How a Rate Study Helped Stephenville Fund Water System Improvements
As the City of Stephenville developed a water/wastewater master plan to address its utility infrastructure needs, it became clear that the City would have to invest millions of dollars in capital projects to continue providing residents with adequate services.
To help determine how to pay for $120 million in capital improvements over the course of a decade, the City contracted with Freese and Nichols to conduct a rate study that explored a wide range of funding options. By thoroughly examining existing fees and projected growth, the study produced a balanced approach between rate increases for current customers and cost allocation to new development.
Collaborating closely with staff and elected officials, the planning team collected valuable input for prioritizing projects, setting achievable goals and providing the information elected officials needed to make the best budgeting decisions for their community. The dialogue led to adjustments in the capital improvements plan project schedule that better aligned it with funding projections.
The rate study added a comprehensive approach to the master planning process, helping the City turn its plan into reality by identifying ways to close funding gaps and move forward quickly with vital improvements.
Mapping Stephenville’s Need
With a population of more than 21,000 in a largely rural area 70 miles southwest of Fort Worth, Stephenville faced infrastructure improvements including pipeline work, and facilities and treatment upgrades. Periodic fee and rate increases had not produced enough revenue to keep up with the community’s short- and long-term needs.
Once the master plan identified and prioritized a list of capital projects and their estimated cost, the team brought in Financial Services Director Richard Campbell, who specializes in helping cities develop funding strategies.
Tailoring a Solution
The rate study analyzed the capital program, existing budget, projected growth, customer base and 10-year revenue expectations. Multiple scenarios then were presented to staff and officials, showing different formulas for raising enough revenue to reach their objectives. Clearly laying out the gap between needs and available funding, then providing mechanisms for closing that gap, helped officials evaluate their options – and understand how to make their case to the public.
Developing a new rate structure to fund the utility master plan involved providing the city manager with thorough information to present to elected officials and working directly with the mayor and council members to answer their questions and understand the adjustments they considered essential.
As a result, the City Council approved a new rate structure that will enable the city to collect an additional $20 million for crucial projects, such as a new elevated storage tank, ground storage tank rehab, and replacement of old utilities in historic parts of the city.
For More Information
To learn more about Freese and Nichols’ services on funding options for capital improvements, please contact Financial Services Director Richard Campbell, Richard.email@example.com, 940-220-4356.