Glendale unanimously endorses Option 2B water rates: October 2025 increase plus $3 storm fee

Glendale Council Reaches Consensus on Option 2B Water Rates and Storm Water Fee—Five-Year Plan Addresses $398M Infrastructure Crisis

Glendale City Council unanimously endorsed a comprehensive water and sewer rate restructuring on Tuesday, reaching consensus to advance Option 2B to public outreach—a single rate increase in October 2025 paired with a new $3/month storm water management fee. The recommendation came after presentation of a five-year financial forecast and capital improvement plan revealing that the city's water and sewer fund currently fails to meet its fund balance targets without significant new revenue.

The rate study, conducted by consultant Justin Razer of Rafis, painted a stark picture of aging infrastructure and mounting costs. Glendale operates 1,000 miles of water distribution pipe—some dating to the 1940s and 1950s—alongside 700 miles of sewer pipe, with portions predating 1940. The city maintains three water treatment plants, two wastewater treatment plants, and a partnership treatment facility. Over the first five years alone, the water services department faces $398 million in capital improvements, partially financed through $273 million in planned bond issuances.

Key Speeches

"I don't really want to hit our rate payers with a rate increase in October of 25 and then turn around and hit them again in January of 26 so that means I'm in favor of option 2B." — Council Member Turner

"I didn't run for city council to raise fees on our residents um but I would I uh I agree with the council in terms of uh option 2B for the public to weigh in on." — Council Member Milner

"This really is for the credit that we'll be issuing on our CIP is to maximize the best credit rating and the best interest rate by having an adopted Five-Year Plan that gets us to our stated fund balance policy goals." — Water Services Staff (responding to concerns about locking in rates for five years)

Timeline

• Staff presentation: Comprehensive review of five-year financial forecast, capital improvement plan (CIP), rate study methodology, and four proposed rate options (1A, 1B, 2A, 2B).

• Key data presented: Account growth projected to decline from 1% annually to 0.5% annually; inflationary impacts since fiscal year 2022 include 34% increase in on-and-M costs, 38% increase in construction costs, but only 8.5% increase in revenues; fund balance targets not met under existing rates through year five.

• Council discussion: Five council members spoke sequentially in favor of Option 2B; Jerry Weiers deferred to council; Leandro Baldenegro briefly mentioned finding slide 21 for context; Councilmember Milner raised questions about locking in five-year rate commitments given economic uncertainty.

• Consensus outcome: No formal vote recorded; council members individually stated support for Option 2B, with staff acknowledging consensus direction for public outreach phase.

• Next steps: Public outreach efforts through April 2025; Citizens Utility Advisory Committee review; notice of intent and public hearing date adoption in April; formal public hearing and rate vote scheduled for June 2025; effective date October 1, 2025 (if approved).

Detailed Rate Structure Analysis

The council was presented with four distinct options, which staff designed as independent choices rather than a fixed hierarchy:

Option 1A (previously approved schedule): October 2025 rate increase + January 2026 rate increase (fifth approved rate increase in sequence from January 2022 onward); sewer rate increase 7.4% in year one without storm water fee.

Option 1B (Option 1A + storm water): Same rate increase timing as 1A, but storm water fee ($3/month) offsets portion of sewer increase, reducing first-year sewer increase to 2.7%.

Option 2A (Option 1A without January 2026): Single rate increase in October 2025 (skipping January 2026 increase and pushing next adjustment to January 2027); higher upfront rates but lower future increases; without storm water fee.

Option 2B (Option 2A + storm water): Single October 2025 increase combined with $3/month storm water fee; yields lowest first-year sewer impact (2.7%) while maintaining five-year fund balance targets.

All four options, when modeled through year five, achieve the same fund balance policy target of 50% of on-and-M expenses and satisfy debt service coverage covenants required by bond rating agencies.

For a typical residential customer using 9,000 gallons monthly (representing the top third of Glendale's customer base; two-thirds use 9,000 gallons or less; median usage is 6,000–7,000 gallons), Option 2B monthly impact was presented as economically equivalent to "two or three gallons of gas" or "a Big Mac meal." Benchmarking showed Glendale's current rates (and post-increase rates) remain "right in the middle of the pack" among comparable Arizona municipalities.

Support

While no formal vote occurred, council support for Option 2B was unanimous and explicit:

• Council Member Turner stated directly that Option 2B "makes the most sense," emphasizing the preference for a single rate shock in October 2025 rather than sequential increases four months apart. Turner also praised the storm water fee as enabling consolidated tracking and auditing of previously fragmented departmental costs.

• Lauren Tolmachoff affirmed support for Option 2B and noted that the approach mirrors Glendale's prior decision on solid waste rates, where two separate fee adjustments were consolidated into a single rate change to reduce customer confusion in billing.

• Leandro Baldenegro agreed with Turner and Lauren Tolmachoff on Option 2B.

• Dianna T. Guzman indicated agreement, noting the comparison to solid waste consolidation.

• Council Member Milner stated "I'm in agreement with option uh 2B."

• Jerry Weiers expressed that he agrees with council and will support Option 2B.

Storm Water Fee Innovation & Implementation

A significant component of the consensus was adoption of a $3/month storm water management fee—a regulatory requirement under Glendale's storm water permit but historically unfunded as a dedicated line item. The fee addresses compliance costs historically split across multiple departments (Water Services, Parks, Engineering, Transportation, Solid Waste) and general fund subsidies.

Annual revenue from the $3/month fee ($2.3 million citywide) would be allocated as follows:

• $400,000 to Parks Department to offset current contractor costs for Skunk Creek cleanup and post-rain-event retention basin maintenance, freeing up general fund dollars for other priorities.
• Remainder to Sewer Enterprise Fund to fund inspection, cleaning, and maintenance of storm water pipe systems, catch basins, outfalls, and dry wells.

The storm water fee, counterintuitively, reduces the required sewer rate increase by offsetting costs that would otherwise appear in sewer rate hikes. Staff noted comparable fees in peer cities: Tempe ($3/month—same as Glendale's proposal), Scottsdale ($8+/month), and Phoenix (variable up to $40+/month based on meter size). Glendale's $3/month positions the city at the lower end of the spectrum despite late adoption relative to many peer communities.

Opposition & Concerns

No organized public opposition was presented during the meeting (transcript indicates zero public comment). However, council members raised substantive policy concerns that staff acknowledged but deferred:

1. Five-year rate commitment inflexibility: Leandro Baldenegro raised concern that committing to five-year rate increases locks residents into predictions during an economically uncertain period marked by tariff uncertainty, capital cost volatility, and inflation unpredictability. He noted he has "actually voted against a rate increase before because I think committing to five years for rates" is problematic. Leandro Baldenegro suggested a phased approach: adopt a five-year plan but commit only to the first two or three years of actual rates, then revisit at mid-term.

   Staff response: Water Services acknowledged the concern but emphasized that bond rating agencies require visibility of a five-year adopted rate plan to issue favorable credit ratings. Even a 25–50 basis point change in effective interest rate on a $273 million bond issuance (five years' worth of CIP debt) translates to millions in additional interest costs. Staff committed to revisiting rates "every other year" and noted rates can be adjusted downward if revenues exceed projections or adjusted upward if expenses exceed forecasts—but the five-year adopted schedule provides the fiscal stability necessary to secure favorable borrowing terms.

2. Urban irrigation customer "death spiral": Council Member Turner raised the most substantive operational concern: Glendale's urban irrigation customer base has declined from 300+ customers seven years ago to mid-270s today. As customers leave, costs per remaining customer rise, driving further customer attrition. Proposed rate increases for 2026 (from $328/year to $399/year) and 2027 (to $485/year) would accelerate this spiral—particularly harmful to elderly fixed-income residents who depend on the service and benefit from city-provided valve turn-on/turn-off assistance (eliminating the need to wake at 2–3 a.m. for scheduled waterings).

   Turner noted that the 50% cost-recovery policy underlying urban irrigation subsidies exists because the community benefits from downtown tree canopy cooling, air quality improvements, and property value maintenance—benefits beyond the individual irrigator's yard. He stated: "we're on the verge of probably going into a death spiral on irrigation customers if we don't find some way to manage the cost differently." Turner did not propose a specific solution but called for staff to explore "alternative cost management approaches" before the June public hearing and formal rate adoption.

   Staff response: None recorded in transcript; item appears to remain open for further exploration.

3. Multi-family apartment rate equity: Council Member Turner raised a secondary concern that Glendale's rate structure may undercharge multi-family complexes with single meters serving 50–200+ units. If storm water fees, sewer fees, and water charges are calculated on a per-meter basis rather than per-housing-unit basis, multi-family households effectively subsidize single-family households. Turner suggested applying per-unit calculations to storm water and other broad-benefit fees: "if an apartment complex has one meter but 200 uh family units then perhaps that complex ought to pay 200 family units worth of water uh storm water fee and then they spread that out among all of their residents you know by recouping it in their rent cost."

   Staff response: Staff committed to working with Rafis (the rate study consultant firm) to review multi-family rate structures and recommend adjustments before the June public hearing.

Project Details

Case/Item Type: Water and Sewer Rate Study & Rate Increase Authorization (informational and consensus item—not a development case)

Applicant/Department: Glendale Water Services Department; City of Glendale Finance and Budget

Rate Study Consultant: Justin Razer, Rafis (rate study firm)

Scope: Five-year water and sewer financial forecast (FY 2025–2029); capital improvement plan covering $398 million in planned improvements over first five years; storm water management fee study; rate structure analysis for residential, irrigation, and multi-family customers

Current Financial Status: Water and Sewer Enterprise Fund currently does not meet council-adopted fund balance policy targets (50% of on-and-M expenses; 180–250 days cash on hand; debt service coverage ratio 1.2–1.8) without rate increases.

Key Infrastructure Challenges:

• 1,000 miles of water distribution pipe; portions dating to 1940s–1950s
• 700 miles of sewer pipe; portions predating 1940
• 3 water treatment plants; 2 wastewater treatment plants; 1 partnership treatment facility (SCAD)
• Routine maintenance: $60–70 million annually (water main breaks, equipment repairs, clarifier coatings failure, etc.)
• Long-term water resources: $40+ million (5-year phase-in; includes Bartlett Dam raising, advanced water purification; costs concentrated in years 6–10)
• Advanced metering infrastructure: $30 million (15-year payback period; expected to achieve cost neutrality over asset life while enabling early leak detection for residents)

Proposed Rate Increases (Option 2B—recommended for public outreach):

• October 2025: Combined water and sewer rate increase (specific percentage not itemized in transcript for Option 2B alone; however, sewer rate component decreases to 2.7% year one due to storm water fee offset)
• Storm Water Fee (new): $3/month effective October 2025; annual revenue $2.3 million; inflationary increases applied in subsequent years
• Years 2–5 (2026–2029): Cumulative increases designed to achieve fund balance targets by year five

Urban Irrigation Rate Proposals (separate from main rate study):

• 2026 (April): Increase from $328/year to $399/year (first-year implementation; split increases)
• 2027 (April): Increase to $485/year (second-year implementation)
• Rationale: Current recovery rate 40s% vs. council policy 50%; customer base declining (300+ → mid-270s over seven years)

Vote Breakdown

Formal vote: None. Item designated as "information and consensus item." Council members expressed support for Option 2B sequentially; no dissenting statements recorded.

Consensus alignment:

• In favor of Option 2B: Council Members Turner, Leandro Baldenegro, Dianna T. Guzman, Milner; Lauren Tolmachoff; Jerry Weiers
• Abstentions / concerns without opposing vote: Leandro Baldenegro raised concerns about five-year rate commitment but ultimately voted (or affirmed via consensus) for Option 2B

Individual vote totals: Not applicable to consensus-based item.

Outcome & Next Steps

Immediate decision: Council directed staff to move forward with Option 2B—single rate increase October 2025 plus $3/month storm water fee—to the public outreach phase.

Public engagement timeline:

• February–April 2025: Public outreach efforts; Citizens Utility Advisory Committee (CUAC) review
• April 2025: Adoption of notice of intent and public hearing date
• June 2025: Public hearing and formal rate vote (council action to adopt final rates)
• October 1, 2025: Effective date for new rates (if approved in June)

Directed follow-up work (before June public hearing):

1. Urban irrigation cost management: Staff to explore "alternative cost management approaches" to address potential "death spiral" in customer base as rates rise; consider whether broader community benefits (downtown cooling, air quality, property values) warrant adjustment to 50% cost-recovery policy or subsidy restructuring.

2. Multi-family apartment rate equity: Staff to work with Rafis consultant to review per-meter vs. per-unit calculation for storm water and sewer fees; recommend potential rate structure adjustments for multi-family complexes before June public hearing.

3. Bond issuance coordination: Finance and Water Services to coordinate timing of $273 million CIP bond issuance with rate adoption schedule to maximize credit rating and favorable interest rates.

Controversies & Context

Historical rate increase schedule: Glendale implemented the first of five council-approved rate increases in January 2022. Four increases have been executed; the fifth (January 2026) is the "pivot point" between Option 1 and Option 2. Leandro Baldenegro specifically asked when the last rate adjustment occurred, receiving confirmation that January 2022 marked the start of the five-year approved schedule.

Economic uncertainty & tariff concerns: Leandro Baldenegro explicitly cited tariff risk and capital cost volatility as reasons to avoid locking in five-year commitments, noting this represents an "unprecedented period of very high inflation" that "no one could really have anticipated." His suggestion to adopt a five-year plan but commit to only the first two–three years of actual rates reflects broader municipal concerns about inflation unpredictability during this era.

Bond rating agency pressure: Staff emphasized repeatedly that moving to public outreach without a five-year adopted rate schedule would impair Glendale's credit rating when issuing $273 million in CIP bonds. A 25–50 basis point downgrade would translate to millions in additional interest costs over the bond's life. This creates a fiscal forcing function: comprehensive rate adoption becomes a prerequisite for capital funding, not merely a convenience.

Urban irrigation subsidy philosophy shift: Council Member Turner's remarks signal a potential policy rethinking. The 50% cost-recovery rule was adopted on the theory that community-wide benefits (cooling, air quality, property values, historic character) justify public subsidy of a specialized service. As the customer base shrinks and per-customer costs rise, the subsidy's efficiency declines: fewer residents benefit while costs per beneficiary soar. Turner framed the issue as a "touch point" problem—different residents value different city services, and allowing one constituency to exit through rate shock weakens the service's sustainability. His call to "put on our thinking caps" suggests the council recognizes but has not yet solved the fundamental design flaw in a declining, means-tested utility targeted toward elderly fixed-income residents.

Advanced metering infrastructure (AMI) as resident benefit: Council Member Turner highlighted an under-communicated benefit of the $30 million AMI project: early leak detection for individual residents, preventing both surprise high water bills and water damage from undetected interior leaks. By positioning AMI as a resident-focused technology rather than a purely operational efficiency tool, Turner elevated its perceived value despite its cost-neutral financial profile to the city.

Duration

• This item: Approximately 90 minutes (staff presentation ~40 minutes; council discussion and questions ~50 minutes)
• Total meeting: Not stated in transcript

Other Notable Items

None recorded. The entire meeting focused on the water and sewer rate study, financial forecast, and consensus direction on rate structure options.