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Posted on: January 24, 2019

Water rate increase beginning for March billing cycle; City issues $35.3 million in debt for more

GALVESTON, TX – Jan. 24, 2019 – Beginning in March, water rates for the City of Galveston will increase on average by approximately 7 percent to account for an increase in rates from the City’s water supplier and to fund important water infrastructure repairs and improvements. City Council approved the increase to continue its ongoing Capital Improvement Plan with improvements to water and wastewater capital assets across the island. This is the first time the City has raised its water rates since 2015.

The rate increase, which will take effect for bills issued after March 1, is based on recommendations from a water rate study completed in December of 2018. The structure adopted in 2015 to encourage conservation has accomplished that purpose. The increase approved for March bills is based on the same structure, with higher charges for non-residential and sprinkler system users, as well as residential customers who use higher quantities of water. Sanitary sewer rates are not changing at this time.

In a related development, the Galveston City Council on Thursday unanimously approved the issuing of approximately $35.3 million in Water and Sewer Certificates of Obligation (COs). The COs will pay for water projects and wastewater projects scheduled and approved by City Council as a part of the Capital Improvement Plan to upgrade existing infrastructure and improve the City’s water distribution and storage capacity. The rate increase also will cover a recent 6 percent water increase in cost from the City’s water supplier, Gulf Coast Water Authority.

The improvements funded are expected to last forty to fifty years, while the COs will be paid back at 3.89 percent over 30 years. The rating agencies cited the city’s “healthy operating cushion, solid expenditure flexibility and moderate long-term liability burden” as reasons for the low interest rate. Moody’s noted the city’s “large and steadily growing tax base,” its “strong, forward looking management team, (and) narrowed though adequate reserves following resolution of an outstanding lawsuit in fiscal 2019.”

The impact of the new water rates on customers’ combined monthly water and sewer bills can be summarized follows:

  1. The typical residential customer with water and sewer service, indoor-use only, will see an increase in their monthly water and sewer bill of about 4.5 percent (approximately $2 per month) or amounts that range from $1.24 (no use) to $2.84 (700 cubic feet). According to an analysis of the City’s water use, 78.3 percent of the bills issued for this category of customers are for 700 cubic feet water use per month or less.
  2. Non-residential customers with a 5/8” meter will see a monthly increase of approximately 3.4 to 3.7 percent or amounts that range from $3.64 for 1000 cubic feet per month use to $6.04 for 2000 cubic feet per month use. Non-residential customers with larger meter sizes will experience a larger percent change in their total bill.
  3. Sprinkler customers with a 5/8” meter will experience a slightly higher percent increase because they pay no sewer charge. Their bill will increase an average of 7 percent depending on how much water they consume.
  4. The minimum total bill, including water, sewer, drainage, garbage and recycling, will increase $1.24 from $53.93 to $55.17.

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