Frisco weighs water rate increases to combat rising operating costs, aging infrastructure
The town of Frisco is pushing forward with plans to adopt a new water rate structure. The town’s hope is to introduce the new fees in an ordinance early next month and implement a change in the fourth quarter of this year.
The town completed a 10-year rate study in 2006, which remained in effect through 2016, meaning there’s been no changes to rates in more than two years. Although a new pay structure is in the offing as Frisco seeks a means to keep pace with rising operating costs, fund conservation programs and modernize its aging infrastructure.
At Frisco’s Town Council work session on Tuesday evening, town staff introduced a number of potential alternative rate structures the town could use. Staff also detailed a number of conservation programs and capital projects the price hike will help to fund.
Over the next five years, the town is planning on funding at least four separate conservation programs requiring an estimated $1.7 million.
“These conservation incentives are all tied directly to the water efficiency plan (the council) approved last fall,” said Jeff Goble, Frisco’s public works director. “All of these plans were in there in one form or another, and allow us to meet the water savings goals we want to have.”
Abandon wells #1 & 2 — $150,000
Relocate Fire Hydrant for Gap Project — $35,000
New Fire Hydrant and Valve (N. 10 Mile and Dam Rd.) — $50,000
Water Main Leak Survey (1/3 of system annually) — $15,000/year
Replace filer modules on Skid A — $150,000
Abandon well #4 — $150,000
River Pines Water Main Replacement — $750,000
Replace filer modules on Skid B — $150,000
Replace chlorine gas w/ hypochlorite at well 6 — $300,000
Creekside water main replacement — $1,000,000
Replace chlorine gas w/ hypochlorite at well 5 — $300,000
Exterior repairs on above ground storage tanks — $400,000
Hawn Drive water main replacement — $500,000
The first conservation program aims to replace the 150 old analog meters left in town with new automatic meter reading systems. Because the old meters are no longer considered accurate, the new meters are expected to reduce water usage by 3 to 5 acre-feet of water a year. (An acre-foot is the equivalent of about 326,000 gallons of water.) Completing the town’s meter upgrades will cost about $150,000.
“Slow the Flow” provides subsidized irrigation system audits to anyone requesting one. Starting in 2020, when grant funding runs out, the town estimates the program will cost $10,000 over five years and save 10 acre-feet of water a year.
The Water Smart Program will allow customers to see detailed usage reports in real-time, allowing them to compare their usage to their neighbors and other customers. The program is expected to save about 5 acre-feet of water a year, but cost about $10,000 a year.
The most significant conservation program, “Start at the Tap,” involves offering rebates to customers willing to replace old fixtures with new, Water Sense fixtures. The program is pricey, at an estimated $300,000 a year for the town, but should save between 6 and 8 acre-feet of water a year.
Capital Improvement Projects
As part of the study, town staff also dove into what projects would be needed to maintain the town’s water system over the next several years.
“We went through knowing the council’s goals and vision to create a good infrastructure,” said Goble. “We reevaluated some things and got all of the water staff involved to figure out what needed to be done.”
While some are easy and relatively inexpensive — such as relocating a fire hydrant for $35,000 — others are considerably more involved and costly. The most significant project listed by the town is the Creekside water main replacement, estimated to cost $1 million.
In total, the town is prepared to pull the trigger on almost $4 million in capital investments into the water system by the end of 2023.
Proposed Rate Structure
With the town expecting to pour about $5.7 million into its water system and conservation programs in the coming years, town officials say higher water rates are necessary.
But if conservation efforts pay off, and residents and businesses are using less water, the town is also anticipating a substantial hit to its water revenues, meaning the town is hoping to create rates that provide a more steady revenue stream.
Staff offered six different alternatives. By the end of the meeting, both council and staff agreed to move forward with a structure that includes a $45 base rate per equivalent residential unit per quarter, $1.12 per 1,000 gallons for individuals using up to 8,000 gallons, $2.24 per 1,000 gallons for those using between 8,000 and 16,000 gallons, $4 per 1,000 gallons for those using between 16,000 and 50,000, and $5 per 1,000 gallons for anyone using more than 50,000 gallons.
The rates are expected to increase between 3% and 5% per year. Additionally, it’s expected that tap fees will increase by 10% each year, from $4,730 in 2019 to $6,925 in 2023.
“This encourages conservation, and it also doesn’t include usage in that base rate of $45,” said Bonnie Moinet, Frisco’s finance director. “I can’t tell you how strongly I feel about the fact that we would at least have a steady flow of income. If we are successful at getting people to conserve water our revenues will go down. So it seems like we probably need some stability in our revenue stream, and this would certainly be one way of doing that.”
An ordinance outlining the proposed rate structure is expected to make its way to the town council sometime next month.
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