By Anton Riecher
A two-step water rate increase of nearly 20 percent over the next year may be necessary for Devine to move forward with obtaining $11.5 million in state financing to replace lead water lines.
The Devine City Council, meeting in special session on Oct. 22, voted to meet again in two weeks to give city staff time to further analyze the results of a long-awaited water and sewer rate study in preparation for a final proposal on the increase.
Investment consultant Mark M. McLiney, senior managing director of SAMCO Capital, told the council that the results of the rate study, ordered as part of the city’s planned application to the Texas Water Development Board for financing, showed that the water utility lost roughly $350,000 in fiscal year 2023.
“After paying all your bonds you are reaching into your reserves to make bond payments,” McLiney said.
City Administrator David Jordan said that prior to the last water rate increase approved in 2018 the council had historically approved annual increases of between two and five percent to deal with maintenance and operation.
However, the increase in 2018 came in the wake of the Texas Commission on Environmental Quality determination that local drinking water exceeded minimum contamination levels for asbestos, forcing the city to borrow $9.6 million for line replacement.
“They had one of two options,” Jordan said. “When they did increase the rates, option one was raise it enough to pay for the debt service, and option two was raise it enough to pay for the debt service as well as maintenance and operations.”
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