Finance Committee — June 11, 2026

Check, check, 1, 2.

All right, it is 6:07 PM on Thursday, June 11th.

Calling the Committee on Finance to order.

In attendance is Councilor-at-Large Ian Abreu, Councilor of Ward 2 Scott Pemberton, Councilor of Ward 1 Leo Choquette, City Council President and Councilor of Ward 6 Ryan Pereira, Councilor-at-Large James Roy, Councilor-at-Large and First Vice President Shane Burgo.

And I'm Joe Lopes, Councilor of Ward 5 and the chair of Committee on Finance.

We do have 2 letters to be read into the record.

The clerk will read the letters.

Mr. President— uh, Mr. Chairman, the first is from Councilor Carney.

Dear Councilor Lopes and honorable members of the council, I am writing this letter to inform you of my possible late arrival to the Committee on Finance on Thursday, June 11th, due to a prior commitment.

I ask that this— you read this letter into the record to make my colleagues, those in attendance, and the public aware the reason for my delayed arrival.

Sincerely, Naomi Carney, Councillor-at-Large.

And the second is from Councillor Gomes.

Dear Chairman Lopes and honorable members of the committee, I am writing to inform you that I'll be unable to attend tonight's committee meeting due to a personal prior commitment.

Please read this letter into the record to make my colleagues and the public aware the reason for my absence.

Sincerely, Brian K. Gomes, Councillor-at-Large.

Motion to receive them.

Second by Councilor Roy.

All those in favor?

Opposed?

The ayes have it.

Item number 1 is a communication.

Mayor Mitchell, City Council submitting it— oh, sorry.

Note, this meeting is being live streamed and recorded.

City Council committee meetings can be viewed on the City of New Bedford's homepage under Quick Links, then Meetings.

Item number 1 is a communication.

Mayor Mitchell, City Council submitting an ordinance amending Chapter 16, Municipal Utilities and Service, Section 16-94 Rate Charges to Provide the Council and the Administration Greater Flexibility in Setting the Wastewater Rate.

It was referred here on May 12, 2026.

1A is an ordinance.

Motion to receive and place on file made by Councilor Roy, seconded by Councilor Burgo.

All those in favor?

Opposed?

The ayes have it.

In attendance, we have Bob Ekstrom, the Chief Financial Officer, Sean Side, the City Engineer, and representative from the Mayor's Office who we do not have.

So I will turn it— oh, Eric Jakes, I apologize.

City Solicitor Eric Jakes is here representing the, the mayor's office.

So Sean, do you want to give us a brief overview on the— on item number 1?

Good evening, everybody.

Thank you very much.

Chairman Lopes, so the city is proposing to make modifications to Section 16, Chapter 94 of the city's Code of Ordinance.

The current code was written around wastewater rates with an interpretation that only one year at a time can be voted through by council.

In 2019, we attempted to put through a 5-year ordinance rate, um, smooth, and that's when that interpretation came out.

So unfortunately, we were only able to move forward with 1 year at a time, and the goal of what we're trying to do here is to allow the council to implement multiple-year rate increases at 1 time.

Up to 5 years, which is directly written into— directly written into the— into the ordinance change.

So what that'll do is it doesn't preclude the council from only allowing 1-year rate increases, but what it does is it allows the council the flexibility to implement up to a 5-year rate increase at one time.

And the driver behind this is that With doing 1-year rate increases, the rates are set based on the budget itself, right?

So 1 year you might end up with a 3%, the next year you might end up with like a 15% rate increase, and the year after that you might end up with an 8% and back down to 3%, and so, so on and so forth as we move throughout implementation of the CIP.

But with a multiple-year rate increase, what it allows us to do it allows us to smooth the rates out.

So by smoothing the rates out and avoiding that sawtooth pattern that I had just talked about, it, it's easier for the ratepayer to be able to budget monthly for their sewer bills annually with knowing what that annual percentage is going to be.

Secondly, the changes that we're making The changes that we're making don't preclude council from making modifications to the rate.

So as an example, DPI comes forth to you, or the wastewater division comes forth to you with a budget.

Council approves a rate modification, um, say it's 2 years, right?

We're allowed to do it 2 years, and it's say 5% both years.

Year 2 comes by, you would expect that the rate would be 5% again.

However, as a result of changes in the budget or council wanting to make modifications to the rate, say the budget comes in lower, the council would still be able to make modifications to that second-year rate even though it was set the year before.

So it's— again, it's not setting it in stone over that multiple-year rate.

Time period.

It's just allowing the council to be able to actually implement that over a multiple-year period.

Again, giving flexibility in terms of creating that smooth pattern while still giving council the changes that if they want to make changes over time, they can do that.

The other change that we made is that it establishes a minimum rate increase of the consumer price index modification.

So, um, if the sewer rate ends up being lower than the CPI, then the CPI index would kick in.

And secondly, if there was no rate increase proposed for that year, then the CPI index would kick in.

This basically eliminates that potential to create a structural deficit by not outpacing inflation.

And as we all know, inflation is certainly rampant right now.

So Um, it avoids— it mitigates that issue as we move forward.

So with that, DPI is proposing that we make modifications as proposed to council for Section 16 of Chapter 94 of the city's Code of Ordinance.

So 2 things.

Welcome, Councilor Carney, Councilor Oliver, Councilor Baptiste.

Can I get a motion to receive and place on file the package that's on your desk?

So moved.

Thank you.

Made by Sean, seconded by Uh, Scott Pemberton.

All those in favor?

Opposed?

The ayes have it.

We have questions for you, Sean.

Councilor Pereira.

Thank you, Mr. Chairman.

Sean, good evening.

I have, um, I think when we had met, um, and we— I had been given a brief overview, I had a few questions.

I still have them.

Uh, I'd like to hear what my colleagues think, but first is the, uh, the 5-year allowance.

I think I would feel something more comfortable to start in the 3-year range.

Uh, I have, uh, where this is brand new, I have some, uh, concerns about allowing a 5-year rate set and, and not seeing how it plays out on a shorter term, where I think, I think I'd ultimately be comfortable setting 2-year rates, but I would say allow us to go up to 3, but I would generally want to set 2s.

And then my other concern, and, and This is where, if you could explain to me a little bit better, I do have a concern about the automatic adjustment for the Consumer Price Index.

I have a— I, I just would like to, because my concern is, yes, I, I understand the need to increase the, the rates so that there are no structural deficits built in, but what happens when we have major loans coming off debt service from in the wastewater fund.

And so the rate's not increasing the same, but then we have huge expenses dropping off.

Now that might not happen for a while, but if we have some expenses dropping off and the rate's going to go up, there could actually be huge surpluses now generated.

So I do have some— I would much prefer it trigger an automatic council review or something to that effect where the council would then enact it or be allowed, because as your point, you can still make adjustments.

I just have a concern about that automatic increase.

And then the other— I think we— I asked in the meeting, it don't— but it— the rates only went up— never went up, uh, how do I want to phrase this— in the past like 5 or 6 years, the Consumer Price Index only went higher than the rates one time, correct?

That was last year.

Last year.

But other than that, the rates have always increased on a higher scale than the CPI?

Yes, correct.

Okay.

Um, when, when appropriate, I did have a question for CFO Ekstrom regarding the same principle.

I didn't know if you had anything to add about the CPI portion of my questioning.

Um, no, nothing to add.

I think you articulated it pretty clearly.

Um, I think that again, the basis behind this is we want to give council the opportunity to to provide input into the rates.

And annually we do do a rate impact analysis to assess where we stand in terms of debt service payments required, revenue required to pay the bills, and, and anything else that's impacting the rates, new projects coming up in the CIP.

And if there's ever a time when, when the rates would be lower as a result of, as you suggested, significant debt service coming off the books, I believe that the commissioner would certainly reach out to the council and have that discussion.

And I believe this commissioner would.

Yes.

My concern also was future commissioners who might not, you know.

And I have no doubt Jamie is forthcoming with that and say, hey, look, no, I know he— that no one in that— in this department is trying to get one over on the council or the residents or the ratepayers, but I do have concerns about future, uh, the commissioners of the department and what that would imply, because this as an ordinance is, is unlimited until changed.

Do you know?

So understood.

Okay, I, I— Mr. Chairman, I yield for now, but I would like to speak with CFO Ekstrom at the appropriate time.

Thank you, Councilor Pereira.

Councilor Roy, was your question for, um, Sean, or is it for somebody else?

It's for Sean.

Perfect, go right ahead.

Hi, Sean, how are you?

Good, Councilor.

Nice to see you again.

You too, likewise.

Um, I was wondering if you could explain to me the pros and cons, um, uh, between setting the rates for 2 years like the councilor from Ward 6, um, um, suggested, or between the 5-year rate, setting the rate for 5 years.

Could you just touch on that for a second so, so we can get a good understanding of, you know, the benefits of changing it, perhaps?

Sure.

Um, first off, I, I tend to agree with, uh, Councilor Pereira on the rate setting.

I don't believe that if the council were to set a 5-year rate, I don't believe that we would make that recommendation.

The language in the ordinance just provides the flexibility to, to do that, okay?

And understanding the Councilor Pereira's point about if it's written into the ordinance, then it can happen.

With the current leadership at DPI, we would not make a recommendation to ever make a 5-year.

That's not something that we would recommend.

There's too many potentials for changes over time, changes with regulations, changes with the agencies that could impact your plan.

If something breaks out in the system, you know, you have to be able to make those changes and modifications.

In terms of a 2-year rate increase, that would be more in line of where where we as a department and our financial team would be comfortable with, that 2 to 3 year range is where we're kind of the sweet spot as to what we, what we'd really like to target.

And you'll see that as we progress forward with future discussions.

But between— what about between a 2 and a 3 year or a 2 and a 4 year?

I'm so sorry, James.

What about between a 2 and a 3 year and a 2 and a 4 year?

Like, what, what are the, what are the benefits of, of setting a rate for 4 years versus setting a rate for 2 years or 3 even?

Um, it's just additional smoothing, right?

So it allows you to spread your costs out over a longer duration.

All right, can you— smoothing, I get it.

Can you just go into it a little bit more?

Sure.

So when we, when we implement a CIP, right, there's various costs on an annual basis, and the same thing with the budget, right?

Those costs require revenues, which then dictate a rate modification potentially.

So one year you may end up with a rate increase of 3%, the next year you may end up with a rate increase of 15%, and then following year 8%, and then back up to 16% and down to 2%.

It's, it's all over the place, right?

By doing that smooth option, it allows the council to set a consistent rate increase over that time.

Where when you take the average, it may end up being like a 5% rate increase over time.

So what you do is you build up surpluses and you use retained earnings to offset that delta between, you know, the rate that you need versus the rate that you actually have.

And it just— it provides the department with greater flexibility as well in terms of managing its program.

All right.

Thank you.

I yield, Mr.

Chair.

Thank you, Councilor Roy.

Anybody else have a question for Sean?

Seeing none, Councillor Pereira has a question for CFO Ekstrom.

Bob, if you wouldn't mind going to the podium.

Councillor Pereira, the floor is yours.

Thank you.

So Bob, when we are— when we're seeing obviously in the wastewater department large loan orders, sure, and for dealing with our, uh, uh, man, uh, administrative order from EPA.

My question is, in years where major debt service is coming off and, and new service isn't increasing at the same rate, or there's big decreases in loans coming off, and this ordinance mandating that the rates rise at least the height of the Consumer Price Index, what happens when The rate doesn't increase the same as the CPI, but they have a lot more room in that budget now because loans are coming off.

Now, I understand to his point, we have good leadership right now— Sean's point, excuse me— we have good leadership.

That's not a concern right now, but it is a concern for the future.

How would that look from a budgeting standpoint?

Well, obviously, with the certainty of a rate in effect for the next 2, 3, or 5 years.

That makes it easier to budget, to tell you the truth.

We do look at debt service.

I don't have the numbers now because I didn't anticipate that you would go into the specifics, but we have a model that forecasts debt until maturity for water, wastewater, airport, downtown parking, and general fund, including the school.

So we, we know what those numbers will be for the next 5, 10, 15 years.

One of the things you could consider with and marrying to this ordinance change is perhaps setting up a— whether it's just wastewater or other funds too— setting up a debt service sinking fund or debt service stabilization fund.

So you could then take years where you have excess because of the, the down— because of the debt service being lower, we'd fund debt— we'd fund the stabilization fund, and then we would draw on the stabilization fund in years where the spike goes higher.

Because it isn't very smooth, right?

We've got a lot of issues going on, and some, some have 30-year lives, some have 20-year lives.

So it's not just a steady trend on debt service going down.

It spikes up and down, as Sean alluded to.

Oh, actually, he said it with the rates, but it applies to wastewater.

It applies to debt as well.

So coupled with a stabilization commitment, that would alleviate any concerns.

Yeah, something to think about that, that would alleviate a lot of issues with then in the future if that fund builds up spikes in debt service to help smooth that out on top of the ability to forecast out longer rates.

Sure.

Based on CPI when, when, you know, if the council enacted a 4-year rate and a huge piece of debt service comes offline and now not only is there a $10 million budget decrease from last year because of that, but now the rate has to increase, you have huge surplus there.

So that all just turns into free cash for that fund.

Yes, then it would do that too, right?

Right.

It's— but, or allow the department to, to make improvements or something with all of that.

But I just have concerns just with the, that notion, and maybe the state— some sort of stable debt service stabilization fund would assist.

I, I was looking for the reference too, but currently in the ordinances, that cost of living increase is already built in.

So there is a minimum cost of COLA increase for wastewater rates right now.

But a lot of times the— it's set by the council annually, so normally that doesn't come into it.

My concern is, right, it's automatic because the rate has— that's right, 3 years ago.

Yes, yes.

Okay, sure.

So, Councilor Pereira, I think this doesn't get to your point about the automatic increases, but I think it will get to your point about what happens if significant debt service falls off.

So our financial team, when we look at the rates, we don't just look at them one year at a time.

We actually look at them on a 20-year basis, focusing on 5 years at a time.

So we know what the city's debt service schedule is for those 5 years based on when they come on the books.

We get the information from either MassDEP through their Schedule Cs or working with Bob's department on any generally obligated money.

And we run that through our model.

So we know exactly when debt service is coming on and off.

So if there's a huge chunk of debt service that's coming on, that would then be realized in the projected rate that would be needed for that year.

Got it.

Thank you.

Um, I'm good.

Thanks, Bob.

Thank you.

Councilor Pereira, are you all set?

Yes, Mr. Chairman.

Thank you.

Do we have any other questions for either CFO Ekstrom or City Engineer Sean Syd?

Seeing none, I need the pleasure of the— I make a motion to amend, Mr. Chairman.

Make a motion to amend the ordinance has been made by Councilor Pereira.

I make a motion to amend Section 1, the second paragraph, where it says for multiple periods of up to 5 years, striking the word 5 and replacing it herein with 3.

Made by Councilor Pereira, second by Councilor Burgo.

Before I take a vote on that, Councilor Pereira, can you provide the clerk with the verbiage, if you don't mind?

Yep.

Thank you.

Now that we're there with that, it's been seconded.

Just on a point of information, can Attorney Jakes just verify that that would be sufficient to doing what I would want to do.

I don't have the ordinance.

I just don't want any ambiguity, Solicitor, and just want to— if I understand you correctly, all you're going to do is strike the word 3— I'm— the word 5 and substitute the word 3 by amendment and then move it forward.

Correct.

And that would just allow us to set rates for up to 3 years?

Correct.

Okay, very good.

Thank you.

Just want to make sure I understood the question.

Okay, thank you, Attorney Jake.

So now that we have clarification, anyone have any discussion on the question?

Councilor Carney, on the question?

Yes, thank you, Mr.

Chair.

So this has come before us on numerous occasions since I've been sitting on council, and we have always reverted back, Stan, to the 1 year.

Um, I'm opposed to going anything but the 1 year.

Um, this is our way to just keep an eye on things and for our, our taxpayers and our ratepayers.

The city council doesn't have a lot of say on a lot of stuff that goes on, on in the city, but it does here.

So for that reason, I, I oppose.

I'm sticking with the 1 year, and that's my feelings on that.

Thank you.

Thank you, Councilor Carney.

Seeing no further discussion, roll call vote on the amendment, and then if that goes, we'll do on an amended ordinance.

Councilor Abreu?

Yes.

Councilor Baptiste?

Yes.

Yes.

Councilor Brigo?

Yes.

Councilor Carney?

No.

No.

Councilor Choquette?

Yes.

Yes.

Councilor Lopes?

Yes.

Yes.

Councilor Oliver?

Yes.

Yes, Councilor Pemberton.

Yes.

Yes, Councilor Pereira.

Yes.

Yes, Councilor Roy.

Yes.

Yes, passes 9 to 1.

I need an ordinance— I need a motion to— motion to refer to the full City Council as amended.

As amended, made by Councilor Pereira.

Seconded by Councilor Abreu.

Roll— anyone on the question?

Seeing none, roll call vote on the ordinance as amended.

Councilor Abreu?

Yes.

Councilor Baptiste?

Yes.

Yes.

Councilor Burgos?

Yes.

Councilor Carney?

No.

No.

Councilor Chauquette?

Yes.

Yes.

Councilor Lopes?

Yes.

Yes.

Councilor Oliver?

Yes.

Yes.

Councilor Pimpton?

Yes.

Yes.

Councilor Pereira?

Yes.

Yes.

Councilor Roy?

Yes.

Yes.

Item passes 9 to 1.

Number 2 is a communication, Mimic City Council submitting an order for the proposed wastewater rates for fiscal year '27 and fiscal year '28 and the proposed wastewater annual base charge for fiscal year '27 to take effect on July 1st, 2026.

The item was referred to the Committee on Finance on May 12th, 2026.

2A is the order.

Motion to receive and place on file made by Councilor Roy, seconded by Councilor Pemberton.

All those in favor?

Opposed?

The ayes have it.

Anyone on the question or would like to speak to anyone that's in attendance.

Councillor Pereira.

Sean, if you wouldn't mind going to the podium.

Thank you, Sean.

Thank you, Chairman Lopes.

Again, good evening, everybody.

Uh, so tonight I'm going to, uh, talk about the proposed wastewater rate increase as a result of implementation of our administrative order, 2017 integrated plan, and our upcoming 2026 integrated capital plan modifications.

Unfortunately, the commissioner could not be here tonight, so as a result of a medical emergency.

So I'm going to be doing the presentation for him.

So an overview of the capital plan.

As I just mentioned, the city's been working through implementation of a 20-year capital improvements plan that was developed under a report that was submitted as part of a 2012 administrative order by the EPA called a Long-Term CSO Control and Integrated Capital Improvements Plan.

Now that's a mouthful.

We simply call it an integrated plan.

And basically what it is, is it's a large document— it's about that thick— that outlines all of the city's Clean Water Act obligations for addressing regulatory compliance, ensuring that our infrastructure is properly maintained, It makes sure that we continue with our combined sewer overflow reduction process, ensuring that our beaches are clean, we can swim and fish in our receiving waters.

So it's a very important plan that we work through.

And in 2019, EPA codified the first 7 years of that plan in a new administrative order.

And since then, we have been working off of our CIP to implement, implement those projects.

And one of the key aspects that I like to always talk about as part of this plan is that the plan focuses on using existing systems that we have.

We don't like to build new facilities that we have to take care of.

We want to take care of what we have and build on that and make changes to those things.

Basically reinforcing the backbone of the system and coming up and identifying high-value, lower-cost, low-hanging fruit projects to address the needs and issues and public health issues that we have out in our collection system.

Unfortunately, and as I mentioned, 2019, shortly thereafter in 2020, COVID-19 pandemic struck.

What happened was, as we were working to move the program forward, we missed some MassDEP deadlines.

Funding was a challenge.

Revenue was decreasing.

People were out of work.

Totally understood.

But what happened when we missed that MassDEP deadline and it caused us a 2-year delay in our implementing our AO projects?

And what that did was it basically pushed all of our projects out 2 years, compounding projects that were supposed to be implemented during that timeframe with projects that should have been implemented 2 years prior.

And we call this basically a snow pile.

It created this mound of projects that needed to get implemented all simultaneously, which becomes a challenge, one, to manage all of those projects, but secondly, to financially pay for them.

Because now you're paying for all of these projects all at the same time.

Next slide, Adam.

In addition to that, we've also been managing challenging funding issues with the SRF program.

MassDEP recently enacted a cap on wastewater funding.

Of $50 million annually by communities.

And in addition to that, they've eliminated the potential for having carryover projects, so spreading costs of a project over multiple years.

So what this is doing is it's forcing us to do even smaller-scale projects than what we have now, and it's limiting the funding that's available to communities within the Commonwealth.

So it's becoming much more challenging for us to be able to obtain SRF funding.

We have used generally obligated funding in the past.

We will continue to use generally obligated funding in the past— in the future, supplemented by SRF funding.

But that mix may change, and we have to monitor our budget and work very closely with the MassDEP to ensure that we can continue to receive those low-interest loans, which are important to our program.

And then lastly, I want to add that all of the work that the DPI does within the city is coordinated with other activities that are going on.

We work with Eversource, we work with the Water Department, we work with our pavement management plan to make sure that we implement cohesive projects, minimize disturbance to neighborhoods and the residents, get the work done in the street and get out of there so that we can pave it and then move on to the next area.

It's definitely— it takes a little bit longer to implement things, but it's certainly much more coordinated.

Next slide, Adam.

So this slide shows the next 5 years' worth of projects.

And what you see here is you can see sort of that in that '27 and '28 timeline, extremely significantly larger dollar values than what you see in the outer last 2 years.

And that was that snow pile that I talked about.

We're still working through the challenges of trying to manage that snow pile from the COVID-19 pandemic and the 2-year delay.

In addition to that, there's also newer projects that are baked in here.

As we were implementing our capital plan, we did a ton of studies, got out into the field, investigated the treatment plant and our pipes, and we simply know more now.

And new priorities have come up.

And we need to address those priorities as well.

We have failing infrastructure that we need to address.

So this 5-year plan addresses that.

But again, continuing over that 5-year period, we're really working hard to get it down to a manageable amount of funding on an annual basis versus that large, you know, $62 million, which is not sustainable, obviously, over the long term of the plan.

So that's why we wanted to get down to more of that $12 to $14 million per range.

And that also sort of calms the rate increases down as well.

Here's a funding breakdown of our capital plan.

You'll see that the first 5 years, that big yellow chunk is combined sewer overflow or CSO funding.

We really want to focus on trying to reduce combined sewer overflows as much as we can.

The red area is focusing on the treatment plant.

The new treatment plant is now 30 years old.

So it's no longer new.

Although it's been well maintained by our contract operator in the city, equipment just gets tired and it needs to be replaced.

And there's equipment that's becoming end of life.

And you'll see that in the pie chart to the right, the funding that's been dedicated, that red area, has grown.

Because over the 20-year life of the plan, equipment is going to continue to get older and we need to make sure that we invest in one of the city's most valuable pieces of infrastructure.

But then again, that yellow area is really still big because we want to still focus on combined sewer overflows.

And then the other colors are smattering of like other different types of investments within the city's collection system.

So in order to continue to finance that, we're asking— sorry, next slide.

So in order to continue to finance the program, DPI is requesting approval from the council for a $20.4 million appropriation to continue to move forward with projects as being outlined in our update to our 2017 plan, which will be coming out in June of next year.

This funding focuses on treatment plant activities.

As I mentioned, the plant is getting old now and equipment is getting tired, and you'll see that the majority of spending here is focusing on the treatment plant.

We have gravity thickeners which address residuals treatment or sludge treatment at the plant.

There's 4 of them.

2 are non-operational.

They don't function at all.

One is being held together by bubble gum and duct tape, and the other one is, is functioning.

And to operate a facility of that size, if that one goes down, the city is in trouble.

We won't be able to meet our permit.

We won't be able to treat our sludge.

Generators at the plant are in need of some repair.

We have to, um, we have to make sure that we, that we take care of them.

They definitely need some updates.

And thirdly, odors.

I know odor is a big, big thing at the plant.

We want to make sure that we continue to maintain the odor control system so that odors at the plant are contained where they should be.

And then we have a pump station upgrade as well as, and then another project at the plant to begin to optimize the process.

Based on the CIP that I showed you 3 slides ago, this is the spending that's projected on an annual basis, or the revenue requirements, I should say.

It starts at about $3 million this calendar year and then goes to $14 million in— excuse me, fiscal year, and fiscal year '30-'31 grows to $14 million.

So the line, that red line that you see that's cutting across the slide there is the current revenue that DPI is generating based on the existing rates.

So I'm going to take a little step back in time to set some context as to how we ended up with the rates where we're at right now.

Next slide, Adam.

Thank you.

So this is where my previous discussion about smooth rates come in.

So last year we had talked about doing smooth rates potentially for over 2 calendar years at 7.8% and 9.8%.

Ultimately, because of the way that the ordinance is written, we were only able to do that.

And actually, it came in at 3 million— 3%.

And the year before that, we came in at 4.3%.

But the reason that came in that low is because the rate was bought down by cash as well as a reduction in the wastewater budget.

And when you start infusing cash into the rates, what happens is that's revenue that still needs to be generated and continues on in its eternity, essentially.

It comes out eventually.

Like, we have to manage that situation.

And the $3.9 million in cash that was infused over the past 2 years has essentially created a structural deficit that is now sort of coming to roost in 2027, which we're calling a catch-up year.

So we need to address that revenue shortfall of the $3.9 million.

Plus the debt service needed to pay for the projects that are currently ongoing and mandated by our administrative order, in addition to the several— the $20.4 million in wastewater projects at the plant that we need to do to keep that facility up and running.

So to assess those impacts— next slide, Adam, please.

To assess those impacts of how we deal with that shortfall and the new projects and that lump of projects that's still ongoing.

We assessed several alternatives in terms of rate modification.

We looked at what it would be for a single year, no smoothing, obviously it's only a 1-year rate.

We also looked at what it would be for a 5-year, no smoothing, so basically based on the revenue that you need on an annual basis.

We assessed a 5-year smoothing option.

We also assessed a 2-year smooth option.

And I do want to point out that both the 5-year smooth and the 2-year smooth, if you recall in my prior discussion, I talked about how some years we'll have some reserves and other years we're going to have some deficits that we'll need to take out of retained earnings in order to fund that, which would then get basically replenished when a future rate increase provides the revenue to do that with the smoothing option.

The 5-year smooth requires $3.4 million in cash.

And the 2-year increase requires about $150,000 in cash.

So it's not, it's not too bad.

I do want to point out that I believe there's a transfer that's coming forth to council.

And once that transfer happens from, from free cash to retained earnings, it'll put the wastewater retained earnings balance at approximately $4.1 million.

So when you think about using $3.4 out of that $4.1, it's getting us down down really, really low.

Next slide, Adam.

This table outlines the percentage increases needed over time.

I'll get into the weeds a little bit on each of these over the next couple slides.

But you'll see that the 5-year smooth has that significant infusion of cash of like $2.5 million in the 3rd year.

But then you make it up in the outer years.

Similar to the 2-year 2-year smooth, the $150,000 comes out this year but then you make it up next year.

I do want to point out that in the 3rd year of the smooth option for 2 years, there's a projected increase right now of 15.9% required.

We have the opportunity because we continue to assess rates on an annual basis to smooth that out as well.

The lower amounts that I showed you in the CIP in the outer years continue so that when we begin looking at that year, we can then move forward and smooth that 15.9%.

So the— we have an opportunity to address that.

And we will continue to work with council and have discussions about the best path forward for doing that.

But we do have an opportunity to smooth that 15.9%.

Out.

This is a breakdown of the 1-year and— next slide, Adam.

Sorry.

Oh, boy.

There we go.

We do— this is the 1-year and 5-year no smoothing.

You'll see for 1 year it's the 12.1%, and 5 years, again, it fluctuates annually with 12% and then 10.4%, 16.5%, and then it drops down to 3%.

In the 2 outer years.

But again, not really needing any cash to offset budgets.

And rate increases would average between $2 and $11 per month with this alternative.

Next slide, Adam.

Here's the 5-year smoothed option.

Again, I would not recommend doing this because of the prior discussion we talked about.

Too many opportunities for changes in the climate that's out there.

But again, on this, this averages about $6.50 on average.

But as you can see, in the 3rd year, you need that really huge amount of cash, which is going to impact our stabilization.

So again, not recommending this one.

Here's the next slide, Adam.

Thank you.

2-year rate alternative.

Um, this is our recommended alternative.

Um, it averages a little more than $6 per month as an annual increase with a rate increase of 11.5%.

Again, that 15.9% in year 3, we definitely have opportunities to further smooth that out in outer years.

Based on that, we're looking at, again, like I said, between a $6 and $8 per month increase over that time period.

So totaling in 2 years around $14 per month.

So in conclusion, we're requesting a couple of approvals from council tonight.

One being a vote for the $20.4 million appropriation by June 30th to make sure that we meet our MassDEP deadlines.

Secondly, we're looking for a modification of the ordinance which was previously voted to pass to council.

Thank you.

And lastly, we would recommend a 2-year rate increase based on the numbers that were shown here, a 2-year smooth increase at the 11.5% per year increase over time.

And with that, I will turn it over to the council for any further questions.

So, Sean, if the body doesn't mind, I think we should take 2 and 3 together.

As item number 3 is the $20,400,000 that Sean referenced earlier.

So without objection, taking 2 and 3 together and allowing Sean to discuss the loan order for number 3, and then we'll take questions for 2 and 3 if nobody has a problem.

Yeah, he already discussed— that's what I was just going to say, the $20 million that he already did.

Yeah, so without objection, we'll take 2 and 3 together.

Sean, if you want to continue, and we'll do item number 3 is the communication, Mayor Mitchell, City Council.

Submitting a loan order appropriating $20,400,000 for the purpose of financing the cost of projects outlined in the city's long-term CSO controlled and integrated capital improvement plan.

It was referred on May 12, 2026, and the loan order was referred on May 12, 2026.

Motion received and placed on file.

Made by Councilor Burgo.

Let's go find me.

Seconded by Councilor Roy.

All those in favor?

Opposed?

The ayes have it.

Sean, you can continue if you'd like.

Right there.

There we go.

So I did touch on this previously in the last present— during the rate presentation.

Again, this is a loan order to continue compliance with our administrative order and begin to implement planned projects that are within our upcoming capital improvements plan that will— it's forthcoming to EPA and MassDEP.

For approval.

Thank you.

Again, focusing on, you know, treatment plan and other things.

Does anybody have any questions for Sean or Bob?

Because Bob is also here.

Councilor Carney?

Yeah, I, I just want to go back when it is— when you're talking about your presentation about the COVID Um, I thought that we got a, an extension, um, during COVID And we were pushed out 2 more years because of the COVID So you're saying we weren't— so those projects had those— that 2 years had to be done before the 4 years had to be done in 2 years?

We did get an extension in 2025, right?

Yes.

And then it pushed— I thought it pushed it out.

So we didn't— you talked about a snow pile of getting everything done in 4 years.

That didn't affect that extension?

We— it's sort of a balancing act, and I, I'm gonna I have Richard Davis here who can also speak to that discussion as well.

Richard, I don't know if you mind talking about that.

Richard, thank you for being here today.

Appreciate you coming down.

The podium is yours.

It's a pleasure.

Thank you.

It's good to see everybody this evening.

The extension in 2025 allowed us through June of 2027.

To finish projects that were in the original AO.

So in that sense, it gave us some grace, and it was mostly COVID-related.

What it doesn't do is cover the aggregation of costs as efficiently.

So those— the costs of those projects built up and needed to be extinguished over time.

Over a longer time than the 2 years really to finish the projects.

So there's, there is, there is that.

But we did get a 2-year grace for a couple of the 3, I guess 3 of the main projects.

And we are on track, I believe, to make good on those.

Right.

I was just confused about the spending in that 4 years if we got extended the extra 2 years.

Then we should have still been on track if we're 2 years out.

That's what I'm just a little confused about.

I think, Councilwoman, I may actually defer to folks who are economic as opposed to legal on this, that, um, the difference between the original deadlines of 2025 and the extended deadlines of '27 did not relieve us of the, the economic burden of having to do all those projects at the front end as we did.

And I believe there may have been some additional— Adam, do you have a thought about how to discuss the delta between when we complete a project and how we pay for a project?

Yeah, thank you.

Yeah, Adam Simonson from CDM Smith.

We've been working with the city on the financial analysis on this.

I think the simplest explanation is, is that the debt service associated with those projects, that is, the payments for that are coming due now, essentially.

So they've been— the completion of those projects has been delayed, but the bills are coming due now to pay for them.

Okay.

So that's been delayed slightly.

And that's when Sean's referring to the snow— that snowpile effect, that snowpile's here now.

Right.

So, okay.

So We got delayed.

We, we got the extensions, so we didn't have to do those, those projects in the first and second year of our instant extensions.

But we still have to do the projects, I get that.

We just were delayed 2 years out.

So you're saying that we did all those 4 projects that we could extended— say, oh, okay, so let's just use numbers.

Say we had 4 projects that to complete And we got the extension for the 2 years, so we pushed the 2 projects out.

So that's what I'm getting at, is that we did them all in those 2 years, the projects.

No, it's just the projects that I just use analogy of like 4 projects, and we got the 2-year extension, so we did those 4 projects within those 2 years?

We did 4.

I would just— it could have been 10, 12, whatever.

I'm just using that for easy math.

If we had to finish 4 projects in that time period and then COVID comes, yep, and then they said, okay, you got 2 more years, and we were doing a project a year, I was wondering why it was Because you have, you have, you also have new projects that were supposed to be starting within the same time period as well.

Right, exactly.

That was my question.

Yes, that was my— that's what I meant.

And every year, projects, those new projects didn't get extended out.

It's just the old projects that were done.

Yes, they didn't go to the end of the pile.

They stayed and started to work with the new projects.

Yes.

Okay.

They only gave us extensions.

Extension on certain projects.

All right, see, that's what it was, it's certain projects.

We didn't get a 2-year extension because I know we had the 20 years to get everything done.

We had under the city 7 years to get everything done under the '19 order.

They gave 2 more years, so that gave us the 9 years.

Okay.

All right, so, all right, so that makes a little more sense.

I was just kind of confused on that.

Okay, thank you, Councilor Lopes.

Thanks, Mr.

Chair.

Sean again.

You know, I'm looking at the screen and I'm looking at the ask.

We need to borrow $20.4 million to do these projects to keep up with our administrative order from EPA.

And by doing this, our rates are going to go up and the regular everyday consumer is going to have to pay more money a month.

So if I'm watching this right now, I'm wondering, what are these projects?

I was wondering if you just can go into a little bit more detail on what a gravity thickener is, or, or, or, or what we're paying $600 grand for nitrogen optimization.

Yes.

Is it not on?

Oh, you need to talk into it.

Oh, I thought it picked me up.

It doesn't pick me up.

Oh no.

Um, all right, I'll go again.

Or, or are we good?

You're going to explain the project, Sean?

Thank you so much.

Explain the project.

Appreciate it.

So like the question by Councilor Roy was to explain the projects if it wasn't heard by everybody.

So there are— there are 4 projects on here that are associated with the city's wastewater treatment plant.

I had mentioned previously that the plant is now 30 years old and some of the equipment is getting tired.

The plant has been well maintained.

That's not the question at hand.

But equipment just gets tired and needs to be replaced over time.

So gravity thickeners are a key process in management of the plant's residuals.

The treatment process generates what's called residuals.

We also call it sludge.

It's not a very nice term.

But in order to manage that, you have to try to get as much water out of that sludge as you can before you dispose of it.

The more water in it, the more expensive it is to dispose.

So we want to get as much water out as we can.

To do that, we basically let it settle.

Okay?

And we let it settle in these things called gravity thickeners.

There are 4 of them at the plant right now.

2 don't work.

Nonfunctioning.

One is held together by bubble gum and duct tape.

And the other one is functioning.

So there's essentially one that's working properly.

If that goes down, the plant can't manage that process.

We will violate our permit and get in trouble by the EPA.

Richard, please come help us.

In addition to that, the tanks are falling apart.

They're concrete.

They're in a corrosive environment.

Literally, we're finding chunks of aggregate in the downstream process of the concrete tanks falling apart.

We have to go and restore those tanks.

So all of that put together, these need some TLC.

They're just getting tired.

Generators at the plant, we have 2 generators at the plant that power the plant in case of a power outage.

Again, those are 30 years old.

They are operated monthly to make sure that they run properly.

But again, there's parts of them that are just getting old and need to be replaced.

We can't get parts for some of them because they're so old.

So it's time that we go through and we start to rehab those.

That's what that $4.8 million is for.

We need to make sure that those function.

We lose power at the plant, no generators, we're in some real trouble.

The nitrogen optimization, that is— right now, the city has really made good progress in terms of improvements to the process to help clean the water that's coming out of the plant.

As part of that, we try to remove as much nitrogen as we can.

Nitrogen in the receiving waters creates algae, it kills eelgrass, it has a lot of environmental detriments.

So we try to take out as much as we can.

This is basically a study and small improvements to the plant that we're going to try to make to even lower that even further, get as much out as we can with what we have, what we're working with.

It's really important, by the way, for the agencies that we continue with this as well.

The agencies love to see us make progress with this, and when it comes time to renegotiate our permit with EPA, they will definitely look favorably upon this type type of work.

The COVID Road Pump Station, we have a leaking force main that's been leaking for more than 10 years.

This is one of the largest pump stations in the entire city, and if that fails, we will end up with a significantly larger emergency repair than $2.8 million.

We need to go and address and repair this leaking force main.

And finally, the solids building odor control.

Wastewater treatment plants are a corrosive environment.

They are odorous.

Our plant does a very good job at maintaining odors because most of it— actually, practically all of it is covered.

There are no open tanks.

Like if you go to Fair Haven, they have all open tanks.

We have none.

They're all covered.

We need to make sure that our odor control system keeps that odorous air, that hydrogen sulfide, within the system and not let it release.

These ducts are corroding.

We need to replace them.

Um, so that's what this project is, is for.

Thank you, Sean.

Thank you, Councilor Roy.

I appreciate— I think, I think these more detailed descriptions will help folks wrap their heads around what we're borrowing money for.

Thank you.

I yield.

You're welcome, Councilor Roy.

Anybody else have any questions?

Seeing none, we're going to take 2 separate votes.

Item number 2 and item number 3 will be voted on separately.

Councilor Pereira.

I make a motion to refer item 2 and 2A out to the full City Council.

Made by Councilor Pereira, second by Councilor Burgo.

Roll call vote on item number 2.

Councilor Pereira?

Yes.

I'm sorry, Councilor Abram.

Yeah, bottom to the top.

Councilor Abram?

Yes.

Yes.

Councilor Baptiste?

Yes.

Yes.

Councilor Burgo?

Yes.

Councillor Carney.

Councillor Chouquette.

Yes.

Yes.

Councillor Lopes.

Yes.

Yes.

Councillor Oliver.

Yes.

Yes.

Councillor Pemberton.

Yes.

Yes.

Yes.

Councillor Roy.

Yes.

Yes.

Item passes 9 to 0.

Item number— to adopt item number 3, which is the loan order for $20,400,000 made by Councillor Pereira.

Second by Councilor Abreu.

Roll call.

Anyone on the question?

Seeing none, roll call vote.

Councilor Abreu, back to lead off again, huh?

Yes.

Yes.

Councilor Baptiste?

Yes.

Yes.

Councilor Burgow?

Yes.

Councilor Choquette?

Yes.

Yes.

Councilor Gomes?

Councilor Lopes?

Yes.

Yes.

Councilor Oliver?

Yes.

Yes.

Councilor Pemberton?

Yes.

Yes.

Councilor Pereira.

Yes.

Yes.

Councilor Roy.

Yes.

Yes.

Item passes 9 to 0.

Seeing no further business in front of us, should we get a motion to adjourn at 7:01?

Made by Councilor Abreu.

Second.

Second by Councilor Chiquette.

All those in favor?

Opposed?

We are adjourned at 7:01.

Thank you, everyone.

Thank you.