HomeMy WebLinkAboutOrdinance 6994Page 1
113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Ordinance: 6994
File Number: 2026-1386
AN ORDINANCE TO AMEND § 51.136 MONTHLY WATER RATES, §51.137 MONTHLY SEWER RATES,
AND §159.02 WATER AND WASTEWATER IMPACT FEES TO CHANGE WATER AND SEWER RATES
AS RECOMMENDED BY THE COST OF SERVICE STUDY CONDUCTED BY CAROLLO ENGINEERS
WHEREAS, the City of Fayetteville’s current water and sewer rates were adopted in 2023 based on a Cost of Service
Study conducted by Black & Veatch Engineers; and
WHEREAS, on May 6, 2025, the City Council approved Resolution 119-25 authorizing a contract with Carollo
Engineers for an updated Cost of Service Study; and
WHEREAS, since the 2023 study, the City has experienced consistent growth in both population and water use and
anticipates continued growth into the future; and
WHEREAS, the City’s cost to deliver water from the Beaver Water District to our customers has increased and will
continue to increase because of the construction and operation of the necessary ninety million dollar large transmission
line into Benton County to receive the water and many other transmission and storage costs; and
WHEREAS, the City’s cost to purchase water from the Beaver Water District has and will continue to increase
because of recent and impending water rate increases imposed by the Beaver Water District; and
WHEREAS, the City’s costs to efficiently operate over two wastewater plants, numerous lift stations, and miles of
sewer piping continue to rise, necessitating an increase of revenue to fund these operations, maintenance, and
improvements.
WHEREAS, the City Council has determined, after the public hearing required by Ark. Code Ann. § 14-235-223, that
the proposed rate changes reflecting the true cost of service should be adopted and that the new rates shall take effect
on July 1, 2026.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,
ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby repeals § 51.136 Monthly Water Rates
and enacts a replacement § 51.136 Monthly Water Rates as shown in Exhibit A, attached hereto.
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby repeals § 51.137 Monthly Sewer Rates
and enacts a replacement § 51.137 Monthly Sewer Rates as shown in Exhibit A, attached hereto.
Section 3: That the City Council of the City of Fayetteville, Arkansas hereby repeals § 159.02 Water and Wastewater
Impact Fees and enacts a replacement § 159.02 Water and Wastewater Impact Fees as shown in Exhibit B, attached
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Ordinance: 6994
File Number: 2026-1386
Page 2
hereto.
PASSED and APPROVED on May 5, 2026
Approved:
_______________________________
Molly Rawn, Mayor
Attest:
_______________________________
Kara Paxton, City Clerk Treasurer
This publication was paid for by the City Clerk-Treasurer of the City of Fayetteville,
Arkansas. Amount Paid: $206.72
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Additional Information Received
Date Received:
MM/DD/YYYY 05/05/2026
Time:
00:00 (AM/PM) 5:30 PM
From:
Name & Title Senior Assistant City Attorney
Blake Pennington
To:
Name & Title City Council
Agenda Meeting Date:
MM/DD/YYYY 05/05/2026
Civic Clerk Number:
Ex. 2025-994 2026-1386
Forwarded to City
Attorney’s Office and
Department Head
Received documentation
from the City Attorney’s
Office
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Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
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Mailing address:
113 W. Mountain Street
Fayetteville, AR 72701
www.fayetteville-ar.gov
CITY COUNCIL MEMO
2026-1386
MEETING OF MAY 5, 2026
TO: Mayor Rawn and City Council
THROUGH: Keith Macedo, Chief of Staff
Steven Dotson, Chief Financial Officer
FROM: Tim Nyander, Utilities Director
SUBJECT: 2026 Water & Sewer Rate & Impact Fee Study
RECOMMENDATION:
Staff recommends approval of an ordinance to change the water and sewer rates and Impact Fees based on a
Cost of Service Study conducted by Carollo Engineers as presented to the Water and Sewer Committee in
open meetings. These recommended rates are reflected in the attached replacement for sections 51.136,
51.137, and 159.02 of the Fayetteville City Code.
BACKGROUND:
The City of Fayetteville has been conducting a water and sewer rate study and impact fee study since May
2025. Carollo Engineers was selected pursuant to RFP 25-02 by the City Council on May 6, 2025 with the
approval of Resolution 119-25.
The intent of the rate study is to establish water and sewer rates that fully recover the cost of providing service
to customers, adequately provide for maintaining and expanding the City’s infrastructure, and provide
adequate reserves for future needs. The study is based on a comprehensive review of the City of Fayetteville’s
water and sewer funds and budgets, comprehensive Water Master Plan, Wastewater Master Plan, planned
wastewater facilities upgrades, customer classes, current usage data, future planned growth of the City of
Fayetteville, and any other information deemed necessary.
The intent of the impact fee study is to analyze how the existing water and sewer capacity is affected by
growth, and to calculate those growth-related costs. It ensures that growth pays for itself and prevents existing
customers from subsidizing new construction through higher utility rates.
The current water and sewer rates were adopted by the City of Fayetteville in 2023 based on a Cost of Service
Study conducted by Black & Veatch Engineers. This was sufficient to fund operations and capital needs until
now. Since the 2023 study, the City has experienced consistent growth and anticipates continued growth into
the future. In addition, the City’s purchased water costs have increased significantly due to recent rate and
impending rate increases from Beaver Water District. The most recent impact fee study was completed in 2007
and implemented in 2009.
DISCUSSION:
In addition to adhering to state requirements, Carollo’s rate-setting methodology is consistent with industry
guidelines described in the American Water Works Association’s M1 Manual: Principles of Water Rates, Fees
and Charges, and MOP 27:Financial and Charges for Wastewater Systems.
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Mailing address:
113 W. Mountain Street
Fayetteville, AR 72701
www.fayetteville-ar.gov
State code dictates a schedule of events for any change in water and sewer rates. These require that the rate
change ordinance be read, a public hearing be scheduled and announced, the ordinance be published, and
the public hearing take place at least ten days after the initial reading and publication of the ordinance. The
rate ordinance can then be approved any time after the public hearing. The public hearing attachment details
the public notice process for the proposed rate study, and what the initial changes will be to the water and
sewer rates. Additionally, the Monthly Water and Sewer Rates attachment indicates the level of rate increases
through 2030.
The rate study prepared by Carollo Engineers reflects some of the following guidelines:
1. The City has adopted a cost of service rate schedule based on customer class.
2. The City is using a volumetric block system within customer class to encourage conservation.
3. New rates reflecting the true cost of service by customer class as determined by the rate study will be
implemented as soon as this ordinance takes effect.
BUDGET/STAFF IMPACT:
Adoption of these new rates will provide necessary revenues to address current and future operating costs and
capital needs.
ATTACHMENTS: 3. Staff Review Form, 4. 2026 Fayetteville Water and Sewer Rates and Impact Fee Study
Report, 5. Revisions: 51.136_51.137___ 2026-04-15, 6. Revisions 159.02___ 2026-04-23, 7. Exhibit A
51.136_51.137___Revisions 2026-04-15_clean version, 8. Exhibit B 159.02___Revisions 2026-04-23_clean
version, 9. Public Notice 2026, Exhibit B 159.02___Revisions Adopted 5.5.26 by City Council Amendment -
CLEAN VERSION
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Ordinance: 6994
File Number: 2026-1386
Page 2
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby repeals § 51.137 Monthly
Sewer Rates and enacts a replacement § 51.137 Monthly Sewer Rates as shown in Exhibit A, attached
hereto.
Section 3: That the City Council of the City of Fayetteville, Arkansas hereby repeals § 159.02 Water
and Wastewater Impact Fees and enacts a replacement § 159.02 Water and Wastewater Impact
Fees as shown in Exhibit B, attached hereto.
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Page 1
City of Fayetteville, Arkansas
Legislation Text
113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
File #: 2026-1386
AN ORDINANCE TO AMEND § 51.136 MONTHLY WATER RATES, §51.137 MONTHLY
SEWER RATES, AND §159.02 WATER AND WASTEWATER IMPACT FEES TO CHANGE
WATER AND SEWER RATES AS RECOMMENDED BY THE COST OF SERVICE STUDY
CONDUCTED BY CAROLLO ENGINEERS
WHEREAS, the City of Fayetteville’s current water and sewer rates were adopted in 2023 based on a
Cost of Service Study conducted by Black & Veatch Engineers; and
WHEREAS, on May 6, 2025, the City Council approved Resolution 119-25 authorizing a contract with
Carollo Engineers for an updated Cost of Service Study; and
WHEREAS, since the 2023 study, the City has experienced consistent growth in both population and
water use and anticipates continued growth into the future; and
WHEREAS, the City’s cost to deliver water from the Beaver Water District to our customers has
increased and will continue to increase because of the construction and operation of the necessary ninety
million dollar large transmission line into Benton County to receive the water and many other
transmission and storage costs; and
WHEREAS, the City’s cost to purchase water from the Beaver Water District has and will continue to
increase because of recent and impending water rate increases imposed by the Beaver Water District;
and
WHEREAS, the City’s costs to efficiently operate over two wastewater plants, numerous lift stations,
and miles of sewer piping continue to rise, necessitating an increase of revenue to fund these operations,
maintenance, and improvements.
WHEREAS, the City Council has determined, after the public hearing required by Ark. Code Ann. §
14-235-223, that the proposed rate changes reflecting the true cost of service should be adopted and that
the new rates shall take effect on July 1, 2026.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby repeals § 51.136 Monthly
Water Rates and enacts a replacement § 51.136 Monthly Water Rates as shown in Exhibit A, attached
hereto.
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City of Fayetteville Staff Review Form
2026-1386
Item ID
5/5/2026
City Council Meeting Date - Agenda Item Only
N/A for Non-Agenda Item
Tim Nyander 4/15/2026 WATER SEWER (720)
Submitted By Submitted Date Division / Department
Action Recommendation:
Staff recommends approval of an ordinance to change the water and sewer rates and Impact Fees based on a Cost
of Service Study conducted by Carollo Engineers as presented to the Water and Sewer Committee in open
meetings. These recommended rates are reflected in the attached replacement for sections 51.136, 51.137, and
159.02 of the Fayetteville City Code.
Budget Impact:
N/A Water & Sewer
Account Number Fund
N/A N/A
Project Number Project Title
Budgeted Item?No Total Amended Budget $-
Expenses (Actual+Encum)$-
Available Budget $-
Does item have a direct cost?No Item Cost $-
Is a Budget Amendment attached?No Budget Amendment $-
Remaining Budget $-
Purchase Order Number:Previous Ordinance or Resolution #
Change Order Number:Approval Date:
Original Contract Number:
Comments:
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2026 Water and Sewer Rate and Impact Fee Study
2026 Water and Sewer Rate and Impact
Fee Study Report
April 2026 / FINAL
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
APRIL 2026 / FINAL / CAROLLO
CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY ii
Contents
SECTION 1 EXECUTIVE SUMMARY 1
1.1 Introduction 1
1.2 Water System 1
1.3 Sewer System 2
1.4 Combined Bill Impacts 3
1.5 Impact Fees 3
SECTION 2 INTRODUCTION 5
2.1 City of Fayetteville Service Area Overview 5
2.1.1 Water Service Area 5
2.1.2 Sewer Service Area 5
2.2 Rate Setting Process 6
2.2.1 Rate Design and Calculation 6
2.3 Forward-Looking Statement 7
2.4 Study Assumptions and Inputs 7
2.4.1 Input Data 7
2.4.2 Cost Escalation and Budget Forecasting 7
SECTION 3 WATER SYSTEM ANALYSIS 9
3.1 Input Data 9
3.1.1 Current Rates 9
3.1.2 Billing Data 10
3.1.3 Expenses 12
3.1.4 Revenues 14
3.2 Water System Revenue Requirements 14
3.2.1 Revenue Requirement Tests 14
3.2.2 Reserve Target Test 15
3.2.3 Debt Coverage Test 17
3.3 Water COS Analysis 18
3.3.1 Functional Cost Allocation 19
3.3.2 Cost Components 19
3.3.3 Customer Allocation 23
3.4 Water Rate Design 25
3.4.1 Rate Structure 26
3.4.2 Fixed Monthly Service Charges 26
3.4.3 Volumetric Rates 28
SECTION 4 SEWER SYSTEM ANALYSIS 30
4.1 Input Data 30
4.1.1 Current Rates 30
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY iii
4.1.2 Billing Data 31
4.1.3 Expenses 33
4.1.4 Revenues 34
4.2 Sewer System Revenue Requirements 35
4.2.1 Revenue Requirement Tests 35
4.2.2 Reserve Target Test 35
4.3 Sewer Proposed Rates 36
SECTION 5 COMBINED BILL IMPACT 38
SECTION 6 IMPACT FEE ANALYSIS 40
6.1 Existing Impact Fees 40
6.2 Methodology 41
6.2.1 Impact Fee Components 41
6.2.2 Impact Fee Methodologies 42
6.2.3 Assessment Basis 44
6.3 Water System Impact Fee 45
6.3.1 Water System Valuation 45
6.3.2 Proposed Water Impact Fee 46
6.4 Sewer System Impact Fee 47
6.4.1 Sewer System Valuation 47
6.4.2 Proposed Sewer Impact Fee 48
6.5 Combined Impact Fee Comparison 49
SECTION 7 CONCLUSION 51
Tables
Table 1 Inside City Existing and Proposed Water Monthly Service Charges for the
Study Period 1
Table 2 Inside City Proposed Sewer Rates and Charges for the Study Period 2
Table 3 Combined Inside City Bill Impacts Under Existing and Proposed Rates for the
Study Period 3
Table 4 Recommended Water and Sewer Impact Fees 4
Table 5 Escalation Factors 8
Table 6 Existing Water Rates and Charges 9
Table 7 Projected Number of Water Connections 10
Table 8 Current and Projected Water Sales 11
Table 9 Baseline and Projected Water Operating Expenses ($ Thousands) 12
Table 10 Projected Water Capital Improvement Plan and Funding ($ Thousands) 13
Table 11 Existing and Future Modeled Debt Service ($ Thousands) 14
Table 12 Projected Water Revenues under Existing Rates ($ Thousands) 14
Table 13 Projected Water Reserve Balance Under Existing Rate Ordinance ($
thousands) 15
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY iv
Table 14 Projected Water Reserve Balance Under Proposed Rate Revenue Adjustments
($ thousands) 16
Table 15 Projected Water Debt Service Coverage Under Existing Rate Ordinance ($
thousands) 17
Table 16 Projected Water Debt Service Coverage Under Proposed Rate Revenue
Adjustments ($ thousands) 17
Table 17 Allocation of Water System Assets to Cost Components ($ thousands) 21
Table 18 Functional Allocation of Water O&M Budget (FY 2026) ($ thousands) 21
Table 19 Allocation of Water O&M Budget to Cost Components ($ thousands) 22
Table 20 Allocation of Water Revenue Requirements to Cost Components ($
thousands) 23
Table 21 Water Units of Service by Customer Type (FY 2026) 24
Table 22 Development of Water Unit Costs ($ thousands) 25
Table 23 Water Revenue Requirement by Customer Type (FY 2026) 25
Table 24 Existing and Mid-Year Proposed Inside City Water Monthly Service Charges 27
Table 25 Inside City Existing and Proposed Water Monthly Service Charges for the
Study Period 27
Table 26 Existing and FY 2026 Proposed Water Volumetric Rates 28
Table 27 Inside City Existing and Proposed Water Volumetric Rates for the Study
Period 29
Table 28 Existing Sewer Rates and Charges 30
Table 29 Projected Number of Sewer Connections 31
Table 30 Current and Projected Sewer Sales 32
Table 31 Baseline and Projected Sewer Operating Expenses ($ Thousands) 33
Table 32 Projected Sewer Capital Improvement Plan and Funding ($ Thousands) 34
Table 33 Projected Sewer Revenues under Existing Rates ($ Thousands) 35
Table 34 Projected Sewer Reserve Balance Under Existing Rate Ordinance ($
thousands) 36
Table 35 Inside City Proposed Sewer Rates and Charges for the Study Period 37
Table 36 Combined Inside City Bill Impacts Under Existing and Proposed Rates for the
Study Period 38
Table 37 Existing Impact Fees 40
Table 38 System Valuation Approaches from M1 43
Table 39 Projected Water and Sewer EDUs (2025-2035) 45
Table 40 Existing Water System Valuation Calculation ($ thousands) 45
Table 41 Water Capital Projects Related to Expansion ($ Thousands) 46
Table 42 Future Water System Valuation Calculation ($ Thousands) 46
Table 43 Proposed Water Impact Fee Calculation 46
Table 44 Recommended Water Impact Fees 47
Table 45 Existing Sewer System Valuation Calculation ($ thousands) 47
Table 46 Sewer Capital Projects Related to Expansion ($ Thousands) 48
Table 47 Sewer Future System Valuation Calculation ($ Thousands) 48
Table 48 Proposed Sewer Impact Fee Calculation 48
Table 49 Recommended Sewer Impact Fees 49
Table 50 Existing and Proposed Combined Water and Sewer Impact Fees 49
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY v
Figures
Figure 1 Conceptual Overview of the Rate-Setting Process 6
Figure 2 COS Analysis Steps 18
Figure 3 Northwest Arkansas Water and Sewer Rate Comparison 39
Figure 4 Northwest Arkansas Water and Sewer Impact Fee Comparison 50
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY vi
Abbreviations
AWWA American Water Works Association
BWD Beaver Water District
Carollo Carollo Engineers
CIP capital improvements plan
City City of Fayetteville
COS cost-of-service
DSCR debt service coverage ratios
EDU equivalent dwelling unit
ENR-CCI Engineering News-Record Construction Cost Index
FY fiscal year
gpd gallons per day
kgal kilogallon
MOP 27 Manual of Practice 27: Financial and Charges for Wastewater Systems
O&M operations and maintenance
PILOT Payment in lieu of taxes
RCNLD Replacement Cost New Less Depreciation
RCN Replacement Cost New
R&R repair and replace
Study Water and Sewer Rate and Impact Fee Study
WEF Water Environment Practice
WIP work in progress
WWTP wastewater treatment plant
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
APRIL 2026 / FINAL / CAROLLO
CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 1
SECTION 1 EXECUTIVE SUMMARY
1.1 Introduction
The City of Fayetteville (City) retained Carollo Engineers, Inc. (Carollo) to conduct a Water and Sewer Rate
and Impact Fee Study (Study) for fiscal years (FY) ending FY 2026 through 2030. The City receives treated
water from Beaver Water District (BWD) and owns and maintains a distribution system for potable water
service. Its water system serves approximately 100,000 people (50,000 connections) inside and outside the
corporate city limits.
The City also owns and operates two wastewater treatment plants (WWTPs) and maintains a local sewer
collection system. The sewer system provides wholesale and retail sewer service to approximately
40,000 connections inside and outside of the corporate City limits.
1.2 Water System
The Study analyzed the revenue requirements to test the fiscal health of the water system, evaluate the
adequacy of current rates and charges, and set the basis for the five-year rate plan (FY 2026 through
FY 2030). Carollo recommends the City increase water rate revenue according to the following schedule:
July 1, 2026 14.0 percent January 1, 2029 3.0 percent
January 1, 2027 16.0 percent January 1, 2030 3.0 percent
January 1, 2028 16.0 percent
The recommended increases are necessary to fund operational and capital needs, as well as meet debt
service and reserve requirements.
Carollo recommends the following rates to meet the revenue requirements over the next five years.
Table 1 Inside City Existing and Proposed Water Monthly Service Charges for the Study Period
Rate Component Existing FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenue Adjustments 14.0% 16.0% 16.0% 3.0% 3.0%
Monthly Water Service Charge
5/8" Meter $7.85 $7.85 $9.11 $10.57 $10.89 $11.22
5/8" x 3/4" Meter $7.85 $7.85 $9.11 $10.57 $10.89 $11.22
1" Meter $11.30 $11.30 $13.11 $15.21 $15.67 $16.15
1.5" Meter $21.55 $21.55 $25.00 $29.00 $29.87 $30.77
2" Meter $29.52 $29.52 $34.25 $39.73 $40.93 $42.16
3" Meter $64.37 $64.37 $74.67 $86.62 $89.22 $91.90
4" Meter $106.59 $106.59 $123.65 $143.44 $147.75 $152.19
6" Meter $213.18 $213.18 $247.29 $286.86 $295.47 $304.34
8” Meter $319.67 $319.67 $370.82 $430.16 $443.07 $456.37
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
APRIL 2026 / FINAL / CAROLLO
CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 2
Rate Component Existing FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Volumetric Rates ($/1,000 gallons)
Residential
Tier 1 (first 2,000 gallons) $4.04 $4.04 $4.69 $5.45 $5.62 $5.79
Tier 2 (2,001 – 15,000 gallons) $5.34 $5.80 $6.73 $7.81 $8.05 $8.30
Tier 3 (> 15,000 gallons) $7.57 $8.70 $10.10 $11.72 $12.08 $12.45
Non-Residential (all usage) $4.72 $4.77 $5.54 $6.43 $6.63 $6.83
Major Industrial (all usage) $3.53 $4.10 $4.76 $5.53 $5.70 $5.88
Irrigation (all usage) $5.34 $8.70 $10.10 $11.72 $12.08 $12.45
Wholesale (all usage) $3.71 $4.25 $4.93 $5.72 $5.90 $6.08
Notes:
(1) Proposed FY 2026 rates effective July 1, 2026.
(2) Beginning FY 2027 rates are effective January 1 of each fiscal year.
(3) Proposed outside City rates are 1.5 times inside City rates.
1.3 Sewer System
The Study analyzed the revenue requirements to test the fiscal health of the sewer system, evaluate the
adequacy of current rates and charges, and set the basis for the five-year rate plan (FY 2026 through
FY 2030). Carollo recommends the City increase sewer rate revenue in accordance with its existing rate
ordinance of 3.0 percent per year. These increases are sufficient to fund operational and capital needs and
reserve requirements.
Carollo recommends the following rates to meet the revenue requirements over the next five years.
Table 2 Inside City Proposed Sewer Rates and Charges for the Study Period
Rate Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenue Adjustments 3.0% 3.0% 3.0% 3.0%
Monthly Sewer Service Charge
5/8" Meter $13.52 $13.93 $14.35 $14.79 $15.24
5/8" x 3/4" Meter $13.52 $13.93 $14.35 $14.79 $15.24
1" Meter $25.94 $26.72 $27.53 $28.36 $29.22
1.5" Meter $47.53 $48.96 $50.43 $51.95 $53.51
2" Meter $65.37 $67.34 $69.37 $71.46 $73.61
3" Meter $140.67 $144.90 $149.25 $153.73 $158.35
4" Meter $231.80 $238.76 $245.93 $253.31 $260.91
6" Meter $459.37 $473.16 $487.36 $501.99 $517.05
8” Meter $687.03 $707.65 $728.88 $750.75 $773.28
Volumetric Rates ($/1,000 gallons)
Residential
Tier 1 (first 2,000 gallons) $5.24 $5.40 $5.57 $5.74 $5.92
Tier 2 (>2,000 gallons) $6.99 $7.20 $7.42 $7.65 $7.88
Non-Residential (all usage) $5.88 $6.06 $6.25 $6.44 $6.64
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
APRIL 2026 / FINAL / CAROLLO
CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 3
Rate Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Major Industrial (all usage) $6.21 $6.40 $6.60 $6.80 $7.01
Wholesale (all usage) $6.09 $6.28 $6.47 $6.67 $6.88
Notes:
(1) Rates and charges effective January 1 of each fiscal year.
(2) Outside City rate factors vary by meter size and are unchanged from the current rate ordinance.
1.4 Combined Bill Impacts
In FY 2026 the total bill increase varies by each customer class due to the proposed water rates being
more aligned with the cost to provide service. In FY 2027 and FY 2028 all customer classes will see an
average of a 9 percent increase on their total combined bill, and in FY 2029 and FY 2030 all customers will
experience an average 3 percent increase on their total combined bill. Table 3 summarizes the combined
water and sewer bill impacts for select customer classes and usage for the rate-setting period.
Table 3 Combined Inside City Bill Impacts Under Existing and Proposed Rates for the Study Period
Customer Class Existing Bill FY 2026 Bill FY 2027 Bill FY 2028 Bill FY 2029 Bill FY 2030 Bill
Residential
5/8" meter, 2 kgals $39.93 $39.93 $43.22 $46.96 $48.40 $49.88
5/8" meter, 4 kgals $64.59 $65.51 $71.08 $77.42 $79.80 $82.24
5/8" meter, 10 kgals $138.57 $142.25 $154.66 $168.80 $174.00 $179.32
Non-residential
5/8" meter, 10 kgals $127.37 $127.87 $139.04 $151.72 $156.38 $161.16
1" meter, 50 kgals $567.24 $569.74 $619.83 $676.74 $697.53 $718.87
Industrial
2" meter, 1,000 kgals $9,834.89 $10,404.89 $11,261.59 $12,239.10 $12,612.39 $13,005.77
6" meter, 5,000 kgals $49,372.55 $52,222.55 $56,520.45 $61,424.22 $63,297.46 $65,271.39
Notes:
kgal – kilogallon
(1) There is a FY 2026 mid-year rate increase for water rates only.
1.5 Impact Fees
Impact fees are one-time fees assessed on new system connections for water or sewer service. As the City
manages its water and sewer systems, it needs to estimate a certain level of capacity required to serve
peak day and peak wet weather flow for existing and future customers. The impact fee valuates the
reservation of system capacity to serve that new and/or modified connection. The City’s current impact
fees were implemented in 2009.
The proposed water and sewer impact fees were calculated using the incremental method, which aligns
with industry standards and follows Arkansas state requirements. Carollo recommends the City charge
water and sewer residential and multifamily development per dwelling unit and charging non-residential
developments per meter based on meter size. The schedule below shows the proposed water and sewer
impact fees.
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Table 4 Recommended Water and Sewer Impact Fees
Customer Class Water Sewer Total
Residential
Single Family (per dwelling unit) $2,672 $2,998 $5,670
Multi-Family (per dwelling unit) $1,897 $2,129 $4,026
Non-Residential
5/8" x 3/4" Meter $2,672 $2,998 $5,670
1" Meter $6,680 $7,496 $14,176
1.5" Meter $13,361 $14,991 $28,352
2" Meter $21,377 $23,986 $45,363
3" Meter $42,754 $47,972 $90,726
4" Meter $66,803 $74,956 $141,759
6" Meter $133,606 $149,911 $283,517
8” Meter $213,770 $239,858 $453,628
10” Meter $307,294 $344,796 $652,090
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SECTION 2 INTRODUCTION
The City retained Carollo to conduct a Study for FY ending 2026 through 2030. The City receives treated
water from BWD and owns and maintains a distribution system for potable water service. The City also
owns and operates two WWTPs and maintains a local sewer collection system. The City Council approves
water and sewer rate adjustments to meet forecasted funding obligations.
The most recent rate adjustments covered FY 2023 through 2027 and were based on the
recommendations of the Water and Wastewater Comprehensive Rate Study (2023 Study), performed by
Black & Veatch. Since the 2023 Study, the City has experienced consistent growth and anticipates
continued growth into the future. In addition, the City’s purchased water costs have increased significantly
due to recent rate and impending rate increases from BWD. The unexpected increases coupled with
anticipated demand growth and other rising operating costs and capital infrastructure needs prompted
the City to update their user rates before the routine five-year update.
2.1 City of Fayetteville Service Area Overview
2.1.1 Water Service Area
The City owns and operates a water system that serves approximately 50,000 meters and approximately
100,000 customers inside and outside the corporate city limits. Outside city customers include the cities of
Farmington, Greenland, and Goshen, and portions of the City of Johnson and unincorporated Washington
County. The distribution system includes over 850 miles of water lines, booster pump stations and storage
tanks to serve customer needs and fire flow protection. The City provides both retail and wholesale water
service. Wholesale customers include the City of Elkins, City of West Fork, and Mount Olive Water
Association.
The City has implemented several water system capital improvement efforts over the past few years to
ensure level of service and accommodate growth. The City is currently in the process of constructing an
11.3-mile transmission main to accommodate increased water demand. With the recent improvements
and those planned for the next several years, the City wants to implement a financial plan expected to
generate sufficient revenue.
2.1.2 Sewer Service Area
The sewer system provides wholesale and retail sewer service to approximately 40,000 connections inside
and outside of the corporate City limits. Outside city customers include the cities of Farmington and
Greenland, and portions of the City of Johnson and unincorporated Washington County. The City owns
and operates a sewer system that includes two WWTPs and a collection system with over 600 miles of
sewer lines and lift stations. The City provides both retail and wholesale sewer service. Wholesale
customers include the City of Elkins and City of West Fork.
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2.2 Rate Setting Process
Rate analyses are typically performed every five years so that revenues from rates adequately fund utility
operations, maintenance, and capital investments. Additionally, in Arkansas, water and sewer providers
must conduct rate studies at least every five years to adhere to the requirements imposed by Arkansas
Act 605 of 2021 and amendments thereto.
In addition to adhering to state requirements,
Carollo’s rate-setting methodology is
consistent with industry guidelines described
in the American Water Works Association’s
(AWWA) M1 Manual: Principles of Water Rates,
Fees and Charges and Water Environment
Federation’s (WEF) Manual of Practice 27:
Financial and Charges for Wastewater Systems
(MOP 27).
The cost-of-service (COS) study presented
within this report consists of the following
three interconnected processes shown in the
figure on the right: Revenue Requirement
Analysis, COS Analysis, and the Rate Design
Analysis.
While the process is described in a linear step-
by-step approach, it is better understood as
an iterative process where the ultimate
objective is to balance revenues with costs in
an equitable manner for customers. These
three processes will form the basis for the rate
analyses presented within this report.
2.2.1 Rate Design and Calculation
The rate design involves developing a rate structure that proportionately recovers costs from customers.
This structure must be resilient enough to handle changing cost and demand scenarios, and flexible
enough to meet other unique criteria. By collecting different cost drivers from different rate components,
the utility can ideally balance these goals.
The rate calculation is intended to quantify the nexus between the Revenue Requirements and the final
rate that customers are charged. This process establishes rates to match the estimated revenue
generation with expenditures.
Figure 1 Conceptual Overview of the Rate-Setting Process
Revenue Requirement AnalysisHow much rate revenue does the City need to fully fund O&M and CIP?
Cost-of-Service AnalysisWhat is each customer class's equitable share of the revenue requirements?
Rate DesignWhat rate structure and rates best recovers the revenue requirements?
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2.3 Forward-Looking Statement
The calculations and forecasts of this analysis are based upon the information available and reasonable
projection of existing service costs, customer demands, system operational needs, existing legal
agreements, and other similar data provided by the City, as well as Carollo’s best understanding of the
City’s system. These projections are based on the data provided by the City.
If significant changes occur to any of those or the other assumptions used in this analysis, the City may
need to revisit the analysis. These changes could include unexpected inflation, changes to Arkansas
specific legislation governing water and sewer utilities, deviation from the projected water and sewer
demands, just to name a few.
2.4 Study Assumptions and Inputs
2.4.1 Input Data
City staff provided Carollo with the following data, which was used to build Carollo’s rate model:
FY 2024 and 2025 operations and maintenance (O&M) budgets for water and sewer.
Multi-year capital improvement plans (CIP).
Water and sewer billing data for FY 2022-2024.
Debt service schedules for existing debt obligations.
Projected system growth based on recent history.
Beginning reserve balances for FY 2025.
Carollo used this data to forecast expenses and revenues, and total revenue requirements for the next ten
years. This forecast extends beyond the five-year timeframe of proposed rate adjustments as it is a best
practice to look at possible long-term funding needs.
2.4.2 Cost Escalation and Budget Forecasting
Based on discussion, Carollo and City staff determined escalation factors to project revenues and
expenses when developing a 10-year financial forecast. These factors were selected based on recent
history, anticipated drivers, and other relevant factors.
Most expenses were escalated either by a general inflation factor of 3 percent, which was based on a
combination of recent inflation trends and anticipated near-term inflation. Salary and labor-related
expenses were escalated by 5 percent per City staff guidance. Purchased water costs from BWD were
escalated based on BWD’s adopted rate schedule, which is set to increase rates annually by approximately
8.5 percent through FY 2030.
While an annual account growth of 2 percent was used to project water sales, an annual account growth
of 1.75 percent was used to project sewer sales, as the sewer system is anticipated to grow at a slightly
lower rate.
Construction materials as part of the budget were escalated by 3.5 percent. Capital costs provided in the
CIP were already escalated by the City and were therefore not escalated in the model.
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Interest earnings on any cash deposits held by the City were calculated and projected based on the
previous year’s cash ending balance using a 0.35 percent annual factor.
The various escalation rates for these factors and others are shown in Table 5.
Table 5 Escalation Factors
Cost / Input Category Annual Rate
General Inflation / Operations 3.0%
Labor 5.0%
Energy 5.0%
Water Cost from BWD 8.5% (5-year average)
Water Cost + Growth 10.7% (5-year average)
Capital 3.5%
Water Account Growth 2.0%
Sewer Account Growth 1.75%
Reserve Interest Rate 0.35%
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SECTION 3 WATER SYSTEM ANALYSIS
3.1 Input Data
3.1.1 Current Rates
The City’s current water rate structure has two components: a fixed monthly charge based on meter size;
and a usage charge based on the amount of metered water sold. Residential customers have an inclining
3-tiered variable rate structure and non-residential customers are charged a uniform variable rate. The
existing rates that took effect on January 1, 2026 are shown in Table 6.
Inside and outside City customers are charged separate rates for service, with outside City customers’
rates being higher than inside City. This difference is to account for the lack of ownership and equity of
the City’s system, as well as to support the additional infrastructure required to extend the distribution
system outside of the City limits.
Table 6 Existing Water Rates and Charges
Rate Component Inside City Outside City Wholesale
Monthly Water Service Charge
5/8" Meter $7.85 $8.98 $9.90
5/8" x 3/4" Meter 7.85 8.98 9.90
1" Meter 11.30 15.55 15.55
1.5" Meter 21.55 30.78 30.78
2" Meter 29.52 42.64 42.64
3" Meter 64.37 88.89 88.89
4" Meter 106.59 130.07 133.70
6" Meter 213.18 245.14 253.40
8” Meter 319.67 367.63 396.49
Volumetric Charges ($/1,000 gallons)
Residential
Tier 1 (first 2,000 gallons) $4.04 $5.10
Tier 2 (2,001 – 15,000 gallons) 5.34 6.75
Tier 3 (> 15,000 gallons) 7.57 9.57
Non-Residential (all usage) $4.72 $5.75
Major Industrial (all usage) $3.53 $3.92
Irrigation (all usage) $5.34 $6.61
Wholesale (all usage) $3.71
Notes:
(1) Rates and charges effective January 1, 2026.
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3.1.2 Billing Data
3.1.2.1 Baseline Billing Data
The City provided billing data covering FY 2022 through 2024 for the water system, including date,
customer identifier, meter size, location (inside or outside city), customer type, metered usage within each
tier, and billed dollar amount. Carollo analyzed this data and aggregated usage, and bill counts for each
meter size and location.
3.1.2.2 Projected Billing Data
To project billing data for the next five years, Carollo used an annual growth assumption of 2.0 percent for
all retail classes and locations but kept wholesale number of accounts steady. Retail per account usage is
projected to remain stable, meaning that any change in total projected water sales is due to account
growth.
The baseline and forecasted billing summaries are shown in the following tables. In the rate model, total
annual bill counts were used to forecast revenues as the number of accounts fluctuates month to month
and total accounts directly corresponds with billed revenue. For purposes of transparency, however, this
report provides for the total number of connections. The number of connections was calculated by
dividing the number of bills by 12 for each month, even though the actual number of accounts at any
given time could deviate from this figure.
Table 7 illustrates the summary of projected number of connections by meter size during the study
period. Table 8 summarizes the projected water sales based on the billing data analysis.
Table 7 Projected Number of Water Connections
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Inside City
5/8” 171 175 178 182 185 189
5/8 x 3/4” 38,905 39,683 40,476 41,286 42,112 42,954
1" 1,592 1,624 1,656 1,689 1,723 1,757
1.5" 342 349 356 363 370 378
2" 375 383 391 398 406 414
3" 97 98 100 102 104 107
4" 16 16 16 17 17 17
6" 5 5 5 6 6 6
Total Inside City 41,502 42,332 43,179 44,043 44,924 45,822
Outside City
5/8” 12 12 12 13 13 13
5/8 x 3/4" 7,301 7,447 7,596 7,747 7,902 8,060
1" 228 232 237 242 247 251
1.5" 18 19 19 19 20 20
2" 11 11 11 11 12 12
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FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
3" 1 1 1 1 1 1
4" 0 0 0 0 0 0
6" 0 0 0 0 0 0
Total Outside City 7,570 7,722 7,876 8,033 8,194 8,358
Wholesale
3" 1 1 1 1 1 1
4" 3 3 3 3 3 3
Total Wholesale 4 4 4 4 4 4
Total Number of
Connections 49,077 50,058 51,059 52,080 53,122 54,184
Table 8 Current and Projected Water Sales
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Water Sales (kgal) - Inside City
Residential
Tier 1 (first 2,000 gallons) 757,096 772,238 787,683 803,436 819,505 835,895
Tier 2 (2,001 – 15,000
gallons) 857,058 874,199 891,683 909,516 927,707 946,261
Tier 3 (> 15,000 gallons) 459,037 468,218 477,582 487,134 496,877 506,814
Non-Residential (all usage) 924,681 943,175 962,038 981,279 1,000,904 1,020,922
Major Industrial (all usage) 302,406 308,455 314,624 320,916 327,334 333,881
Irrigation (all usage) 342,363 349,210 356,195 363,319 370,585 377,977
Total Inside City Usage
(kgal) 3,642,641 3,715,494 3,789,804 3,865,600 3,942,912 4,021,770
Water Sales (kgal) - Outside City
Residential
Tier 1 (first 2,000 gallons) 151,008 154,028 157,108 160,250 163,455 166,724
Tier 2 (2,001 – 15,000
gallons) 239,719 244,513 249,403 254,391 259,479 264,669
Tier 3 (> 15,000 gallons) 107,107 109,249 111,434 113,662 115,936 118,254
Non-Residential (all usage) 52,020 53,061 54,122 55,204 56,309 57,435
Major Industrial (all usage) 0 0 0 0 0 0
Irrigation (all usage) 35,527 36,237 36,962 37,701 38,455 39,224
Total Outside City Usage
(kgal) 585,380 597,088 609,029 621,210 633,634 646,307
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FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Water Sales - Wholesale (kgal)
Elkins 93,225 95,089 96,991 98,931 100,910 102,928
Mount Olive 73,035 74,495 75,985 77,505 79,055 80,636
West Fork 66,632 67,964 69,324 70,710 72,124 73,567
Total Wholesale Usage
(kgal) 232,891 237,549 242,300 247,146 252,089 257,131
Total (kgal) 4,460,913 4,550,131 4,641,133 4,733,956 4,828,635 4,925,208
3.1.3 Expenses
3.1.3.1 Budget Data
The City provided Carollo with its currently adopted FY 2025 budget to use as a base for forecasting. The
budget provided is for water and sewer combined. Carollo worked closely with City staff to identify how
to split costs between two funds and allocated the costs appropriately to each fund based on these
discussions. Additionally, costs were escalated based on the percentages shown in Table 5. The baseline
and projected operating budget expenses are summarized in Table 9.
Table 9 Baseline and Projected Water Operating Expenses ($ Thousands)
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Utilities Director (1800) $127 $129 $135 $140 $146 $151
Utilities Project Management
(4020) $258 $244 $255 $267 $279 $287
Utilities Financial Services
(1810) $1,176 $1,355 $1,407 $1,460 $1,516 $1,562
Meter Reading (1820) $1,339 $1,488 $1,546 $1,607 $1,670 $1,720
Meter Maint & Backflow Prev
(1830) $767 $772 $804 $838 $873 $899
Meter Operations Capital (1840) $165 $0 $0 $0 $0 $0
Water Purchased (3800) $16,097 $18,422 $20,442 $22,746 $25,350 $27,501
Operations & Administration
(4000) $2,257 $2,019 $2,089 $2,167 $2,247 $2,315
Water Distribution Maintenance
(4310) $4,332 $4,883 $5,063 $5,251 $5,445 $5,615
Water Storage & Pump
Maintenance (4330) $353 $360 $375 $390 $406 $418
Capital Water Mains (5600) $0 $0 $0 $0 $0 $0
Water & Sewer Connections
(5620) $534 $571 $593 $615 $639 $658
PILOT $1,073 $1,133 $1,225 $1,547 $1,955 $2,054
Trustee & Pay Agent Fees $151 $151 $0 $0 $0 $0
Total Operating Expenses $28,629 $31,529 $33,934 $37,029 $40,526 $43,180
Notes:
PILOT – payment in lieu of taxes
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3.1.3.2 Capital Improvement Plan Expenses
The City provided the FY 2026 through 2030 CIP, which has been approved by City Council, along with
planned funding for each project. These expenses were already escalated and provided in future dollars.
Most CIP expenses are for routine repair and replacement of water system infrastructure and are planned
to be cash-funded through either rate revenues in the year they are collected, or unrestricted reserves, if
available after meeting the City’s target reserve level.
The City also funds CIP through impact fee revenues. Impact fees are one-time fees paid by new
connections to fund infrastructure needed to expand capacity to meet this growth. Impact fees are
deposited in a restricted fund and reserved for these growth-related projects.
The summarized five-year CIP and funding allocation is shown in Table 10.
Table 10 Projected Water Capital Improvement Plan and Funding ($ Thousands)
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
CIP
Water System Rehabilitation $4,445 $4,259 $3,778 $3,667 $4,326
Water Tank Improvements $1,000 $500 $500 $500 $500
Improvements Defined by Study $0 $0 $300 $300 $0
Relocations for Bond Projects $250 $250 $250 $250 $250
Rate Operations Study $10 $10 $10 $20 $20
Impact Fee Cost Sharing $75 $75 $75 $75 $75
Water Meters $1,700 $2,000 $2,400 $2,900 $2,000
Storage & Pump Station Maintenance $100 $100 $100 $100 $100
Equipment Expansions $25 $25 $25 $25 $25
Technology Equip Replacement $10 $73 $15 $54 $25
Building/Office Improvements $50 $50 $50 $50 $50
Backflow Prevention Assemblies $50 $50 $50 $50 $50
Utilities Financial Services Improvements $8 $3 $2 $8 $8
Total Funding Needed $7,723 $7,395 $7,554 $7,999 $7,428
Funding
New Debt $0 $0 $0 $0 $0
Impact Fees $3,302 $3,302 $3,302 $3,260 $3,343
Remaining Funding Needed from Rates $4,421 $4,093 $4,252 $4,738 $4,085
Total Funding Allocated $7,723 $7,395 $7,554 $7,999 $7,428
3.1.3.3 Debt Service
The City will begin payments to Series 2024 bond in FY 2027, which was used to fund the 48-inch West
Transmission Main Project. While there is no future debt issuances projected in the Study period, the City
should evaluate its capital funding strategy as the CIP changes. Table 7 summarizes the debt service for
the study period.
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Table 11 Existing and Future Modeled Debt Service ($ Thousands)
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Existing Debt Service
Series 2024 $0 $3,052 $4,578 $4,578 $4,578
Total Existing Debt Service $0 $3,052 $4,578 $4,578 $4,578
Future Debt Service $0 $0 $0 $0 $0
Total Debt Service $0 $3,052 $4,578 $4,578 $4,578
3.1.4 Revenues
3.1.4.1 Projected Rate Revenues under Existing Rates
Carollo first forecasted rate revenues for the next five years assuming rate adjustments from the City
ordinance, which includes a 6 percent increase in water rates in FY 2027 and annual 3 percent increases
thereafter. This forecast took the existing rates (Table 6) and calculated revenues based on the projected
water sales and bills from Table 7 and Table 8. By calculating baseline rate revenue under existing rates
and doing this exercise, Carollo identified any revenue shortfalls under existing rates. Projected revenues
before rate adjustments are shown in Table 12.
Table 12 Projected Water Revenues under Existing Rates ($ Thousands)
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Water Sales Revenue $28,823 $31,129 $32,741 $34,397 $36,138
Operations & Administration (4000) $339 $297 $278 $269 $274
Water Distribution Maintenance
(4310) $1,318 $1,345 $1,372 $1,399 $1,427
Total Revenues $30,480 $32,771 $34,390 $36,066 $37,839
3.2 Water System Revenue Requirements
The revenue requirement analysis is a comprehensive test of a utility’s fiscal health, scrutinizing the
adequacy of current revenues and setting the basis for short-term and long-term rate planning. It reviews
the utility’s revenues, expenses, debts, and reserve policies, assessing the viability of each metric going
forward. Where cash flow and balances are insufficient, the revenue requirement analysis determines the
additional cash flow needed to meet all funding goals.
3.2.1 Revenue Requirement Tests
There are two sufficiency tests used to define the annual revenue requirement during this analysis:
(1) reserve target test and (2) debt service coverage test. These sufficiency tests are commonly used to
determine the amount of annual revenue that must be generated from a utility’s rates. The cash flow
sufficiency test was omitted as the City’s cash flow is tested under the reserve target test.
Reserve Target Test: Measures if a utility is generating enough revenue to meet the City’s minimum
operating reserve balance to ensure continuation of their operations and any financial obligations.
This test is not legally binding but provides assurance for a utility’s financial stability and is often
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based on the reserve policies adopted by the City Council. When the year-end balance falls short of
the desired target, a rate increase is recommended. This reserve target ranges by utility, depending on
capital needs and service demands.
Debt Service Coverage Test: Assesses a utility’s ability to meet their annual debt service obligations.
Bond issuances regularly include covenants requiring the agency to maintain sufficient cash flows to
meet annual debt service payments plus an additional amount. Typical debt service coverage ratios
(DSCR) range from 1.20 times to 1.50 times annual debt service, depending on the terms of debt
instrument issued. The City’s current DSCR target is 1.20 times (1.20x). The higher multiplier can
provide credit rating agencies with additional evidence of a utility’s strong financial health and can
potentially reduce long-term costs. If net revenue falls below debt service coverage in any given year,
the model would indicate a need for additional revenue.
Based on the financial sufficiency tests described above, the revenue requirement analysis determines if
the City must increase system revenues to meet its ongoing obligations. If revenues are found to be
insufficient to meet debt obligation (debt service coverage test) and/or reserve policies (reserve
sufficiency test), revenues must be increased to achieve the higher of the needs.
The revenue requirement recommendations presented herein are based on best available information as
of the writing of this report.
3.2.2 Reserve Target Test
The reserve target test assesses the adequacy of the rates to maintain end-of-year unrestricted reserve
balances at or above the City’s policy target. Historically, the City’s annual operating reserve minimum was
10 percent of O&M expenses. Industry best practices are an operating reserve of 90 to 180 days of annual
O&M expenses. To be more in line with industry standards and provide financial security, Carollo
recommended the City increase its operating reserve minimum to the greater of 10 percent of O&M or
$7 million for the water fund. The total water and sewer combined minimum reserve is set at $12 million
starting in FY 2026.
The reserve balance forecast under the existing rate ordinance is outlined in Table 13 below.
Table 13 Projected Water Reserve Balance Under Existing Rate Ordinance ($ thousands)
Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Ordinance Rate Adjustments 6.0% 3.0% 3.0% 3.0%
Beginning Reserve Balance $13,497 $8,027 ($281) ($11,526) ($24,739)
Sources of Funds
Rate Revenues $28,823 $31,129 $32,741 $34,397 $36,138
Other Revenues $1,657 $1,642 $1,649 $1,668 $1,701
Total Sources of Funds $30,480 $32,771 $34,390 $36,066 $37,839
Uses of Funds
Operating Expenses $31,529 $33,934 $36,804 $39,963 $42,588
Debt Service $0 $3,052 $4,578 $4,578 $4,578
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Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Cash Funded CIP $4,421 $4,093 $4,252 $4,738 $4,085
Total Uses of Funds $35,950 $41,079 $45,635 $49,279 $51,252
Cash Flow ($5,470) ($8,308) ($11,245) ($13,213) ($13,412)
Ending Reserve Balance $8,027 ($281) ($11,526) ($24,739) ($38,151)
Reserve Balance Target $7,000 $7,000 $7,000 $7,000 $7,000
Surplus / (Deficit) $1,027 ($7,281) ($18,526) ($31,739) ($45,151)
As shown, the existing rates are insufficient to meet the reserve target throughout the rate-setting period.
The City falls below this target beginning in FY 2027. Carollo recommends the following rate revenue
increases: 14 percent in FY 2026, 16 percent in FY 2027 and FY 2028, and 3 percent annually thereafter.
Following the proposed rate revenue adjustments, the City is expected to meet its reserve targets
throughout the duration of the rate-setting period.
Table 14 Projected Water Reserve Balance Under Proposed Rate Revenue Adjustments ($ thousands)
Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Proposed Revenue Adjustments 14.0% 16.0% 16.0% 3.0% 3.0%
Beginning Reserve Balance $13,497 $10,045 $7,017 $8,825 $9,007
Sources of Funds
Rate Revenues $30,841 $36,406 $46,001 $48,329 $50,774
Other Revenues $1,657 $1,645 $1,666 $1,696 $1,733
Total Sources of Funds $32,498 $38,052 $47,667 $50,025 $52,507
Uses of Funds
Operating Expenses1 $31,529 $33,934 $37,029 $40,526 $43,180
Debt Service $0 $3,052 $4,578 $4,578 $4,578
Cash Funded CIP $4,421 $4,093 $4,252 $4,738 $4,085
Total Uses of Funds $35,950 $41,079 $45,859 $49,843 $51,844
Cash Flow ($3,452) ($3,028) $1,808 $182 $663
Ending Reserve Balance $10,045 $7,017 $8,825 $9,007 $9,670
Reserve Balance Target $7,000 $7,000 $7,000 $7,000 $7,000
Surplus / (Deficit) $3,045 $17 $1,825 $2,007 $2,670
Notes:
(1) Operating expenses slightly increase as revenue adjustments increase due to PILOT expenses. The PILOT expense is
calculated based on previous year’s rate revenue.
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3.2.3 Debt Coverage Test
Debt service coverage refers to the collection of revenues to meet all operating expenses and debt service
obligations, plus an additional multiple of that debt service. Debt service coverage is dictated by the
borrower’s bond covenants and establishes a threshold above basic debt service that the borrower must
maintain. For example, the City’s current bonds require it maintain fees and charges for the sale of water
at levels enough to enable it to collect in each year the amount necessary to pay all its water system
operating expenses, debt service on the bonds, plus an amount equal to 20 percent of debt service on the
bonds. That additional 20 percent is referred to as coverage.
Not all revenues are allowed in the debt coverage test. For the City, impact fee revenues are not included
in the calculation.
Table 15 illustrates that debt service coverage requirements (DSCR) under the rate ordinance increases
will not be met. Table 16 shows debt coverage following proposed revenue adjustments outlined in
Table 14. The City is projected to exceed its debt coverage ratio requirements with the proposed revenue
adjustments.
Table 15 Projected Water Debt Service Coverage Under Existing Rate Ordinance ($ thousands)
Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Eligible Revenues $30,480 $32,771 $34,390 $36,066 $37,839
Operating Expenditures $31,529 $33,934 $36,804 $39,963 $42,588
Debt Service $0 $3,052 $4,578 $4,578 $4,578
1.20x Debt Coverage $0 $610 $916 $916 $916
Debt Service Coverage Target $31,529 $37,596 $42,298 $45,457 $48,082
Debt Coverage Surplus/(Deficit) N/A ($4,825) ($7,908) ($9,391) ($10,243)
DSCR Before Increase no debt -0.38x -0.53x -0.85x -1.04x
Table 16 Projected Water Debt Service Coverage Under Proposed Rate Revenue Adjustments ($ thousands)
Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Eligible Revenues $32,498 $38,052 $47,667 $50,025 $52,507
Operating Expenditures $31,529 $33,934 $37,029 $40,526 $43,180
Debt Service $0 $3,052 $4,578 $4,578 $4,578
1.20x Debt Coverage $0 $610 $916 $916 $916
Debt Service Coverage Target $31,529 $37,597 $42,522 $46,020 $48,674
Debt Coverage Surplus/(Deficit) $969 $455 $5,144 $4,005 $3,833
DSCR Before Increase no debt 1.35x 2.32x 2.07x 2.04x
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3.3 Water COS Analysis
The COS analysis serves as a rational basis for distributing the full costs of the City’s water service to each
customer class in proportion to the demands placed on the system. Those steps are outlined in Figure 2.
Figure 2 COS Analysis Steps
The COS analysis takes the revenue requirements outlined in the prior section and allocates them first to
City functions and then to customer classes based on usage of the City’s system. The goal is to provide a
fair and equitable method of allocating costs and establishes a clear nexus between the water used by
different customers and the fees they are charged by the City to distribute and store that water.
Using the industry standard methodology outlined in the AWWA M1 Manual, the two most widely used
methods for allocation of functionalized costs to cost components:
Base Extra Capacity Method, where costs are allocated among: (1) a base category to provide
baseline water service or average day demand; (2) an extra capacity category to provide peak demand
service, often split into maximum day and maximum hour components; and (3) a customer category to
provide services that do not vary with water usage, such as customer service and billing.
Commodity Demand Method, where costs are allocated among: (1) a commodity category for costs
that are directly driven by demand; (2) a demand category for building and maintaining peak system
capacity; and (3) a customer category to provide services that do not vary with water usage, such as
customer service and billing.
Cost Functionalization
The City's expenses are
allocated to functional
categories on a line-by-line
basis.
Rate Component Allocation
The functional categories are
allocated to cost components
based on system usage statistics
and engineering standards.
Customer Class and Tier
Allocation
The cost components are
reallocated to each class or tier
based on demand profiles.
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Both methodologies recognize that the COS “depends not only on the total volume of water used, but
also on the rate of use, or peak demand requirements.” Costs incurred by the City are not incurred
uniformly or simply based on the total quantity or volume of water used. The COS changes based on both
when and how much water is used. Both methodologies account for this by including an extra capacity or
demand category, in recognition of costs associated with capacity that is not used consistently which
impacts operating costs and capital asset related costs to accommodate peak flows.
For this Study, the Base Extra Capacity methodology was selected. The following sections discuss how
costs are allocated to the system’s functions, cost components, and customer classes using this
methodology.
3.3.1 Functional Cost Allocation
The functional cost allocation assigns the test year’s revenue requirement identified by major functions.
The Study developed a list of functions specific to the City’s water system. Each function is related and
allocated to specific cost components, which can then be assigned to rates. The functional components
used for the City are:
Customer Billing: Costs associated with materials and outside services directly related to customer
communication such as billing, outreach, printing, and postage.
Meters Services: Costs associated with water meters and service connections.
Supply: Costs associated with obtaining treated water to then provide to retail and wholesale
customers.
Pumping: Costs associated with pumping treated water.
Storage: Costs associated with storage of treated water to provide adequate system pressure and
meet maximum hour demands.
Distribution: Costs associated with delivering water to customers including the operation and
maintenance of the water distribution system facilities.
As All Others: Costs associated with other expenses that provide an overall benefit to the water
system such as staff costs for management personnel who oversee all aspects of the water operation.
This category also includes costs that do not fit any of the other categories such as overhead, in lieu
of taxes expense, and the Operations & Administration (4000) budgeted cost center.
The City’s budget was analyzed line by line and distributed to appropriate components listed above.
Details of how the O&M, debt service, and other expenses were distributed among functional categories
are shown in the following sections.
3.3.2 Cost Components
Once the City’s budget was allocated to functional categories, each function category was allocated to the
cost components. The following describes each of the cost components for the City.
Base: This category includes a portion of operating and capital costs related to source of supply and
distribution costs, up to a level that meets the City’s baseline (average day) demands throughout the
year. Base also includes a portion of general and administrative costs associated with the operations
and management of those functions.
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Extra Capacity – Max Day: This category includes a portion of O&M and capital costs for water
distribution related to meeting maximum day demands. Max day also includes a portion of general
and administrative costs associated with the operations and management of those functions.
These costs are incremental to those required for Base service. For example, they include capital costs
related to oversizing the system to meet excess max day demand.
System peaking factors are used to determine the appropriate allocations to the Extra Capacity cost
components. For the purpose of this Study, the maximum day peaking factor is 1.9 based on the City’s
water use records. This means that the maximum day demand is assumed to be 1.9 times the average
day demand.
Extra Capacity – Max Hour: The Max Hour category is similar to the Max Day category but covers the
additional costs related to peak above Max Day. These costs are incremental to those required for
Base and Max Day service. The Max Hour peaking factor is 1.1 times the maximum day demand based
on the City’s recent water use records.
Common to All: Costs associated with the part of the distribution system that retail and wholesale
customers use, like large transmission mains.
Common to Retail: Costs associated with the distribution system that only retail customers use, like
smaller water pipes and storage for max hour demands.
Meter Service: Costs associated with customer meters and service lines and the associated capacity.
These costs are included in the fixed charge based on the meter’s hydraulic capacity.
Customer: Costs related to operational support activities including accounting, administration, billing,
and customer service. These expenditures are common to all customers and are reasonably uniform
across the different customer classes.
Carollo reviewed the existing fixed assets for the water system and allocated each to the appropriate
functional category based on direction from City staff. In addition, each of the operating budget line items
was reviewed and its corresponding costs allocated based on the service provided. The functionalized
assets and O&M are then allocated to the appropriate cost components according to the Base Extra
Capacity methodology. This functional allocation process provides a reasonable, appropriate basis for
proportionately distributing costs to customer types based on their usage patterns and is grounded in
COS principles and standards.
3.3.2.1 Fixed Asset Allocation
Carollo reviewed the fixed asset registry provided by City staff, which allocated each asset to a specific
functional category. The Study then allocated the functionalized assets to cost components. The overall
results of this allocation are used as a proxy to allocate capital-related costs. This minimizes large shifts in
the allocation of capital costs, which can vary significantly from year to year.
Table 13 summarizes the allocation of the functionalized assets to the components to determine the
allocation factors applied to the capital related costs.
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Table 17 Allocation of Water System Assets to Cost Components ($ thousands)
Description Total
Value
Customer Service All Base All
Max Day
All
Max
Hour
Retail
Base
Retail
Max Day
Retail
Max
Hour
As All
Others
Transmission $90,711 $0 $0 $34,396 $56,315 $0 $0 $0 $0 $0
Distribution $103,863 $0 $15,580 $0 $0 $0 $28,843 $51,415 $8,026 $0
Storage $888 $0 $0 $0 $0 $0 $319 $569 $0 $0
Water Meter $3,622 $0 $3,622 $0 $0 $0 $0 $0 $0 $0
General
Water
$1,683 $0 $0 $0 $0 $0 $0 $0 $0 $1,683
Subtotal
Allocation
$200,768 $0 $19,202 $34,396 $56,315 $0 $29,163 $51,984 $8,026 $1,683
Reallocation
of General
$1,683 $0 $162 $291 $476 $0 $247 $440 $68
Total
Allocation ($)
$19,364 $34,686 $56,791 $0 $29,409 $52,423 $8,094 $0
Total
Allocation (%)
9.6% 17.3% 28.3% 0.0% 14.6% 26.1% 4.0% 0.0%
3.3.2.2 O&M Allocation
Similar to fixed assets, Carollo allocated the water system operating expenses to functional categories and
then to cost components. The allocation percentages used to functionalize the operating budgets are
estimates based on discussions with City staff. Table 18 provides the allocation of the O&M budget to
functional categories. Table 19 summarizes the allocation of the functionalized O&M expenses to the cost
components.
Table 18 Functional Allocation of Water O&M Budget (FY 2026) ($ thousands)
Component FY 2026
Budget Customer Meter
Service Supply Pumping Storage Distribution As All
Others
Utilities Director
(1800) $129 $0 $0 $0 $0 $0 $0 $129
Utilities Project
Management (4020) $244 $0 $0 $0 $0 $0 $0 $244
Utilities Financial
Services (1810) $1,355 $1,355 $0 $0 $0 $0 $0 $0
Meter Reading (1820) $1,488 $0 $1,488 $0 $0 $0 $0 $0
Meter Maint &
Backflow Prev (1830) $772 $0 $772 $0 $0 $0 $0 $0
Meter Operations
Capital (1840) $0 $0 $0 $0 $0 $0 $0 $0
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Component FY 2026
Budget Customer Meter
Service Supply Pumping Storage Distribution As All
Others
Water Purchased
(3800) $18,422 $0 $0 $18,422 $0 $0 $0 $0
Operations &
Administration (4000) $2,019 $0 $0 $0 $0 $0 $0 $2,019
Water Distribution
Maintenance (4310) $4,883 $0 $0 $0 $0 $0 $4,883 $0
Water Storage &
Pump Maintenance
(4330)
$360 $0 $0 $0 $180 $180 $0 $0
Capital Water Mains
(5600) $0 $0 $0 $0 $0 $0 $0 $0
Water & Sewer
Connections (5620) $571 $0 $571 $0 $0 $0 $0 $0
PILOT $1,133 $0 $0 $0 $0 $0 $0 $1,133
Trustee & Pay Agent
Fees $151 $0 $0 $0 $0 $0 $0 $151
Total Operating
Expenses $31,529 $1,355 $2,831 $18,422 $180 $180 $4,883 $3,677
Reallocation of As All
Others $179 $374 $2,432 $24 $24 $645
Total Allocation ($) $1,534 $3,205 $20,854 $204 $204 $5,528
Total Allocation (%) 4.9% 10.2% 66.1% 0.6% 0.6% 17.5%
Table 19 Allocation of Water O&M Budget to Cost Components ($ thousands)
Description FY 2026
Budget
Customer Meter
Service
All Base All Max
Day
All Max
Hour
Retail
Base
Retail
Max Day
Retail
Max
Hour
Meter Service $3,205 $0 $3,205 $0 $0 $0 $0 $0 $0
Customer Billing $1,534 $1,534 $0 $0 $0 $0 $0 $0 $0
Supply $20,854 $0 $0 $7,908 $12,947 $0 $0 $0 $0
Pumping $204 $0 $0 $0 $0 $0 $67 $119 $19
Storage $204 $0 $0 $0 $0 $0 $67 $119 $19
Distribution $5,528 $0 $0 $0 $0 $0 $1,806 $3,219 $503
Total Allocation
($)
$31,529 $1,534 $3,205 $7,908 $12,947 $0 $1,939 $3,457 $540
Total Allocation (%) 4.9% 10.2% 25.1% 41.1% 0.0% 6.2% 11.0% 1.7%
Notes:
(1) Totals may not tie due to rounding.
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3.3.2.3 Offsetting Revenue
Water connection fees, billed services, interest income, contracted services, and other non-rate revenue
are used to offset the revenue requirements and reduce the required increase in rate revenue.
Additionally, Outside City retail and wholesale revenue also offset the revenue requirements for Inside City
customers. Table 20 summarizes the net revenue requirements.
Table 20 Allocation of Water Revenue Requirements to Cost Components ($ thousands)
Description FY 2026
Budget
Customer Meter
Service
All Base All Max
Day
All Max
Hour
Retail
Base
Retail
Max Day
Retail
Max
Hour
Operating
Expenses
$31,529 $1,534 $3,205 $7,908 $12,947 $0 $1,939 $3,457 $540
Capital Costs:
Cash Funded
Capital
$4,421 $0 $426 $764 $1,251 $0 $648 $1,154 $178
Debt Service $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenue
Requirement
$35,950 $1,534 $3,631 $8,671 $14,197 $0 $2,587 $4,611 $718
Less Offsetting
Revenues:
Non-Operating
Revenues
($1,657) $0 $0 $0 $0 $0 ($541) ($965) ($151)
Outside City
Retail
($6,020) ($237) ($682) ($1,175) ($2,154) $0 ($559) ($1,058) ($156)
Outside City
Wholesale
($1,179) ($0) ($4) ($467) ($707) $0 $0 $0 $0
Change in Cash
Reserves
($1,434) $0 ($138) ($248) ($406) $0 ($210) ($375) ($58)
Net Revenue
Requirement
$25,660 $1,297 $2,807 $6,782 $10,931 $0 $1,276 $2,213 $354
Allocation 5.1% 10.9% 26.4% 42.6% 0.0% 5.0% 8.6% 1.4%
3.3.3 Customer Allocation
The amount of costs allocable to customers is calculated with the unique units associated with each cost
function. For example, the customer component is the same for all meter sizes and is calculated by
dividing the allocated customer costs by the number of accounts. The resulting value will then be
allocated to each customer class in the final COS step.
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3.3.3.1 Units of Service
Based on functional category, the units of service are water consumed, incremental demand (max day and
max hour capacity), meter equivalents, and annual bills.
Base Costs: Allocated by total annual treated sales volume or annual water consumption in 1,000
gallons.
Extra Capacity Costs: Allocated based on each customer type’s extra capacity demand developed
from the incremental amounts between max day demand and average day demand and between max
hour demand and max day demand. Extra capacity units are based on the incremental capacity, in
1,000 gallons per day, needed to serve demands in excess of the baseline or average day demand.
Meter Equivalents: The meter equivalents are derived based on the meter’s hydraulic capacity. Larger
meters are assigned more meter equivalents than smaller meters.
Customer: For the fixed charge, customer component unit cost is based on number of bills.
3.3.3.2 Unit Cost Development
In order to allocate the COS to various customer types, unit costs of service are developed for each cost
component. As shown in Table 16, the total rate revenue requirements are allocated to each cost
component for the test year. The total cost for each functional category is then divided by the total
number of associated units of service to determine appropriate unit costs for the water system. The units
of service for each customer type are shown in Table 21. Table 22 illustrates the calculation of the unit
costs for each cost component, which are then applied to the units of service.
Table 21 Water Units of Service by Customer Type (FY 2026)
Component # of Bills
# of Bills
Equivalents
Annual Water
Usage (kgal) Max Month Max Day Max Hour
Inside City:
Residential 449,248 459,898 2,114,655 230,250 10,726 7,441
Non-Residential 38,773 61,805 943,175 91,054 3,357 3,176
Major Industrial 59 806 308,455 34,788 1,098 1,039
Irrigation 19,909 26,590 349,210 73,513 3,346 1,386
Outside City:
Residential 85,417 86,476 507,790 73,409 2,656 1,795
Non-Residential 4,866 6,201 53,061 5,676 189 179
Major Industrial 0 0 0 0 0 0
Irrigation 2,376 3,166 36,237 8,299 347 144
Wholesale:
Elkins 12 162 95,089 10,370 394 326
Mount Olive 24 270 74,495 8,631 341 258
West Fork 12 162 67,964 7,917 313 236
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Table 22 Development of Water Unit Costs ($ thousands)
Description Customer Meter
Service
All Base All Max
Day
All Max
Hour
Retail
Base
Retail Max
Day
Retail Max
Hour
Allocated Revenue
Requirements
$1,297 $2,807 $6,782 $10,931 $0 $1,276 $2,213 $354
Total Units 507,990 549,099 3,715,494 18,527 13,042 3,715,494 18,527 13,042
Unit Cost $2.55 $5.11 $1.83 $589.99 $0.00 $0.34 $119.47 $27.13
Units # of Bills # of equiv.
bills
kgal kgal/day kgal/day kgal kgal/day kgal/day
Table 23 shows the COS by customer type for the FY 2026 test year.
Table 23 Water Revenue Requirement by Customer Type (FY 2026)
Component Test Year FY 2026
Inside City:
Residential $15,835
Non-Residential $4,975
Major Industrial $1,482
Irrigation $3,368
Outside City:
Residential $5,112
Non-Residential $417
Major Industrial $0
Irrigation $496
Wholesale $1,179
Total $32,863
3.4 Water Rate Design
Revenue requirements and COS analysis provide the basis for designing water rates. Revenue
requirements show the level of revenue to be recovered from rates to fund utility’s O&M and capital
needs and provide adequate resources to meet minimum cash levels. COS allocations provide the units
and ultimately the COS for each customer class that can be used to design equitable user rates and
charges.
During rate design, it is important to develop equitable charges that commensurate with the cost of
providing service to customers. As this is challenging for each individual customer, rates are normally
designed to meet average conditions for each customers type with similar service requirements.
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The COS results are based on cost and engineering estimates that rely in part on professional judgement
and experience. Detailed results should not be used as exact answers but as guides to the necessity for
rate adjustments. Practical considerations may enter into the final choice of charges, recognizing such
factors as previous rate levels, existing rate structures, the degree of adjustments indicated, and policies
concerning the application of rates. Carollo worked with City staff to analyze various adjustments with
goals of affordability to low volume water users, water conservation, and improving equity and
understanding among customers. The FY 2026 proposed water rates are intended to transition each
customer type toward its COS. Starting in FY 2027, rates are recommended to be increased across the
board for each rate component.
3.4.1 Rate Structure
The City’s existing water rates have been in effect since January 1, 2026, with the following rate structure:
Monthly service charge varies by meter size and varies by inside City, outside City, and wholesale.
Outside City rate factors vary and are not consistent amongst meter sizes.
Volume rate ($ per 1,000 gallons) structure consists of three tiers for residential and a uniform volume
rate for all non-residential customer classes.
Carollo recommends the following minor modifications to the existing water rate structure:
Monthly service charge for outside City and wholesale is proposed to be the same.
All outside City rates have a factor of 1.5 times the rates of inside City for the monthly service charge
and volume rates. This difference is to account for the lack of ownership and equity of the City’s
system, as well as to support the additional infrastructure required to extend the distribution system
out to the farther reaches.
The proposed irrigation rate is the same rate as the residential third tier rate.
3.4.2 Fixed Monthly Service Charges
A monthly fixed service charge is a cost recovery mechanism that is generally designed to recover the
utility’s fixed expenditures, such as metering, testing, billing and other customer related costs. The
proposed fixed charge primarily recovers the customer service and other fixed cost components of the
revenue requirements.
Table 24 summarizes the existing and FY 2026 mid-year proposed monthly service charges by meter size
for July 1, 2026. There is no proposed increase to the Inside City monthly water service charges for the
mid-year rate adjustments. However, Outside City proposed monthly service charges have a 1.5 rate factor
applied beginning July 1, 2026.
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Table 24 Existing and Mid-Year Proposed Inside City Water Monthly Service Charges
Rate Component Existing(1) FY 2026 Proposed(2,3) Difference
Monthly Water Service Charge
5/8" Meter $7.85 $7.85 $0.00
5/8" x 3/4" Meter 7.85 7.85 0.00
1" Meter 11.30 11.30 0.00
1.5" Meter 21.55 21.55 0.00
2" Meter 29.52 29.52 0.00
3" Meter 64.37 64.37 0.00
4" Meter 106.59 106.59 0.00
6" Meter 213.18 213.18 0.00
8” Meter 319.67 319.67 0.00
Notes:
(1) Existing fixed effective January 1, 2026.
(2) Proposed service charge effective July 1, 2026.
(3) Proposed Outside City and Wholesale monthly service charges are 1.5x proposed inside City rates.
Starting in FY 2027 proposed monthly service charges can be calculated by escalating them based on
proposed revenue requirement increases shown in Table 25.
The proposed five-year rates are shown in the following tables. All rates have been rounded up to the
nearest $0.01 to avoid under-collection of revenues.
Table 25 Inside City Existing and Proposed Water Monthly Service Charges for the Study Period
Rate Component Existing FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenue Adjustments 14.0% 16.0% 16.0% 3.0% 3.0%
Monthly Water Service
Charge
5/8" Meter $7.85 $7.85 $9.11 $10.57 $10.89 $11.22
5/8" x 3/4" Meter $7.85 $7.85 $9.11 $10.57 $10.89 $11.22
1" Meter $11.30 $11.30 $13.11 $15.21 $15.67 $16.15
1.5" Meter $21.55 $21.55 $25.00 $29.00 $29.87 $30.77
2" Meter $29.52 $29.52 $34.25 $39.73 $40.93 $42.16
3" Meter $64.37 $64.37 $74.67 $86.62 $89.22 $91.90
4" Meter $106.59 $106.59 $123.65 $143.44 $147.75 $152.19
6" Meter $213.18 $213.18 $247.29 $286.86 $295.47 $304.34
8” Meter $319.67 $319.67 $370.82 $430.16 $443.07 $456.37
Notes:
(1) Existing fixed effective January 1, 2026.
(2) Beginning FY 2027 monthly service charges are effective January 1 of each fiscal year.
(3) Outside City rates are 1.5 times inside City rates.
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3.4.3 Volumetric Rates
Variable volumetric rates include a base component, which represents the cost to meet the average day
demand, a maximum day component, which represents the incremental cost to meet the maximum day
demand; and a maximum hour component, which represents the cost to meet the maximum hour
demand.
Carollo recommends that the City keep its inclining three-tier residential rate structure, where the volume
rate increases for each incremental unit of water at each tier. This rate structure encourages water
conservation, which is a goal of the City.
When designing rates during this Study, Carollo also took a closer look at the low volume users with water
use of 2,000 gallons or less. The proposed volumetric rates for Tier 1 (first 2,000 gallons) will not increase
for the mid-year FY 2026 rate adjustments, which supports the City’s conservation and affordability
efforts.
The FY 2026 proposed rates for Inside City customer classes are summarized in the table below:
Table 26 Existing and FY 2026 Proposed Water Volumetric Rates
Rate Component Existing(1) FY 2026 Proposed(2,3) Difference
Volumetric Charges ($/1,000 gallons)
Residential
Tier 1 (first 2,000 gallons) $4.04 $4.04 $0.00
Tier 2 (2,001 – 15,000 gallons) $5.34 $5.80 $0.46
Tier 3 (> 15,000 gallons) $7.57 $8.70 $1.13
Non-Residential (all usage) $4.72 $4.77 $0.05
Major Industrial (all usage) $3.53 $4.10 $0.57
Irrigation (all usage) $5.34 $8.70 $3.36
Wholesale (all usage) $3.71 $4.25 $0.54
Notes:
(1) Rates and charges effective January 1, 2026.
(2) Proposed service charge effective July 1, 2026.
(3) Proposed Outside City volumetric rates are 1.5x proposed inside City rates.
While FY 2026 rates take into account the COS analysis and the City’s goals and objectives, beginning in
FY 2027, the volumetric rates can be calculated by escalating the rates and charges by the revenue
adjustment percentages.
The proposed five-year volume rates are shown in the following table. All rates have been rounded up to
the nearest $0.01 to avoid under-collection of revenues.
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 29
Table 27 Inside City Existing and Proposed Water Volumetric Rates for the Study Period
Rate Component Existing FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenue Adjustments 14.0% 16.0% 16.0% 3.0% 3.0%
Volumetric Rates ($/1,000
gallons)
Residential
Tier 1 (first 2,000 gallons) $4.04 $4.04 $4.69 $5.45 $5.62 $5.79
Tier 2 (2,001 – 15,000 gallons) $5.34 $5.80 $6.73 $7.81 $8.05 $8.30
Tier 3 (> 15,000 gallons) $7.57 $8.70 $10.10 $11.72 $12.08 $12.45
Non-Residential (all usage) $4.72 $4.77 $5.54 $6.43 $6.63 $6.83
Major Industrial (all usage) $3.53 $4.10 $4.76 $5.53 $5.70 $5.88
Irrigation (all usage) $5.34 $8.70 $10.10 $11.72 $12.08 $12.45
Wholesale (all usage) $3.71 $4.25 $4.93 $5.72 $5.90 $6.08
Notes:
(1) Rates and charges effective January 1, 2026.
(2) Proposed service charge effective July 1, 2026.
(3) Proposed Outside City volumetric rates are 1.5x proposed inside City rates.
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SECTION 4 SEWER SYSTEM ANALYSIS
4.1 Input Data
4.1.1 Current Rates
The City’s current sewer rate structure has two components: a fixed monthly charge based on meter size;
and a volumetric charge based on the amount of metered water sold. Residential customers have an
inclining 2-tiered variable rate structure and are charged based on a five-month winter average to
account for water use that does not end up in the sewer system. Non-residential customers are charged a
uniform variable rate. The existing rates that took effect on January 1, 2026 are shown in Table 28.
Similar to water, inside and outside City customers are charged different rates for service, with outside
City’s rates being higher than inside City’s. This difference is to account for the lack of ownership and
equity of the City’s system, as well as to support the additional infrastructure required to extend the
distribution system outside of the City limits.
Table 28 Existing Sewer Rates and Charges
Rate Component Inside City Outside City
Monthly Water Service Charge
5/8" Meter $13.52 $16.66
5/8" x 3/4" Meter 13.52 16.98
1" Meter 25.94 33.23
1.5" Meter 47.53 66.98
2" Meter 65.37 93.23
3" Meter 140.67 195.74
4" Meter 231.8 286.99
6" Meter 459.37 532.02
8” Meter 687.03 592.02
Volumetric Charges ($/1,000 gallons)
Residential
Tier 1 (first 2,000 gallons) $5.24 $8.05
Tier 2 (>2,000 gallons) $6.99 $8.05
Non-Residential (all usage) $5.88 $8.05
Major Industrial (all usage) $6.21 $8.05
Wholesale (all usage) $6.09 $6.09
Notes:
(1) Outside City sewer rates shown do not include Farmington and Greenland surcharges.
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4.1.2 Billing Data
4.1.2.1 Baseline Billing Data
The City provided billing data covering FY 2022 through 2024 for the sewer system, including date,
customer identifier, meter size, location (inside or outside city), customer type, wastewater flow billed
within each tier, and billed dollar amount. Carollo analyzed this data and aggregated usage, and bill
counts for each meter size and location.
4.1.2.2 Projected Billing Data
To project billing data for the next five years, Carollo used an annual growth assumption of 1.75 percent
for all retail classes and locations while keeping wholesale number of accounts steady. Retail per account
flow is projected to remain stable, meaning that any change in total projected sewer sales is due to
account growth.
The baseline and forecasted billing summaries are shown in the following tables. In the rate model, total
annual bill counts were used to forecast revenues as the number of accounts fluctuates month to month
and total accounts directly corresponds with billed revenue. For purposes of transparency, however, this
report provides for the total number of connections. The number of connections was calculated by
dividing the number of bills by 12 for each month, even though the actual number of accounts at any
given time could deviate from this figure.
Table 29 below illustrates the summary of projected number of connections by meter size during the
study period. Table 30 summarizes the projected sewer sales based on the billing data analysis.
Table 29 Projected Number of Sewer Connections
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Inside City
5/8” 161 164 167 170 173 176
5/8 x ¾” 35,210 35,826 36,453 37,091 37,740 38,401
1" 672 684 696 708 720 733
1.5" 267 272 276 281 286 291
2" 289 294 299 304 309 315
3" 51 52 53 54 55 55
4" 12 12 12 13 13 13
6" 4 4 4 4 4 4
Total Inside City 36,666 37,308 37,960 38,625 39,300 39,988
Outside City
5/8” 9 9 9 9 9 3
5/8 x ¾” 2,867 2,917 2,968 3,020 3,073 3,126
1" 37 38 38 39 40 40
1.5" 5 5 5 5 5 6
2" 2 2 2 2 2 2
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FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
3" 0 0 0 0 0 0
4" 0 0 0 0 0 0
6" 0 0 0 0 0 0
Total Outside City 2,919 2,971 3,023 3,075 3,129 3,184
Wholesale
4" 1 1 1 1 1 1
8” 1 1 1 1 1 1
Total Wholesale 2 2 2 2 2 2
Total Number of
Connections 39,587 40,280 40,985 41,702 42,432 43,174
Table 30 Current and Projected Sewer Sales
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Sewer Sales (kgal) - Inside City
Residential
Tier 1 (first 2,000
gallons) 735,608 748,481 761,579 774,907 788,468 802,266
Tier 2 (>2,000 gallons) 861,902 876,985 892,333 907,948 923,837 940,005
Non-Residential (all
usage) 786,956 800,728 814,740 828,998 843,506 858,267
Major Industrial (all usage) 297,546 302,753 308,052 313,443 318,928 324,509
Total Inside City Usage
(kgal) 2,682,012 2,728,947 2,776,704 2,825,296 2,874,739 2,925,047
Sewer Sales (kgal) - Outside City
Residential (all usage) 99,430 101,170 102,941 104,742 106,575 108,440
Non-Residential (all
usage) 14,248 14,497 14,751 15,009 15,272 15,539
Major Industrial (all usage) 0 0 0 0 0 0
Total Outside City Flow
(kgal) 113,678 115,668 117,692 119,752 121,847 123,980
Sewer Sales - Wholesale (kgal)
Elkins 96,697 98,389 100,111 101,863 103,645 105,459
West Fork 77,327 78,680 80,057 81,458 82,884 84,334
Total Wholesale Flow
(kgal) 174,024 177,069 180,168 183,321 186,529 189,793
Total (kgal) 2,969,714 3,021,684 3,074,563 3,128,368 3,183,115 3,238,819
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4.1.3 Expenses
4.1.3.1 Budget Data
The City provided Carollo with its currently adopted FY 2025 budget to use as a base for forecasting. The
budget provided is for water and sewer combined. Carollo worked closely with City staff to identify how
to split costs between two funds and allocated the costs appropriately to each fund based on these
discussions. Additionally, costs were escalated based on the percentages shown in Table 5. The baseline
and projected operating budget expenses are summarized in Table 31.
Table 31 Baseline and Projected Sewer Operating Expenses ($ Thousands)
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Utilities Director (1800) $127 $129 $135 $140 $146 $151
Utilities Project Management
(4020) $258 $244 $255 $267 $279 $287
Utilities Financial Services
(1810) $1,619 $1,865 $1,936 $2,010 $2,087 $2,150
Meter Reading (1820) $149 $165 $172 $179 $186 $191
Operations & Administration
(4000) $4,216 $3,897 $4,046 $4,209 $4,378 $4,533
Sewer Mains Maintenance
(4410) $2,980 $3,148 $3,266 $3,390 $3,518 $3,624
Water & Sewer Connections
(5620) $735 $786 $816 $847 $879 $906
Trustee & Pay Agent Fees $209 $209 $0 $0 $0 $0
WWTP Administration &
SCADA (5100) $2,368 $2,368 $1,980 $2,039 $2,101 $2,164
WWTP East Side Operations
(5110) $7,759 $7,762 $8,011 $8,269 $8,536 $8,792
WWTP West Side Operations
(5120) $2,501 $2,507 $2,598 $2,692 $2,790 $2,874
WWTP Lab/IPP (5130) $534 $534 $550 $567 $584 $601
WWTP Lift Station
Maintenance (5140) $1,208 $1,286 $1,332 $1,380 $1,430 $1,473
Total Operating Expenses $24,663 $24,900 $25,098 $25,989 $26,914 $27,744
4.1.3.2 Capital Improvement Plan Expenses
The City provided the FY 2026 through 2030 CIP, which has been approved by City Council, along with
planned funding for each project. These expenses were already escalated and provided in future dollars.
Most CIP expenses are for routine repair and replacement (R&R) of sewer system infrastructure and are
planned to be cash-funded through either rate revenues in the year they are collected, or unrestricted
reserves, if available after meeting the City’s target reserve level.
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The City also funds CIP through impact fee revenues. Impact fees are one-time fees paid by new
connections to fund infrastructure needed to expand capacity to meet this growth. Impact fees are
deposited in a restricted fund and reserved for these growth-related projects.
The summarized five-year CIP and funding allocation are shown below.
Table 32 Projected Sewer Capital Improvement Plan and Funding ($ Thousands)
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
CIP
SS Rehabilitation $2,800 $870 $870 $2,870 $2,870
Improvements Defined by Study $0 $0 $300 $300 $0
Relocations for Bond Projects $250 $250 $250 $250 $250
Rate Operations Study $10 $10 $10 $20 $20
Impact Fee Cost Sharing $75 $75 $75 $75 $75
WWTP Improvements $1,700 $1,700 $1,700 $1,700 $1,700
Equipment Expansions $25 $25 $25 $25 $25
Technology Equipment Replacements $10 $73 $15 $54 $25
Building/Office Improvements $50 $50 $50 $50 $50
Phosphorus Standards Management $50 $50 $50 $50 $50
Utilities Financial Services Improvements $8 $3 $2 $8 $8
Total Funding Needed $4,978 $3,106 $3,346 $5,402 $5,072
Funding
New Debt $0 $0 $0 $0 $0
Impact Fees $2,300 $853 $1,153 $2,653 $2,353
Remaining Funding Needed from Rates $2,678 $2,253 $2,194 $2,749 $2,720
Total Funding Allocated $4,978 $3,106 $3,346 $5,402 $5,072
4.1.3.3 Debt Service
The City does not have existing debt obligations that are paid with sewer rate revenue. Additionally, while
there is no future debt issuances projected in the Study period, the City should evaluate its capital funding
strategy as the CIP changes.
4.1.4 Revenues
4.1.4.1 Projected Rate Revenues under Existing Rates
Carollo first forecasted rate revenues for the next five years assuming rate adjustments from the City
ordinance, which includes a 3 percent annual increase for the Study period. This forecast took the existing
rates (Table 28) and calculated revenues based on the projected sewer sales and bills from Tables 29
and 30. By calculating the baseline rate revenue under existing rates and doing this exercise, Carollo
identified any revenue shortfalls under existing rates. Projected revenues before rate adjustments are
shown in Table 33.
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 35
Table 33 Projected Sewer Revenues under Existing Rates ($ Thousands)
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Sewer Sales Revenue $27,259 $28,568 $29,940 $31,378 $32,885
Operations & Administration (4000) $316 $310 $326 $347 $366
Sewer Distribution Maintenance
(4410) $30 $30 $31 $31 $32
WWTP Administration & SCADA
(5100) $406 $418 $431 $443 $457
Total Sewer Revenues $28,011 $29,327 $30,727 $32,200 $33,740
4.2 Sewer System Revenue Requirements
The revenue requirement analysis is a comprehensive test of a utility’s fiscal health, scrutinizing the
adequacy of current revenues and setting the basis for short-term and long-term rate planning. It reviews
the utility’s revenues, expenses, debts, and reserve policies, assessing the viability of each metric going
forward. Where cash flow and balances are insufficient, the revenue requirement analysis determines the
additional cash flow needed to meet all funding goals.
4.2.1 Revenue Requirement Tests
Similar to water, Carollo used two sufficiency tests to define the annual sewer revenue requirement:
(1) reserve target test and (2) debt service coverage test.
Reserve Target Test: Measures if a utility is generating enough revenue to meet the City’s minimum
operating reserve balance to ensure continuations of their operations and any financial obligations.
This test is not legally binding but provides assurance for a utility’s financial stability and is often
based on the reserve policies adopted by the City Council. When the year-end balance falls short of
the desired target, a rate increase is recommended. This reserve target ranges by utility, depending on
capital needs and service demands.
Debt Service Coverage Test: Assesses a utility’s ability to meet their annual debt service obligations.
Bond issuances regularly include covenants requiring the agency to maintain sufficient cash flows to
meet annual debt service payments plus an additional amount. Typical DSCRs range from 1.20 times
to 1.50 times annual debt service, depending on the terms of debt instrument issued.
Since there is no existing or anticipated future debt associated with the sewer system during the Study
period, the revenue requirement analysis for the City’s sewer system was conducted based on the reserve
target test only.
4.2.2 Reserve Target Test
The reserve target test assesses the adequacy of the rates to maintain end-of-year unrestricted reserve
balances at or above the City’s policy target. Historically, the City’s annual operating reserve minimum was
10 percent of O&M expenses. Industry best practices are an operating reserve of 90 to 180 days of annual
O&M expenses. To be more in line with industry standards and provide financial security, Carollo
recommended the City increase its sewer operating reserve minimum to the greater of 10 percent of
O&M or $5 million for the sewer fund. The total water and sewer combined minimum reserve is set at
$12 million starting in FY 2026.
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The reserve balance forecast under the existing rate ordinance is outlined in Table 34.
Table 34 Projected Sewer Reserve Balance Under Existing Rate Ordinance ($ thousands)
Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Ordinance Rate Adjustments 3.0% 3.0% 3.0% 3.0%
Beginning Reserve Balance $3,910 $4,344 $6,319 $8,864 $11,400
Sources of Funds
Rate Revenues $27,259 $28,568 $29,940 $31,378 $32,885
Other Revenues $752 $758 $787 $822 $855
Total Sources of Funds $28,011 $29,327 $30,727 $32,200 $33,740
Uses of Funds
Operating Expenses $24,900 $25,098 $25,989 $26,914 $27,744
Debt Service $0 $0 $0 $0 $0
Cash Funded CIP $2,678 $2,253 $2,194 $2,749 $2,720
Total Uses of Funds $27,577 $27,351 $28,183 $29,663 $30,464
Cash Flow $434 $1,975 $2,544 $2,537 $3,276
Ending Reserve Balance $4,344 $6,319 $8,864 $11,400 $14,676
Reserve Balance Target $5,000 $5,000 $5,000 $5,000 $5,000
Surplus / (Deficit) ($656) $1,319 $3,864 $6,400 $9,676
As shown, the rates under the existing rate ordinance are sufficient to meet the reserve target throughout
the rate-setting period, with exception for FY 2026.
For the City’s sewer system, Carollo recommends the City adhere to the 3 percent annual rate increase
outlined in its existing rate ordinance for FY 2027 through FY 2030. This increase applies to both the
monthly service charge and volumetric rates. With the proposed water rate adjustments, the combined
water and sewer reserve balance would satisfy the combined minimum reserve target balance of
$12 million in FY 2026 and beyond during the Study period.
4.3 Sewer Proposed Rates
With the proposed rate adjustments projected to support the $5 million reserve minimum for the City, the
proposed rates can be calculated by escalating the rates and charges by the percentages shown in
Table 35, which also aligns with the City sewer rate ordinance.
The proposed five-year rates are shown in the following tables. All rates have been rounded up to the
nearest $0.01 to avoid under-collection of revenues.
Rates for all fiscal years are set to take effect at the start of the fiscal year (January 1).
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Table 35 Inside City Proposed Sewer Rates and Charges for the Study Period
Rate Component FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Monthly Sewer Service Charge
5/8" Meter $13.52 $13.93 $14.35 $14.79 $15.24
5/8" x 3/4" Meter $13.52 $13.93 $14.35 $14.79 $15.24
1" Meter $25.94 $26.72 $27.53 $28.36 $29.22
1.5" Meter $47.53 $48.96 $50.43 $51.95 $53.51
2" Meter $65.37 $67.34 $69.37 $71.46 $73.61
3" Meter $140.67 $144.90 $149.25 $153.73 $158.35
4" Meter $231.80 $238.76 $245.93 $253.31 $260.91
6" Meter $459.37 $473.16 $487.36 $501.99 $517.05
8” Meter $687.03 $707.65 $728.88 $750.75 $773.28
Volumetric Rates ($/1,000 gallons)
Residential
Tier 1 (first 2,000 gallons) $5.24 $5.40 $5.57 $5.74 $5.92
Tier 2 (>2,000 gallons) $6.99 $7.20 $7.42 $7.65 $7.88
Non-Residential (all usage) $5.88 $6.06 $6.25 $6.44 $6.64
Major Industrial (all usage) $6.21 $6.40 $6.60 $6.80 $7.01
Wholesale (all usage) $6.09 $6.28 $6.47 $6.67 $6.88
Notes:
(1) Rates and charges effective January 1 of each fiscal year.
(2) Outside City rate factors vary by meter size and are unchanged from the current rate ordinance.
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SECTION 5 COMBINED BILL IMPACT
The following table summarizes the combined water and sewer bill impacts for select customer classes
and usage over the duration of the rate-setting period. In FY 2026 the bill increase varies by each
customer class due to the proposed water rates being more aligned with the cost to provide service.
In FY 2027 and FY 2028 all customer classes will see an average of a 9 percent increase on their total
combined bill, and in FY 2029 and FY 2030 all customers will experience an average 3 percent increase on
their total combined bill.
Table 36 Combined Inside City Bill Impacts Under Existing and Proposed Rates for the Study Period
Customer Class Existing Bill FY 2026 Bill FY 2027 Bill FY 2028 Bill FY 2029 Bill FY 2030 Bill
Residential
5/8" meter, 2 kgals $39.93 $39.93 $43.22 $46.96 $48.40 $49.88
5/8" meter, 4 kgals $64.59 $65.51 $71.08 $77.42 $79.80 $82.24
5/8" meter, 10 kgals $138.57 $142.25 $154.66 $168.80 $174.00 $179.32
Non-residential
5/8" meter, 10 kgals $127.37 $127.87 $139.04 $151.72 $156.38 $161.16
1" meter, 50 kgals $567.24 $569.74 $619.83 $676.74 $697.53 $718.87
Industrial
2" meter, 1,000 kgals $9,834.89 $10,404.89 $11,261.59 $12,239.10 $12,612.39 $13,005.77
6" meter, 5,000 kgals $49,372.55 $52,222.55 $56,520.45 $61,424.22 $63,297.46 $65,271.39
Notes:
(1) There is a FY 2026 mid-year rate increase for water rates only.
As part of the Study, Carollo completed a survey of water and sewer rates for utilities in Northwest
Arkansas, with a focus on the cities that purchase water directly from BWD (Springdale, Rogers, and
Bentonville). All three of these cities have recently passed water and sewer rate increases in response to
the increased cost of purchased water, escalating O&M costs, and major CIP needs, similar to what the
City is currently experiencing.
Figure 3 shows that with the recommended rates in place, a typical combined bill for a City resident will
be slightly less than a similar bill in Springdale and significantly less than the bills that residents in Rogers
and Bentonville will experience over the next 5 years.
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 39
Figure 3 Northwest Arkansas Water and Sewer Rate Comparison
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 40
SECTION 6 IMPACT FEE ANALYSIS
Impact fees, sometimes referred to as capacity or system development charges, are one-time fees
assessed on new system connections for water or sewer service. As the City manages its water and sewer
systems, it needs to estimate a certain level of capacity required to serve peak day and peak wet weather
flow for existing and future customers. The impact fee valuates the reservation of system capacity to serve
that new and/or modified connection.
Carollo relied on City policies, industry best practice, and Arkansas statutory guidance when developing
the analysis in the Study. As with any fee analysis, the City prioritizes COS as a foundation of setting the
capacity fee. Several additional key criteria were at the center of this analysis:
Do the impact fees represent a reasonable nexus to the costs incurred by the City on behalf of future
customers and the benefits received?
Is the impact fee methodology consistent with standards established in the AWWA M1 Manual:
Principles of Water Rates, Fees, and Charges, and the WEF MOP 27?
Do the methodology and the resulting recommendations meet City policies and adhere to applicable
legal requirements?
Are the fees equitable for current and future ratepayers and do they reflect system investment
contributions?
By setting these guiding principles, the results of this analysis are developed with legal, policy, and fiscal
goals in mind.
6.1 Existing Impact Fees
The City’s existing impact fees are based on an impact fee study completed by a different consultant in
2007. In 2009 the City elected to implement approximately one-third of the allowable impact fee
recommended by the consultant. Additionally, the consultant recommended the City charge a per
dwelling unit fee for single family residential and multi-family residential and a fee per meter based on
meter size for non-residential development. In the City ordinance, multi-family development with a master
meter can be charged either by meter size or per dwelling unit.
The following table summarizes the City’s existing water and sewer impact fees.
Table 37 Existing Impact Fees
Customer Class Water Sewer Total Impact Fee
Residential
Single Family (per dwelling unit) $971 $872 $1,843
Multi-Family (per dwelling unit) $691 $620 $1,311
Non-Residential
5/8" x 3/4" Meter $971 $872 $1,843
1" Meter $2,428 $2,180 $4,608
1.5" Meter $4,855 $4,360 $9,215
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 41
Customer Class Water Sewer Total Impact Fee
2" Meter $7,768 $6,976 $14,744
3" Meter $15,536 $13,952 $29,488
4" Meter $24,275 $21,800 $46,075
6" Meter $48,550 $43,600 $92,150
8” Meter $77,680 $69,760 $147,440
10” Meter $111,665 $100,280 $211,945
6.2 Methodology
The impact fee is based on a relatively straightforward calculation: divide system value by system capacity,
yielding an estimate of the cost to build one unit of capacity. This is demonstrated in Equation 1.
Equation 1 Impact Fee Conceptual Formula
𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐹𝐹𝐹𝐹𝐹𝐹=𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝐶𝐶𝑉𝑉𝐶𝐶𝑉𝑉𝐶𝐶𝐶𝐶𝑆𝑆𝑆𝑆
Despite this simple equation, quantifying system value and capacity inputs can be complex and will vary
from utility based on several factors, including but not limited to:
Age, size, and density of the system.
Planned expansion-related capital projects.
Anticipated growth.
Ability to discharge treated wastewater.
Selecting the most appropriate methodology for any utility depends on the nature of the system, the level
of planned investment, and the projected capacity needs. The available methodologies along with the
rationale behind their selection are detailed later in this section.
6.2.1 Impact Fee Components
6.2.1.1 Assessing System Value
The first component of the impact fee is system value. This can be the value of the existing system, future
system, or a combination of both, depending on which methodology is chosen.
An important consideration – and what often presents the most difficulty – is using a system value that
represents the system capacity (not demand) served in the denominator. The two should be in alignment.
System value should be excluded if it is not represented by the system capacity, and vice versa.
This step is further complicated by the nature of investments and depreciation. It is sometimes
challenging to delineate the infrastructure (or a portion thereof), repairs, or replacements serving only
future connections or assess its retained residual value after full depreciation.
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 42
6.2.1.2 Determining System Capacity
The denominator of the impact fee is system capacity. While the calculation is straightforward, the
challenge is defining the system capacity in a unit of measure that can be assessed to a new or modified
connection, such as equivalent dwelling units (EDU) served or a unit cost per gallons per day. For example,
a utility may know that its sewer system treatment capacity is 21 million gallons per day, but it may be
difficult to convert that capacity into service units and divided into system value to yield a per service unit
fee.
6.2.1.3 Calculating the Impact fee
After determining the system value and capacity, the impact fee is calculated by dividing system value by
system capacity. The utility can then assess its impact fee for new connections using a selected fee
assessment approach, which is discussed in the following subsection.
6.2.2 Impact Fee Methodologies
There are three industry-accepted methodologies for calculating impact fees: the buy-in method,
incremental cost method, and a hybrid or combined approach. For this Study, Carollo calculated impact
fees using the incremental method, consistent with the previous Study and State regulations. To
understand this decision better, it is helpful to understand all the options.
6.2.2.1 Buy-In Method
The buy-in approach is most appropriate when existing capacity is sufficient to serve both existing and
forecasted future connections and planned capital investment projects are minimal. These utilities
typically have some “buffer capacity” after constructing excess infrastructure that can meet new
connections.
The purpose of the buy-in approach is to recover costs that have already been incurred by the City.
Existing customers have paid for this system over time through their user rates (through direct capital
financing or retired debt). The buy-in approach (or this component, in the hybrid approach discussed
below) of an impact fee provides a mechanism to reimburse existing system users for the carrying costs of
constructing system capacity that is available for future users.
The fee is calculated by dividing the total system value by the total current capacity of the system,
including all used and unused capacity, as seen in Equation 2.
Equation 2 Buy-In Method Impact Fee Formula
𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐹𝐹𝐹𝐹𝐹𝐹=𝐸𝐸𝐸𝐸𝐶𝐶𝑆𝑆𝑆𝑆𝐶𝐶𝐸𝐸𝐸𝐸 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑆𝑆𝐸𝐸𝐸𝐸𝐶𝐶𝑆𝑆𝑆𝑆𝐶𝐶𝐸𝐸𝐸𝐸 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝐶𝐶𝑉𝑉𝐶𝐶𝑉𝑉𝐶𝐶𝐶𝐶𝑆𝑆𝑆𝑆 (𝐸𝐸𝐸𝐸𝐸𝐸𝑆𝑆 𝑜𝑜𝑜𝑜 𝐺𝐺𝐺𝐺𝐸𝐸)
Existing System Value
Determining existing system value begins with a valuation of all assets currently owned by the utility. This
is then adjusted by several factors, resulting in an estimate of system value that represents the total net
equity held in the system by the utility’s existing customers. AWWA’s M1 manual outlines four possible
valuation approaches:
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 43
Table 38 System Valuation Approaches from M1
Method Asset Valuation Approach
Original Cost Nominal value paid at the time of construction.
Net Book Value Original value, less accumulated depreciation.
RCN Original cost, adjusted to represent cost of replacement in current dollars; no
depreciation is subtracted.
RCNLD (as New) Original cost less accumulated depreciation, adjusted to represent cost of
replacement in current dollars.
Notes:
RCNLD - Replacement Cost New Less Depreciation; RCN – Replacement Cost New
Neither AWWA nor WEF dictate a specific valuation methodology. Carollo recommends the RCNLD
approach for this Study. The first part of this approach is calculating the RCN by escalating the Original
Cost to build each asset to present-day dollars using the Engineering News-Record Construction Cost
Index (ENR-CCI). Values can be inflated based on the ENR-CCI of one of twenty cities or a 20-city average;
due to location, Carollo chose the latter. Then, accumulated depreciation is similarly escalated and
deducted, resulting in the RCNLD.
The existing system value also includes any work in progress (WIP) and cash reserves. However, it must
adjust for costs that have not yet been incurred by the utility. For this Study, those are contributed assets
and debt service principal for the system.
Contributed or donated assets are deducted because current system users did not pay for the
construction of these assets and thus do not own equity in these assets. Therefore, it would be
inappropriate for future users to reimburse current customers for assets which they did not fund.
For the same reason, all outstanding principal on existing debt service of the current system is deducted
because existing users have not yet paid for that portion of the assets and so should not be reimbursed.
After deducting contributed assets and outstanding principal from the RCNLD asset value, the result can
be divided by the existing system capacity to calculate impact fees using the buy-in method.
6.2.2.2 Incremental Cost Method
In contrast with the buy-in approach, which can be described as “backward-looking” by valuating
historical system investment and capacity, the incremental approach is “forward-looking” by capturing
planned expansion and growth of the system. The buy-in approach typically serves built-out systems
better than systems that are growing and expanding. While the buy-in approach looks at the unit cost of
existing capacity in the system, the incremental approach looks at the cost to add marginal capacity to a
system where that demand cannot be served by existing capacity. The incremental approach can be neatly
summed up by the philosophy of “growth pays for growth.”
In contrast to the buy-in approach of valuating the cost of capacity as the existing system assets, the
incremental approach is based on the cost of expanded future capacity. To estimate this, the CIP is
allocated to either R&R of the existing assets or the installation of new assets for new capacity. The costs
are reflected in present day dollars, regardless of project timing.
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 44
Not all projects fit entirely in one allocation or the other; some may serve both categories. For instance, a
pipeline R&R can have an expansion element to it if the pipeline replacement is upsized from the original
pipe diameter and adds capacity or if a portion of the replaced pipeline capacity is unused and available
to serve future connections. Once the projects are allocated between R&R and growth, the expansion CIP
portion of the equation is ready. When there is available existing capacity within the built system, it is
appropriate to also include the value of that capacity in the incremental cost method because it was built
for future users.
Similar to the buy-in method, the incremental cost method calculation divides system value by the
capacity served by those assets. However, because it is critical for the value used in the numerator to
represent the capacity in the denominator, the incremental cost method impact fee divides the sum of
expansion CIP and available asset value by net future capacity available for new connections (future
system capacity less existing demand), as seen in Equation 3.
Equation 3 Incremental Cost Method Impact Fee Formula
𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐹𝐹𝐹𝐹𝐹𝐹=𝐸𝐸𝐸𝐸𝐶𝐶𝑉𝑉𝐸𝐸𝑆𝑆𝐶𝐶𝑜𝑜𝐸𝐸 𝐶𝐶𝐶𝐶𝐺𝐺+𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑆𝑆 𝑜𝑜𝑜𝑜 𝐸𝐸𝐸𝐸𝐶𝐶𝑆𝑆𝑆𝑆𝐶𝐶𝐸𝐸𝐸𝐸 𝐴𝐴𝐴𝐴𝑉𝑉𝐶𝐶𝑉𝑉𝑉𝑉𝐴𝐴𝑉𝑉𝑆𝑆 𝐶𝐶𝑉𝑉𝐶𝐶𝑉𝑉𝐶𝐶𝐶𝐶𝑆𝑆𝑆𝑆𝐹𝐹𝑉𝑉𝑆𝑆𝑉𝑉𝑜𝑜𝑆𝑆 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝐶𝐶𝑉𝑉𝐶𝐶𝑉𝑉𝐶𝐶𝐶𝐶𝑆𝑆𝑆𝑆 −𝐸𝐸𝐸𝐸𝐶𝐶𝑆𝑆𝑆𝑆𝐶𝐶𝐸𝐸𝐸𝐸 𝐸𝐸𝑆𝑆𝑆𝑆𝑉𝑉𝐸𝐸𝐷𝐷
6.2.2.3 Hybrid Method
Some agencies have a sizable existing system plus significant expansion CIP on the horizon. To
appropriately capture the capacity built for future customers as well as reimburse existing customers for
the built system, a hybrid approach combines elements from each methodology to form one impact fee.
The system valuation accounts for both the RCNLD of the existing system and expansion CIP. The
corresponding capacity in the denominator is the sum of total capacity served at the end of the CIP
forecast, as shown in Equation 4.
Equation 4 Hybrid Method Impact Fee Formula
𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐹𝐹𝐹𝐹𝐹𝐹=𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑆𝑆 𝑜𝑜𝑜𝑜 𝐸𝐸𝐸𝐸𝐶𝐶𝑆𝑆𝑆𝑆𝐶𝐶𝐸𝐸𝐸𝐸 𝐴𝐴𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆+𝐸𝐸𝐸𝐸𝐶𝐶𝑉𝑉𝐸𝐸𝑆𝑆𝐶𝐶𝑜𝑜𝐸𝐸 𝐶𝐶𝐶𝐶𝐺𝐺𝑇𝑇𝑜𝑜𝑆𝑆𝑉𝑉𝑉𝑉 𝐺𝐺𝑜𝑜𝑜𝑜𝑃𝑃𝑆𝑆𝐶𝐶𝑆𝑆𝑆𝑆𝐷𝐷 𝐶𝐶𝑉𝑉𝐶𝐶𝑉𝑉𝐶𝐶𝐶𝐶𝑆𝑆𝑆𝑆
6.2.3 Assessment Basis
The assessment basis is the unit of measure used when determining what the fee will be for an individual
connection. Historically, the City used an EDU (per unit) for Residential customers and meter sizes for all
other customers. Currently the City gives master metered multifamily developers the option of the EDU or
meter size assessment.
6.2.3.1 Equivalent Dwelling Unit Projections
Account data is collected from the City’s billing data and converted into EDUs which is the standard
measure of demand expressed as water usage and wastewater discharge for an average household unit.
For the City, one water EDU is equivalent to 235 gallons per day (gpd), and one sewer EDU is equivalent to
233 gpd. The projection of EDUs over the next 10 years helps determine what portion of planned capital
improvements will be eligible for inclusion in the subsequent impact fee calculation. The following table
presents the projected number of EDUs for water and sewer.
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 45
Table 39 Projected Water and Sewer EDUs (2025-2035)
Component
Usage (1,000 gallons) EDUs
2025 2035 2025 2035 Change
Water 6,988,432 8,050,431 81,308 93,664 12,356
Sewer 2,795,690 3,292,757 62,130 73,176 11,047
6.3 Water System Impact Fee
The City currently has system capacity available to accommodate a portion of the additional EDUs
projected over the next 10 years. The City also has upcoming CIP projects for the distribution system that
will expand capacity for future users. Therefore, this Study maintained the incremental approach for
calculating the capacity.
6.3.1 Water System Valuation
While the City’s water system is mostly built out, some water system assets are available to serve new
customers. The first step in calculating the water impact fee is to determine the eligible existing system
assets to be included in the fee.
The existing system value is calculated by adding, RCNLD, WIP, and outstanding interest, then subtracting
contributed assets and debt service principal. As summarized in Table 36, only 9.7 percent of the existing
transmission system and storage and 2.3 percent of the distribution assets are eligible to serve new
customers over the next 10 years.
Table 40 Existing Water System Valuation Calculation ($ thousands)
Component Transmission Distribution Storage Total
Fixed Assets (RCNLD) $14,173 $232,897 $2,166 $249,236
WIP $85,000 $12,618 $0 $97,618
Outstanding Interest $6,561 $0 $0 $6,561
Less: Debt Service Principal $85,000 $0 $0 $85,000
Less: Contributed Assets $0 $83,680 $0 $83,680
Total Existing System Value $20,734 $161,834 $2,166 $184,734
Total Eligible Capacity 9.7% 2.3% 9.7%
Total Eligible Existing System Value $2,011 $3,672 $210 $5,893
The future system value is based on upcoming capital projects within the next 10 years that are related to
serving new customers. Table 41 shows future projects related to customer expansion. As shown, only
distribution system projects are related to expansion.
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
APRIL 2026 / FINAL / CAROLLO
CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 46
Table 41 Water Capital Projects Related to Expansion ($ Thousands)
Capital Project System Expansion
Related
10-Year Total
Ash St. PS & 12" WL Distribution 100% $4,720
S. School Ave. Bottleneck Distribution 100% $1,110
18" WL to Elkins (1.8 miles) Distribution 100% $7,200
Kessler Booster PS Distribution 100% $4,239
HWY 112 N. Relocations Distribution 100% $500
North College Waterline Replacements Distribution 100% $13,200
Total Future System Value $30,969
Similar to the eligible existing system value, only a portion of the capital projects will serve the anticipated
number of EDUs added to the water system over the next 10 years. Below summarizes the eligible future
system value.
Table 42 Future Water System Valuation Calculation ($ Thousands)
Component Transmission Distribution Storage Total
Total Future Systems Improvements $0 $30,969 $0 $30,969
Less: Contributed Assets $0 $0 $0 $0
Total Future System Value $0 $30,969 $0 $30,969
Total Eligible Capacity N/A 87.6% N/A
Total Eligible Future System Value $0 $27,124 $0 $27,124
6.3.2 Proposed Water Impact Fee
Now that the eligible existing and future water system values have been determined, the impact fee
calculation as a dollar per EDU is $2,672, as outlined below.
Table 43 Proposed Water Impact Fee Calculation
Component Transmission Distribution Storage Total
Total Eligible System Value ($ Thousands) $2,011 $30,796 $210
Added EDUs 12,356 12,356 12,356
Water Impact Fee ($ per EDU) $163 $2,492 $17 $2,672
Carollo recommends the City charge residential and multifamily customers on a per dwelling unit basis. As
multifamily dwelling units typically do not use as much water as a single family home, an EDU factor for
multifamily is 0.71 is applied, resulting in a lower fee per unit than that of a single family home. Carollo
recommends charging non-residential development per meter based on meter size. The schedule below
shows the recommended water impact fee schedule.
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2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 47
Table 44 Recommended Water Impact Fees
Customer Class Existing Proposed Difference
Residential
Single Family (per dwelling unit) $971 $2,672 $1,701
Multi-Family (per dwelling unit) $691 $1,897 $1,206
Non-Residential
5/8" x 3/4" Meter $971 $2,672 $1,701
1" Meter $2,428 $6,680 $4,252
1.5" Meter $4,855 $13,361 $8,506
2" Meter $7,768 $21,377 $13,609
3" Meter $15,536 $42,754 $27,218
4" Meter $24,275 $66,803 $42,528
6" Meter $48,550 $133,606 $85,056
8” Meter $77,680 $213,770 $136,090
10” Meter $111,665 $307,294 $195,629
6.4 Sewer System Impact Fee
The City currently has system capacity available in the current to accommodate a portion of the projected
additional EDUs over the next 10 years. The City also has upcoming CIP projects for the collection and
treatment systems that will expand capacity for future users. Therefore, this Study maintained the
incremental approach for calculating the capacity.
6.4.1 Sewer System Valuation
Similar to the water system, there is a portion of the existing sewer system available to serve new
customers. Table 45 shows the calculation of the sewer eligible existing system assets that can be included
in the fee.
Table 45 Existing Sewer System Valuation Calculation ($ thousands)
Asset Category Collection Treatment Total
Fixed Assets (RCNLD) $229,645 $87,357 $317,002
WIP $0 $0 $0
Outstanding Interest $0 $0 $0
Less: Debt Service Principal $0 $0 $0
Less: Contributed Assets $62,721 $0 $62,721
Total Existing System Value $166,924 $87,357 $254,281
Total Eligible Capacity 2.6% 11.7%
Total Eligible Existing System Value $4,419 $10,191 $14,610
The future system value is based on upcoming capital projects within the next 10 years that are related to
serving new sewer customers. Table 46 shows future projects related to customer expansion.
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
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CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 48
Table 46 Sewer Capital Projects Related to Expansion ($ Thousands)
Capital Project System
Expansion
Related 10-Year Total
LS-22 Owl Creek Upgrades Collection 100% $1,030
Mally Wagnon Outfall 18" SS Collection 100% $4,270
Dead Horse to Mally Wagnon 18" SS Collection 100% $4,190
LS-40, 41, 46 and 27 Elimination Collection 100% $1,530
LS-14 Industrial Park Upgrades Collection 100% $4,310
Goose Creek Interceptor + LS-44 Elimination Collection 100% $2,130
Greenland Sewer Cost Share Collection 100% $1,050
Total Future System Value $18,510
Unlike the eligible existing system value, 100 percent of the capital projects related to growth will serve
the anticipated number of EDUs added to the sewer system over the next 10 years. Below summarizes the
eligible future system value.
Table 47 Sewer Future System Valuation Calculation ($ Thousands)
Component Collection Treatment Total
Total Future Systems Improvements $18,510 $0 $18,510
Less: Contributed Assets $0 $0 $0
Total Future System Value $18,510 $0 $18,510
Total Eligible Capacity 100.0% 0.0%
Total Eligible Future System Value $18,510 $0 $18,510
6.4.2 Proposed Sewer Impact Fee
Now that the eligible existing and future sewer system values have been determined, the sewer impact fee
calculation as a dollar per EDU is $2,998, as outlined below.
Table 48 Proposed Sewer Impact Fee Calculation
Component Collection Treatment Total
Total Eligible System Value $22,929 $10,191 $33,120
Added EDUs 11,047 11,047 11,047
Sewer Impact Fee ($ per EDU) $2,076 $922 $2,998
Carollo recommends the City charge sewer residential and multifamily development per dwelling unit,
keeping with the multifamily EDU factor of 0.71. Carollo recommends charging non-residential
developments per meter based on meter size. The schedule below shows the recommended sewer impact
fee schedule.
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
APRIL 2026 / FINAL / CAROLLO
CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 49
Table 49 Recommended Sewer Impact Fees
Customer Class Existing Proposed Difference
Residential
Single Family (per dwelling unit) $872 $2,998 $2,126
Multi-Family (per dwelling unit) $620 $2,129 $1,509
Non-Residential
5/8" x 3/4" Meter $872 $2,998 $2,126
1" Meter $2,180 $7,496 $5,316
1.5" Meter $4,360 $14,991 $10,631
2" Meter $6,976 $23,986 $17,010
3" Meter $13,952 $47,972 $34,020
4" Meter $21,800 $74,956 $53,156
6" Meter $43,600 $149,911 $106,311
8” Meter $69,760 $239,858 $170,098
10” Meter $100,280 $344,796 $244,516
6.5 Combined Impact Fee Comparison
The proposed combined water and sewer impact fee schedule is shown in Table 50.
Table 50 Existing and Proposed Combined Water and Sewer Impact Fees
Customer Class Existing Proposed Difference
Residential
Single Family (per dwelling unit) $1,843 $5,670 $3,827
Multi-Family (per dwelling unit) $1,311 $4,026 $2,715
Non-Residential
5/8" x 3/4" Meter $1,843 $5,670 $3,827
1" Meter $4,608 $14,176 $9,568
1.5" Meter $9,215 $28,352 $19,137
2" Meter $14,744 $45,363 $30,619
3" Meter $29,488 $90,726 $61,238
4" Meter $46,075 $141,759 $95,684
6" Meter $92,150 $283,517 $191,367
8” Meter $147,440 $453,628 $306,188
10” Meter $211,945 $652,090 $440,145
As part of the Study, Carollo completed a survey of water and sewer impact fees for utilities in Northwest
Arkansas. The figure below illustrates that the City currently has the lowest combined impact fee of the
utilities surveyed, while the proposed fees are within the middle range of the group.
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
APRIL 2026 / FINAL / CAROLLO
CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 50
Figure 4 Northwest Arkansas Water and Sewer Impact Fee Comparison
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
2026 WATER AND SEWER RATE AND IMPACT FEE STUDY
APRIL 2026 / FINAL / CAROLLO
CITY OF FAYETTEVILLE 2026 WATER AND SEWER RATE AND IMPACT FEE STUDY 51
SECTION 7 CONCLUSION
In order to meet its financial obligations and secure financial stability, Carollo recommends the City
implement the rates and charges proposed for FY 2026 through FY 2030 that are detailed in this report.
The resulting revenues generated by the rates will allow the City to meet its financial commitments,
achieve necessary capital funding objectives, and absorb the large inflationary cost increases that have
occurred in recent years.
Projected water rate revenue is based on proposed water rates being implemented on July 1, 2026, and
then January 1 of each year thereafter. Projected sewer rates rate revenue is based on proposed sewer
rates being implemented on January 1 of each year starting in FY 2027. Regulatory requirements,
economic conditions, weather events, system emergencies, and other factors can influence the revenue
recovered and/or required for sufficiently maintaining the utility. Therefore, these projections should be
revisited annually and updated as necessary, within a five year period.
Carollo also recommends the City implement the full water and sewer impact fees discussed in Section 5
of this report. The proposed water and sewer rate adjustments for the rate-setting period assume that
impact fee revenue will partially fund projects outlined in the CIP. The impact revenue projected in this
Study is based on 100 percent fee implementation. Carollo recommends the City update its water and
sewer impact fees at least every five years.
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 1 of 16
51.136 Monthly Water Rates
Effective as of the first billing statements issued after December 31, 2023June 30, 2026, the following monthly
rates shall be fixed as rates to be charged for water furnished by the waterworks system of the city, which rates
the City Council finds and declares to be reasonable and necessary minimum rates to be charged. All non-
emergency water uses shall be billed to the user, to include but not limited to water used for: use within
structures; business; manufacturing; irrigation; retail by another water utility; city uses; educational purposes;
medical purposes; water system routine non-emergency uses; wastewater system routine non-emergency uses;
non-profit uses; fire department non-emergency uses to include training and equipment calibration; construction
of new water mains; street cleaning; and wet down of construction sites and materials. Emergency water use that
does not pass through a water system meter shall not be billed, including firefighting, water leaks, water leak
repair, and emergency water line flushing. The volumes used for these emergency purposes should be estimated
and submitted monthly to the Business Office Manager and the Water/Sewer Operations Manager.
(A) Monthly Water Rates.
(1) The water usage of each customer shall be determined each month by meter measurement and the
amount per 1,000 gallons to be paid for water usage by each customer shall be computed on the basis
of the following schedule of rates.
Table A-1
Monthly Water Rates Prior to January 1, 2024 July 1, 2026
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $3.51 $4.04 $4.04 $5.10
Next 13,000 $4.65 $5.34 $5.35 $6.75
Residential
Over 15,000 $6.59 $7.57 $7.54 $9.57
Non-Residential First 300,000 All Usage $3.79 $4.72 $4.38 $5.75
Over 300,000 $3.39 $3.90
Major Industrial All Usage $2.96 $3.53 $3.40 $3.92
Irrigation First 300,000 All Usage $5.04 $5.34 $5.80 $6.61
Over 300,000 $4.53 $5.22
Wholesale Reduced Peak
Demand All Usage
$2.87 $3.71 $2.87 $3.71
Peak Demand $3.20 $3.20
Table A-2
Monthly Water Rates After December 31, 2023June 30, 2026
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $3.59 $4.04 $4.54 $6.06
Next 13,000 $4.75 $5.80 $6.01 $8.70
Residential
Over 15,000 $6.74 $8.70 $8.52
$13.05
Non-Residential First 300,000 All Usage $4.20 $4.77 $5.11 $7.16
Over 300,000 $4.20 $5.11
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 2 of 16
Major Industrial All Usage $3.14 $4.10 $3.49 $6.15
Irrigation First 300,000 All Usage $4.75 $8.70 $5.89
$13.05
Over 300,000 $4.75 $5.89
Wholesale Reduced Peak
Demand All Usage
$3.30 $4.25 $3.30 $4.25
Peak Demand $3.30 $3.30
Table A-3
Monthly Water Rates After December 31, 2024 2026
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $3.81 $4.69 $4.81 $7.03
Next 13,000 $5.04 $6.73 $6.37
$10.10
Residential
Over 15,000 $7.14
$10.10
$9.03
$15.14
Non-Residential First 300,000 All Usage $4.45 $5.54 $5.42 $8.31
Over 300,000 $4.45 $5.42
Major Industrial All Usage $3.33 $4.76 $3.70 $7.14
Irrigation First 300,000 All Usage $$5.04
10.10
$6.24
$15.14
Over 300,000 $5.04 $6.24
Wholesale Reduced Peak
Demand All Usage
$3.50 $4.93 $3.50 $4.93
Peak Demand $3.50 $3.50
Table A-4
Monthly Water Rates After December 31, 2025 2027
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $4.04 $5.45 $5.10 $8.16
Next 13,000 $5.34 $7.81 $6.75
$11.72
Residential
Over 15,000 $7.57
$11.72
$9.57
$17.57
Non-Residential First 300,000 All Usage $4.72 $6.43 $5.75 $9.64
Over 300,000 $4.72 $5.75
Major Industrial All Usage $3.53 $5.53 $3.92 $8.29
Irrigation First 300,000 All Usage $5.34
$11.72
$6.61
$17.57
Over 300,000 $5.34 $6.61
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 3 of 16
Wholesale Reduced Peak
Demand All Usage
$3.71 $5.72 $5.72$3.71
Peak Demand $3.71 , $3.71
Table A-5
Monthly Water Rates After December 31, 2026 2028
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $4.28 $5.62 $5.41 $8.41
Next 13,000 $5.66 $8.05 $7.16
$12.08
Residential
Over 15,000 $8.02
$12.08
$10.14
$18.10
Non-Residential First 300,000 All Usage $5.00 $6.63 $6.10 $9.93
Over 300,000 $5.00 $6.10
Major Industrial All Usage $3.74 $5.70 $4.16 $8.54
Irrigation First 300,000 All Usage $5.66
$12.08
$7.01
$18.10
Over 300,000 $5.66 $7.01
Wholesale Reduced Peak
Demand All Usage
$3.93 $5.90 $3.93 $5.90
Peak Demand $3.93 $3.93
(2) Beginning January 1, 20282030, all monthly water rates shall be increased by 3% per year.
(3) All bills under such schedules shall be computed by adding the applicable meter service charge
prescribed by subsection (B) to the amount determined to be due for water usage under this schedule.
Applicable sales tax and franchise fees shall be added to the bill so computed.
(4) When a common facility/building is served by multiple water meters and the water usage is for the
same purpose, customers may petition the Water and Wastewater Director and/or the Finance and
Internal Services Director to have the water consumption aggregated and have the tiered rates apply
to the aggregated quantity.
(5) Water used for flushing and sampling of newly constructed water lines, Fire Department training and
equipment calibration, and other similar uses requiring a large volume and/or high velocity of water
movement shall employ a fire hydrant meter of the appropriate size for the use. If a fire hydrant meter
cannot be used due to high flow or volume requirements, then the volume of water used shall be
measured by using a pitot gauge to determine the gallons per minute and by timing the flow of water
to be able to calculate total volume. In the cases of fire department training and equipment calibration,
sewer line washing, street sweeping, and other uses where the equipment employed has a built-in
water meter, these built in water meters may be used. All such meters other than those on fire trucks
must be evaluated by the Meter Superintendent. These water uses shall be billed at the same rates as
non-residential customers.
(6) Monthly wholesale treated water rates outside city limits are based on Cost of Service Methodology.
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 4 of 16
(B) Monthly Water Service Charge.
(1) In addition to the above, each customer shall pay a monthly water service charge in accordance with
the following schedule:
Table B-1
Monthly Water Service Charge Prior to
January 1, 2024July 1, 2026
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $6.59 $7.85 $7.54 $8.98 $9.90 $7.54
⅝ x ¾ inch $6.59 $7.85 $7.54 $8.98 $9.90 $7.54
1 inch $9.14 $11.30 $10.52 $15.55 $15.55 $10.52
1 ½ inch $15.93 $21.55 $18.31 $30.78 $30.78 $18.31
2 inch $23.20 $29.52 $26.66 $42.64 $42.64 $28.56
3 inch $54.05 $64.37 $62.18 $88.89 $88.89 $64.38
4 inch $89.50
$106.59
$102.93
$130.07
$133.70
$112.25
6 inch $178.99
$213.18
$205.82
$245.14
$253.40
$213.02
8 inch $268.41
$319.67
$308.67
$367.63
$396.49
$319.47
Table B-2
Monthly Water Service Charge After
December 31June 30, 20263
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $7.85$6.99 $7.99 $11.78 $8.81 $11.78
⅝ x ¾ inch $7.85$6.99 $7.99 $11.78 $8.81$11.78
1 inch $11.30$10.06 $13.84
$16.95
$13.84$16.95
1 ½ inch $21.55$19.18 $27.40
$32.33
$27.40$32.33
2 inch $29.52$26.27 $37.95
$44.28
$37.95$44.28
Commented [NB1]: What did we decide on service
charge for wholesale meters? Match outside city? Get
rid of all together?
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 5 of 16
3 inch $64.37$57.29 $79.11
$96.56
$79.11$96.56
4 inch $106.59$94.87 $115.76
$159.89
$118.99
$159.89
6 inch $213.18$189.73 $218.17
$319.77
$225.53
$319.77
8 inch $319.67$284.51 $327.19
$479.51
$352.88
$479.51
Table B-3
Monthly Water Service Charge After
December 31, 20264
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $7.41 $9.11 $8.47 $13.67 $9.34$13.67
⅝ x ¾ inch $7.41 $9.11 $8.47 $13.67 $9.34$13.67
1 inch $10.66 $13.11 $14.67 $19.67 $14.67$19.67
1 ½ inch $20.33 $25.00 $29.04 $37.51 $29.04$37.51
2 inch $27.85 $34.25 $40.23 $51.37 $40.23$51.37
3 inch $60.73 $74.67 $83.86
$112.01
$83.86
$112.01
4 inch $100.56
$123.65
$122.71
$185.48
$126.13
$185.48
6 inch $201.11
$247.29
$231.26
$370.94
$239.06
$370.94
8 inch $301.58
$370.82
$346.82
$556.24
$374.05
$556.24
Table B-4
Monthly Water Service Charge After
December 31, 20275
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $7.85 $10.57 $8.98 $15.86 $9.90$15.86
⅝ x ¾ inch $7.85 $10.57 $8.98 $15.86 $9.90$15.86
1 inch $11.30 $15.21 $15.55 $22.82 $15.55$22.82
1 ½ inch $21.55 $29.00 $30.78 $43.52 $30.78$43.52
2 inch $29.52 $39.73 $42.64 $59.59 $42.64$59.59
3 inch $64.37 $86.62 $88.89
$129.94
$88.89
$129.94
4 inch $106.59
$143.44
$130.07
$215.16
$133.70
$215.16
6 inch $213.18
$286.86
$245.14
$430.30
$253.40
$430.30
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 6 of 16
8 inch $319.67
$430.16
$367.63
$645.24
$396.49
$645.24
Table B-5
Monthly Water Service Charge After
December 31, 20268
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $8.32 $10.89 $16.34$9.52 $10.49$16.34
⅝ x ¾ inch $8.32 $10.89 $9.52$16.34 $10.49$16.34
1 inch $11.98 $15.67 $16.48$23.51 $16.48$23.51
1 ½ inch $29.87$22.84 $32.63$44.83 $32.63$44.83
2 inch $40.93$31.29 $45.20$61.38 $45.20$61.38
3 inch $89.22$68.23 $94.22$133.84 $94.22$133.84
4 inch $147.75$112.9
9
$137.87
$221.62
$141.72
$221.62
6 inch $295.47$225.9
7
$259.85
$443.21
$268.60
$443.21
8 inch $443.07$338.8
5
$389.69
$664.60
$420.28
$664.60
(2) Beginning January 1, 20282030, all monthly water service charges shall be increased by 3% per year.
(3) The monthly treated water rates and the monthly meter service charge rates prescribed by subsections
(A) and (B) of this section shall commence as of the first billing statements issued after December 31,
2023June 30, 2026.
(4) The State of Arkansas mandated Safe Drinking Water Act fee shall be added to the monthly water
utility bill.
(C) Monthly Standby Fire Protection Service Charge.
(1) Charges for unmetered service connections for standby fire protection and fire hydrants shall be based
on the incoming line size or the backflow preventer size, whichever is smaller, as set forth in the
following table:
Monthly Standby Fire Protection Service Charge
Line Size or Backflow
Preventer Size
Inside City Outside City
1 inch $10.34 $12.38
2 inch $10.78 $12.83
2.5 inch $21.55 $24.77
3 inch $32.31 $37.16
4 inch $64.63 $74.32
6 inch $179.50 $209.60
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 7 of 16
8 inch $376.99 $433.54
10 inch $646.26 $743.18
(2) The Utilities Department shall review the monthly standby fire protection service charges every two (2)
years and shall make recommendations to the City Council following such review. Fire protection lines
shall not be connected to the water system downstream from a meter.
(Code 1965, §21-25; Ord. No. 1165, 4-18-58; Ord. No. 2144, 9-2-75; Ord. No. 2594, 2-5-80; Ord. No. 3197, 7-1-86;
Ord. No. 3409, 2-21-89; Ord. No. 3431, 6-6-89; Ord. No. 3491, 7-17-90; Ord. No. 3513, 9-18-90; Ord. No. 3519, 11-
20-90; Ord. No. 4059, §1, 10-7-97; Ord. No. 4223, 2-15-00; Code 1991, §51.136; Ord. No. 4530 12-02-02; Ord. No.
4540, 02-03-04; Ord. No. 5123, 4-1-08; Ord. No. 6169, §1, 4-2-2019; Ord. No. 6633, §1, 1-3-23; Ord. No. 6681,
§1(Att.), 9-19-23)
51.137 Monthly Sewer Rates
(A) Monthly Sewer Rates.
(1) All monthly sewer charges shall be calculated from the customer's monthly water usage. The following
monthly rates are hereby fixed as rates to be charged for sewer services:
Table D-1
Monthly Sewer Rates Per 1,000 Gallons
Before January 1, 2024July 1, 2026
Class Usage Rate
(In Gallons)
Cost per
1,000
gallons
First 2,000 gallons $4.35
$5.24
Residential
Greater than
2,000 gallons
$5.80
$6.99
Non-Residential All Usage $4.40
$5.88
Major Industrial All Usage $4.71
$6.21
Farmington All Usage $7.52
Outside city All Usage $8.18
$8.05
Wholesale 85% of metered
water usage All Usage
$5.19
$6.09
Usage above 85% of
metered water usage
$2.99
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 8 of 16
Table D-2
Monthly Sewer Rates Per 1,000 Gallons After
December 31, 2023June 30, 2026
Class Usage Rate
(In Gallons)
Cost per
1,000
gallons
First 2,000 gallons $5.24$4.94 Residential
Greater than
2,000 gallons
$6.99$6.59
Non-Residential All Usage $5.88$5.54
Major Industrial All Usage $6.21$5.85
Farmington All Usage $8.05$7.59
Outside city All Usage $8.05$7.59
Wholesale 85% of metered
water usage All Usage
$6.09$5.74
Usage above 85% of
metered water usage
$5.74
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 9 of 16
Table D-3
Monthly Sewer Rates Per 1,000 Gallons
After December 31, 2024
Class Usage Rate
(In Gallons)
Cost per
1,000
gallons
First 2,000 gallons $5.09 Residential
Greater than
2,000 gallons
$6.79
Non-Residential All Usage $5.71
Major Industrial All Usage $6.03
Farmington All Usage $7.82
Outside city All Usage $7.82
85% of metered
water usage
$5.91 Wholesale
Usage above 85% of
metered water usage
$5.91
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 10 of 16
Table D-4
Monthly Sewer Rates Per 1,000 Gallons
After December 31, 2025
Class Usage Rate
(In Gallons)
Cost per
1,000
gallons
First 2,000 gallons $5.24 Residential
Greater than
2,000 gallons
$6.99
Non-Residential All Usage $5.88
Major Industrial All Usage $6.21
Farmington All Usage $8.05
Outside city All Usage $8.05
85% of metered
water usage
$6.09 Wholesale
Usage above 85% of
metered water usage
$6.09
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 11 of 16
Table D-5
Monthly Sewer Rates Per 1,000 Gallons
After December 31, 2026
Class Usage Rate
(In Gallons)
Cost per
1,000
gallons
First 2,000 gallons $5.40 Residential
Greater than
2,000 gallons
$7.20
Non-Residential All Usage $6.06
Major Industrial All Usage $6.40
Farmington All Usage $8.29
Outside city All Usage $8.29
85% of metered
water usage
$6.27 Wholesale
Usage above 85% of
metered water usage
$6.27
(2) Beginning January 1, 20287, all monthly sewer quantity charge-usage rates per 1,000 gallons shall be
increased by 3% per year.
(3) Sewer related fees levied by the Cities of Farmington or Greenland shall be added to the wastewater
utility bill at the request of Farmington or Greenland. These fees may be calculated on a per-thousand
volumetric usage or a per month basis.
(B) Monthly Sewer Service Charge.
(1) In addition to the above, each customer shall pay a monthly sewer service charge in accordance with
the following schedule:
Table E-1 Monthly Sewer Service Charge
Prior to January 1, 2024July 1, 2026
Meter Size Inside City Outside City†
⅝" $18.28 $13.52 $18.28 $16.66
⅝ x ¾ inch $18.28 $13.52 $18.28 $16.98
1 inch $23.74 $25.94 $33.92 $33.23
1½ inch $38.77 $47.53 $60.37 $66.98
2 inch $55.43 $65.37 $79.73 $93.23
3 inch $128.73
$140.67
$184.24
$195.74
4 inch $212.13
$231.80
$303.44
$286.99
6 inch $420.39
$459.37
$601.46
$532.02
8 inch $628.73
$687.03
$899.76
$592.02
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
Created: 2026-02-24 15:05:39 [EST]
(Supp. No. 39)
Page 12 of 16
Table E-2 Monthly Sewer Service Charge
After December 31, 2023June 30, 2026
Meter Size Inside City Outside City†
⅝" $13.52$12.75 $16.66$15.71
⅝ x ¾ inch $13.52$12.75 $16.98$16.01
1 inch $25.94$24.45 $33.23$31.32
1½ inch $47.53$44.81 $66.98$63.14
2 inch $65.37$61.64 $93.23$87.88
3 inch $140.67$132.59 $195.74$184.50
4 inch $231.80$218.49 $286.99$270.52
6 inch $459.37$433.00 $532.02$501.48
8 inch $687.03$647.59 $592.02$558.03
Table E-3 Monthly Sewer Service Charge
After December 31, 2024
Meter Size Inside City Outside City† Farmington†
⅝" $13.13 $16.18 $16.18
⅝ x ¾ inch $13.13 $16.49 $16.49
1 inch $25.19 $32.26 $32.26
1½ inch $46.15 $65.03 $65.03
2 inch $63.48 $90.52 $90.52
3 inch $136.57 $190.04 $190.04
4 inch $225.09 $278.64 $278.64
6 inch $445.99 $516.52 $516.52
8 inch $667.02 $574.77 $574.77
Table E-4 Monthly Sewer Service Charge
After December 31, 2025
Meter Size Inside City Outside City† Farmington†
⅝" $13.52 $16.66 $16.66
⅝ ;x ¾ inch $13.52 $16.98 $16.98
1 inch $25.94 $33.23 $33.23
1½ inch $47.53 $66.98 $66.98
2 inch $65.37 $93.23 $93.23
3 inch $140.67 $195.74 $195.74
4 inch $231.80 $286.99 $286.99
6 inch $459.37 $532.02 $532.02
8 inch $687.03 $592.02 $592.02
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Table E-5 Monthly Sewer Service Charge
After December 31, 2026
Meter Size Inside City Outside City† Farmington†
⅝" $13.93 $17.16 $17.16
⅝ x ¾ inch $13.93 $17.49 $17.49
1 inch $26.72 $34.23 $34.23
1½ inch $48.96 $68.99 $68.99
2 inch $67.35 $96.03 $96.03
3 inch $144.89 $201.61 $201.61
4 inch $238.75 $295.60 $295.60
6 inch $473.15 $547.98 $547.98
8 inch $707.64 $609.78 $609.78
†Cost of Service Methodology required by contract.
(2) Beginning January 1, 20287, all monthly sewer service charges shall be increased by 3% per year.
(C) Determination of Sewer Quantity Charge for Residential Customers.
(1) In the case of residential customers residing in a single family home, duplex, triplex, and/or fourplex,
the average monthly water consumption for the preceding months of December, January, and
February shall be computed separately for each customer, and a uniform monthly charge for each
customer shall be determined by applying the schedule of rates set out in subsection (A) of this section
to such average monthly water consumption. In the case of a residential user for whom a uniform
monthly charge has been established and who moves to a new location the same uniform monthly
charge shall apply at the new location. In the case of new residential customers, sewer averages shall
be established based on the number of individuals residing within the dwelling unit, at a rate of 2,100
gallons per customer per month. This methodology of sewer averaging shall not apply to multi-family
structures containing five (5) or more units in a contiguous building.
(2) In the case of sewer customers who do not have a water meter provided by a public water utility, the
sewer usage volume billed shall be the average volume of all users in the sewer system in like dwellings
from the most recent system-wide sewer average calculation.
(D) Determination of Charge for Non-residential and Major Industrial Customers. In the case of non-residential
and/or major industrial customers, the monthly sewer charge shall be determined by applying the schedule
of rates prescribed in subsection (A) of this section to the monthly water usage of such customers. In the
event that a non-residential or major industrial customer discharging waste into the city's sanitary sewer
system produces evidence to the Water and Wastewater Director demonstrating that a substantial portion
of the total amount of water from all sources used for all purposes does not reach the sanitary sewer which
is in excess of the factors used in establishing the rates in subsection (A) of this section, an estimated
percentage of total water consumption to be used in computing charges may be established by the Water
and Wastewater Director. The factors used in establishing said rates are on file in the office of the Water and
Wastewater Director and are incorporated herein by reference thereto. Any rate so adjusted by the Water
and Wastewater Director shall be effective for a twelve (12) month period beginning with the billing for the
month when rates adjudged hereby go into effect.
(E) Extra Strength Surcharge.
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(1) For all significant industrial users as defined in §51.074, whose wastewater discharge is greater than
300 mg/I of BOD 5 and/or TSS, the city shall levy an Extra Strength Surcharge for each parameter in
accordance with the following unit charges:
Table F1 Extra Strength Surcharges
Prior to January 31July 1, 20264
Prior to 01/01/2024
Extra Strength BOD 5 $0.5743 per pound $0.3148 per
pound
Extra Strength TSS $0.7086 per pound $0.4483 per
pound
Table F2 Extra Strength Surcharges
After December 31, 2023June 30, 2026
After 12/31/2023
Extra Strength BOD 5 $0.5743 per pound $0.5414 per
pound
Extra Strength TSS $0.7086 per pound $0.6679 per
pound
Table F3 Extra Strength Surcharges
After December 31, 2024
After 12/31/2024
Extra Strength BOD 5 $0.5576 per pound
Extra Strength TSS $0.6880 per pound
Table F4 Extra Strength Surcharges
After December 31, 2025
After 12/31/2025
Extra Strength BOD 5 $0.5743 per pound
Extra Strength TSS $0.7086 per pound
Table F5 Extra Strength Surcharges
After December 31, 2026
After 12/31/2026
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Extra Strength BOD 5 $0.5915 per pound
Extra Strength TSS $0.7299 per pound
(2) Beginning January 1, 2027Starting after December 31, 2026, Extra Strength Surcharges shall be
increased by 3% per year.
(3) Extra Strength Surcharges shall be billed monthly and shall be computed on the basis of water meter
reading (wastewater discharge volume).
(4) All sampling and analyses of the wastewater characteristics shall be performed in accordance with U.S.
Environmental Protection Agency 40 Code of Federal Regulations Part 136 approved methods.
(5) The volume of flow used in computing surcharge shall be based upon metered water consumption as
shown in the records of meter readings maintained by the city's business office. In the event that a
user discharging waste into the city sanitary sewer system produces evidence to the city demonstrating
that a portion of the total amount of water used for all purposes is not discharged into the sanitary
sewer, a separate meter or meters or other approved flow measuring device may be installed at the
user's expense, upon its request, to measure only that portion of the total flow being discharged into
the city sewer system. If a surcharge is assessed by the city, it shall be shown separately on the
monthly billing.
(6) Any person discharging industrial waste into the sanitary sewers of the city who procures any part or
all of the user's water supply from sources other than the city, all or part of which is discharged into the
sanitary sewer, shall install and maintain at the user's expense water meters of the type approved by
the city for the purpose of determining the proper volume of flow to be used in computing sewer
service charges. Such meter will be read monthly and tested for accuracy when deemed necessary by
the city. Where it can be shown that a portion of the water measured by the aforesaid meter or meters
does not enter the sanitary sewer system of the city, a separate meter or meters or other approved
flow measuring device may be installed at the user's expense, upon its request, to measure only that
portion of the total flow being discharged into the city sewer system. If a surcharge is assessed by the
city, it shall be shown separately on the monthly billing.
(7) Computation of extra strength surcharges shall be based on the following formula:
(a) Extra strength surcharge:
S = V × 8.34 × [BOD Unit Charge (BOD - 300) + SS Unit Charge (TSS - 300)]
(b) Where:
S = Surcharge in dollars
V = Sewer volume in million gallons
8.34 = Pounds per gallon of water
BOD Unit
Charge
= Unit charge for BOD in dollars per pound
BOD = BOD strength in parts per million
300 = Allowed BOD strength in parts per million
TSS Unit
Charge
= Unit charge for suspended solids in dollars per pound
TSS = Suspended solids strength in parts per million
300 = Allowed TSS Strength in parts per million
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(F) Elkins Sewer Charges.
(1) Elkins' payment for wastewater treatment shall be based on 85% of the metered water purchased. The
volume of wastewater received by Fayetteville at the "Point of Connection" shall be measured by the
installed wastewater meter. Volumes of wastewater below or above the agreed upon percentage (85%) of
metered water, as measured by the wastewater meter, shall be recorded on a monthly basis, with a
reconciliation of the net difference to occur semiannually in June and December. If the reconciliation volume
is over the agreed upon percentage, this amount shall be billed to Elkins in June and December at the actual
computed cost of wastewater collection to and treatment at the Noland Wastewater Treatment Plant, not
including the calculated rate of return and not including depreciation charges, but including any capacity
surcharge, based on the most recent rate as determined in paragraph B of this contract. If the reconciliation
volume is below the agreed upon percentage, the actual amount billed for the difference shall be refunded
to Elkins in June and December
(2) Elkins Impact Fee Charges. The City of Elkins shall pay an additional $0.25 per 1,000 gallons of wastewater,
for all wastewater volume charges including both the 85% of metered water volume and for wastewater in
excess of the 85% of the metered water purchased billed volume.
(G)(F) Hauled Wastewater Fees.
(1) Application Fee. An application to discharge hauled domestic waste must be accompanied by a fee of
$100.00.
(2) Discharge Fee. A fee of $50.00 must be paid for each hauled domestic waste load discharged.
(H)(G) Industrial Wastewater Discharge Permit Fee.
(1) Application Fee. An application for an industrial wastewater discharge permit must be accompanied by
a fee of $500.00.
(Code 1965, §21-26; Ord. No. 1165, 4-18-58; Ord. No. 3197, 7-1-86; Ord. No. 3285, 8-4-87; Ord. No. 3398, 1-3-89;
Ord. No. 3491, 7-17-90; Ord. No. 3637, §§1, 2, 8-18-92; Ord. No. 4059, §2, 10-7-97; Code 1991, §51.137; Ord. No.
4530, 12-02-03; Ord. No. 4803, 12-20-05; Ord. No. 4998, 4-3-07; Ord. No. 5129, 4-15-08; Ord. No. 5438, 9-20-11;
Ord. No. 5739, 2-17-15; Ord. No. 6633, §1, 1-3-23; Ord. No. 6681, §1(Att.), 9-19-23)
Commented [NB2]: Removed as this information is
contained in the Sewer Agreement with Elkins.
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159.02 Water And Wastewater Impact Fees
(A) Applicability.
(1) The following provisions shall apply to all of the territory within the city's water and wastewater service
areas, including areas outside the corporate city limits and within service areas located within
Washington County and other incorporated cities after June 16, 2003.
(2) The following types of development shall be required to pay a water and/or wastewater impact fee:
(a) New and existing development seeking a new connection to the city's water or wastewater
system resulting in increased demand from water and/or wastewater facilities. This shall not
apply to existing development that is connecting to the wastewater system in order to eliminate
an individual sewage disposal system.
(b) New and existing development as stated in (a) above seeking a new connection to the system of
a wholesale customer of the city's water or wastewater system, where collection of the city's
impact fee is required by the city's contract with the wholesale customer.
(c) Nonresidential or residential redevelopment seeking a larger capacity or additional water meter.
(B) Intent.
(1) The intent of wastewater and water impact fees is to ensure that new development bears a
proportionate share of the cost of improvements to the city's water and wastewater systems; to
ensure that the proportionate share does not exceed the cost of providing water and wastewater
facilities to the development that paid the fee; and to ensure that funds collected from developments
are used to construct water and wastewater facilities that serve such developments. It is further the
intent of this ordinance to use the impact fees to implement the city's Comprehensive Land Use Plan
and future plan updates and to implement the city's Five Year Capital Improvements Program.
(2) It is not the intent of this ordinance to collect any money from any development in excess of the actual
amount necessary to offset demands generated by that development for the water and wastewater
facilities for which the fee was paid.
(3) It is not the intent of this ordinance that any monies collected for the water impact fee and the
wastewater impact fee ever be commingled or ever be used for a type of facility different from that for
which the fee was paid.
(C) Time of Collection.
(1) Water and wastewater impact fees shall be paid at the time of installation of the water meter serving
the property or of the connection to the wastewater system, whichever comes first.
(2) Development projects which have obtained building permits prior to the effective date of this
ordinance shall not have to pay impact fees if the building is completed with water and sewer hook-ups
installed and Certificate of Occupancy issued no later than six (6) months from the effective date of this
ordinance.
(D) Fee Determination.
(1) Schedule of Fees. The Impact Fee Administrator shall determine the amount of the water and
wastewater impact fees for residential uses based on the type or size of the water meter and for
nonresidential uses based on the size of the water meter using the following schedule:
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Land Use Unit Water Wastewater Total
Single-Family (average) Dwelling $971.00
$2,672.00
$872.00
$2,998.00
$1,843.00
$5,670.00
Multi-Family
(per dwelling unit)
Dwelling $691.00
$1,897.00
$620.00
$2,129.00
$1,311.00
$4,026.00
Nonresidential
(5/8 x 3/4 inch meter)
Meter $971.00
$2,672.00
$872.00
$2,998.00
$1,843.00
$5,670.00
Nonresidential
(1 inch meter)
Meter $2,428.00
$6,680.00
$2,180.00
$7,496.00
$4,608.00
$14,176.00
Nonresidential
(1½ inch meter)
Meter $4,855.00
$13,361.00
$4,360.00
$14,991.00
$9,215.00
$28,352.00
Nonresidential
(2 inch meter)
Meter $7,768.00
$21,377.00
$6,976.00
$23,986.00
$14,744.00
$45,363.00
Nonresidential
(3 inch meter)
Meter $15,536.00
$42,754.00
$13,952.00
$47,972.00
$29,488.00
$90,726.00
Nonresidential
(4 inch meter)
Meter $24,275.00
$66,803.00
$21,800.00
$74,956.00
$46,075.00
$141,759.00
Nonresidential
(6 inch meter)
Meter $48,550.00
$133,606.00
$43,600.00
$149,911.00
$92,150.00
$283,517.00
Nonresidential
(8 inch meter)
Meter $77,680.00
$213,770.00
$69,760.00
$239,858.00
$147,440.00
$453,628.00
Nonresidential
(10 inch meter)
Meter $111,665.00
$307,294.00
$100,280.00
$344,796.00
$211,945.00
$652,090.00
(2) Redevelopment, Reconstruction, Change of Use. In the event of a redevelopment, reconstruction or
change of use from an existing development or use, the fee shall be the difference between what the
fee would be for the entire redevelopment or reconstruction project and what the fee would have
been for the existing development or use. Existing development must be connected to the water or
wastewater system at the time of redevelopment in order to apply this credit.
(3) Mixed Use. If the proposed development includes a mix of the residential land uses and/or
nonresidential meter sizes that are listed in the impact fee schedule, the fee shall be determined by
adding up all the water and wastewater impact fees that would be applicable for each residential land
use type and/or nonresidential meter size as if it was a freestanding land use type. For mixed use
developments requiring a shared meter to serve both multi-family and nonresidential uses, the impact
fee shall be calculated by assigning (a) the applicable multi-family impact fee based on the number of
dwelling units, and (b) a nonresidential impact fee based on the meter size that would be required to
serve only the nonresidential portion of the development, as determined by projected demands,
fixture counts, or other accepted methods. The combined total shall constitute the impact fee for the
mixed use development, regardless of the actual meter size installed to serve the full building demand.
(4) Fire Suppression/Low Pressure. It is the intent of this ordinance to base water and wastewater impact
fees on the typical usage in a new building or other facility. Extinguishing of fires is not a part of typical
usage; to allow adequate fire flow to sprinklers and internal hydrants at some large and at-risk
properties, it may be necessary for fire protection purposes to install a larger water meter than would
be necessary to meet day-to-day needs of that facility. In addition, a larger meter may be required in
areas of low water pressure than in areas of normal water pressure for the same type of use. In those
cases, it is the policy of the city that the impact fee for water and wastewater should be based on the
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meter size needed by that facility for its typical usage, without regard to fire-flow or unusual pressure
conditions.
(5) Irrigation. Any separate water meter installed for irrigation purposes only shall not be included in the
calculation of the wastewater impact fee.
(6) Affordable Housing and Homeless Shelter Exemption. Construction of single family, non-profit multi-
family supportive housing, and homeless shelters funded wholly or primarily by federal Community
Development Block Grants, non-profit service organizations such as Habitat for Humanity, Housing and
Urban Development housing loans and similar programs designed to provide affordable, owner-
occupied, single family residences to low income individuals, non-profit multi-family supportive
housing, and homeless shelters, and all accessory dwelling units shall be exempted from payment of
impact fees pursuant to this ordinance by the Impact Fee Administrator.
(7) Master Meters. In the event that a water master meter is utilized for any development including multi-
family or mixed use, the fee shall be based on the Master Meter size.
(E) Use of Fees.
(1) Establishment of Accounts. An Impact Fee Fund that is distinct from the General Fund of the city is
hereby created, and the impact fees received will be deposited in the following interest-bearing
accounts of the Impact Fee Fund:
(a) Water Impact Fee Account; and
(b) Wastewater Impact Fee Account.
(2) Water Impact Fee Accounts. The Water Impact Fee Account shall contain only those water impact fees
collected pursuant to this ordinance plus any interest which may accrue from time to time on such
amounts.
(3) Wastewater Impact Fee Account. The Wastewater Impact Fee Account shall contain only those
wastewater impact fees collected pursuant to this ordinance plus any interest which may accrue from
time to time on such amounts.
(4) Order of Use. Monies in each impact fee account shall be considered to be spent in the order collected,
on a first-in/first-out basis.
(5) Use of Fees. The monies in each impact fee account shall be used only for the following:
(a) Acquisition. To acquire land for and/or acquire or construct water or wastewater system
improvements of the type reflected in the title of the account and as described in the Impact Fee
Study as well as extension of service to new development paying an impact fee.
(b) Debt Service. To pay debt service on any portion of any current or future general obligation bond
issue or revenue bond issue used to finance water or wastewater system improvements of the
type reflected in the title of the account that created or will create capacity to serve new
development.
(c) As described in subsection F, Refunds.
(F) Refunds.
(1) The City of Fayetteville shall refund the portion of collected development impact fees, including the
accrued interest that has not been expended seven (7) years from the date the fees were paid. Interest
shall be based on a 4% annual rate.
(2) A refund shall be paid to the present owner of the property that was the subject of new development
and against which the fee was assessed and collected.
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(3) Notice of the right to a refund, including the amount of the refund and the procedure for applying for
and receiving the refund, shall be sent or served in writing to the present owners of the property no
later than thirty (30) days after the date which the refund becomes due. The sending by regular mail of
the notices to all present owners of record shall be sufficient to satisfy the requirement of notice.
(4) The refund shall be made on a pro rata basis, and shall be paid in full no later than ninety (90) days
after the date certain upon which the refund becomes due.
(5) At the time of payment of the water or wastewater impact fee under this ordinance, the Impact Fee
Administrator shall provide the applicant paying such fee with written notice of those circumstances
under which refunds of such fees will be made. Failure to deliver such written notice shall not
invalidate any collection of any impact fee under this ordinance.
Ord. No. 4447, §1, 12-17-02; Ord. No. 4492, §159.02 C.1, 6-03-03; Ord. No. 4496 §159.02 "F", 6-17-03; Ord. No.
4919, 9-05-06; Ord. No. 4975, 1-16-07; Ord. No. 5206, 12-16-08; Ord. No. 6255, §2, 11-5-19)
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51.136 Monthly Water Rates
Effective as of the first billing statements issued after June 30, 2026, the following monthly rates shall be fixed as
rates to be charged for water furnished by the waterworks system of the city, which rates the City Council finds
and declares to be reasonable and necessary minimum rates to be charged. All non-emergency water uses shall be
billed to the user, to include but not limited to water used for: use within structures; business; manufacturing;
irrigation; retail by another water utility; city uses; educational purposes; medical purposes; water system routine
non-emergency uses; wastewater system routine non-emergency uses; non-profit uses; fire department non-
emergency uses to include training and equipment calibration; construction of new water mains; street cleaning;
and wet down of construction sites and materials. Emergency water use that does not pass through a water
system meter shall not be billed, including firefighting, water leaks, water leak repair, and emergency water line
flushing. The volumes used for these emergency purposes should be estimated and submitted monthly to the
Business Office Manager and the Water/Sewer Operations Manager.
(A) Monthly Water Rates.
(1) The water usage of each customer shall be determined each month by meter measurement and the
amount per 1,000 gallons to be paid for water usage by each customer shall be computed on the basis
of the following schedule of rates.
Table A-1
Monthly Water Rates Prior to July 1, 2026
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $4.04 $5.10
Next 13,000 $5.34 $6.75
Residential
Over 15,000 $7.57 $9.57
Non-Residential All Usage $4.72 $5.75
Major Industrial All Usage $3.53 $3.92
Irrigation All Usage $5.34 $6.61
Wholesale All Usage $3.71 $3.71
Table A-2
Monthly Water Rates After June 30, 2026
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $4.04 $6.06
Next 13,000 $5.80 $8.70
Residential
Over 15,000 $8.70 $13.05
Non-Residential All Usage $4.77 $7.16
Major Industrial All Usage $4.10 $6.15
Irrigation All Usage $8.70 $13.05
Wholesale All Usage $4.25 $4.25
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Table A-3
Monthly Water Rates After December 31, 2026
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $4.69 $7.03
Next 13,000 $6.73 $10.10
Residential
Over 15,000 $10.10 $15.14
Non-Residential All Usage $5.54 $8.31
Major Industrial All Usage $4.76 $7.14
Irrigation All Usage $10.10 $15.14
Wholesale All Usage $4.93 $4.93
Table A-4
Monthly Water Rates After December 31, 2027
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $5.45 $8.16
Next 13,000 $7.81 $11.72
Residential
Over 15,000 $11.72 $17.57
Non-Residential All Usage $6.43 $9.64
Major Industrial All Usage $5.53 $8.29
Irrigation All Usage $11.72 $17.57
Wholesale All Usage $5.72 $5.72
Table A-5
Monthly Water Rates After December 31, 2028
Cost per 1,000 gallons
Class Usage Rate
(In Gallons)
Inside City Outside
City
First 2,000 $5.62 $8.41
Next 13,000 $8.05 $12.08
Residential
Over 15,000 $12.08 $18.10
Non-Residential All Usage $6.63 $9.93
Major Industrial All Usage $5.70 $8.54
Irrigation All Usage $12.08 $18.10
Wholesale All Usage $5.90 $5.90
(2) Beginning January 1, 2030, all monthly water rates shall be increased by 3% per year.
(3) All bills under such schedules shall be computed by adding the applicable meter service charge
prescribed by subsection (B) to the amount determined to be due for water usage under this schedule.
Applicable sales tax and franchise fees shall be added to the bill so computed.
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(4) When a common facility/building is served by multiple water meters and the water usage is for the
same purpose, customers may petition the Water and Wastewater Director and/or the Finance and
Internal Services Director to have the water consumption aggregated and have the tiered rates apply
to the aggregated quantity.
(5) Water used for flushing and sampling of newly constructed water lines, Fire Department training and
equipment calibration, and other similar uses requiring a large volume and/or high velocity of water
movement shall employ a fire hydrant meter of the appropriate size for the use. If a fire hydrant meter
cannot be used due to high flow or volume requirements, then the volume of water used shall be
measured by using a pitot gauge to determine the gallons per minute and by timing the flow of water
to be able to calculate total volume. In the cases of fire department training and equipment calibration,
sewer line washing, street sweeping, and other uses where the equipment employed has a built-in
water meter, these built in water meters may be used. All such meters other than those on fire trucks
must be evaluated by the Meter Superintendent. These water uses shall be billed at the same rates as
non-residential customers.
(6) Monthly wholesale treated water rates outside city limits are based on Cost of Service Methodology.
(B) Monthly Water Service Charge.
(1) In addition to the above, each customer shall pay a monthly water service charge in accordance with
the following schedule:
Table B-1
Monthly Water Service Charge Prior to
July 1, 2026
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $7.85 $8.98 $9.90
⅝ x ¾ inch $7.85 $8.98 $9.90
1 inch $11.30 $15.55 $15.55
1 ½ inch $21.55 $30.78 $30.78
2 inch $29.52 $42.64 $42.64
3 inch $64.37 $88.89 $88.89
4 inch $106.59 $130.07 $133.70
6 inch $213.18 $245.14 $253.40
8 inch $319.67 $367.63 $396.49
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Table B-2
Monthly Water Service Charge After
June 30, 2026
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $7.85 $11.78 $11.78
⅝ x ¾ inch $7.85 $11.78 $11.78
1 inch $11.30 $16.95 $16.95
1 ½ inch $21.55 $32.33 $32.33
2 inch $29.52 $44.28 $44.28
3 inch $64.37 $96.56 $96.56
4 inch $106.59 $159.89 $159.89
6 inch $213.18 $319.77 $319.77
8 inch $319.67 $479.51 $479.51
Table B-3
Monthly Water Service Charge After
December 31, 2026
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $9.11 $13.67 $13.67
⅝ x ¾ inch $9.11 $13.67 $13.67
1 inch $13.11 $19.67 $19.67
1 ½ inch $25.00 $37.51 $37.51
2 inch $34.25 $51.37 $51.37
3 inch $74.67 $112.01 $112.01
4 inch $123.65 $185.48 $185.48
6 inch $247.29 $370.94 $370.94
8 inch $370.82 $556.24 $556.24
Table B-4
Monthly Water Service Charge After
December 31, 2027
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $10.57 $15.86 $15.86
⅝ x ¾ inch $10.57 $15.86 $15.86
1 inch $15.21 $22.82 $22.82
1 ½ inch $29.00 $43.52 $43.52
2 inch $39.73 $59.59 $59.59
3 inch $86.62 $129.94 $129.94
4 inch $143.44 $215.16 $215.16
6 inch $286.86 $430.30 $430.30
8 inch $430.16 $645.24 $645.24
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Table B-5
Monthly Water Service Charge After
December 31, 2028
Meter Size
Inside
City
Outside
City
Wholesale
⅝" $10.89 $16.34 $16.34
⅝ x ¾ inch $10.89 $16.34 $16.34
1 inch $15.67 $23.51 $23.51
1 ½ inch $29.87 $44.83 $44.83
2 inch $40.93 $61.38 $61.38
3 inch $89.22 $133.84 $133.84
4 inch $147.75 $221.62 $221.62
6 inch $295.47 $443.21 $443.21
8 inch $443.07 $664.60 $664.60
(2) Beginning January 1, 2030, all monthly water service charges shall be increased by 3% per year.
(3) The monthly treated water rates and the monthly meter service charge rates prescribed by subsections
(A) and (B) of this section shall commence as of the first billing statements issued after June 30, 2026.
(4) The State of Arkansas mandated Safe Drinking Water Act fee shall be added to the monthly water
utility bill.
(C) Monthly Standby Fire Protection Service Charge.
(1) Charges for unmetered service connections for standby fire protection and fire hydrants shall be based
on the incoming line size or the backflow preventer size, whichever is smaller, as set forth in the
following table:
Monthly Standby Fire Protection Service Charge
Line Size or Backflow
Preventer Size
Inside City Outside City
1 inch $10.34 $12.38
2 inch $10.78 $12.83
2.5 inch $21.55 $24.77
3 inch $32.31 $37.16
4 inch $64.63 $74.32
6 inch $179.50 $209.60
8 inch $376.99 $433.54
10 inch $646.26 $743.18
(2) The Utilities Department shall review the monthly standby fire protection service charges every two (2)
years and shall make recommendations to the City Council following such review. Fire protection lines
shall not be connected to the water system downstream from a meter.
(Code 1965, §21-25; Ord. No. 1165, 4-18-58; Ord. No. 2144, 9-2-75; Ord. No. 2594, 2-5-80; Ord. No. 3197, 7-1-86;
Ord. No. 3409, 2-21-89; Ord. No. 3431, 6-6-89; Ord. No. 3491, 7-17-90; Ord. No. 3513, 9-18-90; Ord. No. 3519, 11-
20-90; Ord. No. 4059, §1, 10-7-97; Ord. No. 4223, 2-15-00; Code 1991, §51.136; Ord. No. 4530 12-02-02; Ord. No.
4540, 02-03-04; Ord. No. 5123, 4-1-08; Ord. No. 6169, §1, 4-2-2019; Ord. No. 6633, §1, 1-3-23; Ord. No. 6681,
§1(Att.), 9-19-23)
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51.137 Monthly Sewer Rates
(A) Monthly Sewer Rates.
(1) All monthly sewer charges shall be calculated from the customer's monthly water usage. The following
monthly rates are hereby fixed as rates to be charged for sewer services:
Table D-1
Monthly Sewer Rates Per 1,000 Gallons
Before July 1, 2026
Class Usage Rate
(In Gallons)
Cost per
1,000
gallons
First 2,000 gallons $5.24 Residential
Greater than
2,000 gallons
$6.99
Non-Residential All Usage $5.88
Major Industrial All Usage $6.21
Outside city All Usage $8.05
Wholesale All Usage $6.09
Table D-2
Monthly Sewer Rates Per 1,000 Gallons After
June 30, 2026
Class Usage Rate
(In Gallons)
Cost per
1,000
gallons
First 2,000 gallons $5.24 Residential
Greater than
2,000 gallons
$6.99
Non-Residential All Usage $5.88
Major Industrial All Usage $6.21
Outside city All Usage $8.05
Wholesale All Usage $6.09
(2) Beginning January 1, 2027, all monthly sewer quantity charge-usage rates per 1,000 gallons shall be
increased by 3% per year.
(3) Sewer related fees levied by the Cities of Farmington or Greenland shall be added to the wastewater
utility bill at the request of Farmington or Greenland. These fees may be calculated on a per-thousand
volumetric usage or a per month basis.
(B) Monthly Sewer Service Charge.
(1) In addition to the above, each customer shall pay a monthly sewer service charge in accordance with
the following schedule:
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Table E-1 Monthly Sewer Service Charge
Prior to July 1, 2026
Meter Size Inside City Outside City
⅝" $13.52 $16.66
⅝ x ¾ inch $13.52 $16.98
1 inch $25.94 $33.23
1½ inch $47.53 $66.98
2 inch $65.37 $93.23
3 inch $140.67 $195.74
4 inch $231.80 $286.99
6 inch $459.37 $532.02
8 inch $687.03 $592.02
Table E-2 Monthly Sewer Service Charge
After June 30, 2026
Meter Size Inside City Outside City
⅝" $13.52 $16.66
⅝ x ¾ inch $13.52 $16.98
1 inch $25.94 $33.23
1½ inch $47.53 $66.98
2 inch $65.37 $93.23
3 inch $140.67 $195.74
4 inch $231.80 $286.99
6 inch $459.37 $532.02
8 inch $687.03 $592.02
(2) Beginning January 1, 2027, all monthly sewer service charges shall be increased by 3% per year.
(C) Determination of Sewer Quantity Charge for Residential Customers.
(1) In the case of residential customers residing in a single family home, duplex, triplex, and/or fourplex,
the average monthly water consumption for the preceding months of December, January, and
February shall be computed separately for each customer, and a uniform monthly charge for each
customer shall be determined by applying the schedule of rates set out in subsection (A) of this section
to such average monthly water consumption. In the case of a residential user for whom a uniform
monthly charge has been established and who moves to a new location the same uniform monthly
charge shall apply at the new location. In the case of new residential customers, sewer averages shall
be established based on the number of individuals residing within the dwelling unit, at a rate of 2,100
gallons per customer per month. This methodology of sewer averaging shall not apply to multi-family
structures containing five (5) or more units in a contiguous building.
(2) In the case of sewer customers who do not have a water meter provided by a public water utility, the
sewer usage volume billed shall be the average volume of all users in the sewer system in like dwellings
from the most recent system-wide sewer average calculation.
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(D) Determination of Charge for Non-residential and Major Industrial Customers. In the case of non-residential
and/or major industrial customers, the monthly sewer charge shall be determined by applying the schedule
of rates prescribed in subsection (A) of this section to the monthly water usage of such customers. In the
event that a non-residential or major industrial customer discharging waste into the city's sanitary sewer
system produces evidence to the Water and Wastewater Director demonstrating that a substantial portion
of the total amount of water from all sources used for all purposes does not reach the sanitary sewer which
is in excess of the factors used in establishing the rates in subsection (A) of this section, an estimated
percentage of total water consumption to be used in computing charges may be established by the Water
and Wastewater Director. The factors used in establishing said rates are on file in the office of the Water and
Wastewater Director and are incorporated herein by reference thereto. Any rate so adjusted by the Water
and Wastewater Director shall be effective for a twelve (12) month period beginning with the billing for the
month when rates adjudged hereby go into effect.
(E) Extra Strength Surcharge.
(1) For all significant industrial users as defined in §51.074, whose wastewater discharge is greater than
300 mg/I of BOD 5 and/or TSS, the city shall levy an Extra Strength Surcharge for each parameter in
accordance with the following unit charges:
Table F1 Extra Strength Surcharges
Prior to July 1, 2026
Extra Strength BOD 5 $0.5743 per pound
Extra Strength TSS $0.7086 per pound
Table F2 Extra Strength Surcharges
After June 30, 2026
Extra Strength BOD 5 $0.5743 per pound
Extra Strength TSS $0.7086 per pound
(2) Beginning January 1, 2027, Extra Strength Surcharges shall be increased by 3% per year.
(3) Extra Strength Surcharges shall be billed monthly and shall be computed on the basis of water meter
reading (wastewater discharge volume).
(4) All sampling and analyses of the wastewater characteristics shall be performed in accordance with U.S.
Environmental Protection Agency 40 Code of Federal Regulations Part 136 approved methods.
(5) The volume of flow used in computing surcharge shall be based upon metered water consumption as
shown in the records of meter readings maintained by the city's business office. In the event that a
user discharging waste into the city sanitary sewer system produces evidence to the city demonstrating
that a portion of the total amount of water used for all purposes is not discharged into the sanitary
sewer, a separate meter or meters or other approved flow measuring device may be installed at the
user's expense, upon its request, to measure only that portion of the total flow being discharged into
the city sewer system. If a surcharge is assessed by the city, it shall be shown separately on the
monthly billing.
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(6) Any person discharging industrial waste into the sanitary sewers of the city who procures any part or
all of the user's water supply from sources other than the city, all or part of which is discharged into the
sanitary sewer, shall install and maintain at the user's expense water meters of the type approved by
the city for the purpose of determining the proper volume of flow to be used in computing sewer
service charges. Such meter will be read monthly and tested for accuracy when deemed necessary by
the city. Where it can be shown that a portion of the water measured by the aforesaid meter or meters
does not enter the sanitary sewer system of the city, a separate meter or meters or other approved
flow measuring device may be installed at the user's expense, upon its request, to measure only that
portion of the total flow being discharged into the city sewer system. If a surcharge is assessed by the
city, it shall be shown separately on the monthly billing.
(7) Computation of extra strength surcharges shall be based on the following formula:
(a) Extra strength surcharge:
S = V × 8.34 × [BOD Unit Charge (BOD - 300) + SS Unit Charge (TSS - 300)]
(b) Where:
S = Surcharge in dollars
V = Sewer volume in million gallons
8.34 = Pounds per gallon of water
BOD Unit
Charge
= Unit charge for BOD in dollars per pound
BOD = BOD strength in parts per million
300 = Allowed BOD strength in parts per million
TSS Unit
Charge
= Unit charge for suspended solids in dollars per pound
TSS = Suspended solids strength in parts per million
300 = Allowed TSS Strength in parts per million
(F) Hauled Wastewater Fees.
(1) Application Fee. An application to discharge hauled domestic waste must be accompanied by a fee of
$100.00.
(2) Discharge Fee. A fee of $50.00 must be paid for each hauled domestic waste load discharged.
(G) Industrial Wastewater Discharge Permit Fee.
(1) Application Fee. An application for an industrial wastewater discharge permit must be accompanied by
a fee of $500.00.
(Code 1965, §21-26; Ord. No. 1165, 4-18-58; Ord. No. 3197, 7-1-86; Ord. No. 3285, 8-4-87; Ord. No. 3398, 1-3-89;
Ord. No. 3491, 7-17-90; Ord. No. 3637, §§1, 2, 8-18-92; Ord. No. 4059, §2, 10-7-97; Code 1991, §51.137; Ord. No.
4530, 12-02-03; Ord. No. 4803, 12-20-05; Ord. No. 4998, 4-3-07; Ord. No. 5129, 4-15-08; Ord. No. 5438, 9-20-11;
Ord. No. 5739, 2-17-15; Ord. No. 6633, §1, 1-3-23; Ord. No. 6681, §1(Att.), 9-19-23)
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
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(Supp. No. 39)
Page 1 of 4
159.02 Water And Wastewater Impact Fees
(A) Applicability.
(1) The following provisions shall apply to all of the territory within the city's water and wastewater service
areas, including areas outside the corporate city limits and within service areas located within
Washington County and other incorporated cities after June 16, 2003.
(2) The following types of development shall be required to pay a water and/or wastewater impact fee:
(a) New and existing development seeking a new connection to the city's water or wastewater
system resulting in increased demand from water and/or wastewater facilities. This shall not
apply to existing development that is connecting to the wastewater system in order to eliminate
an individual sewage disposal system.
(b) New and existing development as stated in (a) above seeking a new connection to the system of
a wholesale customer of the city's water or wastewater system, where collection of the city's
impact fee is required by the city's contract with the wholesale customer.
(c) Nonresidential or residential redevelopment seeking a larger capacity or additional water meter.
(B) Intent.
(1) The intent of wastewater and water impact fees is to ensure that new development bears a
proportionate share of the cost of improvements to the city's water and wastewater systems; to
ensure that the proportionate share does not exceed the cost of providing water and wastewater
facilities to the development that paid the fee; and to ensure that funds collected from developments
are used to construct water and wastewater facilities that serve such developments. It is further the
intent of this ordinance to use the impact fees to implement the city's Comprehensive Land Use Plan
and future plan updates and to implement the city's Five Year Capital Improvements Program.
(2) It is not the intent of this ordinance to collect any money from any development in excess of the actual
amount necessary to offset demands generated by that development for the water and wastewater
facilities for which the fee was paid.
(3) It is not the intent of this ordinance that any monies collected for the water impact fee and the
wastewater impact fee ever be commingled or ever be used for a type of facility different from that for
which the fee was paid.
(C) Time of Collection.
(1) Water and wastewater impact fees shall be paid at the time of installation of the water meter serving
the property or of the connection to the wastewater system, whichever comes first.
(2) Development projects which have obtained building permits prior to the effective date of this
ordinance shall not have to pay impact fees if the building is completed with water and sewer hook-ups
installed and Certificate of Occupancy issued no later than six (6) months from the effective date of this
ordinance.
(D) Fee Determination.
(1) Schedule of Fees. The Impact Fee Administrator shall determine the amount of the water and
wastewater impact fees for residential uses based on the type or size of the water meter and for
nonresidential uses based on the size of the water meter using the following schedule:
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Land Use Unit Water Wastewater Total
Single-Family (average) Dwelling $2,672.00 $2,998.00 $5,670.00
Multi-Family
(per dwelling unit)
Dwelling $1,897.00 $2,129.00 $4,026.00
Nonresidential
(5/8 x 3/4 inch meter)
Meter $2,672.00 $2,998.00 $5,670.00
Nonresidential
(1 inch meter)
Meter $6,680.00 $7,496.00 $14,176.00
Nonresidential
(1½ inch meter)
Meter $13,361.00 $14,991.00 $28,352.00
Nonresidential
(2 inch meter)
Meter $21,377.00 $23,986.00 $45,363.00
Nonresidential
(3 inch meter)
Meter $42,754.00 $47,972.00 $90,726.00
Nonresidential
(4 inch meter)
Meter $66,803.00 $74,956.00 $141,759.00
Nonresidential
(6 inch meter)
Meter $133,606.00 $149,911.00 $283,517.00
Nonresidential
(8 inch meter)
Meter $213,770.00 $239,858.00 $453,628.00
Nonresidential
(10 inch meter)
Meter $307,294.00 $344,796.00 $652,090.00
(2) Redevelopment, Reconstruction, Change of Use. In the event of a redevelopment, reconstruction or
change of use from an existing development or use, the fee shall be the difference between what the
fee would be for the entire redevelopment or reconstruction project and what the fee would have
been for the existing development or use. Existing development must be connected to the water or
wastewater system at the time of redevelopment in order to apply this credit.
(3) Mixed Use. For mixed use developments requiring a shared meter to serve both multi-family and
nonresidential uses, the impact fee shall be calculated by assigning (a) the applicable multi-family
impact fee based on the number of dwelling units, and (b) a nonresidential impact fee based on the
meter size that would be required to serve only the nonresidential portion of the development, as
determined by projected demands, fixture counts, or other accepted methods. The combined total
shall constitute the impact fee for the mixed use development, regardless of the actual meter size
installed to serve the full building demand.
(4) Fire Suppression/Low Pressure. It is the intent of this ordinance to base water and wastewater impact
fees on the typical usage in a new building or other facility. Extinguishing of fires is not a part of typical
usage; to allow adequate fire flow to sprinklers and internal hydrants at some large and at-risk
properties, it may be necessary for fire protection purposes to install a larger water meter than would
be necessary to meet day-to-day needs of that facility. In addition, a larger meter may be required in
areas of low water pressure than in areas of normal water pressure for the same type of use. In those
cases, it is the policy of the city that the impact fee for water and wastewater should be based on the
meter size needed by that facility for its typical usage, without regard to fire-flow or unusual pressure
conditions.
(5) Irrigation. Any separate water meter installed for irrigation purposes only shall not be included in the
calculation of the wastewater impact fee.
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(6) Affordable Housing and Homeless Shelter Exemption. Construction of single family, non-profit multi-
family supportive housing, and homeless shelters funded wholly or primarily by federal Community
Development Block Grants, non-profit service organizations such as Habitat for Humanity, Housing and
Urban Development housing loans and similar programs designed to provide affordable, owner-
occupied, single family residences to low income individuals, non-profit multi-family supportive
housing, homeless shelters, and all accessory dwelling units shall be exempted from payment of impact
fees pursuant to this ordinance by the Impact Fee Administrator.
(E) Use of Fees.
(1) Establishment of Accounts. An Impact Fee Fund that is distinct from the General Fund of the city is
hereby created, and the impact fees received will be deposited in the following interest-bearing
accounts of the Impact Fee Fund:
(a) Water Impact Fee Account; and
(b) Wastewater Impact Fee Account.
(2) Water Impact Fee Accounts. The Water Impact Fee Account shall contain only those water impact fees
collected pursuant to this ordinance plus any interest which may accrue from time to time on such
amounts.
(3) Wastewater Impact Fee Account. The Wastewater Impact Fee Account shall contain only those
wastewater impact fees collected pursuant to this ordinance plus any interest which may accrue from
time to time on such amounts.
(4) Order of Use. Monies in each impact fee account shall be considered to be spent in the order collected,
on a first-in/first-out basis.
(5) Use of Fees. The monies in each impact fee account shall be used only for the following:
(a) Acquisition. To acquire land for and/or acquire or construct water or wastewater system
improvements of the type reflected in the title of the account and as described in the Impact Fee
Study as well as extension of service to new development paying an impact fee.
(b) Debt Service. To pay debt service on any portion of any current or future general obligation bond
issue or revenue bond issue used to finance water or wastewater system improvements of the
type reflected in the title of the account that created or will create capacity to serve new
development.
(c) As described in subsection F, Refunds.
(F) Refunds.
(1) The City of Fayetteville shall refund the portion of collected development impact fees, including the
accrued interest that has not been expended seven (7) years from the date the fees were paid. Interest
shall be based on a 4% annual rate.
(2) A refund shall be paid to the present owner of the property that was the subject of new development
and against which the fee was assessed and collected.
(3) Notice of the right to a refund, including the amount of the refund and the procedure for applying for
and receiving the refund, shall be sent or served in writing to the present owners of the property no
later than thirty (30) days after the date which the refund becomes due. The sending by regular mail of
the notices to all present owners of record shall be sufficient to satisfy the requirement of notice.
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(4) The refund shall be made on a pro rata basis, and shall be paid in full no later than ninety (90) days
after the date certain upon which the refund becomes due.
(5) At the time of payment of the water or wastewater impact fee under this ordinance, the Impact Fee
Administrator shall provide the applicant paying such fee with written notice of those circumstances
under which refunds of such fees will be made. Failure to deliver such written notice shall not
invalidate any collection of any impact fee under this ordinance.
Ord. No. 4447, §1, 12-17-02; Ord. No. 4492, §159.02 C.1, 6-03-03; Ord. No. 4496 §159.02 "F", 6-17-03; Ord. No.
4919, 9-05-06; Ord. No. 4975, 1-16-07; Ord. No. 5206, 12-16-08; Ord. No. 6255, §2, 11-5-19)
Docusign Envelope ID: 53AFC179-D95E-8C7C-816A-763379733370
CITY OF FAYETTEVILLE, ARKANSAS
Notice of Public Hearing on Proposed Water and Sewer Rate Changes
City Council Meeting: Tuesday, May 5, 2026 at 5:30 PM
City of Fayetteville Administration Building, City Hall
113 W. Mountain – Room 219 or via Zoom link at www.fayetteville-ar.gov
On May 5, 2026 shortly after the beginning of the Council Meeting at 5:30 PM, the
Fayetteville City Council will hold a public hearing prior to the consideration and possible
adoption of the 2026-2030 water and sewer rates ordinance and impact fee ordinance.
The public will be able to comment during this Public Hearing and also during
consideration of the rate ordinance prior to its final consideration and vote by the
Fayetteville City Council. The public can attend in person or remotely via the link on the
City’s website, www.fayetteville-ar.gov.
If adopted, the proposed new rates would take effect on July 1, 2026, with. All persons
are invited to attend the public hearing and be heard on the matter.
A water and sewer cost of service study was conducted by Carollo Engineers pursuant
to Fayetteville City Council Resolution 25-02 and State Law to perform a cost analysis to
determine if costs allocations are fair and equitable among customer classes and to
review the existing rate structure and design proposed rates that provide adequate
revenues to operate and maintain the utilities and ensure sufficient funds will be available
for necessary capital expansions. The rate study was conducted following the industry
standard methodology from the American Water Works Association (M1 Principles of
Water Rates, Fees, and Charges).
The proposed water and sewer rate changes below are necessary for the City of
Fayetteville to continue to provide safe and reliable water and sewer services to its
citizens and other customers because extensive new capital needs are required now and
will be required in the future, and operating costs have increased and will continue to
increase.
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EXHIBIT B
159.02 Water And Wastewater Impact Fees
(A) Applicability.
(1) The following provisions shall apply to all of the territory within the city's water and wastewater service
areas, including areas outside the corporate city limits and within service areas located within
Washington County and other incorporated cities after June 16, 2003.
(2) The following types of development shall be required to pay a water and/or wastewater impact fee:
(a) New and existing development seeking a new connection to the city's water or wastewater
system resulting in increased demand from water and/or wastewater facilities. This shall not
apply to existing development that is connecting to the wastewater system in order to eliminate
an individual sewage disposal system.
(b) New and existing development as stated in (a) above seeking a new connection to the system of
a wholesale customer of the city's water or wastewater system, where collection of the city's
impact fee is required by the city's contract with the wholesale customer.
(c) Nonresidential or residential redevelopment seeking a larger capacity or additional water meter.
(B) Intent.
(1) The intent of wastewater and water impact fees is to ensure that new development bears a
proportionate share of the cost of improvements to the city's water and wastewater systems; to
ensure that the proportionate share does not exceed the cost of providing water and wastewater
facilities to the development that paid the fee; and to ensure that funds collected from developments
are used to construct water and wastewater facilities that serve such developments. It is further the
intent of this ordinance to use the impact fees to implement the city's Comprehensive Land Use Plan
and future plan updates and to implement the city's Five Year Capital Improvements Program.
(2) It is not the intent of this ordinance to collect any money from any development in excess of the actual
amount necessary to offset demands generated by that development for the water and wastewater
facilities for which the fee was paid.
(3) It is not the intent of this ordinance that any monies collected for the water impact fee and the
wastewater impact fee ever be commingled or ever be used for a type of facility different from that for
which the fee was paid.
(C) Time of Collection.
(1) Water and wastewater impact fees shall be paid at the time of installation of the water meter serving
the property or of the connection to the wastewater system, whichever comes first.
(2) Development projects which have obtained building permits prior to the effective date of this
ordinance shall pay the impact fees in effect at the time of the issuance of the building permit.
(D) Fee Determination.
(1) Schedule of Fees. The Impact Fee Administrator shall determine the amount of the water and
wastewater impact fees for residential uses based on the type or size of the water meter and for
nonresidential uses based on the size of the water meter using the following schedule:
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Land Use Unit Water Wastewater Total
Single-Family (average) Dwelling $2,672.00 $2,998.00 $5,670.00
Multi-Family
(per dwelling unit)
Dwelling $1,897.00 $2,129.00 $4,026.00
Nonresidential
(5/8 x 3/4 inch meter)
Meter $2,672.00 $2,998.00 $5,670.00
Nonresidential
(1 inch meter)
Meter $6,680.00 $7,496.00 $14,176.00
Nonresidential
(1½ inch meter)
Meter $13,361.00 $14,991.00 $28,352.00
Nonresidential
(2 inch meter)
Meter $21,377.00 $23,986.00 $45,363.00
Nonresidential
(3 inch meter)
Meter $42,754.00 $47,972.00 $90,726.00
Nonresidential
(4 inch meter)
Meter $66,803.00 $74,956.00 $141,759.00
Nonresidential
(6 inch meter)
Meter $133,606.00 $149,911.00 $283,517.00
Nonresidential
(8 inch meter)
Meter $213,770.00 $239,858.00 $453,628.00
Nonresidential
(10 inch meter)
Meter $307,294.00 $344,796.00 $652,090.00
(2) Redevelopment, Reconstruction, Change of Use. In the event of a redevelopment, reconstruction or
change of use from an existing development or use, the fee shall be the difference between what the
fee would be for the entire redevelopment or reconstruction project and what the fee would have
been for the existing development or use. Existing development must be connected to the water or
wastewater system at the time of redevelopment in order to apply this credit.
(3) Mixed Use. For mixed use developments requiring a shared meter to serve both multi-family and
nonresidential uses, the impact fee shall be calculated by assigning (a) the applicable multi-family
impact fee based on the number of dwelling units, and (b) a nonresidential impact fee based on the
meter size that would be required to serve only the nonresidential portion of the development, as
determined by projected demands, fixture counts, or other accepted methods. The combined total
shall constitute the impact fee for the mixed use development, regardless of the actual meter size
installed to serve the full building demand.
(4) Fire Suppression/Low Pressure. It is the intent of this ordinance to base water and wastewater impact
fees on the typical usage in a new building or other facility. Extinguishing of fires is not a part of typical
usage; to allow adequate fire flow to sprinklers and internal hydrants at some large and at-risk
properties, it may be necessary for fire protection purposes to install a larger water meter than would
be necessary to meet day-to-day needs of that facility. In addition, a larger meter may be required in
areas of low water pressure than in areas of normal water pressure for the same type of use. In those
cases, it is the policy of the city that the impact fee for water and wastewater should be based on the
meter size needed by that facility for its typical usage, without regard to fire-flow or unusual pressure
conditions.
(5) Irrigation. Any separate water meter installed for irrigation purposes only shall not be included in the
calculation of the wastewater impact fee.
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(6) Affordable Housing and Homeless Shelter Exemption. Construction of single family, non-profit multi-
family supportive housing, and homeless shelters funded wholly or primarily by federal Community
Development Block Grants, non-profit service organizations such as Habitat for Humanity, Housing and
Urban Development housing loans and similar programs designed to provide affordable, owner-
occupied, single family residences to low income individuals, non-profit multi-family supportive
housing, homeless shelters, and all accessory dwelling units shall be exempted from payment of impact
fees pursuant to this ordinance by the Impact Fee Administrator.
(E) Use of Fees.
(1) Establishment of Accounts. An Impact Fee Fund that is distinct from the General Fund of the city is
hereby created, and the impact fees received will be deposited in the following interest-bearing
accounts of the Impact Fee Fund:
(a) Water Impact Fee Account; and
(b) Wastewater Impact Fee Account.
(2) Water Impact Fee Accounts. The Water Impact Fee Account shall contain only those water impact fees
collected pursuant to this ordinance plus any interest which may accrue from time to time on such
amounts.
(3) Wastewater Impact Fee Account. The Wastewater Impact Fee Account shall contain only those
wastewater impact fees collected pursuant to this ordinance plus any interest which may accrue from
time to time on such amounts.
(4) Order of Use. Monies in each impact fee account shall be considered to be spent in the order collected,
on a first-in/first-out basis.
(5) Use of Fees. The monies in each impact fee account shall be used only for the following:
(a) Acquisition. To acquire land for and/or acquire or construct water or wastewater system
improvements of the type reflected in the title of the account and as described in the Impact Fee
Study as well as extension of service to new development paying an impact fee.
(b) Debt Service. To pay debt service on any portion of any current or future general obligation bond
issue or revenue bond issue used to finance water or wastewater system improvements of the
type reflected in the title of the account that created or will create capacity to serve new
development.
(c) As described in subsection F, Refunds.
(F) Refunds.
(1) The City of Fayetteville shall refund the portion of collected development impact fees, including the
accrued interest that has not been expended seven (7) years from the date the fees were paid. Interest
shall be based on a 4% annual rate.
(2) A refund shall be paid to the present owner of the property that was the subject of new development
and against which the fee was assessed and collected.
(3) Notice of the right to a refund, including the amount of the refund and the procedure for applying for
and receiving the refund, shall be sent or served in writing to the present owners of the property no
later than thirty (30) days after the date which the refund becomes due. The sending by regular mail of
the notices to all present owners of record shall be sufficient to satisfy the requirement of notice.
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(4) The refund shall be made on a pro rata basis, and shall be paid in full no later than ninety (90) days
after the date certain upon which the refund becomes due.
(5) At the time of payment of the water or wastewater impact fee under this ordinance, the Impact Fee
Administrator shall provide the applicant paying such fee with written notice of those circumstances
under which refunds of such fees will be made. Failure to deliver such written notice shall not
invalidate any collection of any impact fee under this ordinance.
Ord. No. 4447, §1, 12-17-02; Ord. No. 4492, §159.02 C.1, 6-03-03; Ord. No. 4496 §159.02 "F", 6-17-03; Ord. No.
4919, 9-05-06; Ord. No. 4975, 1-16-07; Ord. No. 5206, 12-16-08; Ord. No. 6255, §2, 11-5-19)
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