McCook Officials Review Long-Term Plans for Water and Sewer Infrastructure

March 18, 2025

McCOOK Neb. - This presentation by Matthew Stoffel of PFM Financial Advisors to the McCook City Council focuses on the city's water and sewer rates, providing an annual analysis and recommendations for future rate adjustments. Here's a summarized breakdown:

Key Takeaways:

Annual Rate Analysis:

• PFM conducts annual reviews of McCook's water and sewer rates, using historical data and future projections to ensure financial stability.

• The goal is to align rate increases with the city's capital improvement plans, particularly large utility projects.

Water Fund:

• Usage Fluctuations: Water usage is highly variable, influenced by weather patterns. A recent drop in usage (from 82 million cubic feet in 2022 to 67 million cubic feet in 2024) is putting pressure on rates.

• Rate Increases: The analysis projects a potential 10% rate increase due to the reduced water usage.

• Capital Projects: The city has significant water infrastructure projects planned, requiring careful financial management.

• Rate Structure: A formal rate study is recommended to examine the current declining block rate structure (where higher usage means lower rates) and the flat ready-to-serve fee, which may not be equitable for all customer types.

Financial Health:

• The water fund's cash balance is currently healthy, but it's projected to dip as major projects begin. The city has reserve funds to mitigate some of the rate increases.

• USDA Loans: The city will use USDA loans for some projects, which require setting aside funds for short-lived assets.

Wastewater (Sewer) Fund:

• Usage: Sewer usage has stabilized after a slow decline.

• Operating Expenditures: Operating expenditures increased significantly in 2024, partly due to staff turnover and design/legal work for plant expansion.

Debt Management:

• A significant debt payment will be completed in 2026, which will help offset the cost of upcoming capital projects.

• Capital Projects: The city is planning a major wastewater treatment plant expansion, funded by a combination of USDA and private loans.

Financial Health:

• The sewer fund has a healthy cash reserve, allowing for some flexibility in rate adjustments.

Rate Increases:

• Sewer rate increases are expected to be lower than water rate increases due to favorable debt management.

Coverage Ratios:

• The city aims to maintain a healthy debt coverage ratio to secure favorable interest rates for future borrowing.

General Points:

• The city is transitioning its rate adjustment schedule to align with the fiscal year (October 1st).

• The analysis is based on current projections and will be updated as project designs and financing are finalized.

• The council is advised to monitor capital improvement progress and adjust rates as needed to maintain financial stability.

• The importance of having a fair and equitable rate structure across both water and sewer utilities was stressed.

In essence, the presentation provides a detailed financial overview of McCook's water and sewer utilities, highlighting the need for strategic rate adjustments to fund essential infrastructure projects while maintaining financial stability.