City of Globe proposes water and sewer rate increases

To continue the City of Globe’s 10-year efforts to modernize its 100-plus year-old water and wastewater system, City Council has proposed rate increases that would go into effect in March 2025.  

Council approved a “notice of intent” in October to begin adjusting the City’s water and sewer rates, with a public hearing scheduled for December 10.  

Final approval by Council will be completed in January 2025 with a targeted, effective date of March 1. 

“Our emphasis is on retaining our high-quality water and sewer system, but we can’t defer maintenance,” City Manager Paul Jepson says. “We’ve been able to do improvements and make progress, but there comes a time when rising costs outpace revenues. We have to keep the status quo at least and prepare for the development opportunities on the horizon for us to improve the system.”  

Globe’s current monthly water rates are at the low end of the spectrum in eastern Arizona. Under the current rate structure, a single family uses about 6,000 gallons per month at roughly $33.36.   

A comparison of rates in a study done by Kevin Burnett of Willdan Financial Services reported that residents of Mammoth, Miami, Kearny, Star Valley, Payson, and Hayden all pay more, with Payson and Hayden residents paying more than $80 per month for comparable usage.  

Only Winkelman, which gets its water through the Arizona Water Company, pays less at about $25 per month.  

 Jepson says that rates have not increased in four years after previous Councils raised them in roughly two-year increments over the past decade. While rates have not increased, the cost of operating the water system alone has risen about $300,000 or about 14% overall.  

In addition to addressing operational costs, the City must increase revenues to 1.2% for every dollar spent to honor the terms of  the Water Infrastructure Finance Authority (WIFA) loans that have financed much of the improved infrastructure on system. Achieving that ratio will allow the City to retain the option to seek additional WIFA loans in the future.  

To bridge the funding gap, the Council is proposing rate increases and instituting a “capacity fee” that will be charged to developers to help the City recover capital costs on future expansion.  

“The capacity fee puts the development cost on the developer,” Jepson says. “Development should pay for itself. Local residents shouldn’t have to pay for future development costs that will increase demand on our existing system.”  

Globe City Council is considering adjustments in the water and sewer rates in the 12%  range. The formal proposal is included as part of the 2024 Rate Study that is now on the City website at www.globeaz.gov.   

The impact on water rates would be in the $9 to $10 range for water per month and with the addition of sewer and trash cost, the estimated impact for a resident using 15,000 gallons a month would be in the $17 to $18 range. More detailed information can be seen on the City of Globe website for cost estimates for water usage, ranging from 4,000 to 26,000 gallons a month.    

Council’s next step will be to hear more from the residents at the Public Hearing on the proposed water and wastewater increases to be held at the City of Globe Council Chambers on Tuesday, December 10 at 6 p.m.

Jepson adds that no matter what approach the Council takes, it is important to raise the rates to match market prices to achieve operational stability over the next five years.  

“When we get to the five-year mark, the chances of needing something substantial would be less,” Jepson says. “But even at 12%, we’re not going above the average, and we’ll bring our rates in with the middle line of our peer communities, so we’re not suggesting anything extraordinary.” 

The increase will also help the City fund ongoing Capital Improvement Plan (CIP) infrastructure funds for improvements that cannot be financed through the General Fund.  

Given projected growth, the City is preparing for capacity fees that would play an important part in future development, particularly in the Northwest Corridor, where infrastructure extension is well on the way. The fees would be about $6,000 per family unit for both water and sewer for the developer to buy into the system. These funds would then be used to expand the system in ways that grant funds are not able to do in preparation for additional development.

Jepson says that capacity fees are an accepted part of the costs developers incur, and the City should not be expected not to subsidize development.  

Regardless, he says the current system needs to be stabilized so the City can maintain its obligation to provide clean water and sewer services to its residents.  

“We have to have a backstop in case the capacity fees don’t perform,” Jepson says. “If there’s no growth, we’re not getting capacity fees, so we must be able to survive without them. Raising our rates to the bare minimum means we can function without capacity fees.”  

On the other hand, if development goes as projected, the fees can be invested back into the system—they cannot be used for operation and maintenance—and allow the City to stave off additional rate hikes in the future.  

“We have a history of upgrading our facilities, and if we’re going to raise rates, we have to show our residents what they’re getting,” says Councilman Freddy Rios, who has spent his professional career in the water utility industry. “We’re updating the 100-year-old system, which has an impact on them, but also on the ability for our fire department and other public services to function.”  

Mayor Al Gameros echoed the need to educate the public about the importance of the rate increase and hopes that once residents understand the need for adjustments, they will support the changes.

“The City has been strategically stabilizing our age-old infrastructure while making improvements and modernizing the system for consistent high-quality service,” Gameros says. “We can’t stand idle, by being proactive and taking advantage of the funding opportunities available now, we can continue to provide good service now and for future generations.”