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Item No. 16 TO: Mayor & City Council Rose Beverly, City Manager FROM: Gene Anderson, Interim Finance Director SUBJECT: WATER RATE INCREASE DATE: June 23, 2025 O XG LIE 18 "N Per agreements with its contract treated water customers, the City of Paris has an independent rate consultant perform a cost -of -service study each year. The study determines the contract customer rates in accordance with the contract terms. A by-product of the study is that water and wastewater rates are also determined for all other customer classes (residential, commercial, and industrial). The study and the City's rate maintenance policy are important financial tools enabling the City to maintain its bond credit rating and the financial integrity of the Water & Sewer Fund. A healthy credit rating saves the City millions of dollars in interest cost over the life of debt issues. This financial integrity is critical for Paris residents and businesses. As the sole provider of these services, the City must maintain the water and sewer system at all times for our citizens and businesses to prosper. STATUS OF ISSUE: On June 9, 2025, the City Council was presented with the study results by NewGen Strategies & Solutions. Having not raised water rates since 2022, the rate consultants recommend an 8.25% increase in water rates to offset rising costs in the last three years. BUDGET: The proposed ordinance goes into effect July 1, 2025, and will increase the water revenue stream to provide this essential service. OPTIONS: 1. Approve the proposed water rate ordinance. 2. Reject the proposed water rate ordinance and give city staff further directions. RECOMMENDATION: Motion to approve the proposed water rate ordinance.