Ordinance for water rate increases tabled by Hillsboro City Council

Despite receiving two letters in support of a proposed water rate increase, Hillsboro City Council members voted to table legislation to that effect on its third reading Wednesday, April 16.

Council heard the first reading of the proposed ordinance to increase the rates charged for water service at their February meeting, with no discussion of the legislation at their March meeting outside of a second reading.

“The chair [Greg Maurer] is not here, but I will speak for our committee that we want to table this,” utilities committee member Jason Brown said at the ordinance’s third reading Wednesday. “We have been doing quite a bit of studying and researching on this. Hopefully we can have meetings soon. That's kind of up to the chair, but right now, we want to table this.”

Brown made the motion to table the ordinance, which passed by a 5-1 vote, with Adam Wilkin providing the lone no vote.

As proposed, the ordinance would impose an annual increase every year starting in June 2025, including the following rate hikes: in both 2025 and 2026, an eight-percent increase; in both 2027 and 2028, a seven-percent increase; in each year of 2029-2031, a five-percent increase; and from 2032 and every year thereafter, a three-percent increase unless otherwise amended.

Current rates are $15.08 for the first 133 cubic feet per month and $6.99 for each 100 cubic feet above the minimum usage of 133 cubic feet.

Safety and service director Brianne Abbott said in February the proposed rate increases are “to cover inflation,” as the ordinance says the city “is incurring additional costs in operating its water delivery system.”

In their packet of information received in advance of the meeting, council had two letters supporting the proposal this month. The first, dated March 26, was from former interim safety and service director and current interim Greenfield City Manager Gary Silcott, an engineer with DLZ.

Silcott said the administration advised council members were “struggling with the amount to increase the current rates” and provided his advice “based on my experience dealing with communities for over 30 years who did not adequately maintain their rates.

“First and foremost is the thought that your water and sewer systems are a business, and none of us in our personal lives would operate a business at a loss or break even,” Silcott wrote. “It’s my understanding that your water rates are not even keeping up with your current expenses, let alone the need to do future upgrades and maintenance.

“With utilities increasing in costs, it impacts you even more on the municipal side because WWTPs [wastewater treatment plants] and WTPs [water treatment plants] are high energy users. We have seen some [communities’] electric costs increased by over 25 percent in the last year.”

Another “factor that cannot be ignored when considering rate increases is the need to address failing systems and aging infrastructure,” Silcott wrote.

“Last summer … with the drought, the city had to use its emergency connection with Highland County because the reservoirs got so low,” he said. “With the climatic changes, it is probably time that the city starts considering dredging the reservoirs or even building a new one to ensure future capacity. The water and sewer lines that are at their useful life are also considerations.

“The city has excessive inflow and infiltration in your sanitary sewer system that if not address[ed] will result in another expansion at the WWTP to be able to treat it and stay in compliance.”

In addition, Silcott pointed out that “if your rates are not high enough, then it jeopardizes your ability to get grant funding.

“Most funding agencies require that your water and sewer rates are at or above three percent of your MHI [Median Household Income],” he wrote. “Hillsboro’s MHI is $45,197, so the average water and sewer bill should be $112.99.”

Silcott concluded that “although rate increase[s] are not popular, in my experience if you communicate with residents and businesses and let them know[you’re] doing all you can to maintain costs and keep them under control, they understand.

“They already see that gas, electric and fuel are higher for them, and the city is impacted by the same rising costs and has no choice but to pass them along to your users,” Silcott wrote.

Council also received an undated letter from city Economic Development Coordinator Lauren Walker, who is also the council clerk.

Walker wrote that the city’s water fund “operated at a loss” last year and discussed the “economic necessity of this action to protect the City’s long-term financial health.

“We're essentially operating a 2025 utility system on a budget that hasn’t kept up with inflation or infrastructure needs,” Walker wrote. “In 2024, the Water Fund produced $1,908,586.11 in revenue. Expenses totaled $1,921,201.20, meaning the fund actually operated at a loss of $12,615.09. This deficit is a clear indication that the current rates are not covering the cost of operating the system, let alone preparing for emergencies or capital improvements.”

For the first three months of 2025 compared to the first three months of 2024, Walker wrote that the city has seen a “44-percent increase in costs year-over-year, which confirms what we’ve known: our over 100-year-old water system is failing, and the costs to maintain it are rising at [an] increasingly expensive rate.
“This is not just an operational issue — it’s a financial risk,” she wrote. “The water fund must support itself. It also places us at a disadvantage when applying for loans or grants, where financial stability and compliance are often determining factors, and letters of financial responsibility must be sent for review when applying for loans/grants.”

Walker continued that “due diligence has been done” and that the legislation is based on “hard facts” and recommendations by “qualified professionals who reviewed our audits and provided a thorough financial assessment.

“The proposed increases are set at a rate that is spread out evenly versus a sudden rate hike when reaching a crisis point,” she wrote.

Walker also discussed the “misconception that Hillsboro’s water rates are among the highest in the region,” as she said the bill includes separate fees for water, sewer and stormwater.

“The proposed changes only affect the water usage portion, not the sewer or stormwater funds,” Walker wrote. “These increases, after 19 years without a major adjustment, still do not exceed what many residents in surrounding areas already pay — again, just for water service alone.”

Walker pointed out that without an increase, the city’s “Water Fund will eventually run out of money,” leading to the city depending on the general fund to cover costs.

“This would technically be against city code since we are obligated to increase rates,” Walker wrote, citing Code 51.076: “The city reserves the right to increase these rates and is obligated to do so if the gross revenues of the waterworks system should at any time be insufficient to pay the operating and maintenance expenses thereof, along with the principal and interest requirements of the bonds issued to finance improvements or additions to the waterworks system.”

“From an economic and fiduciary standpoint, the proposed water rate adjustment is not only justified — it is necessary,” Walker concluded. “It is based on data, grounded in our municipal code, and supported by long-term planning for the sustainability of our City’s most critical utility system.

“I support this action with the understanding that it may be difficult for some to accept. But leadership requires foresight, and this decision protects Hillsboro — not just today, but for decades to come.”

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