Grants Pass City Council voted 6-1 on Nov. 6 to adopt a phased water-rate increase intended to improve the city's coverage ratios and support debt service on a replacement water treatment plant.

Jason Kenney, a staff member presenting the proposal, told the council the city had previously approved a guaranteed maximum price for the replacement plant and a tentative financing plan but lost an anticipated FEMA BRIC grant and therefore must borrow more to complete the project. "Adoption of the GMP provided council with cost certainty and locked in pricing on over 90% of the project," Kenney said, and the loss of the BRIC grant "eliminated $50,000,000 of funding" and increased the need to adjust rates.

Kenney said staff and the city's rate consultant developed three scenarios that combine changes to the base and commodity rates, a treatment-plant replacement fee, and a potential increase in the Urban Renewal Agency (URA) contribution to debt service. He said reworking the rate models and correctly accounting for existing Business Oregon debt reduced the size of the proposed increases compared with earlier drafts. "By lowering all of those, the upshot is we were able to lower the rate increase that we had previously presented to you," Kenney said, adding staff removed about one percentage point from earlier proposals.

The council discussed trade-offs among the options, including customer-service impacts and how bonding agencies view larger up-front increases. Councilor Rick asked whether a 3% up-front option would yield materially better borrowing terms than a smaller phased approach; Kenney said the coverage ratio and the replacement-fee amount would have more impact than a one-off percentage difference. Councilor Kathleen Crone and others favored a phased approach as less burdensome on ratepayers.

During public comment, Bridal Brown, a Grants Pass resident, urged the council to reject rate hikes and to change the rate structure so base rates cover fixed costs and unit charges cover variable production costs. "Lenders will be satisfied if you would return our rate system to what worked for 50 years," Brown said, arguing high unit rates drive reduced water use and harm vegetation and public safety.

Councilor Seth moved to adopt scenario 2 as presented; Councilor Rick seconded the motion. The council took a roll-call vote and the motion passed 6-1; one councilor voted no and did not ask for further changes. Staff said debt-service offerings are expected to begin in December or January and that putting a rate in place before bonding will improve the city's standing with lenders.

The resolution adopted a phased increase intended to reach the revenue and coverage goals identified by staff and the rate consultant over the coming years. Staff told council that detailed long-term projections and scenario comparisons are available in the packet and that the chosen scenario will be included in upcoming bond solicitations.

Council asked staff to return with any URA action necessary if council increases the URA contribution to debt service. Staff also noted the adopted treatment-plant replacement fee will remain on the rate schedule until the related debt service finishes and is not automatically tied to CPI-based changes.

The council's action does not itself change the treatment plant financing documents; staff said they will begin the bonding process immediately and return with specific bond terms and implementation timing.