Great Falls utility rates will increase an average of 27 percent beginning July 1 after City Commissioners voted for the hike during their June 3 meeting.

Staff annually review the water, sewer and stormwater rates, which were last adjusted in 2024. The city did not increase utility rates for three years during COVID.

In April, city staff recommended a 10 percent across-the-board increase for water, sewer and stormwater rates.

City Manager Greg Doyon said during that work session that the city wasn’t well positioned for growth or future development because of limited infrastructure capacity and funding.

During their April 1 meeting, commissioners were scheduled to set a public hearing on the proposed utility rates for May 6, but opted to pull that item from the agenda.

Mayor Cory Reeves said during that meeting that they’d had a good discussion but said they have significant capital needs and potential future development so they required further discussion.

He said they’d probably need a special meeting to keep that process moving.

Other commissioners nodded or said that was fine but offered no further comment on the delay.

No special meeting was held, nor were the water, sewer or stormwater rate proposals further discussed in public meetings until June 3.

During the May 6 meeting, the action to set the public hearing for June 3 was on the consent agenda and no commissioner commented on the utility rates. There was no public comment.

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Staff presented their earlier recommendation of 10 percent increases as Option A on June 3.

“Alternatively, Option B includes an average 27 percent increase to support capital investment in public infrastructure to facilitate economic development, while making Great Falls’ infrastructure more resilient, more competitive and more responsive to opportunities,” staff wrote in their agenda report.

The 10 percent increase for residential customers would have increased the average monthly utility bill by $6.04.

That would have been average monthly residential increase of:

• $2.32, from $23.20 to $25.52 for water
• $2.89, from $28.91 to $31.80 for sewer
• 83 cents, from $8.34 to $9.17 for stormwater

With the 27 overall rate increase, an average monthly residential bill will increase $17.61.

That breaks down to average monthly residential increases of:

• $4.89 or 21.17 percent, from $23.20 to $28.09 for water
• $7.61 or 26.26 percent, from $28.91 to $36.52 for sewer
• $5.11 or 57.6 percent, from $8.34 to $13.45 for stormwater

For commercial customers, the 10 percent increase would have been an average monthly increase of $17.67.

With the 27 percent increase, the average monthly commercial utility bill will increase by $46.82.

That breaks down to average commercial increases of:

• $15.41 or 21.17 percent, from $72.69 to $88.10 for water
• $24.51 or 26.26 percent, from $92.22 to $116.73 for sewer
• $6.90 or 57.6 percent, from $11.96 to $18.86 for stormwater

According to city staff, the water rate increase is needed for about $61.4 million in capital improvements over the next five fiscal years, including ongoing water main replacements of $19.8 million and water treatment plant upgrades of $24.6 million.

The sewer rate increase covers about $166 million in capital improvements needed over the next five fiscal years including ongoing sewer rehabilitation for $9 million, wastewater treatment plant projects totaling $141 million and lift station rehabilitation for $13 million.

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The wastewater treatment plant biological nutrient removal upgrades cost up to $100 million depending on the outcome of potential new regulatory requirements, according to city staff.

The city contracts with Veolia Water for operation and maintenance of the wastewater treatment plant. Operating expenses are projected to grow from $5.9 million to $8.6 million over the next decade.

The storm drain rate increase will go toward maintaining the current system including cleaning and lining current trouble areas, according to city staff, plus about $29 million in capital improvements needed over the next five years to improve the overall functionality of the system.

Significant projects include the south Great Falls storm drainage improvement projects for $8.9 million and two phases of the Central Avenue/3rd Street South drainage improvement project for $9.2 million.

Staff wrote in their agenda report for the June 3 meeting that the 27 percent rate increase would generate about $6 million of additional revenue for water, sewer and storm drain toward expansion of public infrastructure.

The city currently sets aside about $150,000 in water, $100,000 in sewer and $200,000 in storm drain funds annually for “unscheduled development,” according to public works staff.

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“When the city is approached by private developers, they often seek assistance to extending public infrastructure to the project and to offset their cost for installing new water, sewer, storm drain utilities. Aside from TIF, the city does not have funds beyond the unscheduled development funds, which are minimal, to facilitate new development in Great Falls,” staff wrote in their June 3 agenda report. “The rates under Option B include a specific amount to be set aside in a capital improvements fund for use by the City Commission on a case by case, like TIF projects, to be publicly approved by application for new public infrastructure.”

The agenda report did not indicate the specific amount of funds to be set aside for the new capital improvement fund, nor did they share that figure during the public hearing.

In their agenda report, city staff wrote:

• “The city heavily relies on private developers to build out infrastructure; the city’s infrastructure investment resources and capacity are very limited.
• “Business-minded developers expect some level of public investment, recognizing that their projects also generate jobs, tax revenue, and economic multiplier effects.
• “Our rate structures have historically prioritized affordability, which means limited flexibility to support new projects.”

“Staff realizes this is a difficult conversation to have with utility ratepayers, but if had, the commission and staff can possess a clear and more definitive communication process with investors and developers to address their demands for new infrastructure. If CIP funding for new infrastructure is not available in the future, then the city will direct
developers to their other options such as TIF, SIDs, or that they will need to pay for all new infrastructure themselves,” staff wrote in their June 3 agenda report.

Asked if there was a plan for the use of the $6 million in estimated revenue that will be generated by the 27 percent overall utility increase, Doyon told The Electric that “there is not a detailed plan for use of the funds, but there will be a detailed application/approval process presented to the commission at a future work session.”

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The funds won’t be available for a while since none have yet been collected and the new rates won’t go into effect until July 1.

Doyon said he’d directed the public works and planning departments to develop an application process — criteria and guidelines similar to the city’s tax increment financing funding process that will be presented to the commission.

He anticipates additional input from the commission on the staff’s draft that will be used in the final product.

Doyon told The Electric that once the newly established capital improvement fund has available funding, it will be allocated on a first-come, first-served application basis, similar to the city’s process for awarding TIF funds, which are paid only on a reimbursement basis for expenses eligible under state law.

Doyon told The Electric that while the city is aware of new development proposals on the horizon that may be eligible for the new infrastructure funding, “there isn’t a specific, or site-specific plan in place.”

He didn’t anticipate developing one because they would be for a capital improvement plan, which the city already has.

“The nature of the [capital improvement fund] funding is to have money available when an area in the city is experiencing new growth/development — so flexibility is important to be responsive to new projects,” Doyon told The Electric.

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When the funds are available and developers are able to apply, Doyon told The Electric he didn’t anticipate that the fund would stay full for long since “public infrastructure is expensive, which is why we don’t see a lot of new development in areas where there is not already public infrastructure available. In some cases, I could envision one project taking up a majority, if not all of the available funds.”

In an April 24 memo to commissioners, City Manager Greg Doyon wrote: “The purpose of this memorandum is to outline the challenges and opportunities associated with economic development and infrastructure investment in the City of Great Falls. It highlights persistent barriers to growth, analyzes the tools currently available to support
new development, and proposes actionable recommendations for commission consideration. Central to this discussion is the need to clarify the city’s role in facilitating development, the funding mechanisms that can support infrastructure, and the expectations of both the development community and the public.”

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In his memo, Doyon recommended that the city explore additional funding options, “as well as public infrastructure investment to include a utility rate increase for infrastructure expansion; establish a strategic development officer position to lead front-end development discussions; finalize updated special improvement district policy; and
“adopt/endorse clear development process guidance for staff and developers to improve consistency and negotiation transparency with private developers/investors.”

“This document is intended to initiate a broader conversation — with the commission and the public — about how the City of Great Falls positions itself for sustainable growth in the face of increasing demand and limited financial capacity,”Doyon wrote in his memo.

Doyon’s memo was not included in the agenda packets in May or June related to the utility rate increase, nor was it included in Doyon’s weekly packets for April or May.

Doyon sent the memo to The Electric on May 13 in response to an earlier article on the utility rate increase proposal.

The Electric asked why the memo wasn’t included in the agenda packets or publicly released to facilitate public discussion.

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Doyon was out of the office for the following two weeks and on May 29 responded:

“Good question.  I sent the memo and waited for commission feedback – feedback was very light – mostly about the new position funded with TIF dollars.  I wasn’t sure if they agreed with the summary, background, rationale. I think it was a lot to digest. I anticipated that the [city commission] may have wanted a work session to follow-up on it
and they haven’t requested one yet.  Now that I am back, I’m wading through my emails and see if they’ve provided any additional feedback or how they’d like to proceed.”

The recommended new position wasn’t discussed publicly during the June 3 meeting on utilities and development, nor was the SID policy or other aspects of Doyon’s memo, outside increase utility fees.

The memo also discusses the city’s development review process, which the city has for years attempted to streamline, including disbanding the Design Review Board and moving engineers into the city planning office, a move that was later reversed.

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Doyon also sent commissioners, and later The Electric, a document outlining the potential development tools.

The document was also not a part of any of the agenda packets pertaining to the utility rate increase.

In the document, city staff created a chart with the pros and cons of development tools.

Staff wrote that the key advantage of an enterprise fund created with the increase utility rates was a predictable revenue stream that can be allocated for specific infrastructure, promoting long-term planning.

The key disadvantages of that option, staff wrote, are that it’s “politically sensitive, public resistance to rate hikes, regressive impact on taxpayers.”

The option was best used, according to the staff’s chart, when “infrastructure is aging or needs expansion, transparent communication is possible, enterprise funds are strong and support reinvestment.”

During the June 3 meeting, Chris Gaub, city public works director, said expenses are currently outpacing revenues by about $4 million.

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Gaub said during the June 3 meeting that the funds generated from the utility rate hike would maintain and support ongoing needs “and establish a dedicated fund to generate about $6 million annually for strategic investment in utility capacity expansion.”

The funds would be used to expand the capacity of the existing system, not to subsidize developer-specific extensions.
He said the funds would be used for projects that increase overall capacity, resiliency and efficiency of the city utility system to alleviate existing pressure points and support growth.

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For water, that includes replacing undersized mains, upgrading pump stations to handle greater volume and pressure demands, constructing or expanding water storage towers and projects at the water treatment plant.

He said the city is planning to increase an 8-inch water main to a 16-inch main for the Skyline Heights apartments, which will help the system and prepare for future development.

Another future water project is the south main zone pump station and reservoir. Gaub said the project is pretty far out, but would help the current system and be there for when the city decides to grow.

For sewer, the funds would be used for upsizing lines that are approaching capacity and modernizing lift stations.

The city built an east side sewer station for $1.8 million, and Walmart paid their share of $350,000. Future development in that area could reimburse the city for their share of those costs.

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Gaub said that developers would be required to match or cost share in infrastructure costs that use the utility rate revenues through the newly established capital improvement fund.

Gaub said projects using those funds would come to commissioners for approval and be restricted specifically for infrastructure purposes.

He said staff will come up with project eligibility criteria and review the program every three to five years to ensure it’s working as designed.

If there are no significant projects, Gaub said the funds could be redirected to deferred capital maintenance, offset future utility rate increases or be returned to the ratepayers.

“These are all concepts in discussion with the city staff team,” Gaub said.

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Commissioner Rick Tryon said that people had asked him if the city provides water to Malmstrom Air Force Base and Black Eagle, which Gaub said it does, and the new rates would apply to them as well.

Jake Clark of the Great Falls Development Alliance said it was a “pretty bold proposal” and commended the city for considering it.

He said GFDA has long advocated that fees cover costs and the increased utility funds will make development possible in areas with limited capacity.

Clark said infrastructure costs slow development and even with the increased rates, Great Falls is still in the middle compared to other major city’s utility rates.

“I think a 27 percent bite is the best step we could take right now,” Clark said.

Katie Hanning, Home Builders Association of Great Falls director, said “this is really tough.”

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She said that homebuilders tell her the existing infrastructure is why nobody is building in the city.

There were two significant housing developments on the city agenda that night and at least one will not be supported through the increased utility funds.

She said that nobody wants to pay more, but developers can’t afford the infrastructure costs.

Sherrie Arey, NeighborWorks Great Falls director, said that she supported the move with caveats.

“This will be passed on to the renters,” she said.

Arey said she understands the need for infrastructure and had been beating that drum for a while, but there had been past city decisions that were conservative but didn’t consider growth.

She said the city needs to have a plan for the $6 million in new revenue generated through the utility rate increase and show how ratepayers will benefit.

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That “has to be transparent,” Arey said.”This process may not have been as transparent as it needed to be.”

Steve Workman, a local landlord, spoke against the rate increase since it will increase costs on landlords.

Jeni Dodd, a local resident and regular speaker at city meetings, said that the city shouldn’t have given away so much of its COVID relief funds to local nonprofits and that Gaub was being disingenuous about the new capital improvement plan.

She said it was still helping developers and “we shouldn’t have to pay for that. We shouldn’t have to do that.”

Several other landlords also spoke in opposition to the rate increase.

Gaub said that people think the utilities division was funded by taxes, but it’s not. User fees fund those systems.

The city isn’t “jacking up prices for other endeavors,” he said.

Mayor Cory Reeves moved to adopt the 27 percent increase, which was seconded by Commissioner Susan Wolff.

Commissioner Shannon Wilson said, “We need to pay for the services that are provided. They aren’t out there to make money, they provide a service for a very reasonable rate.”

She said that if the utility divisions didn’t get funds, they’d have to consider closing a fire station or pools or reducing police vehicles.

The utility funds are enterprise funds covered by user fees. Public safety and Parks and Recreation are separate budgets, and those funds are not directed to utilities.

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Wolff said they know it’s difficult and that some might think they’re dedicating money to developers.

She said that commissioners see the work being done by public works and are aware of the condition of their systems.

“Come on, we just have to do this if we want to have a community that we’re going to live in,” Wolff said, and it costs more to repair broken systems than to maintain.

She said she looks at the rate increase from the perspective of current infrastructure and “not being able to take care of it the way we should.”

Reeves said, “I concur.”

Commissioner Rick Tryon said it was a difficult decision and that a 10 percent increase, as initially recommended by staff, was a “no-brainer.”

Tryon said a 27 percent increase would take care of the city’s current needs and needs into the future, plus build up capital through the capital improvement fund.

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He said developers want to build housing and commercial development but a major impediment is storm drains.

“We have to take a different approach,”he said. “What we’ve done so far hasn’t worked.”

He said the city can’t have commercial development without new housing.

“If you want less expensive rent or mortgages, have to increase the supply,” Tryon said.

“I’m gonna vote for this reluctantly,”Tryon said. “We have a responsibility to the future of the community.”

He said if the city didn’t take the pinch now, Great Falls wouldn’t be a place kids and grandkids want to stay.

Cities without utility capacity don’t get development, Tryon said, “we need to have more capacity.”

Commissioner Joe McKenney said that there’s an expression of cans being kicked down the road, and he felt commissioners should have been issued a catcher’s mitt.

“Cans just keep coming,” he said. “I’m tired of catching the can.”