City Council Approves Two-Tier Water and Sewer Rate Structure
Council members and the local NAACP have expressed concerns about the equity of the new structure.
By Adele Uphaus
MANAGING EDITOR AND CORRESPONDENT
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Fredericksburg City Council on Tuesday approved a second and final read of the budget, tax rate, and water and sewer fees for fiscal year 2027, which begins July 1.
As part of the vote on water and sewer fees, Council approved establishing a two-tiered rate structure in which “high-volume” customers who use more than 25,000 gallons every two months will be charged at a higher rate.
Staff have noted throughout the budget process that the 10% of customers who are considered high-volume users account for half of the city’s total water and wastewater system usage.
“We determined this year to offer you all a potential solution to make sure that the top 10% users are carrying their fair share [of the capacity upgrades to our water and sewer system] and this was our attempt to do that,” City Manager Tim Baroody told Council at a work session on Tuesday.
The average bi-monthly water bill for the top 10 customers is projected to increase by $1,949, and the average sewer bill by $3,584, in fiscal year 2027, according to information provided by staff.
High-volume customers include educational institutions, healthcare facilities, and some multifamily apartment complexes. Some Council and community members have been concerned about how families living in some of the city’s larger apartment complexes might be affected by the two-tier rate system.
At Tuesday’s Council meeting, Tanya Collins, speaking on behalf of the Fredericksburg NAACP, said, “The concerns we raised [at the last City Council meeting] remain. Though unintended, this policy unfairly impacts vulnerable renters living in multifamily apartment housing.”
“We reiterate that apartment complexes may appear to be single high volume users on paper, but in reality, they are collections of individual families,” Collins continued. “If we are unable to establish strong equity protections now, when the impacts are visible and measurable, then we risk creating a dangerous precedent where the most vulnerable residents in our community may continually absorb the cost of systems around high volume consumption and large institutional users.”
Council spent about an hour during Tuesday’s work session examining spreadsheets prepared by staff in an attempt to understand the potential impact of the rate increase on multifamily housing.
Applying the example of a specific unit in a specific, though unnamed, apartment complex that has a 2-inch water meter and uses 12,000 gallons combined water and sewer on a bimonthly basis, staff’s calculations determined that the total bimonthly increase would be $25.35.
However, as Councilor Will Mackintosh (At Large) said during the meeting, “the math is quite complicated.”
“Some parts are fixed and some are variable related to consumption,” he said. “Because of the way that those fixed fees [which are related to meter size] end up being divided between individual units, the actual material difference in terms of the financial implications between multifamily and single family residences is relatively small, smaller than it seems.”
“All of us hear the equity concerns that have been raised. We all take that seriously,” Mackintosh continued. “I also don’t want us to lose the forest for the trees—for me, the forest being those big commercial and industrial users. We need to make sure they are paying their fair share for the critical upgrades we need going forward.”
Councilor Joy Crump (Ward 2) said she “has faith that as we move through this process and we take a really honest look at the numbers and the impact, that we will reassess [the new rate structure].”
“The budget is a living, breathing thing,” Crump said. “Sometimes we have to take one step back so we can take three steps forward. I truly believe this is one of those cases. I have a lot of faith in our promise to take another look at this, to feel the impact and respond responsibly.”
The motion to approve the two-tier rate structure passed 6-1, with Ward 1 representative Matt Rowe voting against it.
“There are folks for whom [the projected increase] would be a hit,” Rowe said. “It’s worth having continued equity conversations.”
The other budget-related motions, setting the real estate tax rate at $0.84 cents per $100 of assessed value and approving the operating and capital improvement budget, passed 7-0.
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How expensive would it be to convert apartments from single-user status to individual apartment billing? Add a water meter in each apartment and charge each resident separately, rather than charging the apartment complex as a whole. Or, perhaps multi-residential establishments could be excluded from the two-tier billing system.