FY 2027 Budget Workshop: Corpus Christi Water Rates and Consent Decree Update - July 16, 2026

The City Council Workshop was held on July 16, 2026, from 9:00 AM to 11:25 AM CDT. The meeting focused on the Fiscal Year 2027 proposed operating and capital improvement budget for Corpus Christi Water (CCW), including water and wastewater rates, consent decree progress, a Public Utilities Commission (PUC) update, the drought surcharge exemption fee, personnel enhancements, and a discussion of recent rainfall and its potential impact on drought stages. No public comment was solicited and no formal action was taken.

Consent Calendar

• No items were presented; the meeting was a workshop with no action taken.

Public Comments & Testimony

• No public comments were solicited or received.

Discussion Items

• Consent Decree Overview: Nick Winkleman, Chief Operating Officer of CCW, presented details on the 15-year consent decree with the U.S. EPA, DOJ, and TCEQ. Key metrics include:
  • 100% of force mains (138 air relief valves) and all 244 ARVs inspected.
  • 451 miles of video survey completed; 303 miles remain.
  • Sanitary sewer overflows declined from higher pre-2018 levels to 36 in 2025.
  • Explicit costs to date: $109.9 million (capital projects), remaining capital budget $544 million.
  • Implicit costs (operations and maintenance) total $290 million operational and $13.1 million debt service.
  • Self-performance by CCW crews saved approximately $63.4 million compared to contractor costs.
  • The city requested early dismissal from the consent decree in September 2025, but the DOJ denied it in December 2025, stating the agreement remains in effect for the full 15 years.
• Public Utilities Commission Update: The PUC hearing concluded on July 14, 2026, regarding a complaint by outside city limit ratepayers. The protestants seek $39.9 million (2024) and $36.8 million (2025) in refunds; PUC staff recommended a $6.4 million adjustment for 2024 and none for 2025. The city argues no adjustment is owed, citing cost-of-service rate setting. Briefs are due August 6, 2026, with a ruling expected by year-end.
• Drought Surcharge Exemption Fee: This voluntary fee (31 cents per 1,000 gallons) has generated $37.6 million since October 2018, with projected revenue of $6 million in FY 2027. Funds are used for drought-proof water supply capital projects (e.g., SWIFT debt). Participants can withdraw with five years' written notice. The city is considering placing a related ballot measure; legal discussions are scheduled for executive session on July 21.
• Personnel Enhancements: CCW requested new positions for FY 2027:
  • 8 full-time positions and 4 vehicles for the reclaimed water program (funded by contracts).
  • 1 additional utility billing office position for the Rockport Gas Department acquisition.
  • 2 positions to bring the residential well monitoring program in-house.
  • 5 positions for groundwater program operations and maintenance.
• Rate Presentation: Proposed rate adjustments for FY 2027:
  • Wastewater: Residential inside city (5,000 gallons) increase of $1.87 (2.9%) to $65.39; commercial inside (20,000 gallons) increase of $2.92 (1.5%) to $192.59.
  • Water: Residential inside city (6,000 gallons) increase of $2.48 (5.9%) to $44.55; commercial inside (20,000 gallons) increase of $15.70 (6.6%) to $251.88; large volume customers see increases of 4.5%–4.7%.
  • 10-year projections show upward trends due to new water supply projects totaling $1.1 billion (including wells, conveyance, etc.). The model assumes drought surcharge exemptions offset SWIFT debt.
• Rain Event and Drought Update: Esteban (a CCW official) reported significant inflows from recent storms into the Nueces and Frio watersheds. Combined reservoir levels are at 15% (stage 3 drought). If levels exceed 30%, stage 2 could be triggered, allowing lawn watering every other week. The city has requested a temporary 120-day variance from TCEQ to defer environmental releases when levels cross 30%. Council requested a full update on water supply at the July 28 meeting.

Key Outcomes

• First reading of the proposed water and wastewater rates will be held on July 21, 2026, with second reading and consideration on July 28, 2026.
• PUC briefs are due August 6, 2026; reply briefs in mid-August; final ruling expected by end of calendar year.
• Council will discuss legal issues regarding the drought surcharge exemption fee ballot measure in executive session on July 21.
• Staff will provide weekly updates on reservoir levels and drought status via the city manager's memo and a comprehensive report at the July 28 meeting.
• The city will continue efforts to secure state and federal grants to offset the $1.1 billion water supply capital costs.