A BF eight XE slash K four AE five P L H P X underscore O'Hyphen R six two eight underscore GW slash editing.

I think we're we're ready to start the study session.

December sixteenth, two thousand twenty-five.

Mayor Scott Anderson here.

Vice Mayor Bobby Buckley.

Council Member Kenny Bucklin here.

Council Member Young Kaprowski.

Here.

Councilmember Monty Lyons.

And Councilmember Jim Torgeson.

Aquorum is present.

Thank you.

We have uh two agenda items.

The first one is presentation on utilization of different pipe materials in our sewer system.

Staff presentation.

Mayor, Vice Mayor, Council, Senior Council staff.

Turn your microphone on, Ken.

How many times have I seen some people come up here and not turn the microphone on?

And then I'm the guy that did it.

Good evening, Mayor, Vice Mayor, Council, Senior Town Staff.

My name is Ken Snow.

I'm your public works assistant director.

I'm here to present on a review of a couple of pipe materials that we use in our wastewater collection system.

I have two demonstrations that our wastewater team has brought forward for you to see today.

I invite you, without hurting yourself to try to lift a couple of them just to check them out.

We have some lighter uh portions and samples here just for your use and familiar familiarization with the material.

Um as an introduction, there's three primary materials we use.

There are a couple of them more, but for today's discussion, we're discussing VCP or vitrified clay pipe, as well as PVC or polyvinyl chloride pipe and ductile iron pipe.

We sometimes refer to it in the business as DIP for whatever reason we don't call it dip pipe, but it's uh we call it DIP.

And so we're going to discuss the advantages and disadvantages of these pipe materials and how we use them in our wastewater collection system.

And we'll start off with clay pipe.

Literally hundreds of hundreds of years old, probably started off in the bronze age.

It's effectively pottery.

So we take clay, we fire it, the exterior of that clay is chemically similar to glass.

Um but as you know, glass is brittle, and clay pipe uh is like pottery.

It is it is brittle.

So it is difficult to work with.

Um there is they come in shorter laying length, so the actual length of the pipe that you can purchase it in is shorter than um more modern materials.

That shorter length means that you have more bell and spigots, more bell and spigots is more opportunity for root intrusion.

Those comp those repairs can tend to be a little bit more complicated.

You can see some creative repairs there on a piece of uh pipe there on the bottom left-hand corner of the uh photos there, uh wrapping it in or resin as well as concrete repairs as well as these are fern coplings you see on the right hand side there.

The advantage of this material, it is heavy, it is brittle, it is short in length.

Um, it is corrosion resistant, it has great corrosion resistance in wastewater applications.

Modern materials like PVC do have some disadvantages too, and one of them is there's an unknown out there.

PVC has not lasted through an entire life cycle yet.

Um it has a very similar life as what we anticipate, um, but it has a longer laying length and therefore fewer bells and spigots.

Um, and it is a semi-rigid pipe.

It it can handle handling during construction a little bit easier than clay pipe can, as well as the compaction effort that fall uh that follows on top and around the pipe when we when we bury it.

It is similarly resistant to corrosion.

Umert in the in the in the presence of those wastewater gases.

Um longer term, we have we see lower maintenance costs associated with PVC.

Our crews, our equipment, our materials, and our procedures are all based around PVC pipe because it's the vast majority of our system, and I'll discuss a little bit more on that later.

That last material, ductile iron, is used primarily in structural applications.

We don't favor this material in gravity sewers because it is prone to corrosion, um, but there are certain applications where it is required.

This is in places where we require extra protection for the uh to protect our water system, where it's crossing a water line, underneath railroad tracks, underneath highways, underneath canals, specifically it's required inside of casings when we do a jack and bore.

Those are the generally the locations where you'll see a gravity system with ductile iron pipe.

The interior of the pipe is called a lining, and it's it's supposed to be lined with something called Protecto 401 from the manufacturer when in a sewer application.

It's a thin layer of epoxy that protects the metal from corroding.

It is a problematic coating, and we'd like to see a standard in the future where if we do have ductile iron in the system, particularly the gravity system, that it has a cured in-place liner put in place, which is a fully separate pipe within that pipe.

I'll discuss a little bit more on that standard in a moment.

In summary, that PVC cost, the PVC pipe has a lower upfront installation cost because it's lighter in weight.

It's easier to handle out in the field.

Clay pipe does require special inspections during construction, and the repairs are more complicated for us to execute.

Ductile iron pipe is the most expensive for us to get into the ground when it comes to both material installation and the most problematic from a corrosion perspective, as you can see from that bullet there.

Our life cycle analysis generally favors PVC as the more economical choice.

And the and as we transition to this next slide, we're gonna talk about we actually do accept vitrified clay pipe in the system.

It does take the town engineer's approval because we do prefer PVC pipe.

We only have these other tight materials, and I won't spend a lot of time discussing them, but these are more niche applications where those other materials will be used.

But there's a gravity side of that slide, and then we discuss the force mains on the right hand side.

Gravity side is powered by gravity, force mine, force mains are pressurized pipe.

Vitrified clay pipe cannot be used in pressure applications.

So it is not an acceptable material on the failures on our force main systems where those systems are pressurized.

We cannot use vitrified clay pipe.

Um plastic pipe can be used on both the gravity and the force main system.

They're different, what is called a dimension ratio, a different specification of pipe, but they can be used in both locations.

The takeaway there is that if we did use vitrified clay pipe in the system more broadly, it would not have prevented the force main failures that we have seen in recent years.

We took a look at some of the engineering standards with help from the engineering department.

Um they they contacted some of our peers, and where do where do their standards lie?

Um, all of us do allow for vitrified clay pipe.

Um all of us also similarly allow for PVC pipe.

Um I took a note there in the center where ductile iron pipe with CIPP lining.

Um that's something that we'd like to see, but we don't see a CIPP lining going in on brand new installations, but that is a practice that we see growing in the industry.

Um the third one down, reinforced concrete pipe with PV sling, is not a modern material anymore and is is not available on the market to purchase.

This slide's a this figure, it's a couple years old.

Some of you may recognize it from previous what we call the long-range infrastructure plan, um, sometimes known as asset management plan.

But it summarizes the materials that we have inside of our system.

You can see that the vast majority of our pipelines in the gravity sewer side on the left-hand side is our PVC pipe.

We do actually have uh quite a bit of vitrified clay pipe, that blue color.

Um, it's about between 30 to 45 years old here in the system.

I'm gonna show you where that is in just a moment.

Um on the right hand side, you can see that we had a mix of ductile iron and PVC pipelines in our force main system, but in recent years, we have really started to favor a new material called HDPE or high density polyethylene.

This material is more uh is much more resistant to the chemicals that are uh present inside of a wastewater collection system, especially a pressurized one, um, as well as performance in a pressure application.

So here's a map of the town of Gilbert, and we have some materials that are located here.

Um, these are various projects that are existing in the town.

I'm gonna focus you in on the top uh on the top left-hand side of the map, or generally the Fiesta Tech area, Northwest Corridor.

And if we zoom in over there, all those blue lines are our existing clay pipes in the system.

We do have that um this is an older part of town, um, and at the time that this section of town was built, vitrified clay pipe uh was more in use.

Other agencies, like I said, do continue to use it, City of Phoenix, uh, mainly being that one.

But as the town of Gilbert was developed, PVC started to become more prevalent.

And about that time, you can see the kind of the line in the sand where that's how the system grew out at that point.

Um, inside the Fieste Tech area as well as near the Coca-Pelle Golf course, we've had repairs on uh vitrified clay pipe.

It's a little bit more complicated to do that repair on that pipe material.

Um you have to chase back the brittle nature of this pipe, you have to chase it back, get a smooth edge, and slide a new new uh coupling over it to get that repair in place.

Um a little more difficult to do than with the PVC pipe.

Uh, in summary, there are multiple materials inside of our wastewater collection system, including vitrified clay pipe, which is allowed with an exception from the town engineer.

Um currently we have a preference for PVC as it is a more modern material.

Um the methodology for material selection was described as we look at um if this is a pressure application, if it is a gravity sewer application, um, as well as this vitrified clay pipe material would not have eliminated the ductile iron failures uh in the gravity system or on the force main system that you that we have seen.

Um and Castle Metorky Center, see see you piqued your interest there.

Specifically, underneath the loop 202, where we had video of the corroded ductile iron pipe in that section, it is required to have ductile iron in that section because it was a um underneath the highway.

So that's a requirement from the jurisdiction that that is there.

Um so we would have to use ductal iron in that location.

We couldn't put clay pipe underneath the highway.

Um so it would not have eliminated those failures that we saw.

I will end by saying that when it comes to sewer rehabilitation, we have an existing system.

The vast majority of our system is made of PVC with followed by some clay pipe.

It is less expensive to use cured in-place pipe in almost all circumstances to rehabilitate an existing line because it eliminates the excavation and the traffic control associated with the rehabilitation of that line.

So with that, I am available for any questions that you may have.

Thank you.

Questions for Ken.

The way you said that was interesting, because you said it wouldn't have prevented the breakdown.

Of course, it's not going to prevent the breakdown of a different material, but the material itself, I didn't see much saying that we were having failures with concrete pipe anywhere.

I heard you say that it was a little more complex to deal with at times.

But have we had failures in our system?

I mean, some of these look to be 65 years plus.

Specific on clay pipe?

We have.

We have.

So um uh specific examples are usually construction related.

Um clay pipe when constructed and left alone, is will perform very well.

When you have other construction activities around it, um compaction activities, other excavations, horizontal boring, um, it is more sensitive because of its brittle nature.

So um, yes, I can name two off the top of my head that come to uh that come to mind.

That were being and while being installed?

No, after the fact.

After being in being in service for a number of years.

Other questions?

Ken, do you have a breakout on the cost differential of the different uh types of pipes?

Um we don't have that available right now, Mayor Anderson, but we can definitely develop that product.

Thank you.

Any other questions?

The uh actually there is somebody here from a company that makes clay pipes, I wanted to hear what he had to say.

I think Kenny has a question.

Thank you, Mayor.

Thank you, Ken.

So in looking at that one um piece of information you had where you looked at four different cities.

And we all have different standards for kind of where we feel these things fit.

Given how long now all of this has been going in the ground, is there any actual data?

Anybody studying this stuff saying under these conditions, like our climate, these conditions, this pipe is the most recommended for its ability to not breach, to have longevity, to save money, et cetera.

Uh is there anything like that, or are we literally just kind of making our best guesses because that tells me we're all over the place.

Uh Councilmember Buckland, thank you very much for that question.

Pipe materials are well studied.

Um, and I think depending on where you look and the specific conditions on any construction condition, um, you will find different answers.

This I hate to make this sound so nebulous, but every single piece of pipe we put in the ground is the only place where that infrastructure exists on planet Earth.

Every situation is unique.

Is it close to a water source?

Is there underground water?

Is there other utilities nearby?

Once once it gets constructed, is there going to be something else constructed on top of it?

Is there a is there a box culver going to be placed on top of it?

Are the highway loads going to change?

There's a lot of things that and a lot of variables that change in the operating environment for each one of these situations.

Uh we've we've favored uh other materials in the past, and as materials have evolved, uh we see that evolution towards these plastic pipes.

Um a lot of time it is economy.

It's cheaper to get in the ground initially, the material is cheaper, easier to handle, it's easier for the development community to to uh get the infrastructure in the ground.

Um but at the time PVC pipe didn't exist when uh when uh clay pipe was very popular and uh it was being being put into the ground.

Um as far as lifespans, the EPA does stu uh uh does publish expected lifespans.

We generally are planning around 80 to 100 years out of PVC.

It's very similar to what we see um from the industry in the clay pipe industry, which is right around that 80 to 100 year mark.

Thank you.

So then if I can recap what I'm hearing and tell me if I'm wrong.

Yes, there's lots of data out there.

Some of it is the lawyerly answer.

It depends because it depends on what situation it's in.

And um if I hear you correctly, you are you and your team are looking at every situation for the best case scenario based on what you know there.

That is correct, uh Council Member Councilmember Buckland.

Thank you for that.

Um, our engineering team um continuously is evaluating uh new materials and and the applications uh as they come in.

A couple of them are in the audience here here with the Avenue technical questions as well.

Thank you.

Thank you.

Thank you.

Go ahead, Councilmember.

The uh I'm concerned when I look and I see anything with ductile iron after what we're dealing with now.

I don't think people understand how many hundreds of millions of dollars are gonna it's gonna cost, and I still see this here, and I see it as a proved case by a case where we like it here, like it there.

I just don't understand how that can even be something discussed at this point with what this town has just been burdened with.

Why are we why is it even on the table?

I I please let me know.

I didn't mean to go quite back that far.

Uh useful and structural applications, particularly when we get above ground in pressure pipe systems.

Um there it's very useful for when we come up out of the ground, and unfortunately we didn't be in a spool piece of duct line here to demo that.

That's actually one of the pieces we usually show you.

Um we use flanged connections so we can connect things like valves and air release valves, and you can't it's very difficult to do that with a piece of plastic pipe.

Um so there is uses, particularly above ground or in vaults where the various appurtenances to the pipeline system that allow it to operate can be connected and uh allow us to um isolate sections of the system um, particularly in the force main system.

It also allows us to do things like a pump around.

If we do have a failure at a specific location in the system, at various points within the town of Gilbert, we can close valves and isolate that force main and create a what we call a jumper, plumbing one section of the force main, bypassing the broken part of the pipe and dropping back into another section.

And that's part of our system resiliency.

So there are applications where ductile iron is useful.

We are in agreement that proper care of the interior pipe and the maintenance program with the replacement of that pipe needs to be properly programmed.

And um in those specific applications that I just described, um, ductile iron is a really good fit.

There are other places where I do not feel it is an appropriate application of the material, and we are we have we have paid um to uh for that mistake.

So we're not looking at the same kind of retrofitting what's already degrading with the same material.

I'm sorry, your microphone, I'm sorry, I didn't quote you.

That was my bad.

I turned it off.

The uh we're not looking at replacing the failed material with the same failed material, are we?

No, no, we are not.

There are maybe there may be isolated sections where uh we have um where there's effectively at the structural component that's very important where you use the ductile iron to uh allow for a valve to be installed, for example.

But in the other sections of the town, um as an example, we'll talk about the Leighton Lakes Forcement, which was a uh cement mortar lined ductile iron pipe, which is effectively a waterline pipe.

We actually slip line that pipe by taking a piece of HDPE pipe through the ductile iron pipe so that the ductile iron is no longer carrying the wastewater or exposed to that environment.

Um it it's perhaps a it is perhaps difficult to uh understand the thinking at the time, but I think people are making the best decisions they could at that time uh with the knowledge that they had.

And uh today we just understand a little bit more.

Councilmember Lyons.

You had a slide up here that talked about the lifecycle cost.

Could you go to that one for me real quick?

Um I don't think that one was it.

It was the one that uh let's stop on that one.

I'll go back to that one for just a second.

Uh why does the town of Gilbert require engineering approval when Phoenix Chandler and Mesa do not?

What's our rationale behind that?

Um Susanna, did you want to uh give you a moment?

I really didn't want to disturb you.

You look comfortable there.

I was comfortable, but thank you.

Um mayor and council member Lyons.

Um, I think it's been a part of our standard for quite some time.

And so one thing that we are working on right now within the engineering department um along with the development services engineering is working to basically take an analysis of our overall um standards and make sure that we're basically modernizing them appropriately.

So we have not done and culled through a full comprehensive look of our standards for quite some time.

It's time to do that.

So that is one direction that we're trying to get into is to look at that.

This would be one of those items that we would make some decisions on.

Right, very good.

I I like empowering our our our teams to be able to use their best judgment in the field, but if you guys have a good justification for it, I'm okay for it.

I just noted that the other communities had not, and it's just an added prof you know layer in the process of getting things done.

So thank you.

Appreciate that.

No, the other slide I was looking at had to do with the uh you had stated in one of the slides that uh we haven't had enough time yet to look at the full life cycle of the plastic uh right there, that one disadvantages new materials not existed through an entire life cycle.

Yeah, down in the advantages, you say lower long-term maintenance cost.

How do we know that?

Is that uh a projected lower maintenance cost or it seems contradictory to two statements?

Understood.

Thank you very much, Councilmember Lyons, for that question.

So from a maintenance perspective, it's easier to clean that PVC pipe.

The interior of the clay pipe is rougher.

So uh this was maybe something I should have mentioned on this slide.

Is that for the same given size pipe?

This pipe, the aid the this PVC pipe actually can move more fluid because the interior of it is so smooth.

That smooth surface also makes it easier to clean.

The rough surface conversely makes this carry less less fluid through it at a given slope and a little bit more difficult to clean.

Um the more uh bells and spigots are more possible failure points.

And because it's going to be more prone to cracking, because of its brittle nature, we're gonna have more repairs on it.

That that's that's the uh the thought that we have there.

All right.

On the duckle iron, was it not doesn't it does it not have a plastic sleeve inside of that as part of the original installation?

There's like a coating on the inside of it.

Um so from uh from a the industry jargon, if you will.

Uh coatings are on the exterior pipe, exterior, linings are on the interior, just a fun little uh tidbit there.

Um but the answer to your question is no.

The interior of the duct liner pipe does not have a plastic liner.

There's an epoxy coating that is has to be engineer specified by the designer.

That epoxy coating is the brand name for it, it's called Protecto 401.

But it is, as I was saying, it's a it's a thin layer, and our the quality on that Protector 401 hasn't been quite to the level that we had liked to see on something that's going to be protecting that material from corrosion.

Um the things that do protect it and that we have higher levels of confidence in uh that technology is called CIPP or cured in place pipe.

So for a manner of clarity though, that that is a coating that's put on side inside of it rather than a lining that would imply to me a sleeve that's going in when I think lining.

Is that correct?

That that is a correct use of the word.

It is it is a it is a it is a paint.

Exactly.

So that's what I thought is.

Yes, okay.

That's the point I wanted to drive home.

Now, that was not that did not hold up well to the chemistry of our sewer water, I take it as a.

That has been our experience, sir.

Okay.

And how is uh when we look at the the PVC have do we have data to show how well it's holding up to uh that kind of exposure?

Um we do.

We generally don't see any aging in it.

Uh the town hasn't uh we haven't existed long enough to see that PVC section of town start to degrade.

Uh when plastic start to fail, it goes through a mode called slow growth cracking, and we are watching for that uh where we do get failures.

We'll we can get root intrusion sometimes.

Um most of the time it's like some other construction related thing that we find, something when it is initially installed.

Those are the things that we will typically find.

And did I understand you correctly on the two clay pipe failures that we had?

It was result of the pipes being disturbed through some kind of additional action that was going on correctly.

That is correct.

Adjacent construction activity, which brittle nature of the pipe, it'll be sensitive to that.

All right, thank you.

Thank you.

I don't see any other questions, Ken.

Thanks.

Thank you.

Our second item is a presentation on water and solid waste recycling rate pressures.

Evaluate.

Oh, you had the uh the gentleman in the concrete makes like pipes.

Um, the study sessions are don't allow public comment.

The council can suspend the rules with the three-quarter vote.

So if you want to bring somebody up from the public, you're welcome to do that.

You just need to you can take a voice vote.

Yeah, um, you just need six or seven to agree.

Everybody okay?

Just give me a nod.

Yes.

Okay, sure.

We're okay.

Go ahead.

Invite him up.

Is two of soda here?

I'm your counsel.

Do we have somebody up that uh to sweep?

Jeremy Ask us that he has a free presentation.

Maybe I understand Mayor and Council.

I thought uh Mayor and Council.

Um I put together uh a few minutes uh on pipe materials.

Perhaps I misunderstood uh the the pulls that up, I'll go ahead and and uh I just had a maybe six six minutes or so.

I'll go really fast.

Okay.

Uh I I'm an engineer, civil engineer based here in in Phoenix, and uh I thought I would also compare these two materials for you guys using these two metrics, pipe service life and health and environment.

And um just getting started, you know, who's using clay pipe.

The the slide before had mentioned a couple cities, but if you look at this list, New York, Philadelphia, Chicago, City of Phoenix, and City of LA, that's five of the six largest cities in this country that are using clay pipe exclusively.

City of Phoenix does not allow PVC pipe for their wastewater collection.

Quick little reference here, you know, New York City.

You know, the cost in putting a wastewater pipe in the ground is in digging the trench.

You know, you may have a five million dollar wastewater project where the pipe accounts for 200,000.

It's the small percentage of a huge uh project cost, but it's the asset that the city gets at the end.

It's the pipe material, it's not the one you'd want to skimp on.

Pipe service life.

Um actually, clay pipe has been around for thousands of years, not 250.

Um, we have pipe in the US at 223 years old today.

City of Phoenix has pipe, clay pipe, 135 years old.

Tucson, I think we're at 150 years old.

San Francisco does not use PVC pipe, and they have 135-year-old pipe that's gone through both of the major earthquakes.

City of Omaha recently redid their entire downtown.

They said, hey, we've got old pipe, 136 years old, we better take a peek.

They they videoed these lines, they looked excellent.

They repaved the entire downtown new landscaping, curbs, gutters, roads, on top of this pipe that's a hundred and thirty-six years old.

What was the technology of the time when that pipe went in in Omaha?

You know, Carl Benz applies for the world's first automobile, pretty crude, but this pipe is still serving the the residents of Omaha, Nebraska today.

Similar, similar story here in in Minneapolis.

12-inch clay pipe, they were upsizing, built in 1896.

We took that pipe to a factory a hundred and twenty years later, and we bearing tested it.

Its properties did not change with time.

You know, if you think of the oldest human-made things on this planet, they're fired ceramics.

Its properties are not time and temperature dependent.

Seattle public works used plastic for 35 years.

They thought the oldest part of their system, the clay pipe, would be the worst based on what they found, and you can read it there.

They think it could last two, three, four hundred years.

This is why City of Seattle left plastic and is only putting in clay pipe in their system.

Because of that, it's easy for the clay pipe manufacturers to give the residents of Gilbert a 100 year warranty on the pipe.

Right now, the city of Gilbert is getting a one-year warranty.

This is JM Eagle, world's largest manufacturer of plastic pipe.

Diamond Plastics, VinylTech, the local manufacturers, they give the city an 11-month warranty.

You can link to Unibell, they'll take you to Vine of the Vinyl Institute.

It says right there, PVC pipe installations last up two 50 years.

Modern plastics worldwide, they need engineers to understand plastics physically and chemically age.

Their properties change with time.

City of Los Angeles, they understand this, and they published their Bureau of Engineering publishes this long-term tensile and modulus of structural plastics.

And you can look down at the bottom, PVC has an initial tensile and a creep reduction of 47% and a 50-year tensile.

You look at the modulus of 400,000, it's 50 year modulus is reduced 65%.

Look at the rest of the PVCs, 80% reduction.

That pipe is changing with time.

The main feature of plastics, their physical, mechanical, thermal, and chemical properties change with time.

I have kids, and I was shocked to see that my plastic car seat has an expiration date on it.

The plastic in the car seat is changing with time.

Here's a big one for for the residents.

Very inert.

Plastic's not going to give you a health product declaration.

It requires materials that are toxic.

Right now, the US EPA is reviewing vinyl chloride.

You can't have polyvinyl chloride without vinyl chloride.

They're reviewing vinyl chloride for a potential ban because it fails all 10 criteria established under the Toxic Substances Control Act.

There's been projects where they use this red list.

The red list contains the worst in-class materials in the building industry.

Polyvinyl chloride is on the red list.

But what's interesting, as you can see here, it contains three other red listed items cadmium, lead, and phthalates.

94% of tap water tested in the US contains microplastics.

The Journal of Water Process Engineering here, you can see PVC pipes are releasing microplastics into the water.

And why do we care about microplastics?

You can read these stories, they're all over.

This comes from the American Heart Association, loaded with microplastics.

New England Journal of Medicine, very, very, very few things have as much risk as micro plastics to heart attacks and strokes.

Yeti's sales of drinkware, 1.2 billion.

It's because people don't want their water in plastics.

You know, they're committed to phase out PVC because of its toxic life cycle.

And I'd like to think they're doing this because they're altruistic, but I think they know their customers who are Gilbert residents and taxpayers don't like PVC.

We conducted study using data orbital.

Data orbital was the most accurate pollster in the 2020 Arizona election cycle.

Over 70% of the people polled do not want PVC pipe for water or wastewater.

And further, they supported referendums on city projects where plastic pipes were going to be used.

Basically, shelve that project until the next general election and let the people vote.

Thank you for the time.

Not sure what the purpose of that was, but thank you.

Mayor, if I may, before you close this, if you don't have any questions, um, there was there is someone from the Home Builders Association that also requests to speak, but it's up to the council if you want to suspend the rules and allow that.

If you want to suspend the rules and allow that, we'll take the same voice vote.

I mean this is kind of a unusual situation.

It's James Ashley, by the way, just so you know the name is right there.

Fine.

Go ahead.

Thank you very much, Mayor and Council.

Since it was opened up, I thought I'd take the opportunity, and I appreciate that very much.

James Ashley with the Home Builders Association of Central Arizona.

We are here in support of staff's assessment regarding pipe materials used in the town sewer system.

You heard a lot of the universal qualities of PVC and clay pipe.

PVC is durable, efficient to install, corrosion resistant, the smooth interior reduces clogs.

You heard a lot about that.

Very cost effective, and it is tree root resistant.

In the rare occasions, only one municipality in the valley.

The second one that was referenced actually allows waivers to allow for PVC.

In the rare occasions where clay pipe is still required, it's presented a number of issues for builders and developers, included limited supply, labor-intensive construction, the cost, and the delicate properties of the pipe itself.

With clay pipe, as you heard, significantly heavier and more brittle than PVC.

It's harder to transport and handle and install.

It drives up labor and equipment costs.

Estimates are double of PVC when it's used.

The segmented design with joints in clay pipes is prone to root intrusion and leakage from ground shifts, as you heard around some construction activity in the vicinity of existing clay pipe.

And the delicate nature increases the risk of cracking during installation, and over time also leading to frequent need for repairs.

The Maricopa Association of Governments, MAG has baseline standards.

This is Section 615 for sanitary sewer line construction for public works projects.

And MAG specifies PVC pipe should be used, such as SDR 35 for gravity sewers due to its corrosion resistance, cost effectiveness, and durability for sewer systems.

And that's out of the MAG standards.

And with that, I want to thank you very much for this opportunity and having a few minutes to speak this evening.

Thank you.

No.

Okay, let's go on to item number two.

Presentation on water and solid waste recycling rate pressures, evaluation of needs, rate increase, review, and recommendation from the public works advisory board.

Thank you, Mayor.

To begin the presentation, I'm going to walk through a couple slides just highlighting some of the aspects of our enterprise funds and some of the actions the town is currently taking and will be taking in regards to this matter.

We know it's a very important issue and a very complex issue as well.

So the lines of service that fall within our enterprise funds are water, waste, water, solid waste, and environmental compliance.

And they are self-supported through rates and fees.

And the easiest way to think about that, they are essentially set up very similar to what a private sector enterprise would be.

That the cost of the operations and delivering the services are supported by the fees for that service, but there is not a profit factor uh built into that.

The only expense applied to that fund are the support services costs provided by HR Finance and additional IT related matters with no markup on that.

And unlike some cities, the town of Gilbert does not transfer any funds for non-enterprise related activities outside of that fund.

When it comes to looking at the rates and making changes to the rates, there is a very strict statutory requirement for rate increases, starting with a notice of intent, which is what will be discussed tonight, followed by formal adoption by council that's uh tentatively scheduled for February 27th of next spring.

Then there's a mandatory notification and waiting period before the new rates would take effect, and the town council has uh historically or over the last five years begun reviewing the rates every two years for potential changes.

Another important aspect uh related to this matter is the town's credit rating.

It affects the interest expense when we do need to issue debt.

We actually were just uh had Fitch reaffirm the town's triple A credit rating for the water resources MPC utility system revenue bonds.

They highlighted several things, beginning with operating cost burden.

The system's operating cost burden was considered very low at $3,458 per million gallons.

This affirms that the rating agency views the operating costs of both water and wastewater enterprise funds as very efficient, a strength to the system and a positive factor in the rating.

Under life cycle ratio, the lifecycle ratio is low at 35 percent in fiscal year 24.

Plan capital spending for the next five years should typically outpace historical depreciation, supporting a continued low life cycle ratio.

This affirms the strengths of Gilbert's long-term infrastructure maintenance.

Capital spending that keeps pace with or outpaces depreciation is a key indicator of a well-run utility for long-term sustainability.

Some of the rating sensitivities they noted.

Fitch notes factors that could lead to negative rating action, including failure to manage rate adjustments in support of the capital improvement program, sustained trend in capital needs increasing beyond what is supported by the system revenues.

Fitch also noted they will be watching the large volume of capital expenditure over the next few years closely to see how the town is executing on its plans.

Moving on to the major drivers of current rate changes, and this will be discussed in greater detail in the presentation that will be given by Rebecca Hamill on our staff tonight.

But we are in the middle of an ongoing and worsening drought in the southwest United States.

We are preparing, we are preparing Gilbert for impacts from Colorado Colorado River River shortages, excuse me, which is currently 40% of our current portfolio.

And there is a high potential for stage three conditions, which would take effect in January of 2027, which would have a significant reduction in the impact of water we would receive from the Colorado River.

Also, the cost of water is going up.

We also have inflationary pressure on operations and supplies, and then the critical infrastructure needs, which we know are one of the largest drivers of the rate increases, the new water plant, the seven wells, and the maintenance and replacement of water-related infrastructure.

We also want to highlight some of the things we are exploring or doing.

We are currently evaluating cash versus bonds and how that impacts rates, available funding, and overall cost.

We're looking at additional funding for financial assistance programs.

We're looking at a different rate or tier options for agricultural users.

We're researching the ability to serve septic users.

We're looking at we do have incentive programs to reduce water usage, and we continue to evaluate those programs on an annual basis and add to them.

And then we have a water meter audit that will be on the council agenda for tonight for approval.

And I'll dive into a little bit more detail on what that's going to entail.

The town has selected Kimley Horn and Associates Inc.

to complete a third-party audit with preliminary findings available in March 2026, including a public presentation to town council.

The town anticipates the water audit to strengthen public confidence in its utility building practices, some of the key areas that will be handled within this audit.

It will be done by a third-party team.

Kimley Horn Associates will be looking at data and business operation analysis.

AMKA services will do an infrastructure audit, and ME Simpson Company, who is a nationwide leader in water operations and maintenance.

We'll do a 95% statistical confidence level for sample testing.

For under transparency to ensure complete independence, Kimley Horn will have access to all relevant systems and data, and the consultant report the findings directly to the town council without staff filtering or editing those results.

The audit components themselves, a data audit, and we'll be looking at is information flowing correctly.

Operations and businesses practice audit.

We'll look at are the processes sound, and the infrastructure audit will look at our meters measuring accurately.

One of the things we want to emphasize is part of this audit will be looking at all 90,000 plus utility accounts and the data to ensure that everything is functioning as it should be and accurate.

Any discrepancies that we find will be addressed.

During this period, there will be some public engagement.

We'll have a 24-7 project height line hotline.

We'll have project email and website website with biweekly updates, and we'll have up weekly updates to assist with timely resolution of customer inquiries.

And during this period, we do encourage all customers who believe they may have a discrepancy in their billing or in the amount of water that has been calculated to have been used by them in a billing period to continue to reach out to the town, and we will address those and look into those as they come up.

With that, Mayor, I'm now going to turn it over to our team to cover our environmental services rate study and recommendations as well as the water res water study as well.

Thank you.

Mayor Council, my name is Isaiah Scarcio Romero.

I am the solid waste and recycling manager for the town of Gilbert.

I'll be presenting on our solid waste and recycling rates alongside Rebecca Hamill, the water manager, who will be presenting on the water utility rates themselves.

As we begin with all critical discussions, we believe it's essential to highlight our mission guides every decision for Gilbert's future.

We anticipate challenges, we create solutions, and we help people thrive.

Some solutions require difficult choices, but they prevent far greater problems.

We cannot be successful in serving our community without our council.

Council's direction is essential to the delivering on Gilbert's high quality of life that we've come to love and expect.

We'll begin by stating that there is no such thing as a way.

When we throw anything away, it must go somewhere, as quoted by Annie Leonard, former CEO Greenpeace, uh CEO for Greenpeace.

On your images here, you'll see an active landfill where our trash and refuse goals to be buried and decomposed.

And then the other image is a material recovery facility where our recyclable goods are uh converted into bills, sorted, and sold in the secondary market for a secondary useful life.

As we begin to discuss the rate pressures for the solid waste residential and commercial funds, we'll notice that there are two primary categories impacting this race cycle costs associated with our solid waste vehicles and costs associated with the final destination of the materials we collect.

We'll review these individual, beginning with our vehicle replacement costs.

We've seen significant increase in capital cost for new collection vehicles.

The industry replacement cycle is seven years.

We'll state how that impacts our current replacement costs.

And then the backlog that we currently see in our operations, one in three vehicles are due for replacement.

Before uh 2020, we could purchase refuse trucks for about 285,000 with a 10-month lead time.

After 2020, uh supply chain issues uh drove costs above 300,000.

And by 2021, you'll see in the first chart that 325,000 has been raised to that current uh capital cost.

Lead times have since returned uh to a normal 10-month production schedule as production and supply chain stabilized.

Costs, however, have continued to rise, bringing the current price of a side loader over 525,000 due to component and manufacturing expenses.

As a result, vehicle replacement costs have increased 87% since 2020 and by 27 percent since our last race cycle in 2023.

These pressures have permanently raised the baseline price of our refuse vehicles and reduced the purchasing power of our replacement fund.

Now that we review the capital costs regarding replacement of our refuse vehicles, we'll dive into the second category, which is uh the repair and maintenance.

The aging fleet requires higher or repair and maintenance costs, and the industry spare vehicle ratio of 15 to 20 percent, which is needed to cover downtime.

That's maintenance and vendor repairs, plays an important factor into our vehicle repair and maintenance.

In looking at our residential silo fleet conditions uh as the industry replacement cycle is seven years.

We'll see that each of these vehicles here uh are broken into categories.

We have 13 vehicles that are seven years or older past their useful life.

We have eight vehicles that are currently in five years five and six, meaning they're scheduled to do uh be replaced in the next couple of years.

And we have 15 that are newer in our uh fleet.

These are standard normal operating vehicles that um are in their standard useful life.

That's 15 of those.

Uh as you can see here, each vehicle past their intended useful life is contributing drastically to our cost and repair maintenance by age uh in those specific categories.

Those 13 vehicles contribute to 1.8 million uh in our repair and replacement costs last year and last year in our repair and maintenance.

Those eight vehicles contributed to one million of the expenses that we saw in the repair and maintenance, and then the 15 vehicles standard uh 900,000 that we um caught that that cost our operations and repair and maintenance in that specific age category for last fiscal year.

In summary, the total cost of those vehicles shows that um these drivers for the increased cost, the age of the trucks, the hundred uh pieces of equipment that uh continue to move and the increased cost for those parts.

We've seen an increase of this component over 301% since 2020.

And since our last race cycle in the last couple of years, we've seen an increase of 44% in repair and maintenance.

Now that we reviewed those two rate pressures with the vehicles, we'll see uh we'll go into the landfill disposal fees, which is one of the categories for the secondary part, which is when we dispose of our landfill disposal fees is our trash, those continue to rise.

The rising costs in the last two years were not incorporated in the last approved rates, and it's one of the primary drivers for uh solid waste systems nationwide.

Our landfill tipping fees rose to 3.4 million post-COVID, which is what we pay our private partners, Republic Services and WM to dispose of the refuse we collect.

These calls were costs were relatively stable before our last rate increase in 2023.

Since then, our partners have cited supplying issues, equipment, material shortages, labor challenges, rising fuel costs as drivers for higher fees.

As a result, the annual post collection cost increased from $3.8 million in 2023 to $5.5 million last year.

Overall, landfill tipping fees have increased $78% since 2020, with 45% of that increase occurring just after our last rate adjustment.

As mentioned previously, landfill disposal cost is one of the primary rate drivers for solid waste system nationwide.

As part of the 2024 Gilbert, Arizona benchmark report, data shows that last year the average household in our town generated 2,079 pounds of trash.

That's 240 more pounds than the average or 13% higher than the average household last year.

Now that we've reviewed the cost regarding our trash disposal, we'll dive into the second pressure, which is the recycling market.

Recycle recycling revenues fluctuate based on commodity prices.

We have to budget conservatively to account for market shifts and contamination reduces revenue and increases processing expenses.

Recycling markets continue to fluctuate in response to global and domestic economic conditions.

We observed strong commodity pricing starting in August of 2023 with steady month over month increases continuing through May of 2025.

Since then, the secondary market has softened, and we are currently experiencing a broader market downturn.

Paper and cardboard decline is tied to national market pressure and lower mill demand.

Two major party, two major third-party U.S.

plastic processors shut uh down this year, significantly impacting the plastic recycling market.

These closures have reduced processing capacity, slowed the movement of material, and contributed to instability in these secondary markets.

Industry analysts expect these depressed conditions to continue for the next few months, although they anticipate that paper and cardboard prices will not decline much further.

Metals will continue to remain stable under moderate demand.

What this means for our operations is that we have to budget conservatively.

As you see here in this chart, we are because of ongoing market volatility and uncertainty of when the secondary market will stabilize, we have to rely on historical trends.

Over the past five years, recycling costs have fluctuated significantly, with our highest cost reaching 800,000 in 2021, which contributed to the highest cost per ton of $36.02 per ton.

The market improved in 2022, declined again in 2023, and then recovered late in that year, continuing to strengthen through 2024-25.

As shown, last year we received a five dollar and eighty-three per ton rebate.

During this five-year period, our average cost has been eighteen dollars and eight cents per ton to recycle.

Overall, the charted data illustrates the significant fluctuation fluctuations that are driven by those market conditions.

This illustration here shows the total totality of our solid waste system.

It shows how the materials generated at the home.

It's either collected in our trash recycling carts for the landfill disposal or it's collected at the uh blue recycling cans for recycling processing.

As we go through those different end markets, we see that material that is sent to the to the material recovery facility.

The lowest cost per ton occurred this last fiscal year, where we earned a revenue of $5.83 per each ton that we delivered to that material recovery facility.

Um and then the lowest cost that we saw in the last five years for disposal rates was $25.11 per ton in fiscal year 2021.

The average cost per ton to recycle in the same five-year period has been $18.08 as previously mentioned.

The average cost per ton to landfill the material has been $30.97.

And then the highest cost per ton of to recycle occurred five years ago post-COVID, where we saw the highest tipping fee of $36.02 for us to process our material per ton, and the highest cost per tonfilling occurred just last year, where the cry as we see the landfill costs continue to increase year over year.

$41.58 is what we ultimately paid per ton to dispose of our waste last year.

In referencing our 2024 Gilbert, Arizona benchmark report data once again, it shows that our average household generated recycled material of 444 or 444 pounds.

This is on average, so it's on target with what we see across different communities.

To summarize, our landfill expense is the highest disposal pressure of our solid waste system.

Recycling alleviates some of that burden by saving money and supporting sustainability.

Each ton of recycled material avoids landfill disposal fees, reduces overall operational costs, and provides long-term sustainability benefits, such as preferred preserving landfill capacity and extending the life of long-term infrastructure.

In regard to our solid waste utility enterprises funds, bottom line, recycling isn't just environmentally friendly, it's the financially smart choice for our town.

Referencing again our 2024 Gilbert Arizona benchmark report.

In comparing the waste that we generate and the materials that we recycle, our diversion rate is less than average.

The more we can divert from the landfill, the better uh we will be in our solid waste system.

As such, though, we have uh conducted additional programs to help divert material away from the landfill, away from the systems that we collect.

We'll begin by stating that since each ton of material diverted from the landfill is a positive for our system, and in response to recycling market conditions that we saw across the last five years, we discontinued glass collection and blue cans and introduced drop-off glass recycling in February of 2024.

Our contracted uh vendor that processes our material does not have a secondary market for glass, so we do not receive any revenue for glass that they process.

Instead, we pay a processing fee for that material, and then we pay a disposal fee after they dispose of that material once they process it through their facility.

The drop-off program is available in five locations to collect glass exclusively for delivery to our partners at strategic materials where we earn recycling rebates.

To date, we have earned $8,000 and compared to $39,000 that we would have incurred in expenses for processing and disposal costs through our our private partner.

If the glass were landfilled or collected in black hands, that disposal cost would be $13,000 to our system.

This program is one way we are mitigating recycling market volatility, offsetting operational costs while also promoting a circular sustainable reuse of glass, which is absolutely a recyclable material.

As we move into another uh in addition to glass recycling, we also partnered with Goodwill of Arizona on a pilot donation drop-off program.

We have two containers that are located across our parks.

We have one at Discovery Park, one at Cactus Yards.

These state-of-the-art solar-powered containers provide 24-7 donation access, they're ADA compliant, and they're equipped with 24-7 camera surveillance.

They are maintained by Goodwill of Arizona at no cost to the town.

This program promotes reuse, helping to keep items out of the landfills and out of a recycling stream again at no cost to the town or our ratepayers.

Another uh item that we're developing, a program that we're uh currently developing is a battery drop-off pilot that we are going to use to serve residents that are furthest away from our HHW facility.

These sites will support safe battery disposal, they'll encourage responsible recycling, and they'll help prevent truck fires that are caused by lithium-ion batteries, a trend that we see in in the solid waste collections uh market that that we're seeing right now in the industry.

We anticipate that this sites will be operational by March 2026, following some logistics planning, some staff training, and collaborating with our HHW professionals so that we can ensure a proper uh program that's available to residents again that are furthest away from the HHW facility to be able to dispose of this material and keep it out of our uh curbside collection system.

Those are the rate pressures for our solar waste and recycling um enterprise.

We'll be moving on to our 2026 rate overview unless there's any questions by Mayor or Council.

Mayor.

Yes, Councilmember Kaprowski.

Isaiah, thank you for the presentation.

Um could you do you recall how many fires that we've had uh in the past year with the curbside collection?

I'm sorry, uh uh Mayor Counselor Member Kaprowski.

I don't recall quite off the top of my head exactly how many we've occurred in the last year.

I I want to say that we've had several fires that our operators have encountered that they've been able to put uh put off with their fire extinguisher.

Um there's been one for sure that has resulted in the total loss that occurred uh last year or earlier in the year that we are now needing to replace um and that for sure was a total lost vehicle due to a truck fire that happened as a high load that was contributed to something that we picked up in the curb side.

Uh it can it combusted it created a lot of heat.

It unfortunately was not able to be salved.

The truck was not able to be salvaged, and so um it did end up in a total loss due to that fire.

The other incidents that we have had, they have been uh we've been fortunate that no one's been hurt, and we've been able to um to to you know um take care of those fires with the fire extinguisher.

Unfortunately, I don't have the exact number, but I can get that for you, yes, ma'am.

Thank you.

And I'm glad to hear that there is that battery recycling solution to help, and then potentially additional education in that space.

Um then I just wanted to also recognize and thank you and your team for um you know the presentation but the information about what you've been doing on the sustainability and recycling side.

It's not always you know the most um pressing item, but I appreciate seeing the balance of the information and and how it can offset each other.

I also like to hear about how it's part of that circular economy and then being used again, and looks like this here was actually a positive for the community, so appreciate that.

Thank you.

Councilmember Buckland.

Thank you, Mayor.

Great presentation.

Um would you please go back to the slide that showed the amount of waste that the fire, I think it was five cities are putting in the ground.

So Mesa, Arizona, our neighbor to the north, is 237,900 approximately more people than we do.

Their their data hub that I looked up from their city shows their population right now about 5299.

And we're around 292.

And we are putting far more trash in our landfills than the third largest city in the entire state is who's you know almost double us.

So I guess my question and well, my concern is in looking at those tipping fees and those costs increases related to that, all of that, so that the public understands all of that ties to those tipping fees, because that's what it costs us to dump that and get it off out of our town.

And for them to, you know, the the landfills to process it.

So we are by that data wasteful, and uh it's hard for me to take water and sewer separate.

But as far as trash goes, I'm sitting here going, it's really hard for me to have empathy if we have to raise our trash service costs when I see that kind of data.

Is that a reflection that we are not where we should be, or maybe they are closer farther along the way on recycling, or are we just wasteful?

We are we we just buy everything and toss it.

Any any idea?

Mayor and council member, uh the habits that we have as consum uh as consumers absolutely do play into what we collect in our system.

Um what those habits entail specific to demographics or those items are outside of my expertise.

What I will say though is there is opportunities here for us to increase the diversion rate, which is how much we collect on the recyclable side.

If we can remove some of the items that might be recyclable out of the trash stream that we collect into the recycling container, it'll help offset some of the some of the trends that we see here.

While it's being picked up in the trash does not necessarily mean that it's all trash, it could be recyclable as well.

Thank you.

And that's my suspicion is is um how are we comparing to those same cities in terms of are we recycling is that does that correlate the opposite that you know we're we're doing this much recycling and they're doing a better job at it?

Or do we know?

Mayor, council member, this is the diversion rate.

So this is that inverted line where you aggregate how much landfill um tonnage you collect versus how many recycling tonnage you divert away and you you you do the calculation on that math.

We we talked about the sister uh city Mesa, Arizona that has uh that had a larger demographic, their diversion rate is higher.

So while they're also generating less waste, they are generating more recyclables as well.

So they are able to divert some of those materials into it.

Um not necessarily saying that that we can't, but we do see that there again we can increase our diversion rate and shown here.

We could get closer to that average.

If we move the items that we're throwing away into the recycling container that are recyclable goods.

Thank you.

So uh if I understand correctly, you've got three pressures that are are being put upon the system.

One is we've got the replacement cost for the trucks coming up, and if I looked at the I think two thirds of the fleet are going to be need to be replaced in the next three years, correct?

Uh secondly, the dump fees are getting more expensive for us.

That's correct.

And then parts and stuff for maintenance and the cost of labor is going up.

Those are the three pressures that are putting that are being put on this particular service that we are providing the community that's going to drive a need to adjust the rates.

Is that correct?

Mayor, council member, yes, that is correct.

It's the vehicle replacements, uh, the aging infrastructure, which also contributes to the repair and maintenance uh that goes along with keeping an aging infrastructure, the landfill tipping fees that are that we show that have been increasing.

And so when you take those three components, when we want to replace the aging infrastructure, when we want to uh get a better um repair and maintenance cost expense on uh under a certain threshold based on the age of our vehicles, and then the landfill um tonnage that we pay to our private partners, uh those are the the pressures that are driving our current operating expenses um up as we'll continue to show what what these pressures are looking for our rate.

On the can you go back to the trash generation chart per city?

I just want to see a number here real quick.

Okay, that's kind of what I thought.

Uh Councilmember Buckland, one of the things that is not factored into this is household size per community.

Gilbert has nearly a three person per household size, whereas MASA is like two and a half.

So when you look at the cost per ton per individual, Mesa actually is costing more.

We are more judicial with our our refuge than they are if you factor that in.

It's barely a difference, but there is a difference there.

So the thing the skew in the data is the household size.

Thank you.

Very much appreciated.

That's all we got.

Anything else?

I think we're ready for Rebecca.

No.

Mayor, Council.

I have uh I'm gonna go over the 2026 rate overview before Rebecca comes up and then speaks on the water enterprise.

Thank you.

Here we show uh the solid waste and recycling, the residential services.

Uh they include weekly curbside collection of trash and recyclables.

They include 10 uncontained bulk pickups per year, and they include year-round household hazardous waste facility access.

Our week lot, our weekly or weekly curbside collection of trash and recyclables makes up uh 11 and a half million of the residential services budgeted expense in in the category for fiscal year 2025.

Um the uncontained bulk uh makes up 1.6 million.

Our household hazardous waste facility is 334,000 in expenses.

This is the share of our expenses by that category.

As you can see, 85% of our expense expenditures is on that weekly curb side collection, 12 and a half percent is on our uncontained bulk collection, and 2.5 percent is our HHW facility.

And looking at our residential five-year operating fund cash flows, expenses are higher than revenues through fiscal year 2028, and the ending balance dips below the minimum fund balance.

It corrects again in fiscal year 2029 with an ending balance above the minimum fund balance is fiscal year 2030.

This model assumes a 2% revenue increase that's needed to support the operating fund beginning in April 2026.

This model does not assume any additional rate increases through fiscal year 2030, assuming current market conditions remain unchanged.

We evaluate our five-year plans every two years and we adjust to meet the demands of the present day every two years.

This is what it means for our residential customers.

The two percent revenue increase that we need to meet the pressures of our residential fund means a slight monthly increase to these lines of service.

The standard rate is for our 90 gallon trash and recycling service.

It's standard across most households.

This is a the largest line of service that we provide our residents.

The service will see a 55 cent monthly increase.

Residents can also opt in to other remaining categories in this chart or alternative services that they like.

These monthly increases will range anywhere between 14 cents and 50 51 cents a month.

Again, we need a 2% revenue increase to support our residential fund.

These proposed rates uh will meet the impact we see from our rate pressures that we discussed previously.

This is just for the solid waste and recycling line item on our monthly utility bill.

Our solid waste and recycling commercial lines of service include our front load collection and our roll-off service.

They support a river and economy and they serve a diverse range of customers, including businesses, office, retail stores, restaurants, multifamily complexes.

We compete in the open market, meaning these customers can shop around and select the hauler they'd like to receive these services from.

Looking at our five-year operating cash flow for the commercial fund.

The current ending balance of fiscal year 2026 is at the minimum fund balance, but projected revenues cover expenses through all five years, resulting in an ending balance above the minimum fund by fiscal year 2030.

This model assumes a 20 percent overall revenue increase starting in April 2026 and the commercial operating.

No additional rate increases are assumed through fiscal year 2030 contingent upon stable market conditions that we see today.

We review and update the five-year plan every two years to ensure it meets current operational and financial needs.

Here is an example of what this means for our commercial customers, which again can shop around for the best price, although we remain highly competitive with these rates.

We forecast a approximately 13 percent increase among all base payers.

And looking at this example here, one three-yard container service one time a week.

The baseline of service is set at the current rate of $95.79.

Their proposed monthly increase rate will be 108 dollars and 23 cents for a monthly increase of 12.45 cents.

We will offer smaller discounts to heavier users as part of our rate structure.

Currently, when we add another container to this service, instead of charging the full rate of 191.56 cents, we offer a 21 percent discounted rate.

In the proposed new rates, when another container is added, instead of paying the full rate of 216 dollars, the customer will receive a 17 percent discount, bringing the total to 180.

This means their actual bill, we see a monthly increase of 28.40 uh 28.32 cents, or a monthly increase of 19 percent.

To summarize, we are needing to generate 20 percent additional revenue to meet the demands of our commercial operating fund by right sizing the cost of service, reducing discounts while staying competitive in the open market.

Roll-off and commercial rates in this table reflect minor one-time or monthly adjustments based on the service they need.

These services are available to commercial and residential customers needing specialized waste removal.

Customers can shop around for these services as well.

Roll-off delivery, roll-off haul, and compactor haul are the highest service volumes in this category of rates.

They are charged per request.

They're increasing anywhere from four and a half to six percent with the compactor hauling costs seeing the highest increase per service at $16.60 compared to the current rate.

The disposal per ton fee is a pass-through cost set at the current highest landfill rate fee.

The highest last rate cycle was $34.50.

This cost has increased since that last cycle.

The highest will now begin in January 1st, 2027, which will be 44.66 cents.

To summarize, we are needing to generate an additional 20 percent revenue to meet the demands of our commercial operating fund.

These updated rates still remain competitive in the open market with the private sectors, aligning our service more closely with the privates and being able to compete and support the the requirements of our operating fund.

That concludes my portion of the presentation.

Any questions, Mayor and Council?

Thank you, Isaiah.

Any questions?

I do.

Councilmember Lyons.

Can you go back to the one where you're showing the proposed rate increases over the next five years?

I noted that we have no increase 27, 28, 29, and 30.

How do you factor in the impact of inflation upon our rates during those time frames?

Or are you even planning for that, I guess.

Good evening, Mayor and Council.

There are some inflationary factors built into the five-year plan that we're adopting right now, and those are where you know, where you saw specifically on the residential side, there are considerable increases that have happened since the rate increase since the last rate increase, but because we had already accounted for some of that inflationary factor, we're only seeing a small impact on our rate needed now in order to generate the additional revenue.

So we have continued to project some inflation into the five-year plan that's covered by the current the rate proposal that we're showing you today.

So if that's the case, you come back in 28.

Are you expecting to ask for another increase two years from now when we review it again?

Mayor and council, as as Isaiah has mentioned it, a lot of it just depends on uncertainty around the market.

We do the best we can to estimate.

The one thing that we do know that's not built into this is escalation in our landfill costs, and that's something that because it's a pass-through cost, particularly on the commercial side.

Um we actually do want to come to, we've had some discussions and want to come to council on a way to allow us to increase that based on um uh uh some type of a CPI that would um be tied to our our private vendors and what they charge us, so when it automatically goes up for them or for us, we don't have to come back through the process every time.

So is there a way to phase this over a few years or is it we need it now?

Particularly on the commercial side, um it is something that's needed now because the current year is the the largest pressure um for the need for the rate increase, uh which is why you see along the five-year plan, we are not currently projecting needing needing additional increases, and even on the residential side, the two percent is is what we need right now to get FY20, the rest of FY26 and into FY27 to balance.

And then as we you know, in that in that scenario, for example, as we start to finally be able to replace vehicles, we can see maybe some reduced maintenance costs where we can kind of stabilize things that way um and hope to keep the rates more steady going forward.

The reason I asked that is because you were looking at the uh there were part of the trucks that have still got a couple years' worth of life in them, and I didn't know if part of this could be put out two years, and then we have a a projected rate increase at that time to cover those replacements because if I understand that's covered in this, correct?

Those replacements will be part of this rate increase.

Uh that that is correct.

The the adjustments to our replacement fund for the vehicles on the solid waste uh on the residential side is part of this increase.

Um we have so many vehicles that are already so far past their useful life that it's significantly contributing to additional um additional repair and maintenance costs as well as breakdowns over time for staff.

So really this this allows us to get everything so that it's on a more typical replacement schedule where we kind of fell behind during COVID when those vehicles weren't available.

Okay, thank you.

Thank you.

It's 10 tail, and we have some pretty anxious kids out in the lobby.

What would you like to do, Patrick?

Uh Mayor, members of the council, I was gonna suggest that we push the water rate presentation and discussion to the council meeting, which was already gonna be held at the council meeting, but it's my understanding you're going to pull all the presentations up to the very beginning of the meeting.

So we just handle it at that time.

Okay.

With that, I'll uh adjourn the uh study session.

We'll reconvene in 10 minutes.