Mayor, council members, thank you for the time tonight.

We're going to be discussing the utility bill, proposed rate increases, and the notice of intent is part of the formal process for tonight.

Before we get into the presentations on this issue, which is an incredibly important one, as well as in a very complicated one with all of the various aspects and factors that play into that.

I wanted to take just a few minutes and go over some key things regarding our enterprise fund as well as some of the drivers of the rate hikes and some of the things we're doing as a town and an organization in this matter because it can get lost in the presentation of the material itself.

So beginning with our enterprise funds, maybe.

This is off.

Okay.

Beginning with our enterprise funds, the lines of service that are contained within this are water, wastewater, solid waste, and environmental compliance, and they are self-supported through rates and fees.

And I think the easiest way to understand these funds, which are separate from the general fund, it's set up very similar to how a private enterprise would be, where the cost of the service is covered by the fees charged to deliver that service.

The only expense that is coming out of the enterprise fund are the overhead cost for the support services, HR, finance, IT.

Those services, those funds need to operate just like any of our other service lines in the organization, and there is no markup on those expenses whatsoever.

The town of Gilbert also does not transfer any of those funds out of the enterprise funds for non-enterprise related activities like some cities do.

We have to follow a very prescriptive regimen defined by statutor Arizona statute in when it comes to requirements for rate increases, beginning with a notice of intent, which is is tonight.

And then a formal adoption by council, which is currently slated for February 27th.

Then there's a mandatory notification and waiting period before the new rates can take effect.

And the town has begun a process of reviewing rates every two years for potential changes to be more responsive to the needs and ensure that our funds are solvent and can operate.

Another major factor of importance when it comes to these funds is our credit rating and the impact of that credit rating.

And I'll use an example in our personal lives, our credit rating and how that will affect the interest rates we can get on a car loan or a home mortgage, and we know with home mortgages in particular.

Sensitivity to that rate and the subsequent interest is paid, can total up to a lot of money in your monthly payment, as well as the interest cost over the life of that debt.

It is no different when we issue debt.

The better our credit rating is, the better interest rates will get when we do have to go to the markets to issue bonds.

And that can total uh tens of millions in dollars over the life of that bond.

Recently, Fitch just reaffirmed Gilbert AZ's water resources MPC utility system revenue bonds at AAA with an stable outlook.

And I'm gonna uh cover just a few of the things they highlighted in their review.

Starting with the 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.

Looking at the life cycle ratio was deemed low at 35% in fiscal year 24.

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

This affirms the strength 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.

They noted some rating sensitivities, and these factors could lead to a negative rating action.

First is failure to manage the rate adjustments in support of the CIP.

Sustained trend in capital needs increasing but what by beyond what is supported by the system revenues.

And pitch 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.

The major factors driving the current rate changes and Rebecca Hamill on our water resource, or our I'm sorry, our water department manager will go into more detail on these, but the four major categories are the historic ongoing and worsening drought in the southwest United States and what we need to do to prepare Gilbert for impacts from Colorado River shortages.

The Colorado River makes up 40% of our current water portfolio, and there is a very uh strong potential for stage three conditions, which would take effect in January 1st of 2027, and that would result in significant cuts in Colorado River allocations to all the cities that receive water from that source.

Second factor is the cost of water itself, and again, I'm not going to dive into the details on this one.

Rebecca will cover it in her presentation, but the cost of water is going up.

There's inflationary pressure on our operations and supplies, and then our critical infrastructure needs, which were one of the biggest drivers of our rate pressure that we're currently experiencing, the North Water Treatment Plant that is under reconstruction right now and expansion, the seven wells that again will prepare us for potential cuts to the Colorado River and making sure we can meet our peak demand and maintenance and replacement of water-related infrastructure.

Some of the things we are exploring and doing is evaluating cash versus bonds to understand what that impact is on rates, the available funding, and overall cost.

We're looking at uh providing additional funding for our financial assistant pro financial assistance programs.

Looking at different different rate or tier options for agricultural users.

We're researching the ability to serve septic users that currently that water that they use is not uh treated by the town and reused, either recharged or put into our recycled water program.

We are looking at to uh our incentive programs and to reduce water usage and new ways to incentivize uh reduced water usage and new programs that could be employed.

And then we're doing a water meter audit.

And I'll dive a little bit deeper onto this one because it is on for council action tonight.

So 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 the town council.

The town anticipates the water audit to strengthen public confidence in its utility billing practices.

Looking first at the third-party team, Kimley Horn Associates will look at data and business operations analysis.

AMKA services will look at uh perform the infrastructure audit, and then ME Simpson Company will perform a 95% statistical confidence confidence level for sample sample testing, and they are nationwide leader in water operations and maintenance.

From transparency perspective to ensure complete independence, Kimbley Horn will have access to all relative systems and data and the consultant report findings to the council without town staff filtering or editing any of those results.

The audit components itself, the data audit is the information flowing correctly.

Operations and business practices audit, are the processes sound, and the infrastructure audit are the meters measuring accurately.

And one thing I'd like to point out under the audit is they will be looking at all 90,000 plus utility billing accounts and analyzing that data to find any anomalies, any any statistical differences that we can then drill down and try to figure out what may be going on.

And then as part of the public engagement, there will be a 24-7 project hotline.

There will be project email and website, uh project email and a website with biweekly updates, and there will be weekly updates to assist with the timely resolution of customer inquiries.

During this period of time, we are requesting anybody if you believe there is an issue with your billing with your meter with anything to do with your water usage in the town to continue to reach out to the town, and we will continue to address those matters that as they are brought forward to us.

With that, Mayor, that's everything I'd like to uh cover at the beginning.

Um, if there's no questions, we'll ask Isaiah to come up and begin the right presentations.

Any questions at Patrick at this time?

Isaiah.

Good evening, Mayor Council.

My name is Isaiah Scarcero Mero.

I am the solid waste and recycling manager.

And uh, as we get the presentation loaded, uh Rebecca Hamill, uh the water manager will be presenting on the water enterprise fund.

I will be presenting on the solid waste and recycling fund regarding our utility rates.

And as we begin begin our presentation, uh it's critical that with all this discussions, uh, 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 delivering on Gilbert's high quality of life that we've all come to love and expect.

Before we begin looking at the Solid Waste and Recycling Enterprise Fund on the rate pressures and the 2026 rate overview, I'd like to recognize the great men and women of the Solid Waste and Recycling Team.

I'm fortunate and grateful to be a part of such a dynamic and talented team serving our community.

We'll begin by discussing the rate pressures of our solid waste and recycling utility fund.

When we show here 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, former CEO of Greenpeace.

In the graphics that you see here, you'll see an active landfill where refuse and our trash goes to get buried for decomposition.

The other image is a materials recovery facility where recyclable items are bailed to be able to be sold on the secondary market and have a second useful life.

When discussing our rate pressures, we'll begin with our vehicle replacement costs.

We've seen significant increases in capital costs for new collection vehicles.

We want to point out that the industry replacement cycle is every seven years, and we currently have a backlog of one in three vehicles that are due for replacement.

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

After 2020, production delays and supply chain issues drove costs above 300,000 and lead time stretched to nearly two years.

By 2021, the price had already risen to 325,000 as indicated by the first bar.

Lead times have since returned to normal 10 month production schedules as production and supply chain stabilize.

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

As a result, vehicle replacement costs have increased by 87% since 2020 and by 27% since our last race cycle adjustment 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 reviewed the capital costs regarding replacement of our refuse vehicles, we'll dive into the second pressure regarded in this category, which is our vehicle repair and maintenance.

We have an aging fleet, which typically requires higher replacement and maintenance costs.

We will touch base on what the industry spare vehicle ratio of 15 to 20 percent, which is needed to cover downtime to do those maintenance and vendor repairs.

Meaning that at year six, we'll place an order.

At year seven, we receive that vehicle within that 10-month lead time of placing that order, and we'll uh replace the vehicle at its seven-year mark.

As you can see here, one in three vehicles is currently past the seven-year cycle.

We have 13 vehicles in that category.

Eight vehicles are in years five and six, which means that they're going to be scheduled for replacement in the next two years.

And we have 15 vehicles in the age category of one to four, which is a typical standard uh cycle for our year.

What we see here is that over half of our fleet should be replaced within the next two years per industry standard.

In comparing that with the repair and maintenance costs, we see the 13 vehicles contributed to 1.8 million in expenses last year.

The eight vehicles that are due for replacement in the next few years contributed one million to the repair and maintenance expense, and then the 15 vehicles that are earlier in their life cycle, 900,000 in last year's uh expense of repair and maintenance.

Now, what that means for us, these are the drivers for the increased costs.

As I mentioned, the age of the vehicles, the hundreds of moving parts as technology becomes upgraded and more advanced in the increased cost for parts.

As you can see here before COVID, repair and maintenance costs were slightly below 1.5 million.

Post-COVID, we had an initial jump of 2.8 million in 2021, as shown in the graph.

Again, supply chain disruptions, part scarcity, they continue to impact hydraulic systems, electronics, sensors, wiring, control modules year over year.

When factoring in the age of the vehicles, as the equipment becomes more advanced, technology improves, the increased cost for parts.

We've now experienced a 301% increase in since 2020 and a 44% increase since our last race cycle in 2023, bringing our repair and maintenance slightly under 5.5 million last year.

We've reviewed the vehicle uh costs as they relate to our pressures on our solid waste residential and commercial funds.

We'll now discuss the landfill disposal fee.

As you can see here, the landfill disposal fees continue to rise.

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

Landfill tipping fees rose to $3.4 million post-COVID, which is what we pay our private vendors, Republic Services and WM to dispose of the refuse that we collect.

These costs were relatively stable until right before 2023.

Since then, our partners have cited supply chain issues, equipment and material shortages, labor challenges, rising fuel costs, among others for drivers of the higher fees.

As a result, our annual post-collection costs increased from $3.8 million in 2023 to $5.5 million last year.

As you can see here, overall, the landfill tipping fees have increased $78% since 2020, and most importantly, 44 45% since our last rate adjustment.

As mentioned previously, landfill disposal cost is one of the primary rate drivers of solid waste systems 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 pounds more than the average or 13% higher than the average household among comparable cities.

Now that we reviewed the cost regarding our trash disposal, we'll dive into the second pressure regarding our materials, and that's the recycling market.

Recycling revenues continue to fluctuate based on commodity prices.

We have to budget conservatively to account for market shifts and the contamination will reduce revenues and increase up processing expenses.

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

We observed strong commodity pricing starting in August 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 carboard decline is tied to national market pressure and lower mill demand.

Two major third-party U.S.

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

These closures have reduced processing capacity, they've slowed the movement of material, and they've contributed to the instability in the market.

Industry analysts expect these depressed conditions to continue for the next few months.

Although they do anticipate that paper and carbo prices will not fall or decline much further.

Metals continue to remain stable under moderate demand.

What that means for our operations, because of ongoing market volatility and the uncertainty about when the secondary market stabilizes, we budget conservatively and rely on historical trends.

Over the past five years, recycling costs have significant significantly fluctuated, with our highest annual cost reaching 800,000 in 2021 post-COVID, where we paid $36.02 per ton.

The market improved in 2022, declined again in 2023, then recovered later in that year, continuing to strengthen through 2024-2025.

As shown, last year we did receive a rebate of $5.83 per ton for every material that we took to our material recovery facility.

During this five-year period, our average cost has been $18.08 per ton.

The overall charted data illustrates that significant fluctuations are driven by market conditions.

Our system will collect those and take them to their end and places.

They'll either go to the material recovery facility or to the landfill.11 cents.

That was five years ago in 2021 when the rate was the lowest.

Again, that rate continued to increase over the last five years.

On average, uh our recycling cost has been $18.08 over the five year period.

In comparison, uh, the average cost per ton to landfill our waste has been $30.97 over that same five year period.

Our highest cost per ton to recycle occurred five years ago at the uh at the turn of the post COVID era, uh, where we paid $36.02 as the highest cost to recycle that year.

Our highest cost per ton to landfill took place just last year, where our highest tipping fees came in.

We were averaging $41.58 per ton to dispose of our material.

In referencing our 2024 Gilbert, Arizona benchmark report, data shows that our average household generated and recycled 443 pounds of recyclable material.

This is on target with the average that we see across local municipalities.

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

Recycling alleviates some of the 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 preserving the landfill capacity and extending the life of long-term infrastructure.

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

In referencing our 2024 Gilbert Arizona benchmark report once more, we're comparing the waste that we generate and the materials that we recycle.

Our diversion rate is less than average.

Again, the more that we can divert from the landfill, the better it would be for our solid waste system and the utility enterprise.

As such, we have additional programs to help divert material away from the landfill.

Since each ton of material diverted from the landfill is positive for our system, in response to recycling conditions, we discontinued glass collection in the blue cans and introduced the glass drop-off recycling in February of 2024.

Our contracted vendor does not have a secondary market for glass.

So what happens when the glass reaches that destination?

We pay a processing fee, the material gets ultimately landfilled, and then we play a disposal fee for that material as well.

The drop-off program is available in five locations to collect glass exclusively so that we can deliver it to our partners at strategic material where we earn recycling rebates.

To date, we have earned $8,000 compared to $39,000 that we would have incurred in processing and disposal costs through the material recovery facility.

If the glass were landfilled or collected in black hands, the disposal cost would be $13,000 for that same material.

This program is one way we are mitigating recycling market volatility, offsetting operational costs while promoting a circular, sustainable reuse of glass and material that can be used in the secondary market in the secondary life.

In addition to glass recycling, we partner with Goodwill of Arizona on a pilot donation drop-off program.

We have two containers that are located in town parks, one at Discovery Park, one at Cactus Yards.

The state-of-the-art solar-powered containers provide 24-7 donation access.

They're ADA compliant, they're equipped with 24.7 camera surveillance and are maintained by goodwill of Arizona at no cost to the town.

This program promotes reuse, helping to keep items out of our landfills and the recycling system.

Again, at no cost to the town or to our ratepayers.

We anticipate that these sites will be operational by March 2026, following some logistics planning that we're having with our team internally, staff training, and collaborating with our HHW experts and our teams over at the HHW facility.

Now that we've gone over these uh rate pressures, we're going to go into how these impact the 2026 rate overview.

Our solid waste and recycling residential services include weekly curbside collection of trash and recyclables.

We have 10 uncontained bulk up pickups per year included in that, and we have year-round household hazardous waste facility as part of our residential services.

Weekly curbside collection and trash recyclables makes up 11 and a half million of the residential services budgeted expenses.

We have uncontained bulk or that makes up 1.6 million of our expenses, and our household hazardous waste facility contributing $334,000 to the expenses.

The pie chart shows here that 85% of our expenses by category is contributed by curbside collection.

Uncontained contributes 12.5%, and our HHW uh 2.5%.

In looking at our residential five-year operating fund cash flows, expenses shown here are higher than revenues through fiscal year 28.

Our ending balance dips below the minimum fund balance.

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

This model assumes a 2% revenue increase beginning in April of 2026.

This model doesn't assume 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.

This model does include the replacement cycles to upgrade our vehicles and replace some within the marks that they're needed at their end of life within that seven-year industry standard.

And it also includes projections on what we anticipate could change in the market.

However, again, we review it every two years to see if our projections are in line and we'll make changes if needed.

This is what it means for our residential customers.

The 2% revenue increase that we need to meet the pressures of our residential fund means a slight monthly increase to these lines of service.

Our standard household rate is a 90-gallon trash and recycling service.

This service will see a 55 cent monthly increase.

Residents can also opt into the other remaining categories in this chart or the alternative services if they like.

Those monthly increases range between 14 cents and 51 cents.

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

These proposed rates will meet the impact we see from our rate pressures.

We also have our solid waste and recycling commercial lines of service, which include front load collection and roll-off service.

These support a ripened economy and serve a diverse range of customers, including businesses and offices, retail stores, restaurants, to multifamily complexes and schools.

We compete in the open market, meaning that these customers can shop around and select the hauler that they like to receive these services from.78 cents.

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

Again, this projects to uh 13% monthly increase.

If they are we're we're gonna be offering smaller discounts for heavier users to meet the demands that we're seeing.

Currently, when we add another container to this service, instead of charging the full rate of 191 for that secondary container, we offer a 21% discount for the rate of 156 151 dollars sixty-eight cents.

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

This means that their actual bill we will see a monthly increase of 28.45 cents or a monthly percentage increase of 19%.

To summarize, we are needing to generate 20% of additional revenue to meet the demands of our commercial operating fund by rise-sizing the cost of the services by reducing the discounts and staying competitive in the open market.

Roll off and commercial rates in this table are also part of the commercial services that we offer, and they reflect minor one-time or monthly adjustments based on the services selected by our customers.

Again, these can also be shopped around for a better uh for a different hauler.

However, we still remain highly competitive in these areas.

These services are available to commercial and residents needing specialized waste removal, large-scale projects.

The major categories here are roll-off delivery, roll-off haul, and compactor haul.

Those are the most requested service in these lines of services.

These are charged per request, meaning when a customer requests it that that's the service is rendered, and we charge the fee.

They're increasing by four and a half to just a little over six percent across these lines with the compactor hall costing $16.60 extra per service compared to the current rate.

That's one of the highest ones that we see here, however, again, still competitive with the open market.

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

The highest last race cycle fee was $34.50 two years ago.

And as I mentioned previously, those costs continue to rise year over year.

The next highest cycle will begin in January 1st, 2027, when we will be charged through our vendors 44.66 cents.

Again, this is a pass-through cost that we'll be passing on to our customers for the landfill disposal fee.

To summarize, we're needing to generate 20% additional revenue to meet the demands of our commercial operating system.

The updated rates remain competitive with the private market.

We're aligning our service costs more closely with the private sector, and we're supporting the commercial fund requirements.

Any questions?

Council?

Any questions?

This time.

Thank you, Isaiah.

Thank you, Mayor.

Thank you, Council.

Rebecca.

Good evening, Mayor and Council.

My name is Rebecca Hamill.

I'm the water manager for Gilbert, and I'm here tonight to talk to you about the water portion of this utility rate increase.

Last week at the council retreat, we shared with you a version.

Oh, I'm sorry, I didn't advance it.

Uh last week at the council retreat, we shared with you a version of this presentation.

We appreciated your feedback and applied some of the updates that were discussed to ensure transparency for council and for the community.

We want to first start off by acknowledging that these water rate increases are difficult, especially as household costs continue to rise across the board.

We recognize the real impact this has on families and businesses in our community.

However, there's an expectation that we all share that water will always be there when we need it.

The town has an unwavering commitment to provide clean, safe, dependable water so our community can continue to enjoy the quality of life that we're used to.

What we don't always see is the work behind that promise.

Reliable water only feels automatic because hundreds of people are constantly monitoring, treating, and delivering it so it reaches every home every day.

We know this is tough and wish there were easier solutions.

We're actively working to identify ways to help rates normalize in the coming years.

However, we cannot ignore that our once reliable water resources are diminishing, and providing res to residents and providing water to residents now and into the future requires constant care and investment, which sometimes involves tough decision making.

But water is actually the center of everything that makes daily life in Gilbert possible.

It keeps us healthy and safe.

It supports our schools and our hospitals.

It allows our firefighters to protect our community.

It powers businesses and keeps our local economy strong.

And it's part of what makes our neighborhoods thrive.

So when we talk about water, we're not talking about convenience or preparing for future growth.

We're talking about protecting life as it is right now for the people who already live here, for families, for seniors, for kids, for every household that depends on water every single day.

Water isn't just a service, it's the foundation of our quality of life, and keeping it reliable is the most important, one of the most important responsibilities we have as a town.

As we walk through the pressures on our water rates, there are really three main areas creating financial strain on the water fund.

First is the water resource cost.

As drought continues and supplies shrink, the cost of securing water keeps climbing.

An ever-increasing share of our budget is dedicated just to getting the water that we need.

Second, critical infrastructure projects.

Major projects like the Northwater Treatment Plant and our well drilling program are being hit by the same inflation and market pressures affecting construction everywhere.

And third, rising operational costs.

Chemicals, electricity, raw materials, and labor have all gone up.

These increases are touching almost every part of our day-to-day operations.

Let's first dive into the rising water resource costs.

We've been hearing news about the state of the Colorado River for many years now.

The river remains over-allocated, the reservoir levels are unstable, and the seven basin states have still not made an agreement for how to sustainably allocate the water that remains.

The latest deadline for the seven basin states to reach an agreement was on November 11th, 2025.

This deadline has come and gone, and the states failed to reach a consensus on new operating guidelines.

The current operating guidelines expire at the end of 2026, and without an agreement to operate the river in 2027 and beyond, the federal government will need to step in and impose its own plan.

What all of this news about the Colorado River really means is that our access to water is getting much more expensive.

It now makes up nearly 20% of the entire water fund's operating budget.

We've been tracking these increases closely, and since 2020, the cost of CAP water has gone up 73%.

Putting it another way, the same amount of water we bought in 2020 now costs us $3.5 million more in 2025.

And it's not just CAP.

Communities across the region are turning to new water sources to make up for shrinking Colorado River supplies, and those alternatives are significantly more expensive than they used to be.

For example, Gilbert purchased water from the San Carlos Apache tribe in 2019 for just over $5,200 per acre foot.

Today, many communities in the valley are now paying more than $20,000 per acre foot for similar long-term supplies.

So the reality is simple.

Water is costing more everywhere, and paying attention to these increases now helps us avoid even higher costs down the road.

One thing to take away from this is that Gilbert planned ahead.

We have a plan, and we have many projects under construction to make up for these lost supplies, but being prepared for drought costs money.

SRP, CAP, reclaimed water, and groundwater, but 41% of our supply comes the c comes from the Colorado River, and that alone supports about 120,000 people in our community.

In 2026, we're losing 17% of that Colorado River water.

Some of it is required because the river is shrinking, and some of it is voluntary so we can help stabilize Lake Mead and earn grant funding to support local conservation projects.

To deal with these cuts, Gilbert is strengthening operations, managing our water sources carefully, and pushing more conservation.

So even though we planned ahead, keeping water reliable takes real work and real investment to make sure Gilbert has enough water now and into the future.

Excuse me.

As we look for ways to conserve water in the community, it's important to understand where Gilbert is using the most water.

This graph shows that single family homes use most of the water in Gilbert, about 69%.

After that, commercial customers, then apartments, schools, and municipal buildings.

Because households use the biggest share, that's where we focus most of our water conservation efforts.

And here's why it matters.

Water in Arizona, a desert is scarce.

Every gallon that we save is a gallon that we don't have to find, buy, treat, and deliver, and that saves money for everyone who pays a water bill.

When we look at what drives higher water bills, our research indicates outdoor water use is one of the biggest factors.

Gilbert is actually very efficient with the water used inside of our homes.

We can clean and reuse 100% of the indoor water returned to us as reclaimed water.

That means showers, sinks, and washing machines all help us stretch our supply and keep long-term costs down.

But outdoor water use works differently.

About 50 to 70% of water is used outdoors for lawns landscaping and irrigation.

It's gone for good.

It doesn't return to our system.

And we can't reuse it.

That puts more pressure on our water supply and makes it more expensive to replenish.

So when we talk about conservation, it's really outdoor water use that makes the biggest impact, both for individual households and for the community as a whole.

Water conservation is not just the right thing to do, it actually saves us money.

Using less water outdoors means lower bills for customers and less pressure on our overall water supply.

We offer lots of programs to help people cut down on outdoor water use, and many residents are already taking advantage of them.

In 2025, the water conservation team performed 842 checkups.

Each checkup produced an estimated annual water savings of 65,000 gallons per home per year.

This translates to 54.7 million gallons of water saved from our conservation programs.

We know our conservation programs are working, but we also know that it costs money to run these programs.

And so, in order to offset these costs, our water resources and conservation team helps bring in over 28 million dollars of state and federal funding for the water savings project in the past two years.

This included $6.3 million in grants from WIFA, $2 million from the Bureau of Recommendation for Water Smart Water Efficiency Saves, and $16.9 million from the lower Colorado River conservation efforts.

All of this helps stretch our water resources and reduce the long-term costs for the community.

Not only is water conservation cost effective for the community, but responsible use of our water resources is required.

In 1980, Arizona recognized that our groundwater supply wasn't unlimited, and the state created the Arizona Groundwater Code to protect it.

Areas that relied heavily on groundwater were placed under special management rules called active management areas, or AMAs.

Gilbert is a part of the Phoenix AMA, one of the largest and the most regulated in the state.

As a member of the Phoenix AMA, we're expected to balance how much groundwater we pump with how much we put back into the aquifer.

In other words, we can't withdraw more groundwater than we replenish.

To stay in compliance, Gilbert has to follow a number of best practices, and we take those seriously.

Some of the ways we do that include running water conservation programs, offering resources and tools for customers, hosting community education events, tracking and reporting our water conservation process, our progress, using a tiered rate structure to encourage smart water use, monitoring and reducing water loss in our system, and protecting groundwater and replenishing what we use.

All of these efforts help make sure we're managing our water supply responsibly now and into the future.

Now that we've talked about the water resource pressures on the fund, the next respirate rate pressure I'll be talking about is our aging infrastructure.

One of the other biggest pressures on the fund or biggest pressures on our water rates come from aging infrastructure and the rising costs of fixing or replacing it.

Even though inflation has started to level out in some areas, construction costs are still really high, especially for big projects like treatment plants, wells, and major pipelines.

These are the kinds of projects that keep water flowing safely to every home and business every day, and avoiding these means risking failure of this critical infrastructure, which is not an option.

So while things are stabilizing a bit, the truth is that building or repairing essential water infrastructure is still a lot more expensive than it used to be, and that puts real pressure on our water budget.

The work we have to do hasn't changed, but the price of doing it has gone way up.

One of the biggest projects we're committed to, and one of the most important is the Northwater Treatment Plant Reconstruction.

This project is the largest investment in Gilbert's water system and a major part of our long-term water resiliency.

Here are some quick by the numbers on the project.

The good news is that we're making huge progress.

We've passed our 50% milestone for construction completion, and we're now less than 200 days away from the treatment complex coming online.

We're now around 400 days from fully transitioning water production to this brand new facility.

Once it's finished, the Northwater Treatment Plant will provide 70% of Gilbert's entire water supply.

That's enough to serve about $250,000 residents with a maximum treatment capacity of 60 million gallons per day.

The Northwater Treatment Plan isn't just a construction project.

It's a 50-year investment in Gilbert's future that will serve our children and our grandchildren.

This treatment plant ensures that our water services remain reliable, safe, and available as our community grows.

Another major initiative we're investing in to keep Gilbert's water future secure is our well program.

This program gives us access to groundwater at various sites across town, and it's a huge part of our long-term water resiliency strategy.

These wells are especially important during drought conditions, including the shortages we're already seeing on the Colorado River.

Here's where things stand right now.

We have a total of 20 wells that are currently available within our water portfolio.

Those 20 wells are capable of serving up to 52,000 residents.

We also have eight new wells under construction that will be added to our groundwater portfolio.

Drilling is complete for these wells, which is a major milestone.

However, finding water in the desert is a challenge, and finding high quality water is even more rare.

Some of the wells that we drilled have mixed water quality challenges.

We're now working on the treatment and blending designs for the sites that need it to make sure that the water meets all safety and quality standards before entering the system.

So just like the Northwater Treatment Plant, this well program is another big strategic investment to maintain Gilbert's water resiliency, both today and for the future.

It gives us options, stability, and flexibility when other supplies face pressure.

Not only are we seeing cost increases on our major infrastructure projects, we're seeing rising costs across nearly every sector, which means that treating and delivering the water like we all we have always done now costs more.

The next rate pressure I'll be speaking about is how those operational costs have increased.

While inflation has begun to stabilize in recent years, uncertainty remains in many areas of the market, and Gilbert's operating costs continue to rise.

Major impacts to chemical and electrical costs resulted in the department adding over $600,000 to the budget in chemical and electrical costs alone.

These can be attributed to local and national inflation in all sectors of the market, leading to limited manufacturers and small labor pools available in highly specialized sectors.

Increased cost of skilled labor leads to manufacturing and cost supply increases, especially in areas like mechanical and electrical components, which we use to keep the water system running.

Nationally and internationally, we continue to see impacts from uncertainty with tariff and trade, and locally, we're now competing with other large valley-wide projects, which makes sourcing highly skilled labor even more challenging.

All of these various factors place an additional pressure on the water fund and lead to higher operating costs.

Now that we've covered the three main areas of cost pressures on the water fund, I want to talk about the ways in which we have saved money in the budget.

In Gilbert, before we ask for any rate increase, we always exhaust every available measure of cost reduction, alternative funding, or project prioritization.

Raising rates is the last resort.

Before asking council to consider the rate increases, we took a hard look at where we could save money, request funding, or adjust plans, and we were able to make some big impacts.

Some projects, like updating older water lines were safe to delay for a short time.

The risk is still manageable right now, but will grow the longer these projects are delayed, so they'll still need to happen.

We are also successful in pursuing alternative funding, including grant awards and state appropriated dollars, which directly offset the cost of project expenses.

Savings from value-based engineering and fiscally responsible budgeting practices help us to stretch the fund even further.

Altogether, we were able to reduce, avoid, or reprioritize $239 million from the five-year plan.

All of this helped lower the overall costs and keep the community's water system moving forward in a responsible way.

Without these cost saving efforts, we would be looking at raises significantly more.

An increase of more than 55% would have been required in 2026 if we had not been able to reschedule, reduce, or generate revenue to help support the fund.

Now that we've covered all the rate pressures on the water budget, I'll be talking about what goes into utility rates, the history of rate increases, and how our current rates measure up.

Okay, let's talk about something that can get confusing.

The difference between impact fees and water rates.

They sound similar, but they pay for totally different things.

Impact fees or system development fees are charged when new development is built.

These fees help pay for the parts of the water system that need to grow because more people are moving in.

Things like new treatment plant capacity, new wells, expansion to the water distribution system.

Basically, growth does pay for growth, and impact fees cannot be used for everyday system needs like repair or operations.

They only fund expansion.

On the other hand, water rates are the monthly user fees we all pay based on how much water we use.

Rates fund the things that keep water system running day to day, like operations and maintenance, chemicals and power, repairing or replacing aging infrastructure, paying existing debt payments, but rates cannot be used to expand the system for new residents, and they also don't fund general government services like police, fire, or parks.

So in short, impact fees build new capacity for future users, and the rates maintain the system we all rely on today.

Operations, maintenance, repairs, and debt.

Tax dollars do not pay for water.

Those are used for things everyone shares, like parks, police, and fire.

And the cost of service means we charge only what it actually costs to provide the water, not anymore.

If we drift away from these financial policies, it could hurt Gilbert's credit rating, which would make projects much more expensive in the long run.

Similarly, each of the other three lines of service in the utility bill are also solely used to fund the operations of those services.

A typical utility bill is made up of four different lines of service.

There's solid waste recycling, sewer, environmental compliance, and water.

The bill has fixed charges and it has variable charges.

Solid waste recycling, sewer, environmental compliance, and the base fee associated with your water bill are all fixed.

They do not change month over month.

The only portion of the bill that does change month over month is the tiered rates located on the right of this graph.

Diving a little bit deeper into utility bills and how those tiers relate to our usage.

We can see of over 1 million utility bills collected each year, about 57% of all residential water bills are for homes using zero to 8,000 gallons per month.

That's normal indoor use, drinking, bathing, laundry, cooking, the essentials, and some moderate outdoor use.

Our water rates are set up in tiers on purpose.

Water in the lower tiers cost less to help keep essential use affordable for everyone.

Water in the highest tiers costs more to encourage conservation, especially for outdoor watering, which uses the most water.

Now, if we look at the other end of the chart, only one percent of all bills consume more than 50,000 gallons per month.

But that small group uses 7% of the town's total water supply.

This tiered rate structure helps keep basic use affordable while encouraging high volume users to conserve.

This chart shows how the utility bill changes as water use goes up.

The fixed parts of the bill, sewer, solid waste and recycling, environmental compliance, and the meter base fee stay the same no matter how much water is used.

We can see those bands across the bottom.

Excuse me.

What really changes is the volumetric charge or the water consumption cost.

At low usage, the bill is mostly made up of those fixed charges.

As usage increases, the volumetric charge grows and becomes the larger part of the bill.

If you use less water, your bill stays lower and more predictable.

If you use more water, the variable charges rise.

I want to make it as clear as possible when we're talking about water rate increases.

We're not talking about a total percentage increase on all lines of service in the bill.

We are only talking about a percentage increase to the meter base fee and that water consumption cost.

Now we took a look at the three quarter inch meter.

This is a very similar slide that looks at a one-inch meter.

The overall shape of the chart is familiar, fixed charges stay steady, and volumetric charges grow with usage.

But there's one key difference that the meter base fee is higher for the one-inch meter.

You can see it in that red-orange band.

It's thicker than in the previous slide.

Large meters are designed to deliver more water faster.

That means they place a greater demand on the system and require more robust infrastructure to support them.

The higher base fee reflects that increased capacity.

It's not about penalizing larger properties, it's about ensuring the system is funded fairly based on the service level provided.

The slide helps reinforce that utility rates are not one size fits all.

They're carefully structured to reflect both usage and system impact.

For customers with larger meters, it's important to understand that the higher base fee isn't just a flat charge, it's tied to the scale of service they receive.

What we can also tell from these two graphs is that customers' water bill or utility bill is highly individual, and it depends on each customer's unique situation.

Now, we realize that many customers are struggling with increases to their utility bills, and it's important that Gilbert's water services remain affordable.

In February, the ASU Kyle Center for Water Policy released a report on tap water affordability.

In this report, the study evaluates the household burden of water services in communities in Arizona and nationwide.

The report calculates the household burden as the cost of water service for 4,000 gallons per month, which is enough to cover indoor water use and a very moderate outdoor water use, basically enough to live on.

So a person making the lower 20th percentile in a community, what percentage their water bill at 4,000 gallons per month would be.

And the report considers a value less than 2% affordable.

This report also showed that the Arizona average was 1.42%, the national average is 1.44%, and Gilbert's current rates were 1.01% of the 20th percentile income.

Even though it meets the definition of affordability, we realized that many Gilbert customers are still struggling to keep up with these rising costs.

And that's why we offer utility bill assistance for residents making up to 120% of the area median income, which is 79,140 for a single person.

Or any residents that receive assistance from other programs would also automatically qualify.

The discount covers 30% $30 per month towards the utility bill, and to date we have 591 clients enrolled, and I've issued over 76,000 in discounts.

As we evaluate utility rate increases, we will continue to monitor and adjust this program to provide assistance to the residents that need it most.

Now I'd like to show this timeline to remind everybody of the history of utility rates in Gilbert over the last 20 years.

We went eight years without a water rate increase in 2010 to 2017, and 13 years without a rate increase in solid waste recycling between 2009 and 2021, with two rate decreases during that time frame.

In recent years, we followed council's direction to review the utility rates every two years, alternating which funds are considered for rate adjustments in an effort to spread out the impact to customers.

This two-year evaluation timeline aligns Gilbert with the best practice of the industry for fiscal stability in the four enterprise funds.

Here is a summary of the options given before you in 2023.

As a reminder, we had three different options.

There was an all cash option, which required an immediate increase of 130%, a bond option, which required an immediate increase of 95% with a 205 million dollar additional debt, and then a cash bond option, which required an immediate increase of 50%, a 25% increase one year later, and another estimated 25% increase two years after the initial increase.

We are now in that third year.

The plan also included 80 million dollars in new debt, and this plan was preferred because it was a phase increase that allowed customers to prepare for this increase over time.

Here we're looking at our water utility revenue, and what we can see is that we're meeting our revenue goals with the two former rate increases in place, and we're on target to meet estimates this year, assuming the rate increase goes into effect in April, whichever option the council may choose.

It is essential that the water fund received increased revenue beginning in April to keep all of these essential projects and operations funded and on schedule.

Now that we have an understanding of Gilbert's financial policies and what goes into a utility bill, we have two options to go over for the 2026 rate increase.

Before bringing these options before council, we first brought them to the Public Works Advisory Board.

This board reviews and makes recommendations to the council regarding the strategy, approach, and fund planning of initiatives and large-scale infrastructure infrastructure projects across all divisions of the public works department.

We brought before them the wallet the water and solid waste recycling rates.

We reviewed the water and solid waste recycling rate fund pressures.

They evaluated initially three different rate options for water and one for solid waste recycling.

The board asked for two additional options for water, and ultimately recommended one option with support of a second option for council to consider.

In making these decisions, the Public Works Advisory Board used these five decision-making criteria in order to form their recommendation.

Those five criteria were short-term customer impact, operating fund capacity, repair and replacement fund capacity, total cost of ownership, and long-term customer impact.

The board ranked each option for each category and a weighting was applied based on their category ranking.

And ultimately, the board ended up ranking option E first.

Option E is a modification of the original planned 25% increase, but it's more gradual.

So instead of a single increase in April of 2026, this option includes a 14% increase in April of 2026 and a 14% increase in April of 2027.

Ranked closely second was option A, that was the original plan, April 2026 increase of 25%.

Following that was option D, this was the all cash option, and it had the highest increase but included no new debt to the fund.

And then the two bond options of varying amounts, which issued more debt but ended in ended up resulting in a lower operating fund balance, with option C likely requiring future increases to remain stable.

So getting into the details of these options, I'm showing before you option E.

This model assumes a 14% increase in 2026, a 14% increase in 2027, and then an estimated 5% in 2028, 0% in 29, and 5% in 2030.

As we evaluate rates every two years, we will this is this is what we know with the information that we have now, and we will revise those numbers at the next rate study.

And so for the operating fund, we can see that there's an estimated 33 million dollar new bond needed in this operating fund.

The fund balance will dip below in minimum in 2029 and sit right around minimum in 2030.

This option includes increased contributions to the repair and replacement fund so that we can continue to protect our critical infrastructure and an estimated 80 million dollar bond on repair and replacement.

Option A, which is the original planned increase, includes 25% in 2026.

This again includes an estimated $33 million bond in the operating fund.

The fund balance dips below minimum in 29, slightly in part due to how we budget our capital projects all in the first year.

And it has a very similar repair and replacement fund contribution.

The difference between these two options were the ultimate resulting rates.

Here we have 25 all at once, whereas the other option we have 14 and 14, leading to more than 25 after two years.

So here we're looking at a utility bill comparison.

This is the total utility bill, not water only.

Total utility bill, assuming all four lines of services.

We show the current three-quarter inch total bill as compared to option A in red, option E in yellow, and then orange for the first and second year.

What we can see is option year for 20 option E for 2026 is lower than the other options.

But option A, which is for 2026 and 2027, still remains lower than option E in 2027 due to the additive nature of those two separate rate increases.

It's for this reason that the Public Works Advisory Board ultimately recommended option A.

Here we see a very similar slide with a one-inch meter utility bill comparison and the same trend where option A remains the lower of the two options after fiscal year 2027.

So I'm going to go through a few examples here on different water usage and what those total utility bills look like.

Here we have a minimum usage uses usage case scenario.

This is a customer that may live in a 1,500 square foot home, have a desert adapted landscape, have water efficient appliances, low indoor water use, and is very conscious of all utility costs.

We can see what their util their total utility bill would look like with a three-quarter inch meter and a one-inch meter for that 4,000 gallons.

Next, we have an average water user.

This is a moderate single family home, small container garden on the patio, no pool, moderate landscaping, daily showers, and moderate indoor water use.

They're using 8,000 gallons, and we can see what their utility bills look like on a three-quarter inch meter and a one-inch meter.

And I will have a summary slide at the end of these.

Next, we have an above-average user.

This is a moderate single family home with a medium-sized yard with grass and a play area, a pool, sprinkler, slip and slide in the summer.

Four people means multiple daily showers and baths, and higher indoor water use.

They're using 15,000 gallons per month, and we can see what their utility bills look like with the three-quarter inch meter and the one-inch meter with the two options.

Next, we have the high usage.

This might look like a 2,500 square foot home on a quarter-acre lot with mature landscape with grass and trees, a medium-sized swimming pool, front and backyard landscapes that aren't drought tolerant.

They use 25,000 gallons a month.

We can see what their utility bills look like with three-quarter inch meter and one-inch meter.

The last we have the very high usage case.

This could be a one or a five-bedroom custom home on a one-acre lot with a large pool and a spa and water features.

They may feature an outdoor kitchen with multiple entertaining areas, have high maintenance landscaping that receives very frequent watering.

This customer might use 45,000 gallons of water per month, and we can see what their utility bills would look like with a three-quarter inch meter and a one-inch meter.

Now we want to summarize what these two options look like with each with each options.

Option E, we can see what the current utility bill for a three-quarter inch and a one-inch meter looks like, as well as the difference between the existing bill, the first year of rate increase with option E, and the second year rate increase with option E.

And I want to note that the lines that list 2027, that is the second year of the planned increase under this option, and that is the total amount increase.

That's not in addition to the line above it.

And so we can see here what that, what that delta, what that change looks like for 4,000, 8,000, 15,000, 25,000, and 45,000 gallons per month.

I have a similar slide here for option A, a little bit simpler since this is just one and done.

So this is what the delta, the change to the utility bill for a three-quarter inch meter and a one-inch meter with low usage, average usage, above average usage, high usage, and very high usage looks like.

So taking a look at water usage in comparison to other valley cities, this chart is showing an average water use around 8,000 gallons per month.

And we can see that Gilbert falls within the region depending on the option selected.

The gold portion is showing the meter base fee, which is set when we set rates at 50% of our required revenue so that the fund has stability that is not based on customer behavior or weather patterns.

When we compare Gilbert to other cities both today and with the proposed options, we're still in the same range as many of the valley communities.

We aren't at the top and we aren't at the bottom.

We're relatively in the middle.

This helps show that even with the changes we're proposing, Gilbert's rate remained reasonable and competitive with similar cities in Arizona.

This slide is looking at household use, household using a very large amount of water, about 40,000 gallons a month.

Even at this high usage level, you can also see that Gilbert remains competitive with other cities.

The gold bar show the base monthly fee, and the blue bars show the cost of the actual water used.

Gilbert's current water rate and future options sit right around the middle of the chart.

This is intentional.

Our tiered rates are designed to encourage responsible water use and conservation, but they also keep Gilbert's pricing fair compared to what other cities charge at high usage levels.

Our tiered water rates are designed to encourage responsible water use and conservation.

Now this chart requires a little bit of explanation, but what we're showing here is how Gilbert's rate tiers, how much we charge per thousand gallons of water at each consumption compare to our neighbors.

And because there are so many of them on here, I've I've grayed out all of the other colors, except for Gilbert's current, Gilbert's option A, and Gilbert's two option E.

And so what we can see here is because comparing the cost per thousand gallons across different cities in the valley, Gilbert is right in the middle of the pack.

Even with the proposed adjustments, we're still comparable to many of our neighboring cities.

Some cities have higher spikes in their tiers because they charge more for high water use.

Others are lowered depending on their own water supplies and their infrastructure needs.

But overall, Gilbert's rate structure stays well aligned with what we see across the region.

Now, while we focus the majority of our time today on the residential water rate increases, we now have to acknowledge that Gilbert also has commercial and non-residential water increases.

This percentage increase is uniform across the board.

So the 25% increase we see on the residential base rate and the residual residential volumetric charges is the same 25% increase we're seeing on non-residential water use, landscape water use, hydrant water use, and all of the various different meter sizes.

We can see the same thing for option E.

For simplicity, I've only included 2026 for option E, but we will have this full rate study located on our website following this meeting.

Now, I know this is a lot of text, but I do want to read the recommendation letter from the Public Works Advisory Board.

As Gilbert residents ourselves, every member of the Public Works Advisory Board carefully weighed the economic impact that any rate increase would have on the community.

We spent considerable time evaluating the options, striving to identify an approach that minimizes the immediate burden on residents while also avoiding the risk of shifting higher costs or additional debt onto future generations.

The option we recommend reflects what we believe to be the most balanced, responsible, and least impactful path forward.

Based on our evaluation, the Public Works Advisory Board recommends that the town council approve a notice of intent to increase rates and fees at its meeting on December 16th and set a public hearing for February 17th, 2026.

We further recommend that the council adopt option A for the water fund as it best balances short-term affordability for its residents with long-term financial needs of the water system and the continued resiliency of this essential community resource.

Written by Sam Elliott, Public Works Advisory Board Chairperson.

Now I want to be clear.

What we're asking for tonight is not a final decision.

We're seeking approval to publish the notice of intent, which sets the maximum amount that rates can be made, can be increased and starts a 60-day clock.

During those 60 days, we will be publishing the rate study and working on community outreach efforts prior to bringing the increases back to council for consideration or adoption on February 17th.

Now, if we'll hold questions for just a little bit longer, Candace will present our communications plan for the rest of the rate setting process, after which I'd be more than happy to answer any questions you have.

Thank you.

Can I keep using your heart?

Thank you.

Hi, Mayor and Council, Candice Kwan, Chief Communications Officer.

It's important to remember we just sat through about an hour or so going through highly technical information.

It just shows the thought and passion that our teams are going through to thought uh carefully weigh out all of the costs.

But we have to now create bite-sized digestible information to talk to the community about how important it is to consider increased increased rates.

So we're gonna get into that.

The first thing is just establishing the goals.

Uh, ensuring the community or majority of the customers are ensuring the majority of our customers are being informed about the potential rate increases and the importance behind it of why water rates are changing, how our system works, and what Gilbert is doing to protect the community now and into the long-term water accessibility.

When customers have facts, hopefully the conversation should become clearer and more grounded and shared understanding.

Our goal, our goal isn't to just notify people, it's to empower them with accurate knowledge and help them plan, conserve, and trust the complex work being done on their behalf.

The objective is people engage in different ways online, in person, through email, on social media, or simply by reading their bill.

Our strategy is to show up in all the places residents naturally spend their time with clear, accessible information that fits their daily routines.

Whether it's quick, scroll-friendly messages for busy families, deeper dives for those seeking details, or in-person conversations for residents who prefer dialogue, we'll continue to deliver information in ways that feel natural, convenient, and respectful of how people live.

Before we get into any strategy, we want to acknowledge that we did conduct three listening sessions because we wanted to hear from the community.

The town has now completed all three of them.

The format was comprised of tables where a council member, staff subject matter expert, and note taker engage in a two-way conversation with residents for up to 20 minutes or even more.

Notes were taken to ensure feedback at any and any action items were appropriately accounted for.

Over the span of the three listening sessions, a total of 93 residents attended.

We want to send our sincere thank you to those residents who attended, as it's people like them who helped shape Gilbert.

We also want to thank members from council, town manager's office, public works, Office of Communications and Engagement, and finance who stepped up outside of their normal daily responsibilities and dedicated time to prepare, attend, and follow up with community members, showing their unwavering commitment to serving residents of Gilbert.

Overall, about 50 to 100 employees for the past six months have been working on anything related to rates to the listening sessions, and that amounts to about a little thousands of additional additional hours.

So we just want to say thank you.

Your work does matter.

Of those 93 attendees, we reviewed the questions, and most of them fall into a few consistent themes, all which are completely understandable.

A lot of people wanted to know why have water and utility rates increased.

And closely linked to that is why did we go so long without any rates?

That long wool created a situation where unavoidable increases are now happening closer together.

Residents are also comparing Gilbert to neighboring cities and wondering how our rates stack up and why bills differ from household to household.

Those are all fair questions.

And we were able to have we were able to explain how rates were calculated, are calculated, and what drives those differences.

Another major area was billing and media accuracy.

Some customers had issues with user experience and the new billing system, delays, confusing statements, or difficulty tracking usage.

Others asked whether their water meters are accurate and fair.

We heard those concerns and have been validating meters, auditing the system, and improving communication around billing cycles so people know exactly what they're paying for.

We also heard a lot of questions about growth and development, things like is growth causing higher utility costs.

Are new developments paying their fair share?

If we worried about the Colorado River, why are we building new homes?

These are important questions.

We assured them that developers do pay their share of fees, and the decisions about land use and development are tied to long-term planning, affordability, and state requirements.

And finally, we heard about communication and customer service.

Some customers felt previous interactions left them frustrated or without clear answers.

We recognize that, and we will continue to iterate on our strategies without straying away from best practices to provide plain language updates.

In short, people want clarity, they want fairness, they want reassurance that the system is accurate, responsible, and sustainable.

And we are committed to doing just that, and you'll see what we're planning in the coming next coming weeks.

What we know when people are worried about their bills or trying to understand why changes are happening, they turn to places where conversations feel easiest, often online, and those conversations can feel big, fast, and overwhelming.

What we've learned is that online discussions usually represent a small group of highly engaged residents, not the whole community.

And that doesn't make those voices any less important.

It just means it isn't the entire story.

We truly listen to every concern.

We expect questions and frustrations, especially when household budgets are involved.

Every comment, every email, every call matters to us.

And at the same time, most residents engage in quieter ways, paying their bills, conserving water, or simply expecting the service they rely on every day.

Another way to put it into perspective, Gilbert has about 300,000 residents.

That's similar to sizes of large cities like Cincinnati, Ohio, or St.

Louis, Missouri.

And of those residents, about a little over 90,000 utility customers, and of those customers, more than 76,000 customers have created an account in that new portal.

That's a 95% more than what we had within the old portal, showing that our communication efforts did connect and inform the majority of our customers.

And of those customers, only a few hundred people drive those online conversations, small but mighty conversations that we know are important.

But an unsmaler number have joined in our in-person listening sessions.

That's why we need to remind ourselves that we see online conversations often reflect emotion and not the size.

So we listen wily online, by phone, face to face, and we focus on the long-term community needs, data, and decide responsibly for the betterment of the community.

In the end, strong opinions matter, but so does the quiet majority who expect steady service and uh thoughtful planning.

Those are the purpose behind these tough decisions, protecting people, protecting daily life, and protecting our future access to water.

So, as we go into that, we're looking at the strategy that's going to go through and inform how we're going to be speaking to the community and how how where they want us to listen and engage.

It's important to look at the demographic of majority of our community, about 30.4% are between 25 and 44 years old.

That's a little over our 290 of the makeup of the 290,000 residents.

The median age is 34 years old, and a third of that population is under the age of 18.

This is a snapshot of our media consumption.

So as we're going into when you're starting to look at the types of materials and communication assets that we're going to be developing, we're going to be looking at the most media consumption that our community is engaging with.

Additionally, we wanted to double click into traditional marketing strategies because this is the most direct way to inform and connect and uh create informed citizens.

But the backside of that is it is very costly.

You can see that the mailers, so if we were to send a mailer to every single uh utility customer, it would cost about $40,000.

And we did that, the last rate increased.

Um every single resident or customer did receive a direct mailer, but again, it is quite costly.

So based off of the strategy that we would have we would be developing, there are key messages that probably you saw throughout the presentation, Rebecca's presentation and Isaiah's presentation.

One is water's life, and it's getting a lot harder and more expensive to provide.

Two, before raising rates, we cut or deferred every cost we could.

Most customers are average water users.

Gilbert Gilbert's rates are higher, but do remain affordable, and yes, growth pays for growth.

And based off of that strategy and approach, uh, it is the timeline.

We're gonna start communicating today, tonight, all the way until April 2026 and most likely thereafter to ensure everyone is informed of the essential need of the potential rate increase and what it means to ensuring that we have water now and into the future.

I think that's it.