Fort Collins council signals support for steep 2027-28 utility rate increases

Fort Collins council members broadly signaled support Tuesday for sizable utility-rate increases in 2027 and 2028 as staff warned that years of keeping rates below inflation, combined with major infrastructure demands, have left few alternatives. Staff’s recommended scenario would raise water rates 15%, wastewater 10%, stormwater 5% and light-and-power 7% in both years, adding about $18.86 a month in 2027 for an average residential customer who receives all four city utilities.

Finance and utility staff said the rate discussion was the most time-sensitive piece of the city’s early 2027-28 budget work because they need to know soon whether council wants options outside the range staff is preparing for the fall budget process. Utilities Finance Director Joe Wimmer said the recommendations are tied closely to updated capital plans for each utility fund, including the Halligan Reservoir project as the biggest water-rate driver, major work at the Drake Water Reclamation Facility, flood-mitigation projects in stormwater, and electric system replacements for aging cables, transformers and meters.

Wimmer said Fort Collins averaged less than a 2% annual increase for water rates and about 3.5% for light and power from 2015 through 2024, leaving the city in a comparatively affordable position on the Front Range but also creating pressure now. He said the city had “lagged behind CPI increases,” especially in water, wastewater and stormwater, while deferring some asset replacement. Construction and utility-specific costs have risen even faster than general inflation, Chief Financial Officer Caleb Weitz added, saying that even comparing the city’s past rates to standard consumer inflation is “almost generous.”

The water fund drew the most attention because of Halligan Reservoir, which Wimmer said would require a minimum amount of revenue to support bonding for the project. He said Fort Collins has spent nearly $50 million on Halligan to date and would need about $228 million in 2027 and 2028 to continue it through construction. Wimmer said the city is still reviewing regional alternatives that could meet storage goals at a lower cost, but staff believes it is best to budget as if Halligan will move forward. If a different project becomes viable, he said, rates could potentially be lowered in 2028.

Mayor Emily Francis and Councilmember Chris Conway both underscored the argument that water conservation alone cannot replace storage capacity. Francis said storage prepares the city for severe drought and helps ensure enough indoor water supply and business supply during dry years. Conway said it was “eye-opening” to learn that without storage, conserved water simply continues downstream, adding that the city does not “love spending” on a $200 million-plus storage project but that it is critical.

Council members also appeared to accept staff’s broader explanation that low increases in prior years contributed to the current catch-up. Francis said she had an “aha moment” reading that inflation since 2016 had risen about 38% and that city utility rates had not kept pace, which she said was part of why Fort Collins now faces such large proposed increases. Weitz responded that the city was likely still below even regular inflation over that span, and below the cost growth for utility construction and replacement work.

Aging underground systems were another major theme. In discussing water-main replacements, staff said the city should ideally replace about 1% of its 600-mile water-main system each year, or about six miles annually, to stay on a 100-year cycle. Instead, Weitz said the city is replacing a little over 1.5 miles a year, roughly a 425-year replacement cycle. Later in the discussion, staff said the city was roughly on pace with last year’s number of water-main breaks, though 2025’s breaks were especially costly because many occurred under streets.

Staff said Fort Collins still expects to remain relatively competitive on utility bills compared with other Front Range communities even with the proposed increases. Wimmer also pointed to affordability programs, including the city’s income-qualified assistance program that discounts bills by about 25% for eligible residents, along with one-time payment assistance options. Francis said the city should also plan for the possibility of instability in federal LEAP assistance, which supports the current discount structure, and asked about the cost of fully backstopping that aid locally.

No formal vote was taken Tuesday because the discussion was part of a work session, but staff asked council to indicate whether members wanted alternatives outside the recommended range before the budget is drafted. Utility rates will come back for formal adoption with the 2027 budget in November, with 2028 rates to be adopted separately the following year.