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First Reading and Approval of an Ordinance Amending Chapter 26 (“Water”), Article 2 (“Charges and Collections”) of the Oak Park Village Code Regarding the Rates for Water and Sewer Services for 2027 through 2031
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Introduction
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This item advances implementation of the Village Board selected increasing block rate water and sewer rate structure for 2027 through 2031, including a two-tier water rate with a 10,000-gallon quarterly threshold, a uniform sewer rate, and revised monthly service charges.
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Recommended Action
Adopt the ordinance.
Prior Board Action
September 15, 2026: MOT 26-221, concerning the preferred 2027-2031 water and sewer rate structure and preparation of an ordinance amendment. The Board selected Alternative 3, the increasing block rate, as reported by staff for preparation of this item.
Background
The Village has maintained a healthy Water & Sewer Fund balance in recent years. However, inflation, anticipated regulatory requirements, and aging infrastructure are increasing costs, creating a projected gap between necessary expenditures and anticipated revenues. NewGen Strategies and Solutions worked with Village staff to identify three financial goals for the 2027-2031 rate plan:
• Maintain a fund balance consistent with industry best practices.
• Stabilize cash flow within the Water & Sewer Fund.
• Gradually increase fixed revenue recovery to approximately 20 percent over ten years.
Following the initial fiscal year 2026 rate recommendation, staff asked NewGen to evaluate alternative rate structures that would generate the revenue needed to support the system while advancing the Village’s goals for affordability, equity, and sustainability.
The Village Board selected Alternative 3, increasing block rate, which charges a lower water rate for the first 10,000 gallons used each quarter. Only water used above that amount is charged at the higher rate. Sewer charges will continue to use the same rate per gallon, regardless of usage. The proposed ordinance puts this approach into effect and sets water and sewer rates for 2027 through 2031.
Alternative 3 Fixed Rate Charge and Increasing Block Rate
• Fixed Rate Charge increase to 20% fixed revenue recovery over 10 years.
• Tier One: 0-10,000 gallons (3 people x 40 gallons x 90 days)
o US Census Bureau data suggests that the average family in Oak Park is comprised of 3 people (2 adults and 1 child or 1 adult and 2 children), with a significant drop-off in households that have 4 or more members.
• Tier Two: 10,000 gallons +
Timing Considerations
Delaying approval of the water and sewer rate structure for 2027 through 2031 could leave the Village without sufficient projected revenue to support the fiscal year 2027 budget. The resulting funding gap could require drawing down reserves, postponing critical infrastructure improvements, or reducing planned maintenance, increasing the risk of costly emergency repairs and service disruptions.
Financial Impact
While there is no budget impact directly associated with the approval of this item, implementation of the increasing block rate water and sewer rate structure will inform the water and sewer rates for fiscal years 2027 through 2031, ultimately impacting water and sewer financial decisions for the next five years.
Operations Impact
There is no operating impact associated with this item. The item aligns with the department’s core service delivery.
DEI Impact
Since water and sewer services are essential public services, the rate structure has the ability to greatly impact affordability disparities. Village staff, along with the consultants at NewGen, spent time considering how the various water and sewer rate structure alternatives impacted customers with different incomes, household sizes, housing types, neighborhoods, ethnicities, ages, and abilities. For example, low-income households may spend a higher percentage of income on water bills, whereas fixed charges might disproportionately affect low-volume users, which is oftentimes households on a fixed income.
Alternative 3 establishes an increasing block water rate, with a lower rate for the first 10,000 gallons used per quarterly billing period and a higher rate for usage above that amount. This structure encourages conservation while moderating rate increases for the basic indoor water use targeted by the first tier.
Community Input
There has been no community input given in relation to this item.
Staff Recommendation
All of the water and sewer rate structures presented are projected to generate the revenue necessary to cover planned Water & Sewer Fund expenditures and maintain a healthy fund balance consistent with industry recommendations and standards. The Village Board selected Alternative 3, increasing block rate, as the preferred rate structure. Village staff recommends adopting the ordinance implementing Alternative 3 and establishing the water and sewer rates for 2027 through 2031.
Advantages:
• Generates the projected revenue needed to support water and sewer operations, maintain infrastructure, and fund planned capital improvements.
• Moderates water-rate increases for basic household use by applying a lower rate to the first 10,000 gallons used each quarter.
• Encourages water conservation by applying a higher rate only to usage above the first-tier allowance.
• Supports a healthy Water & Sewer Fund balance, helping the Village prepare for unexpected expenses and emergency repairs.
• Establishes a five-year rate schedule that helps customers anticipate changes and allows the Village to plan for future financial needs.
Disadvantages:
• Additional notification and education of the Village’s residents will be needed ahead of the transition in an effort to reduce confusion and prepare residents for potential impacts to their overall water bill.
• Additional staff time is needed by the Finance Department to make the necessary adjustments in BS&A to accommodate the increasing block rate structure.
Alternatives
Alternative 1:
The Board can delay action to gain additional information.
Advantages:
• The Board would be presented with the requested information.
Disadvantages:
• By delaying action, water and sewer rate information for the fiscal year 2027 budget would also be delayed. Preventing progress on the 2027 budget for the water and sewer fund.
Alternative 2:
The Board can provide direction and the ordinance return for a second reading prior to adoption.
Advantages:
• The Board can provide direction it would like included in the second reading.
Disadvantages:
• Delaying approval of the 2027-2031 water and sewer rates could result in projected revenues falling short of the amount needed to fund the Village’s fiscal year 2027 budget. To address the shortfall, the Village may need to use reserves, defer infrastructure projects, or scale back planned maintenance, potentially increasing the likelihood of emergency repairs and service interruptions.
Anticipated Future Actions
In 2032, the Village Board will evaluate the water and sewer rate structures to determine whether adjustments are needed to support ongoing operations, infrastructure investment, and the long-term financial stability of the Water and Sewer Enterprise Fund.
Prepared By: Rob Sproule, Public Works Director
Reviewed By: Jack Malec, Assistant to the Village Manager
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Ordinance