City staff told the council the utility enterprise funds will need multi-year rate increases to meet accelerated lead-service-line replacement (LSLR) requirements and ongoing water- and sewer-infrastructure work.

Key points:
- Rate path: staff presented a five-year plan using 9.8% annual increases for water and sewer to stabilize fund balance and provide predictable funding for replacement programs.
- Lead-service-line work: staff reported about 500 private-service replacements and 1,000 verification visits in the prior year; they said the FY2026 ask for LSLR-related activity is roughly $2.5 million as part of a multi-year program. The city is working with EPA and regional partners to leverage grants and cheaper contract rates via cooperative purchasing (SACWA) for emergency replacements.
- Water- and sewer-main work: FY2026 planned water-main projects include segments on Brickley, Mahan and Shevlin (roughly $1.9 million); the sewer-improvement program includes 4,000 linear feet of cured-in-place-pipe lining planned for the coming season.
- Equipment needs: staff flagged an aging CCTV/inspection rig (camera and truck) and a Vactor unit; the CCTV replacement was estimated at roughly $285,000 in the presentation but staff said it may be deferred to preserve LSLR pace.

Funding and timing: staff said the city can use the state revolving fund and other financing tools but requested council direction on the pace of replacements and whether to defer certain capital items in order to meet EGLE/EGovernment-mandated timelines. Staff noted that reduced LSLR effort this year would require accelerated catch-up in later years.

Speakers: project and utility presentations were made by staff member James and finance staff Phil; councilmembers asked for more detail on the RFPs and potential financing terms.

Ending: staff will return with a detailed financing plan and recommended LSLR schedule so council can set the final rate path and capital plan before the April readings.