Kalamazoo water rates could rise in 2027, as the city’s Utility Policy Committee begins reviewing the capital spending plan behind this fall’s rate recommendation.
Public Services staff walked the Utility Policy Committee through the city’s proposed five-year capital improvement plan at the August 13, 2026 meeting, covering 2027 through 2032. The largest pieces for 2027 include about $16 million toward consolidating treatment at the Central Station, part of a required agreement with the state’s Department of Environment, Great Lakes, and Energy aimed at reducing the number of treatment stations citywide to improve water quality control, along with roughly $20 million in water main replacement, including projects on Michigan Avenue and in the Galesburg area of Comstock Township, and about $5 million for smart meter installation. All told, staff estimated about $41 million of that spending, out of the total capital plan, will need to be financed through bonds.
Lead service line replacement remains a major driver of both spending and rates. The city expects to reach roughly 67% to 70% completion by the end of 2026, with the work continuing into 2027 under the current plan. Each replacement costs around $10,000, with about 20% currently covered by grants, a share officials said is shrinking as more Michigan communities begin competing for the same funding pool. Staff noted the city’s early start on the program, driven by state and federal safety requirements, gave it an advantage in securing grant funding ahead of other communities now just beginning similar work.
Setting next year’s rates involves two separate analyses: a revenue sufficiency analysis, which determines how much more money the system needs overall, and a cost of service analysis, which determines how that increase is divided among different types of customers — residential, commercial, industrial, and others. Committee members are scheduled to review draft findings in September, with a final rate recommendation going to the City Commission in November. That’s a month later than the September–October schedule the city has followed in recent years; one committee member asked staff to try to hold to the earlier timeline if possible, though staff said the process is currently running about two weeks behind.
Several committee members raised concerns about how the public will respond to another rate increase given current economic pressures, noting that unlike visible investments like road repaving, water infrastructure work happens entirely underground — leaving residents with little direct sense of what their money is paying for. One member pointed to a past Kalamazoo Township road millage as an example of a rate increase residents could actually see reflected in improved conditions, something water infrastructure investment typically doesn’t offer.
The city’s water affordability program, run in partnership with the Community Action Agency of South Central Michigan, is funded through 2027 and is expected to remain part of the city’s messaging around any rate increase, alongside public health and system reliability benefits.
What’s next: Committee members will review initial rate study findings in September, with a final rate recommendation planned for the City Commission in November.
