Avondale prepares debt issuance for $360m water and wastewater infrastructure push

Avondale prepares debt issuance for $360m water and wastewater infrastructure pushThe Arizona city is facing steep utility rate increases to fund major capital projects, prompting the city council to favor a delayed 2034 PFAS compliance timeline to mitigate rate shock.

A $167 million PFAS treatment project is required as 11 of the city's 16 groundwater wells exceed regulatory limits.

The city's Water Reclamation Facility will undergo a $155.8 million expansion from 9 MGD to 12 MGD to accommodate rapid development.

Avondale's share of the Bartlett Dam project has grown to $44.5 million to secure 4,500 acre-feet of surface water.

Staff will seek approval for the first round of bond issuances to fund the projects on May 4, 2026.

The City of Avondale, Arizona, is preparing to issue significant debt and raise utility rates to finance over $360 million in major water and wastewater capital projects, driven by rapid population growth, drought, and emerging federal regulations. During a March 23 city council meeting, staff outlined the stark financial realities facing the city's utilities. The largest single driver is a $167 million project to implement PFAS treatment across the city's water system. According to Public Works Director Kirk Beaty, 11 of the city's 16 groundwater wells currently exceed regulatory limits for the "forever chemicals," representing 70% of the city's water production capacity. The estimated cost of the treatment project has surged from a previous estimate of $120 million to $167 million, with annual operating costs expected to increase by approximately $4 million once the system is online. To fund the PFAS project, along with a $6 million water line replacement in the Holly Acres neighborhood, the city modeled two rate scenarios based on compliance timelines. While the EPA has recommended a compliance date of April 2031, Avondale city council members expressed consensus for a delayed compliance scenario of 2034 to mitigate rate shock for residents. Under the 2034 scenario, water rates would still need to increase by 10% in fiscal year 2028, followed by 8% in 2029 and 7% in 2030, while maintaining the city's required 1.5x debt coverage ratio. "I'm going for the by '34. Forgiveness over permission," said Councilmember Shari Weise, echoing concerns from other members about the financial burden of rate hikes on residents. In addition to groundwater treatment, Avondale is securing future surface water supplies through the Bartlett Dam project (Verde River Sediment Mitigation Project). The city is seeking 4,500 acre-feet of water to offset anticipated cuts to its Colorado River allocation. However, Avondale's share of the project costs has ballooned from an initial estimate of $15 million to $44.5 million. Despite the price tag, Beaty noted the cost equates to roughly $9,900 per acre-foot, which remains significantly cheaper than leasing or purchasing additional water rights on the open market. On the wastewater side, rapid development has triggered a mandatory expansion of the city's Water Reclamation Facility. State regulations require design to begin when inflows reach 80% of capacity (7.2 million gallons per day). Current inflows sit at 7.5 MGD, prompting a $155.8 million Phase II expansion to increase capacity from 9 MGD to 12 MGD. The city has already committed capacity to ongoing developments up to 11 MGD. The wastewater expansion will be funded through a mix of development impact fees (60%) and rate increases (40%). Staff indicated that sewer rates would need to increase by 10% in FY2028 and 2% in subsequent years to cover the $57.5 million rate-supported portion of the debt. Construction on the expansion is slated to begin in the summer of 2026. Staff plans to return to the city council on May 4 to seek approval for the first round of bond issuances to kickstart the design and construction of these critical utility projects.