What the first 18% pays for

St. Louis passed a seven-step water rate increase in June. The ordinance lists what the money must cover, and the rate study behind it shows a $442 million capital plan that waits on bonds nobody has authorized yet.

St. Louis raised its city water rates on July 1, the first of seven steps that run to 2032. The ordinance lists, in order, what the new money has to cover. Treatment, staff, bond payments and an operating reserve come first. The capital plan is in the rate study behind the ordinance: $442.4 million over six years, most of it to be borrowed through bonds that no board bill has authorized yet.

St. Louis Public Radio reported the vote on June 18 as a "90% water rate increase". The weekly brief that started me on this piece repeated the number. I wanted to see what sits behind it, because a vendor who reads "90%" can easily hear "a utility about to spend".

I believe a rate increase is one of the better public signals of a utility's capacity to invest. It is also easy to read too early. The ordinance tells you what gets paid first. The rate study tells you what the utility plans to build and how it plans to pay. The audits tell you how far behind it started.

Board Bill 25 from the deficit warning to the first step. The bill took a month from introduction to the mayor's signature.City of St. Louis, legislative record for Ordinance 72155 and its text, Sec. 3 and Sec. 4; Black & Veatch revenue sufficiency study, 4 May 2026; St. Louis Public Radio, 21 Apr and 18 Jun 2026; First Alert 4, 6 May 2026.

1. Seven steps, front-loaded

The bill is Board Bill 25, introduced on May 21 by Alderman Michael Browning. It went through the Public Infrastructure and Utilities Committee on May 27 and June 3, was amended on the floor on June 12, passed its third reading on June 18 and was approved by Mayor Cara Spencer on June 22. It is now Ordinance 72155.

The ordinance text sets seven steps: 18% on July 1, 2026, another 18% on January 1, 2027, then 6%, 6%, 6%, 5% and 5% each January through 2032. Compounded, that is 82.8% by 2032 (derived). The ordinance never states a total, so the "about 90%" in the press is a rounding of something. The likely source is the inflation clause: in any year when the consumer price index rises more than 3%, the excess is added to that year's step, and after 2032 the rates rise by inflation automatically.

How far St. Louis city water rates will have risen at each step of Ordinance 72155, in percent above the rates before 1 July 2026. Each column compounds the listed steps (derived: 18%, 18%, 6%, 6%, 6%, 5%, 5%). In any year when consumer prices rise more than 3%, the excess is added to that year's step, so these are floors.City of St. Louis, Ordinance 72155 (Board Bill 25, 2026), rate tables, pp. 4 and 6, and Sec. 3 (Inflation Adjustment).

The two 18% steps come straight from the rate study. Black & Veatch's revenue sufficiency study, dated May 4, found that "the Water Division would require a 40% rate increase in FY 2027." Because of "the magnitude of this increase and its potential impact on ratepayers," it suggested "two equal 18% adjustments within the fiscal year." Two 18% steps compound to 39.2% (derived). After that, the study's 6% and 5% steps are the ordinance's.

For a household, St. Louis Public Radio reported an average monthly bill of "around $35 to $45" before the change and "roughly $29 more per month by 2032".

2. The order the money goes out

The findings at the top of the ordinance say the increases are "absolutely necessary to provide revenues sufficient" for five things:

"the maintenance and operation of the City's waterworks and water facilities"
"the running expenses of the Water Division"
principal and interest on the outstanding St. Louis Water Revenue Bonds, series 2013
"an operating reserve fund"
the requirements of the bond indenture of April 1, 1994

What Ordinance 72155 says the increases must cover, in the order its findings list them. The capital plan sits in the rate study behind the ordinance, which does not mention it.City of St. Louis, Ordinance 72155, findings, pp. 1 to 2; Black & Veatch revenue sufficiency study, 4 May 2026, Tables 4-3 and 4-4.

That list reads like a utility that needs to stay solvent before it can plan, and the Water Division's audited statements show why. Operating income was $4.4 million in fiscal 2018. It turned negative in fiscal 2021, and in fiscal 2023 the division lost $11.7 million on operations. The 2023 audit records the consequence: operating expenses rose 22% that year, and "the Water Division did not meet its debt service coverage ratio required by the Indenture of Trust for the fiscal year 2023." That indenture is the 1994 one, item 5 in the list. It requires net revenues of at least 110% of the next year's bond payments.

The Water Division's operating income by fiscal year (July to June), in millions of dollars. It fell below zero in fiscal 2021 and reached a loss of $11.7 million in fiscal 2023, the year the division missed the debt service coverage its bond indenture requires. The fiscal 2018 figure is the comparison column in the 2019 report.Water Division of the City of St. Louis, audited financial reports for fiscal 2019 to 2025, Management's Discussion and Analysis (dollars in thousands, rounded here).

The reporting around the vote says the same in plainer words. On May 6 the Director of Public Utilities, Niraj Patel, told First Alert 4 the system "won't make it through the end of the fiscal year without a rate increase." In June, First Alert 4 reported that chemical costs had gone from $5 million to $15 million over seven years and that the city had 399 main breaks last year. The rate study adds that the division "currently does not have a defined financial policy on the level of annual O&M reserve" and recommends one: 45 days of operating costs in fiscal 2027, 90 days from 2028.

So the first 18% buys chemicals, power, a restored coverage ratio and a reserve. The capital work comes next, and it depends on borrowing.

3. The capital plan, and the bonds behind it

The rate study's capital plan runs from $39.95 million in fiscal 2027 to $91.5 million in fiscal 2032, $442.4 million over six years (derived). Treatment plants take the largest share. The study names seven key projects, from $12.0 million of meter replacement to $122.0 million of filter plant improvements at the Chain of Rocks plant.

Water treatment plantsTransmission and distributionPumpingOther

The Water Division's capital plan by fiscal year, in millions of dollars, as the rate study lays it out. Treatment plant work is the largest share in every year from fiscal 2028, led by $122.0 million of filter plant improvements at Chain of Rocks. The six years add up to $442.4 million (derived). Other: storage, hydrants, meters and general.Black & Veatch, St. Louis Water Division Revenue Sufficiency Study, 4 May 2026, Table 4-3 (Capital Improvement Program by Function).

Most of that money is to be borrowed. The study plans $239.8 million of revenue bonds in three sales, in fiscal 2027, 2029 and 2031, and $144.3 million of state revolving fund (SRF) bonds through the Missouri Department of Natural Resources. Cash from rates covers $58.0 million. Debt service rises from $2.4 million in fiscal 2027 to $23.2 million in fiscal 2032.

Cash from ratesSRF bondsRevenue bonds

Where the rate study expects the capital money to come from, by fiscal year, in millions of dollars. Revenue bonds come in three sales: $39.1 million in fiscal 2027, $93.1 million in 2029 and $107.55 million in 2031, $239.8 million in all. State revolving fund (SRF) bonds add $144.3 million and cash from rates $58.0 million. Unspent bond money carries into the next year, so a year's sources do not match its spending.Black & Veatch, St. Louis Water Division Revenue Sufficiency Study, 4 May 2026, Table 4-4 (Capital Financing Plan); interest income and other sources left out.

Those amounts are a financing plan, and the bonds do not exist yet. Today the Water Division owes one loan: the Series 2013 water revenue refunding bonds, a state direct loan, with $4.858 million outstanding on June 30, 2025, per the 2025 audit. The official statements on EMMA, the municipal bond disclosure site, for the city's water revenue bonds are from 1994 and 1998. I found no 2025 or 2026 board bill that authorizes a new water revenue bond, as of November 6. The $39.1 million sale planned for fiscal 2027 would need one.

The city did move some money in the meantime. Board Bill 161, now Ordinance 72125, reappropriates $5,464,157.84 of federal pandemic relief (American Rescue Plan Act) funds to reimburse the Water Division and directs it to spend them on water infrastructure replacement and repair. St. Louis Public Radio also reported about $40 million from the Rams settlement.

One part of the system is missing from the plan. In EPA's latest drinking water needs survey, the city system reported 127,402 service lines, and 63,000 of them contain lead pipe. The Water Division's ten-year capital plan has one lead line item, $250,000 for "Lead Service Line Investigation/Modeling". Replacement may be funded outside this plan; I have not found where.

Contain lead pipeNo lead and no galvanized pipe

Service lines

63,000

64,402

Values

Tier	Service lines
Contain lead pipe	63,000
No lead and no galvanized pipe	64,402

The St. Louis city water system's 127,402 service lines as reported to EPA's latest drinking water needs survey: 63,000 contain lead pipe, about 49% (derived). The Water Division's ten-year capital plan for fiscal 2027 to 2036 has one lead line item, $250,000 for lead service line investigation and modeling.EPA, 7th Drinking Water Infrastructure Needs Survey and Assessment, updated system-level service line data (PWSID MO6010715); St. Louis Water Division, CIP FY2026.

4. What a rate increase can and cannot tell you

National numbers make rate increases sound like a trend line. Bluefield Research reported in March that water and sewer bills rose 5.1% in 2025 across the 50 cities in its index, about a fifth of the US population. That is useful context. It says nothing about which of those utilities have money left over for projects.

The UNC Environmental Finance Center has a sharper way to put it. In its 2026 look at North Carolina rates, it notes that "though a rate increase can be significant for households, it might still be insufficient for a utility to recover its costs." Only 65% of the utilities it studied met its benchmark operating ratio of 1.2. St. Louis is an extreme case of the same thing: a large increase that first has to close a gap.

I would read every rate increase with three questions:

What do the findings or the rate study say the money is for, and in what order?
How far behind was the utility when it started? A deficit, an empty reserve or a missed bond covenant all push capital work back.
What is the next document in the chain: a bond authorization, a capital plan update, a cost of service study?

If you sell to utilities

In St. Louis, the first purchases that this money funds are the ones the operators already make every week: treatment chemicals, power, pipe and repair crews for main breaks. Those are not on a bid calendar two years out.
The ordinance itself creates one procurement. Section 4 says: "By June 30th, 2027, the Water Division will procure a Class Cost of Service Study." That study is how the next rate cycle gets set.
The capital plan names the projects and the years. The first large ones depend on a revenue bond bill before the Board of Aldermen and on SRF loans from the Missouri DNR. The bond bill and the state's SRF project list are the documents to watch.

What I don't know yet

Whether a revenue bond bill is coming, and when. None was on the board bill list as of November 6.
How the 63,000 lead service lines will be paid for, if not through this capital plan.
The vote counts. The city's voting record page for Board Bill 25 did not show a tally.

The next markers are a revenue bond bill, the state's SRF list for fiscal 2027, and the cost of service study by June 30, 2027.

At AquaIntel we read rate ordinances, rate studies, audits and the committee record around them, and keep each step with its date, so a vendor can see what a rate increase pays for and when the capital part is likely to start.

Sources

City of St. Louis, Ordinance 72155 (Board Bill 25, 2026), legislative record and ordinance text, retrieved 3 Nov 2026.
City of St. Louis, Ordinance 72125 (Board Bill 161), retrieved 6 Nov 2026.
Black & Veatch, St. Louis Water Division Revenue Sufficiency Study, 4 May 2026, Tables 4-3, 4-4 and 4-5 and section 5.1, retrieved 6 Nov 2026.
St. Louis Water Division, audited financial reports, fiscal 2019 to 2025, Management's Discussion and Analysis, retrieved 6 Nov 2026.
St. Louis Water Division, Capital Improvement Plan FY2026, retrieved 6 Nov 2026.
EPA, 7th Drinking Water Infrastructure Needs Survey and Assessment, updated system-level service line data, PWSID MO6010715.
EMMA (MSRB), City of St. Louis water revenue bond official statements, Series 1994 and 1998.
St. Louis Public Radio, "St. Louis aldermen OK 90% water rate increase", 18 Jun 2026, retrieved 3 Nov 2026.
St. Louis Public Radio, 21 Apr 2026, retrieved 3 Nov 2026.
First Alert 4, "St. Louis water system won't make it through fiscal year without rate increase, officials warn", 6 May 2026, and First Alert 4, 3 Jun 2026, retrieved 3 Nov 2026.
Bluefield Research, "National Water and Sewer Bills Rise 5.1%, Outpacing Inflation as Utilities Face Rising Cost Pressures", 9 Mar 2026, retrieved 3 Nov 2026.
UNC School of Government, Environmental Finance Center, "Water Rates, Utility Finances, and Affordability: What the 2026 Data Tell Us", retrieved 3 Nov 2026.