On Tuesday, June 4, the Hopkinton Select Board received a presentation from DPW Director Kerry Reed, Water and Sewer Manager Eric Carty, and Matt Abrahams of the Abrahams Group, a water & sewer consultant based in Ashland. 

Expanding on a memo in the board’s agenda packet, Mr. Abrahams outlined various options for water and sewer rate increases in FY 2025. In Hopkinton, water and sewer rates are funded by an Enterprise Fund, not through tax levies, which means the rate payers – households that receive public water and sewer – pay for all the costs associated with providing the service.

Approximately 65% of Hopkinton homes leverage public water and sewer.

Abrahams explained that in 2023, then Chief Financial Officer Tim O’Leary had recommended a 9.5% increase for water and sewer, “with the caveat that future increases could be higher as the costs associated with the MWRA became clear.”

MWRA refers to the Massachusetts Water Resources Authority, which provides municipalities with access to water from the Quabbin reservoir. The town is currently engaged in a multi-year construction plan to retire Hopkinton’s wells and move to the MWRA. 

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On Tuesday night, Abrahams recommended the Select Board increase water rates 40% for FY 2025. This would add $148 annually for the average residential user, bringing the total average cost of water to $518 annually. Abrahams continued that FY 2026 would see a 25% increase, and then FY 2027 and beyond would see a 7% increase in rates. 

He explained that the Enterprise Fund’s retainer is low, sitting at $277,000, but that Town Meeting had authorized capital expenses in excess of that. Further, the town had anticipated receiving connection fees from Legacy Farms, but that work was delayed, so the revenue did not materialize in the years the town expected. Finally, as Director Reed has worked to understand the MWRA costs, the expenses are now higher than anticipated, a full $11.7 million more than were known previously.

Abraham continued to explain to the board that the town will experience another $2 million in costs to connect to the MWRA that are not currently contemplated in the debt schedule, and that once the connection is complete, the town expects an assessment from the MWRA of an additional $2.3 million. That puts the expected budget at $4.3 million in total, or 2.5 times the current $2.3 million contemplated today. 

The Sewer Enterprise Fund is in the opposite financial state; the retained earnings are strong, Abraham said. Sewer flow is down from the expected amount, likely because there are several South Street buildings that remain vacant. The group recommended just a 5% increase in sewer rates for FY 2025, which calculates to an additional $42 per year for the average residential user.

During questioning, board chair Brian Herr stated that he felt that “the town has gotten so big, and the amount of work has increased, and yet the Select Board is [effectively] the Water and Sewer Commission.” Herr suggested that, in the future, the board should consider appointing a commission to evaluate options and make recommendations. 

“If this were my business, and I went to my client and said ‘I’m raising your rates 40%’, they would tell me where the door is, and they wouldn’t be very polite about it. We have to be sensitive to that,” said Herr.