City Council

Cabot City Council – Work Session Agenda Cabot Justice Center 805 W. Main Street, Cabot, AR 72023 September 09, 2025 @ 6:30 pm CALL TO ORDER NOMINATING COMMITTEE – CHAIR STEPHEN REDD 1. A Resolution to Appoint Albert Mayer to the Cabot Water and Wastewater Commission – Presented by Cabot Water and Wastewater Commission MUNICIPAL SERVICES COMMITTEE – CHAIR EDDIE LONG 1. Discussion of Waste Collection Bids – Presented by Laura Nobles 2. An Ordinance to Amend the Code of Cabot Section 2-208 - Presented by Brandon Hillenburg 3. An Ordinance Fixing Rates, Fees, and Deposits for Wastewater and Other Water Services Rendered by the Cabot Water and Wastewater Commission – Presented by Cabot Water and Wastewater Commission BUDGET & PERSONNEL COMMITTEE – CHAIR BRANDON HILLENBURG 1. An Ordinance to Amend Ordinance 35 of 2021 – Presented by Brandon Hillenburg POLICE & FIRE COMMITTEE – CHAIR STEPHEN REDD COMMUNITY DEVELOPMENT COMMITTEE – CHAIR MAGGIE COPE MILITARY AFFAIRS COMMITTEE – CHAIR MATT WEBBER GENERAL COMMUNITY INPUT ADJOURNMENT  Municipal Services Item #1 A Resolution to Appoint Albert Mayer to the Cabot Water and Wastewater Commission; and for Other Purposes  Municipal Services Item #2 Discussion of Waste Collection Bids BID TAB SHEET CITY OF CABOT August 27th, 2025 Waste Material Collection Services for the City of Cabot, AR City Hall Lobby / 101 N. 2nd Street, Cabot AR 72023 Bidder BID BOND BB # 1 BB # 2 BB # 2 ALT # 1 ALT # 2 ALT # 3 ALT # 4 ALT # 5 ALT # 6 UNIT PRICE UNIT PRICE UNIT PRICE UNIT PRICE UNIT PRICE UNIT PRICE UNIT PRICE UNIT PRICE UNIT PRICE UNIT PRICE UNIT PRICE WITHOUT PERFORMANCE BOND Manual Manual Yard Automated Automated Manual Manual Yard Automated Automated Household Total Solid Recyclable Waste Solid Waste Recyclable Solid Recyclable Waste Solid Recyclable Hazardous Monthly Waste Material Material Collection Material Waste Material Material Waste Material Waste Price Collection Collection Collection Collection Collection Collection Collection Collection Collection Green Cashiers Check Environmental $12,735.00 N/B N/B N/B N/B N/B N/B N/B N/B $7.92 $11.05 $6.50 $25.47 5% US Fire Cards Holdings Insurance Company N/B N/B INCLUDED $25.94 Included * TBA NOTHING COMPLETED THIS SECTION $25.94 $804,968.00 GFL Performance Bond N/B N/B INCLUDED *$23.43 INCLUDED * TBA N/B N/B N/B *$23.40INCLUDED *$23.40 Waste 5% Atlantic Connections Specialty N/B N/B $0.50 $17.89 $6.11 INCLUDED N/B N/B N/B N/B N/B $24.50 Waste 5% Enduarance Management Assurance N/B N/B $ 6.50 $ 20.00 $ 7.00 N/B N/B N/B N/B N/B N/B $33.50  Municipal Services Item #3 An Ordinance to Amend the Code of Cabot Section 2-208; and for Other Purposes (1st Reading) Sec. 2‐208. Term. The members of the planning commission shall each be appointed for a term of five years, commencing with the anniversary date of said appointment. Provided that on the enactment of this division one member shall be appointed initially for a term of five years, one member shall be appointed initially for a term of four years, one member shall be appointed initially for a term of three years, one member shall be appointed initially for a term of two years and one member shall be appointed initially for a term of one year. When the term of any member shall expire or when a vacancy shall otherwise occur, the mayor shall make a nomination to fill such vacancy. All current and future planning commission members must reside within Cabot city limits and must continue to reside within Cabot city limits for the duration of their term or terms. (Code 1992, § 32.056; Ord. No. 3‐1961, 7‐10‐1961) Created: 2025‐05‐29 16:24:59 [EST] (Supp. No. 11) Page 1 of 1  Municipal Services Item #4 An Ordinance Fixing Rates, Fees, and Deposits for Wastewater and Other Water Services Rendered by the Cabot Water and Wastewater Commission CITY OF CABOT, ARKANSAS WASTEWATER RATE STUDY DATE: SEPTEMBER 2025 PREPARED FOR: Cabot Waterworks One City Plaza, Suite B Cabot, AR 72023 (501) 843-4654 PREPARED BY: Crist Engineers, Inc. 1 Executive Center Court Little Rock, Arkansas 72211 www.cristengineers.com Crist Project No. 24044  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY TABLE OF CONTENTS 1 INTRODUCTION ....................................................................................................................5 2 WASTEWATER FINANCIAL BACKGROUND..............................................................................5 2.1 Current Wastewater Rates ............................................................................................5 2.2 Historic Wastewater Revenue and Expenses ..................................................................5 2.2.1 Revenue ...................................................................................................................5 2.2.2 Expenses ..................................................................................................................6 2.2.3 Current Standings .....................................................................................................7 2.3 Wastewater Long-Term Debt Service .............................................................................7 2.4 Debt Service Coverage Ratio (DSCR) and Required Revenue ..........................................8 2.5 Tracking Wastewater Financial Records for Forecast ......................................................8 2.5.1 Revenue ...................................................................................................................8 2.5.2 Expenses ..................................................................................................................9 2.5.3 Recorded Results .....................................................................................................9 2.6 Analysis Summary ........................................................................................................9 3 BILLED WASTEWATER MODEL ...............................................................................................9 3.1 Wastewater Services Sold and Number of Connections ............................................... 10 3.2 Projecting Wastewater Billed Revenue ......................................................................... 11 3.2.1 Projecting Annual Service Flat Rate Charge Revenue (Minimum) ............................... 11 3.2.2 Projecting Annual Unit Billed Revenue ..................................................................... 12 3.2.3 Projecting Total Billed Revenue ................................................................................ 13 3.3 Projecting Revenue and Expenses ............................................................................... 14 4 WASTEWATER RATE INCREASE ............................................................................................ 16 4.1 Rate Increase Description ........................................................................................... 16 4.2 Projected Rate Revenue Calculation ........................................................................... 18 4.3 Wastewater Rate Results Comparison ......................................................................... 19 5 CONCLUSION .................................................................................................................... 20 September 3, 2025 l Page | 2 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY TABLE OF TABLES Table 2-1: Current Wastewater Rates Implemented by Ordinance 52 of 2001 ..................................5 Table 2-2: 2024 Wastewater Recorded Revenue and Expenses.......................................................7 Table 2-3: Wastewater Net Revenue Required ...............................................................................8 Table 2-4: Tracking Recorded Wastewater Revenue and Expenses ..................................................9 Table 3-1: Cabot Waterworks Projected Billed Wastewater (Gallons) ............................................ 10 Table 3-2: Projected Wastewater Connections ............................................................................ 10 Table 3-3: Master Metered, Multi-Unit Connections (Wastewater) ................................................ 11 Table 3-4: Projected Annual Minimum (Service Flat Charge) Wastewater Billed Revenue (2024) .... 12 Table 3-5: Projected Annual Wastewater Unit Billed Revenue (2024)............................................. 13 Table 3-6: Total Projected Wastewater Billed Revenue (2024) ....................................................... 14 Table 3-7: Wastewater Projected Expenses ................................................................................. 15 Table 4-1: Wastewater Rate Increase........................................................................................... 17 Table 4-2: Projected Revenue Calculations for 2026 .................................................................... 18 Table 4-3: Average Bill Comparison (5,000 Gallons per month) ..................................................... 19 September 3, 2025 l Page | 3 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY TABLE OF FIGURES No table of figures entries found. September 3, 2025 l Page | 4 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY 1 INTRODUCTION The Cabot Water and Wastewater Commission DBA Cabot Waterworks has been vested with the authority and responsibility for the proper operation, maintenance and improvement of the water and wastewater systems of the City of Cabot pursuant to the authority provided by Arkansas Code Annotated §§ 14-234-116, and 14-234-30 I, et seq. The utility is led by Tim Joyner, P.E., with Bruce Brown as the Financial Manager. 2 WASTEWATER FINANCIAL BACKGROUND 2.1 Current Wastewater Rates Cabot Waterworks' current Wastewater rates are outlined in Wastewater Rate Ordinance No. 27 of 2008 and Ordinance No. 08 of 2001. Table 2-1 displays the existing Wastewater rate structure for the Wastewater Department. Unlike some utilities that differentiate rates by customer type, Cabot Waterworks categorizes its customers into three distinct service areas, each with a unique Service Flat Charge and unit rate. All Service Flat Charges include the first 2,000 gallons of consumption, while unit rates are applied per 1,000 gallons of water usage beyond this threshold. The charges are calculated based on each customer's recorded water consumption. Service Flat Charge Unit Rate (Cost per 1,000 Connection Type (Includes first 2,000 gallons) gallons) Briarwood/Bear Creek Area $27.05 $1.98 Mark Lynn Area $26.43 $1.57 All Customers (Excluding Briarwood/Bear Creek and $5.10 $1.57 Mark Lynn Areas) Table 2-1: Current Wastewater Rates Implemented by Ordinance 52 of 2001 2.2 Historic Wastewater Revenue and Expenses Cabot Waterworks Wastewater Department has provided historic revenue and expenditure records for the rate study. 2.2.1 Revenue 2.2.1.1 Billed Revenue: Cabot Waterworks generates Wastewater Billed Revenue across all customer connections. This revenue is derived from a combination of the Service Flat Charge, which includes the first 2,000 gallons of water usage, and the unit rate applied to all recorded water consumption exceeding 2,000 gallons. 2.2.1.2 Non-Rate Revenue: Cabot Waterworks Wastewater Department collects additional revenue through fees associated with service connections, disconnections, late charges, and returned checks. The department also September 3, 2025 l Page | 5 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY accounts for miscellaneous revenue, interest income, other income, and sales tax discounts as part of its total Non-Rate Revenue stream. 2.2.2 Expenses Cabot Waterworks Wastewater Department tracks expenditures across its system, covering operations, maintenance, and general administrative expenses. A shared set of general and administrative costs is divided between the Water and Wastewater departments, with 20% allocated to the Wastewater department. Additionally, Cabot Waterworks allocates 5% of its revenue to a repair and refurbish reserve account. The recorded amount for 2024, along with all revenues and expenses, is presented in Table 2-2 below. 2024 Recorded Revenue and Expenditures Revenue Expenditures Billed Revenue Sewer Revenue $1,340,939.00 Non-Rate Revenue Fees - Service Connections $12,042.64 Fees - Disconnections $5,655.00 Fees - Late Charges $26,844.59 Return Checks & Fees $1,380.00 Miscellaneous $4,500.00 Interest Income $144,970.77 Other Income $52,553.66 Sales Tax Discounts $564.98 Total Non-Rate Revenue $248,511.64 Total Revenue $1,589,450.64 Expenses Operations and Maintenance Power $184,783.34 Labor $482,824.67 Capitalized Labor Cost ($356,267.44) Payroll Taxes $30,796.65 Retirement $61,921.85 Insurance - workers comp $9,174.92 Insurance - health $36,708.40 Outside labor $11,101.73 Lab fees & Supplies $22,283.95 Chemicals $4,349.20 Materials & Supplies $50,356.25 Grinder Pump Repairs $28,636.42 Street Repairs $12,160.00 Small Tools $11,915.07 Safety Supplies $2,733.89 Licenses/permits/fees $9,700.00 September 3, 2025 l Page | 6 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY R & M - Plant $0.00 R & M - Field vehicles $40,104.21 R & M - Field Equipment $11,950.74 Fuel - Field $21,088.20 Insurance - vehicles & equipment $12,375.42 Insurance - property $27,216.85 Total O&M Expenses $715,914.32 General and Administrative Bad Debt $4,446.33 Dues & Subscriptions $299.97 Education & Seminars $318.00 Employee recognition $912.45 Interest Expense $2,022.96 Licenses and permits $146.80 Locator expenses/One call $2,002.65 Office $1,637.56 Postage & Delivery $212.12 Public relations (Customer Damages) $1,771.39 R & M - Building $457.26 Travel $441.43 Uniforms and PPE $10,024.74 Utilities - other $2,676.41 Utilities - telephone $3,400.20 Utilities - cellular $2,349.02 G&A allocations (80/20 Split) $194,049.98 Total General and Administrative Expenses $227,169.27 Total Expenses $943,083.59 5% Repair and Refurbish $79,472.53 Capital Improvements $518,951.00 Net Revenue $47,943.52 Table 2-2: 2024 Wastewater Recorded Revenue and Expenses 2.2.3 Current Standings Cabot Waterworks Wastewater Department's recorded revenue has exceeded its recorded expenses. They also allocate a 5% gross revenue repair and refurbish reserve. By incorporating the 5% repair and refurbish reserve while covering their operation and maintenance expenses, they meet certain requirements of Act 925. 2.3 Wastewater Long-Term Debt Service Cabot Waterworks is currently servicing a bond maturing in 2028. The initial loan amount was $278,454 with an interest rate of 2.1%. The annual payment is $16,054 until 2028, with a final payment of $9,170 in the maturity year. September 3, 2025 l Page | 7 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY 2.4 Debt Service Coverage Ratio (DSCR) and Required Revenue In calculating the Debt Service Coverage Ratio (DSCR), the net revenue is determined by subtracting total expenses, repair and refurbish, and capital improvements, from the total revenue. This resulting net revenue is then divided by the debt service. 𝑁ⅇ𝑡 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = 𝐷𝑆𝐶𝑅 𝐷𝑒𝑏𝑡 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 Act 925 require a Debt Service Coverage Ratio (DSCR) of 1.10 while meeting all other requirements, including the 5% gross revenue repair and refurbish and funding all operation and maintenance expenses. To determine the Net Revenue Required (NRR), the DSCR is set to 1.10. The debt service is set to $16,054. 𝑁𝑅𝑅 = 1.10 $16,054 Multiply the DSCR of 1.10 by the Debt Service to get the NRR. 𝑁𝑅𝑅 = 1.10 × $16,054 𝑁𝑅𝑅 = $17,660 Table 2-3 shows the debt service and the required Net Revenue as described above. Item Amount Required DSCR 1.10 Debt Service $16,054 Net Revenue Required $17,660 Table 2-3: Wastewater Net Revenue Required 2.5 Tracking Wastewater Financial Records for Forecast This section reviews recorded revenue and expenses since 2022 to forecast future financial trends. This rate study will use a forecast based on historical growth trends. 2.5.1 Revenue Revenue sources include both billed and non-rate income. Billed revenue comes from all three Wastewater service areas (Briarwood/Bear Creek, Mark Lynn, and the remaining customer). Non-rate revenue includes fees from new connections, disconnections, late charges, returned checks, interest, sales tax discounts, and other miscellaneous sources. September 3, 2025 l Page | 8 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY 2.5.2 Expenses Cabot Waterworks Wastewater Department's expenses include operations, maintenance, and general administrative (G&A) costs. To distinguish Wastewater-specific G&A expenses from shared office costs, G&A has been allocated based on an 80/20 split, with Wastewater covering 20% of the shared expenses. 2.5.3 Recorded Results Net revenue, which is the difference between revenue, expenses, and capital improvements, is used to cover debt services. Table 2-4 compares revenue and expenses for 2022, 2023, and 2024, along with the resulting net revenue. 2022 2023 2024 Billed Revenue Sewer Revenue $1,190,222 $1,323,401 $1,340,939 Non-Rate Revenue Fees - Service Connections $5,400 $9,350 $12,043 Fees - Disconnections $6,325 $6,335 $5,655 Fees - Late Charges $24,661 $26,615 $26,845 Return Checks & Fees $1,052 $1,124 $1,380 Miscellaneous $6,300 $3,500 $4,500 Interest Income $32,750 $176,058 $144,971 Other Income $561 $27,430 $52,554 Sales Tax Discounts $856 $3,028 $565 Total Non-Rate Revenue $77,904 $248,512 $248,512 Total Revenue $1,268,126 $1,576,841 $1,589,451 Expenses Total O&M Expenses $607,529 $687,278 $715,914 Wastewater G&A Expenses $22,798 $25,009 $33,119 Shared G&A Expenses $161,759 $189,989 $194,050 Total General and Administrative Expenses $184,557 $214,998 $227,169 Total Expenses $792,086 $902,276 $943,084 5% Repair and Refurbish $26,497 $26,895 $79,473 Capital Improvements $745,638 $1,077,475 $518,951 Net Revenue ($296,095) ($429,805) $47,944 Table 2-4: Tracking Recorded Wastewater Revenue and Expenses 2.6 Analysis Summary Cabot Waterworks Wastewater Department has experienced growth in both revenue and expenses, with some fluctuations but an overall upward trend. When forecasting financials, a 4% annual increase will be applied to all expenses and a 3% annual increase to non-rate revenue. 3 BILLED WASTEWATER MODEL A rate increase serves as a strategy to generate additional revenue. The following sections outline the methodology for projecting revenue based on changes to existing rates. To validate this approach, September 3, 2025 l Page | 9 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY recorded consumption, connection numbers, and rates from 2024 will be used to compare the projected revenue against the actual billed revenue for 2024. 3.1 Wastewater Services Sold and Number of Connections The initial step in projecting the impact of a rate adjustment involves identifying the total usage (gallons), the number of connections by type, and the current rates, as shown in Table 2-1. Projections for wastewater consumption and connections are developed using the methodology described in Section 3.1.1: Population and Connections and Section 3.1.2: Water Consumption. Table 3-1 compares the projected wastewater consumption (in gallons) with the billed amounts recorded for 2024 by rate type. Total billed consumption is expected to grow annually at the historical rate of 1.35%, as outlined in Section 3.1.2: Water Consumption. Briarwood/Bear All Other Metered Total Billed Year Mark Lynn Area Creek Area Connections Wastewater 2024 2,687,632 93,725 621,006,542 623,787,900 2025 2,723,978 94,993 629,404,725 632,223,697 2026 2,760,816 96,277 637,916,481 640,773,575 2027 2,798,152 97,579 646,543,346 649,439,077 2028 2,835,993 98,899 655,286,876 658,221,768 2029 2,874,345 100,237 664,148,649 667,123,231 2030 2,913,217 101,592 673,130,264 676,145,073 Table 3-1: Cabot Waterworks Projected Billed Wastewater (Gallons) Table 3-2 presents the projected Wastewater connections by type, based on the 1.23% annual growth rate outlined in Section 3.1.1, Population and Connections. This growth rate is applied directly to the current number of Wastewater connections for each type. Briarwood/Bear All Other Metered Total Sewer Year Mark Lynn Area Creek Area Connections Connections 2024 50 33 9,681 9,764 2025 51 33 9,800 9,884 2026 52 33 9,921 10,006 2027 53 33 10,043 10,129 2028 54 33 10,167 10,254 2029 55 33 10,292 10,380 2030 56 33 10,419 10,508 Table 3-2: Projected Wastewater Connections September 3, 2025 l Page | 10 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY Cabot Waterworks also serves multi-unit master-metered residential and commercial connections, which are not included in the metered connections listed in Table 3-2. These customers are charged a flat service fee for Wastewater services each month. These connections are projected to increase at the same 1.23% annual rate. Table 3-3 provides a breakdown of these multi-unit residential and commercial connections. Multi-Unit Residential Multi-Unit Commercial Total 2024 1,424 134 1,558 2025 1,442 136 1,578 2026 1,460 138 1,598 2027 1,478 140 1,618 2028 1,496 142 1,638 2029 1,514 144 1,658 2030 1,533 146 1,679 Table 3-3: Master Metered, Multi-Unit Connections (Wastewater) 3.2 Projecting Wastewater Billed Revenue Current rates, connections, and estimated usage will be used to calculate rate results, which will then be compared to recorded amounts. A model of the existing Wastewater Billed Revenue structure was developed to project future revenue based on rate adjustments. The results from this Wastewater model were evaluated using 2024’s average number of connections and billed Wastewater quantities identified in Table 3-1, Table 3-2, and Table 3-3 above. The results are then compared against the recorded amounts to validate the model. 3.2.1 Projecting Annual Service Flat Rate Charge Revenue (Minimum) Projecting the minimum expected Billed Revenue for all users across the system is calculated by multiplying the Service Flat Charge by the number of connections and then by 12 months. 𝑃𝑟𝑜𝑗𝑒𝑐𝑡𝑒𝑑 𝐴𝑛𝑛𝑢𝑎𝑙 𝑀𝑖𝑛𝑖𝑚𝑢𝑚 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝐹𝑙𝑎𝑡 𝐶ℎ𝑎𝑟𝑔𝑒 × 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐶𝑜𝑛𝑛𝑒𝑐𝑡𝑖𝑜𝑛𝑠 × 12 𝑚𝑜𝑛𝑡ℎ𝑠 For All Other Connections, using the equation above, the projected annual minimum revenue would be: 𝑃𝑟𝑜𝑗𝑒𝑐𝑡𝑒𝑑 𝐴𝑛𝑛𝑢𝑎𝑙 𝑀𝑖𝑛𝑖𝑚𝑢𝑚 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = $5.10 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡ℎ × 9,681 𝐶𝑜𝑛𝑛𝑒𝑐𝑡𝑖𝑜𝑛𝑠 × 12 𝑚𝑜𝑛𝑡ℎ𝑠 𝑃𝑟𝑜𝑗𝑒𝑐𝑡𝑒𝑑 𝐴𝑛𝑛𝑢𝑎𝑙 𝑀𝑖𝑛𝑖𝑚𝑢𝑚 = $592,477 September 3, 2025 l Page | 11 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY Table 3-4 below shows the projected minimum Billed Revenue using the current Service Flat Charges. Current Service Flat Projected Service Flat Connection Type Connections Charge Charge Revenue Briarwood/Bear Creek Area $27.05 50 $16,230 Mark Lynn Area $26.43 33 $10,466 All Other Metered Connections $5.10 9,681 $592,477 Multi-Unit Residential $5.10 1,424 $87,149 Multi-Unit Commercial $5.10 134 $8,201 Total $714,523 Table 3-4: Projected Annual Minimum (Service Flat Charge) Wastewater Billed Revenue (2024) 3.2.2 Projecting Annual Unit Billed Revenue Projecting the annual unit Billed Revenue for the Cabot Waterworks Wastewater Department requires analyzing consumption patterns. Cabot Waterworks provided water consumption data grouped into 2,000-gallon intervals, detailing how many connections consumed each interval's amount monthly. The first interval, 0 to 2,000 gallons, corresponds to the consumption included in the Service Flat Charge. On average, 21% of all customers consistently consume less than 2,000 gallons per month. Since the average consumption within this group is not provided, a midpoint assumption of 1,000 gallons per connection is used for those customers. The following equation represents the Projected Annual Unit Billed Revenue. 𝑌𝑇𝑈 − (𝐶𝐸𝐵 × 2,000 × 12 + 𝐶𝑆𝐵 × 1,000 × 12) 𝑃𝐴𝑈𝑅 = × 𝑈𝑅 1,000 Where, PAUR = Projected Annual Unit Billed Revenue ($) YTU = Yearly Total Use (gallons/year) CEB = Connections that Exceed Service Flat Charge Consumption (79%) CSB = Connections that Subceed Service Flat Charge Consumption (21%) UR = Unit Rate ($/1,000 gallons) In this formula, the number of connections exceeding the minimum consumption (included in the Service Flat Charge) is multiplied by 2,000 gallons per month and then by 12 months. Similarly, the number of connections falling short of the minimum consumption is multiplied by the assumed average of 1,000 gallons per month and then by 12 months. These two values are summed and subtracted from the total annual billed consumption. By deducting the calculated included consumption, this formula determines the billable amount of consumption. The resulting difference is divided by 1,000 to align the units with the unit rate and then multiplied by the unit rate. September 3, 2025 l Page | 12 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY For All Other Metered Connections and Multi-Unit Residential and Commercial connections, using the equation above, the projected annual unit Billed Revenue would be: 621,006,542 − ((7,648 + 1,231) × 2,000 × 12 + (2,033 + 327) × 1,000 × 12) 𝑃𝐴𝑈𝑅 = × $1.57 1,000 𝑃𝐴𝑈𝑅 = $596,151 Multi-unit residential and commercial connections were included with all other metered connections because their total recorded consumption is already accounted for within all other metered connection consumption. Table 3-5 illustrates the projected unit Billed Revenue based on the current rate structure for all user types. Connections Connections Current Projected Service Flat Connection Type Exceeding Minimum Under Minimum Unit Rate Charge Revenue (79%) (21%) Briarwood/Bear Creek $1.98 39 11 $3,196 Area Mark Lynn Area $1.57 26 7 $147 All Other Metered Connections + Multi- Unit Residential and $1.57 7648+1231 2033+327 $596,151 Commercial Connections Total $599,494 Table 3-5: Projected Annual Wastewater Unit Billed Revenue (2024) 3.2.3 Projecting Total Billed Revenue To project total Billed Revenue, add the Projected Annual Minimum Billed Revenue to the Projected Annual Unit Billed Revenue for each customer type, and then sum these values. Table 3-6 presents the projected total revenue and compares it to 2024’s recorded Billed Revenue. September 3, 2025 l Page | 13 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY Projected Service Flat Projected Unit Billed Connection Type Total Charge Revenue Revenue Briarwood/Bear Creek Area $16,230 $3,195 $19,425 Mark Lynn Area $10,466 $147 $10,613 All Other Connections $592,477 $595,961 $1,188,438 Multi-Unit Residential $87,149 $0.00 $87,149 Multi-Unit Commercial $8,201 $0.00 $8,201 Total $1,313,826 Table 3-6: Total Projected Wastewater Billed Revenue (2024) The calculated rate projections fall short of the recorded Billed Revenue of $1,340,939 by $26,922. This represents a 2% difference between the projected and recorded revenue. This approach is conservative, as under-projecting may be more beneficial for Forecasting purposes. 3.3 Projecting Revenue and Expenses A 4% annual increase has been applied to all expenses based on recorded 2024 expenses. Table 3-7 summarizes the total projected expenses over the next five years. The repair and refurbish expense is calculated at 5% of the Wastewater department’s gross revenue. Revenue projections for 2025-2030 follow the methodology outlined in Section 3.2, with projected revenue compared to recorded 2024 revenue. The model estimates billed revenue using the existing rate structure and anticipated consumption patterns, while non-rate revenue is adjusted for 3% annual growth to the recorded 2024 non-rate revenue. Shared G&A Expenses were determined in the Water Rate Study report and can be found in Table 4- 3 of that report. Net revenue must meet or exceed the required amount specified in the last line of Table 3-3. September 3, 2025 l Page | 14 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY 2025 Forecast 2026 2027 2028 2029 2030 1. Billed Revenue $1,336,443 $1,331,186 $1,348,781 $1,365,910 $1,384,628 $1,402,885 2. Non-Rate Revenue $255,967 $263,646 $271,555 $279,702 $288,093 $296,736 3. Total Revenue $1,592,410 $1,594,832 $1,620,336 $1,645,612 $1,672,721 $1,699,621 5. Total O&M Expenses $815,069 $859,672 $906,059 $954,301 $1,001,147 $1,053,193 6. G&A Expenses (Sewer) $34,444 $35,822 $37,255 $38,745 $40,295 $41,906 7. G&A Expenses (Shared) $201,890 $209,965 $218,364 $227,098 $236,182 $245,630 8. Total G&A Expenses $236,334 $245,787 $255,618 $265,843 $276,477 $287,536 9. Total Expenses $1,051,403 $1,105,459 $1,161,677 $1,220,144 $1,277,624 $1,340,729 10. Capital Improvements $443,727 $775,447 $1,116,863 $1,101,099 $1,068,213 $1,040,962 11. 5% Repair and Refurbish $79,620 $79,742 $81,017 $82,281 $83,636 $84,981 12. Net Revenue (Line 3 minus the sum $17,659 ($365,815) ($739,221) ($757,911) ($756,752) ($767,051) of Line 9, 10, and 11) 13. Long-Term Debt Service $16,054 $16,054 $16,054 $9,170 $0.00 $0.00 14. Net Revenue Required $17,659 $17,659 $17,659 $10,087 $0.00 $0.00 (Multiply Line 13 by 1.10) 15. Revenue Required (Sum of Line 9, 10, $1,592,410 $1,978,307 $2,377,216 $2,413,611 $2,429,473 $2,466,672 11, and 14) 16. Excess/Shortfall Revenue After Debt $0.00 ($383,474) ($756,880) ($767,998) ($756,752) ($767,051) Service (Subtract Line 3 from Line 15) Table 3-7: Wastewater Projected Expenses September 3, 2025 l Page | 15 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY The negative net revenue identified in the 2026 forecast arises from increases in operational maintenance and repair costs, as well as general and administrative (G&A) expenses, which continue to impact the Wastewater system's financial position. To address this deficit, an increase in Billed Revenue is necessary. This increase will enable Cabot Waterworks to meet its financial obligations, including compliance with Act 925 requirements, covering operational and maintenance expenses, and funding critical repair and refurbishment efforts. A rate adjustment will help align revenue with projected expenses, ensuring sufficient funding to meet regulatory, operational, and maintenance requirements while sustaining the Wastewater collection and treatment system. 4 WASTEWATER RATE INCREASE Based on the projections above, an increase in Billed Revenue is necessary to meet the Wastewater system's financial obligations. Rate increases can be implemented in many ways, but their impact on customers must be carefully considered. Many customers may have lower or fixed incomes, so even a slight increase in monthly bills could significantly affect them and the system. 4.1 Rate Increase Description Table 4-1 below outlines a rate increase option for the Wastewater system. It shows the yearly base and unit rates for each customer type, the impact on a 5,000-gallon monthly bill, and the total projected rate and Non-Rate Revenue. The table also compares revenue to expenses, including capital improvement costs. This rate increase includes an initial $0.58 increase to the Service Flat Charge and a $0.78 increase to the Unit Rate in 2026. Followed by a $0.58 increase to the Service Flat Charge and $0.77 increase to the Unit Rate in 2027. The table outlines the coverage ratios, showing debt service coverage from 2025 to 2028. Per Act 925, a minimum debt service coverage ratio of 1.10 must be maintained. Since the debt matures in 2028, there is no debt service coverage ratio for 2029 and 2030. September 3, 2025 l Page | 16 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY Year Current 2025 2026 2027 2028 2029 2030 Briarwood/Bear Creek Area Service Flat Charge (First 2,000 gal.) $27.05 $27.05 $27.05 $27.05 $6.26 $6.26 Unit Rate (Over 2,000 gal.) (Cost/1,000 gallons) $1.98 $2.76 $3.53 $3.53 $3.53 $3.53 Mark Lynn, Dina, Bradley Extension Service Flat Charge (First 2,000 gal.) $26.43 $26.43 $26.43 $26.43 $6.26 $6.26 Unit Rate (Over 2,000 gal.) (Cost/1,000 gallons) $1.57 $2.35 $3.12 $3.12 $3.12 $3.12 All Other Customers (Includes Multi-Unit Customers) Service Flat Charge (First 2,000 gal.) $5.10 $5.68 $6.26 $6.26 $6.26 $6.26 Unit Rate (Over 2,000 gal.) (Cost/1,000 gallons) $1.57 $2.35 $3.12 $3.12 $3.12 $3.12 Average Customer Bill (5,000 Gallons) Briarwood/Bear Creek Area $32.99 $35.33 $37.64 $37.64 $16.85 $16.85 Mark Lynn, Dina, Bradley Extension $31.14 $33.48 $35.79 $35.79 $15.62 $15.62 All Other Customers $9.81 $12.73 $15.62 $15.62 $15.62 $15.62 Projected Billed Revenue $1,336,443 $1,734,891 $2,145,531 $2,174,364 $2,181,867 $2,211,229 Projected Non-Rate Revenue $255,967 $263,646 $271,555 $279,702 $288,093 $296,736 Total Projected Revenue $1,592,410 $1,998,537 $2,417,086 $2,454,066 $2,469,960 $2,507,965 Projected Expenses $1,051,403 $1,105,459 $1,161,677 $1,220,144 $1,277,624 $1,340,729 Capital Improvements $443,727 $775,447 $1,116,863 $1,101,099 $1,068,213 $1,040,962 Repair and Refurbish $79,620 $99,927 $120,854 $122,703 $123,498 $125,398 Net Revenue $17,659 $17,705 $17,692 $10,119 $625 $876 Long-Term Debt Service $16,054 $16,054 $16,054 $9,170 $0.00 $0.00 Coverage Ratio 1.10 1.10 1.10 1.10 N/A N/A Table 4-1: Wastewater Rate Increase September 3, 2025 l Page | 17 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY 4.2 Projected Rate Revenue Calculation The projected billed revenue in Table 4-1 is based on the methodology outlined in Section 3.2 and its subsections. A detailed explanation of the calculation process is provided in Section 3.2 and its corresponding subsections. Table 4-2 applies the same methodology to the proposed 2026 rates. Item Briarwood/Bear Mark Lynn, Dina, All Other Customers Creek Area Bradley Extension Service Flat Charge (First 2,000 gal.) $27.05 $26.43 $5.68 Number of Connections 52 33 9921 + 1598 = 11519 Calculation 52 * $27.05 * 12 = 33 * $26.43 * 12 = 11,519 * $5.68 * 12 = $16,879.20 $10,466.28 $785,135.04 Total Service Flat Charge per Connection Type $16,879.20 $10,466.28 $785,135.04 Unit Rate (Over 2,000 gal.) (Cost/1,000 gallons) $2.76 $2.35 $2.35 Consumption 2,760,816 96,277 637,916,481 Consumption from Customers Exceeding 2,000 Gallons per 52 * 79% * 2,000 * 12 = 0 11,519 * 79% * 2,000 * 12 Month (79% Except for Mark Lynn, etc.) 985,920 = 218,400,240 Consumption from Customers Under 2,000 Gallons per Month 52 * 21% * 1,000 * 12 = 0 11,519 * 21% * 1,000 * 12 (79% Except for Mark Lynn, etc.) 131,040 = 29,027,880 Billable Consumption 2,760,816 - (985,920 + 96,277 - (0 + 0) = 637,916,481 - 131,040) = 1,643,856 96,277 (218,400,240 + 29,027,880) = 390,488,361 Projected Unit Revenue Calculation 1,643,856 / 1,000 * 96,277 / 1,000 * $2.35 390,488,361 / 1,000 * $2.76 = $4,537.04 = $226.25 $2.35 = $917,647.65 Total Unit Rate Revenue per Connection Type $4,537.04 $226.25 $917,647.65 Total Projected Billed Revenue per Connection Type $21,416.24 $10,692.53 $1,702,782.69 Total Projected $1,734,891.46 Revenue Table 4-2: Projected Revenue Calculations for 2026 September 3, 2025 l Page | 18 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY To calculate the Unit Rate Revenue, below is the equation from Subsection 7.2.2: The following equation represents the Projected Annual Unit Billed Revenue. 𝑌𝑇𝑈 − (𝐶𝐸𝐵 × 2,000 × 12 + 𝐶𝑆𝐵 × 1,000 × 12) 𝑃𝐴𝑈𝑅 = × 𝑈𝑅 1,000 Where, PAUR = Projected Annual Unit Billed Revenue ($) YTU = Yearly Total Use (gallons/year) CEB = Connections that Exceed Service Flat Charge Consumption (79%) CSB = Connections that Subceed Service Flat Charge Consumption (21%) UR = Unit Rate ($/1,000 gallons) Mark Lynn, Dina, Bradley Extension connections were not assigned any subtracted consumption because their projected usage is minimal. Using the same methodology would result in negative billable consumption and revenue. The unit rate revenue from these connections is insignificant compared to other customer connections. 4.3 Wastewater Rate Results Comparison Similar to the water comparison in Table 5-4 for the Water Rate Study Report, Table 4-3 compares wastewater rates for an average monthly volume of 5,000 gallons under the current rate structure and the proposed rates. The rate increase results in a 65% average bill increase in 2030 compared to 2025. Utility Bill Amount Current 2025 2026 2027 2028 2029 2030 Cabot Waterworks $9.81 $12.73 $15.62 $15.62 $15.62 $15.62 Table 4-3: Average Bill Comparison (5,000 Gallons per month) September 3, 2025 l Page | 19 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY 5 CONCLUSION Based on the projections above, an increase in Billed Revenue is necessary to meet the financial obligations of the Wastewater system. These increases are required to ensure compliance with Act 925 to cover rising operational and maintenance costs and fund critical capital improvements. These rate adjustments are designed to align revenues with expenses, maintain reliable service, and support the long-term sustainability of the Wastewater system. September 3, 2025 l Page | 20 Serving Arkansas since 1938  CIT Y OF CA B OT, A RK A N S AS CA BO T WAT ERWO R K S WA ST E WAT E R R AT E ST U DY APPENDIX September 3, 2025 l Page | 21 Serving Arkansas since 1938  EXHIBIT B MONTHLY WASTEWATER RATE CHART Existing Effective Dates (a) All Water Customers 12/31/25 1/1/2026 1/1/2027 (Excluding Briarwood/Bear Creek Extension Area, Phase II and Mark Lynn, Dina, Bradley Extension Area) Zero (0) to two thousand (2,000) gallons $5.10 $5.68 $6.26 * For all consumption in excess of (2000) gallons $1.57 $2.35 $3.12 per 1,000 gallons (b) All Non-Water Customers Zero (0) to two thousand (2,000) gallons $5.10 $11.26 $11.84 * For all consumption in excess of (2000) gallons $1.57 $2.35 $3.12 per 1,000 gallons (c) All Non-Water Customers – With Trash Zero (0) to two thousand (2000) gallons $5.10 $10.84 $11.42 * For all consumption in excess of (2000) gallons $1.57 $2.35 $3.12 per 1,000 gallons (d) Briarwood/Bear Creek Extension Area, Phase II Zero (0) to two thousand (2000) gallons $27.05 $27.05 $27.05 ** For all consumption in excess of (2000) gallons $1.98 $2.76 $3.53 per 1,000 gallons (Only applies to customers financing sewer improvements -Expires after June 2028)** (e) Mark Lynn, Dina, Bradley Extension Area Zero (0) to two thousand (2000) gallons $26.43 $26.43 $26.43 ** For all consumption in excess of (2000) gallons $1.57 $2.35 $3.12 per 1,000 gallons (Only applies to customers financing sewer improvements -Expires after June 2028)** * Minimum Monthly Charge. ** After expiration, reverts to appropriate customer class. 1726099-v1  EXHIBIT C FEE CHART (a) CONNECTION CHARGES Easy Set - 5/8 inch, 3/4 inch and 1 inch meter $ 225.00 An easy set includes the services of installing a water meter and a meter box at an existing service location. Easy Set - 1 ½ inch meter $ 605.00 An easy set includes the services of installing a water meter and a meter box at an existing service location. Easy Set - 2 inch meter $ 725.00 An easy set includes the services of installing a water meter and a meter box at an existing service location. Hard Set - 5/8 inch, 3/4 inch and 1 inch meter $1,500.00 A hard set includes the services of tapping the city water main. Hard Set - 1 ½ & 2” inch meter $3,000.00 A hard set includes the services of tapping the city water main. (b) HYDRANT METER CONNECTION FEE $ 100.00 (c) RE-CONNECTION FEE $ 25.00 This fee includes re-connection of Voluntarily Disconnected Meters. (d) RE-CONNECTION FEE (After-Hours) $ 50.00 (e) RE-BILLING FEE (see Late Payment) $ 1.00 (f) CHECK SERVICE FEE (Insufficient Check) $ 20.00 (g) ORGANIZATION FEE $ 25.00 This fee covers the cost of each address for property owners and real estate agencies. (h) INSPECTION FEE FOR IRRIGATION METERS $ 40.00 (i) STREET BORE FOR CONNECTION TO RESIDENCE (Base Charge) $ 600.00 (j) COST PER LINEAR FOOT FOR STREET BORE $ 16.00 (k) COST PER LINEAR FOOT FOR ROCK BORE $ 20.00 (l) COST PER SQUARE FOOT FOR STREET CUT REPAIRS $ 12.00 (m) STREET CUT FOR CONNECTION TO RESIDENCE (Base Charge) $ 600.00 (n) WASTEWATER CONNECTION FEE (RESIDENTIAL) $ 100.00 (o) WASTEWATER CONNECTION FEE (COMMERCIAL) $ 200.00 (p) WASTEWATER CONNECTION FEE $ 250.00 (2 or more connections on residential or commercial property) (q) WASTEWATER TAP FEE (GRINDER PUMP and GRAVITY SEWER) $ 425.00 1726099-v1  EXHIBIT C Current Fees as of FEE CHART September 2025 Description Fee Easy Set – through and including a 1 inch meter An easy set includes the services of installing a water meter and has an existing meter box at an existing service $225 location in which there has never been a meter. Easy Set – 1 ½ inch meter $425 An easy set includes the services of installing a water meter and has an existing meter box at an existing service location in which there has never been a meter. Easy Set – 2 inch meter An easy set includes the services of installing a water meter and has an existing meter box at an existing service $500 location in which there has never been a meter. Hard Set – through and including 1 inch meter $625 A hard set includes the services of tapping the city water main. Hard Set – 1 ½ inch meter $1445 A hard set includes the services of tapping the city water main. Hard Set – 2 inch meter $1575 A hard set includes the services of tapping the city water main. Fire Hydrant meter connection fee $100 Reconnection Fee – during business hours $25 This fee includes re‐connection of Voluntarily disconnected meters Reconnection Fee – after business hours $50 Rebilling fee $1.00 Check Service fee $20 Organization fee $25 This fee covers the cost of each address for property owners and real estate agencies Inspection fee for irrigation meters $40 Street bore for connection to residence $600 Street cut for connection to residence $600 Cost per linear foot of materials for street bore $15 Cost per linear foot of materials for street cut $35 Sewer Connection Fee (Residential) $100 Sewer Connection Fee (Commercial) $200 Sewer Connection Fee (2 or more connections on same property) $250 (applies to both residential and commercial property) Grinder Pump Connection Fee (Ordinance No. 28, 1998) $300  EXHIBIT D DEPOSIT CHART* Deposit for Water Accounts Meter Size Home Owner Renter Commercial Irrigation 5/8" $ 100.00 $ 105.00 $ 110.00 $ 115.00 3/4" $ 140.00 $ 145.00 $ 150.00 $ 155.00 1" $ 300.00 $ 345.00 $ 350.00 $ 355.00 1 1/2" $ 750.00 $ 750.00 $ 750.00 $ 755.00 2" $ 1,050.00 $ 1,050.00 $ 1,050.00 $ 1,050.00 3" $ 1,250.00 $ 1,250.00 $ 1,250.00 $ 1,250.00 4" $ 1,500.00 $ 1,500.00 $ 1,500.00 $ 1,500.00 6" $ 3,000.00 $ 3,000.00 $ 3,000.00 $ 3,000.00 Deposit for Wastewater Only Meter Size Home Owner Renter Commercial 5/8" $ 80.00 $ 80.00 $ 90.00 3/4" $ 110.00 $ 110.00 $ 120.00 1" $ 230.00 $ 260.00 $ 270.00 1 1/2" $ 375.00 $ 570.00 $ 570.00 2" $ 525.00 $ 790.00 $ 790.00 3" $ 625.00 $ 940.00 $ 940.00 4" $ 750.00 $ 1,130.00 $ 1,130.00 6" $ 1,500.00 $ 2,250.00 $ 2,250.00 * In accordance with Section 8. B., the deposit for any customer whose account has been terminated due to non-payment shall be two-times the deposit required in Exhibit B. 1726099-v1  EXHIBIT D Current Deposit Chart DEPOSIT CHART as of September 2025 RESIDENTIAL METERS (both inside and outside City limits) METER SIZE DEPOSIT 5/8” $60 ¾” $80 1” $100 Renter deposits are $80 regardless of meter size COMMERCIAL AND IRRIGATION METERS METER SIZE DEPOSIT 5/8” $80 ¾” $150 1” $300 1 ½” $750 2” $1050 3” $1250 4” $1500 ORGANIZATIONAL FEES (non‐refundable) STANDING DEPOSIT One residence $25 Multiple residences (maximum 3) $75 One residence deposit cannot be moved to another location Multiple residences can be moved to another location with only 3 residence meters on at one time  Municipal Services Item #5 An Ordinance to Amend Ordinance 35 of 2021