Water and sewer rates for Niagara Falls residents and businesses will increase 5.9% after the Water Board voted unanimously Monday night to adopt a proposed 2026 budget that contained the rate hike.
After a public hearing that saw no business or resident speakers, board members approved the spending plan following a presentation by both the agency’s rate consultant and its executive director. Both pointed to declining revenues as the largest reason for the rate increase.
“This budget addresses declining revenues,” Water Board Executive Director and General Counsel Sean Costelo said. “We have worked hard to control expenses. Costs are largely under control.”
But Costello said dramatic drops in industrial water and sewer charges have created large budget gaps. Sewer charges fell from $12.5 million in 2023 to $8.75 million in 2025.
Sewer revenues for the projected 2026 budget are $1.3 million less than in 2025, without a rate increase.
“Water revenue has been relatively stable, but has been overestimated for several years now,” Costello said. He said the 2026 budget projects a $600,000 decline in water revenue without a rate increase.
Costello cited a loss of revenue from the shuttering of industrial facilities in the city. He said the July announcement that the Cascades Containerboard Packaging facility, formerly known as Norampac, would shut down in October had a dramatic impact on revenue projections for the 2026 budget.
The 2021 closure of the OxyChem operations on Buffalo Avenue, which are finally winding down, also created revenue challenges for the agency.
Ten large industrial users currently account for 35% of the water board’s annual revenue billings. Costello said making projections of revenue from those users can be tricky because “their use fluctuates a lot.”
On the expense side of the proposed 2026 budget, the cost of chemicals, interest on the water board’s debt and a large increase in sludge disposal presented challenges, Costello said.
While debt service and chemical costs remain the two largest drivers of water board expenses, the bid price for sludge removal in 2026 shot up 37%. The board was also recently hit with a 25% increase in its carbon-related costs at the outdated wastewater treatment plant.,
The water board also carries a large debt service created in 2003, when the city spun off its water department and created the agency. The city immediately transferred $110 million in debt to the newly minted water board.
By the end of 2024, over $68 million of that debt remained outstanding. The interest payment on that debt in 2025 was almost $8 million. The debt interest payments represent 20% of the 2026 budget.
“I can not understand how (the debt transfer) happened,” Water Board Chair Richard Sirianni said.
The water board will save $300,000 in personnel costs by reducing its number of employees from 110 to 96.
Before voting on the budget, Sirianni said he felt members were “comfortable with a rate like this.”
“There’s only so much cutting we can do,” he said.
After two successive years without rate increases, the board’s rate consultant suggested small, consistent yearly rate increases could help avoid large rate hikes in the future.
“We’ve got to make sure rate increases are consistent so ratepayers don’t take such a hit,” Board Member Renae Kimble said.
Roughly half of the water board’s customers receive what is characterized as a “minimum” quarterly bill. Under the proposed rate hike, the bill would increase by $8 a quarter or $32 a year.
Costello told the board members that without the rate increase, they would confront a $2 million deficit in the 2026 budget.