The Manteca City Council has approved a second interfund loan to keep day-to-day water services afloat.

The $5 million, 10-year loan at 4.17 percent interest was approved last week.

It is in addition to a $10 million interfund loan the council approved June 3.

A decision to ease in a needed water rate hike over three years means the city needs to borrow funds to keep Manteca’s water operation and maintenance fund from drying up.

It is what was projected to happen this fiscal year after municipal water rates were not increased for 15 years.

The money being borrowed will come from the city’s water capacity fee collected on growth.

The need for the $15 million in loans was built into the water rate increase that finally went into in May.

It will cover ongoing operations, maintenance, and capital projects as well as meet ongoing reserve requirements.

The interfund loan, allowed under state law, will be paid back with 4.17  percent interest over a 10-year period starting with the 2026-2027 fiscal year.

Expenditures entering the current fiscal year that started July 1 was budgeted at $20.6 million to keep the system operating with only $13.2 million in revenue.

The deficit spending has effectively depleted the water maintenance and operations reserves.

Inflation for everything from wages, supplies, and the big operational item — PG&E power to run water wells — has effectively eaten away at the reserves after the city went without a rate increase for 15 years.

The annual water rate hikes approved over the next three years will eventually double the basic service charge from $17.15 a month where it was at for 15 years to $34.53 on July 1, 2028. The rate hike will allow a lot of pressing replacement work for aging pipelines to take place.

The basic rate each month is now at $21.24. Water use is on top of the basic charge.

To contact Dennis Wyatt, email dwyatt@mantecabulletin.com