SEQUIM –– On a split vote Tuesday night, the City Council accepted a consultant’s recommendation to increase water and sewer rates 4 percent a year for the next five years to help fund improvements to the system.
Approval of the rate study does not necessarily determine what the city will charge for providing water and sewer service to citizens, City Manager Steve Burkett noted before the council’s 5-2 vote.
That determination will come when the city assembles its 2014 budget, a process typically set for the fall.
Still, Councilmen Erik Erichsen and Ted Miller, who cast the two votes against acceptance, worried that accepting the study would set the stage for the 4 percent increases, which both said would pinch financially strapped water customers.
Worries over authority
“I believe that we are setting rates right now,” Erichsen said.
“I wasn’t born in a pumpkin patch yesterday.
“This is giving us the authority to go to the top of the rates.”
Council members Candace Pratt, Laura Dubois, Dennis Smith and Genaveve Starr voted to accept the study, as did Mayor Ken Hays.
“We’re not setting any rates tonight,” Dubois said.
City Attorney Craig Ritchie told the council that state law forbids the city from adjusting rates without having an approved, independent study.
Effects of 4 percent hike
The plan’s suggested 4 percent increase would raise the water bill for a single-family residence from $32.98 now to $40.13 in 2018.
Sewer bills would go from $55.34 now to $67.33 in 2018.
Sequim’s current average water bill is $32.98, lower than Port Angeles, $47.55, and the Clallam County Public Utility District, $57.90.
Sequim’s average is higher than Port Townsend’s $31.87.
Sequim’s average sewer bill of $55.34 is also lower than Port Angeles’, $63.10, and higher than Port Townsend’s, $33.85.
Public works director Paul Haines said the rate increase suggested by consulting firm Peninsula Financial Consulting is significant but makes sense in a lot of factors.
“It is an aggressive plan,” Haines said. “But it’s driven on an awful lot of fronts.”
Increasing rates was suggested to pay for $26 million in upgrades to the water and sewer systems over the next 20 years and to ensure each fund maintained a cash reserve of more than $2 million.
The master plans for both the water and sewer systems call for $13.5 million in improvements in the first six year, primarily replacing 1.5-inch pipes with 8-inch pipes.
The report said the city likely will need to add capacity to its sewer system by 2029, though the water system should be adequate for the next 20 years.
The sewer fund and the water fund each presently have approximately $5 million in their respective reserves, for a total of almost $10 million.
Erichsen said since current capacity is sufficient, the city should wait until the economy rebounds to add treatment and storage capacity.
Cheap borrowing
Haines also noted that current low-interest rates could save the city money in the capital projects, as borrowing costs are lower.
“The time is good to do it,” he said.
Burkett added that planning for incremental increases in coming years would show the city is using a “good business practice” by setting up revenue sources for coming projects.
That, Burkett added, would reflect well on the city’s credit when it goes to issue construction bonds for the planned $13 million City Hall/police station building, slated to be built next year.
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Sequim-Dungeness Valley Editor Joe Smillie can be reached at 360-681-2390, ext. 5052, or at jsmillie@peninsuladailynews.com.
