City rate study back to drawing board

POULSBO — An update of Poulsbo’s utility rates will have to wait a little longer as the City Council has sent it back to committee for more work.

The city started re-examining its water, sewer and stormwater rates about 18 months ago. Public Works Superintendent Bill Duffy said it had been more than 10 years since Poulsbo had last increased water rates and about three years since it had raised sewer rates. He said the intent was to ensure there was equity between what different customer classes were paying and also to make sure the utilities were making enough money to support themselves on operation, upkeep and debt.

Duffy said his study of the current rate structure showed that large-scale users were actually paying less per unit than smaller users because of a commodity rate the city offered. He has proposed a rate structure that brings those unit prices much closer than before. The proposal also increases rates to a level that is more in tune with the utilities’ fiscal needs.

“Every city does this every (two or) three years and the difficulty we’re having is it’s been over 10 years since we’ve raised water rates and inflation has eroded our purchasing power,” Duffy explained.

The proposed rate structure received a less-than-enthusiastic response from City Council members at their Oct. 2 meeting. Major concerns included the amount of increase, the elimination of a commodity discount and new fees that were added to basic service charges.

“My rates (for August) were 58 percent more under this new system,” Councilman Jeff McGinty said, noting that he’d run his own bill through the proposed numbers. He added that he thought the issue should be sent back to committee for further study before the council approved such a fee hike.

“Although we’ve had public forums, we have not had public hearings and I’d like the public to be included in this,” Councilwoman Kathryn Quade said, also asking for more time on the issue. “I was under the impression that my rates were going to stay the same, but apparently that’s not the case.”

Despite sticker shock, council members also noted that they understood a fee increase was in order.

“It is imperative that we do some sort of rate increase. We have to keep our existing system going,” Councilwoman Jackie Aitchison said. “People can conserve water, there are things you can do to keep your bill low.”

The council agreed to send the issue back to the Public Works Committee for discussion at its Oct. 9 meeting, however, the group intends to vote on the matter as soon as possible. Duffy said updating utility rates is a complex issue, so he’d rather answer any council concerns than to pass a document council members were concerned with.

“We’re trying to get ourselves back in a fiscally responsible position. I don’t want to rush into it though, I want to make sure it’s done right,” Duffy told the Finance Administration Committee at its Oct. 2 meeting.

Even so, city staff pointed out that there is limited time to pass a new rate structure.

Duffy said he has serious concerns about the Poulsbo’s ability to improve and replace existing infrastructure since the old rate structure has not allowed the city to put away the amount of reserve funds that are needed.

He added that the council recently approved a utility extension to the Olhava property that is necessary for Olympic College construction to move forward. That extension will be paid for through an interfund loan, which will also need to be repaid through utility rate revenue. And, of course, the project’s earlier larger scale and much more expensive version “Full Meal Deal” had to be scrapped because the city did not have an updated rate schedule in place. Poulsbo therefore did not have the ability to prove what its revenue stream would be in order to secure a loan for the project.

“Believe me, we can’t go into debt until we do this rate structure,” Donna Bjorkman told the Finance Administration Committee.

Duffy said he hopes to be able to address council concerns in committee as soon as possible and to bring the document back to council by the end of the month. If the new rates were approved by the end of October, they could take effect by the beginning of 2003.

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