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Sewer district demands cash up front

In order to service the south-end customers who want sewer connections, the Fort Ward treatment plant will have to undergo a significant expansion.

And to pay for that, the Kitsap County Sewer District No. 7 will need $1.5 million cash up front from the city.

“I don’t see us starting construction until we’ve got the money in hand to pay the bills,” said KCSD commissioner Gayle Ashton.

District and city officials and their attorneys met Wednesday afternoon to consider the ramifications of a district resolution that it would make 250 connections available for south-end neighborhoods at a cost of $6,000 apiece – less than earlier estimates – but would require the whole amount to be paid up front.

District officials said the plant needs a second aeration tank before it encounters both the new connections and wet weather.

“That needs to be in place a month before we have a record rainfall,” said district engineer Mike Yuhl.

Because the tiny district’s bonding capacity has been exhausted, the only way to finance the necessary work is to get cash up front from the city, according to district commission chair Sarah Lee.

The city has always assumed that the connection fee could be paid as individual homes hooked up to sewer service, city Administrator Lynn Nordby said.

The prospect of paying the money up front raises a number of troublesome questions, to which the participants at Wednesday’s meeting had no ready answers.

“This could sink the whole thing,” said Nordby.

The city had been planning to form a Local Improvement District, or LID, as a way to provide sewer service to four south-end neighborhoods – the lower portions of Emerald Heights, Rockaway Beach, upper Pleasant Beach and Point White – as well as to Blakely School.

In those areas, a combination of small lots and adverse subsurface conditions have reportedly created recurring problems with septic systems.

Under LID financing, the city sells bonds to pay for construction costs, then passes the costs through to properties within the district. Property owners have the choice of paying up-front or paying over 20 years at a rate of interest tied to the rate the city pays the bondholders.

According to council resolutions approving the south-end plan, property owners with working septic systems would not be required to hook up immediately.

All owners would have to pay for the cost of running the sewer line past their property, referred to as the “shared cost.” But they would not bear the on-site costs of tying their individual residences to that line, or the “latecomer” cost to share facilities already installed to service Lynwood Center until and unless they wanted the sewer service.

But if the KCSD connection cost must be paid up-front, then the city would, in turn, need to pass that cost along to all properties within the LID – both those that want to hook up immediately, and those that don’t.

New math

Adding the connection fee to the costs that are mandatory for all properties significantly changes the arithmetic for those who might want to opt out.

Using cost estimates from a 2002 consultant’s report, Emerald Heights property owners would have to pay just under $25,500 for a sewer connection, but almost $21,000 even if they don’t hook up.

Comparable figures for Pleasant Beach are $23,000 to connect, $13,500 to defer; for Point White, $26,000 to connect, $16,000 to defer, and for Rockaway Beach, $26,000 to connect, $17,000 to defer.

“That won’t go over very well, because we’ve been telling people for years that they can opt out,” said Charles Hawk of Rockaway Beach, a sewer proponent who attended the Wednesday meeting.

The bright side, said Hawk, is that the $6,000 connection fee is significantly lower than earlier estimates of $10,000, which may increase the proportion of owners who want to hook on immediately.

“When we were talking about $10,000 per hookup, I think we might have had less than 50 percent participation,” he said. “But at $6,000, you could get as much as 80 percent.”

The next step will be for the city to actually draw the boundaries of the areas to be included within the LID. If 60 percent of the property owners within the boundaries object, the LID cannot be formed.

City Attorney Rod Kaseguma said that state law does not explicitly address the issue of protests by 60 percent of the owners in one sub-area of an LID, but he will recommend that the council agree to carve out any neighborhood where that protest threshold is exceeded.

Sewer commissioner Lee said that the district has to offer connections to all properties within the LID boundaries, even though some owners might elect to defer hooking up.

And while she said the district might accept being paid over time to coincide with its construction costs, it cannot finance the expansion itself, then wait to see which property owners decide to pay the connection fee.

“If the city wants to talk about a payment schedule, we can show some flexibility,” she said. “But if it wants something for nothing, we can’t be flexible about that.”

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