The council spars over the rate structure, subsidy of stormwater management.

A councilman’s attempt to hike the city’s stormwater management fee by more than 60 percent next year touched off a heated debate among council members this week.

The very validity of the stormwater utility – for which residential homeowners are currently charged $6.50 per month, and commercial properties are charged based on impervious surfaces like parking lots – came into question.

“To call it a utility is kind of a farce anyway,” said Councilman Jim Llewellyn, arguing that some properties should be exempt from the fee. “This doesn’t look or act like a utility, and to charge people when they don’t use it or take advantage of it is unconscionable.”

First enacted by the city in 1991, the Storm and Surface Water Management utility fee funds a range of activities related to stormwater management island-wide, including ditch maintenance and improvement of storm facilities as roads are upgraded.

The city now spends $1.5 million per year on stormwater management, but the SSWM fee brings in only about $1 million, resulting in a subsidy of about $500,000 per year from the city’s general fund.

The fee hasn’t increased since 2001, contributing to the deficit as maintenance costs have gone up over that period.

To make the utility self-sustaining as directed by city policy, Finance Director Elray Konkel has called for a series of small fee increases over the next few years, beginning with a 2006 hike to $7 per month that would bring in an additional $75,000 in revenue.

That hike went before the council Tuesday, and had to be approved that evening if the fee was to be collected next year. But Councilman Nezam Tooloee argued for a bigger fee hike to a level that would immediately bring the fund into balance – estimated by Konkel to be $10.50 per household per month.

To force the council to reconcile the fund, Tooloee proposed an amendment that would eliminate the stormwater fee altogether after 2007, unless the rate structure is studied and changed. He decried the current rate structure, saying “it has inequities all over it.”

“We have absolutely no data,” Tooloee said after the meeting. “For all we know, we could be charging residential customers way too much and commercial customers way too little, or the other way around. We have no clue.”

But to raise the fee by more than the proposed 50 cents per month would have required additional public notice and hearings, and the council faced a deadline for passage that evening.

Still, Tooloee and Councilman Bob Scales suggested that the only “risk” was the extra $75,000 in utility revenue that might not come in next year, if the originally proposed fee increase could not be enacted in time.

That brought the rebuke of several council members, who urged prudence.

“I’m glad you used the word ‘risk,’” Councilman Bill Knobloch said. “I’ve never heard such irresponsible talk from a council in all my life.”

Councilwoman Christine Rolfes agreed, saying Tooloee’s move smacked of “grandstanding” and that the council had no business enacting a significant fee hike without public input.

“The ‘risk’ is that we might lose $75,000,” Rolfes said, “and the ‘gain’ is that we might be able to tax the citizens of the island another half-million dollars that they’ve had no public input on – which is horrible.”

Tooloee withdrew the amendment, and the 2006 fee was set at $7 per month as first proposed. Also defeated was a move by Llewellyn to exempt some properties from the fee entirely; Rolfes argued that all property owners benefit from stormwater utility to the extent that it maintains local roads.

At issue now is when the SSWM fee structure will be re-examined. Tooloee will push for a formal rate study in next year’s budget, to address “inequities” and eliminate the fund subsidy.

After the meeting, Konkel said that the city could take Tooloee’s approach and simply jack up the stormwater fee to bring the utility fund into balance immediately, but such a move would have drawbacks.

Viewed one way, the impact would be about $4 per month on island homeowners; viewed another, it would be a rate increase of more than 60 percent overnight.

The latter, Konkel suggested, was politically untenable for the city.

“The fantastic numbers usually wind up in the paper, and then back in my lap,” he said.

Konkel said he prefers a policy of annual, graduated fee increases tied to inflation or some other measure, rather than irregular and much larger jumps every few years.

“If we do it right and it’s fair and it’s regular, it’s so much less painful for the people on the dais,” he said, “as well as the staff.”

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