Council remains divided on offshoring city water system in wake of city manager recommendation

A million-dollar price tag and a potential fight with the city's union appears to have done little to erode support for a controversial contract to outsource management of the city's water system.

Late last week, Bainbridge Island City Manager Doug Schulze made clear his opposition to a five-year contract with Kitsap Public Utility District.

Some on the city council have been pressing for Bainbridge Island to shed its water system, and have some other entity own or manage the utility, in response to complaints that have percolated over excessive water rates since 2009.

While the city eventually lowered its water rates, the fervor to get Bainbridge Island City Hall out of the water business remains. Earlier this year, the council asked Schulze to negotiate a contract with KPUD that would see the Poulsbo-based utility manage Bainbridge's water system.

But last week, Schulze outlined his concerns with the proposed KPUD contract.

The Bainbridge water system is actually made up of three systems that supply 220 million gallons of water each year to approximately 6,000 customers, with assets valued at $15 million, and Schulze came out firmly against the offshoring idea.

Schulze said the KPUD contract would ultimately result in costs of more than $1.1 million to the city. He also noted the contract would violate the Bainbridge's existing contract with its employees union, and run counter to the city's comprehensive plan, the document that guides growth and development on the island.

The council is expected to review the proposed KPUD contract at its meeting Wednesday.

Schulze's recommendation to reject the contract, however, does not appear to have changed any minds on the dais.

The council remains split, between those who have faith that the city can adequately run its own water system, and those who don't.

Mayor Steve Bonkowski supported getting the city out of the water business during his successful run for a council seat in 2011, and since joining the council last year, has spearheaded the recent moves to outsource management of the city's water system.

"When I took office that was one of the things I was very strong about, transferring the water (utility) out of the city," Bonkowski said.

"I was elected by a clear majority and when I campaigned, overwhelmingly (voters) were dissatisfied with the city's management of the water utility," he said.

Bonkowski said the city should be talking about the concerns of ratepayers.

"We haven't had a conversation around managing our utility for the benefit of our customers," he said. "There isn't anything in the city manager's discussion that alludes to, 'We can do a better job.'"

While much of the earlier talk on a proposed KPUD contract centered on expected cost savings, Bonkowski has also previously stated that the city could provide better services to citizens if city hall reduced its scope of services.

That view, though, was countered in the city manager's assessment of the KPUD contract. Schulze noted that the city of Bainbridge Island has less on its plate than many other cities its size — it lacks a parks department and a fire department — and is not overextended in its core services.

Even so, Bonkowski said Monday there was room for improvement.

"I don't know if it's overextended, but it certainly isn't providing the best service," Bonkowski said.

Previously, three others on the council have also been keen on outsourcing the water system; Councilman David Ward, Councilwoman Debbi Lester and Councilwoman Sarah Blossom.

Three others on the council — Councilwoman Kirsten Hytopoulos, Councilman Bob Scales and Councilwoman Anne Blair — favor keeping the city in control of the utility.

Scales said the city manager's recommendation should not be a shock, and he recalled that Schulze has said at more than one recent meeting that the proposed contract won't pencil out.

"In some ways, there's nothing new because he's been saying this all along," Scales said.

"I think what's different is that he's laid it all out very, very clearly and in great detail," he said.

Scales noted that the council voted unanimously for a city manager who was well-regarded in his field, and he's offered his professional opinion on the contract.

"Obviously, in making the recommendation it is extremely helpful because what he's done is what he hired him to do — which is to provide us with a thorough analysis of this issue that we've put forward and give us his best recommendation from the perspective of the city manager.

"What this clearly points out is, there is no rational basis to transfer the water utility. If the council decides to do it, it's clear that it will be a purely political decision," Scales said.

If council members want to make a vote based on pure politics, that's fine, Scales said, as long as they don't try to cloak their vote under the guise of cost savings. There's no evidence that's true, he said.

"I don't want anybody to say this is going to be great for the ratepayers or great for the city. If you want to say, 'Look, I made a campaign promise ... and I don't care what the information says,' then they can do that," he said.

"I just hope they are honest," Scales said.

"Most of our discussion has been around the cost," he added. "Trying to argue that this will save the city money or save the ratepayers money, and that's just not true."

Both Hytopoulos and Scales were outspoken on previous controversies related to the city's water system, such as when the city was criticized for overcharging its customers. But since then, the utility has cut rates to remain competitive with surrounding water purveyors.

Blair said she would favor the city retaining management as long as the city proves it can run the utility fairly and efficiently.

"The ratepayers need to be sure that we are not overcharging them and that our rates are competitive with KPUD and we are able to manage the utility at that revenue base," Blair said. "If that's the case, I am an advocate for our local government."

Blair said that the city has met the requirements of efficiently running its water utility at reasonable rates, and that the problems in past years have been corrected.

She favors maintaining the water system under the city's purview.

"It's going to take a whole lot to persuade me differently," Blair said. "I'm very comfortable with Doug's recommendation."

Review writer Brian Kelly contributed to this report.

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