Sewer rates could double or triple to pay for WWTP

Published 7:28 pm Tuesday, September 22, 2009

The city is exploring the idea of doubling or even tripling sewer rates in the next month as a last resort to pay for the remaining upgrades to its Waste Water Treatment Plant.

City officials have said they are considering such action because of an ongoing legal battle with the Bainbridge Ratepayers Alliance.

“If we don’t get the ratepayers lawsuit resolved, probably within the next 20 to 30 days, we will have to double or triple the rates,” said City Manager Mark Dombroski.

The matter was first raised in a meeting of the Finance and Personnel Committee last week when City Councilor Bill Knobloch inquired about the status of funding the treatment plant upgrades. Knobloch said the current situation is the city’s own fault because none of the events surrounding the lawsuit were unexpected.

“The government has waited too long to sit down at the table and address solutions,” he said. “Whether or not ratepayers were sitting at the table, the city knew it had this legal problem and should have done something about it.”

To increase rates, the full council must pass an ordinance. The ordinance must first make its way through the finance committee before being presented to the full council. Following first reading, a public hearing would be scheduled. Then, the ordinance could be sent back to the committee or recommended for third reading, at which point the council would have an opportunity to vote.

Dombroski said Wednesday that the first reading of an ordinance that would increase the fees could come as soon as a City Council Meeting on Oct. 7. The rate increase would last only as long as it took to complete the treatment plant upgrades or until the appeal process ended and the city secured a loan or bond, Dombroski said. At that point, the council could vote to reduce rates back to the previous levels.

Earlier this month, the city was granted a summary judgment motion on the issue of bond validity, which, without an appeal, would have simplified the city’s attempt to obtain either a loan or bond for the remaining cost.

Last week, the ratepayers group filed a notice of appeal of the summary judgment on the issue of bond validation.

In response to the appeal, Cashmere Valley Bank, the potential lender of a $6 million bond anticipation note declined to issue the funds but did offer an extension of 90 days, said Cashmere Chief Financial Officer Alan Crain.

“We won’t close until this matter between the city and Ratepayers Alliance is out of dispute,” Crain said.

Richard Allen, president of the Ratepayers Alliance said the two groups are not in settlement talks at this time but are communicating.

“Maybe in two weeks I could call them settlement talks, but not now,” he said. Allen declined to comment on exactly what it would take for the lawsuit to be settled.

Knobloch said he has been imploring the city and the rest of council to seek settlement for as long as the lawsuit has been active.

Councilor Barry Peters, chair of the Finance Committee, said the lawsuit is hurting the very same people it was filed in support of. He said the lawsuit is wreaking havoc on the city’s utility finances and could lead to an extremely difficult situation for future projects.

“The city will run out of money in its utility funds if it can’t follow its financial plan to borrow,” Peters said.

The financial implications of the lawsuit are becoming a hot topic within the community as well as at City Hall.

When Kevin Dwyer addressed the council Wednesday night as “a regular citizen,” not as executive director of the Chamber of Commerce, he urged the people involved with the ratepayers group to drop their lawsuit so the city can be assured of having the bond funding it needs to go forward with the Winslow Way reconstruction project.

Peters said he has heard concerns from ratepayers and businesses about the impact the lawsuit will have on the treatment plant and future utility projects.

The city has explored numerous ways to make up for the lack of funding for the remainder of the project. Dombroski said stopping or slowing the construction on the treatment plant was considered, but neither option was viable, Dombroski said. Stopping construction could equate to a breach of contract and may result in the lenders of the $7 million worth of public works trust loans to call in the debt. In the contract, the city has the right to delay construction for 90 days, Dombroski said.

A potential rate increase would raise fees that are already higher than state and county averages.

The sewer fund has been the poorest of the three utility funds. Earlier in the year the city authorized an interfund loan of $3 million from the water fund to prop up the sewer fund.

The increase in rates would not pay off the interfund loan, Dombroski said. To this date, $1.7 million of the authorized amount has been loaned to the sewer fund.