October 5, 2010
11:00 – 12:10 p.m.
Chair Virgil Clarkson, Mary Dean, Andy Ryder
Scott Spence, Scott Egger, Troy Woo, Peter Brooks, Rick Walk, Ken Ahlf
COUNCILMEMBER DEAN MOVED TO ACCEPT THE AGENDA. DEPUTY MAYOR CLARKSON SECONDED. MOTION CARRIED.
Septic to Sewer Conversion for Woodland Creek Estates
Scott Egger, Public Works Director, provided an update on the status of communication between the City of Lacey and Thurston County regarding the sewer conversion project for Woodland Creek Estates. The County has obtained a $3.8 million grant and $1.2 million dollar loan towards the cost of the project.
There is a funding shortfall of approximately $900,000. The County will reimburse the City’s amount of $350,000 with its conservation futures. The County is currently in negotiations with LOTT to discuss waiving connection fees to cover the remaining shortfall.
The County would like to request the City waive its plan review and inspection fees, which amounts to approximately $53,000. As an incentive to encourage the 134 property owners in Woodland Creek Estates to participate in a LID, the County would also like to request the City to freeze its connection fees at 2011 rates for a two-year period.
In a few weeks, the County Commissioners will decide whether to accept the grant or decline. In order to accept the grant, there must be a 100% participation by residents in Woodland Creek Estates to convert from septic to sewer.
Scott stated the City owns the step tank system and would need easements to access the property to maintain it. The City is willing to collect the step tank easement fees, on the condition that fees would only be collected from those property owners willing to participate.
Peter Brooks, Water Resources Manager, remarked that County staff is preparing to meet with residents to discuss the projects. If residents do not want to convert from septic to sewer, the County Commissioners and Board of Public Health would then have to decide how to proceed.
Scott stated it would be the County’s responsibility to form the LID, but the City has offered to help with the process. He reiterated that this is the County’s project, and they are expected to take the lead. Committee members agreed, and do not support the city’s participation as the lead agent.
Staff will continue to work with County staff to address this issue, and keep the Committee informed. IGA for Brewery Engineering Study
Peter Brooks, Water Resources Manager, presented the Committee with a request to approve an Intergovernmental Agreement (IGA) with the cities of Olympia and Tumwater to hire a consultant to conduct an engineering study on the brewery property.
In 2006, the City of Olympia condemned the Brewery water rights, and Lacey and Tuwmater joined in the condemnation. As a result, the three cities jointly own 20 acres of brewery property and each own 730 acre feet of water rights. An engineering study needs to be completed to determine how to develop the site to create water infrastructure for the cities. An IGA is needed to select the consultant. COUNCILMEMBER DEAN MOVED TO FORWARD A RECOMMENDATION TO FULL COUNCIL TO ENTER INTO AN IGA WITH OLYMPIA AND TUMWATER TO HIRE A CONSULTANT TO CONDUCT AN ENGINEERING STUDY ON THE BREWERY SITE. COUNCILMEMBER RYDER SECONDED. MOTION CARRIED. Proposed Utility Rate Increase
Troy Woo, Finance Director, presented the Committee with a recommendation to increase resident and non-resident water rates to 4.0% effective with billings after January 1, 2011. This rate increase would be included in the 2011 budget process, and addresses the increased cost of operating the water system and its new treatment facilities, and a portion of the debt currently impacting the utility.
Recent significant capital improvements in the Water Utility have greatly impacted operating costs as well as placed the utility into a debt position. Currently the utility has an outstanding loan from the Wastewater Capital Fund. The original amount outstanding was $9.5 million. The Water Utility has an obligation to make interest payments on the funds borrowed. Both principal and interest payments were made in 2009 and are included in the 2010 and 2011 budgets.
There are two sources of revenue that are identified for making principal and interest payments. These are general facility charges (GFC) collected from each new connection and water rates. Council has recently authorized a substantial increase in the GFC fee. Troy noted that the “average customer” using 900 cubic feet will experience a $0.91 monthly increase. The non-resident customer will pay $1.09 more.
The City has hired a consultant to perform a comprehensive and multi-year rate study. The study is scheduled for completion in late 2010. To adopt a balanced budget the City Council will need to act on the 2011 rates prior to the completion and acceptance of the rate study, so staff has calculated the necessary rate increase. This adjustment may not be sufficient if overall consumption declines from previous levels.
Councilmembers Andy Ryder and Mary Dean expressed concern about raising rates on customers who conserve water consumption. Instead of charging a flat 4% rate increase for all customers, they suggested charging a higher percentage for higher consumption use and a lower percentage for lower consumption use. Troy remarked that this suggestion could be a solution to reward customers who conserve water, although it is late in the budget process to implement the change for 2011. Peter Brooks, Water Resources Manager, remarked that it is anticipated the new rate study, will provide recommendations for equitable increases.
Troy stated that 15% of rates collected are applied to the capital replacement fund for restoration, and 85% is spent on producing and delivering water. He added that although customers can lower their costs by reducing consumption, there will always be a fixed cost for utility operations. Mary commented that if the rate increase is applied to the base rate, then a 4% increase seems more reasonable. Committee members stressed that public education is very important to help customers understand the process.
Committee members also discussed increasing the surcharge for non-resident customers. Originally the 50% surcharge was implemented to help pay for new water infrastructure in the county to serve residents who received City water. As the infrastructure was completed, the surcharge was gradually decreased to 20%.
Troy stated that if rate increases are not implemented January 1, 2011, services would need to be reduced to balance the budget.
Deputy Mayor Virgil Clarkson stated if the water rate increase is needed to balance the 2011 budget, then he would support it.