Cannon Beach looks at 40 percent water rate increase

Cannon Beach water, wastewater and stormwater rates could increase up to 40 percent.

After months of deliberation, the public works committee will recommend to Cannon Beach city councilors a combined 40 percent increase for water and wastewater rates for next fiscal year.

It’s the same rate that was proposed earlier this year as a way to finance projects in the water and wastewater master plan. The 20-year plan is required by the state, and projects would focus on rehabbing or replacing a variety of systems, including brittle water lines and water storage tanks.

Approving the plan, which outlines roughly $7 million in water infrastructure and $2 million in wastewater priority-one projects, and the rate increase to fund it stalled in May after committee members raised concerns about how projects were prioritized and discrepancies within the rate study.

Since May, committee members worked with Public Works Director Jim Arndt to evaluate the benefits and drawbacks of funding the whole master plan versus just a percentage, different rate structures and payment phase-in options.

But ultimately, the majority of the committee voted to recommend a proposal Tuesday similar to the one made earlier this year, which will keep the city’s current rate structure and raise the average homeowner’s water bill from about $50 a month to $70 in the first year.

The committee will introduce its recommendation to the City Council at a work session Dec. 12.

“None of this is easy,” Arndt said. “We have needs in this town, and addressing them is going to hurt for awhile.”

Cannon Beach has not had a significant rate increase in 10 years. Because of this, the Public Works Department has not been able to fully cover operational costs without dipping into the general fund, according to both Arndt and his predecessor, Dan Grassick.

The sharp increase would allow critical projects to be steadily funded by ratepayers rather than relying on hotel and rental room tax revenue — which, when the economy is poor, can create funding instability for these projects.

Financing 100 percent of these high-priority projects with rates would help the department catch up on projects, as well as reduce the impact on future maintenance costs, Arndt said. But doing this would require rates to raise closer to 60 percent.

“We want to provide for and maintain this system sustainability,” Arndt said.

Most committee members agree there are parts of the system that have been neglected and need to be replaced, but are uncomfortable recommending a rate increase that would finance any more than 50 percent of water infrastructure projects and 75 percent of wastewater projects listed in the plan. Doing so still generates $2.1 million and $1.61 million for water and wastewater projects, respectively.

Most members have disagreements about what infrastructure projects should be considered as a No.1 priority, so only providing partial funding encourages the city to prioritize projects and pursue alternative funding options like bonds and grants, committee member Douglas Craner said.

“We want to encourage the city to look at other solutions,” Craner said. “We’re not wanting things to fall apart, we just don’t want it all to fall on ratepayers.”

The committee also is recommending the City Council phase in rate increases over five years, which would mean residents would see a 35 percent and 5 percent rate increase for water and wastewater respectively in the first year, and single-digit rate increases for the following four years. After five years, rates would only be adjusted for inflation.

“There are things that need to get done, and I think we can do that with a lower funding level,” said Rich Bertellotti, the public works committee chairman. “We all recognize issues with how it was prepared, but this is an outline — not a plan to be followed like a blueprint.”

While the committee voted to recommend approving the water and wastewater master plan and rate increases, they did so with reservations.

Les Wierson, the one committee member who voted against the recommendation, said there are still too many issues with the plan itself for him to support rate increases associated with it.

Wierson took issue with a plan that appeared to be trying to replace an entire water system, which he deems as excessive, he said.

“The proposed 20-year plan is very large, especially for a small city staff available to guide, inspect and approve the new construction,” Wierson said.

Craner expressed concerns that the plan lacks “schedule and implementation ability.”

The committee chose to retain the current rate structure, which includes an allowance of 400 cubic feet of water usage, after deciding the alternative rate options provided by the consulting firm Civil West Engineering Services would disproportionately impact homeowners in comparison with large commercial outfits. The committee, however, is still recommending to the city to continue exploring more equitable rate structures that would encourage more conservation, committee member Carolyn Propst said.

“I think we should work forward with what we have, get an increase to pay for some of these projects and then take a deeper dive into structures,” Propst said. “This is not a static, one-time decision.”

Arndt will provide a recommendation that “follows the need of the system,” which could differ from the conclusion of the public works committee, he said.

“We aren’t trying to rebuild a whole system in 20 years. It’s good practice to replace them every 80, and to do that you have keep up the progress, little by little, so the system lasts in perpetuity,” Arndt said.



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