CANNON BEACH — City councilors had mixed reaction to the water and wastewater rate increase proposal presented by the public works committee at Tuesday’s work session.
The committee recommended to fund 50 percent of all projects detailed in the water master plan and 75 percent in the wastewater plan with a rate increase. 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.
The proposal would keep the city’s current rate structure and raise the average homeowner’s water bill from about $50 a month to about $70. The increase would be phased in over five years and generate $2.1 million and $1.6 million for water and wastewater projects.
But many of the councilors questioned a rate increase that would only partially finance projects. Some worried without full funding from rates, the system would not be maintained and would eventually depreciate. Others raised questions about whether commercial outfits were paying enough under the current rate structure.
“We have this need — it is well-established — and we are only going to get half of it funded? That doesn’t make sense to me,” City Councilor Mike Benefield said. “If we don’t have the funds, we’re going to be back to square one when our water system isn’t paying for itself.”
The city plans to hold a public hearing in February before implementing any changes. But for now, the city is considering approving just the first year of rate increases proposed in the five-year plan, which would increase the cumulative water, wastewater and stormwater base rate by 16 percent from this year to next — about an $8 difference for the average residential ratepayer.
City Manager Bruce St. Denis and Public Works Director Jim Arndt recommended revisiting the issue after designing a five-year capital project schedule. The plan would impact rates annually by accelerating or slowing increases depending on what projects are planned for each fiscal year.
“Instead of locking into a rate schedule, let’s vet the projects by the board and the committee and talk more clearly about what we need in terms of cash flow and rates,” St. Denis said.
Approving the plans and the rate increase to fund it stalled earlier this year after committee members raised concerns about how projects were prioritized and discrepancies within the rate study completed by Civil West Engineering Services.
Since May, the committee worked with 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.
The committee opted to recommend financing only the water and wastewater master plans partially in an effort to lessen the overall impact to ratepayers and incentivize the city to find alternative funding through grants and bonds.
The committee also thought funding only half the plan would encourage the city to prioritize financing the most urgent projects.
“The (public works committee) has reservations about the priorities and the reasoning and explanations for some of the projects,” the committee wrote in a letter to the City Council. “We are recommending you adopt the plans because they are a good starting point for evaluating our water and wastewater systems.”
But Arndt cautioned councilors that while the city always seeks out grants to fund projects when applicable, funding less than 100 percent would likely not keep up with depreciation of the system over the 20-year life of the plan.
“After 10 years of no increases, we’re just catching up,” Arndt said.
Benefield and Councilor George Vetter said they felt the increase was relatively nominal in comparison with what could be accomplished with the revenue if the plans were funded fully.
“If this is what it costs to have water, then this is what it costs. Why pull from other sources other than rates?” Vetter said.
While agreeing with the needs of the system, Mayor Sam Steidel was wary of any more increases that could impact ratepayers, and suggested exploring ways for the city to use lodging tax revenue to help fund projects.
“The number of day-trippers we have is an abuse on the system,” Steidel said.
Councilor Nancy McCarthy also questioned whether a different type of rate structure could be explored to make sure commercial customers were “paying their fair share.”
Bob Reid, a member of the Public Works Committee, agreed with McCarthy’s inquiry, arguing the commercial outfits that attract thousands each year play a role in the degradation of the water and sewer system.
“If you charge commercial businesses, they pass it onto the tourists, which are largely the reason why we have to support a system built to support 10,000 people for a town with only 1,700 residents,” Reid said.