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Newberg utility rates will see increases

Government — Citizen committee concludes its work while council debates proposal


Utility rates will increase in Newberg during each of the coming two years, but while the water rate increases are solidified, the City Council has asked for review of the wastewater rates to see if they should be set higher than proposed, and due to an obscure aspect of city code some of the stormwater rate increases could be challenged by voters.

Committee weighs various goals

The council considered rates determined and proposed by the Citizens Rate Review Committee following its five-month deliberation process.GARY ALLEN - Water usage, wastewater and stormwater rates will all increase next year, perhaps leading some residents to monitor their water meters more frequently.

When considering rate revisions, rate consultant Deb Galardi told councilors in early March, the CRRC has several objectives. It wants to ensure rates will meet system needs generally looking five years out (to avoid major rate adjustments each year and instead bring them on gradually), it considers rate structure with an eye toward efficiency, it tries for equity between new and existing users (which particularly comes up with system development charges) and it aims to charge users proportionate to their use through different customer classes and other measures.

Recent positives for utility finances include favorable borrowing terms meaning less interest, no increase in staffing anticipated and being able to take advantage of existing reserves, Galardi said.

But the city needs to continue replacing its aging infrastructure, paying off the cost of the wastewater treatment plant expansion and recovering the full cost of water and stormwater systems from users to avoid taking on additional debt.

Also, while no positions are expected to be added and in fact the FTE (full time equivalent) number for the utility system has decreased, PERS and cost of living increases mean labor costs have risen.

Rates proposed

The CRRC proposed rate increases of an overall average of 3.5 percent for water, 4 percent for wastewater and 9 percent for stormwater. However, city staff noted, “The actual changes to the individual fixed and volume charges will differ by customer class and meter size,” so different customers’ bills could increase in a different way.

A residential customer with a 3/4-inch water meter would see a service charge increase from the current $1.93/month to $2.18/month in 2017 and 2018.

The same customer would see a meter charge increase from $11.78/month now to $12.48/month in 2017 and $12.95/month in 2018. The volume charge for that residential customer would increase from the current $3.85 per hundred cubic feet (ccf) to $3.86/ccf in 2017 and $4/ccf in 2018.

For wastewater, single-family customers would see the fixed service charge increase from the current $20.66/month to $21.20/month in 2017 and $22.41/month in 2018.

Single-family and several other classes’ volume rates would increase from $8.19/ccf to $8.57/ccf in 2017 and $8.84/ccf in 2018.

Stormwater rates across the board would increase from $8.67 per equivalent dwelling unit (meaning an amount equal to what an average single-family residence contributes in water runoff) to $9.45 in 2017 and $10.30 in 2018.

That equals out to an overall $4.33 difference in 2017 and a $4.92 difference in 2018, for monthly utility rates for an average single-family customer.

In terms of rate increases, those are on par with the average amount other cities around the country are increasing their rates, Galardi said. But just looking at an individual residential household bill, when compared with other nearby cities, Newberg is on the higher end.

“This is the cumulative impact of past decisions as well as current cost structure and needs,” Galardi said, although she noted that the many factors unique to each community make it hard to compare.

Rate increase versus capital

projects

With the CRRC’s recommended rates, capital improvement projects would be deferred for a few years in order to keep the rates down.

City Engineer Kaaren Hofmann said from the city staff perspective the biggest issue is putting off improvements to the city’s inflow and infiltration (I-and-I) projects.

Then-Councilor Tony Rourke agreed, bringing up some of the major storms that strained the water system during the winter.

“We’ve had significant I-and-I issues this year,” he said. “Does this deferral really just defer this and put sewage into people’s houses like a month and a half ago?”

Hofmann explained there is money for improvements during the next fiscal year, but with the recommended rates the two years after that would not have I-and-I projects funded. The city is aiming to hit much of the maintenance needed to prevent the large storm issues during the next fiscal year.

Bill Rourke, who serves on the citizens’ rate review committee, testified against the recommended rate increase.

He explained that he’s retired and receiving Social Security, and that this year neither his Social Security nor any other retirement payments had increased from last year. It was therefore not easy to recommend the proposed rate increases.

But he was actually opposed not because he would have to pay more — but because he felt they should be raised even higher.

Passing the buck

“In years past we have made decisions not to fund capital improvement projects, in my opinion to a fault,” Rourke said, adding that only recently has the city attempted to catch up with that.

Rourke said the proposed rates would likely “kick the can down the road” through not funding necessary capital improvement projects, and would require future CRRCs to propose substantially higher rates to make up for that.

CRRC chairman Rick Rogers indicated the challenge of deferring maintenance projects versus high rate increases is shared by cities around the country.

“To say we’ve been behind is like saying that to any other community,” he said, encouraging the council to pay attention to masterplans that are in the works and that will determine which projects are prioritized with funding.

Councilors voted unanimously to pass the water rates.

Tony Rourke sought to revise the wastewater rate recommendation, adding 1 percent to the recommended increase to bring it up to a 5 percent increase. He indicated that money should be used for I-and-I projects dropped during the most recent rate-setting session.

“I-and-I actually saves the city money down the road,” he said. “You spend it in your capital improvement and it saves you down the road.”

City Attorney Truman Stone reminded the council that if it wanted to raise the rates above the CRRC recommendation, the rate must return to the CRRC for further consideration. The council voted 6-1 to send the wastewater rate back to the committee.

Councilor Scott Essin opposed the idea, noting that when the city increases residents’ rates their usage is likely to decrease, although consultant Deb Galardi said that increasing the rates by such a small percentage would probably not cause a large reduction in usage.

Obscure rule delays stormwater rate

The stormwater recommendations passed unanimously, but following public testimony by former City Councilor Robert Soppe, those rates are not completely finalized.

Soppe brought up legislation adopted four years ago that requires, if the city is raising the water rate by an amount exceeding the consumer price index by more than 3 percent, the option to refer the increase for voter approval.

He noted that the stormwater resolution would raise rates to an amount that would kick in the referral requirement, and following review of the municipal code Stone determined Soppe was correct.

The council gave notice that for 30 days from the initial hearing citizens have the ability to refer 42 cents of the stormwater rate increase in 2017 and 90 cents of the increase in 2018 to a voter decision. If nobody chooses to send it to the voters by April 6, the increases will begin next year.

Committee opts not to increase rate

The CRRC reconvened last week to consider the remanded wastewater rate and ultimately decided to leave the rate increase at its already agreed-upon percentage.

Rogers reminded the committee that the consultant had initially presented a 5.9 percent increase for wastewater rates.

“We said that sounds like too much, how about 3.25 percent,” he said. “Staff came back with more information and the committee eventually compromised with a 4 percent increase.”

Because of the voter referendum law on any increases above a certain amount, a wastewater increase above 4.2 percent would have the option of a voter referendum. Galardi returned to the CRRC with a 0.2 percent increase, bringing the rate up against that 4.2 percent mark.

Mayor Bob Andrews, a non-voting member, laid out the reasoning behind the increase, explaining that rates had essentially been frozen for 10 years in the 1990s, leaving the city to run down its reserves in paying for the utility system.

He said the increase would be a small step toward rebuilding the city’s reserves rather than passing the buck to the next rate committee.

But committee members noted that they had gone through a lengthy process with much staff input, and many of the I-and-I issues had come up during that process.

“We went through a deliberation that weighed a lot of these considerations, including the proverbial ‘can down the road,’ but I think that we need to be sensitive to our charge as citizens,” Rogers said, adding that the council would need to raise the rate on its own if it feels strongly enough.

As is, he and other committee members said, they wouldn’t feel right increasing the rate based on the minority opinion of one committee member and one city councilor. The committee voted unanimously to leave the wastewater rate at 4 percent.

The CRRC recommendation will return to the council for final consideration, but after last week’s CRRC meeting, city staff determined another CRRC public hearing must be held first.

The hearing will cover the revised wastewater rate, will accept public testimony and will result in an official rate committee recommendation. That hearing will be held at 6:30 p.m. April 7 in the Public Safety Building at 401 E. Third St.