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Monday, June 20, 2011, 10:00 AM
Book: 65, Page: 1

Special Meeting

Called To Order The meeting was called to order by Committee Chair Seth Fleetwood at 10:05 AM

Roll Call
    Seth Fleetwood, Council Member, At Large
    Michael Lilliquist, Council Member, Sixth Ward
    Barry Buchanan, Council Member, Third Ward
    Gene Knutson, Council Member, Second Ward


Special meeting of the Lake Whatcom Reservoir and Natural Resources Committee to discuss a proposal for a rate increase to fund land acquisition in the Lake Whatcom watershed.

Staff present: Ted Carlson, Clare Fogelsong, Joan Hoisington.

Other participants: Bill McCourt

Seth Fleetwood. We are here to discuss a rate increase for additional revenues for Lake Whatcom land acquisition. The current $5 surcharge was adopted by the City Council after a public vote to adopt a $12 rate failed by a small margin. Under a proposal floated by the Watershed Advisory Board (WAB) this would go up to $12, or an increase of $7 per month.

Another part of the proposal before us is to spend the additional money 50% for land acquisition and 50% for land or facilities for stormwater treatment. One question is if we want part of this 50% for stormwater to go to capital projects. There will be some changes to the recitations in the draft ordinance. Also, we will discuss exemptions to the increase, right now there are hardship exemptions. Section H of the ordinance would have to be revised to allow capital projects. We should keep in mind that there are some studies showing that infiltration will not work in all parts of the lake because of clay soils so we may need to broaden the language to say regional water quality projects.

Michael Lilliquist. I am in support of an increase. I would like clarification of how our current stormwater rates are set and whether those funds can be used to augment this effort.

Ted Carlson. Rates are set using a cost of service model. This reflects all operating costs plus the capital program over a 20 year period, and we also have a 6 year Capital Improvement Plan (CIP) for water, sewer, and storm. This information helps us build the rates. If we want increased stormwater projects in the watershed, the process would be to identify those projects. The cost-benefit analysis the city is doing, plus the Detailed Implementation Plan (DIP) for the TMDL could also help identify new projects. We are working on the 2012 budget and there is a planned rate study for the stormwater utility. New projects will be built into the rates. The acquisition program is watershed-wide. One question arises on whether the city can use stormwater utility money outside of the city boundaries. This would need to be examined. Using water money outside of the City is OK.

Michael Lilliquist. What is the process for adding Lake Whatcom projects to the 6 year capital facilities plan?

Ted Carlson. Stormwater capital planning is more difficult than for water or sewer. Water and sewer planning is about meeting a specific demand. The lake is a very long-term prospect for cleanup. The DIP will help identify specific projects. Many projects will take longer than can be reflected on a 6 year CIP.

Michael Lilliquist. Is it difficult to add stormwater capital facilities into the plan?

Ted Carlson. It would be easier if the Council provided a set percent increase that will be set aside for stormwater capital projects. This will be added to the capital facilities plan and the rates.

Seth Fleetwood. Part of the answer relates to what we see as sufficient, and a policy question is, what is the extent of protection we want to impose? We need analysis of the money available, and of the need for more capital projects. The DIP will impose some obligations on us and help us create a list of required capital projects. Do we wait for the DIP or be proactive?

Clare Fogelsong. We don’t know the exact timing of the DIP. It will be developed in conjunction with Department of Ecology (DoE) and the EPA. There is no need to wait for this to decide what we want to do.

Seth Fleetwood. The utility rates are set in part by operating costs and by capital expenditures, if more projects are needed the rates go up.

Ted Carlson. More capital projects result in a higher rate. There are stormwater needs throughout the city. Water utility funds also pay for Lake Whatcom projects. We need investments to comply with DoE stormwater permit requirements.

Seth Fleetwood. Stormwater rates are set to meet base DoE requirements. Do we have authority to raise rates?

Ted Carlson. We may have authority. We have slightly more leeway than with water rates. The TMDL is also a component.

Joan Hoisington. The dollars would be cleaner if charged through the acquisition fund or the water utility rather than the stormwater fund, if they are used for projects outside of the city.

Michael Lilliquist. I suggest we should not use stormwater rate dollars for projects outside the City. Water money can be used for this.

Seth Fleetwood. Regarding outcomes today, there are some differences in this proposal from the opinion held by the community. One question for today is whether we accept the proposal or revise it and then make a recommendation to the full council.

Barry Buchanan. Can Bill give us his take on using 50% of funds for capital projects?

Bill McCourt. The WAB proposal was to set aside 20% of all funds for infiltration projects, or about a million dollars per year. A 50-50 split of the increase is about $1.5 million per year. The WAB would like to restrict this to acquisition of parcels for stormwater facilities. The stormwater fund should pay for capital investments.

Seth Fleetwood. I want to clarify that 50 percent of the increase is proposed to go to stormwater. The overall goal is to accelerate land acquisition. The other part is for stormwater, this could be capital projects, or land for stormwater facilities.

Barry Buchanan. Can you review our current capacity for land acquisition and the effect of an increase?

Ted Carlson. Now we get about $2 million per year from the $5 fee. If we had another $7 per household per month that would equal a total of $5 million per year. Most of the current funding is going to debt service.

Michael Lilliquist. In the WAB proposal, 20% of the total was for stormwater, while 50% of the increase is 30% of the total. That would equal about $1.4 million more for acquisition and $1.4 million for new projects.

Gene Knutson. What are 2012/13 unmetered rates? We’d be adding $7 per month.

Ted Carlson. There is a 6.5% increase for water or about $2 for each year between 2007 and 2012. In 2013 the increase will be indexed to the CPI-U. The sewer rates will increase through 2013 and then be indexed.

Bill McCourt. In the 2007 rate increase there was $20 million in bonds proposed for acquisition. This was supposed to be on top of the $5 fee. $6 million were issued. A $1.5 million increase would get us back to the level promised. Right now bond interest is being paid by the fund.

Gene Knutson. I understand why we are moving forward, I am looking at the bottom line. What is the overall impact for unmetered customers?

Ted Carlson. A 2012 rate study for water will show the increase needed. There is a 6.5% increase in rates on average, and sewer is a little bit more.

Barry Buchanan. Is the spreadsheet based on the WAB proposal?

Bill McCourt. There are 2 spreadsheets, one based on the original WAB proposal, and the other is based on what you have before you.

Seth Fleetwood. We need to get agreement on the 50-50 split for the new dollars. [committee expressed support.] We also need to discuss exemptions.

Ted Carlson. There is currently a hardship exemption for low-income seniors. This could be extended to other low income households. The ordinance adds the watershed fee to our untreated industrial water. Encogen has a $300,000 gallons/day water permit. Do we want to offer an exemption for industrial users including smaller non—profit water users, such as hydroponics, using industrial untreated water? Also, Encogen right now pays a $13,000 flat fee based on volume. This does not work for smaller operations.

Seth Fleetwood. Is untreated industrial water exempt?

Ted Carlson. Currently they do not pay a watershed fee. We need to specify whether an exemption should be added to the ordinance.

Michael Lilliquist. The exemption is logical.

Seth Fleetwood. Do people agree with the senior exemption? [committee expressed support.] Add an exemption for all low-income [committee expressed support.]

Michael Lilliquist. I would just add that if it becomes too complicated we stick with just the seniors.

Ted Carlson. PSE has a narrow definition of exemption.

Seth Fleetwood. So we agree on 50-50 split. What about the 50% for stormwater – should we permit capital expenditures? The WAB proposal says no dollars should be used for capital costs.

Michael Lilliquist. We should add in capital projects but hope the rate study shows the dollars are not needed. We should keep some flexibility.

Seth Fleetwood. I agree. The question is how to draft the ordinance language.

Barry Buchanan. Has acquisition for regional projects been examined in the cost-benefit analysis?

Ted Carlson. We look at acquisition and regional facilities but not this specific proposal.

Barry Buchanan. The CBA will give us a good feel for where programs for infiltration are on the priority list.

Seth Fleetwood. There is broad agreement we need more money for the watershed. We need to make sure this is a best use. The rate study plus the CBA will inform new investments.

Ted Carlson. For regional infiltration there is a soils issue. In Basin 1 sufficient property may not be available. Sites may be expensive.

Seth Fleetwood. What soil studies are available?

Ted Carlson. We did 100 borings to assess the soil conditions. Soils are better away from the lake but there is nothing to infiltrate. Other projects such as filtration systems may be better. Flexibility is good.

Gene Knutson. Are we going to go to monthly billing?

Ted Carlson. This is still under consideration. On-line affects the ease of handling. About 20% pay on-line and this is growing. This started last year. We still get a check from the bank we have to process.

Michael Lilliquist. Is January 2012 the effective date of the ordinance.? [committee expressed support.]

Joan Hoisington. Some changes are needed in the recitations. Section 6.a. needs to be amended. Should Section H reflect the 50-50 split?

Michael Lilliquist. We don’t need to specify that in statute. This can be put in the whereas’s.

Joan Hoisington. For Section H we need to specify stormwater capital projects.

Seth Fleetwood. Is it OK to say 50% for stormwater including capital projects?

Ted Carlson. For Northshore, we could extend this. This would require many different funding sources. Could some of this money go to that type of project?

Bill McCourt. The WAB call for residential retrofits rather than spending on arterials.

Seth Fleetwood. Do street funds cover some of the dollars needed for such projects?

Ted Carlson. Funds are available but are not sufficient for many projects.

Michael Lilliquist. The more specific we get the clearer it gets, including for the public -- or we can provide for flexibility. I would agree with flexibility so we can get the most bang for the buck.

Seth Fleetwood. Let’s leave it broad for now and use the recitals to provide legislative intent.

Joan Hoisington. The language -- the water rate is to be used for land acquisition and other land preservation measures. Should this be re-worded or broadened?

Clare Fogelsong. I’d suggest we add another part to Section H with the new elements. Then it would be acquisition, preservation, and new sets of projects.

Seth Fleetwood. You have our permission to broaden the language. I think we need one more Lake Whatcom Committee afternoon work session before this goes to Council.

Meeting adjourned 11:13 AM.

There being no further business, the meeting adjourned at 11:13 AM.

Seth Fleetwood, Committee Chair

ATTEST: Mark Gardner, Legislative Analyst

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