Alderwood water district owes Lynnwood $360K in missed tax payments
Published 2:10 pm Friday, March 20, 2026
EVERETT — The Alderwood Water and Wastewater District did not pay required utility taxes to the city of Lynnwood for 15 years, according to Lynnwood city officials.
The district now owes about $360,000 to the city, and Lynnwood customers have been faced with increases to their utility bills.
On March 11, the Lynnwood Times reported that a Lynnwood resident saw a $300 increase in their utility bill due to a “retroactive adjustment” for 2020 to 2025. In the article, Michael Kundu, spokesperson for the water district, attributed the additional cost to a utility tax increase the City Council passed in November. On Monday, the Lynnwood Times reported a clarification from city staff that the increase was due to years of unpaid utility taxes.
Alderwood has not paid utility taxes to Lynnwood since the City Council first approved utility taxes on water and sewer in 2010, Mayor George Hurst said in an email Wednesday.
In a joint statement, Hurst and Finance Director Michelle Meyer said city staff learned about the unpaid taxes last year. While state law allows cities to collect up to six years of delinquent taxes, the city and the district agreed on five years during negotiations. The city also agreed to waive penalties and interest, the statement said. The total amount for the five years is nearly $360,000, the city and district confirmed.
In a statement to The Daily Herald on Thursday, Kundu attributed the missed payments to a “communication shortfall” between the district and the city.
“Since the matter was brought to light, we have been working cooperatively and have been in constant dialogue at all levels to solve this issue,” he said. “We remain mindful of potential impacts on both our ratepayers and our wholesale customers.
The Alderwood Water and Wastewater District is the largest water and sewer district in the state, according to its website. The district serves portions of Lynnwood, Bothell, Brier, Edmonds, Everett and Mill Creek. Alderwood has about 650 household customers in Lynnwood city limits, Kundu said.
“AWWD is only billing those 650 households responsible to repaying that tax, to ensure that this retroactive tax is not unfairly subsidized by AWWD’s other 300,000 ratepayers who are NOT residing within the (City of Lynnwood’s) footprint,” he said.
The district is offering payment plans for up to a 2-year period to lessen the impacts on ratepayers, Kundu said.
Lynnwood’s finance department expected payments to begin in October 2025, Hurst said Wednesday. The district started billing ratepayers for the retroactive taxes in February, the statement said. Hurst said the city expects the district to pay back the owed total by the end of the year.
Jenna Peterson: 425-339-3486; jenna.peterson@heraldnet.com; X: @jennarpetersonn.
