LAKE STEVENS — A yearslong dispute between the city of Lake Stevens and a local sewer district could soon reach a conclusion.
The conflict centers around when the city can take charge of the Lake Stevens Sewer District, a separate entity with its own governing body.
It hinges on the question of which holds more legal weight: a 2005 agreement barring the city from assuming control before 2033, or a state law giving the city power to take over if at least 60% of a district falls within city limits.
As soon as July 26, a ruling in Snohomish County Superior Court could provide an answer.
City officials want to take over the district now, instead of waiting nine years. The district contends the city already signed a contract agreeing to wait.
A focal point of debate is who should pay for an expansion of the sewer system into an industrial zone in the city. City and district officials also differ on how a takeover could affect sewer rates, environmental standards and district staff.
The strife between the two bodies has played out in the public eye for years, even before the recent feud. The city and district maintain dueling web pages, each putting forth its own version of events since the city moved to take the district over in 2020.
A 2005 contract vs. a state law
Before 2005, the district provided sewer services to an area near what were then the city limits, while the city operated a separate system. That year, the two parties inked a merger agreement to smooth the way for the city’s future growth and jointly build a new wastewater treatment plant.
The district took the helm of the now-combined sewer system with the understanding the city would take over “no sooner than twenty years from the date of District acceptance of” the new plant. That condition would put the transfer to the city in 2033.
But in 2020, the Lake Stevens City Council passed an ordinance to annex the sewer district early. City officials cited a state law allowing cities to take over water and sewer districts if city boundaries contain at least 60% of the district’s service area.
At the time of the original agreement, “the City was less than a quarter its current population of approximately 40,000 and far less than 60% of the District’s service area was within” city limits, a recent city legal document states.
In 2021, the district sued the city to stop the takeover. In 2022, the parties put the legal battle on hold to try coming to an agreement outside of court.
Earlier this year, those talks fell apart. In February, the city canceled upcoming meetings with the district.
City Administrator Gene Brazel said the district giving wage hikes to senior management was a turning point because the existing salaries were already higher than typical city wages.
In an April public letter, Mayor Brett Gailey said “unnecessary obstacles” in talks with the district were “primarily due to the sewer district’s resistance to the assumption process.”
“Recent actions taken by the Sewer District Commissioners, including substantial salary increases for top managers,” he wrote, “raise serious concerns about transparency, fairness, and fiscal responsibility.”
In June, the city filed a motion to get the district’s lawsuit dismissed in Superior Court. A judge is set to hear the motion July 26.
Mariah Low, the district’s general manager, said the city used the salary increases as a pretext for stopping the talks. The raises were based on a routine salary survey, she said.
“There’s been a real reluctance on the city side to give up anything that they feel is their right to have,” she said. The salary increases were “an excuse, maybe, for calling off the negotiations and heading back to court, because that might be a faster way to get to where they want to be.”
Should growth pay for growth?
Much of the rift boils down to a disagreement over how to handle sewer extension into the Lake Stevens Industrial Center.
Officials want to encourage industrial development in the center on the northeast side of the city. Currently, most of the area uses a septic system instead of a sewer system.
The district’s philosophy is “growth pays for growth,” Low explained, meaning interested developers agree to put in the infrastructure themselves and then donate it to the district.
Such agreements with developers are much more common than districts paying for infrastructure extensions themselves, she said. In the latter scenario, sewer rates could rise.
It comes down to: “The grandma down the street doesn’t want to really pay for the new sewer line that isn’t gonna affect her home,” Low said.
Brazel argued, in this case, the lack of infrastructure is to blame for the lack of new development.
“If we’re gonna be able to build out the industrial area with wage-paying jobs,” he said, “you have to run sewer out there to facilitate expansion.”
He added the city would continue looking for grants to extend sewer into the industrial area. Lake Stevens already has a project in the works to run a sewer line along 131st Avenue NE, into the industrial center. The city would fund that project.
The 2005 contract specifies the city can fund sewer service expansion itself. It can also create a local improvement district, in which ratepayers would bear the cost of an extension.
However, city officials believe the district should be the one to pay for the expansion.
Low noted the district would have to take on millions in debt and increase rates to finance such an extension. She suggested the industrial area may be struggling to attract development for other reasons, such as limited land.
Part of the industrial center is also outside district boundaries, so the sewer system would have to annex it to extend service there.
The city argues takeover saves money
The district’s “growth pays for growth” model is the most common way to handle residential development, said Tim Trohimovich, director of planning and law for the statewide nonprofit Futurewise.
“But if you’re a jurisdiction and you’ve got some industrial land and you haven’t been very successful at attracting businesses,” he said, “extending public facilities to those sites to make them what are called ‘shovel ready’ … that’s not uncommon.”
Futurewise advocates for the Washington State Growth Management Act. The 1990 law aims to “encourage development in urban areas” and limit urban sprawl, among other goals.
“In general, cities are the units of local government most appropriate to provide urban governmental services,” the act reads.
The reasoning, Trohimovich explained, is a city managing public services eliminates redundancies.
“The sewer district has an elected board, right?” he said. “Well, so does the city. So why have two elected boards?”
For that reason, “it would be very likely that this merger would save ratepayers money,” he said.
Lake Stevens officials take that position, as well. The city has touted a third-party study showing up to $595,000 in savings in the first three years after annexing the sewer district.
Those savings come in part from eliminating “duplicate expenses,” according to the study conducted by financial consulting firm Moss Adams.
“One stop shop, good governance,” Brazel said. “You go to City Hall and you pay your utility bill and get your permits — all your services in one location.”
The sewer district would remain a distinct department under Public Works, said Brazel. Some district employees might move to a different city department, but their jobs would be secure.
The city is required by state law to bring all full-time district employees over. Brazel declined to comment on how this could affect part-time employees.
Lack of trust
The study on cost-savings has Lake Stevens using $280,000 in district funds each year for city overhead costs.
Unlike the city, the district is focused solely on sewer services, Low said.
“There’s a concern that when it becomes part of a larger government organization, then maybe some of those same ways we currently operate are not going to be maintained,” she said.
She added that the projected maximum savings, $595,000 over three years, would only save ratepayers about $1 a month.
The study also suggests “restructuring roles and responsibilities” among staff could save money. It notes that though the city must bring over full-time district staff, it’s “unclear if retention of employees is required” after the takeover.
While the city has promised to bring employees over, Low said city officials and staff have made seemingly contradictory statements in negotiations and public meetings.
For instance, she said, city staff have argued in negotiations that management or administrative employees don’t meet the state’s definition of employees “engaged in the operation” of the district, and therefore don’t have to be brought over.
She added “comments that are derogatory to staff or to the future of their positions … have come from both these staff negotiation meetings and in public comment and through the rumor mill.”
Brazel said the city stood by its position that all district employees will be offered jobs when the city takes over.
Low said the district is also looking for assurances from the city that it’ll maintain the district’s preventative maintenance and environmental standards. For example, the district exceeds cleanliness standards for wastewater discharge, she said.
“I think it boils down to a lack of trust between the two entities based on the history,” she said. “The district lacks trust in the city and the city lacks trust in the district. And that’s pretty evident in things that have transpired.”
Sophia Gates: 425-339-3035; sophia.gates@heraldnet.com; Twitter: @SophiaSGates.
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