LAKE STEVENS — A yearslong legal battle between the city of Lake Stevens and the Lake Stevens Sewer District will remain in limbo for at least another two months.
It’s up to a court to decide if the city can take over the sewer district eight years earlier than originally planned. Some Lake Stevens residents are left wondering how the decision could impact ratepayers amid rising sewer rates.
In 2005, the city and district signed an agreement charting the course for how sewer management should grow alongside the city. They agreed the city would annex the sewer district no sooner than 2033.
But in 2020, the Lake Stevens City Council passed an ordinance to annex the district early. It cited a state law that gives the city power to do so if at least 60% of the district falls within city limits. At the time, Lake Stevens Mayor Brett Gailey said the move could save taxpayers money and enhance economic development.
In 2021, the sewer district sued the city, accusing it of breaching the 2005 agreement. After a year, they put the legal battle on hold and tried to come to an agreement on their own. In early 2024, the city stopped meeting with the district.
Later that year, the city filed a request to get the lawsuit dismissed. A judge denied the request and set a trial date of Dec. 2.
In October, according to court documents, the city discovered additional records in Bellingham related to the 2005 contract. To allow time to get the records, the judge moved the trial to April 14.
While the status of the annexation is up in the air, residents are preparing for sewage rate increases.
In December 2024, the Lake Stevens City Council approved a 3% utility tax on the sewer district. The district will reflect the tax as a fee on residents’ sewer bills beginning in April 2025. The revenue from the tax will go toward street and sewer maintenance, construction, reconstruction and expansion projects.
In 2026, the tax will increase to 6%. At the meeting, sewer district commissioner Andrea Wright said the tax would amount to a 6.38% increase for customers’ sewer bills.
“I was deeply disappointed to hear council members and staff attempt to justify the proposed 6% utility tax,” Wright said. “If the city is seeking to generate additional revenue, I strongly recommend reconsidering the ongoing and unnecessary lawsuit with the sewer district.”
A 2020 study from a city-hired consulting firm estimated the city would have to pay between $450,000 and $1 million in legal fees.
The 3% tax will generate an estimated revenue of more than $680,000, according to the city. In an email, city administrator Gene Brazel said the tax will stay in place if the city takes over the sewer district. He declined to comment further, citing the pending litigation.
The increase for ratepayers comes at the same time as rate increases from the Snohomish County Public Utility District.
“It just seems like there’s a ballooning of rate increases and taxes that’s making it impossible to do anything anymore,” Lake Stevens resident Steve Formhals said.
In December, Snohomish County told the sewer district it would no longer provide its benefits package to sewer district employees. In January, the district asked the city to sponsor them into the Association of Washington Cities Employee Benefit Trust so it could maintain its benefits.
The city ultimately decided to sponsor the district, but members noted one of the benefits of taking over the district would be immediate sponsorship into the trust.
The city could save up to $595,000 over three years by annexing the district, eliminating “duplicate expenses” such as engineering and administrative costs, the 2020 study found. However, sewer district general manager Mariah Low told the Herald in July the savings would only save ratepayers about $1 per month.
Low also raised concerns about what would happen to sewer district employees in the event of annexation. According to state law, the city must keep full-time employees who are “engaged in the operation” of the sewer district. It isn’t clear what would happen to part-time employees or what how the city defines “engaged.”
Part of the utility tax revenue will go toward repairing deteriorating rings around many of the city’s manhole covers. At the Dec. 10 council meeting, council members said determining if the city or sewer district are responsible for the rings is a “gray area.”
“That’s one of the challenges of having the two separated instead of being united,” council member Kymm Shipman said at the meeting. “We’re bickering over something that is actually a safety hazard for our citizens.”
Jenna Peterson: 425-339-3486; jenna.peterson@heraldnet.com; X: @jennarpetersonn.
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