City raises utility rates

LYNNWOOD

Water and sewer rates are going up Feb. 1, a change that city officials say will allow long-delayed improvements to move ahead.

Under the new rates, part of a six-year adjustment approved by the City Council in 2006, the average drinking water bill for single family residences this year will increase 4 percent and the average sewer bill will jump 17.5 percent.

Sewer rates will increase the most over six years: 17.5 percent this year, 17 percent in 2008, 8 percent in 2009, 6 percent in 2010 and 2 percent in both 2011 and 2012.

They are the highest rate increase since 1993. William Franz, the city’s public works director, said Lynnwood’s sewer and water rates are lower than rates charged by seven other regional water and sewer utilities. Even after the adjustments, he said, the rates will rank “below average.”

Rates remained stagnant from 1993 until a rate adjustment in January 2005 bumped single-family water and sewer base rates from $19.66 to $20 a month. Commercial users saw their rates increase even more.

Those increases made up for an imbalance in rates that forced apartment and condominium renters to pay more for their sewer and water than businesses, Franz said.

“We had found commercial had been underpaying for a number of years,” he said.

But the 2005 rate increases did little to help the three water utilities — sewer, storm water and drinking water — stand on firmer financial ground.

In 2005, a city consultant, FCS Group, did a Comprehensive Utility Rate Study. That study showed that Lynnwood’s water and sewer rates were far too low to meet both future operating and capital improvement needs. Last year, the council approved an update to the city’s Water and Sewer Comprehensive Plan. That plan identified a list of capital projects for which additional revenue would be necessary.

And, because the city’s water and sewer utilities are considered enterprise funds — meaning they’re run like businesses and have to pay for themselves — the lack of revenue spelled trouble.

Why hadn’t water and sewer rates increased much since 1993? Councilwoman Lisa Utter said rates just hadn’t been an issue on the council’s radar.

“To be perfectly honest,” said Utter, a council member since 1997, “it’s because no one raised it as an issue that we need more money in that fund.”

So, business owners and residents got water and sewer cheaply, but the city had its finger in the dike for more than a decade.

“It basically boiled down to our inability to do further capital work,” Franz said.

Those capital projects included construction of a pump station, improvements to the Lynnwood Wastewater Treatment Plan, and various sewer and water line upgrades as well as improvements to a storm water culvert on 44th Avenue for which the city had to take out a $300,000 loan.

“We were to the point in our storm water utility that our revenues from rates were just enough to fund operation and maintenance, leaving nothing for capital programs,” Franz said.

That borrowing cut into the city’s general fund, which pays for basic services like roads, cops and firefighters.

It also threatened — but did not hurt — the city’s bond credit rating. A high bond rating allows the city to pay less when it finances long-term purchases and serves as a financial barometer for the city’s financial health.