Washougal leaders seeking answers to water cost woes

Washougal residents are troubled over the cost of their water bills. Washougal city council members are troubled over the cost of mandated improvements to the city’s water system.

There’s no doubt that water — and how to pay for it — continutes to be a troublesome topic in Washougal these days.

To that end, leaders are working with outside parties to update the city’s water system plan, which will include a list of recommended projects, estimated costs and potential funding options, and complete an analysis of the city’s much-maligned utility rates.

“Our utilities are critical and necessary infrastructure for our community,” City Manager David Scott told the Post-Record. “Planning, operating, maintaining and funding these systems is a complex endeavor which exists in a highly regulated context. The city understands that there are community concerns about the costs of operating and maintaining our utility systems. It is our goal to provide ratepayers significant and timely information and engagement opportunities as we move forward with the utility rate study, and to do our best to mitigate impacts to rates.”

Murraysmith, a Portland-based public infrastructure engineering firm, is helping the city to update its water system plan, which “evaluates system compliance with respect to Washington State Department of Health (DOH) requirements,” Murraysmith principal engineer Brent Gruber told the council during its meeting on Monday, Aug. 22.

Gruber said the city should implement a series of upgrades and improvements to its water system during the next 20 years that will cost an estimated $53.2 million, a number that elicited a combination of surprise, concern and befuddlement from several council members who wondered if they might have to raise the city’s utility rates to help pay for the upgrades.

“You say that these are DOH regulations that we’re trying to comply with. What, if any, funding (is available)?” councilwoman Michelle Wagner asked. “We’re talking $50 million over a 20-year period for a city whose revenue is only 10 million a year. Is that all supposed to be financed with rate increases? I guess (it is), because there’s only a $2.75 revenue bond. How do we get there when we have a population of people whose No. 1 concern in the city is raising rates? Is there a moratorium that we can do on rate increases or what? Those are scary numbers to me.”

City councilwoman Julie Russell said that if the city can’t lobby outside sources for more help, “there should be a mandate on not requiring any more requirements, because we can’t even afford to pay for the ones we already have.”

“I’m sure we’re not the only city experiencing this kind of sticker shock,” Wagner said. “It certainly seems like there really needs to be a combined effort from a lot of cities to have some understanding on the point of the kind of pain the decision-making authorities are causing to the cities and the ratepayers with some of the requirements that come down. I feel like there might be a disconnect between what needs to be done and what can financially actually be done.”

The city council will hold a public hearing and vote to adopt the plan during its meeting on Monday, Sept. 26. City leaders will then submit the plan to the DOH for approval.

“I worry if we go into a public hearing or we bring this to the public without answers to some of these questions, it’s just not going to be a good message,” Washougal Mayor Rochelle Ramos said. “(We can’t) walk in and say, ‘Well, we don’t know how this is going to impact (you),’ and ‘We don’t know what we have to do,’ and, ‘We don’t know what to (tell) you.’ That is the No. 1 question all of us get — ‘How are you going to lower utility rates?’ I hope we have some of those answers. Otherwise, it’s not going to be a pleasant meeting for sure.”

The current utility rates, adopted by the city council in 2018, will remain in place through 2023. The average water rate in Washougal is $40.38, according to the city of Vancouver website. Rates for other cities in Clark County are between $23 and $31.

“One woman wrote (on social media) that her bill is more than her mortgage payment,” Washougal resident Ramona Sinhart told the Post-Record in 2020. “How in the world are people supposed to pay this? Not eat for a month? What about single mothers? Some people just can’t afford to pay these bills.”

Earlier this year, the city council approved a $196,714 contract with FCS Group, a Redmond, Washington-based consulting firm, to analyze the city’s utility rates.

The contract also contains an agreement with Barney & Worth, a Portland-based strategic planning and communications company, to provide public engagement services. Barney & Worth, a subsidiary of Murraysmith, is “known for helping communities engage with their communities in very difficult situations, particularly in the area of utilities,” Scott said during a workshop session on Monday, May 9.

“There are billions of dollars of projects that are mandated upon us, and we have no choice but to do them,” Scott said during the workshop session. “We’re trying to get federal funding or state funding, and if things open up a little bit more, maybe we’ll get some support.

“During the last study, we looked at four options — one of them was lowering rates and one of them was freezing rates. The council opted for neither of those because the implications of doing so basically meant that we could no longer sustain our utility programs. The revenue requirements analysis is heavily influenced by capital project costs. That is the main driver of the cost. It’s not maintenance and the labor cost of maintaining our system. Those are not insignificant, but it’s the capital facilities costs that are the main driver.”

Scott told the Post-Record that the study is currently in the “data-collection stage” and will evaluate utility revenue requirements; recommend rates necessary to fund the city’s water, wastewater and stormwater systems from 2023 to 2028; provide a comparison of current water, wastewater and stormwater system costs and operations against industry benchmarks; and develop and execute a plan for communicating information about utility costs, financing and funding, operations, rate structure, and rate changes to customers throughout the process.

“It is noted that revenue from utility rates is not the only source of funding for utility projects,” Scott added. “Other sources of funding include system development charges, cash balances achieved over time pursuant to rate policies designed to accumulate funds for future expenses, and state and federal legislative appropriations — not a guaranteed source.

“Some financing is available (through) state and federal funds via loans to utility providers at preferred interest rates that are lower than the market rates for utility revenue bonds, and some communities in Washington are eligible for what is called ‘principal forgiveness’ for some of these loans — essentially a grant that does not have to be repaid. However, Washougal does not qualify for this because our utility rates are not high enough relative to our median income to qualify for this subsidy. Any loans or bonds we issue must be repaid, typically on 20-year terms.”

Barney & Worth is preparing to launch a community engagement program that will include an eight-to-12-member citizens advisory committee “representing a cross-section of customers which will serve as a sounding board throughout the study and be involved in the review and analysis of the options,” according to Scott; stakeholder interviews; two public meetings on yet-to-be-determined dates; a fact sheet; information on the city’s website and social media channels; and a video that will communicate the purpose of the study, provide context about the utilities and encourage people to participate in the process.

“I love seeing this community engagement program,” councilwoman Molly Coston said during the May workshop session.

“A couple of months or so ago, I met with somebody who’s very skilled at getting the community to say ‘yes.’ I said, ‘How do you do that on social media?’ And he said, ‘You can tell people (the facts) until you’re blue in the face, but there’s a certain amount of distrust because you’re an elected (official) and you’re getting paid to say this stuff, and you represent the ‘man,’ in a way. Get a group of committed citizens, educate them, understand the situation, and they’re the people that communicate.’ This is kind of what we’re working towards with this community engagement program and the committee. I think it’s a great idea.”

There is at least one water-related topic that Washougal citizens don’t have to worry about, however.

“The city provides excellent, high-quality water to its customers,” Gruber said during the Aug. 22 workshop. “No issues there.”