Water rates approved; councilor blasts process - UPDATED 6:20 p.m. Tuesday, November 15

After almost two years of wrangling, differences of opinion and differences in approach, the city council quietly voted 4-1 to make permanent the temporary four percent increase that went into effect May 1. (Note: the print edition and an earlier version of this story stated that the vote was 5-0. Councilor David Asson notified The Nugget that he had, in fact voted "No," arguing that "This rate increase can not and will not sustain the water fund into the future even without paying for any further CIP expenditures delayed years into the future.")

The temporary rate hike was to expire on November 30. The rate also includes a reduction in water allowance, which makes the increase effectively just over 6.6 percent.

As reported last week in The Nugget this decision does not resolve the ongoing issue of how to model the city's water system as a stand-alone enterprise. However, based on Council President David Asson's spreadsheet model, the increase should keep the water fund's ending balance at what is considered a "best practices" level.

Councilor Sharlene Weed blasted the water rate decision process in a two-page statement she read into the record at Thursday's meeting (the full text accompanies the online version of this story at www.nuggetnews.com).

"Considering the length and breadth of this saga, the entire process can only be described as dysfunctional," she stated.

She cited several instances in which she believes city staff provided "misinformation" to councilors and to a council-appointed Technical Advisory Committee (TAC), which analyzed the requirements of the water system:

"The city manager continually stated that water rates have not been increased since 1994. Water rates had increased 20 percent in 2009. Projects on the initial CIP (Capital Improvement Plan) were based on growth projections that were incorrect.

"Early in the process, staff proposed a rate increase and claimed the majority would not see their water bill increase... careful analysis of available data showed the opposite to be true.

"Staff insisted that funding for the CIP projects could not legally come from reserves but had to be generated from the fund. This option continually put forth by Councilor (Jerry) Bogart was later proven to be legal and viable."

She also criticized "council leadership" (Mayor Lon Kellstrom and Council President David Asson) for "continuing to push for a significant increase even after hundreds of hours of TAC vetting had revealed an increase was unnecessary."

"This kind of nonsense is why people hate government," Weed said. "Misinformation from the staff...hours and hours and thousands of dollars wasted...leadership that is out of touch."

Kellstrom disagreed with Weed's characterization, but acknowledged that there is a "fundamental disagreement in approach" regarding water rates. Councilors Weed, Wendy Holzman and Pat Thompson were all opposed to further rate increases at this time, leaving Kellstrom and Asson in the minority.

"My point and David's point - and we can see it in the numbers - is that the increase is vital to maintain the fiscal and operational viability of the fund over the long term," he told The Nugget.

Kellstrom cited the city's annual financial audit, which notes that the ending balance for the water fund was declining, and at $72,000 it was approaching the lower recommended limit of $60,000.

Both Kellstrom and City Manager Eileen Stein acknowledged that some information provided to the council through the process was incorrect or at least misstated, but both dispute the characterization that it was "misinformation."

"Incorrect is a more accurate description - it's not misinformation," Kellstrom said. Staff was not "trying to mislead anyone."

"I think staff has been factual, responsive and truthful with both the council and the TAC," Stein said.

She acknowledged that saying water rates had not increased in recent years was not accurate.

"I probably should have used the term 'utility rates,'" she said. Stein noted that the city decided in 2009 to offset a water rates increase with a corresponding decrease in sewer rates in an effort "to be sensitive to people who are struggling with utility bills."

Kellstrom and Stein acknowledged that legislative changes would indeed allow CIP funding out of reserves, but Kellstrom vehemently disagrees with what he calls "us(ing) our seed corn to pay operating expenses, which I think is a serious problem long-term."

Weed asserted that staff's concerns about the use of chlorine gas at a well site had been debunked by the TAC.

Stein said staff had concerns about safety that the TAC decided in its risk management deliberations was a "risk the city could live with."

"I wouldn't use the word debunked," she said.

Stein said that the water rates question "has been a difficult issue for the council to work through and we're done with it for the time being."

Weed told The Nugget that she felt she had to make a public statement about her concerns. She believes her colleagues on the council knew what to expect from

her.

"We know each other," she said. "This is not the first time I've made strong statements about things that are important to me. I couldn't not make that statement; if I see something that's not being done right and I don't point it out, I'm complicit... I don't think pretending everything's OK makes it OK."

Asked if the public airing by a councilor of perceived problems with council operations means that the working capacity of the council is damaged, Kellstrom said, "I wouldn't call the council broken. We go ahead and move on to other things."

On that there may be agreement. Weed said the council will continue to work on upcoming issues, despite the tensions reflected in her statement.

"Oh yeah," she said. "We've been muddling along for the past two years."