Council delays implementation of rates

The city council is holding off on the planned implementation of entirely new water- and sewer-rate plans to allow time to develop better citizen outreach explaining the programs.

The council agreed to the delay in a Thursday evening workshop. At the council meeting that followed, the council also delayed the planned implantation of a new master fee schedule modeled on the Deschutes County system.

This delay was prompted in part by a challenge from Wade Underwood, owner of Three Creeks Brewing Co. When it came time for public comment Underwood asked City Manager Andrew Gorayeb, "Andrew, what is the proposed change in fees going to do to me on my new brewery?"

Gorayeb acknowledged that he did not know and agreed with Underwood that such information should be known in advance.

The delay in implementation of all three plans will allow the city to clearly define and communicate the specific effects of these fee changes on both commercial customers and typical households.

The new rate schedules were developed in part due to requirements to bring the city's enterprises and fee calculations in line with state standards. All revenue-generating enterprises operated by the city (water, sewer, and previously garbage collection) must be run as viable stand-alone "businesses." Losses in an individual fund cannot be subsidized by other city revenue (taxes, fees, etc.).

The city received a letter last month from the U.S. Department of Agriculture noting that the sewer fund is in technical violation of requirements. The city's sewer-rate fee schedule implemented several years ago had the enterprise running at a loss. Rates were lowered by the council at that time in an attempt to help mitigate the effects of the recession on ratepayers.

The enterprise was functionally solvent due to reserve funds, but technically it needs to be brought into compliance.

The city's master fee schedule had two challenges. First, it was found to not be in compliance with state requirements in the way that fees were calculated. The city was using an hourly calculation of the work required to calculate fees. The state requires a flat fee.

The city had also recently restructured the inspection department by hiring Deschutes County to operate the Building Official Services for the city (plan review, permit applications, inspection). This allowed the city to tap into Accela software which allows local contractors to file applications, pay fees, schedule inspections and check on projects they may have going anywhere in the county at city hall. It seemed logical to the council to adopt the county fee schedule at that point.

The state requirements for the city's water system enterprise are identical to those for the sewer system. The enterprise must operate in a stand-alone fashion. The city is considering a "pay for what you use" approach to the fee structure for city water services.

"This is a more transparent ... responsible and equitable approach to water rates," said Gorayeb.

Gorayeb later told The Nugget that he plans to talk with large commercial users directly about any impact a change would have on their accounts.

He forecasts implementation in November or December.