Citing COVID concerns, council reverses on water rate increase

Megan Stewart

Due to concerns about the economic impacts of COVID-19, Sweet Home residents will not see an increase in water rates for the 2020-21 fiscal year, instead maintaining the current base rate of $19.99.

The City Council voted 5-1 on June 23 to rescind a planned increase of the base water rate to $21.70.

Voting in support were Mayor Greg Mahler and councilors Susan Coleman, James Goble, Lisa Gourley and Dave Trask. Councilor Courtney Nash voted no. President Pro Tem Diane Gerson was absent.

The council originally agreed on April 14 to the increase because the city needed water system repairs. During the council’s June 9 meeting, however, City Manager Ray Towry suggested they reconsider the increase, as by then, they had discovered and repaired a massive water leak on the north end of 9th Avenue.

Other less important projects, which would require the fee increase, could be postponed, he said, acknowledging that Public Works Director Greg Springman disagreed with him. Councilors decided then to delay implementing the increase until the June 23 meeting, so they had more time to consider the options.

At the June 23 meeting, Towry reiterated his stance on the increase, saying the council initially raised the base rate to “track down the water loss,” but shortly after “found the silver bullet,” a discovery of a massive water leak earlier in the spring that has saved the city approximately 350,000 gallons a day. He also said they hadn’t yet considered COVID-19’s financial toll on the city at the time they raised the rate.

“One of the council’s goals is to be responsive to the needs of the community,” said Towry. “We thought it would be prudent to take a look again at the water rates.”

He noted staff members might have varying perspectives on the issue, but said that was OK because “we all have jobs to do, and we represent different areas and different thoughts that come from different directions.” He also praised Springman for “being able to have difficult discussions” with him.

Finance Director Brandon Neish discussed the other expenses responsible for the proposed water rate increase, including a backwash device at the water plant that stabilizes the system overall, the veritable flow device that “eliminates the pounding mechanism” to prevent leaks, and a 2-inch water main replacement project on 9th Avenue, estimated to cost $250,000.

With the current rate of $19.99, Neish said the city anticipates collecting $2.3 million, which would put it into a deficit of almost $200,000. The rate increase was intended to make up that difference.

To maintain the current rate but still make up for that $200,000 deficit, Neish proposed that the city postpone replacing the 9th Avenue project for a year, spending $70,000 instead on preparation for that project. To make up for the rest of the $8,000 deficit, he suggested they utilize the remaining balance in the water fund.

Neish warned, however, that even though the plan to maintain the current rate is feasible, “it doesn’t mitigate the potential need down the road.” In other words, while foregoing the increase won’t actively strip money from the water fund balance, Neish said it may force the council to raise the rate even more in future years to meet fiscal requirements.

“We can certainly mitigate and assist residents and business owners right now given the ongoing pandemic, as folks kind of rebound from the Covid-19 situation, and then revisit this in a year when we redo rates again,” said Neish, adding that “it just might need more.”

Trask asked Springman which water projects he considered the most important. Springman said if he had a choice, he considered stabilizing the treatment plant the city’s top priority. He also emphasized the need for the 2-inch water main to be removed.

“So, I realize you want to do them all,” said Trask of the to-do list.

“We can’t,” said Springman.

Malher expressed concerns over freezing the rate, which the council did at $17.90, from 2012 to 2015, saying the action “came back and bit us in the hind end” by forcing them to increase it almost $10 in 2016.

“I don’t really want to get into another big jump again,” Mahler said, describing that as “not a wise move.”

“I was there when that big raise came,” Trask said. “It’s painful, but it’s not something I think we can avoid.”

Coleman said she was in favor of holding off on the rate increase because of COVID-19 and the fact that the massive water leak is no longer a concern.

Goble said he agreed that the council froze the rate at $17.90 for too long, but still voiced support for holding off on the current increase and following Neish’s suggestion to postpone replacing the 2-inch water main on 9th avenue.

“We can always look at this later,” said Goble. “The 9th avenue, I know it needs to get done, but it’s working, it’s holding. If it pops, or anything goes wrong with it, we’re going to transfer money and funds around to fix it anyways.”

Gourley said while they have many “good” projects lined up for the city, “right now our community needs to us to be very conservative with what we’re doing here and I think we need to remove that resolution.”

Nash, who attended the meeting virtually, said that while it’s never “fun” to raise rates, he believed that the increase would provide them with “back-up” should they face “any other major issues,” particularly small leaks “popping up all over the system.”

Raising the rates to $21.70 like initially planned, he said, could save them from having to say, “Oh, man, you know, we should have kept that little bit of raise on the water rates, because now we got another $400,000 project that popped up because we blew another line.”

Nash said they should raise the rate and then re-evaluate their status next year. He agreed with Goble that they should nix the 9th avenue repairs, however, and focus on the other projects.

“Well, you know Mr. Mayor, this kind of reminds me of the marijuana money, for one, and the [police levy]” which the council “decided to keep,” said Trask. “And I have no problem with that, none at all, but we budgeted for that $1.71, so the next time around are we going to be at $4? I don’t know, I don’t know.”

Mahler said Trask’s concern about future rate hikes is why he’s “still on the fence” about the decision, but ultimately agreed with Goble and Coleman that the “COVID situation” takes precedence.

“Well, as you know, I’m about as conservative as anyone on this [council], but I tell ya, this is going to be a tough one,” Trask said.

Coleman pointed out that it’s a good idea they’re still setting aside $70,000 in preparation for the future 2-inch main repairs this year.

“We’ve established that, with the current funds, we could at least get started with the planning and the mapping and prepare in the event of some kind of catastrophic issue on that line,” said Neish, “because that line does have 30-plus patches.”

Trask asked Neish whether it would be possible to bring the resolution back once “the COVID thing gets squared away” and the City is in a better financial situation.

Neish said It would, but that by then they may already be too far into the modified plan to be able to use the new funds for anything other than “stockpiling.”

“I think this is a good opportunity, too, for us to mirror what we did for the Wastewater Plant,” Springman said, referencing the grants and extra funding the city received from the state for the project.

In other action, the council:

– Unanimously approved the updates to the city’s Fleet Policy that the council discussed at the June 9 meeting and postponed until June 23 so they could think about it. Under these new updates, the city can now permit drivers 18 years or old, instead of the previous age limit of 21, which allows it more freedom in recruiting seasonal temporary employees. According to a staff report, other updates include “revised procedures for employees to follow in the event of an accident” and adding a “Daily Driver’s Vehicle Inspection Report.”

– Unanimously voted to adopt the 2020-21 city budget. The total appropriations for the coming fiscal year sits at $29,363,383.

– Held a public hearing as a requirement for the city’s application for a USDA rural development grant, which the council decided to pursue on April 14. The grant will help fund a new K9 patrol vehicle and more protective equipment for police officers,including seven ballistic vest carriers and seven ballistic shields for each patrol vehicle. The public hearing portion was intended to allow the public to voice opinions about the grant. No one from the public chose to comment.

– Unanimously approved resolutions necessary for the city to receive $482,376 in state revenue sharing funds, which the state collects from liquor, cigarette, marijuana, and gasoline sales.

– Unanimously approved a resolution requiring the city to certify that it allows for the use and sales of marijuana inside Sweet Home city limits, so the city will be eligible for $182,783 in state marijuana tax revenue.

– Unanimously approved the resolution to allow a property line adjustment between City Hall and property owned by Daniel D. Smith. Smith, who introduced himself at the beginning of the meeting. Smith uses a driveway that has encroached on city property for over 50 years.

The cty proposed Smith could keep his driveway in exchange for 1,929 square feet of the southern end of his property. The city plans to use that land to construct a sidewalk from the City Hall park area for the Duck Hollow neighborhood to the southeast, as well as combine three lots into one to develop a park in the future.

As required by Oregon law, both properties were appraised and are of equal value. The city and Smith split the cost of the appraisal, but the city is contributing $1,500 for the survey and recording, while Smith is paying $500. Smith still needs to receive agreement from his mortgage-holder to go through with his end of the deal.

“In my opinion, it’s a good deal for the city overall,” Mahler said.

– Unanimously approved the removal of a city easement on private property at 1502 Main, which is hindering redevelopment of that property.

– Unanimously voted to renew an intergovernmental agreement between the City and Oregon Cascades West Council of Governments for technological services.

– Unanimously voted to accept the CARES Act Funding and Grant Agreement from the State of Oregon, which will provide Sweet Home $52,294.43 to cover various costs related to COVID-19.

– Unanimously approved the third and final reading of a city ordinance amendment that would allow people to disconnect from city water and reconnect to their wells. The third and final reading will take place on July 14.

– Unanimously approved an ordinance amending the Official Zoning Map in an area consisting of 8.72 acres, located at 4472 Highway 20, from Commercial Highway (C-2) to Residential High Density.

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