The proverbial can-kicking of water and sewer utility rate increases in Woodland hasn’t helped the city with its infrastructure needs, officials said.
At the Woodland City Council meeting on April 17, Mayor Will Finn walked through a presentation to explain how the city got to the point where it needs to increase its water rates by nearly a third over the course of this year.
Problems with the city’s utility rate structure were identified as far back as 2007, Finn said. Woodland lacked the needed fund balances in its water and sewer funds, which can be used for future expansion, maintenance and emergency fixes.
“The term ‘bankrupt’ was used a number of times” during those old discussions, Finn said.
In 2012, the city adopted annual rate increases of 7% for both water and sewer utilities, Finn said.
“There was no date range given,” he said. “It was just 7% every February.”
In 2018, the city identified the annual increase was not based on capital planning needs for the city. It was instead based on rates in surrounding communities, Finn said. That wasn’t feasible, because Woodland’s existing infrastructure and needs are different from other places.
“We were just arbitrarily raising the rates 7% every year with no end in sight,” Finn said.
Following that realization, the city contacted utility rate consulting firm FCS Group to conduct a rate study, which was adopted in December 2020.
“We paid hundreds of thousands of dollars for that plan to come through, for those calculations to be done, to make sure … that things are being taken care of,” Finn said.
The study showed the city’s water fund balance was far below the balance in its sewer fund. Current water funds have a balance of only about $750,000 compared to around $4 million for sewer, Finn said.
In the first few years of the plan, the study showed Woodland needed increases of more than double the 7% rate for water and less than half that rate for sewer annually, according to Finn’s presentation. The water rate increase will eventually taper off to 5.5% annually with the sewer remaining at a 2.6% increase each year.
Since 2020, the city council has delayed some of the planned increases while approving others, “kicking the can down the road” as those hikes move further away from the intended date of implementation, Finn said.
The latest delay came in December, when the council voted to postpone rate increases for water until May and sewer until November.
For this year, water rates will see increases of 31% in two installments in May and November, and a 5.2% sewer increase in November, based on Finn’s presentation.
Those rates will decrease next year, with a water rate increase of 5.5% and a sewer rate increase of 2.6% annually through 2030.
From 2018 to 2022, Woodland spent more than $4.7 million on water projects and more than $1.4 million on sewer projects, according to the presentation. Projects the city has planned for the next several years will total multiple times that, the mayor said.
“Our water program says that we need $17.5 million now to upgrade,” but the current plans for rates will raise only a fraction of that amount, Finn said.
“We’re trying to be reasonable, but we’re also trying to get forward, too,” Finn said.
Councilor DeeAnna Holland said previous reasons to delay the rate increases included the COVID-19 pandemic and subsequent inflation. Holland noted the continued postponement only moved the inevitable further down the line.
“It’s going to suck regardless, if we do it now, if we keep putting it off,” Holland said. “When a majority decides to finally pull the trigger, it’s going to hurt.”
The costs for needed projects are only going to continue to rise, Holland said.
“This stuff has went up millions of dollars since the beginning of this,” Holland said.
One of those projects addresses a leaking water reservoir. Either its repair or replacement is mandated by the state, Woodland Public Works Director Tracy Coleman said.
When she began to work for the city, Coleman said a million-gallon reservoir cost about $2 million. Now that cost is close to $5 million.
“You can move it down the road, but you’re going to have to pay for it some way or another,” Coleman said.
The latest delay in the increases came after numerous council meetings were attended by residents who were not happy with their utility bills. Many of those concerns were directed at Minol, a utility billing company the city contracted out for services this year.
Woodland City Administrator Peter Boyce said issues with Minol are improving. Boyce noted the city is actively following up on complaints.
“It is getting better,” he said.
The city council will decide whether to stick with the 15.5% water rate increase next month.
“It’s not fun to talk about, because we’ve had rooms full of people saying ‘how can you do this to us, we can’t afford it,’ and I understand,” Finn said. “Based on the information that’s given to us, and what we have in the account, it’s what we need to do to get us to the next step and to maintain our system.”
