Residents see utility rate increases as city searches for sustainable funding

With an aging utility infrastructure and some pipes approaching 100 years old, Puyallup city officials are attempting to work proactively to find sustainable funding to fix the city’s infrastructure before it fails.

But some residents might not like route the city is taking to get there.

Puyallup is continuing to raise utility rates for water, sewer and stormwater to fund projects to eventually replace the aging infrastructure.

“We found that we did not have enough money in the bank to do essential, basic repairs,” said the city’s deputy mayor, John Palmer. “You just can’t let that go, it will catch up with us. It’s better to replace it before it breaks.”

Puyallup’s wastewater and stormwater collection systems are composed of approximately 190 miles of pipe, 6,500 manholes, 10,000 lateral connections, 15,000 acres of drainage and 32 detention ponds.

To increase the money in the bank, as Palmer put it, the city is continuing to raise utility rates each year based on the Construction Cost Index, an index the city uses similar to a cost of living index, but that uses the cost of pipe, asphalt, concrete and other construction materials — similar to groceries and gas, used to calculate the typical cost of living — to determine how much residents should pay on their bi-monthly utility bills.

Prior to the Great Recession, rates for water, sewer and stormwater increased roughly 3 to 4 percent annually on average to ensure there was enough money to fund projects, Palmer said.

But freezing rates for four years during the recession put the city in a financial hole, he added.

“Starting in 2012, after the recession, we reinstated overall rate increases,” Palmer said. “(The Puyallup City Council) decided it was better to phase rate increases than to implement a 20-percent rate increase.”

Starting Feb. 1, utility rates went up 6.4 percent for water, 2.4 percent for sewer, 2.4 percent for stormwater, adding up to an overall rate increase of 3.3 percent. In 2015, water went up 6.7 percent and sewer and storm each rose 2.7 percent, with an overall increase of 3.6 percent. Landfill fees for solid waste picked up at the curb have stayed constant over the last five years, the last increase coming in 2010.

While rates are continuing to rise, the revenue available from water, sewer and stormwater increases are still not enough funding accomplish all or even most of the projects listed on the capital projects list. Those projects typically include seismic retrofits, tank recoatings, water main replacements, lift and pump stations, sewer lines and more.

And when projects go unfunded, they are pushed into future years, growing each subsequent year’s deficit, Palmer said.

In 2016, the total cost of capital projects matches the cost in the capital fund budget. However, in 2017 the city’s projected cost of capital needs projects won’t match the available capital funding for street, water, wastewater and storm projects.

While an aging utility infrastructure is not a Puyallup-specific problem, it still is important to establish funding for high priority projects, said Public Works Director Rob Andreotti.

“(Utility rate increases) is a start for funding,” Andreotti said. “We have to pick the highest priority projects and fund those first.”

This story was originally published February 11, 2016 at 12:44 PM with the headline "Residents see utility rate increases as city searches for sustainable funding."