Along with being the oldest incorporated jurisdiction in the greater Spokane Valley area, the city of Millwood holds the distinction of having its own water and sewer utility.
While water rates in the town of just over 1,700 residents have ebbed and flowed over the years, overage charges have not been amended since 1981. City officials have indicated that scenario could soon change based on dwindling cash reserves and ongoing capital improvement costs.
As work progressed on Millwood’s 2012 budget last December, City Clerk Tom Richardson said an independent study of the city’s water department – which includes a review of costs, capital facilities and efficiencies – “would likely result in a rate increase.”
At Monday night’s City Council meeting, Millwood Mayor Dan Mork and the governing board heard a synopsis of the water study from Andy O’Neill of the Rural Community Assistance Corp., a Spokane-based nonprofit group that provides research support and technical assistance to towns and cities.
O’Neill began his presentation by pointing out that while the city charges an annual base rate of $17.35, a considerable number of customers do not utilize the established level of 4,000 cubic feet – or 29,920 gallons of water. The study showed that 30 percent of residents and 71 percent of businesses fall short of the yearly usage on average.
Keeping the base rate at $17.35 and changing the corresponding cubic feet to 2,000 – or 14,960 gallons – would generate just under $7,000 for the city, O’Neill said. The change would still leave 17 percent of citizens and 57 percent of businesses below the revised level.
In addressing the commodity rate – the amount charged to water customers who exceed base usage – O’Neill said the city’s fees of 20 cents per 100 cubic feet (748 gallons) for residents and 14 cents for commercial sites was a bargain.
“That’s a lot of gallons for 20 cents,” he said.
Millwood did raise the annual water base rate by 18 percent – from $14.70 to $17.35 – at the end of 2010. It was the first increase in utility rates since the mid-1990s. The city has mentioned the possibility of another 6-percent hike that would move the rate to $18.39, although O’Neill pointed out that, with a 3-percent level of adjusted inflation, the rate would, in reality, only amount to 3 percent. The resulting impact would leave the city with a shortfall of over $50,000 in revenues versus expenditures for 2013, he said.
To stabilize the water budget, O’Neill recommended that the city look at a $2 annual increase to the base rate, beginning in 2013. The shift would mean a $19.35 charge in 2013, $21.35 in 2014 and $23.35 in 2015, at which time the rates would be re-evaluated.
On the commodity side, O’Neill advised a rate hike in the range of 25 cents each year in for residents, setting the 2013 charge at 50 cents. Businesses would also pay more for use beyond the base amount, although the 35-cent fee in 2013 would keep pace with the city’s history of charging around 30 percent less to commercial sites.
The commodity rate would reach a ceiling of $1 for households and 70 cents for businesses in 2015.
Though no decision was made on Monday night, Mork commended O’Neill for his “very good work” and called the findings of the study “very interesting.”
O’Neill said after his presentation that he was “not there to tell the city what their rates should be,” but added that the current rate structure would mean a steady depletion of resources.
O’Neill emphasized that any future change in rates should include a dedicated effort by the city “to educate and inform customers.”
As for the city’s timeline, Richardson said any rate alteration would “require some discussion” and be based on the utility’s list of capital priorities and requirements. He added that if a decision is to be made, it would likely be on the council docket before the irrigation season this spring.