05/23/2005 - Regular - MinutesPRESENT:
KIM E. ABEL, MAYOR
COUNCILMEMBERS:
John Clauson
Todd Cramer
City of Port Orchard
Council Meeting Minutes
Regular Meeting of May 23, 2005
Robert Geiger, Mayor Protem
Rita Diienno
Carolyn Powers
Ron Rider
Rick Wyatt
ALSO PRESENT: Treasurer Tompkins, Public Works Director Abed, Planning Director
Long-Woods, City Clerk Etgen, Police Chief Townsend, and City Attorney Combs.
6:30 P.M. CALL TO ORDER
Ty Moore led the audience and Council in the Pledge of Allegiance.
APPROVAL OF AGENDA
No changes were made to the agenda.
AUDIENCE COMMENTS FOR ITEMS NOT LISTED ON AGENDA
Patrick Lucas, citizen, stated he felt there had not been enough detail in previous
minutes regarding his expression of safety violations about the legal width and
turnaround on his street for emergency vehicles, and read his previous comments to
Council. Mr. Lucas provided as written documentation: page 39 and 40 from the 2003
International Fire Code; a page beginning with Section 503.2.4 of the 2003
International Fire Code -City of Port Orchard Amendments; and page five of a Kitsap
County Fire Prevention Bureau manual. Public Works Director Abed will discuss the
issue with Mr. Lucas and bring the matter to the Street Committee if necessary.
Fred Olin, citizen, thanked Council for their decision to correspond with the Washington
State Department of Fish and Wildlife about the decision to remove the parrots from
the cell tower. He updated Council on his efforts to allow the birds to live freely.
PUBLIC HEARING -Sewer Rate Increase
Mayor Abel opened the public hearing at 6:40 p.m. Public Works Director Abed
reported the following assumptions were being used by staff in making the sewer rate
increase proposal:
• The figures are based on a $9.00 per month increase;
Minutes of May 23, 2005
Page 2 of 11
• The Equivalent Residential Unit (ERU) is one per single family residence;
• There is a 100 ERU increase per year with 25 percent in McCormick Woods,
outside the City limits;
• If Council acts on the rate increase tonight, there will only be six months worth
of revenue collected;
• A three (3) percent growth rate factor is used for the following years' data.
Mr. Abed reported on a projected three years' worth of data, stating he had seven years
forecasting if anyone in the public wished to review it. The following table was
presented as a graphic:
Mr. Abed stated operating expenses or payments to the plant in 2005 for treatment of
effluent were over $939,000. By 2007 operating expenses are expected to be over
$996,000. All other expenditures other than the operations and maintenance such as
the collection of effluent and lift stations along with some plant costs for labor and
equipment are made by payment from the City's sewer operating fund. Currently in
2005 those expenditures are expected to be $752,986 and escalate to $878,348 in
2007.
Mr. Abed noted that revenues generated by the existing rate structure will be $1.45
million dollars to $1.5 million dollars with a shortfall in 2005 of over $241,000. In 2007
the deficit would be up to $336,000. He stressed State law does not allow the City to
run a deficit budget in any fund -each fund must have the revenues to cover
expenditures.
Mr. Abed stated the proposed increase of $9 per month for sewer rates would only raise
$249,000, leaving less than $7,000 at the end of the year. 2006 would bring in a little
over $510,000 over expenditures, and 2007 would bring in a little over $522,396 over
expenditures. Mr. Abed reported there are always unforeseen emergency expenditures
that cannot be predicted, and the assumption of adding 100 ERU's each year is
conservative, but still may not pan out. It is important, Mr. Abed said, to be
conservative and ensure there is money in the fund to deal with emergencies and
unforeseen situations in case the predicted additional ERU's do not pan out.
Mr. Abed reported the increase for City residents would mean a $9 per month, or $18
bimonthly change in sewer bills of $54 to $72. Residents outside the City limits who
currently pay $81 would see an increase of $27 for two months (with a multiplier of 1.5)
for a new rate of $108 for two months.
Minutes of May 23, 2005
Page 3 of 11
Mr. Abed presented a graph showing the City's proposed rates compared to other
jurisdictions based on an Association of Cities (AWC) rate study performed recently. He
reported the low average is roughly $32 to $34 dollars per month inside the City, and
roughly $45 outside the City. Mr. Abed noted that the City's new monthly rate would be
approximately $36 in the City and $54 outside the City. Some cities, Mr. Abed reported,
have high rates of $65 per month inside the City and $80 per month outside the City.
He noted the City of Port Orchard is above the average in the rate increase, but below
the high, and acceptable compared to other cities.
Mr. Abed stated the sewer connection fee increase proposal was based on the City's
total asset value in the plant of a calculated $13.5 million dollars. The total number of
City ERU's is currently 4,350. If the assets are divided by the ERU's, each contribution
for the system amounts to $3,103. The next component, Mr. Abed reported, is the
plant itself -the total original plant costs plus upgrades. The second phase of the
treatment plant expansion will provide advanced treatment allowing the City to be in
compliance with the Department of Ecology's requirements for effluent. The actual
original plant cost was $10.7 million dollars, and the upgrade is expected to be $19
million dollars for a total of $29.7 million dollars. Mr. Abed reported he has a
breakdown available for public review if requested.
Mr. Abed noted that the City and Karcher Creek Sewer District's total ERU's are 9,195.
The total plant costs, including upgrades, divided by the 9,195 ERU's comes to $3,230.
Added to the $3,103, the maximum connection fee that could be charged is $6,333. To
offset costs, based on staff and committee evaluations, the recommendation is for a
$6,000 General Facility Charge, or sewer connection fee.
The connection fee comparison with other jurisdictions shows that the City of Bremerton
charges $7,666 per ERU for a General Facilities Charge. Karcher Creek Sewer District
charges roughly $5,222, and Kingston charges $6,500 per ERU, which is not far from
the proposed fee.
The General Facilities Charge would be collected at the same time the homeowner
obtains the Building Permit for new construction. If an existing project were not already
connected, it would be paid prior to the time it is connected to the sewer.
Mr. Abed reported a public meeting regarding the proposed sewer rate increases had
been held on May 11, 2005. If this public hearing results in the approval of the rate
increases by Council, it is anticipated the new rates would take effect on July 1, 2005.
In summary, Mr. Abed stated he understood this was a hefty increase and that some
people have concerns about the increase, but the bottom line is the City has to balance
the expenditures with the appropriate revenues, and not run a deficit budget.
The Mayor invited public testimony at this time.
Minutes of May 23, 2005
Page 4 of 11
Patrick Lucas, Port Orchard resident, stated he was interested in the fact that it appears
McCormick Woods residents are part of the system because essentially each home had
its own septic system and the community drain field failed, so the City took on the
responsibility. He noted all septic tanks are pumped on a five-year rotation, which
increased the City's personnel and utility service expenses. Mr. Lucas asked why City
residents have to accept the responsibility. He stated if the individuals who bought the
homes did not check out the situation ahead of time that City residents should not have
to take it on.
Mr. Lucas added that he felt Council was in the position of asking citizens to once again
take on responsibilities from mistakes made in the past and wondered about the
decisions Council made originally to "stick" residents with this increase in costs. He
noted Council Member Clauson had talked of the increase in operation costs due to
expansion and the sewer mains being "maxed out" and that this increase would help
future funding for growth and asked why this was not considered and again asked how
citizens are now stuck with the increase.
Ron Rice asked why two figures for the original costs and the current value of the plant
were added together to come to the $3000 connection fee. He stated he has lived in
the Port Orchard area for 30 to 40 years and has commuted across the Sound and that
the water today is clearer than in times when there was no treatment. Mr. Rice stated
he is in favor of good treatment for sewage but that he has a problem with the way the
fees are administered. He said he has a small business on Sedgewick and Sidney for an
espresso and pizza stand and truck rental, and after hooking up to sewer noted the
ways the bimonthly figures are computed. Mr. Rice reported he put a metering system
on the water and all the water that comes through the meter goes into the sewer and
after reviewing the figures he found the total water used, with some hoses on the
ground but assuming it all went into the sewer that the business uses 2.5 ERU's. His
bimonthly bill should be $130 to $135 a month, and he has been paying $284 for two
months instead. The espresso stand is considered one ERU and Seabeck Pizza has eight
chairs inside and four outside and is considered three ERU's like a total service
restaurant. Because the restroom inside the barn is closed and they didn't want people
walking through the storage, there is a separate restroom and sink in a building and is
charged a total of over 5 ERU's. A third increase of 33% would be $370 every two
months instead of $284 for two small businesses.
Mr. Rice stated the trucking business is manned by family members who never use the
public restroom and there is no water usage and he questioned how they could justify
administering a $6000 hookup fee that would be $6,000 times 2.5 ERU's in the range of
$15,000 or five times $6000 at $30,000. He stated he didn't think small businesses
could afford that and asked for review of the administration of the sewer fees. He
stated he was not opposed to the increase and wants to pay for what is needed, but has
a problem with the way it is administered.
Minutes of May 23, 2005
Page 5 of 11
Ron Underwood of McCormick Woods stated McCormick Woods residents pay a 50
percent surcharge and pay for the pump-out every five years. He noted they are not 20
percent of the households in the City of Port Orchard but pay 30 percent of the fees in
the sewer district. He questioned how many residents use the sewer system outside the
City of Port Orchard and asked who else outside the City pays the 50 percent surcharge
they do.
Ann Johnson, Port Orchard, stated her property on Tremont Street was assessed and
charged around $2,000 because of the sewers and she is still on septic. She stated she
was told at the time that this assessment would benefit her property and she questioned
how it did so. Ms. Johnson stated she was not approached when the sewer went
through to hook up and now she assumes it would be a tremendous amount of money
to do so. She wondered why she was never asked to hook up to the system when so
many people outside the City have been. Ms. Johnson asked if the assessment charge
would be deducted from the hookup fee.
Larry Westfall, McCormick Woods, questioned how many people in the City of Port
Orchard could afford a 33.3 percent increase in their sewer rates, stating the McCormick
Woods residents would not have a problem with it. He stated McCormick Woods
residents pay for the privilege of being hooked up to the sewer system in Port Orchard
and pay 1.5 times what City residents pay. Mr. Westfall stated he felt it was taxation
without representation since he could not vote for any of the Council Members.
Dick Davis, McCormick Woods, asked what had been done in terms of cost cutting
measures and what is being done to streamline the organization to improve the
performance of the organization to keep cost increases to a minimum.
Bryan Petro, Port Orchard, stated he wanted the City to annex and that the City should
annex Gorst to get the car dealers tax revenues for costs to go down and be spread out
for everyone. He reported he remembers Mr. Huntington telling the Chamber of
Commerce when the new sewer system was proposed that current rates would be held
for 30 years. Mr. Petro asked why it is now running into a deficit.
Larry Westfall, McCormick Woods, stated the other gentleman had talked about
annexation of McCormick Woods, and he asked for a place on the Board.
Patrick Lucas asked why it is important that McCormick Woods is involved in the City
and wondered if this increase is a result of their intent to build more houses.
Council directed three letters from citizens received prior to this hearing be included in
the minutes. They are as follows:
• Steve Cahill of Port Orchard sent correspondence received by City Hall on
May 23, 2005 regarding the proposed sewer rate increase. Mr. Cahill noted
that a rate increase in 2003 had been 17 percent, and this proposed increase
Minutes of May 23, 2005
Page 6 of 11
would be 33 percent. He stated the Consumer Price Index (CPI) for 2002
through 2004 shows 4.5 percent growth, and that his conclusion from the
disparity is that "either rate calculation is not well understood by the City or
costs are totally out of control." He requested the City determine which is
the case before going forward with a rate increase. Mr. Cahill stated two
principles should be adhered to for consideration of a rate increase. "1)
Operating cost increases of the existing system justify and should be
supported by rate increases to the existing ratepayers. Such increases can
be forecast with reasonable accuracy and should closely track the CPI. 2)
Capital costs for expansion of the system should be paid for by new
customers through connection fees and the new billing revenues. The
existing base of ratepayers should not be required to pay for expansion of
the system."
Mr. Cahill went on to say when the treatment plant was first built an LID was
formed and users were charged an assessment fee, which seemed to him a
reasonable approach. He questioned why not the same now, instead of
"demanding that existing ratepayers front the money to build a bigger plant
for the benefit of future customers," and "let the future customers pay for it."
• Charles E. Hall, Port Orchard, sent an e-mail received at City Hall on May 23,
2005 stating "The sewer rate increase of 33 1/3% that you propose is
outrageous. Having just found out .... I'm vigorously opposed."
• Robert R. Moffitt, Port Orchard, sent an e-mail received at City Hall on May
23, 2005 stating he is adamantly against the proposed 25% sewer rate
increase that follows an already high 15% increase from 2003. He noted the
CPI for the US was 2.3% in 2003, minus .1% in 2004 and about 3% this
year, and that the proposed increase was not in line with inflation.
Mr. Moffitt expressed his belief that future revenues for future growth should
be borne by future customers with increased hookup fees, not existing
customers. He stated current customers should be given increases in-line
with currently the current 3% CPI.
Mr. Moffitt stated he was disappointed with the City's public notice process,
being made only two days before the public hearing. He added there was no
room or building number given for attending the meeting on the notice. He
states, "I expect a response to this e-mail and its formal inclusion in the
decision process."
The public hearing was closed to further public testimony at 7:16 p.m.
Minutes of May 23, 2005
Page 7 of 11
CONSENT AGENDA
Councilmember Diienno moved and Councilmember Wyatt seconded a motion
approving the Consent Agenda. Upon vote, motion carried unanimously.
A. Approval of Minutes of the May 9, 2005 City Council Meeting
B. Approval of Claim Warrants Nos. 43378-43452 in the amount of $90,875.84
C. Approval of Public Event Applications
D. Authorization for Mayor to Sign Assignment of Lease for Property Adjacent to Hi Joy
Bowl
E. Authorization for Mayor to Sign ILA with Kitsap County for Permitting Application
Computing Services
BUSINESS ITEMS
Passage of Ordinance No. 010-05 -Water and Sewer Rates
Council Member Geiger moved and Council Member Rider seconded a motion
to adopt Ordinance No. 010-05 which will raise the City sewer rates by $9
monthly in the City and $13.50 monthly outside the City in addition to
increasing the sewer General Facility Charge to $6,000 per ERU.
Council Member Geiger stated this action had been referred to as taxation, and that he
is opposed to taxation. He noted that the City has purchased a ultra-modern method of
treating sewage and pure effluent, exceeding State standards and that it will keep the
City above standard for years to come.
Council Member Geiger stated Karcher Creek Sewer District made a substantial increase
in their rates at the time the plant was developed in order to cover the improvements.
He reported the District keeps a separate set of books and that because of law the City
is the lead agency for the borrowing of funds. Previously the City was the lead agency
in the formation of the LID, and that if it were allowed now, the addition could be paid
for differently. Council Member Geiger noted that the previous LID was the biggest one
to date in the State of Washington and was very successful resulting in rate savings in
interest and capital funding.
Council Member Geiger went on to state that the proposed fee increase is no different
than when an energy or gas company raises fees to collect revenues to cover their
expenses. He noted individual discrepancies could be visited and reviewed, and that it
is imperative to have a clean-running sewer treatment facility in order to avoid
environmental contamination and resultant fines. Council Member Geiger noted the
City is legally barred from consideration of annexation of McCormick Woods at this time.
Council Member Rider stated no one looks forward to increasing rates for residents, and
gave the analogy that if a bus became too small for riders that the cost of getting a
Minutes of May 23, 2005
Page 8 of 11
new bus would be shared by all, not just the new people getting on the bus. He stated
Council is legally prohibited from charging similar ratepayers different rates.
City Attorney Combs verified that ratepayers in the same "class" have to be charged the
same rate. People inside the City limits have to be charged the same rate, as people
outside the City limits have to be charged the same rate.
Council Member Rider emphasized that the connection fee will only be for new
connections, not existing ones.
Council Member Clauson reported that McCormick Woods put in a collection system
through a ULID and are paying for the system and impact to the treatment plant as well
as for the extra duties the City performs, including a 50 percent surcharge for pumping
of septic tanks. The increases are primarily due to the expansion and additional
operating costs that allows for growth. Council Member Clauson advised that State law
dictates expansion of sewer treatment plants before they reach their maximum
capacity.
Council Member Clauson reported that when the construction is finished on the plant
there would be an improvement in the quality of sludge produced. Currently, he stated,
the City and Karcher Creek pay to have it trucked away at a high cost. When finished,
the effluent could be used locally for fertilizer, and hopefully it can be sold to cut
operating costs.
Council Member Clauson questioned why Ms. Johnson had been assessed and not
hooked up to sewer. City Attorney Combs stated she would receive credit for the
amount she already paid when connecting to the system. Council Member Diienno
asked about the possibility of adding to the value of the $2000 because it had been
collected so long ago and would be "worth" more in today's values, but City Attorney
Combs stated it would appear in that case that the City had reserved a "space" at the
treatment plant all this time for the customer and yet the customer had not paid for the
operation or maintenance during that time period.
Council Member Geiger expressed his understanding that there had been no statements
made about reserving or holding spots for LID payers at the time the LID was formed.
He added the Port Orchard Boulevard sewer main was planned before McCormick
Woods was added to the system and had been a benefit to everyone. Council Member
Geiger stated it was his understanding that individuals paying the original assessment
fee would pay a connection fee at a later date in lieu of the LID. Treasurer Tompkins
noted that the credit would be given for any payment of the ULID or LID.
City Attorney Combs noted that the changes to the water assessments are bringing the
rates up to date with a Cost of Living Adjustment (COLA), and that Council will probably
have to look at the water connection fee in the future.
Minutes of May 23, 2005
Page 9 of 11
Responding to a question by Council Member Cramer, Treasurer Tompkins reported she
would have to check records, but she believed there are some other "outside City limit"
ratepayers, Sidney Glen School being one.
Council Member Cramer stated there are unknown cost factors associated with the
plant expansion, and he would rather come back to ratepayers saying rates could be
rolled back rather than having to make another increase in a year.
There was some discussion on the efforts to keep costs down in operations and Phase
II of the plant.
Upon vote, motion carried unanimously.
Approval of an All-Mail Primarv Election
Council Member Clauson moved and Council Member Diienno seconded a
motion to approve an all-mail primary for the 2005 election. Upon vote,
motion carried unanimously.
Authorization for Mayor to Sign Change Order No. 5 with Pease & Sons for
theJWWTF
Public Works Director Abed reported this change order is the result of on-going work
with the contractor. A credit of $297,000 will be reflected in the next change order.
Council Member Rider moved and Council Member Diienno seconded a
motion to authorize the Mayor to sign Change Order No. 5 with Pease & Sons
for the Joint Waste Water Treatment Facility. Upon vote, motion carried
unanimously.
Establishing a Policy Regarding the Use of City Credit Cards to Transact
Official City Business
City Clerk Etgen reported on the request to establish a policy authorizing the use of
credit cards by Department Heads. Initially only three cards will be established. Use
limitations are spelled out in the policy.
Council Member Powers moved and Council Member Clauson seconded a
motion to establish Administrative Policy No. 100-019 regarding the use of
City credit cards for the transaction of City business.
Answering a question by Council Member Powers, Treasurer Tompkins reported that
sales tax not charged directly by vendors is paid to the State on a monthly basis, and
that the use of credit cards would not affect the continuation of that policy.
Minutes of May 23, 2005
Page 10 of 11
Upon vote/ motion carried unanimously.
Study Session -Joint Meeting with the City of Bremerton -Discussion
Council discussed potential agenda items for a joint meeting with the Bremerton City
Council, possibly to be held on June 30th.
COUNCIL/MAYOR & STAFF REPORT
Planning Director Long-Woods reported she has received notification that Karcher Creek
Sewer District is considering annexing two large areas of land; Council has until June 3
to submit comments on the proposed annexations.
Public Works Director Abed reported he will be taking guard duty leave from June 6th
through the 20th. He is proceeding with negotiating a contract for the Tremont Street
widening project, and has conducted interviews for the Building Inspector. He stated he
has not been successful at finding an Interim Assistant City Engineer.
Council Member Rider reported Berger/ABAM Engineers, Inc. appeared to be the best
firm for the design phase work for the Tremont Street widening project.
Council Member Rider moved and Council Member Diienno seconded a
motion to approve Berger 1 ABAM Engineers, Inc. as the design engineers for
the Tremont Street widening project. Upon vote/ motion carried
unanimously.
City Clerk Etgen updated Council on the negotiations with Brem-Air for the garbage
contract.
Mayor Abel reported she would like to set up a joint meeting with the Kitsap County
Commissioners to discuss the County Campus Overlay District on July 6, 2005 at 6:30
p.m.
Council Member Powers reported the Public Property Committee had met and she
received Council consensus to proceed with talking to Mr. Whitney about bringing the
display case with the ship model in it back to City Hall.
Council Member Powers added the Committee is considering changes in the fee
structure for use of the Active Club building, and storage facilities.
Public Works Director Abed announced a draft agreement was sent to owners of land
near KFC who have indicated they are interested in donating property to the City. There
was brief discussion regarding the donation of a new backstop in a park, which will wait
for further committee discussion.
Minutes of May 23, 2005
Page 11 of 11
Council Member Powers reported the Public Property Committee had also talked about
setting up a citizens committee to review recommendations for public art in the form of
sculptures and murals.
Council Member Geiger stated one of the residents of Bay Street had asked about a
residential parking permit for Bay Street; Council Member Dilenno said she believed the
recommendation to changes to the parking ordinance had been side-tracked because of
earlier discussions about parking.
Council Member Dilenno reported the Street Committee is meeting on May 26th with
downtown building and business owners to discuss the marquee.
Council Member Powers will fill in for Council Members Wyatt and Dilenno at the next
Finance Committee meeting and Utility Committee meeting.
EXECUTIVE SESSION
Council recessed at 8:40 p.m. and then went into Executive Session at 8:45 p.m. to
discuss pending litigation. Council came out of Executive Session at 9:21 p.m. and took
no action.
The following committee meetings were set during the Council meeting:
Finance, Insurance & Negotiations-June 2, 2005, 7:30a.m. -City Hall
Utility Committee-June 3, 2005, 7:30 a.m. -City Hall
Streets, Alleys & Storm Water Committee-May 26, 2005, 6:30 a.m. -City Hall
Public Property Committee-June 15, 2005, 7:30 a.m. -JA Michaels
Upcoming Workshops/Special Meetings:
June 2, 2005-6:30 p.m. -Budget Workshop
June 9, 2005-3:00 p.m.-Tour of Other Cities-Small Lot Developments
June 11, 2005 -12:00 p.m. -Tour of Other Cities-Small Lot Developments
June 30, 2005-6:30p.m.-Joint Meeting with City of Bremerton
July 6, 2005-6:30 p.m.-Joint Meeting with County re CCOD-place to be determined
ADJOURNMENT
At 9:21 p.m. Mayor Abel adjourned the meeting.
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