Public Works
TITLE: Public Hearing: Proposed Ordinance for Amended Sewer Connection Charges
DEPARTMENT CONTACT: Public Works Director Bill Franz
Staff intended to include updated Sewer Connection Charges with the implementation of the Utility Rate Study that was adopted by the Council in September of 2016 for the period of 2017-22.  We notified the Council prior to adoption that we needed additional time to complete the work necessary to implement the connection charges. That work was completed in 2017.
Conduct a Public Hearing and take public testimony related to the ordinance attached to a separate action item under "Other Business" which provides for updated sewer connection charges for all new connections to the City’s sewers.

The current system of Sanitary Sewer Connection Charges (LMC 14.50) dates back to the original construction and establishment of the City’s sewers (ca. 1960-1990). The expenditures that the Utility made through a series of Local Improvement Districts (LIDs) that were the basis of those charges have long been paid off and the development patterns that the sewers served have been largely completed.  The existing connection charges are extremely low, some as little as $50. As the sewer system from that era was adequate to handle the steady growth of the past decades, the connection charges were not updated and overall utility rates were utilized to meet revenue needs.  As the City has entered a new era of growth and expansion there has been the need for upsizing of the sewer system to accommodate that growth. As an example, in the City’s Regional Growth Area (City Center and Mall area) Sanitary Sewer Lift Stations No. 4, 8, and 10 and the piping between them need to be upgraded and upsized at a cost in excess of $16 million.  These projects are needed in part to meet the flows generated by projected new growth consistent with our updated Comprehensive Plans. Similar projects are needed throughout the City including upgrades at the City’s Wastewater Treatment Plant. The cost of providing the portions of the sewer system needed for growth is valued at over $100 million.

The City contracted the FCS Group to develop the proposed system of connection charges as a part of the 2016 Utility Rate Analysis. The new system of charges calculates the overall value of growth capacity in our existing system as well as the cost of needed growth capacity improvements over the next 20 years and attributes them on a unit basis to new expected growth. The system uses an Equivalent Residential Unit (ERU) method, where an ERU discharges 125 gallons per day and is charged a connection fee of $2,480.  Other non-residential uses are then assessed an equivalent number of ERUs based on a calculation of their flow rates.

Staff has also researched our regional neighbor’s sewer connection charges. What Lynnwood proposes falls near the very bottom of the amounts. Ours are lower in the range because the proposal does not also include the past costs of building the entire existing system. The administration weighed that option which can legally be included, but instead adopted a "growth pays for growth" model that balanced the needs of revenue for upcoming capital projects with affordability to our development community.

Alderwood W/WW District (KCDNR)

 $  1,700

Lynnwood (Proposed)

 $  2,480


 $ 2,855


 $ 3,106

Silverlake W/S District (Alderwood Basin)

 $ 3,890

Mountlake Terrace

 $ 4,080


 $ 4,417

Mukilteo W/WW District Eastside


Silverlake W/S District (Everett Basin)


Alderwood W/WW District (S. Everett Basin)


Mukilteo W/WW District Westside






Staff has also looked at a few theoretical commercial developments based on average sewer flows (from actual metered water usage for similar businesses) and calculated the Sewer Connection Charge per the proposed ordinance, as follows:

Coffee shop with small seating area (8 ERU):                        $18,000
Large restaurant with large seating area (71 ERU)                 $175,000
300 Unit multi-family apartments (0.75 X 300 = 225 ERU)      $558,000

At the February 5th Work Session a question was raised concerning offering a reduced sewer connection charge for affordable housing projects. The FCS Group researched the issue and raised procedural issues that could require potentially significant changes to the rate structure. In addition, the administration discussed this issue and have fundamental concerns with providing an incentive for the capital portion of utility fees and charges.  The City does offer a suite of rate reductions for lower income customers which have been steadily expanded.  Staff recommends that the ordinance be approved as is and if this issue is still of interest in the future it can be discussed during the next rate analysis in 2019.

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