After a year of work by a citizen task force, the Homer City Council on Monday passed a resolution changing the water-sewer rates to what’s largely a commodity based model — everyone pays the same rate for a gallon of water and a gallon of treated sewage.
The new rates take effect Jan. 1.
A new citizen group, Homer Voice for Business, had opposed the rate changes. The group largely objected to what it said was a mixed model and not strictly a commodity system. The Water-Sewer Task Force, the citizen and council member group that came up with the rate changes, pitched it as a cost-causer, cost-payer model. Commercial and residential customers pay the same per-gallon rate for sewage, $14.70 per 1,000 gallons, but users in areas that have a lift station pay a higher rate, $21.80 per 1,000 gallons. Michael Dye, chief executive officer for Land’s End Holdings, had said earlier that if the intent is to have a fair, commodity based system, it should also be commodity only for sewer.
In a public hearing Monday, testimony ran mostly against the rate changes.
Josh Garvey, chief financial officer for Land’s End Holdings, said Homer Voice for Business has tapped into a feeling by many businesses that the council and city government are anti-business. Council member Beau Burgess said he had gotten eight phone calls recently about the rates, and seven of the callers said they would see their rates drop.
“They’re not concerned about saving some dollars. They’re looking at the overall community,” Garvey said.
Many people criticized the high cost of Homer’s water and sewer system and inefficiencies in it.
“The amount the general fund has charged the enterprise fund for administration is very high and I think unwarranted,” said Ken Castner, who served on the task force.
Castner also noted that a third of treated water goes into Kachemak Bay unused.
“It’s not a good thing to throw away a third of the water we treat and produce,” he said.
Paul Hueper reiterated a common criticism: that Homer water is more expensive than other Kenai Peninsula cities.
“We’re losing sight of the big picture here, that we are three times the city of Soldotna,” he said. “We’ve got to find a way to reduce these water costs.”
Adrienne Sweeney, owner of the Driftwood Inn and AJ’s OldTown Steakhouse, pointed out other inefficiencies: that water lines at the fish cleaning station run constantly, that Coast Guard housing has a water line leaking, that manholes leak and that the flow into the sewage treatment plant increases a third in heavy rains.
Homer Voice for Business had proposed revisions to the water and sewer rates. Council member Bryan Zak, who is running for re-election in October, tried to introduce five amendments, but none passed. Some failed for lack of a second and others on a roll call vote. Making the schedule strictly commodity, with no lift station extra charges, failed. Zak also tried to decrease the conservation rate from 6.5 percent to 3 percent.
That rate is the calculated loss in revenue predicted that would come from the rate changes. The per-gallon water rate is the revenue projected to furnish water divided by the number of projected gallons sold. The conservation rate lowers the projected gallons sold by 6.5 percent, thus charging more per gallon.
Council member Beau Burgess, who served on the task force, said the task force tried to be conservative in its usage projections.
“I would encourage us not to be stingy,” he said. “If we overcharge, great — we can reduce that rate in the future.”
“I agree with you we have to be a little conservative,” Zak said. “That 3 percent is on the burden of the business owners, the biggest users.”
Council member Francie Roberts pointed out that the per-gallon water rate is the same and affects everyone the same.
Mayor Beth Wythe agreed. “What Bryan is saying is because they use more, they pay more,” she said. “That is exactly the purpose of a commodity based system.”
One idea proposed by Homer Voice for Business did get some traction: creating a standing commission or task force to review the city’s budget, including the water-sewer budget, on an ongoing basis.
When that idea was proposed at the Committee of the Whole meeting, Wythe said, “I read that and I thought, ‘Oh, that’s what they elected the council to do.’”
Zak proposed the commission idea as an amendment, but Council member Barbara Howard pointed out that because it’s a substantial change to an introduced ordinance it might not be allowable. City attorney Holly Wells advised that creating such a commission be done in a separate ordinance. The amendment died for lack of a second. Zak said he would ask city staff to prepare such an ordinance.
Homer Voice for Business also had proposed using $150,000 of $700,000 in Port and Harbor fees paid by the jack-up rig Endeavour-Spirit of Independence to offset some of the rate changes. Zak proposed that as an amendment, too.
“We thought if they used our sewer system they should pay for it, too,” Garvey said.
Wythe said that $700,000 did pay for sewer use through Port and Harbor fees. That money went to an enterprise fund.
“We do not steal money from an enterprise fund to pay for the water and sewer fund,” she said. “That’s what you would be doing.”
That amendment failed on a 5 to 1 vote, with Zak voting yes.
On the final resolution as amended, the council also voted 5 to 1, with Zak voting no, to approve it. On a vote of immediate reconsideration, the council also voted to add the effective date — a detail lost earlier. Council member David Lewis used that opportunity to make one more change, changing consideration of water-sewer rate changes from every two years to annually. That idea had come from former council member Kevin Hogan in public testimony.
“I think you need to listen to the people until they’re satisfied,” Hogan said. “Take it up as often as needed for the next three years.”
Burgess said the rate model took as assumptions the cost of water and sewer as set by the city. It’s an allocation of costs. The council needs to look at the bigger issues of waste and how to get more users in the system, he said. Burgess said the city should do what it did with natural gas and create a city-wide water and sewer system paid for by equal assessments by lot.
“Let’s do what’s best for our community as a whole,” he said. “What’s best for business as a whole.”
Michael Armstrong can be reached at email@example.com.