Cheney sewer rates on the way up

Cheney residents will see something happen at the end of April they haven't seen in over nine years - their sewer rates go up.

The City Council approved an ordinance March 11 raising sewer rates $5 for the remainder of 2014 for all users and another $3.25 in 2015, pending a review of the city's wastewater treatment plant flows. The ordinance takes effect 30 days after passage.

The last rate increase was in 2005, from $25.71 to $27.06 for single family residence. At the time the city was paying off its $10 million debt for construction of its wastewater treatment plant as well as enjoying a healthy period of residential growth.

That growth was impacted by the recession of 2007-2009, resulting in the average number of sewer connections dropping from 45 per year to 12 annually from 2008-2013. That led to annual connection fees dropping from $200,000 a year to $55,800.

The city also lost another $200,000 in annual sewer revenue when Wilcox Dairy moved out of town in 2009-2010, but incurred an additional $10.25 million debt with the completion of its treatment plant expansion in 2009. Those losses impacted the annual interest income on reserves, dropping it from approximately $200,000 annually to around $12,000.

City officials elected to hold sewer rates at their 2005 levels, hoping the economy would turn around soon, and used the reserves to pay the debt on the treatment plant's original bill.

"Now we're at a point where we don't have those any longer," Finance Director Cindy Niemeier said.

Niemeier said normally usage rates along with depreciation of the facility would work to stabilize and then replenish the reserves. While depreciation continues to decline, Cheney's rates have not remained enough to keep up with the city's $705,653 annual loan payment for just the original plant construction.

That amount begins to decrease in 2021 until the expansion debt is also paid off by 2029. But without a rate increase, Cheney would enter into a negative "cash at year end" – reserves – amount of $466,239 in 2017, and $1,585,191 by 2019.

"That's what those reserves are for, to get you thru those rainy day times," Niemeier said. "But we must have a plan in place to replace (the funds)."

The new 2014 rate will slow the reserve fund loss for this year from $1,347,380 to $1,091,298, leaving $1,318,459 in the account. At the end of the year, Niemeier and Public Works Director Todd Ableman will take a look at what's happening in the city to determine if it is necessary to implement the $3.25 increase, which if implemented would still keep Cheney's rates among the lowest in Spokane County.

Right now Cheney's treatment plant handles about 1.5 million gallons of sewer water per day, most of it residential. The plant has plenty of capacity, and its process could be modified to accommodate a heavier, industrial flow, Ableman said.

Growth is not a factor in the city's new rate equation, which is why Ableman wants to take a look at flows toward the end of the year. A section of the Golden Hills development was recently replatted to allow for 11-12 lots where a contractor can come in and start building.

"Once those are gone, there's not a lot of buildable lots left," Ableman added.

The city is going to be meeting with the developers of Harvest Bluff this week on the construction impacts of the subdivision. The new development bordered by Betz Road on the south and Murphy Road to the east would provide for more long-term housing growth.

Ableman also said the treatment plant is beginning to receive more industrial strength loads from Eastern Washington University, a result of it being labeled a significant industrial user by the state Department of Ecology in 2010.

"All of these things are kind of variable," Ableman said. "Which is why it's important to review the (sewer system's) structure."

John McCallum can be reached at jmac@cheneyfreepress.com.