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Editorial: City sewer revamp, funding plan deserving of praise

Tue., Nov. 25, 2014

The latest piece of Spokane’s innovative plan to finance the reconstruction of much of the city’s wastewater infrastructure fell into place when $200 million in “green” municipal revenue bonds received a favorable interest rate.

The bonds, to be paid off over 20 years, were bid at 3.08 percent, well below the 4 percent rate the city predicted. As a result, the city will come out $1.8 million ahead and use the savings to finance a $5 conservation credit that will benefit the bottom 20 percent of water users. In addition, multifamily residences will pay $2 less a month on their sewer bills. The Spokane City Council has agreed to the changes.

Overall, sewage rates are set to increase 2.9 percent per year for the next three years. The increase is pegged to the average gain in the Consumer Price Index over the past 25 years. This is the first time the city has set multi-year rates, which provide predictability for citizens and budget writers. A monthly sewer bill for a single-family residence in 2015 goes from $27.27 to $28.06. Those who flush less could qualify for the conservation credit. Pickup for 32-gallon garbage bins increases by 44 cents.

The bond sale is a solution to a difficult problem facing many cities: How to replace outdated wastewater and stormwater systems to meet looming federal pollution deadlines without large spikes in monthly bills. Because the benefits are environmental, the bonds are labeled green. Investors looking to add to their environmental portfolios should be drawn to them.

Spokane is one of the first cities in the country to issue such bonds. Moody’s and Standard & Poor’s issued favorable credit ratings.

A perennial Spokane problem, particularly on the South Side, is stormwater runoff during heavy rain that empties into the Spokane River, carrying with it PCBs and other pollutants. Under the plan, stormwater would be separated from wastewater and diverted from the river. And the city’s sewage plant would add another level of treatment for wastewater. By the end of 2017, raw sewage would no longer reach the river.

By showing this commitment to protecting the river, the city hopes the state will provide another $60 million to help achieve environmental goals. If this project is deemed a success, it could provide the model for other cities.

Unlike water and garbage rates, sewer rates are the same regardless of usage. But the discount for multifamily residences ends the irrational practice of charging each apartment unit the full utility rate. The conservation credit is only available to single-family homes. Both changes are aimed at curbing the reality of low users subsidizing high users.

Rather than complain about meeting pollution standards, the city has worked hard to devise a solution. Keeping rates the same wasn’t realistic. Keeping them low while modernizing the system should be applauded.