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Spokane, Washington  Est. May 19, 1883
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Millwood sewer bond scheduled to end in 2015

Valerie Putnam vrputnam@yahoo.com

Millwood residents may see a slight decrease in their sewer bill next year, while large commercial customers may see a significant increase.

The anticipated decrease for residents is the result of the city’s $1.73 million Water and Sewer Revenue Bond, ending next year. The bond funded sewer construction in the mid-1990s.

The current rate structure charges residential and commerical customers $35.40 a month for up to 800 cubic feet of water. Users are charged $1.44 per 100 cubic feet above the base. Residential customers average about 550 cubic feet per month.

Necia Maiani of the engineering firm Welch, Comer and Associates said the city’s current rate structure is consistent with Spokane County.

“They treat the resident and commercial base customers the same,” Maiani said. “They all pay the same amount for up to 800 cubic feet of water. Then over that volume they’re paying a volume charge.”

Maiani proposed different rate options for the council to consider implementing next year during a workshop last week. Each rate is based on a different percentage of depreciation value. The depreciation value is a percentage of funds collected as a reserve to repair and replace parts as they wear out.

“Systems should make provisions for funding depreciation,” Maiani said. “Once your system has worn out you have money in the bank to do replacements.”

Expenses covered by the sewer rates include operation and maintenance, Spokane County treatment cost, depreciation funding and capital improvements.

In her presentation, she outlined other goals such as establishing a 12.5 percent operating reserve, as well as emergency reserves to cover replacing the lift station and a year’s payment to the county for treatment costs.

To meet these goals, Maiani proposed the monthly base rate at $12.53. The base rate is calculated using the value of the city’s fixed and variable costs, along with its short lived assets, totaling $139,350. That total of the three is then divided by the 927 users in the city.

To cover the county’s estimated $132,000 annual treatment cost, Maiani said each user would be charged an additional $14.43.

Maiani said the estimated net value of the city’s system is $5.14 million, with the system depreciating at $98,000 annually.

Maiani recommends the city also consider adding a percentage for depreciation funding to the base rate.

“We always recommend you fund as much as you can; 100 percent is ideal but that is not always ideal for the customer,” Maiani said.

She further recommended the council consider a rate funding 50 or 75 percent of the depreciation value. This would equate to a monthly charge of $31.37 per user, a 12 percent savings from current rates, or $33.57 resulting in a 5 percent savings for residential and commercial customers using 800 cubic feet of water or less a month. Implementing these rates would provide the city an estimated revenue of $348,541 allocating 50 percent depreciation funding or $373,055 for 75 percent.

Commercial customers using over the 800 cubic feet of water would see an increase in the volume charge of $2.14 for every 100 cubic feet over the 800. Maiani said that volume charge is consistent with what the county is charging the city.

Increasing the volume charge would potentially impact 15 commercial customers in the city; three of the 15 would see a $50 to $100 monthly increase.

Another item Maiani asked the ouncil to consider is breaking out the treatment costs on customer bills.

“It (treatment costs) is something the city has less control over,” Maiani said. “So breaking it out so users can see would be helpful so if there are changes to that it is shown in the bill.”

The city currently pays Spokane County $107,897 annually for treatment costs. After evaluating the county’s 2012 Wastewater Utility Rate Study Update, Maiani she found no information as to how the county’s costs for treatment are being allocated to Millwood.

“It is not clear where the county came up with what they are charging you,” Maiani said. “With that being said it’s hard for me to say what you should be charged or what you may be charged in the future.”

Maiani added that for purposes of Welch Comer’s study, the firm assumed a treatment allocation of $132,000.

The council plans to adopt the new rates as part of the 2015 budget.

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