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Thursday, June 4, 2020

Zero percent water and sewer rate adjustment proposed for 2021

Due to the devastating economic effects of the COVID-19 pandemic, the city is considering a 0% rate adjustment for water and sewer rates in 2021. If approved, 2021 water and sewer rates will remain the same as 2020 rates.

City Council will vote on the first reading of this proposal during the June 8 meeting. If the first reading is approved, Council will vote to approve the proposal at the June 22 meeting.

“We recognize that our residents are struggling due to the economic fallout from COVID-19,” said Public Works and Utilities Director Max Kirschbaum. “Thanks to the fast action by our Finance Department and Public Works and Utilities team to reduce costs and make adjustments, and thanks to the long-term professional management of our city’s finances, we are able to fully fund our water and sewer system needs without raising rates in 2021.”

Taking advantage of lower interest rates made available during the COVID-19 pandemic, the city closed on the refunding (refinancing) of its 2010 Build America Bonds earlier in June. The refunding sale reduced debt service by a little over $3.6 million in net expenses without extending the amortization period over the remaining 10 years of the original debt issue. The principal amount refunded was $17.9 million. This savings, combined with restructuring future debt payments, allowed the city to fund necessary operations and projects in 2021 without a rate increase.

The proposal includes additional strategies to help minimize the financial impact of water and sewer system expenses including using $2 million from a rate stabilization fund, reducing the utility’s contribution to the city’s General Fund by $500,000 and strategically using debt for intergenerational equity. The city has also formed an internal task force to identify innovative solutions to maintaining the city’s infrastructure and reducing costs.

The city traditionally approves water and sewer rates for the following two years along with a two year budget for the rest of the city. Given the unique and developing circumstances resulting from the COVID-19 pandemic, the city is preparing a one year budget for 2021 only. This will provide time to better understand the financial and community impacts of COVID-19 before proceeding with consideration of 2022 budgets and rates sometime in 2021. 

Although a 0% water and sewer rate adjustment is possible for 2021, the need to invest in critical infrastructure remains. A large portion of the city's infrastructure was built in the late 1970s and early ’80s during a period of significant growth in the city. This infrastructure is now close to 50 years old and needs to be replaced. City staff continue to recommend gradually increasing the city’s investment in construction projects that repair and replace the city’s existing infrastructure to maintain the high-quality service customers expect and deserve.

The draft proposal can be found at www.cityofwestminster.us/RateProposal and will be available for public review and comment through Monday, June 22. Public comments will be documented and considered by Council before voting on the proposal.

The city offers several programs to help interested customers use less water and manage their bill. A water bill assistance program offers income-qualified customers, including customers financially impacted by COVID-19, a $15 per month credit toward their utility bill. The city also offers several water conservation programs to help residents use less water outdoors including an irrigation consultation program that saves participating customers an average of $150 on their water bill.

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