City Administrator: Doubling utility rates may be necessary

Ferndale City Council is scheduled to discuss at Monday’s City Council meeting whether or not to approve a contract to hire a consulting firm to do an analysis and make recommendations for how to adjust City of Ferndale utility rates in order to cover costs associated with providing those services. City staff recently announced they are faced with about $30-million in new project costs associated with providing water, sewer and stormwater services in addition to the ongoing maintenance and operations costs.

In January, city staff published a request for qualifications from consultants in a search for a resource to hire that could analyze and make recommendations for future utility rates.

The contract calls for the city to spend about $140,000 with the consultants, FCS Group with an office in Redmond, Washington. The cost is expected to be paid with money from 3 city utility funds; water, sewer and stormwater. Public Works Director Kevin Renz he would expect the analysis to be completed by August of this year.

Renz told Finance & Administration Committee members on Wednesday, March 13th, “We have been modifying rates within our utilities over a number of years as an in-house exercise but I think taking a comprehensive well thought out look at the financials associated with the utility funds and making sure that the rate structure incorporates all the necessary components so that we are positioning ourselves to be successful in the future. What we are bumping up against now is the decisions that have been made are not letting us be successful where we are now.”

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City Administrator Jori Burnett said during the same committee meeting this was something the city should have done nearly a decade ago. “This should have been wrapped up as part of our comprehensive plan in 2016. Staff that were here did not want to do it so they didn’t do it. This staff wants to do it but with their current workload they would not be able to get to it.” Renz estimated it would take staff over 2 years to complete the same analysis and make recommendations.

Burnett said, “We might be looking at doubling our rates. There is some very scary considerations if we did look exclusively at rates [as the only funding source] if we couldn’t get any outside money.”

Renz pointed out there will be options to consider. “Maybe we utilize refunds in the early years until we get to the rate level we need to be at.”

Discussion of the utility rate study contract begins at about 31:00 in the audio record of the meeting.

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