Leavenworth council directs staff to prepare resolution raising system development charges; several members favor shorter, three-year phase-in

City of Leavenworth staff presented a phased plan to raise system development charges for water, sewer and stormwater, and councilmembers gave direction to prepare a resolution for adoption this fall and to develop a public outreach plan.

At a study-session discussion on Sept. 23, a staff presenter (identified in the transcript as Andy) said the charges shown in the packet are based on one equivalent residential unit (1 ERU) tied to a 3/4-inch meter and on a consultant-reviewed legal “maximum allowable” calculation. Andy said water charges currently sit at about 50% of the calculated cost, sewer is roughly 50% and stormwater about 70%, and recommended phased increases that would reach the calculated level over time. “That is the calculated amount of what the impact to a new connection to the system costs,” Andy said. “It’s just that we can’t charge more than that, so we call it the maximum.”

Why it matters: Council and staff said the increases are intended to shift the cost of new connections to new development rather than to existing ratepayers, and to build the utility funds needed to move capital projects from emergency repairs to planned replacement through a proposed Integrated Capital Improvement Program (ICIP).

Key details and council direction - Proposal shown to council: a recurring 15% year-over-year increase (applied to the system development charge rates) through 2028 to reach roughly 90–95% of the calculated amount, then a final 5% increase in 2029 to reach 100% of that calculated connection cost, with an annual inflation factor thereafter. Andy described the 100% figure as the calculated cost, not a discretionary “markup.” - Council concerns and alternatives: several councilmembers voiced discomfort with a four-year phase-in. Multiple members asked for a more condensed option (two- or three-year phase-in). One councilmember asked staff to model a 20% / 20% / 10% three-year option; another said a three-year schedule would be a reasonable compromise. No formal vote on rates took place at the meeting; council provided policy direction to staff. - Timing and next steps: Andy said staff’s goal is to draft a resolution in October or November to adopt system development charges through 2029 so the development community has earlier notice. Council asked staff to bring back the numbers for the three-year schedule and to include inflation indexing going forward.

Projects and budget context cited by staff - Staff identified a set of near-term capital priorities they said require funding: Cedar Street (unlooped main), West Center Street (deficient main and low pressure), Stafford Street (parallel undersized mains and low pressure), Poplar Street (repeated repairs leaving no good tie-in sections) and a section of Division Street running under the river. Those projects, staff said, have driven emergency repairs in recent years and contributed to the current shortfall. - Staff said some planned work in 2025–26 is being funded by real-estate excise tax transfers because the utility funds lack cash on hand. A staff member described a recent $400,000 emergency replacement (Pine Street) that required outside funding and heightened the risk of denied emergency funding requests from regional boards.

Community impact and outreach - Councilmembers repeatedly asked for a strong public communication plan that explains which projects the rate changes will fund, shows photos of problem infrastructure (e.g., repeated patches, wooden storm troughs), and lists possible hardship supports and eligibility criteria. Staff said they will work with communications staff (Sylvia and Cara were named in the discussion) to prepare FAQs and outreach materials, and asked for a short, clear package the council could use in discussions with constituents. - A resident who spoke during public comment urged the council to charge the full, calculated system development charges immediately rather than phasing increases. Staff and council noted the tradeoff between encouraging development and avoiding shifting costs to existing ratepayers.

Quotations - Andy (city staff, utilities): “That is the calculated amount of what the impact to a new connection to the system costs. It’s just that we can’t charge more than that, so we call it the maximum.” - Councilmember (unnamed in transcript): “If we want better roads, if we want our infrastructure to last and not have to be reactive, if we want to be proactive, then if that’s what this takes, then that’s what it takes.”

What was decided (formal and informal outcomes) - No rate ordinance or resolution was adopted at the Sept. 23 meeting. The council gave staff direction to: (1) prepare a draft resolution for the council to consider in October or November that would adopt system development charges through 2029; (2) model a three-year phase-in alternative (suggested 20%/20%/10%) as well as the four-year option already proposed; (3) include an inflation-indexing provision going forward; and (4) develop a public outreach and FAQ package explaining which projects the revenue will fund and what hardship assistance options exist.

Next steps - Staff to return with the three-year and four‑year numeric schedules, proposed resolution language, and a communications plan including project lists and photos. Council indicated willingness to consider a three-year schedule if the numbers and outreach are sufficient.

Ending note Council members and staff framed the discussion as an effort to stop “chasing” emergency fixes and instead build reserves to proactively replace aging mains and other infrastructure. Several members said the pace of increases should be balanced against development timelines and community outreach that explains what the funds will pay for.