North Bend officials warn wastewater fund faces insolvency within years; options include rate increase, sale or legislation

City Administrator David told the North Bend City Council on Feb. 10 that the city's wastewater enterprise fund is under severe financial pressure and could become insolvent within about four years unless the city secures new revenue, sells assets or obtains external help.

The warning came as Public Works Director Ralph Rowles and staff reviewed this fiscal year's operating and capital picture for the wastewater treatment plant, including a roughly $1.3 million federal EPA appropriation the city has received and recent capital outlays that exceeded budgeted totals.

"The deficit is going to come from reserves this year," Rowles said, adding that operating costs are about $1.9 million while typical annual revenue is roughly $2.23 million. He told the council the plant can be operated on current fees but the system cannot be maintained and replaced at that revenue level: "We cannot replace and maintain the plant with the income where we're at." Rowles also said the city spent an unusually large amount this year on capital work and expects more multi‑million dollar projects ahead.

City Administrator David said the League of Oregon Cities declined to support draft legislation the city had pursued to address what staff described as a home‑rule/legal obstacle to the city's proposed fix. "The League's position is ... to go neutral on any potential legislation," he told the council, and said that stance undercuts the city's effort to seek a statutory remedy.

Council members and staff reviewed options outlined by administration, including: intensify public outreach and a town hall to explain the financial outlook; seek voter approval for fee increases in future elections; sell municipal wastewater assets or enter a public‑private partnership to operate the system; and pursue targeted legislation. Councilors discussed the difficulty of passing a charter amending ballot measure that requires supermajority turnout and majority thresholds.

Ralph Rowles said the plant had benefited from an EPA reimbursement but that some large projects this fiscal year will leave the plant's account running a deficit: "Our operating costs are about $1,900,000 without doing any capital outlay, and we have $2,200,000, so that's $300,000 [surplus]; with capital, we are upside down." David and others noted the city has been denied grant programs that require the locality to have fees above a national threshold, because North Bend's fees are comparatively low.

Councilors asked staff to develop clearer, attention‑getting public communications about the fund's condition and possible timelines for service impacts. Staff said they would post an insolvency counter on the city website, prepare community outreach materials and explore consultants or other technical assistance. No formal vote was taken; staff will return with outreach materials and more detailed fiscal scenarios.

Why this matters: the wastewater fund is an enterprise that supports a federally permitted treatment plant; failure to fund needed capital work could lead to regulatory enforcement, fines or a state takeover. The council faces a choice between raising local fees, restructuring assets or accepting external intervention.

Ending: Staff will prepare public outreach language and fiscal scenarios for upcoming work sessions and will return with options that may include a ballot measure or negotiations with external operators.