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Poulsbo leaders review water utility rate options and connection fees to fund capital needs
Summary
City staff and consultants presented a financial analysis showing the water fund is operating at a deficit under current rates; staff recommended phased rate increases and a modest rise in connection (GFC) fees to sustain operations and capital projects.
City staff presented a financial analysis of the city’s water system plan and recommended a phased approach to rates and a modest increase to connection fees to bring the fund back into balance.
Diane (Finance) and Charlie (Public Works) summarized the system: roughly 90 miles of water main, multiple pressure zones and wells, and a capital program that totals tens of millions over a 20‑year horizon. Staff said the water fund is currently running an operational deficit under status‑quo revenue assumptions and that doing nothing would deplete reserves and jeopardize future capital work.
Staff presented three scenarios: (1) no rate increase, which leaves a projected operating shortfall; (2) a single large rate increase (presented as a 15% one‑time increase in 2025 together with a $500 general facility charge increase) that restores fund balance but imposes a substantial immediate bill increase; and (3) a phased plan of smaller annual increases (recommended alternative) plus a one‑time GFC adjustment. The recommended scenario spreads increases (example: mid‑year adjustments) so ratepayers see smaller annual changes while operations and capital needs are addressed.
Council members asked for clarifications on assumptions and equitable mitigation. Councilmember McVeigh asked whether the “one‑time” increases precluded future adjustments; staff explained that annual CPI‑U indexing remains standard and the analysis is a 10‑year projection that would be revisited as actual revenues and development activity change. Councilmember Doug (surname not provided) and others discussed the need to balance affordability with the city’s long‑term obligation to fund a large capital program, including a planned public works facility and multiple water system projects.
Staff also reviewed the general facility charge (GFC, connection fee) methodology; the city’s current GFC is below the regional average and the statutory method would allow a much higher charge. Staff recommended a modest increase (for example, $500 or $750 depending on council direction) while noting sewer connection fees are already relatively high and that connection fees must be used for capital not operations. Council asked staff to return with refined options and to design the rate ordinance process with a public hearing. Staff indicated a mid‑year implementation and a public hearing process would follow if council approves a rate path.
