‘Cost causer-cost payer’ model used in water-sewer task force proposal



A rate schedule proposed by the Water Sewer Task Force would drop monthly service fees from $45 to $18 a month, with apartment users seeing service fees drop from $45 to $5 a month for each unit, even if the building has one meter. That’s just one of the recommendations in a draft report discussed Tuesday night at the regular meeting of the task force.

Other recommendations in-

• Using a commodity or per-gallon water and sewer schedule;

• Using a cost-causer, cost-payer schedule, where users, such as Homer Spit businesses, that require higher service costs pay their share of the cost;

• Charge to the general fund and the city as a whole services used by all residents, such as fire hydrants;

• Adjusting the monthly service fee based on the cost by the city finance department to bill users and spreading that on an equal basis among all users. Using the 2013 budget, the task force calculated the monthly service fee should be $18.

Created by the Homer City Council last year in response to citizen and business complaints about rate changes it made, particularly for apartments, the Water Sewer Task Force has been meeting since March 2012 to review the rates and come up with a fairer schedule. The task force holds meetings over the next month and plans to submit its recommendations to the council by April, said Mayor Beth Wythe, chair of the task force. 

The council would then consider the task force’s recommendations and potentially change the water-sewer rates.

Wythe was appointed to the task force when she was a council member and continued on as mayor. Other task force members includes council member Beau Burgess, Ken Castner, Lloyd Moore, Sharon Minsch and Bob Howard.

Public testimony on Tuesday centered on the issue of perceived fairness. Land’s End Resort owner Jon Faulkner and comptroller Mike Dye criticized the rate schedule for singling out Spit users.

“I think that the model is grossly unfair to Spit users,” Faulkner said. “I believe it’s flawed, fundamentally flawed.”

Dye said based on the Spit’s share of usage it pays more than its share when a 2.9 cent per gallon Spit sewer rate fee is added.

“I’m having a real hard time why there’s this need to single out the Spit users at 2.9 centers when it appears they’re already covering that expense,” Dye said.

Castner said the task force looked at additional costs beyond general operations and maintenance. For users at the end of the Spit, because of its location 5 miles from town, two sewer lift stations are needed to get sewage to the treatment plan near Beluga Slough. In town, many users have gravity-fed sewage lines. Users on East End Road also have lift stations.

“When you’re burning electricity to lift the septage, those people should pay for that,” Castner said.

“We can definitively say a portion of the cost of maintaining the lift systems is geographically proportional to users,” Burgess said. “What is the cost? There is a cost of essentially having that stranded outfit out there.”

“I disagree,” Faulkner replied. “You haven’t proved that. … I want to see facts. You’re purporting to the community that this is fair.”

Faulkner also noted the unfairness of charging hotels like his a added rate of 4/10 cent per gallon for high BOD, or biological oxygen demand, that is, the extra demand to treat sewage coming from restaurant kitchens. He said that while the Land’s End sewer line includes waste from the kitchen, much of it also comes from hotel rooms. The city doesn’t differentiate between those two waste steams.

Castner agreed that there should be a better way of calculating the portion of high BOD for facilities with a mix of kitchen and residential waste. He cited the Homer Senior Center and Friendship Terrace as another example.

“I agree with you it’s unfair to charge everything as if it’s filthy, high BOD water,” he said.

Wythe and Burgess both noted a larger issue with the Homer water and sewer system: it’s a large, expensive system with a low density of users. 

“This comes back to a very expensive infrastructure used by a small number of users,” Burgess said. “Really, the larger issue is infilling and getting a larger number of users. That is the core issue.”

Faulkner had noted how other Kenai Peninsula cities had lower water and sewer rates. Those other cities don’t have totally compliant systems, though, Wythe said, while Homer meets a higher standard.

“We are in a good position,” she said of Homer compared to Kenai and Soldotna. “They are looking at large water and sewer rates in meeting those standards.”

Faulkner said that the new rates would impact his business severely.

“I don’t know any business that can sustain the increases you’re proposing,” he said. “They’ll have consequences, real consequences.”

Not everyone was critical of the draft rate schedule. Larry Slone, a Homer Advisory Planning commissioner, praised the draft schedule. He had criticized the rate schedule last year when the council considered it. The new one is better, he said.

“I support this model,” Slone said. “If one subscribes to the philosophy of cost-causer, cost-payer, it’s not possible to get any fairer than this.”

The task force’s next meeting at 5:15 p.m. Feb. 5 is a work session in the City Hall conference room. Another public hearing is 5:30 p.m. Feb. 19 in the Cowles Council Chambers.

Michael Armstrong can be reached at michael.armstrong@homernews.com.