Mountlake Terrace city councilmembers at their Dec. 6 regular business meeting unanimously approved the adoption of an 18-month utility repayment program for residents and businesses that have fallen behind on their bills to this point during the COVID-19 pandemic.

The city is reaching out to utility customers with accounts that are at least 30-days in arrears about signing up for a repayment program. It’s continuing those efforts in December and will begin administering the extended program in January 2022. The program is only available to those who sign up before then.

Finance Director Crystil Wooldridge noted the program is meant “to give customers the ability to pay back the delinquent account amount,” and “is just getting them on a repayment plan so that they can get caught back up.”

Early in the pandemic, the number of unpaid utility bills statewide grew at a rapid rate as unemployment levels rose and household incomes shrank. Washington law controls how public utilities, such as the city’s water, sewer and stormwater services, can collect customers’ unpaid bills. For publicly owned water and electric utilities, the amount of an unpaid bill is capped at four months of service. The limitation’s rationale is that water and electric services, unlike sewer and stormwater, can be shut off in order to motivate payment.

The state recognized that utilities faced with the four-month limitation on collecting unpaid water bills were approaching a point of having to shut off a large number of customers in order to get payment. However, waiving the past-due amounts would run contrary to the state constitution’s prohibition of gifting of public funds. Under state law, the city can place a lien on a customer’s property for unpaid sewer and stormwater bills. That lien can then be increased if the amount of the unpaid bills continues to grow over time.

Gov. Jay Inslee and the state’s legislative leaders adopted a moratorium in April 2020 that prohibited public utilities from shutting off water, electricity and telephone services for nonpayment, and also suspended late fees. The moratorium, which remained in effect until Sept. 30, 2021, was meant to ensure that water, electricity and other essential public health services continued to be made available during the pandemic.

To address public utilities’ having accrued up to 19 months of unpaid bills during the moratorium, along with the ability to collect only four months in arrearages, the Washington State Legislature passed House Bill 1069 (HB 1069) this year, which modifies the process for collecting water bills following an emergency such as the pandemic.

As a result, Mountlake Terrace may collect on the full amount of unpaid utilities, but it must implement a repayment program that allows customers at least six months to repay the amount past due. The city may put a lien on the property for the unpaid amount if the utility customer either doesn’t sign up for the repayment program within three months of the emergency ending, or the customer does not abide by the terms of the agreed-upon repayment plan over a three-month period.

Mountlake Terrace currently has approximately $1 million in unpaid utility bills throughout the city. There are roughly 640 utility accounts in arrears, with an average past-due amount of $1,600. Nearly two-thirds of those accounts are more than 60 days behind. By implementing a repayment program under HB 1069, the city will be able to collect, either through repayment or lien, the unpaid utility bills accrued during the moratorium.

City staff had recommended an 18-month repayment program, which would closely mirror the time period of the moratorium’s unpaid bills. The rationale was that expecting utility customers to repay up to 19 months of unpaid bills over only a six-month period, while also staying current on their future bills, would be difficult. If the repayment program outlined in HB 1069 had not been implemented within three months of the moratorium ending then Mountlake Terrace would only have been able to collect four months of past-due fees.

Separately, the council will hold further discussions, at its Dec. 16 work/study session, about possibly using a portion of the city’s American Rescue Plan Act (ARPA) funds in order to provide financial assistance to utility customers who may continue to be unable to pay their past-due amounts.

The city will also soon publish an online poll for residents to provide their feedback about various options for using its share of ARPA funds. Under ARPA, the City of Mountlake Terrace is eligible to receive nearly $6 million in COVID-19 pandemic relief funds. Half of that total was made available this past summer and the remainder will be paid in mid-2022.

In other business, the council unanimously approved a 3.5% salary adjustment for non-represented employees in 2022. That represents a 2% increase for next year, along with a 1% increase that the council previously discussed adopting this fall for non-union employees as a “catch-up” to the unions’ 2.75% salary adjustment for this year. The adjustment also includes an additional 0.5% increase to reflect the gap in implementing the proposed increase from earlier this year.

The increased salary range schedule is intended to keep the city competitive in the area’s hiring market and its net budgetary effect will be approximately $310,000. City Manager Scott Hugill had previously told the council, “We can afford it, it’s in the financial forecast.”

The council also approved a raft of measures on its consent calendar including:

– Adoption of a water service installation fee ordinance recommended by staff that will convert the installation of water meters to a flat fee. Municipal code had previously required those wanting a water meter to first make a deposit toward the estimated cost of installation based on the costs of materials, labor and equipment. Any difference between the deposit and the actual cost of installation was then either refunded to the customer or an additional fee was charged by the city before it issued any occupancy permits.

Moving forward, the flat fee will save the city money spent on administrative costs based on the additional time associated with processing either a refund or an additional charge. The ordinance eliminates the upfront deposit’s time-and-materials fee. The flat fee will be based on recapturing the actual cost of the water meter itself, along with a labor cost related to the average amount of time needed to install a meter – which city staff said typically takes about one hour.

It also allows the city council to maintain oversight of fees and set the cost of installation in the annual fee resolution rather than through future municipal code updates.

– Approval of an amendment to the professional services agreement with ARC Architects, Inc. authorizing $2,934 in additional funding for work completed at the Civic Campus to address acoustical concerns discovered in some meeting and training rooms at City Hall and the police station. As a result, voices and sounds in those rooms reverberated to the point that it was difficult to hear what was being said and/or presented. The additional acoustic features were previously excluded from the project’s original scope for budgetary purposes.

– Adoption of two resolutions, one for building/fire and one for civil/land use, making various changes to the 2022 fee schedules for development services such as the review, permitting and inspection of land use and construction.

Fee schedule changes include an increase in the hourly rate to $155 per hour in order to account for anticipated cost-of-living adjustments, while also remaining aligned with neighboring jurisdictions. Adjusting some fees to more accurately reflect the actual staff time required for processing, such as a decrease in administrative time needed for some permits with electronic permit submittal. Removing the requirement of a deposit for water meter installation, and instead using a flat fee to reduce the time and costs associated with administration and permit submission. Altering electrical permitting fees so they are based on the number of inspections required, lowering the cost of minor electrical permits and decreasing the administrative staff time associated with the automatic issuance of some permits through the city’s electronic permit system.

City staff had recommended the changes, noting they would allow the city’s development services department to improve its cost-recovery model for services provided while also taking into consideration the economic climate, complexity of individual activities and fees charged by neighboring jurisdictions. The fee schedules also continue to reflect the council’s interest in subsidizing the costs of some minor permits for do-it-yourself property owners.

– Authorizing the city to enter into a contract for a public works loan of nearly $7.6 million to fund the construction of the Westside Water Main improvements project. The low-interest loan has a rate of 0.94% and offers a term of 20 years. Its repayment will be funded directly from the net revenues of the city’s water utility system.

The loan was recommended by city staff because it terms are more favorable than those currently available on the bond market. Construction is anticipated to begin in early 2022. More information about the improvements project can be viewed here.

— By Nathan Blackwell