Wednesday, February 17, 2010

Bellevue faces challenges in paying for new sewer plant

Property tax liens considered by city attorney

Express Staff Writer

Bellevue City Engineer George Tanner points out some of the features of the city’s new wastewater treatment facility, scheduled to go into operation this spring. Photo by David N. Seelig

The city of Bellevue is taking steps to prepare for a low point in the city's sewer fund in 2014, in response to concerns that the city may not have enough cash to pay for a $7 million sewer plant scheduled to go online this spring.

"It's going to be close," City Administrator Tom Blanchard said. "The city needs to have some reserves in the sewer fund."

He advised the City Council on Thursday to transfer $470,000 from a sewer capitalization savings account to the sewer fund, which has fewer strings attached. He said the transfer would allow more flexibility in dealing with the projected shortfall.

"The money will now be used to pay for any expense associated with the new wastewater plant," he said.

Blanchard said he hopes the city will also set aside about $100,000 in a new reserve account. Most of that will go to pay three years' worth of remaining bond payments, at about $85,000 per year, for the old lagoon-style facility that is being phased out.

The new treatment facility was funded in part with a $6 million sewer bond passed in 2005. An additional $714,000 in city funds was also allocated for the facility.

Sewer rates have been raised steeply to pay for the new facility. In 2005 the rate was $19.55 per month. Today it is $61 per month and may have to rise even further if the city doesn't make ends meet in the next few years.

"This has created quite a bit of consternation in the city right now while people don't have a lot of money," Blanchard said.

Blanchard said that due to lower-than-expected construction growth, unpaid sewer bills and other factors, the fund will be stretched thin for the next five years.

Last year, the city was anticipating $1.5 million in federal appropriations to help pay for the new facility, but that fell victim to the changing attitude about earmarks on Capitol Hill. When the federal stimulus funding was issued, the city did not qualify for that money, either.

The $470,000 sewer capitalization fund savings were collected over the past 10 years from $3,500 hookup fees from new residents. The 4.5 percent annual growth rate that filled that account has now dropped to zero growth projections for the next few years.

To make things worse, the city is seeing a steady stream of foreclosures, adding to the $50,000 in unpaid sewer bills. City staff was directed Thursday to collect data on unpaid accounts over the past two years to get a clear picture of sewer fund projections.

City Attorney Rick Allington said he is researching the legality of placing property tax liens on lots with past-due accounts to recoup unpaid bills. The city would collect the lien amount when the properties are resold.

City Planning Administrator Craig Eckles said it would be better to apply pressure to those owing the city money before it is too late.

"The best thing is to turn off the water while the people are still there," Eckles said.

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