FAQ Regarding Amity's Water & Sewer
Water section updated June 29, 2021. Sewer updated June 9, 2021.
Is my water safe to drink?
Yes. Amity’s water is tested on a regular schedule and meets all of the quality and safety requirements set by both the Oregon Department of Environmental Quality (DEQ) and the US Environmental Protection Agency (EPA). Feel free to stop by Amity City Hall to get a paper copy of our last annual report on Amity’s water. The water quality report is also on line and may be found on this website and a link to it was sent with your July 2020 water bill.
But my water was brown recently. Doesn’t that make it unsafe? Would you drink it?
The water is safe to drink. You are right it did not look nice at the beginning of July 2019. The sediment in the water was neither toxic nor dangerous. We do not like to drink water that is brown in color either. Yet, we test the water to ensure it meets EPA and DEQ standards for purity and safety. Feel free to stop by Amity City Hall to get a paper copy of our last annual report on Amity’s water; that states our water’s purity and safety.
Why was the water brown right before July 4, 2019?
It was brown due to a glitch when shutting a fire hydrant valve; a term called “hammering.” The City legally sold water to a construction firm, which took the water from a hydrant to fill a tanker truck. Upon completion of the process, the valve was shut too abruptly, causing the flow of water to backwash through the entire city system. As our water system adjusted, the water surged back and forth through the pipes.
It is similar to crimping a garden hose. When one crimps (or bends) a garden hose while it is running, the flow stops suddenly, but the water backs up at the crimp. Then when one releases the crimp the water surges as the backup clears out. This is similar to what occurred to Amity’s water system. This kicked up sediment in the pipes and turned the water brown. Flushing the system (residents running their faucets and the City’s Public Works releasing water) cleared up the water.
The City works with many entities that use the fire hydrants. Due to this unfortunate incident, the City will be more stringent about who is allowed to tap our fire hydrants. We commit to doing more to ensure non-city entities know how to properly open and close our hydrants. To this end, we are studying a future requirement that entities pay penalties for “hammering” our water system.
Sediment? From where? How did sediments get into the pipes?
All drinkable water running through any pipe system has millions of microscopic-sized mineral particles floating within. These microscopic particles sink over time and do build up over the years, settling at the bottom of the pipes. This is what was kicked up when the water system was “hammered.”
The City has a program in place to periodically flush the city’s pipes of sediments. When flushed, the water in the pipes is agitated in a controlled fashion, kicking up the sediment, and the water is sent into the City’s waste treatment system. This process helps keep the City’s water system clear of sediments. However, this is a water, time, and labor intensive process and is done only periodically.
Although the City works to clean its water infrastructure, such sediments may also come from the pipes on your property or inside your residence. Your pipes are of various qualities, depending upon the age of the house. Older homes, especially those built prior to World War II, may have untreated pipes that often rust or corrode. This rust may enter your water and discolor it. This may explain why some houses see more brown water than others.
Water heaters also need to be inspected and cleaned over their service life. Old water heaters can produce sediments, too, turning tap water brown. If you are experiencing discoloration when you use hot water, but not cold water, it may be due to the water heater.
The City recommends that you check your pipes and water heater, especially if you have an older home.
The November 2020 system wide flush the City did of its water infrastructure purged the vast majority of the sediment in our water pipes. This high pressure cleaning eliminated multiple years of buildup in our pipes ensuring that our water flows more consistently, with higher pressure, and with less sediment in the pipes.
But the City stated it has old pipes during the 10 July 2019 City Council Meeting. Isn’t this the culprit, the City’s old pipe system?
While the City of Amity - and many municipalities across the country - has a hodgepodge of pipes, these pipes were built to the safety codes and standards of their era. The City repairs and replaces pipes routinely, to ensure you have the highest quality, safe water from the source all the way to the connection point with your residence, regardless of the age of our infrastructure.
Does sediment enter into the pipes from outside? The City has had numerous leaking pipes; can impurities enter the pipes and contaminate our water that way?
This is unlikely. When there is a sizable leak, the escaping water pressure drives everything out of the pipe, not into it. Amity also chlorinates our water to kill bacteria that may be seep into the water. Chlorination and testing ensures the water stays safe to drink.
If you are interested in learning more about municipal water chlorination please check out this website.
Where is Amity’s water coming from?
Amity’s water comes from the South Yamhill River. It is piped to a treatment facility and then it is piped to the City. Our treatment facility ensures that the water from the river is made clean, safe, and drinkable before entering the City’s water system.
Do we use well water (underground reservoirs)?
No. Although some residents and agricultural operations draw from wells, the City pulls water from the river.
Why doesn’t Amity tap into the underground reservoirs that other cities use? Why not get water from the same source as McMinnville?
It would be prohibitively expensive to pipe water from McMinnville’s water source into Amity or use an underground reservoir. If our City Council approved using McMinnville’s water source, it would take years to construct the required infrastructure.
McMinnville has much better water. Why is our water worse than theirs?
Amity’s water meets the same DEQ/EPA standard as McMinnville’s for quality and purity.
McMinnville’s water costs a lot less than Amity’s water. Why do I pay so much?
A 2019 independent study of comparable water consumption rates concluded that Amity does not have the highest rates in Yamhill County. As of July 2019, Amity’s water rates are $17.89 cheaper per month than the highest rates in the county; overall, Amity is in the middle of the pack of Yamhill County municipalities. But, Amity is $39.67 more expensive per month than McMinnville, as of July 2019. It should be noted that Sheridan, in August 2019, approved a water and sewer rate increase.
There are many reasons for this. Our relative population to McMinnville is a reason. At last count Amity is right under 1,700 people. McMinnville is right under 34,000 people. Therefore, McMinnville can spread the cost of its water service over 20 times more customers. In other words, if the cost of running a municipal water system is $100 and Amity has 10 consumers, each will pay $10. If McMinnville has 200 consumers (20 times bigger), for the same $100 cost, each consumer will pay 50 cents. This is one reason why Amity pays more.
Another reason is the economies of scale gained by operating a large system. Yes, McMinnville does have a larger infrastructure and more employees, leading to higher costs. Yet, McMinnville also does things in large scale; the size of their system and the quantities in which they work provide economies of scale (like buying in bulk).
Next, each city gets to choose its own water rates independently of other cities. Municipal governments and utilities often use dozens of variables to determine optimal rates. What is factored into the rate calculation (the “how and why”) adds complexity to the process, making further comparisons between Amity and other cities, like McMinnville, difficult.
Finally, McMinnville owns all of the rights to its own water. From the source to the tap, McMinnville's water service does not have to pay for things such as state permits, water rights, and the like. This lowers a lot of costs. McMinnville's water is also all gravity fed, eliminating a lot of the infrastructure - pumps and other gear to keep the water flowing - that most systems employ. This significantly reduces costs for the rate payer.
Recently Mac Water and Light increased its rates. While, yes, it is significantly lower than ours, residents of McMinnville are also getting rate increases. So are other municipalities in Yamhill County, to include Sheridan.
Did my rates go up? How much did my rates go up? Why do they go up?
Yes, your base water rate goes up by $5 (five dollars) this month - February 1, 2021. You will see the increase in your next water bill. This is to ensure the City can repay the US Department of Agriculture / Rural Development's (USDA/RD) loan requirements for a $1.635 million loan the City accepted on July 31, 2019.
The City also raises rates when required, to meet the costs necessary to operate and maintain its water system and to ensure the overall long-term fiscal solvency of the enterprise. (Usually, the City has raised rates in alignment with Consumer Price Indexes.)
To serve you better in late 2020, Amity's City Council directed City Staff to undertake a rate study. USDA also agreed. We are currently researching multiple data to determine a new rate that will both meet the needs of our debt obligations and minimize the impact to your wallet. While the rollout of any rate proposal will need to be approved by Council, we do not have a projected timeline for completion of the rate survey.
The City raised water rates back in February. Now we hear that during July's City Council meeting, water rates will be addressed again. Why?
In 2020, the City Council directed City Staff to undertake a comprehensive water rate study in response to both public concern about our water rates and to meet a requirement to pay back our funding sources. This rate study took nearly a year and was conducted by an outside, impartial entity.
This entity, Oregon Association of Water Utilities (OAWU), is the expert in analyzing and conducting research on water utilities.
OAWU will present the findings of their work on July 7th at the City Council Meeting. The expectation is that once OAWU presents their results, the City Council will vote to accept their findings. If accepted, then the City will implement the new water rates.
***UPDATED JUNE 29, 2021***
So, the City is going to raise water rates on July 7th?
OAWU will present their recommendations. If the Council accepts the proposal, then they will have the option to accept a resolution to implement the proposed findings as a new water rate. They also have the option to decide when any new rates may go into effect. While City Staff will make proposals and recommendations, it is up to Council to decide.
The Council is under NO obligation to accept this rate proposal! Unlike our sewer rates, where time was of the essence and the legal need to balance the City's budget were driving factors, the City is under no such pressure now. The City requested this rate study as a means to determine if improvements to our water rate billing and rate structure could be made. If OWAU's proposal is not what the Mayor and Council want, they can ask OAWU to go back and "do it again."
Mayor Lehman HIGHLY encourages everyone to either come to the Council Meeting or ZOOM in, listen to the proposal from OAWU, and provide your input to Council. The City Council will make up their own mind, but they seek your input! They want you to hear the same thing they are - straight from OAWU's own experts.
But our rates are going up again, right?
Not necessarily. While OAWU has provided City Staff and Public Works a draft proposal of their final recommendation, it is only a draft. The City will receive their final proposal in July.
That stated, the City can only estimate based of the draft proposal. This draft indicated that the new rates will incorporate a consumption component into the Base Rate. If this component stays in the final proposal, some people may not pay anything beyond the base rate for their water. Also, the draft proposal indicated the "Line Replacement" cost will be rescinded. Again, we cannot promise these requirements will make the final proposal on July 7, 2021, but we're pretty confident they will.
What are you doing with all of the water money we are paying you?
The City uses your money to operate and maintain the water system on a daily basis. The City is also undertaking a multi-year improvement program to renovate and repair its water system. In partnership with State and Federal agencies, the City has accepted a USDA/RD loan, USDA/RD grants, and Community Development Block Grant (CDBG) grants to pay for this work. Often, the City must provide matching funds and/or make initial deposits to receive the State and Federal loans and grants; matching funds and deposits come from your water payments. The City described the use of loans and grants during the July 10, 2019 City Council Meeting. Water rates are also used to determine the solvency of the enterprise and your payments ensure that the City has funds available to repay its loan obligation.
Why did the City accept this financial burden?
The City accepted this loan as a part of a $5.579 million funding package that included the loan, but also nearly $4 million in grants! For a City of our size and for a project of this complexity, this is an extraordinary deal for the City. No project of this size and complexity can be paid for solely with grants, and only a few (very large) cities maintain enough internal capital to even consider undertaking such a project without seeking financial assistance. To provide our community members safe, clean drinkable water now and into the future, this project is needed and this financing is necessary.
The City secured a $465,680 loan (of which $247,840 is a forgivable loan -- or "grant") to relocate the water transmission line across the Salt Creek Bridge on Hwy 153 at the west side of town.
This bridge is due for repair in 2022 by ODOT. We (the City) are required to move the water transmission line off the bridge before they begin repairs. At the end of March 2020, ODOT put a weight limit on this bridge, as it becomes weaker. This is hastening the City's desire to move our pipe away from the bridge to ensure we will continue to provide our community clean, potable water.
Now that the City has secured the loan, it started a statement of work and will undertake the initial design/engineering on the project in June 2020.
What are the improvements?
There are 3 remaining projects the City is working upon:
Project #1) Move the water intake point and renovate the Water Treatment Plant. The City and its State and Federal partners intend to move the water intake point up the river to a deeper and faster running part of its source river. The City purchased the necessary property from ODOT and the County to relocate the intake.
The intake itself will also be improved, to increase functionality and capacity. The Water Treatment Plant will be modernized, expanded, and repaired.
On September 2, 2020, our City Engineers presented to our City Council the updated status of this project. Due to changes in requirements, design specifications, delays, and other changes (both foreseen and unforeseen) the Engineers stated that the project is seeing cost increases and delays. They presented to Council multiple options to bring this portion of the project to completion, which Council debated and analyzed for nearly 2 hours during the meeting. In a 3-1-1 vote (3 for, 1 against, 1 abstain) the Council directed City staff to seek additional funding for the project while also re-scoping the project to complete the required objectives while reigning in overall costs.
As of mid-January 2021, the City is working with USDA and our financial institutions to obtain $4 million in additional funding to complete the final portions of the project. While we're slightly behind schedule we're confident we can complete the project by the end of 2022.
Project #2) Relocation of the water transmission line across the Salt Creek. The City is working to not only move the pipe, but to improve the pipe’s throughput capacity. Initial geo-engineering and planning is underway.
This pipe is the main transmission line from our water treatment facility on Briedwell Rd to the City. It is not a minor service line to an individual property on the west side of town. It is vital infrastructure for the City.
The pipe was installed on the bridge years ago, through a legal agreement between the City and ODOT. Recently, ODOT determined that the bridge needed to be demolished and replaced with a new bridge. ODOT directed the City to remove the pipe off the bridge. We must comply with ODOT's directive or lose our water connection.
After much work and deliberation, the City's Engineers and City Staff determined that the best course of action would be to relocate the pipe underground next to the new ODOT bridge. The City sought and obtained external funding (see above) to accomplish this work in full without having to draw from other internal budget sources.
Project #3) The American Relief Plan of 2021 will provide the City of Amity funding to use for infrastructure projects that are "shovel ready." The City Council has initiated the purchase and installation of new wireless capable digital water meters. These meters will replace all of the older meters in town. We expect this project to begin in August and be completed before the end of the year.
Why are we buying meters? What do new meters do for us?
The new meters are both more accurate and more reliable. More accurate meters will result in a better meter read. A better meter read will ensure that you pay for exactly what you use! Right now, there are many meters in town that do not read accurately which may result in a significant under or over charge in your monthly billing.
Tied with a possible / potential inclusion of consumption in the base rate (see above about the rate study) some of you may see your overall water bill decrease.
We've not seen anything. What, if anything, have you accomplished so far?
In 2020, the City completed work on the filtration systems and the water reservoir. As we began 2021, the City has over 1 million gallons of water in storage in its reservoirs and is pumping adequate water to meet daily demand with a sizable reserve to meet excess demand - such as firefighting operations.
Many of you may note or recall that in late December 2020, there was a duplex fire in Amity that required a sizable draw on our water system. Although Amity Fire pulled tens of thousands of gallons of water from the system, there was no drop in water pressure throughout the City, no danger of a drop in water capacity throughout the system, the water drawn to fight the fire was replaced in our reservoirs within 24 hours, and we - the City - did not receive a single complaint from the community as a result of the water draw (a routine occurrence in the past).
Additionally, as late at mid-2019, Amity lost a lot of water to the bad infrastructure. There were leaks at the reservoir, throughout the City, and at the treatment plant. Over the last 18 months our work on the water project and fixing water leaks has reduced our estimated annual water loss by 15% and it's still getting better! This reduction means more water available to you the consumer. It also means a more efficiently operated system that conserves more water.
During a recent 2020 State inspection of our infrastructure, the inspectors congratulated our Public Works for the significant improvements in our water system's effective, efficient, and secure operations. If we were getting a letter grade for the inspection, then we improved to an "A" for system performance and operations.
We see that as significant progress!
The City's remaining projects are:
Project #1) The City is still awaiting an update regarding the archaeological survey done along the path of the new water intake point and transmission line to the treatment facility. We are also working to rescope the size of this project and to obtain the required additional funding.
First, the City has spent time and money to conduct the engineering development, design, and planning of the work to be done regarding the projects listed previously. The City has put considerable effort into minimizing the environmental impact of the work to be done while meeting other State and Federal regulations regarding infrastructure projects of this magnitude. There has been considerable effort put into designing the system to be effective and efficient now and into the future, once completed. Also, the City is establishing procedures and plans to ensure that the "turning dirt" phase of the project(s) has a minimal impact on the ability of the City to provide water and sewer service.
While most of the activity has been "behind the scenes" it is necessary to do this. It is vital to ensure we have met the legal requirements to do the work safely, effectively, efficiently, and quickly when it begins. Unfortunately, this process takes considerable time. Each entity and agency with a stake in the project has the authority to review, revise, change, approve or reject, any of the activities, plans, decisions, designs, etc. the City undertakes during this process. So, imagine the complexity of designing and building a massive infrastructure project that includes oversight from approximately a dozen entities and agencies!
Each step comes with associated costs both in money and time. These dollar costs are paid by the loan and grant money, as well as by the City's own funds. The City uses your taxes, fees, and utility rates as the funds (budget) by which it repays the loan and pays for other costs associated with the water infrastructure. As of September 2, 2020, the City Council authorized City Staff to seek additional $4 million in funding to attempt to bring the project to completion by mid 2022.
Additionally, the City has been engaging with all of our partners to ensure we conduct the work intelligently and with respect for everyone affected by the work. For example, the City is working with multiple agencies to ensure we respect the cultural heritage of our Native American community members. This includes a required archaeological excavation along the route of our desired water line. An activity that is now underway. As of December 1, 2019, the archaeological site activities are complete and the analysis is underway.
The City has been respectful of our Native American community members and the local (current) property owners to conduct this vital work, while minimizing the environmental damage and disruption to ODOT rights-of-way. The planning, development, and execution of this activity required considerable costs in time, labor, and money. As of early January 2021, the local Tribes requested modifications and changes to the agreement with the City and USDA regarding the protection of their heritage. While we sort through these differences and come to a new consensus, we have to pause other aspects of the project.
Project #2) The City secured funding for the relocation project. We have started the scope of work and initial design/engineering began in June 2020. We expect to go to bid on this by Fall of 2021 and complete the work in 2022. Due to delays with both ODOT and in obtaining the necessary Environmental Assessments these timelines have slipped.
Finally, the City still needs to pay for the current operations of the system. The City's Public Works is out there everyday doing the daily monitoring, upkeep, and maintenance such a system requires -- working to patch leaks, repair water meters, ensuring the water and sewer treatment systems' pumps and valves operate, and responding to your - our customers and consumers - needs. The costs of their tools, materials, time, and labor is paid from your utility bills, as budgeted by the City for the year.
How long will these water projects take and why?
The City and its State and Federal partners estimate that it will complete the water intake, water treatment, and pipeline work in late 2022. The pipe across the Salt Creek is still in its early stages and an accurate timeline is not established, but we expect to begin the project in mid-2021. A timeline for the replacement of the City’s water meters is not established, but should begin in August or September of 2021.
When partnering with State and Federal agencies, such as USDA/RD, they set the timelines and allocate the money. Additionally, there are numerous laws and regulations associated with every project that the City must follow. The City may only undertake each aspect of the program within these set timelines, once the money is obligated, and after showing legal compliance with all of the relevant Federal and State laws and regulations. Again, this is a lengthy process! Unfortunately some of these delays are also causing our overall costs to go up, which the City and its partners are aware of and are working to control.
Finally, the City completes each aspect of the project as fast as engineering, the environment, labor, resources, and safety allow. The City demands that projects are done right the first time; it will not sacrifice the safety, quality, and integrity of a project’s completion to meet a timeline.
What changes have happened as a result of the COVID-19 pandemic?
Right now, the City is continuing each of the 2 projects listed above. State and Federal Authorities consider our infrastructure projects to be essential. They have directed the City and our contractors to continue our work and to take every necessary precaution available. As we begin to reopen our economy while still in the middle of the pandemic, the City, its contractors, and state and federal partners are continuing the project while being effective, efficient, safe, and in compliance with the State OHA guidance. Even as we ramp up, there may be delays to getting components, materials, and labor. We are adapting as we move along to accommodate these changes. This is new to all of us and we're doing the best we can to keep the projects moving.
***UPDATED JUNE 29, 2021***
I read on Facebook at the end of June 2021, that the City just got $2 million dollars from the State to use for water (or sewer). Is that true? And what money is this?
Mostly true. The $2 million is a component of the money the State of Oregon received as part of the American Rescue Plan Act (ARPA). The money coming to Oregon may be spent as decided by the Legislature in Salem and Governor Brown, within limits! They have agreed to give $2 million of the State's ARPA money to each Oregon House District.
As of June 29, 2021, the City has not been officially awarded any funding from the State. But, we can confirm that, thanks to the tireless efforts of multiple people, especially Representative Nearman, his staff, Mayor Ryan Lehman, and Ms Anna Scharf, House District 23's funding was assigned solely to Amity. This is amazing and we're quite thankful for the allocation.
Yet, this money is not in Amity's bank account. There is still a lot of work that needs to be accomplished before that happens. And there is no guarantee that Amity will get the full $2 million. Although Representative Nearman asked that all his $2 million go to Amity, his request needs to be approved by the whole Legislature. Once approved, it then needs to go to Oregon's Department of Administrative Services (DAS) for implementation. The Legislature's decision and DAS's implementation are not yet final. The City thinks this will happen soon.
So, yes, it is true Rep Nearman, Ms Scharf, and others have done amazing and difficult work to ensure Amity gets $2 million from the State, it hasn't been announced officially to the City and the money is not in our bank account.
What will the City do with it?
The City asked Representative Nearman for funding to accomplish two water infrastructure projects identified in our most current Water Master Plan as in critical need of accomplishing.
One project is a complete overhaul (repair, renovation, replacement) of the water pipes that connect the City with its reservoir. Right now, the pipes are adequate but need new valves, connections, and better components to keep up with future demands upon the system.
The other project is to overhaul about a 1-mile loop of water pipes along Goucher Street in SE Amity, replacing bad pipes, replacing service feeds to each house, replacing fire hydrants, and replacing much of the valving.
Wait....what? Why isn't this $2 million being used on the other water projects? The ones mentioned above. The ones that are costing the City millions and have increased our water rates in recent years. Why not put the money to that?
There are two reasons we did not do that. First, the other projects are already funded. It would actually be disadvantageous to the City to attempt to change up (or switch) the funding already approved. Also, the $2 million in funding we're about to receive does not cover the full cost of the other projects Amity is undertaking. We would still need the other funding sources to complete them.
Second, the initial guidance the City had was that ARPA money was to be applied to new infrastructure projects, not projects already underway or funded. Amity Public Works went through all of the City's outstanding needs, as identified in our Water Master Plan, and selected the two most critical projects that met all of the State and Federal requirements - new project(s), easily completed within the given timeline, had the smallest environmental impact, easily accomplished permitting, etc. The City presented these two projects to Representative Nearman.
Could you have used the money to offset our previous water rate increases -- or our most recent sewer rate increase?
Unfortunately, no. The Federal guidance on ARPA funding is that it cannot be used to replace lost utility revenue, fill utility budget shortfalls, or lower utility rates. These are things considered to be "direct revenue replacement" which isn't allowed within the ARPA terms. The guidance was clear about this.
But, this is $2 million from the State, not the Federal Government.
Although the City should get the $2 million from the State, it is actually Federal money given to the State and then on to us. So, the Feds set the rules. We are not legally allowed to adjust your water or sewer rates with this funding. However, there is ARPA money out there that may be used for this purpose. Council President King is leading the City's efforts to obtain this funding for Amity's residents. Yet, we do not have a lot of information about how this process may work, or if we may even get this funding. But, Council President King will pursue this to the end.
That's 2 more water infrastructure project. Reading through this, we've 5 water projects either underway or planned now. Why didn't the City consider using this $2 million in funding on other projects within the City, like streets or sidewalks?
Again, much of how we can use the money is defined by the Federal government's guidance within the ARPA. Projects have to be tied to problems stemming from COVID. The projects tied to ARPA funding were broadly categorized, to include infrastructure. Yet, within "infrastructure," water and sewer projects were given priority and were/are more likely to get ARPA funding. Repairing streets and sidewalks, while needed, is not defined as ARPA's main priority for funding.
However, if the President's infrastructure bill is passed into law, we expect there to be funding for streets and sidewalks, which this City will attempt to secure for itself. Additionally, the City has received $100,000 in funding to improve the roads and sidewalks between the Elementary School and High School. We've also applied for another $100,000 grant to repair part of Church St. Recently, we paved and fixed the "car killer" corner of 1st & Stanley. We're aware of the need to fix our streets and sidewalks; we're doing what we can to fix them.
Did the City just raise our sewer rates? By how much?
Yes, on June 2, 2021 the Council voted to raise the City's sewer rates. Effective July 1, 2021 the base sewer rate for all users will increase $15. Then again on July 1, 2022 the rate will increase another (additional) $15. Finally, beginning in July 2023 there will be rate increases of 2% to keep pace with inflation.
WOW! That is a lot! Why?
The City is required by law to balance the budget each year and to balance each component of the budget, too. The City was facing a $150,000+ shortfall in the sewer component of the budget. City Staff, working with Council, cut as many costs as possible to our expenses in sewer operations. However, we were unable to close the shortfall without resorting to rate increases. City Staff advocated to Council to raise rates significantly to cover the shortfall.
Why wasn't City Staff capable of balancing the budget without a rate increase? Didn't they balance the budget it in years past? What happened?
Yes, the City did balance the budget previously. In years past, the City transferred money from different accounts in the overall budget to offset losses in the water account and sewer account. Unfortunately, due to the loss of revenue caused by COVID-19, this year the City did not have the funds available to transfer.
City Staff worked with financial advisors (our CFO) and the Council to strip the sewer budget of all extra costs. Yet, without next cutting services we could not find a way to close the gap between revenue in and expenses out.
The City is going to blame COVID-19...really?
Yes. The general fund is one of the ledger accounts the City pulled money from to cover losses in our sewer account. The City earns money into the general fund from gas taxes, lodging taxes, property taxes, and fees and charges applied to services. All of these decreased during the numerous closures during COVID. People drove less, did not go to hotels, and did not use services as frequently. The City, in-turn, received less money.
The City also uses System Development Charges (SDCs) and fees from builders and developers for sewer use. This revenue declined significantly as building slowed nationwide over the last 18 months.
Additionally, we received marijuana taxes from the state that went into our general fund. Measure 110 diverts much of that tax revenue to other state programs cutting the amount available to Oregon’s cities, including Amity.
In fact, we forecasted these losses last year and began to reduce expenses in anticipation of the revenue shortfalls. But it was not enough. Therefore, we had less available money to transfer between accounts. And it was largely due to COVID-19.
So, now that the economy is recovering, we will get that revenue back and the need to raise rates will go away, right?
Unfortunately, no. We are required to approve a balanced budget before the beginning of the fiscal year. So, the immediate rate increase must occur. However, if over the course of the next fiscal year our revenues do increase and our expenses remain stable, there may be a possibility of lowering the future rate increases.
Costs are going up nationwide. The City must pay more for goods and services, just like you. The financial experts in academia, government, and business expect costs to remain high for the foreseeable future. We must budget for these projected higher costs and ensure we can meet it with enough revenue.
Our City Council is committed to minimizing the frequency and dollar amount of the rate increases. They may reconsider the sewer rate increases during next year's budget preparations. They will reconsider rate increases when the sewer rate study results are presented.
Still, does this just mean that the City Staff was not doing its job properly and when it could not keep up the charade it just decided to raise rates?
No. The City Staff works under the guidance of the City Council. Previously, the City Council decided not to raise both water and sewer rates simultaneously. Therefore, City Staff had to legally balance the budget without sewer rate increases. City Staff attempted to not cut sewer services, personnel, or maintenance. Therefore, transferring money within the budget was the only other legal option at the time.
Moving money from certain accounts to others within the budget is legal. All these transactions were approved with Council oversight and the approval of our financial expert(s). This kept sewer rates low while also balancing the budget for as long as it was feasible.
Did the City Administrator make this a predetermined certainty? The City’s Newsletter implied as much.
While the newsletter may have implied the decision was predetermined, it was not! The City Administrator admits that the Newsletter article he wrote was poorly worded and he apologizes. But the City Council and Mayor still had the option to vote against the rate increase.
Then why didn’t the Council vote down the rate increase? They know that we do not want another rate increase. It appears the Mayor and City Council want public participation, but only listens to the City Administrator and simply does what he wants.
Unfortunately, the City hasn't raised rates since early 2019, while our costs to operate and maintain the system kept going up. Circumstances of the last 18 months necessitated the City Council to vote upon rate increases now, before the start of this new fiscal year. The City Administrator and CFO are required to impartially present the data and make a recommendation to the Mayor and Council, which is what they did. In fact, our CFO requested sewer rate increases multiple times since 2019.
The Mayor and City Council held 3 public meetings with City Staff and our CFO over the last 6 months going through the City’s finances and budget. This was not a last-minute decision forced by City Staff. The Mayor and Council sought to avoid rate increases. They went through the budget line by line to obtain savings. They saved the community every penny they could. They argued and debated the necessity of a rate increase. They heard you and asked the tough questions of the City Administrator and CFO. They asked about mitigating the rate increases through other means.
The Mayor and Council did not come to their individual conclusions quickly and they did not make their decisions because the City Administrator and CFO recommended it. They were aware of the consequences of not voting for the rate increases and they each made up their minds accordingly.
***UPDATED JUNE 9, 2021***
What is the worst that would have happened if the Council listened to the community and voted down the rate increase?
The next vote the City needed to make on June 2nd, was a vote on adopting the budget. Had Council voted down the rate increase, then the budget proposal would had to be voted down, too. Thus, City Staff would have been obligated to go back through the budget, line by line, slashing expenses until the budget balanced with the revenues available (without a rate increase). City Staff would have had to do this in about 2 weeks' time, then present the changes back to Council during another Council Meeting, and then finalize our required documentation needed to meet the State's requirement to deliver a balanced budget on July 1st. City Staff would have had little time to explore and present various other options to the Mayor and Council and have them debate these options.
Ultimately, regardless of other actions taken, the City would've been forced to cut general sewer maintenance (fixing leaks) and reduce how much the sewer treatment system operates - how much sewage gets treated per day - to reduce maintenance and operation costs. The Council knew this would be even more unacceptable to the community than a rate increase.
Did the City consider any other options besides raising rates? What about issuing bonds or levies?
Yes, the City had the option to issue bonds or levies. However, there are many reasons these were rejected as options.
First, bonds require a lot of time and effort to establish. There are a lot of state and federal laws regarding how a municipality may issue bonds. There are also a lot of costs associated with creating bonds – lawyer fees, bankers, reports to file, etc. This also takes a lot of time, time the City did not have, as the budget needs to be balanced and approved by July 1st.
Second, per Oregon law, bonds may only be used for capital projects. Amity faces a revenue shortage; therefore, the bonds are not the appropriate tool to fix the problem.
Third, while City Staff briefly considered this option – putting a local tax option to the voters – they rejected the idea because it would both take too long to establish and may not gain the revenue needed.
Therefore, City Staff had two options to present to Council regarding balancing the upcoming budget – raise rates or drastically reduce expenses in sewer operations, maintenance, and personnel.
One can read more about Oregon levies and bonds at this website: https://www.oregon.gov/dor/programs/property/pages/property-taxes.aspx.
***UPDATED JUNE 9, 2021***
Did the City Council or the Staff consider other budget options, such as layoffs, stopping pay raises, eliminating other services, or contracting out services, to avoid the rate increase?
Yes, City Staff did consider other options. However, these options would either not cover the gap in needed revenue or would cause other problems for the City.
Closing City Hall or Public Works or reducing their operating hours would not make a significant impact on financial savings and would make it harder for the City to serve the community. Closing the Library would significantly hurt those community members who rely on its services - computers, internet connectivity, summer reading programs, etc., and would not significantly reduce city expenses.
While the City could've eliminated personnel or contracted out work, there are only 9 City employees in total. The City currently contracts out its City Planner, Law Enforcement (which also does Code Enforcement), Municipal Court Judge, City Attorney, and Chief Financial Officer. The County runs our elections and building inspections. Amity Fire is a component of McMinnville Fire and is not a part of the City government. Thus, we are already a very "lean" City, there is very little to eliminate or outsource.
Plus, many of our employees are unionized. Changes to their employment status (layoffs / pay freezes) would have required negotiations between the City and the union. While there are non-union, "at will" employees, these positions are vital to the City's operations - City Recorder / Treasurer and Public Works Superintendent.
The City Administrator's position may be eliminated, as that position serves at the consent of the Mayor and Council. While they have not indicated their desire to eliminate this position, they always retain that right. If community members want to provide comments to the Mayor and Council regarding the City Administrator's performance or retention, they may do so.
Therefore, the City Administrator determined not to pursue these options and did not advocate for them to Council.
Seems like the Council faced a difficult decision. Did anyone consider how much it will hurt those community, having to pay the higher rates?
Yes, it was a difficult decision and our elected officials agonized over it. They are aware that many individuals are still recovering from the economic recession of the last 12 – 18 months and that money is tight. The Mayor mentioned repeatedly that he, every Councilor, and the Administrator will be paying the higher rates, too. It was not an easy vote for them to cast, knowing they will feel the sting of the rate increase, too.
Through no fault of the prior or current Council, the City got caught in a "Perfect Storm" that required our elected officials to reconsider their position about rate increases. It is truly commendable that the City Council revised its position after considering new information; making the tough decisions needed to meet our fiduciary responsibilities!
But are you not just going to use this rate increase to pay for other things in the budget? You have multiple costly water projects underway (see above) won’t this money just pay for the on-going water projects? Basically, you are not really going to spend this money upon the sewer system.
No. While we can transfer money from the general fund and SDCs into our sewer account, we cannot use sewer revenue on non-sewer related projects or operations. Therefore, the sewer rate legally cannot pay for any water infrastructure projects. The money gained through the rate increase will be used to operate and maintain the sewer system.
We will not use this money to improve the sewer system at this time. We are in the process of determining what deferred maintenance and system improvements are needed. When that is accomplished and presented in an engineering plan - called a Wastewater Facilities Plan (WWFP) - then the City will begin repairing and improving the sewer system. The available funds generated by the rate increases will then be used to improve and repair the sewer system per the WWFP.
When will that happen?
Right now, we expect the WWFP to be complete by the end of 2021. Therefore, we will begin any sewer work in 2022 or 2023.
What is next?
The Council has directed City Staff to undertake a comprehensive sewer rate study and deliver those results to Council no later than June 2023. Like the water rate study, this will be conducted by an objective third party. They will recommend to the City Council a new slate of sewer rates that will meet the needs of the City into the future.
***UPDATED JUNE 9, 2021***
June of 2023 seems like a long time. Why not reevaluate the rates sooner or have the rate study completed sooner?
A thorough evaluation of our sewer rates by outside, independent experts will take 12 – 18 months to complete. The team of experts conduct an investigation into our sewer operations to find areas where the City may gain efficiencies, eliminate unknown redundancies, and cut costs. They will also review the WWFP to estimate the costs and (more importantly) the needed revenue for each recommended repair and renovation. Being independent, these experts will present their recommendations directly to the Mayor and Council without interference from City Staff. And they present their findings in a public forum, too. The experts are meticulous, and their recommendations are “worth the wait.”
Also, such a study may cost the City up to $50,000 to accomplish, but it could cost significantly less to conduct. Legally, the cost of the sewer rate study must be paid out of sewer revenues. The City cannot currently afford to pay for a study, but we’ve it budgeted in the future. The Mayor, Council, City Administrator, and Public Works see this as an investment in our sewer system’s long-term financial health.