With the typical monthly cost proposed to rise to $250 a month in 2023, a watchdog panel has concerns about affordability and transparency.

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When Vera Patterson received a postcard from Seattle Public Utilities (SPU) this summer alerting her to a round of proposed rate hikes, she knew what she had to do.

Patterson consulted her walking group — South End women in their 60s and 70s who gather to circumnavigate Seward Park, share news and trade stories.

“Hey guys, did you get this postcard? Our utility bills are going up,” Patterson, 68, told her friends. “They’re going to have public hearings. We need to go talk.”

Her group did exactly that, sending several members to City Hall for three public hearings this summer.

SPU is asking the City Council to approve a new six-year plan with 5.5 percent average annual increases to its combined rates for water, wastewater, solid waste (billed every other month) and drainage (paid through property taxes).

The typical monthly cost for a homeowner would climb from $180 this year to $250 in 2023, while the typical cost for an apartment dweller would grow from $107 to $151.

SPU says it needs the money to replace aging pipes, prevent sewage from spilling into the Lake Washington Ship Canal and keep up with rising employee expenses, among other things.

But a watchdog panel says SPU has missed opportunities amid a construction boom to make developers of new buildings pay for adding stress to its systems.

The panel also argues SPU’s 1.4 million residential and business customers deserve more transparency. Most voters in 2015 weren’t aware the $930 million Move Seattle transportation levy that they approved would put them on the hook for an additional $201 million in SPU spending.

While saying the rate increases are necessary, SPU acknowledges they would make life less affordable in a city where rents, property taxes and other costs for ordinary people are escalating. Water rates already are among the steepest in the country.

“I find myself before you as an alarmed senior citizen watching my quality of life shrinking daily with little to no concern exhibited by the leadership of this city,” Patterson told the council last month. “The question today is whether or not you’re listening.”

“There are costs involved”

SPU customers are well acquainted with rate hikes, having seen the typical per-month utility cost for a house nearly double from $80.09 in 2004 to $156.99 in 2014.

The council in 2014 approved a plan for 2015 through 2020 that projected average annual increases of 4.6 percent, while the new plan would cover 2018 through 2023.

For the period of overlap — 2018 through 2020 — the new plan includes greater increases than the old plan projected, something that frustrates some customers.

“You had a budget,” Patterson said in an interview with her walking group at the Rainier Beach library. “If you didn’t live within your budget, you can’t keep coming to me. Because the well is dry.”

The upward revision for 2018 through 2020 is largely based on a planned surge in capital spending to meet regulatory requirements, according to SPU’s finance director, Cameron Findlay.

SPU has moved up its timeline for building a giant wastewater-storage tunnel along the ship canal, while work related to Move Seattle is planned for the same period.

The storage tunnel, SPU says, is a significant example of spending that must happen and that most customers support. Seattle is under a 2013 consent decree with the U.S. Environmental Protection Agency and Washington State Department of Ecology to lessen the amount of wastewater pouring into city waterways.

Wastewater and stormwater in older neighborhoods along the ship canal drain through the same pipes, and the mixture spills into the ship canal during storms.

A joint project with King County, the storage tunnel will keep nearly 60 million gallons of polluted water out of the canal each year, bringing Seattle into compliance, according to SPU. The cost estimate for the project has been $423 million.

But capital projects aren’t the only reason for the proposed rate increases. SPU says its operating expenses — construction materials, taxes and employee benefits such as health insurance — are growing quicker than Seattle’s 2.4 percent inflation rate.

“The story around the country is about tension between affordability, compliance and environmental protection and the provision of core services,” said SPU General Manager Mami Hara.

Cities used to receive more federal and state support as they sought to comply with environmental regulations, said Noel Miller, who chairs SPU’s customer-review panel.

In recent years, the assistance has dwindled “to practically nothing,” according to Miller, a former public-works director for Edmonds. “I want a clean environment. I want to protect fish,” he said. “Well, there are costs involved.”

Despite its concerns, the panel is supporting the broad strokes of SPU’s new plan.

That disastrous flood at the West Point wastewater-treament plant? SPU is counting on King County’s insurance policies covering the repairs.

Though many communities outside Seattle buy their water wholesale from SPU, their customers pay different rates than people in the city.

Developer fees

When Patterson and her friends warn about customers struggling, Hara and Mayor Ed Murray insist they are all ears.

“We have been laser focused on affordability,” the mayor said in a statement, noting his administration has doubled enrollment in the city’s Utility Discount Program, which gives a 50 percent discount to certain low-income households.

Since last September, SPU has scrubbed more than $300 million in proposed spending from its new multibillion-dollar plan.

But City Councilmember Lisa Herbold, who chairs the council’s utilities committee, says more can be done to bring down the size of the requested increase. For instance, SPU could get developers to pay more.

Unlike other utilities in the area, SPU doesn’t impose growth charges when new buildings connect to its wastewater and drainage systems. And its water-system growth charge is the lowest in the area.

Boosting the charges would reduce the revenue burden borne by regular customers. SPU considered it in 2014, estimating then it could raise up to $8.6 million annually.

But the idea was put on hold in 2015, when the mayor sought a deal with developers on affordable housing. Foes say such charges make projects more expensive and would cause less housing to be built at a time when renters need more options.

Though Murray says he remains open to charging more “as we go forward,” SPU says it would need to recrunch some numbers and solicit input from developers.

Herbold is less patient, pointing to politics as the barrier to swift action. SPU could exempt affordable-housing developers from the charges, the council member says.

“The mayor has not wanted to take on this issue,” Herbold said in an interview.

The charges and various other changes Herbold is pursuing could ease the rate increases — but only a tad, given the scale of the planned spending.


Paying for Move Seattle

Miller’s customer-review panel, which recommended several of the changes aimed at reducing the rate hikes, also has raised concerns about transparency.

SPU’s new plan includes $152 million in “must-do” spending and $49 million in “opportunity” spending related to Move Seattle transportation projects.

Must-do work, such as relocating pipes, is tied to the transportation projects, while opportunity work, such as replacing pipes, means taking care of something sooner rather than later — while a street is already ripped up. SPU’s water and wastewater pipes are 70 to 80 years old, on average.

Not only were those expenses not included in the Move Seattle ballot measure, they weren’t highlighted for voters by Murray and the Move Seattle campaign.

“The Move Seattle costs are contributing notably to the rate spikes we see in 2019 and 2020,” the customer-review panel wrote in a letter to the council.

“Voters should understand the full impact of what they are being asked to approve.”

That letter also mentions the utility taxes SPU pays the city and that continue to increase.

SPU passes its taxes on to its customers but doesn’t itemize them on bills. So customers may not realize what the taxes are doing to their pocketbooks.

“This is completely opaque to the ratepayer,” the customer-review panel wrote, recommending that the taxes be itemized and that the city rein them in.

Those recommendations are under consideration by Herbold’s committee, which meets Tuesday.

SPU’s water is very high quality, and its customers use less water than people elsewhere, which helps them keep their bills down.

“SPU is one of the nation’s leading public utilities,” Murray said in his statement.

“Though rates may increase, our many efficiency and conservation programs help SPU keep bills low, as well prevent need for more costly infrastructure projects.”

To the Seward Park walkers, however, that sounds like spin. They say people in the community are moving because they can no longer afford to live in Seattle.

“Where does it end?” wondered Toni Hall, 67. “How can people carry on?”

“They can’t,” answered a matter-of-fact Kathryn Thomas, 69. “They’re moving to Kent.”

SPU should introduce a discount for seniors who aren’t wealthy, yet don’t qualify for the low-income discount, added Bessie Gratton, 73.

And the women say the proposed rate hikes should be better publicized. Those postcards that got the walking group talking: SPU mailed them only after Herbold insisted on it.

“Why aren’t people more upset?” Patterson asked. “People don’t understand what this is going to do to their overall budgets.”

This story has been corrected. An earlier version identified $423 million as the estimated cost of a ship-canal tunnel project to SPU, rather than to both SPU and King County.