Water and sewer rates to increase; harbor fees increase postponed

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The City of Kodiak sign at the Kodiak Island Borough Building. (Photo by Kavitha George/KMXT)

The Kodiak City Council was considering postponing scheduled rate and fee increases for utilities and services due to the COVID-19 pandemic, but changed their mind in order to meet debt obligations.

At their work session this week, the City took up postponing increases to water, sewer, harbor fees for six months. Next month, water rates are scheduled to increase by 5%, sewer rates by 7%, and harbor rates by 2.8%.

The council has been considering this for the past several weeks after Governor Mike Dunleavy signed SB 241, which allows municipalities to “ temporarily suspend imposition of late fees and disconnection fees on residential customer’s utility accounts” in the wake of the COVID-19 pandemic.

Postponing rate increases on water and sewer for the next six months, which have been scheduled since 2016 and 2017 respectively, will result in over $200,000 of lost revenue for the city. Revenue loss from the harbor increase would be about $65,000.

However, as City Manager Tvenge noted, the city has debt related to infrastructure projects, which rely on the revenue from the rate increases.

“The wastewater treatment plant loan (that) we took out, that was a $600,000 assessment loan. That first payment is due August 1st, and that’s $32,600. That’s a one time fee. That’s for that loan. Then of course we have the construction of the facility, and the facility was going to be budgeted through the rate structure, so we would have to subsidize all that as well.”

Tvenge ultimately recommended that the council not postpone the rate increases, noting that there are mechanisms in place to help people pay their utility bills during the COVID-19 pandemic. But this didn’t sit well with some councilmembers, who looked for alternatives.

Councilmember Charlie Davidson asked, “Would that be able to be taken out of the CARES fund?

Tevenge answered, “No. You can’t replace revenue loss (with CARES Act money).”

The CARES fund is federal aid sent to states to support industries, businesses, people, and municipalities affected by the COVID-19 economic downturn. The City of Kodiak is slated to receive over $11 million, but, as Tvenge noted, is restricted in how that money can be used.

Councilmember Whiddon proposed not postponing water and sewer, but because of instability in the fishing industry right now, postpone the harbor increase. The council accepted this idea. The new rates for water and sewer will be implemented in June.

Water and sewer patrons who may have difficulty paying their bills are encouraged to contact Kodiak Public Works at 907.486.8060. They can help you set up an adjusted payment plan or assist with the COVID-19 Hardship application for utility and rent assistance.

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