ORD 2009-35 RELATING TO SEWER UTILITYORDINANCE No. 2009-35
AN ORDINANCE of the City of Bainbridge Island,
Washington, relating to -the City SewerUtility; setting
sewer treatment plantcapital facility surcharges;
adding a new. -Section 13.12.305 to Chapter 13.12 Of
the Bainbridge Island -Municipal Code establishing for
limited period of .time a sewer treatment- plant.
capital facility surcharge for -customers of the
Bainbridge Island 'wastewater Treatment Plant in
order to pay for costs related to upgrades of said Plant.
THE CITY COUNCIL of THE CITY of BAINBRIDGE ISLAND
WASHINGTON, DO ORDAIN AS FOLLOWS:
Section 1. Recitals and Findings.'
A. The City operates a Sewer Utility, including a Wastewater Treatment
Plant located at 1220 Donald Place N the "Plant").
B. A structure for establishing grater and sewer rates, charges, and fees was
established by Ordinance No., 82-20, which has been subsequently
amended, and as codified in Bainbridge Island Municipal Code
("BIMC"') 13.12.300.
C. The City Council in 2007 authorized construction of Proect No. 00086,
Winslow 'wastewater Treatment Plant Upgrade Project, Liquids and
Solids Improvements (the - "Project""), hich consists of carrying out
certain additions and alterations to, and upgrades, betterments and
extensions of the Plant, all as set forth in the 2008 Capital Facilities Pian
approved by the Council on January 13, 2008, and which are of
particular benefit to the customers Of the sewer Utility whose wastewater
is treated at the Plant ('.'customers of the Plant"').,
D. Completion of the Project will enable the Plant nt to meet the requirements
of its discharge permit with the Washington State Department of
Ecology.
E. The City has contracted with a number of parties to ties ign, construct and
provide equipment for the Project.
F. The- Project is approximately 0% completed, and it is expected to be
completed between March and April 2010.
G. On January K 2009, the City Council adopted Resolution No. 2009-01 _
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expressing its official intent for the Cir to reimburse itself for certain
expenditures related to the Pect from proceeds of a fature borrowing,
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H.
The City Council passed Ordinance Nos. 2009-02 and 2009-07 ("Bond
Ordinances"), and Resoi tion Nos. 2007-195 2009-013 2009-08, and
2009^1 - "Bond Resolutions"). in order to authorize the issuance of
bonds ("Bonds") and/or bond anticipation note ("Note") for the purpose
of funding the Project and paying for the costs of the issuance of the
Bonds and/or Note.
1. n April -22, 2009, the Bainbridge Ratepayers Alliance "BRA" filed a
lawsuit against the City in Kitsp County Superior Court, and an
amended lawsuit on July 6, 2009 against the City (collectively referred
herein to as the "Lawsuit'')* .
J. Among the various claims and relief sought, the Lawsuit sought "
judgment declaring the proposed fond issue void".
K. On July 17, 2009, the City filed a notion for summary judgment seeking
to validate the Bond ordinances, and to dismiss the claims that the Bond
Ordinances were void.
L.On August 27, 2009, the City filed a motion to seven the claims related to
the validity of the Bond ordinances from the other claims presented in
the Lawsuit.
IIS. On September 4, 2009, the City's motions were granted, and orders were
entered by the Superior Court for Ritsap County that validated the Bond
Ordinances, 'dismissed with prejudice the claims that the Bond
Ordinances were void, and that severed the claims related to the validity
of the Bond Ordinances from the other claims presented in the Lawsuit.
N. On September 14, 2009, BRA filed a motion for reconsideration with the
Court which was denied by the Court on September 17, 2009.
0. On October 7, 2009, BRA filed a Notice of Appeal with the Washington
Division 11 Court of Appeals.
P. The City has been unable to issue the Bonds or enter into a Bond
Anticipation Dote due to the pending appeal and litigation, and this has
negatively impacted the sewer fund and severely jeopardized the City's
ability to pay for costs associated with the completion of the Project,
�. Without the issuance of the Bonds and/or Bond Anticipation Note and/or
other project debt financing in 2009 or 2010 in the amount of $1.5
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million or More, the Qity currently projects that the sewer =fund will have
a :negative. balance in .'early 20 1.0 and be unable to find further n'ents
for costs associated with the completion of the Project.
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R. In order to fund completion of the Project, it. appears both necessary and
reasonable . that the City implement a short-term sewer surcharge for
customers of the Plant.
S. The surcharge imposed by this ordinance will be suspended upon issuance
of -the Boyds- and the City Council will. take im-Medi t action ti re to
cause each ratepayer to experience a reduction in future obligations o the
sewer .utility reflecting the amount of the surcharge previously paid.
T. During the term ofthe surcharge. the City will continue to explore
reduction of the tdtal amount of funds needed to be generated by this
surcharge, as described Below.
U., This -Ordinance has been referred to and reviewed by the City's Utility
Advisory Committee, and said Committee Inas issued a written report
(attached) to the City CoUn it that makes certain recommendations which
have been incorporated in the Ordinance.
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V. The City caused to be puhlihd in the City"s legal newspaper and mailed
to each of the City's sewer customers a notice of a public hearing on suer
treatment plant capital facility surcharge proposed in this Ordinance held
on November 9, 2009 and continued to November 23, 2009,
W. 'The City Counleil has determined that it is necessary to implement a short-
term sewer surcharge for customers served by the City"s Plant in order to
f nd completion of the Project.
t.- Section 2, A new Section 13.12.305 is added to BIMC Chapter 13.12 and shall read a
follows:
"13.12.305 Wastewater Treatment Plant Capital Facility Surcharge.
A. The City has found it both reasonable and necessary to the
fanding of the City sewer Utility's wastewater Treatment Plant Upgrade
Project (the "Project") to fix the following temporary surcharges for the
purpose of meeting temporary cashflow needs for Project expenses that
are paid or payable in 2010 prior to the City's obtaining at least $1.5
million' in proceeds of one or more anticipated 2009 or 2 0 10 Project debt
financing transactions (the "Project Debt Financing").
B. Charge imposed for. users of the Winslow waste water
Treatment Plant only. In addition to the sewer flat rate, baserate and
volume -charges (collectively, "Monthly Charges") imposed pursuant to
BIMC 13.12.300 for customers of the City's Wastewater Treatment
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Plant, there shall -be added a monthly capital facility. surcharge equal to a
percentage o 'the customer's Monthly Char es* The surchargex..
percentage shall be 111 %, -unless end until the percentage is changed- 4
pursuant to D below. The surcharge percentage applicable licabl to each such } :.
customer in a given month shall be uniform.
C. The surcharge otherwise imposed under this section shall not
apply to participants in the City'.s low- 'income and senior discount
program.
D. The amount of the surcharge shall be reevaluated during the
term and the City Council may, with the advice of the Finance Director,
adjust the percentage prospectively to: correct for any material amount of
over/under collection of the funds necessary to cor lete the Project, or
to adjust for the amount - of a y Project - Debt - Financing where the
proceeds to the City Sewer u - - are. less than, $1.5 Thillioh.
E. Collection and billing. These charges shall be billed and paid
on a monthly basis in the sane. manner as other sewer utility billings,
F. Effe.cfive dates. The surcharge shall be -in force and take
effect for Monthly Charges that .are first bill -ed in January 2010 and shall
apply monthly 'thereafter until and iluding the Monthly Charges that
are first. billed in the earlier of; i June 20 10, or(ii) the first calendar
month following the City's receipt of Project Debt Financing proceeds
amounting. to $1.5 million or ,Wore."
Section 3. A subfund, entitled "Wastewater 'Treatment Plant Capital Facility Surcharge
Subfund" (hereinafter "Subfund") is hereby established within the City Sewer Fund. All
collected surcharges authorized under this Ordinance shall be accounted for in the Subfund and
shall be used exclusively for the payment of expenses for the Project and repayment of the
interfu d loan authorized by Resolution No, 2009-13 1.
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Section 4.. This ordinance shall take effect and' be in force five days after passage,.
approval, and publication as required by law.
PASSED by the City Council this 9th .day ofDecember, 2009.
APPROVED b the Mayor _this 111h day of December, 2009,
Christopher Snow, Mayor
. , ATTEST/AUTHENTICATE:
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Rosalind D. Lasso , City Clerk
FILED WITH THE CITY CLERK: November 20, 2009
PASSED BY THE CITY COUNCIL: December 9, 2009
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F 1 C� YS D: December 1 , 2009
EFFECTIVE DATE: December 23, Zoo
RDf ANC No.: 2009-35