January 2023

CITY MANAGER’S NEWSLETTER

JANUARY 2023

Rate-Setting Survey Results

The City recently did a survey asking about rate setting authority. Under a charter amendment passed in the mid-1990s, any increase in any tax or fee must be approved by City voters.  As discussed in a previous newsletter, this provision means that the City is ineligible for most of the grant and loan programs that fund water and sewer improvements.

The survey asked two questions:  First, whether people would approve a change that allowed  City Council to agree to set rates as necessary to repay loans for water and sewer improvements.  A majority of respondents were opposed:

Oppose                        55%

Support                        36%

Undecided                   10%

Second, whether people would support City Council having rate-setting authority if the increases were limited to the amount of the Social Security cost of living increase.  A majority of respondents were still opposed:

Oppose                        55%    

Support                        36%

Undecided                   10%

These survey results raise two more questions:

Follow up question one:  How does Bandon want to pay for a reliable water system?

According to our recently-adopted water system master plan, Bandon’s water system contains a large amount of aging concrete pipe.  These pipes were installed decades ago and are nearing the end of their useful life.  This is not a problem that is growth-related, and is a $10-million item at current costs.  Needed meter replacements, a new pump station, and storage in the southwest section of town, bring this figure to around $14 million. 

In addition, Bandon should have a seasonal backup water supply system for summer months in the event there is not enough water in Ferry or Geiger Creeks. Without rate-setting authority, the City cannot effectively address those issues through government grants and loans. This leaves four options:

Option One - General Obligation Bonds.

In this case taxpayers vote to borrow money to be repaid through a property tax assessment.  Bandon has done this in the past.  However, doesn’t it make more sense that water users pay for what they use?  What about out-of-town users?

Option Two - Voted Rate Increases and Higher-Interest Borrowing.

In this option, voters would need to approve rate increases, and the City would borrow funds at rates higher than would be available through government loan programs. 

Option Three - Let the System Degrade.

Without funds, Bandon will have to allow the system to degrade.

Option Four - Sell the System.

Bandon could get out of the water business and sell the system.  The buyer could set rates as it wished.  This has not worked out well for other communities.

Follow up question two:  Does Bandon want reliable electricity?

The City and Bandon Electric cannot continue to provide reliable electric service under the current charter and rate structure.  As far as we can tell, Bandon is the only electric utility in the country that has to seek voter approval to set rates. 

Costs for transformers, wire and other equipment have doubled in the last couple of years and continue to rise.  Supply chain problems mean that we have to keep more backup equipment in stock. Old equipment wears out and fails.  Lightning strikes can take out transformers.

Bandon’s electrical utility rates are much lower than our two adjacent power companies - Coos Curry Electric and Pacific Power - yet we deal with similar challenges and compete for skilled line workers.

   Without a charter change or voter approved rate increases, the City can’t guarantee reliable electric service in the long term.