State lenders want Seward's first water and sewer rate study since 1993 finished

Seward hasn't studied its water and sewer rates since 1993, and the state program that lends the city money for wastewater projects has told it to finish one, Public Works Director Doug Schoessler told the City Council on Tuesday.

When the city presented its financials for those loans, Schoessler said at a budget work session, the lenders told it, "you got to finish that rate study or we're not repaying all your grant that we gave you." He hopes to have the study done by the end of the year.

The loans come from the state revolving fund run by the Alaska Department of Environmental Conservation, which passes along federal money, and they can be forgiven much like grants. Seward has had most of its loans forgiven, Schoessler said, and the total is up to almost $8 million. "It certainly helped to be able to keep the rates where we are right now," he said.

City Manager Kat Sorensen said the proposed budget for 2027 and 2028 assumes no rate changes from the study, calling it "a very status quo budget." But once depreciation is counted, the water and sewer funds' costs exceed their revenue in both years, she said, "so we have to be mindful of and plan for that as we look towards that rate study."

A rate study went to the council around 2020 to 2022 but never came back after a newly hired city employee wasn't comfortable with it, and then COVID hit, Schoessler said. The city has made cost-of-living increases since, he said, "but not a rate study to show where we should be."

The biggest change, he said, would be simpler billing. Staff now have to work out how many units are in a building to set its rate. Larger buildings and businesses should be on water meters, he said, with rates that match what most communities do.

The year-end target may slip. Schoessler said some records have "really major data issues" that Public Works and the finance department are working through for the city's consultant.

Water and sewer rates are set by council resolution, according to the city's 2025 utility tariffs. The council holds public hearings on the budget Nov. 9 and Nov. 23.