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Winlock modifies sewer loan to avoid rate increase

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The Winlock City Council has approved a modification to a Department of Ecology (DOE) loan allowing them to keep current water/sewer rates unchanged into next year, though without the ability to seek a similar modification in the future.

Approved during the council's Nov. 10 meeting, the modification allows them to draw $160,000 from a $217,000 reserve account attached to the loan, which they can then use to help make regular loan payments rather than drawing from elsewhere in the water/sewer budget.

The council had otherwise been faced with the option of increasing rates to make up for an expected shortfall of $153,000 in next year's budget, which Mayor Lonnie J. Dowell said had been an alternative the city was hoping to avoid.

"This is one way of potentially making it one more year without having to raise rates," he said of the loan modification, stating DOE would not be in a position to allow them to draw from the reserve for a second time. "We're not going to be able to ask the Department of Ecology to re-structure [the loan] again."

DOE had awarded Winlock a $6.9 million loan in 2007 toward construction of their $12 million sewer plant, completed in 2008, and required the city to build a reserve of around $333,000, equivalent to one year of loan payments, to help ensure they would be able to meet their obligations.

City Clerk Theda Curry said, were it not for this requirement to build a reserve, which the city has struggled to fulfill since taking out the loan, the water/sewer department would be operating in the black. But because of contributions of around $10,000 per month toward the reserve, the water/sewer department needs to either increase revenues or decrease expenses to balance their budget.

Curry said, in being able to use the reserve, the city will make its loan payment next year without having cut department services or increase rates, with around $57,000 to remain in reserve after the transfer is made.

She added DOE has given the city until 2025 to build the reserve back up to its required level of $333,000, which Curry said should be a more favorable situation for the city, given the loan in its entirety is expected to be paid off by 2027.

While no figures were given to the council of how high rates would have to increase if they did not approve the loan modification, Curry stated, according to preliminary calculations, she expects the increase would have been "substantial" compared to current rates of $138 per month, considered to be among the highest in the county.

She added, if the council does finds themselves needing to increase rates in the coming years, they are planning to do so gradually rather than seek larger increases at fewer intervals.

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