# The Price of Clean Water: Bellingham Tackles 100 Years of Deferred Infrastructure The City of Bellingham's Budget and Finance Committee met on July 7, 2025, to confront a sobering reality: a century of deferred maintenance on the city's water, sewer, and stormwater systems had reached a financial breaking point. Over the course of an hour-long meeting, committee members grappled with proposed utility rate increases that would push a typical family's monthly bill from $135 to $189 over three years — increases that, while painful, officials argued were essential to prevent system failures that could cripple the city. Committee Chair Lisa Anderson presided over the meeting, joined by Council Members Dan Hammill and Michael Lilliquist. The discussion was informed by months of prior presentations and technical analysis, with today's session focused on five specific ordinances that would implement the rate increases and expand assistance programs for low-income residents. ## The Staggering Cost of Delay Mike Olinger, Public Works Deputy Director, opened the presentation with a stark illustration of how delay makes infrastructure problems exponentially more expensive. In 2012, the city could have replaced its aging wastewater solids handling system for $43 million with 7% rate increases. When they tried again in 2021, the price had jumped to $259 million requiring 14% increases. That project was shelved due to PFAS contamination concerns. Now, looking ahead to 2039, staff estimates the cost at $720 million requiring 19% rate increases. "Delaying action now leads to faster, higher rate increases later," Olinger explained. "Results in a more reactive maintenance which is more expensive." The presentation was supported by consulting engineer Tage Aaker from FCS, who walked through detailed financial projections showing how the proposed increases would work. A typical single-family customer currently pays about $135 per month for water, wastewater, stormwater, and watershed fees combined. Under the proposal, that bill would rise to $152 in 2026 (a 13% increase), $172 in 2027 (another 13% increase), and $189 in 2028 (a 9.7% increase). When adjusted for inflation, Aaker noted, the $189 bill in 2028 would be equivalent to about $173 in today's dollars — providing some context for the real impact on families. ## Infrastructure on the Brink Mike Wilson, Assistant Director of Public Works for Engineering, provided sobering details about the city's infrastructure challenges. Much of Bellingham's water and sewer systems were built in the 1920s and 1930s, meaning pipes are reaching 100 years of age and the end of their useful lives. The city has been investing only $2-3 million per year in pipeline replacement, but the Water System Plan recommends accelerating that to $13 million annually. Rather than making such a dramatic jump immediately, staff proposed gradually building up the replacement program over the three-year rate period. On the water system side, the primary drivers for rate increases are distribution system piping replacement and storage improvements, particularly the long-planned King Mountain storage facility. This project would consist of two 2.5-million-gallon tanks and supporting infrastructure, representing a major investment in system capacity and reliability. For wastewater, the biggest expenses include sewer conveyance improvements (pipe replacement throughout the system) and emissions upgrades at the Post Point treatment plant. Wilson noted that with cancellation of the major solids handling project in 2022, the city still faces significant deferred maintenance needs. Perhaps most alarmingly, Mayor Kim Lund highlighted during the discussion that the city's single water intake from Lake Whatcom — the wooden pipe connecting the reservoir to the treatment facility — is more than 100 years old. "Of the things that keep me up at night, that is the thing," Committee Chair Anderson remarked. "That is our lone connection to Lake Whatcom." ## Housing and Infrastructure Nexus Council Member Michael Lilliquist pressed staff on how infrastructure investments could unlock housing capacity, viewing utility improvements through the lens of the city's housing crisis. He pointed out that the city doesn't build housing directly, "but we build infrastructure that makes housing possible. We're in the infrastructure business." Wilson explained that the King Mountain water storage project is particularly critical for enabling development on the north side of the city and beyond Guide Meridian, where hundreds of housing units depend on adequate water capacity. The infrastructure investments aren't just about maintaining current service levels — they're about enabling the city's growth strategy. Lilliquist also explored how infill development benefits from existing infrastructure. Wilson noted that it's actually less expensive to serve infill development because pipes are already in the ground, though sometimes they need to be upsized to meet current standards. For the Alderwood area to the west, Wilson revealed that the city actually has significant capacity through the Marietta Reservoir, which is currently offline due to water quality concerns. If development or water sales could create enough turnover to maintain water quality, that reservoir could be brought back online, providing substantial capacity for western growth. ## The Customer Assistance Expansion Recognizing that utility rate increases would hit low-income residents hardest, the city proposed expanding its Customer Assistance Program (CAP). Currently limited to seniors and disabled residents earning less than specific income thresholds, the expanded program would be available to all households earning less than 80% of Area Median Income. The program maintains three discount tiers: - 75% reduction for households earning 30% of AMI or less - 50% reduction for households earning 30-50% of AMI - 25% reduction for households earning 50-80% of AMI Additionally, nonprofit housing providers would see their discount increase from 10% to 25%, and the eligibility would be streamlined to remove age and disability restrictions. Finance Director Andy Asbjornsen explained that about 52 complexes currently participate in the nonprofit program, all serving residents at 60% of AMI. The expansion is expected to double or triple participation over the coming years. However, Council Member Lilliquist raised important concerns about mixed-income housing projects. Under the current structure, a development serving both market-rate and affordable units might not qualify for discounts because it's served by a single meter. "I don't want us to get in the way of such a project because the benefits of mixed income developments are pretty clear," he said. Chair Anderson acknowledged the complexity but noted they had time to work out solutions, citing an upcoming mixed-income project in Fairhaven that would test these scenarios. ## The Limits of Assistance The most sobering aspect of the assistance program discussion was its inherent limitations. Council Member Lilliquist noted that the program only helps "bill payers" — typically property owners — but most low-income residents are renters who don't receive separate utility bills. "This discount is necessary and important and it will help hundreds and hundreds of households, but I think there are maybe thousands who are equally low income who will not benefit from this," Lilliquist observed. He explored whether some kind of voucher system might work but acknowledged the complexity of essentially providing rent subsidies. The city estimates that funding for the expanded CAP program will cost typical customers about $1.30 per month currently, rising to $4.65 per month by 2028 as more people qualify and rate increases provide more funding. ## The Development Balance Council Member Hammill asked about developer obligations for infrastructure, seeking to clarify for the public how growth pays for itself versus burdening existing ratepayers. Wilson explained that developers must build and transfer infrastructure along their frontages, plus pay system development charges calculated to cover their proportional impact on citywide infrastructure needs. Chair Anderson provided a layperson's explanation: when the city needs to upsize a water main from four inches to eight inches to serve expected growth, developers pay connection fees based on their proportional benefit. "It's not completely externalized onto our ratepayers in the community," she noted, acknowledging the balance between development costs and public burden. ## Strategic Timing and Future Uncertainty One key aspect of the proposal is its three-year timeframe rather than the typical longer-term rate setting. Chair Anderson explained this reflects uncertainty around the city's comprehensive plan update and Environmental Impact Statement process, which will determine where future growth should occur. "We know the projects that we really need to deal with in the short term. Those are known," she said. "But the idea is not to necessarily plan for five years from now if that's not a direction we're going to go." Notably, the wastewater rate study removed the nutrient removal project entirely due to ongoing uncertainty about Department of Ecology requirements and PFAS issues. Staff didn't want to build rate increases around a project that might not be required or might take a different form. ## Committee Votes and Process Despite the difficult nature of the rate increases, the committee moved through the ordinances efficiently. Council Member Lilliquist insisted on voting on the Customer Assistance Program expansion first, calling it "a necessary precursor to considering the increases." The committee unanimously approved all four ordinances: - Customer Assistance Program expansion (24597) - Water utility rate increases (24594) - Sewer utility rate increases (24595) - Stormwater utility rate increases (24596) Council Member Hammill acknowledged the real impact on renters and others not directly helped by the assistance program, saying "we need to continue that work" beyond today's actions. Chair Anderson emphasized the necessity despite the difficulty: "Clean water is the number one foundation of health and safety of our community and unfortunately we are having to pay the bill now for what hasn't been paid in the past." ## Looking Ahead The ordinances now advance to the full City Council for consideration, with staff hoping for first and second reading approval and final passage on July 21st. Implementation would begin January 1, 2026, with enhanced communications starting in August and Customer Assistance Program enrollment beginning in October. Public Works committed to a proactive communication strategy with the goal to "inform, not persuade," emphasizing transparency about why the increases are necessary. The city is also working to replace its utility billing software to provide better customer support and tracking capabilities. As the meeting concluded, the weight of the decisions was palpable. These weren't rate increases driven by expanding services or gold-plated projects, but the inevitable cost of infrastructure that has served the community for a century. The wooden water intake pipe from Lake Whatcom, the 100-year-old distribution mains, the aging treatment facilities — all represent investments made by previous generations that are now reaching the end of their useful lives. The committee's unanimous approval reflects a recognition that while the increases are painful, the alternative — system failures, emergency repairs, and even steeper future costs — would be far worse. As Chair Anderson put it: "We can't afford to have our infrastructure fail."

### Meeting Overview The Budget and Finance Committee met on July 7, 2025, to review and approve major utility rate increases for Bellingham's water, sewer, and stormwater services. The committee unanimously approved four ordinances implementing significant rate increases beginning January 2026, along with an expanded customer assistance program for low-income households. ### Key Terms and Concepts **Customer Assistance Program (CAP):** A utility bill discount program for low-income households, being expanded from seniors/disabled only to all qualifying low-income residents earning up to 80% of area median income. **Area Median Income (AMI):** The midpoint income for the Bellingham metropolitan area as published by the U.S. Department of Housing and Urban Development, used to determine eligibility for assistance programs. **System Development Charges:** Fees paid by new development to help cover the cost of infrastructure improvements needed to serve new growth. **Water System Plan:** A state-mandated document assessing current infrastructure, projecting future demands, and outlining necessary capital improvements to meet Department of Health regulations. **King Mountain Storage Project:** A proposed 5 million gallon water storage facility consisting of two tanks to address water storage deficiencies and support growth. **PFAS:** Per- and polyfluoroalkyl substances, "forever chemicals" that forced cancellation of a planned $259 million wastewater solids handling project in 2021. **Post Point Resource Recovery Plant:** Bellingham's wastewater treatment facility that processes sewage and currently incinerates solids. **ccf:** One hundred cubic feet, the unit used to measure water consumption for billing purposes. ### Key People at This Meeting | Name | Role / Affiliation | |---|---| | Lisa Anderson | Committee Chair, Fifth Ward Council Member | | Daniel Hammill | Committee Member, Third Ward Council Member | | Michael Lilliquist | Committee Member, Sixth Ward Council Member | | Kim Lund | Mayor (attending) | | Mike Olinger | Public Works Deputy Director | | Mike Wilson | Assistant Director of Engineering | | Tage Aaker | Senior Project Manager at FCS consulting firm | | Forrest Longman | Deputy Administrator | | Andy Asbjornsen | Finance Director | ### Background Context Bellingham's utility infrastructure is aging, with much of it built in the 1920s and 1930s. The city has been investing only $2-3 million annually in water pipe replacement but needs to accelerate to $13 million per year. A critical example is the 100-year-old wooden pipe that is the sole connection between Lake Whatcom reservoir and the city's water treatment plant. Delaying infrastructure improvements makes them exponentially more expensive – a wastewater solids handling project that would have cost $43 million in 2012 is now estimated at $720 million by 2039. The city is balancing maintenance of existing infrastructure with accommodating growth, while trying to minimize rate shock for residents already facing housing affordability challenges. ### What Happened — The Short Version Staff presented comprehensive utility rate increases: 13% combined increases in both 2026 and 2027, followed by 9.7% in 2028. For a typical single-family customer, monthly bills will rise from $135 today to $189 by 2028. Water rates will increase 12% annually in 2026-2027, then 11% in 2028. Sewer rates will jump 19% in both 2026 and 2027, then 12% in 2028. Stormwater rates will see only inflationary adjustments plus small amounts to fund the expanded assistance program. The committee also approved expanding the customer assistance program from just seniors and disabled residents to all low-income households earning up to 80% of area median income, with discount tiers of 25%, 50%, and 75% based on income level. All four ordinances passed unanimously and move to full council. ### What to Watch Next - Full City Council vote on all four ordinances expected July 21, 2025 - Community communications campaign starting in August 2025 - Customer assistance program enrollment begins October 2025 - New rates take effect January 1, 2026 - Water System Plan final approval expected November 2025 at earliest ---

**Q:** What is the total percentage increase in utility bills for a typical single-family customer in 2026? **A:** 13% combined increase across all utilities. **Q:** How much will a typical monthly utility bill increase from 2025 to 2028? **A:** From $135 per month in 2025 to $189 per month by 2028. **Q:** What are the three discount tiers in the expanded Customer Assistance Program? **A:** 25%, 50%, and 75% discounts based on income level relative to area median income. **Q:** Who is eligible for the expanded Customer Assistance Program? **A:** All low-income households earning up to 80% of area median income, regardless of age or disability status. **Q:** What is the proposed King Mountain storage project? **A:** A 5 million gallon water storage facility consisting of two 2.5 million gallon tanks. **Q:** How old is the wooden pipe connecting Lake Whatcom to the water treatment plant? **A:** More than 100 years old. **Q:** What happened to the $259 million wastewater solids project planned in 2021? **A:** It was cancelled due to PFAS concerns. **Q:** How much does the city currently invest annually in water pipe replacement? **A:** About $2-3 million per year. **Q:** How much should the city be investing annually in water pipe replacement according to the Water System Plan? **A:** About $13 million per year. **Q:** What percentage increases are proposed for sewer rates in 2026 and 2027? **A:** 19% increases in both 2026 and 2027. **Q:** When do the new utility rates take effect? **A:** January 1, 2026. **Q:** How many years do these rate increases cover? **A:** Three years (2026, 2027, 2028). **Q:** What discount percentage will nonprofit housing providers receive? **A:** 25% discount (increased from the current 10%). **Q:** When will the customer assistance program enrollment begin? **A:** Early October 2025. **Q:** What was the estimated cost for a wastewater solids handling project in 2012 versus 2039? **A:** $43 million in 2012, estimated $720 million by 2039. **Q:** What percentage of the first 10 years of capital costs is just for replacing existing pipes? **A:** More than half of the costs are for the annual replacement program. **Q:** How will stormwater rates change under the new proposal? **A:** Only inflationary adjustments plus small amounts to fund the customer assistance program. **Q:** Who made the motion to approve all four ordinances? **A:** Council Member Daniel Hammill. **Q:** What was the vote result on all four ordinances? **A:** All passed unanimously 3-0. **Q:** When is the full City Council expected to vote on these ordinances? **A:** July 21, 2025. ---