Consolidation discussion continues with Council

Last year, the PUD (Public Utilities District) received a grant from the Washington State Department of Health to “complete a feasibility study about consolidating the PUD-controlled Puget Island Water System and Cathlamet’s water and sewer system. The discussion regarding the negotiation of such a consolidation, which has been the subject during several sessions of Town Council, continued as a workshop during Monday night’s session. In a prepared report that was part of the Monday meeting’s packet, Town Clerk-Treasurer Sarah Clark stated, “The Town has not yet determined if—or how—it can balance the budget in the absence of utility revenues… the concern is not due to utility revenues subsidizing other services, as some have suggested, but rather that many legally shared costs such as various services, subscriptions, overhead, and staffing would remain even if utilities were transferred. While some reductions may be possible to ease the burden, a portion of these expenses would still need to be absorbed by the already over-leveraged General Fund.”

Councilmember Laurel Waller, who has represented Council in discussions with PUD District 1 Commissioner Gene Healy, had sent a letter on Monday, April 14 to fellow councilmembers with the subject reading, “PUD thinking and work session.”

In her letter, Waller stated, “Gene handed me the cover letter and a draft Consolidation contract at the beginning of our meeting…I requested a word file, put on Word tracking, and proceeded to change the document to what I felt was fair and equitable as well as in the best interest of the Town's citizens and utility customers… Gene and I met again last Friday… I explained my process and that unless someone could convince me to change something... the revised document was basically how I was going to hand it to the council.”

Asking in her letter that “consolidation close be set at Jan. 2, 2026,” leaving six months to “go through the process,” Waller stated, “I am not expecting agreement with the contract or the changes. I believe the revised document does allow us a reasonable starting point for further or final negotiations. I believe I have taken out just about as much light as possible from between the two positions ... which is the goal of what I am trying to achieve.”

During Monday’s workshop, Waller referred to her discussions with not only councilmembers but PUD members, mentioning the 13 points of the contract colorfully nicknamed the “Baker’s Dozen.” Addressing the Council, Waller said, “At the end of the day, the one question in the air that people answer differently is 'who owns the assets?'... You're not going to make it through, you're not going to get any closer, you’re not going to remove any daylight until you come to a decision about that part. Because that's what carries this..Who gets the assets?...That's the real question. Once you come to a decision on that then it's much easier for everything else to fall in line around it to see. It's hard to split the baby. I don't know how to split the baby.”

Later in the discussion, Town Attorney Fred Johnson, who had recognized that eight of the 13 points from the “Baker’s Dozen” had been rejected, noted an amount of $42,000 Waller “eliminated” in her review of the contract that would “help fund the deficit” and asked, “Did you negotiate on behalf of the Town for that?”

Countering, Waller said, “I don't want a cost that's going to be directly put in the way so that I get to have a rate increase to do it….PUD has to be able to manage what their expenses are in order to set rates… As a utility customer, I don't want my rates to have to go up. I'm already paying for everything that people have been paying for, so add an extra $42,000? No, that's going to reflect in my rates.” Mayor David Olson countered by asking Waller, “Would the $1.7 million a year from Town revenues go to subsidize Puget Island Project for the water treatment part of it? Do they know that? How would they spend $1.7 million a year in Town revenues?”

Councilmember Robert Stowe, in turn, responded, “If we release the systems to PUD, it's their prerogative and responsibility to take care of the system. You keep saying, 'Well, we don't want to pay for their water system over there. They're not the Town.' Well, it's more than just the water. It's wastewater and that 1.7 million is going to have to go to infrastructure repair because the Town hasn't been doing very much in that arena… If you keep pushing this hard and delaying this much, we're going to have to give up to the state… We don't have the funding to repair what's coming down the line… Even if we could secure the loans, that goes right on the backs of the rate payers… We have a hard row to plough.”

As the workshop discussion turned to him, Councilmember Joe Baker said, “When we used to have council people go to different meetings, I was going to PUD meetings. I was very impressed when they were so proud that they didn't have to raise rates this year... I don't think they take rates raising lightly at all. If the rates need to be raised, I think they do it for the same reason that we do it...I'm not worried about that at all, but I am worried about Town assets being given away...We need to come to terms about what we consider Town assets....We need to be compensated rightly for those… I don't want it to be a fire sale. I want the Town to be fairly compensated if Town assets are taken over. I can understand that's part of negotiation and that's how things are negotiated, but first, I think the Council needs to get together and we need to decide what are our assets.”

Worried that the suggested June 5 deadline for a decision wouldn’t “provide enough time to finish due diligence,” Johnson suggested a July target to have the next set of drafts. “I can work with that,” said Waller. Concurring, Johnson said, “I'm all for working together. I'm just not for putting in things that put us in impossible positions and we screw up something.”

At the conclusion of the discussion, Mayor Olson, who, at the beginning of the workshop, referred to the consolidation negotiation as “the most consequential decision in 100 plus years,” asked Johnson to “do a legal report of the documents” and asked Clark to “do administrative financial impact analysis” for Council to consider the next time it meets.