Update Sept. 26:

At the Sept. 25 Sequim city council meeting, Sequim Public Works director Sarah VanAusdle clarified that a councilor indicated after the Sept. 11 meeting they intended for Sequim Bay Lodge to pay the out-of-city multiplier of 1.5 times for sewer rates rather than 1.25 times in-city rates.

Councilors had unanimously approved a 1.25 multiplier over five years.

However, most councilors said on Sept. 25 they recalled that they intended to vote for a 1.5 times multiplier for the lodge’s rate. They voted 6-1 with deputy mayor Brandon Janisse opposed to a 1.5 multiplier at a gradual rate over five years.

At the Sept. 11 meeting, councilors mentioned and/or alluded to a 1.25 multiplier or “what it’s supposed to be” or “needs to be” when prompted by staff.

Staff said on Sept. 25 there was some confusion after that meeting on what rate to apply.

VanAusdle said the original recommendation from staff was changing the multiplier to 1.25 years over three years.

She said staff listened to the meeting many times and the council’s intention was unclear.

“If it was unclear, that (1.5 multiplier) was my intention as a councilor,” mayor Tom Ferrell said.

VanAusdle said city staff will negotiate other terms of the sewer contract and bring back a contract for council approval.

Previous:

After some confusion over rates and fees allegedly owed by Sequim Bay Lodge and -14 Below Ice Cream Co. and Café, Sequim City Councilors opted to update the businesses’ sewer rates at a gradual rate and waive a large connection fee.

According to Public Works Director Sarah VanAusdle, the lodge had been paying a lower rate than in-city hotels/motels after a rate change in 2017, and there’s no documentation whether or not the lodge paid a connection fee for the restaurant space years ago.

City staff estimate the hotel over a 19-month span through July 2023 was undercharged about $18,000 less than in-city hotels/motels of comparable size, and if it were to pay a connection fee for the restaurant it’d come to a little less than $68,000.

However, city councilors at their Sept. 11 meeting unanimously opted to waive the fee. They also agreed to charge the hotel at a gradual increase over five years ending up at a 1.25-percent multiplier as an out-of-city sewer hotel/motel rate payer.

City councilors were set to finalize a contract Sept. 25 after press deadline.

Councilor Kathy Downer said Sept. 11 she wanted to “forget everything that happened before” for the businesses.

“We can’t prove if they paid it or not,” Downer said. “(The owner) does need to pay a fee for a hotel outside of city limits but gradually.

“All of us sitting here are for small businesses.”

VanAusdle estimated the lodge’s bill will be about double per month in five years once its rates are brought to current levels.

City staff estimate that the lodge paid over 19 months about $30,700 from January 2022 to July 2023, whereas with the 1.25 multiplier they would have paid about $60,200, or about $72,300 with a 1.5 multiplier.

Compared to in-city hotels of similar size, VanAusdle said the lodge was paying about 37 percent less because of rate structure changes.

City staff have “no desire to put a hardship on a business,” she said.

“They’re a large account,” VanAusdle said. “I don’t want to slam them with a huge increase. It should be gradual over time so they can adjust.”

History

The lodge hosts 54 rooms at 268522 U.S. Highway 101 just east of Sequim, and it connected to the city’s sewer system in 1998 following an emergency declaration by Clallam County after the business’ septic system failed and was deemed a health hazard. City councilors at the time agreed to connect the business to the city’s sewer system, city staff report.

Co-owner Parmiit Sidhu told city councilors Sept. 11 he at one point spoke with someone at city hall who told him the sewer line was his responsibility if it breaks or has issues, but VanAusdle said the city constructed the line and has responsibility for its maintenance.

Over the years, sewer rates changed for in-city and out-of-city hotels/motels as a 2014 utility rate study determined the businesses were underpaying for usage. Councilors in 2017 voted to charge hotels/motels 75 percent of single-family sewer base rate per its number of rooms, city staff report.

At the time, the out-of-city multiplier was two times the in-city rate, but staff determined that the increased rate would place an undue burden on the lodge, so they kept the rate the same, VanAusdle said.

City councilors voted to reduce the out-of-city rate for sewer rates to 1.5 times from two times in 2020.

VanAusdle said an out-of-city multiplier is in place as an incentive for businesses/residents to annex into the city for lower utility rates, and because it tends to cost more for the city to maintain.

City staff report the existing sewer contract wasn’t transferred to the new owners in 2018, so they needed an updated one after learning of the restaurant owners’ intent to open in May. The city sought confirmation of the sewer after Clallam County staff sought confirmation of a valid sewer hook-up.

It was connected, but VanAusdle said the city doesn’t have records of receiving a connection fee for the restaurant sewer line. City staff, however, were aware in 2007 the restaurant had hooked up to the lodge’s sewer line.

Both she and city attorney Kristina Nelson-Gross said the lodge and restaurant’s situation is unique.

“I’m not aware of anywhere else (this applies),” VanAusdle said, but added that Sequim Bay State Park will also need an updated contract.