Sequim’s water customers could see a 3.5-percent increase in their monthly water bills in 2009 and 2010 and sewer customers could see a 15-percent monthly increase in those years under a rate schedule unanimously adopted by the city council at its Monday meeting.

The rate increases, which will be reviewed as part of the upcoming 2009 budget process, could increase monthly water bills to $25.85 in 2009 and $26.75 in 2010.

The monthly sewer bills could increase from $39.18 to $45.06 in 2009 and $51.82 in 2010.

Finance director Karen Goschen said the debt required for upgrading the city’s water and sewer system requires the rate increases.

Ashley Emery from Peninsula Financial Consulting of Brinnon told the council at its Aug. 4 meeting that those upgrades through 2012 could cost $5.1 million for the water utility through 2012 and $16.4 million for the sewer utility.

Emery said there’s a "substantial difference" between the city’s water and sewer utilities.

The water reclamation facility upgrade and expansion project will be complete in 2010, reducing future sewer rate increases from 15 percent to 3 percent, which makes it a lower rate hike than water over the long term, Emery said.

Because of the margin of error built into the rate schedule, the city wouldn’t need much more than that but he wouldn’t recommend much less either, Emery said.

Goschen said they didn’t want to increase the rates too much but they must for a couple of years because of the water reclamation plant and these rates will be revisited every year anyway.

Emery said since the water utility has rates designed to fund future replacement costs, if property managed it won’t need big rate hikes like the sewer utility does.

The city’s water rates are pretty good compared to the rest of the state, he said.

Prior to the presentation, council and staff watched a 13-minute video that described a $255 billion "funding gap" faced by cities and counties between the money available now and what they will need to meet federal regulations by 2020.