Leavenworth increases development fees to cover rising utility costs

LEAVENWORTH — The one-time fee required to develop new connections to the city’s water, sewer and storm water systems will see a significant increase over the next three years. The new charges will take effect Jan. 1, 2026, with phased hikes of 20 percent in 2026, 20 percent in 2027, and 10 percent in 2028.

The increase in system development charges are part of a larger effort to bridge the current gap in utility maintenance and operation costs and plan for long-term capital needs. A 2024 Utility Rate Study by HDR Engineering identified more than $40 million needed in city water, sewer and stormwater projects through 2033. However, the utility rates and development charges have not been updated to reflect the cost of aging infrastructure, new development, and increased capacity.

“At this point, we're just losing money. We're not covering our costs because we haven't increased our rates since 2012,” said Councilmember Anne Hessburg during a study session discussing the decision.

Currently the city is only charging about half of the legal maximum on system development charges for water and sewer, and about 70 percent of the maximum allowed for stormwater.

“[The maximum amount allowed] is the actual calculated amount of what the impact to a new connection to the system costs. It's just that we can't charge more than that, so we call it the maximum,” said Public Works Director Andi Zontek-Backstrom.

During the Sept. 23 Study Session, Zontek-Backstrom proposed an increase of 15 percent every year over four years, bringing the system development charges up to the maximum allowed by 2029.  According to Zontek-Backstrom, deferring increases would keep the city in a reactive mode, continuing to address emergency repairs rather than planning for systematic infrastructure replacement. She highlighted that the current budget already depends on Real

Estate Excise Tax (REET) transfers for water projects because the water utility fund is insufficient.

During the previous study session, resident Ron Duncan urged the council to charge the full amount in the next year, pointing out that any delays would cause current ratepayers – who already saw a rate increase – to make up the difference. Councilmembers agreed that further delays would worsen the funding shortfall.

While several councilmembers expressed concern about the steep increases, they acknowledged that past deferrals had left a funding gap that could no longer be ignored. The council ultimately reached a consensus to shorten the schedule to three years.

“Ultimately we have to do what we think is right for the future,” said Councilmember Shane Thayer.

The council unanimously voted to approve the system development charge increase during its Oct. 14 meeting.

Taylor Caldwell: 509-433-7276 or taylor@ward.media