With a 5-1 vote, Kenmore City Council adopted a franchise agreement for water and sewer utilities with Northshore Utility District.

The Northshore Utility District (NUD) Board of Commissioners approved the franchise agreement at their meeting on March 3. The franchise agreement addresses costs the City of Kenmore incurs for operating a franchise, including administration costs and impact on city infrastructure. To help recover these costs, a 5 percent franchise fee is included in the franchise agreement with NUD.

Council member Nigel Herbig vocally did not want the agreement to pass.

“I had introduced an amendment dedicating the new revenue from the fees to the Streets Fund. The amendment failed,” he said. “I thought we owed it to our citizens to guarantee that the funds would be spent as promised on street maintenance.”

The District will pass this fee along to Kenmore rate payers, who will see it as a separate line item on their water and sewer utility bills. For a household with an average water and sewer utility bill of $86.52 per month, the franchise fee will cost about $4.33 per month or $51.96 per year. As a result of NUD’s billing cycle, half of Kenmore rate payers will notice only two weeks of the fee on their March utility bill. The remaining rate payers will notice the full 5 percent fee in their next utility bill.

“Revenue from this fee will help us keep our city looking beautiful,” said Rob Karlinsey, city manager. “This fee will mitigate the street fund’s declining fund balance and provide added resources to maintain the city’s transportation infrastructure.”

The franchise fee will generate approximately $400,000 per year in revenue, helping offset the City’s rising fixed costs and declining revenues available for street maintenance and pavement preservation. A franchise fee is common in franchise agreements of this type. When compared to its neighbors, Kenmore’s combined utility taxes and franchise fee are still relatively low, even with the added franchise fee for water and sewer.

The franchise agreement takes effect March 15, 2014. The term of the agreement is through December 31, 2016 after which either party may terminate the agreement with five years written notice.

The City of Kenmore does not currently own and operate water and sewer utilities and instead grants a franchise allowing NUD to provide water and sewer utilities to Kenmore residents and businesses. The city’s current franchise agreement with NUD was adopted in 2003 and needed to be updated to clarify responsibilities among entities and reflect changes in state law.

The franchise agreement and franchise fee with NUD has been part of city council discussions since 2012, including during the 2013-2014 biennial budget public review process. Most recently, city council held a public hearing February 10.

More information is available on the city council’s Feb. 24 meeting agenda at www.kenmorewa.gov/council.