City of Chelan formalizes repayment plan for Lift Station 5 costs owed by sewer district

CHELAN — The Chelan City Council is preparing to formalize a repayment agreement with the Lake Chelan Sewer District after learning that costs tied to past infrastructure upgrades had never been formally brought before council.

The issue involves capital improvements completed at Lift Station 5 between 2020 and 2022. Under an existing interlocal agreement between the city and the sewer district, the sewer district is responsible for 50 percent of improvement costs at the lift station due to the volume of sewer flow routed through the facility.

According to Finance Director Heidi Evans, those upgrades totaled approximately $1.6 million, making the sewer district’s share about $818,000.

Evans told council that the city has received just over $211,000 in payments toward that total, leaving a remaining balance of approximately $607,000.

“The prior finance director back in 2020 had essentially developed an informal repayment schedule,” Evans said during a Feb. 3 workshop at City Hall. “Unfortunately, it was never brought to council at that time.”

Evans said the issue came to light this year after Lake Chelan Sewer District commissioners raised questions about the obligation.

“This was only caught and brought to our attention thanks to the Lake Chelan Sewer District Commissioners bringing it forward, as they believed that it was on their books,” she said. “This was not on the Public Works Director’s radar nor my own, so we’re just thankful for their honesty.”

Evans described the documentation surrounding the arrangement as limited.

“When we really looked into the documentation on this arrangement, it was quite scarce,” she said. “A lot of the information was just slated to that prior leadership and largely verbal in nature.”

The proposed agreement would establish a formal 10-year repayment schedule and apply an interest rate of just over 4.3 percent, calculated from the city’s 12-month average return through the Local Government Investment Pool.

Evans said that if the balance is carried for the full term, the city would receive roughly $141,000 in interest in addition to repayment of the principal.

“We’re just looking to get our money back in the bank and then as well some additional revenue for investment interest,” she said.

Under the proposal, both principal and interest payments would return to the sewer capital fund, where the original expenditures were made.

Evans told council that staff are now working more closely across departments to ensure that obligations tied to interlocal agreements are tracked and brought forward appropriately in the future.

The agreement is expected to come before council for formal approval at an upcoming meeting.

Andrew Simpson: 509-433-7626 or andrew@ward.media