‘Sticker shock.’ New city council reconsiders Pasco’s 140% water rights fee increase
The city council in Pasco has formed an ad hoc subcommittee to study the impacts of a new surcharge and 140% fee increase to the municipal water rights acquisition fee.
The move comes one month after 41 Tri-City developers, builders, real estate agents and property owners drafted a letter urging the city council to repeal the ordinance that included those increases.
While a full-on repeal is unlikely to come from the city council, it’s possible the governing body makes some small tweaks to the code changes after their subcommittee work is finished.
The ordinance was passed at a Nov. 27 city council meeting in a 5-2 vote. It allows the city to begin charging developers a higher fee — a market rate charge of $4,150 per acre-foot needed, or 1.3 pennies per gallon — if they’re unable to sell or lease the city their water rights.
The increase amounts to less than a penny per gallon and it went into effect Dec. 8. Dollars collected go directly into a fund the city uses to buy water rights that developers need.
On top of the fee increase, a new 50% surcharge will be administered on properties if their water rights had been relinquished within the past 10 years.
The changes do not apply to current projects, only future property developers. The city says this increase will ensure new developments contribute fairly to the community’s shared water resources.
This will not impact residential water bills.
Sticker shock on water rights
Since the change was approved by city council, three seats have turned over and a new council majority has voiced interest in vetting the issue further.
Two of those new public officials — Councilmen Leo Perales and Charles Grimm — will lead the subcommittee.
“At the end of the day, we really need to just figure out what’s best for the city of Pasco,” Perales told the Tri-City Herald.
“Growth should pay for growth, but at the same time we need a middle-of-the-road approach and to not be putting hurdles in front of developers,” he said.
Perales said big changes like this deserve more stakeholder engagement. While the city reached out to developers about the changes, several council members feel the process was rushed.
City Manager Adam Lincoln said staff is currently working to schedule a public meeting to answer any questions outlying questions about the increase.
A decision on changes to the ordinance could come back to the council in as soon as a few weeks.
“We’ll be ready to hold as many meetings as council needs to make sure they feel confident in their decision,” Lincoln said.
The increase to the water rights acquisition fee has been characterized as “sticker shock” by some among the city council. The fee hasn’t been raised for about a decade now, and in that time the price of water rights has increased significantly.
23,000 housing units
Water resources in Washington belong to the public and can’t be owned by any individual or group. Water rights allow a person or group to use the valuable resource for a specific time, place and purpose.
The previous fee was so low last year that some developers exploited a loophole and chose to sell their existing water rights on the market for high prices and then absorbed the city’s low acquisition fee by requesting the city’s rights.
But Pasco is running out of water and new development is booming.
The city currently leases or owns about 18,883 acre-feet of potable water annually — about 6.2 billion gallons that’s drawn from the Columbia River and groundwater.
In 2022, the city used about 84% of its total allowable water rights and it will need to purchase more.
Pasco’s population is expected to increase by 60,000 over the next 20 years and the city needs to build an extra 23,000 housing units just to keep up. There are currently 2,000 homes being reviewed by the city for development.
Perales believes an increase to the fee could impact the city’s goal to build tens of thousands of new housing units by 2045.
