LAKE STEVENS—Since the City of Lake Stevens and the Lake Stevens Sewer District entered a legal battle involving a merging agreement in 2020, the total cost of legal-related fees, by both the City and the District, has reached a total of nearly $700,000.

The city and sewer district have been participating in a less-than-amicable merger process for the last few years that has already resulted in a lawsuit filed by the Sewer District after the City allegedly breached its contract, approving an ordinance in 2020, to use existing statutes to assume the district prior to the contractually agreed upon year of 2033. The City, in turn, filed a countersuit against the district arguing it was within their “legal right to assume the Sewer District according to state law.” The district is currently working with their attorneys to find out whether the City has the “legal right” to assume authority of the Sewer District before 2033.

The Sewer District and the City jointly filed to get a judge assigned in Snohomish County Superior Court and are now looking at setting a date for a summary judgement hearing.

As of now it appears the summary judgement motion hearing has been set for July 26 with the City of Lake Stevens’ attorney, the Sewer District’s attorney, and a judge.

The two agencies are still deciding on a trial date, but the city of Lake Stevens informed the Lynnwood Times that it will most likely be sometime in December of 2024.

The Lake Stevens Sewer District will be using the same attorney they’ve retained since 2017.

According to public records request made by the Lynnwood Times, the City of Lake Stevens has spent a total of $412,906 on attorney fees since 2020—the year the Lake Stevens Sewer District filed a lawsuit against the city for breach of contract.

While the City of Lake Stevens’ Attorney doesn’t itemize its attorney fees, City Administrator Gene Brazel informed the Lynnwood Times most work in the past 18 months has been devoted to drafting settlement documents not litigation. For the last 18 months the city has been working with the Sewer District to come up with a settlement agreement as well as a transition plan to incorporate into the city.

“It was a collaborate approach, we were working together but it got to the point where we weren’t making progress,” said Brazel. “The city made a decision that we needed to go back to the courts and seek summary judgement.”

The City contacted the Sewer District back in April to inform them they were seeking a summary judgement.

The District raising salaries for executive positions was just one example of the city not meeting eye-to-eye, Brazel continued, adding that the city compares its salaries to others in the area to ensure they remain marketable. By raising salaries to “accommodate a few folks” it could affect other cities across the state.

The primary disagreement between the District and City, as it relates to coming to terms with negotiations, has been pay and positions that would be held by District employees when they transferred to the city, Brazel added.

Brazel dismissed the District’s claim that the City is attempting to merge with it to take advantage of its positive cash revenue flow.

By state law, utility funds are considered, what’s called, enterprise funds so sewer funds raised by rates have to be used for sewer work. The only way that they could be used elsewhere, by state law, is to take out a loan against the utility and pay it back with interest.

The City of Lake Stevens has looked at imposing a utility tax for all utilities but has ultimately decided on not imposing a sewer utility tax in attempt to complete negotiations with the District.

On the other side of the legal dispute, the Lake Stevens Sewer District has spent a total of $267,559 on attorney fees since 2020.

The total cost of both the City’s and District’s legal fees of $680,465 equates to about $52 per household when taking into consideration the most recent Census reports’ data on estimated households within Lake Stevens.

The Sewer District’s General Manager Mariah Low informed the Lynnwood Times the District did not budget for litigation in 2020, when it spent a total cost of $5,500 in attorney fees.

“In 2021 through 2024 we’ve had to budget a fair good amount,” Low told the Lynnwood Times. “But it’s unknown how much it will cost from year-to-year and into the future. It all depends on what happens with the litigation.”

Low continued that, when budgeting for legal fees, it’s often a shot-in-the-dark since costs can vary from year-to-year but the District does its best to estimate based on years prior. For example, in 2024 the District budgeted $225,000 with $200,000 of that set aside for anticipated legal costs and only $25,000 remaining for general expenses.

So far this year the District has spent $4,488 in city-related legal fees.

“It’s really hard to budget something like that when you don’t know which turn it’s going to take,” said Low. “It’s a very significant portion of our budget.”

Despite this, Low added that the District has still been able to meet all of its other service obligations.

“We’re not sacrificing other things in order to do this,” said Low.

Litigation aside, the Sewer District is honing in on improving infrastructure, capital projects, and staff engagement. The District is also hiring for a couple of positions in a few months.

“We just focusing on the business we’re supposed to be doing,” said Low.

In August of 2021, the not-too-distant city of Shoreline took over Ronald Water, and Wastewater District. The city of Shoreline was the last example of a Washington State city taking over a special purpose water-sewer district which the Lake Stevens Sewer District has looked at as a model for its negotiations with the city—assessing what went well, what were the pitfalls, etc.

From 2023 to 2024, sewer rates in the city of Shoreline have jumped from $73.75 a month (which includes Shoreline Wastewater Utility as well as King County treatment) to $81.00 a month—a $7.25 or 9.83% increase.

The City of Shoreline says the increased rates are due to incorporating projects identified in its Wastewater Master Plan, extending the current low-income senior home-owners discount to low-income customers of all ages, utilizing a balance of debt and pay-as-you-go funding for capital projects, resuming the imposition of fees to cover credit card processing costs, and inflation.