City of Depoe Bay Water/Sewer Utility Tax and Rate Increases (2019–2025)

Water and Sewer Rate Increases (2019–2025)

• Pre-2021 Background: Prior to 2021, Depoe Bay kept water and sewer charges relatively low, with only modest annual adjustments that failed to keep up with rising service costs^[1]. By 2019–2020 the City was implementing small inflationary rate increases (on the order of ~3% per year), leaving the bi-monthly base water charge around $45 and sewer base around $32 by 2020 – rates that were not covering growing operational and capital needs^[1][2]. In fact, 2021 marked roughly a decade since the last comprehensive rate review, during which time costs had outpaced the minimal rate hikes^[2].
• 2021 Rate Study and Resolution 513-21: In early 2021 the City commissioned FCS Group to analyze the financial health of the water and sewer utilities. The study revealed that existing revenues were insufficient to meet maintenance, debt, and capital requirements, putting the long-term viability of the systems at risk^[2]. FCS Group recommended significant rate increases to generate adequate revenue for operations, infrastructure investment, and to "preserve or enhance the financial integrity of the system"^[2]. After public presentation of the findings on August 17, 2021, the City Council adopted Resolution No. 513-21 on September 7, 2021 to implement a multi-year schedule of water and sewer rate increases^[3]. This resolution set out an immediate rate hike effective September 1, 2021, and annual increases every July 1 thereafter through at least 2030^[3]. The intent was to gradually bring Depoe Bay's utility rates in line with the actual cost of providing service and to fund planned capital improvements over the coming decade^[2][3].
• Initial Increase (Sept 1, 2021): The first jump under Resolution 513-21 took effect September 1, 2021. Water rates rose roughly 7% at that time (the bi-monthly base water charge increased from about $46.50 to $49.76, with usage fees per 1,000 gallons rising from $3.50 to $3.75)^[4]. Sewer rates saw a much steeper initial adjustment of around 15–16% (the base sewer charge jumped from $33.00 to $38.28, and the per-1,000-gallon sewer usage fee from $3.50 to $4.06)^[5]. This large one-time increase for wastewater was designed to catch up after years of under-collection in the sewer fund^[6]. City officials noted that prior incremental boosts had not kept pace, especially given the high costs of operating the wastewater treatment system, so a substantial correction was needed^[2].
• Scheduled Annual Increases 2022–2025: Following the 2021 adjustment, Depoe Bay's plan called for yearly rate increases each July 1. These were implemented as scheduled. On July 1, 2022, water rates increased about 7% (base water fee from $49.76 to $53.24) and sewer rates about 16% (base sewer from $38.28 to $44.40)^[4][5]. On July 1, 2023, rates went up again to $56.96 for the bi-monthly water base (+7% from 2022) and $51.51 for the sewer base (+16% from 2022)^[4][5]. The July 1, 2024 increase brought the water base to $60.95 and sewer base to $59.75^[7]. By July 1, 2025, the bi-monthly base charges reached $64.61 for water and $67.52 for sewer per Equivalent Dwelling Unit (EDU)^[8][5]. Usage charges climbed in tandem – for example, by mid-2025 the water usage fee was $4.86 per 1,000 gallons (up from $3.50 in 2019) and the sewer usage fee was $7.16 per 1,000 gal (up from $3.40–3.50 in 2019)^[9][5]. These figures illustrate the cumulative impact: from 2019 to 2025, Depoe Bay's water base rate rose roughly 43% (from $45 to $64.61) and the sewer base rate more than doubled (about 111% increase)^[4][5]. Such aggressive hikes were explicitly aimed at addressing deferred capital upkeep, meeting rising operating expenses, and building reserves for future infrastructure projects^[2]. The City acknowledged the burden on ratepayers but emphasized that, even after these increases, Depoe Bay's rates would be in line with or below those of similar Oregon coastal communities, and that the revenue was critical for system upgrades and compliance requirements^[10][11].
• Rate Increase Rationale: The official rationale for these utility rate increases centered on ensuring adequate funding for water and sewer operations, debt obligations, and capital improvements. According to the 2021 rate study report, the City needed to raise rates to support ongoing maintenance of aging infrastructure (like the water treatment plant and sewer system) and to finance capital projects identified in its Capital Improvement Plan^[2]. Additionally, the loss of outside revenue was a concern – notably, Depoe Bay anticipated the potential future loss of wastewater treatment revenue from the adjacent Gleneden Sanitary District (which had been contracting to send sewage to Depoe Bay's treatment plant)^[12]. The prospect of Gleneden building its own facility meant Depoe Bay's sewer rates had to eventually stand on their own without that partner's contributions^[6][13]. This context, combined with inflationary cost increases, led the City to adopt a proactive multi-year rate strategy in 2021. In summary, the steep water/sewer rate increases from 2019–2025 were driven by the need to catch up after years of flat rates, fund critical infrastructure upgrades, and stabilize the utilities' finances for the long term^[2][3].

Taxes and Levies for Water/Sewer Infrastructure (2019–2025)

• No Citywide Utility Tax or New Levies: Depoe Bay did not impose any new citywide taxes or special levies specifically for water or sewer infrastructure between 2019 and 2025. The city's approach to funding its utilities relied on user rates (as described above) and existing debt arrangements, rather than new taxpayer-approved measures in that period^[14]. Notably, Depoe Bay has no permanent property tax base for general city operations – the City's charter tax rate is effectively $0, so it cannot levy property taxes for general funds without voter approval^[15]. The only property tax charges the City collects are voter-approved bond levies dedicated to repaying water and sewer system debt^[15]. In other words, any property taxes related to utilities were tied to previously issued bonds, not to new operating levies or fees. During 2019–2025, the City did not refer or pass any new bond measures or local option tax levies for water or sewer purposes^[14]. Instead, the needed revenue for utility upgrades was generated through the rate increases and other existing sources (e.g. grants or the Urban Renewal fund), rather than new taxes on residents.
• Existing Water/Sewer Bond Debt: Depoe Bay's water and sewer infrastructure had been partly financed by general obligation bonds in the past, and those debts carried into 2019–2025. In 1999, for example, the City issued bonds to fund a major expansion of the wastewater treatment plant (a project undertaken to meet Department of Environmental Quality standards and accommodate future growth, in cooperation with Gleneden Sanitary District)^[16]. The 1999 financing included both revenue bonds and a voter-approved general obligation (GO) bond for the sewer system^[16]. Similarly, earlier improvements to the water system were debt-financed. By FY2019, the City's audit reported roughly $2.46 million in outstanding water/sewer bond principal remaining^[17]. These bonds are on long repayment schedules (the combined water/sewer debt is scheduled to fully mature by 2036)^[18]. Crucially, GO bonds are repaid via dedicated property tax levies. Depoe Bay's sewer GO bond has an associated property tax levy each year, and (in past years) there was also a water GO bond levy – though in recent times the City has been able to cover water debt service from utility revenues instead of a separate tax^[19]. As of 2023, the City confirmed that "the Sewer GO bond has its own tax levy, and water debt is being paid from rates" – meaning only the sewer bond still drew upon property-tax dollars^[19]. The sewer bond levy is relatively small and was the only city property tax imposed for any purpose during 2019–2025 (Depoe Bay levied no general-purpose property tax in this period)^[15].
• Bond Levy Amounts and Changes: The amount of property tax raised for the sewer GO bond can fluctuate year to year based on debt service schedules and assessed values. In the late 2010s, the City's annual sewer bond levy was on the order of only a few tens of thousands of dollars. For instance, in FY2018–19 the City levied about $9,092 in property taxes for bond debt, which increased to roughly $14,902 in FY2019–20 – a 64% jump, reflecting a higher debt service requirement that year (possibly due to a scheduled principal payment or reduced outside contributions)^[20]. This bond levy is "outside" Measure 50 limits (it is a voter-approved exempt debt levy), and it only funds the sewer system debt – it cannot be used for operations. The City did not increase any existing bond levy rate beyond what was necessary to meet the bond's repayment schedule. In other words, the tax rate for the sewer bond was adjusted within its authorized parameters to generate the needed annual payment, but no additional utility-related taxes were added on top of that. Depoe Bay's effective bond levy rate has remained very low (for example, on the order of a few cents per $1,000 of assessed value) given the city's small debt and tax base. It's worth noting that Depoe Bay's sewer bond is partially supported by other revenue as well – the City applies sewer System Development Charges (SDCs) and contractual intergovernmental payments to help pay the debt. During 2019–2022, the neighboring Gleneden Sanitary District was paying on the order of $136,000 per year toward Depoe Bay's sewer debt service (as part of an agreement for treatment capacity)^[21]. The City also periodically transferred accumulated SDC funds into the Sewer Bond Fund to offset debt payments^[22]. These contributions reduced the amount that had to be levied from Depoe Bay property owners. Overall, while the sewer bond property tax did increase in dollar terms during 2019–2025 (as scheduled debt payments grew), this was not a discretionary tax hike but rather the fulfillment of pre-existing bond obligations. No new bonds were issued in this timeframe, and the city's strategy was to retire existing debt on schedule^[14].
• Capital Funding via Urban Renewal (Non-Tax Mechanism): To finance new water and sewer infrastructure needs without raising taxes, Depoe Bay leveraged its Urban Renewal Agency and other non-tax revenue sources during this period. The Depoe Bay Urban Renewal Agency, which is funded by tax increment financing (diverted property tax growth within a designated area), accumulated substantial reserves that the City directed toward utility projects. Notably, the FY2023–24 budget included an Urban Renewal Agency allocation of $500,000 for a Water Treatment Plant upgrade^[23]. This infusion from urban renewal funds (which does not increase any individual's taxes, but rather uses existing incremental revenues set aside for development) helped support water system capital improvements without resorting to a new bond or tax levy. Similarly, the City has historically used grants and state loans for major projects when possible. The reliance on Urban Renewal Agency funding and the significant transient lodging tax revenues (earmarked partly for infrastructure via transfers) meant that Depoe Bay could undertake required water/sewer upgrades in 2019–2025 largely without additional burdens on local taxpayers beyond the scheduled rate increases^[23][24].

In summary, between 2019 and 2025 the City of Depoe Bay substantially increased water and sewer utility rates (per a 2021 Council-adopted schedule) but did not create any new taxes or voter-approved levies for those utilities. The only tax increases in this realm were the incremental changes in the existing sewer bond property tax levy, which continued as previously authorized to repay legacy debt. All new funding needs for water and sewer infrastructure were met through the stepped rate hikes on customers, prudent use of system development charges and partner contributions, and allocations from the Urban Renewal program – rather than new direct taxes on property owners. The City's rationale throughout was to ensure safe and reliable water and wastewater services by investing in aging infrastructure and keeping the enterprise funds solvent, while minimizing the impact on taxpayers beyond what had already been approved in the past^[2][24].

Sources

• [1] City of Depoe Bay – Public Works News Release: "Water/Sewer Rate Increase Information" (August 3, 2023). cityofdepoebay.org/publicworks/page/watersewer-rate-increase-information (Describes the 2021 council approval of scheduled water/sewer rate increases after 10 years of no significant rate changes.)
• [2] FCS Group – Depoe Bay Water/Wastewater Rate Study Presentation (2021). cityofdepoebay.org/media/10786 (Provided the justification for rate increases: existing rates were insufficient for operation and capital costs, recommending ~15% initial sewer hike and multi-year adjustments to achieve financial stability.)
• [3] City of Depoe Bay – 2021–2030 Water and Sewer Rate Increase Information (Sept. 2021). cityofdepoebay.org/media/14106 (Official document outlining the new rate schedule adopted by Resolution 513-21, including effective dates and percentage increases for water and sewer rates through 2030.)
• [4] City of Depoe Bay – 2021–2030 Water and Sewer Rate Increase Information (Sept. 2021). cityofdepoebay.org/media/14106
• [5] City of Depoe Bay – Resolution No. 513-21 (Sept. 7, 2021). cityofdepoebay.org/media/14106 (Council resolution adopting new water and sewer rate schedules; as reflected in city documentation, it increased the bi-monthly water base from $49.76 (Sep 2021) to $53.24 (Jul 2022), etc., and sewer base from $38.28 to $44.40, etc.)
• [6] Financial Condition Analysis – City of Depoe Bay (FY Ended June 30, 2021). Analysis based on City budget documents and unaudited financial reports
• [7] City of Depoe Bay – Water Rate Increase & Water Quality Report – News Release (May 30, 2024). cityofdepoebay.org/administration/page/water-rate-increase-water-quality-report (Notifies customers of the July 1, 2024 scheduled rate increase, with new water/sewer rates per City Resolution 513-21.)
• [8] City of Depoe Bay – 2021–2030 Water and Sewer Rate Increase Information. cityofdepoebay.org/media/14106
• [9] City of Depoe Bay – Resolution No. 513-21 (Sept. 7, 2021). cityofdepoebay.org/media/14106
• [10] FCS Group – Depoe Bay Water/Wastewater Rate Study Presentation (2021). cityofdepoebay.org/media/10786
• [11] FCS Group – Depoe Bay Water/Wastewater Rate Study Presentation (2021). cityofdepoebay.org/media/10786
• [12] Financial Condition Analysis – City of Depoe Bay (FY Ended June 30, 2021). Analysis based on City budget documents and unaudited financial reports
• [13] Financial Condition Analysis – City of Depoe Bay (FY Ended June 30, 2021). Analysis based on City budget documents and unaudited financial reports
• [14] City of Depoe Bay – Fiscal Year 2023 Financial Condition Analysis. Citizen analysis based on City budget documents and public records
• [15] Financial Condition Analysis – City of Depoe Bay (FY Ended June 30, 2021). Analysis based on City budget documents and unaudited financial reports
• [16] Gleneden Sanitary District – Wastewater Facility Plan Timeline. glenedensanitary.com/wastewater-treatment-facility-plan-timeline (Timeline notes the 1998 agreement where Depoe Bay issued revenue and GO bonds to expand the shared wastewater facilities, providing historical context for the origin of Depoe Bay's sewer bond.)
• [17] City of Depoe Bay – Audited Financial Statements FY2019 (Notes). FY2018-19 Audit Report (Discloses the amount of outstanding water/sewer bond debt (~$2.46 million as of 2019) and that these bonds are repaid by property tax levies and scheduled to mature by 2036.)
• [18] City of Depoe Bay – Audited Financial Statements FY2019 (Notes). FY2018-19 Audit Report
• [19] City of Depoe Bay – Fiscal Year 2023 Financial Condition Analysis. Citizen analysis based on City budget documents and public records
• [20] Oregon Department of Revenue – Property Tax Statistics 2019–20. oregon.gov/dor/programs/gov-research/Documents/publication-or-pts_303-405_2019-20.pdf (Shows Depoe Bay's bond tax levy amounts – e.g. City's bond levy was ~$9,092 in 2018–19 and $14,902 in 2019–20 – illustrating the increase in property taxes for the sewer bond debt service.)
• [21] Financial Condition Analysis – City of Depoe Bay (FY Ended June 30, 2021). Analysis based on City budget documents and unaudited financial reports
• [22] Financial Condition Analysis – City of Depoe Bay (FY Ended June 30, 2021). Analysis based on City budget documents and unaudited financial reports
• [23] City of Depoe Bay – Fiscal Year 2023 Financial Condition Analysis. Citizen analysis based on City budget documents and public records
• [24] Financial Condition Analysis – City of Depoe Bay (FY Ended June 30, 2021) / Secretary of State, Oregon – Municipal Audit Summary (Depoe Bay). (Highlights that Depoe Bay has no general property tax levy aside from voter-approved bond levies, meaning the City's only property tax collections are for water/sewer bond debt.)
• [25] Depoe Bay Budget Message FY2023–24 – City Budget Officer's Message (May 2, 2023). cityofdepoebay.org/media/10136 (Notes that water and sewer rates increased July 1, 2023 per Resolution 513-21, with specifics of the base rate and per-kgal fee changes.)
• [26] Financial Condition Analysis – City of Depoe Bay (FY End June 30, 2021). Analysis based on City budget documents and unaudited financial reports (Provides context on sewer fund shortfalls and the 13% sewer rate increase effective July 1, 2020, as well as the use of Gleneden Sanitary District payments and SDC funds toward sewer debt.)