PREVIOUSLY: Eureka City Council Tables Discussion on Increased Fees for Sewer Lateral Repairs Due to Pushback From Local Realtors, Homeowners

###

The Eureka City Council returned to the hot-button issue of sewer lateral repairs at Tuesday’s meeting. After hearing widespread opposition to a proposal that would increase fees for deep or complex sewer lateral repairs, the city council voted 3-2, with council members Leslie Castellano and Kati Moulton dissenting, to maintain the status quo and deny the proposal for the time being.

More than two dozen local realtors, private contractors and homeowners voiced opposition to the proposed fee hike, which appeared on the 2024-25 fee schedule, and urged the city to overhaul the entire sewer lateral ordinance. 

But before we dig into it, here’s a little bit of background: In 2019, the Eureka City Council adopted the Private Sewer Lateral Ordinance, which shifted the responsibility of lower laterals — the section of sewer pipe that runs from the property line of a building to the sewer main under the street — to property owners. However, a few years after the ordinance was adopted, city staff reported ongoing issues with laterals not being replaced by property owners when they should be, largely due to the cost. 

To address the issue, the city council amended the ordinance in 2022 to include a point-of-sale trigger that requires a private contractor to inspect the lower lateral upon the sale or transfer of a property. The city also set up a “fee in lieu” system to give property owners the option of paying an $8,000 fee  — the average estimated cost of lower lateral replacement — to the city, which allows staff to take care of repairs for them.

[CLARIFICATION: The City of Eureka determined that the average estimated cost of lower lateral replacement is closer to $10,000. The $8,000 figure was based on a calculation that factored in a 20 percent subsidy from ratepayer funds, which helps offset costs for property owners.]

Over the years, staff has encountered an increasing number of lower lateral installations that, due to depth and complexity, exceed the average cost by thousands of dollars.

To account for the increased costs, last month, staff proposed a tiered system that would increase the “fee in lieu” to $12,600 for lower lateral installations that are more than five feet underground. Under that proposal, fees for “non-standard installation” would be determined by the city engineer. However, in response to widespread opposition from local realtors and property owners, the council decided to table its decision on the matter.

At the start of Tuesday’s public hearing, Eureka Finance Director Lane Millar said the tier for “non-standard installation” had been removed from the proposed fee schedule, though the $12,600 fee for deep lateral installation was still up for consideration. 

City Engineer Jesse Willor explained the reasoning behind the proposed fee increase and described the complex sewer systems staff has encountered. “They don’t happen all the time, but they do — surprisingly — happen,” he said.

“We try to evaluate each case [on] its own, and we can’t really set a single price for it,” Willor continued. “We’ve seen cases where the lateral goes underneath the neighbor’s home … and there’s no fronting main; that’s where the projects get expensive. That’s when you start putting around the $30,000 number because that’s a building code violation. You can’t repair a lateral that goes underneath your neighbor’s house.” 

In these complex cases, Willor said the city generally follows the same process it would for capital improvements: staff draws up a design process, the city engineer tallies a cost estimate and takes bids from contractors. However, that process can take time.

“It’s standard engineering practice, but we have to make a judgment call when it comes to the case of the ‘non-standard installations’ because we don’t want to overestimate and charge somebody too much,” he said. “We actually underestimate, in this case, and try to give a lower number. That way we don’t come in over the top of what we expect a contractor to have.”

Following Willor’s presentation, City Manager Miles Slattery emphasized that the “fee in lieu” is an optional fee. 

“When property owners have a lateral that needs to be replaced — regardless of standard or non-standard — it is up to the property owner to pay that fee or fix it themselves,” Slattery said. “If they think that they can fix it for cheaper than what our fee is, they can have at it, and they can fix it.”

The city recently received a Public Records Act (PRA) request for information related to the sewer lateral fund balance, Slattery said, which has accrued over $2,130,000. 

“We have spent $730,000 since then, and that leaves a balance of $1.4 million that is still in that [fund],” he said. “[W]e have 212 properties that have paid the fee, but the lateral work has not been done. When you add all those up, it adds up to $1.73 million. That’s a difference and a deficit of $346,000 and it really falls into alignment with that 20 percent, so there are no excess funds. … We are contributing 20 percent of our ratepayer money towards this project [which] helps us subsidize the property owners.”

Addressing a comparison previously made between local municipalities, Slattery said the City of Arcata handles repairs “in house” but charges $400 more than Eureka. Councilmember Renee Contreras-DeLoach interjected, contending that Arcata doesn’t have a fee for deeper lower laterals. There was a somewhat tense exchange between the two, but they let the subject drop.

During the public comment portion of the meeting, Heather Bergen, president of the Humboldt Association of Realtors, spoke against the proposed “fee in lieu” increase, adding that the point-of-sale trigger has “entangled us all in a web of liability.”

Bergen

“We are not the sewer lateral police,” she said. “We are simply trying to help our clients navigate and negotiate through an expensive and confusing repair where there are often no solid answers. Albeit, there is solid waste. The point-of-sale component of this ordinance is unfair. It does not and will not fix the problem that is the city’s aging sewer. We’d really like to see the entire ordinance re-evaluated.”

About a dozen other local realtors echoed Bergen’s concerns, many of whom spoke in favor of a cap on “non-standard installations.” Local realtor Joanie Frederick urged the city to come up with “an equitable solution for everyone.”

“I mean, the point of sale seems kind of like a patchwork,” she said. “It would be great to go into one block and do all the laterals and do low interest rate loans. … I know it needs to be done, and we’re ready to help you with what we run into with the issues, but I think it’s time to have an advisory group and maybe approach it a little differently.”

Local contractor Donny Mobley agreed that the city should pursue an advisory group with local realtors and asked that contractors be included in the process. “There is a lot of stuff that it’s a very gray area and every one of these is a different situation,” he said. “[Myself], along with a lot of other people in my business, have been a part of that and I think it’d be very valuable to [include] somebody in [that group] that deals with this on a daily basis.”

Other speakers said the city should pay for failing laterals. Following public comment, Councilmember Leslie Castellano addressed those comments directly. “I just want to clarify, when people say the city should pay for it, that is taxpayers,” she said. “This is governed by enterprise funds, and so they would be passed onto ratepayers. For me, I think that’s less equitable than costs being passed on[to] homeowners.”

Castellano made a motion to bring the item back for consideration in a few months to give the staff time to hash it out with local realtors and contractors. Councilmember Kati Moulton seconded the action.

Contreras-DeLoach indicated that she would vote against the motion, noting that it “doesn’t make sense” to approve the $12,600 “fee in lieu” increase if there’s a chance that the council would rejigger the ordinance. “Point being, I think there were valid points that were brought up tonight. I don’t want to vote yes on $12,600 [fee] when I think that we might need to work on this [ordinance] a little bit,” she said. “I think there’s gaps … that I think we need to work on.”

Councilmember G. Mario Fernandez said he could see the need for both the $8,000 and $12,600 fees to be approved with the rest of the fee schedule and said he would also vote no on the motion.

Catellano invited the rest of the council to come up with an alternative. After a bit of discussion and a confusing attempt, Fernandez made a motion to approve the fee schedule, aside from the $12,600 fee for deep laterals. Contreras-DeLoach seconded the motion.

The motion passed 3-2, with Castellano and Moulton dissenting.

###