The City of Ketchikan is a step closer to increasing water rates by 5 percent across-the-board, but City Council members indicate that they’d like to see options that would help close the gap between what fish processing plants pay, and the much greater actual cost of their water needs.

The fee-hike ordinance passed unanimously in first reading Thursday night. It must come back to the Council for a second reading before the rate change can take effect.

Council Member Dick Coose suggested adjusting the increases so that fish processing plants pay more.

“The suggestion is 1 percent on residential, 1 percent on apartments, leaving business and haulers and industrial at 5 percent, and fish processors, we’d bring them up 50 percent,” he said.

Processors use significantly more water than any other customers, but pay a lower rate. Some Council members charged that homeowners were subsidizing those industrial users unfairly.

City officials recently met with fish processing company representatives. Those representatives objected to any rate increase that would single out their industry, but they agreed to continue working with the city to close the gap.

Processors now pay about 20 percent of the actual cost of the water they use.

Council Member Sam Bergeron said it’s an issue of fairness.

“It’s easy to just go ahead and go, ‘Five percent across the board, status quo, away we go.’ It continues on an exacerbates an inequity to our residential ratepayers,” he said.

City Mayor Lew Williams III expressed concern about raising rates too high on an important local industry.

“We got good power and we had low water and these guys came in and made major investments down that whole Stedman road, with new bunkhouses and redoing appliances, because we were very business friendly,” he said. “I want to make sure we stay that way as we negotiate with them, and instead of ramming something down their throat, we keep working together.”

The ordinance likely will come back to the Council for its April 4 meeting.

Also on Thursday, the Council approved a $2.6 million contract with Dawson Construction to renovate City Hall downtown. The building, constructed in the 1920s, needs roof, window and siding work to control leaks.