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07/11/90 SP City Council Minutes271 A SPECIAL MEETING OF THE KALISPELL CITY COUNCIL WAS HELD AT 5:30 P.M. WEDNESDAY.. JULY 11, 1990, IN THE COUNCIL CHAMBERS AT CITY HALL. MAYOR HOPKINS PRESIDED. COUNCILMEN ATKINSON AND GUNNERSON WERE ABSENT. ALL OTHER COUNCILMEMBERS WERE PRESENT. Mayor Hopkins called the meeting to order and led the Pledge of Allegiance. ADDRESSING THE COUNCIL Elna Darrow, Bigfork, Vice President of the Flathead Lakers, an organization of about 1000, who all live around the lake, said the organization has been around for about 25 years, and has been concerned about the unsewered Evergreen and they are so happy the City is about to reach a resolution to the problem. She thanked the City for the Laker's and for the lake. Jack Fallon, Evergreen Sewer District, said there were three minor points he wanted to present. 1. He referred to Page 12, Appendix C, on the Surcharge, that Evergreen will face a surcharge if the sewage that comes out of their forced main at the end of the forced main at the treatment plant, if that hits the maximum limit, they recognize they are hit with something there and then we go back and try to determine where that is , but we are trying to understand how that Appendix C would apply to us. Because we notice it was just taken right out of the code and not necessarily applicable to us. We view it that if our sewage violates those perameters, Then it comes out of the forced main at the treatment plant, then at that point in time the City and the District works on going to try and determine where that user is within our system, but we don't think that appendix is applicable to a user out in our system right now because we are going to have to pretreat our sewage before it gets transported to the City and if we have to pretreat it , then we are thinking we should get that money to pretreat it as opposed to the City. We need to know who the user is, is it the district or the landowner, and then at what point in time does that come into play. Our thoughts are it would come into play if the concentrations that come out of our forced main into the treatment plant violate the parameters as opposed to the discharge into our system and violating the perameters. So if the wording could be structured to indicate it that way, we would not have any problem. 2. On page 11, Appendix B, it talks about the replacement fund being one of the components of the rate. EPA ordinance guidelines requires that a replacement fund is paid by use and not by lump sum. So that needs to be calculated into the rate as part 1 is. (Just needs to follow EPA guidelines there) 3. Page 7, Surety Fund, request would be, because of the potential rate structure and lack of EPA funds, the cost of the project is increasing quite a bit and anything we have to set aside is going to tax the people even more and I would like to request a reduction in the amount of the Surety. Whether it would be 3 months payments or 3 years or $50,000 or the estimated incremental cost to treat Evergreen sewage. We would like to request that be reduced due to our financial obligations. 272 SEWER & WATER REVIEW EVERGREEN SEWER AGREEMENT Granmo moved the City Attorney be authorized to write and the Mayor be authorized to sign a Letter of Understanding with Flathead County Water & Sewer District No. 1, Evergreen, incorporating the features of interlocal agreement reviewed by the City Council on the llth day of July, 1990. The interlocal agreement shall only be executed by the Mayor upon completion of required prerequisites, including consent of annexation and creation of the RSID, withdrawal from the rural fire district and all other predetermined prerequisites Councilman Nystul seconded the motion. Furlong questioned the Council authorizing a Letter of Understanding on a document that is being reviewed, after just having input from Jack Fallon on three items. He said he assumed that the Council will take them under advisement. He said there are differences in this draft and the draft of 7/3/90. He asked if final form is expected at this meeting? Granmo stated with amendments, he would expect to get this in final form tonight. Granmo asked City Attorney Neier if "approve" would be a better word to use than "review", in the motion? Neier stated if this is going to be amended and approved, then it should be changed. He said he thought it was going to be reviewed and actually write a letter of intent incorporating basic features of this document and wait for Evergreen to look at it, but since they are here, and all these changes can be incorporated, we can approve the agreement and write a letter of understanding with Evergreen and send it to them tomorrow for their approval tomorrow night. Nystul asked if it was the intent of the motion and the intent of the Council that what we are doing tonight is approving what we anticipate as the final draft of the document? Realizing that the City Attorney and Attorney for the District have yet to go through this and dot the is and cross the t's, that the Water Quality Bureau has yet to look at the document, that D.A. Davidson, a potential bond underwriter and Dorsey Law firm, who will likely do a legal opinion on the document, that those folks all have to look at this thing to see if there is something we have missed. So is it our intent that we are doing as a final draft, subject to those reviews? Neier said it has to be. Nystul said this is not going to be in concrete. Granmo said he would like to have this in as final a form as we can make it, modified by Council action. Nystul said if the City Attorney and the Attorney for the District need to change a whereas to a therefore, is that going to cause us any problem? Granmo said the City Attorney says reviewed is a better word. Nystul asked Neier is this in final legal form? Neier said it is not, it couldn't be signed at this time. 273 Neier said it also needs to be submitted to the Attorney General's office, EPA will want to look at it, the Dorsey Law firm, bond council will want to look at it.. My reason for using the term reviewed is that I didn't think we were really going to approve this agreement and it was going to not be in some way amended at a later date. I knew there were some things in here that probably, like the rate on the replacement fund, changes necessary. 1 thought this is the document that we were basically going to give to the Evergreen Sewer District and they were going to approve or accept, with some minor changes , then we would write a Letter of Understanding incorporating both that ,the final agreement would only be executed after everything was in order including creation of the RSID , which means the bond people are going to have to look at it and I should have put in there the Attorney General's approval and consent of the annexation requirement. That's what I thought we were doing tonight. That way we can make some changes in it here , Tom Flynn has offered 3 changes and Evergreen has offered 3 suggestions and we could make those changes tonight and redo it. That would be what we approve or reviewed and send it to Evergreen, for other parties to take a look at. Evergreen needs the Letter of Understanding so that the County Commissioners can get started on the RSID. They won't start on the RSID until we get some kind of letter with Evergreen saying yes we have the basis of an agreement. This document is the basis of an agreement. May be some problems in it as to who the user is, and fairly easy to handle, don't think I can write the language now, but shouldn't be too difficult. There may be some other minor changes. I don't think we should approve this as a final agreement because we don't need to have the final agreement approved until one day before September 1, 1990. Hopkins said he did not think we approve the agreement until they are ready to open the flood gates. No not that day, but more towards that day. Fallon stated they requested clarification from the Water Quality Bureau and they said that we need to have an interlocal agreement signed by Sept. 1. He said the County Commissioners want to know that we are going to have something signed, any additional appropriations that we can get, they want to see something signed before they proceed on it. We don't see any, aside from the changes I mentioned, we don't see any problems and we have a regularly scheduled Board meeting tomorrow night and I can't speak for everybody, the attorney, the engineer and myself are in agreement with what is written in the document and we will present it to the Board that way, as taking favorable action on it. That is what we are urging, as far as EPA review. The EPA won't review the document because one of their grant conditions is that anything that they require supersedes any contractual agreements between any entities. As far as bond councils, that is correct. They will review it. We need something signed .before we can continue, that's what we got from the Water Quality Board just the other day. Furlong said it seems that we have a basis of understanding or we have an agreement in principal. Furlong asked if we have received a consent to annexation and consent to withdraw from rural fire district of 51% of the properties adjacent to Hwy 2 and Hwy 35? Hopkins said we would not ask for that until we have an interlocal agreement. That contingency of the Board or the Dis:trict10roviding those -to the City is based upon approval of this agreement. He said the Letter of Understanding' is a way to move this along more quickly 'without having to: sign the 1 ! 4 274 interlocal agreement but what I am hearing is that the letter of understanding does not mean anything. We may as well work on the interlocal agreement if the Water Quality Bureau is saying they have to have it by Sept. 1. Fallon said you can put a memorandum of understanding attached to it saying that this does not go into effect until these conditions have been met. So the interlocal agreement signed, that satisfies the Water Quality Bureau but there is this letter that is also a contract that says this is not effective until these conditions have been met. County Commissioners just want to know if the City is going to treat the sewage. Evergreen's Attorney, Bill Astle said that this letter of understanding, substantial agreement or agreement in substance, is saying we have come a long way, in concept. Astle said this letter of agreement is enough for us to begin and we can rely that there will be no substantial changes in substance. He said he thought the Commissioners would accept the go ahead with Glen and my opinion. We have a binding substantial letter of agreement, subject to a whole lot of conditions subsequent. Mayor Hopkins stated Tom Flynn's concerns would be addressed. Furlong stated on Page 3, the first full paragraph, beginning with the whereas, he wanted to know if the "agreement" is an agreement, an interlocal agreement or is there a difference? Hopkins stated he felt it was the interlocal agreement, because we are asking for Attorney General review. Furlong stated an interlocal agreement, under chapters of state law made reference to their requirement of a committee and when that was a no -no, we dropped that idea. Are there any conditions attached to an interlocal agreement that we are not aware of? Neier stated this agreement essentially complies with the state law, there was a previously drafted agreement that had a joint board established, the draft looked at about the 3rd week in June, we had a Board of Sewer review that would establish the rates, subsequent to some meetings, the state law states there shall be a board or administrator to govern the interlocal agreement authorized to carry out the interlocal agreement. In there we have inserted "pursuant to that section of Montana law the parties hereto agree that the administrator responsible for administrating the operation, maintenance, modification and expansion of the treatment plant shall be the City of Kalispell. And the city shall have sole exclusive authority in so far as matters involving the treatment of sewage and disposal". He said that change was made at the request of the Sewer & Water Committee to get us out of the joint board situation and into the City being the administrator of the treatment plant rather than have a joint board administrator. If Evergreen agrees with it, then it should be submitted that way. Hopkins asked if in the state statues there are items that need to be addressed in interlocal agreements and are not addressed in here that the Attorney General will bring it to our attention? Neier stated that is the only provision of the state requirements of.''"an interlocal agreement that may even be in question. Everything else that is supposed to be in an interlocal agreemenV.," i'w'p'in therd.- �. } 7 F. 275 Furlong suggested everywhere in the agreement that it states "interlocal agreement", strike "interlocal" and have agreement only, then there would be no question. Furlong said on Page 4,"quantity of sewage to be treated", .682 was adopted as opposed to 22%, but now it is, what happens 15-20 years down the road if Evergreen's needs are greater than .682 or the reserve capacity. Hopkins stated he thought that would come up under "duration and term", and that this agreement could be renegotiated at any time that both parties are willing. Nystul stated the forced main will be designed for a given capacity, and the given capacity will be 682 gallons per day or whatever the quantity the board chooses. Once you are at that capacity, you have a problem, because you cannot pump anymore without redoing the main. If you reach capacity, you have to figure out how to get the excess to the plant. Buck stated that if that was incorporated on Page 3, the service area would also have to be incorporated into the quantity of sewage to be treated. Furlong stated on Page 6, of the last draft, 5 lines up from the bottom, it was his understanding that there would be a period after "engineer" and the remainder of that would be dropped. Hopkins stated he had the same question and saw the redraft and noticed that was still in there. That would be taken out. It is on Page 8 of the last draft. Hopkins stated it has raised a question, at what time if the City does elect to agree to upgrade the force main, at what time do we offer payment to the district that is undergoing the construction. Fallon stated that refers to your election as to having a forced main increased to that size, so that would be at the time of bid and then the question would become when you have construction and we have to make our payment, do we pay the full amount and then you not pay your share, or do you pay it at the same time we pay ours? Furlong said on Page 7, under "odor abatement", what happens if we do add on to the force main, at that point, whose odor does it become? Engineer, Dennis Carver said the odor control is going to take place in probably 3 locations, part of it will occur away from the lift station in Evergreen, part of it will occur in the force main, away from that station, and that may take care of it. If not, something may need to be taken care of at the plant. Furlong said Fallon had stated some concerns with replacement, but when we talk about monthly charges, particularly on the bonds or capitalization, does that include, in everyone's opinion, also the interest, the carrying charges with that bond? Fallon stated the annual payment on the bond is principal and interest. Furlong stated on the top of Page 8, "in the event the district is in default of any payment to the City for any 30 day period", then it goes on to say "the City upon 10 days notice". Why isn't the 30 days long enough? Why not change the 30 to 40 days? Hopes ' stated -,'it will, Neiso'lhot'dd. 276 Furlong said on Page 10, Appendix A, at the top it says "the approximate boundary". When will it be specific? Fallon stated the boundary is specific right now, as far as the map associated with the RSID, and will be specific in the agreement. Nystul stated on Page 6, the last full paragraph, says "an engineering firm as approved by the City and the District known hereafter as the engineer shall notify the City. He said the engineering firm selected by the District isn't going to be approved by the City as far as he knew. They will pick their own engineer to do their design, so it seems the words "as approved by the City" are not correct. Fallon stated the entire line could be struck and just say the District's engineer. Nystul said under Surety Fund, the $100,000.00, the last draft had $50,000.00. And he said on Page 11, the replacement costs, the $31,000.00 that is there is what's established under the present EPA for what we just got built, so it should be understood, the replacement cost is a requirement of the EPA Grant and what we're accumulating on a per gallon basis for extent of users. Hopkins stated, Fallon, in order to test the validity of the formula, has presented in this agreement, requested that the numbers that were stricken from prior draft, be presented to him again, so that the formula could be tested. He said he requested the Public Works Coordinator to prepare the numbers and forwarded them to Fallon, with the understanding that the numbers will not become a part of this agreement at this time, but that the only way that the validity of the formula and of this document could be tested, was that the District have the availability of the numbers. The Council specifically requested that the numbers not be in the document. Furlong stated he felt Fallon should let us know the results of the study. Fallon said they had already looked at the numbers, and if we were hooked on, the City would be paying $2.00 per thousand gallons, just for the treatment plant, not the collection system. If we sent the City 200,000 gallons of sewage, we would be paying approximately $2.15. If we sent the City 300,000 gallons, we would be paying $1.74 because of the lump sum capital debt that we would be paying on a monthly basis. He said if we sent 400,000, it would be down to about $1.50. Those are higher than anything that has been represented in the past, but we don't know what our options are right now. Furlong stated he would like the motion reread. Granmo said the City Attorney is authorized to write and the Mayor is authorized to sign a Letter of understanding with the Flathead County Water and Sewer District No. l(Evergreen), incorporating the features of interlocal agreement reviewed by the City Council on the llth day of July, 1990. The interlocal agreement shall only be executed by the Mayor upon proper completion of required prerequisites including consent of annexation and creation of the RSID and any other requirement. Furlong asked if we will see this letter of understanding before it is signed? Hopkins stated it will be available the afternoon of July 12, and if theme aria.'no comments;' itwill besigned by'5:00 p:m., Friday, July :113t1h A �s' Upon roll call vote, the motion carried unanimously. ADJOURN The meeting was adjourned at 6:50 p.m. i1 ATTEST: Amy H. Robertson, Clerk -Treasurer Debbie Liverman, Recording Secretary Approved as presented August 8, 1990 1 277