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12-12-88 Public Works Comm MinutesPUBLIC WORKS/COUNCIL WORKSHOP 5:00 PM DECEMBER 12, 1988 ON The meeting was attended by Mayor Kennedy, Councilmen Gunnerson (Committee Chairman), Furlong, Saverud, Atkinson, Hopkins and Nystul. Councilwoman Hafferman arrived at 5:45. Also attending were Public Works Director Hammer, City Attorney Neier, City Accountant Robertson, City Surveyor Zavodny, City Clerk/Treasurer Halver and Rick Hull of the Daily Inter Lake. Evergreen Seger Project Proposal Public Works Director Hammer discussed the points in his written review of the Evergreen Proposal. The council members requested written answers be sought for several questions raised. 1. Will substantially everyone in the Sewer District be required to hook up within one year, like Woodland Sewer SID 337? The actual amount available from the grant cannot be determined until this question is answered. 2. Are there going to be any 2" service lines? 3. Will new hones or businesses have to install septic tanks to hook up to the system? (If the small diameter system design is chosen.) 4. Are the service lines grant eligible? 5. Will the septage from pumping the septic tanks be hauled to the Kalispell WWrP? If so, how are these costs being paid and who will be doing the pumping and hauling? 6. Who will own and run the system and set the policies? 7. Is the annual O & M cost, including septic tank plumping and inspection, of $93,500 realistic? 8. Does the monthly rate proposed for debt retirement include principal? 9. What year, or rate, was used by Stahly in his Evergreen Rates estimates? City Accountant Robertson reported the City should raise the rates 12% this year and next to meet our reserve requirements. City Accountant Robertson reviewed her memo to the Mayor and Council regarding the Sever Fund Cash Flaw Shortfall. Surveyor Zavodny thought locating, inspecting and pumping the Septic Tanks could be troublesome, with the City help liable for any and all damage to shrubs and other vegetation. - 1 - PUBLIC WORKS/COUNCIL. WORKSHOP 5:00 PM DECEMBER 12, 1988 Ken Hammer reviewed the points in Dave StahlyIs letter. City Attorney Neier said we should do a rate study and develop a specific rate for Evergreen. Councilman Furlong thought we should accommodate Evergreen if possible and have then use our plant instead of building another one in the valley. Councilman Nystul didn't think they could get by with just a small diameter system, they would probably have to build a combination of conventional and well diameter. Mayor Kennedy didn't think leaving existing, possibly leaking, septic tanks is in the best interest of the Flathead Basin. He also thought there were a lot of systems in Evergreen that don't even have a proper septic tank. Clerk/Treasurer wondered if Federal and State regulators would change their minds five years down the road and require a conventional system, just like they keep changing the requirements for Kalispell's Sewage Treatment. Mayor Kennedy said one of the key problems in the Evergreen Proposal is their request to reduce or waive the hook-up fees. Councilman Gu mierson said we have to determine what type of system we will accept, not worry about the amount of hook-up fees right now. Councilman Furlong was not in favor of the small diameter, gray Hater system. Hammer said the eventual system will have about nine mules of sewer lines. The committee agreed the council will not be ready to make a decision at the December 19, 1988 meeting. The above listed questions need to be answered. The consensus was the City is reluctant to go with the small diameter system. The numerous questions raised in the operation of the small diameter system need to be addressed. The meeting adjourned about 7:15 lam. - 2 - December 7, 1988 Honorable John "Ed" Kennedy Mayor of Kalispell Drawer 1997 Kalispell, Montana 59903 RE: EVERGREEN 201 SEWER PLAN Dear Mayor Kennedy: sraHL9 r:nGincErinG a assoaaTes 901 N. BENTON • HELENA, MONTANA 59601 PHONE 406/442-8594 Following the recent meeting between the City people and the Evergreen .people there needs to be further decisions and considerations by the City of Kalispell. 1. The information that was presented in the past indicated that the City of Kalispell residents would benefit financially by having the proposed Evergreen Sewer System connected to the Kalispell plant. With this in mind, other givens should be brought forth: 1) The proposed Kalispell 201 Phosphorus Removal Facility Plan is being approved with a future capacity to treat the Evergreen effluent. 2) The re -work of the Kalispell plant will be mostly new facilities located outside of the flood plain. 3) So far, the most economical option for Evergreen would be to build their own plant, however, there are 2 main drawbacks: (1) Several scattered wastewater treatment plants to handle the effluent from one urban area does not seem to be good long range planning and, (2) A separate treatment plant does not adapt well to phase construction which will almost certainly be necessary in the Evergreen area. 4) Applying the City of Kalispell user fee and hookup to Evergreen, along with Evergreen's debt retirement and operation and maintenance on the collection system is financially beyond Evergreen's needs. Therefore, Evergreen would ask the City of Kalispell to consider: OFFICES: 322 SECOND AVE. WEST • SUITE B • KALISPELL, MT 59901 • 406/755-8707 600 E. BASELINE • SUITE B2 • TEMPE, AZ 85283 (1) Let Evergreen share in the debt retirement of the new re -worked city plant, the existing plant bonded • indebtedness and the new outfall (Center Avenue to plant) bonded indebtedness. Sharing the indebtedness would take the place of a large part of the hookup fee. A token hookup fee would remain to reinburse the City for the portion of sludge facilities, and the new outfall, that already has been amortized by the city users. This would apply only to those existing houses which would be hooked up as a district(s) is/are formed in Evergreen. New constuction or new subdivisions would be subject to the existing ordinances unless other arrangements were made. 2. Let Evergreen share the operation and maintenance cost of the Kalispell treatment facility. 3. Let Evergreen share the operation and maintenance cost of the City outfall lines used by the Evergreen effluent. 4. Let Kalispell operate and maintain the Evergreen collection system including lift stations and pump station, for an agreeable fee. If the City is agreeable to these concepts then there still • remains many smaller details to work out. Evergreen is on a somewhat urgent schedule, so as not to loose funding sources. Would it be possible for the City to appoint a sub -committee to work with an Evergreen sub -committee and the consultant to iron out the details. The committee could hold bi-monthly meetings on a regular basis, keeping the issue active. I'll get in touch with you after your council workshop meeting of December 12. We wish to thank you for your time and efforts on this behalf. Sincerely, STAHLY ENGINEERING AND ASSOCIATES r J. David Stahly President JDS:mje cc: Lou Gates, Evergreen District •PW-0105-88 CITY 01' )(-)fin "Ed" Konnedy, Jr. H-:yoi DATE: December 12, 1988 TO: Mayor Kennedy All Council Members FROM: Ken Hammer, Director of Public Works Di,sw,:r 19or Kuhr,: , dl, MCfIL LuI 599112-1997 SUBJECT: Supplemental 201 Facility Plan - Kalispell Vicinity (Evergreen) The Evergreen Proposal can be broken down into three main categories. I. Benefits to the City of Kalispell • Il. Design Criteria III. Conditions/Specifics GENERAL COMMENTS. 1.) The Evergreen Proposal suggests that there are 1908 future users and the EPA Grant is based upon that figure, however, only approximately 200 users will be connecting upon completion of the construction. Doesn't EPA require that substantially everyone connect within one year, such as Woodland Sewer SID 337. 2.) The costs difference between the desired "conventional gravity sewer" and "small diameter gravity sewer" is negligible, in fact, I suggest that it is actually cheaper to go to the conventional gravity sewer. See Chart below: /I Alternative Capital Costs EPA Funding Local Funding 0 6 M/ / Conventional $7,492,475 $2,283,740 $5,208,735 $84,000 Small Diameter $7,290,040 $4,732,520 $2,557,520 $93,500 This Chart understandably shows why Evergreen is proposing the "small diameter gravity sewer" as their choice. The problem again seems to show that the major concern is with EPA funding. 3.) Generally, a "small diameter gravity sewer" is not conducive to long range growth and development. It is a short term solution to a long range problem. • 4.) While reviewing the Supplemental to the 201 Facility Plan, it shows table 9-2 on page 9-23 as having 4" service lines as grant eligible, I don't believe that service lines are eligible. If not, then the $1,488,000 should not be figured in on the Capital Costs on the above Chart. Pg 0105-88 Mayor and All Councilmembers Supplemental 201 Facility Plan (Evergreen) December 12, 1988 Page 2 • 15.) A major maintenance concern with "small diameter sewer" is keeping the septic tanks from filling with solids and overflowing into the sewer system. Therefore, each septic tank must be checked at least once a year and cleaned once every three years. Neglect of septic tank maintenance requirements could lead to total system failure! 6.) To clean the septic tanks once every year would require hauling the septage to the Kalispell WWTP, unless they intend to go to land application. 7.) New development outside the Evergreen Service Area would be reviewed by district management before granting an extension of the system. 8.) Using the number of 1908 future users would mean that 636 tanks would have to be pumped each year in addition to making inspections on the remaining 1272 tanks. The 0 & M costs as outlined in the 201 Facility Plan mention an annual cost of $93,500. I don't believe that this will cover the above -mentioned annual costs. 9.) A reveiw of the costs and comparisons for the Evergreen Proposal indicates that the monthly rate is based upon the Debt Retirement, but it appears that only the interest was used, not the principal. 10.) According to the City Accountant, the City of Kalsipell should consider raising Sewer Rates by 24 per cent in conjunction with the modifications and improvements to the proposed WWTP. If this is the case, then Evergreen would be . required to reflect this in their figures. 11.) I am not certain that the Reserve Capacity Cost Ratio (RCCR) has been considered throughout this study, that is, future growth is not eligible for EPA Construction Grants. 12.) There is a concern that the grey water from the "small diameter sewer" may disturb the "new process" which the City of Kalispell is considering for improvements to the WWTP. This would have to be determined by the engineer that the City selects to perform the design. BENEFITS TO THE CITY. From the previously mentioned comments, it is not clear at this time that there are any benefits to the City of Kalispell. More information is needed! DESIGN CRITERIA. Once the benefits from the Evergreen Proposal have been established in the best interest of the City of Kalispell rate user, further discussion should take place. However, it appears to be in the best interest of the City of Kalispell as well as Evergreen to strongly consider the "conventional gravity sewer" system. CONDITIONS/SPECIFICS. • When the benefits to the City of Kalsipell rate user have been determined and the design criteria established, then the conditions should be addressed, such as: 5PW-0105-88 Mayor and All Councilmembers Supplemental 201 Facility Plan (Evergreen) December 12, 1988 Page 3 • CONDITIONS/SPECIFICS. Continued 1.) Annexation Issue. The City Staff feels that the policy of requiring waiver of protest of annexation is a good policy and should continue for the Evergreen Water District. While the City may not want to consider annexing any areas in Evergreen at this time, the City should always keep her options open. This would be consistent with the present policy. 2.) Should the City of Kalispell be the,,administrator? The City Staff agrees that Flathead County should be the administrator. If the City is the administrator, administrative fees should be charged accordingly, as direct and indirect expenses have already occurred. 3.) Hook-up Fees. Presently the hook up fees are $500 for single family residence within the city limits. The 125% surcharge also applies to hook-up fees. Therefore, for the Evergreen Water District, the hook-up fees should be $625. These fees should not be waived, however, if it proves to be advantageous for the City to consider the proposal, perhaps these funds could be earmarked for the construction of the sewer lines. 4.) Rates. The rates should be according to the rate schedule as established by the City Council. Again, this would be consistent with past practice. • 5.) Ownership/Maintenance of New Sewer Lines. The City Staff feels that the City should own and maintain the new lines. This will ensure the system is being maintained efficiently and no hidden costs will be passed on to the City of Kalispell sewer user. 6.) Billing/Customer Complaints. The City should also do the billing and obviously if we own/maintain the system, we should handle all complaints. However, there are additional costs to bill Evergreen users which were not addressed in the 0 & M costs as outlined in the report by Stably Engineering & Associates. 7.) Details. If all of the above -mentioned items can be satisfactorily addressed by the City of Kalispell and Evergreen Water District, there are still more details which must be addressed. CONCLUSION. A decision to accept this proposal, or any other proposal by the Evergreen Water District should be reviewed carefully and a decision should not be made on December 12, 1988. MORE INFORMATION IS NEEDED. as 0 • CITY OF KALISPELL December 12, 1988 MEIN T0: Mayor and City Council FROM: Amy Robertson City Accountant RE: Sewer Fund I hope by now that you have had a chance to look over the financial report for last year. If you did you may have noticed that the sewer fund had a loss of $49,000 for the fiscal year. More noticable is the loss in working capital (cash) of $143,612. Unfortunately the budget does not reflect all of the costs for the sewer funds. There are uses of cash required by the band ordinances which are not expenditures but still require cash such as R & D reserve funds requirements and principal payments of the debt itself. While working on the numbers for the Evergreen project I put together the most current numbers as follows. FY88 City cash usage: actual* Debt Retirement $ 205,178 *Does not include Reserve Requirements 106,884 storm sewer, the Plant 0 & M 370,320 annual report does. Collection O & M 299,394 $ 981,776 Revenue: Sewer service charges $ 793,724 Shortfall < $ 188,052 > As I said last spring we need a rate increase. A 12% increase will generate about $95,000.... we need 12% for two years to bring us up to current needs. These numbers do not include any capital outlay, construction or new debt requirements for building a new treatment plant. If we have a new bond issue for the wwtp there will be addition debt and reserve needs and another rate increase. In looking at Evergreen's numbers, I find that they are using yesterdays costs with anticipated users for 1990. The costs for plant O & M and collection O & M are $100,000 lower than our actual costs in Fy88. What will the 0 & M cost be in 1990? Furthermore the debt retirement numbers in the report only address the interest portion; the cash needed to retire the bonds will add another $8 + to each customers monthly cost in Evergreen. I have many more concerns regarding the Evergreen Project which I believe public works is addressing. More important I think is addressing the Sewer Funds current financial position.