02-26-86 S&W Comm MinutesFebruary 26, 1986 SEWER AND WATER COMMITTEE 10:00 P.M.
Chairman Nystul and Council members Hafferman and Ruiz in attendance.
Mayor Kennedy, DPW Hammer, Attorney Neier, W/S Superintendent Hyde, Construction
Inspector Van Dyke, Accountant Robertson, Tom Flynn, Mike Fraser, Jay Billmayer,
George Murgel and Roger Hopkins of the Daily Inter Lake also present.
PHASE I BIDS - Mike Fraser gave a short synopsis of the bids received
for Phase I. The lowest bidder's documents are in order. Mike Fraser pointed
out that the firm is doing well in projects statewide and recommended that
the City award the bid to Holm -Sutherland as soon as possible. This led
to discussion of bid bonds and the timing of awarding the bid. Attorney
Neier's opinion was that the City could not award until the bonds were sold.
There was some discussion of when the bid bonds should be returned and Attorney
Neier, the Engineer and the Committee agreed that all but the three lowest
bid bonds should be returned immediately.
C. Nystul pointed out that the Committee needed to coordinate with the
City Attorney on when the formal award of the bid would take place. C. Haffer-
man asked several questions regarding the article in the paper regarding
responsiblity of council members for decisions made. If there is not enough
money for this project then where is the money going to come from? -00. response
was that it would be paid for with revenue bonds. She asked if the City
had the money in hand. When she was told that the bonds were not yet sold
she pointed out that the City could not award the bid without the money.
Attorney Neier stated that at the award of the bid the contract should be
• signed. He reviewed the process and timing of award and signing with the
conclusion that the notice of award and the signing of the contract were
-" to be considered simultaneous actions. He also was of the opinion that when
the bid was awarded the City assumes responsibility for the profit to be
realized from the project. The cash should be in the bank at the time of
signing. C. Ruiz stated that the City couldn't sell bonds for a project
that they didn't have the figures on. Needed a calendar for this. Attorney
Neier responded that the usual calendar for an SID or bond issue
includes - hearings, notices, inducement resolution, and about halfway
down the calendar is where you go out for bids - but it is putting the cart
before the horse to go out for bids before arranging for the bonds. C. Hafferman
further asked about money in the bank to cover the engineering work for the
project, and C. Nystul explained that there was approximately $200,000 in
the bank to cover the engineering and that the proposed bonds would cover
Phase I. The Council still must decide how much of Phase II will be taken
from which fund so that they can sell one bond rather than two bonds a month
apayt, which would cost more. The Finance Committee is to meet at 8:30 a.m.
February 27 to select a bond underwriter so that at Monday's Council meeting
they will be in a position to pass the necessary preliminary resolution
authorizing the first part of the process to sell revenue bonds. C. Hafferman
then asked what would happen if the Council did not approve the bonds - and
the Committee agreed that the Council would not award the contract at this
Council meeting, based upon the Attorney's opinion.
There was extended discussion of the timing of public hearing for a
rate increase and the buying of the bond and receiving of the proceeds, and
• the awarding of the bid. The Contractor has 60 days before he can withdraw
his bid. Tom Flynn suggested that the Council set a public hearing date
of April 21, and explained the notice procedure and timing required. He
said the City could have had a rate increase in effect now, but last November
when he wrote his critique and gave it to the Mayor nothing
SEWER AND WATER COMMITTEE
• February 26, 1986
Page 2
was ever done. There has been a problem with the haphazard way things have
been handled. He pointed out that he finds himself in the same position
as the taxpayers who know only what is written in the paper. From one week
to the next it seems the City is enjoying a bounty of funds from all sides
and then we hear that they are vastly overextended. So it was suggested
that my (Mr. Flynn's) obligation was to tell you what to do. All I can do,
he stated, is tell you what can be done within statutory limits, where
rate matters are concerned. He also said that for years the need to provide
replacement funds has been pointed out. He prepared and gave out a copy
of the proposed rate changes, which are based on 12%. He also pointed out
that the Council could not buy any more revenue bonds than could be paid
for out of a 12% rate hike. This project is not an EPA mandated project
so it must be within the 12%. Ordinance 1002 states that for any improvements
to the plant the City would set aside 1/20th of the cost for replacement,
to begin July 1 after the completion date. So he arbitrarily, for the sake
of this discussion, included that amount to be set aside. The City is already
obligated to set aside $31,000 per year, which has been partially fulfilled
(was not begun when it should have been but -is being done now). HeOWlained
the process by which they decided what figure should be used for the 1/20th.
He felt that the City could get the $30,000 (1/20th) in addition to the 12%
by raising the hookup fees sufficiently to cover this. This seems a fair
approach. He did question whether the City was making it undesireable to
• live in town. There was additional discussion of the timing for a rate increase
hearing in relation to the bonding and award of bid, revenue bond capabilities
for Phase II (none), which portions could be paid for by tax increment (1st
Alley West and a portion of Phase 1I), and the details of what is needed
in the Water Department to get everything done and notices out on time. The
Committee agreed to recommend three things to Council: 1) All but the three
lowest bid bonds be released, 2) No award of bid until the bonds are sold,
and 3) to proceed with the sale of bonds in the amount allowable (contingent
upon the 12% sewer rate increase).
C. Ruiz stated that it was not his job to find funds and that he wanted
the Finance Director and the Mayor to provide the figures, laid out plainly
showing options available and a calendar with recommendations for funding
of Phase I, Phase II, and 1st Alley West for Monday night and for future
meetings. Accountant Robertson said that they could provide the information
concerning what is available but they needed to know dollar figures for the
projects and a schedule of spending. DPW Hammer said he was tired of this
arrangement also and stressed that Council needs to plan ahead - the City
needs a 5-year capitalization plan. C. Ruiz said he was not afraid to make
a decision if he knows what funds are available.
WATER RATE INCREASE - A 12% increase will raise $70,100 annually for
bond retirement. Discussion included the $261,000 in water funds that will
be involved in 5th Avenue West, the need for ample reserves for replacement,
the Accountant's concern that there are at present no funds legally set aside
for R & 0 (Council needs to authorize this), historical costs vs. actual
costs, and the uses R & 0 funds can be expended for. The Committee recommended
40 to Council that the entire 12% water rate increase be set aside for R & 0
and that a public hearing date be set.
SEWER AND WATER COMMITTEE
• February 26, 1986
Page 3
FIRST ALLEY WEST - Jay Billmayer explained changes in the recommendations
because of studies done when the original sleeving plan was found not feasible.
There are 37 stores served by this sewer line. The City has two alternatives:
1) a 10" pipe at a sufficient depth to achieve gravity flow, OR 2) Raise
the level and modify the service outlets and/or use lift pumps where needed.
Mr. Billmayer recommended Option 2 and went on to list his reasons: deep
sewer construction would encounter laid up rock foundations, concern about
roof drains, plumbing in basements, gas mains, power poles with cross members
which are holding transformers, a 20' alley closed in by buildings, the type
of trenching needed for laying the pipe, the groundwater table (10' below
grade and slightly above footings), saturated silt problems, slope stability
aspects, and dewatering. Fifteen of the structures would require pumps for
sanitary sewer. Two already have pumps. Alternate 2 would reduce excavation
costs but the savings would be taken up by the purchase of the pumps. The
major advantage would be the lessening of the potential property hazards.
The Power Company system is archaic but the whole business district relies
on it and it would be very expensive to replace. The figures for th��eyy��.options
are: 1) $185,000 plus approximately $6,000 for_ geotechnical and $2U ►0
for dewatering, and 2) $207,000.
C. Ruiz asked if it was possible to SID this, but the response was that
the City put these lines in and the utility should replace them. Replacement
• costs should have been set up for this type of problem. The alley reconstruction
portion ($103,000) could possibly be an SID. This project is set for this
summer.
There are still 22 roof drains in service. There is an ordiance (Jan.
1985) providing for assessing roof drains, but this has not been done. This
is unmetered flow coming into the system. These drains must be eliminated
because the small pumps will not handle the flow. A center invert in the
alley will provide drainage to catch basins. The building owners must provide
designs to get the water from the roof to the alley. The Committee agreed
that the roof drains must be eliminated. There is a question of who is supposed
to enforce the ordinance. Stahly Engineering should be able to provide a
list of the existing roof drains on lst Alleys East and West. These should
then be billed or put on the taxes.
Jay Billmayer went on to say that the City should work with the telephone,
cable and power companies to get conduit laid in the alley for replacement
so that the alley will not have to be torn up in the future. He felt that
the surface replacement should be concrete. The DHES will approve either
choice for this project. At this point Billmayer needs direction.
DPW Hammer said the City needs the funds before going out on bids. C.
Ruiz indicated that tax increment funds should be used. The City Attorney
will work out agreements concerning maintenance of the pumps so that the
City will not be responsible except for providing the pumps initially.
DPW Hammer will talk to PP&L to see if they would be willing to pay the difference
40 ($25,000) between going shallow and going deep. This would save them the
headache of maintaining their poles during construction and save them the
cost of laying conduit in the future as it could be done while the alley
is torn up. He said he feels PP&L owes the City one because they took City
money on Center Street when technically the City did not have to pay.
SEWER AND WATER COMMITTEE
February 26, 1986
Page 4
BILL CLEMENTS SEWER LINE - DPW Hammer explained the situation and said
the General Fund is obligated to Mr. Clements for $2,300. Mr. Clements has
two estimates and the Building Department should have excess funds this can
be taken out of. This matter is to go to the Finance Committee. Mr. Clements
would pay the sewer hookup fee.
Attorney Neier arrived at the meeting.
SLUDGE HANDLING FACILITY WARRANTY DATE - Water Quality Bureau says that
the warranty period ends February 28 because that was the date of the end
of the contract period. Attorney Neier indicated he wrote a memo concerning
this last year. He said the plant was finally accepted by resolution in
July because a long list of items were not accomplished under the contract
period. He wonders why the WQB is involved in the date and being involved
why they appear to be on the contractor's side for a reduction of time.
Three change orders extended the original contract period to February 28.
The question seemed to be whether the City needed to do anything. S��1y1,1,Supt.
Hyde said that Morgan and Oswood are not actively refusing to do an*ing
but that may be only because the City is not actively pursuing. Pic Olsen
has given up on them. There was a meeting in September of all those involved
and Stahly wrote a number of letters concerning deficiencies. M & 0 fixed
some of the problems, and others are continuing to develop. The Committee
felt it was important that M & 0 be notified of all warranty problems by
40 the 28th just in case it does end up being the end of the warranty period.
The contract states that 1) The Owner is to serve notice of problems to Contractor
and surety, 2) the Contractor has 10 days to repair or replace, and 3) if
not done the Owner may fix and go to the surety for collection of costs.
Attorney Neier pointed out strongly that the staff must be notified
that under no circumstances is anyone to sign any releases for bonding companies
for M & 0. A letter will be sent to M & 0 listing the items that are not
working, attempting to charge for itemsalreadyrepaired, and giving ten
days to repair or replace- It was agreed that Stably would write the letter
listing the items and the Mayor would add a cover letter and send both to
M & 0.
DPW Hammer pointed out that until the date the complete operation and
maintenance manual was received from WQB the City cannot be blamed for operator
error on any of the items in question.
ajg
11
It .
is
WATER UTILITY FUNDING:
As replacement reserves have been drawn down to extremely low levels
in recent years and there is a constant demand on them the necessity
for this increase is obvious. ,It is proposed that the funds generated
by this increase be transferred monthly to that replacement account.
The increased funds to be obtained from an adjustment of user fees
and an increase in hook-up fees. Proposed user fee adjustments as
detailed below. Adjusted hook-up fees to be discussed.
BASIS OF INCREASE:
1984-85 Water Billing
Hydrant Rental
Hook Up Fees
Annual Increase per Statute
12%
$ 566,857
14,500
3,277
584,634
$70,156
DETAIL OF
PRESENT REVENUE
AND PROPOSED INCREASE
-------------------------------------------------------------------------------
RATE PRESENT
1984-85 i
PROPOSED ADJUSTMENT
BRACKET --Gallons RATE
REVENUE---+
ADDED REVENUE
-----------------------------
i
-RATE -----INCREASE--
-------------
Monthly Usage:
i
0 to 20,000 $.90
$341,063
$1.00 $.10
$34,106
20 to 50,000 .82
51,177
.90 .08
4,994
over 50,000 .75
75,400
.85 .10
10,053
i
i
467,640
49,153
Sprinkling .45
i
90,645
.50 .05
10,522
Out -of -City Premium
i
4,162 i
500
Customer Fire -Protection
i
4,410
530
MUNICIPAL HYDRANTS
i
14,500
5,200
HOOK UP FEES
3,277 !
4,200
$ 584,634 $ 70,105
SANITARY SEWER FUNDING:
Base Year--1984-85 Income from Sewer Fees $ 639,380
'Income from Hook-up Fees 75,690
Gross Revenue 715,070
State Statutes permit annual increases in municipal utility
revenues up to 12% of prior years revenue.
AND
A further increase sufficient to fund any EPA Mandated items.
There is an unfunded EPA item resulting from the completion
of construction at the Waste Water Plant. On Feb. 1, 1982
while negotiating the grant for the plant with EPA you
were required to adopt Ordinance 1002, which stipulates that
the utility will set aside the sum of $31,000 annually into
a replacement reserve covering the existing plant. And
at such time as additional plant is completed this reserve
will be increased by 1/20th of the cost of such additions.
V*
The $31,000 is presently being placed in reserve. The added
sum per ordinance will be required beginning July 1, 1986.
• The ordinance is not clear as to exactly what items the
1/20th applies. This has been discussed with city officials
concerned with the utility and Stahly Engineering personnel
as well as the former Director of Public Works who drew up
the ordinance. The conclusion reached was that it was
intended to cover the mechanical elements of the new plant
and that the added reserve should be approximately $30,000
Bids have been opened covering Phase One of expansion of the
sewer mains the cost of which must be covered by issuance of
Revenue Bonds in a sum approximating $600,000.
Bonding agents have indicated the annual debt service on
an issue of this size will be approximately 84,000
PRPOSAL:
That Sewer fees be increased 12% from the present $1.25 per M
to $1.40 per M Gallons with appropriate adjustments to minimums
which applied to present income of $715,070 will provide 85,808
That Hook-up fees be increased sufficiently to provide the
sum needed for the reserve fund, which will involve an increase
of about 50% 30,000
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