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HomeMy WebLinkAbout2006-05-11 - MinutesMayor Dan Coody City Attomey Kit Williams City Clerk Sondra Smith aye City Council Water & Sewer Meeting Minutes May I I, 2006 Page I of 6 Member Aldermen evi le ARKANSAS City of Fayetteville Arkansas City Council Water & Sewer Committee Meeting Minutes May 11, 2006 Ward 1 Position 1 - Robert Reynolds Ward 2 Position 1 - Kyle B. Cook Ward 3 Position 2 — Robert Ferrell Ward 4 Position 2 - Lioneld Jordan A meeting of the Fayetteville City Council Water & Sewer Committee was held on May 11 at 6:30 p.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. MEMBERS PRESENT: Alderman Kyle Cook, Chair; Alderman Robert Reynolds, Alderman Robert Ferrell; Alderman Lioneld Jordan STAFF PRESENT: David Jurgens, Tim Conklin, Gary Dumas, Steve Davis Chairman Kyle Cook called the meeting to order. 1. Approval of Minutes No minutes were approved. 2. WSIP Update a. West Side Wastewater Treatment Plant The Committee viewed a video of the progress being made at the new wastewater treatment plant. David Jurgens said, given that they broke ground on the project only three months ago, the contractors are doing an excellent job. Alderman Ferrell asked if we are on schedule or ahead of schedule for the project. David Jurgens said we are on schedule on some parts of the project and ahead of schedule on some structures. He said that the contractor had 55 people working on-site on Monday. He said he would like to schedule some time for this group to go out and look at the site. He would prefer it not be a regular Council Tour because the contractor generally starts work at 7:00 a.m. By 4:30 p.m. the site would be pretty quiet. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes May I I, 2006 Page 2 of 6 b. Subproject WL -5 c. Subproject WL -1 and 3 d. Subproject WL -4 e. Subproject EP -1 g. Subproject WL -6, Hamestring Lift Station Mr. Jurgens said four contracts are now underway. Gamey is proceeding with boring work on the 24" and 30" force mains across Wedington Drive. Oscar Renda has their boring contractor in town already for doing bores across I540, College Avenue and various other places. Three contracts are actually physically doing work on the ground and Oscar Renda will start their second one in June. We open bids in two weeks for the Hamestring Lift Station contract. Seven good qualified contractors came to the mandatory pre-bid meeting. Archer Western is doing work on the east plant and they are proceeding on schedule and are looking to put some of the structures in operation in July. All should be at substantial completion around December or January. The pipe work, the east plant and the west plant are moving according to schedule and going very well. Alderman Cook said he wants to change the agenda a little by moving the ANRC funding item down to the HDR Rate Study agreement item so they can be discussed together. Alderman Ferrell asked if all the right-of-way had been acquired. David Jurgens said that two easements on the west side were filed in court today. In ten days we will get the written document back from the court saying we can occupy the land as necessary. All easements except two were settled. Of those two, he thinks one will settle. 3. Sanitary Sewer Rehabilitation Project Update a. Basin 1-5, 18 & 19 Sewer Rehabilitation Construction David Jurgens said TG Excavating has three crews on site and are going forward on getting that construction done. They have been doing work up on Skyline Drive and Lighton Trail. They are also working in the vicinity of Old Missouri Road laying a replacement interceptor. b. Farmington Area David Jurgens said the final design is underway on this project and we should be getting it by late summer. c. Insituform Term Contract Renewal David Jurgens said we have one year's work still available to us on this contract. He expects Shannon Jones will be bringing this renewal before the Council in June. Alderman Ferrell asked who is acting as project manager on the WSIP until one is hired. David Jurgens said he is acting as project manager now and so far it is going okay. He said they hope to do interviews for the secretary next week and hope to have her on board soon. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes May I I, 2006 Page 3 of 6 In response to a further question from Alderman Ferrell, David Jurgens said they have done some interviews for project manager. They had seven applications and none were a perfect fit. They are now in the process of determining what exactly we need for the position and plan to make an offer within two weeks. 4. HDR Rate Study Agreement & ANRC Funding Alderman Cook had staff distribute copies of a booklet that the City staff presented to the Arkansas Natural Resources Commission on Thursday, May 4. Mayor Coody, Steve Davis, Alderman Cook and David Jurgens met with representatives of the Commission to ask for funding options and additional money to try to finalize funding for the overall project. ANRC has verbally agreed to what was presented. One of the options presented was to try to wrap the funding around present debt and try to hold off on the principle payments until after that debt is paid off. This would reduce the amount of rate increase for citizens. If the agreement can be finalized, it will be a help the City tremendously. Steve Davis talked about the contents of the booklet of information submitted to ANRC and explained some of the information, including the schedule for the project and cost. The estimated construction costs for the elements that were a part of the original WSIP are now predicted at $178 million. When we add the Farmington lift station, the total comes to $183 million. Included in the information was how much we have paid so far, how much is left to pay, the amount of the RLF funds available and how much more money we need. The schedule shows we need an additional $55 million to complete the work. Mr. Davis said that we have $5.1 million in sewer system revenues available, as well as $2.5 million in impact fees, which buys down the project costs to $47.5 million. We currently have $12.6 million in outstanding water & sewer system debt. Our maximum annual debt service is $2.4 million and the average annual debt service is $1.3 million. He explained that if the City does a traditional loan or bond, we add the annual debt service for the new bond or loan to the average annual debt service. The bond covenants say we have to have rate coverage equal to either 125 or 130% of the average annual debt service. When looking at the 130% coverage, we would need a 68% rate increase in sewer rates. Mr. Davis reviewed the options for the City at this point. He talked about the option of "wrapping" or interweaving our existing water and sewer revenue bonds with the $47 million loan from ANRC so we attain a fairly level $3,841,000 annual debt service, which would allow the rate adjustment to be reduced. He reviewed the rates that would result from the different options, with and without the wrap. He talked about the cash pay down options and said the current cash available from the sewer system and from wastewater impact fees is $7.6 million. We will soon have an additional $1.1 million from the 35 acre land sale. Based on our build -out trend, we should be able to generate an additional $2,250,000 from impact fees, giving us about $11 million in cash to pay down this total debt. He explained that a key for ANRC is rate affordability. One of the measures that the EPA mandates for ANRC is how water and wastewater rates impact affordability of customers. They define affordability as 2% of the median family income. He went on to explain how either a 68% or a 49% rate increase would translate to the ratepayer. He said the combined water and wastewater bill for pretty much every user in Fayetteville would be under $112 per month with a 49% rate increase. Most of the residents in Fayetteville are currently paying between $30 and $45 per month. He said the request the City made to ANRC was approval to begin drafting loan documents where Fayetteville borrows up to $47 million and wraps around the debt service payments with the RLF loan until Fayetteville's existing revenue bond issues are fully paid in 2012 and 2017. He said 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes May I I, 2006 Page 4 of 6 the meeting with ANRC staff was very productive and Randy Young (Director of ANRC) called Mayor Coody on Friday (May 5) to say that they agreed with our request. David Jurgens said he had talked to Scott Savoy today and Mr. Savoy said they are in the process of drafting the letter of approval to the City and it should be out by the end of next week. Steve Davis said before the ANRC will sign a loan, the City has to have a rate ordinance in place that provides the debt service coverage. The rate ordinance can be structured so the rates don't come on line until the money is actually needed to make the debt service payments. There was discussion about current rates and how much the increase would be for the citizen, considering average usage and high usage in summer months. Alderman Cook asked staff to come up to some scenarios for what charges would be for the average citizen. Steve Davis said staff could pull some numbers and come up with various scenarios. He said the rate study itself will take about nine months to get done. It will be a very thorough rate study and unlike the Black and Veatch study, you will be able to trace numbers all the way through and there will be explanations with every exhibit so it will be easy to understand where the numbers came from. We don't anticipate any of the confusion that was associated with the 2003 study. Alderman Cook said he wanted to get this information to the Committee. There will be more questions and we will need more information but he wanted to get the information out there so the Committee could begin thinking about it. Alderman Ferrell said he welcomes the information. He thinks that as soon as we get this information, a poll of the committee should be taken to see where we are headed. He said we don't need any more work that we don't need to do on this project. Alderman Jordan agreed and said we need to look and if there is any fat at all on the project, we need to cut it out. Alderman Cook said there are some items that have been discussed in the total number that we can put off. David Jurgens said he is in the process of analyzing what was published in the master plan and updating it for capacities and issues like that. Alderman Cook said ANRC will not give us the money unless we do a rate study and get our rates at a level that will satisfy that debt service. Steve Davis said we have $75,000 in the budget for this rate study and we had $10,000 that was left over from the last rate study, giving us a total of $85,000. We need $13,000 out of water and sewer reserves to pay for this rate study. In answer to a question from Alderman Reynolds, Steve Davis said you have to do the study because you have to be able to defend why you are charging that much money. We are obligated by ANRC to produce the data from the rate study. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes May I I, 2006 Page 5 of 6 5. Impact Fee Update Tim Conklin said he has been working with Duncan & Associates on phase II of this project. Last year the Council approved a resolution to have Duncan & Associates look at a methodology and proposal to update our impact fees. It has taken some time to negotiate with them to get a consulting fee down to a level that staff felt comfortable presenting to this Committee and to the City Council. For Fayetteville to update the fees for the central system (treatment plant, lift stations, force mains within Fayetteville) it will cost $30,500 (for the parts that we own). The idea is that we would calculate a base impact fee for the City of Fayetteville and the cities of Elkins, Farmington and Greenland would pay Fayetteville to calculate impact fees for their systems that provide capacity to connect to our systems. Mr. Conklin has talked to the mayors of each of these communities and they will have to talk to their city councils and make a decision about whether to participate and reimburse the city for their share of the fee. He reminded the Committee that Fayetteville owns the water system in all the communities except Elkins. Elkins also owns their own sewer system, as do Farmington and Greenland. The idea behind combining the impact fee study with their systems is that their systems do connect to ours and they also have issues with regard to capacity and being able to provide the infrastructure to tie onto our system. It would be a two-tiered impact fee system, one for the main capacity we are building and one for those cities that want to charge an impact fee to pay for infrastructure that produces additional capacity in their communities. Mr. Conklin says he does not yet have a signed contract from Duncan & Associates. He believes it will take agreements with the other communities in order to get a signed contract. The mayors of those cities have the information and will let us know if their cities are interested in participating. He said he would like to place this item on the June 6 City Council agenda while working with these cities to see if they are in agreement. He believes all the communities realize there is a need to be able to recoup and pay for infrastructure that increases capacity within their communities and this is one method of accomplishing that. Whether or not they chose to use this method will be up to their city councils. Alderman Jordan moved that this item to forwarded to the City Council for the June 6 meeting. The motion was seconded and it passed unanimously. 6. Farmington Contract Update Steve Davis said staff met with Farmington on Tuesday evening (May 9). He feels the negotiations have wrapped up. The next phase will be drafting up what has been agreed to, clearing that with both negotiating teams and then bringing it to the sewer committee of each city and ultimately on to the city council of each city. 7. Citizen request for review of sewer rate average David Jurgens said that Geary Lowery has asked that this item be added to this agenda. Mr. Jurgens handed out information provided by Mr. Lowery to each of the Committee members. Alderman Cook said he would like to have the item added to the next Water & Sewer Committee agenda to give Committee members time to read the information. He allowed Mr. Lowery time to speak about the issue. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes May I I, 2006 Page 6 of 6 Geary Lowery talked about water and sewer rates. He said we don't know how much sewage is going through the system for each individual home and the only way that information could be determined is by installing out flow sewer meters at each residence. He asked the Committee to study the information he has supplied to them before the next meeting. He said there are senior citizens, handicapped and low income citizens who have trouble paying their bills and we do not have a rate structure that will accommodate their needs. 8. Scheduling the Next Water/Sewer Committee Meeting The next meeting of the Committee was scheduled for May 30, 2006 immediately following the Council agenda session. (This meeting was later changed to 6:00 p.m. ,following the Equipment Committee Meeting) 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org