HomeMy WebLinkAbout2006-07-27 - MinutesCity Council Water & Sewer Meeting Minutes
July 27, 2006
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Member Aldermen
Mayor Dan Coady Ward 1 Position 1 - Robert Reynolds
V10
Ward 2 Position 1 - Kyle rt Cook
CityAttorney Kit Williams 1 Ward 3 Position 2—Robert Ferrell
Tave e Ward 4 Position 2 -Lioneld Jordan
City Clerk Sondra Smith ARKANSAS
City of Fayetteville Arkansas
City Council Water & Sewer Committee
Meeting Minutes
July 27, 2006
A meeting of the Fayetteville City Council Water & Sewer Committee was held on July 27, 2006
at 4:30 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 Lioneld Jordan
MEMBERS ABSENT: Alderman Robert Ferrell
Staff Present: Gary Dumas, Susan Thomas, Tim Conklin, Shannon Jones
Also Attending: Mayor John Harris, Farmington and Alderman Ernie Penn, Farmington
Chairman Kyle Cook called the meeting to order.
1. Farmington Contract & WSIP Update
Alderman Cook explained the main purpose of this meeting is to discuss a couple of issues that
are pending in the negotiations with the City of Farmington. He welcomed Farmington Mayor
John Harris and Farmington Alderman Ernie Penn. He explained that the negotiation team met
again last week and he felt the discussion has now come down to two issues: how much capacity
Fayetteville will allocate to Farmington and the costs of the lift station. The primary issue is
capacity. Initially we had projected that Farmington would need a capacity of around 5000
customers through 2020. Of course they have almost reached that number already. The
negotiating team has asked Farmington for a number which they think would be adequate for
future capacity. Based on their growth patterns, Farmington feels that 7500 customers is a
legitimate number. Alderman Cook said, based on past conversations with the Committee, he
doesn't believe that number will be acceptable but he wanted to bring the matter to the
Committee for discussion. Also discussed at the negotiating meeting was a percentage of roughly
8.2% of our capacity at the new plant. Of course we won't truly know what the capacity of the
new plant is until it comes on line. He told Mayor Harris that he did not think the City Council
would support guaranteeing a specific number capacity but that they might be more willing to
support a percentage.
Ernie Penn said Farmington appreciates all the good efforts and courtesy shown by the parties
involved in the negotiations. He said the sewer discussions between the two cities initially began
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during Fayetteville's previous administration when Fayetteville engineers met with Farmington
officials to tell them about the new proposed Westside treatment plant. Fayetteville would need
access to the plant site and at that time the extension of Broyles Road was in the planning stages,
with discussion of a possible cost share between the two cities. At that point, it was expressed to
Farmington officials that all the construction and engineering fees for the Farmington lines and
the lift stations would be included in the original specs and costs of the west side sewer plant
project. The cost sharing and capacity issues would be a negotiated item. After a change in
administration and turnover of engineering staff, discussions basically stopped and Fayetteville
notified Farmington that they were not interested in doing any street construction with
Farmington and that they would access the plant off Hwy. 16. He said that in 2004, Fayetteville
and Farmington went through mediation for resolution of disputes regarding repairs and
maintenance of the sewer system under the existing contract. A resolution was reached and both
parties agreed to make some repairs on the system. A great deal of ground water was entering
into the system and affecting their ability to service the sewer customers and for future
development. After discussions with ADEQ and the Health Department, Farmington entered into
a self-imposed moratorium until a sewer study could be done to identify and prioritize the
problems. Fayetteville has repaired all the areas listed as priority one in the mediation agreement
and other repairs are ongoing. In 2005 the City of Fayetteville contacted Mayor Harris about the
possibility of merging the Farmington system with the Fayetteville system. The mayors of the
two cities entered into a memorandum of understanding to be presented to the respective
Councils for consideration. Nothing happened with that and in August 2005 sewer negotiation
teams were appointed by each city and meetings began to discuss the possible merger of the two
systems and other issues pertinent to the current contract, which does not expire until 2009. At
the present time there is no limitation on the number of sewer taps available in Farmington based
on the current contract. All the recent discussions of the new lift station have been based on a
cost estimate of $4,800,000 (which was for the station plus the lines). We have been discussing
Farmington having an 80% cost share in that lift station. Recently another figure of $7.1 million
has been mentioned. He said Farmington officials have a concern about being told that they have
a limitation of 5000 customers on the system and still being asked to make their sewer customers
liable for $5 million worth of debt without any guarantees for future growth. It would be very
helpful for their internal discussions if they had some idea of the capacity of the plant when it
comes on line and what percentage of that capacity would be allocated to Farmington. If the
percentage allocated still ends up only serving 5000 citizens, nothing has been resolved. It will
be hard for Farmington rate payers to pay a bond payment for a new lift station with no potential
growth to the city. They would like to see the current cost estimates from RJN that indicate what
the capacity of the new plant will be, what the immediate load will be on the plant and what
percentage of that will be allocated to Farmington. He talked about the overcharge to the
Farmington customers after the Black & Veatch study from 2004 until now. He said Farmington
would like to request the refund process to the Farmington customers be implemented
immediately.
Alderman Cook said the original contract with Farmington is somewhat vague and confusing as
far as repairs to the system. Fayetteville was responsible for the point repairs to the system. In
the mediation agreement, Fayetteville agreed to repair manholes (which have been fixed) and to
cost share with Farmington on the additional line work that needed to be done up to $100,000.
John Harris said the capacity issue is a very real concern for Farmington. They don't want to
enter into a contract where their growth will be choked off. They have submitted a number
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(7500) to Fayetteville and though that number is negotiable, they would like some kind of
guaranteed number of taps to allow for growth
Alderman Cook acknowledged the fact that Farmington customers have been paying more than
they should have been paying, as was borne out by the study commissioned by the City of
Fayetteville and surrounding cities to recalculate the Black and Veatch study.
Gary Dumas said that as agreed upon in the mediation agreement, repairs either have been done
or will be done. He said everything prior to the mediation agreement is immaterial to this
discussion. He said he doesn't believe there is any issue about that fact that a refund is due. What
needs to be discussed is what is going to happen now. We need to look at the capacity issues, the
plant and the lift station.
In response to a question from Alderman Reynolds, Gary Dumas said the master facility plan
allocated 5000 of the 61,337 design capacity of the plant to Farmington. In 2000, the population
of Farmington was 3605. Since then their population has increased approximately 33% so they
are near their 2020 expected population. That fact needs to be addressed but the method of
addressing it is in the Committee's hands. The initial lift station was designed for 5000 plus the
Fayetteville flow that would go through it. We recognize that Farmington is going to grow to
more than 5000 by 2020. Therefore, the lift station has to be upsized to accommodate that. If
Farmington wants a lift station that will cost $3.6 million, one can be built for that but it would
only accommodate their current population. It would not serve their growth in the future and Mr.
Dumas doesn't think the City would want it as a part of the system because it would have to be
upgraded immediately.
Hugh Kelso, RJN said when they did the 2001 Preliminary Design Report from which the
original lift station costs originated it was based off a Farmington population of 5000 and a
certain proportion of the population of Fayetteville in the area that is currently served by lift
station 11. Those numbers (for both Farmington and Fayetteville) came from the Northwest
Arkansas Regional Planning Commission. The 2020 population for Farmington is projected to be
somewhere around 7732. They have also extended the projections for the design life of the lift
station to 2030 since it will not go on line until 2008. That would take the projected population
of Farmington around 9734 based off Northwest Arkansas Regional Planning Commission
numbers.
He continued that there are two things in the plan — they sized the interception that will go from
the Farmington east lift station to the Farmington west lift station for ultimate growth, (full build
out of the entire service area that can come to it) which is well over 20,000 people. He said you
can do that with gravity sewer but you cannot do that with lift stations and force mains.
Therefore, the interceptor is sized for ultimate build out and the lift station and force main to the
plant are sized for 2030 population (9700 people from Farmington and roughly 1700 from the
City of Fayetteville).
In response to a question from Ernie Penn, Mr. Kelso said the number represents the portion of
the residents that will be using this interceptor. However, there have been some areas added to
that number due to the growth in the city. Two areas, designated I54 & I55, (one is south of
Farmington and one is southwest of the current Fayetteville service area) are being added to the
calculations, which adds extra cost. The Goose Creek area which was not included in the 2001
report has also been added. The 2001 cost of $4.8 million, when adding the new populations and
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additions, is now $6 million. He also mentioned that engineering costs were not included in the
original cost estimates nor were the construction administration costs. These have now been
added.
Ernie Penn asked what Fayetteville's contingency plan would be if Farmington decides not to
participate in the transfer of ownership and costs of building the new lift station and what that
cost would be.
Hugh Kelso said the contingency plan would be for Fayetteville to redirect Lift Station 11
straight to the plant. The lift station would have to be upgraded and a new force main would have
to be added. He said they are in the process of finalizing the cost but he doesn't have those
numbers at this time. He said it would be a cheaper alternative but it wouldn't give Farmington
any additional capacity. Farmington's interceptor and force main are currently at capacity for wet
weather flow.
Ernie Penn asked what the benefit is for the City of Fayetteville to enter into this agreement to
transfer ownership of Farmington's system if the alternative is cheaper.
Hugh Kelso said keeping the status quo doesn't allow Fayetteville to grow much on the west
side either. Currently, there is no provision for Goose Creek to be served, either Fayetteville's
portion or Farmington's. By moving the lift station down, it gives both more capacity and allows
for additional growth.
Alderman Jordan asked what Farmington's contingency plan would be if they do not
participate with Fayetteville in this agreement.
Ernie Penn said he assumed they would stay with the status quo. At this point they have
unlimited growth until 2009.
Mayor Harris said they have talked to some of their engineers and they feel that with some
changes, the limit created by the interceptor could change.
Ernie Penn said that most of the developments in Farmington's growth area are now putting in
step systems or septic tanks so if they are incorporated into the city limits, they won't be
changed. He said they are just trying to get all the facts because they know they will be getting
these questions from the Council and from their citizens.
Gary Dumas said, as with any utility, Fayetteville always wants more customers to share the
fixed overhead costs. However, we have alternatives to serve the area on the southwest side of
town and as growth occurs along the area along Goose Creek it would be served lift station by
lift station, just as it is now.
Alderman Cook said if the lift station is engineered for 2030 and the population of Farmington
is estimated to be 9700 at that time, are we saying we should allocate Farmington 9700 taps.
Gary Dumas said that is the way the percentages are proposed. But those numbers would be
evaluated each year and if the percentage of utilization changes, then the number could be
adjusted. But the problem is the initial debt. The actual number from Stephens for the base line
Farmington debt service is $19.28 per customer.
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In response to a question from Ernie Penn, Gary Dumas said when the Westside plant reaches
capacity Fayetteville will fix it — just as we have just done. He said that guaranteeing any entity a
certain usage of the design capacity of the plant would not be something staff would recommend.
Alderman Jordan said Fayetteville doesn't know exactly what the capacity will be on the west
side and that's a big issue. The City has approved developments totaling around 5000 units.
Although they won't come on line for several years, it creates a problem in guaranteeing a
certain capacity to Farmington.
Ernie Penn asked if there are any projections as to how much of the Westside plant will be in
use the day it comes on line.
Hugh Kelso said RJN is not doing the capacity numbers. He said the design capacity for the
plant is for 61,300 people in 2020. The design flows are 10 million gallons per day on an average
basis and peak wet weather capacity of 36 mgd. Those three numbers were used to design the
plant. He said the City has just received the updated census numbers and City staff is taking
those numbers, figuring what the Noland Plant has been able to achieve and applying that to the
west side. He feels that staff will have an estimate of what they think the operating capacity will
be within the next 30 days or so.
Alderman Jordan said he needs those numbers before he can make a decision.
Mayor Harris said they are in the same position and would like to know those figures as soon as
Fayetteville does.
Alderman Cook said that is why a percentage had been discussed. He said 8.2% has already
been allotted. If the plant goes above the rated capacity, Farmington will get more capacity. But
until it comes on line, we will not know how many people will actually be hooked in.
Gary Dumas continued that we know what design capacity is but we don't know what the
operating capacity will be. The Noland Plant is operating well above its design capacity. The
new plant is a different technology plant with massively increased wet -weather flow capabilities.
The operating capacity of the Westside plant will probably be influenced by that. But the number
will not be known until the plant is operational. David Jurgens will be able to give us a ballpark
figure based only on the experience with the Noland plant.
Alderman Jordan said he would like someone to come up with an estimate of what they think
that operating capacity will be before he feels comfortable guaranteeing capacity to other cities.
Gary Dumas said that is why the percentage was suggested. Whatever the capacity is, a
percentage would go to the other city.
Alderman Reynolds said he thought we would soon know how many customers would be
removed from being serviced by the Noland plant when the Westside plant comes on line. Tim
Conklin should have some idea of the plans in the works for development on the west side. With
that we should be able to come up with some figure to know how close we are going to be to
61,000 so Farmington will know what they can use.
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Hugh Kelso said he felt that would be a fairly easy number to come up with. The big unknown is
what the growth rate will be
Gary Dumas said he thinks a guarantee for any customer or user group would be an error for the
City of Fayetteville.
Hugh Kelso said the Committee needs to keep in mind that if we want this to be constructed by
2009 when the plant comes online, we don't have a lot of time to make decisions. The bid would
need to be awarded by March 2007 at the latest. The design can be done quickly enough but
easement acquisition will be more difficult.
In response to a question from Gary Dumas, Hugh Kelso said the drop dead date for a decision
would need to be within the next 30 days.
Alderman Jordan said he could work with that but needs a little time to think and do some
figuring.
In response to a question from Ernie Penn, Hugh Kelso said he should have the costs for the
contingency plan for the City of Fayetteville within the next 30 days. He did clarify that the
number will not include any costs for upgrades inside the City of Farmington.
Gary Dumas said this number would be to accommodate the current flow running through this
lift station. It will not provide for any growth. This number is simply the answer to Farmington's
question about Fayetteville's alternative plan.
In response to a question from Alderman Cook, Hugh Kelso said he expected to have the
numbers within the next two or three weeks.
Alderman Reynolds asked when we will have the paperwork done in order to bring the refund
due to Farmington rate payers to the full Council.
Gary Dumas said he thought the Committee was waiting until the Farmington contract was
finalized. However, it is up to the Committee how they want to proceed.
Alderman Cook said he thought we should proceed with that process.
Gary Dumas said he will begin work on that tomorrow and get it on the Council agenda.
Alderman Cook opened the floor for public comment on this issue. There was none.
It was decided to reschedule the next Water & Sewer Committee meeting from August 10 to
August 17 at 6:00 p.m.
Alderman Cook asked for clarification from staff on the two financing options for the WSIP
outlined in a memo from staff. Two financing options were mentioned, sales tax or rate based
He said the memo shows that if we use a rate -based system, the overrun will be paid off in 2028.
If it is financed through sales tax, the date would be 2018.
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Susan Thomas answered that the $38.3 million will be paid off in 2028 if financed with rates.
The anticipated payoff for funding through sales tax would be 2018
There was discussion about the methodology used and the numbers on the spreadsheet
distributed with the staff's memo regarding financing options. Ms. Thomas explained some of
the numbers and how they were calculated.
Alderman Cook said he wants to be clear that with the rate option, both the base charge (or
service charge) and the cost per 1000 gal. will be increasing. He said he wants to make sure O &
M is included in the figures.
There was discussion regarding rates and the potential for rate increases due to operational
increases in the future.
In response to a question from Alderman Cook, Gary Dumas said part of the money being
collected through the 29% rate increase already implemented was moved by the Council to put in
the capital fund to pay for the WSIP. This money was already in the water & wastewater reserve
fund. It was pulled out of the reserve fund to spend it on capital.
There being no further business, the meeting was adjourned.
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