Council Minutes
17445
February 12, 2001
PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
February 12, 2001
The city council of the city of Grand Forks, North Dakota convened from a committee of the whole meeting in the council chambers in City Hall on Monday, February 12, 2001 at the hour of 11:17 o’clock p.m. with Mayor Brown presiding. Present at roll call were Council Members Brooks, Bjerke, Stevens, Hamerlik, Burke, Glassheim (on teleconference system), Gershman, Lunak, Christensen, Bakken, Kreun - 11; absent: Council Member Klave, Martinson - 2; 1 seat vacant..
ADOPT ANNUAL CASH FLOW ANALYSIS FOR
WASTEWATER UTILITY
Following presentations by Advanced Engineering, Steve Burian, Vice President, and Nate Weisenberger, engineer, the matter of the annual cash flow analysis for the water utility, stormwater utility and the wastewater utility were presented to the city council for consideration.
The city auditor stated that one of the reasons they brought the steady rates for the council is that over the years they have worked on the variable rate process and it becomes very hard for a council when after several years they need to approve a large increase in the rate, it’s easy to say that those in the future should pay the cost but when get to the future time and a council has to vote that it’s very difficult. He stated they would like the area of the wastewater acted on this evening and again that he firmly believes that what the council is doing is accepting a plan based on what the CIP plan is, that they are trying to plan for the future. He stated that in talking with Moody’s about what we are doing, it is based on a plan and based on a revenue plan that will support a CIP plan, doesn’t mean that it will actually happen but if don’t have those two things in order we don’t get the bond rating, that they talked to a representative at the State Bank where getting these SRF loans and if we don’t have a plan in place to pay for what we are asking for they do not want to give us those loans, and need to consider it that way.
Council Member Christensen asked how much money they are request for the council to approve for the wastewater issue, but not the water utility or stormwater utility; and stated that people should pay for what they use when they’re using it, and not for the City to build a big reserve to pay for it in the future.
The city auditor stated that they need the wastewater cash flow analysis approved because we are already doing the wastewater treatment plant and are negative $4 million at this point on that project, that we’re not building a cash balance, need to prove that we can pay for it - the 7.4% on the cash driven steady rate adjustment.
Council Member Kreun stated that in terms of the dollars - that we don’t want to spend the dollars for people in the future but have to spend a little bit of dollars, that the way to do business is to take a little of reserve and borrow some and a difference of splitting the difference would be correct methodology and can obtain that methodology with accepting this particular analysis, but to bring into perspective, that wastewater treatment rates of 3.1% in dollars to our customers comes to $1.17/mo., and if go to the stormwater it’s $0.20/mo. and if go to the water utility it’s $0.76/mo. and that totals $2.13 for the whole analysis; that comments were made last week - that this doesn’t double in 7 years because it’s 3.1%, it doubles in 22 years and so won’t have that great an affect on our customers, and that it’s an item they may want to look at, not great dollar amount at this time and can be adjusted as we go along; and if get too much in reserve we can reduce it or if not enough, increase it, but that the city auditor indicated that it's very difficult to add those large numbers if we run too far in a deficit, and recommended for those small amounts that we accept the analysis for all three utilities.
It was moved by Council Member Christensen that we adopt the rate study increase for the wastewater treatment facility at cash driven analysis which would be 7.4% for the next 4 years, graph spiking to 14.2% in year 5. Council Member Gershman seconded the motion.
The city auditor stated this would be for the next 4 years and going to 14.2% for the wastewater treatment facility; that the State Bank where we are getting the SRF loans from met on January 11, 2001 and approved our request for a loan contingent upon approval of a rate plan. He also stated they are adopting this as a plan that you will follow, would still have to come back to council to implement this plan for 2002 with an ordinance change.
Todd Feland, public works department, stated that it’s important to note that it’s not just the basic rate, you also have flow, BOD and Total Suspended Solids (TSS) and in particular on the BOD and TSS will have businesses that are going to have much more rapid increases than our residential users, and will also see the flow rate as much higher which affects larger industries (ie., RDO and Simplot) more than the average consumer, and have to take as a whole package of the base rate plus the flow plus our industrial surcharges.
Council Member Christensen stated he was making his decision based upon information that was given to him by staff and the motion he made is based upon 7.4% and the 14.2% that they just heard a presentation on, and if there is anything hidden that the citizens are going to get an increase other than what was just presented to him would like to know before he votes, that he doesn’t want any hidden charges.
Steve Burian, Advanced Engineering, stated that in the Executive Summary entitled Utility Annual Cash Flow Analysis, Wastewater Utility, Study Results, shows the flow rates, BOD Surcharge and TSS Surcharge, work that was done by the Public Works Department and was a constraint or basis for this work and when the motion was made was for the base rate, increase of 7.4%, 7.4%, 7.4% to 14.2%, that this flow rate and BOD and TSS were already included in this, none of your residential customers will pay BOD or TSS surcharges but anybody that uses more than 5,000 gal/mo., each incremental 1,000 gal. pays in the flow rate component, and if used 8,000 gal. would pay 3 times whatever the flow charge is for the utility increase at these percentages, so it’s not hidden but include this table along with 7.4% and 14.2%
Council Member Kreun stated that the $1.17, that’s an 8,000 gal. average so some of those figures are included in that. Mr. Feland stated that if they review the Executive Summary XVI you will see the Executive Summary 6 which is this table and which is entitled Projected Flow and Strength Rate Adjustments for the Wastewater Utility. Council Member Christensen asked what on average the flow rate charge for someone that does 8,000 to 10,000 gal./mo. Mr. Burian stated that they were given the 3-page summary and if review the wastewater utility flow, that the numbers he was quoting includes both the flow rate component over 5,000 gal. and the base charge, so when saying $19.83 per year and $16.55 per year, that this table is comprehensive and includes both the flow rate increase as well as the base rate increase. Mr. Feland stated that on a residential customer you pay the base rate and then for your cap at the 10,000, could pay up to 5,000 gal. of the flow rate, but as a residential customer you’re capped at 10,000 so the most you would pay would be for 5,000 gallons, whatever the rate on the flow is, and that’s how residential customers are billed.
Council Member Brooks stated that they have built into these rates a contingency so if some other unforeseen things come as they do in any plan, that we have it covered. Mr. Feland stated what they have for an insurance policy at this time is the cash balance, you have a 50% cash balance so there is an insurance policy, and if see in the wastewater utility that as this plan was developed from 1995 there were cost increases based upon capacity and started out being approx. $13 million and today $26 million plant, and can see what happens when that does occur - it affects everybody and percentage increases are much higher than the 3% and that’s the trade-off but on the other side people are paying at a closer time to when it is actually constructed.
Council Member Bjerke stated that this money is going to the new wastewater treatment plant. Mr. Feland stated that if they look at Table ES-7 of Executive Summary, you will find in the public works department analysis, that is the percentage of the resident or base rate that is going towards the wastewater treatment plant, the 2.4% is outside the wastewater treatment plant (rehab., wastewater rehabs), and that’s percentage related to that which they have to work on but the $26-27 million plan is already there that they have to pay for.
Upon call for the question and upon voice vote, the motion carried 11 votes affirmative.
ADJOURN
It was moved by Council Member Christensen and seconded by Council Member Lunak to adjourn. Carried 11 votes affirmative.
Respectfully submitted,
John M. Schmisek
City Auditor
Approved:
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Michael R. Brown, Mayor