Committee Minutes

MINUTES-SAFETY/SERVICE STANDBY COMMITTEE
Wednesday, February 12, 2003 - 4:30 p.m._______________

Members present: Kerian

Also present were: Hal Gershman, Todd Feland, Candi Stjern, Hazel Fetters-Sletten, Steve Burian, A/E, John Mastracchio, Malcolm Pirnie.

1. Water/Wastewater cost of service report.
Todd Feland, director of public works, reported that Mr. Burian and Mr. Mastracchio would review drafts for the cost of service evaluation for water and wastewater, starting with solid waste and water today, and would like to go over some of the assumptions that have gone into the model, some of the percentages as they looked at cost of service in different groups and how they would like to propose some rate changes and how bill people out, and making some of the final conclusions as part of this study.

Mr. Mastracchio reviewed the wastewater cost of service evaluation (summary of results 2/12/03 draft).

He reported they looked at two things, cost to serve customers and how does that compare to revenue currently have in place, looking at financial position of the wastewater utility, what is revenue adequacy currently and how does the financial position look in the future. He stated the rate structure is fairly equitable and may want to make some minor adjust-ments but overall that came out fairly equitable on the revenue adequacy size, and will need to increase rates and give some indication of what it looks like at this point as far as how much rate increases they would recommend in the future.

He then went into some of the assumptions that both the cost of service evaluation and the
financial projections. They looked at industrial pre-treatment program separately and looked at how much of the entire lab area and how much cost are you recovering through permit fees and how much recovered through other charges and fees that are in the wastewater utility.

Multifamily residential units, currently don't have a separate user class for multifamily units, what they did in the cost of service evaluation was to put multifamily units that were 4 or less in the residential class and greater than 4 would be in the commercial/industrial class, and in the future may want to have a separate class for multifamily, but for this cost of service evaluation, that's how they handled the cost associated with that. Mr. Feland stated that multifamily units are more like residential than commercial but right now the data base doesn't have it that way but for future years, try to make them residential customers rather than commercial because behave more like a residential customer.

Mr. Mastracchio stated they looked at debt service cost and assigned those to the various customers and based on what the capital project associated with that debt is used for, looked at putting 10% of the debt service cost into the base fee so that that cost would be assigned to a certain percentage based on number of bills and when they did this, made the same assumption that the remaining 90% of debt was allocated in the same fashion as the 10%, and really based on what the debt is used for and what the capital project associated with the debt is used for, and then how that cost is distributed to customer classes was based on really what the benefit of that capital project was for.

He stated looking at your capital projects in the future, what expected to fund in the future and those line items are shown indirectly out of your CIP for 2004-2008: Sewer Rehabs, Pump station Rehabs, Forcemain Rehab, Vactor Truck reserve, Clean Primary Cell and replace vehicles/crane and other part relates to the biosolids project, variety of different projects but latest information they have is $4 million investment in that project. Mr. Feland stated they wanted to be fairly conservative in that number, as don't know true cost estimate at this point. Mr. Burian stated that the larger biosolids project deferred and are confident that they can at least defer it for the 5-year planning rise that they have here and optimistically 10 or more, in addition for those that how is the City is going to grow and how build new lift stations and new forcemains, and note that the CIP isn't real aggressive on those kinds of things, they really didn't have the information to include in here and that's why had assumption upfront that there was no expansion of the community as far as the wastewater system is included except for Lift Station 37 which is in CIP in 07.

He stated in getting into the cost of service results, that on percentage basis what does it cost to serve the various customer classes and have identified the customer classes: residential, commercial/industrial and heavy industrial users, and when they do cost of service evaluations you never get it exactly, you're within 5%, and its considered reasonable. The revenue cost difference and are within the 5%, and its really up to the City to decide whether (do on case by case basis) and if the City wants to make the cost and revenue equal or closely related, you can make minor adjustments over time to do that, but it looks now as though fairly close.

Mr. Mastracchio reviewed conclusions: that revenue receipt from each customer class is fairly reasonable when compare it to the associated cost to serve them, that if you look at revenue receipt from Simplot it might be slightly high and commercial/industrial slightly low compared to associated costs to serve them; and up to the City to decide how much adjustments they want to make to make it as close as they can be but have to realize that the revenue numbers change from year to year, and what they recommend to do is to keep an eye on those revenues every year to see how they compare to the costs and if they con-sistently show that there is some discrepancy then want to make some minor adjustments but wouldn't recommend next year making complete adjustment because then if revenues change then the comparison is going to change and you may over compensate and following year have to make adjustment back, that they want to continue monitoring it and if consistent trend, then make some adjustments at that time.

He stated that the Revenue Adequacy results, and show current financial position and some of the things noted here is that the City is budgeting a revenue deficiency of about a $1 million in the wastewater utility for FY2003, that isn't that alarming because you have some cash reserves available in that utility to cover that, but it's not something that you want to continue doing year after year, to deplete cash reserves and rates would not be keeping up with the costs to operate that utility and over time want to eliminate that revenue deficiency.

He stated they have used 25% of O & M budget, and is target that the utility has, so 25% of O & M budget is $793,000 and that's the minimum amount want in your cash reserve to cover any operating expense revenue fluctuations. Mr. Burian stated they are ultimately going to recommend that in addition to an O & M reserve are an O & M reserve that you also establish a rehabilitation and replacement reserve and that some of the money there if weren't budgeting for revenue deficiency that would draw that down and the more money you have there the more you could really start that fund on a positive note because it is something you haven't had historically.
Revenue Deficiency: they looked at operating expense , operating revenues coming into the utility and expenses exceed revenues by $972,000.

He stated their conclusions when looking into next 3 to 4 years, seeing that indicates that for residential and commercial/industrial customer cost is looking at approx. 6 to 9% rate increases annually and for heavy industrial cost, 3 to 6% increase. and that's what the initial financial projection looks like at this point. If you implement those rate increases that will help to eliminate the future revenue deficiencies, pay for the CIP outlined, cover any increases in debt and operational expenses, and continue to maintain adequate cash reserves in wastewater utility for things that come up, i.e., emergencies (emergency maintenance problems, etc. that utility needs to cover).

He reviewed recommendations that have come out of the evaluation: and first set of recommendations is general or general policy decisions and review. Mr. Burian stated this is meat of the presentation and need City to ultimately or philosophically give them a yes.

Mr. Mastracchio stated that have so much fixed costs in your wastewater utility, shifting some of that fixed cost in the base fee; and wanted to choose a number that was not insignificant and one that would not cause your base fee to be enormous for your customer and 10% was in the range.

Mr. Mastracchio stated the next set of recommendations are related to the main structure. Implementing separate base rate for residential, commercial/industrial and heavy industrial user classes and may have two or three separate base rates by meter size so that those would be used include and generate the most wastewater have a larger base rate than those that are smaller. Mr. Burian stated that this is unlike water where you have a variety of meter sizes and charge for meter size so some recognition because users are different and id'd what the base costs were for the different user classes were suggesting that you provide a more accurate price by having a separate base rate for each user class.

Mr. Mastracchio stated the next recommendation is to eliminate the 5,000 gal of flow currently included in the base rate so that some customers that don't use the 5,000 gal. currently they pay for 5,000 gal. in the base rate so if eliminate the 5,000 gal., charging exactly what they use. Mr. Burian stated the base rate that they would recommend and some people on fixed incomes, single person, may use 1 or 2,000 and see a much lower wastewater rate that wasn't obtainable under the existing structure because assuming they were using 5,000 and that gives assurance on that.

He stated there is a 10,000 cap for residential users and primarily associated with summertime water use and taking look at averages month to month, don't see any need to change that 10,000 gal. cap at this point, looks reasonable and didn't do complete statistical analysis on it, but that's an okay number to use; which it's not going in the sewers. Mr. Burian stated they have some recommendations on the waterside to get at that because that's expensive thing for water and on wastewater side it's big advantage.

He stated that adjustments to strength surcharges when new capital projects come on line they are impacted by dealing with the consequences of having high strength wastewater such as the biosolids project, and as those new capital projects come on line, the users that have a high strength wastewater that come into the wastewater treatment plant, pay the surcharge fee and making adjustments to that surcharge fee over time is those capital projects hit the wastewater utility and recommendation that we have.
He stated they recommended taking a look at was the way you have your tapping fee set up for new customers, and it is based on the current debt service that you have associated with new customers, once the debt is paid off, tapping fees go away, so that if a developer knows that, they may not develop until the period when the debt service is paid off and get it free, and want to look at that and potentially make some adjustments. It was noted that those are now connecting fees, changed from tapping to connection. Mr. Burian stated that one of the things they looked at was maybe a 20-year life with no depreciation on watermain followed by 40 years as a straight-line depreciation , and one of the things seen across the country is where you'd figure out who would potentially benefit from that watermain and if some were in the city limits, figure out how to pay for that, and the ones that were out you'd set up basically how much that was worth for individual lots or developments and rather than depreciating that at all, you'd leave that as a kind of connection charge as you're suggesting, a fixed connection charge, and on top of that because you have a 3% carrying cost, rather than 20 years followed by straight-line depreciation, you'd actually say it was $5,000 per lot or $2,000 per lot, and that $2,000 would actually grow al little bit using the carrying costs of your capital so you're not allowing that - that would actually be contrary to what you have now as an incentive because they see that their costs going up by the cost of money every year - and in the final report will actually be suggesting that this be a little bit more aggressive than what you're thinking and that's a policy decision or another alternative to think about.

Mr. Mastracchio stated the final recommendations they have are associated with cash management, using some of the $3 million in cash reserves, were smoothing the rates they would recommend, instead of the lumpy rate increases, and funding for renewal and replacement is something they would recommend but there are two things that come into play here: 1) the fact that you have your current customers are really paying for the new wastewater treatment plant and paying for the biosolids project and if you were also funding reserve for replacement, they are paying both, and would recommend that you defer a significant funding of renewal and replacement until around 2007 or 2008 where things start to stabilize and that's a point where you can start putting in more money in your renewal and replacement fund so that the next time a major capital project comes down the line, you would have reserves available in the account that can be used to reduce the amount of additional debt you'd have to take on, etc.

Mr. Burian stated because you do have some of the wastewater treatment plant that hasn't started yet, so don't know exactly what the operating costs are going to be for that new facility, once operating, and because the biosolids planning process is actually still in progress and know that they have this near term project that they're trying to identify how much that is going to cost as well as when and how big the long term project is going to be, and finally as mentioned your wastewater master plan isn't really aggressive on where growth is going to go, been more addressing the rehabilitation, which is great, as some cities really fall down on the rehabilitation strategies and one thing the City might lack is a little more vision on how much it is going to serve subdivisions and how do it moving forward, and recommending that in the near term look at revenue adjustments of 6 to 9% each year in 2004 and 2005 for the residential and commercial/industrial users based on the cost of service and what would be needed, 3 to 6% each year in 2004 and 2005 for Simplot and RDO, and then allow this plant to start up and then allow the wastewater to consider some kind of wastewater collection master plan to allow for distribution master plan that gives you a sense and vision on how you're going to grow the town and how much it would cost to do that, and then you could use the results of these studies to give you better sense for what you want to do with your rates rather than getting too aggressive with that, and another thing that has been discussed is because this is committee process works so well where there was a combination of policy makers and staff and consultant team getting together regularly and starting to get some of that information out there and a lot of the policy makers to understand the ramifications of decisions they make, and in conjunction with that you'd look at a city council which ultimately with your TV. and things, these two citizen education process using something like quarterly updates but some kind of process where you continue to hear a little bit about the wastewater utility as needed so understand what things are out there which are big deal, how much is it going to cost, and once get planning process done, start up planning methods and educational process underway, you revisit this cost of service in a couple years and then try to decide how aggressive you need to be on your rate strategy moving 5 years into the future, but given that there's not some certainty right here that don't be quite as aggressive as you can, and that's big deal when get to the water utility. four pronged approach - interim rating increases that are moderate but not allowing for that revenue deficiency to keep getting bigger, coupled with some planning, education and then looking at cost of service in a couple years to continue this process.

Mr. Gershman stated when saying quarterly updates as needed, if something signification were to happen, we would hope that you would come in and give us some news, i.e., that the wastewater is started up and is working properly and actually maybe more efficient than you think. Mr. Burian stated that was why they were presenting the wastewater first, because the big water plant is a lot of justification that needs to be communicated to the City on why that needs to be done, educational process, the timing needs to be looked at, the size of the facility needs to be looked at, the technologies that are used in the facility and what was anticipated that quarterly would be coming to you with quite sized issues - water demand projections and how they relate to capacity - and if want to use a linear population projection, use statistical analysis and a bell shaped curve or maybe not build for Christmas and Easter in the church but build for something that's more moderate and maybe quarter later come in and show age and infrastructure dilemmas with the water utility and with this because there would be some quarterly updates coming regularly for water, dovetail those wastewater ones and as appropriate things. Mr. Gershman asked when the wastewater treatment plant started in construction; it was noted in 1998 (approved in 1997 and started the groundwork in 1998). Kerian asked if there has been an increase all four of those years. Mr. Feland stated yes. Kerian stated they had talked about moderate increases of 6 to 9% in a couple years but if the picture is as we been presented and don't have huge new areas coming on, and asked if they have said, if that is the picture, in 06 and 07, looking at 18% - Mr. Burian stated wastewater utility given assumptions made and information they had and process they went through, these are rate increases that are moderate as well as should prevent any surprises down the road.

Mr. Burian reviewed water cost of service evaluation/ summary of results 1/12/03 draft; and stated that as before the rate increases are needed in future years but the difference here is the City should consider changes to the rate structure to approve equitability so cost of service percentages plus or minus 5%, the overview is that water didn't come out quite as co-esthetically as saw with wastewater. He stated here you are going to see a lot of dif-ferences in numbers, there is PILOT and transfers included in this base, infrastructure expansion in terms of big water transmission lines out to new growth areas are not included with the exception of one that was done in some master planning after the flood for 2012 and this main would be from somewhere around 17th on the west side of town down to 62nd and around to the new water tower, when put that new water tower in there was some visioning done at that time on how you loop in the whole system, that water tower is connected on Columbia and connected farther east but as you go to the west side of town were looking at a big corridor to get a big main around down so have a three-way loop; the inflation rate for general expenses later was the same as before

Mr. Gershman asked if they have heard anything re. grants coming out of Washington, and that it sounds like they are shoving everything back to the States- noted that everything is already dried up that was not already into the works. Mr. Burian stated that some of the things that were right in for the 03 stuff that should have been done in October, 2002 and when get to 2004 lot of people reluctant about counting on that. He stated one of their recommendations is because they are looking at 00 or 10 until they start to need the real money for this, hoping that life turn around a little bit, one of the updates is cost esti-mating, funding, ramifications, etc. because nobody has had an opportunity to do that , and thinks that is something the council could really benefit from, given that's another thing that was done after the flood and was tabled while focused on near term improvements of the clearwell, intake and interim residuals management systems. He stated that the Senate and House of Representatives staff have been really helpful on that on a partisan comment, reception on the hill has been received quite as well

Cost of Service Results - that they looked at residential, commercial/industrial and heavy industrial and because Simplot and RDO have their own wastewater treatment plant they discharge differently than to each other, on the water side they use water relatively similarly so they didn't look at distinguishing Simplot using RDO, and percentage of cost based on 2003 budget year for cost and 2001 revenue and resulting revenues that they would have from that and second table is more reflective if the 5% was kind of the rule of thumb that were okay - see numbers that were approached and exceeding that and if look at the cost differences divided by the revenue times 100, you can see that in this case the residential was shown to be actually quite low given that analysis in commercial/industrial was looked at as high, and heavy industrial a little closer than need to be on the water side.

He stated conclusions from that, did consider that they were far enough out of bounds that may want to consider adjusting rates in terms of user class and as looked at that that heavy commercial and commercial industrial may be high and residential users lower in this case.

He stated re. Revenue Adequacy, Current Financial Position, that much like the wastewater utility in FY2003 did elect a budget for revenue deficiency of $1.2 million, again it wasn't a irresponsible decision because in this utility have $8.6 million compared to O & M reserve of $1.1 million; and if don't raise rates this keeps getting deeper and as have some major capital improvements and could be some benefit to targeting that money to stick an initial chunk out of what other prudent water plant project they forwarded and what recommend-ations are, and obviously with this need to use cash to supplement that in 2003 and with the future projects you are projecting some debt increases associated with those future projects.

He stated conclusions are that rate increases would be appropriate to meet future bond coverage covenants to help pay for the capital improvements plan, to cover increases in debt and operational expenses that have been projected and to maintain adequate cash reserves. He stated some of the things they were looking at, many similar to the one you saw before: striving to eliminate the revenue deficiency, looking at more moderate consistent rate increases instead of any surprise. He stated they have so much cash and it's true you could continue to give the three zeros that they looked at in the past in terms of rate increases but have potential that keep plowing a little deeper into that revenue deficiency each year and when cash is up, would be in for a surprise, much like the one we just had in the wastewater side. He stated one of the things they want to look as well is schedule, and if can delay that a little bit and Hazel Fetters-Sletten can still find ways to keep the water plant running and have to bring a few more interim improvements as a result of that, and if can look at all aspects of the water plant and review that with you and get a sense for how big, what technology and when, those kinds of things are really helpful for the planning process because in the interim have been forced to try to make some assumptions. Gershman stated we have to be careful that we don't build for Christmas and original one he saw was building for tremendous increases in industrial production in Grand Forks, we have to be real and know where things are and would rather scale it so that you could add onto it if the need were to arise. Mr. Burian stated that in defense of the times Simplot has just doubled their facility and was asking all these aggressive things on the wastewater plant and the mood was that their industry is just really going to town, and then the potato industry economics got a little bit less desirable and when that happened a lot of assumptions that were made, looked at the capacity there's some smaller recommendations they could make but haven't had a chance to do that.

Mr. Burian stated multifamily suggestion of working with IS so that next time you do this you are in better position to break user class out as reiterated here as well as the differences in how University of North Dakota uses water, where PILOT and general adm. costs should go as well as 10% of debt service that have at the wastewater presentation.

He stated as moving in the rate structure the general policy as rate increases are imple-mented do think revenues and inequalities between user classes through future rate increases would certainly make sense; this is similar recommendation but water rate is set up where you have between 5/8" and 8" meters with number in-between and different base rate with zero water included for all of those; after that have a flow charge that up to 30,000 gal. a certain rate, 30 to 200 is another rate, 200 to 1 million is another rate and over 1 million is another rate; have a declining block as you move forward and one of the things they are recommending is implementing separate base rates and similar to the meter and rather than having all those sizes and have it irrespective of what user class they are in, having one for residential, 2 or 3 for commercial/industrial and couple for the heavy industrial (Simplot and RDO) and refine it to that rather than this whole series of classes. He stated in addition they are recommending to eliminate declining block rates as they feel right now that there's an incentive almost to use more in some ways and not steeped in cost of service. In addition one of the big things about water plant design that they will go through with the council is based on peak days and peak days is winter usage multiplied by whatever that worst summer usage is with likely some rationing included, and how much rationing is really important; that because you design it that way if you give people an incentive through rates to use more, and so no price signals to not do that. He stated that the Red River, in addition to floods, is very drought susceptible and even though we might have a nice plant, we may not always have enough water, and community that's facing a future water plant for a community that's a little drought susceptible rather than having a declining block and felt that something that gave more price signals of being prudent and conservative was better. Along with that some users around the region are looking at seasonal rates to residential and commercial/industrial because the worst peaking factor comes from people that water their lawns - not good or bad , they do that. That what communities are looking at across the region is taking their winter flow after winter and giving them 30-50 or some additional amount over that as normal summer usage, and after that actually implement a seasonal rate and that's often times higher than the rate they are paying otherwise - and has heard things as high as double the rate but not sure recommend going that extreme, but further gives the signal that we need to be careful about how much we use in the summer because that's when that peaking capacity comes into play. Along with that implementing a separate flow rate for each user class and the reason for this is that some of the declining block was a recognition that a Simplot user had 3mgd is going to have economy scale and is looking that each of these user classes (residential, commercial/
industrial and heavy industrial) having a flow rate that based on the cost of service analysis would be reflective of their cost of service, and probably would have three different rates, probably go down a little bit as you used more water but wouldn't be an incentive to use more but because you regularly use more and your cost of utilities differently in certain ways that we're going to give you benefit. Simplot is really a good water user - they use a lot of water and they use it steady, where on the wastewater side they are little bit more troublesome because they are discharging the high strength wastewater to the city - they use 2 million/day. Mr. Feland stated one of the concerns they would have to address is the elasticity of the residential user of where their break point is - we have to look at the revenue and what we anticipate and be mindful that people may curb their habits and do something to revenue also. Mr. Burian stated that because they are not totally up against it, is his recommendation would be to go slowly - have some slight increase in the summer and getting a sense for people's patterns and test over a few years. He stated one of the communities they are working with is looking at the double but reason is they used their peak plant capacity last year and now have time to plan design and figure out how to construct more and in an emergency state so not worrying about elasticity, worrying about stopping people water usage any way they can, and this is one of the ways they are hoping to do that.

He stated on a cash management side it is the same recommendation you saw before, have a lot of cash so lets go reasonably on this, use the cash to do that but also try to do some things moving forward so can fund renewal, replacement reserves and start to get rid of that revenue deficiency as they move forward. He stated where a lot of the strategy came from in terms of this four pronged approach and recommended the near-term is to look at revenue adjustments as 3 to 6% each year in 04 and 05 for all the user classes and because had inequalities could guess that probably have the lower rates potentially for some of the classes and little higher for the other, but even then just doing something moderate like this - moving forward to allow you some time would be a good idea, and recommending some additional planning efforts, distribution and getting your arms around the water treatment plant facility plan and also looking into whether this grant funding, assuming from several years is going to be realistic or whether we need to look at not relying so heavily on grant funding. He stated here is where looking at quarterly updates throughout 03 and 04 and was recommended by staff as well as some of the council representatives that they've talked to and they really think they would benefit much like the biosolids job and have a good process, and once you get those things developed, look beyond the near term in rate increases, but something in the interim that gets us away from that revenue deficiency that you are spending before knowing exactly where the plan is going to take you.

Kerian asked what would be the reason to take the apartments as a separate class, are there expenses different, revenue different. It was noted their use profile is very similar to residential, but want to do a separate class. Mr. Burian stated you could do it both ways, if put in residential might end up wanting to have two base rates, an apartment of 30 versus a single family residence might have much different meter size and much different approach to things, even some of their flow might be smoothed little bit by the way that there's 30 different users using it differently and if want to give them a rate of $6.00/month as a base rate or recognize that a 30-unit complex would maybe have more, and that was the thought process that you'd go into that multifamily and maybe create a couple tiers in there because a little unique to single family residence - lawns might not be quite as big and may not water in the same way - have a different use profile and what looking for is homogeneous user classes; and commercial/industrial and multifamily together over 4 may go to a restaurant and it's only open from 8:00 to 6:00, and next place is apartment complex where everybody gets up and showers at same time, and comes home etc. and don't look alike at all in terms of homogeneous user class. Hazel stated if the landlord has 1 meter and bill, would affect their housing costs. Mr. Feland stated he thinks they agree that it is sub-part of the residential and try to figure out what that is.

Mr. Feland asked if general thoughts about assumptions on where those rates are - won't do in one swoop in one year, but is that general direction. Kerian stated she didn't see any big surprises and is the direction that we're looking for. Gershman stated that taking the time is really important, educational process, things are going to change over the next year or two and we need to get our arms around a lot of policy decisions in the next couple years and some of that can come back into this too. Mr. Burian stated they weren't quite as aggressive with water rates because they know there's more uncertainty with that big job that's farther out in the timeframe and this way do more of the planning and try to write the revenue deficiency.

Kerian stated there is no committee quorum and if there was anything more they would need; Mr. Feland stated they weren't planning to bring this to council but get a few nods that they are on the right direction and not off base.

Mr. Burian stated one explanation on the water utility because it pre-dates Mr. Feland, people wondering why the $8 million - the City was actually doing some master planning back in 1995-96 before the flood and recognized that your intakes were all old and shot, recognized that you needed that storage and would end up being the clearwell, none of the jobs turned out to be what they envisioned because of the flood, but the City had a plan and putting some reasonable rate increases in moderate one to start getting their arms around that and had some of it in design process, then the flood hit and it was stopped - but had increases implemented already and no expenditures to go along with them and a lot of the improvements to the water plant were paid by FEMA and CDBG and even this huge improvement that we're going now, and almost all of it or 75% is coming out of the flood protection project and being special assessed and not out of water utility; and what was planned to be improvements for 10 years, have done almost all of them but haven't done any as water utility cost and where that $8 million came from is that it came from the fact that they were generating more revenue than expenses - only unfortunate part is that it pre-dates this council is when they saw the huge number, and didn't have the background, and that's when got the zero rate increase and never had a revenue deficiency before the revenue deficiency kind of crept up on us as normal costs went up and there was some debt service in the clearwell project and was really attractive to look at doing that and now people are understanding some of the ramifications of that, and fortunately caught it before it was a tragedy. Kerian stated the point is what do we do going forward.

Mr. Feland stated that prior councils did want to drive down the cash balances, felt they were too high and there was a conscious effort that those balances seemed like a lot of cash, and that was philosophy and intent and not out of the ordinary. Mr. Burian stated about the flood can look at the silver lining, were looking at new intakes, were looking at storage and were looking at new sludge plants and that the levee came through but the intakes are on the wet side, the clearwell site went right through the levee and the sludge plant being torn down because levee going right through it, and as part of that we're doing different jobs but top 3 priorities are flood protection project, and even though people so frustrated with all this money being spent, in reality it was almost the best thing that could happen to the water utility.

Kerian thanked everybody for being here.

The meeting adjourned at 6:10 p.m.

Alice Fontaine
City Clerk