1973 01 22 SST79S
January 22,1973 -Council Chambers -8:00 P.M.
CITY COUNCIL OPEN STUDY SESSION -Discuss proposed Capital Improvement Program and Water-Sewer
Rate Structure.
The Study Session of the Moses Lake City Council was called to order by Mayor Skaug.He asked City
Manager Chet Waggener to briefly present background information for the proposed Capital Improvement
and Water-Sewer Rate Structure Study.He stated that in March of 1969 the Council authorized submittal
of an application for a $27,000 grant for a Comprehensive Water &Sewer Study 1970-1990,which was
approved by HUD in February of 1970. In December of 1970 the Council approved the study completed
by Stevens,Thompson & Runyan,Inc.In June of 1972 the City Council authorized a Rate Study and Capital
Improvement Program to be completed for the City by Bill Vadman,Financial Consultant,and Stevens,
Thompson &Runyan,Inc.,Engineering Consulting firm.He introduced Bill Vadman,and also George Nordby
and Dennis Priebe,representatives of STR.
Bill Vadman covered briefly a little bit of the City's present day situation regarding outstanding revenue
bonds.He pointed out that most of the improvements to the water-sewer system have been done with
revenues since 1955.Although by todays standards our coverage covenant should be 1.35,which means .
that for every dollar debt service we have to earn an extra 35% to provide the City with a flow of dollars
to meet day to day expenses.But because of today's cost increases our excess revenue for improvements
have been reduced considerably.In any capital improvement program you want to borrow generally for the
major improvements and look to revenues to meet the day to day improvements,etc.,and this is what the
coverage covenant is for, and in order to earn over and above the 35%,rates will probably have to be raised
to offset the higher cost of operating.The proposal is to issue additional bonds, and should have enough
cash flow, not only to meet the borrowing requirements,but also meet the capital improvements made from
revenue.He stated -"your utilities are a business proposition".
10-Year Capital Improvements Program 1972-1982 - -George Nordby stated the Comprehensive Plan is
really a spring board and comprehensive plans basically do require facilities for future growth.Subsequently
the Larson Treatment Plant presently under construction.STR,along with City staff felt the need to look at
the actual operations of the City maintenance requirements and how the system is operating,so the capital
improvements program is really incuding both of those items;actually new facilities and some items that we
see concern themselves merely with maintenance and operation.The Capital Improvements Program is tailor
ed for 10 years,and we have utilized input from the Comprehensive Plan.
He gave the 1973 Project Cost Estimates for the City Sewerage System including extension of sewer mains,
rebuilding and mechanical refurbishing of lift stations,telemetering of 9 stations;treatment plant modifica
tion including a new control and/or shop building,along with right of way land purchase and sewer jet
purchase by the city -totaling $1,983,500.
He gave the 1973 Project Cost Estimates for the City Water System which includes new water mains,re
placement of mains,storage reservoir additions and overhaul of existing facilities;well pump replacement;
well house maintenance and replacement of structures at Well Nos.3 & 4;well rehabilitation;new and
replacement of well controls;beautification and landscaping at all well sites,and possibility of construct
ing Well No.11,-totaling $2,755,100.
1973 Project Cost Estimates for the Larson Sewerage System includes construction of a new sewerage treat
ment plant;infiltration and exfiltration evaluation studies and cleaning and TV inspection,along with the
sealing and replacement of controls,and lift station telemetering for four stations in the collection system,
- -totaling $927,000.
1973 Project Cost Estimates for the Larson Water System includes extension of water mains in the Larson
Housing area,and 8" and 10"lines in vicinity of the Larson Reservoir;rehabilitation of tanks and reservoir;
well rehabilitation and well pump replacements and well house maintenance,-totaling $394,500.
The Grand Total for the 10-Year Capital Improvement Program is $6,060,100,based upon anticipated
costs for 1973.
FIRST PHASE implementation of the 10-Year Capital Improvement Program:To be accomplished with money
where the Citv would receive 75% from EPA and 15%from the Department of Ecology,for Sewer only.The
projectcost to the City would be 10%.The first phase grand total of $3,257,600,of which $1,098,150 would
be covered from the sale of bonds,and $532,300 covered by City current revenue.
Outof the 10-Year program there are some needs that need urgentattention and others envisioned that needattentionlater,and whatare considered first phase implementation are what should be constructed now and
be financed now. Someof those needs in the City Sewerage System are the Eastlake relay 10"sewer,and
abandon the Eastlake Lift Station;Knolls Vista 6"forced main,12"sewer and 8" and 12"siphon and gravity
flowdirectly Into the treatment plant.Broadway to Sewerage Treatment Plant Lift Station and 20" forced main;
infiltration and exfiltration control sealing and replacement;infiltration and exfiltration evaluation studies,
TV inspection and cleaning. LiftStations: -Structure rebuilding and mechanical refurbishing and replacement
for the stations at Main,Marina,Pelican Horn and Winona,and Telemetering for 9 stations.At the Treat
ment Plant:-Outfall extension,chlorine contact basin expansion,pumping and piping modifications,processequipmentmodificationsandimprovements;new control and/or shop building;purchase of land for right-of-
way and sewer jet purchase,-totaling $1,125,500.
1-797
Study Session - : 2
January 22,1973
The First Phaseneedsin the Cltv Water System is construct an 8" water line in Valley Road from GrapeDrivetoStratfordRoad;10"line from Well No.9 to cornernear endof Crestview Drive;8" line from
Northshore to end of Crestview; 8" line from end of Crestview Drive north to section corner, then west
to Crestview; 6" line connection,Love Avenue to Knolls Vista. Water Main Replacements. Storage: -Includes Reservoir Project No.1and overhaul existing reservoirs. Miscellaneous:Groundwater study
and simulation analysis of system to improve RPV and booster pump operation. Well pump and well house
maintenance and replacementof structures at Well No. 3 &4; well rehabilitation; newand replacement
of well controls;beautification and landscaping at all well sites,-totaling $1,114,600.
First Phase needs of the Larson Sewerage System would include infiltration and exfiltration evaluation,studies,cleaning &TV inspection;infiltration and exfiltration control,lift station telemetering for four
stations,and construction of new seweragetreatment plant, - totaling $927,000.
First Phase needs of the Larson Water System would include 8" and 10"lines in vicinity of Larson reservoir;
rehabilitation of tanks;well pump replacements,totaling -$90,500.
Recommendation is for 1.1 million sale of revenue bonds and the coverage be set up to provide $53,000peryearforcoverage.This is the total first phase implementation.Possibly half way through this 10-year period the City may needto finance about 3 million and implement the second phase of the program.
Bill Vadman presented a debt redemptionschedule pertaining to the $1,100,000 proposedbond inssue.
The payment of interest onlyon the proposed issue through 1988 commencing maturing bonds in 1989runningthrough1997.This,ccupled with our present bond requirementr which amount to approximately$115,000 a year through 1988 anda lesser amount in 1989 and 1990 making an annual debt redemption ofapproximately$180,000.The proposed rate increase would bring in approximately $220,000 to meet the
debt schedule,which would leave approximately $40,000 to meet unforeseen capital improvements.
He also poi-nted out that by deferring bond payments to 1989,it would have a tendency to require a lesser
Increase in utility rates at this time. He stated that the trend at the present time is for a good interest rate
for long term bonds, and as recently as a little over two years ago we would be lookingat an interest rate
over 7%instead of one that should be under 6%at this time.It also has the benefit of giving a better cash
flowof money which would be available to take care of capital improvements on a pay as you go plan,
as it would release a portion of the principle payment of the proposed bond issue for cashimprovements
until the bonds started maturing.
MayorSkaugcommented, that in the 16 years before we start payingon the principle on the new issue,
we will be paying out a tremendous amount of interest on that.Bill Vadman stated that if we were to
start maturing bonds Immediately, the principle amount wouldrun approximately $55,000 a year to mature
the bonds which would require a greater increase in utility rates at this time. He also pointed out that
due to inflation,the cost of construction has exceeded the interest requirements on borrowed money for
the past 15 to 20 years,and that actually people can borrow money and make an immediate improvement
to a systemat a lesser cost than if they were to save the money until they had accumulated the cost for
the improvement to the system.
Increased Utility Rates - George Nordby presented a chart of Proposed Water and Sewer Rate Schedules:
CITY WATER
Residential
0 -500 C.F.
501 -1000 C.F.
1001 -2000 C.F.
2001 -3000 C.F.
all over 3000 C.F.
Commercial
0 -*500 C.F.
501 -1000 C.F.
1001 -2000 C.F.
2001 -3000 C.F.
all over 3000 C.F.
CITY SEWER
Residential
Flat Rate
Commercial*
0 -1000 C.F
1001 -15000 C.F
15001 -35000 C.F
all over 35000 C.F
$3.50/month
0.25/100 C.F.
0.20/100 C-.F,
0.15/100 C.F.
0.10/100 C.F,
$5.50/month
0.25/100 C.F.
0.20/100 C.F.
0.15/100 C.F.
0.10/100 C.F.
$3.00/month
$3.00/month
0.20/100 C.F.
0.15/100 C.F.
0.10/100 C.F.
*Billing for six summer months will be based upon water consumption
during six winter months'.
n
U
o
GO
-.
Study Session - : 3
January 22,1973
LARSON WATER
Residential (metered housing)
0 -500 C.F.
501 -1000 C.F.
1001 -2000 C.F.
2001 -3000 C.F.
all over 3000 C.F.
Residential (unmetercd housing)
$3.50/month
0.25/100 C.F.
0.20/100 C.F.
0.15/100 C.F.
0.10/100 C.F.
Use commercial rate for "master meter"consumption
plus $3.75/month minimum charge per residence.
Commercial
0 -500 C.F.
501 -1000 C.F.
1001 -2000 C.F.
2001 -3000 C.F.
all over 3000 C.F.
LARSON SEWER
Residential
Flat Rate
Commercial*
0 -1000 C.F.
1001 -15000 C.F.
15001 -35000
all over 35000
C.F.
C.F.
$5.50/month
0.25/100 C.F.
0.20/100 C.F.
0.15/100 C.F.
0.10/100 C.F.
$6.00/month
$5.00/month
0.40/100 C.F.
0.35/100 C.F.
0.30/100 C.F.
*Billing for six summer months will be based upon water consumption
during six winter months.
Summarizatlonby City Manager-He stated the present rate sttuctu^re was-stashed inttte 1940J s
and coverage rates and growth carried us,and at present the City does not nave enougn coanacovtmye^$6,060,100,with First Phase immediate needs of $3,Zb/,bJU,
we would only reduce the rate structure by 6.5*to 7.3%,whichis not reauyra f weSS»2£^r^t^^^^^^Z^^^^ile LU1/.0 borrow money
and do the proposed first phase.
From the graphs displayed we can see the proposed rate structure is relatively comparable with adjacentcitiesWUh?Cities that have really looked at their water rate problem,such as Ellensburg and Yakima,
then our proposed rates would be lower.
He also emphasized there are some intangibles that we have not discussed;they are requirements thatwfllbeseTforthfa?the Deoartment of Ecology and Environmental Protection Agency Standards We topeThatwecouldassume^that'we will be able to secure Federal financing for what they will require us to do.
The proposed rates would be an approximate increase of 45%for City wat^?J^27%for Larson water and 59%for Larson sewer.Presently the existing rates for Larson water and sewer
are about 20%higher than city rates.
of EcoUy We ?hin"'the e is a draw-down in the entire Basin and any wells drilled in the proxrnuty of amileoTe'cuy limits would be an infringement upon our water well rights.What we are really orotestmgarethedeepirrigationwells,and feel we have enough data to oast a reasonable doubt and ask the DepartmentofEctibgytogiveusassistanceinestablishingthereasonforthedraw-down.
The City Manager stated he would not want to suggest the Councilberushed£**Wg$Z£S^^
proposal.
nTaSer sS^ion!Sfr^S^r^Kt'^T^e,,973
at 8:00 P.M.The Council concurred.
Meeting
ATTEST
City CI
mayor ^-Otto M.Skaug [
1798