Wednesday, September 20, 2017
INDEPENDENCE — A water rate presentation analyzing the effect of the city’s purchase of a water right last month, as well as the potential building of a new wastewater pumping plant, was given at the Sept. 12 Independence City Council meeting.
Steve Donovan, of Donovan Enterprises, conducted and presented the study.
Within Donovan’s presentation were breakdowns of how much money the city would need to pay each year to execute both the water and wastewater capital improvement plans that the public works department has slated for the next five years, as well as a proposed plan of where to get the funds.
For the water CIP, the total cost over the next five years — adjusted for inflation — is $2,273,377. More than half of that cost would come in 2018.
Donovan’s suggestion of sources for money was a combination of obtaining revenue bonds, using system development charges and pulling money from resident water rates.
The proposed amount of funds from the water rates was 28.85 percent of the total needed.
This would result in a rise of approximately 2.5 percent per year until 2022, making the average monthly bill $7 higher than it is at present.
Revenue bond proceeds would cover the bulk of the cost at 53.46 percent, and system development charges would pay for 17.69 percent.
For the wastewater CIP, the total cost over the next five years is $9,696,516.
While this amount is significantly higher than the water CIP, Donovan suggested that the city could use the DEQ’s Clean Water State Revolving Loan Program with a sponsorship option.
This would allow the city to borrow nearly $1 million more than they would with a conventional SRF loan, with a 1 percent principle and interest rate rather than a 2.53 percent rate.
Revenue bond proceeds, including the aforementioned DEQ loan, would account for 75.97 percent of the required funds for the wastewater CIP, while system development charges would cover 21.13 percent, and residential water rate increases would pay for 2.9 percent of the total.
To provide this 2.9 percent, the wastewater rate would rise 5.5 percent per year over the next five years.
The projected monthly base rate for 2022 would be $57.02 — $11-and-change more than it is at present.
After Donovan’s presentation, Mayor John McArdle advised the council that, should they have detailed questions, they should approach the city staff for explanation at a later time, and that there would be time for more discussion about the plan moving forward.
“Is this helpful, outlining a business plan?” McArdle asked the council. “Is this looking — we’re not voting or anything — but does this look like a reasonable approach?”
Councilor Tom Takacs voiced a request to “go forward and do further analysis.”
“It is daunting to do more debt, but I don’t think there’s any other way to accomplish this other than through debt,” Councilor Marilyn Morton said. “And it certainly doesn’t make us unique from other communities.”
The rate increases mentioned above are not final.
The study was conducted to give the city council and community an idea of what effects the coming capital improvement plans will have on the city’s finances, as well as providing a suggested plan of action.
The city manager and other city staff will continue to work with Donovan over the coming weeks to create a finalized plan to present to the council in October.