WATER/WASTEWATER TASK FORCE MEETING

MINUTES

April 12, 2001

11:30 a.m. - 1:30 p.m.

Room 325 - Civic Center

1) CALL TO ORDER

The meeting was called to order by Councilor Wes Bennett.

2) INTRODUCTIONS

Introductions were made. Members, staff, and citizens were in attendance as noted below.

Staff present included Frank Mauldin (Public Works Director), Tim Gerling (Assistant Public Works Director), Bob Woods (Management Analyst), Jack Merritt (Finance Director), Jon Ellis (Assistant Finance Director), Mark Siegel (Finance Debt Manager), Paul Eckley (Chief Utilities Engineer), Pat Dodge, (Management Analyst). Debbie Galardi, Consultant, was also present.

Public attendance included Mark Fields (SESWD), Rob Kissler (Keizer Public Works), Susan Gahlsdof (Keizer Finance Department), Chris Eppley (Keizer City Manager), and Chuck Spies (Turner City Administrator.

3) CITIZEN INPUT

None at this time.

Chair Councilor Wes Bennett at this time put the issue of election of a Vice Chair on the table and requested nominations. This position is necessary in case of absence of the Chair during meeting. JB Summers was nominated and after brief comments, was elected unanimously to the position.

4) MINUTES

Revised minutes of October 12, 2000, October 19, 2000, and November 9, 2000, were approved and the motion carried.

5) COSA (Rate Design and Proposed Water/Sewer Rates)

Jack Merritt was introduced to present an overview of work to date and recommendations for approval by the Task Force. The presentation included Integrated Financial Planning, COSA Policy Review, System Revenue Requirements and Rate Slopes, Customer Class Revenue Responsibility, Rate Design Policy Issues, and Proposed Rate Schedules. After detailed presentation, Task Force approval of the following recommendations was requested:

• A 5-year program of smoothed rate increases
• Water B +8.3% per year through 2006
• Sewer B + 8.9% per year through 2006
• Surcharge of 7.5% for outside-City users
• Transition to full Cost-of-Service Rates over five years

Also presented for discussionCshould the City provide a mechanism for low or no utility bills for low income users?

The schedule for review and approval for revised water and sewer rate schedules for 2001:

May 7 Staff report and Council Workshop/Public Forum

June 11 Council Public Hearing

June 26 Council Deliberation and Adoption of Rate Schedules

August 1 Effective Date of Revised Rates

After the presentation, Councilor Bennett opened the meeting for questions.

Steve Travis questioned the group breakdown - what happens if this changes significantly? Jack Merritt responded that the rates would have to be re-established. Steve also stated his concern with the health of the food processing industry.

Mike Gotterba asked about when increases would be in place. Jack responded that August 1 would be the implementation date and then every July 1 thereafter.

Councilor Quillinan asked what the amounts are based on and what is the total cost of recovery. The amounts are based on system requirements, but Jack does not know the cost of recovery total at this time.

Frank Mauldin stated that the big drivers on the wastewater side are the improvements to Willow Lake (about $200 million) and on the water side, the big driver is the transmission line from Geren Island (about $50 million).

Councilor Quillinan asked for clarification of the minus figures on the charts on pages 25 and 26 of the handout (copy attached for file only). Jack explained that this represents the cost decrease for those classes.

JB Summers asked about the breakdown for food processing industry into three classes - can it be appealed? Jack stated that the breaks are not firmly fixed at this point. Frank Mauldin also said that appeals could be made. He also stated that they had put auto repair shops at very high wastewater strength, but representatives of this group have convinced staff that they have new technology that reduces this strength a great deal before it leaves their business.

JB also asked if the Task Force is being asked for approval of the 7.5% surcharge for outside users at this point. The answer to this was yes. Jack Merritt stated that staff believes this is reasonable and there is no policy change.

Chris Eppley thanked the City of Salem staff for their work with them throughout this COSA process. He stated that he thinks this proposal is equitable and that can be sold to Keizer City Council and to the citizens - one that will work.

Jack Merritt stated that the commercial subclasses will not be implemented for least a year due to the City not having the internal capabilities to do the billing at this time.

Steven Anderson - Is there a simple answer to why 7.5% is reasonable?

Jack Merritt explained that, in general, the risk factor for the City makes the surcharge necessary. A lot of places do it because it is also a sort of incentive for people to come inside the City. There are a number of reasons that there are different rates charged outside the City. We have not gone into a detailed study.

Steve Anderson commented that if that is the case, it makes sense to have one large system. There may be issues with a large system to bring Cities together as a group to deal with them. But this is a policy issue.

Keizer Mayor Christopher commented that the City has no risk, that the risk is to the ratepayers. Jack Merritt and Bob Woods provided the explanation that the responsibility of bond repayment does fall upon the City. The bonds are sold and the City is responsible to assure that there will be sufficient funds to pay debt service costs, either from ratepayers or some other source.

Councilor Wallace had a questions on slide 38 and 50. On slide 50, does public include prisons? This was clarified that prisons are in the institutional category, public includes state buildings, municipal is City parks and the like.

Susan Gahlsdorf asked if the administrative fee is included in the rates. Jack replied that right offhand he did not recall, but will provide that information to her.

Lee Beaty asked what choice City Council has when this goes to Council. Jack Merritt replied that they could choose to do any one of a number of things, including deciding on charging a lesser amount or postponing the increase. There is no advantage to postponing or deferring and in order to keep the costs contained, it is necessary to have this plan. Lee also stated that what happens if the plan is deferred needs to be more widely publicized.

The plan will be reviewed every year to see that everything is on track.

Charley Waters asked where/when the public could comment. The public education meeting will be first and then testimony can be given. At that point, Council can ask that more work be done before deliberations.

Steve Anderson had a question on one of the slides regarding the transition to full cost of service rates over five years. He pointed out that a summary should be presented to the public to show what the cost delay would do to rates versus the effect of no delay.

Councilor Wes Bennett asked about the surcharge - are people in the City responsible for franchise fee? Jack Merritt stated that the franchise fee was originally developed to offset some of the costs caused by damage to roads and street cuts.

At this time, the Chair, Councilor Bennett called for a show of hands of those in favor of the recommendations staff would make to Council. By a vote of 10 in favor and two abstentions, the recommendations were approved to forward to Council.

Steve Travis stated that just because you approve the recommendations does not mean you agree with the rate structures.

JB Summers asked about ow income users and how they fit into the picture. Jack Merritt stated that staff has no position on this. However, staff will propose that Council continue the present program of sewer rate discounts for eligible senior and disabled users. Councilor Bennett asked for a recommendation on what income should qualify for reduction or no bill. Jack replied that staff could inquire as to what other cities are doing, but would not make a recommendation. Charley Waters asked what mechanism the City currently uses for low income. The qualification is senior citizen or handicapped at $12,000-$13,000 based on the Social Security Index. For those who qualify now, it means a reduction of around $7 for sewer only. Keizer Mayor Lore Christopher asked that this be broadened to include low income. JB Summers stated that this motion is outside the realm of scope - this should be left up to Council and this was agreed upon by other members.

Frank Mauldin at this time brought up the issue of another big event for Water/Wastewater Task Force involvement. The City is trying to permit a transmission line from Geren Island. This means a lot more work on the Water Master Plan. The Water Master Plan now needs to include a threatened fish section. This is work for the Task Force. Staff is now writing a Request for Proposal which will come through the Task Force. The City=s water rights are being challenged.

7) OTHER

At this time, Frank Mauldin presented the name of the new member replacing Ed Davis for the General Business representation. Jack Lowery of Prudential Real Estate will fill this membership vacancy. Lee Beaty attended this meeting in his absence. Next meeting will be by prior notification.

8) ADJOURN

Meeting adjourned at 1:15 p.m.

These minutes are transcribed from notes and the tape recording of the Task Force meeting on April 12, 2001, as an overview of the meeting. They are not verbatim. Any attachments are to the file copy only.

Linda Nelson, Staff Assistant II

May 7, 2001

Attachments: Attendance Sheet (file copy only)

COSA Handout (file copy only)

These minutes were approved at May 17, 2001, meeting.