CITY COUNCIL MINUTES

 

MARCH 29, 2007

 

The meeting was called to order by President Pleasant at 7:00 p.m.

 

MEMBERS PRESENT:  Ms. Sellers, Mr. Fogt, Mr. Pleasant, Mr. Burke, Mr. Reams

Mr. Marshall (arrived at 7:35 p.m.)   Excused:  Mr. Gore

 

OTHERS PRESENT:  Mayor Kruse, Director of Administration House, Finance Director Morehart, Law Director Aslaner, Clerk Patterson

 

REPORTERS PRESENT:  Ryan Horns – Journal Tribune

 

CITIZENS PRESENT:  Esther Carmany, Richard Lowe, Gary Little, Tom Tumbry, Annalee Webb, Dick Noland, Mary Tullis, Andy Brossart, Gayle Williams, James Hassinger, Jennifer Weikart, Crista Miller, Barb Miller (for Bill Limes), Kristy Dearing, Merrill Rausch, Darlene Daniels, Greg Faulkner, Chris Clark, Don Frazier, Ron Miller, Lloyd Baker, Nevin Taylor, David Creviston

 

1)     Funding – Bond monies and financial options for sewer and water

 

Mr. Rich Simpson of Brickler & Eckler gave an overview on bond monies and financial status.  Bricker and Eckler has served Marysville as Bond Counsel for more than 30 years.  They view the City of Marysville as their client and serve the City as a whole.  They provide their best legal advice regardless of local political considerations.  They bring their experience and institutional memory to bear on proposed financings and offer their guidance as to what is in the long term best interest of the City and its residents.  They rely on the expertise of the engineers relative to capacity of the water system, the type of improvements needed, the estimated cost of the improvements, the projected operating costs of the system and projected revenues of the system.  Based on the engineers’ studies, they work with the City’s investment bankers to help design a cost effective financing plan for the City.  The number one goal of the financing team in every case is to design a financing plan that allows the City to hold rate increases to a minimum.  No one, and certainly not any member of the financing team wants to see rates raised more than is necessary in order to meet the City’s capital improvement needs.  Under the guidance of the City’s investment bankers, they help analyze many different financing options in order to identify the best approach for Marysville.  They look at revenue bonds, bond anticipation notes, both revenue bond anticipation notes and general obligation or tax supported bond anticipated notes.  They look at OWDA loans, floating rate alternatives, TIF revenue supported financing options and various combinations of all of the above.  They also look at different amortization schedules.  Their goal is to minimize the financial burden on current residents of the City and capture the benefit of future growth in the City.  One of the things they look at in every case is a plan that pushes back into the future more of the debt payments, more of the principal payments on the bonds rather than paying that debt off sooner.  One consequence of that is that the total amount of interest paid over the life of the borrowing will be higher, but another consequence of that is that in the early years, it means lower payments, which means lower rate increases until growth in the City can allow revenues to catch up.  They are all committed to doing the best job possible for the City.  Mr. Simpson asked, “Why wouldn’t it make sense to have a very low interest rate OWDA financing as all or part of the financing for this particular project?”  He said in most cases you would, but not if it meant a higher rate increase, at least in the early years.  “Why would it make a higher rate increase?”  Mr. Simpson drew a chart as an example:

 

1M

 

800

          __________________________________________________________________

600 

         

400   

 

200_____________________________________________________________________

       2007           2009           2011           2013           2015            2017            2019

 

 

The straight line represents the amount of money the City has to pay for principal and interest every year on a loan.  This is known as a level debt service loan.  An OWDA loan is a level debt service loan.  EXAMPLE ONLY:  Say it takes $650,000 per year to pay off that loan.  What kind of rate increase does it take to generate that much money, because it will take that much money in the first year.  Rates will have to be high enough to produce that much money.  There is another way to borrow money if you do a bond issue.  Ohio law allows us to postpone paying principal.  The bonds can be structured in such a way that more money gets paid to principal in the later years and less in the early years.  That allows us to count on growth in the City.  New residents coming into the City will help make those payments in the future.   The curved line shows the bond issue financing.  The same amount of money is borrowed, but is paid back at a different rate.  This means not as much money has to be raised in the first years, thus keeping the rate increases lower and letting the growth catch up. 

 

The bond financing team looks at dozens of profiles and structures so they can put together a plan that achieves the needs and raises enough money to build the projects that are needed to satisfy the EPA mandate to maintain capacity for the residents, and gives the City as much money as is needed, but keeps the impact lower on the rate payers in the early years. 

 

Mr. Fogt commented that “it’s pretty hard to swallow when we can get a cheaper rate from EPA loans.”  It looks like there are other sources that are better suited.   Mr. Simpson said those come with strings attached. 

 

Mr. Andy Brossart addressed Council.  Mr. Brossart agreed with Mr. Fogt.  In terms of the options that are out there, besides going with loans, grants are opportunities, but they don’t satisfy the complete capital improvement plan, which is a problem.  Mr. Brossart passed out a booklet on “Utility Financing Overview” (copy available in the Clerk’s office).  He pointed out various pages as snapshots of the water system.   Page 11- The “green” line is based on the water reservoir and what the annual payment would look like with all the debt given an EPA or OWDA Loan.   Page 12 shows the same level payment across the term of debt financing.  Page 13 is a comparison to a traditional financing.  The debt has been wrapped around the back to bring down earlier years, but at a higher interest rate.  They were told to achieve the goal of keeping the rates low.  That’s what this chart shows.  Page 14 shows the financing for the Water Treatment Plant.  The “pink” shows what happens with an EPA loan over 30 years at a 3-1/2% interest rate; it balloons.  Mr. Brossart said you have to think five/ten years down the road because this City in particular, has seen an awful lot of rate increases over the years.  The delay of trying to smooth those out and not having rate increases in the teens, you might pay a little more on the rate increase now, but it’s not going to be such a substantial increase down the road. 

 

Mr. Brossart has been with Fifth Third Securities for two plus years but has been in this business for nine years.  Fifth Third Securities looks at the analysis for a project.  They review all options, look at what fits best within the goals and financing and overall goal with rates and the cost of money and give advice to the City as to what’s the best way to go given the situation. 

 

Mr. Pleasant referred to the fact sheet, “If the improvements needed in the Water System are delayed, this will have direct results on the financial viability of the Sewer System (because water usage is used to calculate the sewer usage).  Mr. Pleasant asked Mr. Brossart or Mr. Simpson to address that fact.  Mr. Brossart repeated the question, “If the water system is delayed, does that have an affect on the sewer system?”  Mr. Brossart stated, “Yes.”  If the water system is deemed not appropriate to serve the needs of the community, the EPA will shut down the allowable taps within the City.   It has affects on the wastewater side because the wastewater is tied to development that would continue on in the community, not only with rates, but also with residential incentive districts, which were put in place to keep rates from 33%/year increase down to 17%, which was what the strategy was in that financing plan.  Should the EPA come in and shut the system down because itis not adequate to serve the needs of the community, it will have an awfully bad impact on the wastewater system and the ability to go out and borrow at a decent rate, if at all.  Mr. Pleasant asked for confirmation of Mr. Brossart’s statement saying the reason for that is because the sewer rates are determined off of the water rates.  Mr. Brossart said they flow with each other.  The development plan for the sewer was based off of future development within the City.  If development stops, you have a problem.  If you’re not making your payments on the bonds, or if you don’t meet your coverage factor that you’re bringing in the extra amount that has to be adhered to per the bond indenture, they can come in and force the City to raise rates even higher on the wastewater side in order to meet the obligations.

 

Mr. Pleasant referred to the fact sheet, “The City established several residential incentive districts in 2005 to help repay a portion for the Sewer System as an alternative to higher sewer rates.”  Mr. Brossart explained they were looking at the EPA coming back with the final determination, and it was discussed how to finance this.  The directive was to find whatever mechanism they could, besides raising rates on the community, in order to pay for this.  At the time the State law allowed them to do residential TIF’s, 300 acre areas spread around the City.  With the development that was occurring, they felt the growth coming in would help pay for new improvement needs.  It was again designed to reduce rates from 33% to the 17% level.  They looked for every tool possible to help keep those rates down. 

 

Mr. Pleasant asked if the 6% for two years that’s being proposed at this time would enable the City to move on with the project.  Mr. Brossart said it depends on what projects.  Mr. Pleasant responded, “The reservoir.”  Mr. Brossart said it pays for the reservoir.  It does not pay for the water treatment plant. 

 

Mr. Pleasant also heard, “Why not something less like two 3%’s, two years of 3% increase.  Is that enough money to fund the reservoir?”  Mr. Brossart responded, “No.”

 

Mr. Pleasant asked about the interceptor bid.  It was opened on March 20th and has to be let out in 60 days.  He asked Mr. Simpson to explain that process.  Mr. Simpson said if the City chooses not to award the bid, that means the bids are all off the table.  The bidders go back in the market and re-bid the project.  It’s not known whether you’ll get a much higher bid or fewer bids.  Contractors are not happen to have to go through the bid process a second time.  They all know the information and what it’s going to take to bid, so it doesn’t put the City in a favorable situation.  As time goes by, costs inflate.  It’s usually not in the best interest of the City to reject the bids. 

 

Ms. Sellers asked, “What are the permissible sources of debt service up until the time that “growth” starts to pay for itself, and referred to a chart.  She noted resident user rates are one permissible source of debt service.  Mr. Simpson stated whenever you finance an enterprise, a water or sewer system, sometimes an airport or hospital; it’s generally financed from the revenues of the system.  The revenues of the system are defined as all the money that comes into the system less what it takes to operate the system on an annual basis.  The gross number less the operating cost and what’s left over is the net revenue.  That’s what’s available to pay principal and interest on the bond.  Sometimes they supplement that net revenue number with TIF revenues.  TIF’s can be an additional source if available.  You also look at taxes, property tax, income tax and sometimes sales tax to help finance an enterprise.  One of the problems you run into with taxes is mismatch. 

 

If you begin using tax revenues, then some tax payers are customers of the system.  You generally don’t do that if you can avoid it because some people are treated unfairly. 

 

Ms. Sellers asked about developers agreeing to provide debt service.  Could that money be accepted?  Mr. Brossart said yes, if it was dedicated to the system.  It would be a source of revenue.  Ms. Sellers noted prepaid tap fees as an example.   Mr. Simpson said tap fees are often times included in the projection.  In the sewer system, they assumed the tap fees would continue to be there to help pay the debt service.  If the water capacity is not available to permit growth, then the tap fees that are counted on that help pay the sewer bonds off won’t be available either.  That’s why they are tied together.

 

Mr. Fogt asked what’s holding our credit rating maybe lower than it could be?  Mr. Brossart said revenues.  Given what’s been laid out for the capital projects, revenues are a concern.  They’ve got the coverage factor within the trust indenture at the lowest the industry will allow.  They convinced the insurance companies and (inaudible) for the first time ever to take a look at another source of revenue, such as the TIF revenue, to help pay for the sewer system.  The revenue stream is the biggest issue given what the EPA has laid out as requirements that have to be made on the capital side.  Mr. Fogt noted the City’s total debt is $126M, and we’re looking at $53M on the trunk line sewer, $30M for a water plant and $25 for reservoir and asked isn’t that an anchor on our --   Mr. Brossart said that’s a concern.  When they came out with the first financing for the wastewater system, they made it a disclosure item.  They said this is the plan so everyone knows going in, people buying that first set of bonds understands this is the plan; this is what has to happen down the road, so people were fully aware of that, not only on the wastewater side, but the water side as well. 

 

2.     Water Needs Discussion

 

Public Service Director Tracie Davies, City Engineer Phil Roush and Wastewater/Water Superintendent Rick Varner gave a powerpoint presentation on water facts.  That presentation is incorporated into the minutes.   ** Additional comments will be added for the specific slide. ** 

 

Slide:  Existing Issues Addressed in the Master Plan

          Trihalomethanes is a chlorinated byproduct and are a regulated substance.  The longer the water is in the system, normally the higher the Trihalomethanes. 

          The Master Plan recommended doing a bench scale test to potentially reduce PH levels and various things in the system so that when the water gets older out in the system, when it gets out in the New California area, down by 161, that we aren’t having these disinfection byproduct problems. 

          In the new treatment processes down the road, they would probably use activated carbon to eliminate or reduce organics thereby reducing Thihalomethanes in the system.

 

Slide:  Well Water

          Mr. Roush added that the expected volume available for a well is 1 to 1-1/2 million gallons a day, so for every 1 to 1.5 mgd, you need an additional well.  Also, the way EPA rates the wells, if you have a well field, they only count the volume of the wells with the largest well out of service, and so if you have five wells, you can only have the capacity for four.

 

Slide:  Surface Water

          Mr. Varner said both well water and surface water will have a place in future supply for the City of Marysville.  If there is a reservoir built, it will service surface water; the well water is still going to be a large part as the system that grows the City of Marysville.

 

Slide:  Surface Water with Reservoir Storage

          Presently the City of Marysville uses a combination of well and surface water.  In 2006, the ratio of the well water to surface water was about 2 to 1. 

          If there are issues with the well and surface water, you’ve got the reservoir, you’ve got your capacity to continue to give water to consumers. 

 

Slide:  When will we Exceed Rated Capacity?

          Based on the City’s current peak average, which is 3.01 mgd, we have .16 mgd worth of capacity available.  The average single-family household uses about 550 cu. ft. of water per month.  Based on that usage, we have enough capacity to build 914 more houses on our system before we’re out of drinking water to sell.   If you base it on commercial, Bob Evans Restaurant is equivalent to 27 houses, Wal-mart is equivalent to 36 houses, Kroger is equivalent to about 18 houses, the Hampton Inn and Holiday Inn are equivalent to about 30 houses each.  Commercial growth will eat at that household growth quickly.  In two or three years, we’ll be out of water in our existing plant.  We need to start designing a new plant and building it now or at least designing it so it can be built.  We could have a serious condition come up shortly.  If City gets re-rated to 4.33 mgd, we would be in a position to serve another 7,500 homes.

 

Mr. Varner said the City may promote a conservation program for the City of Marysville this year.  In his research, lawn watering can use in an hour what most people would use in a full day.  Will probably propose for the City to go in an odd-even type of lawn watering.  Odd addresses will water on an odd day; even addresses will water on an even day.  Low-flow type fixtures in the systems will conserve water usage.  Education programs will be provided. 

 

Ms. House added comments about the financial plan.  After the Master Plan was completed, the team of people, of which Council was invited to be a part of, along with Administration and staff, this financial strategy was developed using everybody’s expertise.  Based on the data gathered and assimilated in our Water Master Plan, a financial strategy was developed to accommodate the implementation of the Master Plan. 

 

A part of that strategy addressed rate increases needed to accomplish the plan’s goals.  Several rate scenarios were examined prior to one being selected as a recommendation.  Quoting from the Master Plan, “Based on the desire to minimize water rate increases for existing customers, uncertainty regarding the rate of new customer growth, and the potential for needing significant rate increases in FY09 and FY10, the following 5-year rate schedule is suggested:

 

          FY 06                   FY07           FY08           FY09           FY10

          5%              8%              8%              8%              8%

 

This rate schedule “smoothes” the more significant rate increases that are anticipated to be required in FY09 and FY10 over the 5-year forecast period. 

 

None of us wants to have our rates increased, and so the team looked at the least offensive of all the options that we had for all of the citizens of Marysville.  We continue to advise that we follow that 5-year rate structure so that the Master Plan can be implemented to the benefit of all the citizens of Marysville.

 

Mr. Pleasant referred to the fact sheet.  The cost of the Water Treatment Plant being $35M with 1-1/2 years of that being design, do you have a feel of either percentage of what that $35M would be as far as the design cost?  Mr. Roush said about $3M for design. 

 

Mr. Fogt recalled the price tag of $30M being discussed a week ago.  Mr. Roush stated the plant itself might but then you include the design fees.  Mr. Roush said the plant is $30M, the engineering including design and construction engineering is $5M.  Mr. Fogt noted the study said $27.6 for the plant itself.  Mr. Roush noted those were 2005 dollars. 

 

Ms. Sellers asked about the number of residential units in Jerome Village.  Response was 2,200. 

 

 

3.  2nd Reading       COMPANION RESOLUTION TO ORDINANCE _____ “TO AMEND

      Public Hearing           SECTION 931 – WATER RATES – OF THE CODIFIED ORDINANCES

                             OF THE CITY OF MARYSVILLE” was presented for second reading,

public hearing.  Mr. Fogt moved to waive reading in full; affirmative voice vote was unanimous.  Ms. Sellers explained that she proposed this resolution in an attempt to address a couple of her concerns which led to her “no” vote on the 8% rate increase.  She said Mayor Kruse does not support this resolution.  She feels there are many reasons why it is good for Marysville residents.  The only way she can support the proposed rate increase is if this resolution is approved. 

 

About the original 8% increase and then the compromised 6% increase currently on the table, she appreciates the frustration expressed by her colleagues John Marshall, Mark Reams and Dave Burke, that we as Council did not follow through with our original plan for the higher rate increases.  There was an understanding about how much the rate increases would be, and we, as Council, have changed course here and are not following that understanding now.  She sees great value to the views of the residents in coming forward to ask that the 8% rate increase be reduced.  She thanked the residents for their work on this issue.  The residents have come forward with two important points about the original 8% rate hikes.  The first is that the 2005 Plan does not require growth to pay for itself.  We’re asking current residents to finance infrastructure improvements for big residential developments like Jerome Village, which is miles from our City limits and has nothing to do with our residents or their well being.  Secondly, residents have said the City did not explore all the options for financing these new improvements back in 2005.  We have not asked developers, such as Jerome Village, to pay for any part of the reservoir or any part of the water treatment plant, and it was just assumed that the full price of these would be Marysville’s problem, and that Marysville residents would have to provide debt service for these projects.  She believes there is still some creative financing that can be done.  One idea is pre-paid taps, suggested by Mr. Lloyd Baker.  Given our current financial model, if we collect all the prepaid tap fees with the rate structure in place, we’ll have a deficit at the end of our debt.  Maybe we need to re-evaluate the amount of taps that we’re asking from these developers; maybe we need to think about impact fees or zone pricing so that later in the day we have higher rates for County residents further down that are now part of our system right now.  These two points trump the rigid adherence that we would have to the original plan and warrant the re-evaluation, which has been done by the Ad Hoc Committee.  It’s a matter of respect.  We need to show respect for our current residents, particularly those willing to devote their time to this issue, and she acknowledged Ms. Carmany, Mr. Baker and Mr. Noland and many others.  She thanked everyone for all their work on this issue.  “I will do everything I can to make growth pay for itself, and I know who I represent; I represent the citizens of Marysville, the people in this room and not developers in the southern part of our County or landowners in the southern part of our County.  The 6% compromise doesn’t satisfy everyone, but it does enable us to move forward with water supply improvements, and we need that for the health and safety of our current residents.”  She has come to the conclusion, based on information that she has, that the reservoir is the best way to go for water supply improvements.  She would be glad to hear if there is any new information out there.  Based on the fact that there is excess capacity in the reservoir, which is good planning, however, she can’t vote on the 6% rate increase unless two things are in place, which are a part of this resolution. 

 

The two parts of the resolution are that we need a Land Use Plan and a Business Plan.  She stated, “Now or in the future I won’t ask residents to buy something if I’m not going to be able to tell them what they’re buying.”  Part of the rate increases are for the benefit of the residents but part are for also building capacity for future growth.  The City currently has no plan or understanding in place that is current that tells us what the growth in the southern part of the county is going to look like and how to protect our current residents from costly residential development.  That’s what a Land Use Plan does.  It’s a shield and a sword; it can protect property owners and help them plan for their future in knowing ways to invest in property.  It also protects the City from developers who might say we’re making arbitrary and capricious decisions about what kind of growth we want.    The first step is to have an idea of what Marysville wants for the area.  We now have a City Planner who can do this in-house.  She encouraged residents to come and participate in this process.  Planning Commission needs to be involved in this process. 

 

Part two of the resolution is the Business Plan.  She has heard a lot of people in support of the rate increase that “you have to spend money to make money” and feels that’s pretty logical, but if we’re asking residents to finance growth, we better have a plan in place to return some amount of that benefit to them.  Bond holders wouldn’t give us money if they didn’t have an expected rate of return.  That means lowering rates in the future.  The document she is looking for should describe how we’re going to manage and reduce our debt and not repeat the mistakes of the past.  She commended Ryan Horns of the Journal Tribune on the coverage of the topic of previous mismanagement of Administrations in the debt.  We need to use the money given to us by the residents wisely and find a way to reduce our debt principle.  That’s what that plan is all about.

 

Mr. Burke and Ms. Sellers had discussed how to get the projects in the south to pay for themselves in order to avoid incurring more debt.  “With Dave on that, it’ll get done.  Dave follows through with what he starts.” 

 

Ms. Sellers said she has heard some residents voice concern about the enforceability of this resolution; that it doesn’t have any teeth, even though it’s a good idea.  “Yes, the Mayor and Administration theoretically could ignore this, just like they could ignore any resolution or ordinance and give it the attention it deserves.  There is really no good penalty that we can impose, I mean we can’t fine them.  We can’t coerce them into doing something, but I would hope that if it passes, that the Mayor and Administration would comply and do what’s best for the City, and I believe they will.  But, as you know, the ultimate remedy for all this; for all of us elected officials, is if you don’t like what we’re doing; if you think we’re not doing our jobs, you think somebody else could do a better job, is to vote us out.”  Ms. Sellers built in timeframes for completion of these two projects; three months for the Business Plan, six months for a mid-term report on the Land Use Plan.  Once the Land Use Plan is in place, it’s good for several years and provides the shield and sword mentioned above to manage the City’s growth.  The Business Plan is trickier.  We’ve got to find a way to not make the same mistakes we’ve made as a City in the past, and we’ve got to find a way to reduce our debt, which is the purpose of the Business Plan.  For these reasons, Ms. Sellers supports the 6% rate increase together with this proposed resolution and “knows the work is just beginning for Council on these matters.”

 

Mr. Noland addressed Council and said he wholeheartedly endorses this resolution.  This City has taken on a tremendous amount of debt.  He has never worked for a City of this size with a $125M, so far, and another $30M or $60M in debt.  He asked, “How much can a city of this size tolerate?”  The water and sewer utility now is a really big business.  He views the Mayor as the CEO and City Council as the Board of Directors.  There is a real need for a business plan so that the staff knows what they need to give in terms of reports to Council.  He also agreed with the Land Use Plan.  He’s been asking for the last five years for a Land Use Plan for what’s going to go on in the southern part of the County where he lives.

 

Mr. Lloyd Baker addressed City Council.  He agrees with Ms. Sellers, that the lack of a business plan is the root of frustration of the citizens.  It’s an important first step for both the Land Usage Plan and the Business Plan, and feels they would have precluded many of the problems that we’re trying to resolve now, 16 years later.  He commended Ms. Sellers for her work.

 

Mr. Greg Faulkner addressed Council.  He thanked Ms. Sellers for her resolution.  He asked Mr. Marshall, his Ward Councilman, how he felt about Ms. Sellers’ resolution?  Mr. Faulkner supports the resolution.

 

Mr. Marshall stated he did not fully understand exactly what’s to be accomplished with the resolution.  It’s his understanding that there is a County Master Plan that includes land use.  There is a City Master Plan that includes land use.  There is a Master Wastewater Study and a Master Water Treatment Study and we’re ending up with more studies on top of studies.  He asked for an understanding as to what this accomplishes above and beyond what the City already has in place that is being followed both at a County and City level.   From the standpoint of a business plan, he understands a business plan from a corporate point of view, but he doesn’t feel there is enough detail in the resolution for the City staff to make a stab a putting a document together.  He feels the wording is too vague to get a result.  There are a lot of factors that go into place here as far as finding businesses willing to locate here; it will depend on the economic impact at the time.  You’re making assumptions that don’t necessarily have a lot of facts based on them yet.  Mr. Marshall stated this legislation would be up for vote at the April 12th meeting and due to his travel schedule, will be unable to attend and vote on it, so he feels it’s a moot point at this time. 

 

Ms. Sellers said she didn’t think it was a moot point and addressed Mr. Marshall’s concerns.  She said there is a 1999 County-wide Comprehensive Plan that addresses County-wide land use.  The City Planner commented to Ms. Sellers that the Plan is a pretty good plan, but it doesn’t really talk about what Marysville wants for our entire growth area, which includes the contract between the County and City for sewer and water services.  It also doesn’t include areas like Jerome Village and that area.  The Plan is dated 1999 and a lot has changed in the City since then.  The assumptions used back in 1999 mentioned by Mr. Marshall have changed since then.  An updated Plan is needed and we also need to make sure it covers the entire area that Marysville is considered to grow. 

 

As for the Business Plan, Ms. Sellers agreed with Mr. Marshall that the wording is not real specific as to what we need to see because the problems are fairly simple.  We have incurred debt and made refinancing decisions where now our principle stands about the same that it was many, many years ago.  We don’t seem to have a plan for repayment.  This ties in with some of the work she wants to do with Dave Burke on finding alternative financing methods.  The idea is that the Administration not make the same mistakes that have been made with creative accounting, etc. and also to ensure that we make a priority of rate reduction, which currently is not in the Malcolm Pirnie Plan.  Malcolm Pirnie consultants admit that their Plan does not cover these issues. 

 

Mr. Burke feels it’s a course of action we need to take regardless.  The fact that there is plan after plan after plan sends mixed messages to developers, County, City, Township.  We need to find a way to solidify that, maybe not necessarily reinvent the wheel, but put the spokes back in the hub to make it function.  He feels there are answers out there.  Marysville presents a lot of opportunity in terms of its utilities and the developers, and other commercial enterprises have to realize that.  It’s naïve to think that they won’t work with the City, not just because we’re the only game in town, but because ultimately it would be less expensive than other kinds of things.  Moving that forward assures us of our home values within this town.  He agreed with what Ms. Sellers is doing.

 

Mr. Marshall asked for clarification of the resolution endorsing an incentive package for the County which was to bring businesses to Marysville.  Mr. Phillips said it was the EDAP, Economic Development Action Plan.  Mr. Marshall asked if that plan qualifies as a business plan, because it lays out a variety of issues that businesses need to look at to come in. 

 

Ms. Sellers asked Mr. Phillips asked if the EDAP deals with water and wastewater debt management?

 

Mr. Phillips stated the EDAP does not deal with specifics as far as financing, but it does plan for the community’s economic growth and makes recommendations on what we should do and how we should approach economic development and the need for industrial and commercial growth vs. residential.  Ms. Sellers asked if the EDAP includes a land use plan in the allocation of residential and business units that would be binding on the developer and would protect the City from making decisions about those matters if we were called to task by a developer?   Mr. Phillips noted that the problem with Comprehensive Plans is they are guidebooks; they are not a requirement for a developer to follow.  City Council or Planning Commission can decide against any plan they come up with.  A Master Plan was done in 1999.  There is a Land Use Plan which includes all of Marysville, all the way down the US33 Corridor and makes recommendations on density for residential, industrial and commercial.  Jerome Township has drafted a comp plan, but it has not yet been adopted by the trustees. .  Millcreek Township has a Land Use Plan which was adopted last year.  Those plans do recommend density levels for residential, commercial and industrial in those locations.  Ms. Sellers commented that the Land Use Plan serves as a shield.  If the Plan calls for business growth only and the City denies a residential subdivision, the City will be protected by the Plan in making that decision.  Mr. Phillips agreed with Ms. Sellers.  It’s more of a protection than a requirement.  The EDAP is a guide for the future economic growth of the community.  Mr. Phillips stated that if there is not water or sewer taps there, it could negatively impact the need for commercial and industrial growth, which pays the bills much quicker than residential growth development.

 

Mayor Kruse believes the City has a Business Plan with the Water Master Plan.  $265,000 is invested in this Plan that was put together with cooperation of Council, Administration, Industry and the public.  It has a component in it as far as how the finances of the system will be dealt with.  Secondly, Mayor Kruse noted the discussions that have taken place about the City refinancing the purchase indebtedness from the purchase of the water system.  We’re still at the same level on the principle that we would have been without the refinancing.  He feels there were wrong conclusions drawn from that whole issue in the newspaper.  How the City manages debt is dictated by the market and is recommended to the City by the financial experts in attendance at this meeting (Andy Brossart and Rich Simpson).  If the market dictates that the City can refinance at a lower interest rate and save $200,000 a year on an issue, after looking at the new interest rate and the cost of refinancing, we do it.  Before that is done, it comes in front of City Council.  The principle is not lower because the savings were not applied to the principle.  The savings were applied to other capital improvements.  Council had to approve the recommendation.  Trucks and equipment were purchased for the Water Plant.  Other capital needs were purchased with that money, things that the City would not have got otherwise unless going back to the public and asking for a rate increase to help purchase those needed items.  The City can’t spend those savings without Council’s okay.  The principle is at the same point it would have been if we didn’t refinance.  The amortization schedule that was in place when the City originally financed is still the same amortization schedule.  It will be paid off at the exact same time.  The only thing is, the City was able to free up money from paying interest on our borrowed money and reinvest that into capital items within the water system.  Consequently, we didn’t have to go back to the people for a rate increase.  The conclusions that are being drawn from what ended up in the newspaper are erroneous.   

 

Mr. Fogt commented that the refinancing he disagrees with is the one done in 1993 and he was not on Council at that time. 

 

 

3.     2nd Reading  AN ORDINANCE PROVIDING FOR THE ISSUANCE AND SALE

Public Hearing   OF NOT TO EXCEED $53,000,000 OF WASTEWATER TREATMENT SYSTEM REVENUE BONDS, SERIES 2007, OF THE CITY OF MARYSVILLE, OHIO, UNDER ARTICLE XVIII OF THE CONSTITUTION OF

 OHIO, FOR THE PURPOSE OF PAYING COSTS ASSOCIATED WITH THE ACQUISITION, CONSTRUCTION, EXPANSION, REHABILITATION AND IMPROVEMENT OF THE CITY’S MUNICIPAL WASTEWATER COLLECTION AND TREATMENT SYSTEM; AUTHORIZING A FIRST SUPPLEMENTAL TRUST INDENTURE TO SECURE SUCH BONDS AND ADDITIONAL PARITY BONDS HEREAFTER AUTHORIZED, WHICH INDENTURE SHALL PLEDGE THE REVENUES OF SAID SYSTEM; AUTHORIZING THE PURCHASE OF MUNICIPAL BOND INSURANCE OR OTHER FORM OF CREDIT ENHANCEMENT, IF NECESSARY, IN CONNECTION THEREWITH; AND AUTHORIZING A BOND PURCHASE AGREEMENT, A FEDERAL INCOME TAX COMPLIANCE AGREEMENT, AN ESCROW AGREEMENT, AND AN OFFICIAL STATEMENT APPROPRIATE FOR THE OFFERING AND SALE OF SUCH BONDS; AND DECLARING AN EMERGENCY” was presented for second reading, public hearing. 

Mr. Fogt moved to waive reading in full; affirmative voice vote was unanimous. 

 

Ms. Esther Carmany addressed Council.  “Thank you for all the hard work you have done to solve this problem of the highest water rates in Ohio.

 

How much debt is too much?

It seems we are in too much debt.  Is there an agency that oversees debt for municipalities?  The word "default" and "the City of Marysville" should not appear in the same sentence.     It is not the duty of the residents to absorb the costs of funds that have not been carefully monitored.

 

 We can keep the rate hike in line for 2007 by asking the Water Enterprise to suggest their own budget cuts.  This concept emerged strongly during the recent Ad Hoc hearings. 

 

How much debt is too much?  $126.11 Million total debt was reported as of February 28, 2007.   The broader perspective would be to look at debt as one aspect of overall financial management, and leadership.  Does the city have a good budget?  Does it accurately estimate revenues and expenditures?  Does it rely too much on a single revenue that might be volatile?  Does the city have ample reserves?  Who monitors investments?  Is the portfolio valued daily?  Does the City Council take seriously its responsibilities for oversight of the investments?  Who prepares the investment reports?  Does the city have written investment and debt policies?  Is there an integrated financial management system?  A quick appraisal of the history of debt as pertains to the Water Enterprise shows the beginning of this debt accumulation was a $9M debt shouldered in 1991 when the Water Company was purchased.   How did they expect to pay back the debt in the first place?    How do they expect to pay it back now? When do they expect to pay it back?

 

Municipal debt is easy to issue, hard to pay off.  Each time a debt is negotiated, the lenders earn a % on the total amount borrowed, sometimes as high as 1% of the loan balance   What are the costs of issuance on this $53M loan? Were lenders shopped, or was only one bank considered?   What is the necessity of the emergency?  The respected attorneys at Brickler & Eckler  are ruling on legality.  It may be legal, but is it the right thing for Marysville?  You must be a good steward, be careful.  Make revenues equal expenditures.  Sometimes municipal officials are far riskier with the city's finances than they ever would be with their own.  Good advice is "Live within your means"  Every year, adopt a budget with an operating margin that allows for disasters, or, if no disaster, allows for the reserves to be built up for a "rainy day."  To answer the question?  How much debt is too much?     I don't know, but someone in this room should know, and make it their responsibility to find a solution.   The citizens are not asking for cuts in their water rates; they are asking for fair treatment.”

 

Mr. Greg Faulkner asked what the City’s bond rating is.  Mr. Brossart responded EAA1. 

 

          5.  2nd Reading       TO AMEND SECTION 931 – WATER RATES – OF THE

               Public Hearing  CODIFIED ORDINANCES OF THE CITY OF MARYSVILLE, was

Presented for 2nd reading, public hearing.  Mr. Fogt moved to waive reading in full; affirmative voice vote was unanimous.

 

Mr. Gary Little addressed Council.  “There once was a community known as Monarchville.  Within the confines of this Ohio town were many good and hard working individuals.  These good people worked extremely hard for their pleasant and comfortable life style. Their work-a-day-world revolves around the transportation and lawn beautification industries.  Not only these kind and good people but many, both young and old, wanting to build a relationship close to the football (and basketball) MECCA in Columbus.  The essence of life, to have all the good things in life at ones finger tips, Monarchville.

 

The year 1991, Monarchville started the plan to set itself apart from the sleepy small town image.  It had harbored and woke up to a concern and needed to become something bigger, yes, much bigger.  So many things back then were needed but “Rome was not built in a night or a day” neither would be Monarchville.  We set the stage for the growth, as we know that the basis of this new life would come from our infrastructure and the utilities that help growth to flourish.  Calculating and looking for, we found the most important ingredient to get this plan erected – water - yes, liquid gold.  We could start this project on the backs of that water company close by and build our nirvana.  Yes, we would buy a county water company and grow it to be self sustaining.  Monarchville bought that dream with just 9+ million dollars and the young and old knew that we would have a growing megatropolis that would maybe rival some of those IRISH towns so close to the MECCA, so that if Monarchville had yet to pay down much of the debt incurred 1½ decades ago, maybe we can ask the good, young and old to help us with this small burden.  It does not matter that the residents would not be getting a better product, but they need the water so they must pay for it.  Gone are the days of getting a good product for a decent price, and we will need to understand the price that the young and old are willing to pay for this “Liquid Gold.”  Why are we not done paying for that old water plant?  Why are we taking on more debt?  We are about to finance the rest of the sewage treatment plant.  Yes, before we get the debt paid for our original water plant, we will have to finance the sewage treatment plant and our water reservoir.  Don’t think for a minute that we won’t have both our water and our sewage rates go up again and again.  It will be less than a year and Monarchville will comeback to our fair, honest residents and ask them for more money.  We can’t worry about it because the administration will write the grants and talk about these big businesses to help us through these tough times – right.  Monarchville should have looked into debt ratio long before buying the land for the reservoir and the sewage treatment plant and done something about it, but that is water over the dam!!!!!!!!  Can Monarchville residents afford this convenience?  Yes.  Is it a problem for me to pay for it?  No.  Should you have to pay for this need by our administration?  No.  Is it a need or a want by a select few or by the masses?  I often think of Boston Harbor.  Will you let Monarchville governing body ram the increases down our throats?  Follow the path that is right, just and rectifiable! 

 

Mr. Little asked, “What percent does business pay?  They have 40% of our water use, how much does business pay for our water and pay for building that?  What year will we retire the debt from 1991?  When I look at the 146 page document of what it says in the 2007 budget, we’re looking at $110,000 and if we’re having trouble financing $9M, what are we going to do with $110M?

 

Mr. Nevin Taylor addressed Council.  He noted his questions are probably better answered when the presentation was being made.  He said currently we’re addressing half of our water usage commitment to Jerome Village.  Correct?  Is Jerome paying the same rate as we are as citizens, since the need for water addresses that over half of our future commitment will be to Jerome Village?  Will they be held to the same rate that we are as Marysville citizens?  Mr. Pleasant said the rate will be different for Jerome Village; it will be higher.  Mr. Taylor asked if Marysville’s rates increased, will the rate increase by the same percentage for Jerome Village.    He also asked in all our planning since we decided we were going to have a reservoir, to the point it looks like if this rate is increased will start the process, how much have we spent on studies, research, engineering, re-engineering, restudying, since we started this process 10 years ago.  Mr. Pleasant will look into it and get back to Mr. Taylor.  Mr. Taylor expressed concern for senior citizens because they are the ones most affected than those who are working day-in and day-out.  In talking to two of his elder residents, if there is any way to look at a rate increase that gives seniors some favor, it would help him support the proposed increase. 

 

Mr. David Creviston addressed Council about the senior citizens, the elderly and those on fixed incomes.  He referred to Page 2 of the ordinance and pointed out the rate chart.  He noted the “First 140 cu. ft. or any part thereof”.  That is the minimum, the base rate that all water rates are calculated for residential use.  Over the last three years, he’s checked with the Utility Billing Department and has been told on a regular basis that there are 300 + individuals each month that meet the minimum criteria.  There is only one way to meet the minimum criteria and that’s not to use water.  He put himself on a strict water conservation basis.  Tonight is the first night that he’s ever heard the word conservation used in dealing with water rates, even though it was the very first comment made by the consultant on the Wastewater Treatment Study, to say that Marysville should implement a conservation education program.  Regarding equity and fairness, you don’t have to raise rates to create equity or assemblance of fairness.  He asked Council to make one amendment to this ordinance, take the 140 c.f. as a minimum and increase it to 200 c.f.  In doing so, you’re going to give some leeway to individuals to use a little bit more water and will improve their health circumstances as well.  By changing the minimum usage to 200 c. f., it will balance out the sewer, which will help a lot of individuals.  “A number of these people here tonight, all they’ve wanted from the beginning is some equity, some fairness, some response from their government, and do you know what the currency of government is – it’s trust.  And along the way some trust has been broken.  I don’t think it’s always been intentional, but I think it always in many respects lacks some professionalism within.  If one person makes a motion for that amendment tonight, I guarantee you one thing, it’s not going to cost you enough money in water usage that you won’t get paid for compared to what the 140 is compared to 200, because you know what, the more water that you use in industry, the less this city charges per cubic foot?  Now that’s interesting.  The more you use the less you are charged per cubic foot.  The real emphasis on cost factors are put on the individual residential user.” 

 

Mr. Creviston felt the presentations were wonderful, but a day late.  They should have been heard before a public hearing.  He asked that Council make the amendment tonight so that “when everyone leaves here something positive can occur.” 

 

Ms. Gayle Williams addressed Council.  She was born in this town.  This is not the town she grew up in.  It’s becoming big city, and if she wanted to live in a big city, she’d move to Columbus.  She likes the small town atmosphere.  She doesn’t see how she is benefited from the growth of Marysville and all the strip malls.  She enjoys going to Dublin or Columbus for shopping.  She’s sad by what she sees with this town.  She doesn’t understand the sewage run off that she’s charged every month, because every time it rains, her neighbor and she watches that water sit in front of their house until it evaporates. 

 

Mr. Dick Noland addressed Council and thanked the staff for the presentation.  He would have liked to have seen that a couple of years ago.  He made some comments that added to or modified the information and disagreed with some of it.  “When reviewing the MPI report it’s very apparent that there could be problems with organic material in the surface water from Mill Creek.  Top page 2-2 it states “that compliance with total trihalomethane (TTHM) requirements of the forth coming Stage 2 Disinfection and Disinfection Byproducts Rule (DBPR) is likely to be problematic” and added that he respected Malcolm Pirnie’s opinion.   Page 2-16 under Conclusions and Recommendations it states “compliance with future regulations may be a challenge.”  Also, it states, “Agreements with Union County and surrounding townships (Jerome and Millcreek) under which the City might be responsible for compliance with current and future DBP regulations are likely to make compliance with TTHM requirements even more difficult.”

          Are we proposing to build a “supply” that has significant treatment problems and at a cost even greater than the cost of treating ground water?

          What is the capacity at existing facilities and reasonable timing of construction of new facilities?

          The current rated capacity of the existing WTP is 3.46 mgd (million gallons per day) (according to Jones & Henry report) and with the current demonstration work, maybe rated higher.  Mr. Noland agreed with what Ms. Davies and Mr. Varner showed. The average day pumpage in 2006 was about 2.1 mgd.  The peak day in August of 2006 was 3.0 mgd.  Pumpage is generally higher in June, July and August.  Except for the summer months, the plant is operating well within the design capacity (about 60% of design capacity). My conversation with OEPA (he has nothing in writing) led to the conclusion the OEPA is not concerned until the average day approaches 80% of design capacity or 2.54 mgd, if the more conservative value of 3.17 mgd is used and 2.77 mgd if the 3.46 mgd is used.  Thus, the reserve capacity at this time is about 670,000 gallons a day.  The average increase in rate for the City of Marysville for the last 18 years has been between 30,000 and 40,000 gallons per year.

          The real question is; how fast is Marysville growing or will be growing in the near future?  The average day demand based on the WTP record shows a slight decrease in demand since 2000.  Why has this occurred?  A better way to find out the real usage would be to calculate the total of the amount of water sold through customer water meters.  Council ought to know every month how much water is sold the previous month.  This should be done for each month and each year beginning in 2000.  These numbers could also be used to verify some of the assumptions made in the MPI Water Master Plan which were used to justify future capacity requirements and proposed construction schedules.

          Other questions should be asked if the city desires to maximize the efficiency of the Water Department Operations.  What is the actual chemical cost of treating the existing ground water versus the potential cost of treating poor quality surface water such as discussed in the MPI Water Master Plan?  While the chemical cost for ground water may be slightly higher on hardness, for the somewhat softer water, the overall cost may not be.  This is because of the different and/or additional treatment units and chemicals required treating surface water with high organic content and the potential taste and odor problems with surface water.  The MPI report and City acknowledge that probably the best method to control the organic problems with surface water is through both treatment and dilution with ground water.  Mr. Noland agrees with that.

          The cost of developing additional ground water supply is cheaper than surface water supplies.  The B&N report which has been referenced for the 2.5 mgd safe yield of the current ground water supply also states that additional ground water, up to 4.0 mgd, is available.  He had no details on how they arrived at that. 

          All that is being suggested here is that the City may have some options which have not been explored in sufficient detail to result in the most efficient expenditure of the monies paid by existing customers.  Also the more reserve capacity that is built into any

future water facilities, the more the financial burden falls on existing customers.  As stated in the MPI Water Master Plan “The slower the growth rate, the longer the City and existing customers will have to bear the burden of the cost of expansion to serve new growth.”  (P7-17)  In situations where water facilities and capacities are to primarily serve new growth, the actual construction and timing of the new facilities is important and required continuous monitoring of parameters which show that the growth is actually occurring. He noted of the subdivisions shown in the presentation given by City Staff, he personally knows one of those subdivisions hasn’t built a house in two years.  All of the subdivisions which have been promised water should be revisited to determine if that growth is occurring and at what rate now.

          On financing, has the City given any thought or consideration to asking the various developers to pay up front for the water taps they will want, say, for the next five years?  In this way, the risk of slow growth would be shared by both the City existing customers and the developers.

          Mr. Noland is a professional engineer and has worked in the water and wastewater industry for over 45 years.  He’s been in a number of Council meetings where rates have been raised.  What he would like to have seen is to put all the facts on the table and show the citizens their options.  You don’t necessarily push any particular plan.  He’s still curious how much debt can the City the size of Marysville absorb.  We’re now talking between $180 and $200M.

 

Mr. Greg Faulkner addressed Council.  Regarding the presentations given earlier this evening, it would have been nice to have the opportunity to have reviewed the presentation a day or two ago or some time other than this evening.  It also would have been nice to have been able to ask questions during the presentation, which would have been more beneficial to the citizens.  He questioned the chart drawn earlier by Mr. Simpson showing the financial curve and allowing growth to catch up to offset the cost in the future.  He said that can be so misleading.  You have no idea what the future holds.  We could be in a bit of a recession in the future, at which time the timing is the worst for having an increase in the utility cost.  Nothing ever gets less expensive, wages never keep up with cost increases.  The message about conservation is very good.  He’d like to see more of that.  There are all kinds of technology out there to reduce water consumption within a household.  He mentioned the Building Standards from the U.S. Green Building Council for their LEED Program might be a good place to start. 

 

When talking about reaching capacity, people act like that was a problem.  Marysville is no longer a small town.  People come to Marysville because it’s not Columbus or Dublin, but he thinks Administration seems to feel that Marysville needs to grow and be like Dublin.  He noted that Coleman’s Crossing has almost completely emptied out the intersection of 36 and 33.

 

Regarding the estimates for building the reservoir and the treatment plants, Mr. Faulkner said he has worked in public service and development and almost every project that he’s dealt with in the public sector has cost overruns.  There are a lot of ups and down in the market when it comes to steel and concrete.  No one really knows what it’s going to cost to build until they close out the project. 

 

Impact fees should be explored.  Residents should not bear the price of development at the developer’s profit. 

 

Mr. Faulkner mentioned the City’s current usage demand and the plant capacity.  He’s not sure the City has a big emergency on its hands.

 

In closing, Mr. Faulker said growth is not always good. 

 

Mr. Don Frazier addressed Council.  Planning should never stop and for that reason, while he may not agree with part of the underlying reasons that Ms. Sellers is proposing her resolution, he believes her statement that we need to continue to plan and is glad she has made that commitment to engage in that planning process.  Part of what Council has done in this situation here tonight is they have already undertaken, long ago in a Planning Process that they participated in and was recommended by the Administration, perhaps because of EPA mandates or because of other necessities of debt that we face in the operation of aging water and sewer plants and the need to relocate a sewer plant in a manner that the EPA will be satisfied with and a manner that could support both the current citizens and future growth.  Much as we might like for things to stay the same, we all, regardless of who we are, know that things don’t stay the same, and Marysville is not the same as it was when he came to town in 1982, and it won’t be the same next year as it is here in 2007.  In his opinion, Council was advised at the outset of this planning process of what would be needed to stay that course in the way of rate increases, in order to undertake the projects that Council voted to undertake.  Now we’re knee deep in the construction of a new sewer plant.  Some of the suggestions would seem to indicate that we need to stop after we’ve undertaken the course that Council has already voted on and which he supports, even though he doesn’t like rate increases any more than anyone else.  His water and sewer rates have gone up $50 a month minimum.  He feels it would be irresponsible of Council to not pay attention to what Mr. Simpson has said and what the Master Plan said is needed in order to get this done.  While he supports Ms. Sellers resolution regarding planning, he also thinks it would be irresponsible for Council to say that we’re going to make it a 6% increase, when they know in everything before them has demonstrated that an 8% increase is needed in order to avoid huge increases on down the line.  He feels one thing Council needs to consider is the fact that before Council tonight are three gentlemen, and you have one of the smartest and most respected bond counsels in all of the state of Ohio.  He’s a managing partner of a huge law firm and respected in the entire central Ohio area for his expertise in many areas, most notably in the bond counsel area.  Marysville has not made a mistake in who they’ve hired to represent the City.  You would be making a huge mistake if you don’t listen to his advice.  Council undertook the commitment, and he respectfully said that you can’t and should not look back.  There are no circumstances to justify you backing out of the commitments that have been made. To do so would have disastrous consequences.  If you don’t want to face the default word that Ms. Carmany talked about, you need to consider what would and will happen if you back out on the commitments already made.  “It would be much worse than having to look at us here in the audience here tonight and then voting for what you know is right in adhering to the commitment that you’ve made.” 

 

It’s important to consider Mr. Creviston’s comments and Mr. Frazier supports those.  It costs the City almost nothing to help out those who are in need.  Mr. Creviston has been very creative in making creative suggestions to both Council and County Commissioners and other City and County Officials, and he has something in his suggestion that could possibly be a home run for the City if it’s considered.

 

It’s important to consider the fact when looking at the water plant that you need new development both inside and outside the City to help pay for the debt you have voted to incur and/or will vote to incur.  In order to serve development, you have to have both sewer and water to offer.  When talking about growth in the southern part of the County, and whether or not it will make a difference to the City, you need to consider the fact that right now on the table is one of the largest developers in the nation by way of Forest City.  He does not represent them, but believes that all of Council would behoove themselves by getting on the telephone and telling James Martinowski, who represents Forest City, that you want him to stay in the game and that he’s important, not only to the southern end of the county but to the City of Marysville.  If people like him walk away from the projects that are on the table in the southern end of the county, you won’t have funds or perhaps may not have funds to pay down the debt which has been incurred.  If he walks away, the whole Glacier Ridge project is in danger of becoming a hodge podge of development that none of us are going to like to see when driving down the highway.  For all of those reasons, he respectfully asked council to take a serious look at the commitments that were made in the past, take a serious look at what it takes to pay off the debt, take a serious look at what happens if you pass only a 6% rate increase and what you have to have on the other end and what we’re all going to face when we live in the City as rates.  If you think people are angry now, just wait until that point in time when the rates have to be much higher than what have been projected.  He commended Council to Mr. Creviston’s recommendations. 

 

Mr. Lloyd Baker addressed Council.  He passed out an information sheet on Capacity Fees.  He feels these fees acknowledge that the existing citizens have funded too much growth already, and it is a way of managing urban sprawl, as well as helping to maintain and enhance the value of the existing properties. 

 

He passed out a copy of an article from the Marysville Journal Tribune dated February 23, 2001.  He noted one of the pillar defenses that he gleaned from the Ad Hoc Committee’s work was the term “Pay me now or pay me later.”  At some point, payments are going to catch up with us.  In 2001 when this article was written, it was used to defend substantial sewer rate increases, as well as water rate increases at that time, which went virtually unchallenged by the community because they were willing to pay now in 2001.  Using that as a defense now to expect us to pay again in 2007 is a misuse of that statement.  That statement comes across as “pay me now and pay me later.”  That removes the spirit of that comment and removes that defense.

 

Many people have forgotten until their water bills come, usually in January, about the legislation that was passed in 2005, substantially increasing the sewer rates.  They were raised 68.7% in increments up through 2010.  To date, 31% increases remain from that to appear on peoples’ billings between 2008 and 2010.  In less than three years, each dollar that consumers are now paying for sewer charges, they will be paying $1.31 for every dollar they are currently paying for sewer usage.  He feels that’s been overlooked in evaluating the impact of these water increase.  That 31% does not include the proposed 12.3% increase in water. 

 

On the reservoir issue, how many reservoirs do we have to pay for before we get one?  Mr. Baker referred to articles in the Marysville Journal Tribune on March 23, 2001 and the February 23, 2001.  Comments were made that the legislation for the 2001 increases “will fund debt service on the City’s purchase of the water company which totals $1.2M annually as well as pay for current and future improvements such as the construction of the Raymond Road reservoir.”  “The City also intends to start construction on the reservoir in 2004.  These increases could make it easier to pay for that project because the City will have to finance less debt.  The City will also be able to get more favorable interest rates from lenders.”  Mr. Baker said that seems incongruous with where we are