2000 JUL 18 REG MIN - Laserfiche WebLink

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Revolving Fund loan was disbursed as follows: $8 million for the first two ditches and some renovation to Unit 2 and said an additional $4 million would go for the two additional ditches. From the $13 million the City was financing, he said $12 million was earmarked for improvements directly at the wastewater treatment plant and the other million would go into pipeline improvements on the system. Utility Director Clarke provided overview on the condition of the wastewater facility that was maintained under contract by OML under the directorship of Les Evans, when it received the cease and desist order that was still in effect. After it obtained charge of the facility, the City noted there was considerable wear and tear and lack of maintenance. The City hired Krieger and Stewart to do an evaluation of the plant, an engineering review and to make specific recommendations. The cease and desist order specifically directed that the plant meet 8.2 million gallons a day (MGD) capacity. He said that failure to meet the mandate would have allowed the State step in, do the work and bill the City for the work. After study, the City determined that the best financing vehicle was the State Revolving Fund that was approved for $8 million. Following award of the bid, Americon Construction built two one million -gallon ditches, that allowed the City to reach the 8.4 million gallons of capacity. The contract called for a review of Unit 1, that showed it was 51 years old, outdated and unreliable and the only option was to add additional capacity in order to satisfy the cease and desist order. Staff calculated the rate impacts and presented the matter to the Utilities Commission where it obtained preliminary approval to proceed. The City Council authorized Staff to issue a change order to Americon, on emergency conditions, and Americon was on site continuing to work. Director Clarke concluded the City now had to secure the financing to complete that construction phase. Director Holliman stated there was a risk in the proposed action in that the lease payment, proposed at a fixed minimum amount, would be less than the current in -lieu payments by $200,000. Under the proposal, the general fund would receive less cumulative revenue; however, the present arrangement did not have the support and the strength provided by the legal framework of the JPA. Staff recommended that only one year's worth of lease payments be made up front, specifically, $1.5 million combined, with additional $300,000 to be returned to the wastewater fund to act as a rate stabilization fund. He concluded that, after five years, the general fund would probably be behind in terms of cumulative resources under this arrangement. Discussion followed on the recommendation that a portion of the $1.5 million be earmarked, specifically, for capital improvements. There was discussion on ensuring that Grand Terrace's rate to equitable. It was noted that Grand Terrace's rate increase was not even 17.3%. City Attorney Carvalho informed that when there was a public utility, the rates charged had to reflect the actual cost of providing a service. If it was Council's direction to have Staff look into implementation, City Attorney Carvalho stated it was something that could be incorporated; however, if Council directed that it absolutely had to be done, she stated that she did not have a answer to that directive at this time. Utility Director Clarke stated that the percentage increase recommended for the City of Grand Terrace was 16.8%. It represented a change from the current figure of $14.62 to $17.07. He said there was a contract with Grand Terrace and that the rate charged was only for the City Council Mins July 18, 2000 3