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Page 3 Wastewater Treatment Plant City Council Meeting 3/21/00 perform the same work for about $2.5 million less than their original bid. No other contractor could perform this work for $3.5 million. This matter came before the Utilities Commission at their regularly scheduled meeting of March 13, 2000. After discussion of the salient points regarding this issue, the Commission passed the item by a vote of four to one. The four to one vote was sufficient to give Staff direction to forward this matter to the City Council for their consideration. ALTERNATIVES Few alternatives are available to ensure the long-term operational efficiency of the wastewater collection system. In order to complete the upgrades and expansion at the treatment plant, a rate increase of some proportion has already been established. The recommendations over and above the existing plan will keep the system running in a reliable and safe manner. The only other alternative is to rehabilitate Unit1, and wait until its ultimate demise, which could be soon. At that point, the City will be in violation of its reliable capacity requirement and be instructed to add capacity. Most likely moratoriums will be mandated to limit growth, and financial and rate changes will be instituted to complete the construction of the added facilities. This is a risk that will be a reality at some point in time. During previous rate changes it has been argued to take any utility rate change before the voters prior to implementation. Even though Staff has no objection to this approach when the change deals with costs of operation or capital improvement programs associated with routine renewals and replacements. However, this situation is more closely aligned with regulatory mandates which could be imposed whether or not the general electorate approved the rate change. In other words, a"no" vote may be meaningless if the regulatory body issued an order that promulgated the rate change. FINANCIAL The financial plan, with the inclusions for the State Revolving Fund loan and additional debt service for the two additional ditches, along with normal anticipated cost increases, results in a proposed rate increase of approximately 35 percent for all service classes. As was the case in the study adopted two years ago, this proposal reflects the original modification in Fiscal Year 2000-2001. In order to carry out additional improvements at the Wastewater Treatment Facility, funding will have to be secured with the additional borrowing. Staff is not requesting that this rate change be adopted now, but rather that it come back to the Commission and City Council in May for approval of the rates to become effective later. It will take several weeks to complete the analyses for the bond issue and rate design. Even then, the revised rates would not go into effect before the next fiscal year. ENVIRONMENTAL IMPACT All environmental concerns have been addressed for the rehabilitation and expansion at the Wastewater Treatment Plant. Staff will prepare and file the proper Notice on the additional 2 MGD expansion.