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HomeMy WebLinkAbout04/11/2011 Work SessionCity of Springfield Work Session Meeting MINUTES OF THE WORK SESSION MEETING OF THE SPRINGFIELD CITY COUNCIL HELD MONDAY, APRIL 11, 2011 The City of Springfield Council met in a work session in the Jesse Maine Meeting Room, 225 Fifth Street, Springfield, Oregon, on Monday, April 11, 2011 at 5:30 p.m., with Council President Pishioneri presiding. ATTENDANCE Present were Councilors Pishioneri, VanGordon, Wylie, Moore, and Ralston. Also present were City Manager Gino Grimaldi, Assistant City Manager Jeff Towery, Assistant City Attorney Mary Bridget Smith, City Recorder Amy Sowa, and members of the staff. Mayor Lundberg and Councilor Woodrow were absent (excused). 1. Jasper Trunk Sewer, P20353. Civil Engineer Pam Eide presented the staff report'on this item. She introduced Kyle McTeague and Bill Evonuk from Murray, Smith and Associates, the consultants that had worked with the City on this project. A power point was presented and available at the meeting. Mr. McTeague said he had managed the Jasper Trunk Sewer project. He appreciated the City.for selecting MSA to work on this project. He also acknowledged that City staff had been great to work with. Mr. McTeague provided an overview of this project. The project was intended to provide extended sanitary sewer service to the southeasterly portion of the City. The project generally followed Jasper Road and consisted of 18,000 feet of gravity sanitary sewer so there was no need for pumping. The project started at a connection point of 27" in diameter and slowly decreased in size to 12". The project also allowed for the decommissioning of three existing pump stations. It would eventually expand sewer service to the urban growth boundary (UGB) limits. The slide showing the project area, divided the project into 5 sections, or reaches. Mr. McTeague provided some background on the project. This project was originally identified in the City's 1980 Sanitary Sewer Master Plan. In 1997, the first phase was constructed. He described the area of the first phase. The second (current) phase was adopted in the 1999-2004 CIP, was further identified in the 2008 Sanitary Sewer Master Plan, and was adopted into the 2010-2014 CIP. MSA began analysis and design in September 2009. They were nearly done and would be delivering to the City a 90% complete design in a couple of weeks. Mr. McTeague discussed the alternatives analysis as he referred to a map of the second reach. He described the alternatives as noted on the map. Through the analysis they were able to optimize the sewer depth by making it as shallow as possible, minimize wetland impacts, minimize traffic impacts, minimize utility impacts, simplify service connections, and minimize maintenance costs. He explained each of those factors. City of Springfield Council Work Session Minutes April 11, 2011 Page 2 Mr. McTeague discussed each reach and the impacts and costs associated. The costs shown were overall project costs, including engineering, administration, and contingencies. The construction costs would be about 80% of the costs shown on the slide. Currently, because the economy was not yet up, the bids could be favorable for the City. Reach 1 was the most expensive per linear foot of pipe of all of the sections due to the depth and width of the pipe. Reach 2 was slightly less costly, went through an area that was less developed, and into an area that was more developed residentially. Reach 3 would get to the area that would allow for the decommissioning of two of the pump stations (Golden Terrace and Jasper Meadows). There was already a pipe in ground at that location which was installed by a developer. If the City was going to build the pipe incrementally, he would suggest looking at completing through to Reach 3. Reach 4 had more industrial and commercial land. He discussed the pipe size as it decreased through Reach 4 and 5 down to 12". They did need to cross Jasper Road in Reach 5. Mr. McTeague reviewed the project schedule. The Alternatives Study started in late 2009 and was completed in early 2010. Since then, they had been in final design which was near completion. They were finishing up the final design and had started the easement work and permitting. He described some of the permitting required. The final stage would be construction, which was scheduled to start in 2012, but that could change. Mr. McTeague said to move forward, there were several options the City could consider. They could bid the project in pieces, decommission just one pump station at a time, or bid it all at once. It was up to the City to determine when funding was available. At some point, they would want to develop the full area for development, but for now they could build it incrementally. Councilor Moore asked how many construction jobs the first three phases of this project would generate. Mr. McTeague said it could be anywhere from 20-25 people. There were others that would be supported, such as materials' suppliers, etc. Councilor Moore asked how much the City had invested to date. Mr. Evonuk said fees paid to the consultant were about $300,000-$400,000. Mr. McTeague said MSA would also oversee construction observation and administration, which would be an additional $300,000. Councilor Moore asked about interest rates and if it would be a savings to start sooner because of the cost of lending. Mr. Grimaldi said the municipal bond market was in an odd situation currently as investors were reluctant about going to municipal bonds. Finance Director Bob Duey said the interest rates were currently 5 to 5 1/2%. The usual range was between 4 to 6%. Mr. Grimaldi said they could be better off when the market settled down. Councilor VanGordon asked how close to their life span the pump stations were. City of Springfield Council Work Session Minutes April 11, 2011 Page 3 Mr. McTeague said Lucerne Meadows was near the end of its life. Jasper Meadows had a significant long life left, and Golden Terrace had about 10-20 years. i City Engineer Ken Vogeney said in order to build out the rest of the Jasper Meadows development the Golden Terrace Pump Station had to upgrade their pumps. Jasper Meadows was newer. The Lucerne Meadows Pump Station was quite worn out and maintenance staff were working on it every other week. - Ms. Eide said Golden Terrace was fine to operate, but didn't have the reserve capacity to meet new regulations. Councilor Ralston asked if the City could sell the pumps to other cities. Mr. Vogeney said pumps were normally designed and built for specific locations. The new pumps in the Golden Terrace Pump Station could be reused, as could some parts from the Jasper Meadows Pump Station. The Lucerne Meadows Pump Station would need .to be disposed of. Councilor VanGordon asked if the $80,000 noted was the annual cost to run the pump station or upgrade costs. Mr. Vogeney said the $80,000 was the upgrade costs for existing pumps. Council President Pishioneri asked why the first phase was nearly three times the cost per linear foot compared to Phase 4. Mr. McTeague said there were several impacts affecting the cost. Reach 4 was outside of the pavement, so there were no paving costs. The backfill could be reused, the diameter of the pipe was smaller with a narrower trench, and it was shallower. The geotechnical work at Reach 1 showed there were hobbled soils in the area and a relatively high groundwater table. Those conditions were problematic in terms of trench stabilization. The contractor would need to be especially careful when boring through and even then, some of the trench could slough down. The pipe would be 27" in diameter, 20 feet deep,,with trench walls expanding as they went up, and full surface restoration would be required. Council President Pishioneri said he would like to see some photos as they worked on that portion. Councilor Moore asked if that section of pipe was connecting to something 20 feet deep. Mr. McTeague said it was. Because these were gravity sewers, they needed to continue to run downhill. There were factors that needed to be crossed under, such as creeks and utilities. The minimum depth of sewers was 5 feet. Council President Pishioneri thanked Mr. McTeague for his presentation. 2. Regional Wastewater, Local Wastewater, and Local Stormwater User Fees for Fiscal Year 11-12. City of Springfield, Council Work Session Minutes April 11, 2011. Page 4 Supervising Civil Engineer Jeff Paschall and Environmental Services Manager Ron Bittler presented the staff report on this item. A document was distributed that put all options for local wastewater rates on one sheet for easier reference. Mr. Paschall presented a power point on this subject. Each year, staff looked at the current projected financial data for the Regional Wastewater, Local Wastewater, and Local Stormwater funds which were funded by user fees. The goals in developing fee proposals were to provide adequate resources for operations/maintenance, capital projects in the CIP (Capital Improvement Program), and the City's debt obligations. Local Stormwater Rates: Mr. Paschall provided a brief timeline to date for local stormwater. In 2008 the twenty-year Stormwater Master Plan was adopted and identified $34M in capital need on the City's current system. About $ l OM of that was identified as critical in the next five to six years, and was included in the current CIP. In FY09/10, Council adopted a rate increase of 14%. At that time, the operating budget was also reduced $115M to keep the rate increase from going any higher. In FY10/11, the rate was increased 15%, which brought the current residential rate up to $11.32/month. In October 2010, the,City issued $ l OM in bonds to'pay for water quality projects associated with our obligations to the Mill Race reconstruction project and several other water quality projects. Mr. Paschall discussed the local stormwater projects that had been adopted in the most recent CIP. They included: flood control; preservation; water quality/restoration; studies; and system expansion. He referred to a chart showing the projected funding sources for the projects, and noted that $5,760,000 was anticipated from SEDA (Springfield Economic Development Agency) funds. That would be the Glenwood project which wouldn't move forward until the funding was available either through SEDA or another funding source. Without that, the user fees comprised about 61% of the projects that had identified funding. Mr. Paschall reviewed the forecasted stormwater rates. The rate. drivers included capital project funding requirements,, debt service requirements, and inflation. The proposed rate increase for the next four years was 3%, increasing the average monthly bill by about $0.34. Reviewing the current projected financial data, the proposal approved by Council last year was still feasible and was being proposed. Councilor VanGordon asked how the $24M (from the $34M overall projected costs) would be funded. Mr. Paschall said several of the projects were not yet to be. defined. There was $1M in the Jasper Natron area and Glenwood area to study the area and determine the CIP. Many of the projects were expansion projects. The $10M in the CIP was for the critical water quality projects. With the proposed scenario, the user rates would generate about $5M for capital above the $1 OM bond. That would set the City up for future capital needs. He didn't anticipate higher increases in the next five to ten years. Staff would be doing a Stormwater Master Plan update in the next year and would know more after that was completed. Councilor Moore asked how Springfield compared with Eugene regarding fees. Mr. Paschall said there was'a slide later in the, presentation with that information, but he thought Eugene was just over $2 less than Springfield. Many other cities were also going through updates so the figures could change. City of Springfield Council Work Session Minutes April 11, 2011 Page 5 Mr. Bittler said as of April 1, 2010, Eugene's average rate was $9.82. Councilor Moore said there was not a lot of understanding by the public of why they were paying for stormwater, and some people didn't have stormwater because they lived on a gravel street. Mr. Paschall said one of the options last year was to have two stormwater bonds; one at $7M and one at $4M, but that projected a higher rate increase over the five years. By selling a larger bond at a better rate and getting more capital money up front, staff was able to project user rate increases to inflation and still maintain our operations and for. reserves. Local Wastewater Rates: Mr. Paschall provided a brief timeline to date for local wastewater. In 2008 the twenty-year Stormwater Master Plan was adopted and identified about $68M in capital need on the City's current system. Much of that was for the 15-20 year mark. Soon after the 2008 Master Plan was adopted, the City faced a mandate to complete several thousand feet of rehabilitation through EPA (Environmental Protection Agency) order. That led the City to sell bonds in 2009 in the amount of $22.8M. Council had also decided in that bond sale to set aside funding for the Jasper Trunk line. In FY09/105 the operating budget was reduced by about $123,000 in order to keep the stormwater rates as low as possible. The operating budget was also reduced in FYI 0/11 by $46,000. It was also recommended at that time to postpone the construction of the Jasper Trunk Sewer, putting off the need for a future bond. The construction fees were put toward other high priority rehabilitation, preservation and upgrade projects, such as pump station upgrades for pumps that didn't meet compliance. . Mr. Paschall discussed the local wastewater projects that had been adopted in the most recent CIP. They included: preservation, studies, and system expansion. He discussed each project type. Most of the system expansion cost was the Jasper Trunk Sewer. Mr. Paschall reviewed the forecasted wastewater rates. The rate drivers included; capital project funding requirements, debt service requirements, and inflation. The forecast projected a rate of 9% for FYI 1/ 12 and FY 12/ 13, and 6% for FY 13 / 14 and FY 14/ 15 . The 6% increases were. based on two more anticipated bond issuances; one in FY12/13 and the other in FYI 4/15. One of the key rate drivers was making sure we kept our legal obligations to sell bonds. Councilor Ralston asked why that was not one of the options if it was approved last year. Mr. Paschall said he would review that later in the presentation, but did note that one of the options was at that level. He had looked at the money that could be generated for capital on the rates, and determined they could eliminate the need for the $9M, or push it out further, which brought the rates down to 3%. The key rate drivers for local wastewater were current debt load and maintaining our legal obligations per the bond covenant, looking at future issuance of bonds, and the timing of selling the bonds. Mr. Paschall referred to the chart that was distributed to the Council (attached to these minutes) and explained each option, including the pros and cons. Option 1 included the Right of Way (ROW) use fee, and Option 2 was the same without the ROW fee. Options 1 and 2 were the highest cost to citizens. Options 3 and 4 included a delay in the sale of bonds and pushing out construction of the Jasper Trunk Sewer. There were some risks in Option 3 in pushing out the bonds for that project due to the possibility of not meeting the minimum debt coverage ratio. Option 4 was the recommended option with.a steady increase of 4%, giving the City a cushion for the bond covenant. Options 3 and 4 also included the ROW fee. City of Springfield Council Work Session Minutes April 11, 2011 Page 6 Councilor VanGordon asked about the growth on the ROW fee. Mr. Paschall said it built on each year. He explained. Councilor Ralston asked if any of the options presented were better suited to help the City build out the Jasper Trunk Sewer to Reach 3, allowing the pump stations to be decommissioned. Mr. Paschall said he felt it was possible to do that, but would take some strategy of current projects and revenue from user fees. He would need to put together a strategic map to show if that could work. Option 1 or 2 would allow the City to build the project to the end. Option 3 or 4 would require a strategy to build it out in segments. Councilor Wylie said she was concerned due to previous increases. Voters had been generous when voting for levies for Police and Fire, and if.the City continually made increases, the people would get annoyed. Senior citizens were being charged more, yet were not getting more from Social Security. It was difficult, but she had no answers. Councilor Ralston said the advantages of building to Reach 3 was potential development and that was the cost of a growing city. He understood the concern, but didn't feel doing nothing was an option. One of the City's strengths was that we explained to our citizens about stormwater and the Federal requirements the City faced. We needed to continue educating the citizens. Councilor Moore referred to Attachment 2; page 3. Both Eugene and Springfield paid the regional wastewater fee, yet Springfield's fee was nearly double that of Eugene's. Mr. Bittler said both cities. were under the compliance order from EPA to deal with stormwater getting into the sanitary sewer overflows. There was a prohibition that those overflows must stop by December 2009. Both cities invested heavily in election system repair. Springfield was a smaller city, spending like dollars across a smaller population, causing higher rates for Springfield. Councilor Moore asked if there was any point these increases would ever stop. Mr. Paschall said the desire was-to build new infrastructure for development, which also added to operations and maintenance, so we would need to collect more money for those funds. Mr. Grimaldi said there were options. The Council could take a different approach to economic . . growth and expanding our boundaries. We were driven by the community's desire for increased jobs, which meant growth. Councilor Moore said in adding lines, we were adding the number of people to share the cost. She asked if those increases would be ongoing for years to come. Mr. Paschall said it was difficult to project out farther than five years because the data became less reliable. He explained some of the factors that affected rates. Mr. Grimaldi said Attachment 1, page 11 provided a history showing that there were years with no increase. There were also years.with a significant increase due to the factors presented. City of Springfield Council Work Session Minutes April 11, 2011 Page 7 Mr. Paschall said last year, they were originally looking at a 22% increase. After making some adjustments to the CIP and the Jasper Trunk Sewer project, they were able to reduce it down to 9%. The two lower rate options (3 and 4) spread,the Jasper Trunk Sewer project out so it was built in increments instead of all at once. During that time, there could also be a developer that might come in and help pay a portion of the trunk line. Councilor Ralston referred to Attachment 2, page 3. He noted that Springfield charged the second lowest in local wastewater fees. Councilor VanGordon asked what kind of economic recovery was calculated in these proposed fees. Mr. Paschall said it was based on a 3% growth factor. He explained further.- Councilor Moore said it would be better if the City could get the Jasper Trunk Sewer done sooner because it would open up some jobs and. prepare the City for the economic turnaround. . Councilor Ralston said Option 2 was his choice. Councilor Pishioneri said he looked at all four options closely. He agreed with Councilor Wylie to try to keep the increases as low as possible. He felt Option 4 allowed the City to postpone the bond. He liked that it still had the ROW user fee included. Option 1 provided the most money for the City now, but getting a bond now was risky. He compared Option 2 and Option 4. Option 4 allowed the City the flexibility to wait to go out for the bond. Councilor VanGordon agreed. He felt Option 4 provided more options on the Jasper Trunk sewer. Councilor Wylie agreed with Option 4. Option 3 or 4 gave the City some room and wouldn't have us starting out at the highest level. Councilor Ralston said he liked the upfront cost to get started on projects, but he didn't feel strongly either way. Councilor Pishioneri confirmed with staff that this would be revisited again next year. Yes. Choosing Option 4 showed the citizens the City was trying to be responsive. Councilor consensus was Option 4. Councilor Moore asked if staff would move forward on a bond if it became clear it was a great opportunity. Yes. Mr. Paschall said he could prepare a funding schedule that provided the money to start the Jasper Trunk Sewer project, by segment and how much. Councilor Pishioneri asked to have that in a Communication Packet memo Regional Wastewater Rates: Mr. Bittler said the Metropolitan Wastewater Management Commission (MWMC) reviewed and approved their rates on Friday, April 8. The regional wastewater program funded the administrative portion, which was provided by Springfield staff, and operations and maintenance, which was provided by Eugene staff. The 2004 Facilities Plan which identified $196M City of Springfield Council Work Session Minutes April 11, 2011 Page 8. in capital projects in 2006 dollars and thirty-eight projects, many to comply with the wet weather regulatory compliance, had been the main thing driving the regional rates over the last few years. There were significant projects that needed to be done by December 2009. The Facilities Plan was a twenty-year plan and they were looking at about $26M for the next year and about $77M over the next five years. Mr. Bittler said the rates were about as good as they could be this year. Last year, they forecast a 4% increase over the next five years. He referred to the debt service coverage ratio and noted that the MWMC was positioning itself for another $20M bond in FYI 3/14. As they went into the next year, the strategy remained about the same. They would continue to strategically use SDC reserves for debt service, although after FYI 1/ 12, the SDC reserves would be depleted. They would also maximize transfer of monies to capital fund to pay for the CEP, maintain rate stability reserves at $2M to allow for larger.capital transfers, and minimize or delay the additional bond issuance while staying in a position to issue that $20M bond. Mr. Bittler said going into the FYI 1/12 budget cycle, staff took three rate scenarios to the MWMC on March 11. The Commission was clear that they wanted to only see the minimum rate required and directed staff to put the budget together around the 4% increase, which was the minimum. One of the benefits in this construction period was that bids had been coming in under estimates. Also, through the management of the capital projects they were able to set that additional $20M borrowing back to FYI 6/17. The table displayed in the slide showed the rate schedule approved by the MWMC on April 8 of 4%. The average monthly increase would be about 0.84, bringing the regional fee to $21.75 for FYI 1/ 12. Ratification of the MWMC budget was scheduled to go before Council on May 16, but could be moved to May 2. Councilor Moore asked what the increases for all fees would be in total. Mr. Paschall said it would be $1.92 combined for an average household. That was based on about 4800 gallons per month usage, normally a family of four. ADJOURNMENT The meeting was adjourned at approximately 6:50 p.m. Minutes Recorder - Amy Sowa i O Christine L. Lundberg Mayor Attest: Amy Sow City Recor er r-I r-I 0 N 00 C O 0 ?m/ ii L di +-1 V O J C O 00 _ U 4? -a o L 0 O O O CL a1 to N U L f6 O N v (Ij ? C C LL Q Lo tf3. N CL L X x m>. 0 _ . U O Ln > o O N C: C_ aJ L O N aJ N O O C2 U 4J N 3 U m N 0 L- L w to a 'p u C: Y O N Y 0 c C (3) 'N N N L . m 4- L Q 4? N O l U C N L q0 O 42 -o 0 O a 00 to Ln N r4 ri >. 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