Special Meeting
March 10, 2009
The
Mayor and Council of the City of Fairbury met in special joint session with
the Board of Public Works in the Council Chambers, 612 D Street, Fairbury,
Nebraska, on the 10th day of March, 2009, at 5:30 p.m. Mayor
Homer L. Ward called the meeting to order for the City Council. Board of
Public Works (BOPW) Chair Shirley Howell called the meeting to order for the
BOPW.
Notice of meeting was given in advance thereof by publication in the
Fairbury Journal News, Fairbury, Nebraska, the designated method of giving
notice, as shown by affidavit of publication. The Open Meetings Act is
posted in the Council Chambers as required by law.
Roll call found the following Council Members present: Doug Brown, Ed
Friesen, Ron Byrd, Don Trimm, Beryl Lueders, Shirley Bender, and Brad
Kuzelka. Absent: Kelly Davis. Roll call found the following BOPW members
present: Howell, Preston, Phillips, Schultis, and Schacht. Others present:
Superintendent of Utilities Michael Beachler, Assistant Superintendent of
Utilities Larry Naiman, and City Administrator Joseph Parker.
Mike
Beachler stated Larry Naiman had given a brief overview to the BOPW
regarding the utility revenue, expense, debt service, and reserves in
relationship to utility rates and he will give a short version of this to us
this evening. Naiman stated the utility rate ordinance is over in November;
so will be doing a new rate study and hopefully have the new ordinance into
effect by November 1, 2009. Naiman mentioned that both he and Beachler are
representatives on the Municipal Energy Agency of Nebraska (MEAN) board and
MEAN committee. We own our own power plant and lease it to the power pool –
produces 15.3 megawatts; we receive $45,900.00 monthly for leasing the
plant. We have had a 4.7% power rate increase from MEAN. We get our
electric resources from Municipal Energy Agency of Nebraska (MEAN), Western
Area Power Administration (WAPA) and Leased Generation which is our own
Power Plant. MEAN is the wholesale electricity supply organization of the
Nebraska Municipal Power Pool (NMPP Energy). Created in 1981, MEAN provides
power supply, transmission, and related services to more than sixty
communities, one public power district and one joint action agency in four
states: Colorado, Iowa, Nebraska, and Wyoming. MEAN communities are the
owners and have voting representation on decisions concerning rates and
services. MEAN has a diverse power supply portfolio: Coal, Wind, Hydro
(Water), Purchased Power (coal, natural gas, wind, nuclear), and Member
Generation. Fairbury water sources include the Crystal Springs Well Site
(filtration gallery and six wells) and the East Well Field Site (three
wells). We have one million gallons storage at the water tower and 2.5
million gallons at the reservoir west of the power plant. Average daily
water requirements range from 1.25 to 1.5 million gallons with a peak daily
need of 4.3 million gallons. We have an agreement with Health and Human
Services not to exceed five million gallons per day. The electric costs are
changing due to many different factors: coal cost have increased roughly
70% in three years, rail transportation costs up four times due to increase
of diesel fuel, cost for federal mandated transmission systems up $200,000
year, increased costs for materials to maintain and construct power plants,
substations, transmission grids, etc., drought has affected WAPA hydro
production and cooling ability for large coal plants, environmental
compliance, cost of financing projects has increased because of the economy,
locally the cost of equipment, poles, wire, and transformers has increased
at a rapid rate. Compliance is a factor for increase in water and sewer
rates; compliance with most recent mandates has resulted in increased
capital expense and treatment costs. Some unanticipated expense were the
2002 storms, which took out some electrical lines, the “L” Street Sewer,
Substation north of town, Feed Water Pumps, and Crystal Springs Wells
totaling $1,356,000.00. These expenses were in a short amount of time and
had to access the utility reserve funds at this time. Upcoming expenses for
this year are: $38,808.00 for boiler insurance, $100,000.00 for
property/liability insurance, $41,000.00 for ½ of “L” Street sanitary sewer
bond (due in April~reimburse the City), $190,000.00 NDEQ semi-annual
revolving loan (due in June), $200,000.00 for bucket truck, $163,000.00 for
completion of SPCC mandate compliance at the power plant, and $50,000.00 due
in October to reimburse the City for street light costs (in lieu of tax)
totaling $782,808.00. Also $972,808.00 is due in December to the DEQ. (May
have to access reserve funds.) The Sewer Debt Service payments – Waste
Water Treatment Plant (WWTP) annual payment is $140,563.00 and the “L”
street sewer is $40,794.00 totaling $181,357.00. According to the last rate
study – we have 1,963 sanitary sewer customers (1,713 residential and 249
commercial). By Naiman’s calculation, each customer is obligated for $92.39
payment for debt service or pays 7.6 months towards debt service prior to
revenues available to operate system or make other required improvements.
Sanitary sewer rates increased 10.8% in March 2008 and 6.2% in March 2009.
A 3% increase in expense and a reduction in capital expense of $25,000.00 is
anticipated for the sewer utility to net $3,536.00 per year. The Water Debt
Service payments – Filtration Plant annual payment is $50,874.64. According
to the last rate study – we have 2,026 water customers (1,739 residential
and 249 commercial). By Naiman’s calculation, each customer is obligated
for $25.11 payment for debt service or two months at a minimum residential
bill. Rates were increased 2.6% in March 2008 and 1.4% in March 2009. The
electric serves 3,388 customers. Purchased power exceeds $3.1 million.
Rates were increased 5.2% in November 2007 and 5.2% in November 2008. There
is uncertainty in future power costs. Several items on capital improvement
list: variable speed pumps in power plant for water distribution, spills
prevention (SPCC mandate), bucket truck, line improvements (meet increase of
customer demand and maintenance – i.e. relocation of Beatrice Concrete),
Traeger Line, Ellis Line and Livingston Line, completion of update of
voltage in downtown has been ongoing for several years, replace portions of
sanitary sewer lines causing problems – infrastructure, water main
maintenance – fire hydrant replacement, the electrical underground has been
there a long time (needs to be examined), maintenance to transmission line
(this may be something we could do with the all hazards mitigation plan),
contingency for storms, anticipation of 40% or more increase in electric
equipment, storage building for pipe, chipper, bucket truck, and service
truck replacement. The utility is required to complete an integrated
resource plan (IRP) as requirement to receive our federal power allocation.
MEAN includes Service M towns in a joint IRP. A portion of this IRP is to
promote conservation in lieu of increasing power costs. MEAN has developed
the Energy Smart Lighting program to encourage the installation of more
efficient lighting. This will help people save; help consumers with
conservation. Fairbury Light & Water will have a booth at the Home Show in
April to help inform people of this lighting program. They would like to
get commercial customers to replace less efficient lighting products with
the new, high-efficient lighting. Council person Beryl Lueders wanted to
know if it would be dangerous if the lights would break. Lueders stated
would have to make sure to let the public know about the danger and to let
them know how the expenses relates to the rates. Naiman stated it would be
best to get on the EPA web site to get the complete guidance on how to get
rid of the bulbs. If have a small amount of mercury, if seal it up you can
take it to the landfill; if spill on carpet – keep it contained, don’t
vacuum.
Discussion
was held regarding the five year agreement between the City and BOPW sharing
the bond payment and interest for the sanitary sewer bond authorized by
Ordinance 2826. BOPW member Shirley Howell stated when the sanitary sewer
was first done it was a General Obligation Bond; everyone shared the cost.
The first year and a half the BOPW paid it all. Then the Council asked BOPW
to pay for half. Howell stated the BOPW needs to know what the City is
planning on doing and if they would be asking the BOPW to continue paying
half; need to know before they do their rate studies which will be late
summer or early fall. Howell mentioned they have rate payers that are not
citizens of Fairbury, like Harbine, etc. BOPW member Kent Preston stated the
five year agreement will be finished when the BOPW makes their payment this
April. Howell wanted to know if they could implement the GO bonds again;
Beachler didn’t think you could go back and do that again. Beachler
referred back to the rate payers having to pay $92.39 for debt service.
Beachler stated it is becoming a harder job to service the sewer customers
because we are not growing. Their cost alone keeps increasing because we
can’t spread it over a broad customer base. Preston mentioned it is more of
an expense to get rid of the water than to put to the houses; cash flow;
penalizing people that don’t live in Fairbury; town is growing north and
east. Naiman questioned if the LB840, which would have to be a vote of the
people as the current plan ends next year, if some of that money could be
used for a portion of the sewer. Mayor Ward said would have to stipulate
what the money would be used for on the ballot. Naiman stated if we could
show the people that we are trying to reduce taxes and rates; maybe that
would help to get it passed. Council person Doug Brown stated maybe it could
be earmarked infrastructure; but then may run into people being more
concerned about the streets they drive on than the sanitary sewer. City
Administrator Joseph Parker stated could maybe say property tax relief ~
then could use for different things and he thought it was good doing the
payment half and half. Howell wanted to know what would happen if had
problems ~ it would be very costly since it is a 40’ sewer. Howell said the
BOPW just needs an idea what direction the City will go with this. Preston
stated would need to make up an agreement. Beachler agrees with Parker that
half and half would be good; he would be happy if it stayed that way. Said
would need to make up an agreement for five years, ten years or forever.
Parker suggested to go with five years as things can change and can be
re-evaluated again at that time. Friesen moved to continue another five
year agreement between the City and BOPW (50/50) sharing the bond payment
and interest for sanitary sewer bond. Motion seconded by Trimm.
On roll call: Brown,
Friesen, Byrd, Trimm, Lueders, Bender, and Kuzelka voting “yes”. Davis
absent. Motion carried. BOPW Preston moved to continue another five year agreement between the City and BOPW (50/50)
sharing the bond payment and interest for sanitary sewer bond. Motion
seconded by Schacht. On roll call: Howell, Phillips, Preston, Schacht, and
Schultis voted “yes”. Motion carried.
Trimm
moved to advertise for riding mower bids for Crystal Springs for BOPW and
not to exceed $16,000.00. Motion seconded by Lueders. Beachler stated they
mow a lot of land by the east well, Crystal Springs, power plant, and water
tower. The new mower would go to Crystal Springs and the older mower would
go to the plant.
On roll call: Brown,
Friesen, Byrd, Trimm, Lueders, Bender, and Kuzelka voting “yes”. Davis
absent. Motion carried.
Discussion was held regarding the purchase cap of $10,000.00; the BOPW would
like to have it increased. Beachler wanted guidance to what the BOPW can
spend without having to go to the Council and what can be spent without
having to go out for bid. Beachler read Fairbury Municipal Code 35.30 –
Contracts and Purchases; Bidding and other requirements which states (A)
except as provided in Neb. RS 18-412.01 for a contract with a public power
district to operate, renew, replace, or add to the electric distribution,
transmission, or generation system of the municipality, no contract for
enlargement or general improvements, such as water extensions, sewers,
public heating system, bridges, work on streets, or any other work or
improvement when the cost of that enlargement or improvement is assessed to
the property, costing over $20,000.00, shall be made unless it is first
approved by the City Council. (C) Advertisements for bids shall be required
for any contract costing over $20,000.00. Beachler stated it is rather
confusing how it is worded in regards to assessed to the property. Council
person Shirley Bender stated she had talked to the BOPW attorney, Ron Schwab
-- and it is $20,000.00. Bender’s concern is that it is $20,000.00 per
bill; anything over the $20,000.00 would need to come before the Council.
Bender stated if that is what their attorney says that is good enough for
her; everyone agreed it is $20,000.00. Parker stated the legislature is
working on $30,000.00 for bids this year.
Bender
moved to adjourn the meeting. Motion seconded by Trimm.
On roll call: Brown,
Friesen, Byrd, Trimm, Lueders, Bender, and Kuzelka voting “yes”. Davis
absent. Motion carried. Meeting adjourned at 6:45 p.m.
Homer
Homer L. Ward, Mayor
ATTEST:
Sharyl Preston, City Clerk
