Members in Attendance: Kevin Alig, Andy Bischoff, Jerry Stenger, John Watson,
Attorney, and Darlene_______(Treasurer)
Doug Farrow was absent
Others in Attendance:
Sewer Board Members: Chuck Hail, Lou Thaman, Dave Bischoff, and Andy Zeigler
EES Employees: Frank Leonard, Robert Curry, and Steve Carter
Bose McKinney & Evans LLP: J. Christopher Janak, Attorney
H. J. Umbaugh & Associates: Scott A. Miller, CPA
Note: The meeting was held outside, in the covered picnic area. Several citizens were
in attendance. The meeting did not start until approximately 8:10 p.m., when
Jerry Stenger arrived.
Previous Board meeting minutes were read and approved with changes (unable to hear what changes were made). The Treasurer gave a report concerning revenues.
Officer Wendt gave his report of recent activities in the area, and warned that there have been many daytime burglaries in Dearborn County, and stated that if anything, or anyone looks out-of- place, call the police.
Andy Bischoff then said that tonight’s meeting was to discuss the rate study, along with expansion. He then introduced John Watson.
John Watson gave a summary stating they had a preliminary rate study, and were also engaged in studies about where we are with the plant (sewer), and capacity in the future. Watson continued that he, Fred, and Steve met with Scott Miller of H. J. Umbaugh.
Bob Curry interjected that Christian Knock (sp.) of the Bond Council met with them also.
Watson continued they will go one way or the other, they are reaching capacity (at the
St. Leon Wastewater plant). We will not be able to have anymore taps, and there are consequences if we don’t go forward, and if we do go forward, Scott Miller has a rate study to discuss. Watson said we have not raised rates since 2002, that is 6 years down the road. They have experienced increases in costs, and the preliminary study indicates rate increases are necessary with or without plant expansion. The bottom line from Umbaugh is to go forward with the rate increase, and in terms of expansion the lion share will be applied to expansion. Watson said Frank and Bob will address the terms of capacity at 90% , IDEM, and a moratorium.
Frank and Bob showed an exhibit which demonstrated when capacity would reach 90%, and it coincided with plans/dates set for expansion. Frank concluded that expansion from 300,000 to 600,000 was an appropriate expansion. They tried to get the county to cost share, but the county never got it in place. Plans were approved by IDEM, and bids were received in 2007. Four good contractors made bids; the low bidder was 3.74 million dollars, approximately $600,000 under other bids. The project has been on hold since then. Frank said he checked with the contractor, and we are in a position where if we have to rebid we would not get a better bid than we had. Costs have increased 4.6% on average. If we move forward, the expansion will be finished the middle of 2010, and that would be consistent with 90% capacity. We have lost 7-8 months. We need to process the application and get into the first phase.
Bob Curry, engineer, said John (Watson) called him in May to review documents, quality and spacing of bids, and after viewing everything, found it was in perfect order, and the spread was about what you expect for a wastewater plant. Curry explained that you must have on line and add customers by May 2010. We need to proceed as quickly as possible because if IDEM sees you made commitments beyond 90%, we would not only be in violation of commitment to developers, but have problems with IDEM as well.
Watson said that IDEM can make an agreed order, and stop all further development, until the wastewater plant is completed. When an order is issued, they go over everything with a fine tooth comb. Watson asked the attorney, Christopher Janak, if IDEM can order you to make an increase.
Mr. Janak said there are utility issues all over the state, if your utility reaches capacity and they can’t hook up, and capacity is certified at 90%, you will get letters and visits and orders from IDEM. Mr. Janak said he has never seen where they tried to get you to expand with an agreed order. He has never seen it happen.
Frank Leonard said not to sound too negative, about expansion and future rates, the fact is that all commitments have been made—let’s do this.
Watson said regarding the financial component, a rate increase is necessary regardless.
Chris Janak said here is where you are from a rate perspective. In 2002, there should have been a 45% rate increase. The Town thought growth would take care of expenses, so they only increased rates by 5%. But rates are not covering expenses. Costs have to cover. IN revenues are not covering costs, unless you use gaming revenues. As you use up more and more of gaming revenues, you have a timing perspective, and you’ll have to get financing. You have to show rates are enough to cover cost. You need to raise rates to get bond loans. It will take 60-75 days to get financing. You have a 15-18 month project, if you started today to get legal rates.
Scott Miller stated it is a paradox, growth helped keep rates lower. The challenge is how can we get the project done. I can’t use customers not connected yet, give you time to get them connected. An estimate of projected costs is $4,680,000. You have $575,000 funds applied, and $310,000 available funds on hand, which leaves $3,795,000 to borrow. You will need an underwriter, and besides others, we can consider a local bank.
You have to borrow short-term for 5 years. You go to a bank and place with a bond for $3,795,000, to do the project. That allows you to get customers, and five years from now you will get a long-term bond issued for 15-20 years, which buys you time. The more customers you have, that is a financing solution.
Scott Miller continued the current operating expenses were $381,000, and additional operating expenses were $19,100 for chemicals etc., all prices are going up. The debt services, three outstanding, total $312,400. The proposed 2008 interest will be $170,800 for 5 years, to be built into the rates and charges until we get the long-term bond. An allowance for replacements, is $93,700. The revenue requirements will be $933,900, and rates and charges need to cover it, plus interest.
Miller continued that money collected, including riverboat sharing which amounts to $88,100, totals $825,800. The additional revenues required (to meet expenses) is $108,100. An increase of 15% is needed to cover the $108,100.
Chris Janak and Scott Miller discussed that rates and charges have to cover principal and interest and another 25%, which is why you need 15%, not just 10% or 12%. Anything less than a 15% increase will not get you debt service. You can put in more gaming money, but the market is tumultuous now. If you go with 15% in place, you will have more money at the end. In 5 years you will have to replace the initial bond, with a long-term bond issue.
Chris Janak said they did not like being the bearer of bad news, either you will need to do this, or commit more gaming money, and what will happen if gaming revenues are reduced?
Watson said we are revisiting the rates, it has been 6 years now (since an increase).
Steve Miller said at the 15% increase, it averages to 2-1/2% per year. Some communities have an annual increase built in for 15% every year.
Watson said we can start the process for a bond ordinance parallel with the rate ordinance. We will advertise, have a public hearing, issue an ordinance.
Steve Miller said we look at banks, it has to be competively bid, and area banks can participate.
Watson stated that if we don’t go forward, we will need to increase rates to cover costs. We will have to tell people there is no more capacity to be committed.
One of the speakers stated that they are digging at Maple Ridge now.
(I raised my hand to ask Andy Bischoff to clarify something for me, as follows.) There was a moratorium in 2004, and later at a Dearborn County Planning and Zoning meeting, Mark Mitter stated they had a meeting with the St. Leon people regarding capacity, and the St. Leon people told them they could cover developments being proposed.
Andy Bischoff said there was a moratorium for a short time, and that for 10 years total, plus or minus, (capacity) could be covered.
Andy Zeigler said they had 13 hookups in 2008, we won’t make 29 (average per year?).
Frank Leonard said 76 (hookups) would be the amount to cover entire debt service.
An estimated 50 customers signed due to customer connection enforcement.
Curry stated rate increases with each (new) member.
Cliff Eibeck asked if they could have a copy of the financial information. Watson said it was public information. Andy Bischoff told Cliff to go to the St. Leon office tomorrow, and fill out the request form, and they would give him a copy.
Andy Bischoff stated we have been discussing this for over a year. The Dearborn County Regional Sewer District (DCRSD) was to fund them 40%, but that is not going to happen. Even with a 15% increase, we will be taking about $100,000 from riverboat money. We have purchased land for over $300,000, and want to have a Town Hall and a park. Andy Bischoff continued that he did not think they should double capacity. There is nothing promissory out there, the economy is not good, there are no businesses asking to come here, projects have been downsized.
Andy Bischoff stated he understands that we were to ask for 45% increase in 2002, but only asked for 5%. Riverboat money pays for police, and it would be good if they did not have to use riverboat money (for the wastewater plant).
Discussion followed with Andy Bischoff, Janak, and Miller regarding how pledged money has to be there regarding bonds.
Andy Bischoff stated they should think about a smaller scale expansion.
Frank Leonard said it can be done into two phases.
Steve Carter said building two smaller (plants) is not going to be saving half—there are additional considerations to be made, like the sludge handler, etc.
Frank Leonard said they recommended this expansion because it is the most cost effective deal for the town.
Andy Bischoff stated he did not want to use riverboat money. (The wastewater plant expenses) was designed to hold its own. That hasn’t happened here. Go back and look at this 15%, the rate increase has to do it, and we downsize expansion. Townspeople didn’t want the sewer to start with.
Watson said let me lay it out for you. You recognize the need for a rate increase and expansion. If (decision) is to lower expansion capacity size, and cut out riverboat dollars, we have to redo work and redo funds. We better hurry.
Curry asked Andy if they are going to cut out riverboat funds (from financial proposal), and Andy said to cut it out.
Chuck Hail said to reconsider if we get a re-bid on the number where we are now, even if we get a re-bid at ½ the capacity we (might not) beat the price we are at now.
Andy Bischoff said that is a 4 million dollar gamble that those buyers are going to be there.
Chuck Hail said they could have future customers, but they couldn’t talk with them until we knew what Dearborn County was going to do.
Andy Bischoff said Dearborn County is not going to fund 40% of our property. This can come up again after the first of the year after the elections.
Chuck Hail said we won’t have capacity if we are not going to build.
Discussion continued. Watson stated we can cut in half to get capacity, and the other half in two more years. Frank Leonard said how is this line going to go from a hydraulic standpoint? Curry said we have to have a fast track to get IDEM to approve it, this requires careful watching.
Andy Zeigler stated that time wise regarding engineering, it takes just as long to design a 100 gallon tank, and a 1 million gallon tank. Let us hold-off until the first of the year, the economy is slowing down, we won’t hit 90% until July 2010. We have a cushion, hold off another five months.
Janak stated you can increase rates in the meantime.
Watson said whatever town wants, I’m there. From a legal perspective, Watson continued, to redo a smaller project, directions have to be given to Bob, Frank and Steve for a January 2010 deadline, we have something of a timetable.
Andy Bischoff said to them, you/we recklessly used capacity.
Watson asked if they wanted the rate study in place. Andy Bischoff said they will make a decision tonight. Watson said you’ve held off a long time.
Chuck Hail asked if it would make us look better if we asked for 10 (%) now, and 5% next year?
Andy Bischoff said no one wants to increase rates. In 2002, we were told to ask for a 45% increase, and we only raised the amount 5%. I make a motion we vote on a 15% rate increase. Jerry Stenger seconded the motion. All ayes.
Curry asked if they are to eliminate the riverboat money (from the future proposals).
Andy Bischoff said yes. Andy Bischoff also stated that this is the first time the St. Leon Town Board has refused a St. Leon Sewer Board request. Andy Bischoff continued, we have postponed the expansion decision until the first of the year.
John Watson and Andy Bischoff agreed they will issue an ordinance, and the public hearing of the ordinance will be next month, regarding the 15% increase, to be in effect after October.
Many people left, and the remaining part of the meeting was held at the table with Andy Bischoff and Jerry Stenger, with others standing around.
Andy Bischoff said regarding landscaping they are going to hold off until spring.
The Girls Scouts/Boy Scouts are helping with the greenery.
Jerry Stenger, said we need to get in there and so something with the property (purchased for the town), and do it right. He referred to other people being successful in acquiring grants, and thought they should try and request grants themselves for playground equipment for the park area, as an example.
Paul Horner asked Andy Bischoff if there was any available property from the land the town purchased, because St. Joseph’s cemetery was running out of room. Paul said they would just like them (the Board) to think about it for now. Watson also said that Doug Farrow called him and asked him to mention this matter at the meeting.
Andy Bischoff said they would have to see, they have not completed their plans yet for the property. Andy continued that they wanted to do something historical for the town and the townspeople.
Jerry Stenger said he wanted to leave something from his term in office, to be there in the future.
At that point Bob Curry came over and asked if they every thought of getting Dept of Commerce grant for $500,000. A discussion followed about going to the Southeast Planning Office at Versailles and talking to the grant administrator regarding grants available for the wastewater plant.
The meeting ended at approximately 10:20 p.m.
Helen Kremer
Logan Township
Note: A 15% increase will estimate approximately as follows:
Single dwelling unit @ $57.00 to $65.55 bi-monthly
Typical residence* @ $85.32 to $98.12 bi-monthly
___
*typical residence using 10,000 gallons per bi-monthly period
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