Minutes of The Special Price City Council Meeting

City Hall: Price, Utah

June 2, 1999, 5:30 p.m.


Mayor Lou Colosimo

Councilmembers: Roy A. Nikas, Betty P. Wheeler, Joe L. Piccolo, Stephen L. Denison, Richard Tatton

Staff: Vernon W. Jones (Community Admin.),  Joanne Lessar (City Recorder),  Pat Larsen (Finance Director),  Gary Sonntag (PWD/City Engineer),   Aleck Shilaos (Chief of Police)

Others Present: Robert Potts, Anne Jensen, Cherrill Marx, Scott McDonald, Dean Bohl, Wardella Edwards, Dorothy Livingston, Thomas Livingston, Lamar Edwards, Nick Tatton, Tyler Sinclair, Tom Alexander, Levon Grundvig, Steve Jones

1. PUBLIC HEARING - Budget For FY1999/2000

Mayor Colosimo opened the Public Hearing at 5:30 p.m. to receive comments on the proposed budget for FY1999/2000. Mayor Colosimo stated that each City resident received a letter regarding the increases in water and sewer rates. The water transmission lines from the springs to the Water Treatment Plant and then to the City limits all need to be replaced. Several sewer lines need to be replaced. Our Sewer Department is continually replacing broken sewer lines. The letter also indicated a 6% reduction in electric rates.

Sherrill Marx, 636 East 400 South - Asked what the General Fund is? Pat Larsen explained that the General Fund is supported by property taxes and provides services, such as police, fire protection, roads, cemetery, offices, wages, etc. The Water Fund is strictly for water and the Electric Fund is for power. Mrs. Marx asked about the statement in the letter stating that the residents will be assessed to help pay for these improvements and that it will be abandoned in the future. Somehow the rates are never abandoned. Councilmember Piccolo stated that this means there are old sewer lines that need to be repaired and if the City repairs those lines that will be abandoned in the future, then the money is being spent for nothing. The current lines will not last much longer than 2 to 6 years. Some of those lines have been in place since 1939. The City is trying to prevent a large incremental increase to pay for these improvements. Smaller increases put the money aside for the transmission line in an attempt to plan into the future. Councilmember Denison stated that the present line will remain in service until the new line is installed. This last year $100,000 was budgeted to replace this section of line. However, the Council reviewed it and felt that in would not be in the Citys best interests to take out 600 to 700 feet of line, spend $100,000 and end up putting in a new line in 5 years. In essence, we've wasted that $100,000 year after year. The pump cost is approximately $50,000 annually. Rather than spend $100,000 to replace part of that line and $50,000 in pumping, that combining the $150,000 would go towards a payment on a new transmission line and we wouldn't have to worry about the leaks and maintenance that we currently take care of.

Lamar Edwards, 238 North 5th Avenue - Asked if the water line to be replaced is cast iron or plastic. Councilmember Piccolo stated that it is cast iron. Some of it is clay, but most of it is cast iron. Besides providing water to City residents, there are approximately 400 residential hook ups between the Water Treatment Plant and the City.

Dean Bohl, 850 North 1000 East - Questioned the size of the proposed new water line. He has lived here for 11 years and seen the growth of this area. Some areas have development and some don't. How does the new line compare with the size of the existing line and is there any future possibilities for secondary water to relieve the need for culinary water? He asked why secondary water lines are not placed in new subdivisions as they are created? What would happen if a business came to town that employed 400 people? This would create a need for water. Is the proposed line sufficient to handle this? Gary Sonntag reported that the size of the line is projected for a 25 to 30 year usage. It is anticipated that the new line will be a minimum of 24" in diameter and possibly a 30" or 36", depending on how far we predict into the future. Thirty years is a typical number to use for projects. We currently have a 16" line from the Treatment Plant to the City and a 12" line from the springs to the Treatment Plant. Gary stated that the concept for a secondary system has been discussed several times. There has been some indepth engineering and analysis to find out if it is feasible. It involves being able to deliver water into the City at a comparable pressure relating to where the water is coming from and whether you have to store it. Secondly, the condition of the water quality. If it is full of silt, it will be a difficult task to get it through a pipe and out of sprinkler heads. Another factor is how much water can be taken out of the canal. There is only so much water we are allowed to take out considering the other users downstream. When you add up the dollars compared to the users, the cost benefit ratio doesn't work out very well. Mr. Bohl suggested looking into grant money.

Vern Jones stated that he feels a pressurized irrigation system will be needed in the future. In anticipation of this and for a number of years, the City has continually purchased water shares within the canal companies. There currently is a proposal to pipe the water in the canal beginning in the Spring Glen area. If this happens, by the time the water reaches Price, it will have approximately 26 lbs. of pressure. Twenty pounds is needed to operate a sprinkler system.

Councilmember Nikas stated that the only difference between a secondary system and the present culinary system is how well the water has been treated to drink. You still have to pay the bonds to pay for the sedimentation basin, the piping, tearing up the streets to construct the system, etc. Potentially, a secondary system is not a freeby. It could end up costing more than the current water rates. This type of system is still in the planning stage. Why do a secondary system if it costs twice as much per gallon as a culinary system. It would help the culinary system if the City could run laterals off a pressurized irrigation system to the schools, the college areas, the ballfields, parks, and cemeteries. This would allow more culinary water for any big businesses that might come into the City.

Steve Jones, 795 North 800 East - If a secondary water system was installed, what impact would this have on the proposed pipe size for a new water system? The biggest cost would be to dig the trench. Why not put both pipes in at the same time. The labor would be basically the same. The treatment would be a fixed cost. Councilmember Piccolo stated that the secondary system would not come from the Treatment Plant. The main transmission line will not support a secondary water system. Mr. Jones recommended a complete evaluation of the whole process. He referred to the cost of $100,000 a year to do repairs. If you conduct an economic evaluation on a $7 million dollar project, and you are only saving $100,000 a year, there is no payback. Its like buying a new car. You cannot justify a new car on economics alone. Councilmember Piccolo stated that the cost of operation and maintenance was basically what Councilmember Denison mentioned. The pumps to place the water on the hill was a million dollar investment and they are wearing out. Money needs to be set aside to rebuild those and plan on getting the water there at a minimal flow without pumping it. This cost has to be brought into it as well. Mr. Jones asked for a complete evaluation showing all the options. Councilmember Piccolo stated these studies cost and they take time. Those studies have both been requested. They are studies that are being presented now. If the project is not feasible, this Council would not have supported it. To begin with, the water has to reach the City's storage tanks on its own power. If it is not feasible right now to put in a new system, then we will wait. Somewhere in the future we will need it and if we start putting funds away right now, we can do it when the time comes. It will not be spent on equipment, benefits, wages & salaries. It will be designated to supply water to the tank on hill for future use. If this system was to be installed tomorrow, residents would be looking at a 30% increase instead of a 3-5% increase.

Steve Jones - Stated that the rate increase for this year is 4%. What will be on top of that and what is the time table? Councilmember Denison stated that part of this information will come out of the analysis being done. At this point in time, we haven't gone before any funding sources to find out what will be a grant and how much will be a low interest rate loan. Those types of answers are not known at this time. Those answers will determine whether we end up with a 30% increase overall or with a 20% or something different, based upon how much we can get as a grant or if we can obtain a loan at a 1/2% or 2%. Whether we end up going with a new transmission line or having to replace pumps, we need the money to do that. These are the options we are looking at now. Councilmember Piccolo stated that in recent years, the Community Impact Board has made it very clear that those municipalities that are not willing to invest their own money have little or no chance of getting grants or low interest loans. If you try to finance a $3 million dollar project and you have a half million in reserves, you have a better chance of getting grants and loans. This is another reason we are trying to set aside a little at a time to make sure it is there for that project. Price City's water rates are some of the lowest in the state. Residents can expect more future increases.

Councilmember Nikas stated that the project to run a new pipeline, whether the size of the pipe will be 24" or 32", etc., will be approximately $7 million dollars. It would require a 35% increase in current water rates to pay back the bond on this large a project at a low interest rate. The last time the City bonded to construct the 10 million gallon water tank, rates were raised all at one time. The residents came to the Council and said we shouldn't have done this, that we should have spread it out over time. This is one of the ideas we are now presenting to you. Rather than a 35% increase to start tomorrow, we will start with a smaller increase. At the current projections, the project may be more or less than $7 million. Right now the projections are to run a brand new transmission line from Castle Gate to Price to the ten million gallon tank for approximately $7 million dollars. This has nothing to do with a secondary system. Sherrill Marx asked how long it would be before a new line is needed from the springs to Castle Gate? Councilmember Piccolo stated that it too will eventually need to be replaced.

Steve Jones asked if the City looked into the options of doing something with Price River Water Improvement District? They also have a plant up the canyon. Councilmember Piccolo stated that PRWID's capacity is not able to serve both Price City and their customers. In order to serve both, PRWID would have to dig and construct a new line. Steve asked if an agreement could be worked out with PRWId where they could supply part of Price Citys water and if so, would this reduce the cost to run a separate plant? Councilmember Piccolo stated that this is currently being done. The City and PRWID exchange water whenever either entity needs it.

Councilmember Nikas stated that this project is not to expand the Water Treatment Plant or do something different with the springs. Price City gets quite a bit of water from the springs and the plant is also very efficient. A couple years ago we did some new sedimentation and backfill programs that increased the efficiency of the plant. We feel comfortable where we are with the current growth with our plant and our agreement with PRWID to use water from their plant and vice versa. We are very concerned that if something seriously happens to our transmission line, we have no water in Price except what we could get with some cross-connections with PRWID, and that would be very limited. We are looking ahead as to how necessary this project is.

Councilmember Piccolo stated that future planning is one major concern. The transmission line is the last link to tie in with future planning, at least until the year 2020. The treatment plant and the storage facilities that we have developed are capable of keeping the City in culinary water well beyond the year 2020 at the present rate of growth.

Councilmember Nikas stated that if the City has a $7 million dollar project that has to be done to get the water from Castle Gate to Price, the question is how do we pay for it? Do we pay for it through sales tax, property tax, or through a user tax. We felt that the user tax is the most equitable. It shouldn't come out of property taxes if you don't use very much water. This is why we are proposing to increase water rates.

Gary Ortega, 580 Rose Avenue - The way he sees mutual funds working is you take money, put it into mutual funds from corporations and from municipalities that are selling the bonds and then its put on the market for somebody to buy. Why can't the City consider taking some of this money and buy bonds? The City would wait until the project begins and use the interest from these bonds to begin the project. Councilmember Piccolo stated that the City does do this. Councilmember Nikas stated that the City received money from the Community Impact Board and the Water Resources Board when they constructed the 10 million gallon water tank. As soon as that money was received, we invested it. Because of the interest from that investment, the City had some money left over after construction of the water tank. That interest, which amounted to approximately $300,000, is now being used to replace water distribution lines throughout the City. Residents will probably see that we are replacing four times the number of lines that we normally replace because of that interest money. Councilmember Nikas invited Mr. Ortega to contact the City Treasurer if he has any other ideas.

Councilmember Tatton stated that as he is the "new kid on the block" so to say, he has been impressed at what the City has done to try and save money and was unaware of before as an outsider. Some examples are the purchase of used equipment instead of new. So far this year, the City has saved over $30,000 by buying used instead of new. There is a concern with this group of individuals to try and save every dollar possible so there isn't a need for increases. He is proud to work with these people. They have an attitude to save a dollar rather than tax an extra dollar.

Councilmember Piccolo reminded the residents that the City has reduced electric rates by almost 12% within the past two years. This equates to almost $6 to $8 per month for most residents. The Council looks carefully at each utility and when there is an excess in one, it has been refunded back to the citizens.

There being no further comments, Mayor Colosimo closed the Public Hearing at 6:18 p.m. Mayor Colosimo thanked the residents for taking the time to attend this meeting.

2. UTAH LOCAL GOVERNMENTS TRUST - Contract For Medical/Dental Benefits For 1999/2000 - Tabled

Meeting adjourned at 6:39 p.m.