Item 3A - Minutes Approval - Laserfiche WebLink

Home Browse Search

Responding to a question from Ms. Bettman, Mr. Ruffler confirmed that staff had done a preliminary estimate that indicated it would require a 65 percent increase in user rates if the MWMC had to depend on user fees alone to underwrite capital costs. Ms. Bettman suggested the City had no alternative but to build the needed infrastructure, and asked what happened if those improvements did not occur. Mr. Ruffler responded a substantial portion of the projects identified were necessary to handle wet weather flows and the timing of construction was determined by the State. If the City was not able to go forward with those projects, it would increase its risk of violating its permit law and incurring penalties. Ms. Bettman appreciated staff's diligence in the matter. She recalled the council's discussion when it adopted the facilities plan, and at that time she had expressed regret the community would never capture in SDCs what was needed for new capacity, and some of that the burden was being shifted to the rate payers. However, it was obvious to her that the infrastructure was needed, and although she disagreed with the financing mechanism, she had supported the facilities plan. Ms. Bettman saw no alternative but to create the strongest IGA possible. Mr. Lidz said another reason to use revenue bonds was because they allowed the community to spread the cost of projects out over more time and capture revenue from new users moving in to the community. If the MWMC front-loaded the costs with a rate increase now, that meant only current users paid. Mr. Pap6 determined from Mr. Lidz that general obligation bonds could be used to underwrite the cost of projects if the projects in question were City projects. Mr. Pap6 asked if the City of Coburg was party to the discussions about the IGA. Mr. Ruffler said no, as that presumed that Coburg would join the MWMC. That had not yet been decided. Mr. Lidz added that the IGA did not preclude the addition of Coburg to the system, but the IGA must be amended before that occurred. City Manager Taylor noted that staff was engaged in a study of the technical issues involved in serving Coburg, and would return with a recommendation regarding both technical and governance issues should it be recommended that Coburg be included in the IGA. Mr. Pap6 suggested that Coburg be provided with the draft and solicited for comments. Mr. Pap6 asked how often the jurisdictions reviewed the project list. Mr. Poling indicated it was a five- year list; the first review was scheduled for 2010. Mr. Pap6 asked if the City would need to do capital improvements to meet overflow issues even without new construction. Mr. Ruffler said yes. Mr. Pap6 concluded that existing rate payers were part of the problem. Mr. Kelly suggested that the IGA, if very lengthy, be provided to the council via the internet. Mr. Kelly believed the difference between issuing revenue bonds and not issuing revenue bonds was the 65 percent rate increase, and suggested a more likely scenario if the modifications to the IGA did not satisfy the bond counsel was that the bonds could still be issued but at a lower credit rating, meaning higher interest. Mr. Jewett said that in discussions with the bond counsel and the financial advisors, they indicated the draft IGA had the basic minimum requirements to get access to the debt market. If some substantial changes were not made, it was not just a question of quality of the debt, but whether any MINUTES--Eugene City Council February 9, 2005 Page 6 Work Session