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