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The 2004 Facilities Plan outlines a schedule for construction of the capital improvements necessary to maintain the needed wastewater treatment capacity and capability. This schedule, if followed, allows MWMC to maintain compliance with the current discharge permit and anticipated future needs of the Eugene/Springfield communities. Adhering to the Facilities Plan construction schedule for the next five years is crucial if the MWMC is to comply with a deadline of 2010 set by the Oregon Department of Environmental Quality (DEQ) to prevent wastewater overflows during specified storm events. Delays in the construction schedule will result in any or all of the following consequences: 1) increased costs of construction; 2) increased costs due to enforcement actions taken by the DEQ or the Environmental Protection Agency (EPA) or both; 3) increased costs from defending MWMC and the partner agencies from regulatory enforcement actions and/or third party law suits; 4) threats to public health and safety caused by sewer overflows, which are projected in the next few years but will be controlled by constructing the planned improvements according to the plan schedule; 5) the establishment of a potential requirement that significant industrial users reduce or curtail their discharges during times of peak flows at the plant; and 6) the potential denial of new connections based on inadequate wastewater treatment capacity within regulatory guidelines. Timing The timing of required capital improvements to the regional wastewater facilities is set forth in the 2004 Facilities Plan. The CIP schedule starts in 2005 and includes an extensive list of projects and activities that must be undertaken to meet the objectives for regulatory compliance. A draft resolution has been prepared (Attachment D) authorizing MWMC to issue bonds so that, if approved, a total amount not to exceed $100,000,000 in revenue bonds could be issued by the commission. This would be approximately the amount needed to finance the first five years of construction projects, as included in the Facilities Plan, taking into account inflation. The first issuance of approximately $35,000,000 in revenue bonds is planned for September 2005. Subsequent issuances would occur over approximately a five-year period, and would be planned strategically under the advisement ofMWMC's Financial Advisor. The regional wastewater sewer user rate established by MWMC to cover operations, capital improvements and debt service is proposed to increase by 6% in fiscal year 2005-2006, an increase which equates to about 70 cents per month on an average residential sewer bill. Without the timely issuance of revenue bonds it would require at least a 65% increase in user rates to generate sufficient funds to support the CIP, which equates to an increase of over $7.00 per month on the average residential user's monthly bill. The proposed amendments to the intergovernmental agreement for the Metropolitan Wastewater Management Commission are presented in Attachment A (which is in legislative format) and Attachment B (which is a clean copy for improved readability). These amendments are the culmination of several years of work reviewing the agreement. The scope of the review initially included only changes to align the IGA with changes in operational and physical sewerage system conditions and public policies, which have evolved over the past 25 years. With the adoption of the 2004 MWMC Facilities Plan, review of the IGA was necessarily expanded to support implementation of the Facilities Plan and enable the use of low-cost financing mechanisms needed to serve the metropolitan area for the next twenty years. The majority of the changes proposed in the IGA are related to the need for periodic updates to reflect current operational practices, adopted plans, and metro-wide policy documents. These modifications do L:\CMO\2005 Council Agendas\M050509\S050509C.doc