MINUTES FOR THE STUDY SESSION
ASHLAND CITY COUNCIL
April 2, 2012
Siskiyou Room, 51 Winburn Way
Mayor Stromberg called the meeting to order at 5:31 p.m. in the Siskiyou Room.
Councilor Silbiger, Slattery, Morris, Lemhouse, and Voisin were present. Councilor Chapman arrived at 5:35 p.m.
1. Look Ahead Review
City Administrator Dave Kanner reviewed items on the Look Ahead.
2. Discussion of Draft Water and Wastewater Master Plan.
Public Works Director Mike Faught, provided background on the two-year process that included participation from the Ashland Water Advisory Committee (AWAC), Carollo Engineers, Keller Associates, Economic and Financial Analysis, and Shawn Piggott Associates.
The draft Water Master Plan included a 10-year Capital Improvement Project list, and financial plan that totaled $30.5 million consisting of the following:
New 2.5 MGD water plant $12.0 million
Construct new and upgrade Park Estates water tank 8.7 million
Pipe TID Canal 1.1 million
Construct emergency TAP 2.1 million
Pipe replace/maintenance 6.6 million
Total $30.5 million
The draft Waste Water Master Plan Capital Improvement Project list totaled $10.8 million and included:
Shading (tree planting) $ 1,646,000
New pipes that will parallel Bear Creek 1,248,000
New oxidation ditch at the WWTP 4,000,000
Relocate the effluent outfall pipe to Bear Creek 856,000
Pipeline replace and system maintenance 3,041,000
Water Master Plan
AWAC looked at three options for peak demand, 1) Construct new backup Water Treatment Plant and TAP Partial Intertie at a total of $30.5 million, or 2) Construct full TAP for $28.8 million, and 3) Upgrade the existing Water Treatment Plant for $18 million. Of the three, AWAC recommended option number one.
The 1998 study forecasted peak demand issues by 2016 that could change to 2018 due to conservation efforts. Even though population projections in the study were 1.4% and the actual was .7%, it would not significantly change forecasts and staff anticipated peak issues at 2018.
Mr. Faught was not sure what the City of Medford would charge to connect to Talent Ashland Phoenix (TAP) Intertie Pipeline for emergencies. Staff was currently working with the City of Medford on the feasibility of connecting to TAP, and defining what constituted an emergency.
Option 1 would take 5-6 years to complete the larger projects. Shawn Piggott from Shawn Piggott Associates explained how the inflated cost for the 10-year CIP was $35,480,000. Sixty-four percent of that cost in two years prompted a need for rate stabilization and advanced funding to build up a pool of resources to buy down the rate impact when the City purchased bonds.
David Kraska, the Vice President for Carollo Engineers explained they took into account current water use, and determined the gap between supplies and demand projections with population. Carollo Engineers worked with AWAC on conservation goals and agreed to size City supplies assuming 5% additional conservation with a City goal of 15% conservation. Based on that percentage, the City would need additional supplies by 2038. The 2038 target was partially demand analysis and supply analysis. They based supply analysis on prior drought periods in 1924 and 1928-1931, factored climate changes into the models with results indicating wetter springs and drier summers. If that proved accurate, Ashland would be out of water during September and October and need more supplies. Alternately, if it did not occur and the community was overly conservative, it would push out the 2038 date further. The worst-case scenario for a dry summer would have Ashland using Talent Irrigation District (TID) supplies earlier in larger quantities. If in 10 years climate change did not occur as predicted, the City could work on controlling how much TID water was used and where.
Council noted the cost of conservation in the plan included a half-staff person, and wanted to know if the improvement costs to citizens to reach a 5% or 15% reduction were calculated. Mr. Kraska responded that cost would occur in the next study. Mr. Faught added one option involved SMART controllers for summer irrigation, the toilet rebates had maxed out at this point. Not conserving would increase infrastructure. Conservation efforts applied to summer only, Ashland had met winter use conservation.
Mr. Faught explained the 12% rate increase for 2012 included a 10% base rate adjustment that would increase from $16 to $18 with the net increase as 12% of the overall rate. Mr. Piggott explained as they developed the financial analysis for the Master Plan they tracked Capital Improvement Programs and Operations and Maintenance expenses anticipated during the forecast period. A base rate would help stabilize revenues. In FY 2012, the City experienced a 3% under-recovery related to water sales during spring and summer. FY 2011 under-recovery was more severe at 11%. They identified $185,000 of under-recovery annually and determined a 10% increase would cover that amount yearly and recommended implementing the base rate May 1, 2012. If recovery did not occur, AWAC suggested a rate stabilization fund to defer any under-recovery that may happen. The 10% was a reasonable starting point and no rate should remain static, if the City continued to experience spring rain, they could adjust the percentage. The City was not recovering through irrigation usage and the only way to guarantee recovery was adjusting the base fee. The base rate would be a per meter charge and did not include water used.
Mr. Faught explained for Council that the City currently uses a four tiered rate structure with 30% increments that worked well. Mr. Piggott agreed the system functioned well and added the City could look at similar features and inject those types of policy considerations in the future. It would require a detailed cost of service analysis instead of the revenue requirements analysis developed for the Master Plan. They constructed a revenue requirements model that could overlay a cost of service analysis cost pools by user and function class. Ashland was a large residential area and the only out layer was irrigation usage that created the under recovery. It would require extensive detail. City Administrator Dave Kanner noted it would be prohibitively difficult to have an income test applied to the rates. The preferred way was to establish a fund that offered rebates to those who could demonstrate need based on income for a limited period. Mr. Piggott clarified that the existing structure provided benchmarks for people who conserve and for those with low-incomes.
Mr. Faught reiterated 5% conservation was achievable through sprinkler options and possible connections to TID water where feasible. Mr. Piggott further explained if Council only implemented the 10% flat rate, it would not meet the Ending Fund Balances.
Council requested staff to include alternatives of No Change or Do Nothing Options in both Master Plans with points regarding redundancy and its importance.
Mr. Faught addressed the 600-acre water right with TID and that staff was proofing beneficial use of water to increase water rights. Mr. Kraska added that the City currently had 795 acres, plus the 600-acres for emergency use. Staff was confident the City would gain additional rights. The study did not look at increased TID rates.
Waste Water Master Plan
James Bledsoe the Project Manager and Principal of Keller Associates explained that the City wanted to be in a position to maintain their assets. This would require some type of allocation of either debt service or a sinking fund and is addressed in the Waste Water Master Plan. At the Waste Water Treatment Plant (WWTP), they looked at replacement needs and calculated them into the Capital Improvement Plan. For the collection system, they built budgets that were target values for developing an ongoing rehabilitation plan. The cost was high and it would take many years to implement as well as a 10% rate increase annually for the next five years to cover the larger projects. The goal was 2022 when the City retired the largest debt that averaged an annual $2,000,000 obligation. At that time, they would be able to dedicate funds to replace the collection system infrastructure. They estimated $700,000 a year should go into the collection system for maintenance and currently the City was spending less than $200,000 a year. Pipes tended to have a 75-year life expectancy, some of the pipes in Ashland were 75 years old. Mr. Faught added they currently spent approximately $460,000 annually for pipe replacement. Having adopted Master Plans would allow the City to apply for low interest loans and grants.
Mr. Bledsoe explained infiltration and the oxidation ditch process. The project was a large capital improvement that needed to occur over the next 10 years and the City should not delay. However, the City could delay others phases after the initial 10 years.
Conservation reduction in the WWTP would help but was not nearly as substantial as the waterside due to the infiltration and inflow component. Using gray water would decrease flow. Membrane technology was improving and it was likely to extend membrane functionality over 15 years. Ashland was innovative when membrane technology first occurred.
3. Discussion of City Council goals for FY 2013.
Mayor Stromberg explained that City Administrator Dave Kanner colored coded the Goals and Objectives document from the Council Retreat February 11, 2012. Non-highlighted items Council agreed to, yellow highlighted items Council did not discuss, and green text items were where one or more Councilor’s doubted Council agreed to add as objectives.
Goal 1: Diversify the economic base of the community
Objective 1: After Chamber Business Retention and Expansion survey is complete, provide a plan where necessary to take actions to address issues identified in Chamber’s survey to assist with local business retention and expansion. (Green text – one or more Councilors doubted Council agreed to add)
Planning Director Bill Molnar explained the survey was complete and they were compiling results with a report to Council due in June to review results and strategies. The survey would lead to a series of actions.
Council consensus they did agree to the objective.
Objective 2: Update Downtown Plan (Yellow highlight – Council did not discuss during Goal Setting.)
Council agreed they did not discuss the item, was interested in having a plan, but questioned how it would diversify the economic base. It could go into the Goals as an action item.
Council determined they needed more time to review the document and directed staff to set up a special Study Session for the following Monday, April 9, 2012.
Meeting adjourned at 7:08 p.m.
Assistant to the City Recorder