Wednesday, February 22, 2012

Ogden Water Consultants Recommend $20 Million in New Bonds and a 60% Rate Increase Over the Next 10 Years - Updated

If further water infrastructure needs remain unaddressed, they should be funded from BDO revenues, wethinks

To kickstart this morning's WCF discussion, we'll put the focus on last night's Ogden City Council Work Session, where issues relating to Ogden City's water system were broadly reviewed. Briefly, we've excised the following segment from last night's council packet, which describes the range of last night's council discussion. Not only did the Council discuss the currently pending water rates study, but it examined the City's water system projected infrastructure needs well into the future:
  • To review status of the Utility Rates Study
  • To review the financial obligations of maintaining a quality water utility system

The purpose of the work session is to provide a status update regarding the Utility Rates Study and to begin the discussion of what will be required financially to maintain a quality water utility system as the City moves forward. The discussion will include reviewing financial implications of the major capital projects identified in the Capital Improvements Plan and the City’s master plans, to review the financial conditions necessary for potential future bonding and to maintain the highest bond rating, and to review requirements for operation and maintenance of the utility system.

Laura Lewis and Cody Deeter from Lewis, Young, Robertson and Burningham will be leading the discussion and will be presenting the information to the Council. Ms. Lewis and Mr. Deeter will be presenting several financial scenarios to allow the Council to better understand the financial obligations the City may have and to review the potential options for funding a quality water utility system. The focus of the discussion will not be on changes to the rates structure but rather on the financial obligations of maintaining the level of service the Council feels is appropriate. Discussion on specific rates and how the costs may be shared among users will be the focus of future meetings beginning with the March 6, 2012 fact finding work session.[Emphasis added].
Upon our earlier examination in advance of last night's meeting, we'd expected this meeting to be something of a "snoozer." Unfortunately this was not the case at all, as we learned last night in one of our lower comments sections, wherein one alert WCF Reader (who else but Dan Schroeder?) who'd sat in on last night's meeting, provided this sobering heads up:
Breaking news: Water consultants are telling city council to issue additional bonds for capital improvements and repay the debt with significant rate increases in coming years. The scenario that's being shown now would involve $20 million in new bonds and a 60% rate increase over the next 10 years. Keep in mind that Ogden's water rates are already higher than those of virtually all other northern Utah cities.

...Slight correction: Looks like the eventual rate increase would be only 55%.
Gentle reader Dan is right, of course. As we reported on WCF last week, Ogden's water rates are already higher than those of virtually all other northern Utah cities.

Hoping that the Standard-Examiner would flesh out a few more facts on this topic, we checked out this morning's S-E article, which was unfortunately no help at all on this new water rates issue:
Alas, S-E reporter Mitch Shaw missed this issue entirely, possibly because he ducked out on the council work session before the water rates discussion came up.

As a consequence, we've done a little additional fact gathering this morning, and here's some additional info, obtained through reliable sources close to city hall, although the underlying facts still remain a trifle thin:

The $20M new bonding for water system improvements, repaid by increasing rates about 55% over the next 10 years, would consist of improvements which would be mostly for the water treatment plant and flow/pressure upgrades.

That's right, folks, despite the last wave of water system bonding, ($49.1 million, to be exact, which occurred only in 2008), our local bureaucrats already seem to be getting in gear to pile on more public debt, with a new scheme to hit the rate payers with higher and higher fees.

We dunno, folks. Wouldn't it make more sense to start tapping the Business Depot Ogden Cash Cow to fund these incessant infrastructure improvements? Wasn't it the original intent of Glen Mechem's mayoral administration in obtaining the BDO federal "land grant" to use the revenues derived therefrom to fund Ogden City's infrastructure needs?

Under Boss Godfrey's administration we got into the bad habit of allowing Godfrey's "A" Team to use BDO revenue to fund every half-baked Boss Godfrey plan, scam or money-losing project under the sun.

It's time for the Caldwell Administration to do an abrupt about-face, no?

If further water infrastructure needs remain unaddressed, they should be funded from BDO revenues, wethinks.

One thing's definitely sure... we'll be turning our attention to council developments for the upcoming "March 6, 2012 meeting", where the council will further "discuss and review the implications of the financial approach determined on February 21, 2012 on the base rate and tiered structure."

Update 2/23/12 8:00 a.m.: One of readers has transmitted to us the following spreadsheet and graphs, showing what the consultants proposed to the council on Tuesday night:
For some reason the spreadsheet doesn't show all the rows that are in the original hard-copy printout. The hidden rows show more detail on the revenue and debt service, and then itemize the proposed capital projects. For the next 5 years, the capital projects would be:
  • $13.13 million for the water treatment plant
  • $1.05 million for storage projects
  • $12.26 million for distribution fire flow and pressure projects
  • $2.5 million for pipe replacement
  • $9 million for canyon pipeline rehab project
  • $3.03 million for meter replacement
Comments, anyone?


good_reader1 said...

How about looking at city owned property and leased back at under market values, say like "The Junction". Where is the independent audit of money coming into the city coffers. Is the water funds the old mayors slush fund?

Isn't the Lewis company the same that Godfrey used, lets get some new contracts out there

Oggie said...

Just a year ago, the city had lots of extra money on this water bonding fiasco, due to falling interest rates.

Today, they need twice as much money, according to their corrupt consultants.

It's the developers who are driving this show.

They want the pipes and tanks laid in, so the bench can be bulldozed and condo'd out on the cheap.


blackrulon said...

Just before he left office Matthew Godfrey proposed lowering rates on city water to users who did not have a secondary water connection. Was that wish for lower rates simply out of the kindness of his heart or was it a desire to lower rates for industrial users prior to the release of the study reecommending  increased bonding and a general rate increase?

Ogden resident said...

Lewis, Young, Robertson and Burningham were the consultants that put together the city’s last water rate structure and they blew it badly. They missed all sorts of obvious considerations and as we witnessed the city has been dealing with their mess ever since. Why the city would be using them again leads me to believe that they are close to someone in the city administration rather than because they are competent.
As for what the city is proposing, all of these now proposed projects were known about before previous round of bonding but were not brought forward because the previous administration wanted the tanks at the top of 36th street gone and came up with an expensive way of doing that. They developed an overpriced and oversized tank that was built and buried into the side of the mountain. At least 5 million dollars more was spent than what could have been done to solve our minimal water storage issues at that location. The previous administration IMHO was keen on seeing the old tanks removed so that someone someday could develop the property on the location where those tanks once stood.
It would appear the previous administration used the excess revenues developed within the original rates developed by Lewis, Young, Robertson and Burningham to fund the administration’s pet business development projects. Upon the administration’s leaving they tried to close that door (funding source) behind themselves when they recommended rate reductions. Had the previous administration been serious about addressing the city’s water infrastructure needs these projects now on the table would have been addressed then and were wouldn’t have carelessly spent the previous bonding funds.
Without a doubt the pipeline from the water treatment plant to the mouth of the canyon should be on the top of the list. One of the two line is barely hanging on and without it the city would have a serious problem serving the resident. The next project on the list should be pipeline replacements where in the city would replace or double up lines that feed into the city from our water storage reservoirs (don’t know if this is their $12.26 million for distribution fire flow and pressure projects or their $2.5 million for pipe replacement from the water storage reservoirs). As it is now the city has a hard time moving the volumes of water needed to the residents especially in emergencies situations such as fires. The treatment plant would be next, followed by the other projects.

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