Get ready to pay, Ogden residents!
By Dan Schroeder
Tonight’s city council agenda is a busy one. First comes a special session to approve the mayor’s appointment of a still-unnamed individual as Ogden’s new Chief of Police. Then comes an RDA meeting to approve the development agreement with Boyer Company for the new IRS building. (The agreement basically pledges $500,000 in tax increment, to be collected over the next five years, to Boyer.)
After these formalities, the council will hold yet another work session to discuss the utility systems. Readers will recall that last week, council members held a public hearing on utility rates and got an ear full from unhappy citizens. Tonight, the council will hear the administration’s pitch for funding $180 million in utility infrastructure upgrades. Needless to say, this cannot be done without raising utility rates even higher.
Since the work session agenda packet weighs in at a whopping 120 megabytes, I’ve extracted its most important parts and packaged them as two smaller files. The first piece includes the council staff summaries of the water and storm sewer “master plans,” along with the administration transmittal letters and the draft council resolutions that would approve these plans. The second piece is the water system master plan itself, minus the lengthy appendices and some large maps (removed to keep the file size below 10 megabytes).
The most expensive piece of the proposal by far is a systematic replacement of the city’s water pipelines over the next 40 years, at a total estimated cost of $129 million. Fortunately, this replacement doesn’t have to be done all at once. In fact, the replacement program can be postponed several years with little harm. But it cannot be put off indefinitely, and the city absolutely needs to start planning now.
More urgently, the proposal includes three major water system upgrades over the next five years: a major upgrade to the water treatment plant near Pineview Dam ($9.8 million); replacement of the pipeline in Ogden Canyon ($9 million); and a long list of “distribution and fire flow” improvements throughout the city ($12.3 million).
The council has known for years that the treatment plant upgrade would soon be necessary, but chose in 2007 to postpone this project and leave it unfunded at that time. It’s perplexing, though, that the minutes of the council meetings in 2007 don’t mention any other urgent, unfunded water projects. I’m trying to learn more about why these needs are seemingly coming out of nowhere.
Also perplexing is the cost of the treatment plant upgrade. The new master plan puts the cost at $9.8 million, but the staff summary puts it at $13.1 million. I’ve been told that the difference represents additional work in or near the plant that the city engineer has requested. Let’s hope the council will scrutinize this additional request carefully. Perhaps, though, the council will be relieved that the request is still far less than what they were apparently told in 2007, namely $46.6 million.
After the first five years, the biggest proposed expense becomes pipe replacement. But there is one other line item that merits extra scrutiny: a $3.7 million request for digging some new wells to augment Ogden’s water supply. The master plan clearly states (on page 60) that these wells won’t be needed for 20 years, yet includes this line item in the budget for years 6 through 10.
The timing of projects is important, because it determines the extent to which the city must borrow money to pay for them. Over the long term it’s much cheaper to pay cash, but there may be no way to raise enough cash for the short-term needs. That’s why the city borrowed $50 million for water and sewer projects in 2008, and we’re now paying about $2 million per year just to cover the interest on those bonds. The city’s consultants are now proposing another $34 million in bonding and a corresponding increase in interest paid.
Will the city council go along with the consultants’ proposal to borrow another $34 million? Or will they work to fund more of the needed projects with cash and thus lower Ogden’s interest payments—and residents’ utility bills—over the long term? The answer will depend on whether they hear from more of their constituents:
Update 3/13/12 6:55 p.m.: Heads up, people. Dan S. is now live blogging from the City Council Chamber. Click "comments" to follow his real-time remarks.
