No New Rate Increases for Additional Water Projects?

Wicks asks pressing questions; administration provides some answers.

By Dan Schroeder

At least one Ogden City Council member is asking some good questions about the $30 million increase in planned water infrastructure spending over the next ten years. Councilmember Amy Wicks submitted a list of nine written questions shortly in advance of last Tuesday’s work session, and received nine short answers on Friday:

• Questions and answers on water utility master plan amendments

One of the answers will come as good news to Ogden utility ratepayers: “It appears that rate increases outside those already accepted will not be necessary.” Though this statement is tentative, it is consistent with the results of my own financial analysis. (The “already accepted” rate increases include a 3.5% hike this July plus annual increases for inflation.)

In another of its answers, the administration suggests that additional bonded debt may be in the water utility’s future, when it comes time to spend an estimated $17 million to replace the 36-inch pipeline in Ogden Canyon. This is the larger and newer of two parallel canyon lines, first installed in 1937; the older 24-inch line was replaced last winter. The administration and its consultant are now recommending that the 36-inch line be replaced within six to ten years, whereas the 2012 version of the master plan put this project in the 11- to 40-year time frame.

My own analysis indicates that all of the proposed water projects, including the 36-inch line replacement, can be completed without any new bonds. Then the water fund would keep its debt interest payments from growing yet again, and could reduce rates (or forgo inflationary increases) after the end of the ten-year period of intensive upgrades.

However, the administration and its financial consultants (LYRB) seem to favor paying for projects with bonds, rather than dipping into the water fund’s cash balance. That balance stood at nearly $10.7 million last June and should reach approximately $15 million by this June. The cash is earning less than 1% interest, while the water utility is paying 4.45% interest on its most recent bonds.

The administration’s unwillingness to spend this cash is also reflected in another of its answers, in which it explains that “available funding” dictated the relatively modest capital spending rate of only $4.3 million per year over the first five years of the new plan. This is less than the rate at which surplus cash will accumulate in the water fund, thanks to the recent rate increases. Under the proposed plan, I project that the cash balance will reach $20 million by 2019.

Of course the administration won’t rely on my financial projections, or even try to do its own. Instead it is again retaining consultants LYRB to update the projections they did two years ago. (Those projections weren’t very accurate: they under-estimated the June 2013 cash balance by $4.7 million. This low estimate contributed to the city’s decision to issue new bonds, with LYRB as its paid financial advisor for the bonding process.) The council will have to wait a few more weeks to see the revised LYRB projections, and to discuss the water fund’s current cash position.

Wicks’s final question concerns two proposed new wells on the west side of the Wasatch Range. The city’s engineering consultant originally projected that these wells would be needed to meet growing demand in about 18 years (from now). Furthermore, the city recently achieved some unanticipated water savings by replacing the leaky 24-inch canyon pipeline. The administration, however, asserts that the two new wells should be dug only six years from now, “for both source redundancy and capacity.” There is no mention, in the proposed master plan revisions, of the possibility of avoiding the need for new wells through water conservation.

Oops! $30 Million of Further Ogden City Water Infrastructure Repairs Needed - Updated

Old projections now obsolete, yet council members seem unconcerned

By Dan Schroeder

Less than two years after they approved a comprehensive master plan for upgrading the city’s water infrastructure over the coming decade, Ogden City Council members were told Tuesday night that the plan needs major revisions. Water Department manager Kenton Moffett and consultant Cliff Linford of Sunrise Engineering stated that many of the city’s water pipelines are in worse condition than they had thought, and recommended adding more than $30 million of further repairs and upgrades to the ten-year plan.

Sunrise Engineering developed the current water master plan in cooperation with the city administration during 2011. The plan called for $26 million of infrastructure upgrades during the first five years, $19 million over the next five years, and about $4 million per year thereafter for the next 30 years.  The city council debated the plan for dozens of hours during many meetings in the winter and spring of 2012, finally approving the plan, with only minor modifications, in May 2012.

At the same time the council also approved a 10-year financial plan for its utility systems, developed by consultant Lewis Young Robertson Burningham (LYRB).  The financial plan included significant water rate increases for the first few years and more than $22 million in bonding to fund the most urgent water projects: the replacement of one of the city’s pipelines in Ogden Canyon and the replacement of the water treatment plant near Pineview Dam.

Now, however, it appears that the 10-year financial plan will need a major overhaul to include another $30 million of projects. There was no discussion on Tuesday of whether another water rate increase would be needed to pay for the projects, and there was only a passing mention, by Linford, of a possible additional bond. Council executive director Bill Cook stated that more information on the financial implications of the new master plan will be provided to the council in late February. However, he and his staff are pushing the council to approve the master plan itself (though not actually commit any funds to the projects) this coming Tuesday, February 4.

During the discussion Tuesday night, no council members expressed any alarm or unhappiness about the massive increase in planned expenditures, or asked who was responsible for the apparent $30 million error in the 2011 master plan and the resultant waste of everyone’s time. Moffett and Linford explained that the new revisions came out of a detailed analysis of recent leaks in the water system, and that they were unable to prioritize pipeline replacements two years ago because they hadn’t yet put the leak data into a convenient format. They did not comment, however, on their failure in 2011 to accurately estimate even the total cost of pipeline replacements that would be needed during the coming decade.

The good news is that, with careful planning, the city should be able to cover the additional $30 million in expenditures without any further bonding or rate increases. This is the conclusion of my own financial analysis, which incorporates the city’s newly released financial data from fiscal year 2013. As I predicted in 2012 and pointed out again last summer, the LYRB financial plan significantly under-estimated water revenue and over-estimated operating expenses. The rate increases approved in 2012 were higher than was needed to cover the infrastructure repairs planned at that time, but seem to be just enough to cover another $30 million by 2024. I predict, though, that “just enough” won’t be good enough for the city administration or LYRB, so they’ll be asking the council to approve yet another bond and rate increase in a few years.

The proposed master plan revision actually calls for a reduction in spending after 2024, because many of the pipe replacements formerly planned for after 2024 would instead be done sooner. Logically, you would think this would mean that Ogden residents can expect a water rate reduction at around that time, or that the city could accelerate its debt payments for a few years after 2024 and then reduce rates even more. However, there seems to be no way to predict when the administration will unveil yet another surprise in the form of more urgent water system repairs. Also, it seems to be a general rule that utility rates and public debt are on a ratchet that can go only up, not down.

Most of all, the lesson from this fiasco is that the city’s consultants and bureaucrats can make as many errors as they please, and nobody will hold them accountable. The city will keep hiring the same consultants, the bureaucrats will keep their jobs, and the council members themselves will continue to follow along like sheep, doing whatever they’re told, never even complaining about the hours they spend listening to excruciatingly detailed presentations of data that are often misleading and sometimes flat-out wrong.

Update 2/1/14 7:45 a.m.:  The master plan does not appear on the agenda  for this coming Tuesday's council meeting, so it appears that the council leaders and/or staff have changed their minds about the timing. This may or may not be a result of my communications to the council members. - Dan S.

Update 2/3/14 8:00 a.m.: Better late than never, the Standard carries its own Cathy McKitrick story on this topic this morning:

• Ogden City to replace water pipes amid leak data

"I can't comprehend how the consultants could have missed as much as they did. Nor can I understand why the city administration and city council didn't insist on higher standards of accuracy," says Ogden City government watchdog Dan S., in the lower S-E comments section. 

So many questions... so few answers.

Ogden Water and Sewer Bonding Update: Major Campaign Issue Delivered On a Silver Platter

A Weber County Forum Tip 'O the Hat to Councilwoman Wicks, the sole current council member with a lick of common sense

(Translation: Rubber-stamped)

The Standard's Mitch Shaw reports on last night's 6-1 Council vote, whereby an extremely docile and administration-compliant Council majority basically rubber-stamped the Caldwell administration's recommended new top-dollar bonding, authorizing the issuance of  some $18 million in Water and Sewer Utility improvement bonds under the following specific parameters, with council member Amy Wicks being the lone dissenting vote:

The first resolution authorizes the city to pay for a new water treatment plant at the top of Ogden Canyon by issuing $13.4 million in bonds and paying it off over 25 years. The second resolution pays for storm sewer improvements along Harrison Boulevard by issuing $4.7 million in bonds with a 20-year repayment period.

Read Mr. Shaw's full writeup here:

• Ogden finalizes water bond issue

A Weber County Forum Tip 'O the Hat to Councilwoman Wicks, the sole current council member with a lick of common sense.

Write this down...
so you don't forget it!

Congrats to council challengers Pamela Shupe Stevens, Turner C. Bitton, Stephen D. Thompson, Marcia L. White and Courtney Jon White, who've just had a major 2013 Ogden Municipal Election campaign issue delivered by the council incumbents on an engraved silver golden platter, and dropped onto their very laps.

"Opportunity knocks," Ogden City Council challengers.

Update 8/27/13 5:00 p.m.: Thanks to the helpful intercession of Ogden's own "Mayor Mike," the full August 21 Council meeting video is now available for viewing via Youtube:

Ogden City Water/Sewer Bonding Update: Live Blogging From the City Council Chambers Tonight

Ogden Mayor Caldwell: $28 mil sitting in bank; wants to borrow $18 mil more

Big doin's in the Ogden City Council Chambers tonight, as our Ogden City Council continues its consideration of  a "preferred" Caldwell administration proposal which could result in as much as $18 million in combined Water and Sewer Utility  bonding, including much-needed construction funding for a new water treatment plant for the Water Utility.  Tonight's the night that the council will hear public comments on the Mayor's preferred proposal, along with at least five other Council-requested options set forth below.  As an added bonus, O Weber County Forum political wonks, we're delighted to report that Ogden City watchdog Dan Schroeder has just now confirmed that he'll "be there and can provide some live coverage." For a brief overview of the various options on the Council table, we set forth the "essentials" below, gleaned from tonight's council packet:

The Council will hold a public hearing to accept input on issuance of  bonds to fund the water treatment plant and various water distributions projects and various storm water projects, including the Harrison Boulevard project.

Sewer and Water Revenue Bonds-Water Treatment Plant
Bond Parameters Resolution 2013-19 set the parameters for funding the2013 Series Bonds. The parameters for the bonds are as follows:

• Not to Exceed Amount: $15,500,000
• Not to Exceed Interest Rate: 6%
• Not to Exceed Term: 35 years
• Not to Exceed Discount: 3%

The Parameters Resolution set a cap on the amount, interest rate and term. However, LYRB estimates that actual bond amounts and interest rate will be much lower. The Administrative Transmittal set forth the Administration’s original recommendation. It set the actual approximate amounts as follows:

• Actual Approximate Amount: $13,700,000
• Actual Approximate Interest Rate: 4.7%
• Actual Term: 30 years

Approximate Issuance Costs: $360,000
Repayment of the debt service of $850,000 annually would come from the water utility.

At the Council’s request, the Administration provided other options for the Council’s consideration as follows:

Click to enlarge image

Storm Sewer Revenue Bonds – Harrison Boulevard Project
Bond Parameters Resolution 2013-20 set the parameters for funding the 2013 Series Bonds. The parameters for the bonds are as follows:

• Not to Exceed Amount: $5,500,000
• Not to Exceed Interest Rate: 6%
• Not to Exceed Term: 25 years
• Not to Exceed Discount: 3%

The Parameters Resolution set a cap on the amount, interest rate and term. However, LYRB estimates that actual bond amounts and interest rate will be much lower. The Administrative Transmittal indicates that actual bond issue will be as follows:

• Actual Approximate Amount: $4,700,000
• Actual Approximate Interest Rate: 4.12%
• Actual Term: 20 years
• Approximate Issuance Costs: $180,000

Repayment of the debt service, which will be approximately $340,000 annually, will come from the sewer utility.

Tonight's council meeting will kick off promptly at 6:00 p.m.  If you can't make it to the Council chambers tonight, do the next best thing, and tune into Weber County Forum for Dan Schroeder's ever-informative live blogging.

With something like $28 million in city Water and Sewer funds drawing a measly 1% interest, will the City Council nevertheless simply rubber-stamp the Mayor's "Borrow to the Max" approach?  Or will the City Council, during the 2013 Municipal Election season, avoid the ire of the lumpentaxpayers, tap into the Mayor's ridiculously bloated $28 million "slush fund," and instead adopt a more fiscally-manageable "common sense" approach?

We guess we'll find out tonight, eh, folks?

Update 8/20/13 5:49 p.m.:  Eureka, WCF readers.  Dan S. has just now logged into Weber County Forum, and is now live-blogging from the City Council Chambers.  Click "comments" to read Dan's real-time posts!

Standard-Examiner: Ogden Council to Address Bonding for Water Treatment Facility

Big Debt faces off versus Common Sense

Mark your calenders, folks. As a followup to our most recent article on the subject, the Standard carries a story this morning, announcing to its print readership, in advance, Ogden City Council's previously set public August 20 public hearing, concerning the Caldwell administration's proposed $18 million water/sewer capital improvement bonding:

• Ogden council to address bonding for water treatment facility

Borrowing "to the Max"

S-E reporter Mitch Shaw has even done some additional "sleuthing" on the subject, and reveals that despite calls for financing some portion of these repairs from some $28 million (not the mere $10 million which Mr. Shaw reports) which is sitting mostly idle in the Water and Sewer Uitility Funds' bank accounts,  the Caldwell administration remains steadfast in seeking to run up the city's prospect bond debt "to the max," at the highest possible principal loan amount, over the longest possible repayment term:

“A lower bond amount or shorter term would save the city interest over time,” reads a letter issued Thursday by the city’s Public Services Department.
“However, the benefits of such savings are currently outweighed by the capital needs of the water utility.”
Because the full amount of the bond was planned for in the city’s financial sustainability plan, the mayor and the Public Services Department believe that increasing the number of projects to replace leaking pipes and addressing other projects identified in the master plan will actually provide a better return for the water utility than reducing any debt costs associated with the term or amount of the proposed water bond.
The city council is also considering a $4.7 million storm sewer bond that would come with an interest rate of approximately 4 percent and would be paid out over 20 years.

We'll sdd that we're delighted to observe the Standard finally getting ahead of this important story, for once, at least.

Down in the lower SE comments section, we're also delighted to find that Ogden City Political Watchdog Dan Schroeder has already chimed in with his own views on this "thorny" subject:

When the financial sustainability plan was put together last year, the city's consultants predicted lower revenues, higher expenses, and lower interest rates. Now we know better: higher revenues and lower operating expenses have allowed the water fund to accumulate more cash than expected. On the other hand, interest rates have increased so borrowing money is less affordable. The city would be foolish not to adjust its plan in light of these changed circumstances. That means spending the accumulated cash and borrowing less.

Thus the stage is set; and the battle lines are drawn:

Big Debt v. Common Sense

Keep your eyes on Weber County Forum this coming Tuesday, where we'll devote a dedicated new article to the City Council arena bonding battle which is brewing between the lumpencitizen-driven forces of  Fiscal Common Sense vs. the bureaucratic advocates of Big Government Debt.

And yes.  We do believe that the current council's treatment of this issue could become an important 2013 Ogden Municipal Election issue, depending on how the council incumbents handle it.

Update 8/16/13 9:00 p.m.: Thanks to a tip from yet another sharp-eyed and alert WCF reader, we provide this online Question and Answer sheet, elaborately setting forth the Caldwell administration's surprisingly flimsy "rationale" concerning this matter:

• 2014 Water and Storm Sewer Bonds Questions and Answers

Ogden Council Set to Discuss $18 Million Utility Project Bonding at Tonight's Work Session - Updated

Ogden City Administration continues to push for bond financing of the "whole $18,921,773 enchilada" even on the eve of the 2013 Municipal Election

As a followup to our July 29 and July 31 WCF articles, wherein Dan Schroeder reported on the inexorable progress of the Ogden City Administration toward $18 million in new water and sewer infrastructure bonding, we'll provide a quick heads-up regarding tonight's Ogden City Council work session, where the council will "Discuss Various Options Proposed for Bonding," as more particularly set forth as the last item in tonight's Council Packet. Here's a screenshot of the series of water utility "options" which will be discussed tonight, with the Administration's preference prominently highlighted in yellow, presumably to keep our City Council on the legislative "straight and narrow," we suppose:

And here are the Administration's suggested parameters for the sewer bonding:

So amidst all the talk about financing some portion of our water and sewer utility improvement expenses from the $28 or so million we have sitting in the bank, drawing a measly 1% interest, the Administration continues to push for bonding the "whole $18,921,773 enchilada," at an interest rate which even our esteemed "financial advisor," Lewis, Young, Robertson, and Burningham, "estimates" could be as high as 6%.

Although these proposed bonding matters have indeed been set for additional public discussion for August 20, having observed the council's aggravating pattern of making their decisions at the "work session level," we do express our concern that a council majority will already have their minds made up even before Ogden lumpencitizens have enjoyed the "formal" opportunity to chime in on the issue.

There's no word whether Dan S. will be available for live blogging tonight; but we'll be keeping a close eye on the results of tonight's work session in any event, particularly in view of the ongoing 2013 election, wherein we have the strong sense that the financial prudence of these current bonding proposals could very well develop into an important campaign issue.

Update 8/6/13 5:59 p.m.:  Dan Schroeder is now live-blogging from tonight's Ogden City Council Work Session! Click "Comments" to read Dan's real-time posts.

Update 8/7/13 6:30 a.m.:  A public hearing on the bonds has been set by the City Council for August 20.

City Council Meeting Special: Live Blogging From the City Council Chambers Tonight - Updated

$18 million water infrastructure bonding proposal on the agenda

We just received some good news from Dan Schroeder a couple of minutes ago, regarding tonight's Ogden City Council Meeting, wherein the Ogden City Administration's $18 million water infrastructure bonding proposal, which was the subject of  Dan's WCF writeup of yesterday, will be discussed and put to a Council vote.

Just to get you all into the spirit, here's a (slightly generic) video lead, which we nevertheless believe to be a highly suitable prelude for a council meeting of such importance as tonight's Ogden City "legislative branch" meetup:


Pull up your Barcaloungers and pop up your Oville Reddenbacher's folks...

Meeting kicks of at 6 p.m. sharp!

Look to our comments section, to read Dan's realtime posts.

Happy day! We have Dan's live blogging from the Ogden City Council Chambers tonight.

Update 7/31/13 6:30 a.m.:  The Standard's Mitch Shaw provides a morning report of last night's meeting, noting, among other things, that "... for the water plant bond, both the total amount of the bond and the number of years it will be repaid could change before the bond issuance is finalized after an Aug. 20 public hearing on the matter":

• Ogden OKs bond resolutions for storm sewer repairs, new water plant

Thus there's still one more chance to lobby your council members to minimize the total debt to be bonded and interest to be accrued, people:

• Contact Ogden City Elected Officials

And with November's 2013 Municipal Election polling fast approaching, Ward 3 council challenger Turner C. Bitton demonstrates his attention to important Ogden City issues and chimes in with last evening's water infrastructure bonding-topical press release:

• Ogden Council candidate blasts proposals for water bonds

Additional thanks to Dan Schroeder for his dogged gavel-to-gavel coverage of last night's meeting.

Update 8/4/13 2:00 p.m.:  The full Council video is now available for viewing:

• Ogden City Council July 30 2013

Ogden Council Poised to Borrow $18 Million for Utility Projects

Sole purpose of new debt is to maintain even larger cash balance in case of “emergency”

By Dan Schroeder

The Ogden City Council will vote this Tuesday on the proposed bonds that were discussed at its July 9 work session. The bonds are intended to fund a new water filter plant below Pineview Dam ($11.6 million), some smaller water infrastructure projects ($1.8 million), and a series of storm drain improvements to alleviate storm water hazards on Harrison Blvd. ($4.7 million). These bonds would add to the utility funds’ existing debt of approximately $60 million.

Nobody is questioning the importance of these utility infrastructure projects. But at the July 9 work session, several council members wisely questioned the idea of paying for them with borrowed money, when the utility funds have more than enough cash already sitting in the bank. City treasurer Mike Goodwin stated on July 9 that the water fund balance was currently at approximately $11 million, while the sewer and storm drain fund was at approximately $17 million. He further stated that these cash reserves are held in a variety of investments that earn from 0.5% to 1.25% interest.

Thus, the city administration is proposing to borrow approximately $18 million at 4 or 5% interest, for the sole purpose of maintaining an even larger cash balance that’s earning approximately 1% interest.

The council’s agenda packet for this Tuesday (relevant pages excerpted here) shows a few further details and minor changes to the proposal.

First, to partially address the council’s concerns, the staff are now offering four different borrowing options for the water portion of the bonds (see Council Staff Review, page 3). The three new options would reduce the water bond amount from $13.4 million to $11.6 million, or reduce the repayment period from 30 years to 20, or both. Making both changes would reduce the total interest payments from about $11 million to only $6 million (not including the interest on the storm drain bonds).

Second, staff have provided some updated numbers for the current financial position of the water fund (see pdf page 9, numbered 4 on the page). Apparently the water fund balance stood at $10.2 million at the end of June, somewhat less than Goodwin had informally indicated on July 9. Furthermore, the city is making an emergency expenditure of $1.4 million to replace the pipeline that recently ruptured near the mouth of Ogden Canyon and temporarily closed Highway 39. (I’m not sure why this long-overdue pipeline replacement wasn’t already in the city’s near-term plans.)

On the other hand, the water fund had an operating surplus of $3.2 million for the most recent year, and another rate increase of 7%, approved in May of last year, just took effect this month. So by the time the bills for the filter plant come due in 2015, the fund should have accumulated several million dollars more.

(The council packet does not include any updated information on the cash balance of the sewer and storm drain fund—only budget projections that are now out of date.)

So again, why would the city borrow money at 4 or 5% interest, just to maintain an even larger cash balance earning only 1%?

The council actually adopted a resolution last year that endorsed the concept of maintaining large cash balances. At that time, the justification provided by the city’s financial consultant (Laura Lewis of Lewis, Young, Robertson, and Burningham) was that large cash reserves look good to investors, making it possible for the city to borrow money at lower interest rates. In other words, the reason to borrow the money, rather than paying for the projects with cash, is so the city can get a lower interest rate when it borrows the money.

Lewis did not repeat this line of circular reasoning on July 9. Instead she pointed out that if the city uses up all its cash reserves and then an emergency repair needs to be made, the interest rate on an emergency loan or bond would be relatively high. Nobody in the room gave an example of what sort of emergency expenditure they thought the city might expect to make.

Even if the city forgoes the bond and pays for the filter plant and other projects with cash, the total balance in the utility funds should should never drop below $10 million. And the city’s utility infrastructure is widely dispersed, so it’s hard to imagine an emergency that would cost more than a couple million dollars in the short term. (The $1.4 million pipeline replacement near the mouth of Ogden Canyon is an excellent example.)

I recently asked a couple of council members what sort of disaster they have in mind that might cost the city more than $10 million in emergency repairs. The only scenario they’ve mentioned is the potential failure of Pineview Dam, perhaps due to a major earthquake. Geologists estimate that major earthquakes on the Wasatch Fault occur on average every 300-400 years. In such an unlikely event, it is highly probable that Ogden’s utility systems would be eligible for federal grants that would cover at least 75% of the cost of replacement.

Lewis, Young, et al.,
Taxpayer Leeches
"Financial Consultants"

So I’m still at a loss to understand the motivation behind these proposed bonds, which would ultimately cost the city about $10 million in net interest payments (plus or minus a few million, depending on the option chosen and the actual interest rates obtained). That’s $10 million that the city could instead spend on other needed infrastructure upgrades in coming years—or refund to the citizens in the form of lower utility rates.

But it’s quite clear that the Caldwell administration is behind this bonding proposal—as is its consultant, Laura Lewis. Lewis’s firm would presumably act as the city’s “financial advisor” on the bonds, and (according to the final page of the packet excerpt) receive a fee of 0.4% of the amount borrowed, or about $70,000.

City Council Notes: Ogden Considers Water Bonds for More Than $18 million - Updated

With three Ogden Council incumbents running for re-election in the 2013 Municipal Election, it'll be fascinating to observe where the Council goes from here, won't it?

A cool $18 28 mil in the bank

As a followup to last night's Ogden City Council work session, wherein the Ogden City Council discussed the prospect of issuing a total of as much as $21 Million in new bonding to fund a proposed Ogden water treatment plant and various storm water projects, the Standard's Mitch Shaw breaks the bad news to its print readership that the Council has set a hearing on July 30, 2013 to consider going even further into hock, even though Ogden City already has a total of at least $18 28 million (in "emergency money," so-called) currently sitting idly in its water and sewer funds:

• Ogden considers water bonds for more than $18 million

Ogden City water utilities watchdog Dan Schroeder hits the nail squarely on the head, wethinks:

The elephant in the room here is that the water and sewer funds have approximately the same amount of cash, just sitting there, probably earning only about 1 percent interest,” Schroeder said. “According to the projections that (Ogden water rate consultant Lewis, Young, Robertson & Burningham) made last year, the cash as of now should be over $18 million. For the life of me I can’t figure out why anyone would borrow money at over 4 percent interest when they have the same amount sitting there in the bank earning only 1 percent.

Apparently at least some math-capable Ogden Councilmembers are also on the same page as Schroeder: "Council members Amy Wicks, Susie Van Hooser and Doug Stephens asked Laura Lewis, with LYRB, the same question," Mr. Shaw reports.

“I’m not proposing that we suck the fund dry. But if we have a lot of cash on hand, it might make sense to come to some sort of compromise where we aren’t bonding for so much,” adds the ever level-headed Councilwoman Wicks.

With three Ogden Council incumbents Bart Blair, Neil Garner and Doug Stephens running for re-election in the 2013 Municipal Election, it'll be fascinating to observe where the Council goes from here, won't it?

"Do the Math," LOL!

Update 7/10/13 12:03 p.m.:  Via the ever-diligent Ogden political watchdog Dan Schroeder, we now learn that the cash balances are actually "$11 million in the water fund and $17 million in the sewer fund," so it's a cool $28 million total which Ogden City has "parked" (nearly interest-free) in these respective City "emergency slush funds." Moreover, inasmuch as the new prospective bond is expected to be for $18.4 million, our ever-wise City Council "critters" could actually "forego the bond [entirely] and still have about $10 million left as a cash cushion against future emergencies."

Go figure, heheheh....

Standard-Examiner: Scar From Water Pipeline On Mountain Above Ogden Temporary, Officials Say

"Not to worry," sez Ogden City Engineer Justin Anderson

As a followup to Dan Schroeder's highly informative and timely 9/4/12 WCF post, the Standard gets the word out to its print edition readership concerning the ugly "scar recently seen on the mountainside behind Weber State University":

• Scar from water pipeline on mountain above Ogden temporary, officials say

"Not to worry," sez Ogden City Engineer Justin Anderson. Thanks to the planned re-seeding efforts of Ogden City and the U.S. Forest Service, the mangled vegetation will ultimately grow back.

We'll see, won't we.

Water Pipeline Installation Underway

Line will connect 36th Street tank to 46th Street tanks.

By Dan Schroeder

If you’ve looked up at the foothills in the vicinity of 36th Street lately, or hiked in that area, you’ve undoubtedly noticed the new scar just south of Strong’s Canyon. This is the alignment of Ogden City’s long-planned water transmission line between the 36th Street and 46th Street tanks.

The purpose of the new transmission line is to connect the main Ogden City water system, which serves most of the city, to the city’s portion of the Weber Basin culinary water system, which serves the southern end of Ogden. Once it’s completed, the new line will allow the city to move water between the two systems, providing more flexibility in using the two water sources, and some redundancy in case one source or the other is interrupted. This project is being funded by proceeds from the 2008 water and sewer bond.

The pipeline begins at the pump house just below the new 5-million-gallon tank above 36th Street, behind the southeast corner of the golf course. Its route then crosses Strong’s Canyon, turns up-slope, and climbs to the Bonneville shoreline level on property owned by Weber State University. It then turns and follows the Bonneville terrace southward, staying mostly above the old double-track trail. My understanding is that the pipeline will follow Beus Drive and Spring Road through the Beus Hills subdivision. As of two years ago, the preferred route from there dropped down to Skyline Parkway and then south to 46th Street.

Here is an old map, from the city council’s meeting of August 10, 2010, showing the four alignments that were then under consideration (click to enlarge):

At that time the preferred alignment was number 2, shown in green. The new scar seems to be a bit north of this line near Strong’s Canyon and a bit farther east along the Bonneville shoreline.

The photos below were taken Sunday evening, as I hiked along the northern portion of the new scar. The bulldozed area varies from about 25 to 35 feet in width. The city has promised to revegetate the route after the pipeline has been installed, but only with grass and small plants—not trees or shrubs.

In addition to the pipeline, the city had originally hoped to install a new water tank a few hundred feet above the Bonneville shoreline behind WSU. However, City Engineer Justin Anderson informed me last year that the tank proposal had been abandoned, due to the steepness and instability of the slope.

Standard-Examiner: Ogden Commits to $4M Bond for Water Pipes

Sodden Query: Is there no one on the Ogden City Council who is capable of operating a simple hand calculator?

For archival consistency we'll post the latest concerning the 2012 Ogden Water Rates re-set fiasco, as the  Standard-Examiner reports this morning that The Ogden City Council last night voted to approve issuance of "$4 million in bonds to rebuild a 100-year-old water pipeline that is one of Ogden’s main suppliers of water," and that "[i]t’s also expected that $13 million in bond funds will be requested in fiscal year 2014 to pay for the design and construction of a new water treatment plant":

• Ogden commits to $4M bond for water pipes

Beneath this morning's S-E story, the ever-savvy Dan Schroeder offers a comment which puts the Council's multi-stage borrowing/spending scheme in context, wethinks:

Borrowing money at 2.6% interest is a reasonable thing to do under the circumstances. What's not reasonable is borrowing another $13 million at 4% interest when you have more than that sitting in the bank earning less than 1% interest. The utility funds' enormous cash balances are the big secret here that nobody talks about. For that matter, it was ridiculous (but harmless) for the water fund to borrow money from the sewer fund, when the water fund has $6 million (probably more by now) of its own.

Why borrow $13 mil at relatively high interest when the city already has ample cash "parked" in the bank, drawing "peanuts," we ask?

Is there no one on the Ogden City Council who is capable of operating a simple hand calculator?

Standard-Examiner: Ogden OKs Bonds to Fix Water Pipeline

Even bigger borrowing and spending is coming up on the near horizon

The Standard-Examiner reports that the Ogden City Council last night embarked on the next stage of implementing its 2012 water rates re-set fiasco, which it meekly and ineptly approved , over substantial lumpencitizen objection, on May 22, 2012.  As a followup to borrowing a cool $1 million from the sewer fund, the Standard's Mitch Shaw reports that "[t]he city council adopted a resolution Tuesday night to issue $4.5 million in bonds to fix a century-old water pipeline that supplies Ogden with much of its water":

• Ogden OKs bonds to fix water pipeline

We forewarn that even bigger borrowing and spending is coming up on the near horizon, whereby Ogden City rate payers will be ultimately burdened by at least $13 million in additional long-term, relatively high interest rate bonding, for a project which could otherwise have been more prudently and inexpensively financed, for the most part, by simply "tapping" existing cash reserves and current revenues.

Don't let the cat get your tongues, O Gentle Ones.

Standard-Examiner: Ogden Transfers $1 Million to Help Construct New Water Treatment Plant

A mere warm-up for the bigger decision  over the upcoming $13 million bond, whereby the interest rate will be higher, the payment period will be 15 times longer, and it won't just  be another city fund making money off the council's mind-boggling ineptitude

Fresh off the City Council's passage of Ogden City's bassackwards new water rates scheme, which effectively penalizes water conservation, and rewards the biggest water users with discounted rates, the Standard-Examiner reports this morning that the city council has taken action to jump-start the process.  Here's the lede:

OGDEN — A month after raising water rates to pay for needed infrastructure improvements, the city is moving around some money to begin one of the improvements early.
On Tuesday night the city council approved a resolution that will allow the city to borrow $1 million from the sewer fund and lend it to the water fund in order to expedite the construction of a new water treatment plant.

Read Mr. Shaw's full writeup here:

• Ogden transfers $ 1 million to help construct new water treatment plant

Regarding the whole concept of transferring a cool mil to the water fund, which is already flush with cash, Gentle Reader Dan S. hits the nail on the head, we believe:

Mr. Moffett is incorrect. The loan is not necessary because the water fund has a $6 million cash balance that it could easily tap into for the design work. But bureaucrats always prefer to do things the most complicated possible way, it seems.

Hold onto your wallets, Ogden City lumpencitizens.  Consider this a mere warm-up for the bigger decision  over the council's upcoming $13 million bond, whereby the interest rate will be higher, the payment period will be 15 times longer, and it won't just  be another city fund making money off the council's mind-boggling ineptitude.

Comments, anyone?

Final, Final Chance to Offer Your Comments On Ogden's Proposed Water Rates Ripoff - Updated

Time to "put your foot down" once and for all

As a followup to Friday's Weber County Forum article, here's another quick reminder of tonight's regular Ogden City Council meeting, where among other things, the Council will make its final decision regarding the much discussed Ogden City Water Utility Rate Ordinance proposal, which we've been fretting about here at Weber County Forum over the course of the past several months.

If you still haven't contacted the city council about your preferences regarding this proposal, check out our May 18, 2012 article where we provide handy issues cribsheets and council contact info:

• City Council Solicits Further Citizen Input Regarding Council Consideration of the Proposed Culinary and Storm Water Master Plans, FY2013-17 Capital Improvement Plan and Utility Rate Ordinance

If you're opposed to the current plan, which boils down to a highly "complex system of rates that no one can understand, rewards wasteful users, punishes those with secondary water and only serves as a smokescreen to 'raise' money for the city general fund," it's time to "put your foot down" once and for all. If you don't all speak up now, we're all likely to "get soaked."

We'll dedicate this thread to coverage of tonight's important Water Rates Topic, and cordially invite anyone who'd like to comment before, during or after tonight's meeting to do so.

Don't let the cat get your tongues, O Gentle Ones.

Update 5/22/12 5:35 p.m.:  Attention everyone.  Dan Schroeder is now live blogging from the City Council chambers.

Update 5/23/12 6:50 a.m.:  Here's this morning's Mitch Shaw story:

• Ogden at last passes water rate increases

City Council Solicits Further Citizen Input Regarding Council Consideration of the Proposed Culinary and Storm Water Master Plans, FY2013-17 Capital Improvement Plan and Utility Rate Ordinance

Time to put on the full court press, wethinks

Here's quick heads up for Ogden City citizens who are concerned by the pending Ogden Water rates citizen rip-off.

We received a cordial invitation this morning from Amy Sue Mabey, Communications Coordinator for the Ogden City Council:

Thursday, May 17, 2012 4:39 PM

On Tuesday, May 15, 2012, the Ogden City Council held a public hearing regarding the proposed Culinary and Storm Water Master Plans, FY2013-17 Capital Improvement Plan and Utility Rate Ordinance. At the close of this public hearing, the City Council decided to continue Council deliberations to May 22, 2012.

The Council will make its decision on May 22, 2012. If you wish to provide additional input, please do so prior to the May 22nd meeting. Input can be provided via: e-mail — citycouncil@ogdencity.com; phone—(801)629-8153; or mail—2549 Washington Boulevard, Suite 320, Ogden, Utah 84401.

Thank you,

Amy Sue Mabey, MPA
Communications Coordinator
Ogden City Council
amymabey@ogdencity.com
(801)629-8629

Thrifty and water conservation oriented Ogden water users dodged a bullet last Tuesday, when the Council wisely tabled this matter for an additional  week of further deliberation. Obviously the council is sitting on the fence on this. Don't sit on your own thumbs, folks; let's not let Ms. Mabey and the Council down.

Short of words?  Here's a link to our handy WCF talking points crib-sheet:

• Last Chance to Stop the Convoluted and Ill-conceived Ogden City Water Rates Ordinance Revision Dead In Its Tracks

And here's another one, for good measure:

• Dan Schroeder News Release: Ogden Water Rate Increase Higher Than Claimed

You know what to do, Ogden City water rate-payers.

Time to put on the full court press, wethinks:

Ogden Lumpencitizens Rally to Oppose Water Rates Rip-off

Last Chance to Stop the Convoluted and Ill-conceived Ogden City Water Rates Ordinance Revision Dead In Its Tracks

Speak up today, Ogden City Citizens... or forever hold your peace!

Tonight's the night for final public input (6 p.m. - Ogden City Council Chambers) on the water rate revision proposals  which we've been discussing here on Weber County Forum for the past several months.  Check out tonight's full council packet here:

• 05/15 City Council Regular Session

Despite relatively robust and well-reasoned public objections to the current proposals, which if enacted would essentially ignore water conservation and even reward those water users who use the greatest volumes of water with volume use discounts, as well as unfairly penalize those Ogden rate payers who have the benefit of secondary water and thereby reduce the demands on the Ogden water supply system, the council seems hell bent to blindly ram this plan down our throats.  For the benefit of those who might attend tonight's meeting to lodge their final protests, we provide our chief objections below in summary form:

• Ogden's water and sewer rates are already high by Utah standards
• One reason for Ogden's high rates is the massive interest payments on the utilities' bonded debt. Under the current proposal, the utilities would take on even more debt and the interest payments would rise further.
• Another reason for Ogden's high rates is because the city has been using the utilities to subsidize other city operations. This subsidy is proposed to keep growing along with utility rates. 
• The proposed water rate increase is higher than even the consultants say is necessary.
• The proposed rate structure would shift more of the costs from those who use more water to those who use less.
• Sewer rates are proposed to go down by a few percent on average, but most of the benefit of this reduction would go to a subset of commercial customers (see page 29).

Tonight's our last chance to stop this overly convoluted and ill-conceived ordinance dead in its tracks.  While we'd hope that all steely-eyed Ogden residents will make a point of attending tonight's meeting to forcefully lodge their protests, we'll also encourage all Ogden City water users to formally register their objections via the Ogden City Council contact link below:

• Contact Local Officials - Ogden City

Speak up today, Ogden City Citizens... or forever hold your peace!

Keep your eyes on this article folks, as we anticipate that Dan Schroeder will be live blogging from the Council Chambers tonight, for which community minded effort we'll thank him in advance.

In the meantime, we'll dedicate our lower comments section to those WCF readers who'd like to offer their own remarks before, during or after tonight's regular council session.

Update 5/15/12 5:34 p.m.:  Attention, everyone.  Dan Schroeder is now live-blogging from the City Council Chambers. Click "comments" to monitor his real-time posts.

Update 5/15/12 9:32 p.m.:  In one of Dan's real-time comments, he refers to a "slideshow," presented by Dan during the public comments segment of tonight's meeting.  Having received this document by email and uploaded it to our WCF storage site, we're happy to provide the link:

• Utility Rate Proposal Overview - Dan Schroeder, 15 May 2012

Update 5/16/12 7:00 a.m.:  The Standard-Examiner provides this morning's post-meeting Mitch Shaw  story:

• Ogden tables utility rate increase

Ogden Water Rate Increase Higher Than Claimed

If you don't speak up, you're bound to get "soaked"

As we approach Tuesday's upcoming (5/15/12) Ogden City Council session, at which time Ogden City citizens will have one final opportunity to offer their public comments on the proposed Ogden City water rates revisions which have been a topic of Weber Count Forum discussion over the past several months, a couple of news items have arisen this morning, which once again place the water rates topic back on the WCF front burner.

First, the Standard-Examiner carries this Mitch Shaw story, reporting that Ogden City political activist and WCF contributer Dan Schroeder warns that "Ogden’s upcoming water rate increase could be higher than advertised":

• Activist: Ogden water rates could go higher than estimate

Secondly, we'll link to the news release below, which was transmitted by Dan Schroeder to SE Reporter Shaw earlier in the week, and graciously re-transmitted to us as a courtesy this morning. This is the original document which provoked Mr. Shaw's morning article, according to Dr. Schroeder.  As professor Schroeder opines in a comment beneath this article, "The situation is much worse than this article would lead you to believe..."; and that's no exaggeration, wethinks:

• Dan Schroeder News Release: Ogden Water Rate Increase Higher Than Claimed

Even upon a cursory reading it appears that, for reasons unknown, Dr. Schroeder's warnings have been soft-pedaled by the Standard. Between the bad assumptions, data calculations, the so-called "experts," Lewis, Young, Robertson, and Burningham (LYRB),  have made quite a mess of the water rates revision process, in our view. It's no wonder, we'll suggest, that our Ogden City Council seems to be having their eyes glaze over. We'll leave it to our readers to make their own contrasts and comparisons, of course.

For our readers' convenience we'll also link the original consultant's report and appendices, which are referenced in both Mr. Shaw's story and Dan's news release:

• The consultants’ report, describing the rate recommendations and the analysis behind them;
• The appendices to the consultants’ report, showing more details of the analysis.

Have at it O Gentle Ones; and don't forget to mark your calenders for Tuesday's critical Council Meeting.

And whatever you do... don't neglect to throw in your own 2¢.

If you don't speak up, you're bound to get "soaked."

May 1, 2012 Ogden City Water Rates Council Presentation/Discussion Video

Last chance, folks... this matter has now been scheduled to May 15, 2012 for final public comment, prior to the Council's council vote on this "water conservation unfriendly," bass-ackwards ordinance

As a followup to the May 1, 2012 City Council regular meeting, where various city staff and outside consultants presented data supporting the still pending water rate ordinance revision recommendations, we'll embed for our readers' enlightenment the full council video from the 5/1/12 meeting, which has now been uploaded to the Ogden City website.  Fast forward to 1:32:47 to view the entire utility rates presentation and discussion:


Don't miss out on Dan Schroeder's public remarks at 3:08:19, where he proficiently presents to the Council the same informative charts, graphs and analysis furnished in the WCF article linked above. His gentle "dig" at water hog Council Member Hyer will put a smile on your face too, we're sure.

Remember, folks, this matter has now been scheduled to May 15, 2012 for final public comment, prior to the Council's vote on this "water conservation unfriendly," bass-ackwards ordinance. That'll be your last chance to publicly register your objections, folks.

We'll also note that the water rates topic was an agenda item in last night's council work session, in which connection we'll invite any readers who sat in on last night's meeting to jump aboard the lower comments section to flesh out what aspects of this new water rates plan the council most recently discussed.

New Utility Rate Ordinance Released - Updated

Rates will go down for the biggest users, up for everyone else.

By Dan Schroeder

The Ogden City Council has a busy agenda for tonight’s meeting, much of it in preparation for the start of a new fiscal year on July 1. And looming large on the agenda is the presentation of the new proposed water rate ordinance and related reports and documents.

The full agenda packet weighs in at 38 megabytes, so I’ve extracted three manageable excerpts for the convenience of those who are following the water rates issue:

• The draft ordinance and a related policy resolution, along with summaries by the council staff;
• The consultants’ report, describing the rate recommendations and the analysis behind them; and
• The appendices to the consultants’ report, showing more details of the analysis. (In this excerpt I’ve removed some pages of graphs which are rather unwieldy and, in my opinion, unnecessary.)

There’s a wealth of fascinating information in these documents, at least for numbers geeks like me. I’ll write about more of these details in a future article. For now, though, let’s just cut straight to the “bottom line” and answer the most obvious question: What’s going to happen to your water bill?

The nominal (proposed) water rate increase for the first year (effective this July 1) is 7.8%, composed of a 5% real increase plus 2.8% for inflation. This will be followed by another 5% increase next year, and a 3% increase the year after next, plus cost-of-living increases (tentatively set at 2.5%) every year.

But the initial 7.8% increase is accompanied by a major restructuring (and simplification) of the water rate system, and any major restructuring inevitably produces winners and losers. Who are the winners, and who are the losers? That is, whose rates will initially increase by more than the nominal 7.8%, and whose will increase less?

The answers are on page 19 (pdf page 20) of the consultants’ report, where you’ll find a table of percentage increases arranged by type of customer and amount of monthly water use. For those who (like me) prefer a more visual representation, I’ve produced this graph of percentage changes for residential customers (click for a larger version):

I apologize for this graph’s complexity, much of which is due to the complexity of the old water rate system. To figure your rate increase, you need to know whether your property is also served by secondary water; if so, look at the purple lines. Otherwise you should look at the blue lines, except during summer (May through October) if your monthly use is above 12,000 gallons; then look at the green lines. Finally, you should choose the dashed line if you’re one of the 7% of residents who has an extra-large one-inch connection, but look at the solid line if you’re among the other 93% of us with 5/8 or 3/4 inch connections. Whew!

The graph’s horizontal axis shows the amount of monthly use. Notice that the scale of this axis becomes more and more compressed as you go to the right. The grid lines go by hundreds up to 1000 gallons, then by thousands up to 10,000, and so on. The median residential indoor use is about 4,000 gallons, while the median use during the summer for those who irrigate with culinary water is about 10,000 gallons.

And now you can see that the “losers” include everyone whose water use is below these median levels, and quite a few of those above. This is because the “base rate,” which you pay even if you use no water at all, is rising by 17% (or almost 20% if you have a 1-inch connection). The “winners,” on the other hand, include those who use a lot of water for summer irrigation, as well as the few whose monthly usage is truly enormous—hundreds of thousands of gallons. Most of these customers will actually see their bills decrease by about 5%.

Don’t pay too much attention to the big purple and blue spikes near the middle of the graph. While these large increases will affect certain customers, they are the results of eliminating some unfair discounts that these customers were getting under the old water rate system.

I’ve also produced a similar graph for commercial water customers, with larger connections (click for a larger version):

Again, you can see that this proposal would shift some of the revenue from the few who use a lot of water onto the many who use less. There are some interesting differences among the various connection sizes, but I won’t take the time to explain them in detail here.

It’s unclear to me whether the selection of “winners” and “losers” in this rate restructuring was mostly accidental or mostly intentional. Nothing in the report indicates that anyone was trying to shift the burden from large water users to small ones, and I never heard anyone state such a goal explicitly during the many meetings I attended. However, the consultants have consistently expressed a preference for higher base rates, in order to produce a more stable revenue stream. And some city council members have pushed for a bigger discount for those who irrigate with culinary water during the summer. That sentiment seemed to drive the council's informal decision, on April 10, among the options put before them.

On the other hand, almost everyone involved in this process has expressed at least some desire to discourage wasteful water use and encourage conservation. That's the fiscally prudent approach for the long term, because it lessens the need to develop new water sources and expand the system. Besides, it only seems fair to charge customers based on their actual water use. The new rate structure would be a step backward in this respect.

Update 5/1/12 7:03 p.m.:  Dan S. is now live-blogging from the City Council Chambers. Click "comments" to follow his real time posts.

Update 5/2/12 7:00 a.m.:  The Standard carries a short Mitch Shaw story this morning, briefly summarizing the probable outcome of last night's meeting:

•  Ogden council to consider new utility rate ordinance to cover water system improvements

Comments, anyone?

Update 5/10/12 9:00 a.m.:  For the benefit of those WCF readers attentively following the water rates revision issue, here's a link to the 5/1/12 Ogden City Council Regular meeting, where the supporting data for the proposed new utility rate ordinance were discussed in minute detail:

• Ogden City Council - May 01 2012