Rates OK'd; projects on hold

The rate ordinance for the Jay County Regional Sewer District passed with no issue Monday night, but other issues are stalling the board’s ability to close on its grant/loan package and start construction on three projects.
The board held a public hearing to consider the ordinance, with only one objection from Derek Rodgers, who lives in the Skeens Addition project area north of Dunkirk.
But Rodgers’ objections were more about the scope of project than the rate ordinance.
“I think that it’s crazy that I live a mile and a half out of town and I’m getting hooked up to city sewer,” Rodgers said Monday during the hearing.
The ordinance establishes monthly sewer rates of $76.75 consisting of $5.29 in billing charges, $44.23 in operating, maintenance and treatment charges and $27.21 in debt service.
That rate may fluctuate depending on finalized treatment agreements with the cities of Dunkirk and Portland, which are still pending.
Although the district board planned for construction to begin at the end of this month, the process is being impeded by the lack of treatment agreements with Dunkirk and Portland.
The district needs those agreements to connect its lines with sewer systems in those two cities.
Construction on two projects near Dunkirk and one near Portland cannot begin until the board closes its grant/loan package with the United States Department of Agriculture Rural Development office.
“They (Rural Development) won’t let you close without it,” said Jeff Rowe of H.J. Umbaugh and Associates, who performed the rate study and formed the rate ordinance.
Sewer district board president Gerald Kirby informed other board members that he received a draft of the agreement with Dunkirk for the Skeens Addition back from the city’s attorney Jim Forcum with an OK on it. That agreement will now need to be passed by the Dunkirk City Council.
“Dunkirk has basically agreed to everything,” Kirby said, also noting that the city agreed to charge only one connection fee for the one tap the district line will make into current city systems. Tap fees have been a point of contention in negotiations with Portland.
However, agreements for the Willow Drive project south of Dunkirk and the Foxfire Addition project southwest of Portland are still in limbo.
Kirby said he has not heard anything on the Willow Drive agreement, which he thought was strange because hammering that contract out should be simple since every house will be charged a flat treatment fee.
And an agreement with Portland is stalled as both sides have a differing stance on how many $525 fees should be charged for the district to hook into the city’s line and send sewage to the treatment plant.
While Kirby is arguing that the sewer district should be treated as one entity and pay one fee for its one physical tapping point, the City of Portland has said its ordinance demands fees from every property on the line.
During Monday’s meeting of the Portland City Council, Portland Mayor Bruce Hosier passed out a copy of the city’s sewer connection ordinance to council members. This ordinance includes regulations for properties wanting to hook into the city sewage system as well as the city’s current tap-in fees.
He asked council members to review the information — which also included a letter he sent to the sewer district this summer — and call him if they had any questions.
Also, during the council comments near the end of the meeting, council president Bill Gibson said he felt the city should stick to its ordinance.
“We should stay with it,” he said. “We shouldn’t change just for them.”
Gibson also is a member of the Portland Board of Works. Members of the board of works voted Thursday to have the $500 “connection” fee and $25 application fee added to the agreement for the sewer district.
Kirby’s argument remains that since the sewer district is constructing and maintaining the line, that it should be treated as one unit.
“It’s the same as if they wanted a tap fee from every room in the Holiday Inn,” he said. “The individual rooms at Holiday Inn are not tapped in. Our individual customers at the Jay County Regional Sewer District are not tapped into the city of Portland.”
Kirby said he plans to asked to be placed on the agenda for the Portland Board of Works’ special meeting Thursday to discuss the tap issue with that board.
He also said that the district’s attorney, Steve Murphy, will be meeting with Portland’s attorney Jim Forcum today on an unrelated issue, but that the two may also make time to discuss the sewage contract.
The delay also means that the sewer district will likely have to extend its bids with the three contractors selected to do the installs.
The amounts in the construction contracts are valid for 90 days, which could be expiring on Saturday.
Kirby said it was unclear whether the 90 days is from the time when the district issued letters of intent to award to the three contractors on Sept. 11, or a later date when Rural Development reviewed those bids and gave its OK. Either way, Kirby said a Rural Development representative said this morning that the district could call the individual contractors and ask for an extension.
An RD rep told Kirby this morning that at this point there is no jeopardy of the sewer district losing its funding — a 45 percent grant, 55 percent low-interest, 40-year loan package totaling about $1.1 million — due to the delays.
Once the sewage agreements are inked by their respective cities and a couple remaining rights-of-way issues are resolved, RD will deliver instructions for closing, allowing the district can close on its funding and begin construction.
Based on the current schedule, which may change depending on how long closing is delayed, the district would owe its first payment — an interest-only payment — in July 2011.
The board plans on beginning to collect fees by issuing a 25 percent collection a month after closing and during construction and then beginning full billing after construction completes or June 1, whichever comes first.[[In-content Ad]]