Hondius Water Users Project Committee – 12/15/15 Meeting Minutes
Present: Jim Redman, Tony Burroughs, Don Piepgras, Bill Rawsky, Beth Coulson, Brandy Flanagan
Also attending were the Larimer County Representative and the Engineer hired to prepare the Preliminary Engineering Study
Previous Meeting Minutes
Minutes from the November 19th meeting were approved and Jim will have them posted to the website.
Town Meeting Update
The Town is taking a much more proactive position with respect to water projects such as ours. There are currently four projects that the Town is working on, including ours and the Park Entrance project, which is also off High Drive. In a meeting on December 13th with the Town Trustees, that Jim also attended, the Town personnel presented their proposal to the Town Trustees, and the Trustees seemed very supportive of the Town’s proposal which focused on the following objective:
At the request of the private water system, Town Board enters into a Voluntary Water System Transfer and the Town becomes the applicant for USDA RD project financing.
Jim’s impression is that this is an extremely positive turn of events for the following reasons:
- The Town is willing to become the applicant for the project loan. They would obtain financing for the additional detailed engineering work and the actual project costs, which under the USDA funding option, are paid prior to obtaining the financing. The Town obtains a bridge loan and the interest cost associated with the bridge loan becomes part of the total project cost ultimately rolled into the USDA funding (obtained by the Town). The Town pledges revenue as security for the loan, so there are no liens.
- The Town essentially takes the place of a Local Improvement District (so no LID is required under this option) and users pay back the Town through rates, so there is an additional line item on the monthly water bill, which effectively goes to the Town to repay their loan.
- The Town will determine whether a project is approved based on obtaining a signed petition by a majority of users (i.e. not limited to Colorado residents). In our case this would be a majority of the current Hondius users but with the ability to also still “invite” those along the line to join the project if they so desire. The issue of the percentage vote required was discussed in the meeting with the Town Trustees and while it probably still needs a formal approval by the Town, the discussion was whether it should be a simple majority or something like 60% and the sentiment seemed to favor a simple majority. There would be no requirement, as we have discussed in the past would be required, for an election (and this election timing would have been limited to the month of November).
- The USDA option does not require Davis Bacon union wages. Town representatives indicated on the Park Entrance project, the State Revolving Fund (SRF) option estimated cost was approximately $1 million, while for the USDA option without union wages, the estimates were approximately $700,000. (Our estimate was prepared assuming the SRF option as we did not know of a viable USDA option at that time.)
- The USDA option allows a loan payback period of up to 40 years vs. the 20 year payback on the SRF option.
- The Town would provide for a manner for which additional users would be able to hook into the system at a later date that would benefit those that were part of the project initially. For example, additional users would commence paying rates once joined to the system that would either reduce the amounts the original users pay or would pay off the loan at an accelerated rate (so would be paid off before the 40 year period is up).
- Costs estimate for the additional lines deemed necessary for the storage tank option
- Tank cost – including property acquisition
- Identifying an acceptable petition method for resident approval/interest
USDA Funding Option
The USDA option appears to be a promising change of events. This is a process that the Larimer County representative has not used in the past, so we will have to work through any issues; however, this option does not require the Davis-Bacon protocol, which reduces labor costs, would not require a LID and a November ballot vote, and finally could possibly speed up the project by a full year.
It is recognized the Town does not want to “push” a project not supported by the residents and so some type of ballot vote for the project is expected. The vote would likely involve all residents effected – Hondius users, and not just Colorado residents. It was identified we need to ask the Town what type of petition they’d want. It was also identified we would need to include the estimated cost of the project with that petition. The project needs to be pretty much figured out at the time of a petition.
Park Entrance Project
As stated earlier, Park Entrance is another project in our vicinity known to be in progress. The Larimer County representative noted that he believes this project is not as far along as ours, i.e. it has yet to have an engineering study prepared.
Cost Discussion
The project cost assuming an SRF loan, as presented at our October 2015 public meeting for Hondius users and Non-Hondius users in the vicinity, was estimated at $3.3 million for the option including a water reservoir. The estimated cost assuming no water reservoir and instead using pumps only under an SRF loan option is $3.1 million. Even though not having to adhere to Davis-Bacon under the USDA option reduces the labor costs, the Engineer recommends we stay somewhat conservative on the cost estimate for the project as we don’t want to have the estimate ultimately be low. It was discussed that the Town would create a process for those who did not initially fund the project and wanted to join in later (which would benefit those that originally were included in the project). We will eventually need to educate everyone (Hondius users and Non-Hondius users that are in the vicinity of the lines and could elect to join the project) on the plans for, and benefits of, the possible project.
Committee Involvement with Tank Acquisition
The owner of the land for the proposed site of the storage tank has been identified and the Committee discussed the process for trying to make contact with the owner. All agreed it would be best to try to engage the landowner into this project. Jim and the Larimer County representative will discuss the approach to take.
Next Steps
The Town has increased their involvement with the project and so the following items are needed from them:
Our preliminary engineering report needs to be updated to consider the cost estimates noted above, as well as the terms of the USDA option.
Closing.
Next Meeting: TBD – Mid-January 6:00 PM MST.