Thursday, November 3, 2011

Answers to questions ...a second witness

This comes from Benjamin Reeves, Santaquin City Manager.  It was in reply to verification to the two questions posed in the last post.


Thanks for your e-mail.

Rumor 1 – Your response is correct and this rumor is 100% false. 

The existing rates, that were established in October of 2011 ($20.00 increase), will fully fund the proposed improvements (e.g. Construction of the MBR, Debt Service Payments, Operations & Maintenance Costs [O&M].)  This rates will not increase other than cost of living tied to a CPI index over time.  Furthermore, because of the structure of the USDA loans, the debt service payments do not take into consideration any growth that has, and will continue to, come to Santaquin City.  As such, every new home that pays impact fees can (by approval of the council) pay the debt down faster and every new connection will pay monthly user rates which will spread the O&M costs over a great pool of people.  Once again these new connections are “not counted in the current funding package”.  Therefore, future city council’s will be able to do one of two things with this new monthly revenue coming from these new residents.  They can either evaluate the O&M & debt service and divide that total across the new larger pool of connections, thus allowing for the possibility to lower rates each year as growth continues “or” the council may choose to keep rates flat and use the incremental difference to pay down the debt sooner (using a Dave Ramsey approach of debt snowballing)  Either way, the our current rates will fully fund this project. 

Rumor 2 – This one is a bit more complicated.  As proposed, this facility is planned in a two phase approach.  The first phase will take 60% of the sewer into the new plant while maintaining the lagoons for a short period of time (2 year estimate).  The cost to fully retire the lagoons is $1.2M.  However, the project as it is proposed is most likely going to change.  As proposed to the north, the building was originally designed to be a beautiful building with a great deal of landscaping to lessen its impact on the neighbors in that area.  If this facility is relocated to the west, the building’s design could easily be scaled back to have more of a business park (industrial look) model.  Scaling the building back would then fully fund both phases into one project. 

With that said, there is still great merit in having this facility built to the north where gravity will flow the sewer to the facility.  Even if the eventual site remains to the north, it is very likely that the building would be built more modestly than currently designed, (e.g. less landscaping, elimination of the administration building, etc.).  Furthermore, with the rebidding of this project, we believe that further savings can be found by breaking the project into smaller components.  (e.g. MBR Facility, Piping Project, etc.)  By breaking some of the subcontract work into separate projects, we believe that we could get local contractors to perform some of that construction and save the city financially. (Currently, local contractors find it too difficult to obtain financial bonds on such a large scale project.)  FYI…When I say local contractors I want to be 100 percent clear that this does not mean the mayor.  Mayor DeGraffenried has never and will never have any work stemming from this project.  There are no financial ties and personal benefit for him in association with this project.   

As such, whether the project go to the north or west, we believe that we will be able to fully fund the retirement of the lagoons and consolidate phase 1 & 2 of this project.  Of course, after the lagoons are retired, the proceeds from the sale of the land for a business park will pay off the existing debt on the lagoons as well as a portion of the debt on the MBR facility.

Once again, Thank you so much for your efforts to get the truth out.  I am attaching a letter we received yesterday from Walt Baker, the Director for the Utah Division of Water Quality for the entire State of Utah.  He has weighed in on the issue that we are facing.  I think you will find it interesting.  You are more than welcome to put this letter before the public. (I'll post that letter next)

Thanks again,

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