Water & Sewer Committee Moves Ahead With LoanIssue Date: May 16, 2013
After months of discussion, the Peshtigo Water and Sewer Committee on Monday, May 13 tentatively agreed to recommend that the city accept a 20-year loan from the DNRs Clean Water fund to finance the $1.9 million wastewater treatment plant reconstruction project that is finally nearing completion. The state program has agreed to the financing at 2.625 percent interest and includes forgiveness of $70,000 to $80,000 of the principal.
The committee hesitated in hopes of getting a better interest rate from some other source, but the Clean Water Fund must have a reply by June 30 or the deal is off the table. Engineer Don Heikkila, representing project consultant Kaempfer and Associates, said they have been advised by the Department of Administration that forgiveness awards are not likely to be available for next year.
Stumbling blocks for the committee were the facts that once accepted the loan cannot be repaid early, and in todays world lower interest rates are not unheard of. However, everyone at the meeting agreed that low interest rates are available for short term financing but not for long-term loans. Local financial institutions had previously indicated they are not able to provide long term loans at the interest rates the city would like.
The committee was reminded by Clerk/Treasurer Mary Ann Wills that the local lenders had offered interest rates of 2 and 3 percent on short term notes only.
Until recently, the committee had reasons to expect some principal forgiveness for project costs, but had been given no firm numbers on interest rate or principal forgiveness. Now they do, and the $70,000 to $80,000 principal forgiveness is equal to about two years of interest at the rate they have been offered.
Next steps are to have the figures and loan documents reviewed by city auditors, which hopefully will be done in time for a Finance committee meeting on Monday, May 20. If all goes well and everything passes review by City Attorney David Spangenberg, the financing could be an agenda item for the next regular City Council meeting on Tuesday, June 4. Wills noted the auditors are expected to give their annual report on city finances at that meeting.
One of the requirements of the Clean Water Act loan was preparation of a complete operating manual for the new wastewater treatment plant system, and that was authorized at the April meeting of the Water and Sewer Committee. Cost for having Kaempfer & Associates prepare the manual is $40,000, but everyone seemed to agree it would be worth the price, even if financing was not handled through the Clean Water Act fund. The manual will include operating instructions and repair information on all the equipment installed in the wastewater treatment plant renovation.
Mayor Al Krizenesky commented that having a completely updated operating manual will save many dollars in operating costs over the years.
BPM, Inc. operates the plant under contract with the city, and pays a share of the bills as the largest user of the facility.
Near the end of the meeting, BPM, Inc. Manager Jim Koronkiewicz asked why the mill has been getting bills for an engineering project that he felt could have been handled by City Engineer George Cowell and BPM engineers.
Cowell told him they need certified plans for the state, and commented, I am an engineer, but not for the wastewater treatment plant.
We hired engineers...We did not hire BPM to do the engineering, Committee Chair Fred Meintz declared.
Why is BPM paying for a contract with Kaempfer that was agreed to by the city without input from BPM? Koronkiewicz wanted to know. He told the committee he wants the item on the agenda for the next Water and Sewer Committee meeting, which is set for 10 a.m. on Tuesday, June 11.
Heikkila reported that August Winters & Sons have installed and tested the back flow preventer for the non-potable water system, but the issue of potable (drinkable) water for the restrooms has still not been settled. They have drafted a change order to expand August Winters scope of work. Cowell said the DNR wants a response by June 1. Cowell said he will advise the DNR they are looking into contractors to do the work.
Koronkiewicz asked that BPM, Inc. also be given an opportunity to respond as well, since the project was on their issue list as operators of the Wastewater Treatment plant.
Meintz commented Kaempfer had given them an engineering cost estimate but no information on the anticipated cost of the work involved.
Koronkiewicz wanted to know where the latter from the state had come from, and was told everyone had just received copies that morning, along with an inspection report by the DNRs Bruce Oman. Meintz asked Heikkila to have come project price estimates for the next committee meeting.
Plant Operator Gary Motkowski reported things in general are going well at the treatment plant.
Heikkila advised them tentative date for startup and testing of the new backup generator is scheduled for Thursday, May 23. The 600 gallon propane fuel tank is sized to run the generator for 24 hours at three quarters load.
Committee Member Tom Gryzwa felt the generator should be tested once a week, and Motkowski said he tests the lift stations every Wednesday, to allow time to get parts for repairs if needed.
The committee approved some contractor payment requests, okayed a $9,409 change order for Oudenhoven Construction for an automatic garage door opener and an aeration system improvement that had been previously approved
Purchase of some butterfly valves from Brey Utilities for the low quote of $19,277 was approved.
Tentative approval for some additional welding at an added cost of $19,080 was approved, subject to inspection and verification of need.
A deduct of $19,002 was approved because some stainless steel plates were found to be made of stainless steel and will not need to be replaced.
Meintz noted whenever there is a change order that adds to the contract price the contractor adds on a percentage for overhead and profits, but when there is a deduct the amount included for overhead and profits is not subtracted. Heikkila will speak to the contractors about it.
Discovery of some bad wiring that had to be replaced will add about $78,827 to the Elmstar Electric contract, plus $10,000 for overhead and profit and $40,000 for a temporary service that will be needed while the transition takes place and then can be kept in place for future use.
Koronkiewicz presented the committee with a timeline list of what will be done, when it will be done, and who will do it in regard to a checklist of maintenance issues identified on a plant inspection a few months ago. They are to talk with Cowell when they have concerns about moving ahead with the work. He said if there is an emergency they could call a special committee meeting.
Meintz asked how costs will be split and was told it is still fifty/fifty as they are still operating under the old agreement.
Koronkiewicz noted some of the projects have been accumulating for years, since before BPM took over the mill and the wastewater treatment plant operation, and they will need time to get the repairs done.
Meintz asked that repair of safety rails and other safety issues be given priority on the list, particularly since they are not major cost items.
Repayment of $25,632 to BPM as the citys share of costs for work done under the agreement was approved to be paid for by the utility.
Koronkiewicz presented a preliminary draft summary of a new operating agreement, but said they would not go into details unless it was a path the city wanted to follow. Meintz felt it was a good start, and Cowell felt it somewhat parallels the city of Menominee agreement, but felt the city attorney needs to review the proposal. Heikkila suggested the information BPM needs for the document is included in the materials gathered for the sewer rate proposal, and handed out copies of his comments. It will be on the agenda for the next Water and Sewer Committee meeting.
Gene and Linda Erickson had sent a letter voicing their displeasure at being notified via a newspaper article that the committee had rejected their claim for reimbursement last month, rather than by way of a personal letter or phone call. Meintz said the couple did not dispute the decision, just the way it was handled, and he wondered if they would have been notified at all if there had not been a newspaper article. He said it should be policy that a letter goes out the same day in regard to similar decisions.
The committee agreed to accept an extended payment plan from Ryan Larsh regarding a broken water pipe and a resulting water bill for $1,057.95. The sewer charges will be deducted because the water did not go into the sewer, and wills was to set up a payment plan for the water bill. A pipe froze and broke while Larsh was on vacation.
Cowell reported flushing of water lines on the east side of the city continues on Thursday nights from 10 p.m. to 3 a.m. This week the flushing will be done in the industrial park area. Rainbow Court and Drive areas are done. Cowell said they flushed out a lot of debris, including some large chunks, and water quality should improve as a result. He said when they flush an area they stand by and make sure the water clears up before they move on, so most residents will not even notice that it has been done. Once the flushing is complete throughout the city the water mains will be delivering a better product, Cowell said.
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