City Council

CITY OF SARATOGA SPRINGS CITY COUNCIL WORKSHOP CITY COUNCIL ROOM TUESDAY, JULY 29, 2003 6:00 P.M. PRESENT : Commissioner Thomas Curley, DPS Kenneth Klotz, Mayor Commissioner Michael Lenz, Finance Commissioner Thomas McTygue, DPW Commissioner Stephen E. Towne, Accounts ALSO PRESENT: Phil Klein, Supervisor STAFF PRESENT : Deborah Harper, Deputy Commissioner, Accounts Hank Kuczynski, Deputy Mayor William McTygue, Director Utilities Jeff Wait, City Attorney ALTERNATIVE WATER SOURCE Commissioner Thomas McTygue said this workshop was called to discuss the many important details of the alternative water source. He said perhaps residents of the community and Council members were not as well informed about this project as he thought they were, therefore, he said that holding several workshops to answer all of the questions was a good idea. He said tonight he hoped to develop a list of questions that would be forwarded to the County on their report and agreement. He said one of his questions to the County was when will their report be completed. He said he would send a list of questions to the County immediately following this meeting and hoped to get a response within one week=s time. Mayor Kenneth Klotz said he had several questions, but they were not in writing. He said he had articulated them during the last workshop meeting. Commissioner Thomas Curley asked specifically what was Commissioner Thomas McTygue looking for. Commissioner Thomas McTygue said he hoped to compile a list of questions tonight that relate to both the County agreement and the draft report. Commissioner Stephen Towne said he had a number of questions but had not yet forwarded them to DPW. He said it was his understanding that Rich Straut would present an analysis of the report this evening. He said Commissioner Thomas McTygue had raised a number of questions for the County and that was probably a good starting point. Commissioner Stephen Towne said there were a number of questions raised in Commissioner Thomas McTygue=s May 5 memo that should be addressed. He said there were also questions within the DEIS Section 293A through 293H, Section 9.8. He said it was his intention to supplement those questions. Commissioner Thomas McTygue said since his May 5 memo, there was a draft report from Malcolm & Pirnie, the County consultants, and a letter from Ray Callanan. He said one of the more important questions was why the City would be required to pick up two thirds of the cost of the water purchase. He said initially the County was asking the City to purchase 3 mgpd, however, that had since risen to 4 mgpd. He asked why other municipalities such as Clifton Park which is larger and further away was not being asked to purchase the same amount. He also questioned why the 4 mgpd amount was not simply split between the municipalities. He said that Clifton Park has expressed the need of only one mgpd. Commissioner Thomas McTygue said there are many days during the winter when the City does not use 4mgpd and during the spring months when the City uses only slightly more than 3mpgd. He said he also would like to see a business plan. He wanted to know why the City could not purchase raw water from the County. He said there needs to be considerable investments made in this project and wondered why each municipality could not be responsible for treating Page 1 of 5 City of Saratoga Springs City Council Workshop Meeting Minutes Tuesday, July 29, 2003 their own water. He pointed out that not all of the County=s towns/cities/villages would tie into this system, therefore, it truly was not a regional water supply. He said some other municipalities are being supplied water by other means. Commissioner Thomas Curley said his question was also the same, why was the City being asked to purchase 4 mgpd. He said he was also concerned about would be responsible for the watershed management plan and at whose expense. He said that was also a question for the Saratoga Lake alternative B who would manage and operate the watershed. Commissioner Stephen Towne said the questions that are being asked of the County should also be asked of the City=s alternative. He too agreed that the question needed to be asked that if the County believed that they needed to sell 6mgpd to make the project viable, why was the City being asked to purchase 4 mgpd. He said the County should be asked if there was any flexibility in the amount that they want the City to purchase. Commissioner Stephen Towne said there are two documents that need to be considered when asking the questions of the County. He said there were the May 5 memo and the August 7 memo. He said there was also correspondence from Commissioner Thomas McTygue to Ray Callanan detailing a list of questions on the viability, timetable, minimum draw, backup measures, participation, control, etc. Rich Straut, Barton & Loguidice, said he had spent a good deal of time reviewing the draft report in conjunction with the agreement from the County. He said he began working on a list of comments to guide him in evaluating the proposal, but instead developed a list of questions that need to be answered before he could prepare comments. He said there are a number of inconsistencies between the documents and then reviewed his questions with the Council. 1. Table 10-1 on Page 10-1 of the report presents an Aestimate of Probable Initial Construction Cost@ for the County=s proposed project. Provide backup information for these cost estimates. Rich Straut said the initial cost estimates in the report for phase one was $72.5 million but he had been unable to justify that number from the report. 2. Based on statements on page 604, and again on page 7-1, is it correct to assume that the County=s proposed water storage tank site will be located at the Luther Technology Campus? Will this tank be a ground storage tank? Please identify the tank site. Rich Straut said the County is proposing a 5 million gallon storage tank as part of phase one but it was unclear as to where that tank would be located. He said the project will potentially and significantly be impacted on that determination. He said it makes a significant economic difference on whether the tank is located above ground or below ground. He said the cost of construction and hence the cost of water rates could be dramatically affected. 3. Please provide information explaining how the proposed wholesale water rate of $1.95 was derived. Rich Straut said there is a difference in the water rate between the draft agreement and the water report. He said he needed clarification on from where the $1.95 came. He said if the County received no grants, the wholesale rate to the City would be $2.45 and then the City would need to tack on the cost of distribution. 4. A number of future capital projects are identified in the report that will be required to further expand service to other communities in the county. These include: B construction of a parallel water transmission main within the 15-20 year of operation (pp. 6- 1&6-5) Page 2 of 5 City of Saratoga Springs City Council Workshop Meeting Minutes Tuesday, July 29, 2003 B expansion of the water treatment plant in the 10th year of operation and then again in the 15th year of operating (p. 9-2) B construction of facilities (transmission mains, tanks, pump stations, etc.) as required to extend service to other areas of the County. Please verify whether any or all such costs are included in the $72 million projects cost estimate and the guaranteed City wholesale water rate. Rich Straut said there are a number of capital improvements proposed in various phases. He said the proposed size of the pipe originally was at 48 inches but had since been reduced to 36 inches. He said within this project there is a proposal to add a second pipe in the 10 to 15 year range. He said they are also proposing expansion of the water treatment plant in the 10th year and again in the 15th year. He said those costs are significant capital improvements. He said some of the dollar amounts had been included in the report and others have not. He said he was also concerned about the proposal to further expand to facilitate other areas of the County. He said that proposal was somewhat nondescript and wondered what that might entail and the cost of that expansion. He also wondered if all of those costs had been included in the project and in the guaranteed rate. Commissioner Stephen Towne asked how the proposals were being compared Aapples to apples@. He asked how Rich Straut was harmonizing the proposals of construction of new facilities vs. the renovation and expansion of existing facilities. He asked how Rich Straut got to the point where they could be reviewed equally. Rich Straut said they look at the service life of the facility. He said it was not uncommon for a facility to go beyond the service life so they also look at the length of the debt service. He said during the service life of the facility all of the costs need to be considered. Commissioner Stephen Towne made the comparison of buying a new car or maintain a debt free car. He said the City now has a facility that is debt free, however, will need some major investments. Commissioner Thomas McTygue said that was all the more reason for the County to sell us raw water. He said the City has a facility that could treat water. Rich Straut said they look at all of the capital improvements that would be required to maintain the plant. He informed Council members that as part of the DEIS, they inspected the existing water treatment plant. He said they found that the plant is well maintained and structurally sound. He said City equipment has been replaced and/or upgraded regularly. He said under the DEIS they have looked at the cost to expand the plan and to make improvements and all of those costs are included the DEIS. Commissioner Stephen Towne clarified that all of the capital improvements have been included in the DEIS plan. Rich Straut said yes. Commissioner Thomas Curley asked about having a breakdown of the costs. Rich Straut said the breakdowns were included in the DEIS under Section 9. 5. The draft agreement for sale of water stipulates that the wholesale water rate would be fixed at $1.95 per 1,000 gallons for a period of 10 years. However, the cover letter that the draft agreement accompanied indicated that the fixed rate would be guaranteed for five years. Please clarify the duration of the proposed rate guarantee. Mayor Kenneth Klotz agreed there was contradiction. 6. Would the County be willing to guarantee that the wholesale water rates charged to the City will fall or maintain constant following the initial proposed guarantee period? Rich Straut said the City needs to know if the County will guarantee future rates. He said there are a number of proposed capital improvements that will effect the project. Commissioner Stephen Towne agreed these were appropriate questions. He said though that the same questions should be asked of the City=s alternative. Rich Straut said he is working on addressing those issues. Commissioner Thomas McTygue said the City=s proposal does not call for an update in 10 years. He said the City=s proposal is for a 30 year period and it would be less costly. He said the County is not looking at a 30 year plan but rather a 10 year plan and then running a second pipe at a potentially substantial cost. Page 3 of 5 City of Saratoga Springs City Council Workshop Meeting Minutes Tuesday, July 29, 2003 Mayor Kenneth Klotz said he was concerned with the number of out clauses for the County. He said the whole project could become null and void because of a whole range of issues. He asked if the County might be willing to eliminate some of the out clauses. Rich Straut said that his question to the County was whether the rate guarantee would expire in five or ten years. He said there are potentially a lot of other costs that could come through expansion of the system and those costs could be added to the City=s rate. He said he did not see any limits on what could be charged or any projections on those rates. He wondered that once the five or ten year period was over, how would the City control its costs. He said he was looking for a way to compare the City=s potential risk with the County alternative with or without a guarantee rate vs. the alternatives. Commissioner Stephen Towne said perhaps there needs to be some clarification that the out clauses were for before the contract is signed and not after. 7. Please provide evidence that the grants indicated in the report have been committed to the project. Rich Straut said he believed there were potential grants and there is the assumption that the grants will be obtained, but the City should have confirmation that the grants are coming. He said the Council also needs to be aware of the costs both with and without the grants. 8. Is it correct to assume that if the County receives grants as suggested in the report (i.e., $2 million per year for 5 years), that the grant funds would be applied to Abuying down@ the water rates during that first 5 years of operation rather than to reducing the principle on the loan? Rich Straut said there needs to be clarification on whether the grants would buy down the rates or pay down the principal. 9. Is it correct to assume that the Saratoga County Water Authority will not be the agency operating the proposed water system? Rich Straut said he assumed that a water district would be formed but that needed to be clarified. He said there also needed to be some clarification on who would operate the district. He said there are differences as to what authorities and districts may do. 10. Will the proposed County water district have the authority to assess taxes on properties within the district in the event that revenue from water sales is insufficient to cover the district=s expenses? Rich Straut said a district would have the ability to tax while an authority would not. 11. Is it legal for the district to exist and operate a County water supply system where the Saratoga County Water Authority has already been formed to perform this function? Rich Straut said he was not sure of the legal ramifications of what exactly a district would be allowed to do, who could legally create the district, etc. Mayor Kenneth Klotz said those were questions that the City Attorney should look into. Commissioner Stephen Towne asked what was the projected rate of interest on the debt service. Rich Straut said it was 4 percent over 30 years. Commissioner Stephen Towne said subsequent to the submission of their plan, he read that the Town of Moreau had acquired a zero percent interest loan from a NYS revolving fund. He asked if there was any reason to believe that the City or County might be able to tap into that fund. He said he would also like a better feel of where the other municipalities in the County stand so that the City might be able to determine the viability of this project and to also project potential rate reductions with the addition of Page 4 of 5 City of Saratoga Springs City Council Workshop Meeting Minutes Tuesday, July 29, 2003 those municipalities. He said also much had been made of potential lawsuits and he asked if there were any groups or organizations who might be adverse to the County plan. He said potential lawsuits were an item of consideration. Mayor Kenneth Klotz said that while the dollar amount of $72 million had been the amount that was noted in the proposals, he had also heard the dollar amount of $91 million. Rich Straut said the $72 million amount was for phase one of the County Plan. He said that would extend the line from the upper Hudson to the Luther Technology campus. He said though it was unclear whether it includes all of the costs that could come about due to the expansion. He said he did not believe the $72 million included expansion costs. Commissioner Thomas McTygue asked that Council members summarize their questions and submit them to him tomorrow. He said he would then forward a copy to the County and would ask for a response within a week. He said another workshop would then be scheduled. He asked Supervisor Phil Klein for his assistance in having the County respond within a week. Phil Klein said he did not think one week was enough time but thought it could be done in two. Commissioner Thomas McTygue said he would appreciate the answers in a week if it was possible. ADJOURNMENT There being no further business, Mayor Kenneth Klotz adjourned the meeting at 6:50 p.m. Respectfully submitted, Kathy Moran Approved: Clerk Page 5 of 5