Town of Daniel
Special Town Council Work Meeting
June 25, 2009
Wasatch County Services building
West Conference Room
55 South 500 East
Heber City, Utah
6:30 PM
Quorum present Mayor Michael Duggin, Council members Heather Bateman, Gary Walton, Eric Bunker. Council member Jon Blotter arrived at 6:48 PM.
Also present were Planning Commissioner Kim Norris and Planning Secretary Kathy Percy, Water board members Chris Anderson and Keith Bates, Water company secretary Joyce Anderson, Engineer Ryan Taylor, Board of Appeals chair Chip Turner, and James Kelly.
Guests included Michael Grange of Division of Drinking Water, Curtis Ludvigson of Rural Water of Utah Association.
Recorder Merry Duggin was present to record the minutes.
This special work meeting was called to order by Mayor Duggin at 6:37 PM by introducing the special guests Curtis Ludvigson and Michael Grange. He then opened the discussion by pointing to a list of issues that would need to be addressed during the water revenue bonding process.
Mr. Ludvigson discussed his sample ordinance which he drafted as a former mayor of Sterling UT as a good example covering the basics of operating a water company. He indicated that connection fees must be set at an amount to cover the actual costs of the connection to the water company. He suggested that the ordinance Daniel eventually passes may want to consider each connection on a case by case basis or set an average so that each new connection will be charges the same amount. Impact fees must be handled very carefully, based on an analysis of our engineering company, and must be used only for growth of our facilities and not for replacement of our old facilities.
Mr. Grange took up the discussion to remind the Council that we should establish a repair and replacement reserve account which would be used for repair and replacement. Division of Drinking Water (DDW) is requiring the water company to place 5% of their annual budget in a construction fund, and DDW will require the Town to notify DDW if any of these funds are being used. This reserve account should be considered in our rate calculation, but we must go forward from today and not use past fees as a basis for today’s fees unless we have good justification for them.
Mr. Taylor indicated that we have done an impact fee analysis and recommends that we charge $15,000 to install a new line and may require irrigation shares from a new water customer. If a well turns bad, the well shares could be turned in. A discussion followed concerning the value of a water share in transferring from irrigation to domestic use. Some water rights might not be transferable and/or valued at less than 100%, and all water rights would have to go through a change application process through the State Engineer’s office. It was agreed that impact fees could be challenged by developers, and the Town must have a clear basis for charging them and be extremely careful that they would be used only for growth of the system.
Mr. Ludvigson pointed out that if the Town owns and operates the water company, then it should be run so that the Town Council members are the decision makers. An advisory board is permitted, and the company should raise enough revenues to pay its employees and cover all expenses. He advised the Town to make changes gradually over time. He suggested that the Town not to establish too many types of water rates and felt that water usage is the best and most equitable measure for setting rates. A simple system would be to set a minimal amount as a base rate, and charge increasing dollar amounts for increased usage. Example: $25/10,000 gallons per month, $1 per thousand for 20,000-30,000 gallons, $1.50 per thousand for up to 50,000, $2.00 per thousand for more than 50,000. Another example: Set a base dollar amount per month for zero gallons and then charge for the actual water usage. This could be a good system for the small water user.
Mr. Grange recommended that the Town could set water rates and then examine them at a later date to see if they are effective. Rates can be changed by resolution adopted by the Town Council and do not require a public hearing. According to Mr. Grange, the average rate in Utah is $37.11, and statewide the rate is $1.34/1000 gallons. Mr. Grange recommended $37.50 as an average rate for the Daniel Municipal system. This average rate would allow the Town to cover the bond debt service and generate enough capital for operation costs, repair and reserve account, and inflation. The State is requiring $3,950 be placed in a special account each year over a 10 year period so that the Town would have enough to make a yearly bond repayment in case a problem should arise (to be considered a “rainy day” fund).
Mayor Duggin asked for volunteers to work on several committees. Council member Blotter and Mr. Ryan Taylor will work together on a water rate structure. Council members Eric Bunker and Gary Walton and Planning Commissioner Kim Norris will work on an ordinance for the Town to consider for operation of the water company.
And Water Board member Chris Anderson and Water company secretary Joyce Anderson will work with Recorder Merry Duggin to compile a budget for the water company to be adopted by the Town Council.
A letter will be produced and mailed to all the water customers outlining the changes to occur as the operation of the water company service as it passes from a private to a public system. Recorder Merry Duggin reminded those present that a Public Hearing has been scheduled for August 3, 2009 at which the water customers may speak concerning the operation of the water company including the new rates and bonding process.
Mayor Duggin thanked everyone for coming and adjourned the meeting at 8:55PM.
Merry Duggin,
Recorder