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HomeMy WebLinkAboutRes2014-019 Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2014-019 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, APPROVING A TRANSFER OF FUNDS IN THE AMOUNT OF $500,000 FROM THE WATER ENTERPRISE FUND TO THE WASTEWATER ENTERPRISE FUND FOR THE PURPOSE OF CONDUCTING MITIGATION EFFORTS AT LOWELL POINT SEWAGE LAGOON, AND APPROPRIATING FUNDS WHEREAS,operation of the Lowell Point Sewage lagoon was initiated in November, 1993, and the lagoon has operated for more than two decades without a significant investment in lagoon repair or sludge disposal costs; and WHEREAS, maintenance and repairs are necessary so that the Lagoon can perform as intended, which may require diversion of sewage into one cell while another cell is serviced, repair and/or installation of pumps and piping, and disposal of lagoon sludge, in addition to the design, engineering, and other associated repair work; and WHEREAS, City staff are developing plans for long-term repairs to the Lagoon,but in the immediate term, it is necessary to perform work to design, engineering, and perform odor-control measures at the Lagoon, necessitating an appropriation of$500,000; and WHEREAS, despite recent increases in the wastewater tariff aimed at addressing deferred maintenance needs of wastewater infrastructure,the cash balance in the Wastewater Enterprise Fund is approximately $689,600, and $311,000 in the Wastewater Major Repair and Replacement Fund (MRRF), for a combined total of approximately$1 Million at December 31,2013,still insufficient to cover major anticipated costs of repairs; and WHEREAS,the cash balance in the Water Enterprise Fund is approximately$2.7 Million, and in the Water MRRF, $212,500 for a combined total of nearly$3 Million at December 31, 2013, which includes a recent loan repayment to the Fund of approximately $1.9 Million; and WHEREAS, the administration recommends a transfer of cash from the Water Enterprise Fund to the Wastewater Enterprise Fund MRRF to cover the costs of short-term mitigation efforts at the Lagoon,in an amount not to exceed$500,000. The Water Fund is considered a more appropriate source of funds given the shortfall of cash in the Wastewater Fund,given the shared customer base of ratepayers for both the Water and Wastewater Funds, as well as the relationship between system inflows (Water) and outflows (Wastewater). NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: CITY OF SEWARD, ALASKA RESOLUTION 2014-019 Section 1. Funding in the amount of $500,000 is hereby appropriated from the Water Enterprise Fund net assets account no. 701-0000-3071-0702 to the Wastewater MMRF Fund account no. 702-0000-3070-0701, for the purpose of conducting necessary short-term repair needs at the Lowell Point Sewage Lagoon, including performing design work, odor control, engineering, etc. Section 2. This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 10th day of February, 2014. THE CITY OF SEWARD ALASKA C vV 142 /Av can Bardarson, Mayor AYES: Keil, Casagranda, Terry, S uires, Butts, Bardarson g Squires, None ABSENT: None ABSTAIN: None VACANT: One ATTEST: Jo anna Kinney,'CMC Ci y Clerk ,�ypF SEbt;•• :•? e 4 • SEAL ' e _ • r • •i i • • • ti.,eFiOF•P0•i.•` COUNCIL AGENDA STATEMENT t. sc ,1 Meeting Date: February 10, 2014 4 4" 4 From: James Hunt, City Manager 11.4510' Agenda Item: Transfer of$500,000 from Water Fund to Sewer MRRF for Lowell Point Sewage Lagoon Repairs BACKGROUND & JUSTIFICATION: The upgraded Lowell Point Sewage Lagoon began operation in November, 1993, and has operated continuously for more than two decades without a significant investment in repairs or sludge removal costs. It has become necessary to perform immediate mitigation efforts on the lagoon in order to enable the lagoon to perform as intended, and improve odor control at the Lagoon. Depending on the cost of mitigation efforts, funding will be spent on odor control efforts, design and engineering, and potentially dredging. Eventually, repairing the system will likely involve diversion of sewage between cells, repairs and/or installation of pumps and piping, and removal and disposal of sludge, but we anticipate the need for further funding to facilitate all of the necessary repairs, and will bring this matter back to Council in the future. The Wastewater Enterprise Fund and its Major Repair and Replacement Fund have inadequate reserves available to meet the cost of these expected mitigation efforts, estimated at approximately $500,000. As of December 31, 2013, the cash balance in those funds combined, totals approximately $1 Million. Given the relationship between inflows into the system (water) and outflows from the system (sewer), there is some relationship between these two enterprise operations which can justify the sharing of cash reserves for major infrastructure needs. These two utilities share a common purpose, some infrastructure, and customers, and prior to 2006 were accounted for in a single enterprise fund. This source of funding is preferred instead of the use of taxpayer funds from the General Fund, which has no Major Repair and Replacement Fund available. INTENT: The intent of this action is to provide funding to the Wastewater MRRF Fund to mitigate odor problems at the Lowell Point Sewage Lagoon. This transfer of funds is not intended to be a loan, and repayment from the Wastewater Fund to the Water Fund is not contemplated by this transaction. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan (document source here ): Protect air quality, p. 1. 11;Following recommendations from Water/Sewer Systems Analysis, X p.2 2. Strategic Plan (document source here): X 3. Other(list): Water/Sewer Systems Analysis X ATTORNEY REVIEW: Yes X No ATTORNEY REVIEW: Yes X No FISCAL NOTE: The transfer of $500,000 from the Water Enterprise Fund to the Wastewater MRRF will reduce the approximate cash balance of the Water Enterprise Fund and its companion MRRF, to $2.4 Million, preserving the balance in the Wastewater Enterprise Fund and its companion MRRF, at approximately $1 Million. We anticipate needing to come back to Council for additional funding in the future, for the purpose of conducting repairs to the Lagoon, to include the costs of engineering, repairs, and dredging. The approximate cost of those efforts it not known at this time. Approved by Finance Department: RECOMMENDATION: Council approve Resolution 2014- authorizing a transfer of$500,000 from the Water Enterprise Fund to the Wastewater MRRF for the purpose of conducting mitigation efforts and maintenance to the Lowell Point Sewage Lagoon.