The Grove Municipal Services Authority approved several contracts for the sale of natural gas to surrounding communities on Tuesday, and began to plan for their future as well.
Rick Smith of Municipal Finance Services gave the board a detailed overview of where the Authority stands in terms of debt service obligations, and outlined their options for financing future projects.
"Grove has done an excellent job funding improvements through a combination of sales tax and revenues," Smith said. "We're looking at continuing that plan into the future, but there are some issues that are going to require some careful planning."
The Authority currently has approximately $1.8 million per year in debt service obligations, which are paid through utility revenues and a .04 sales tax, which was approved by voters in 2001. That tax will be expiring in 2021, unless an extension is approved by the voters. The scheduled expiration of that tax will begin to affect the Authority's long-term financing options for projects going forward unless the tax is extended.
The two main items the Authority is considering financing options for are expansion of the wastewater treatment plant, and the automated meter reading system the Authority has been reviewing for several months. The water treatment plant expansion is estimated to cost $4.3 million, while the meter reading system is estimated at $2 million.
Smith's group has recommended financing of the water plant through a loan through a state drinking water improvement program, and financing the meter reading system through private bank financing.
The board approved a standard agreement with Rose & McCrary Engineering to begin planning for the water plant expansion, with board members Ron Tipton and Jim Ford voting against the measure. The plant's expansion has been the subject of much discussion during recent meetings, with some board members expressing reluctance to expand the plant before addressing other infrastructure issues.
City Manager Bruce Johnson stressed again that the expansion is needed not only to the plant operating a maximum capacity currently, but new environmental regulations from the Department of Environmental Quality and the Environmental Protection Agency.
"Our plant had record production in July," Johnson said. "The $4.6 million we have estimated here is to provide good quality water that meets the new standards. The information I have from staff is that it will take $20 to $30 million to replace all of our water infrastructure.
I have never said that expanding the treatment plant was going to solve our water loss problem." ‘I think our primary responsibility to the citizens is to provide ample, high quality water," board member Berwin Kock said. "That's what they expect from us, and that's our priority. That's why I support this water plant expansion."
The city has budgeted $800,000 per year that will come from the recently increased rates to be put toward infrastructure replacement over time.
The Authority approved recently negotiated contracts for natural gas delivery with the communities of Afton, Fairland, Jay, and Rural Water District #10. Tipton announced his resignation from the Authority at the end of the meeting, citing a busy personal schedule.
"My wife and I looked at our schedule, and I would be missing four of the next five meetings," Tipton said. "I don't think it's fair to this board or the city management to have somebody on the board who can't participate. I have every confi dence in this group and the plans they have going forward.