News Column

Holden Council cuts $1.1 million from utility board budget

June 30, 2014

By Sue Sterling, The Daily Star-Journal, Warrensburg, Mo.

June 30--HOLDEN -- The City Council cut $1.1 million in proposed spending from the Board of Public Works' 2015 budget Thursday in a special meeting held to resolve budget questions.

The council tabled budget approval June 10 when some councilmen questioned budget items. No board members appeared to answer the questions.

The $1.1 million included in the wastewater budget would finance construction of mandated improvements to bring the lagoon system into compliance with state and federal regulations.

The council approved a contract two years ago with Shafer, Kline and Warren to provide preliminary engineering and design of an ammonia removal and disinfection system for the lagoon.

Engineering fees are being paid through State Revolving Fund monies left over from 2005 lagoon construction.

Construction funds are not available, and council members questioned where the board would get the money.

Water Superintendent Tony Lerda said the total cost will not be determined until the final design is completed.

"Then we'll determine what we're going to do, and then (decide on) financing," he said.

Lerda said much of the work may be done in-house to lower costs.

"It appears we can do all except for the electrical," he said.

Engineers "are looking at a new grant," he said, which could provide $500,000 for the project.

"We're looking at eligibility requirements," he said.

If the grant requires setting rates at 2 percent of the average monthly household income, then they will not apply, because sewer rates would increase to $64 per month. Without the grant, Lerda said, the board can possibly refinance the debt service and avoid a rate increase.

If required to borrow, Lerda said, the board could add $3 to $7 per month to sewer bills, which now average about $40 per month. He said financing could come from a lease-purchase, conventional loan or bond issue.

"There are all kinds of dynamics for managing (the cost) without a significant impact," Lerda said.

Mayor Rick Edwards questioned whether Lerda's firm, O&M Enterprises, could do the work without going through a bid process. He said city ordinances require bids for projects costing more than $5,000.

Lerda said the bid process has administrative costs, adding contractors would add "some cushion" to their bid. He said he has done similar work for other clients.

"If I can't save you money, I won't do it," he said.

Edwards said he would seek legal advice.

"We need to be in compliance with state law," he said.

Lerda said, "It's an offer on the table. You can take it or leave it."

He said improvements "have to happen," and the council can take the $1.1 million out of the budget now and put the money back when needed.

"I'm not going to sign off on $1.1 million before we know where it's coming from," Councilman Doyle Weeks said.

Councilman Neil Carter asked if the board plans to raise water rates. A budget worksheet showed water revenues at $403,000 for the year compared to budget of $522,000, and the board budgeted revenue for 2015 at $535,000.

Lerda said the budget worksheet compiled in March did not include total revenues for 2014, which will not be known until June 30. He said the collection figure showed "year-to-date" revenue, which does not include the last couple of months.

"It's helpful to have up-to-date information when we're asked to make a decision," Edwards said,

Board Chairman Jim McDaniel said 2015 water revenue is anticipated at $537,614. He said the board budgeted $2,000 less than that for 2015.

Edwards suggested the council "red line" the $1.1 million expenditure and amend the budget later when costs and a funding source have been determined.


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Source: Daily Star-Journal (Warrensburg, MO)

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