In 30 seconds
- The water rate study calls for raising the water rate from $2.73 to $7.39 per 1,000 gallons over two years, a figure that does not include debt service on the separate $11 million loan the city has been approved for.
- The Arkansas Natural Resources Commission (ANRC) said the $11 million loan is approved but not yet closed, so the city is not on the hook for repayment and has not started paying debt service.
- Once debt service on the $11 million loan is added, ANRC estimated the rate increase needed at roughly 58% over the current rate.
- A separate $16 million water-and-sewer financing request is pending before ANRC's commission, which meets November 20 and is weighing about 70 applications statewide for a limited pool of forgiveness funds.
- Before the $11 million loan can close, the city still needs a rate ordinance, a bond counsel, an engineer's plans and permits, ANRC said.
- The city's new well cost about $1.4 million, paid in cash with no loan, and now pumps 1,200 gallons a minute, more than the 800 gallons a minute originally estimated.
Recap
ANRC and ARWA called in to walk through the rate increase
Chief of Staff James Valley opened the meeting by explaining the council called in Dennis Sternberg of the Arkansas Rural Water Association and Chris Colclasure of the Arkansas Natural Resources Commission to answer questions on the water and sewer rate increase the city passed in July . Sternberg said his rate study already included the city's first $100,000 emergency loan but does not include the separate $11 million loan the city has been approved for .
The $11 million loan: approved, but not closed
Sternberg said his rate study can be revised once ANRC gives him updated numbers . Colclasure said the city has been approved for up to an $11 million loan but it has not been closed, so the city is not yet on the hook to repay it and has not spent any of the funds . Colclasure said adding the $11 million loan's debt service to the rate study would require roughly a 58% rate increase over the current rate .
What still has to happen before the loan can close
Colclasure walked through the steps still needed before the city can close on the $11 million loan: a rate ordinance, engineering plans and specs, permits from the Department of Health and the Department of Environmental Quality, a 30-day referendum period, and a bond counsel to guide the process .
A second, larger ask: $16 million taken up in November
Colclasure said the city has also submitted a combined water-and-sewer financing request for $16 million, which ANRC's commission takes up once a year, in November . He said the commission meets November 20, that the city cannot use both the $11 million and the $16 million for the same project, and that roughly 70 applications are competing statewide for a limited pool of funds . Colclasure said the deadline to even be considered for the November round was in September .
The rate-burden threshold for principal forgiveness
James Valley asked how the state's two-year phase-in allowance squares with the constitutional bar on operating at a deficit . Colclasure said the city is required to put 5% of revenue into a refurbishment and replacement account on top of maintenance and operating costs . Colclasure said the city's water rate-burden factor was 1.17 and needs to reach 1.25 to qualify for principal forgiveness on the $16 million request .
Water loss and an aging system
Sternberg said the rate study found the water department was more than $1.17 million short of breaking even for the year, after the city produced 1.428 billion gallons of water but sold only 378 million, a 73.5% water loss rate . Colclasure said the leaks will continue until the city moves from patching leaks to replacing pipes with the $11 million .
The new well: $1.4 million, paid in cash
Asked about the new well's total cost, Colclasure put it at about $1.4 million . Mayor Christopher Franklin said the well was paid for in cash with no loan, that the council took heat for the decision, and that the well now pumps 1,200 gallons a minute, more than the 800 gallons a minute originally estimated (the caption garbles this figure as "12200") .
Sewer bypass pumps: a $1.2 million history
Franklin recalled that during his time on the council, the city spent over $1.2 million on emergency bypass sewer pumps (the caption reads "$12 million," a transcription garble), including an $800,000 outlay funded largely by American Rescue Plan Act money, and said the city was down to about four bypass pumps from a peak of eight .
Transcript
Auto-generated from the meeting video's captions and lightly cleaned for readability — wording is kept as spoken, not corrected, except that caption-garbled names of city officials are normalized against the roster. Speaker names follow the attribution work in our governance record; a ° marks a name our reviewers have not yet verified. Every timestamp plays the city's video from that moment. Watch the full meeting ↗
6:42
Unidentified just going to wait forties and just get right there The Bu so people know this means to let Mr car discuss the $1 million loan and Ral Waters here to expain [Music] take a
7:15
Unidentified ro here
7:19
City Clerk Sandi Ramsey° Harris St
7:21
Councilman Joe St. Columbia (Ward 2)° Columbia pres
7:24
City Clerk Sandi Ramsey° E Davis here Dr Miller
7:30
City Clerk Sandi Ramsey you have four present two
7:38
Chief of Staff James Valley ab good afternoon Mr Mayor members of the council and City Administration Mr Steinberg Arkansas Rural Water Mr Cole col with Arkansas Natural Resource Commission um this meeting is called today for the purpose of the council hearing from uh Mr Cole clay and Mr stanberg uh in regards to questions they may have as we're considering a water rate increase and SE rate increase in the city of H West and there's a intersectionality that dealing with in terms of median household income and the rules of of of of complying with Arkansas law on following a rate study uh that also intersects with the fact that our water department is underwater and that you can't operate at deficit um and so kind of with that as the backdrop uh we had a public hearing July 23rd and the city council passed an ordinance raising the water and sew rates and that followed having a presentation in in Lano uh by Mr Sternberg of the race study to Mayor Franklin and to me and then we had a meeting on July the 2nd when Mr Sternberg uh repeated that presentation St to the entire Council and to the general public uh then we passed an ordinance and one of the things that was done in that ordinance was we raise sewer rates um in an effort to comply with the median household income um demands of getting loan forgiveness and what we've learned since that time is that the Su uh does not have to comply with that only the water and so I think at this point we turn it over either to the council for questions or to the gentleman for president presentation but I believe I think they're here to answer the question but how y'all want to do it that's kind of where we
9:37
Dennis Sternberg (Arkansas Rural Water Association) are I'm open to answer questions as Mr Valley mentioned I was here July the 2nd presented the rate study hopefully you all still have a copy of it if you don't I have one with me but uh the numbers were provided by the city to me uh from Mr Turner it's recorded treasure and we worked up the rate study and from that we made the presentation based on those numbers and that's where those numbers come from only thing I will say in the rate study that we did is we did include that first $100,000 emergency loan that is actually in the rate study already now my understanding Mr coaz you can correct me if I'm wrong you really haven't taken that other 100,000 as of yet so that wasn't figured in so understand that and the other question is about the 11 million you've been approved for that's not been included in this rate study so when you if you have to borrow that full 11 million that of course is going to have to be added in and that's when Mr Co closers agency will tell you what the the rates will be we've got a general idea what they will be but until it's finalized you really don't know but I'd be open to answer any questions I have on my rate study that I presented only thing I will say on the water I did present it and recommend you do it in two increments the increase from 273,000 the first year would be $56 I believe and the next year brings it all the way up to $7.39 so you phase it in on the sewer you were at $182,000 I recommended you going based on your numbers to $282 cents a th000 that will not cover any improvements you need on your sewer and I can assure you you have cost outlaying waiting right now that's going to have to be done as well so understand that we ran the numbers based on what provided at the time so with that I'd be glad to answer any questions that individuals might
11:36
Unidentified have one question I had for the record was uh as relates to numbers that you ran did the treasury give you information about the department
11:44
Dennis Sternberg (Arkansas Rural Water Association) operating at the deficit yes and and that's why we recommended raising increases you know if you go to the rate study itself on on the water on page three of it your Revenue total revenue this is meter revenue and non- rate Revenue you had meter Revenue of, 84,5 188 you had non-metered revenue of $1 15,681 m955 267 in revenue for the water that's water only but you had an expense of 2,697 675 you turn to page four you had a shortage of 1,1 $176,600 in Revenue to break even so understand that that's where your rate is adjusted on your cost per thousand if you borrow additional money we figure that into your minimum bill so going forward if you borrow additional money that goes into your minimal Bill to assure the lender that they get their money back I'm certain that's the way Mr cazer agency will do it but I'll let him answer that and then you study you showed that the city lost approximately 1 billion gallons in 73.5% of the water [Music] uh on page 15 of 16 Helen West down the water produce one bill I 428 mil 34,000 gallons for the 12month period they sold 378 m436 th000 which showed a water loss to be a 73.5% for every 100 gallons you're putting out there you're losing 73 and a half gallons that was at this time now it has improved you've done a lot of improvements you've hir contractors real waterers been over here to help I didn't ify leaks but leaks continue to happen because you have an aging infrastructure I mean there's no other way to put it and they will continue unless we do improvements and that's where 11 million that anrc is here to discuss what can be done with
14:16
Chris Colclasure (ANRC)° that yeah and I I'll just kind of jump in on that I mean one of the things tied to the 11 million really is even though you have a scope of work that you submitted with that proposal is really understanding what your priorities are which goes back to the engineer that you hired developing a plan so that we understand what are the things that you need to fix first ultimately you got to get out of leak replacement or leak fixing mode and get in pipe replacement mode because ultimately just fixing leaks all the time is going to kill you over time so you have to get in there and start replacing pipes and our hope is that the engineer is making progress on that so that we can work with you you to figure out you know the best Solutions going forward on that as far as the $1 million loan anytime we do financing to any Community or water system across the state we we underwrite them just like a bank does and so you know we make sure we'll look at your finances and make sure that you know you're charging enough one to take care of your system but two to also you know repay The Debt Service back over whatever terms if that's a 10e 20 year 30-year loan and then our some of our email correspondents that went back and forth you know what we show based on $1 million over a 20-year term at 4% you're looking at about a 58% increase that doesn't take into account the rate study that Dennis did because that's that those were done separately so at some point you know those all those rate combinations increases have to be meshed together um but we will you know at the time of loan closing which you know you all will need a bond counsel to close that $1 million loan we also know you have a $16 million request Ino um and that commission the commission won't meet till November till we can figure out what to do with that financing request but at the time of closing loan closing once we get through all the details there'll be a imization schedule that will show you the exact payment and you know what your rates are going to have to be all those different things because you'll have to pass a rate ordinance to be able to close on the
16:36
Unidentified loan question yes H how do we put those two things together um how long would it take for us to get because if your race study didn't include the the second hundred or the 11 million is it possible to get get it
16:52
Dennis Sternberg (Arkansas Rural Water Association)° revised so that it doesn't yeah we can revise it I mean I just need to give with NRC and they'll give me numbers they've gave me some numbers to look at for that but at the time we just looked at the condition of the system for that 12 month period
17:04
Chris Colclasure (ANRC)° and I'll say right now you have you've been approved up to an 11 million loan but it's not been closed so you're not you're not on the hook to pay it back yet because you're not spend anything you've not spent any of those funds yet but once we close the loan then you'll you know the community be on the hook for rep and you might explain to them once a long closes you just don't give a entity that amount of money to start spending it's there's a process yeah it so one will run on a reimbursement schedule so as you spend dollars for the construction or engineering those components then upon getting the invoices you'll load those into our system and then we can disperse the funds based on progress that is being made okay the other thing is we don't charge like we don't charge interest immediately so you're charged interest on the parts of the loan that you use so you're not getting charged $1 million worth of interest you know you're going to get charged on the part that you use because let's just say some projects do come in under budget so they deobligate whatever's left and so you're only going to pay the interest on the pieces that you use and you won't typically start repayment till you know usually two and a half years or so after
18:16
Unidentified closing okay but at the time at the time of of closing on the loan you need the rates to reflect an amount that would repay the amount that's inv that is correct you'll have to have a rate ordinance that's passed and that'll be part of all the documents at the time of at at the time of
18:39
Unidentified closing Mr Co everyone around here has a l to the officials and we understand what you are are saying but for the sake of the public can you take us through okay the public knows that there's $1 million is out there could you take us through from here through closing what has to happen because some people there have been false statements about you got1 million what you done with Etc forth for the sake of the public that's going to be watching the video could expain us from here until close and where we go
19:08
Chris Colclasure (ANRC) so whatever whatever the project is it has to it needs to be to go through the loan closing you're going to have to have your rate ordinance we're going to need some you know plans and specs we're going to need to understand what it is that you're You're Building uh to make sure that it's you know it's in compliance with what you asked for for the funds um and then obviously you've got all of your permits that you're going to have to do so I mean if it's a water system you know you're going have to get your permits through uh Department of Health on tour you know you're going to have to get your permits through uh energy and environment Department of Environmental Quality so all of those things now and also as part of the loan you are going to have to have a a referendum period um you know typically 30 days when you're going to obligate yourself to that debt and so you know the first step really is hiring a bond Council that can help you go through all of those steps and I don't know if you have a bond counsil already there's a lot of different Bond councils across the state that work with communities that would be my number one advice is get a bond counsel you know on staff or hired but you've also got to get a project designed I mean we need to we need to understand what the project is and that needs to be prioritized yes I mean really that needs to be like yesterday I mean that that project designed because I mean you've got old distribution system in a in a very old water plant and so you know those pieces need to be designed out and understand what you're going to do and the timeline that's going to take you to do it that would be my my sense of urgency for you all is to make sure that you get those things done
20:59
Unidentified but you have an engineer on contract
21:01
Unidentified correct is that so paperwork signed he's on board he's he's
21:07
Unidentified ready has he started designing parts of
21:10
Unidentified the project yet I don't know I know it's far has been getting the well done I don't know if he's started designing the project yet at this
21:20
Unidentified point a lot of these things should be happening at the same time that's I think that's what director's trying to
21:25
Chris Colclasure (ANRC)° say yeah I mean you can hire a bond counsil at the same time your engineers working on
21:30
Unidentified the on the design of the project so so now that the council's aware that we start trying to get fund counts and things like that together because I think they just want to have the information to know which way to go uh and I think know by you being here trying to get give them some insight on which way we should go so everybody can have the the knowledge and understanding of which way we should go because I'm saying one thing and I want to make sure they hear from you on which way we should go so we can all be on the same page because for the longest we've been getting misinformation by people outside so what you all being here is a help to us to explain to the body which way we're going I think now that we know that they know that it can be secured and um on their decision on what they want to do because by them not knowing you know you're hearing this on the street but they're hearing from you all now I think it's it's better for them so I think I'm I'm glad you all came so uh I think by them hearing it this question for both of you considering Mr sber statement earlier that uh he can update the rate study once he get additional information what's will be the approximate time on the additional information to as
22:44
Chris Colclasure (ANRC) response to most eist question oh I mean I can get him the information this afternoon you know after I leave this meeting I can get him we've already got I mean we've already underwritten the loan so we have our numbers we know how much per meter size and so we can just easily transition that information to Arkansas Rural Water Association for them them incorporate into the rate
23:07
Unidentified study okay Mr Co CL when you mentioned you've already underwritten it would that be that figure that's roughly
23:15
Chris Colclasure (ANRC) $85,000 per year yes sir so it's it's roughly about a 58% increase over 4,000
23:23
Unidentified gallon rate right now yes sir yes sir so so what's what's we get all together can we in the council's here we need to make it available so the public can see and have another hearing so the public can understand what we're doing so they won't be left out in the dark again so I think you want to let them know what you're doing and why so once we get your numbers and you real water put all this together uh and the council see it I think we need to present it to the public so they can see what the next
23:55
Dennis Sternberg (Arkansas Rural Water Association)° steps will be and let me clarify something because that is a good point when you merge these numbers our numbers were based on that 12-month picture where it showed that you were not covering your total expenses and you was over a million dollars short that's why the rate increase on the cost per thousand has to go in now the debt coming on will be added into that minimum Bill to assure so you're going to see two things happen now the minimum Bill won't have to be increased and director you can correct me until for the 11 million that's until closing yeah we'll need a rate ordinance that's approved yeah okay when you get ready you know we we'll get you the numbers based on his numbers but that'll have to that new minimum because we in the rate study understand the minimum I said you don't need to change it right now but you will need to change it with this additional debt understand that that has to be repaid so so that
24:51
Unidentified that brings me to a second another question we can we can phase in the rate increase with the increases necessary to cover the 11 million you need an ordinance pass if that ordinance even phases it in at some point Beyond closing would that be sufficient to close on loan do you have to have it actually implemented at the time of
25:12
Chris Colclasure (ANRC)° closing usually it's implemented at the time of closing under 605 you have the ability to phase in uh your rate increase if it's over for example if it's under 50% you're supposed to do it in a year if it's over 50% you can phase it in over a couple years years and then if the rate study suggests something different to phase a a rate increase in over three years it's up to the rate study provider and really the how much of an increase you have to have but we prefer like ours to be incre you know whatever the increase is if we say your rates need to go to a certain amount then that's that's what the preference
25:47
Unidentified would be and I asked a question that was that may have been a little convoluted if I can simplify you need us to actually be collecting that money at the
25:57
Chris Colclasure (ANRC)° time that you close no it can be phased in yeah so so it I mean you're going to pass your ordinance right for it but I mean I don't think you're going to be necessarily collecting you know at the very time of closing and that's my point because it means we could for example take on the first uh rate study in an increase and then if there's an additional amount that it needs to be increased for the the 11 million we can have that in the same ordinance but it's coming at some point yeah my advice would be is when we get Council right and and we sit down and actually go through all the paperwork kind of like buying a house then we'll finalize all of those things at that time okay but that R ordinance is going to have to be the full amount because it's the full amount to cover the debt service and and so that we're still talking apples and app even if it's not immediately collected it'll need to be passed in that order I think is what you
26:52
Dennis Sternberg (Arkansas Rural Water Association)° say yes okay that is correct but but the initial rate study I did shows you again losing over a million dollars operational it needs to be implemented top of rate increase
27:09
Unidentified okay okay so I I guess I'm I'm just the new water and SE rate findings that are on page nine and I kept hearing over and over and over again that the $7.39 per 1,000 gallons is our absolute break even amount based on the numbers you based on the numbers we gave you and so for right now as long as we do that rate increase and does that 738 include does
27:51
Dennis Sternberg (Arkansas Rural Water Association)° include sewer at all that's simply water
27:54
Unidentified so as long as we do this for right now understanding that I know we're gonna have to you know um for 100 you know 000 for the 10 million 11 milon that 11 million that we're GNA have to come back get a new rate study and all that but for right
28:16
Dennis Sternberg (Arkansas Rural Water Association) now this and we recommended it in twoyear Phase first year goes to $56 cents on water from 273 to 506 in the second year the rate study recommends going to the full 739 so you phase it in in a twoyear period so year one 506 and that's on page 14 again okay and then year two we go to the
28:42
Dennis Sternberg (Arkansas Rural Water Association)° 739 okay that was a recommendation in the rate study which act 605 allows more if it's more than a 50% increase you can recommend it being done in a two-year period and so I just want to understand that that amount is enough
28:58
Dennis Sternberg (Arkansas Rural Water Association)° for right now well it was enough it'll get you for what you spent for the year we looked at you're in another year I don't you know you that's why I say rate studies need to be looked at annually especially in your condition to make sure that you're charging what you need to be charged you know that's why we also said you do a 3% per year after you get up to that full amount because it
29:21
City Attorney Andre Valley° cost go up every year Mr Steinberg you mentioned 3% and uh explain to the council as you did to the mayor and me why you said 3% just a solid 3% as opposed to following cpis it
29:38
Dennis Sternberg (Arkansas Rural Water Association)° fluctuates up and down well and that's exactly why because CPI fluctuates so much we say a 3% we've looked at it over the years doing rate studies that a 3% increase per year is a lot of easier for customers to accept and it helps cover your cost of inflation all these water Parts you're buying the cost have went up drastically you can ask your superintendent Mr Val can tell you every part you buy is it continually increased so if you don't keep up all you're doing is digging yourself back in a hole again we want to get you to Solid Ground and moving forward and and and I say this you know
30:18
Mayor Christopher Franklin you know yall have to remember we still on bypass pumps for SE so we really really really need to raise sewer because uh from Mrs Davis and Mr ethy and myself when I was on the council we spent over over $12 million on bypass pumps Miss DAV you remember when we had this you know we had got in charge $800,000 for bypass pump the city was on nothing but bypass pumps so a lot of your American Rescue act money went to bypass pumps am I am I correct M Davis Mr ethony and that's where most of the the money that we gotten the the I think probably like right a million and a half probably went on bypass pumps strictly that so if we don't raise sewer we still be in the same situation that you know we got out here at the pump right here at the um Industrial Park it's a bypass pump over there and over here by the CLE dunnings Park there's another bypass pump and we kind of el Miller yeah Eliza Miller so we we so we have to do something with SE and we got to do something fast that's where money's going a big chunk of money we could have done something else with but you know at the time the council was surprised by the $800,000 that we had to spend on byass pumps and we're still on bypass pumps to this day so my suggestion is you I know that when you talk about water so the public don't really understand that you know these pumps push to water where push the sewer where it needs to go and you have sewer sewer PS out there on Little Rock road so it has to push all that stuff there so we need to make sure that the water problem can be solved but you have to factor in sewer is important and then you got your your sanitary drains got got got to factor all those things in it's a it's a lot to this and uh if I hadn't been on the city council for all those years to know that you have sanitary side sewer water it's a lot to to come to match up with but it it's it's kind of at this point that we have to do something that's going to pull us to where we can be much better than what we are and I now we have to explain this to our customers on what's going on that's why there are videos that I've tooken and Tred to make sure they upload to Facebook to show people what's going on because people really you talking about it they don't really understand it because you know I had to see it so I'll be more than happy to make sure you all get to see these where these sewer puns are and things like that how we on bypass pumps because at one point we was on eight bypass pumps so I think we've down to four if I'm
33:16
Unidentified correct so well that that brings me to another question so you know I I understand that your recommendation was every January that we do a 3% increase uh to account for the cost of living I understood that we received the email from the city treasurer and so one of the things I understood because Mr Sternberg told us you know listen as far as the sewer you know it's adequate for right now you're holding on but don't you know get excited because that's an issue you're GNA have to deal with I if I remember correctly and so the treasurer said that we could do the18 2 cents to 282 so would that I mean would that help us with the cost versus what was
34:09
Unidentified implemented before the moratorium I I think to to me I think what we implemented will greatly get us where we need to be because the treasure he's not he's not here so I can ask them but I think what we implemented the first time on sure would really help the city get to where it needs to be because we got a lot of a lot of Asian infrastructure and SE it's gonna be next to clash so we a try to get ahead of this now or deal with it later but I think right now we should focus on water and S together at a comfortable number so that when these two gentlemen put their numbers together we can make sure we can pay this loan back and we make sure we start getting out bypass pumps make sure we start having money to put back so we can do keep make sure we can maintain the system cuz you know again the governor also said that it gave us three things to do we have to we have to make sure that we pay a person 50 two people $50,000 and $100,000 salary so how are we we need to implement all this in there together to show what we got to what we have to do so it's a lot so you got all these numbers somebody give these numbers to put out you got these numbers you got $11 million loan to factor in you got these whether that's A1 $200,000 worth of salary that you have to factor in and then you got to make sure the people who are at working how do you factor in and giving them raises to to make sure they do what they need to do so it's a whole lot we have to factor in to make sure that we can be in
35:45
Dennis Sternberg (Arkansas Rural Water Association)° compliance let me answer your question on on your SE side there again the rate study was look looking at that 12 month picture and that $182 and the recommendation that your present rates on to go to 282 was just getting you to the break even amount you're looking at another funding issue where you're going to have to go and come back to Mr Co clure in his Agency for the sewer you need to have your engineer design something and give some cost estimates on what it's going to take to correct those pump stations that's existing that you got bypass pumps on because every pump station has to have at least two pumps because if one goes down you always got another one and you should be fixing the one but you've got to the situation where they went down both of them you didn't fix them you got another one went down and you didn't fix them that's going to take an additional loan and do it correctly a bypass pump is just getting you by that's all it's doing it's it's a waste of money in my opinion bite the bullet you do the loan make the corrections but that's I just want to make sure you understand that that the dollar increase was just getting you to the break even amount for that 12- month picture again
36:57
Chris Colclasure (ANRC)° now I'll add to that I mean I don't I can't reemphasize enough and I know Dennis shared the same thing but I mean having your having your engineer tell you what you need to fix first and and start moving down that road sooner than later is is really where you need to go because you have to start fixing some of it and until the engineer has has can can lay that that out for you you mean you have nebulous I mean you have nebulous dollars nebulous timelines those sorts of things so that really needs to be nailed down by your Consulting engineer to help you do that because you're going to have to do it in phases there's there's no doubt and then you have justification for a rate increase because you know a dollar amount you're going to have to borrow to fix and make the corrective actions you need because you've got energy and environment that's going to be looking at you on that Wastewater side and I'm certain they already
38:01
Unidentified are can can can the 11 million that we've already been approved for is that just water or can that cover any sewer
38:08
Chris Colclasure (ANRC)° projects that was just water because that was out of the drinking water State
38:13
Unidentified revolving fun now you said there a meetting in November Mr Co about another
38:17
Chris Colclasure (ANRC) $16 million yeah you all submitted a request for 16 million and I believe it it had kind of a combination of water and waste water uh but both in that request and the thing is is is we will be doing principal forgiveness funding so we that's one time a year that we do principal forgiveness is in November now your current rates as they are you're you're not at the rate that you need to be to qualify for principal forgiveness because the thing is and you could you could do a rate increase to do it like before the meeting but I mean the thing is is typically if you're if you're I me we look at 1.5% of the median household income based on your LMI are over 50% then youall have to meet the 1.25 so 1.25% of your median household income needs to be spent on water and 1.25% needs to be spent on sewer to qualify for principal freets just to be eligible in the state so but right now you're not at that I think our last calculation you were at 1.17 when we ran your numbers back in for the February $100,000 Emergency Loan and the the $1 million loan and is that 1.17 for water or for
39:45
Unidentified sewer that was for water right do you
39:48
Chris Colclasure (ANRC)° have a calculation of where we are on sewer I do not know where you are on
39:52
Unidentified it's gonna be less Mr Co just for for the record are
39:57
Unidentified you saying that we need to have this before November for that to be for that 100,000 apply your rates need to be at a point that makes you eligible but I mean that's not let's
40:14
Chris Colclasure (ANRC)° face it that's not that big of a jump from 1.17 to get to 1.25 but you have I mean you need to be in compliance with 605 granted your due date is not till 2026 for your rate study but you have a lot of infrastructure issues and you're running in the negative so I I would say that a rate increase is probably needed as soon as possible then you can worry about the debt service at the as we approach closing I mean you know because you have a year to close typically we have a year to close the loan now we approved yours in February and so to guarantee your rate we ask that you close in in 12 mon months so February of 25 is is not that far away that's
41:07
Chief of Staff James Valley correct and Mr coia the I mentioned at the beginning of the meeting there was an intersectionality um the need to raise our rates and also there's a constitutional provision I believe it is that requires us to not operate at a deficit so there's a statute that says you can raise the rat over two years years but the Constitution say you can't operate at a deficit so were those two things uh how do they mesh or do they mesh at
41:38
Chris Colclasure (ANRC)° all I I mean my advice would be not to run in in a deficit so you're going to have to get your rates up where I mean typically when we even when we underwrite we're looking to see what does it cost to maintain your system your M cost and then you have to sufficiently fund M maintenance and operation cost and the debt right so in that instance if I'm
42:05
City Attorney Andre Valley° hearing what I think I'm hearing then the race study is to break even that is don't operate at a deficit then you wouldn't break even by doing over two years you'd have to do it the first year well and there's a Dennis in the are you do you have the refurbishment account is
42:23
Dennis Sternberg (Arkansas Rural Water Association) that in it's in it's in the right state both water and sugar yeah under 605 you have to put 5% in a refurbishment account so that's above and beyond what your maintenance and operation costs are right and on your water for that year we looked at that 12- month picture your refurbishment replacement account is based on 5% of your total income well your total income as I mentioned was $1,955 268 so you take 5% of that that's $ 97,7 that you'll be fing into a refurbishment replacement account that you can use to fix pumps to replace lines on water on sewer you do the same thing and your refurbishment replacement account again is based on the 5% which is we have a net positive on that uh you had a total of $92,700 sewer and the refurbishment replacement account would be $45,000 35 for SE that's on page six on the sewer at the
43:36
City Attorney Andre Valley° bottom so are you suggesting that that replacement and referment account would get you out of the trouble of operating at a deficit for that one year while you're gradually raising the rates well
43:49
Chris Colclasure (ANRC)° it actually does get you out of that deficit that 5% because you're you're required to fund it now but you've got to get the rates adequate to fund it that's why we're making the recommendation to get it to be able to fund that you have to have it to the minimum of what we're recommended and is
44:06
Unidentified that minimum the 506 for the first year or the minimum is the 739 total the 739
44:12
Dennis Sternberg (Arkansas Rural Water Association)° on water is the total that's in a two-year period now you can do it in one year but we recommend because it allows the the ACT 605 allows it to be implemented in two years if it's more than a 50% increase years was on cost ,000 yes so that's why we recommended in two years yes on the sewer we said you're going from1 82 to 282 that's not more than 50% so therefore you implemented a one-year period but that does get you to the 1.25 that director cazer is talking about on the load to moderate income level right you said it does not get us
44:51
Chris Colclasure (ANRC) to and I don't have the sewer rates in front of me so I I couldn't tell you on what your sewer rates are but I know looking at your water rates uh your rate burden Factor was 1.17 it would need to be at 1.25 so is your water rates uh just for clarification still the minimum is 1620 for
45:14
Chris Colclasure (ANRC)° residential it's actually 1674 residential it was 1620 but the year you looked at okay but it had been raised by CPI to 16 so you have an automatic CPI calculation that you figure in each year
45:27
Unidentified yes sir and now it's 1674
45:31
Unidentified correct and you do the same on sewer
45:34
Unidentified automatic yes sir and the sewer was 927 I think yeah I believe it may be 988 now
45:44
Chris Colclasure (ANRC)° okay I go back and look I think those numbers that's why we need updated numbers to make sure we're doing calculations correct be able to tell you what that
46:04
Unidentified 4,000 do you have a date with the November lead
46:08
Chris Colclasure (ANRC) this yes it's November I want to say it's the 20th I can tell you for sure one here's the thing too that you have to understand is you have an outstanding $1 million loan the principle forgiveness if if you were considered for it would be on the 16 not the 11 so you depending and you can't use the 11 and the 16 on the same thing because you were already approved for a project at the $1 million loan so if it was the same thing you would almost have to deobligate the 11 and take your chances on the 16 that you would get some portion of that in the form of principal forgiveness I can't guarantee you that you know you'll get anything because there's 70 some odd applications for the November meeting and we have a limited amount of funds and we fund down a project priority list but but to be even considered your R burden Factor would need to be at 1.25 to even be [Music]
47:11
Unidentified considered stand the S rate this year is 958 for the first uh th000 and 188 for each, gallons after that
47:29
Unidentified and that 273 on water increased as
47:33
Unidentified well yeah water 1674 and 2882
47:43
Chris Colclasure (ANRC)° 282 I I will just confirm that the commission meeting is November 20th in L thank you
48:10
Dennis Sternberg (Arkansas Rural Water Association)° so I will say uh I'll get get back with the director Co cion on the loan to make sure we have the same numbers and give you a update on that and I can email it back to the
48:25
Unidentified Council on 11 million yes sir do you want the 100,000 emergency figured in as
48:31
Chris Colclasure (ANRC)° well or not yes yes we we're in the process of drawing that down we need to figure that yeah I think we 96700 remaining
48:48
Unidentified okay so we we that's that's in the works we applied to get it it hasn't made it to us yet but it'll be funded Within next 10 business days or less my
48:59
Mayor Christopher Franklin° understanding okay so you're working with my staff on the all the document
49:03
Chris Colclasure (ANRC)° requirements right now yes sir I had a conversation with Miss am yesterday and I also in contact with M Andre
49:14
Unidentified Johnson okay all right all right any other questions from any other council member
49:50
Chris Colclasure (ANRC)° uh it's a lot to take on but but you've got you've got to keep moving and you know your engineer is is the the main thing that needs to be moving now on the projects to get a priority on on what needs to be done and you know continually fixing leaks a isn't the answer we need to start replacing
50:11
Unidentified lives Mr Co clay this may be a little backwards but I don't think we asked you to introduce yourself to the audience so they know who you are the council requested the uh key players in this process the loan and Grant process would be you and study process be Mr Sternberg but could you just give our audience a little background about you and what you do and which division of state
50:35
Chris Colclasure (ANRC) government you operating in sure sure Chris call cazer I'm the director of The Natural Resources Division of the Arkansas Department of Agriculture so we administer roughly six programs three Federal three state for assisting Water and Wastewater systems with financing and so we work with communities all across the state on water and wastewater fin financing current portfolios is about 2.5 billion in Grants and Loans or loans in principal forgiveness all across the state um we've been fortunate to receive some federal funds that we've been able to distribute um but right now we're seeing a major Water waste water funding a lot of that I think is act 605 because folks we have primarily loan tools and a lot of communities now can afford to take on the debt to fix their infrastructure and 's a lot of water Wastewater funding uh projects going on right now across the state we've done like I said 450 projects in three years so a lot of lot of projects out there but we assist communities off State we're happy to be here to help you we've had lots of conversation with Smith Mills and the mayor and others just trying to help you navigate the situation that you're in and you know we'll stay committed to trying to help you through this there is another thing that I want to mention you know act 605 to be in compliance you have to have a rate study and you have to implement the other thing that you have to do is your water board has to be trained has to have receive eight hours of training and you don't have a water board you have a city council and so that means the city council the majority of the members it could just be a simple majority but they would need to have taken the training and the eight hours of training to to stay in compliance with 605 as well those report reports are due every January and so you know we get the reports from communities on their or water systems on their water boards attending training and so Dennis provides training through we actually have graduates all right one thing we need is just the report is a the number of members that have gone through the training uh because we actually keep track of that as well under 605 as the as the agency that administers that program
53:04
Unidentified any more questions I just want to say thank you so much um you know I think that it's always helpful when you know this body you know our mayor our uh Chief of Staff our City attorney all the members you know when we make every effort to try and make everything as transparent as possible I think that that is helpful um you've certainly answered a couple of questions that I had I called myself studying and I went back and looked at the videos over and over and over and I had all these questions but then you know just that piece of information that you go yet back to the table because of the 11 million and we may have to do the rate study again and so it's just a it's an Ever moving project you going on so I just wanted to say thanks I mean I found
54:00
Unidentified it helpful for me for sure you bet and I would say the same thank you because what she's not saying directly is that we also have to build trust with the uh community and we need them sometimes not to hear from the elected officials that people have a low bar of trust for but from somebody who's not as they say from here tell us exactly what we need to do so that when we actually do it they understand how we got you can
54:28
Unidentified can I ask the question yes sir I I I I drove out by the new well today finalizing it with the mission control hooking it all up so all be automatic uh you know I I sat in here several different Council meetings where the city approved the to do the well and set aside money I mean it's nearing completion so do we have those good I just want to make sure that that's I don't know what the
54:58
Chris Colclasure (ANRC)° total cost was but right $1.4 million
55:01
Chris Colclasure (ANRC)° yeah I think the I guess the reason I'm bring that up just to make sure people understand there is a major cost in just sir the well itself and and and we
55:11
Mayor Christopher Franklin° didn't we didn't take out a loan we pay this way when this well is done to be paid for with cash our own money so we have to borrow anything and I think people have to understand that you all around this table made tough decisions for this well and I mean you all should be commended for trying to make sure we save this community and what you all did you all deserve the city council and the administration deserve a standing ovation for getting out here to make sure we got this well completed and we're right at completion so I my hats off to you all and thank you all for thinking about the citizens you know because we can get get caught up in this thing of people people but you all got caught up in taking care of the community so I'm y CU y y really need to take care of the community for us on that appreciate that because we would not have a well if you all hadn't a lot of yall took heat for this well uh a lot of people had a lot to say about what we were doing but you all should be commended because now we have a functioning well at 12200 gallons a minute so that is something we
56:18
Mayor Christopher Franklin° 1200 that's more than estim 800 came at
56:22
Mayor Christopher Franklin° 12200 so I think that you so any who's who's got something to say this city council is is a bunch of shakers and movers because we got a
56:33
Unidentified wh uh Mr Co and Mr Sternberg I want to thank you all as well one point of personal privilege that that that I would like most e said it once uh one of the things that I think the Citizens need to understand is what is the status of our infrastructure and because we we have long way of here and I think that it would be good for them to hear it from someone other than us to tell them that hey this is the beginning of the journey as I describ a group of people the other day getting the well if this was a car run out of gas getting the well just simply turn off the gas light we not even a quarter of a tank uh full and we still got to go all the way to being full but I would invite any comments you all have about the infrastructure need for infrastructure and long term that this is something because these race studies I my opinion I've said before said we're going to be constantly having to look at rates and and and people going have to get used to the notion of the bills are going to be constantly going up because there a lot to do in infrastructure I would invite any
57:43
Mayor Christopher Franklin° comments from me one of you well unfortunately I can make a lot of comments because me and my staff have been over here quite a
57:51
Mayor Christopher Franklin° bit this is precisely why I
57:54
Chris Colclasure (ANRC)° wanted thank you but for the last year and a half but the bottom line is you have an aged infrastructure on water and wastewater both sides that honestly has had neglected maintenance for for years and it's caught up you know rates were too low rates should have been looked at back then and continually adjusted to where you don't see a major increase uh and hopefully you could have maintained the the water treatment plan on the west hel side is the mo one of most familiar with I've been to the Hell in the water plant as well but you need major infrastructure upgrades there you can have a well but if you can't get that treatment plant to process that water you're still shutting down because the filters are not adequately taking care of it so they have to wait and and your high service pumps are out pumping what the treatment plant can produce so you shut down until that clear oil fills back up and then it can start pumping back out to your system your tank you're talking about you you had Wells that depleted in capacity that actually continually decline decline decline one of them completely failed so that's why the emergency need was for the well that you guys did and I commend you for that uh you know it actually came in higher than what was projected and that's great but the wells can provide the water but if you don't have a treatment plant that's adequately operational and maintained you're still going to have problems your distribution system system is in serious need of help your main distribution lines all your old 2-in galvanized lines need to be replaced that isn't going to happen uh quickly and it won't happen cheaply as you mentioned you know we talked about the $1 million for water that's water only uh you've got the same problems I can assure you on the sewer side I've heard enough about pump stations and bypass pumps and how long you've been running on them that's infrastructure that you can't afford once you have both pumps and a lot of big larger lift stations have three pumps in them and they they'll pump different varied amount of water Wastewater based on what the the flow will be coming into it that's projected but all white Wastewater collection systems are going to have what they call II infiltration and inflow when you have heavy rains your treatment your your collection lines fill up your pump stations have to be adequately size to produce the pumps to put the water back to the Wastewater Plant uh yours is well you got you got pumps down in four different Li stations I just heard you're using a bypass pump that bypass pump probably won't be able to keep up all the time all these things need to be addressed and it goes back to what director coer said before you can get funding we've got to have plans specs priorities what you're going to fix why you need to fix them what is the cost estimate that all has to come to them to to approve the dollar amount you might need and whether you get principal forgiveness or or have to take loans but you have to have it fixed and guess what it has to come from rates the rate payers and it's no different than this any system in the state they have to come up with those revenues and the revenues come from water rates and Sewer rates and you need to look at both entity Water and Sewer is a separate business everything needs to be built directly for all cost for Wastewater to Wastewater not combining it into the water and Sewer mixing it together keep track of what's going on then you know what your system is running like and you have a business plan on how to address it and you can as I mentioned several meetings before you can start watching the Trends on your annual expenses you can see where your problems are it'll show you that it's continually increasing your water uh loss here in West Helena didn't just happen overnight it continually increased until it actually went down and then you had a combination of well problems come in after that so you had continual combination of different things happening but you got to turn the corner and the first corner is you got a well now let's get the plans from the treatment plan and lines in place get them in there and get this thing funded because you need to have it done that 73% will drop I can assure you the leaks we help fix when you dig it up you had a clamp here and clamp here and the leak was in the middle when you when you're running in and stuff like that long range plan says you should have had that replaced already your other problem in your system is you've had so many different people lay new lines and tie lines in together they never abandoned nothing so your system is harder than any system we've ever worked on to isolate and shut off a section because you're looped every which direction and now a lot of your vows don't shut all the way off and you we can hear that going through the valve we know that's a fact but it'd be a lot simpler if we could go back and valve everything off you ultimately might end up with a whole new distribution system just because of the valving issues you know I said when you eliminate your lines on gallon eyes you need to cut and cap if you do that you'll never have to worry about that line leaking again because it's out of service but if you just lay another line there and tie into that you still got that other line that's active it's a problem so you've got to start eliminating those problems in your construction you're ER can design that and make that happen but you got a Long Hill to go you just started you're at the bottom of the hill and you got a long way to go yes
1:03:35
Unidentified sir and as as to uh the actual cost of this one of the issues that we discovered along the way is that everybody thinks the $200,000 that we received is sufficient to fix it but to be clear the 11 million is just a beginning and we're talking water on that just water the 11 million is just the beginning we're going to need millions and millions more to entirely replace the system right but you got to prioritize what you think should be done first and that's the key you need to start doing that and I just want to be clear that people don't think that even the 11 million fixes everything it does
1:04:10
Chris Colclasure (ANRC)° not it's just the beginning correct you won't really know to your engineer can lay everything out and and provide you a good cost estimate for fixing the things
1:04:20
Chris Colclasure (ANRC)° that need to be fixed the soonest I me what Dennis said I mean we recognize that your distribution system is in really bad shape I mean that's that's why you've had three emergencies roughly
1:04:32
Dennis Sternberg (Arkansas Rural Water Association) in a little over a year yes sir um and so I mean prioritizing getting those lines fixed is seems critical to me and valves and the plant and I mean because you're you're in a lot of ways I know you have no choice but to fix the leaks but you have to get out of leak fixing mode right and get into pipe replacement mode you have to otherwise you're going to spend all your money fixing leaks and other challenge you got is what the mayor mentioned getting keeping adequate paid licensed operators as you know you're under consent administrative order now on that that that has to be
1:05:16
Mayor Christopher Franklin° done and I'm I'm glad that you all are here to explain that because this is something should I mean previous administration should have we should have had something like this a discussion so the the city council everybody know what's going on at the same time because now you all know for sure what I me and Mr Val been trying to tell everybody it that these issues exist now you see it and you hear and I hope the listening audience will take heed and we got to make some strives toward the right way with uh raising rates and um I'm certainly going to take what they said to heart and make sure that we that the water department Mr Rose Mr valy gets start getting on these plans to do things we need to do because we need water and sore we can't attract anybody with Hospital chemical plants especially our residents nursing homes all the people who are looking at us here that you're having water trouble they going to go the other way we want them to come this way so gentlemen I thank you
1:06:18
Mayor Christopher Franklin° allberg mayor uh Mr stanberg and Mr coia uh I'm paying the audience for for questions because they're not on the agenda they're not allowed to to speak and there was one concern that was for you Mr Co I'm going to ask it and then Mr Sternberg if after the meeting you'll meet uh Mr meows at the beard and he has a financial question I think that you can just help him answer that but um if I remember the question right it was about us qualifying for that principle forgiveness already been approved we still qualify for that not for the 11
1:06:59
Chris Colclasure (ANRC) because one we did that in February we didn't have principal forgiveness dollars to give out we get that from direct federal funds we only do that one time a year in November so there is no going backwards in time to forgive anything in the past this would be for future funding requests that you would qualify for principal forgiveness all of that depends on how much direct federal funds we receive and then the number of projects requesting principal forgiveness because even though you would qualify at 1.25 we go off a funding ranking sheet that's done for the by the Department of Health for water systems and so you know there's 900 and something projects on there I can't tell you where you are on the on the list I would assume that you're you're probably up there in the top 25% if I had to guess that's just a guess but we can we we fund until we run out of money on the principal forgiveness side and it's not 100% we do a 75 25 a 5050 and then a 25% principal forgiveness 75% loan so it's a loan principal forgiveness combination if we do happen to award principal forgiveness but that's only one time a year and it does not go backwards in time so so so we so the the 16 that we're looking for if we get our race we're looking to if we get our race up to qualify for the 16 million so we already got an application in for the 16 so so you might be if you're if you qualify at 1.25 which you'd have to elevate your rates then depending on how much principal forgiveness dollars we have and how many project requests are ranked higher than yours that you potentially could get some principal freakness dollars so so
1:08:49
Unidentified Miss Miss Ms already has a request in
1:08:52
Chris Colclasure (ANRC)° she does so so the deadline to submit a
1:08:54
Chris Colclasure (ANRC) request to even be considered was in September because we have to have time to process all of those applications and I think again we have 70 some odd applications for principal forgiveness or for funding so we need to get our rates up right F so we canif I would say that you need to have your rates up to where you would qualify because right now you don't because that 16 million you started replacing some more things so just be ahead of the game thank you Miss Mill for for getting it done for us
1:09:23
Unidentified yeah I just want to say thank you too
1:09:25
Unidentified miss m for coming yeah she's super instrumental I know with with a lot of the paperwork and other things I want to say thanks to glad you're
1:09:37
Chief of Staff James Valley here all right now we have one item of business that we need you all to take care of if you will uh before you adjourn and that is a uh permit from Estella Graham they've been doing it for several years on Hernando Street family reunion or they are permitted to block off the street during the Blues Fest in their family reunion it's been signed off on by the department heads and this Council has granted it at least three years or so four M Miss Davis tells us so that and that's going to happen before you meet again so we we need you to give them a thumbs up a thumbs down today if you
1:10:21
Unidentified will miss Miller moves to approve that M
1:10:26
Unidentified Mrs Harris second the motion in
1:10:29
Unidentified discussion Madam cler you call the rooll
1:10:32
Unidentified stavis yes M Harris yes mrly yes M Miller yes yes oh not e
How this page was made: built from the city's own meeting video (YouTube ↗) and its posted meeting packet (Drive folder ↗). Dollar figures are quoted from the documents; nothing here is paraphrased from memory. Corrections: cheekforhelena@gmail.com.