HomeMy WebLinkAboutSpecial City Council Minutes 12.22.2009MINUTES OF THE CITY COUNCIL OF LAUREL
December 22, 2009
A special meeting of the City Council of the City of Laurel, Montana, was held in the
Council Chambers and called to order by Mayor Ken Olson at 6:30 p.m. on December 22, 2009.
COUNCIL MEMBERS PRESENT: Emelie Eaton
Chuck Rodgers
COUNCIL MEMBERS ABSENT: Kate Hart
Alex Wilkins
OTHER STAFF PRESENT: Mary Embleton
Sam Painter
Kurt Markegard
Mayor Olson asked all attendees to sign the attendance sheets.
PUBLIC INPUT:
Doug Poehls
Mark Mace
Chuck Dickerson
Norm Stamper
Bill Sheridan
Matt Wheeler
Tim Reiter
There was no public input.
SCHEDULED MATTER:
• Public Hearing: Intention to increase the City of Laurel's water rates and charges to become
effective on January 10, 2010.
Mayor Olson asked staff to introduce the item to the council.
Chief Administrative Officer Bill Sheridan introduced Harry Whalen, who works as a circuit rider
for the Montana Rural Water Association.
Harry Whalen has been employed by Rural Water for the past 22 years, and his total longevity in the
water field is 52 years. Montana Rural Water has been in existence for the past 32 years helping.
communities across the state. Montana Rural Water assists any community, water system, city or
town with a population under. 10,000 people. Harry works on a Federal contract with Rural
Development, which is the old Farm Home organization. During President Clinton's second term as
president, the name Farm Home was changed to Rural Development. Rural Development loans
money to all communities with a population under 10,000. He explained that his services to the City
of Laurel are at no cost to the city or the ratepayers.
Harry asked the audience to look at the third page of the information distributed. He explained the
structure of a city and town in the State of Montana and stated that the City of Laurel works from a
General Fund. The General Fund is funded by the tax base of the City of Laurel, and city residents
paid the first half of the taxes on November 30t". However, that money cannot be used for water and
sewer. The General Fund only supports the fire department, police department, city hall, library, and
all city amenities with the exception of the water and sewer departments. Those water and sewer
departments, according to the Department of Commerce, are referred to by the State as Enterprise
Funds. Montana Codes Annotated, 7-7-4424, states that Enterprise Funds must be self-sustaining.
When bonds are sold, the city must have adequate rates in place based on classifications. He
clarified that for the taxpayers because some people do not realize that tax dollars do not support the
water and sewer. Water and sewer have to stand on their own merits, which is why rate increases or
adjustments are necessary.. Montana Code Annotated 69-7-101 gives cities the authority to set rates,
fees, and charges based on classifications. Rates must be fair and just. The reason for this public
hearing is to explain to the ratepayers what the rate will be and how the numbers were determined.
Harry stated that the base rate is the first part of the water rate. The first requirement is to take an
inventory of connections by connection size. This system has been used in Montana for the past
sixteen to eighteen years, and all the lending agencies in the State of Montana adopted this policy
about twelve years ago. People are charged for water based on the connection size of their service
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Council Minutes of December 22, 2009
line. The City of Laurel has 2,545 '/4-inch services, for which the multiplier is 1. There are 68 one-
inch services. The 1-inch service is 1.79 times larger than the 3/4-inch service. Multiplying 69 times
1.79 means there are 121.72 equivalent dwelling units (EDU). Rural Water was instrumental in
setting up this procedure, which used to be called a customer equivalent. Twelve years ago, the
State plagiarized and put this system in their paperwork, so now when the city borrows money, this
system is used. The EDU total is 3362.43 EDU's. Harry explained how the multiplier was
determined. By taking the cross sectional area of pipe and squaring the diameter of the 3/4-inch pipe,
it is 9/16. To square the diameter of a 2-inch pipe, multiply it by itself, which is 4. To divide by a
fraction, invert and multiply. The.multiplier is 7.14 on the 2-inch line. The multiplier times the
number of connections is. how to determine the Equivalent Dwelling Units. When an engineer
designs a water system, it has to be designed for peak flows and there has to be consideration for the
connection size of the services. The connection size determines the pipe in the ground for the
distribution system. It would cost less if only 6-inch pipe was needed. But because the demand on
the system by larger users must be accommodated, this system was developed. The larger pipe
increases construction costs, but it is not fair for ratepayers with a'/4-inch line to pay additional costs
for the larger pipes in the ground. Every ratepayer with a'/4-inch pipe pays the minimum amount for
the base rate. For the ten 3-inch lines, the multiplier is 16 for 160 Equivalent Dwelling Units. There
are two 6-inch pipes and one 10-inch pipe. The 10-inch pipe is equivalent of a 177.77 '/4-inch pipes.
Harry stated that, if people reviewed the numbers, they would understand why this system was
developed and copied by the State of Montana and lending agencies.
Harry spoke regarding the debt service and the requirements for reserve. The City of Laurel's State
Revolving Fund debt service for the year is $58,522.00. There is also debt service of $47,437.00 per
year, debt service of $186,680.00 per year, and an additional loan of $383,980.00 per year. A 1997
bond is debt service of $83,373.00 per year. That is a lot of debt service, but there is a lot of debt on
this system with the new upgrades at the water plant and the intake line. Because the water
treatment plant has lots of moving parts, the city also funds a depreciation and replacement account
of $200,000 per year. The loans require a certain amount of surplus over and above the debt service.
The last item on the base rate is $250,500.00 for operation and maintenance costs. Harry stated that
the reason that number is there is because he wanted the base rate to be a certain amount and did not
want the cost per thousand to be exorbitant. With the EDU system, the city has a total of
$1,210,492.00 in debt service and operation and maintenance costs. Taking the EDU's of
3,362.43.00 and dividing that into $1,210,492, the result is $360.01 or $30.00 per month for the base
rate. He went on to the next column of numbers where the service line size and the EDU cost is
$30.00. The multiplier for the'/4-inch line is 1 and the base rate is $30.00. The multiplier on the 1-
inch line is 1.79, so the base rate is $53.70. The 1 V2-inch line is four times larger and the base rate is
$120.00. The 2-inch line has a multiplier of 7.14 and a base rate of $214.20. This rate applies to all
2-inch lines in the city with the exception of some that will be addressed separately. The 3-inch line,
which is 16 times larger, is $480.01. The 2, 3, and 4-inch lines are often Laundromats or schools.
Schools had to change because often over 50 percent of the kids are bused in from the county. This
system is used so the school pays its fair share of the water based on the demand and usage. Harry
tries to protect the ratepayers so the ratepayers do not subsidize the school for students bused in from
the county. A 4-inch line is 28.57 times larger than a'/4-inch line. Two 6-inch water mains are equal
to 64 EDU's. The one large 10-inch water line is the equivalent of 177:7 3/4-inch lines as far as
demand is concerned. Harry then spoke regarding the section on gallons per year. The City of
Laurel uses 639,041,385 gallons of water out of the river every year. The larger users use the
majority of the water, and, as shown by the rate, they pay for it. By taking the $250,500.00
operation and maintenance cost and adding it to the $1,149,500 and dividing that by the gallons sold
in thousands, which is 639,041, the cost per thousand is $1.80. As an example, if a ratepayer uses
6,000 gallons of water in a month, the base rate is $30.00 plus six times $1.80, which is $10.80, for a
total monthly water bill of $40.80. In the winter months, a ratepayer might not use that much water,
and in the summer months, they might use twice that much. Montana Codes Annotated states that
the city must have fair and just rates. By figuring the rates by connection size, Harry and the city
have attempted to set a fair and equitable rate for everyone. During Marc Racicot's last.term in
office, he took the Public Service Commission out of the picture. In order to raise a water rate back
then, the municipality had to go before the Public Service Commission. The State required
municipalities to do that, but the requirement usurped the powers of elected officials and that is why
the law was changed. Whenever Harry went before the Public Service Commission to justify a rate
increase, the Commission liked this system because it was fair and just and easily understood. The
total income required is $1,210,492.00, plus the sale of water, and the total income will be
$2,360,766.49.
Harry stated that this is how it will affect the majority of folks that have a'/4-inch line. The City of
Laurel has not had a rate increase since 2004 or 2005. Once an adequate rate is in place, he always
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urges councils and mayors to address increasing costs with small increases rather than waiting for
several years and then implementing a large increase.
Mayor Olson asked Bill to introduce others.
Bill stated that he realized the audience wanted to speak. The city appreciates that and is looking
forward to it, but a few more people that represent the city have information to present. He
introduced Mary Embleton, the city clerk, to speak about the past and the fixture.
Mary touched briefly on some of the financial aspects of the water system and stated that the city has
spent the money on improvements, maintenance, replacement, and upgrades of the ratepayers' water
system. This is the ratepayer's system and the city manages it for them. Over the past ten years or
so, $14.5 million has been spent on major improvements, renovations, replacements and upgrades in
the water plant and in the water system. Those are things that are not seen very much because it is
either down at the water plant or under the ground. She stated that the $14.5 million has been well
spent, but it has caused the city to have to make tough decisions on the water rates. The city has had
to borrow extensively in order to do the improvements. In order to borrow the money, the city
works through the State, which issues tax-exempt revenue bonds on behalf of the city. The city pays
bond counsel, which prepares the paperwork in order to prove and satisfy IRS requirements to have
the tax-exempt bonds issued in the name of the city in order to fund these improvements and
renovations, replacements, and upgrades for this system. During the process, bond counsel reviews
the city's financial picture very critically. Mary sends the bond counsel audited statements of the
Water Fund, which is the only fund and source that can sustain these improvements. When the State
funding agencies review the city's financial records, they ensure that the city can repay the loan.
Right now, the city pays. over $750,000 per year in bond payments. Mary stated that it is the
ratepayers' system. The city has used a lot of its reserves and has successfully applied for and
utilized grant fiends and resources from the State and Federal levels. Mary stated that the city does
not like to do this, but eventually rate increases are needed to keep improving and maintaining the
system.
Bill asked Public Works Director, Kurt Markegard, to speak at this time.
Kurt Markegard read the following report on the water system. The report was distributed with the
handouts.
The City of Laurel's water system has been a tumultuous system that has required many
repairs and upgrades due to environmental and regulatory causes. Each component of the
water system seems to have had its share of problems.
The water intake in the Yellowstone River was left high and dry due to seasonal spring
runoffs that eroded upstream gravel bars and deposited the gravel material upstream of the
city's water intake, therefore diverting the main channel of the river to the south bank. The
City of Laurel had tried to deal with the river diversion for years to no avail and was required
to find a permanent solution that solved the water intake problem. The solution to the intake
problem was to install a new water intake into the deepest part of the Yellowstone River and
that project was completed in 2003. This cost was substantial at $3.2 million but should
ensure a reliable flow of water to the City.
The water plant has treated and pumped water to the citizens for many years and has seen its
share of issues. The largest financial upgrade to the water plant in the recent past was the
addition of the clear well building. This building was required by the Department of
Environmental Quality to assure that the chlorine the City uses to sterilize the water had
enough contact time before being distributed to the city's water mains. This clear well
project was in excess of $5 million and the financial burden is reflected in Laurel's high
water rates.
The water plant also has seen some recent maintenance and improvements this past year.
The filter media. and underdrain.tiles were replaced last winter to assure that the water plant
could meet the daily water demands by its users which it could not meet in the spring of 2008
as the Yellowstone River experienced a lengthy and muddy spring runoff. This runoff
required snore maintenance and taxed the water filters to provide enough water for the City
of Laurel. The city had no choice but to limit their consumption. This cooperation from
CHS Refinery and reduced lawn irrigation in the city parks allowed the water plant to meet
its daily water demands by the rest of the water users without any water restrictions. The
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filter media had been installed in 1978 and had lasted thirty years before being replaced this
last winter and should meet the future needs for some time to come.
The water pumps at the water plant are also being replaced or upgraded to better protect the
water distribution lines from a condition called water hammer or pressure spikes as pumps
are turned on or off. This water hammer has caused many old water mains throughout the
City to rupture leaving residents without water until city crews repair the water mains. The
pump replacement and or pump upgrades to variable frequency drives will allow for a softer
starting and stopping of the water pumps which will help eliminate water hammer and the
pressure spikes the City has experienced in the past. These pump upgrades are expensive but
necessary in order to prevent the water main breaks and the resulting damage to the city
streets.
The water storage reservoirs north of the City have bad issues as well. The old concrete
water reservoir that the city relied on for more than fifty years developed a crack in the
concrete floor which allowed water to escape and compromised the entire concrete reservoir.
The water leak created a soil settlement issue under the reservoir that engineers determined
was not financially feasible to repair. The City chose to install a new 4-million gallon steel
reservoir to replace the old concrete reservoir. This new steel reservoir provides Laurel's
water storage, as well as water pressure that is needed in order to flow water into the
residents' homes.
The water reservoir is a critical part of the fire suppression system throughout the city and
provides for a large amount of water to be delivered through fire hydrants in cases of a fire
emergency. Without adequate water storage, the fire department would not have enough
water flowing through the water mains to douse structure fires. The need for more reservoirs
is critical as the City of Laurel does not have adequate water storage or water pressure in
some neighborhoods to meet required fire flows. This fire flow inadequacy has a financial
impact on all residents as insurance premiums and policies reflect a city's ability to suppress
structure fires. The less fire suppressions ability equals higher insurance premiums.
The water flowing throughout the City would not be possible if it were not for the water
mains. The City has many miles of water mains consisting of various materials that include
-cast iron, asbestos concrete, and plastic pipe.
The cast iron water mains are old and replaced wood mains that were originally installed
when the city developed its water system over a hundred years ago. These cast iron water
mains are susceptible to corrosion that occurs from the water as well as the soils they are
installed in. Most of the water main breaks occur in these lines due to their age and
condition. Replacement of some of the undersized and corroded cast iron water pipes took
place this fall on the east side of Laurel. These lines had been repaired many times and had
caused significant damage to the streets in which they were installed during water line
ruptures.
The City also recently replaced the waterlines in Main Street from 1" Avenue to 8th Avenue,
and in East I` Street from 1st Avenue to Wyoming Avenue. One block sections of water
lines were also replaced from Main Street to East l st Street on Montana, Colorado,
Pennsylvania, and Wyoming Avenues.
Replacing old water mains will be an ongoing issue with additional costs to the water system.
The city cannot afford the expensive investment maintaining or the rebuilding of its streets
only to have them destroyed by broken water mains.
Laurel's water system will always be in the need for improvements. Infrastructure
improvements are necessary and expensive, and so far have been critical to the citizens of
Laurel. The high water rates are a reflection of the City's past as well as requirement for the
future in order to pay off the financial debt the City has and will incur.
It is not pleasant to have such a heavy burden on the users of a water system. City staff with
the help of water rate consultants has tried to equally share the costs of owning and operating
the water system. The equivalent dwelling unit (EDU) calculations as it pertains to meter
size is one of the main changes besides the rate increase. The EDU calculation that the city
used in past rates was found to be insufficient to standard calculations recommended by
bonding agencies as well as by the Montana Rural Water Association. This proposed EDU
Council Minutes of December 22, 2009
calculation change will increase revenue for the system at the same time reflects the
influence that higher demand customers place on the overall costs associated with the
necessary water infrastructure to meet their water demands.
The other significant change in rates is the addition of a new classification of Bulk Water
Resellers. This issue was brought to the city staff s attention a year ago when a request by an
individual to open a new bulk water fill station was researched. The City had no rules or
regulations and no separate water rates to bulk water resellers of its water supply. This
request for a new fill station was researched for the better part of the last year. It was found
that this classification of user was reselling millions of gallons per month of potable water to
customers outside the City limits. The volumetric rates or price per thousand gallons that the
City was charging was exactly the same as the residents inside the city limits pay. The price
did not reflect a comparable base rate though. City residents are charged $25.58 for a
thousand gallons per household with an average consumption of only 6,000 gallons a month
for a total cost of $35.08. The reseller was paying an EDU factor of 4 times the residential
base rate for each service line, which is approximately $100 per 2-inch service. So for two 2-
inch service lines at approximately $200.00 a month plus. the $1.81 per thousand gallons, the
bulk water reseller is reselling water to non-city residents at a comparable rate that equals
only eight city households. Based on the average monthly bulk water reseller usage of 1.5
million gallons per month divided by the average consumption of a city household of 6,000
gallons, they are reselling enough water for about 250 city households. The base rate charge
to 250 city households would be about $6,000 plus the $2,700 for water consumption would
equal about $8_,700 a month. The bulk water reseller is charged a base rate of $200 plus
$2,700 for the 1.5 million gallons for a total of about $2,900 a month. The rate difference for
a bulk water reseller is $5,800 less than what the water utility would charge for 250
residential homes. The rates are not comparable as the price per gallon is excessively lower
for the bulk water reseller than a city residential household.
The bulk water reseller customers equally have a vested interest in. the City of Laurel's water
system as they share the need for potable water. The water plant has to produce the water,
the water mains have to distribute the water, and the water reservoir must maintain the water
pressure for the flow of water to all water consumers. It is not unreasonable to believe that
the water reseller customers should equally share the cost to provide this potable water. If it
is going to cost a city residential household a proposed rate increase of $40.80 for 6,000
gallons of water, why should it not cost the reseller's customers at least that much for the
same 6,000 gallons? This is what the new bulk water reseller classification reflects with an
appropriate rate of $6.80 per thousand gallons.
The last change to the rates is the raw water rate. CHS Refinery buys water from the utility
that has not been treated. In past rate increases, the price per thousand gallons increase 2
cents per thousand gallons every year for three years in a row starting in 2003 and ending in
2005. Since there has not been a water rate increase for four years, it was determined that 5
cents per thousand gallons increase was justified.
Rate increases are never easy and the issues that the Laurel water system has had to endure
are incredible. The fact that the system has over $8 million in loans and more needed
improvement than the city can afford is less than desirable. The City does have the
obligation to pay down its debt, plus maintain the water system as well as plan for the future.
By voting for the approval of the rate increase with the EDU change and the more equitable
rates for bulk water resellers, the city council will be ensuring that the water system will have
the availability to continue providing safe and drinkable water.
Kurt stated that, in a nutshell, improvements are needed. He showed a section of a waterline that
was recently removed and replaced with a PVC line. On Christmas Day last year, a waterline break
left approximately three blocks of city residents without water. The improvements being done are
necessary and the money is being spent wisely as an investment in the infrastructure, the future, and
the quality of water.
Bill Sheridan stated that nobody wants to raise water rates, including elected officials and staff. He
stated that it is important to realize that everyone is in this together. The Federal government gives
the city direction to make improvements to the system. The City of Laurel has to use the
Yellowstone River, which means a treatment system is required. Bill has worked in one or two other
communities. Eventually if people are not willing to increase their investment in the water system,
the Federal government will come down on. the city and start fining it. That is a difficult and
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unacceptable situation. Again, nobody wants additional increases in their water service. Bill stated
that he is lucky enough to have a small home here and he pays a water service for it. He appreciates
it and enjoys it, and he thinks.all.of the elected officials do the same. No one wants to increase the
water bill and that is all the way up to the Cenex folks. The city does not want to create any
problems for them, but the reality is that improvements must be made to maintain the system. That
means water rates need to be raised from time to time.
Mayor Olson addressed the council. He stated that the applicant has presented the issue and he
invited any questions from the council to the applicant.
Council Member Mace asked regarding the current monthly base rate for water resellers.
Mary stated that currently the monthly base rate for water resellers is based on the size of their
meter. The proposal is to meld the base rate into the volumetric rate. With the new proposal, water
resellers will not pay a base rate but only a volume rate of $6.80 per 1,000 gallons. They will just
pay a flat volume rate, because the base rate is built into the $6.80 volume rate.
Mayor Olson stated that six letters were received by the city and the letters were submitted into the
record. (Letters were received from J. W. Maxson, Conrad C. Sandaker, Brad Dillon, Ken and
Peggy Miller, G. Steven and Karen Ahmann, and Hendrickson Law Firm, P.C.)
Mayor Olson opened the public hearing and read the rules governing the public hearing.
Mayor Olson asked four times if there were any proponents. There were none.
Mayor Olson asked if there were any opponents.
Carl Swanson, 8105 Panorama Court in Billings, thanked the mayor and council members for the
privilege to speak. "I am addressing the bulk resellers and I believe there is a fallacy in the argument
presented today. I'm willing to pay a fair price for the water. I don't want to be subsidized and I
don't want a handout. 6,000 gallons for the average household of city users, I would argue strongly
that bulk water users are quite a bit more conservative. We turn the tap off when we brush our teeth.
We don't take long showers. We don't water our lawn. So we do use less water. The rates the city
users pay include delivery of that water. You plumb to their homes. You haven't plumbed to mine.
You provide fire hydrants (clapping) to people within the city. Their homes are protected much
better than mine. They also receive lower insurance premiums than I do. (clapping) There is no
plumbing provided to my house and there is no fire hydrant. We cost you less. Why should we pay
the same rate? Why should we subsidize everyone else? (clapping) I look at the average water bill
in here. My average bill is more than double the highest city in here. If you want to provide
distribution and bring the water to me, I would pay the fair rate. (clapping) You don't provide it."
Mayor Olson asked if someone else would like to speak.
Ron Reitler has two properties, one in the city and one out of the city. His home residence is 1691
Beartooth Drive and the second property is at 411 SE 0' Street downtown. "A couple things. I
certainly with my property in town understand the situation that we are in, needing upgrade and
certainly am open minded to the rate increase that is for the business property that I own. My
concern mainly is with the. bulk supplies also. My home that I built I put in two cisterns with a drain
field. So we are not also utilizing the septic system that the city provides, which is another service
that we don't need. I put in a cistern system, a drain field for a total of a little over $14,000. That
wasn't subsidized by the city. That was an expense we took on living outside the city limits. In
order to get water to my place, periodically I have it delivered and periodically I bring my own in.
We also have operating and maintenance costs that we have that is not subsidized by the city,
whether that is a truck to haul our water in, a tank to provide the water to put into, a trailer and fuel
to go back and forth, and time to get it. I don't know if that has been brought up as far as the cost
that we endure by not having it delivered by the city, but that's something that is paramount to what
we do along with the conservation we have to do. Secondly, when I purchased my property nine
years ago when Bob Rosselot was still alive, I understand from Bob that he offered the city at one
time to give you the property up on Beartooth Division up there to locate a new water tower for
future residences that would be moving into the area. And you all know now that in those areas
houses are built on them, so you could have revenue coming in now had the council back then
several years ago had the insight to look at what was going to happen with the growth of Laurel. So
now you have several homes out there north of town that could be supporting the city if those actions
had been taken back when some of us, I wasn't here at.the time, but other people in that area could
Council Minutes of December 22, 2009
see the growth potential. So those things are consideration basically for the bulk people that have to
haul their water certainly should be brought into consideration for the pricing that we pay according
to the city residents. (clapping)
Kelly Varnes, 208 North Broadway, practices law with the Hendrickson Law Firm and was asked by
Fox Water Service and Cindy and Darrell Fox to submit some comments. "I did that by writing so I
don't want to take a bunch more time since those are technical and already part of the record. I
thank you for that, Mr. Mayor. The only comments I would make in addition to that is, the only
comment I have is in regard to the classification of bulk water sellers from everybody else. And
when government does that, it has to do it on a fair basis. And I'm not sure that the analysis of the
city staff on this particular situation meets that requirement. And any time you try to reach non-
residents, the Supreme Court has said that is fine, and you look at non-residents who hunt and fish in
Montana pay more than we do. That is all acceptable. The question is how you get to them. Here
you are trying to get to those folks, the non-residents, by reaching through members of your own
community. That's where I think the classification possibly breaks down in that you are taking
someone that is using something that is not putting any kind of greater impact on your system and
treating them differently from everybody else. Typically, when you see changes or different rates in
a water system, you see it because of the size of pipe because they are using more water which
makes more sense, or if they are putting significant demands on your system like maybe CHS or any
other large industrial facilities may do. And so you will see an increase or different classification
there. Here I don't see any justification by the city staff for any further impacts in regard to the
Laurel water system. So just basing the change on who they sell to, I don't think passes the standard
that would be applied. And that would be the only thing. Thank you all for your time." (clapping)
Kelly Jorgenson, 243 Pine Crest Road, lives between Park City and Columbus. "I really appreciate
the opportunity to be able to speak to you tonight simply because I'm not a citizen of Laurel.
However, I am a citizen of Laurel because this is where I spend my money. (clapping) When I
come to Laurel to get water, (clapping) I go to the IGA store and get groceries. I go to Wal-Mart. I
go to the pharmacy. I get my hair cut. I buy my gas. If I am forced to make a choice if the major
portion of this city's water rate increase hits the bulk reseller and puts them out of business, I'm
going to Billings. I won't be coming off the interstate on my way home to get groceries, to go to
Wal-Mart, to buy gas, or to go to the pharmacy. I will get it in Billings. (clapping) I work there
every day. My husband has offered me his three minutes just in case I go over. They did this in
Columbus and they tripled the water rates in Columbus. My husband and I used to go to Columbus
every week to get water and we stopped at the Sports Hut and had dinner and a couple of drinks and
we did our grocery shopping. We rented a couple movies and then we went home. It's probably
been six to nine months since I have been into Columbus. Haven't spent a dime there in over a year.
I'm just one person. I have approximately sixty neighbors in my same subdivision that come here
every week for water as well. So I understand the position that the city is in, but when you think fair
and just, I think that you have to think whether or not you are impacting everyone in a fair and just
manner as well. Thank you." (clapping)
Scott Olson, 12911 Medicine Man Trail, lives by Molt. "Again, appreciate the process. I hate to put
my back on all you people. Appreciate you all being here. Appreciate the manner in which this
great country operates and this opportunity to talk. Now, to make this short because I don't want to
repeat everything that everybody already said. With all that in mind, these numbers that I see
assume a continuous consumption that stays constant and I'm sure it includes an increase in
consumption as well. When I quit coming here and all these people quit corning here and all their
friends quit coming here to consume the water, who is going to cover that cost then? I want you
guys to consider that because as I see these rates continuously increase and this multiplier go up
based on a meter, it makes me wonder who is going to cover, are these guys that have the bigger
pipes going to continue to take the burden? And when they do that, are they going to close their
meter and go some place else as well? So I think you want to take that into consideration when you
start talking about fair because we do incur costs outside of what a regular city resident does and one
of the reasons we come here is because we feel that the rate is fair. If it's not going to be fair, then
we will go some place else and now you have lost that revenue. So I would just like you to consider
that." (clapping)
Catherine Rogers, 1713 Valley Drive, is living there right now with her boyfriend. "He carries his
water right now because his well went bad. He does not have the money, nor do I, to dig deeper.
Ok. We are paying for 1,000 gallons right now $5.00. Subtract from that the fact that the city does
not have to take care of our gray water. Subtract from that you don't have to take care of our pipes.
Add to that the gas and the fuel that it takes to get the water to our house. Add to that the time that it
takes away from our families. Subtract that, as somebody else already stated, the fire hydrants. We
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pay a bigger cost on insurance. Also, subtract from that the wear and the tear on the vehicles and/or
trailers and the equipment that it takes for us to get the water to our houses. (clapping) How much
are we going to have to pay per 1,000 gallons of water if this rate increase goes into effect? Realize
that if Mr. and Mrs. Fox close the station, that means we take all of our business to Billings."
(clapping and YESSSS).
Ron Willis, 5115 Chief Brave Wolf Trail in Laurel, stated that "this young lady that just spoke about
if the Foxes close the station that they have, does the city have any means to supply water for all of
us? (clapping) I'm sure that everyone here sympathizes with the city. It costs money to operate
these plants. We know that. We know that this stuff costs money. Why should we subsidize every
home. in Laurel when we don't use those water mains? We use a short water main that goes from the
station to the pumping station. If you close it, what do all these people ... sure this is just a small
percentage of people that actually use that. I'm sure there is actually ten or twenty times as many
people as you see in this room. What do they do?" (clapping)
Jeff Akton, 3542 River Road, looks at the base rate and had just one question. "On a rate of water
coming out of a 3/4-inch, how much of that charge is for wastewater? That the city is charging?"
(clapping)
Someone answered "zero."
Jeff stated "so you don't charge any of your city residents to treat your water?"
Someone answered - "separate charge."
Mayor Olson stated that it is a separate sewer charge.
Wally McClain, 3555 Buffalo Trail, stated: "Besides all of the other comments reflecting a lack of
vision and thought on your water department, I have a deal for you guys. You are obviously going
to railroad this increase through. That's fine. We'll pay it. However, we want to be reimbursed for
what our insurance premiums cost because we don't have a fire hydrant handy. We pay the highest
insurance rates possible and none of you say, we will stick in hydrants for you. You want to raise
our rates, fine. Stick in hydrants or pay our insurance costs because we don't have hydrants."
(clapping)
Bob Graham, 1200 Cedar Crest Circle, was "on the city council for eight years and I greatly
sympathize with the people who are sitting here. However, the people behind the are citizens of
Laurel. You all know. that. We shop here, I know you heard this before. But we also pay taxes
here. How many of you people in this room voted for the new stadium that was built outside of
town? Good. How many of you people have ever turned down a school levy for this town? They
haven't. They support this community loyally, financially, and governmentally. They are law-
abiding people and we are willing to pay our fair share. But take your rates and the people in town
are paying $1.85 for 1,000 gallons. You are asking these people to pay close to $7.00. Why? Why
don't you put up a meter and charge us the same rate and charge us through the fee for your city the
$30.00 base rate? Then we are equal to the people who live in Laurel. Why are you asking us to pay
more? That's not equitable. So think about it. You have heard the. threats here. I hate to hear
threats. I'm sure that's what it is. I'm sure that a lot of these people are not going to take their
financial support of Laurel away. But some of us will. (Rumblings - we will). We may even take
our money out of your banks and your credit unions and start voting against your levies. Think
about that. Think about what you are doing here. Be equitable with us. I know we could have built
our houses in town. By the way, it wasn't Bob Rosselot who wanted to give the city the property. It
was my fancily. We wanted to give the city five acres free for a new reservoir. But at that time, it
wasn't feasible and the city turned it down. At that time it wasn't feasible. People here, how many
of you would like to be on city water and city sewer? (clapping) Ok. Build your reservoirs,
increase that, bring in the city limits, and you will have equality, but to sock these people this much
money all at once, and if we do lose Fox Water, then we lose the other water suppliers. We are in
big doo-doo. Thank you." (clapping)
Mark Cady, 414 South 64"' West, stated that they "obviously haul water out to our place. We do
have water when the ditch is running, but I'm a little afraid to drink that. I agree with all these
people. You know there's so many factors considered, but some of the other things, I mean, with the
risk of somebody calling me green or thinking I'm a tree hugger or something, you have to look at
the other factors, too. Our economy is in the dumps right now. Ok, so if the Foxes close down, we
are asking people to take more stoney out of their hard earned paychecks to drive and buy the fuel to
Council Minutes of December 22, 2009
go to Billings to haul their water. I wish you would consider all these factors as everybody here has
said and think about all the environmental impact this will also have- This is comparable to people
that cannot afford to buy their drugs, you are messing with a necessity. Water is a necessity. This is
comparable to old folks that social security check doesn't make it, so they eat dog food because that
is a necessity. Please folks, consider that and think about everybody else. We do pay our fair share.
Thank you." (clapping)
.Gary Hilyer, 1715 Logo Lane, lives just north of town. "I got to tell you that I don't think we are
looking at the other avenues. Laurel is a ghost town. This street, Main Street and these streets, it is
a ghost town. My question back to you. I can stand here and say for sure I will be shopping in
Billings. I can guarantee it. I promise you that. And T work there so it makes it easier, but I force
my wife to shop here. We are both small town Montana born and raised, and I think it is a shame
that we are not looking at the bigger picture. My question back to everybody, now that I am
complaining, is a solution. One of the solutions simply to me would be, what about filling up these
buildings with businesses in town to help offset our costs here. Those are avenues. Bob Graham
just brought up another avenue. Remember that was brought to our attention. It sounds like
somebody was trying to shove something through and I'm a little disgruntled by it. I appreciate
finding out about it, maybe too late, but I would like you to take a look at that because I do work in
an industry that gives me the ability to talk to as many people as I can possibly talk to every day and
I will share this word. I will shop somewhere else. Thank you." (clapping)
Mayor Olson asked if there were any other opponents.
Pat Kimmet, 2130 Saddleback Drive, is here to testify as a representative of CHS. "I'll be brief. But
we like others are concerned about the proposed increases. We do understand the need to properly
fund the water infrastructure and sympathize with the predicament you are in. These projects do
have to be funded. However, we are concerned that our proposed increase in our city base water rate
will be increasing by 267 percent, which seems high all at one time. And maybe that's a
consideration you can give is more time. At a time when refineries are shutting down in our country
because of poor economics, we are deeply concerned about any additional costs that may affect our
ability to compete. We understand that if the refinery in Billings had a 10-inch city water line like
we do that their base rate would be 12.7 percent of our existing rate and only 31/2 percent of the
proposed rate. In addition, they currently pay less per gallon for city water than we do. That does
put us at a competitive disadvantage. We would ask that you consider our concern as you make your
final decision. Thank you and thanks for all that all of you do for the City of Laurel." (clapping)
Chris Brookman, 1777 Buffalo Trail, stated that he may be reiterating what others have said. "Miss
Mary said, well how would you like a debt load of 3/4 of a million dollars a year. T have that in my
cattle business. I'm a livestock dealer throughout the United States. With the increase in fuel costs,
staying in motels, all of the things that l incur in my business, I feel basically the same needs that
you do in the city and I have had to increase some of my costs to my customers. But we cannot and
will not take all this burden that you are putting on our shoulders right now. There is no reason for
this increase to be this much.for us users in the. country. We will gladly help, but if you insist on
increasing the rates this much, I also will guarantee that you will see the last of my family and a lot
of my friends on Buffalo Trail in Laurel. We will go to Billings." (clapping)
Jennifer McKinley, 1503 Sullivan Lane, thanked for the opportunity to voice her opinion- "I also
agree with what has been said here. I am a single family occupant. I have a 1,500 gallon cistern. I
have one income and with the 12 percent increase that we have had to endure through Yellowstone
Valley Electric, I don't know how I can afford ... I am practically sitting in the dark as it is and I
still have $120 or $130 month electric bill and with the increase water rate, I don't know what I'm
going to do. I might as well go live on the prairie. Thank you." (clapping)
Zach Roth, 308 Forrest Avenue, stated that he lives in town, does get water, and pays the septic and
everything. "I know it may not be a lot on my small water system and a family of four, but every
dollar does count. I mean I'm working 70 hours a week right now. We are barely cutting by as it is.
My taxes have gone up, my health insurance has gone up, these are things I have a hard time fighting
and I need to make a stand somewhere and say I can't afford if you guys raise my water $5.00 a
month, let alone $20 a month is what it is looking like. I mean it's a lot and it's going to hurt.
Thank you so much for your time." (clapping)
Bob Graham stated that he "has received three phone calls from friends who live inside the city
limits. I have been offered three times people who live in Laurel called me on the phone and
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Council Minutes of December 22, 2009
sympathized and they said, Bob, don't worry, just bring your tank down, and they are serious, and
fill it up using our water tap. Is that legal?"
Mayor Olson stated that the city would look into it and get an answer back to him.
Bob Graham stated that "might be a solution. We will come into town and just fill up at our
neighbors. I thought, wow, I didn't think it would. Thank you." (clapping)
Linda Jerod, 4819 Moser Dome Road, and her husband moved here from Tennessee six years ago.
"We both met with wanting to live out here. We moved out here and we live approximately six
miles from town. We have cisterns. My husband is an over-the-road truck driver. I take care of the
farm. I have livestock, which is my choice, but I am on a cistern system. All my life I grew up on a
large farm in northern Illinois. We had a well. Anywhere else I ever lived, I always had city water
and there were places that I lived ten miles from town. My average use was about 6,000 gallons a
month. Average water bill probably max $50 to $60. We have been using the Foxes since we have
been here. They have been really wonderful to us and everyone in our area. They haul for a lot of
people and we have elderly people out on our road that cannot go get water, so they have neighbors
come to get water for them. But back to the thing about shutting this down, and I get the cost of
having to upgrade and come into the 21St century, I get that. I don't have a problem with it. It's
these high rates. If you do put them out of business, 1 also just like everyone else will not turnoff to
come into Laurel. I will do all my business in Billings. When we received the Wal-Mart here, that
changed everything for me. I barely even go to Billings, only to pick my husband up from when he
comes in off the road, which is at the west end of town. So we don't even go into town unless it is
absolutely necessary to go to Big R or somewhere. My question to you is, and I'll just put this out
there, but I am in agreement with everything that everyone said here, is were there tax breaks given
to Wal-Mart for coming here for their water? Also, is it possible to help with the offset of the cost to
get some of the stimulus money?"
Mayor Olson stated that the city is looking into that-
Linda Jerod said "thank you." (clapping)
Cindy Fox, 9407 Laurel Airport Road, is the owner of Fox Water Service. "I have a few things to
throw out here. I talked to Bob Davidson of Amitex Services in Billings and he said that most of the
standpipes are in eastern Montana. He also said most of them are individually owned and he said the
only successful standpipes are those that are owned by individuals and who sell water at a coin-op
and deliver bulk water. I called DEQ to confirm this information and was told 90 percent of water
standpipes are in eastern Montana. Seventy-five percent of them are individually owned. They also
said that every standpipe's rate is 50 gallons per quarter and that is exactly what we charge. Our
competitor, Fisher Water Service, who uses a 4-inch line in Billings pays a base rate of $52 for that
4-inch line and then he pays $1.69 for every 1,000 gallons. They also charge $85.00 for 4,000
gallons in the Billings area. If we would have a 4-inch line with your new rate, it would be $857.11,
an $802.11 difference, and that's not including the price of the water. We have tried to keep our
prices reasonable to the customers we haul to. It has taken both the coin-op and our regular
eustomers to do this. We started out very small and continue to grow because of our good service
and reasonable rates. This is why (clapping) it is so disheartening to us that we are being singled out
because we haul bulk water. Why are the people who come to the standpipe expected to pay a base
rate the same that people live in town? There is a huge expense to living on a cistern. The cost of
putting in a 4,000-gallon cistern with a mediocre pump is running $5,000 at this time. It's not like
living in town and being able to turn the faucet on anytime and there's many of us that can attest to
here that, when we get into the shower, that's when we run out of water. We put our standpipe in in
1985. The City of Laurel also had a standpipe at this time. They closed their standpipe in 2001.
Mr. McCann, who was the Public Works Director, gave the reason for closing it that municipalities
should not be competing with private business. (clapping) Now that Public Works Director Kurt
Markegard has another idea, who also lives out of the city limits on a well, and the only expense he
has is the electricity to run his pump. The city has raised their rates seven times since we put in the
standpipe. A couple years ago, they raised their rates three times in two years for improvement of
their water system. Now they want to raise it again. We have spent the last 24 years being on. call
24 hours a day, seven days a week to keep this standpipe going. It took us 22 years to break even
with all the expenses that we incurred with the standpipe. Darrell has worked two jobs all of our
married life. His polio is catching up with him now and he's nearing retirement. "phis meeting
should be about our faithful service to these people for keeping the standpipe going instead of us
sitting here wondering if we have to shut it down because we cannot make a go of it. Merry
Christmas!" (lengthy clapping)
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Council Minutes of December 22, 2009
Mayor Olson asked four times if there were any other opponents.
Grady Skaggs, 1178 Benedict Gulch Road in Park City, stated that he "is not sure if he is an
opponent or a proponent. He has been hauling water for 25 years. I know you have to take in
money to pay for the system. I'm just not sure the equivalent of 250 families, it seems to me like
you must have some expenses with those 250 families you don't have with us. And I'd like to see a
little bit of savings there. I know I'm going to have to pay more money for my water and I don't
mind that and I built out in the country so I will have to pay more fire insurance, but I sure would
like to get by with as small an increase as possible." (clapping)
Mayor Olson asked twice if there were any other opponents.
Darrell Fox, 9407 Laurel Airport Road, is co-owner of Fox Water Service. "What I do need to say
here is, if there is a rate increase, the coin-op is going to shut down. I mean, we don't have a choice.
We would be totally at a disadvantage to competing against Billings with the 50-gallons per quarter
that we sell at. So we would still ..... We, once we pay for water, once it goes past the meter, it
shouldn't make any difference where it goes. We were paying the base rate. I don't sec where there
is any more work being done at our standpipe and there has not been since 1985 than there is
anywhere around Billings. This pipe is not coming from our standpipe. We have never had a major
break there because we do have water hammer protection that we put in ourselves. What I am
getting at is any kind of a crazy water rate increase like that we will have to shut down. We won't
have a choice." (clapping)
Alan Clark, 5990 Moser Dome Road, agrees "with all these guys. I haul water and everybody
expects there are going to be rate increases. That's not a secret but as far as singling us out, that's
wrong and my only other question is, Mr. Markegard, where is the new standpipe going to be for all
the people that have to fill around here? (clapping) What is the cost of that going to be? When you
figure it all out, we would like to know." (clapping)
Mayor Olson asked three times if there were any other opponents. There were none.
There being no further business to come before the council at this time, the meeting was adjourned at
8:04 p.m.
Cindy Al ' n, Council Secretary
Approved by the Mayor and passed by the City Council of the City of Laurel, Montana, this 51h day
of January, 2010.
enneth E. Olson, Jr., Ma r
Attest:
Mary K. Ynbleton, Clerk-Treasurer