City council approves water system plan

After eight months of wrangling, the Sisters City Council voted 3-1 last Thursday to accept the water system Capital Improvement Plan (CIP). Sharlene Weed was the dissenting vote. Councilor Wendy Holzman was absent due to family emergency.

This approval comes in the face of a great deal of earlier discussion and considerable debate during the council meeting. The council rejected an alternate proposal by Councilor Sharlene Weed to push the start date for the projects out until they could be justified by real population growth. Weed's proposal was based on earlier citizen input and analysis (see "Activists Challenge city on water rates, " The Nugget February 23, 2011).

Lack of agreement on a CIP has been the stumbling block in developing a working financial model of the city's domestic water system. Consultant Deb Galardi has been commissioned by the council to develop a model on which to base the proposed new rate structure, but she couldn't complete her model until the CIP budget amounts and timing were approved. Galardi will present her most recent findings at the council's March 3 workshop.

Mayor Lon Kellstrom and Councilor David Asson have noted on several occasions that the water system is a revenue generator (enterprise fund) and needs to be run like any other business. Four years ago the water system reserve accounts was $227,000; today the fund is $94,000. Without either increasing the revenue or reducing the expenses, the city water system could be in the red by year's end.

A significant portion of the reserve money was used to purchase emergency generators for each of the city's three wells so that city residents will not be without water during a power failure.

The consultant's "model" will be used to fine tune the water fund revenue requirement projections. It will allow for a new reserve and use a more streamlined and equitable billing algorithm. It will also include generating a sufficient fund pool to cover the approved CIP projects as they become necessary.

A simple procedure would be to use the consultant's model to establish what the base water rate would be for a revitalized water billing system. Capital projects could then be added one at a time, based on priority. The subsequent increase in water rates could be determined. The council could then decide what capital improvements they could afford based on what percentage of water rate increase they felt was acceptable in difficult economic times.

There was no disagreement that CIP items that were strictly growth related should be postponed from the current list. There was also little disagreement on the eventual need to complete the CIP projects. There is considerable disagreement among councilors and the citizen activists as to the when these projects need to be started.

City Manager Eileen Stein said, "...I just wanted to remind the council that all of the projects on the CIP are based on the 2005 Master Plan which the council did approve, so it is out of customary order for the council to approve any five-year CIP at any moment in time...it is reviewed every year during the budget process for deciding how to appropriate money into capital outlay monies."

It is obvious that Sisters is not growing as projected in the 2005 20-year Comprehensive Plan.

The city staff maintains that none of the CIP projects that remain on the list are growth related.

However, Mayor Kellstrom is quick to point out that there are projects that, while not growth related, are capacity related.

Interim Public Works Wirector Paul Bertagna notes that, when digging up a significant section of a 30-year-old four-inch water line that needs repair, one that is located in an area that is expected to grow at some time in the future, it may make sense to replace the line with a six-inch, eight-inch or even 10-inch line now - even though that additional capacity will not be needed until five or even 10 years down the road.

The same type of situation applies for the city's "Pump No. 1." The well, the pump and pumphouse were put in 38 years ago by the current city engineer. Of the city's three wells, No.1 is the primary water source for Sisters. To rebuild the aging pump before it quits on its own is a $55,000 non-contested line item on the CIP.

However to rebuild the pump and "rehabilitate" the well, the roof needs to be taken off the small and somewhat dilapidated building. With the building open, it would make sense to also overhaul the sometimes problematic chlorine disinfectant system.

Arguably the system should be replaced with a much lower risk and less regulated sodium hypochlorite (rock salt) system - but such a system will not fit in the small, run-down pump shed, so a new building is required. The additional cost of the rock salt disinfecting system and the new building is an additional $340,000 in 2012/2013.

And activists Mike Morgan and Ed Protas have forwarded the city municipal studies questioning the need to convert away from the chlorine gas system.

The consultant's model may finally bring some clarity to this contentious issue, and resolve some of the many outstanding questions. The model is expected to provide a vehicle upon which a rational, justifiable and sustainable water rate structure can be built.