SR 06:152 (3) - Laserfiche WebLink

Certainly, in the near term, the Council could determine to fund the remaining water facilities in the VCSP area by an additional loan from the Water Replacement Fund. Money is available in that Fund and could be used for that purpose. An alternative to pay for the over-sizing costs to the water facilities (currently estimated to be $1.5 million of the $8.5 million) would be to increase at this time, the water rates for large consumers of water within the Ruby Hill area. Part of the reason why the reservoir needed to be increased from one million gallons to 1.4 million gallons is the high demand put on the existing tanks that serve Ruby Hill. Requiring those residents who choose to use significant water to pay a higher rate and applying those dollars to pay for the over-sizing of water facilities would be an effective funding source. Another option for consideration would be to increase the water rates for all water users within the VSCP area served by the new facilities in order to offset the cost escalation of these facilities. Yet another option would be to create a fourth tier water rate for high consumers of water throughout the City. This would be most appropriate, as the primary reason for the additional capacity is the result of higher than forecasted water consumption, a trend that is common in areas of town with large lots. Council is not being asked to decide these funding issues at this time, but should recognize that by proceeding with the award of this contract for the reservoir, it necessarily will need to award contracts or enter into agreements for the remaining water facilities (pump station, turnout and completion of the tank access road). In that there is not currently funding available for those remaining facilities (other than by a loan from the Water Replacement Fund), when these other matters are brought before Council for approval, staff will recommend the most appropriate funding vehicle or vehicles for the remaining facilities. CONCLUSION In conclusion, staff is recommending, because of the significant annual current escalation in heavy construction bid prices, the twelve to fourteen month construction cycle for the reservoir and the critical need for the reservoir, that City Council approve the recommendations within this staff report to proceed with water reservoir construction. However, also included as part of Council's actions is directing staff to bring back a financing plan or strategy such as discussed within this report to complete all facilities planned for and needed within the VCSP area and adjacent areas. SR 06:152 Page 12 of I3