Friday, January 19, 2018

Absarokee Water & Sewer board sets the record straight

The Absarokee Water & Sewer District Board wants to set the record straight as to its recent actions regarding the proposed water system repairs.
1. In June, 2015 we hired an engineering firm to perform a “Preliminary Engineering Report” (PER) as required by state and federal infrastructure funding programs in order to qualify for financial assistance. Great West Engineering assigned Collette Anderson to be our engineer. In January, she presented the PER at a public meeting in Absarokee. In her assessment of our town’s water system, she explained that we have a major water loss (70 percent on average over the past three years) and inadequate flow for fire protection close to the schools, and are not in any position to accommodate growth. She suggested a plan to address our problem in four phases.
2. On Feb. 9, the Board voted to give Great West the go ahead to finish the PER with a recommended project to include Phases 1, 2 and 3. We did not recommend pursuing Phase 4 at this time. That is ALL that has been done to date. The PER cost to date is $38,000 with $25,000 paid for by two grants from the State of Montana.
3. Phase 1, which will replace the worst of our steel pipe (much of which is deteriorated 4-inch pipe – code now requires 6 inch minimum) will cost approximately $1.5 million. The District could pay for this by borrowing the money from perhaps the State Revolving Fund and use the new $12 per month “Capital Development Fee” to pay for this loan. Interest rate from the state fund is currently about 2.5 percent and there is a possibility of principal “loan forgiveness,” which is essentially a grant of $500,000.
4. We have to point out, however, that while doing only Phase 1 does not entail another rate increase, there are several disadvantages: the town would be torn up for many more years, inflation will increase the costs of later phases and interest rates could also increase.
5. Planning to do all three phases at one time has advantages. The cost - $2.6 million to $3.6 million – could be bundled into one loan/grant application package that state agencies could get into their appropriation requests for the 2017 legislature. Waiting now would mean going to the 2019 session or beyond.
6. If our applications are not successful (the loans/grants are awarded on a competitive basis) the District would scale the project back to the level for which funding is available. This may or may not necessitate a rate increase.
7. If our applications packages are approved and a part of the funding includes a TSEP grant, then, and only then, would we be required to meet their minimum water rate of between $52-$54. That rate would have to be in place when construction is complete – most likely that would be fall of 2018.
8. One way to decrease cost is to qualify for a Community Development Block Grant (up to $450,000) which requires 67 percent of the Income Surveys returned. This would require sponsorship by the County.
9. To see all options presented, please go to and under Forms and Reports is the presentation given at the meeting on Jan. 20 or can be obtained at the office.
10. Prior to the rate increase effective Feb. 1, 2016 the rate for water used above 4,000 gallons was $1.61/1,000. At the Oct. 6, 2015 meeting this rate was to be increased to $1.89/1000, however, after discussion and comments from the community, the Board voted in November to increase this to the current rate of $2.50/1000. This will enable the District to rebuild funds necessary to fund the water system improvements discussed above.
The Water Board recognizes these are huge decisions and the solutions are not cheap. The Board has discussed and will continue to explore ways of alleviating future rate increases on low-income households. The one thing we hope we can all agree on is that doing nothing is NOT an option.
From the Absarokee Water & Sewer District Board of Directors