Treasurer says city sewer rates are inadequate

Tuesday, October 2, 2012

By Ralph Pokorny

Nevada Daily Mail

You can pay me now or pay me later -- that was the message Nevada City Treasurer Mike Wade delivered to the Nevada City Council during their meeting last night.

Nevada residents are going to have to pay for the fact that the city has not raised its sewer rates enough to cover the increases in the cost of operating the sewer collection and treatment operations that have come about due to inflation.

Wade told the council that he thinks it will require between a 10- and 20-percent annual increase in sewer rates over several years to reach the point at which the money the city collects for sewer service will cover the cost of operation.

On top of that, the city is facing an unknown cost to meet the water quality requirements for Little Drywood Creek that will hit when the operating permit for the city wastewater treatment plant is renewed in 2014.

Wade told the council that they city has been informed that it must meet these requirements regardless of the cost and even if the technology is not available.

The requirements for Little Drywood Creek stem from a court ruling handed down in the 1990s that calls for the creek to be suitable for whole body contact; and, in effect, calls for the effluent discharged from Nevada's wastewater treatment plant to be cleaner than the water in the creek.

When the city built the new wastewater treatment plant, it was financed with bonds to repay a low interest loan of about $13 million from Missouri's State Revolving Loan Fund.

According to information included in the city council meeting packet, when the city issued the bonds in 2007, the city was required to have several reserve funds set up for things like depreciation and replacement, principal and interest and operating reserves. Usually, these reserves are taken from the loan proceeds and are easily established.

In Nevada's case, this was not done and these required reserves do not exist. The bond documents indicate that when the reserves are not in place the entity must take steps to begin funding those reserves.

"I like to have a 15-percent reserve," Wade said, adding that at 15-percent reserve amounts to about two months operating funds.

In other business the council:

* Voted 3-0, with James McKenzie excused, to give final approval to a special ordinance setting the city's 2013 city council election for April 2; and, if more than two people file for the one open seat, setting Feb. 5 as the date for a primary. Filing for the election opens at 8 a.m., Oct. 16 and closes at 5 p.m., Nov. 20. For more information or to file for the election contact the city clerk, at the city hall, 110 S. Ash St., (417) 448-2700.

* Voted 3-0, to pass on first reading a special ordinance budgeting $15,000 from the tourism fund for the Bushwhacker Committee to use to contract a name band for the 2013 Bushwhacker Days celebration.

* Voted 3-0 to give final approval to a special ordinance approving change order No. 1 to the Emery Sapp & Sons contract for the reconstruction of the apron at the Nevada Municipal Airport. The change order reflects a reduction in the cost of this part of the project of $222,111.95.

* Voted 3-0 to give final approval to supplemental agreement No. 1 to the city's contract with Emery Sapp & Sons for construction of a new apron at the Nevada Municipal Airport. This agreement and the change order No. 1 reflect an overall cost reduction for the project of $93,157.71. The cost of the project is being paid for with a 95-percent matching grant administered by MoDOT Aviation.

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