Utility Committee Agenda and Packet 2018 02 02

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City Council Utility Committee Meeting Minutes Friday, January 19, 2018 Page2of3 Mr. Peterson presented an update on finalizing the addition of consulting services for the Windy Gap project. The contract is expected to go to Council in February or March. Mr. Peterson reviewed the early financing options available to the City for the Windy Gap Project. The two options currently considered are: Pooled Financing (Option A) - where all participant would join together for a single loan on the project or Individual Financing (Option B) — where the City would secure a loan independent of the other project participants. Each option also includes a subset of 1) providing a cash down payment from fund reserves or 2) financing the entire cost. All options are highly sensitive to the projected interest rate. At this preliminary stage, a cash down payment (Option 1) appears to be the best option with slight advantage towards individual financing (Option B) based on assumed rates. Staff, First Southwest and Northern Water will continue to evaluate these options and refine the cost implication as the project cost, interest rates, terms and bond requirements become more distinct. Lastly, the financing options will also be presented at future Finance Committee meetings for their review and discussion. VII. Update — CIP Projects Mr. Peterson discussed upcoming projects and reviewed the Quarterly Report and the CIP summary. Emphasis was given to the SCWTP Pump Station that is under construction and estimated to wrap up in July, with High Zone pumps being operational in April. The multiple projects of HVAC, filter media, plate settlers and disinfection modifications at HBWTP are also underway. The last update was in regards to the Plant Improvements project that covers the 102 maintenance items. All 102 items have been awarded and are either under construction or have been completed. Mr. Kowar outlined that staff are starting the 2019/2020 budget process which will include a review of the long term CIP Plan. VIII. 2018 Utility Rates Mr. Kowar highlighted the overall rate process and the final rate recommendation presentation that is ready for Council in March. A request from the Utility Committee was made to evaluate the possibility of utilizing financing options to lessen rate impacts from larger future CIPs. Staff will complete this process in conjunction with the 2019/2020 budget process. The Utility Committee voted in favor of the 2018 utility rates and recommends that the presentation be made to Council for approval with the Utility Committee support. IX. Water Treatment Process Update Mr. Kowar briefly summarized the various chemicals used in the water treatment process and the impacts to the operational budget. It is anticipated that chemical costs will fluctuate with some changes in suppliers/vendors, the modification to the disinfection equipment at both plants and the reinstitution of flow paced chemical addition.