July 30, 2014
5:30 P.M.

Members Present:
Matt Cutler, Department Manager/Garland Public Works
Todd Miller, Garland City Councilmember
Roger Fridal, Tremonton City Mayor
Paul Fulgham, Tremonton Public Works Director
Lyle Holmgren, Tremonton City Councilmember
Shawn Warnke, Tremonton City Manager
Darlene S. Hess, Tremonton City Recorder

Tremonton City Mayor Roger Fridal called the July 30, 2014 Tremonton/Garland Wastewater Treatment Plant Quarterly Committee Meeting to order at 5:34 p.m. and welcomed all in attendance. The meeting was held at the Tremonton City Civic Center at 102 South Tremont Street, Tremonton, Utah. In attendance: Garland City Department Manager, Matt Cutler; Garland City Councilmember, Todd Miller; Tremonton City Mayor, Roger Fridal; Tremonton Public Works Director, Paul Fulgham; Tremonton City Councilmember, Lyle Holmgren; Tremonton City Manager, Shawn Warnke; Tremonton City Recorder, Darlene S. Hess; Brad Rasmussen, Aqua Engineering; and Tenille Tingey, Zions Public Finance. Also present was Tremonton Councilmember Bret Rhode. Garland City Mayor Scott Coleman was excused.

Mayor Fridal told the Committee that he would like to switch item number four and five on the agenda as he has to leave early tonight for another obligation. Garland Councilmember Miller also has to leave early tonight and would like the items switched.

1. Motion by Tremonton City Councilmember Holmgren to approve the agenda with items four and five switching places. Seconded by Garland City Councilmember Miller. Motion approved by consensus.

Mayor Fridal asked everyone to introduce themselves. The following people were in attendance: Paul Fulgham, Tremonton City Public Works; Lyle Holmgren, Tremonton City Council; Roger Fridal, Tremonton City Mayor; Shawn Warnke, Tremonton City Manager; Bret Rohde, Tremonton City Council; Tenille Tingey, Zions Bank Public Finance; Brad Rasmussen, Aqua Engineering; Todd Miller, Garland City Council; and Matt Cutler, Garland City Public Works.

2. Approval of minutes – January 15, 2014

Motion by Tremonton City Councilmember Holmgren to approve the Tremonton/Garland Wastewater Treatment Plant Committee Meeting minutes of January 15, 2014. Seconded by Garland City Councilmember Miller. Vote: Tremonton City Mayor Fridal – aye, Tremonton City Councilmember Holmgren – aye, Garland City Councilmember Miller – aye. Motion approved.

3. May Financial Statements

Tremonton City Manager Warnke reported that as of May 2014 the Wastewater Treatment Plant has expended $11K more than revenue earned. This has been a trend for the Wastewater Treatment Plant and is the reason for the need to increase rates. There is usually a very small amount of money made each year or expenses are higher than revenue. The electrical costs increase each year, and there are improvements that have been needed as well as repairs. Tremonton City has budgeted $130K from reserves. The solid handling capacity needs to increase and approximately $400K has been budgeted. The front end loader and dump truck used for compost need to be replaced and have been included in the budget for the new fiscal year with the funds coming from Tremonton City’s reserves.

Garland City Councilmember Miller stated that Mayor Coleman wanted him to ask about the $300K in depreciation for the year. Tremonton City Public Works Director Fulgham stated that all mechanical items are depreciated at a ten year span with concrete structures and pipe at fifty years. Garland City Councilmember Miller noted that expenses for trucks should be covered by the depreciation. Tremonton Public Works Director Fulgham noted that the depreciation was scheduled on the purchase price when the items were new. However, to replace the items will cost more as prices have gone up in the last ten years.

Garland City Councilmember Miller asked Tremonton City why they pay $258K a year for compost. Tremonton Public Works Director Fulgham explained that the City has three options for handling bio-solids: 1) change it to class A bio-solids by composting; or 2) incinerating; or 3) land apply or landfill as class B bio-solids. The City does not do incinerating and by turning the bio-solids to compost the City can get rid of it and it is no longer responsible for the bio-solids. If the bio-solids were applied to the land or sent to the landfill, they would be called class B bio-solids and the City would have responsibility for them forever. Garland City Councilmember Miller noted that $6K worth of compost was sold last year. Tremonton Public Works Director Fulgham noted that some cities landfill the bio-solids, but most do not. If Tremonton City chose to landfill the bio-solids it would cost $50-60K a year and the landfill could change policies at any time and no longer accept bio-solids.

Brad Rasmussen with Aqua Engineering stated that everyone that makes compost looses money in the process. The choice is to go green and create a product that is usable by composting or to have class B bio-solids which can be used in farming. Class B is less expensive. Central Valley, which is the biggest plant in the state, was recently in the news for using class B application somewhere by Box Elder County. Mr. Rasmussen works with quite a few plants and a lot of them do compost. Tremonton made the decision in 1994 to do composting to handle bio-solids. Tremonton Public Works Director Fulgham stated that the City has the risk and liability associated with class B bio-solids if the City does not turn it into compost.

Garland City Councilmember Miller wondered if it is time to readdress the City’s policy on how to handle bio-solids. It would save the Tremonton City $200K plus to land apply the bio-solids. Tremonton Public Works Director Fulgham expressed that Garland City has no liability as it would all fall to Tremonton City. Tremonton would need to find a land owner that would allow the City to land apply the bio-solids. Tremonton City Councilmember Holmgren stated that the risk could be small but the cost of the risk is astronomical and it is better to remove the risk altogether. There can be a lot of public opposition regarding class B bio-solids.

Mr. Rasmussen explained that composting is the actual step to going green. Part of class B is monitoring metals and taking samples of the soil. The public perception of bio-solids must be considered.

5. Discussion of Draft Wastewater Treatment Services Agreement dated July 22, 2014 based upon the methodology of charging Garland per 1,000 gallons of Wastewater

Garland City Councilmember Miller noted that it was discussed in the January meeting for Garland to be charged per 1,000 gallon units instead of ERU’s (Equivalent Residential Units). Garland City Councilmember Miller asked if Tremonton knew the actual cost to process 1,000 gallons. Tremonton Public Works Director Fulgham stated that $18.30 is charged per month for 12,800 gallons by every user. The industrial/commercial users pay an additional $0.75 per 1,000 to treat the overage. Garland City Councilmember Miller figured that it cost around $1.15 per 1,000 gallons based on the number of gallons treated per year and the budget for the year. Tremonton City Manager Warnke stated that revenue needs to be increased. Garland City Councilmember Miller noted that the new agreement states that Garland can be charged for every 1,000 gallons that comes down the pipe multiplied by an amount that Tremonton City Council decides. Garland City would like a set amount per 1,000 gallons that both Cities agree on and be set for two to five years.

Garland City Councilmember Miller stated that Garland is not prepared to sign an agreement for the next twenty-one years if there is not a set amount. It leaves the amount open to change by Tremonton City Council. Tremonton City Manager Warnke noted that the agreement does use the return on asset ratio as one of the criteria used to determine when rates need to be increased. If the State came out with a new regulation, it would cost the City more to process and would necessitate a raise in rates. Impact Fees also influence rates as the fees must be used within a set timeframe. When Tremonton Public Works Director Fulgham figured the cost per 1,000 gallons, based on the same formula Councilmember Miller used, it came out to $2.15 per 1,000 gallon unit. Garland City Councilmember Miller noted that the current agreement states that Garland will pay cost for treatment. That is why the actual cost for treatment needs to be figured.

If Garland is charged on flow, the money that would be saved by fixing infiltration can be used for other projects. Right now there is no money or incentive to fix infiltration problems. Garland City Councilmember Miller stated that it would be fair if Garland were charged on the actual amount of solids and the amount of flow. Mr. Rasmussen said that if Garland were to be charged on a combination of load and flow, there would need to be meters installed to regulate that. If Garland decreases the amount of water that comes down the pipe, it would not affect the mass. It would save on hydraulics but the mass would be the same.

Garland City Councilmember Miller noted there are some places where sump pumps are pumping into the sewer collection system on high water table users. Garland would like to get these removed. Tremonton Public Works Director Fulgham explained that it is a federal offense to dump sump pumps into the sewer collection system. Garland City Councilmember Miller would like to have things like this fixed but where is the incentive to Garland. Mr. Rasmussen said that water is a factor that is used to determine the cost and it is fairly difficult to break down. The water that is used must be moved but the same amount of oxygen would be needed for the solids regardless of the amount of water. Both flow and solids are very important. Tremonton Public Works Director Fulgham said that other regional facilities charge other cities more than local residents.

Mayor Fridal noted that Garland and Tremonton will not be treated any different and that Garland will not be charged less than residents of Tremonton. Garland City Councilmember Miller proposed that Garland City be treated like an industrial user in Tremonton. Tremonton Public Works Director Fulgham noted that Garland is not like an industrial user as all residents have individual meters installed. Mr. Rasmussen stated that if Garland were to be treated like MOM Brands the new agreement is obsolete and Tremonton can charge what they want.

Mayor Fridal left at 6:10 p.m. because of other obligations.

Mr. Rasmussen spoke about affordability and new laws regarding phosphorous that Garland would need to be in compliance with. In the next five years Nitrogen is listed on the docket to be included in the rule making. Tremonton City Manager Warnke added that the Impact Fee methodology as administered by Tremonton City has changed. Advanced spending is no longer considered eligible to meet state law. Impact fees would need to go toward projects that would need to be done within a six year window. All the above items will raise costs. Garland City Councilmember Miller believes everyone is aware that costs will be going up.

Tremonton Public Works Director Fulgham noted that Garland can be considered one industrial user but will not pay the same rate as industrial users in Tremonton. Tremonton City Councilmember Holmgren noted that industrial users pay a lot to put in pre-treatment facilities. It was also noted that Willard City increased fees to $77 a month and Elwood to $46-48 a month. Tremonton rates are quite a bit lower at $18.30 a month.

Garland City Councilmember Miller stated that Garland would like some control over the increase in prices. Tremonton City Manager Warnke and Tremonton Public Works Director Fulgham explained that Mr. Rasmussen has already explained what factors control price increases and they are not something that can be changed or discussed. Tremonton Public Works Director Fulgham noted that Tremonton City has not increased rates since 2001 as industries in Tremonton have helped pay for the increased costs. Tremonton City Manager Warnke noted that RMP (Rocky Mountain Power) has had tremendous increases. RMP has gone before the public service commission the last couple years asking for a 5-7% increase.

Garland City Councilmember Miller noted that Garland would like some say in how to handle bio-solids. Tremonton Public Works Director Fulgham explained that even if Tremonton City did not compost there would still be several costs associated with bio-solids such as: $40K in polymer, $20K for power, and $5K for gas. It would save the City around $100K. Tremonton City Councilmember Holmgren explained that when an industrial user finds their bill higher than anticipated, they take steps to do more pre-treatment and thus lower the bill.

Garland City Councilmember Miller wondered why and when Garland was billed on ERU’s. It was set up in the original contract that Garland would pay cost for treatment. Garland is being charged cost plus money put in the reserves and whatever else it takes to run the plant. Mr. Rasmussen asked if those charges were the cost of processing. Garland City Councilmember Miller agreed they were.

Tremonton City Councilmember Rohde asked where the funds come from if repairs are needed on the sewer collection end. It was explained that Tremonton and Garland both have their own sewer collection funds that are used to fix collection problems within their city.

Tremonton City Councilmember Holmgren noted that there is not a meter in place to measure the total flow from Garland. That is why Garland has been charged on ERU’s. Mr. Rasmussen explained that wastewater meters are very hard to maintain. Mr. Rasmussen determined the cost to treat 1,000 gallons at $2.12 per 1,000 gallons based on actual costs spent last year. It was estimated that West Liberty Foods pays $16K in overage per month and MOM Brands pays $4K per month with a total of $240K a year in overage. Mr. Rasmussen noted that without the $240K in overage it brings the price to $1.66 per 1,000 gallons. The numbers presented by Mr. Rasmussen only include costs to operate the plant.

Mr. Rasmussen noted that Central Valley services a large part of Salt Lake, including seven different entities. The budget is set up and the cost is then divided based upon percentage of flow owned by each entity. Mapleton is a minority holder in the Spanish Fork treatment plant and when repairs or upgrades are needed, the costs are billed proportionately to Mapleton based on the fee.

Garland City Councilmember Miller remarked that Garland City would like to have a set multiplier each year and be able to accept the amount or choose another option for treatment. Mr. Rasmussen explained that Garland is in that position now and can accept or find another source for treatment.

Tremonton City Manager Warnke advised the Committee that Tenille Tingey from Zions Bank Public Finance suggested to him during the meeting to do a rate study. It is known that there will need to be a rate increase because the Treatment Plant does not receive enough revenue to be sustainable into the future.

Garland City Councilmember Miller expressed that the basics of the draft contract looked good, there just needs to be a specified amount for Garland. It was noted by Garland City Department Manager Cutler that the notification should be changed from a 90 day notice to once a fiscal year notice. It would be hard for Garland to make those changes to their budget throughout the year.

Tremonton City Councilmember Holmgren commented that Tremonton City needs to come up with a figure for each 1,000 gallons to present to Garland City. Another meeting should be scheduled within six to eight weeks while it is still fresh on everyone’s mind. Garland City Councilmember Miller is more concerned with the amount, evidence, and details showing how the amount was determined, than with who does the study and comes up with the figure.

Mr. Rasmussen asked Garland representatives if they were opposed to collecting impact fees and passing them onto Tremonton to help with capital expenses. Mr. Rasmussen was told by Garland City Department Manager Cutler that Garland would probably send the fees to Tremonton as opposed to holding them and gaining interest. Garland does not want to be stuck paying a large amount when Tremonton needs to make upgrades/improvements. It was explained by Mr. Rasmussen that when a large amount is necessary it will be a bond and the bond payment will be tied into monthly payments and shared by all. Garland City Councilmember Miller would like Garland’s amount to include fees for projected growth in monthly amount and not have to worry about sending impact fees to Tremonton monthly.

Mr. Rasmussen explained that if Garland chose to have the impact fees combined with the amount per 1,000 gallons, then existing customers would pay for the growth instead of the new customers. Garland City Department Manager Cutler would like to see the impact fees go directly to Tremonton and not have them passed along to existing customers to subsidize future growth in Garland.

Tremonton City Manager Warnke noted that impact fees will not cover the expenses associated with growth. They only pay a small portion. All customers will pay for expanding the treatment plant. Both cities together are not growing fast enough to generate the cash to build the project within the statutory six years. The impact fees are being collected in arrears now. The new regulations have changed how impact fees are used and set a specific time frame in which to use them.

Tremonton City Manager Warnke understood from the discussion that Tremonton City will come up with a rate per 1,000 gallons that will include capital, operation, maintenance, and expansion costs. It will also include an explanation of costs. Mr. Rasmussen suggested that a rate be presented to Garland based on flow and another on ERU’s for comparison. Tremonton City Manager Warnke notified the Committee that Tremonton City will be taking the impact fee analysis to Tremonton City Council for approval and will identify projects that will be done within the six to ten year window and the costs associated with the projects. Ms. Tingey recommended that Tremonton get an amount based on the current numbers. It will be known that capital projects will be coming in the future that will affect those amounts. It will take Zions Bank Public Finance ninety days to complete the analysis.

The next meeting was scheduled for September 17, 2014. Tremonton City Manager Warnke asked if Garland had any changes to include in the new draft contract. Garland City Department Manager Cutler would like to remove the 90 day rate increase notice and change it to once a year notice for rate increases. Tremonton City Manager Warnke explained that Tremonton could see an additional rate increase during the year if the State were to change regulations. Garland City Department Manager Cutler agreed that could be included in the contract to allow for a rate increase during the year if there were a State mandate that affected the pricing. It was agreed that it would be better for both entities to have a longer contract period than a year.

Garland City Councilmember Miller left the meeting for other obligations at 6:55 p.m.

4. Presentation and discussion on updating impact fee for the Wastewater Treatment Plant – Brad Rasmussen, Aqua Engineering and Tenille Tingey, Zions Bank Public Finance/Municipal Consulting Group

Ms. Tingey was concerned with whether or not there would be an assessment in Garland on behalf of Tremonton. If there is not an assessment it would need to be determined based on ERU’s.

Garland City Department Manager Cutler explained that Garland knows where the infiltration is coming from and it is slowly being fixed. They have caught people dumping water on West Factory by putting up cameras. Tremonton City Director Fulgham has noticed that the flow increased a lot this year from Garland. What agricultural crops are planted plays a role in how much irrigation is applied to the fields. Garland City Department Manager Cutler explained that Garland removed the piping and manholes by the church. If growth comes into that area, then Garland will do something, but for now it helped with infiltration to remove them.

Tremonton City Director Fulgham noted that the amount of Garland’s flow has increased tremendously this spring. Tremonton can fluctuate from 31M to 40M per month while Garland goes from 6M to 15M a month.

6. Discussion of a draft letter to Garland City that formally gives notice of Tremonton City’s intent to terminate the agreement entitled Amended and Restated Interlocal Compact Agreement for the sole purpose that the said agreement does not automatically renew on June 1, 2015 for an additional two year