"That $98 million isnt complete," Bechtel said. "We dont know if we will have to replace fire hydrants, for example, or when we would have to replace or put major funds into the sewer treatment plant. ... If I had a crystal ball, that would be great."
Bonding options to raise the funds included 20 and 40 year options at 1.86 percent and 4 percent interest. It was estimated if bonds were issued for the entire amount for 20 years at 1.86 percent interest, that would mean a 100 percent increase in rates to cover the debt; at 40 years it would mean a 60 percent increase in rates; at 20 years and 4 percent interest, it would be a 120 percent increase in rates; and 40 years at 4 percent interest it would be an 85 percent increase in rates.
"This would not include raises for maintenance of the system," Bechtel added.
"I think its impractical to see this kind of increase immediately," said Councilman Jeff May. "I think this is something that can be done with a more reasonable plan over time. We cant accomplish all this at once anyway. ... (The city) failed to invest money in the system over the past 20 years, so you cant catch up all at once."
Bechtel presented additional financing plans which included a $10 per month meter charge, a $15 per month meter charge, a $20 per month meter charge, a 7.5 percent annual rate increase and a 5 percent rate increase plus a $10 per month meter fee.
Under terms of the 5 percent increase and the $10 per month meter fee, residents who pay the minimum of $22 per month for water and sewer would see the amount increase by $33.38 the first year; by $34.55 the second year; By $35.78 the third year going to an additional $46.27 in 10 years.
Under the terms of a 7 percent increase and the $10 per month meter fee, residents who pay the minimum $22 per month water and sewer bill would see an increase of $23.94 per month the first year; $25.74 per month the second year; $27.67 the third year; and by 10 years see an increase of $45.90 per month.
Piper asked about the last years proposal from American Water to purchase the system and asked what the company had offered -- which was to put $3 million a year in improvements into the system for 10 years and to pay the city $33 to $40 million.
"The amount they were going to put into the system is the same as the funds we would raise between the 5 percent rate increase and the $10 fee and the 7.5 percent increase and the $10 fee," Bechtel clarified.
"With just the $10 meter fee plus the 5 percent increase, ... the revenue created the first year would be enough for a $20 million bond," May added. "What is left would pay for additional bonding. ... We could do a lot of this the first five years."
The Council has asked for more definitive numbers on bonding and loan rates, as well as a priority list from the water and sewer departments.