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Page 1 of 7 - Special Board Meeting - March 08, 2010
State of Michigan
County of Shiawassee
Charter Township of Owosso
Be it known that the Owosso Charter Township Board of Trustees met in special session on Monday March 08, 2010 at 5:30 P.M. in the Township Board Room, located at 2998 W. M 21, Owosso, Michigan 48867.
Call to Order: Supervisor Miller led the Pledge to the Flag.
Roll Call: Supervisor Miller-Yes, Clerk Gute-Yes, Trustee Krajcovic-Yes, Trustee Campbell-Yes, Treasurer Cudney-Yes, Trustee Campbell-Yes, Trustee Schultz-Yes. Trustee Archer – Absent (due to loss of father).
Agenda Approval: Supervisor Miller: There is an agenda and before I go to the agenda I would like to make a comment first. I talked to Mr. Newhof just recently and I polled some people and this is an informational. Tom’s here along with Jim Newkirk to answer questions and give some ideas.
So if it is okay with the board I would suggest that we dispense with the agenda and with the rest of the agenda and the board just go out there and we let Mr. Newhof stand up front and he is going to give what he has and if people have questions. Does anyone disagree with that style?
Trustees Krajcovic and Schultz state they did not have a problem with it. It makes it very informal said Miller.
Other than the clerk all board members leave their position at the board table and take a seat in the audience.
Clerk Gute: Danny we did not approve the agenda nor did we have public comments.
Supervisor Miller: Judy we are going to dispense with it and make this very informational and if the public wants to make a comment they can.
The March 08, 2010 Agenda is not officially approved.
Public Comments: (Due to the diversion away from the agenda comments are addressed throughout meeting).
Tom Newhof:
Prien and Newhof, has worked with the Township since about 1971. They design the Township sewer system that was built in 1979-80. They designed our Industrial Park in about 1976–1977.
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They designed the water system in the industrial park and they have worked with the Township on several occasions throughout the 80’s, 90’s and earlier in this decade on a possible water system that would serve more of the Township. Though the voters in the Township always turned those projects down. So far it has only been something we all talk about.
Recently the Federal Government came up with a stimulus program to create jobs. Of the $800billion dollars allotted only $8billion was designated to sewer and water. Though the percentage allowed for water was only $2billion. When you consider $2billion among 50 states that does not leave much for Michigan.
Back months ago Tom had reviewed a tentative contract with the city. It was about the best contract he had seen from the city so far but he does not know if it was good enough. Though it might be one worth talking further on.
The Drinking Water Revolving Fund (DWRF) is a loan program that gives low interest loans to communities that qualify for projects. The low interest is 2 1/2 %. When the stimulus money came out the program had no provisions for grants. So what the State has been doing is forgiving the loans. They call it loan forgiveness or call it negative interest.
The DWRF is a State program. The State gets grant money from the EPA and loans the money to communities. The communities pay the loans back and that money goes back into the revolving fund and goes back out as loans to other communities. That program received extra stimulus grant money and was being used by the State for either negative interest or principal forgiveness. The project the Township submitted in 2003 ranked “first community” or number one (1) with the State but your voters turned it down.
Applications must be submitted by May 1 each year if the Township goes with this program. It would be necessary for the Township to hold a public hearing and Township residents would have to have a 30day advance notice of that public hearing. Ranking is done in June or July and the priority list comes out in September. The money then become available in October and is given out each quarter. The money must be obligated for that same fiscal year.
At this time the Township would only be eligible for loan money but the word is that if Congress passes this second stimulus bill then there would be potential grant money available.
Another program available is from the Federal Government. It is a branch the Department of Agriculture and is administered by Rural Development. Their loans are 3 ½% payable in 40 years. It is aimed at small communities and they focus on low to moderate-income communities.
Recently the Federal Government came up with a stimulus program to create jobs. Of the $800billion dollars allotted only $8billion was designated to sewer and water. Though the percentage allowed for water was only $2billion. When you consider $2billion among 50 states that does not leave much for Michigan.
Back months ago Tom had reviewed a tentative contract with the city. It was about the best contract he had seen from the city so far but he does not know if it was good enough. Though it might be one worth talking further on.
The Drinking Water Revolving Fund (DWRF) is a loan program that gives low interest loans to communities that qualify for projects. The low interest is 2 1/2 %. When the stimulus money came out the program had no provisions for grants. So what the State has been doing is forgiving the loans. They call it loan forgiveness or call it negative interest.
The DWRF is a State program. The State gets grant money from the EPA and loans the money to communities. The communities pay the loans back and that money goes back into the revolving fund and goes back out as loans to other communities. That program received extra stimulus grant money and was being used by the State for either negative interest or principal forgiveness. The project the Township submitted in 2003 ranked “first community” or number one (1) with the State but your voters turned it down.
Applications must be submitted by May 1 each year if the Township goes with this program. It would be necessary for the Township to hold a public hearing and Township residents would have to have a 30day advance notice of that public hearing. Ranking is done in June or July and the priority list comes out in September. The money then become available in October and is given out each quarter. The money must be obligated for that same fiscal year.
At this time the Township would only be eligible for loan money but the word is that if Congress passes this second stimulus bill then there would be potential grant money available.
Another program available is from the Federal Government. It is a branch the Department of Agriculture and is administered by Rural Development. Their loans are 3 ½% payable in 40 years. It is aimed at small communities and they focus on low to moderate-income communities.
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Mr. Newhof believes the Township would fall in the moderate category. The operation of the system needs to reach 1 ½% of the medium family income of the community to obtain a loan. If it exceeds that they have grants available. Rural Development has contacted Prien and Newhof stating they are looking for communities that could use the money. If Michigan doesn’t use this money then they will have to turn it back in to be used by the other states. There is no real timeframe to qualify for this program. If Rural Development doesn’t use the money by the end of their fiscal year it has to be turned back in.
If the Township wants to do something they are going to have to figure out what they are going to do. What type of project you want to do.
The last project the Township was going to do on their own was bigger than the districts the city was offering in the last contract he reviewed.
These loans or grants are available for any water infrastructure. It is for water pipes, service lines, meters, storage tanks, pumps, water plant or anything else that has to do with water. The Township issue here is “where is this water going to come from”. It could come from the city or you could build your own treatment plant. Prien and Newhof and the Township, has always looked at both of those. The Township has always negotiated with the city but they have never been quite there. The reason for that is because the city always puts conditions on the agreement that are not satisfactory to the Township. Therefore, the boards have always looked at doing it themselves.
He (Tom) has always been here to try to help the Township out but he has no particular interest in going one way or the other. He believes an agreement with the city would be cheaper. A bigger scaled project would be more advantageous for both municipalities but for one reason or another there has always been a few conditions attached by the city that makes the Township say no we’re not going to that. I am not here to tell you to go with the city and I am not here to tell you to do it yourself but if the board decides he wanted them to know there was money available right now.
Prien and Newhof has, designed a pamphlet called Grants and Loans 2010. It is a collection of all the grants and loans available that Prien and Newhof is aware of and; will leave copies for the board.
An article was just submitted to MTA by Jim Haggerty and should be in your next MTA Journal. It is titled “Funding your Infrastructure Projects”. He left copies of the article for the board.
Questions & Comments:
Clerk Gute: If we come up with a plan whether it is with the city or on our own we should have it ready by next October?
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Newhof: His guess is the Township is too late for this year for the DWRF. If the board wants something done next year then they would want a project plan ready by next January or February. You will want to have your public hearing again in April and get your application in by the first of May. As far as Rural Development they will take your application now. He believes they have until October to obligate their share of the money from the Federal Government. If you think you could come up with a plan in the next three or four months then I think you qualify for Rural Development. You have to start talking to them right away and get a pre-application in saying you’re interested then they will start sending you information.
Trustee Schultz: While in talks he suggested that our water lines follow along our sewer lines. Though the city has so much going on right now. They’ve changed boards and city managers and right now we haven’t even had a meeting.
Supervisor Miller: About two weeks later the city was real receptive to Gary’s suggestion. Asks if the DWRF based their decision on the amount of customers ready to connect.
Newhof: No. In Michigan we cannot force anyone to connect to water. People can drink whatever they want. If the well is contaminated so be it. There is no legislation, no provision and no legal remedy for the State to condemn your private well.
Trustee Krajcovic: Obviously if we do switch over to city water in the industrial park it will be one switch and everyone will have to switch. Do you foresee us running into any problems? We’ve had some comments that yes we want the water. Legalities, is there anything with the people that say well I’m happy with the Township water and I don’t want to pay a different rate for municipal water from the city. Do you foresee any problems we might run into there?
Newhof: No not really it’s an advantage actually. It’s a Township system right now so it’s public. It’s owned by the public of the Township and; you’re providing water to the customers. You need to meet all the EPA rules for water quality the condition of your system the maintenance of it and it probably requires monthly reports. So, if you put your own system in you just have some ready customers out there.
Clerk Gute: What Diane is talking about is in my presentation last week I had done a cost comparative of city prices vs. Township prices for one of our customers currently being served by the Township. Currently in the tentative agreement it states we will immediately cut off water service to our industrial park and connect our customers to the city. My problem is that currently a Township water customer that pays $345 per quarter. The city rate, from what I come up with on line will be over $2,000. I just do not feel we should just cut those customers off without having a say and not be happy and perhaps they could annex to the city for single rates or something.
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Newhof: Well that rate is one of the issues that the board has never been willing to agree with.
Trustee Krajcovic: How often do you deal with other Townships that marrying into a city water system?
Newhof: Every day.
Krajcovic: General rule is it two times the rate? Do Townships have to pay normally two times the rate or in our case 1 ¾ times the rate?
Newhof: No, that’s not real common but cities do typically want to increase water rates outside the city. Two times is fairly high. Muskegan charges 1 ¼. I think they charge 1 ½ and the Township receive ¼ back. Holland has one. Wyoming and Grand Rapids both have contracts that are not multiples of their rate. They take the cost and divide them. It is a very fair agreement in my opinion. They take all the costs of the system starting with labor and chemicals, power and amortization of their equipment, depreciation and the city managers salary and lump it all together and divide it by who uses the most water.
Resident Mike Thornton: Were the Townships outside of Holland and Wyoming responsible for putting their own infrastructure in and do they maintain their own infrastructure?
Newhof: Yes.
Richard Simpson: I can’t understand why the Township would want to buy the pipe and then turn the maintenance of it back to the city. They will maintain the hydrants the pipeline and everything. It is not that expensive for the Township to maintain it.
Newhof: Last week I spoke with a township client of ours that has 4 water districts. One is, served by the adjoining township and O&M, is billed by the adjoining township. The 2nd district is wholesale water from a large city and the township sends the bills out but the neighboring township does the O&M. The 3rd district has a big trunk main running through it that the big city maintains and the adjoining township does the O&M and another township sends out the bills. The 4th district is completely operated by the big city and they do the maintenance and billing. So within this one township you might get a bill from the township, you might get a bill from the adjoining township and you might get a bill from the city. Depending which one and; all of them are legitimate and their rates are reasonable. They got a reasonable rate from the big city but they are starting to say, “why are we, doing it this way?” Why don’t we try to combine some of this why don’t we try to simplify our life here!
Trustee Krajcovic: How often do you deal with other Townships that marrying into a city water system?
Newhof: Every day.
Krajcovic: General rule is it two times the rate? Do Townships have to pay normally two times the rate or in our case 1 ¾ times the rate?
Newhof: No, that’s not real common but cities do typically want to increase water rates outside the city. Two times is fairly high. Muskegan charges 1 ¼. I think they charge 1 ½ and the Township receive ¼ back. Holland has one. Wyoming and Grand Rapids both have contracts that are not multiples of their rate. They take the cost and divide them. It is a very fair agreement in my opinion. They take all the costs of the system starting with labor and chemicals, power and amortization of their equipment, depreciation and the city managers salary and lump it all together and divide it by who uses the most water.
Resident Mike Thornton: Were the Townships outside of Holland and Wyoming responsible for putting their own infrastructure in and do they maintain their own infrastructure?
Newhof: Yes.
Richard Simpson: I can’t understand why the Township would want to buy the pipe and then turn the maintenance of it back to the city. They will maintain the hydrants the pipeline and everything. It is not that expensive for the Township to maintain it.
Newhof: Last week I spoke with a township client of ours that has 4 water districts. One is, served by the adjoining township and O&M, is billed by the adjoining township. The 2nd district is wholesale water from a large city and the township sends the bills out but the neighboring township does the O&M. The 3rd district has a big trunk main running through it that the big city maintains and the adjoining township does the O&M and another township sends out the bills. The 4th district is completely operated by the big city and they do the maintenance and billing. So within this one township you might get a bill from the township, you might get a bill from the adjoining township and you might get a bill from the city. Depending which one and; all of them are legitimate and their rates are reasonable. They got a reasonable rate from the big city but they are starting to say, “why are we, doing it this way?” Why don’t we try to combine some of this why don’t we try to simplify our life here!
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So once again if you can reach an agreement with the city that is reasonable in your mind it would seem like the economy of scale would say that should be the cheapest. But if the city has too many hooks into you on various issues or too many charges for this and that and too much control over your planning you have to be happy with the agreement if you’re not you would have to decide to do it yourself. I really didn’t come out for this I just came here to talk about money. There is money out there.
Resident Jeff Sines: In last Thursday’s paper it states Owosso is going to up their rates two more times this year. It’s pretty expensive. I feel we should do our own plant. You’ll hire people and the economy will grow a little bit. You maintain yourself and you control it yourself.
Unknown: It does not take that much to run your own plant.
Resident Dave Johnson: Realistically how many customers would we need to run our own?
Newhof: You’re running your own now in the industrial park.
Note: Discussion turned towards the different types of water systems, their costs and the increasing costs each.
Caledonia Twp. Resident John Orrin: Explained the reasoning behind Caledonia signing a contract with the city was to begin installing infrastructure and building your customer base and if down the road the city starts getting ornery or we got tired of doing it then we could put in their own treatment facility. He believes Caledonia can get out of the contract by giving the city a year notice.
Resident Richard Gute: He knows Middletown was a concern in Caledonia because it was so old. He asked Mr. Orrin if they had to front any money towards that or save any monies to repair the pipes in Middletown?
John Orrin: They only strongly suggested it. They did not dictate it. They only suggested what areas needed upgrading. Caledonia owned all the infrastructure and while I was talking to them I kept thinking that if at anytime these guys started pulling something funny or if they you know. Because they were talking really nice and they wanted to do it because they were only using their plant at a certain percentage.
They wanted us and we wanted them. But between the preferred fire agreement and some of the other things that they were doing it just didn’t set right. So we wanted to run the pipeline down there at any time. They were not going to dictate how we run our water as long as they had water and they had plenty. Their system has grown but Home Depot won’t do it. Now you guys have a little bit different situation where you have an industrial park and some stuff that you are doing there.
Resident Jeff Sines: In last Thursday’s paper it states Owosso is going to up their rates two more times this year. It’s pretty expensive. I feel we should do our own plant. You’ll hire people and the economy will grow a little bit. You maintain yourself and you control it yourself.
Unknown: It does not take that much to run your own plant.
Resident Dave Johnson: Realistically how many customers would we need to run our own?
Newhof: You’re running your own now in the industrial park.
Note: Discussion turned towards the different types of water systems, their costs and the increasing costs each.
Caledonia Twp. Resident John Orrin: Explained the reasoning behind Caledonia signing a contract with the city was to begin installing infrastructure and building your customer base and if down the road the city starts getting ornery or we got tired of doing it then we could put in their own treatment facility. He believes Caledonia can get out of the contract by giving the city a year notice.
Resident Richard Gute: He knows Middletown was a concern in Caledonia because it was so old. He asked Mr. Orrin if they had to front any money towards that or save any monies to repair the pipes in Middletown?
John Orrin: They only strongly suggested it. They did not dictate it. They only suggested what areas needed upgrading. Caledonia owned all the infrastructure and while I was talking to them I kept thinking that if at anytime these guys started pulling something funny or if they you know. Because they were talking really nice and they wanted to do it because they were only using their plant at a certain percentage.
They wanted us and we wanted them. But between the preferred fire agreement and some of the other things that they were doing it just didn’t set right. So we wanted to run the pipeline down there at any time. They were not going to dictate how we run our water as long as they had water and they had plenty. Their system has grown but Home Depot won’t do it. Now you guys have a little bit different situation where you have an industrial park and some stuff that you are doing there.
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Resident Mike Thornton: Asked Mr. Orrin if Caledonia’s contract had a stipulation in it that there would be no land for water.
John Orrin: Now that you have become a Charter Township I don’t know if you really have to worry about that. We didn’t have to do that. They did a bunch of carving out of our township too.
Resident Richard Gute: Asked Mr. Orrin if all of Caledonia Township customers came back to Caledonia Township.
John Orrin: Yes. He even remembers the look on the face of one of the members that was negotiating for the city when they realized. But if they are in Caledonia they’re ours now.
Resident Richard Gute: Asks Mr. Orrin if they pay a per hydrant annual fee.
John Orrin: No. He’s pretty sure there was no additional charge there and if there was it was minimal.
Note: Discussion turned towards hydrants
Clerk Gute: Asked Tom Newhof if the grants and loans could co-mingle with each other? Can you part from one and part from another?
Newhof: Yes.
Tom’s sense of what the Township needs to do is, either reach a deal with the city or agree that you can’t. Maybe with new people there you can. You have to decide how you are going to fund it.
Note: Aquifers in and around the Township are discussed.
Public Comments; (Due to the diversion away from the agenda comments were addressed throughout meeting).
Adjournment: Moved Trustee Schultz, Second Trustee Krajcovic to adjourn the meeting at 6.45 p.m.
Respectfully Submitted,
Judy K. Gute
Owosso Charter Township, clerk
Danny C. Miller
Owosso Charter Township, supervisor
John Orrin: Now that you have become a Charter Township I don’t know if you really have to worry about that. We didn’t have to do that. They did a bunch of carving out of our township too.
Resident Richard Gute: Asked Mr. Orrin if all of Caledonia Township customers came back to Caledonia Township.
John Orrin: Yes. He even remembers the look on the face of one of the members that was negotiating for the city when they realized. But if they are in Caledonia they’re ours now.
Resident Richard Gute: Asks Mr. Orrin if they pay a per hydrant annual fee.
John Orrin: No. He’s pretty sure there was no additional charge there and if there was it was minimal.
Note: Discussion turned towards hydrants
Clerk Gute: Asked Tom Newhof if the grants and loans could co-mingle with each other? Can you part from one and part from another?
Newhof: Yes.
Tom’s sense of what the Township needs to do is, either reach a deal with the city or agree that you can’t. Maybe with new people there you can. You have to decide how you are going to fund it.
Note: Aquifers in and around the Township are discussed.
Public Comments; (Due to the diversion away from the agenda comments were addressed throughout meeting).
Adjournment: Moved Trustee Schultz, Second Trustee Krajcovic to adjourn the meeting at 6.45 p.m.
Respectfully Submitted,
Judy K. Gute
Owosso Charter Township, clerk
Danny C. Miller
Owosso Charter Township, supervisor
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