Hillsboro losing ground on water-plant debts

The Hillsboro City Council agreed to refinance some old bonds on past water-plant improvements at a lower interest rate at its Tuesday meeting, but heard from the mayor that the city is not keeping up financially with ongoing demands to upgrade the facility.

The council approved a proposal to refinance about $1.6 million in 1996 bonds at 3.54 percent instead of the 1996 rate of 5.45 percent. The move would save the city more than $207,000 by the time the bonds are paid off in 2016-which is a year earlier than the original schedule.

The proposal was presented by Jerry Rayl, the city’s financial adviser, who was representing Gold Capital Management in Wichita.

As the proposal was being discussed, Mayor Delores Dalke expressed her frustration and concern about the city’s financial picture regarding water-plant improvements.

She said the 1996 bonds had already been refinanced then to cover past expenditures at the water plant and were also increased to pay for additional improvements that were required at the time.

With the city needing to borrow more than $3 million more to complete the latest upgrades required by the Environmental Protection Agency, the city’s debt is growing larger, not smaller.

What’s more, Dalke said, if the cycle holds true, EPA will probably demand even more upgrades in the next seven to 14 years-before the city can pay off the old bonds, much less the anticipated loan required for the current project.

“We’ll never get caught up with the water plant the way we’re going now,” she said. “No banker would work with us if we were trying to do this with our homes.”

Dalke said the only way to eliminate the debt may be to raise water rates and use the extra revenue to pay off the debt faster. Dalke acknowledged the decision would be unpopular, but she said the council needs to discuss its options.

“We face a tough session over water rates,” she said.

In the end, Dalke said the refinancing proposal ultimately would save the city money, even though it would add $40,000 to the city’s debt load to cover Gold Capital Management’s 2.5 percent fee.

“I’m not excited about it, but I’ll go along with it,” she said.

Water-plant plans

The council reviewed a three-page summary of changes included in the final plans for upgrading the water plant.

City Administrator Steven Garrett said the plans have been submitted to the Kansas Department of Health and Environment. If approved, the city can apply for the funding needed to complete the work.

Among the “big items” identified was a 12-inch water line that will connect the plant with Rural Water District No. 4. This will provide the city with an alternate source of water if the plant would need to quit using water from Marion Reservoir, as it did during last summer’s algae bloom.

Also included was the addition of a standby generator that would enable the city to keep producing water even if the normal electrical source was shut down.

After listening to the overview, the council tabled a $35,000 invoice from Evans, Bierly, Hutchinson & Associates of Great Bend, the engineering company drawing up the plans for the plant improvements. The council decided that, according to the terms of the contract, the invoice was premature.

Other business

In other matters, the council:

n heard from city engineer Bob Previtera that a preconstruction meeting with APAC Kansas regarding Phase II of the Main Street renovation project was held earlier in the day. The effort to redo the last two blocks of North Main will begin at least by June 14, and possibly sooner. It should be completed by Aug. 1, but the contract does allow for 75 days.

Dalke was authorized by the council to sign a “notice to proceed” as soon as the final contract is fully assembled.

n heard from Garrett that he and other city representatives met with Nancy Ronto of Burbach Pools about building a new pool for Hillsboro. Garrett said they discussed the needs of the city.

He noted a pool recommended by Ronto will “radically change the operation and maintenance” of a local pool. But those changes should increase efficiency and revenue, he said.

n heard from Garrett that the city is nearing a new agreement with area township boards regarding fire protection. He said the old agreement was forged in 1976.

n heard from Garrett that a system is in place for processing rebuilding plans from the Hillsboro Mennonite Brethren Church, which lost its facility in a March 7 fire.

In an effort to keep communication with the city clear and efficient, the church has designated three people from the congregation to be its liaison with the city, Garrett said.

Likewise, as the city’s zoning officer, Garrett said he is the person authorized to be the city’s liaison with the church. He said council members do not need to be involved in the issue unless the church would ask the council to change a city ordinance.

n passed Ordinance 1085, which amends Ordinance 1078 to reflect a ruling by the State Board of Tax Appeals that the timetable for the city’s 10-year tax abatement arrangement with Container Services Inc. be shifted by one year. Instead of beginning in 2004, it will begin in 2005.

n approved the mayor’s appointment of Frances Rhodes to the Library Board.

n heard a report from Megan Kilgore, executive director of the Hillsboro Management Board, about events being planned for May, including the Kansas Sampler Festival in Newton and the Family/Folk Festival, Hillsboro All-School Reunion and the city’s 120th anniversary celebration planned for Memorial Day weekend.

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