City of Bigfork
Special Meeting April 18, 2005
Members Present: Mayor Amy Tendrup, Bob Zimmer, and Amy Pifher Absent: Jean Lexvold and Richard Salmi Also Present: Julie Kennedy, Andy Shaw, Mark Maki, Roger Clapp and Dick Grabko
Mayor Tendrup called the special meeting to order at 5:36 p.m.
City Engineer Julie Kennedy introduced Roger Clapp from Rural Development and explained that the City will be applying to RD for our long-term project funding. Clapp was here to discuss the grant application process, water and sewer rates, and income guidelines.
Clapp began with a discussion of median household income and how it relates to water and sewer rates. In order to be eligible for RD grant or loan funds, the City’s water and sewer rates must be at 1.7% of the median household income for our area according to the 2000 census, or RD’s similar systems cost, whichever is higher. RD’s similar systems cost is currently a minimum of $35 for water and $35 for sewer. This amount is higher than 1.7% of Bigfork’s median household income, so it is the amount we are required to charge before being grant or loan eligible. RD implements this minimum similar systems cost in an effort to get cities to the point of being self-sufficient and not needing to seek grant and loan funds for system repairs and upgrades.
When the City applies for a grant or loan with Rural Development, they take into consideration what other funding sources the City is considering. Kennedy explained that the City will be applying for a small cities development grant and funding from Public Facility Authority (PFA) and Minnesota Rural Water. Rural Development will recommend the best program for the City’s needs at the time of the application, whether it be a program that they sponsor or a program sponsored by another entity.
Clapp noted that there have been some changes in the program. Cities used to be able to hire any engineer for their project. Now, if Rural Development funding is used, the City must do a Request for Qualification for engineering services. Clapp provided handouts on this and stated that Midwest Assistance Program and Minnesota Rural Water will assist with this process.
Zimmer question what grant to loan ration the City could hope for. Clapp explained that it will depend on how much money is made available for debt service through rate increases. This amount is figured by taking the number of connections to the water and sewer system and multiplying it by the minimum charge. Then the current operating expenses and current debt obligations is subtracted and the amount left is what is available for new debt service charges. Rural Development has loans up to forty years at 4.25% to 4.5%. The maximum grant award from RD is $800,000. There are two different levels of funding that cities are eligible for. Forty-five percent of the project costs is usually awarded. Up to seventy-five percent can be awarded if there are health issues present.
Kennedy asked Clapp to comment on the timeframe involved with securing funding through RD. Clapp stated that it depends on how fast the City wants to put everything together. The initial phase can be done in as little as a month. Kennedy explained that the initial phase is what we have already been working on with the preliminary engineering report. Clapp added that funds for 2005 are not necessarily used up already and so the City could apply for funds yet this funding cycle.
Kennedy stated that we will be submitting in May of this year to be added to the PFA’s Project Priority List (PPL). Rural Development looks at this list when making funding determinations. The current moratorium imposed by the Minnesota Pollution Control Agency on any new connections to our city sewer system will move us up on the PPL and, in turn, will make us a better candidate for RD funding.
Mayor Tendrup adjourned the special meeting at 6:29 p.m.
Angie Storlie City Clerk
These minutes are available on the City website at www.cityofbigfork.com. To sign up to receive the minutes by email, send your email address to ctyclerk@bigfork.net.