Despite new plant, utility rates frozen

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Officials say costs will hold through 2025
Marysville is moving forward with plans for a new water treatment plant, but officials are pledging that despite the cost, they will hold utility rates steady for at least five years.
At a recent work session, Marysville Finance Director Justin Nahvi said the city “will not even consider raising rates” until 2025.
This despite the city’s plan to borrow about $50 million to build a water plant and complete several other water related infrastructure projects.
City officials said the need is there. Public Safety Director Mike Andrako said the city’s current water plant is rated to treat about 4 million gallons of water a day. In July, at the peak of use, the city treated 3.98 million gallons. Andrako said that in January, at the low point of use, the city treated just 1.7 million gallons.
He said that once a plant averages about 75% of capacity, the EPA will mandate expansion of the plant or construction of a new plant.
“We are right there at that capacity, so we don’t have much time to spare, especially when you look at the rate we are growing,” Andrako said.
Council member Nevin Taylor said there is, “no question in my mind we need to act.”
The timing actually couldn’t be better for the city said Andrew Brossart, a partner with Bradley Payne Advisors.
“It is going to be hard to see rates go any lower than where we are today,” Brossart told council.
Brossart said bond rates are currently low, but he does not expect them to rise until after the 2020 election.
For the 2020 budget, city officials are projecting the cost of the plant and some other projects at about $71.5 million. City officials said that based on that cost they will borrow about $50 million and pay the remainder in cash.
Council Member Henk Berbee said he is concerned because he remembers construction of the city’s waste water treatment plant.
“It started with a certain budget and it far exceeded that budget,” Berbee said.
Andrako said he is “cautiously optimistic we will be below the original cost.”
Marysville City Manager Terry Emery said that while they believe they can bring the project costs in about $60 million, he said he wants “to be cautious until we go to bid.”
Nahvi agreed that was the right approach, as did Brossart.
“We have seen construction costs go crazy this year,” Brossart said.
City officials said they are about ready to put the project out to bid.
They said they expect to be able to close on bids in March and begin construction in the spring.
“We are ready to roll,” Emery said. “We have been ready.”
Brossart cautioned council that its pledge to freeze rates could hurt its rating when it is time to borrow.
“The fact that you are not raising rates is a detriment,” he said. “It has gotten way too many communities into too many problems.”
City Engineer Jeremy Hoyt said that all along, there has been “marching orders not to touch water rates.”
“That is rule number one, everything else falls in line after that,” Hoyt said.



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