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06.a1 Draft minutes 11-15-2022 Special Meeting November 15, 2022 A special meeting of the Scandia City Council was held jointly with the Wastewater Advisory Committee on the above date with modifications. The meeting was conducted in-person at the Scandia Community Center and over an electronic platform. All participants who joined the meeting remotely could hear each other and contribute to discussions. Mayor Christine Maefsky called the meeting to order at 6:05 p.m. Roll call was taken. The following were in attendance: Council members Heather Benson, Jerry Cusick, Steve Kronmiller, Patti Ray, and Mayor Christine Maefsky. Staff present: City Administrator Ken Cammilleri (remote), City Attorney Chris Nelson, Fire Chief Mike Hinz, Public Works Director Charles Fischer, Engineer Ryan Goodman, and Treasurer Colleen Firkus. Wastewater Committee members present were Perry Rynders and Dan Cartier (remote). SEWER BUDGET DISCUSSION WITH EHLERS ASSOCIATES Administrator Cammilleri gave an overview of the Uptown and Big Marine Sewer Utility draft budgets. The focus was on improving the cash position of each Utility to fund needs for repair and replacement of aging infrastructure. The draft budget presented a combination of rate increases and borrowing. The need to continue pursuing state funding was stressed as well. Uptown Sewer is expected to add a new user when the Scandia Heritage Alliance building is built and the impact on the sewer is unknown at this point. Increasing the service area and adding more users to the system, which currently has 9 users, would help with building fund balance. The most pressing challenge is the unfunded MPCA mandate to treat nitrates in the Big Marine Sewer System. The updated cost projection is $1.2 million. No state funding is available for this project. American Rescue Plan Act (ARPA) funds are being applied. The balance would be paid from increased User Fees and borrowing. ARPA funds must be spent by 2024, but the project does not have to be completed until 2025. The next priority is replacing Lift Station #2 currently estimated at $350,000. A suggestion to add meters to make User Fees more equitable would add an additional capital expense of approximately $145,000, as well as software to run it, and need to be replaced every 15 years. Jason Aarsvold, a financial advisor with Ehlers Associates, indicated that what was in the budget is what he recommends for meeting these challenges. The city can and should continue to pursue grants and state bonding, but should not count on them. The state has a Public Facilities Authority (PFA) loan program which would allow a longer loan period of 20 years and likely a more favorable interest rate of 1% less than the open bond market. The only downside is the loan is not callable and therefore cannot be restructured or repaid early. The city could also issue debt through a local bank. Aarsvold advised that these projects cannot be completed without any impact on the Utility budgets. The city could push the projects out and save up through increased User Rates, but would that be more affordable with interest rates going up. Engineer Goodman stated that the Bliss Nitrate Project can wait until 2025, but the ARPA funds must be spent in 2024, so it would be advisable to bid the project in the winter of 2023-2024 and start construction in the summer of 2024. This will also give the city opportunity to pursue other funding. November 15, 2022 Scandia City Council Page 2 of 2 The next Council budget work session was set for November 22, 2022 at 11:00 a.m. ADJOURNMENT Ray, second by Benson, moved to adjourn the meeting. Motion carried 5-0. The meeting adjourned at 6:52 p.m. Respectfully submitted, Colleen Firkus, Treasurer