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Minutes - 2007 - City Council - 10/24/2007 - Special /' EAGLE CITY COUNCIL Special Meeting Minutes October 24, 2007 I. CALL TO ORDER: Council President Guerber calls the meeting to order at 5 :30 p.m., as Mayor Merrill is not in attendance. 2. ROLL CALL: Present: BASTIAN, GUERBER, NORDSTROM, BANDY. A quorum is present. 3. PLEDGE OF ALLEGIANCE: Mrs. Donna Guerber leads the pledge of allegiance. 4. PUBLIC HEARING: A. Local Improvement District (L.I.D.) No. 2007 - City of Eal!:le: A public hearing at which owners of property to be assessed within proposed Local Improvement District No. 2007-1 ("L.I.D. No. 2007-1 ") may appear before the City Council (the "Council") of the City of Eagle (the "City") and be heard as to the propriety and advisability of creating L.I.D. No. 2007-1 and acquiring and financing the Project, as hereinafter described, and as the time and place when and where the Council will consider the creation of the proposed L.I.D. No. 2007-1 and the acquisition of the proposed Project, and hear all complaints, protests, and objections which may be made in writing and filed with the City Clerk on or before said time, by any owner of any parcel of land to be assessed. This item was continuedfrom the September 20,2007 meeting. Guerber introduces the item and explains that this is a continuation of a meeting that was held on September 20,2007. City Engineer, Vern Brewer, explains that at the last meeting the Mayor and Council called for a Citizens Committee to be formed to review the data the City had compiled in regards to the formation of the Local Improvement District. Mr. Brewer reviews a power point presentation (attached to minutes). Guerber lists the members of the L.I.D. Committee. Kathy Ball, Bob Hamilton, Chester Goodell, Debra Helton, Danelle Green, Doug Mayer, Mike Sieler and Tom Sorge. The members of the committee are given the opportunity to address the Council as to their findings as a result of their participation on the committee. Guerber notes the public hearing is open. Council President Guerber swears in Mr. Mike Sieler. Mike Sieler 1125 Steeple View Drive Eagle, ID 83616. Mr. Sieler reviews a PowerPoint presentation that he composed to conveys his analysis of the proposed acquisition of Eagle Water Company. He lists, in great detail, the benefits to acquiring the system. He appreciates the access to all of the materials and studies provided to the committee and has enjoyed being allowed to participate in the process. (PowerPoint attached to the minutes) Council President Guerber swears in Douglas Mayer. Page I K:\COllNCIL\MINUTES\Temporal)' Minutes Work Area\CC-IO-24-07spmin.doc Douglas Mayer 2302 N. Aldercrest Eagle, ID 83616. Mr. Mayer provides a handout with his written comments. Generally it seems like a good deal. The City has the storage, and Eagle Water has the wells, it would be a good "marriage of systems." Mr. Mayer did an analysis of costs and relays his findings. He is comfortable with the recommendation to move forward. It was a good experience to be on the committee and would encourage additional public input for the cost assessment portion of the process. (Handout attached to minutes) Council President Guerber swears in Debra Helton. Debra Helton, 1203 Cerramar Ct. Eagle, ID 83616. Ms. Helton provides her written testimony for the record, which is attached to the minutes. Ms. Helton reviews a rate comparison for Eagle City and United Water that she conducted. She commends the City for the information on the website, as it quite extensive and informative. Ms. Helton feels that the purchase is inevitable and the merging of the City of Eagle and Eagle Water System would be beneficial. It appears that the purchase price is reasonable. (written comments attached to minutes) Council President Guerber swears in Tom Sorge. Tom Sorge 2532 N. Edgewood Ln. Eagle, ID 83616. Mr. Sorge supports the transaction and is in support of the information presented by his fellow committee members. The acquisition is in the best interest of the City. The allocation of benefits for those in the L.I.D. boundary is something he could not quite come to terms with, specifically for those on the low end and that only had fire flow benefit. The assessment for well users will definitely need to be looked at. The boundary is appropriate, but as he stated less appropriate for the well users. The 6.2 million appears to be a reasonable amount. Thanks Council for the opportunity to be on the Committee. Council President Guerber swears in Danielle Green. Danielle Green 1362 E. Nest View Ct. Eagle, ID 83616. Appreciates serving on the Committee. Vern Brewer did an excellent job of providing the Committee with the data and information to review. Residents need to understand that water rates are going to go up regardless and ifthat information could be gotten out to the public it would be beneficial. The Council members thanks the Committee members for dedicating their time to serving on this committee. Brewer notes that the three Committee members that were not able to attend, he has their written testimony for the record. These will be attached to the minutes for the record. The PowerPoint presentation and the Cooper Norman report will be posted on the City's webpage. Council President swears in Michael Creamer. Michael Creamer, an attorney with Givens Pursely P.O. Box 2720 Boise, Idaho. Mr. Creamer represents Eagle River LLC. They submitted a protest letter in September and another one was submitted today with additional comments for Council's consideration tonight.. Eagle River does not protest the purchase of Eagle Water Company, they do Page 2 K:\COUNCIL\MINUTES\Temporary Minutes Work Area\CC"IO-24-07spmin.doc have issue with the use of an L.I.D. to facilitate the purchase. With an L.I.D. a smaller number of people would be responsible for the costs associated with the purchase. Eagle River has already paid for the water system (these having been paid to Eagle Water Company) that serves them and they do not feel they should have to "re-purchase" these assets. Eagle River opposes the L.I.D. and feels other financing methods should be pursued. However, should the L.I.D. should go forward, Eagle River asks that the boundary be re-drawn to exclude the Eagle River development. If the boundary continues to include Eagle River, then Mr. Creamer urges the Council to seriously look at the assessment for Eagle River as they have already paid for their infrastructure. Council President swears in Derek Smith. Derek T. Smith, 1102 N. Purple Sage Way Eagle, ID. Mr. Smith is an Eagle Water Company customer. He is dissatisfied with Eagle Water Company and he is not opposed to the acquisition. Council President swears in Russ Gronewald. Russ Gronewald 371 S. Harlan Place Eagle, ID. On behalf of Eagle West Subdivision Water Association he is filing an official protest of their subdivision being included in the L.I.D. He has contacted Eagle Fire Department and they (Fire Department personnel) stated they would dispatch a pumper truck, and an additional one if needed, to respond to a fire in their subdivision. Therefore he does not feel there is a fire benefit to this subdivision and does not feel they should be included in the L.I.D. boundary. Council President Guerber swears in Mr. Cowen Bill Cowen 349 W. State St. Eagle, Id. Mr. Cowen is in favor of the City owning Eagle Water System. However, he does not feel that the financing should be pursued through an L.I.D.. Feels that public relations should be improved to help get the citizens become informed and on board for this purchase. Furthermore, in the future an L.I.D. should not be utilized and the City needs to find a better way to communicate with the public. Council President Guerber swears in Mr. Deckers. Steve Deckers 2249 Dickey Circle Eagle, Idaho. Mr. Deckers does not feel that there is a fire benefit for him, as he is served by a private water system. But in the long run, 20-50 years down the road, looking back it will be seen as a great benefit to the City as a whole. Guerber closes the public hearing. Council deliberation. Guerber states that it is his understanding that the first step is to establish the local improvement district boundaries. After this step is completed, the City Engineer will analyze the specific benefit each property with in the district boundary will derive from system. Discussion. Bastian and Guerber both feel that all properties will receive some degree of benefit. Systems fail and contaminations occur, the merging of the Eagle Water Company system and City of Eagle system will provide a benefit be it now, or at some later date. It will be up to the Engineer to analyze and quantifY to what degree and base the assessment rate on the benefit derived. Bandy states it will be challenging to quantifY the fire flow benefit for the residents. Discussion of fire flow benefits. Bastian would like to keep the L.I.D. boundary as drawn. With the knowledge Page 3 K:\COUNCIL\MINUTESITemporary Minutes Work Area\CC-IO-24-07spmin.doc that the assessment for individual properties will be based on benefit will need to be reviewed. Doug Mayer poses a question to the Council. Is this a business or is Eagle River a subdivision. Eagle River is the business subdivision on the east side of Eagle Road south of the bypass. Debra Helton states that it is her understanding that even if Council approves the boundary tonight, individuals may still appeal this decision within 30 days to District Court. General discussion. 5. UNFINISHED BUSINESS: A. Ordinance No. 571 Creation of Local Improvement District (LID): - City of Eal!:le: An ordinance of the City of Eagle, Ada County, Idaho, creating Local Improvement District No. 2007-1; describing and setting forth the boundaries of the LID; providing for the project to be financed therein; appointing an engineer to prepare the necessary specifications, engineers' report, and assessment roll; providing for the payment of costs and expenses of the project to be assessed against the property within the local improvement district and the method of assessment; providing for the issuance of local improvement district bonds and warrants; providing for related matters; and providing an effective date. This item was continuedfrom the September 20,2007 meeting. Bastian moves, pursuant to Idaho Code, Section 50-902, that the rule requiring Ordinances to be read on three different days with one reading to be in full be dispensed with, and that Ordinance # 571 be considered after being read once by title only. Bastian reads Ordinance # 571 by title only. Seconded by Nordstrom. BANDY AYE; BASTIAN AYE; GUERBER AYE; NORDSTROM AYE... ALL AYES...MOTION CARRIES................. Bastian moves that Ordinance #571 be adopted. Seconded by Bandy. BANDY AYE; BASTIAN AYE; GUERBER AYE; NORDSTROM AYE... ALL AYES.. .MOTION CARRIES. B. Resolution 07-29: Authorizing agreement for Bond Counsel services. This item was continued from the September 20, 2007 meeting. Nordstom moves to approve the Resolution 07-29. Seconded By Bastian. BANDY AYE; BASTIAN AYE; GUERBERAYE; NORDSTROM AYE... ALL AYES...MOTION CARRIES. Bastian moves to adjourn. Seconded by Bandy. ALL AYE: MOTION CARRIES... "........... .." EA .... Hearing no further business, the Council meeting adjourned..........: o:.....2~~ ...... ...~-.... -.. ~ ~.. ORA7'l;-. ., Respectfully submitted: = c:;: ~~ ...., ~ .:0 .: 1 t : : u ,.' _: : '-- Cvw4-- k.. ~/n-{MVr-/ \.. \. c.~~~/i~ I , '=' ..;'4: ~ ,\<ci.. """'. ~ ~ ..fOItPO\l""...,,",~ l #, 0']' ....... \. v ...... #####. <'t TE 0 ~ ,.,.' Page 4 """.11.111" K.\CQUNCIL\MlNUTES\Temporary Minutes Work Area\CC-IO-24-07spmin.doc SHARON K. BERGMANN CITY CLERK/TREASURER A TRANSCRIBABLE RECORD OF THIS MEETING IS AVAILABLE AT EAGLE CITY HALL Page 5 K:\COUNCIL\MINUTES\Temporary Minutes Work Area\CC-IO-24-07spmin.doc EAGLE CITY COUNCIL PUBLIC HEARING SIGN-UP SHEET SUBJECT: Local Improvement District (L.I.D.) No. 2007 - City of Eaele: NAME 1/D Aiikick October 24. 2007 5:30 D.M. ADDRESS/ TELEPHONE/E-MAIL ;23oz N_ /9/-s2 t . 938 2 7 B$ cim.f E,e i-9 rh i 1 C -;,e LOA\ P-0 c o'ic Z72 C7 ISO ca- ?3701 or cets/te- Kvtar 3 7/ 3. NR%,t) /0/ X39 -33.37 '� Sv S . ,/ ,C TESTIFY YES/NO? PRO/CON y"c_c y5 yrc Arrt XdA4P4-te /5-6e-- LC/m.1.1-1- V-e-0 CP,G-L- CC? (23G1L << Sharon Bergmann From: Douglas R Thomas [druelthomas@cableone.net] Sent: Sunday, October 21, 2007 2:02 PM To: eaglecity Subject: To Mr. Phil Bandy- Election and LID 2007 Eagle City LID 2007-1-Hlghligh... Mr. Bandy, 4 OM CM' OF edjekt kit; 21 NV File: Route to• I been following publications regarding the mayoral candidates and attended several of the LID -2007 meetings. 1 am absolutely against the current proposal of a Property Assessment and the unfair method/categories our politicians have chosen to administer assessments. Attached is a letter I previously sent to the city (for the purpose of this email, please focus on the highlighted areas.) I am a metered water user and also pay separately for irrigation water. My opinion is that the current LID -2007 proposal and assessment categories is absolutely unfair to how and the amount I will be assessed (my domestic water bill is always under $20 a month.) Regarding the assessment, do the math and my point is well made. Additionally, the people who are on wells also made a valid point regarding the unfairness and their lack of benefit. As a Council Member and potential Mayor, what is your position to my comments regarding unfair LID assessments. How would you convince me to change my mind about how you and the City Council are inject assessment equality into the LID 2007? Many feel that the offered price to the owner of Eagle Water is too high. I share this opinion and is so stated in the attached letter. Regards and thank you for your past services to the city of Eagle, Douglas Thomas 208-939-6763 No virus found in this outgoing message. Checked by AVG Free Edition. Version: 7.5.488 / Virus Database: 269.15.3/1082 - Release Date: 10/20/2007 2:59 PM 1 September 13, 2007 To: The City of Eagle City Council Mayor Nancy Merrill Council Members- Stan Bastian, Steve Guerber, Phil Bandy, Scott Nordstom eaglecity aC�.citvofeaaIe.orq From: Douglas R Thomas 1652 N Parkforest Way Eagle, Idaho 83616 208-939-6763 In reaards to LID 2007-1 1 am against The City of Eagle's LID 2007-1. Proposal to purchase Eagle Water and assess the residents of Eagle. After five hours of attending both the Open House and City Council Meeting on Sept. 11, 2007, I left with the feeling that the city has not accurately disclosed the True/Real Costs of LID N. 2007-1 and 1 am. therefore. against your proposal and discourage you proceeding with the LID and assessment process. My reasons are as follows: I feel the City of Eagle is overstepping your area of competence and that Water Management and Ownership must be left to a Private Company. History shows proves, repeatedly, that private companies can more competently, and at less cost, run a business than can a government agency. In this case, if United Water were to purchase Eagle Water, the PUC would govern that United Water conform to requirements and costs to customers would be carefully scrutinized. The City of Eagle cannot guarantee Eagle Residents the same conditions; thus leaving you the opportunity to run Out of Control! I feel The City of Eagle is not disclosing an Accurate projected cost per household. If you were to approve the LID, I suspect costs will rise and will most likely be out of control. As history also shows with government agencies, nobody in government can be monetarily held accountable for poor decisions. If United Water were to purchase Eagle Water, they being a privately held company, would be held accountable to the PUC. I suspect The City of Eagle is paying too much for. Eagle Water. Eagle Water is a system that has a PUC moratorium placed on it because the services have not been adequately maintained or updated. I propose that The City of Eagle let Eagle Water go onto the open market. For years, Eagle Water has been poorly maintained and inadequately upgraded; why purchase a liability? Additionally, I feel you have not reported the intangibles. For example, you are not accurately reporting the condition/health of Eagle Water as a business and the condition of their assets. If The City of Eagle were to withdraw your proposal to purchase Eagle Water, what would United Water be willing to pay for Eagle Water? I suspect it would much less than 6.2 million dollars because the cost to bring it up to PUC requirements would exceed the $900,000 that The City of Eagle has estimated. You have not identified and included in your cost projections, the future need to hire additional city employees and purchase equipment. Thus, the need to increase the tax base in order to pay more benefits, equipment, and pension plans. You should instead, invest city dollars in people with occupations that are critical to efficiently running the city, occupations that are truly a Value Add. Let a private company such as United Water provide the water service and personnel to do the job. I believe that long term, United Water or some other private company will prove to be more efficient services and less cost than what the City of Eagle can provide. With LID 2007-1, you are stepping outside the boundaries of your expertise. I do not have confidence in your ability to efficiently and cost effectively manage the personnel you will have to hire to run a citywide water system and deliver these services at the costs you are proposing. I suspect that 20 years from now and if United Water or another private company purchases Eagle Water, the residents of the City of Eagle will have paid less for their services than we would if The City of Eagle purchases Eagle Water, assesses our property and, over time, establishes new water rates based on actual operating costs. Your assessment proposal is unfair to the residents of Eagle. As you have done in the past, you are taking a shotgun approach to a problem. Much the same as you did. with Sewer Ratesm past years In the case of your sewer rates, my belief is a family of two should not have to pay the same as a family, of four plus. My Eagle Sewer rate, went from $10 to $26 per month, which was and is absurd. Take, for example, the city of Meridian who charges sewer rates based on household water usage. Why can't Eagle do the same? Your proposal for a two -assessment system (well owners and current residents with meters) is unfair and shortsighted. At the Sept. 11 meeting, you could not tell the owners who have water wells, exactly how they would benefit from being assessed. You could not adequately explain how their Fire Protection Benefit would differ or be better in the future for those folks. You failed to include a different assessment for people who are on a city meter but use city water for only household use and pay separate Irrigation Fees for landscape watering. Assessments, if any, should be based on metered water usage:: Those who benefit most by using the more water should pay more based on their usage. I could continue with this letter but let me say in closing that after living in Eagle for fifteen years, l have seen the growth and the watched the City Council and Planning Commission spend money without accountability and LID 2007-1 is another example and will place a hardship on many of our Eagle residents. It is time for you to pull in the reins and start operating on a budget rather than a city that continually finds new ways to spend money. Please put yourselves on a budget and make Eagle an affordable place to live rather than continue your Out of Control Spending which is placing burden and hardship on the residents; many of which you are forcing out of their homes. Please stop spending the city's money as if you have a bottomless bank account! Cordially, Douglas R. Thomas Cc: The Idaho Statesman Editorial Page Editor- Kevin Richert krichert aeidahostatesman.com Cooker Norman CERTIFIED PUBLIC RCCOUNTANTS A PROFESSIONAL LIMITED LIABILTY COMPANY MEMBER: AMERICAN INSTITUTE OF CPAs IDAHO SOCIETY OF CPAs CPA ASSOCIATES INTERNATIONAL, INC. Mayor Nancy Merrill and Council City of Eagle P.O. Box 1520 Eagle, ID 83616 October 18, 2007 Re: Review of Eagle Water Company Value v. Purchase Price For the City of Eagle Dear Mayor and Council: BOISE *TWIN FALLS • IDAHO FALLS As requested, we have reviewed the Asset Purchase Agreement and certain operating information of the Eagle Water Company for the purpose of expressing an opinion as to whether the $6,300,000 price paid plus financing cost was reasonable and fair to the City of Eagle. This engagement is limited in scope compared to a formal business valuation engagement the purpose of which would be to express an independent opinion of value on the Eagle Water Company as a whole. A formal valuation would require much more analysis and much more reporting and, therefore, cost substantially more than this engagement. Our analytical process for this engagement is commonly referred to by business valuation analysts as a "sanity check" on value. In order to express our opinion on whether the price was reasonable and fair or unreasonable and unfair, we met with Mr. Vern Brewer of Holladay Engineering Co. to review the work their staff performed to analyze and summarize the annual operating revenues and costs of Eagle Water Company immediately prior to its purchase by the City of Eagle, to project the total expected costs of purchasing and operating the Eagle Water Company system as part of the City of Eagle's system and to compare rates per gallon charged in each scenario to the rates charged by United Water for similar water service. We also reviewed the most recent financial reports filed by Eagle Water with the Idaho Public Utilities Commission. We did not audit the work of Holladay Engineering. We found the following facts to be relevant to expressing our opinion on whether the price was reasonable or unreasonable: 1. Eagle Water Company is privately owned and as such is a public utility subject to regulation and price controls imposed by the Idaho Public Utilities Commission. 2. Present rates charged by Eagle Water Company are significantly lower than market rates. For purposes of our analysis we consider rates charged by United Water and the City of Eagle to be equivalent to market rates. UNIVERSITY PLAZA • 960 BROADWAY AVENUE, SUITE 525 • BOISE, IDAHO .83706 (208) 336-0800 • FAX (208) 336-7092 • WWW.COOPERNORMAN.COM • E-MAIL: CN @COOPERNORMAN.COM Mayor Nancy Merrill and Council Re: Review of Eagle Water Company Value v. Purchase Price October 22, 2007 Page 2 of 4 3. The Eagle Water Company system has deferred system maintenance and deficiencies in water pressure and fire protection that any future purchaser would be required by regulatory bodies to fix. Charges for fixing these issues would be passed on to customers provide that the charges stay within the market rates charged for similar services within the market area (the Treasure Valley). 4. Because it is a privately owned system the Eagle Water Company system will likely sell within the lifetime of current owners to another privately owned company, such as United Water, or to the City of Eagle and such a sale will likely be result in the below market rates for services of Eagle Water Company being adjusted up to market. 5. Rates charged per ccf and per 1000 gallons of water delivered by the Eagle Water Company, the City of Eagle (immediately after the purchase) and by United Water are represented in the attached schedule. 6. The purchase was made of all of the Eagle Water Company assets essential for operating the system in its present condition, more specifically described as follows: a. All items of tangible personal property of used the Eagle Water Company's Utility Business ("the Company"), including all reservoirs, storage tanks, pumps, distribution lines, hydrants, valves, meters, equipment, furniture, inventory, fixtures, materials, supplies, motor vehicles, and spare and replacement items; b. All wells, water rights, and water rights applications, including the Company's interest in any real property associated therewith; c. All leases of personal property and real property associated with the Utility Business to which the Company is a party, whether as a lessor or lessee, and all rights, benefits and interests of Seller under the contracts, agreements, commitments, understandings, purchase orders, sales orders, documents and instruments, in each case solely as approved by Buyer in its sole discretion; d. All deposits or down payments, if any, made by the Company's customers or prospective customers relating to the purchase of goods or the performance of Utility Business services (including but not limited to construction of water system infrastructure or facilities) not completed in full conformance with all customer requirements and specifications and accepted by the customer on or before the Closing; e. All proprietary rights, intellectual property and intangible property of the Company that is used in the conduct of the Company's Utility Business, including customer lists, customer relationships, customer agreements, customer under- standings, technology, know-how, processes and operating rights; Mayor Nancy Merrill and Council Re: Review of Eagle Water Company Value v. Purchase Price October 22, 2007 Page 3 of 4 f. To the extent transferable, all approvals, authorizations, consents, licenses, permits, franchises, tariffs, orders and other registrations of any federal, state or local court or other governmental department, commission, board, bureau, agency or instrumentality held by Company and required for the conduct of the Company's Utility Business; g. All operating data and records, including, without limitation, financial, accounting and credit records, correspondence, budgets, engineering and plant records and other similar documents and records related to Seller's Utility Business. 7. Some of the assets listed, such as the water rights, have a significant tangible value that is transferable independent of the other assets in the system. Analysis of the above data shows that the purchase price paid for Eagle Water Company assets can be absorbed, including costs for upgrading to the water system to current operating regulatory standards at rates for services that are within the current fair market rate for such services. The 2005 analysis of Holladay Engineering shows total charges of $2.51 per 1,000 gallons are needed to pay for the system, upgrades to the system and operation of the system. 2005 was the lowest year of four water demand years analyzed (2003 through 2006), so the rate per 1000 gallons of $2.51 is the highest potential total rate expectation of the four years. Based on consumption updates of 334 ccf contained in the recent Eagle Water Company Final Engineering Report, 2007, applying the same comparison, the total charges of $2.41 per 1,000 gallons are needed to pay for the system, upgrades to the system and operation. It is our opinion that these rates compares favorably to the $2.53 per 1,000 gallons charges of United Water for similar services and are therefore within the fair market rates for water services, especially considering the planned water service upgrades included in the rates. We are aware from our discussion with Mr. Brewer that the City has identified a number of additional benefits of acquisition including public ownership of water rights, local use of the natural resource, avoided costs of obtaining additional water rights and wells, service economies of scale, and administrative benefits associated with combining utility development with land use decisions. The values of these perceived benefits were not defined or incorporated into our limited scope of valuation. A sanity check on value is a test on whether the price paid is affordable to a typical buyer assuming normal financing alternatives available to the typical buyer. By comparison, it is the way that actual markets test the appraised value of residences, i.e. are they affordable to the perceived typical buyer? Based upon this sanity check it is our opinion that the price paid by the City of Eagle for the Eagle Water Company water system assets was a reasonable and fair price for the City of Eagle to pay for that system. Mayor Nancy Merrill and Council Re: Review of Eagle Water Company Value v. Purchase Price October 22, 2007 Page 4 of 4 if we can be of further assistance in this regard or if further explanation of our opinion is needed, please call. Sincerely, Cooper Norman 65044/ Ociiew-MA- David M. Cooper, CPA, CVA Enclosure City of Eagle Comparison of Rates for Water Services Rate per Coversion Rate per ccf Factor 1000 Gallons Eagle Water Company: Total Gallons Sold in 2005 694,362,184.00 Total Revenues Charged $ 658,773.00 Price per Galion $ 0.00094875 Price City of Eagle with Eagle Water Company Purchase: $ 1.27 0.7480 $ 0.95 Charge for Water Usage 1.19 0.7480 $ 1.59 Monthly $8.50 Base Charge Annualized (X12) 102.00 Average ccf per residential customer 294.00 Price 0.35 0.7480 $ 0.46 Annual LID debt service per residential customer $ 101.10 Average ccf per residential customer 294.00 Price $ 0.34 0.7480 $ 0.46 Total Projected Price $ 1.88 $ 2.51 United Water: Estimated annual charge per residential customer 555.75 Average ccf per residential customer 294.00 Price 1.89 0.7480 $ 2.53 City of Eagle Local Improvement District (LID) Committee Written Comments from Kathy Ball The Eagle City Council requested that Committee members, meeting for three two-hour sessions, form an opinion they would share with the Council on the City's extensive negotiation and due diligence process in evaluating the value and performance of acquiring and merging Eagle Water Company with the City's water system. The City trusts that, when the opportunities are discussed and the issues explored in more detail, the conclusions of the Council will be shared by these members of the community. The City is very grateful for the expertise represented by these voluntary members of the community and their time and effort to understand more fully the City's decision to purchase Eagle Water Company. I have borrowed (copied) Robert Hamilton's suppositions to preface my answers as well. They are: • The Eagle Water Company is for sale. • The City of Eagle has been negotiating purchase of the Eagle Water Company for over two years under a seller -imposed nondisclosure agreement (which prevented the City from informing the public about the negotiations). • If the City of Eagle ultimately declines to purchase the Water Company, some other entity (likely United Water Company) will. • Eagle Water Company water rates are currently the second lowest in the State of Idaho and have not been increased for a number of years (other than the recent surcharge imposed to address the low pressure problems east of Highway 55 and to pay for preparation of the PUC report). • Current Eagle Water Company rates are significantly lower than they would be had appropriate rate increases been sought to keep pace with regular system improvements and the impacts of inflation on operation and maintenance costs. • Regardless of who purchases the Eagle Water Company, water rates for current Company customers will increase significantly. City of Eagle water system rates are lower than those of the United Water Company. • The Eagle Water Company system has a number of deficiencies that need to be addressed (see the approved report to Idaho PUC). • The Eagle Water Company has a minimal amount of system storage (90,000 gallon tank at well #2) and no cross connection with any adjacent water supply entity to aid in system reliability. • A major fire event within the Eagle Water Company service area combined with a major power outage could present a significant problem since several of the company wells do not have on-site generators (deficiency noted in the PUC report). • • Merging the City of Eagle water system with the Eagle Water Company would result in a single municipal system serving all potions of the city north of the river (the area south of the river is served by United Water Company). • Merging the two systems would provide Eagle Water Company customers with access to the soon -to -be -completed City water tank. This would improve water pressure in low-pressure portions of the Company's service area and significantly enhance fire protection for both systems. • If the Eagle Water Company was not purchased via the LID. The current City of Eagle water users would be required to cover the construction of the large storage (water) tank near Hill road, and other improvements (and expansion) to the existing wells within their boundaries. • City acquisition of the Eagle Water Company would place the infrastructure and associated water rights in public ownership and assure that this precious resource isn't exported to other areas. • More work is needed to confirm the assessment roll, better identify the benefits (domestic water, irrigation water, &/or fire protection) that accrue to each metered parcel/customer on the assessment roll and (presumably) refine the allocation of LID indebtedness based on those benefits. Questions from the City: 1. From the information presented, do you believe the acquisition of Eagle Water Company — complete with customer base, infrastructure and water resources — is in the City's and public best interest? Despite the estimated cost of the LID (cost to metered users appears to be between $700 to $1000), the lowest cost alternative for all impacted users, for the near and distant future would be for the City of Eagle to purchase Eagle Water Company and to take advantage of the combined resources. Calculations I have done indicate that the cost of not purchasing Eagle Water Company (and merging Eagle City water users) would actually cost more (via higher rate fees). 2. Given the Committee's limited time to discuss available information and city's process, have you gained more confidence in the two-year effort of negotiation, evaluation and due diligence being performed by the City? Yes The 8 hours of focused education made decision clear. 3. With the merger of the systems and the specific improvements outlined in the Purchase Agreement, can you see a basis for some allocation of performance benefits to all parties in a Local Improvement District? Yes. 4. From the discussion of improved water system reliability, sustainability, and potential beneficiaries, does the Local Improvement District boundary appear reasonable? No, but given that other properties have not been developed, and other properties are directed by United Water, it is the only boundary possible ,vim, for the LID at this time. 5. Based on your limited assessment of the potential value of the system and value to the City, does the purchase price of $6.3 million in the Agreement appear to be reasonable? Yes, if the water rights prove to be as valuable as it is currently perceived, and the due diligence supports the current estimates. Further, I would propose that the City of Eagle not develop a monopoly in regard to the billing and collection of water fees. I would ask the city to allow a management company to bid to obtain a contract to provide the services to the current City of Eagle users. Additionally, I would ask that the City to contract with, or employ Eagle Water Company employees to provide services of billing and collection of water fees for the Eagle Water Company users. After a period of time, maybe 12 months, the city could assess the cost/benefit of each method to determine which one would be most efficient and effective for the Eagle taxpayers. City of Eagle Local Improvement District Committee Written Comments Provided by Robert Hamilton 24 October 2007 Based on the information provided to the LID Committee and my review of the approved Eagle Water Company report to the PUC, I perceive the following as givens: • The Eagle Water Company is for sale. • The City of Eagle has been negotiating purchase of the Eagle Water Company for over two years under a seller -imposed nondisclosure agreement (which prevented the City from informing the public about the negotiations). • If the City of Eagle ultimately declines to purchase the Water Company, some other entity (likely United Water Company) will. • Eagle Water Company water rates are currently the second lowest in the State of Idaho and have not been increased for a number of years (other than the recent surcharge imposed to address the low pressure problems east of Highway 55 and to pay for preparation of the PUC report). • Current Eagle Water Company rates are significantly lower than they would be had appropriate rate increases been sought to keep pace with regular system improvements and the impacts of inflation on operation and maintenance costs. • Regardless of who purchases the Eagle Water Company, water rates for current Company customers will increase significantly. • City of Eagle water system rates are lower than those of the United Water Company. 2. • The Eagle Water Company system has a number of deficiencies that need to be addressed (see the approved report to Idaho PUC). • The Eagle Water Company has a minimal amount of system storage (90,000 gallon tank at well #2) and no cross connection with any adjacent water supply entity to aid in system reliability. • A major fire event within the Eagle Water Company service area combined with a major power outage could present a significant problem since several of the company wells do not have on-site generators (deficiency noted in the PUC report). • Merging the City of Eagle water system with the Eagle Water Company would result in a single municipal system serving all portions of the city north of the river (the area south of the river is served by United Water Company). • Merging the two systems would provide Eagle Water Company customers with access to the soon -to -be -completed City water tank. This would improve water pressure in low pressure portions of the Company's service area and significantly enhance fire protection for both systems. • City acquisition of the Eagle Water Company would place the infrastructure and associated water rights in public ownership and assure that this precious resource isn't exported to other areas. • More work is needed to confirm the assessment roll, better identify the benefits (domestic water, irrigation water, &/or fire protection) that accrue to each metered parcel/customer on the assessment roll and (presumably) refine the allocation of LID indebtedness based on those benefits. Questions from the City: 1. From the information presented, do you believe the acquisition of Eagle Water Company — complete with customer base, infrastructure and water resources — is in the City's and the public's best interest? Yes 2. Given the Committee's limited time to discuss available information and city's process, have you gained more confidence in the two-year effort of negotiation, evaluation, and due diligence being performed by the City? Yes 3. With the merger of the systems and the specific improvements outlined in the Purchase Agreement, can you see a basis for some allocation of performance benefits (domestic water, irrigation water, & fire protection) to all parties in the proposed Local Improvement District? Yes 4. From the discussion of improved water system reliability, sustainability, and potential beneficiaries, does the Local Improvement District boundary appear reasonable? Understanding that the City is apparently restricted by law from extending the LID boundary beyond the city limits or into city areas served by United Water Company, the boundary is reasonable. A portion of the Eagle Water Company service area east of Old Highway 55 is outside the City limits and thus outside the proposed LID boundary. 5. Based on your limited assessment of the potential value of the system and value to the City, does the purchase price of $6.3 million in the Agreement appear to be reasonable? Yes, pending completion of due diligence RECEIVED & FILED QITY OF EAGLE UL 12 s 2007 File: Route tr • Eagle River, LLC A. Ennis Dale Senior Vice President aedale@EavleRiverDev.com October 24, 2007 Via hand delivery Sharon K. Bergmann, City Clerk City of Eagle 660 East Civic Lane Eagle, ID 83616 RE: Local Improvement District No. 2007-1 Dear Ms. Bergmann: Please consider this letter as supplemental to Eagle River, LLC's ("Eagle River") September 10, 2007 protest of the City's proposed creation of Local Improvement District No. 2007-1. In our protest, we informed the City that Eagle River had already paid the costs to construct the potable water distribution infrastructure that serves the Eagle River project at the South East corner of Highway 44 (the Eagle By -Pass) and Eagle Road, which is within the boundaries of the proposed LID. Eagle River was required to fund construction of this infrastructure and transfer it to Eagle Water Company as a condition of receiving water from this public utility. Eagle River continues to own substantial portions of this project, although numerous commercial lots have been sold with the attendant water infrastructure construction costs being passed on to the purchasers. Our September 10th letter stated that Eagle River had incurred approximately $350,000 in construction costs for these water distribution facilities—facilities the City now proposes to purchase from Eagle Wa ter Company with reimbursement from Eagle River through the proposed LID. Eagle River since has confirmed that it actually has expended approximately $373,492.53 to construct this water distribution infrastructure, a significant portion of which was 485 East Riverside Drive • Suite 100 • Eagle, Idaho 83616 • (208) 938-4270 FAX (208) 938-4272 Sharon K. Bergmann, City Clerk City of Eagle October 24, 2007 Page 2 paid directly to Eagle Water Company's construction division. Eagle River's additional design, engineering and survey costs associated with this construction puts Eagle River's total investment in the water system at over $400,000. This sum does not include any costs for Eagle Water's hook-up charges, service line charges or other costs of plumbing, piping, fixtures and appliances on the consumer side of the connection to the utility's facilities. Eagle River previously informed the City Council of the apparent legal infirmities of the City's proposal to using an LID to acquire water facilities, to including the Eagle River property within the LID boundaries and to levying assessments on Eagle River property owners to pay the City's costs of acquiring improvements they already have paid for. We continue to question why the City is not pursing acquisition financing through general obligation funding. This may require voter approval because of statutory municipal debt limits, but that patently is the preferred method to finance the proposed acquisition, particularly where it is the City's citizens who will be called on to repay its obligations in any event. Putting the acquisition (and financing) to a vote of the City's citizens—those whose property ultimately may be benefited, but certainly will be burdened by the ensuing debt— may postpone a potential November 2007 closing with Eagle Water to accommodate the statutory notice and timelines. It also may limit the amount of the purchase price the City can finance. But these are not a legitimate reasons to circumvent the process altogether. Idaho LID statutes were not intended to permit elected officials to unilaterally incur substantial additional debt that their electors would not otherwise authorize the municipality to assume. As the City Council is no doubt aware, under the LID statutes, any decision to create the proposed LID and include the Eagle River property within its boundaries without simultaneously indicating whether and to what extent Eagle River would be required to pay again for benefits it already paid for and receives would present the issue of waiver if Eagle River did not immediately seek judicial review of the decision. Eagle River continues to support available avenues for the City's 485 East Riverside Drive • Suite 100 • Eagle, Idaho 83616 • (208) 938-4270 FAX (208) 938-4272 Sharon K. Bergmann, City Clerk City of Eagle October 24, 2007 Page 3 acquisition of the Eagle Water Company that would avoid that prospect. Eagle River respectfully requests that the City pursue these other avenues, or that it exclude the Eagle River property from Local Improvement District No. 2007-1. Cc: A. Ennis Dale Nancy Merrill Steve Guerber Susan Buxton Charles Carlise 485 East Riverside Drive • Suite 100 • Eagle, Idaho 83616 • (208) 938-4270 FAX (208) 938-4272 e ioIjk*- EAGLE WEST SUBDIVISION WATER ASSOCIATION MIKE RYALS, PRESIDENT 250 S. HARLAN PL. EAGLE, ID 83616 OCTOBER 23, 2007 CITY OF EAGLE OFFICE OF THE MAYOR 660 E.CIVIC LANE EAGLE, ID 83616 MAYOR Et MEMBERS OF THE CITY COUNCIL: THE BOARD OF DIRECTORS OF THE EAGLE WEST SUBDIVISION WATER ASSOCIATION WOULD LIKE TO SUBMIT A REQUEST FOR EXEMPTION FROM THE PROPOSED LOCAL IMPROVEMENT DISTRICT 2007-1(L.I.D.07-01) IT 1S THE OPINION OF THE 24 HOMEOWNERS WITHIN THE EAGLE WEST SUBDIVISION THAT WATER NEEDS ARE BEING SURPASSED BY THE CURRENT SYSTEM BEING USED WITHIN THE SUBDIVISION AND MINIMAL IF ANY BENEFITS WOULD BE DERIVED BY THE PROPOSED L.I.D. THE COMMUNITY WELL SYSTEM WAS ORIGINALLY APPROVED FOR 27 HOMES WITH ONLY 24 HOMES BEING BUILT. IT IS ROUTINELY LAB TESTED WITH NO NEGATIVE RESULTS. ADDTIONLLY, THE PUMP COMPANY ROUTINELY CHECKS THE CONDTION OF THE PUMPS AND TANKS. THE SYSTEM EXEMPLIFIES A CONSCIENTIOUS EFFORT TO MEET THE NEEDS OF THE HOMEOWNERS WHILE PROVIDING DRINKING WATER THAT EXCEEDS WATER STANDARDS. ATTACHED IS A COPY OF ADDITIONAL COMMENTS, MADE BY WATER ASSOCIATION PRESIDENT MIKE RYALS, SUPPORTING THE REQUEST FOR EXEMPTION OF EAGLE WEST SUBDIVISON FROM THE PROPOSED L.I.D.07-01. Prisident Board of,D'rectors Vice President card of Drectors 1-17 rd ofirectors EAGLE WEST SUBDIVISION WATER ASSOCIATION MIKE RYALS, PRESIDENT 250 S. HARLAN PL. EAGLE, ID 83616 OCTOBER 24, 2007 PUBLIC HEARING: LOCAL IMPROVEMENT DISTRICT 2007-1 MIKE RYALS MAYOR Et MEMBERS OF THE CITY COUNCIL: JUST A FEW BRIEF REMARKS REGARDING THE EXEMPTION REQUEST FROM THE EAGLE WEST SUBDIVISION LOCATED ON SOUTH HARLAN PL. FOR THOSE OF YOU THAT ARE UNFAMILAR WITH OUR SUBDIVISION, HERE'S A CRASH COURSE. WE BECAME A SUBDIVISION IN 1976 WHEN EAGLE WASN'T SURE WHAT TO DO WITH A SUBDIVISION, OR EVEN IF THEY WANTED ONE. 31 YRS. LATER WE ARE STILL HERE. FAMILIES HAVE BEEN RAISED ON THAT 1 QUIET DEAD END STREET AND NOW THEIR CHILDREN ARE IN OWNERSHIP OF SOME OF THE HOMES. THERE ARE 24 OF US RANGING IN AGES FROM THE MID TWENTIES TO THEIR 80'S, EMPLOYED IN ALL SORTS OF JOBS AND SOME RETIRED. WE ARE A PRETTY TYPICALLY QUIET NEIGHBORHOOD. THAT'S SOUTH HARLAN PL. IN A DISCUSSION WITH THE ENGINEER AT THE CONCLUSION OF THE LAST MEETING, HE MADE SEVERAL SUGGESTIONS THAT I FOLLOWED UP ON. I CALLED DEQ REGARDING ANY CONCERNS OR ISSUES THEY MAY HAVE ABOUT THE SUBDIVISION WATER AS IT RELATES TO THE L.I.D. THEY HAD NONE. WE DID DISCUSS THE INTERNATIONAL CODES BUT THEY WEREN'T SURE IT WOULD APPLY TO US. THEY ONLY WANTED TO BE SURE OUR WATER WAS BEING ROUTINELY TESTED AND OF COURSE WE ARE. MY 2ND CALL WAS TO THE PUMP COMPANY SERVICING THE COMMUNITY WELL. WE HAVE GOOD PRESSURE AND THE PUMP CAN PUMP MORE WATER THAN IS CURRENTLY BEING USED BY THE SUBDIVISION. NEXT I WENT TO THE EAGLE FIRE STATION. THE MAJORITY OF THE HOMES IN THE EAGLE WEST SUBDIVISION ARE 1200 SQ.FT. WITH A COUPLE THAT ARE 1800 SCUT. MY QUESTION TO THEM WAS "IF WE HAD A FIRE ON SOUTH HARLAN PLACE COULD YOU PUT IT OUT AND HOW WOULD YOU PUT IT OUT"? THE REPLY OF COURSE WAS "YES" AND THEY WOULD BRING A TANKER WHICH HOLDS 3,000 GALLONS WITH ANOTHER BACK-UP TANKER IF FOR SOME REASON IT WAS NEEDED. THEY INDICATED THAT 1 TANKER SHOULD BE ABLE TO CONTROL ANY FIRE ON THAT SIZE OF HOUSE. THERE IS ALSO HYDRANTS LOCATED ON STATE STREET. AND FINALLY I ASKED IF I WOULD BE CHARGED FOR NOT HAVING THE RIGHT "BRAND" OF WATER? CURRENTLY THERE IS NO CODE REQUIRING HOMEOWNERS WATER SYSTEMS TIED TO FIRE PROTECTION. . MY POINT IS THAT EAGLE WEST SUBDIVISION IS GOING ABOUT ITS BUSINESS IN A SAFE AND PRUDENT MANNER AND UNLESS THIS ELECTED BODY CHOOSES TO INTERFERE, BY INCLUDING US IN THE L.I.D. AND THEN ASSESSING US AS NON-CONNECTED BENEFICIARIES, WE SHALL GO ABOUT OUR BUSINESS AS USUAL FOR ANOTHER 31 PLUS YEARS. WE HOPE THE COUNCIL AFTER REVIEWING OUR REQUEST FOR EXEMPTION WILL AGREE WITH THE HOMEOWNERS OF EAGLE WEST SUBDIVISION AND EXCLUDE US FROM THE L.I.D. S36,(zc� c �3/ 7 /6 .ad • 4/414-7 &k--fCtAXA:/t/ /6 Com, . -I 4 , r RACK-u0-1ll�� WL, 44 V (c_39,e,4_4_,f / t�✓LA.C.uZ-6-r�q/C �t1 :A P / 0 bon.) _c4L 60_ 4, a - -43 -17 __ cu -a %"_,A - 4/zryt,c/4-a4 ric <O`�'�C 1(x-1 G ZIL(A, ,Yz-e2,P f -c7- V fj),ttk- 7 3 y�-• -�-� . 1 C,c±--Jtrl ou4-- 7S 7 atio V Gtr Puce, fL ,..1-c-a-e-c-c)--ji a zit fc,.1__G -7`61- 11Z ,-Ztt-w • 4a2 h_61.4 )1-4t.o.st Owk-4 LL<A. iLe_z T.zz cat, tee^ T?rl'7"ej / / J c/7- cioor City of Eagle Local Improvement District (LID) Citizen Committee Report Public Testimony, Mike Sieler 24 October 2007 Findings and Understandings Six hours of committee meetings reviewing and discussing the data available for public scrutiny. Evaluation criteria: 1. Why buy Eagle Water Company (EWC)? 2. What are the benefits? 3. What are the financial implications? 4. What counteractive measures exist? 5. Future new, non -LID user impacts Mike Sieler, 24 October 2007 2 1) W iy Buy Eagle Water Company? • Eagle City would be a better steward of a limited and precious resource. • Obtain valuable senior water rights • Greater quantity of wells (2+6) enhances backup system to cover failure or maintenance needs. • Enhanced fire protection • Removal of Department of Environmental Quality (DEQ) moratorium Mike Sieler, 24 October 2007 3 2) What Are The Benefits? • Economies of Scope & Scale — Increased system integrity — Greater quantity of wells — Higher customer count • Established billing and collection system • Municipal "Intertie" with Garden City • High -load water availability improves fire protection & customer use • No unwarranted exportation of unused water • UWC avg. well volume = 560 gal per minute* Mike Sieler, 24 October 2007 4 2) What Are The Benefits? continued • Independent counsel review in public record —Legal: Stoel-Rives —Business: Cooper Norman • Eagle City more inclined to non -chlorine purification (UV Light Disinfection System, EPCOR) • DEQ oversight maintains water quality • Elimination of PUC bureaucracy Mike Sieler, 24 October 2007 5 *www.unitedwater.com/uwid/ waterid.htm 3) Financial Considerations • Replacement costs overwhelm present value despite maintenance needs — 6 wells @ $600K ea. = $ 3,600,000 — 284,000 feet of Pipe = expensive plastic (oil @ $80+) — 327 hydrants, 712 valves, 102 blow -offs • Economies of scale yield lower per -customer cost basis • Lower operation costs versus shareholder -driven, foreign-owned corporation (www.suez-iyonnaise-eaux.fr) • No corporate debt, dividend 6 , or taxes with city ownership Mike Sieler, 24 October 2007 United Water United Water Idaho 15c Interest on Debt 16c Dividends & Reinvestment 15¢ Depreciation 15C Taxes 39c Operations & Maintenance http.//www.unitedwater.com/ uwid/custmrid.htm 3) Financial Considerations continued • Eliminate PUC -driven overhead costs • LID payment based on usage or class -oriented assessments to be determined • LID Payment by one-time fee or time -based payments • Fixed Income payers would have property lien? — Worst case scenario for non-payment • Health -Welfare low income program subsidies may be available Mike Sieler, 24 October 2007 7 4) Counteractive Measures • Hire needed service -management experts —Present EWC employees —Present EWC back office systems, operations —Present City -hired UWC billing service • Current EWC rates will increase. • Outcome and cost based on EWC buyer Mike Sieler, 24 October 2007 8 5) Future non -LID User Impacts • New developments and non -LID customers — pre -pay and certify operational integrity before hookup to city system. — No adverse impact on present LID base population. • Additional fees for new, non -LID users • Storage -Trunk Line (STL) Cost: $1,500. • Connection Equiv. Cost $450 • Hookup Cost $845 • New systems will bolster full system integrity Mike Sieler, 24 October 2007 9 Legend Value 0 None x Good xx Better xxx Best Cost $ Lowest $$ — $$$ Highest Qualitative Analysis Attribute Number of wells Storage Facility Intertie capability LID Community benefit LID Customer -based control LID Water Rights Fire water protection integrity Eventual Customer Cost Eagle City Eagle Water United Water H2O Company Company X x City DEQ x x x x DEQ PUC xx x x Eagle only 0 within Eagle x 0 Export H2O x x DEQ PUC 0 Export H2O x $$ Choose future $$$ cost basis Mike Sieler, 24 October 2007 10 Legend Value 0 None x Good xx Better xxx Best Cost $ Lowest $$ $$$ Highest Qualitative Analysis continued Attribute Number of wells Storage Facility Intertie capability LID Community benefit LID Customer -based control LID Water Rights Fire water protection integrity Eventual Customer Cost Eagle City United Water H2O Company X x City DEQ x x x Eagle only 0 within Eagle x 0 Export H2O x x DEQ PUC 0 Export H2O x 11 5 Combined EWC & Eagle City XXX XXX X XX X x City DEQ xxx Mike Sieler, 24 October 2007 11 Addendum • LID Committee Questions Analysis, Mike Sieler • United water customer service web pages www.unitedwater.com www.suez-lvonnaise-eaux.fr • UV water disinfection system www.epcor.ca/Customers/Municipalities/Water+Services www.epcor.ca/NR/rdonlyres/A3A35175-CC96-4FD0-98AB-. 162988121Al2/0/UV fact sheet.pdf • City of Eagle LID Citizen Committee meeting handouts Previous public testimony Mike Sieler, 24 October 2007 12 City of Eagle Local Improvement District (LID) Committee The Eagle City Council requested that Committee members, meeting for three two-hour sessions, form an opinion they would share with the Council on the City's extensive negotiation and due diligence process in evaluating the value and performance of acquiring and merging Eagle Water Company with the City's water system. The City trusts that, when the opportunities are discussed and the issues explored in more detail, the conclusions of the Council will be shared by these members of the community. The City is very grateful for the expertise represented by these voluntary members of the community and their time and effort to understand more fully the City's decision to purchase Eagle Water Company. Findings and Understandings of Mike Sieler based on the six hours of meetings to review the data available for public scrutiny. Five evaluation criteria were derived: 1. Why buy Eagle Water Company (EWC)? 2. What are the benefits? 3. What are the financial considerations? 4. What counteractive measures exist? 5. Future new, non -LID user impacts WHY BUY • Eagle City would be a better steward of a limited and precious resource. • Obtain senior water rights. Three dated in the 70's, 3 in the 90's • Obtain greater quantity of wells (6) to enhance backup system to cover failure or maintenance needs. • Enhanced fire protection • Removal of Department of Environmental Quality (DEQ) moratorium BENEFITS • System integrity brings enhancements to a greater population base. • Greater quantity of wells across broad customer base • Established billing and collection system • Municipal "Intertie" agreement with Garden City • High -load water availability for improved fire protection & customer use • Improved fire protection insurance rating • No unwarranted exportation of water from EWC assets or aquifer directly within Eagle boundary • Obtain scrutiny of legal (Stoehl-Reeves) and business (Cooper Norman) aspects from independent agencies accountable to public record review process. • City more likely to investigate non -chlorine disinfection mechanisms (UV Light) than corporation. • Maintain DEQ oversight for water quality purposes FINANCIAL CONSIDERATIONS • Replacement costs overwhelm present value despite maintenance needs • Economies of scale and lower per customer cost basis • Lower operation costs versus shareholder -driven, foreign-owned corporation • Elimination of corporate debt, dividends or taxes associated with city ownership • Eliminate PUC -driven overhead from operation costs • Usage -based or class -oriented assessments for individualized LID payment, to be determined • Payment by one-time fee or Escrow funded, time -based payments • Fixed Income payers would have property lien? • Health -Welfare low income program subsidies may be available COUNTERACTIVE MEASURES • Hire service -management agency experts where needed over present EWC employees or back office systems and operations • Utilize present city -hired UWC billing service • Current EWC rates will increase. Outcome and amount based on who buys EWC FUTURE NEW, NON -LID IMPACT • New developments and non -LID customers would pre -pay and certify operational integrity of their full working system before hookup. As a result there would be no adverse impact on present LID base population. • Additional fees for new, non -LID users, e.g. Storage Tank Link (STL) cost: $2,700. • New user systems bolster full system integrity Based on the above analysis I can answer in the affirmative for all five questions. Questions from the City: 1. From the information presented, do you believe the acquisition of Eagle Water Company — complete with customer base, infrastructure and water resources — is in the City's and public best interest? 2. Given the Committee's limited time to discuss available information and city's process, have you gained more confidence in the two-year effort of negotiation, evaluation and due diligence being performed by the City? 3. With the merger of the systems and the specific improvements outlined in the Purchase Agreement, can you see a basis for some allocation of performance benefits to all parties in a Local Improvement District? 4. From the discussion of improved water system reliability, sustainability, and potential beneficiaries, does the Local Improvement District boundary appear reasonable? 5. Based on your limited assessment of the potential value of the system and value to the City, does the purchase price of $6.3 million in the Agreement appear to be reasonable? Michael Sieler 1125 Steeple View Drive Eagle ID 83616-4757 Welcome to United Water Page 1 of 1 United Water United Water provides water and wastewater services to 7 million people in the United States. uty who we are what we do careers search IMPORTupdaf s Select a local utility site below to view Important news information folie! Water Bethel, Delaware 'nrted Water Camden 1 fined Water Corporate 1;nrted \\ ;net Idaho United Water Jersey l Hy, Hoboken Water SeR ices I ratted .\'.iter Lambeth lle I luted V% Ater Nes Polk I ,need 14',ner Penn. l and WESTERN' .=SPEEDPAY' Pay my vaiter bill ;;1111.1-. 111 Via !EP PAP'NEPSh :CJNCLL w1r eca 211 1 into! 1!atcrInc tllxlated 08/07 .TATER QUALITY REPORTS http://www.un i tedwatcr.com/ 10/23/ 2007 United Water Idaho: Water Supply Page 1 of 3 United Water United water Idaho Source of Supply United Water Idaho takes great pride in its ability to provide you with safe, high quality drinking water. We use a combination of surface and groundwater. Approximately 80% of your water is supplied from 88 wells located throughout the Boise area. The remaining 20% of your water comes from two surface water treatment plants (Marden Water Treatment Plant and Columbia Water Treatment Plant) which treat water from the Boise River. Water from our wells is treated with small amounts of disinfectant to protect against potentially hazardous microorganisms that can get into the water. We also feed very low doses of polyphosphate at 17 of our wells to sequester minerals and keep your water clear. Surface water from the Boise River is treated at our Marden Plant using an innovative upflow clarification process. This treatment process involves subsequent filtering to remove particulate matter, followed by disinfection with chlorine to destroy any harmful bacteria. In addition, we adjust the pH to reduce the corrosivity of the water and decrease the possibility of dissolving metals from household plumbing. The Columbia Treatment Plant uses state -of -the art membrane filtration technology to prevent minute particles from passing through to the finished water . Treatment process Source of Supply Delivery capacity Water treatment plants Operating wells Average well volume Average well depth Deepest well Water Usage in 2004 Water delivered Average daily usage Peak usage Minimum day usage Distribution System System coverage Pressure zones Water mains Main size Reservoirs 97 million gallons per day 2 with a capacity of 24.3 million gallons/day 88 560 gallons per minute 550 feet 1,120 feet 15.5 billion gallons 43 million gallons 93 million gallons 20 million gallons 160 square miles 10 1043 miles 2 inches to 30 inches 33 who we are customer info site map LeakGuarcl http://www.unitedwater.com/uwid/waterid.htm 10/21/2007 United Water Idaho: Water Supply Page 2 of 3 Reservoir capacity 33 million gallons Booster stations 41 System Automation United Water Idaho's water system consists of a large number of widely separated facilities. This makes it necessary to use a high level of automation to provide an uninterrupted supply of quality water. Automation begins with a network of highly reliable sensors that monitor thousands of important pieces of information which include system pressures, flows and levels. These sensors send this information to more than 120 remote terminal units (RTUs) that are capable of operating all of our pumps and valves in response to changing system conditions. The RTUs report system conditions to the supervisory control and data acquisition system (SCADA) at our office on Victory Road for display and further control action as necessary. RTU information is transmitted using a combination of radio channels and dedicated phone lines providing a complete system update in less than one minute. The SCADA system is the eyes and ears of the most important piece of our water production and automated control system -- our trained and certified operators, technicians, engineers and managers. SCADA gives them the essential information they need to provide a plentiful supply of clean, clear water for all your needs. ,\Tater Quality United Water Idaho's goal is to provide you with water that meets or surpasses all the standards for safe drinking water. These health and safety standards are set by the United States Environmental Protection Agency (EPA) and the Idaho Department of Environmental Quality (ID DEQ). Our United Water team works hard to provide you and your family with top quality water and premier service 24 hours a day, 365 days a year. To ensure the safety of your water, we monitor before, during and after the treatment process. All of our sources of supply are monitored and tested every year. We also sample and test water directly from the distribution system on a regular basis. We perform over 120 tests for bacteria every month. We also analyze for inorganic chemicals, heavy metals, volatile organic chemicals, pesticides, herbicides, and radionuclides. If problems are found, we discontinue use of the water source until we are certain it is safe. United Water Idaho's Water Quality Report provides important information about your drinking water. Both the EPA and the ID DEQ require water suppliers to mail a Water Quality Report (Consumer Confidence Report - CCR) to customers on an annual basis. You can download a portable document format (PDF) of our CCR To view or print the CCR, please download the free Adobe Acrobat Reader. If you have specific questions about water as it relates to your personal health, we suggest that you contact your health care provider. http://www.unitcdwater.com/uwid/waterid.htm 10/21/2007 United Water Idaho: Water Supply Page 3 of 3 !*.'Get Acrobat Adobe Reader For More Information E-mail: uwid@unitedwater.com home 1 who we are 1 water supply 1 customer info 1 conservation 1 news 1 related links 1 site map United Water Resources http://www.unitedwater.com/uwid/waterid.htm 10/21/2007 United Water Idaho: Customer Info Page 1 of 4 Jr( . United Water United Water Idaho L uStorncr Service IV V Our top priorities are to provide you with a reliable supply of high quality water and excellent service. Whenever you have a question about your water, your service or your bill, please feel free to contact us. We're here to help! Customer Service Center 8248 West Victory Road Boise, Idaho 83709 Phone: 208 362 7304 Fax: 208 362 1479 After Hours: 208 362 1300 E-mail: uwid©unitedwater.com Days: Monday -Friday Hours: 8:00 a.m. - 4:30 p.m. If you pay online through your bank or misplace your payment envelope, please note that our payment address has changed to PO BOX 371804, Pittsburgh, PA 15250-7804; be sure to update your records accordingly. Customer Billing and Payment The average residential bill for a United Water Idaho customer is approximately $341 annually, based upon annual usage of about 182 CCF (hundreds of cubic feet) or approximately 136,136 gallons. Your water bill is determined by the amount of water used in a two month period and the size of the meter that serves your home. We read your water meter bi-monthly and calculate the consumption. The volume charge is then applied to the water consumed, to arrive at the consumption charge. There is also a customer charge based on the meter size. Applicable taxes are added for the total billing. For detailed information on your account, please contact customer service at 208 362 7304. Summer rates are in effect from May 1 through September 30. The volume rate in the summer is 25% higher than in the winter and is applied to the amount of water used. Summer rates are intended to promote conservation of our precious resource. Remember that almost one third of your annual consumption can occur in a two month summer bill! Under our winter/summer rate structure, customers pay the lower winter rate on the first 300 cubic feet of water used (approximately 2,244 gallons) during the summer months. Usage above 300 cubic feet of water will be billed at the summertime volume rate. Call our customer resource line at 208 362 7336 for information on conservation programs or e-mail us at uwid©unitedwater com. who we are water supply news site map Leak��uard, --SPEEDPAY' Pay n' 'hater bill onhna. http://www.unitedwater.com/uwid/custmrid.htm 10/21/2007 United \Vater Idaho: Customer Info Page 2 of 4 Sample residential bill calculation based on average annual consumption of 182 CCF: 169% of the consumption is on the summer rate [34,1% of the consumption is on the inter rate ICu tomer charge for 3/4 inch meter 'Subtotal I3b/o franchise tax to Boise City* (State drinking water fee (Total annual water bill *If city resident There are several ways to pay your bill. 18 CCF x $1.2112 = $21.80 108 CCF x $1.5141 = $163.52 56 CCF x $1.2112 = $ 67.831 6 bills x $16.21 = $ 97.261 $350.411 $10.51 $3.00 $363.92 • You can pay your bill online; Online Bill Payment You can pay your bill online by credit card or electronic check payment through Western Union Speedpay. There is a $3 convenience fee associated with this service. Choose from these convenient payment methods: Credit Card - Visa, Mastercard Debit Card ATM - STAR, NYCE, PULSE Electronic check • You can mail your payment in the envelope provided with your bill; • You can pay in person at our office at 8248 West Victory Road, during normal business hours or use the night deposit; • You can pay at our payment center at the US Bank on 10th and Idaho; or • You can arrange for a reoccurring autopay direct from either your checking or savings account. For information contact customer service at 208 362 7304 or e-mail us at uwid©unitedwater.com. • You can pay with a debit/credit card or check by phone for a $3.00 convenience fee. To establish either of these payment options, contact our customer service group at 362.7304 or call toll-free at 888.608.6690. Note: If you pay online through your bank or misplace your payment envelope, please note that our payment address has changed to PO BOX 371804, Pittsburgh, PA 15250-7804; be sure to update your records accordingly Here's what a typical water dollar pays for: http://www.unitedwater.com/uwid/custmrid.htm 10/21 /2007 United Water Idaho: Customer Info 15c Interest on Debt 16c Dividends & Reinvestment 15g Depreciation 15c Taxes Employee Identification 39c Operations & Maintenance Our employees are required to carry photo identification badges. If in doubt, always ask to see an employee's badge or call us during business hours at 208 362 7304 to confirm that we have sent an employee to your home. Idaho PUC The Idaho Public Utilities Commission (PUC) is the state agency that ensures that all utilities provide safe, adequate and reliable service at a reasonable cost. They also approve service charges which are fair for both the customer and our company. Charges for water service cover our costs for collecting, treating, testing and delivering water and maintaining our system These charges also include items such as labor, electricity, chemicals, taxes, depreciation and interest expenses. If you would like more information about the Idaho Public Utilities Commission you can call them at 208 334 0300. Tips For The Cold Are you ready for the big chill? Winters can be harsh on household plumbing and rough on your wallet should damage occur Follow the tips below to help protect your sprinkler system, pipes and water meter from freezing. Taking these steps now can spare you from being left without water or having to incur expenses for plumbing repairs or damaged furnishings. • The Big Chill Checklist provides you with important tips to protect your indoor and outdoor plumbing. • The Sprinkler System Winterization document answers your questions about protecting your system from damage during cold weather. For More Information E-mail: uwid@unitedwater.com http://www.unitedwater.com/uwid/custmrid.htm Page 3 of 4 10/21/2007 United Water Idaho: Customer Info Page 4 of 4 home I who we are I water supply 1 customer info 1 conservation 1 news 1 related links 1 site map United Water Resources http://www.unitedwater.com/uwid/custmrid.htm 10/21/2007 SUEZ - Groupe industriel international et de services. Electricite, gaz, services a I'energie, eau, pr... Page 1 of 1 LANGUES COURS EN DIRECT RECHERCHE English Paris . 23/10/2007 17'37'02 43,81 euros -0,47% Francais Mots CIe5 ok GROUPE ACTIVITES FINANCE PRESSE CARRIERES DEVELOPPEMENT DURABLE AcUonnaires Investisseurs ]ournalistes & Medias Stages & Alternance Offres d'emploi NOS VALEURS 1 Professionnahsme 2 Sens du partenariat 3 Esprit d'equipe 4 Creation de valeur 5 Respect de 1'envvonnement 6 Ethique COMMUNIQUE DE PRESSE 15/10/2007 GDF SUEZ oblect,fs operabonnels et branuers, gouvernance du nouveau groupe et calendner FOCUS Lire tous les communiques Consultez la plaquette Developpement Durable - Piller de notre strategie Decouvrez les 210mes Trophees Initiatives Innovations Consultez le document de reference 2006 de SUEZ Consultez la plaquette commerciale 2006 de SUEZ Decouvrez le Rapport d'Activites et de Developpement Durable 2006 UOUS 1MER AtiL�AUENIRAL• EN SAVOIR PLUS SUR ENTRE SUEZ ET I;AZ DE FRANCE Cof dt Fr, nCe• > Electricite • Gaz Services multi -techniques © SUEZ 2007 Contact Informations legates 1 Syndication RSS 2.0 1 Accessibllite 1 Credits http://www.suez.com/fr/suez/ 10/23/2007 e UJRAVIOLET LIGT FOlI \NATER DISINF[CTION Over the past 20 years, ultraviolet (UV) disinfection has developed into a viable technology for the treatment of drinking water. Using intense beams of ultraviolet light, the same as those from the sun, UV disinfection systems are able to inactivate protozoa, bacteria and viruses. Through extensive research and rigorous field trials UV disinfection has proven to be safe, reliable and inexpensive. As part of our commitment to providing top quality water, EPCOR Water Services Inc. is proud to be a licensed distributor of products from Calgon Carbon Corporation. The Sentinel'" UV barrier system from Calgon Carbon Corporation is one of the premier water disinfection systems on the market. The graph at the right shows that a very small dose of UV (10mJ/cm') can inactivate 4 log (99.99%) of cryptosporidium. LOW CAPITAL AND OPERATING COST Log Inactivation UV Dose Response for Protozoa, Bacteria, Viruses 5 4 3 211/( 0 — Cryptosporidium — Giardia E con — Rotavirus 0 10 20 30 40 UV technology is an inexpensive alternative to traditional water disinfection methods. The Sentinel- UV system takes this cost-effective nature one step further. It is compact for easy retrofitting, uses fewer UV lamps, and requires Tess power than low pressure UV systems. This means that Sentinel' has lower installation costs, requires less maintenance and has lower operating costs than traditional disinfection methods and low pressure UV systems. 10 9 8 7 Q) 6 5 4 3 2 Operating Costs to Provide 4 log Cryptosporidium Inactivation 0 Sentinel' UV Ozone Ozone Membranes 226C 76C (MF) Capital Costs to Provide 4 log Cryptosporidium Inactivation (10MGD) 4400 4000 3600 3200 2800 0 c 2400 w 2000 1600 1200 800 Capital 1Costs j--41 Installation 1 I ,1 Costs ++ +++ 400 _6•1_ 0 Sennner UV u SS, Ozone Ozone Membranes 226C 76C (MF) FEATURES Of SETIELTM The Sentinel" System uses UV disinfection to provide highly efficient inactivation of viruses, bacteria and protozoans - with no disinfection by-products: • High-intensity, medium -pressure UV lamps: Medium pressure UV lamps typically have power outputs 20 to 200 times higher than low-pressure systems, greatly reducing space and maintenance requirements. • Quickwipe'" cleaning technology: Quickwipe is an automated mechanical steel wire brush that cleans the lamp sleeves and eliminates fouling to maintain a consistent UV dose—with no added chemicals and no manual cleaning required. • Flexible, compact design: A simple design, with modular components and high-intensity, medium -pressure lamps, allows a very high degree of flexibility in design for retrofitting into existing water treatment plants with tight space requirements. • Robust electromagnetic power supply: Electromagnetic power supplies are longer lasting and more stable than electronic power supplies. • NSF/EPA-verified: The U.S. Environmental Protection Agency (EPA) and National Sanitation Foundation (NSF) have verified the performance of a Sentinel' reactor (R-1 1, Model 6-1) under the EPA's Environmental Technology Verification (ETV) program. This reactor obtained an estimated 3.9 log inactivation of cryptosporidium parvum as determined by animal infectivity studies. • Fully automated control system: Automated operation and safety controls allow for minimal operator attendance. • Easy installation: Due to simple process and electrical connections, installation is easy and quick. • UV sensor: Ensures that adequate UV dose is being applied. • Isolated lamp power supply and control cabinet: Ensures that electrical and control equipment can be placed in a safe and convenient location. • Smart -start back-up Tamp: Back-up lamp will start automatically if one lamp extinguishes. For more information, please contact us: 10065 Jasper Avenue, Edmonton, Alberta T5J 3B1 Phone: 310-4300 Fax: 310-4295 (toll-free anywhere in Alberta) www.cpcor.ca Serail of ' )17 Sentare!" is a registered trademark of Calgon Carbon Corporation. 12260 Vickers Way, Richmond, B.C. V6V 1H9 Phone: 1-877-270-9236 Fax: (604) 270-3851 tool In keeping with IPCOR's commitment to the environment, this has been panted on recycled paper 10105 Waiter Services Page 1 of 1 EPCOR Careers 1 Contact Us 1 Search: Home �ha�u Communities About EPCOR Home & Small Business 111 Developers & Contractors 111 Commercial & Industrial 111 Electricity Retailers III Power Producers Municipalities You are here Home > Customers > Municipal ties > Water Services ► Water Services Water Operations Consulting & Management ► Water and Sewer Field Services Water Lab Services Water Meter Services ' Artificial Neural Networks Ultraviolet (UV) Disinfection ► Transportation Services ► Technical Services Water Services for Municipalities EPCOR has tremendous experience and expertise in water systems, operations and rnanagement. Our wide range of industry-leading services for municipalities include: • Water Operations Consulting & Management - services to design, build, operate, and optimize water operations • Water and Sewer Field Services - including water system diagnosis, pigging and swabbing, maintenance, construction, repairs, and unidirectional flushing. • Water Meter Services - for metering options • Ultraviolet Disinfection - for drinking water treatment. • Artificial Neural Networks - for water treatment. • Water Lab Services - for analyzing drinking water. Terms of Use 1 Compliance & Ethics 1 Privacy Policy 1 Site Map 1 Website Help 1 Go 111 Municipalities 111 Safety http://www.epcor.ca/Customers/Municipalities/Water+Services/ 10/23/2007 CG IolP41o1- City of Eagle Local Improvement District (LID) Committee Written Comments from Douglas Mayer Going into this there were only two questions I had. 1. Is this a good deal on the purchase price of Eagle Water Company? 2. What is this going to cost us? However, soon I had several residents asking questions like. 1. Was the city trying to get in the water business to create city jobs? 2. Was this a good old boy, under the table deal since we hadn't heard anything about it? 3. Was the city trying to buy the water company so that they could give the water to the foothills development? From all the hard work put in by the committee you have already heard answers to most of these questions. I would like to stay with my first two questions. 1. Is this a good deal on the purchase price of Eagle Water Company? Looking at asset cost, replacement cost, water rights values and synergy of systems this looks like a good deal. Looking at it as an opportunity that you may never get again is another caveat. You have heard that we looked at this question several different ways and each time it came out as a pretty good deal. Eagle City needs more wells and water rights and Eagle Water Company needs more storage and an intertie to another system for emergencies. If the two systems don't merge both are looking at greater capital costs and operating costs that they will charge their customers in the form of higher rates. Examples of these are: Storage Tank for Eagle City New well for Eagle Water Company Intertie to another system for Eagle Water Company 2. What is this going to cost us? We were told that the cost would be $700 to $1,900 per resident. I have attached a spreadsheet that I put together to help satisfy my curiosity. It has three options that are based on: 1. Water Users 2. Meter Users 3. Water Usage Each of these has several assumptions that were gleaned from the meetings and are subject to change based on the final amount based on due diligence and more accurate figures that will be the basis for the assessment. They also assess larger users such as business and larger meter users more. Total Yearly Monthly Water Users $ 1,141.41 $ 89.66 $ 7.38 Water Users Equiv. $ 947.77 $ 74.45 $ 6.12 Meter Equiv. $ 899.24 $ 70.64 $ 5.81 Water Usage Everyone is different This gave me a sense for the range and the cost of what we are talking about. Based on this information I am comfortable in recommending that the process move forward and suggest that involving citizens in the cost allocation process will make it more equitable and provide an improved and a more palatable solution. LID Allocation Information 3 Methods of Charging Residence of LID Cost Rate Period $ 7,200,000.00 LID Cost 4.75% 20 $ 2,900,000.00 Storage Tank 0.003958333 240 Option 1 4.6X Population EWC New Bus Eagle City Well Total Allocation Sl. /Month Amort/Yr Amort/Mo Check Figure Water Users 3450 660 358 1340 500 6,308 $ 1,141.41 $ 4.76 (589.66) (57.38) Equivalent units 3450 660 1646.8 1340 500 7,597 $ 947.77 $ 3.95 (574.45) ($6.12) $ 7,200,000.00 Amort/Equiv (56 12) (56.12) (528.17) (56.12) (56.12) Option 2 Meter Site EWC New Bus Eagle City Well Allocation SL/Month Amort/Yr Amort/Mo Meter Users 3450 660 358 1340 5,808 Smallest Meter 3282.75 660 1284.25 5,227.20 90% Larger Meters 167.25 358 55.75 580.80 10% X2 3 X4.6 X2.3 Equivalent units 384.675 1,646.80 167 25 2,198.73 Amort/Equiv (513 37) (55.81) (526.73) (513.37) 8,006.73 $ 899.24 $ 3.75 (570.64) (55.81) Option 3 EWC New Bus Eagle City Well Total Usage Rate per yr 970 970 3220 60 0 LID Tank per CCF per CCF Usage CCF per year 3346500 640200 1152760 80400 0 5,219,860 Usage CCF/20 yrs 66930000 12804000 23055200 1608000 0 104,397,200 $ 0.07 $ 0.03 Per House/Bus $ 1,337.97 $ 1,337.97 $ 4,441.50 $ 82.76 $ Per House/Bus/Yr $ 66.90 $ 66.90 $ 222.07 $ 4.14 $ Per H/B per mon $ 5.57 $ 5.57 $ 18.51 $ 0.34 $ - Amort/Mo (58.65) (58.65) (528.70) (50.53) $0.00 Total $ 230,799.29 $ 44,152.91 $ 79,502.82 $ 5,544.98 $ - EWC New Bus Eagle City Well Tank based on CCF $ 26.95 $ 26.95 $ 89.45 5 1.67 $ Tank/month/house $ 2.25 $ 2.25 $ 7.45 $ 0.14 If Eagle City only paid for the Storage Tank per resident $ 9.02 per month per resident Allocation SL/Month Amort/Yr Amort/Mo $ 2,164.18 $ 9.02 (5170.00) (513.99)1 $ 7,200,000 00 $ 7,200,000.00 City of Eagle Local Improvement District (LID) Committee The Eagle City Council requested that Committee members, meeting for three two-hour sessions, form an opinion they would share with the Council on the City's extensive negotiation and due diligence process in evaluating the value and performance of acquiring and merging Eagle Water Company with the City's water system. The City trusts that, when the opportunities are discussed and the issues explored in more detail, the conclusions of the Council will be shared by these members of the community. The City is very grateful for the expertise represented by these voluntary members of the community and their time and effort to understand more fully the City's decision to purchase Eagle Water Company. Questions from the City: 1. From the information presented, do you believe the acquisition of Eagle Water Company — complete with customer base, infrastructure and water resources — is in the City's and public best interest? Yes. I feel that integrating the two systems alleviates the deficiencies of both systems giving the people within the LID the best possible water system plus the tremendous benefit of senior water rights. Given the Committee's limited time to discuss available information and city's process, have you gained more confidence in the two-year effort of negotiation, evaluation and due diligence being performed by the City? Yes. I feel it is unfortunate that due to legalities, the city was unable to bring this matter to the attention of the people earlier, but after 8 hours of focused discussions with Vern and the other members of this committee, I feel the City has advanced according to the structure of the law. 3. With the merger of the systems and the specific improvements outlined in the Purchase Agreement, can you see a basis for some allocation of performance benefits to all parties in a Local Improvement District? Yes. As previously stated both systems have deficiencies. A consideration of the cost for the city to improve its current system must be considered if this purchase does not take place. Merging the two systems, as I understand it, will make for a more viable, complete water system, better able to serve the residents within the LID boundaries. • -r•• ,;: ; • ; ;() :•• ..; :,!!•• ***: .. ii!i • • 2i.");.; 'J1 ;: • .• ,*" • !ci. ':1 %;, .• jr•.: . ; ;•• fP;i.:. , _•1 4. From the discussion of improved water system reliability, sustainability, and potential beneficiaries, does the Local Improvement District boundary appear reasonable? Generally yes. It is obvious that United Water customers cannot be included. I also understand that areas outside the city boundaries cannot be included but I wonder if there is any way to address the properties on the east side of Hwy. 55 that are currently being serviced by the Eagle City Water who will definitely benefit from the improved water system. 5. Based on your limited assessment of the potential value of the system and value to the City, does the purchase price of $6.3 million in the Agreement appear to be reasonable? Yes. Looking at the Eagle Water Company as a whole including 6 existing wells, boosters, flow equalization reservoir, water mains and customer base is significant but only part of the purchase. The senior water rights, some dating back to the 1970's, which are included in this purchase are an important factor. All taken into consideration, it would appear that this a reasonable purchase price. Debra Helton 1203 Cerramar Ct Eagle, Id 83616 (208) 938-3416 October 20 2007 111U cz„li : . WC,C3 rS..;fj il:)‘',.);:!t ;DJ 1)t 1.•;;;',;:* Rate Comparisons The following information was derived from my actual August 2007 bill from Eagle Water Company. The Eagle Water Company uses "cf which stands for cubic foot or cubic feet. My total monthly usage for the month was 7,380cf. The United Water company uses "ccf' which stands for hundred cubic feet. For this comparison I will use ccf as my standard so my August usage was 73.8ccf (7,380cf : 100 = 73.8cf). The Eagle Water Company does not break it down on your water bill but has a base rate of $7.84 which allows for 0-6ccf which is considered domestic use. Usage over the 6ccf is billed at .451 per 1 ccf which would be the equivalent of irrigation use. EAGLE WATER COMPANY Domestic - 6ccf $7.84 Irrigation - 67.8ccf x $0.451 30.58 D.E.Q. Fee .33 Franchise Fee .38 Surcharge 13.00 Total $52.13 "`:%.-*1 • • t •••'• • ••'' • ' ; • •'• • • , •.• • '0 ,'"='• • • ?•' •-• \:4•;* . ;- 1.; c •*•• „ ;.• • •••-0• 4,:t.." • '• -". •'!'; ;•,;•.• c.; s.; C` • . , ...• , .1- • . • ••• ; • • ”4.,-..i••{L,i•.: • . • . . • • ; • ' • ; •• • i';'•-';‘• • _ .• . CITY OF EAGLE WATER Domestic - 6ccf x $1.19 $7.14 Irrigation - 67.8ccf x $1.19 80.68 Base Customer Charge 8.50 Total 96.32 The projected total assessment per residential unit or residential customer equivalent is $700.00 to $1900.00. If the owner elects to pay the LID in monthly installments over a 20 year period, the annual cost with an estimated 4% to 6% interest would be $60.00 to $160.00. Total Assessment Yearly. Monthly $ 700.00 $ 60.00 $ 5.00 $1,900.00 $160.00 $13.34 CITY OF EAGLE WATER WITH LID ASSESSMENT Total as shown above $96.32 LID Assessment of $700.00 5.00 Total $101.32 Total as shown above $96.32 LID Assessment of $1900.00 13.34 Total $109.66 •*--t : - itr '•••• • I ';-1,:.* • 7*; • • .*** •• •• • '• "1 • • • „.. ;„ • • i ,• 4'; ; • ••• • • ; ...• •- • .•^Z t • • ," ; >••. • • • • :tI ' > 1. • t , • 7 .• • • • • , 'st • s. • !,•• • . 4 • • . 1". f •;* • ; 4. , : • • • — * •• • t• •••;,.. ; • • 1,• : 7. 4" •f..-! 't • ) • • • •• • ...„, t 4 ; UNITED WATER COMPANY Domestic - 6ccf x $1.2112 $ 7.27 Irrigation - 67.8ccf x $1.5141 $102.66 Base Customer Charge 8.11 Eagle Franchise Fee 2.20 Safe Drinking Water Fee 0.25 Total $120.49 The Eagle Water Company bill of $52.13 is nice but unrealistic and soon to be a thing of the past with the inevitable sale of the company. So here's a condensed look at the rate comparisons; United Water Company $120.49 City of Eagle with the estimated high LID Assessment 109.66 Difference $ 10.83 Again, the sale is inevitable. So in looking at these basic figures, it will actually cost me less to have the City of Eagle purchase the Eagle Water Company, even with the LID assessment, than to have United Water make the purchase. And each of you that are Eagle Water Company customers can run these same figures with your bill and I'm sure you'll come up with similar savings. Debra Helton 1203 Cerramar Ct Eagle, Id 83616 (208) 938-3416 October 24th 2007 •.•-• ' • - • • • •—•-: --!•••;-':..• • : . •'•• .1) — ' ; ; . • • • • • • :,-*; . 4 ; • ; t'• • •• ••••"••• • i • . . *IN .efi`! • • • ;•• • • • • •• • `• • • • ; • ••••• •_• • • ;• „„ ! 4.. —. • -. • • ! '* • •-•: . • .• • "- •••:: ' •.7,15 I •..•; '‘.";.•!-:*•;•• 4. ',;";•-•'.• • , s • • :22; • .• . , . •:.11'...;••-••••••• ; • •'..••• • •.• .:•.:•",s11.1,7••• •%•'-•.":F•• • • .”„.. After the fact, 1 realized 1 have not addressed the citizens who are not Eagle Water Company customers. Most of them, due to their own wells or other irrigation situations will likely be in the low to middle assessment category, probably in the $5.00 -$10.00 a month range depending on the final assessment roll and means of assessment calculations. For some this is a couple of cups of Starbucks coffee For others on a fixed income it will be more of a burden. I don't take $10.00 lightly, but I do feel it is beneficial to all of us within the LID boundaries to have this integrated system. And when you return home tonight, turn on the national news and watch the fires in Southern California. Consider the natural habitat of that area and then look outside your windows at the foothills that surround us. The day might come when you'll want more than your well or a low flowing river to fight a fire and protect your home. Hopefully the day will never come when we see that kind of devastation but a little investment into securing of a more viable water system seems like the right thing to do. Debra Helton 1203 Cerramar Ct Eagle, Id 83616 (208) 938-3416 October 24th 2007 '• • ' • • • . i i• • .• ..• ;.. -;.•'•': •-•". ,• • - .•`/•: .i•t'-• .'•, hi.•'•,:i.••-•\ •• • • 5 ''''' ! .1,./ 1:::: :::":4 !•'...' . i • . ••• '..; i .,•!. '.• •••e' • ." ' • .•• ..- . • .•...... .• i. • S. ; .; ';..• 't .• : ; t : : 1 :•:•'.) • T:•• ‘.: V % • ',..? i ; ',.i.'i .; . • 11....,..;.. '. . : . '.•% c ; ..• ::: '....%-:.f, .'4 e :.:1 1 'l.' 1:•••;:•.; I. i . :;....: • ...: .f: ...,.. ; . : : :..' .2 : t. : .5 •....- li'' i• s: ; f•::•1 %,...' r. ! f:.: 1.• ... .,i .., ,•.. : i ; , : 7.), 1...f f••*‘‘.• 'C.: ',;: i .;.''' ..... 4i . ',J..: : -..:.!..,•; (:) , . ,....-': 7..,..: , • i.; " ..: „ ••• ;:•' .......;; .....i ,.i :..i..';i .....::. ***. ;:.:',.. - i:,...*. ..} •::.•:',7ii. '.---,''.',::''.'1'.1. :::, \•••.-.'. i til....''',Y.';', ,i'-.' ::::::(:',.."1,;.:1".i •:-..).....:f....'ii.; ... f 1 '.:'':' •-• t• ;.: •.. cc Ialggic ,7y -a° City of Eagle ... Local Improvement District (LID) •.. • •• Committee Review • October 24, 2007 Statement of Facts •• • In August of 2005, Eagle Water Company approached the City expressing an interest to sell the private water utility to the City, which currently owns a public water utility. The City began an analysis that, early on, identified mutual synergies from acquiring and merging water systems. Over the next two years, the City and Company negotiated on all aspects of acquisition including assets, deficiencies, regulatory approval, agency concerns, and purchase price. Midway through the negotiation period, a moratorium on future growth of EWC was placed on the Company by DEQ and it remains in place today. 1 Statement of Facts •• • Due to an outstanding Public Utility Commission (PUC) rate case and other state agency matters, the City agreed to a request by the Company to keep the negotiations confidential to protect the Company during the PUC rate process. On July 10, 2007, an Agreement to Purchase was approved by the Council. Prior to signing the Agreement, the City considered various methods of financing the purchase and selected Idaho Code Title 50, Chapter 17, formation of a Local Improvement District, as the most suitable mechanism due to the special benefits to residents in the boundary area. The City is now engaged in the public process outlined in the statue. Purpose of LID Committee •• • • The Council adopted a Resolution Initiating the Formation of LID No. 2007-1 and is holding a hearing to consider protests to the creation of the LID, or to the manner of assessment or inclusion of property therein. At the request of its citizens, the Council postponed its action and asked a group of citizens to comment on the Council's decision based on detailed consideration of the general value of the resource and assets, options to acquisition, and a review of the City's and public interest within the LID boundary. 2 Meeting 1: October 3 How we got here • Brief history of City of Eagle Water system development including water rights • Regional and local significance of water as a commodity • History of negotiation with Eagle Water Company • Stewardship of resource as a goal of the City • Strengths and weakness of the stand-alone systems: EWC and City • Significance of Public versus Private utility ownership for the future • Implementation planning and economies of scale • The LID process • Setting the initial LID boundary ••• ••• Meeting 2: October 10 :• An Agreement to Purchase • Details of the Agreement ratified July 10, 2007 • Improvements tied to acquisition Agreement • Due diligence process • Calibration Testing and modeling • EWC Moratorium and growth of the EWC system without City intervention • Options to the City's offer to purchase • Valuation methodologies and valuation • Business plan for the combined system (Eagle 2007 budget) 3 Meeting 3: October 17 Pursuing responsible decisions •• • ••• •• • • Review Modeling output and demonstration of benefits to the combined system • Methods and relative scale of Assessments under the LID process • Significance of fire flow and the value of property protection • Costs of service and cost parity with utilities of equal value • The cost of non -participation to future water users not in the LID • Schedule for main line extension: the Capital Improvement Plan • Protecting the resource and public through centralized water system Questions from the City, . • • •• • Do you believe the acquisition of Eagle Water Company — complete with customer base, infrastructure and water resources — is in the City's and public best interest? 2 Have you gained more confidence in the two-year effort of negotiation, evaluation and due diligence being performed by the City? 3 With the specific improvements outlined in the Purchase Agreement, can you see a basis for some allocation of performance benefits to all parties in a Local Improvement District? 4 From the discussion of improved water system reliability, sustainability, and potential beneficiaries, does the LID boundary appear reasonable? 5 Based on an assessment of the potential value of the system and value to the City, does the purchase price of $6.3 million in the Agreement appear to be reasonable? 4 Meeting 4: October 22 Summary of Responses •• • ••• •• • Committee Members Questions 1 2 3 4 5 6 7 8 Is acquisition of EWC in the City's/public interest? Yes Yes Yes Yes Yes Yes Yes Yes Have you gained confidence in the City evaluation? Yes Yes Yes Yes Yes Yes Yes Yes Can you see a basis for allocation of cost? Yes Yes Yes Yes Yes Yes Yes Note2 Does the LID boundary appear reasonable? Notel Yes Yes Yes Yes Yes Yes Note2 Does purchase price, $6.3 M, appear reasonable? Yes Yes Yes Yes Yes Yes Yes Yes Note1. No, but it is the only option available Note2. Yes, but qualified, based on future expansion plans to serve area. 5