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REGULAR MEETING MARCH 27, 2017
<br />hundred (300) days, so it will be somewhere in the beginning of January, 2018. The second
<br />increase will be about $2.97 for an average user, which will be one (1) year later, sometime
<br />toward the beginning of 2018. I want to apologize for my revised cover letter that I gave you that
<br />was incorrect and let you know that I have corrected that one for you. You will receive the
<br />corrected cover letter, but the ordinance was still correct. There was no change in the substance
<br />of the ordinance. Overall, the new ordinance has reflected about a four percent (4 %) increase in
<br />the first year of the overall utility bill. I share that only because I think there is some confusion
<br />about the water portion versus the utility bill itself. One of the things that was helpful was being
<br />able to come to a compromise in the use of TIF. It allows us to phase -in the rates and gives us a
<br />short-term finance source for the first three (3) years. So, included in this proposal is the
<br />utilization of $6,600,000 of TIF dollars in the years 2017, 2018, and 2019, because one (1) of the
<br />issues we are going to have is first portion of the rate impact won't come into place until 2018. It
<br />will start generating revenue, although most of that revenue is going to be eaten up by
<br />outstanding ONM charges that are in excess of what our revenues are coming in, currently.
<br />Mr. Horvath presented to the Council and public slides depicting the South Bend utilities system,
<br />which Mr. Horvath explained has not been kept up as well as it has needed to be. He added that
<br />the national grade for water infrastructure is a "D ". He next presented a map of the utilities
<br />system of South Bend, going over each element of that system for those in attendance. He
<br />explained that there were three (3) different components to the system. Mr. Horvath stated,
<br />There's a supply and treatment portion, which is usually the well fields. We also have storage
<br />facilities. We have a couple of ground reservoirs, six (6) booster stations, but we only have one
<br />(1) elevated tank. He explained that the tank, which holds 2,000,000 gallons of water, is crucial
<br />for times of power outage, but also pointed out that the six (6) booster stations that pump from
<br />City reservoirs are helpful in that regard, as well. They are still susceptible to an outage, he
<br />explained, and care must be taken to ensure that they are running off backup generators in times
<br />of need. Mr. Horvath stated, And finally, there is the system itself, which are the pipes in the
<br />ground, the valves, the fire hydrants, and the meters for billing —which is what we call the
<br />"distribution system." This capital plan has components of each of these. The first number of
<br />years, it's heavy on supply and treatment. Mr. Horvath then presented the last master water plan
<br />to the Council and public. He stated, We had an overall system demand of about 31,500,000
<br />gallons a day on a max day and a peak hour demand of about 78,900,000 a day. Our system
<br />capacity is rather large: it's 77,200,000 gallons a day. Once again, because we don't have a lot
<br />elevated storage, they had to meet those peak needs by having a lot of capacity. So, the way they
<br />met peaks was by being able to pump more water. Over time, they had been using that extra
<br />capacity and when a well went down and didn't work anymore, they just left it and didn't replace
<br />it.
<br />Mr. Horvath stated, so where we are today is that we can actually pump 42,000,000 gallons a
<br />day. Even though we should have the ability to do 77,200,000, we only pump about 44,000,000,
<br />and that's because of the pumps that are currently not working. Mr. Horvath presented to the
<br />Council and public images of the utilities facilities themselves in various states of disrepair.
<br />Depicted were failing water filters, the threat of the north station flooding, a tank that is out -of-
<br />service due to a chlorine leak, an out -of- service fluoride tank, one of nearly fifty (50) actuators
<br />that no longer function, a generator that has had consistent maintenance issues, and the Fellows
<br />reservoir which has required $400,000 worth of maintenance and repair since 2002. Mr. Horvath
<br />stated that the system has five - hundred and eighty -three (583) miles of water main and 5400 fire
<br />hydrants. He stated, The current five (5) year replacement rate for what we have done in the last
<br />five (5) years: we will replace our water mains once every six - hundred and thirty -four (634)
<br />years and our fire hydrants once every hundred and sixteen (116) years. There is a lot of stuff in
<br />this downtown area that is 1875 vintage. That was ten (10) years after the Civil War, so, really
<br />old stuff. At that point, you're hoping and praying that it doesn't fail.
<br />Mr. Horvath presented to the Council and public staff numbers. He stated, It's not a matter of
<br />operations and maintenance going wild. I think the Utility has been trying to do what it can to
<br />keep rates down and prolong the need for a rate increase. They wouldn't have not had a rate
<br />increase in 2006 without doing things like this. Mr. Horvath presented a study done in January,
<br />2015 showing the bills for the top five - hundred (500) water systems in the United States, listed
<br />in according to the bill amount for an average residential bill of 5,000 gallons a month for each
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