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County Grants $100,000 for Subsidies and Amends Inter-local Agreement

Seeley Lake Sewer


November 2, 2017

MISSOULA - The Missoula County Commissioners approved a grant to help lower the initial operating and maintenance (O&M) of the proposed Seeley Lake sewer at their Oct. 25 administrative meeting. The commissioners also approved an edited version of the inter-local agreement between the county and Seeley Lake Sewer District.

District Manager Greg Robertson explained the need for subsidies. The District has been split into four phases for constructing the collection system and only Phase 1 will be connected to start with. With no subsidies, the 205 lots of Phase 1 would bear the full O&M cost.

Robertson proposed using District reserves along with continuing the administrative fee the District currently charges and requested the county add in $100,000 to make it more affordable. Once each phase of the collection system is built, the administrative fee will go away for that phase.

In Robertson’s projected O&M, the subsidies would be used mainly for the first three years after the treatment plant is operational. During those years, Phase 2 and 3 would be constructed taking the total number of lots paying O&M from 205 to 452. At that point, the district reserves and the county funding would be exhausted.

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With the proposed subsidies, the O&M for Phase 1 is estimated to start out at $36.47 per month. As Phase 2 and 3 are constructed that rate would climb to an estimated $48.56 per month and would then be essentially unsubsidized. The only subsidy left would be Phase 4’s administrative fee.

When adding in Phase 1’s debts service of $50.51 per month, the initial subsidized rate would be $86.98 per month per lot. That total monthly rate would climb to an unsubsidized rate of $99.07 per month.

Total costs for Phases 2, 3 and 4 will vary depending on the cost of each phase’s collection system. No estimates have been provided for the construction of each of these phases’ collection systems. Those phases’ share of the debt for the treatment plant is $27.70. Their collection system debt will be added to that along with O&M.

Commissioner Dave Strohmaier shared that his sewer bill in Missoula is only $15 per month and that he felt Seeley’s rates would be a “significant burden.” Without subsidies the starting rate for Phase 1 would be nearly double until more phases were added.

Robertson recommended the county use money out of the Rural Special Improvement District Revolving Fund (RSID) for the subsidies. Special Improvement Districts (SIDs) are formed to construct infrastructure or perform maintenance for specific areas benefited from the SID.

Robertson explained that the fund is set up to guard against defaults in payments for SID projects. The county is legally required to have five percent of the unpaid debt for current SIDs in the fund. There is more than $100,000 beyond the required percentage currently in the fund.

Commissioner Nicole Rowley questioned if the surplus in the RSID fund shouldn’t be returned to the people that paid in for SIDs.

It was explained that the five percent is actually included up front in the cost of the project like other administrative fees. Therefore it is not an overpayment from the taxpayers and is not returned.

Money paid into SIDs for maintenance such as road maintenance or lighting districts does not get deposited into the RSID account. Only SIDs that construct infrastructure make deposits in the RSID account.

Commissioner Jean Curtiss said she liked the idea of using money from the RSID because the bulk of it came from sewer and water infrastructure projects.

The commissioners discussed a couple of other places from which funding for the subsidy could come but eventually settled on using the RSID fund.

Robertson said the commissioners could provide the subsidy money as a grant or as a loan.

“My concern is: [the county] loaning [the District] the $100,000 and then them having to raise their assessments to pay it back isn’t [help], it’s help in the beginning but it adds burden later,” said Rowley.

Curtiss questioned if they needed to make a decision on the subsidy at the meeting or if it could wait.

Robertson explained that to satisfy requirements in the Rural Development (RD) funding conditions they needed to make a commitment to the subsidy funding. Robertson said RD didn’t need to know if it is a grant or a loan.

Strohmaier was concerned that if the county didn’t commit to a grant it would appear as a “bait and switch.” Rowley agreed.

The projected O&M monthly costs were calculated using a county grant not a loan. If the county provided a loan those numbers would have to climb to repay it.

The commissioners agreed to do a grant instead of a loan. The vote to grant $100,000 to the District was unanimous. The grant is contingent upon the district moving forward with the construction of the system under the current RD funding offer.

The other agenda item pertaining to the District was the inter-local agreement between the District and Missoula County.

The inter-local agreement provides management services and other county resources to the sewer district free of charge. The original agreement dates back to 2011. It was extended a couple of times but expired Oct. 22.

A new agreement was drafted by Missoula County Deputy Attorney Matt Jennings and signed by the District Board at their last meeting.

The commissioners spent a significant amount of time discussing the role of the county.

Because Robertson is Missoula County’s Director of Public Works and a county employee, the perception is the county commissioners have a say in the District. That perception is wrong.

“I read our limited role and responsibilities as the board of county commissioners as it relates to sewer districts is a pretty limited fashion. State statute does not appear to give county commissioners a whole lot of control or sway over such districts,” said Strohmaier.

Strohmaier and Rowley expressed their concern with some of the language in the new agreement stating that Robertson is a county employee and that commissioners “supervised” him.

“We don’t supervise [Robertson] in his role as the [District] Manager, we supervise him as the county public works director,” said Rowley.

Jennings said it is important to be clear on who makes the decisions on the allocation of county resources. The District has no say in what county resources can or will be used.

Also, the District board has no supervisory power over Robertson as a county employee. For instance, they cannot deny a request for personal or medical leave by Robertson.

The District has exclusive control over the policy and design of the project.

Rowley said she has had several requests from the public to advise Robertson on how to perform his job as district manager. She said those people point back to documents like this one that says the commissioners are his supervisor.

Jennings said that by the operation of the law, it is clear the county has no control over the District but the agreement could be amended if it would make it clearer to the public.

The motion passed to strike the sentence stating the commissioners were Robertson’s supervisor. Curtiss voted against it.

Another issue was raised regarding a limitation the new agreement put on county employees’ time. It stated that “in aggregate and on average” county employees could provide no more than 20 hours per week to the District.

The Pathfinder questioned if 20 hours per week would be enough especially since Robertson offered to have the county do construction engineering for the Phase 1 of the collection system.

Construction engineering was close to $500,000 in the engineering estimate for the project. The county performing the work reduced the estimate that went to RD in the funding application.

Curtiss felt there would need to be an additional agreement outside of the inter-local agreement to handle the engineering.

“In fairness, I did make that commitment of staff time [to perform construction engineering] to try and whittle down the costs,” said Robertson.

“From my perspective, what the county has wanted to do in Seeley all along is do what we can to help. That’s why we’re allowing [Robertson] to spend half [his] time or more on this. That’s a substantial contribution by the county because we want this to get off the ground at an affordable rate for the residents,” said Rowley. “I would say it’s not a decision point of whether we do that engineering or not, that decision has been made. We said we would.”

Robertson said in order to keep up with his county job, he spends a significant amount of his own time, off the clock, working for the District. If the sewer project moves forward, Robertson felt the 20-hour limitation would have to be amended.

Jennings explained that he added the limitation to the agreement to put some sideboards on the county’s commitment to the District. The number of hours was simply put in for discussion. Nobody commented on it in the first drafts and so it was left in.

“If [Robertson] can’t put in the hours or have his employees put in the hours, we’re hamstringing the project,” said Rowley. “It’s crunch time and its go time [if the District moves forward to construction] so it seems odd now to be putting a time limit on it when we haven’t before. We need to put time in it to be successful.”

Rowley moved to strike the 20-hour time limit on Robertson’s and county employee’s time. All three commissioners voted yes.

The commissioners voted to sign the agreement as amended and send it back to the District board to consider signing at their next meeting.

The next District board meeting is scheduled for 5:15 p.m. Wednesday, Nov. 8 at the Missoula County Satellite Office located at 3360 Highway 83.


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