Members of the Clearwater City Council aren’t ready to commit to refinancing a 2008 sewer bond until they see the results of a water/sewer rate study.

 

The discussion on water and sewer rates has been ongoing for months, and it was on Tuesday’s agenda. again.

 

  Mayor Pete Edmonson said the sewer fund was insolvent and has been short about $75,000 a year on average. The main reason for the shortfall is the city’s annual debt service of $596,801 on the 2008 Sewer Revenue Bond with a current balance of $5,335,000.

 

He said in order to make the fund solvent, the council had three options:

 

“We can increase the rates to meet the expenses. We can continue to subsidize with general fund money into the sewer fund or we could refinance an existing sewer debt,” he said. “Does anyone see a fourth option? Anyone here want to increase the base and sewer rates?”

 

“We have to look at the whole picture,” said Councilman Rollie Lange. “That may still be an option even after we refinance it, depending on how the numbers come through.

 

Since we don’t know that number, it’s hard to answer that question.”

 

Edmonson said regardless of what the user rates would be, the base fees are attached to debt service, which will continue to be the same if the bond is not refinanced.

 

“We need $600,000. We have to charge base fees to do that,” he said. “Now we’re charging and receiving $525,000.”

 

“We don’t really know anything until we know what the rate study is - what we’re really going to gain,” said Councilman Mike Ranum. “If we’re going to gain five bucks, why do it? If we’re going to cut it in half, then maybe that’s something to look at. But I don’t see going through all this at this point without that piece of the equation.”

 

“Are we anywhere near having that (rate study)?” asked Councilman Kris Crandall.

 

“That would be in our October meeting,” said Administrator Kevin Kress.

 

Edmonson reiterated his point about the base fee being what covers the debt service.

 

“Unless I’m misunderstanding, the rate study is to give us what we need to be charging the user side - not the base side,” he said.

 

“It shows us both,” said Kress. “It also shows us where we are now and where we would be if we restructured.”

 

“I would guess the base study will say you need $600,000,” said Edmonson, “so you need to raise your rates.”

 

Edmonson said the original discussion about restructuring the bond raised questions about  interest rates and whether the city would qualify.

 

He said in May the city received an amortization schedule of a hypothetical draft bond showing debt service savings of $300,000 a year if the loan was refinanced and extended an additional 10 years. He said in discussions with the Public Facilities Authority (PFA), the interest rates were as low or lower and the city would be a good candidate for refinancing.

 

“We have to make the decision now so we can connect with PFA in November or December and move forward,” he said. “That’s why it’s back up on our agenda tonight.”

 

Councilman Chris Ritzer said he has never seen any documentation saying the rates were going to be higher or lower.

 

“That’s why we need the rate study,” said Crandall.

 

“I tend to agree,” said Kress. It’s the starting point to tell us whether or not it’s a good decision. That’s why went after the rate study - to see what we would do.”

 

Kress said the PFA has additional requirements before they allow a refinance. And a refinance probably wouldn’t take place until next August.

 

“We don’t have the answers yet,” he said. “We need the rate study. I think we’re going in the right direction. We just don’t have the information to go to the PFA.”

 

“If there’s this much conversation about this topic, we’re nowhere near ready to make a decision,” said Crandall. “I don’t feel like we have enough information to move in either direction at this time.”

 

He made a motion to table the issue until the rate study is completed.

 

The vote was 4-1, with Edmonson against.

 

The next council meeting is Oct. 17.

 

The council approved the expenditure of an additional $5,000 to cover improvements to the ballfield at Sportsman’s Park. A new irrigation system has been installed on the field. Other improvements include ground work around home plate and the pitcher’s mound. The city is in the process of drafting a lease for the Clear Lake Area Youth Baseball Association (CLAYBA) to use the field.