May 5, 2009 City Council packet - Laserfiche WebLink

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City Council Date: April21, 2009 REGULAR Item: Motion ITEM: Water System Financing Team for Groundwater Contamination Area SUBMITTED BY: Craig W. Dawson, Interim City Administrator REVIEWED BY: David Snyder, incoming City Attorney Jack Griffin, City Engineer SUMMARY AND ACTION REQUESTED: Groundwater has been contaminated in the west -central and southwestern parts of Lake Elmo. Properties having private wells have been negatively affected, and residents are having their wells treated with individual granular activated carbon (GAC) systems, being provided bottled water, or have been connected to a public water supply. The best long-term solution, in terms of economic feasibility and reliable quality of water supply, is to expand the City's water system in order to supply water to this area. Given the high cost to most effectively provide City water, the City needs to find partners and sources for significant funds to make the needed improvements. The Council should consider designating a core team to lead this effort, with the understanding that other key persons will be involved as needed and the Council will be kept up-to-date and involved throughout. BACKGROUND: The public costs for the water system improvements are estimated to be in the area of $6 million, and the private costs to access the system are estimated to be in the range of $2 million to $3+ million. Through a consent decree by the Minnesota Pollution Control Agency (MPCA), 3M has provided funding for the measures taken to date; however, these measures have not addressed the long-term need for a water supply from the City. The City has had meetings with the MPCA and the Minnesota Department of Health (MDH) as recently as last fall, and began some exploratory discussions about possible funding sources. It is apparent that the needed funding will have to come from a variety of sources, and any reasonable opportunity should be pursued. Since then, staff has submitted application to be on the Project Priority List for the State's Drinking Water Revolving Loan Fund for three water system improvements, including approximately $6 million for the Southwest Area Watermain Extension Project. This is, however, a loan program, rather than a grant, and would carry long-term costs. Federal stimulus funds may reduce the loan obligation. Staff has also submitted a federal appropriations request through Senator Klobuchar's office for approximately $3.4 million for this project in the 2010 fiscal year. As recommended during the review of the Water System chapter for the Comprehensive Plan during the April 14 City Council work session, a "team" should be assembled for the necessary financial assistance resulting from the groundwater contamination. The Council indicated its concurrence with this approach. Suggested Team: As the City has had discussions with State agencies and 3M in the past, the mayor and city administrator have participated on behalf of the City. Staff suggests that the persons in these two positions continue to head up the City's team going forward. By their nature, these positions represent the Council and the staff, and they carry weight in representing the City with others. As the mayor has been involved in past meetings, there would be a continuity in the he has developed relationships with other parties. For increased effectiveness, it is also important to the number of persons involved be small and have flexible schedules in order to concentrate on this project. Additionally, if Council were to name two of its members to the team, it would constitute a committee and need to notice anytime it would meet (per the Open Meeting Law), and affect the flexibility of meeting with other parties. Anything the City's team might do that could be characterized as negotiating would need to be done within parameters agreed upon by the Council. With this approach, the leads on the City team would call upon key people (e.g., city attorney, city engineer, perhaps other specialists) when appropriate to provide assistance. The Council would be kept up-to-date and involved in decision -making throughout the process.