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IM looks for water savings

Bond options studied

October 2, 2012
The Daily News

By LINDA LOBECK

Staff Writer

IRON MOUNTAIN Iron Mountain City Council members gave the city manager and finance committee the go-ahead to consult with a financial adviser about refinancing the 2004 water bonds.

According to City Manager Jordan Stanchina, the interest rates are at an all-time low and the finance committee had discussed that there might be a significant savings if they refunded the bonds that are currently going to expire in 2034.

"The current bond has $4,005,000 of principal remaining and $2,552,045 of interest," Stanchina said. "Three possible scenarios have been set up for a 15-year refunding that would shave seven years off of the bond. The three options have varying up-front cash contributions which can increase the long-term savings."

To move the process forward, the city will select a financial adviser to look over the three scenarios.

The first option is a no cash contribution and would mean a gross dollar savings of $1,432,044. The second looks at a $295,000 cash contribution from the city with a $1,789,720 gross dollar savings and a third option would be a cash contribution of $575,000 for a gross dollar savings of $2,136,111.

Changing the bonds into a 15-year bond rather that the current 22 years remaining means that the bonds would expire in 2027 rather than 2034. Putting more money upfront into a cash contribution would be determined by how much the city can take from the water funds at this time.

Councilman Ted Corombos agreed that the money in the water utility fund has built up and could be used to pay down this bond debt, similar to what the city did with paying off the fire truck early.

Mayor Bruce Rosen agreed and noted that the city needs to be mindful that the interest rates are extremely low now.

"The question is can we or should we take the $575,000 for this or are we drawing down the water utility fund too much," Corombos asked.

The city has some time to decide what to do on this, since it can't pay off any of the bonds until they are first called on March 1.

Stanchina said that the first step is to secure a financial adviser to work with the city and get the legal work filed. The services of an underwriter, legal adviser, financial adviser and for bond insurance will cost between $67,000 to $100,000. This cost amount can be rolled into the bond schedule.

During public comment time, Brenda Burkette of 931 East H St. in Iron Mountain expressed her concerns and the problems she sees with the city water system. She had earlier spoken to the council at the Aug. 6 meeting noting that she, her husband and dog were all sick from drinking city water at the time samples had come back indicating that the city needed to chlorinate the water.

At Monday's meeting she said city employees needed to become educated about the Safe Drinking Water Act and listen and take citizens' information on what might be going on with their water. She added that many people were confused as to how the source of the water supply works for the city, and that the city needs to increase public awareness of its water system.

Councilman Bob Moraska said Burkette's assertions about the city employees not being caring or not listening to citizens was untrue.

"The city will do anything it can - take every precaution to ensure the water quality for its citizens. You are making silly remarks and I'm very disgusted with what you had to say. I'm sure that the city will continue to work on this to make sure the water quality is where it should be for all of us," Moraska said.

Stanchina was asked how many complaints had been made to the city about the water in the past six months.

"There were some questions about the chlorination, but that's it. We are in full compliance with our water license. We do our required sampling - five every month - and everything is in compliance. A similar situation occurred in Kingsford with regards to a bad sample and they also had to chlorinate. Once you chlorinate, you are not going to have a bad sample," Stanchina said.

"I think the city's done everything it can to provide the best possible water quality," Rosen said. "I haven't heard of anyone having this problem."

Stanchina agreed. "We've worked to improve what we can so we don't have to chlorinate. And there has never been e-coli in a water sample. The tests have always come back stating that."

When the city discovers the presence of coliform bacteria in testing samples, like they did the end of July, they are required by the Michigan Department of Environmental Quality to begin chlorinating the water system and notifying its customers of the problem.

Stanchina added that after Burkette came to the Aug. 6 council meeting, the city water department checked to make sure that the residuals were working well in the water going into her home. This is done by taking the chlorine residuals off the hydrant nearest to her home to get a water to sample. "The residuals were appropriate - at a normal level."

Councilman Colin Jacobetti said that it might be something between the main city line and her house that is causing the problem. He suggested that she and her neighbors get samples to the health department for testing and then have the results sent to the city manager.

Stanchina agreed, noting that the only way they can find out if there is a problem somewhere in the city is if people call to let them know.

Corombos said that people need to bring in a sample of their water to the city and present it as evidence so they can see what's going on. "Let's deal with the facts and not rumors."

Linda Lobeck's email address is llobeck@ironmountaindailynews.com.

 
 

 

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