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Auburn mayor alone in flushing regional sewer idea

City Council votes to have deal points prepared for $100M project
By: Jon Schultz, Journal Staff Writer
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Auburn City Council kept the prospect of joining a $100 million regional sewer project alive Monday, but Mayor Kevin Hanley strongly opposed it, saying it would be “one of the most risky and costly decisions” in the city’s history.

The council voted 4-1 in favor of directing staff to prepare a set of deal points to present to Placer County and/or Lincoln in order to move the project forward.

The vote came after two hours of discussion, including input from Placer County Supervisor Jack Duran, who said the county would be willing to contribute $7 million from its general fund to subsidize the city’s cost of buying into the project.

Councilwoman Bridget Powers said Duran’s offer, which he characterized as the “floor” for the county’s potential contributions, is a sign of progress, and even if all the answers aren’t yet known, it’s important to continue down that path.

“It is environmentally correct for our community and for the future of our children and of our children’s children, and it is smart for us to be thinking ahead 50 years and not be … shortsighted,” Powers said. “We are closer, and we are a whole lot closer than we were 15 years ago, and we are a whole lot closer than we were two years ago.”

Councilman Dr. Bill Kirby, who has been on the city’s temporary regional sewer committee with Powers, said, “We’re getting there. To miss this opportunity would be a tragedy.”

The City Council meeting came on the heels of the city’s recent staff report with updated financial and operational analysis that shed little, if any, positive light on going regional.

Discussions of a regional wastewater plant have been ongoing for more than a decade, and if the City of Auburn joins in with the City of Lincoln and Placer County, the total project cost is estimated at $100 million, according to recent estimates.

With an up-front cost of $36.3 million for Auburn to buy in, city staff found “minimal compelling reason” to continue to pursue the project if Auburn is unable to get outside funding to stabilize the effect on the sewer rate, which could increase up to $180 annually to pay for regional.

Hanley’s staunch opposition comes after he proposed a plan in July 2012 that would have subsidized the cost to Auburn’s rate payers by using future monies from the Middle Fork Hydroelectric Plant. The county rejected that plan, he said.

After dealing with the project personally for seven years, Hanley said it’s best to part ways with it.

He’s disappointed that there is still no clear governance structure, and agreed with city staff’s assessment that staying with the Auburn treatment plant is the best solution.

Just this month, the California Water Environment Association named it the plant of the year for efficiency and environmental compliance, beating out 11 Sacramento-area facilities, he said.

Going regional would result in “great debt and financial uncertainty,” Hanley said.

If the city receives $7 million in outside funding, sewer rates would increase by $120 annually for a single family dwelling, according to the city report. The $7 million offer on the table from Placer County would be disbursed in $1 million per year increments, Duran said.

To keep rates stable at about $726 per year for a typical family, $18.16 million in outside funding would be required, according to the Auburn report. With no outside funding, annual single-family dwelling rates would increase by $180.

Those estimates are based on Auburn using about $3.3 million of sewer fund “regionalization” reserves and unspent bond proceeds toward the project, lowering the amount to be financed to about $33 million, according to the report.

Hanley said using that $3.3 million to go regional would be “morally wrong,” because when the city proposed increasing rates, “It basically said these increases are going to go to meet the regulatory requirements of our plant, treat our aging sewer lines.”

“It didn’t say anything about regional,” he said. “If you favor a regional plant, go to the voters and raise all the money you need to do it. That would be the morally honest way to do it.”

The concept of economies of scale does not pertain to this project, and instead of seeing savings, Auburn would face an increase in costs, the city staff report said.

Furthermore, the current Auburn plant would face no greater challenge than the Lincoln facility in meeting future compliance standards, it said. Staying with the local plant also maintains City Council’s ability to directly decide compliance strategy and its effect on rates, the report found.

Councilman Keith Nesbitt offered several new deal points, including the creation of a Joint Powers Authority “with a strong voice” to govern the regional sewer, and veto power over major changes within that JPA.

Nesbitt also said the zero-percent state financing the county is exploring is attractive.

Councilman Mike Holmes said he was much in favor of the project at the beginning of the process, and although he thinks it’s the way to go in the long term, there are too many unanswered questions.

As for the county’s cost, recent estimates said it would be $63 million if Auburn joins the project, or $73 million without Auburn.

In the spring of 2012, Placer County supervisors voted to have the City of Lincoln design, construct and operate a pump station and pipeline and expand the Lincoln treatment and disposal facilities for the SMD1 treatment plant in North Auburn.

The project is currently being designed, and its draft environmental impact report conducted by Lincoln started the 45-day public comment period last week.

If the project moves forward as proposed by the City of Lincoln, Placer County customers in unincorporated North Auburn, Lincoln and potentially the City of Auburn would have their sewage treated at a plant off Fiddyment Road in Lincoln.

 

Jon Schultz can be reached at jons@goldcountrymedia.com. Follow him on Twitter @Jon_AJNews