RMWD secures federal funding to cover two reservoirs

Rainbow Municipal Water District (RMWD) has applied for and received approval for a loan of $6,702,680 from the State Department of Public Health to help cover its North and Northside reservoirs in order to bring the water up to state standards.

Dave Seymour, RMWD general manager, said he learned shortly after September 30 that the district had been approved for the funds from the Safe Drinking Water State Revolving Fund and the Federal Stimulus Package.

“Half of the amount <approximately $3.35 million> can be repaid over a 20-year period at an interest rate of about 2.5 percent,” he said. “The remainder is a grant that does not have to be repaid at all,” said Seymour.

Although two reservoirs are involved, the work was bid as one contract, Seymour said. Therefore it could be funded as one project. The project cost is estimated at $7,475,000, meaning the district will be responsible for the $772,320 difference.

“We will pay the difference out of pocket,” said Seymour.

In order to qualify for the funds, Seymour said the project had to be “shovel ready.” He said RMWD was ahead of the game because it had already begun work on the North Reservoir.

“We are already at the point where we will have North finished in about two weeks,” he said. “Once the first one passes the testing process, Northside will be started.”

Seymour said he expects both projects to be complete and running smoothly within a year.

When it comes to debt being incurred by RMWD, Seymour said the district is limited by Ordinance 95-1, which it tried to modify in a special election held in August. The measure, labeled Proposition A, failed by a small margin at the ballot box.

Seymour said for the time being, this loan will be the only one the district can secure without voter approval, because “we are prevented from incurring more debt when we already have in excess of $1 million in debt.”

While some ratepayers question the way the district is interpretting Ordinance 95-1 by applying for and accepting the debt for the North and Northside resevoir work, without a vote by ratepayers, Seymour said the district followed the advice of its legal counsel, Procopio, Cory, Hargreaves and Savitch LLP (San Diego), on the matter.

Jack Wireman, one of the authors of Ordinance 95-1, said regardless of how the current RMWD board interprets the ordinance, the legislative intent was clear.

“The legislative intent of 95-1 was to prevent debt of over $1 million without a vote – with no exceptions,” he said. “Under [this board’s] interpretation, they could have applied for $100 million. Essentially, their novel interpretation prevents public scrutiny.”

Wireman said at some point in the funding process, RMWD will accept more than $1 in debt.

“Whether they take it in increments or a lump sum, they will exceed the $1 million limit without ratepayers’ approval through a vote,” he stated.

Although the district preliminarily applied for federal funding in February, the final decision to move forward with the loan was made at the July 28 board meeting, Seymour said.

“[The board] directed me to sign and file the application at that time,” confirmed Seymour, adding that the directive passed in a 4-1 vote, with Director Jack Griffiths opposed.

Griffiths was also opposed to Proposition A, the attempt to amend Ordinance 95-1.

The effort to amend the ordinance may not be over, Seymour indicated.

“We’re not throwing out the idea of going out for another election to fix Beck Reservoir,” he explained. “It will be a $15 million project. If we can pay it off over 20 years, it will be more favorable to the ratepayers.”

Meanwhile, Seymour said Rainbow ratepayers can expect to see increases in both water rates and meter surcharges.

Finding a way to pay for the reservoir work, he said, is mandatory for the district because of state requirements.

“We have to do the work; we don’t have any option,” said Seymour. “We’ve got a lot of evaluating to do. We’re trying to come into compliance with the least possible impact on our customers.”