The meeting was called to order by Mayor Cheryl A. Young at 7:30 p.m. Mayor Young delivered the invocation and led the flag salute.

Mayor Cheryl A. Young

Councilor Marian Calnon

Councilor Bill Guy

Councilor Gary Hudson

Councilor Bob Schmor

COUNCIL MEMBERS ABSENT:

None

ALSO PRESENT:

Micah Olson, Public Works Superintendent

Leahnette Rivers, City Administrator/Recorder

ATTORNEY PRESENT:

Harold Olsen, City Attorney

A quorum was present and due notice had been published.

Public Hearing opened.

Mayor Young said the City Council has received copies of written comments from Mr. and Mrs. Byers, Jean Erickson and Michelle Erickson about the proposed rate increase.

Leahnette Rivers explained that the City acquired nearly $3 million in loan funds to construct a water reservoir and groundwater production wells as an alternative water source. She said the first debt payment on the loan is due on December 1, 2004.

Leahnette said the water reservoir project is substantially complete, and the reservoir was filled and put on line in November 2003. She said some of the items remaining to be completed include repaving Ninth Street, landscaping the reservoir site, and completing the project.

Leahnette said the well project is still underway. She said the City is currently investigating the use and acquisition of an existing groundwater well.

Leahnette said the current interest rate on the loan is 1%, and the term of the loan is 30 years. She said over the life of the loan, the 1% interest rate translates into a cost savings of nearly $2 million. She said the City has the option of converting the loan to a 4.21% interest rate, with a term of 20 years.

Leahnette explained that the annual debt payments under the 1% loan are equal to approximately $115,000.00. She said this is the approximate amount that will be due on December 1, 2004.

Leahnette said in order for the City to continue to qualify for the low 1% interest rate, the City Council will need to adopt a rate structure that will result in a water charge of at least $53.68 per 1,000 cf. She said this rate will need to be adopted by February 1, 2005, and must be implemented by February 1, 2007.

Leahnette said the proposal before the Council tonight is to adopt a $5.00 increase in the base rate for a residential customer, and an increase of similar proportion for other users. She said the revenue generated from this increase would be supplemented with revenue from system development charges to make the first debt payment in December 2004.

Leahnette suggested that the Council consider a series of increases over the next few years to both generate the revenue necessary to make the annual loan payments and to meet the loan requirements to retain the low interest rate.

Leahnette said with the number of customers we have today, a rate increase of $13.37 per month would be required in order to generate the revenue needed to make the annual loan payment.

Jim Gillam of Columbia City suggested that maybe the City's system development charges (SDC's) are too low.

Leahnette said state law strictly regulates how an SDC can be calculated, and Columbia City has adopted the maximum SDC permitted by a fairly recent SDC study. In addition, she said the City annually adjusts the SDC, to account for inflation. She discussed how an SDC fee is calculated with the Council and audience.

Leahnette distributed a graph showing the annual payment for a 30-year term at 1% and the annual payment for a 20-year term at 4.21%. She explained that the annual payment for the 1%, 30-year loan will be about $115,875, with total interest payments of about $487,000, while the annual payment for the 4.21%, 20-year loan will be about $230,000, with interest of about $1,610,000.

Jim Shinkle said he thought the City obtained a federal grant a few years ago to update the water system.

Leahnette explained that we received a $10,000 grant and a $20,000 loan several years ago to complete a water reservoir siting study and a water rate study. Otherwise, she said the only funding we have received is the $2.9 million Safe Drinking Water Loan, which is equivalent to receiving a grant due to the low 1% interest rate.

Leahnette said in order to qualify for the 1% interest rate, the City must meet the State's definition of a Disadvantaged Community, which means a community whose average annual residential rate for drinking water is at or above a certain percent of the median household income of the area served by the water system. For Columbia City, this means we will need to charge at least $53.68 for 1,000 cf of water, based upon the City's 1990 median income levels. She said our funding was secured just months before the new 2000 median income levels became available, which would have boosted the rate for 1,000 cf to over $80.00 in order to qualify for the low interest rate.

Jim Shinkle asked how this compares to the current water rates.

Leahnette said currently the charge is $21.00 for the first 500 cf, and each 100 cf up to 1,000 cf is $3.00, and each 100 cf over 1,000 is $4.00. She said additional increases will be needed between now and February 2007 to bring the rate for 1,000 cf up to $53.68. She said currently we charge $34.00 for 1,000 cf.

Jim Shinkle asked why we didn't increase the water rates several years ago, rather than increasing them by $5.00 per month now.

Mayor Young said we are currently working on incremental increases to bring the rate up to the required amount.

Leahnette said in 2001 the City completed a Water Rate Study that suggested an immediate increase of 42% in rates in order to pay for our operation and maintenance costs. She said the Council adopted an average increase of 23% in September 2001, and adopted another average increase of 19% in May 2003, to bring the rates up to the level recommended by the study to cover our operation and maintenance costs. She said now the Council is looking at increases to provide revenue for the loan payments.

Jim Gillam said the cost of water from St. Helens also factors into our rates.

Leahnette said in 2001 our wholesale water rate to St. Helens increased from $0.77 per 100 cf to $1.28 per 100 cf, which contributed greatly toward our need to increase rates to meet operation and maintenance costs.

Leahnette noted that St. Helens is in the process of building a water treatment facility, and they expect their water rates to increase by 20% per year for the next five years as a result of the project. She said large increases in rates are typically required when an entity receives either state or federal financing to complete a project.

Jim Gillam asked if our rates will go down if our well project is successful.

Leahnette said our operation and maintenance costs will go down, but the rate requirement of $53.68 for 1,000 cf will still be required in order to qualify for the 1% interest rate.

Kevin Kent suggested we commit to reserving any excess water revenues for future projects.

Mayor Young said revenues in excess of operation and maintenance costs and debt payments could only be used for water projects.

Jim Gillam asked if any thought had been given to retired seniors who are trying to live within their means.

Mayor Young said the final rate structure has not been established. She said in Columbia City many of the retired people have rather significant incomes, which contribute to our high median income level.

Public Hearing closed.

AGENDA ITEM 3 CITIZEN INPUT: None.

Pam Powell, Hospital Coalition Coordinator for Columbia Health District, and Karen Ladd of the Columbia Health District, spoke to the Council and audience regarding a proposal to expand the health district boundaries and establish a new tax base.

Pam read a letter she wrote on January 28, 2002, to the City Council. The letter explained that the Health District began a countywide health assessment in the spring of 2001 using a grant from the Northwest Oregon Economic Alliance and the OHSU Office of Rural Health, with in-kind support from the Port of St. Helens and the Columbia Health District. The assessment involved interviews, surveys and focus groups, and two needs emerged from the process - the need for 24/7 emergency care and the need for more primary care providers and specialists.

The letter explained that the Hospital Coalition was formed to research the new federal designation of a rural Critical Access Hospital (CAH). A CAH provides 24/7 emergency care; is a short stay hospital for the moderately ill; has no more than 25 beds; and refers complex cases to a partner full-service hospital. It would succeed where our former hospital failed because the CAH has much higher reimbursement from Medicare (101% of cost) and limited expansion.

The letter said the study showed some public help will be required for start-up costs and to maintain the building and equipment, which would be publicly owned, and the Columbia Health District has taken on the task of expanding its borders to reflect the catchment area of the new hospital. In addition, it explained that a new tax base for the expanded district is being sought, in the neighborhood of $0.30 to $0.40 per thousand assessed value, to be used for the CAH. It requested City Council approval of a resolution to include Columbia City within the new district boundaries if the voters approve.

Pam explained that the resolution is necessary because each of the incorporated areas within a new district boundary must consent in order to be included.

Councilor Schmor asked how the new district boundary will vary from the current district boundary.

Pam said the current district boundary extends from the Trojan Plant area down to the Multnomah County line. She said the plan is to expand further to the west, closer to the Vernonia boundary area. She said initially they considered expanding to the entire Columbia River Fire and Rescue boundary area, but they found that it made more sense for folks in Rainier to continue to use the healthcare resources they have in Longview. She said the City of Vernonia is not included because of their close proximity to Beaverton/Hillsboro.

Councilor Schmor cautioned that they might be fighting a losing battle. He said he served on the Hospital Board, and the residents living to the north used Longview, and the majority of the residents in Scappoose went to Portland, leaving little foot traffic for the local hospital. He said people needing trauma care were taken to Portland. He said it was very frustrating to watch the organization go into debt and finally close because the business wasn't there.

Pam said the CAH designation was established in 1997 and was designed significantly for areas such as ours that have had a hospital that could not make it financially. She said there are 16 CAH's in Oregon, and most of them were existing hospitals that were not making it and were able to scale back and receive a higher reimbursement for Medicare services. She said they are designed to take care of CAT scans, dialysis, and other types of more routine services the community needs.

Mayor Young said she recalled the old hospital going into debt and closing, and then some questions being raised about some funds the hospital had and where that money had gone.

Karen Ladd said she believes those funds were used to subsidize rent for one of the tenants that leased a portion of the building from the Columbia Health District.

Pam said St. Helens and Scappoose City Councils have already adopted a resolution.

Karen said under the previous hospital structure, reimbursement was different for urban and rural settings. She said hospitals in a rural setting were reimbursed a lot less for procedures than hospitals in urban settings. She said the CAH designation addressed that problem, and the reimbursement mechanisms are really different.

Councilor Hudson said he certainly supports the voters having an opportunity to look at this.

4.1 Parks Committee: Chair Calnon said the groundhog did see his shadow. She said the Parks Committee will meet on February 24, 2004.

4.2 Water Source and Development Committee: Chair Guy said City representatives had a preliminary meeting with the Oregon Water Resources Department staff to discuss filing the application for Water Rights. They suggested we also meet with representatives from the Oregon Department of Fish and Wildlife to discuss any concerns they might have about the use of the well upon McBride Creek.

Councilor Schmor questioned the Water Committee's interest in obtaining surplus water from the Voris Probst well as mentioned in the last Water Committee Meeting. He said he understood that they run out of water from time to time.

Micah Olson said they are only using about one-third of their system's capacity at this time. He said there are two wells - one with 6 gpm and one with 15-20 gpm, and they are only using the 6 gpm well at this time.

4.3 Streets Committee: Leahnette said the final costs are in for the street light upgrade project. She said the project came to $14,770.14, which is $4,541.00 less that the original "not to exceed" estimate. She said the 60-month zero interest loan will cost $246.17 per month, and our monthly charges are now $469.71, maintenance and repairs are estimated at $50.00, bringing our monthly total to $765.88

Leahnette explained that this is a cost savings of about $367.75 per month, and suggested we consider reinvesting this money into under lit areas within our street lighting system. It was the consensus of the Council that the Streets Committee evaluate the existing system and prioritize under lit areas for improvements. Councilor Guy volunteered to participate in that process.

Jim Shinkle said the area around 310 Pacific is over lit. Leahnette said the Committee will evaluate the system for under lit and over lit areas.

4.4 Sewer Committee: No report.

4.5 Library Report: Liaison Hudson said the Friends of the Library have filed non-profit corporation paperwork with the State of Oregon, and February 25 is Patron Appreciation Day.

Harold Olsen was excused from the remainder of the meeting.

4.6 Other Reports:

Councilor Schmor asked that the minutes be corrected to reflect his absence from the last meeting, and Mayor Young asked that we delete the Police report because there isn't one.

Micah Olson said the third paragraph from the bottom on page 3 says the rate of $53.68 for 7,500 gallons must be adopted by February 2005, and he thought the correct date was February 2007.

Leahnette said the rates must be adopted by February 1, 2005, but the effective date of the increase can be delayed until February 1, 2007. She said she will add the effective date to the paragraph to make it more clear.

MOVED (HUDSON), SECONDED (CALNON) AND CARRIED UNANIMOUSLY TO APPROVE THE CONSENT AGENDA WITH THE CORRECTIONS DISCUSSED.

AGENDA ITEM 6 UNFINISHED BUSINESS: None.

The Council completed the first reading of Council Bill No. 04-303.

The Council completed the first reading of Council Bill No. 04-304.

MOVED (HUDSON), SECONDED (GUY) AND CARRIED UNANIMOUSLY TO APPROVE COUNCIL BILL NO. 04-305.

The Mayor and City Council members discussed the rate structure and debt requirements with staff at length.

Leahnette noted that the resolution has been prepared in a manner that increases the rates for larger meters and outside customers by the same percentage rate and the inside residential customer. She said the resolution reflects a 24% increase in all of the minimum charges for all customer classes.

MOVED (GUY), SECONDED (HUDSON) AND CARRIED UNANIMOUSLY TO ADOPT COUNCIL BILL NO. 04-306.

The Council reviewed a proposal dated January 10, 2004, from Officer Greisen regarding the proposed lease of a police car.

Council briefly discussed the proposal, and Leahnette suggested we postpone further discussion about the matter until the Chief is present. She said she expected him to be here tonight to answer questions about the proposal.

Council Members raised many questions including the need for an additional police vehicle, whether the maintenance of existing vehicles was adequate, whether or not the anticipated donations for continued maintenance and repairs would actually come through, the request to use the vehicle for commuting purposes, the City's annual insurance costs, etc.

The Council reviewed a list of last year's Policy Goals and Objectives and some recommended changes. Leahnette asked the Council for input on additional goals. Council Members suggested some additional items relating to library services and police protection, and it was the consensus that a Goal Setting Workshop be scheduled for Thursday, February 26, 2004, at 7:00 p.m.

Business License Ordinance Interpretation: Leahnette asked the Council to interpret the section of the business license ordinance that exempts persons who provide temporary and irregular yard care, house cleaning, home maintenance not requiring a building or plumbing permit and babysitting services. She said staff is having a difficult time understanding what is considered temporary and irregular.

It was the consensus of the Council that we look at sample ordinances in other cities to see how they handle the licensing of these individuals.

MOVED (HUDSON) SECONDED (CALNON) AND CARRIED UNANIMOUSLY TO EXTEND THE MEETING UNTIL 9:30 P.M.

Urban Growth Boundary (UGB) expansion: Leahnette recommended staff meet with the City Engineer to review the UGB expansion area to evaluate the impact it will have on our capital plans and our system development charges. The Council discussed this at length.

MOVED (SCHMOR), SECONDED (CALNON) AND CARRIED UNANIMOUSLY THAT STAFF REVIEW THE UGB AREA WITH THE CITY ENGINEER TO EVALUATE THE IMPACT ON OUR CAPITA PLANS.

Cancelled Meeting: Leahnette asked to be excused from the February 19th Council Meeting because she will be out of town. After a brief discussion about the lack of anticipated agenda items, it was the consensus of the Council that the meeting be cancelled.

AGENDA ITEM 9 ADJOURNMENT: There being no further business to come before the Council,

the meeting adjourned at 9:30 p.m.

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