SILOAM SPRINGS -- City Administrator Phillip Patterson presented city directors with three options to pay the amount owed to the Grand River Dam Authority (GRDA) and recommended passing the cost on to the citizens Aug. 3 during the city board meeting.
GRDA incurred a significant extraordinary cost during February's winter storm, along with other utilities across the south, Patterson said. GRDA's cost is more than $102 million, and Siloam Springs' portion is 3.77% or $3,855,758.
GRDA offered three ways to pay: pay the amount in full with no carrying cost; pay it off in 12 months with no carrying costs or pay it over 10 years with a carrying cost which has yet to be determined but is estimated to be $500,000, Patterson said.
In order to have the opportunity to apply for a 10-year loan, GRDA asked all its customers to let it know what option they choose by September or be lumped into the 10-year plan, Patterson said.
After weighing the three methods of payment, Patterson recommended paying GRDA over a 12-month period, he said.
City staff broke down the citizens of the city by six different categories and determined a prorate share of the energy cost by different percentages, according to a staff report prepared July 29.
Categories for the prorated amounts, according to the report, are residential, 22,41% or $864,025; residential commercial, 9.9.% or $382,792; commercial, 6.82% or $263,061; commercial all-electric, 0.38% or $14,635; small power, 9.30% or $358,716; and large power, 51.16% or $1,972.530.
Based on the current calculations from city staff, a 36-month payment plan would result in the following estimated additional monthly fees to the residents' electric bills: residential, $4.38 per month; residential all-electric $9.46 per month, the report states.
Commercial customers would have the extra amount broken down by kilowatt-hours used per month, the report states. Commercial would pay $3.62 for 2,000 kilowatt-hours or less and $73.53 for greater than 12,000 kilowatt-hours per month; commercial all-electric would see charges of $4.86 for 2,000 kilowatt-hours or less and $63.04 for greater than 12,000 kilowatt-hours per month, the report states.
Small power accounts, which are defined by the city as users whose total monthly demand is less than 250 kilowatts or energy consumption is more than 10,200 kilowatt-hours and less than 43,350 kilowatt-hours monthly, would have charges of $59.78 for 10,000 kilowatt-hours or less or $454.30 for greater than 90,000 kilowatt-hours per month, the report states
Large power accounts, which are defined by the city as users whose peak demand is greater than 250 kilowatts or energy usage is greater than 43,350 kilowatt-hours monthly, would have payments based on actual consumption which will range from $22 up to $10,000 per month, the report states.
City board members reacted differently to Patterson's proposal. Directors David Allen, Brad Burns, Lesa Rissler and Marla Sappington adamantly opposed the idea of passing the cost onto the citizens, opting instead to use the city's reserves.
Directors Reid Carroll and Carol Smiley were OK with the proposal. Director Mindy Hunt proposed sharing the cost with citizens instead of having them pay it back to the city in full, she said.
"I do not want to charge the citizens," Sappington said. "I don't feel it's their obligation to pay extra. It happened; we need to be responsible, take care of it, pay it."
A majority of the directors liked the idea of paying the amount to GRDA over a 12-month period, with Burns preferring to pay it all at once.
Patterson responded by saying he would bring back numbers for the 50-50 split with the citizens and paying the amount fully from the city's reserves.
Sappington said bringing the additional numbers back would be a waste of time because the four board members were pretty adamant about the city paying for it and not passing on the costs.
Patterson wanted to bring back the numbers so he could show the board what the cash reserves are today, he said.
"We need to know where the money is," Patterson said.
According to the June financial statements which were presented during the meeting, the city has $20,111,261 in unrestricted cash in the general fund and $13,814,790 in the utility fund.
Smiley asked Patterson how paying the amount off from reserves would affect different projects the city would like to do, as well as whether lowering the reserves would hinder the city's attempt at bonding.
Patterson told Smiley it depended on what kind of bonding the city would do. He also said he would like to sit down with Finance Director Christina Petriches and see out of which fund to pull the amount owed to GRDA.
Echoing back to the workshop on July 20 about accelerating street projects, Patterson told the board the three-year payback would not impact the presentation Petriches gave at the last workshop.
"If we pull it all out of the utility fund, it will have an impact on how much you could draw or borrow from the utility fund to accelerate street projects," Patterson said.
City directors also approved the following items:
Consent agenda
• Workshop minutes from the workshop on July 20.
• Regular meeting minutes from the July 20 city board meeting.
• Memorandum of understanding between the Siloam Springs Police Department and School District for school resource officers.
• Resolution 33-21 concerning a significant development permit for 22000 Arkansas 16.
• Resolution 34-21 regarding a final plat development permit for the 21000 to 22000 block of Davidson Road.
• Resolution 37-21 concerning a special use development permit for 300 Cordes Drive.
• Resolution 38-21 regarding a special use development permit for 3020 E. Jefferson St.
• Resolution 39-21 concerning a special use development permit for 400 S. Mount Olive St.
• Resolution 40-21 regarding a special use development permit for 714 W. University St.
Resolutions
• Resolution 35-21 concerning a preliminary plat development permit for 813 Arkansas 16.
• Resolution 36-21 regarding a preliminary plat development permit for the 22000 block of Davidson Road.
Ordinances
• Placing Ordinance 21-14 concerning the annexation of 37.44 acres of the 15000 block of Arkansas 59 on its third reading and then taking a separate vote to adopt the ordinance.
• Placing Ordinance 21-16 regarding rezoning 610 W. Tahlequah St. from R-2 (Residential Medium) and R-3 (Residential Two-Family) to R-4 (Residential Multi-Family) on its first reading.
• Placing Ordinance 21-17 concerning amending the zoning code with regard to private drives and sanitation trucks on its first reading.
• Placing Ordinance 21-18 regarding body art businesses on its first reading.
Staff reports
• Broadband Committee request for a feasibility study.
• June financials.
• Administrator's report.
Marc Hayot can be reached by email at [email protected].