ORDER-2024-23 : Requesting authorization to borrow funds in the amount of $686,500 from MWRA as part of the Local Water System Assistance Program to fund costs for local water system improvement projects.

Transcript (~15 min @ 10:27)

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▶ 10:25 Ryan Williams: Um, first before us in orders, we have order 2024 dash 23 requesting authorization to borrow funds in the amount of $686,500 from MWRA as part of the local Water System Assistance Program to fund costs for local water system improvement projects. And we have some members of the administration here to talk to us about this order schedules. So, uh, by unanimous consent, I would like to seek to suspend rule 37 B so we can hear them speak. And seeing no objections to that rule 37 B is suspended so that we can have dialogue with members of the administration. Please introduce the, uh, the request and let us know what we're here for.

▶ 11:06 Speaker 8: Thank you. So, um, this is a request that, uh, for those of you who are new to the council, we usually come before you annually to request a, um, to request authorization to borrow from the MWRA Water Assistance Loan Program. I always describe this as it's just our own money coming back to us. If we don't take advantage of this money, then another community would be taking advantage of it and all the MWA communities pay in through our rates so that they can offer these loans back to us. So it's the wise thing to do to accept this money. Um, and with me are Catherine Armada, treasurer Collector, and Jay Coy, our deputy city engineer. And Jay has a brief presentation. Um, can you, if you

▶ 12:46 Speaker 9: Perfect. Um, good evening counsel. Uh, as Elena said, my name is Jay Coy. I am the deputy city engineer. Um, our city engineer, Vonny Reese wasn't able to make it tonight. Um, so, uh, Andrew, you can skip one more slide. Yep. Thanks. Um, so the Local Water System Assistance Program, um, as Elena said, is an annual loan, um, that we get from MWRA, um, that they do with all MWA communities. Um, over the past so many years, they've, they have $725 million that they allot to all of their MWA communities. Um, and they split it depend depending on the size of the community, um, and their needs. Um, we're currently in phase three of that program that goes from fiscal year 18 all the way to fiscal year 30. Um, average, uh, we get about 650,000 a year, um, depending on, uh, each year. Um, and you'll see this year it's about the same. Um, next slide, please. Um, so our previous five years of these loans, um, Melrose has received, uh, just over $4.7 million. And with that money we have replaced, um, 18,200 linear feet of pipe, which is about 3.4 miles of our 80 miles of pipe, um, which consists about 30 streets, as you can see on that list. I won't go through the list, but, um, you're welcome to, uh, grab this, uh, presentation if you'd like.

▶ 14:12 Speaker 9: Next slide, please. So, as I stated this year, um, we're, we have $686,500 available to us, um, before we accept this money, and when we go through our project planning and everything, we go through our financial model and make sure that, um, and look at what the impacts will be. Um, with this upcoming loan, um, the impacts are negligible, um, showing a total debt service repayment of $660. And that's not per resident, that's total. So you divide that by the number of counts, it's it's cents. Next slide please. Um, in 2017, we had a capital efficiency plan, um, completed by our consultant t and Howard. Um, in this plan, they identified critical areas of the water system. They based it off of the hydraulic model and any critical components, um, with considerations. And, um, they used an asset management rating system. So they rated everything from, um, condition of the pipes, brake history, um, low pressure, all things like that. So they, and they rated it depending on, um, those factors. And that gave us our overall plan of, uh, of attack, where we should start and, and, and what our order should be. Um, the next two slides are maps showing those phases. The first map is phase one and two. So those are the kind of higher numbers in, in your asset management rating. Um, I know these maps are hard to see. Um, again, they're available if you would like, feel free to let me know and I can email them to you. Um, the next map is the phase three and three A and three B, so a little bit further down on the priority list, but still, um, the top priority, um, the top priorities in the city. Next slide please. So this upcoming year, um, we are looking to do, uh, roughly 1600 linear feet of pipe, um, with about half of that in Sewell Woods Road, the other half in Maple Road, um, with a little bit of an alternative, uh, in, of 375 feet at the opening of, uh, Sewell Woods Road at Lin Fells Parkway. Um, the reason there, there's an add alternate to the project is, um, it's not, um, a super priority, but it's something that needs to be upgraded. And if we have the funding to cover that add alternate, we're going to, so we bid it strategically where we don't have to award it if we don't have the money. Um, but if we can find the money from free cash or whatever funds, then we can add that on and we get a little bit more of a, uh, economical, uh, to scale by having the project done at the same time. Um, so overall, our construction costs for the, the base bid, which is the, the main project is about 587,000. Um, and then that add alternate is another just under 200,000 with a total project cost of 780,000. Our, our schedule right now is, um, our bid opening would be in about a month, mid-April with construction starting about a month after that. Um, or sometime depending on the, the contractors, but, um, to be finished by mid-November at the latest with paving of these repaving of these roads to happen next year in the construction, um, schedule of 2025. Um, and that's really about it. Um, so we're welcome to answer any and all questions you may have. Oh, I'm sorry. Catherine had some, some things to add.

▶ 17:32 Speaker 10: The request is for a $686,500,000 10 year note from the MWRA. This is at 0% and it's repaid evenly over the years at 68 6 50. As, um, Jay said it's not an additional financial burden and as Elena put in her memo, we do have about $280,000 rolling in bonds rolling off, um, in fiscal 25. So this really has negligible impact right now.

▶ 18:05 Ryan Williams: Okay. Thanks. Uh, counselors questions.

▶ 18:10 Speaker 7: Councillor Vandiver,

▶ 18:11 Kimberly Vandiver: Thank you for the detailed presentation. I was wondering when you, um, look at pipe replacement and the rankings and the phases, um, if, if lead pipes are completely taken care of at this point, or if that figures into the prioritization?

▶ 18:24 Speaker 9: That's a good question. So we replace all of the, uh, water services from the water main to the property line within the scope of the project. So all of the houses that fall in line on those water mains will replace the private services, uh, I'm sorry, the public side of the services. Um, if we do discover that they're lead on the private side, we notify the homeowners to let them know that um, they have a lead service and that they should go ahead and, and, um, change that if they, if they would like. Um, we do have a a, an incentive program right now where we're, um, reimbursing those residents by with a thousand dollars. So, um, so that's part that's, you know, part of the notification process as well. Um, but if it's, there's a public side led service, then it is removed, all of them get, um, upgraded to copper during the course of the project.

▶ 19:14 Kimberly Vandiver: And, and that's within the, the, the sort of overall prioritization scheme. So, so there may be lead pipes that aren't, you know, that are in later phases still that haven't been moved

▶ 19:25 Speaker 8: Up. So I, I can answer that one. So our lead services, we've just finished doing an inventory and between lead and unknown, which could be lead, we're at roughly, I would say about 800 services. And if I had to guess, we probably have about 400 that are definitely led, um, four to 500. And those are scattered all over the city. Unfortunately, they're not, it's not like we can just target one neighborhood and say, okay, we're getting a huge percentage of the lead. And so our water main projects are looking at different criteria for selecting those. The whole, um, the, uh, report that Jay had, the maps from looks at hydraulics, it looks at, um, condition of pipes and break history, and that's all in the water mains and there's no lead in the water mains. So, so it's a different set of criteria that drive the capital program versus the lead replacement, which is really, we replace our side whenever we're in a neighborhood, like on this project. But the private side lead services are probably the bigger issue. And we have a different loan that we actually got approved probably in the fall, um, for a lead service replacement program, which is a one point, I think $1.035 million project. And that's gonna target both removing our side of the lead and then giving that a thousand dollars incentive. And we're trying to work with residents. In fact, if anyone out in the world is listening, um, who has a lead service, we're gonna be sending out letters trying to get people on board with this program because once our contractor's in town, the contractor will be able to replace the private side service as a private arrangement with the homeowner at the same time. Mm-Hmm. So they could get the whole service replaced all at once. They'll pay for the private, we'll pay for the public, and then we'll send them a thousand dollars incentive. So that's our, our hope is that we can get a lot of people on board. This 1.035 million is enough to do over a hundred services if we can get people on board.

▶ 21:27 Speaker 9: That's great. Okay. Yeah, that makes Sense. Yeah. And just to further clarify, um, so this is the, the water main project. The water mains are the larger pipes in the street that's basically servicing all the homes in the area and in, in the entire city. So there's no lead in the water mains. The only lead that's in the city are for private services, which is just a one inch pipe or, or smaller that goes from the water main to a single family home or one single, one single building. Um, so that's, it's a, it's, it's a separate program. This is really just for the water mains, but we're also attacking the, the private services as well that are led. Got

▶ 22:03 Kimberly Vandiver: It. Yeah, that makes sense. And I saw in, in the chart, you know, these are the one foot, two foot, these are the big pipes. Mm-Hmm. Yep. Okay. Okay, great.

▶ 22:12 Speaker 7: Anybody else? Councilor Romanul, Forgive me if this is an elementary question,

▶ 22:15 Devin Romanul: but what accounts for the 0% rate?

▶ 22:18 Speaker 8: That's because it's part of this MWA program. So like I said, it is literally our money that they collect through rates. They put a certain, they put hundreds of millions over the years into this special account from the water system rates. And then they, they apportion it back to the communities through these different phases of their loan program. And then on the sewer side, they have the same program, except the great thing on the sewer side is that they actually offer it a 75% grant when we get those. So we only pay back 25% of the loan. Still zero interest, but, um, but we get the rest as a grant. But it is, MWA doesn't have a lot of different income sources coming in, aside from member communities rates. So they have, you know, little fees and things that they collect for other things. But for the most part, the MWA is funded from all of us. So anything we get back is just our own money coming back.

▶ 23:12 Speaker 9: Thank you very Much. It also gains interest too, that we can pull from at and don't have to pay that back. Mm-Hmm. It's not part of the loan program, so it's that's great. Yeah, it's, it's, it's pretty nice. Alright. Yeah. Thank you for the info. Mm-Hmm.

▶ 23:26 Robb Stewart: Councillor Stewart. Thank you Mr. Chair. And actually, Mr. Coy just answered my question. I was interested in understanding, uh, when you get this revenue, uh, 'cause $686,000 when you put it in a bank account, that collects a lot of interest pretty quickly, doesn't it? Mm-Hmm. Um, I mean, we're talking hundreds if not thousands of dollars. That what, so that goes directly right back into the same program? Yes.

▶ 23:50 Speaker 8: Yeah. When we have leftover funds, they, um, so it goes into an account MMDT account, I don't know, Catherine, I'm sure knows what that stands for, Heidi. Um, and then as the interest is collected, it stays within that account and MWA tracks how much interest we've earned and then we can use it on these water main projects. So a lot of times, like what Jay has just presented, the total project cost, if we award the alternate is a little higher than the loan that we're asking for, but if we have interest, then we might be able to afford that. Um, and then we tend to make up those small differences with free cash requests from the water enterprise fund. Sure.

▶ 24:28 Robb Stewart: Mm-Hmm. Sure. It's a good time to have this money then. Yeah.

▶ 24:31 Speaker 9: And every year the, the next set of funds become available in July. It's not really great to coincide with construction season 'cause we are already in construction season, so we can't really add that onto like an existing project. So we just apply for it and around this time of the year, go to bid and just do it, do that every year. Got

▶ 24:52 Robb Stewart: It. Got it. Thank you all. Thank you Mr. Chair. Thank you.

▶ 24:58 Ryan Williams: So what does the will of the committee,

▶ 25:02 Robb Stewart: Mr. Chair, I'll make a motion to recommend to the full council.

▶ 25:04 Ryan Williams: Motion to recommend by Councillor Stewart. Second.

▶ 25:09 Speaker 7: Seconded by Councillor Rio. All in favor? Roll call. Vote

▶ 25:14 Speaker 2: Vice Chair Williams. Yes. Councillor Stewart? Yes. Councillor Reky. Yes. Councillor Hamilton? Yes. Councillor Vandiver. Yes. Councillor Romanul? Yes. Councillor Finocchiaro. Yes. President Elli? Yes. And Chair Jamine? Yes. That's unanimous with nine? Yes.

▶ 25:33 Ryan Williams: Alright. That one moves forward to the full counsel. Thank you very much. Thank

▶ 25:36 Speaker 9: You. Thank you.