TO: Mayor and City Council
THROUGH: Steve Powers, City Manager
FROM: Kacey Duncan, Deputy City Manager
SUBJECT:
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Transfer of appropriation from the Utility Fund to the Capital Improvements Fund.
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
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ISSUE:
Shall City Council transfer $3,900,000 of appropriation authority from the Utility Fund, Non-Divisional, contingency and materials and services to the Utility Fund, Non-Divisional, interfund transfers for the purpose of initiating drinking water treatment and system capacity projects in the Capital Improvements Fund?
RECOMMENDATION:
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Adopt Resolution No. 2018-22 transferring $3,900,000 of appropriation authority from the Utility Fund, Non-Divisional, contingency and materials and services to the Utility Fund, Non-Divisional, interfund transfers for the purpose of initiating drinking water treatment and system capacity projects in the Capital Improvements Fund.
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SUMMARY AND BACKGROUND:
In May 2018, low concentrations of cyanotoxins passed through the Geren Island Water Treatment Facility and into Salem’s drinking water system. In early July 2018, the City began using a powdered activated carbon pre-treatment process as a temporary measure to address the cyanotoxin threat until a new treatment process using ozone contact chambers could be designed and constructed. Procurement for design of the new ozone contact chambers is underway. To provide additional groundwater and water storage, new water infrastructure projects have also been started. The groundwater and additional storage will help to address potential Santiam River water supply shortages associated with U.S. Army Corps of Engineers work on the dam at Detroit Reservoir and provide resiliency against other future risks to the Santiam River. The total cost of the new treatment and secondary drinking water source is approximately $80 million. Construction is expected to be complete in 2021 on the ozone treatment facility and in 2022 for the secondary drinking water source.
FACTS AND FINDINGS:
To begin the projects immediately, adjustments have been made to the timing of projects in the utility portion of the FY 2019 capital construction budget and the City’s Five-Year Capital Improvement Plan (CIP). Funds currently programmed for some utility projects in the first three years of the CIP will be shifted to fund the ozone project at Geren Island and groundwater well and water storage projects. Funding for the delayed utility projects will be backfilled when a future utility bond sale occurs in 2020.
The funding shifts will not affect non-utility projects. As an example of the shift in timing for funding water infrastructure projects, the Ewald Avenue waterline replacement project was allocated $1,264,570 in the FY 2019 capital construction budget. The funds will be reallocated to the work at Geren Island in FY 2019 and replaced in FY 2021.
Resolution 2018-22 provides the necessary budget action in the current fiscal year to transfer a total of $3,900,000 from the Utility Fund operational budget to the Capital Improvement Fund to facilitate funding projects detailed in Attachment 1, Water Projects Summary.
Attachments:
1. Water Projects Summary
2. Resolution 2018-22