Woodland Hills Community Association Loan Application Public Hearing Minutes

December 14, 2011

In attendance were:

Randy Alexander - Woodland Hills Community Association (WHCA) president

Richard Helmstetter – vice-president

Carol Crozman - treasurer

Kathy Colasardo – corresponding secretary

Jim Stewart – recording secretary

Randy Alexander convened the hearing at 7pm. Randy introduced Ted Schultz from CETEC Engineering. Ted summarized the water system’s current condition noting our high water losses over the last few years. The lower part of the Woodland Hills water system was built in the 1970’s and the current pipe in the ground is at the end of its expected 40-year lifecycle. Ted outlined what the project would accomplish and the cost, $1,250,000. The WHCA board would apply for a 20-year loan from the state of South Dakota and repayment of the loan would add about $45 to $50 per month to each resident’s water bill. The amount of the rate increase would depend on the board being able to obtain grants and loan forgiveness.

Ted opened the floor to questions and comments from the residents.

Question: how likely are we to get the loan.

Blaise Emerson from the Black Hills Council of Governments explained that it would be quite likely given his experience in the past with these types of projects and applications.

Question: How did the board establish the rates?

The board recently raised rates to cover our operating expenses and the amount of a new increase would be commensurate with the cost of repaying the project’s loan.

One resident noted that our rates are high compared to other water systems in the area.

A question was raised about the source of the current water loss. Is the loss coming from leaks on the main lines? How often have the mains been repaired in the past 10 years? The members of the board cited three repairs to the main lines in the last 15 months but the board had not compiled statistics on the frequency of main line repair.

Terry Nelson requested the floor and spoke to his knowledge of the water system’s history having lived in Woodland Hills for 31 years. Terry stated that he thought the system was improperly built from the very beginning of the subdivision. He also added that our housing values could suffer if the system continued to fall into disrepair.

Another resident responded that our housing values could suffer if the water rates were too high.

Duane Berke spoke and asserted that the water system was built correctly because he was here when the pipes were installed. Duane also worried that from the project documentation that costs could come to an extra $100 to $120 per month Ted Schultz (CETEC) replied that the documentation had a table which illustrated project cost to rate hikes spread across the 104 accounts in the water system ranging from a project of $100,000 to $2 million. Because of that table the board had selected a project that would cost $1.25 million.

Doug Wahl asked Ted if CETEC would certify 100 percent no leaks if this project went forward. Ted said there could be no such guarantee because only part of the system was being overhauled.

Steve Darling asked about the wisdom of using meter pits, would they not be subject to freezing and that he didn’t know of any water system in the area using meter pits because of the winter temperatures. A couple of residents cited their knowledge of systems in South Dakota that make use of meter pits.

Mr. Berke asked if this proposal is final and could it be modified? The members of board replied that this proposal was the minimum needed to bring the oldest part of the water system into good repair. Each home would receive a

meter pit in order to help identify service line leaks much faster.

Another resident asked about the feasibility of just installing meter pits and detecting and repair leaks. That does not address the problem with current mainline pipe having reached its end of life. Blaise Emerson discussed that aging water systems are becoming a more common problem in the area and some subdivisions are repairing in stages. Perhaps it would be possible to repair small sections of the system but that delay could raise the final cost of the project goal: to replace the entire lower half of the water system.

Terry Nelson offered an opinion that loan rates are the lowest that he’s ever seen and that the board would be advised to get moving before rates start to go up.

A question of road damage and repair was raised. Does the project cost include road repair? Ted responded that road patching and chip seal was included in the cost. Another resident wondered how much damage heavy equipment would cause to the road? Ted replied that most of the time the equipment would be off the road in the ditch lines.

Sue Jones asked about who would inspect the work being done? Ted said the CETEC would be on-site to ensure the quality of the work but that CETEC would not oversee 100 percent of the work.

Would the proposed hydrants in the plan be sufficient for fire fighting? No, the system would be built with 4-inch pipe and would allow fire trucks to fill their tanks but that direct draw by a pumper truck would not be supported.

Discussion started on a suspected leak in the upper part of the system and would this project permit that leak to be detected and repaired? It’s possible the leak could be detected with the residential meter pits. But the expectation of the board is that an upper system leak would be found and repaired in early 2012 when the weather warms up. That kind of repair would be part of the regular operation and maintenance of the system under the current rate structure.

Discussion of the meter pits resumed and a question was raised on how the meters would be read. Ted explained that a digital read out could be pole-mounted above the pit and each resident would read his or her meter monthly as is done now. Optionally the water system operator could use a radio read and each resident would be billed monthly. Some residents objected to the perceived cost of that method.

Doug Wahl raised the question of default. What happens if the system is unable to pay the loan? Dale Hansen, legal counsel for the WHCA board, replied that in the event of a catastrophe, such as a fire wiping out 80 percent of the homes, the state could possible forgive the loan. Dale explained that no homeowner is legally responsible for the debt. The load repayment is an obligation of the water system.

Mr. Hansen then explained that it was his opinion that the residents should form a sanitary district and he briefly explained how that is done. The sanitary district operates under established state law as compared to the operation of a non-profit board as the WCHA is today. Mr. Hansen advised that he would not be inclined to sign off on a legal opinion supporting a revenue bond issued by the WHCA. Forming a sanitary district would result in a six-month or greater delay in starting the water project.

There was a lot of discussion and cross talk among the residents regarding the sanitary district idea including a suggestion that Woodland Hills incorporate. Blaise Emerson offered his opinion that incorporation would not be very useful for the water project.

When that discussion concluded the board asked the residents to indicate if they were in favor or opposed to proceeding with the loan application. The board would convene another public meeting of the residents before accepting the loan obligation.

By a show of hands and including proxy notes from residents unable to attend, 36 residents were in favor and 12 were opposed.

The hearing was adjourned at 9:02pm

Submitted by Jim Stewart, Recording Secretary, WHCA.