Meeting Minutes
February 25, 2013

Attendees

Staff and Guests

Open Discussion

Personal Property Taxes

With regard to gun legislation, John said that we ought to toot the SAUSA horn right up the chain of command. This program has really worked as far as eliminating a lot of the gun crimes in the valley. Tom said he had talked to a legislator recently with regard to the SAUSA Program. The word was that we may get another $10,000 and it doesn’t look like we are going to get what we asked for. Tom continued, what is frustrating is that we can document that we have saved the State $14 million plus and they can’t come up with $100,000 to fund something that is working. Bill mentioned that Tom, Ross Borden and he had spoke recently with the co-chairs of JFAC and felt the meeting went well. It was his impression that they were going to do something but, how much more was anybody’s guess.

With regard to personal property taxes, Tom indicated he had talked with Chuck Winder and the impression was that it is going nowhere this year. It seems to be getting bogged down in complications and is getting pushed aside due to other things confronting the legislature this year. Things like the health insurance exchange and education bills are pushing this legislation to the side. Tom said that the Association of Idaho Cities and the Idaho Association of Counties is doing a real good job of educating the legislature on this topic. John added that given the fact that the State budget is tight, they would have a hard time coming up with $20 million let alone the big figure that IACI is requesting in order to overturn Personal Property Tax.

Garret said that he had been talking with Ken Harward with AIC and he mentioned three bills that we should be watching. They are H0160, H0104 and H0094.

Garret indicated that all three of these bills are potentially very harmful and have been introduced by the same legislator.

Ken had put together a meeting recently with Rep. Morse and had not heard the outcome of the meeting.

Larry pointed out H0193.

Garret indicated that Mike Moyle came to him and several others and tied all three issues together. His exact words were I am not going to let another dime go to counties. What said do you want the trac phone bill or leave the 911 fee in place? Do you want the trac phone bill or take the 911 fee back to 80 cents. He said this is a windfall and he is not going to let any more money come to the counties.

Wastewater Infrastructure Incentives

Bill Jaracki said he wanted to talk to the Partnership about something innovative that they have done with the City of Nampa. As everybody knows, the City of Nampa is looking at a massive upgrade to their wastewater facilities. This is going to be done over two phases. The first phase is about $28 million. The second phase will cost about $70 million when you add it all up. Nampa has to be concerned about tracking the progress and its effect on rate payers, especially industrial rate payers.

What they did last summer was look at the idea of how does the City interact with the district. How does the City create incentives for industrial expansion within the City? And how does the wastewater plant provide an economic engine? In the past, what has happened in the City of Nampa is the City Council has made arrangements with every user that has come in. It always comes down to the industrial user not wanting to pay the hook-up charges. It is also a necessary expense to compensate all the existing rate payers for what they have invested in the capacity of the system. Because we have done things in the past that have added precedent, the City has said, should we establish policies of creating a level playing field for anybody coming in that is expanding the system of the City.

What happened last summer is the City of Nampa put together what he feels is the most comprehensive policy on industrial incentives of any community in Idaho. He pointed to a handout which was an abridged policy the City Council adopted in September.

Basically what they did with this policy document was lay out the purpose of the wastewater plant and industrial customers, with the idea of tying economic development strategy to wastewater plant capacity. And then they laid out a bunch of concepts in the policy that provide guidance to the public works department as the City moves forward.

The guiding principles are that the incentive policy should complement the economic development policy. So if you are trying to have industrial expansion that is focused on high-tech, then your policy incentivizes that. The second thing is they wanted to create incentives that provide real value for industry. We have a major industry in Nampa that complains all the time about how the City doesn’t do them any favors what-so-ever. They try to negotiate an arrangement on rate fees that are an extreme detriment to the City. The City Council rejected the arrangement based on this policy being developed.

The third thing is we wanted to balance the costs and benefits to prevent the degradation of the financial integrity of the Wastewater Enterprise Fund. We want to provide the best service, for the most people for the longest period of time at the least cost. If you have industrial customers that are not funding their fair share, you have an unsustainable utility. That eventually catches up to you and you end up having to raise rates dramatically.

The City said, that if an industrial customer pays to reserve discharge capacity at the wastewater plant, they own it. Right now, if a company leaves the city, the city can take all that capacity back and sell it to somebody else. Under this policy, if a company has said we need to reserve an x amount of wastewater capacity, and have paid for that hook-up, they get to keep that. And they have some provisions for them to be able to market that right to discharge in the open market.

Garret asked if this is based upon strictly volume. The thing that is most detrimental to their plant is the consumption of biological. Bill said it is all the constituents.

Bill said that basically what the City of Nampa has done is create a situation where the City has excess capacity, they can loan this capacity to an industry up to two years. An industry will petition the City saying we would like to expand our operations and come to Nampa. The City will lend you capacity because we have excess capacity and we will do that for no charge. When the petition comes in, the City does a technical test to see if they can actually do it. Then turn it over to economic development department to see if this is a good deal for the City. What kind of jobs are going to be created and what are the wages on those jobs? At the end of the two years, then the company can buy that.

The idea is that if the City has excess capacity, why not use it and give it as an incentive to industry as long as they give us something in return, jobs….etc. The industry pays for the use, but do not pay for the hook-up charges.

The idea of Section F. Pretreatment and Voluntary Environmental Improvement Financing is tied to a piece of legislation that is included on the back. This RS21914 is sitting in the Revenue and Tax Committee right now. It is called Voluntary Environmental Improvement Districts. It is like and LID, and an industry could voluntarily request an Environmental Improvement District be formed to purchase the pretreatment equipment that increases the capacity of the wastewater treatment plant. The loading then is the capacity the City gets back. It reduces the company’s improvement costs and thus their operational costs. The financing terms are better than what they would already get. So the difference between financing the capital facilities for pretreatment and what they are paying for rates benefits the company.

The Council has a right under this policy to modify some of these terms.

One section he wanted to point out is section 7. There is an incentive they create called the Capacity Optimization Fee. It is extremely useful for any city that is coming up against its planning department. What happens with a municipality wastewater plant, if you come to 85% of your capacity, you are required by DEQ to begin the process of planning a new plant. What we are trying to do in Nampa is we are trying to operate the wastewater plant at 84.99 percent of capacity. The idea is if you stay under that 85% level you don’t have to build a new plant. So we create something called capacity optimization. The idea is you charge a company above the current level for any capacity they are not using. We want companies to operate at their peak discharge and we don’t want them to have a whole bunch of capacity above the peak discharge. So we look at their peak discharge and give them 15% above that. And anything above that 15%, you are paying us to maintain that program.

Capacity optimization is a tool that keeps a company from speculating on that excess capacity. They end up paying a premium to the city to sit on that capacity. Tom said, let’s take Simplot for example, they have paid to have a reservation on capacity that is huge. If they decide to give up on that capacity, are we required to pay them something? The answer to that is no.

Directors Report

Steve moved to approve the minutes and financial report. John E. seconded. Motion approved.

Bill mentioned in continuing his attempt to advocate for increased SAUSA funding, he had drafted a guest editor article for the area newspapers on the Project. He pointed out the letter and indicated it would be going to the papers the week.

The next meeting is being held on March 27 and will be hosted by Canyon County.

John E. asked if there was any objection to discussing the SAUSA project with the Congressional delegation when they are back east.

Meeting adjorned.