Frequently Asked Questions

Welcome to the Shady Cove Municipal Water System Frequently Asked Questions Date Released: 7/6/12 The purpose of this document is to provide a list of frequently ask questions (FAQ s) relating to the proposed Shady Cove Municipal Water System. These questions come directly from you as you endeavor to understand the critical importance of such a system to the current and the future needs of your City as well as the direct impact upon you and your family. The responses to your questions are based on current FACTS. As the process moves along, updates will be made to hopefully keep all of you thoroughly and accurately informed. Many of the current responses are taken directly from the Water Master Plan Update - 123 Pages which can be accessed in its entirety under the WATER SYSTEM link within the City of Shady Cove web site. If you have questions that are not on this list, please email them to waterinfo@shadycove.net and we will do our best to respond to you within a couple of days. The following FAQ s are based upon some of the many questions we have received thus far. They are in no particular order and will be numbered only to provide a reference designator as the FAQ list grows. Questions which cannot be answered at this point will be shown in red as a reminder that further information is required in order to provide an accurate response. 1. Why do we need a municipal water system and why now? Need:. Shady Cove sits in a Wildfire Hazard Zone We need water for fire protection.. Many citizens are purchasing water and others experience water quality problems.. Economic vitality is threatened. New businesses are hesitant to locate in Shady Cove, and existing businesses are hesitant to invest for the future.. Our source of groundwater is located in a fractured rock aquifer, which provides abundant water to some, and nothing to others. Plus it provides very little storage.. Jen Woody of Oregon Water Resources Department states that the water table is showing long term signs of lowering, compounded by the impact of seasonal variations of snow pack and rain. 1

. Groundwater and wells are an exempt use under state law; therefore, the city cannot stop new wells from being drilled, or impose a moratorium on new building.. According to Larry Menteer, Jackson County Watermaster, any new well may have an adverse impact on wells, far from the site of the well due to the nature of the fractured rock aquifer. Opportunity:. Interest rates are at historic lows, therefore; the cost of borrowing is favorable.. State and Federal officials are supportive and willing to help with the project.. Grant money to help with the project may be available.. Water for municipal use is currently available from Lost Creek Reservoir. Reality:. Other cities are looking at the available water for municipal use from Lost Creek Reservoir.. Interest rates will most likely rise along with construction costs in the future.. Money to loan from Federal and State sources may not be readily available in the future. 2. How long will it take to build the system? Current construction estimate is 3 to 5 years after project construction start-up. Could be shorter based upon the final engineering. 3. Will I have to stop using my well? No. Per the Water Master Plan (WMP), page 4-3, par 4.3.1, well owners will have the option of keeping their wells in addition to connecting to the new system. A backflow prevention device would be required to be installed by the owner. Also see FAQ #14. 4. Will my fire insurance premium be reduced? Per the Pre-Iso Evaluation study prepared for Fire District #4 (Shady Cove/Trail) dated January 2001 by Emergency Services Consulting Group, page 23, based on a $200,000 home within 1,000 ft of a city fire hydrant, a survey of five nationwide insurance companies indicated insurance savings ranging from $86 per year to $144 per year with a median savings of $117 per year. Commercial properties could incur much greater savings. Actual savings must be determined by your insurance carrier. Also see FAQ #19. Also see FAQ #29. 5. What is included as the service connection from the City s main water line to the user property? 2

Per the Water Master Plan (WMP), page 5-15, par 5.4.8, service connection includes a 50 LF service line allowance, a meter and a meter box. Also see FAQ #24. 6. My well is ok and doesn t cost me any money. Why would I want to pay for something I already have? Your well is not free. Costs actually include periodic testing, electrical power to run the pump motor, maintenance on the well pump, pump controls and motor in addition to the possible cost to re-line or otherwise keep your well in operating condition. Further, the reduction or loss of acceptable well production may require a new well or a deepening of the existing well. Also consider what happens if there is a power outage if a backup generator had not been installed. And, your water source, the fractured rock aquifer, is not a guaranteed source of water. 7. What parts of Shady Cove will be covered by the new water system? A requirement of the lending agencies is that the entire City be included and connected to the new system. 8. How much will a new water system cost? Per the Water Master Plan, page 5-16, Table 5.3, Phase 1 is estimated at $10,267,655; and page 5-17, Table 5.4, Phase 2 is estimated at $10,648,334 for a total system estimate of nearly $21 million dollars for a City-wide system. 9. How will we pay for the new system? The system will be paid for through a combination of general obligation (GO) bonds, grants, loans and user fees. 10. How much will it cost me? This is normally the 1 st question asked, but unfortunately, it is usually the last question that can be answered accurately. Final engineering design and available funds from lending agencies will dictate the costs and how they re recovered. Also see FAQ s #15 #27. 11. When would we vote on this system? The vote would be taken during the November 2012 election if we have sufficient information available to place it on the November ballot. The final decision must be made by August 8, 2012. The next election opportunity would be in May 2013. See FAQ #26 for decision. 12. Will the water have to be treated? 3

Water treatment will be in accordance with Department of Health Safety (DHS) requirements. Fluoride treatment is not dictated by DHS. 13. What will happen if this system is voted down? We will continue to use an unreliable source of water via the multiple wells located throughout the City and suffer from the lack of easily available water via fire hydrants for fire protection. The impact was clearly identified in a report by Jen Woody, Hydrogeologist with the Oregon Water Resources Department and Larry Menteer, Jackson County Watermaster. 14. Do I have to hook up to the new water system? Lending agencies must be assured of the financial viability of the overall system which also must be in compliance with state and federal requirements. Per the Water Master Plan, page 3-3, par 3.4, connection to the water system will be mandatory. However, referring to FAQ #3, well owners will have the option of keeping and using their wells in addition to connecting to the new system. 15. How will the monthly water rates be set? A formal Rate Study will be conducted by Rural Community Assistance Corporation (RCAC) to determine the rates. Normally such a study is based on past history taking into account water usage and O&M (operation and maintenance) costs. However, this first rate study will be based on the estimates presented in engineering documents, lending agency inputs and upon RCAC s professional recommendations. The rates may also include a portion of debt service. After the first year of operation, rates may be adjusted based upon actual usage & O&M data. The first rate analysis information should be available the beginning of June 2012. Also see FAQ s #10 & 27. 16. We are on a private community water system using one or more wells. How will the new municipal water system affect us? As stated in FAQ #14, hook up to the new water system is mandatory. In addition, Water Master Plan, page 5-15, par 5.4.8 indicates that no budget has been included in the plan to purchase the small, private water systems. There has been some discussion regarding the connection of the municipal system to the private systems using master meters. In this instance, the private systems infrastructure would remain and be used for the distribution and individual metering. However, the final engineering study and recommendation is yet to be completed. Also see FAQ #33. 17. What happens to our water supply if there s a power blackout? 4

Per Water Master Plan pages 5-12 and 5-14, par 5.4.3 and 5.4.6, each booster pumping station and the treatment plant will be equipped with an emergency power generator to provide emergency power in the event of a power outage to insure a continued supply of water to the users. 18. Has a final decision been made on the purchase of Shady Cove Waterworks assets? No. However, PremierWest Bank is making a presentation on the subject to the City Council at a Special Meeting on 3/22/12. Outcome will be covered in future FAQ s. See FAQ 28 and 30. 19. Water for fire protection is critical. How many hydrants would be installed within the city limits? Per the Lee Engineering Study, approximately 167 hydrants are proposed and spaced at approximately 500 feet apart. Normally to be considered for a fire insurance reduction, the user must be located no more than 1,000 ft from an active hydrant and be within 5 miles from the fire station. Also see FAQ #4 and #29. 20. What is the difference between a General Obligation (GO) Bond and a Revenue Bond? Per ORS 288.150 (5), a GO Bond is a bond including a credit agreement, which is a full faith and credit obligation and which is payable from property taxes. A Revenue Bond, per ORS 288.805 (6), is a bond issued for any public purpose, which is secured by revenues either pledged or designated to be payable for such public purpose of the public body. In short, a GO Bond is paid by property taxes and a Revenue Bond is paid through monthly user fees as debt service. 21. What is an EDU? An EDU, Equivalent Dwelling Unit, is a unit of measure for water systems and for wastewater systems to estimate as accurately as possible anticipated usage and revenue expected. EDU s are also used for the design of system infrastructure. Each single family residence has an EDU of 1. Muti-family residences and non-resident facilities would have an EDU which is a ratio of what that facility is expected to use versus the anticipated usage of a single family residence. In short, it is an attempt to level the playing field among various types of water users. The history of actual usage will be used to determine EDU s for multi-family residences and non-resident facilities. More on this subject is covered in the Water Master Plan, page 2-3, par 2.4. 22. What kind of system life can be expected before major repairs? 5

Per the Water Master Plan, page 2-1, par 2.1, municipal treatment and pumping equipment is typically designed for a minimum of a 20-year life. Many elements of the system can be expected to last well beyond 20 years, such as 50+ years for pipelines and 40+ years for tanks. Bill Pavlich, project engineer with HGE, indicated on 6/1/11 that mechanical equipment such as pumps last 10-20 years, treatment plant membranes for 7-10 years and pipelines can last up to 100 years. Attentive preventative maintenance (PM) can prolong facility and equipment life. A reserve fund will be established to cover any major problems. PM s will be covered as part of the O&M (operation & maintenance) fees. 23. Why not install just a fire suppression (hydrant) system? The majority of the cost for a municipal potable (drinking water) or nonpotable (fire suppression water supply only) system is the engineering, permits, construction and installation of the infrastructure (pipes in the ground), pumping and water storage. Since the treatment plant is a relatively small portion of the overall system, it is economically prudent to get the whole package, drinking water and fire suppression water supply, in one cohesive system. In addition, the lending agencies that are currently being worked with will not lend funds only for a non-potable fire suppression system. They are interested only in a city-wide water system that will benefit all of its citizens with drinking water and a fire suppression water supply. 24. Per FAQ #5, a 50 LF (lineal feet) service line allowance is part of the Master Plan. But many lots are quite large and some distance from the meter box and meter. How can we get this allowance increased? If not increased, this could be an extreme financial burden for some of the property owners. As previously mentioned, per the Master Plan, page 5-15, par 5.4.8, the estimated system cost includes a 50 LF allowance. To increase this number will increase the overall cost of the entire water system, an increased cost which will have to be paid by all. The final decision must be made by the City Council, and they would so direct the Engineer to make any adjustment. 25. How will a resident along James Place hook into the water system? Referring to Master Plan, Figure 5.5, a distribution line does not extend from Rene Dr into the James Place area to service addresses 29, 31, 33 & 35. This must be addressed during final design. 26. Update to FAQ #11 Based upon apparent currently available funds at an extremely attractive interest rate, the vote on this system will occur on November 6, 2012. 6

27. Cost data will be available the end of July 21012. In order to insure the most accurate information possible, cost data will now be available the end of July. This additional time is required for the Engineering Project Scope & Cost Analysis as well as the Rate Study Analysis. 28. Clarification regarding Shady Cove Water Works. (See FAQ #18 & 30) Shady Cove Water Works will not be purchased as an existing business. However, some of its assets might be beneficial for the new municipal water system such as pipes already in the ground and other infrastructure. Discussions are continuing regarding the purchase of assets which are deemed potentially cost effective by our Engineer. 29. Further information regarding fire / hazard insurance. (See FAQ #4 & #19) Most insurance carriers use the ISO (Insurance Service Office) rating when establishing fire/hazard premiums. A rating of 10 is terrible; a rating of 1 is superior. Currently Shady Cove is rated at 8a for residential properties and at 9 for commercial properties. It is anticipated that Shady Cove can attain a rating of 6 for both residential and commercial properties with the municipal water system. On 5/12/12, Hart Insurance provided us with a study showing the following examples of potential premium savings for various insured values: RESIDENTIAL PROPERTIES COMMERCIAL PROPERTIES $217,000 15.4% Masonry Restaurant 26.7% $267,000 18.9% Mini Storage Masonry 43.2% $300,000 18.5% Hotel Frame 23.6% The actual savings must be determined by the property s carrier. 30. Further information regarding Shady Cove Water Works. (See FAQ #18 &28) Additional discussions have occurred with the Bank; however, they have indicated that no decisions can be made until November 2012 at the earliest. Consequently, at this point, all further project planning and costing will be based upon refinement to the Water Master Plan, Alternative #1 which excludes any and all parts of Shady Cove Water Works. 31. Will the City water come from wells? Will that affect my well(s)? 7

The water for the municipal water system comes from Lost Creek Lake via the Rogue River. Wells will not be affected. 32. We are on a private community water system. If, according to FAQ #16, we are connected to the municipal water system via a master meter, two questions: 1- how do we get fire hydrants in our community? 2- Who pays to have our individual meters read and who handles individual billing? As stated in FAQ #16, the final engineer study and recommendation is yet to be completed. 33. Describe the makeup of the main line to be installed down Hwy 62 north of the bridge in conjunction with the ODOT project. This must be more than just laying a pipe down Hwy 62. Per the Water Master Plan, page 5-3, par 5.2, the large diameter transmission/distribution main that runs along Hwy 62 will provide fire protection for the area served, which includes the school, the commercial core, and most of the larger buildings in Shady Cove. In addition and per FAQ #5, the Water Master Plan, page 5-15, par 5.4.8, service connections includes a 50 LF service line allowance, a meter and a meter box for each connection. Also, per the Water Master Plan, page 5-15, par 5.4.8, Pipelines include hydrants (generally spaced at 500 feet intervals and/or at key locations) and valving. These are not depicted in Figures 5.1 5.6. The main transmission line must obviously include all materials and equipment to satisfy these requirements and phasing of installation will be in accordance with best engineering practices. 8