Butler County Times Gazette
  • New waterline for Augusta/One-cent sales tax to help fund line

  • Augusta City Council selects waterline route
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  • A new route was chosen for the water line to El Dorado Lake Monday night.
    That change will add at least $1.2 million to the project that is being funded by a 30-year one-cent sales tax and increases in prices for City of Augusta water customers.
    The council had chosen a similar path to the current water line when the project was first developed. That path travels through the HollyFrontier Refinery property and along railroad property. The original plan to replace that waterline got away from the railroad rights of way but still included going through refinery property.
    The new route travels down Highways 77 and 400. It adds 2.5 miles of pipe which is the cause of the additional $1.2 million approved Monday night.
    However, that figure does not include additional costs for rights-of-way as the city purchases an additional 2.5 miles of 20-foot right-of-way property.
    Willis Wilson of Aquatech Engineering Consultants said even though there is more land to purchase, his experience tells him land along highways is typcally less expensive, and with the proposed path, there are only 38 property owners to negotiate with instead of 50.
    “I’m curious, why was avoiding the refinery not included in the original list of priorities when we selected the path,” Mayor Kristey Williams asked.
    Gabe Gonzalez, who resigned a few hours after this discussion, told the council this change came from his office.
    “This line is going in the ground forever and, right now, we have a good working relationship with the refinery but placing the line there leaves it beyond our control and we are at their mercy if there is a break,” he said.
    Gonzalez said this new route gave the council a chance to invest the money now to avoid a long-term problem.
    Ward One Councilor Matt Childers asked if there was a way to get a cost-benefit analysis on whether those long-term problems are worth at least $1.2 million in upfront costs.
    Councilor Mike Rawlings said $1.2 million is a minimal cost over the 40-50-year life of the pipeline. He said he remembered from his years on the council and before doing repairs on refinery grounds was always difficult.
    “If we have these issues with the refinery, is there a record of the problems we have had? Why was this not considered before we passed the sales tax,” Williams asked.
    She then asked the council for a consensus on the route of the new water line.
    Councilor Jason Lowery said considering Rawlings’ comments and the fact there would be no accessibility issues, he agreed the new route was better.
    Councilor Matt Malone said this option was better in his opinion because after 50 years, the city will have recovered these upfront costs.
    Page 2 of 3 - The council unanimously agreed to add the costs and place the line along the new path which will cost $17.4 million rather than the original $16.2 million.
    Augusta one-cent sales tax to help fund line
    In November of 2012, Augusta residents approved a one-cent sales tax to help fund a new waterline to El Dorado.
    The recent drought revealed what a water supply study confirmed, Augusta needs access to a larger supply of water than is currently available.
    For most of the year Augusta has more than enough water. With up to 2.5 million gallons per day from El Dorado through existing lines, up to one million gallons per day more from the city lake and less than a million gallons per day from Santa Fe Lake, Augusta has more than enough supply for even its peek summer usage of just over 4 million gallons per day.
    But when one or more of those sources is compromised, water restrictions become necessary.
    In order to avoid that scenario that played out for more than two years before last summer’s heavy rains, the citizens voted to put in a new, higher volume line to El Dorado Lake to make that scenario far less likely.
    The city typically receives between $850,000 and $1 million per year on a one-cent sales tax. Because of the nature of the new sales tax, the city can only use 90 percent of the proceeds from the new tax to pay for the water line.
    It will take about $1.1 million per year to pay the financing on the new water line. Whatever isn’t covered by the sales tax will be funded by increases in water rates for Augusta’s water customers.
    Those increases to customers could have become larger Monday night when the Augusta City Council voted to change to route of the water line and incur, at minimum, an additional $1.2 million, increasing the amount the city finances. In addition to voting to increase the cost, because of the effects of a mini-boom in the oil and gas industry in the area, it is unlikely the bids for installing the lines will come in under estimate as materials and pipeline workers are at a higher demand than they were in 2012 when the estimate was first made.
    But it isn’t all bad news for Augusta residents and water distribution customers.
    Thanks to an improving economy and a new Super Walmart, the city’s sales tax receipts have expanded significantly.
    The new sales tax began being collected in April of 2013. Because sales tax revenue is usually reported two months after it is collected, (April receipts are reported in June, December collections are reported in February) the June 2013 report was the first one to show what impact the sales tax would have.
    Page 3 of 3 - In June of 2013, the city received $158,066 compared to just over $80,000 in June of 2012. That is what would be expected since the city had doubled its sales tax rates.
    However, July and August receipts were up significantly over 2012 numbers. In July, the city brought in $204,000 compared to only $73,556 in 2012. That is $57,500 ($28,750 per one cent sales tax) more than would have been expected. August’s numbers (from June sales) were almost $30,000 more than would have been anticipated.
    The new Walmart Supercenter opened mid-way through June.
    September and November’s numbers were each in line with what would have been expected. However, October and December numbers were each more than $25,000 ahead of expectations.
    A similar pattern is holding at the beginning of 2014. January was almost exactly twice January 2013 numbers. But February collections from December sales were about 35 percent higher than expected.
    The city received $273,000 compared with only $96,000 the previous year. That is more than $80,000 ahead of what could be projected.
    In eight months, the city has received $781,478 from the new tax. If those numbers hold through the next four months, Augusta is on pace to bring in $1,172,217 for the first year of collections.
    The 90 percent of that number that would be applied toward water line financing is $1,054,995 of the almost $1,100,000 needed to finance the project each year.
    The amount of the project not covered by the additional sales tax will be made up with a cost increase for water customers. The governing body has not determined how that increase will be applied or the amount.
    Kent Bush can be reached at kbush@butlercountytimesgazette.com.
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