December 12, 2022

The Common Council of the City of Valparaiso, Indiana, met on Monday December 12, 2022 at 6:00 p.m. in City Hall. Councilmember Schmidt called the meeting to order. The Pledge of Allegiance was said. Present were Councilmembers Reed, Cotton, Schmidt, Pupillo, Peterson, Anderson, and Costas. Mayor Murphy was absent.


MOTION: Councilmember Reed moved to adopt minutes of the November 28, 2022 meeting. Councilmember Peterson seconded the motion. Upon voice vote the motion passed with a 7-0 vote.

ORDINANCE NO. 29, 2022


Councilmember Reed moved that Ordinance No. 29, 2022 be read a first time and considered on first reading. Councilmember Peterson seconded the motion. Clerk-Treasurer Taylor read Ordinance No. 29, 2022.

Steve Poulos did a presentation on the process over the next 12-18 months for new production wells. He was joined by Andy Mouser of Baker Tilly and on Zoom was Attorney Dennis Otton. Over the next year he will be before the Council presenting rate cases for water and waste water based on operational needs. Tonight he will cover the specific purpose of Ordinance No. 29, 2022. A brief history of Phase I and how it evolved to the Phase II water plan. Current rates. Financing with the help of Andrew. He will provide a recommendation and will answer questions. Utility operations are very capital intensive. They are a 24/7 operation that utilizes many assets to provide high quality water service. With all the systems they manage they meet and exceed environmental standards on a daily basis. They identify infrastructure needs. This is done by age, risk of failure, consequence of failure, operational effectiveness of process units, regulatory requirements, thus meeting environmental requirements. Once those studies are complete they hire consulting engineers to design new processes and upgrades. While they are being designed, they have already met with the rate consultants to determine the operational needs for the utility. Not only for today but for years to come. They determine the capital needs for the community, the cost associated with both, and eventually determining the net effect to the rate payer. Stake holders are involved to educate them as part of the process so they have a true understanding and appreciation of the utility service. On both sides of the utility there are needs – water, waste water and pipe in the ground. One Third of the pipe in the ground is over 50 years old. The specific purpose of Ordinance No. 29, 2022 is to proceed with $23 Million Dollars’ worth of water improvements with the intent to move this year just on Phase II of four production wells. The rest of the project as Phase III will be in 2024. The Ordinance provides the ability to issue bond anticipation notes not to exceed $6 Million Dollars to cover the cost for the engineering contract of $2.3 Million and construction of four production wells is estimated around $5 Million Dollars. The choice of drawing on Bond Anticipation Notes is at the discretion of the Utility Board.

As part of Phase I a focus group was assembled. There was a comprehensive overview of the water system. They listed all the pros and cons of water sources that were identified. They went over the estimated capital

cost and the net effect to the rate payers. At that time a decision was made to stay with ground water with the understanding this was a 15 year solution. As part of Phase I they constructed eight new wells to replace the aging airport wells, five miles of transmission line, upgrades to the airport plant, and additional water storage of 2 Million gallons. That was an $18 Million Dollar bond issue.

They would like to move forward with Phase II of the construction of four new wells. This is part of the strategic plan to replace aging wells at Flint Lake. An issue with Phase II will be supply chain issues. Lead time on components ranges from six weeks to 40 weeks. They really do not want to wait for the complete water design to be finalized a year from now and delay the construction of these four wells for another two years.

The average daily demand over a 12 month period is 5 Million gallons per day. The well capacity is between

8.4 and 8.98 Million gallons per day. When designing, you have to assume your largest well is out of service. Therefore, your firm capacity is 7.4 to 8.0 Million gallons. You never want that number to be lower than your daily maximum demand. This averages about 7.0 Million gallons per day during the summer months.

The last utility rate was imposed by this body in 2013. It was a three phase increase. The last time a citizen saw a raise was 2016. Valpo’s rate of $72.00 per month is below the State average and has historically been in the middle of the pack.

The Utility needs to hold approximately $5 Million in reserve to meet obligations. He recommends and the Utility Board Agreed as part of a bond resolution, to make a recommendation to the Council that it would like to move forward more expeditiously on the construction of these four wells. Because of that the Board wants the flexibility to sell bond anticipation notes not to exceed $6 Million Dollars to pay for the water design of $2.3 Million Dollars and the construction of up to four wells to maintain the current reserve level.

Andy Mouser – Bond Anticipation Notes are a great tool to use when they are used as part of a larger $20-$25 Million Dollar project. For this project they anticipate 2-3 years of borrowing. This will keep interest rates down and give the City time to get the long-term financing ready to go. They will look to local banks for this financing. Bond Anticipation Notes can be done on a draw basis. These funds can be used for any preliminary project costs as well as preliminary engineering costs. There is no need to raise rates to pay for Bond Anticipation Notes. It is only payable from future financing. There is no additional security that is pledged.

Steve Poulos added the recommendation is to proceed with Ordinance No. 29, 2022 at the next meeting.

Councilmember Costas – He is curious why some of the communities in Lake County that are the size of Valparaiso are a lower rate.

Steve Poulos – Every community is different with different circumstances and priorities. One thing that makes a difference is how aggressive they are on their aging infrastructure. Valparaiso is one of the first communities to have an aging infrastructure component built into the rate. Valparaiso has old pipes, and the cost of infrastructure is very expensive. Some of the larger cities have higher rates because they have had agreed orders and consent decrees imposed by the EPA regarding CSOs and flooding and basement backups. The rate payers are now burdened to pay those significant infrastructure needs. Valparaiso has met their CSO requirements with the State of Indiana based on expanding the treatment plant and being strategic with sewer separation projects throughout the City.

Councilmember Costas – Is it more cost effective to drill wells versus getting water from another source?

Steve Poulos – In 2013 they did an analysis to decide if they were going to stay with ground water or look at lake water or a combination of both. At that time they wanted to stay with the City’s own ground water system. The rate increase at that time would have been three times what they were proposing. As the City grows there needs to be conversations regarding additional water sources.

Councilmember Cotton – There are demands placed on our water supply from a few entities. One is Pratt. He wonders if there could be an impact fee. The additional capacity might be a benefit to these larger industries. So he would like to see in the rate making process that consideration is given to applying impact fees. This is something the unappropriated ARPA funds could be used for.

Councilmember Pupillo – With the addition of the new wells, does this provide additional capacity or keep us where we are?

Steve Poulos – This will add 1-1.2 Million gallons. Wells fight against each other if they are too close to the aquifer. This is why they need to have the discussion regarding water sources. Wells will decline over the years. It is not that the aquifer is running low, it is the mechanical aspect of the wells.

Councilmember Pupillo – How long until this needs to be looked at again?

Steve Poulos – Approximately 5-10 years from now. Phase III is looking at more sources for water than just the four additional wells.

Councilmember Cotton – How is the sustainability of the aquifer determined?

Steve Poulos – The aquifer in Valparaiso is sustainable because of where the wells were placed and they are monitored daily.

Councilmember Reed – Do any customers pay an impact fee?

Steve Poulos –No. They do pay a tap on fee on the sewer side but not on the water side. He is looking at a system development charge for new developments. As of this month Pratt has installed a water reclamation system. This will result in a 30% to 40% reduction in water usage.

Councilmember Schmidt – With the City having old pipes, what is the current maintenance cost? Will the new wells affect that cost?

Steve Poulos – In 2013 they built in a financial system where money was set aside to replace old pipes. Costs have gone up and they are looking at increasing that bucket of money.

MOTION:Councilmember Reed moved to carry Ordinance No. 29, 2022 to the January 9, 2023 meeting. Councilmember Peterson seconded the motion. The motion passed with a 7-0 voice vote.

ORDINANCE NO. 30, 2022


Councilmember Reed moved that Ordinance No. 30, 2022 be read a second time by title and a third time in full and be considered for adoption and the opportunity be given for the offering of amendments. Councilmember Peterson seconded the motion. Clerk-Treasurer Taylor read the Ordinance.

John Seibert addressed the Council. It is a safeguard in case they need to cover expenses. If they do not use it, it goes back in the General Fund. This appropriation is requesting to spend money they have created.

Public Hearing:

Councilmember Schmidt announced Ordinance No. 30, 2022 requires a Public Hearing and presented Proof of Publication that at tonight’s meeting the Council will consider the appropriation of $40,000. Seeing no one wishing to address the Council, Councilmember Schmidt declared the Public Hearing closed.

MOTION: Councilmember Reed moved to adopt Ordinance No. 30, 2022. Councilmember Cotton seconded the motion and so approved with a 7-0 vote.

ORDINANCE NO. 31, 2022


Councilmember Reed moved that Ordinance No. 31, 2022 be read a first time and considered on first reading. Councilmember Peterson seconded the motion. Clerk-Treasurer Taylor read Ordinance No. 31, 2022.

Andy Mouser of Baker Tilly addressed the Council. Tonight is step 2 in the process. Ordinance No. 31, 2022 is appropriating funds and Ordinance 32, 2022 is the General Obligation bonds. There are three means of financing that are being used for this project. Two are through the RDC and the General Obligation Bonds.

Tonight’s Ordinance is the appropriation Ordinance. A Public Hearing on the appropriation will be at the January 9, 2023 meeting. The appropriation is in the amount of $27 Million Dollars. The General Obligation bond approves financing for Memorial Parkway in an original principal amount not to exceed Five Million Eight Hundred Fifteen Thousand Dollars ($5,815,000.00). It is a tax neutral bond. The interest is not to exceed 7% and the term is 20 years.

Councilmember Cotton – What will the debt service be?

Andy Mouser – The total debt service on the bond should be around $500,000-$600,000 per year.

Councilmember Cotton – He is trying to determine what the current debt ceiling is. He thought you take the aggregate assessed value, divide that by 3 before adding 2%. He would like to know if that is correct.

Andy Mouser – The formula he is using is correct. The RDC and Park have their own boundaries. Councilmember Cotton – How can you keep the interest below 7%.

Andy Mouser – They constantly monitor the market. Councilmember Costas – Are these taxable bonds? Andy Mouser – They are tax exempt.

Councilmember Costas – Are the bonds rated? Andy Mouser – They expect to rate them.

MOTION:Councilmember Reed moved to carry Ordinance No. 31, 2022 to the January 9, 2023 meeting. Councilmember Peterson seconded the motion. The motion passed with a 7-0 voice vote.

ORDINANCE NO. 32, 2022


Councilmember Reed moved that Ordinance No. 32, 2022 be read a first time and considered on first reading. Councilmember Peterson seconded the motion. Clerk-Treasurer Taylor read Ordinance No. 32, 2022.

MOTION:Councilmember Reed moved to carry Ordinance No. 32, 2022 to the January 9, 2023 meeting. Councilmember Peterson seconded the motion. The motion passed with a 7-0 voice vote

Community Update

Attorney Patrick Lyp presented an update on the Public Nuisance Ordinance. He has been working with the Valparaiso Police Department. There are a few complexes where they have problems. He has sent letters to landlords. They have been cooperative and taken action. The necessity of police interaction is down.

Councilmember Anderson reported on the Opioid Settlement. The City is expecting to receive approximately

$240,000. Some of the funds are restricted and some are unrestricted. The Council allocates the funds. He is putting together an Opioid forum to do a presentation to the Council. This will involve the schools, courts, rehabilitation industry and others that can shed light on the Opioid situation in the area.

Councilmember Cotton – He feels this is a countywide problem and he would like to have other entities involved.

Council Liaison Reports

Councilmember Reed reported the next School Board meeting is December 15th. This meeting will be held in the VHS cafeteria.

Councilmember Cotton again congratulated the Utilities for the many awards they have received.

Public Comment

Walt Breitinger – 608 Academy. He thanked Steve Poulos for the presentation tonight. He also thanked him for protecting the water. He discussed many instances over the years of protecting water. He thinks building the wells needs to slow down and consult with scientists not just developers.

Mary Abraitus – 605 Yellowstone. She presented pictures of accidents on Yellowstone. She requested that Yellowstone have signs re-installed for No Through Trucks. This has impacted the safety of residents and small children. She is hopeful to learn what progress is being made.

Barbara Domer – Yellowstone. The No Through Truck signs on Yellowstone were up for over 27 years. This is an increased safety risk. She has petitioned to re-instate the No Trucks on Yellowstone. The road is in terrible condition. She contacted the County and they deferred to the City. She has sent emails to Evan and Casey and has not gotten a reply. Mike Jabo said he would do a traffic study. She doesn’t want a study; she wants the signs. Why is Harrison a No Through Truck street? She feels the citizens on Yellowstone are being targeted. She demands the signs be reinstated. She wants a public explanation of why the signs were removed on Yellowstone and a public explanation of why Yellowstone is used by the City trucks.

Cedric Northern – 2018 Double Eagle Lane (before evicted). He has emailed City leadership and received no response. The City has done nothing for him. The City is responsible for his injuries and health issues.

Attorney Lyp – He has talked with Cedrick in the past. He has advised City leadership to not respond to Cedric because he has threatened to sue the City. He has received his emails. Some of theme are very offensive. He has asked Cedric to keep pictures off his emails.

Cedric Northern – He asked if the City owns Valpo LLP. Is the City Council doing anything about mold in apartment complexes?

The meeting adjourned at 7:24 p.m.

/s/ Holly Taylor, Clerk-Treasurer

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