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The US Highway 280
Water Project
April, 2004
Dear Chelsea Neighbor:
In addition to a large debt for the new city hall, city officials have incurred an even larger debt burden for us in order to construct a water project along Highway 280. The attached gives some questions and answers about this project and related matters. I hope that you will find the information to be thought provoking and a matter of concern.
We wish to take this opportunity to express our thanks to all of those who have responded to our previous mailings. Your expressions of support have been most encouraging. We will continue to endeavor to help you become better informed about matters in Chelsea that affect our quality of life, our well being and our pocket books.
We also wish to respond to questions received about our motivations in forming Chelsea Voters for Better Government and in preparing and mailing the newsletters. Wayne and I are doing these things as a public service. We are concerned about our city, and we hope that others will share this concern. We wish to help citizens become well informed about conditions in Chelsea; and we encourage them to be willing to serve as elected officials. For those interested in running for mayor or city council, we have some information that will be helpful. We will be glad to supply copies upon request.
Public notice of the election to be held on August 24 must be posted on July 6. Once notice is posted, candidates may begin qualifying. Qualifying forms should be available at City Hall. The last day a candidate can qualify to run for municipal office is July 20. Each candidate must specify which position he or she is running for; and they run against only those other candidates who have selected the same position. The persons presently holding the council positions are as follows:
Position #1: Richard Conkle;
Position #2: John Ritchie;
Position #3: Doug Ingram;
Position #4: Jimmy Lovvorn;
Position #5: Earl Niven, Jr.
Thank you for this opportunity to share information with you and your family.
Sincerely,
Juanita J. Champion
Treasurer
TOPIC:
THE US HIGHWAY 280 WATER PROJECT
In March, 2003, the City of Chelsea entered into a contract with the Westover Water Authority whereby the city would build a water tank, install equipment and place a water line along US 280. Below are critical questions and answers dealing with this project and how it can affect the residents of the City of Chelsea.
Question: How much money was borrowed for the project? Answer: $3.2 million.
Question: How was this money obtained?
Answer: In June, 2003, the $3.2 million was borrowed using a warrant. (As with the $2.08 million borrowed on a warrant for the city hall, this made it unnecessary for city officials to secure the approval of citizens in order to put the city into this debt.)
Question: How much will it cost to pay off the $3.2 million for the water project?
Answer: With annual payments until 2018 of approximately $284,000 (except for the first two years when only interest is due), it will cost $4,484,165.
Question: Was the decision to borrow the $3.2 million based on an independent analysis made to determine the economic impact of the water project and the loan on the city?
Answer: No such analysis was publicly presented when the borrowing was approved by the mayor and city council.
Question: What happens to this water system after it is completed?
Answer: The contract requires Chelsea to give ownership of it to Westover Water Authority.
Question: What will Chelsea receive in return?
Answer: Westover Water Authority agreed to give to Chelsea the $1000 tap fee after each connection to the water line for up to 15 years. (For Chelsea to be reimbursed in full for its expense will require 4,485 tap fees. Will this happen within 15 years? Not likely.)
Question: Will the project be self-supporting from tap fees, building permits and sales taxes on building materials?
Answer: Not likely. (By our calculations, available upon request, developers will need to build and sell 114 homes every year for 15 years, at an average sales price of $185,000 per home, for the city to receive enough revenue from these sources just to cover the annual debt payments.)
Question: If this is the case, who then pays for their share of other city expenses such as fire and police protection, road maintenance, city operations and maintenance of city property?
Answer: The rest of us must pay for them.
Question: Was tap fee revenue projected in the budget for the present fiscal year?
Answer: Yes, $54,000.
Question: Will this revenue be received?
Answer: Not likely since development of Chelsea Park still is only in the earth moving phase, and this fiscal year ends on September 30. (Regardless, the $112,995 interest on the loan still must be paid. It will have to come from general funds.)
Question: What else does the contract contain?
Answer: It requires that the city secure prior approval of engineering and construction contracts from Westover Water Authority.
Question: Has this been done?
Answer: Apparently not.(On April 2, 2003 the City of Chelsea entered into an engineering contract which had not been approved by Westover Water Authority.)
Question: What was the result of this failure on the part of city officials?
Answer: On June 9, 2003, Westover Water Authority passed a resolution not to reimburse Chelsea for the cost of the engineering contract. (The amount of this contract was approximately $274,000.)
On March 29, 2004, there was an article in The Birmingham News entitled “Westover may act as conduit for bond”. It described how the Town of Westover would assist in the securing of funds for a large sewer project at no financial risk to their town. If Westover can do this for a sewer project, why could not Chelsea have done the same for the water project instead of incurring the present, large, long-term debt?
ADDITIONAL FINANCIAL INFORMATION
|
Payment
Owed For |
Amount
Owed |
Annual
Payments |
| SC 39 park land |
$221,727
|
$22,878
|
| City hall land |
$672,879
|
$61,218
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| Lot 7, Foothills |
$452,751
|
$42,550
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| City Hall |
$2,080,000
|
$181,000 avg
|
| Water Project |
$3,200,000
|
$283,878 avg
|
| Total as of 09/30/03 |
$6,627,357
|
$591,524 avg
|
After the payment of these annual debt charges, there still are many expenses that must be paid by the city. These include operating the Fire and Rescue Department, maintaining non-county roads, paying salaries, and keeping up city property, including the new city hall.
Paid political literature by Chelsea Voters for Better Government
60 Chelsea Corners, PMB 111, Chelsea, AL 35043, Juanita J. Champion, Treasurer
Submitted by...
Juanita Champion
Posted 05/17/2004
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