PRESENT: Mayor Jepsen; Council Members: Jerri Sly, Kay Robinson, Skip Matthews; Police Chief: Doug Rathbun; City Attorney: Michael Mills standing in for Bill Kuhn; City Manager: Gerald Breazeale; Planning Commission: Tom Sly

ABSENT: Councilors Loretta Nairns, Mike McGuire, City Attorney Bill Kuhn, Public Works Director Dave Winters.

VISITORS: Dan Michael, Midge Michael, Connie Pappas, Tom Fritz.

(Unless otherwise noted, "MOTION CARRIED" indicates all in favor.)

1.GENERAL BUSINESS

A) Call to Order. Mayor Jepsen called the meeting to order at 7:02 PM.

B) Pledge of Allegiance. Mayor Jepsen led the Pledge of Allegiance to the Flag.

1. Announcements - Mayor Jepsen stated that the City Council had been in a meeting regarding the

1. Approval of the Minutes of April 12, 1999. Motion by Jerri Sly to approve the minutes, Second by Skip Matthews. MOTION CARRIED Abstaining, Tim Van Cleave since he had not been at the last meeting.
1. Report from Planning Commission - Deborah Kendrick stated that she had not been at the last Planning Commission meeting and did not have a report.
7. Correspondence - Mayor Jepsen stated that there was some correspondence that should be discussed and asked City Manager Breazeale to report on the correspondence from Hayden Family Dentistry. Breazeale stated that he had been contacted by the dental office regarding the City owned lot on Main Street between the Post Office and the Shoe Box Store. The dentists are interested in building a dental office on the now vacant site and were inquiring from Council if the lot could be purchased. The dentists have indicated that they would build a structure that would be in keeping with the existing downtown environment. Breazeale explained that one of the pros of selling the property would be that there would be new downtown development which would add to the attractiveness of the downtown. Additionally, there would be revenue from the sale of the property that could be used for city hall improvements. On the con side, the City would be loosing a prime location for constructing a new city hall building. After discussion, it was the consensus of the Council to conduct further negotiations with the dentist to determine the price they would be willing to pay. Once an offer is presented the Council will consider the matter further.
8. COMMUNICATIONS FROM THE PUBLIC
9. Oral Communications from the Public not on the agenda. - None
10. Request for Animal Permits The City has received four requests for animal permits. Greg Greenup, 225 NW Baltimore St., requested a permit for three sheep for 4-H project. Sally Marlatt, 640 N Elder St., requested an animal permit for fifteen hens and two roosters. Dave Pranger, 135 Minor Street, requested an animal permit for four horses. Blair Keithley, 475 Linden Way, requested an animal permit for three sheep for a 4-H project. Motion by Kay Robinson, seconded by Tim Van Cleave to approve all four animal permits. MOTION CARRIED.
11. PUBLIC HEARINGS
12. Water Rate Increase. Mayor Jepsen opened the public hearing at 7:15 PM. City Manager Breazeale was asked to explain the proposed rate increase and why it was needed. Breazeale stated that the water system was old and deteriorating. Many of the steel mains are rusting away and repairs of leaks are frequent. Current funding levels do not allow for adequate maintenance, repairs and replacement of the water system. There has been no increase in water rates since 1994 while the cost of operating and maintaining the system has increased. The rate of degradation of the system is also increasing. The water system is also operating at capacity and during the summer months some customers have to cease irrigating to avoid draining the reservoirs. Without increasing water rates the best that the public works crews can do is to place repair bands on leaks and hope the rest of the old pipe holds. Without increasing the rate charged for water, the problems will only get worse, and the costs of repairs will increase causing the ultimate costs to be much higher. Breazeale is recommending an increase in the rate charged for usage above the 1,000 gal. minimum. The reasoning is that the larger users should support their proportion of the costs of operating the system and that small users not be penalized. An additional consideration, according to Breazeale, is that by increasing the usage rate, conservation may be encouraged and users would be more prone to repair leaks promptly. Conservation in the use of water would delay the necessity to increase the supply. It would be easier from an accounting standpoint and budgeting perspective to raise the base rate. Increasing the base rate would not, however, accomplish the desired conservation and would be unfair to small users. Upon questioning, Breazeale explained that the average usage for a household was about 5,000 gallons per month. During the Summer months usage is substantially higher due to irrigation. He explained that a household with a summer usage of 29,000 gallons would see an increase of about $8.00 per month. It is impossible to predict with accuracy what revenue would be generated by the increase, since the user would be in control of the usage. By conserving water, customers could actually lower their bills if they had previously been wasting water. Mayor Jepsen stated that the City provides water service without profit. All moneys generated from water sales go directly into the operation and maintenance of the system. Dan Michael, Midge Michael, Tom Fritz and Connie Pappas asked various clarification questions relating to the increase and the use to which the revenue would be dedicated. Michael Mills interjected that he had done some math and calculated that the average user of 5,000 gallons would see an increase of $2.20 per month or $26 per year. The possibility of using a gradual increase was suggested by a member of the public. Breazeale stated that he would like to see yearly increases to keep up with the cost of inflation to ensure that the system is adequately maintained. He also stated, however, that the proposed increase, while high would not be sufficient to take care of all the needs to operate and maintain the system. A grant is anticipated to be applied for which will fund a feasibility study and develop a Water System Master Plan. The plan would help direct repairs and improvements to the areas where it is most needed. This will help to ensure that the maximum value is obtained from funds used to improve the system. Connie Pappas stated that she felt that the system needs to be improved but increases should be delayed until the full costs of the improvements are needed. Midge Michael stated that if the increases were made gradually, the public would be accepting of the increase. Connie Pappas stated that several smaller increases would be more acceptable. She also stated that the City should do more informing of the public about the needs to repair the system and as to where the money would be going. Skip Matthews stated that he was aware of the needs to repair and improve the water system and he considers the increase as making up for the lack of making the increases over the past four years. Midge Michael stated that if the leaks in the pipes were repaired then the water that is now being lost would be recovered and would not require more source of supply. Kay Robinson stated that a rate increase would be needed to pay for the cost of repairing the leaks. Mayor Jepsen asked if there were more comments regarding the proposed rate increase. Hearing none, he closed the hearing at 7:50 PM.

1. COMM0UNICATIONS FROM THE CHIEF OF POLICE
   1. Code Enforcement - No report
   2. Activity Report - Police Chief Doug Rathbun distributed the activity report for the month. He also reported that the department had purchased a new police vehicle to replace the vehicle that had been on lease from the State of Oregon. The lease program from the state was no longer being used due to the requirement for replacement insurance coverage. There were sufficient funds in the Capital Improvement Fund to purchase the vehicle. The lights and other equipment were being installed from the vehicle that had been leased from the state.

1. COMMUNICATIONS FROM THE PUBLIC WORKS DIRECTOR.- No report was given because of the illness of the Public Works Director. Mayor Jepsen asked City Manager Breazeale if there was any activity he wanted to report. Breazeale mentioned that the department had been doing work on the water lines and would be installing valves with the money that would be obtained from the Regional Strategies grant. Also the department is working with the Fair Board to extend a main out to the indoor arena for the fire system. The main that would be installed could be looped in the future with the line on Fairview Way. This loop would solve the low pressure problem when the fire hydrant on Fairview Way is used. The Fair Board would pay for the cost of materials for the extension, and public works crews would install the main. Some of the unknowns at this point are the flows that would be required and the size of the main that would be installed. Breazeale reported that well 2 had experienced a failure this morning. The problem was traced to a fuse that went out. The level of the main reservoir dropped because of the loss of the well. Communications failures have occurred with the telemetry system and the crews are manually operating some wells while we are awaiting parts. The weeds downtown are being controlled by public works crews as they can find the time. The parks are being mowed and watered.

6. COMMUNICATIONS FROM THE FIRE CHIEF - Chief Estes was not present

1. COMMUNICATIONS FROM THE CITY MANAGER
2. Resolution No. 362-99 A Resolution Adjusting Water Rates. City Manager Breazeale stated that he was sensitive to the concerns of the citizens regarding a water rate increase. No one wants their rates to be increased. He stated that he believed that it was important to move swiftly, however, to provide funds adequate to operate and to fund the Water System Master Plan that is urgently needed. Motion by Councilor Robinson to adopt Resolution No. 362-99 with a second by Tim Van Cleave. MOTION CARRIED.
3. Resolution No. 363-99 A Resolution Approving Accounts Payable for Payment. Motion by Councilor Sly to approve Resolution No. 363-99 with a second by Councilor Van Cleave. MOTION CARRIED
4. Resolution No. 364-99 A Resolution Approving the Transfer of Appropriations Within the 1998-99 Budget from the Sewer Fund Contingency to the Debt Service Fund. City Manager Breazeale explained that when the budget was prepared last spring, inadequate transfers were budgeted for to pay for the debt obligation. This resolution would allow the funds to be transferred. Motion by Councilor Sly, second by Councilor Matthews, to approve Resolution No. 364-99. MOTION CARRIED.
5. Resolution No. 365-99 A Resolution Approving the Transfer of Appropriations Within the 1998-99 Budget from the General Fund Contingency to the Law Enforcement Materials and Services Fund. Breazeale explained that to avoid over expending some line items in the Law Enforcement Fund, the transfer is requested to pay for some anticipated expenses in the Telephone Expense line item and the Vehicle Expense line item. The Vehicle Expense line item has encountered additional expense due to the lease of the police car from the State. Councilor Matthews moved to adopt Resolution No. 365-99 with Councilor Sly providing the second. MOTION CARRIED.
6. Resolution No. 366-99 A Resolution Authorizing the City of Heppner to enter into an Intergovernmental Agreement with Morrow County Weed Control District. City Manager Breazeale explained that the Morrow County Weed Control District had requested that the City of Heppner adopt the County Weed Control Ordinance in order that they could conduct weed control, enforcement, and education activities within the City of Heppner. The resolution presented would provide the Weed Control District with the authority to conduct all activities with which they are empowered within Heppner city limits without obligating the City to any cost liability. Motion by Councilor Robinson to adopt Resolution No. 366-99, seconded by Tim Van Cleave. MOTION CARRIED.
7. Intergovernmental agreement for the delivery and use of water by and between the City of Heppner and the Willow Creek Park and Recreation District. City Manager Jerry Breazeale reviewed the existing agreement between the City and the Park District. Discussion ensued regarding the approximate costs of providing water and sewer to the Park District without cost. The benefit to the City by providing the service to the District was that the City no longer had the expense of maintaining the pool, and that the water park was an asset to the City and by supplying water and sewer without cost to the District would help to keep them financially stable while the District gets established. Councilor Van Cleave moved, with a second by Councilor Sly, to continue providing water and sewer service to the Willow Creek Park and Recreation District at the same terms as last year. MOTION CARRIED with Councilor Matthews abstaining.
8. Proposed Grant Application for Technical Assistance for Water System Master Plan. City Manager Breazeale explained that there was a possibility to apply for grant funds through OEDD Special Public Works Funds for technical assistance in preparing the master plan for the City water facilities. This matter had been discussed at previous meetings. Prior to submitting the application for grant funding OEDD requires that a public hearing be held. The public hearing must be publicized at least 10 days in advance of the hearing. Breazeale stated that he had not been able to publish the notice in advance of tonight’s meeting and was requesting that the Council hold a special meeting to have a public hearing so that the grant could be applied for as soon as possible. CONSENSUS of the Councilors was to hold a public hearing on May 25^th to consider whether to apply for the $10,000 technical assistance grant.
9. Heppner Community Strategic Plan Jerry Breazeale reported on the work that had been done on the strategic plan. The committee working on the plan was currently doing community outreach to inform all members of the public of the plan in progress, receive input on the draft plan, and to determine public acceptance of the goals and action plans proposed. Copies of the draft plan are available from City Hall, and anyone was welcome to obtain a copy. Jerry stated that he was making the presentation to the City Council as part of the process. It was extremely important that when the strategic plan is adopted, that the community is behind the plan. The strategic plan will help to guide the development of the community in the future. A public meeting will be held on May 20^th at 7:00 PM at the Heppner Senior High School Library to present the draft plan and receive public comment. The final public meeting will be held in June. Breazeale explained that the committee has been meeting every two weeks at the Heppner Ranger District Office on Main Street.
10. Solid Waste Franchise City Manager Breazeale reported to the Council that the holder of the solid waste franchise was behind two quarters in franchise fee payments. The franchise agreement requires that any problems with the franchise be brought to the attention of City Council. The franchisee has been notified in writing of the delinquency. Mayor Jepsen asked if there had been any response to the notification. Breazeale explained that two letters had been sent regarding the franchise payments. One payment had been made since the letters were sent bringing the delinquency to two quarters rather than three. Breazeale asked for direction from Council. Councilor Robinson stated that the franchisee had been quite ill lately. Councilor Matthews stated that he would like the franchisee to respond in some way. Councilor Robinson asked if past experience had been similar. Breazeale stated that it had not. Mayor Jepsen stated that he knew the owner of the company quite well and would talk to him to find out what the problem is. No further action was recommended at this time until after the Mayor had contacted the owner.

1. COMMUNICATIONS FROM CITY ATTORNEY Michael Mills was present representing Bill Kuhn. He stated that there was no new action to be aware of at this time.
2. COMMUNICATIONS FROM MAYOR/CITY COUNCIL MEMBERS
   1. Councilor Matthews asked whether there was any word from Loretta Nairns as to whether or not she would be staying on the Council. Mayor Jepsen stated that he would be contacting her next week. Her absence was due to the illness of her husband and it was unknown how long she would be in Bend. Questions regarding Councilor McGuire’s absence were answered that he would be returning after June.

ADJOURNMENT.

The meeting was adjourned at 8:35 PM.