Public Hearing Regarding Building Moratorium and Expansion Options

September 28, 2007

To: All Property owners in the Southside Water & Sewer District

The Building Moratorium which was initially imposed in April, 2004, will expire October 11, 2007. Unfortunately the District is still unable to lift the moratorium. A public hearing will be held Friday October 12, 2007, at the Sagle Elementary School to discuss the matter. There will be legal and engineering representatives available to answer questions as well the District Board of Directors and a representative from IDEQ.

Before the moratorium can be lifted the District must resolve the following issues.

1. How to expand the capacity of the Districtís waste water treatment facility.
2. How to distribute the cost of the expansion.

After considering several expansion options the District is left with two viable options, both of which involve discharge into the Pend Oreille River.

1. Upgrade the existing facility to an Activated Sludge system and discharge the treated effluent into the Pend Oreille River Oct to Apr and land apply Apr to Sep.
2. Continue to operate the present system for land application during the growing season and add a MBR to handle the excess waste water. The effluent produce by the MBR system would be discharged into the Pend Oreille River year round.

The Activated Sludge system will cost about $2.6 million and will increase the Districtís capacity from 350 to 800 ERU. To add the MBR system will cost $3.9 million and will increase the Districtís capacity from 350 to 650 ERU. Both systems meet all current state and federal pollution control requirements. See the attached position papers to see the pros and cons for each of the options.

The District must also determine how the cost of the selected option will be distributed. It is the Districtís intention to finance the initial cost with a 20 year IDEQ loan at 3 Ĺ % interest. The following options for repaying the loan will also be discuss at the hearing.

1. General Bond: All property in the District which, can be serviced by the sewer collection system, will be subject to an annual property tax levy. The tax for the Activated Sludge option would be $.73 per $1000 assessed value and for the MBR option would be $1.11 per assessed value.

2. Revenue Bond: All rate payers in the District will be charged one twelfth of the annual cost on their monthly sewer bill. Initially the Activated Sludge option will cost $513 per year and the MBR option will cost $787 per year. The amount charged each month will decrease as new customers are connected to the system.

3. Hookup Fees: New hookup fees for the Activated Sludge option would be $15,000 and for the MBR option $17,000 assuming there would be at least 20 new hookups per year over the 20 years of the loan. If fewer than 20 new connections are made in any given year, the shortfall will be supplemented with a property tax levy.

4. LID: A lien will be placed against each recorded parcel of property that is or can be connected to the sewer. The lien is paid in annual installments over the 20 year life of the loan. For the activated Sludge option the cost would be $ 318 annually and for the MBR option the cost would be $429 annually.

5. A combination or variation of some or all of the above.

The Districtís primary objective is to satisfy customer requirements, while complying with existing regulations and addressing the publicís environmental concerns. Please join us at the Public Hearing.

Seasonal Discharge (Activated Sludge)

Activated sludge is a time tested proven and reliable technology that results in waste water discharge that is protective of human health and the environment. The treatment facility can be constructed on the site of the present facility and would meet the Districtís current and future needs. In the warm weather season the treated waste water will be land applied to grow and harvest hay on the existing 27 acre site as occurs today. During the cold season the treated waste water will be discharged into the Pend Oreille River at a distance of 5000 feet from the shore of Murphy Bay to the rapidly flowing river channel. Permits from the U.S. EPA and Corps of Engineers will be required.

The impact on the environment will be negligible and is probably not measurable. In the treatment process at least 85% of the solids are removed; and over 99% of the pathogens and bacteria are removed or destroyed. Rather than use chlorine for the final purification of the water, an ultraviolet light process will be used. This will eliminate any possibility of residual chlorine in the discharged water. Approximately 50% of the phosphorus will be removed. In the summer the nutrients will support the growth of hay on the land application site. By discharging during non growing months the discharge will not contribute to the growth of algae in the river. Should future regulations require additional nutrient removal; a filter system can be added to the system, however the system would not be expandable.

Year Around Discharge (MBR)

MBR (Membrane Bioreactor) is the state-of-art treatment method for municipal wastewater. It includes membrane filtration as part of the process which will remove 80-90% of phosphorus and nitrates from the sewage. The product from this system exceeds all current and anticipated EPA and IDEQ discharge requirements. Furthermore, it exceeds the quality of a conventional activated sludge system. For these reasons, the Sandpoint Citizen Advisory Committee utilized MBR technology as a quality benchmark when examining future treatment goals. Dover also selected this process for their current modifications and expansion.

The MBR system is expandable in relatively small increments. This allows for further expansion of SSWS treatment facilities to meet future growth with the growth funded by sewer hook-up fees, not user fees.

The MBR product can be used for most irrigation including private lawns, parks, golf courses and crops. There is no current need for reclaimed water identified by the district other than district crops. However, should a large commercial facility, such as a golf course, be constructed, the MBR product could be used for irrigation. This could turn a product that costs money to discharge into a saleable product that generates revenue.