City of Parkville considering selling sewer system to PCRSD to retire NID debt

The City of Parkville is moving forward with its investigation into the viability of selling the City’s sanitary sewer utility to the Platte County Regional Sewer District (PCRSD). The City is exploring the issue as a possible option for retiring the debt on its troubled Brush Creek Drainage Area Neighborhood Improvement District (NID).  Last month, the Board of Aldermen approved a nonbinding memorandum of understanding with the sewer district to explore the potential advantages and disadvantages of such a transfer. Last week, the newly-formed committee made up of Mayor Jim Brooks and incoming mayor Alderman Nan Johnston and Aldermen Marc Sportsman and Jim Werner tasked City financial advisor Springsted Inc. to perform a cost-benefit analysis to establish a net value for the sewer utility, identify various financing options for the transfer and evaluate the overall costs and benefits to the City of transferring the sewer utility. This analysis is expected to be complete in about a month. A little more than a year ago, the City’s water utility, Missouri American Water, stopped its sewerage billing service. The City of Parkville took over the billing duties, but not without some bumps in the road and the eventual hire of a part-time City employee to handle the new responsibility. Also within the last few years, the City has been aware of a looming potential problem in the Brush Creek Drainage Area NID. When the district was formed in 2006, the City and PCRSD entered into partnership to build and maintain improvements in the NID area. After the economic collapse of 2008, development in the NID stalled and most properties within the NID are now owned or controlled by various banks. With no tax-generating entities within the NID area save one convenience store, the City faces a significant liability — up to about $5 million — if property owners don’t pay up on assessments due at the end of this year. Bond repayments are scheduled to begin in early 2015. Recently, PCRSD approached the City with the possible solution that would allow the City to retire the NID debt and the sewer district to expand its service. “Many questions need to be answered before a contract can be drafted and presented to both governing bodies for consideration,” said City Administrator Lauren Palmer in her report. “Adoption of the MOU (memorandum of understanding) is an expression of the Board’s desire to fully evaluate this concept. It is not legally binding on either party, but indicates a willingness to enter into good faith negotiations.” The City agreed to pay Springsted a maximum of $13,500 to perform the analysis and evaluate financing options. Should an agreement between the City and the sewer district be executed, PCRSD will reimburse the City for half the fees paid to Springsted. PCRSD Director Dan Koch confirmed this week that PCRSD is discussing the possibility with Parkville officials, but stressed that “there is nothing to commit to until a value is established.” Koch also said the utility is performing its obligatory duty to serving the public. “One of the goals of the Board is to regionalize, to establish economies of sale by regionalizing for the citizens of Platte County,” he said.