BOUTON - Xenia Rural Water District must have a plan to restructure its rates for all users and reduce operation expenses by Thanksgiving.
This was the message sent to the board in a letter from Bill Menner, with the U.S. Department of Agriculture Rural Development, one of the district's lenders.
The board discussed the letter briefly during a three-hour meeting Thursday evening.
"This letter was a surprise," said Walt Tomenga, the head of the Xenia board. "It was our hope that our two main creditors would talk together and coordinate a request (for the districts' debt restructuring). There was some reciprocity when we laid that out."
Then the Bank of America filed a lawsuit Sept. 17 against Xenia seeking repayment of $7.8 million.
The letter from the USDA requesting a new proposal from Xenia in 30 days arrived Sept. 27; it told Xenia officials a sale to Des Moines Water Works was no longer a priority.
"They said the sale is off of our wish list," Tomenga said. "They think we should remain an independent entity, and challenged us to come up with a restructure."
Menner told the board not to include debt forgiveness from any creditor in the new proposal.
The proposal offered by Xenia in March included a sale to Des Moines Water Works and debt forgiveness of $45.5 million from the USDA and Assured Guarantee.
A representative from Assured Guarantee attended the Thursday meeting.
The proposal may include another rate increase for all users, including ethanol plants. The board's attorney will review its contracts with ethanol producers to understand the legal obligations outlined between the two parties.
Marc DeLong, Xenia's interim executive director, said he is in the preliminary stages of drafting a new proposal.
Capital Improvements
In addition to wrangling with debt payments, the board is continuing to try and provide customers with adequate, quality water.
Representatives from Bartlett and West, an engineering firm with an office in West Des Moines, presented information regarding water source supplies for 9,000 customers in the district's 11-county area.
The study focused on the northern part of the district, including Webster County.
Brad Pleima and an associate said the Stratford water treatment plant produced the cheapest water at $0.85 per 1,000 gallons and was operating at 72 percent capacity.
However, Pleima said a production increase at area ethanol plants would consume the remaining water. He suggested the board explore the options of minor rehab work at the plant or an expansion.
Pleima said the north service area isn't a large growth area and is losing population; it's the ethanol plant's use of water that could strain the Stratford facility.
"If there is growth in ethanol plant water use, then we can assume small improvements to the Stratford plant would be sufficient to handle ethanol expansions," Pleima said. "We need to visit with the plants on their future plans of demand."
Pleima also presented an option for the board to serve the Boone and Madrid supply areas from Statford, which would cost an estimated $4.4 million to improve the Stratford plant, or an estimated $990,000 to replace both the Boone and Madrid facilities.
Water rates in Boone and Madrid would need to increase to $2.50 and $2.91 per 1,000 gallons, respectively, for the district to break even, according to the B & W preliminary study.
The Xenia board took no action.
Its next meeting is tentatively set for Nov. 18 at 6 p.m. in Dayton or Stratford.
Contact Lindsey Mutchler at (515) 573-2141 or lindsey@messengernews.net