In our Board Meeting held in Draper on May 7, 2008, Mr. David Hansen, Chairman of the Water Company addressed the property owners and gave some very helpful information regarding the proposed bond that was not stated or not clear in the recent legal notice mailed to you by the County. We invited Mr. Hansen to review the information we previously posted on this issue. After doing so, he kindly provided us with the following letter, which we post here. Please read this letter before you decide how you feel about the bond proposal.

Dear Timber Lakes Lot Owners:

Recently there has been significant controversy and comment regarding our attempts to improve our water system. We have tried several times and via several methods to convey information related to the needed improvements including two water rate hearings, an informational meeting, the mailing of a letter attempting to describe the plan, the posting of a water rate hearing transcript on the Wasatch County website, the mailing of the transcript to anyone requesting it, open discussions over the past 18 months at our monthly board meetings, and personal communications with several individuals explaining the proposed plan. As difficult as it is, it is impossible as a volunteer board to respond personally to every question asked. We hope you will understand the level of commitment offered by the water board, often without thanks.

As many of you may know, a letter was recently passed out at the entrance to Timber Lakes which included several mis-representations or mis-understandings related to the proposed project. This letter did not identify the author, nor was it signed. The unfortunate part is that many individuals may have believed that the letter represented an official position of the Property Owners Association. Such is not the case as clarified by the Property Owners Association. Please be aware that the proposed project being undertaken by the Timber Lakes Water Special Service District involves the following:

1. The replacement of approximately 18 miles of undersized and inadequately sized piping which is buried at shallow freeze depths. We have spent hundreds of thousands of dollars over the past several years trying to keep water flowing in winter months, making repairs to frozen sections, and replacing hundreds of feet of frozen water lines each spring. Several residents have gone without water following a freeze until the line can be worked on in the spring. Even with significant rate increases we estimate it will take 20 years to replace and upgrade the balance of the system using our own crews. The water company was created to maintain and operate our water system, not be a construction company. To complete the project we will hire a professional piping and tank construction company to build the system right, leaving our crews to maintain and operate it.

2. An engineering estimate of just over $14 million has been prepared by the District’s engineer for the complete project. This estimate includes all aspects of the project so that bond costs are estimated high, not low. Construction costs, and therefore bond costs cannot exceed that amount without readvertisement and a new bond approval by all lot owners. If we are able to reduce costs by having our crews perform some of the work, such as spring development, road base installation, etc., we will do so when possible. Final bond costs, and the final costs to each lot owner will be based on actual costs, not the estimate which we believe to be high.

3. We have been told that the bond will carry an interest rate of 5 1/2%.

4. The original estimate of the bond assessed to each lot is $9,310/lot. This amount may be reduced proportionately if bids come in lower than estimated by the engineer.

5. The assessed bond for each lot can be paid off as a lump sum if desired by the lot owner. A refund for the difference will be paid to the lot owner should construction costs be reduced. We are also trying to work out a way whereby lot owners can pay off their portion of the bond on an accelerated schedule if desired.

6. The engineer has estimated road repair costs to total $3,500,000. To be conservative, the engineer prepared his estimate based on a full 6″ road base depth, over the entire road width, for all roads within the construction scope. Theoretically, all we should have to replace is the road base within the excavated trench area. However, it is sometimes difficult to clearly identify disturbed from undisturbed road base and therefore additional base will be installed over the entire road width. Our project is not to build new roads, but to repair the water system and restore what we have disturbed. We will restore the roads with current road base depth, whether that be a 2″, 4″, or 6″ road base. The addition of any road base will in many cases improve road conditions.

7. An estimate has been provided by the engineer to add a telemetry system which allows the monitoring of the system remotely, and provides for emergency response should abnormal conditions, such as a water line break, be detected. The purpose if a telemetry system is not to make it easier for our employees, but to provide 24/7 monitoring, system recording, better system accounting, and shortened response time during abnormal operating conditions. An undetected water line break can for example quickly create significant property flood damage, and drain precious stored water needed to meet peak day demands and potential fire flows. The board feels that the estimate provided by the engineer significantly exceeds our intent and alternatives are being reviewed to reduce these costs.

8. There is a mandatory 10% bond fee that is charged to all bonds to ensure repayment of the bond. The fee is not to cover the costs of delinquent accounts, but to provide a level of insurance to the bonding entity that the District can and will meet the repayment obligation. A property tax lien will be placed on all properties who are delinquent in their accounts, and the 10% bond fee will be used at the end of the bond to make final bond payments and shorten the term of the bond.

9. Some additional points that should be considered are that 1) water system upgrade costs now being proposing were estimated in 2003 to cost about $3,500 per lot ($30/month) and are expected to increase substantially every year the upgrades are delayed, and 2) there is a strong likelihood that building permit restrictions could be imposed in the future if our water system is not upgraded. If imposed, building permit restrictions would significantly and negatively impact lot values.

10. Stagecoach Estates, a local development north of Silver Creek Junction near Park City has similar water system problems. To resolve their issues, their water board is contracting with Mountain Regional Water Special Service District to fix their problems and provide them water. It has been estimated by MRWSSD that rates for needed upgrades will be on the order of $160/mo per lot owner. I guess it could be worse.

11. Finally, anyone desiring to protest the proposed bond assessment may do so by filing a written protest with the County by 5:00 pm on May 19th. We ask that if you carefully consider all the issues involved with this project and support the board on this important and critical bond decision.

David Hansen – TLWSSD Chair