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Agenda Item 9AAGENDA ITEM # 9A MAY 23, 2011 May 16, 2011 MEMORANDUM TO: The Honorable Mayor and Members of the Commission FROM: Jim H11, City Manager SUBJECT: City Mana is Report Notice of Suit The City has received a written notice of an intent to sue from a lawyer for the owner of a house at 31 17"' Street in Atlantic Beach. It alleges that the City's Building Department failed to stop a contractor from doing work on a house without a building permit, without being incompliance with applicable codes, and without inspections. The owner claims to have suffered damages in excess of $100,000. This information has been turned over to the City's insurance carrier for investigation. Emergency Sewer Repair During the City's recent sewer rehabilitation project in the Selva Marina area, staff found several areas where point repairs were necessary. Most of the sewer lines in this area were installed in the 1950s.Two critical point repairs required a large emergency purchase orders to the City's annual contractor. The first was an improperly constructed connection at the Selva Marina lift station wet well. This connection was coming apart, allowing excess water and dirt to enter the station. It was in imminent danger of collapsing, which would have shut off all flow to the lift station. The cost of this repair was $22,400. This first repair was previously reported to the Commission. While completing the repair, it appeared that there was a hole in the top of the pipe coming into the lift station. Staff approved $5,000 in additional funds for the contractor to attempt to install a liner to repair the hole in the pipe near the wet well. During the attempt to install the liner, it became evident that instead of the hole near the wet well, the entire top of the sewer main from the wet well to the manhole was deteriorated and starting to cave in. The contractor was directed to begin bypass pumping around the lift station, as no flow could get through the pipe and into the station. The cost of this line replacement was unusually high because of the depth of the line (18 -20') and by having several Bellsouth conduits over it. Bypass pumping and dewatering to the area added to the repair cost. The cost to replace the sewer main was estimated at $50,000, which was added to the earlier emergency purchase orders for a total of $77,400. Funds are available to pay for this repair in the sewer budget. This is being reported to the City Commission because it exceeds the limit for City Manager approval of normal purchases. Pension Reform Pension reform is one of the City Commission's top strategic goals for the year. This report is to let you know the status of legislation in Tallahassee. In the final days of the 2011 legislative AGENDA ITEM # 9A MAY 23, 2011 session, a joint conference bill was approved by both Houses dealing with pension reform for local police and fire plans. It awaits the Governor's signature. The bill falls considerably short (in my opinion) of being the "significant" pension reform that was articulated by the Governor and the House leadership before the session began. Essentially, only two substantial measures were included in this bill to ease the burden of State mandates on Florida cities. The first is that a cap of 300 hours of overtime per year can be used for pension calculation purposes. While there is no cap on the number of overtime hours that can be used for calculations in Atlantic Beach, it has not been a problem in our community. However, in other cities, police and fire employees, anticipating upcoming retirements, have been known to "spike" their hours by volunteering for as much overtime as possible just before retirement. The second provision helping cities is the elimination of the requirement that pension benefits be increased whenever member contributions are increased. This was the provision that Atlantic Beach officials testified about on several occasions. There is one other provision of interest in this bill that requires the Financial Accounting Standards Board to get actuarial reports from all cities and counties showing the value of the Defined Benefit Plans accrued, vested, non - vested and total benefits. The interesting part of this is that it requires local governments to calculate and report these figures based upon an estimated rate of return being used by the Florida Retirement System which is currently 7.75 %. The Atlantic Beach Pension Boards chose to retain the actuarial assumption of an 8.0% when they recently considered various amendments. While Atlantic Beach will not need to change contributions to the plan based upon the new rule, it will require that additional work be put into the actuarial reports to calculate the different rate of return required by the State. Once the Governor has taken action on this bill, it will be reported to the City Commission.