11-04-92 v NEW UTILITY ORDINANCE, RAMS & MONTHLY BILLING
PRESENTATION TO CITY COMMISSION AT SPECIAL MELl'ING
NOVEMBER 4, 1992
1. INTRODUCTION: ALAN POTTER
Introduction and explanation of the work of the Water and
Sewer Committee in assessing the current status and proposed
improvements in the city's utility systems
2. OVERVIEW: KIM LFINBACH
Overview of finances, rates, and proposed ordinance etc.
3. NEH.i)S: BOB KOSOY, (Harry McNally, Tim Townsend)
Explanation of need for improvements, review of conditions at
city plants, etc.
(Attachment 1 - Capital Improvement Plan)
4. FINANCIAL ANALYSIS: KIRK WENDLAND
Introduction of Joe Welch, Purvis Gray & Company
(Attachment 2 - Financial Analysis)
(Attachment 3 - Water and Sewer Rate Ordinance)
5. CONCLUSION: COMMISSIONER FLETCHER
Summary of project and proposed actions
(Attachment 4 - Schedule with Critical Path)
6. COMMISSION REVIEW:
Commission discussions, questions/answers
MINUTES OF THE SPECIAL MEETING OF ATIANTIC BEACH CITY COMMISSION HELD IN
CITY HALL, 800 SEMINOLE ROAD, AT 7:00 PM ON QDAY, NOVEMBER 4, 1992
Present: William I. Gulliford, Jr. , Mayor
Glenn A. Edwards
Lyman T. Fletcher
Adelaide R. Tucker, and
J. Dezmond Waters, III, Commissioners
And: Kim D. Leinbach, City Manager
Maureen King, City Clerk
Robert Kosoy, Public Works Director
Kirk Wendland, Finance Director
Alan Potter, Committee Member
Tim Townsend, Atlantic Beach Division Chief
Harry McNally, Buccaneer Division Chief
Joe Welch, Representative of Purvis Gray Company
Alan Jensen, City Attorney, was excused.
The Mayor called the meeting to order and invited Commissioner Fletcher,
as Chairman of the Water and Sewer Committee, for his comments.
Commissioner Fletcher reported the reports being presented that evening
were the result of many hours of staff and volunteer time.
Alan Potter briefly reviewed the growth which the city has experienced
in recent years and the development and maintenance of the city's water
and sewer system. He pointed out that upgrades and expansions of the
utilities had not kept pace with growth and with the proliferation of
government regulatory agencies and their stricter administrative rules.
As a result, the city has experienced a DER Consent Order which mandated
significant additions and improvements to the water and sewer systems.
The Water and Sewer Committee had held thirty workshop meetings since
its inception in January 1991 and had worked hard to accomplishing the
Consent Order mandates, establishing fair utility rates, worked toward
consolidating the three utility systems, and setting up a program of
construction and financing to meet projected build-out, and maintaining
the utility system thereafter.
Kim Leinbach gave a brief overview and explained that when the rate
adjustments were made a year ago it was with the knowledge that further
adjustments would be necessary. He pointed out because of the Consent
Order and the fact that Atlantic Beach was the only utility system
available to many residents, the city now needed to undertake major
capital improvements. He felt the city had accomplished a lot in the
past through very conservative means but it was his opinion a solution
to address future needs was necessary. He said the City Commission
would be asked to adopt the Capital Improvement Program, approve a rate
structure to support that program, and approve a plan to finance the
long term debt.
Bob Kosoy reviewed the five-year capital improvement program and
indicated the proposed improvements would cost $10.5 million over the
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Minutes of Special City Commisson meeting
November 4, 1992
five-year period. He said the majority of the projects were urgently
required and explained in detail those projects which were scheduled for
FY 1992/93. He reviewed a critical path illustrating each phase of the
program and explained how they all worked together. Tim Townsend
further reviewed some of the Atlantic Beach projects. He noted that
$625,000 had been proposed for replacement of water distribution lines.
He explained that some area of the city had 2-inch water lines which
were thirty years old and in very poor condition. Consideration had
been given to doing this work in smaller phases but it was felt the city
could get better prices by going ahead with the larger project. Further
discussion ensued regarding infiltration of stormwater into the sewer
system and Mr. Townsend explained that televising, cleaning and sealing
had been ongoing during the past few years and infiltration had been
reduced.
Kirk Wendland said the five-year improvement plan had been reviewed
during budget preparations and had been refined and reduced from $14
million to $10.5 million. The rate structure had also been reviewed and
it was apparent that revenues generated were inadequate to cover the
cost of operating the system. Purvis Gray was then hired as a
consultant to review the financial position of the three water and sewer
funds, estimate funds currently available for improvements, and make
recommendations regarding funding which would be required.
Joe Welch of Purvis Gray & Company provided each Commissioner with a
Financial Analysis of the Water and Wastewater Utility Systems, dated
October 28, 1992. He reviewed the scope of services which his firm had
been asked to perform which were as follows:
1. Analyze the current financial position of the three separate water
and sewer funds and estimate funds currently available for
improvements.
2. Structure a proposal to consolidate the three separate water and
sewer funds into one water and sewer fund. Analyze the current
debt positions of each fund and the consolidation of existing debt
through refinancing.
3. Provide information and make a recommendation on potential funding
mechanisms, including at a minimum, bank loans, bond issuance, DER
loans, and user rates
4. Determine whether the existing rate structure is adequate to meet
the requirements of the desired funding mechanism. If not,
determine the required revenue stream.
5. If adjustments are necessary to the existing rate structure, make
recommendations on a rate structure which will provide adequate
revenues
He reported the city's utility systems were in sound financial condition
with cash available estimated at $3,756,336. He reviewed each of his
conclusions and recommendations, a copy of which is attached hereto and
Page Three
Minutes of Special City Commisson meeting
November 4, 1992
made a part hereof. He recommended the city use up to $3 million of
existing funds to finance the needed improvements and finance the
remainder through outside borrowing. He said he had contacted four
government agencies regarding the loans and felt the best option for
funding was through the DER which had low interest loans available for
sewer improvements. Considering the current low interest rates he felt
the city should proceed as quickly as possible to secure a DER loan for
the sewer improvements and issue bonds to fund water improvements. If
approved for a DER loan, he felt it would be at least a year before the
city would receive the money.
Mr. Welch pointed out the water and sewer funds were operating at a net
loss. Based on the data provided by the city he felt rate increases
totalling 39% for sewer and 46% for water would be needed over the next
five years. Rate increases were also recommended for connection fees
and he also felt the late payment fee should be changed from a fixed
$5.00 to a percentage of the late balance. Mr. Welch further
recommended paying off the Buccaneer and Oak Harbor bonds as early as
allowable and refunding the pollution control bonds. He said city staff
had expressed a desire to consolidate the throe water funds into one
water account and the three sewer funds into one sewer account and he
concurred with this suggestion. He felt this would be cost effective as
far as record keeping and personnel were concerned.
At this time the Mayor called for a five minute recess.
The meeting reconvened and Alan Potter complimented Joe Welch for
working so well with the Water and Sewer Committee. He said that George
Worley had projected build-out in Atlantic Beach at 1,200 additional
units and build-out in the Buccaneer district at about 2,400 units. He
felt the five-year improvement plan as proposed, would accommodate
build-out and the system would then just have to be maintained but that
no future expansions would be needed.
Mayor Gulliford inquired into the capability of diverting flow from the
Buccaneer plant to the Atlantic Beach plant. Mr. Potter said this had
been discussed some time ago but a pipeline would have to be built and
it did not seem to be financially feasible. The Mayor also inquired
whether an annual contribution from the water and sewer funds to the
general fund had been anticipated. Mr. Welch replied that $200,000 had
been included in the 1992/93 budget but he felt a decision should be
made by the City Commission regarding establishing a percentage of funds
which could be contributed.
Commissioner Edwards expressed concern that the proposed projects would
cost more than the projected figures. Mr. Kosoy felt if some of the
projects were delayed the city could be subject to fines and may have to
pay higher interest rates at a later date.
Page Four
Minutes of Special City Congnisson meeting
November 4, 1992
Discussion then ensued regarding the rate increases and the change to
monthly billing. It was explained the monthly billing would require
additional work to administer but it had been times to lessen the impact
of the rate increases. Storm water and sanitation services would be
billed equally each month but until the new computerized meter reading
system was on line, meters would be read quarterly and excess water and
sewer would appear on one bill per quarter. The question was raised
regarding whether it would be better to have one large increase or to
spread the increases over a period of time. Alan Potter explained funds
for the five-year program would be borrowed at the outset but funds not
spent would be earning interest in a bank. The Water and Sewer
Committee felt these savings should be passed on to the consumer by
keeping the rate increases as low as possible and spreading them over
the five-year period. Commissioner Edwards expressed concern that some
residents could not afford to pay the increased rates and Alan Potter
said that even with the proposed increases the water and sewer rates in
Atlantic Beach would be lower than any public or private utility in
Duval County. The City Manager agreed to work as much as possible with
those people who had problems paying their utility bills. Joe Welch
said he had spoken to DER and he felt Atlantic Beach would qualify for a
low interest loan (current rate is 3.8%) and he suggested the city move
ahead to pursue the DER loan as quickly as possible to lock in at the
current low rates.
Ccarmissioner Waters roved to authorize the City Manager to prepare and
submit an application for a DER revolving loan to provide funding for
the proposed sewer improvements. The motion was seconded by
Commissioner Fletcher and was unanimously approved.
The draft ordinance to implement the changes which had been discussed
was then briefly reviewed. Following discussion two changes were made
as follows: Page 2, Section 22-25 (New) the word "type" was changed to
"class," and Page 6, Section 22-29, the last word of Paragraph 1 was
changed from "period" to "date," and the City Manager was requested to
include first reading of the ordinance on the Commission agenda on
Monday, November 9, 1992.
Mr. Kosoy asked the wishes of the City Commission regarding the capital
improvement projects, and following further discussion it was agreed to
prioritize the various projects into three categories: those projects
which must be undertaken immediately, those projects which must be
undertaken but which are less urgent, and those projects which could be
postponed until later if necessary.
Commissioner Fletcher summarized the outlined program and stressed the
importance of moving ahead quickly to take advantage of the current
economic conditions and the low interest rates.
Page Five
Minutes of Special City Connisson meeting
November 4, 1992
A meeting between the City Commission and the architects who had been
contracted to present recommendations and prepare plans for improvements
to the concession stand in Russell Park, was scheduled for 6:00 PM on
Monday, November 9, 1992.
There being no further business to come before the City Commission, the
Mayor declared the meeting adjourned at 10:00 PM.
Che
William I. Gullifo d,
Mayor/Presiding 0 ic:�
ATTEST:
Maurcon King U
City Clerk