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08-31-92 v MINUTES OF THE SPECIAL CALLED MEET NG OF ATLANTIC BEACH CITY COMMIISSION HELD IN CITY HALL, 800 SE4INO E ROAD, AT 6:30 PM ON MONDAY, AUGUST 31, 1992. The meeting was called to order by Mayor Gulliford. Present, in addition to the Mayor, were Commissioners Edwards, Fletcher, Tucker, and Waters. Also present were City Manager Leinbach, City Attorney Jensen, Finance Director Wendland, and City Clerk King. 1. Authorization to retain Purvis Gray and Company for finance review services Each Commissioner had received a suggested scope of services for the review of the city's financial standing and capital needs. Commissioner Fletcher reviewed the scope of services and explained the Water and Sewer Committee had met that afternoon and had recommended amendments to the scope of services as provided. OQrmissioner Fletcher moved to enter into a contract with Purvis (ray in accordance with the scope of services as amended, copy of which is attached hereto and made a part hereof. The motion was seconded by Commissioner Waters. Commissioner Edwards was opposed to undertaking the proposed study. He said the city had conducted studies in the past and had not used them. He favored a moratorium on new connections to the sewer system. Commissioner Fletcher explained the fee would not exceed $7,000.00 and since Purvis Gray had conducted the city audits for the past three years they were very familiar with the city's financial condition and had a good working relationship with the city. Following further discussion regarding the condition of existing water and sewer lines and the expansion which would be necessary at both the . Atlantic Beach and the Buccaneer plants, the question was called and the notion carried on a vote of 4 - 1 with Cannissioner Edwards voting nay. Commissioner Fletcher suggested drafting an ordinance requiring that connection fees be set aside for future expansion of the plants and he was advised that those foes were already restricted to that use. The question was asked whether some of these funds had not been spent for other uses in the past. The Mayor felt the city should move ahead to consolidate the accounting for the three utility systems. A lengthy discussion ensued regarding rates and impact fees and William McGee inquired into the legality of transfers of funds frau the Sewer Department to the General Fund and Mr. Jensen agreed to check further into this. (City Attorney Jensen left the meeting at this time) . 2. Fiscal year 1992/93 budget discussions Atlantic Beach Water - Tim Townsend reviewed the budget and explained $625,000 had been budgeted for water line replacement. He said the Page Two Minutes of Special Called Meeting August 31, 1992 areas had already been identified and it was felt better prices could be secured by undertaking the entire project in one year rather than doing the construction in phases. He said if the DER and EPA tightened up on water sampling requirements additional lines may have to be replaced and $125,000 had been budgeted for this purpose. He also proposed drilling an additional well at the #2 plant to provide backup to the one existing well, and constructing a storage shed for water plant equipment. He explained the water department was operating in the red and the recent rate increases had not been sufficient to cover the operation costs. Kirk Wendland explained the only existing debt in the Atlantic Beach water fund were the Gulf Breeze bonds which were paid for out of both water and sewer. Atlantic Beach Sewer - Tim Townsend reviewed the Atlantic Beach Sewer Department budget and explained $1,623,000 had been budgeted to expand the sewer plant to 2.5 MGD which, he felt, would be adequate to handle build-out in Atlantic Beach. Mr. Townsend explained the budget included $250,000 for the first year of a 5-year program of cleaning and televising sewer lines. Kirk Wendland explained the 1971 General Obligation bonds were paid from Atlantic Beach sewer revenues. The rate of interest is 5 3/4% and the bonds will mature in 1995. Debt service on State Pollution Control bonds which will mature in 2000 is also paid from Atlantic Beach sewer revenues. Discussion ensued regarding the cost of sludge disposal and the Mayor asked if any alternative process had been identified. Mr. Townsend explained there were some good systems available but all were expensive. The Mayor suggested the Water and Sewer Committee or Purvis Gray check further into the feasibility of some alternative methods of sludge handling or disposal. Commissioner Waters inquired why Workers' Compensation insurance should have increased more in the Sewer Department than in other city departments. Kirk Wendland said he would check into this and see if any employees had been incorrectly classified. Buccaneer Water - Harry McNally explained the $80,000 budgeted for utilities was due, in part, to past payments which the city was required to pay to JEA. He said he was not able to take the water plant out of service for maintenance and proposed to build an additional storage tank so maintenance could be carried out on the existing tank when needed. He also planned to purchase one truck and and a backhoe which would be shared with Atlantic Beach water and sewer departments. Mayor Gulliford felt the amount budgeted would not be adequate and suggested increasing this figure. Page Three Minutes of Special Called Meeting August 31, 1992 Kirk Wendland explained the Buccaneer bonds would mature in 2000. 32% of this debt was paid from Buccaneer water revenues and 68% was paid from Buccaneer sewer. Buccaneer Sewer - Mr. McNally reviewed the Buccaneer sewer department budget and explained the upgrades and maintenance necessary. He said there is no room at the current site for expansion and it would be necessary to acquire additional land. Oak Harbor WatPr - Brief discussion ensued and Mr. McNally explained he had budgeted $95,000 to upgrade the water lines in some streets which currently have 2" lines. Oak Harbor Sewer - Discussion ensued regarding the discrepancy between revenues and expenditures. Kirk Wendland explained the Oak Harbor bond was paid at the rate of 68% from sewer and 22% from water revenues. It was explained this bond would mature in 2018 and Commissioner Fletcher said Purvis Gray would make recommendations regarding refinancing bond refinancing. The next budget workshop was scheduled for September 10, 1992, at 6:30 PM. Mayor Gulliford announced the City of Jacksonville would hold a public hearing in the Council Chambers regarding Atlantic Beach's intent to take legal action to settle the dispute regarding the interlocal agreement. He requested this meeting be publicized as much as possible and encouraged the citizens to turn out to support Atlantic Beach at this public hearing. There being no further business to come before the City Commission, the Mayor declared the meeting adjourned at 9:15 PM. / iil s'' liam I. Gul if.ili Mayor/Presiding al - A T T L S T: Ma Ven King V City Clerk SCOPE OF SERVICES OF AGREEMENT WITH PURVIS GRAY AND COMPANY APPROVED BY THE CITY COMMISSION AT SPECIAL CALLED MEETING OF AUGUST 31, 1992 Preamble: Accept and utilize the capital improvements proposed in the Water and Sewer Funds for the next five (5) years as well as other data provided by the City. We will be responsible for providing this information to you, along with cost estimates for these improvements. Phase 1 - Analyze the current financial position of the three (3) separate water and sewer funds and estimate funds currently available for capital improvements. (I believe this step is basically complete.) Phase 2 - Structure a proposal to consolidate the three (3) separate water and sewer funds into one (1) water and sewer fund. The current debt positions of each fund have been recently analyzed by Purvis Gray. Provisions of bond covenants, etc. will be provided at your request. Consolidation of existing debt, through refinancing, should be analyzed. Phase 3 - Based on the results of the foregoing, provide information on potential funding mechanisms. At a minimum, analyze funding the desired improvements through bank loans, bond issuance, DER loans, and user rates. Based on your expertise in the utility industry, make a recommendation on desired funding mechanisms, providing a basis for selection of each alternative. All costs of financing should be delineated for each alternative, including but not limited to all costs for financing such as closing, attorneys' fees, issuance fees, etc. Phase 4 - Based on the results of Phase 3, determine whether the existing rate structure is adequate to meet requirements of the desired debt funding mechanism. If not, determine the necessary revenue stream required to meet these requirements. Phase 5 - If adjustments are necessary to the existing revenue stream, (results from 4 above) , make recommendations on a rate structure which will provide adequate revenues. During this analysis, consider available cash on hand and other relevant data as available, and provide alternatives such as a one-time rate adjustment or incremental rate adjustments. Indicate the data utilized (as provided by the City of Atlantic Beach) including the number of customers and consumption for each utility for the computation of any adjustment proposed.