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HomeMy WebLinkAbout612 - MINUTES - City Commission MINUTES OF WORKSHOP MEETING DANIA BEACH CITY COMMISSION WATER AND WASTEWATER RATE-STUDY TUESDAY, AUGUST 24, 2004 - 6:00 P.M. 1. Call to Order Mayor McElyea called the Workshop to order at 6:00 p.m. 2. Roll Call Present: Mayor: C.K. McElyea Vice-Mayor: Bob Mikes Commissioners: Bob Anton Pat Flury City Manager: Ivan Pato City Attorney: Tom Ansbro City Clerk: Louise Stilson Absent: Commissioner: Robert Chunn 3. Discussion on Water and Sewer Rate Study(Patricia Varney, Finance Director) Patty Varney, Director of Finance, introduced Henry Thomas, Vice President of Public Resources Management Group, Inc. (PRMG). Henry Thomas highlighted the points of the study conducted by his firm. The purpose of the study was to project expenditure requirements through fiscal year 2009 and to develop Water and Wastewater Utility rates and Impact Fees to recover cost of service; fund anticipated Capital and Expansion needs; promote the conservation of water resources; comply with Rate Covenants, as required by proposed indebtedness; maintain adequate Reserves for emergencies and unforeseen Capital needs; and to minimize the shock of rate increases to customers. Mr. Thomas advised they projected a yearly customer growth of 0.6% for Water, and 0.7% for Wastewater. He stated the current rates are not adequate to deal with future needs and would need to be increased by 50% between 2004 and 2009. He commented that Melaleuca Gardens is included in the projection, and the loss of Melaleuca Gardens (400 customers) would be a significant blow to the system. He commented there were no grants from the County, and no large contributions from developers included in the projection. He recommended we start increasing rates in 2004, so it would not be so severe in the future. Minutes of Workshop Meeting 1 Dania Beach City Commission Water and Wastewater Rate Study Tuesday, August 24,2004—6:00 p.m. ® Operating Expenses Mr. Thomas reported that operating expenses were projected to increase due to insurance costs, inflation, and bulk wastewater service. The projection includes no additional employee positions. Capital Funding Mr. Thomas remarked the Water Storage Tank Removal & Replacement cost is projected at $2.2M; Water Plant Upgrade $5.1M; and the Water Main Looping Upgrades $5.1M. Funding on the Water side, is projected to be a State Revolving Fund (SRF) loan of $14M; Operating Reserves of$408,000; and $720,000 from Impact Fees. Wastewater Capital Costs are $3.1M, with pay-as-you-go financing because these are primarily rehabilitation projects. Our current rates do not cover much above the cost of operations, and Infiltration/Inflow (I & I) means fixing collection systems. In addition, the Lift Station program needs a lot of attention. Even if the City borrowed all the funds needed for the repairs, the rates would still need to be raised to meet coverage. Mr. Thomas advised the repayment of the SRF loan would begin in 2008. Fund Balances— System Debt Mr. Thomas commented he would not recommend dropping below the $1.9M in Unrestricted ® Reserves the City currently has, and recommended increases of $700,000, per year, through 2009. He remarked the City currently has short-term notes for water meters and vehicles which should be paid off in the near term. Then, there will be the $15.2M SRF loan coming on-line in 2008, with a total debt service of$1.28M per year. To get where we need to be in 2008, system-wide revenues need to increase 10% in October 2004, and 12% per year, for the next four years, for Water; Wastewater needs to increase 8% per year for years 2004 —2006; 7% in 2007; and 6% in 2008. Mr. Thomas remarked when inflation impacts your operating costs, you have to pass that through regular, but nominal, increases. He submitted, even without this large Capital Plan and improvements we are trying to achieve, there would still be rate increases just to keep up with inflation. Fernando Vazquez, Director of Public Services, estimated that the City was losing 400,000 gallons per day on infiltration. The main infiltration problem comes from the laterals. Mr. Thomas remarked we should plan some of our projects in conjunction with FDOT plans for road widening and road improvement projects. If we do not do our projects in the context of FDOT repaving, we will have serious problems because they will impose a moratorium on road cuts for a period of five years. Minutes of Workshop Meeting 2 Dania Beach City Commission Water and Wastewater Rate Study Tuesday,August 24, 2004—6:00 p.m. He restated their recommendation is to bring our rates in line to have us financially sound by 2009. He remarked the City's Base Monthly Charge is low, and the study shows that the cost of service needs to be upwards of $9.00, currently, with lower volume charges. They proposed going to $9.00 in the Base Charge over the next five years, with the usage charges maintaining built-in conservation measures. He provided the Commission with a handout of comparative residential bills with other South Florida cities. Commissioner Flury requested to see a comparison with the cities of Hollywood and Ft. Lauderdale, which are not included in the comparison chart. Mr. Thomas will provide a new chart for the next meeting. Mr. Thomas stated that Impact Fees can only be used to provide funding for the City's Capital Expenditures for expansion of Water and Wastewater service to meet the needs of population growth, and should not be used to fund Capital needs related to deficiencies in the current system or to pay any operating costs. He proposed an increase in combined Water and Wastewater Impact Fees from $1,342 to $1,870. Mr. Thomas pulled Appendix D (Miscellaneous Service Charge) from the report because he misinterpreted some information. He will provide a revision at the next meeting. Mr. Thomas remarked that staff would like to move forward with the projections, and tonight we are looking for direction from the Commission. Vice-Mayor Mikes remarked it was a good presentation and did not see what other choices we had. He asked if there were any potential Legislative initiatives that might cause us to redesign. Mr. Thomas responded that he was not aware of any proposed legislation. The City of Hollywood may have some issues (i.e., sludge disposal) that will affect our wholesale treatment costs over time. Commissioner Anton asked if our Impact Fees were considerably lower than the survey group. Mr. Thomas responded, not Water Impact Fees, but Wastewater Impact Fees are lower. Vice-Mayor Mikes asked if any cities were using Developer Agreements to get something over and above Impact Fees. Mr. Thomas responded it was a possibility, such as in-kind services, but it really depends on how bad they want the capacity to develop. He explained that the City of Miramar had sold Treatment Plant capacity, in their West Plant, to their development community. Then, when they wanted to tie the two Plants together, they bought it back. He stated they did get a significant up-front contribution from the developers. Vice-Mayor Mikes suggested the City Manager research what the City of Miramar did. Minutes of Workshop Meeting 3 Daiwa Beach City Commission Water and Wastewater Rate Study Tuesday,August 24, 2004—6:00 p.m. Fred Bloetcher, advised he has been working with staff and the City does not have a good • Extension Policy for people who need to extend pipelines. He remarked that some communities use Developer Agreements for this, but the problem is that you negotiate different agreements with different people. He remarked that an assumption has been made that growth is relatively minimum, if this assumption changes, it changes a lot of the long term assumptions made here. 4. Adjournment Mayor McElyea adjourned the workshop at 7:00 p.m. CITY OF DANIA BEACH -ATTEST: t. K. MCELYIIA MAYOR-COMMISSIONER LOUISE STILSON CITY CLERK Approved: September 14, 2004 • • Minutes of Workshop Meeting 4 Dania Beach City Commission Water and Wastewater Rate Study Tuesday,August 24,2004—6:00 p.m.