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Minutes 10-17-83MINUTES OF THE SPECIAL CITY COUNCIL MEETING HELD AT CITY HALL, BOYNTON BEACH, FLORIDA, MONDAY, OCTOBER 17, 1983, at 7:30 P.M. PRESENT James R. Warnke, Mayor Carl Zimmerman, Vice Mayor Nick Cassandra, Councilman ~Joe deLong, Councilman Samuel L. Wright, Councilman Peter L. Cheney, City Manager Suzanne Kruse, Deputy City Clerk Mayor Warnke called the meeting to order at 7:30 P.M. The sole purpose of this meeting was for discussion and action on the utilities budget and water and sewer rates for the 1983-84 fiscal year. Mr. Cheney presented his proposal. Explaining that the utilities system as the water and sanitary sewer systems are self support- ing and supported only by the rates that are charged for the consumption of water and the collection of related sewerage, he advised that an increase in rates is recommended again this year. Mr. Cheney reviewed the actual income for the end of 1982-83 compared to the previous year and noted that the estimate came pretty close. At the end of September, without the final audit adjustment that would be coming in, it appears that a loss in the water and sewer revenue fund is about $423,000. As anticipated, t~ere was a loss because there was only a 33% increase in rates instead of the 54% recommended. Now, expenses in the fund are being recommended and presented as appropriate for the coming year. Mr. Cheney advised that these expenditures are to operate the existing systems and has ngthing to do with expansion, or the new water plant, or the new sewer plant. It has to do with the day-to-day operation of the existing water plant, a pass-through charge of sewer plant, the existing operation of the sewer collection system, and maintenance a~d repairs of current water and sewer systems. That, as it is s~en today, is what Mr. Cheney was presenting for Council's dis- c~ssion and consideration. Mr. Cheney noted that, as the city has expanded and is adding six m,)re wells, there is an increase in the electric and chemical C~ h. i o' a )sts because more water will be produced. He said the City has ~d a deficit situation for two years while many years previous Was a positive situation. He explained that the tendency is .at retained earnings (surplus in the general fund) are built up ~er a period of time, then over a period of time, those earnings re used. RDgarding the rates, Mr. Cheney said they have taken an average m~nth of actual use, applied new rates through the computer to those actual uses, then arrived with new income for that month, a~d multiplied that by 12 to come out with estimated income for the coming Year. - 1 - MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA OCTOBER 17, 1983 Also, Mr. Cheney indicated that how the day-to-day water and sewer revenue fund is operated indirectly has a bearing on the ability to go into the bond market. If a situation is developed where the fund is continuing to oPerate from a day-to-day basis in a deficit situation, like any business, it would be difficult to go to the market for new money. He advised that the City will be needing to go into the market for new money just to meet the other needs of the City. Mayor Warnke noted that a large majority of citizens are retired and use less than a minimum. He wanted to keep the minimum of 3,000 gallons at the present figure, approximately. $3.9, and then expand above that for commercial and usage over 3,000 gallons. It was noted that Mr. Cassandra had brought that up at a meeting before and he was inclined to go along with the answer the City Manager hadmade at that time: That is an area that can be re- searched and done inhouse without an outside consultant. That might be appropriate next year. Mr. Cheney indicated the difference between~Mayor Warnke~'s suggestion and Councilman Cassandra's suggestion. Mayor Warnke's idea was to leave it at $3.90 for the minimum up to 3,000 gallons and instead of raising the amount per thousand from 95 to $1.25, raise it from 95 to $1.50 or $1.60 per thousand. Mr. Chaney i~dicated the problem of adjusting rates whereby the people paying the minimum are nOt paying their fair share of the basic cost of having the system in line. Councilman Wright questioned if that might be discriminatory if it is not equitable. Continuing, Mr. Cheney thought Councilman Cassandra was.'suggesting that the per-thousand gallon charge increase as you use more thousand gallons; so to follow up and combine the two things t~gether. . as the Mayor had suggested, maybe they could leave the m~nlmum at $3.90, then make the next thousand $1.25, and the next thousand $1.50, and the next thousand $1.60 - something of that nature. Councilman Cassandra suggested that paying more for using more Water might bring in some conservation. This is also part of their con- cern with the upcoming problem of not enough water in 85-86. Councilman Cassandra reviewed the City Manager's summary where the rate changes were presented in 2,000 increments. Mr. Cheney advised that that chart is water and sewer, and sewer has a cap of 7,000, so that is the reason it goes up less between 7 and 9,000. Councilman Cassandra felt that would hold up legally. Councilman Wright sees this as a tremendous burden on larger families that w~uld need more income than a family of ~one or two people. Mr. Cheney also indicated that electricity is quite likely to increase in cost with increased production. - 2 - MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA OCTOBER 17, 1983 Mr. Cheney pointed out that in the water and sewer system they are not proposing increase of any personnel. When Councilman Wright asked about the status of the Assistant Utilities Director, Mr. Cheney explained that they have been considering reorganizing the Utilities Department but within the same number of personnel. He will bring that before Council within a couple of months but it won't affect the budget. In response to Councilman Wright's concern, Mr. Cheney indicated that if they don't want an 18% increase, they should show where the expenses are going to go down, otherwise theywill have a deficit again. Councilman Cassandra explained the method he used in going over the proposed budget together with the Finance Department budget report. In reviewing Department 331, Page 310, line by line, Councilman Cassandra referred to line item 30-45 showing an increase of $1500 he felt could be challenged as one of the possibilities to be made smaller, and the electric recommended increase a.s another. Then on Page 311, still Department 331, Councilman Cassandra referred to an increase in the area of wells and screens, includ- ing equipment repair and building repair, and he felt there could be a cut of approximately 20,000. Mr. Cessna answered to that, noting that this part of that money is to do what they haven't been able to do because of the use of the wells. He referred to reports on the wells and the necessary steps that department will have to take to bring wells (4 in particular) back up to standard and maintain production. Mr. Cessna noted that $3500 under that account takes care of it and part of it is in other accounts in there causing the increase, all in the same department. Mayor Warnke interrupted to announce that Former M~yor.Trauger was in the audience. In answer to Councilman deLong's qu~ry~. Mr. Cheney advised that there are'accounts which are supplies and accounts which are contract and they follow the State classification of accounting system which tells them where to put things. Mr. Cessna explained that they had a very wet year and.their total production per day on average was substantially below what had been in previous years, therefore they spent less than was budgeted. Now they are adding $10,000 to what was budgeted last year assuming they are going to have a normal year, and that 10,000 is the fact that six new wells will all be at least 10 and usually 15 horsepower per well higher than the wells presently used. Mr. Cessna indicated that if Council doesn't appropriate it he will have to come back to the City Manager in - 3 - MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA OCTOBER 17, 1983 May and request an appropriation amendment to the budget to get through the rest of the year. Vice Mayor Zimmerman noted the significant difference in the size of the motors. Mr. Cessna explained that the higher horsepower is due to the 55 to 60' depth of the newer wells which will be pumping a million gallons another 20 or 30' up, which costs more money per gallon to pump the water. During discussion, Mr. Cheney advised that cutting down rates does not necessarily say they're cutting dOwn expenditures. It was the general 'consensus that they should not try to change the rate in the middle of the year. Councilman Cassandra led discussion of Page 319, questioning increases. Mr. Cheney explained the Utilities Department Operators classifications and status. Also, Councilman Cassandra challenged the area on Page 318 con- cerning Processing Chemicals. .He questioned the need for that much for the worse possible season. Continuing to the line item for electric, Councilman Cassandra again challenged that much, even with the new wells. On Equipment Maintenance where the need is indicated for another $35,000, Councilman Cassandra had no doubt there is. justification but he raised the question. In the area of $277,000, he said could they not reduce $50,000. Mr. Cessna reported that it depends upon how much they produce as to how much chemicals and power they use. Mr. Cessna referred to line item 40.43, Equipment, Repairs, and M~intenance. Answering to the Challenge where it went up sub- · stantially '($35,000), Mr. Cessna explained the needs of the 5-year old line handling system (the large tanks that go up). He also noted that they have to do some moving because of the way it had been installed, to solve problems in handling the lines. He said if they let it go, they will loose the whole system. Mr. Cassandra accepted that, and there was no question in his mind that the dire need with all reasons given justifies it. Mayor Warnke asked fgr the projected life of that system; Mr. Cessna answered 20 years but needs maintenance to keep it going. Mr. Cheney indicated the S~me thing would apply to account item 30.45 which had been pro- p~sed for $45,000 and they are only spending 12; that was for three clarifiers. Mr. Cessna said they were also five years old and they are handling the line with all the chemicals to treat the water. Mr. Cessna further advised that they Paint two elevated towers, and they figured.to have the same amount in the budget e~ch year to handle one piece of equiPment each year alternately, establishing a routine to level out t~e demands ~n the budget rather than have a "big bump" in it. Mayor Warnke expressed his agreement for preventive maintenance. Councilman Cassandra said he did not challenge the clarifier. Mr. Cheney wanted them to - 4 - MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA OCTOBER 17, 1983 know there was some rationale for the expenditures and they spread them out if they can. Councilman Cassandra indicated that he had no question in Departments 333 and 334. However, the total area of water, Departments 331, 332, 333, and 334, had an increase of $351,918 from last year which he felt between 70 to 100,000 might be enough recommendation of a cut in total. Councilman Cassandra questioned the water meter expenditures. He said he had reviewed the budgets of 198g through 1983 and noted that the City had bought fire hydrants, water meters and water mains thoughout those previous budgets of comparable numerical numbers. In rebuttal, Mr. Cheney advised that the City installed this year 1268 new meters and for every new meter installed they get a payment for installation. In addition, he said, they phased out 942 old meters, and the old meters were part of mainte- nance and repair. Mr. Cheney advised that every new fire hydrant is put in by the developer, unless the City is putting in a new line as part of the phase system that needS hydrants. Some of the old hydrants have been in the ground for 20 or 30 years. It was noted that they Can't ~get~parts for the very old hydrants. As a point of information, Councilman Cassandra asked Mr. Swann if they depreciate-amortize When they buy new meters for capital expenditures. He asked if the City has a straight y~ar life span type of procedure. He asked what happens to the money put into that fund, if it is used to buy back or just keep building up a fund. Mr.-Swann advised that the City has revenues come in for the sale of the meter, and the depreciation on the items builds up and builds up into the retained earnings of the fund. Under discussion, Mr. Cessna advised that there is a one'time charge on the ~ew water meters, then the City maintains them forever as part of the City's operating cost. Councilman Cassandra wanted to suggest that they extract some money from that fund. Mr. Cheney advised that there was no money to eXtract. Mr. Swann indicated that they ran at $600,000 deficit last year. Mr. Cheney said it was taken from the built up retained earnings. Mr. Cheney indicated that the bond buyers expect them to build up a reserve for the big problems. Mayor Warnke asked how many meters they have in the whole city. Mr. Cessna answered, between 16 and 17,000. Councilman Cassandra went to Page 342, Account ~351, Sewerage Collection. In comparing it this year with last year, he noted a $47,800 increase and found a few line items to raise up as '~ossible areas". Mr. Swann advised of a very ~&rge encumbrance on line item 40.3F, so Councilman Cassandra removed his.question on that. - 5 - MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA OCTOBERi 17., 1983 Mr. Cessna detailed the use of the TV camera in locating areas with bad infiltration, areas that will be grouted, and lines that will need-to be replaced. Councilman Cassandra again questioned Processing Chemicals on Page 350, line iteTM 30.65. Mr. Cheney advised that this is · Odophos, which is the stuff put in the green tanks by the stations to keep the odor down. Mr. Cessna explained the system and noted that they have been able to get a $20,000 reduction in price. Mr. Cheney indicated that it is concentrated, so at the same time they are saving $2'0,000, item 40.11 (which is water) is increased to $5,000 and will go to about $8,000. Mayor Warnke asked about group bidding. Mr. Cheney advised that the City has started it with Boca and Delray. He indicated anticipation of 15 to 20% savings and expects to include Police and Fire uniforms. R~ferring to Page 356, Sewer Treatment, Councilman Cassandra q~estioned Mr. ~heney about the labor force where they ~had two and will have only one yet the money amount doesn't change in that line item (regular time). Mr. Cheney thinks that was a mistake. They were able to phase out the Bristol Springs Plant.  ey will have only one person and Mr. Cheney thinks the money ount was not changed. Councilman Cassandra questioned the shut-down cost. Mr. Cheney advised that they keep rebudgeting that each year and not spend- ing it. It is put in because they know that at some point they have to do something about the existing old sewer treatment plant. Mr. Cheney advised that the City is still paying debt service on the old plant they are not using, and would need EPA and DER permits to reactivate any part of it. He said 2/3 is not useable aSd should be torn down,, and 1/3 is useable. Mr. Cessna advised that it is the least energy intensive, .the least manpower intensive, and Would meet the requirements to .get a temporary operating permit if the need arose in an emergency situation. He noted that it could probably be operated .with three or four men under present regulations. M~yor Warnke asked that the record show that Owen Anderson, E~ecutive Vice President of the Chamber of Commerce, joined the audience. Referring to ti.ne 40.91 in the same department, which is money paid for the regional plant, Councilman Cassandra asked if any increase is foreseen~ Mr. Cheney indicated that they anticipate $761,000 instead of $861,000. The recent action of the sewer 2 ° , board increases the user charge so 0~ would be added to that so it would be $910,000. - 6 - MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA OCTOBER 17, 1983 Col. Trauger, former Mayor, came forward and referred first to the 3,000-gallon minimum which had been discussed with a progressive rate beyond that. Col. Trauger felt it would be a problem similar to the Florida Homestead Tax. He did not believe that would be right; ~he believed all household water, users should pay the same rate for useage. He reminded Council that Councilman Wright~had come back from Orlando with all kinds of restrictive devices of conservation to put in the faucets and toilets, and people were totally negative. As far as the proposal of an average increase of 18% is concerned, Col. Trauger strongly urge~ Council to reduce this to around 10 or 12%, then establish it on a rate basis of a 10% increase over the next 4 0~ 5-years. Councilman Cassandra questioned line item 40.90, Computer Operation in Department 393, Building Department, of $93,000. Mr. Cheney explained how and why most of the cost is put in this department. Also for point of information, Councilman Cassandra referred to General Administration and a $450,000 charge on line item 4'0..81. Mr. Cheney explained that as a 6.9~or 7% charge to the Utilities Fund, comes as revenue in the General Fund, and attempts to cover all administrative costs that the general fund carries out to support the Utilities Fund. He indicated that it Would be put totally on a tax base of the citizens if it is not put here where the users of the Utilities System ~recharged. Cguncilman Cassandra noted that they will b.e expecting a report from Mr. Cheney regarding refinancing of the total debt service. T~.ey reviewed Page 10 of the Revenue Report for the period ending September 30, 1983. Recapping, Councilman Cassandra noted the three possibilities: 1) a pro rated concept, 2) to'maintain ~a base, and 3) to forget the base and "pay as you use". Cquncilman deLong asked about the agreement with Ocean Ridge. Mr. Cheney said they are charged a straight rate because they do all t~e maintenance. When asked about Briny Breezes, Mr. Cessna said the City has one master meter there and Briny Breezes maintains all their lines.. Councilman Cassandra ~sked about the earnings of interest. Mr. Swann explained this, noting again that they had to go through a lot of large capital expenditures out of the General Fund because they underestimated that area and they had only increased the income by 33%. Mr_ Cheney noted that the City also has a Capital Improvements Fund where all the capital utilities charges had been going, and he briefly explained the uses. - 7 - MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA OCTOBER 17, 1983 After-'thorough discussion, Councilman Cassandra moved that the City Manager bring in a 10% rate increase and the effect it would have on expenditures. Councilman deLong seconded. Mayor Warnke said it has been moved and seconded to have the City Manager tomorrow night present the Council with a 10% rate increase and to show the effect it would have on water and sewer rates. Mr. Cheney said, "with the exception of that 8½%"; Councilman Cassandra agreed. Mayor Warnke noted that's part of the motion. Councilman Wright moved to amend the motion so the City Manager would also bring back a report reflecting what a 12% increase would look like. Councilman Cassandra seconded. Mayor Warnke said it has been moved and seconded to have an amendment to also bring back charges of 12%. No discussion, the motion to amend the maih motion carried 5-0. Mayor Warnke then took a vote on the main motion and it carried 5-0. Mayor Warnke welcomed input from the audience. Mr. Kiebler came forward and spoke against high increases. He realized they need money to run the utilities but he pleaded for a way to bring things down. Mayor Warnke asked if he had any suggestions for specific areas. He did not, and Mayor Warnke advised him that the "multi-page" water and sewer budget report was available to him to look over. Councilman Cassandra encouraged My. Kiebler to come to the regular council meeting the following night to see comparison rates, and he advised Mr. Kiebler that information can be picked up in the City Manager's Office. Councilman Zimmerman encouraged suggestions for cutting. He reported that he had a recommendation made to him to cut down expenses by reading the meter four times a year - each quarter instead of each month. It was not advocated. Councilman Cassandra moved to adjourn. The meeting was adjourned at 9:40 P.M. Councilman deLong seconded. CITY ~F BOYNTON BEACH, FLORIDA V~ce Ma~ - 8 - MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA OCTOBER 17, 1983 ATTEST: Cfc~ilman~~ -~ J ~ DepUty C~ty Clerk Recording Secretary (Three tapes) - 9 -