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HomeMy WebLinkAbout08-08-89 SS . . . MINUTES OF THE SPECIAL SESSION COMMISSION MEETING HELD ON TUESDAY, AUGUST 8, 1989 Mayor Ison called the meeting to order at 8 p.m. PRESENT: Mayor Ison; Commissioners Johnson, Dabbs, Combs, and Hager; City Manager Shapiro; City Attorney Rosenthal; City Engineer Shira; Director of Planning Behrens; Finance Director Poston; and Deputy Clerk Resnik. ABSENT: None. DISCUSSION ON CURRENT FINANCIAL CONDITION AND FUTURE FINANCIAL REQUIREMENTS OF WATER/SEWER FUND Mayor Ison explained the delay in getting the meeting started was to allow time for the City's financial consultant to meet with the City's consulting engineer and staff to finalize matters. Stanley Cohen of Rachlin & Cohen, the city's financial consultants, handed out a tentative water and wastewater rate study that was to be considered for adoption by the City commission. Mr. Cohen explained that the study included a summation of the results of the auction of capacity for wastewater connections that had already occurred, specifically what has been paid in Letters of Credit. Mr. Cohen said the engineering data was furnished by Professional Engineering Consultants (PEC). Mr. Cohen said the bottom line in regards to the City's water and wastewater systems is that improvements need to be made to existing facilities and new facilities need to be built to allow for growth. He explained both existing customers and new customers will have to pay for these respective improvements. Mr. Cohen said the typical customer (who uses about 6,000 gallons of water per month) is now paying $5.00 for the first five thousand (5,000) gallons of water and $.75 per 1,000 gallons thereafter which totals an average customer cost of $5.75 per month for water. The wastewater cost is based on a flat rate fee of $22.63 for an average customer utility cost of $28.38 for those residences that have both water and sewer. Mr. Cohen said the proposed increase for the 1989-90 fiscal year would include raising the base water charge - which would be paid regardless of whether or not any water was used - to $6.86 and $.46 for each 1,000 gallons. For the same typical customer who uses about 6,000 gallons of water per month, the new formula would result in a $9.62 monthly water bill which is 13.6% more than the current average monthly bill. . . . Page 2 Special Session City commission Meeting August 8, 1989 Mr. Cohen said the 1989-90 fiscal year proposed wastewater charges are calculated differently than the current method but the average customer will still pay $22.63. The wastewater charges would include a base rate of $13.81 with a $1.47 per gallon charge thereafter, with the average customer paying an additional $8.82 above the base rate, or $22.63. Mr. Cohen said most other municipalities have a similar system. This way, if people are away for certain times throughout the year, they still must pay the flat rate of $13.81. He said this must be done because the City must still continue to payoff its debts incurred through improvements to the system, expansions, etc. Mr. Cohen said the City will first finance through short-term bonds from October 1, 1989 through September 30, 1994 and then approach the long-term bond. He said the City would increase its water rates another 3.33% again in 1993 in order to help achieve the long-term financing it needs. Mr. Cohen said this plan has some key assumptions. First, he said, the plan relies on the developers building the houses that they have reserved capacity for. Second, the financing is based on bond anticipation notes at 6.5% for the short-term bonds and Mr. Cohen said he felt comfortable that they could get the bonds for that or less. Thirdly, Mr. Cohen said they had estimated the long-term bonds at 8% although, he said, no one could really be sure what they would be. He said they overcompensated because they had really figured it to be 7-7.25%. Mayor Ison asked if there would be any other increases in the water rates between 1989 and 1993. Mr. Cohen said the two increases he had talked about were the only increases figured into the analysis. Mayor Ison asked if it was possible for a household to pay less than the $32.25 payment outlined as the average for 1989. Mr. Cohen said that some people would probably pay $1.90 less on water and $6.00 less on sewer. He said some people would also pay more because what he had outlined was the average customer. There was also discussion about provisions for irrigation meters for those on sewer and Mr. Cohen said this was outlined in the 1988 ordinance. Planning and Zoning Board Vice Chairman Linebarier asked if the senior citizens were taken into account in determining rates. Mr. Cohen said there was no provision included that would allow any class of people to get free service. He explained that it was illegal for an enterprise fund to grant free service and that the City would have to subsidize the senior citizens out of the General ____I . . . Page 3 Special Session city commission Meeting August 8, 1989 Fund if the City commission chose to continue granting the senior citizen discount. city Manager Shapiro said at the request of the City Commission, the senior citizen program would be continued by taking the funds out of the General Fund. Mayor Ison clarified that the water service was discounted for senior citizens but the sewer fee was not. R.P. Mohnacky, 1820 prairie Lake Boulevard, said it seemed to him to be quite a drastic change going from 5,000 gallons for $5.00 to zero gallons for $6.86. Mr. Cohen explained that the need for the increase was because the existing water facilities were not operating on a self-sustaining basis. He said improvements were needed on the existing system in order to serve the existing customers. Mr. Cohen said there was another payment method for future customers and that that money was paid by developers. Mr. Cohen said the improvements to the existing system for the existing customers were such that the present water rates had reached a point of inadequacy. He said along with increasing the rates, the City was also trying to make the system more equitable by restructuring the way water use was calculated. city Manager Shapiro noted that another reason rates were increasing was because the city had reached the point where it had to start paying back developers who had fronted money to do improvements to the existing system years ago. Planning and zoning Board member Weeks asked Mr. Cohen what would happen if the developers did not build the homes they have proposed. Mr. Cohen said that could create a problem but that the City did have guaranteed revenues in the form of reserve capacity charges that the developers had fronted and these were equivalent to the carrying costs of that capacity. He said the developers were the City'S bank, so to speak. Several things were cited as examples of improvements that were needed to the existing system. The backbone of the system needs upgrading to include back up availability to the existing wells and improvements need to be made to give better water pressure to certain parts of the city. Mayor Ison said as recent as 1983, the City did not really have a complete system but rather subsystems, some with no back up measures. Mayor Ison said the new improved system would be a quality system and with it totally looped, it would also provide the quantity needed. Mr. Cohen explained that for the current fiscal year (1989-90) the City would use the $446,000 cash from developers for water capacity and the $676,000 worth of irrevocable letters of credit for sewer . Page 4 Special Session city Commission Meeting August 8, 1989 capacity as security that the bank will need in order to allow the ci ty to borrow the money it needs. He said the developers have put their money up front and if they did not build, the City would have the revenue to fall back on and that existing customers would not be saddled with paying higher rates for the new facilities that would have to be built to handle future customers. Planning and Zoning Board member Sims asked if the base charge would still be sufficient if consumption decreased and Mr. Cohen said it would be sufficient. . Planning and Zoning Board Chairman Swickerath asked if the residential unit flow was based on overall consumption divided by the number of residences. Mr. Cohen said there was a formula that converted every unit to a common denominator. Chairman Swickerath said part of his question was to find out if the City had considered basing the rate on the number of fixtures in the household. He said his reasoning was to charge someone with a pool and four bathrooms differently than someone who only had one bathroom. Mr. Cohen said it is very complicated to charge that way. He said it would be difficult to keep up with modifications to homes. He also said some people may have a large household with many bathrooms and others may only have two people with the same number of bathrooms so the use would be much less but because of the number of fixtures the two-person household would pay more than their fair share. Mr. Cohen said actual gallonage used is not always adequately reflected by the number of fixtures in the house. He said it is an acceptable method of calculating but the best method for Ocoee is to use the gallonage. Commissioner Dabbs asked if the new rates were comparable to other ci ties in Central Florida and in the Orlando area. Mr. Cohen displayed a chart for the Commission which showed Ocoee's proposed 1989-90 water rate increase as compared with Orange County and area citys' current rates. The chart showed that the increased rate would make Ocoee slightly higher than winter Park water rates but lower than Orange County rates. Orlando and winter Garden were lower than winter Park. Mr. Cohen asked the City Commission to take into account the fact that many of the cities would probably consider raising their rates for the 1989-90 fiscal year but that those proposed increases were not reflected in his chart. Mr. Cohen also had a chart displaying the wastewater rates for the same cities. Again, Orange County's rate was the highest at almost $28 per month and Ocoee and winter Park were about the same with . . Page 5 Special Session city Commission Meeting August 8, 1989 Ocoee's rate staying at $22.63. Orlando's current rate is about $18 per month. Mr. Cohen said Orange County's rate was going to increase again soon. Mayor Ison said he wished Mr. Cohen had included Apopka and Altamonte springs in his charts. He said the growth occurring in those cities was similar to Ocoee and was affecting them similarly. Mr. Cohen said the new rates would probably bring about a decrease in consumption with people knowing they will pay for everything they use. He said the City builtin the fact that additional gallonage may decrease when they were figuring on the rates. Mr. Cohen said the decrease will be favorable for saving water. He said some cities have already built in penalties into their systems for over consumption and at some point in time the City of Ocoee may decide to do this as well. Mr. Cohen said the way this is done is to charge more per gallon after a certain point. For example, he said, the City may opt to charge $.46 for the first 6,000 gallons, $.50 for the next 4,000 gallons, and $.54 for anything ~ over 10,000 gallons. city Manager Shapiro asked the City commission when they would like to formally consider this proposed rate plan. Mr. Cohen said theoretically the first and second readings could take place in August and the Request For Proposals could be sent out after the first reading to the banks with a required returnable date of 30 days. Mr. Cohen said with the combined efforts of the bond counsel and the bank's attorney it could probably be accomplished by September 30, 1989 or around that time. Mr. Cohen said he recommended that this new rate go into affect with the beginning of the 1989-90 fiscal year. Mayor Ison pointed out that Mr. Cohen had only reviewed up through Page 4 of his Water and Wastewater Rate Study with the Commissioners and asked if they needed to go through the remainder of the document. Mr. Cohen said the other pages were back up material and documentation to show the feasibility of all the numbers and information that would need to be shown to the bank. There was also a schedule of how much the developers will or have paid towards future capacity allocations. Mayor Ison pointed out that on Page 14, Item #5 reflected that the City would purchase the Hubbard tract (40 acres) but that the City had negotiated a better price than what was listed on Schedule 4. City Manager Shapiro said the original price of $400,000 had been brought down to $340,000, representing a savings of $60,000 over what was ~ . . . Page 6 Special Session City Commission Meeting August 8, 1989 anticipated to be the price. Mayor Ison reminded the Commission that the items listed were estimates as no bids had been received as yet. Planning and Zoning Board Chairman Swickerath asked what the growth potential was past 1994. He wondered if the City felt there would be a decline in the growth since the report did not go further. Mayor Ison said no one has committed past 1994. Chairman Swickerath said if the study was based only on known demand, perhaps the City needed to add in additional capacity in the event more was needed. Dave Refling of Professional Engineering Consultants, the city's consultants on this study, said the figures were based on the capacity sale. He said the City was placing an importance on the need to acquire land for future expansion of the water and wastewater facilities (for future capacity sales) but that the actual demand was used for purposes of the rate study. Planning and Zoning Board Chairman Swickerath asked why the City did not increase the rates from $.46 per gallon to $.53 per gallon or there abouts in case more was needed than what was anticipated at this time. city Manager Shapiro said the City could not justify charging the existing customer for theoretical growth. city Attorney Rosenthal agreed and said from a legal standpoint, the current rate payers are not paying for expansion of the service. The existing customers are paying for improvements to the existing system and future developers will have to pay for enlarging the system. Attorney Rosenthal said new growth must pay for new growth. He said the City also has to make sure that new growth does not pay for improvements to the existing system. Mayor Ison asked Finance Director Poston for a list of new water customers (for connections to new homes or apartments) for this past year and a list of building permits pulled for new homes in order to make a comparison. R.P. Mohnacky, 1820 prairie Lake Boulevard, said by using the new formula his bill would probably increase 50% and he did not feel this was appropriate. Don Tooley, a developer of mUlti-family residences in the City of Ocoee asked why the City did not use the inverted rate now. Mr. Cohen said there was a need to address the more immediate concerns and then that could be looked at. Planning and Zoning Board member Switzer asked if there were any plans to retrofit any of the older neighborhoods. City Manager . . . Page 7 Special Session City Commission Meeting August 8, 1989 Shapiro said the City had set aside money to do some of that each year and it would be on a priority basis as determined by the new in-house City Engineer. Planning and Zoning Board Chairman Swickerath asked if the neighborhoods with septic tanks would remain with septic tanks. City Manager Shapiro said the subdivisions currently with septic tanks would stay that way and would not be converted to sewer. City Manager Shapiro asked when the City commission would like to see the ordinance to increase the rates as proposed. Attorney Rosenthal said for clarification purposes, the city could adopt the new rates by resolution, but that there were some other things that the City wanted to modify in the ordinance and as a result, they would do the rate increase by ordinance. ci ty Manager Shapiro said some of those things that staff was requesting to change were higher deposits for some people based on usage and whether they owned or rented their home. City Manager Shapiro said staff would attempt to have the ordinance to the Commission by August 22, 1989 for first reading. There being no further comments, Mayor Ison declared the meeting adjourned. ADJOURNMENT: 9:30 p.m. -:Jt- ~ L MAYOR ISON ATTEST: DEPUTY CLERK RESNIK