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HomeMy WebLinkAboutCouncil Workshop Minutes 11.24.2009MINUTES COUNCIL WORKSHOP NOVEMBER 24, 2009 6:30 P.M. COUNCIL CHAMBERS A Council Workshop was held in the Council Chambers and called to order by President Doug Poehls at 6:30 p.m. on November 24, 2009. COUNCIL MEMBERS PRESENT: x Emelie Eaton x Doug Poehls X- Kate Hart _x_ Mark Mace x_ Chuck Rodgers _x Chuck Dickerson Alex Wilkins Norm Stamper OTHERS PRESENT: Sam Painter James Caniglia Mary Embleton Kurt Markegard Bill Sheridan Public Input (three-minute limit): Citizens may address the Council regarding any item of City business not on the agenda. The duration for an individual speaking under Public Input is limited to three minutes. While all comments are welcome, the Council will not take action on any item not on the agenda. Karl Dan Koch, 320 Colorado Avenue, praised the city for the new water line recently installed in Montana, Colorado, Pennsylvania, and Wyoming Avenues. He stated that it is good because they will be able to flush the toilet on Christmas morning, which could not happen last year because the water line blew out on Christmas day. Thanks to Kurt, the line was fixed seven hours later last year. Dan stated that the road is now a mess and he is sure that the contract says the contractor will clean it up. He asked the council to drive down Colorado Avenue to see what it looks like in front of the school particularly. He would like the city to tell him that something will be done with the street. The dirt is messy enough, but when it rains now, it is impossible to walk across the street without being in mud. He stated that there must be something that can be done to clean it up. General items There were none. Clerk/Treasurer: • Resolution - Engagement Letter with Dorsey & Whitney for Sewer System Revenue Bonds Mary Embleton stated that the Engagement Letter with Dorsey & Whitney is $10,000 for the Sewer System Revenue Bonds. These bonds are more complex because the city is incorporating ARRA money in the project. Additional requirements and legalities and compliance issues had to be addressed for preparation of this revenue bond. She stated that Dorsey & Whitney has done excellent work for the city, and she encouraged approval of the resolution. The cost is higher than the last one, but the work is more complex. 9 Resolution - Sewer Project Phase 2A1 bond resolution Council Workshop Minutes of November 24, 2009 Mary stated that the actual bond resolution is large, so she chose a few pages for distribution to the council. The first page distributed is the title page. She stated that Series A, B and C Bonds are needed because of the differcnt funding sources. The second page showed the funding sources for the project budget. The first source is ARRA A-Forgiveness money that will be treated as a grant and does not need to be paid back. The second funding source is the ARRA B-Loan at a 0.75 percent interest rate. The ARRA monies total $750,000. The regular SRF Loan is the C-Bond series for $846,000. The city also received a $750,000 TSEP Grant for the project. A portion is for this project and a portion is for the Phase 2A2 for the oxidation ditches. The project was split into two phases because the ARRA funding needed to be separate from the rest of the project. The third page showed what the city's debt service will be. There is currently one revenue bond in the Sewer Fund, and three more will be added. The first bond will not have to be repaid if the city is in compliance with all the ARRA regulations. The savings will be tremendous because 3.75 percent is the best rate for a SRF loan. This project will cost $1.8 million. The contracts were signed today and the Notice to Proceed is ready to be issued. The contractor will start work next Monday on this projcct. The City of Laurel applied for the grant in 2006, was awarded the TSEP Grant in 2007, and is now going to construction. Public Works Department' • Proposal for bulk water sales rate and usage Kurt Markegard presented the resolution of intent to increase the City of Laurel's water rates and charges. At the request of Mayor Olson and Bill Sheridan, staff came up with the rates that best reflect the costs associated with meeting future obligations for the water supply system. Mary did extensive work on the financial situation and the proposed base rate. A new classification for bulk water resale has been proposed. The council put a moratorium on that earlier this year. After this is completed, the moratorium can be lifted so people can ask the city council's permission to resell city water. Kurt asked Mary to speak about the financial part, how base rates were determined, and how EDU's were implemented. Mary stated that Kurt discovered the city was not using a standard EDU system multiplier for the different sizes of meters. Harry Whalen, Montana Rural Water, provided a formula and workshop to determine the base rate for what it costs to have the system in place. The base rate is a fixed rate and the volume rate is a variable rate. The best scenario was to split O&M (operation and maintenance) costs between the volume rate and the base rate. The base rate needs to service all the debt service, depreciation, and a portion of the O&M. Then the rest of the O&M needs to be serviced by the volume rate. It was determined that the base rate should increase from $24.22/month to $30/month. That is an increase of about $5.78/month, which is less than $70/year for the base rate for a 3/-inch meter and the majority of the city's customers. There are over 2,500'/-inch meters in service. Then the EDU factor was applied to the base rate to determine the base rates for the bigger sized meters. The information is depicted in Exhibit A. The consumption rate is proposed to remain at $1.80 per 1,000 gallons. Currently; it is $1.813333. The volume rate will remain the same for all customers, with the exception of the bulk water resellers. While reviewing this, it was discovered that the bulk water resellers were paying the same volume rate as residents and regular businesses. That did not seem fair because that water was going out of city limits to service people who live out of town, but they were not subject to the base rate. The most equitable way to determine a bulk water rate is to take an average residential customer's bill, and the usage for an average family of four is 6,000 gallons a month. The new average bill will be $40.80, after taking the $30 base rate and then multiplying 6x$1.80. Working that backwards and dividing by 6 units, or 6,000 gallons, the overall cost per unit is $6.80, which would be the $6.80 bulk water resale rate. Now the customers that come to town to fill up their tank will be sharing the base rate. Raw water, which also needed to be 2 Council Workshop Minutes of November 24, 2009 addressed, has been at 35 cents since 2005. The last water rate increase was a three-year rate increase in 2003. The raw water rate went from 28 cents to 35 cents in that time, so in five years another nickel for 1,000 gallons seems fair and equitable. System development fees will not change, but they need to be addressed in the utility charges. The curb box repair insurance fee will remain at $1.00 per month per user. The utility hook-up fees, and repair fees, and utility billing fees and deposits will remain the same, but are being captured in one resolution. Chuck Dickerson asked if the current charges could be added to the list of proposed charges. Mary stated that could be done, but Exhibit B will show that information. She stated that a resolution of intent will start the process. Statute requires that a public hearing be held and that it is advertised for three weeks. During that three week period, the city must send out a notice to every user with an estimate of the impact. Exhibit B will show the figures to inform people that the average bill for a 3/- inch meter will increase from $35.00 to $40.80. The average usage for a 3/-inch meter is 6,000 gallons. Mary will prepare the calculations, and the notice will be in the paper and mailed to every water user in the city. The bulk water resellers will be added to the bottom line in Exhibit B. Mary expects many phone calls and will have the staff prepared to answer questions. Mary explained the timeframe. If the resolution of intent goes forward, then December I" will start the clock ticking. The public hearing at a special council meeting on December 22nd will be advertised on December 2"d, 0, and 16th. The resolution to adopt the rates would be scheduled at a special council meeting on December 29th prior to the council workshop. The rates would be in effect on the January 10th water meter reading date. On February 10th, the city will bill for the end of February, and the increased revenues will start showing up in March. Mary stated that the focus was on EDU's and adjustment of the base rate because the debt service in the Water Fund continues to occur because of the work being done. The increase should not have a huge impact on the majority of customers, but it will address some of the inequities seen with the larger water customers. Kurt stated that this has been a long, tedious process. As the city goes forward with fixing the water system and doing improvements on the water lines, there will be more debt. There are many inadequacies in the system and more infrastructure work needs to be done. He asked the council to seriously consider the rates and what staff is trying to accomplish for the betterment of all ratepayers and citizens of Laurel. Chief Administrative Officer: • Resolution - Lease Agreement with the Laurel Jaycees Bill Sheridan stated that the Laurel Jaycees signed the lease agreement. He spoke regarding the needs and concerns involved with providing potable water to the Jaycees building during the winter months. More work will be done on that issue. The resolution and lease agreement will be on the December I" council agenda. • Resolution - Contract for roof replacement at the Laurel Library Bill stated that high winds blew off a portion of the library's roof last month. The city received three quotes for replacement of the roof. Bill stated that an engineer's expertise is needed to determine the best replacement for the roof in order to ensure that it will last for decades. There is funding in the CIP budget for the roof replacement project. As more review is needed, the resolution will not be on the December 1st agenda. 3 Council Workshop Minutes of November 24, 2009 • Resolution - Amendment No. 1 to Task Order No. 12 with Morrison-Maierle, Inc. for Water & Wastewater Rate Studies Bill stated that the city has worked with Morrison-Maierle to deal with water and wastewater rate studies, particularly the water rate studies. There was some sluggishness in trying to come up with some final advice and a plan from the engineering firm. Morrison-Maierle has submitted an additional $8,770 bill for doing the water and wastewater rate studies. The amendment to the task order that was created quite awhile ago will allow for the funding to pay MMI for their work. The city will go on with the rate system and studies that are being considered at this time. The resolution will be on the December 1" council agenda. Executive Review: • Appointments: o BSEDA Nominating Committee - Chuck Rodgers President Poehls stated that the appointment would be on the December Ist council agenda. • Council Issues: o Generator in Murray Park (Chuck Dickerson) Kurt explained that the contract times were specified at 120 days for completion of the project. The contractors completed the water line project. They started the generator pad and ordered the generator through ACE Electric. The contractor has also ordered pumps for the Water Treatment Plant, but there are lead times from the time ordered to the time delivered. The masonry contractor started setting up the block wall for the generator pad and wanted to know what kind of block to use. As Kurt wanted the same block used on the building, they chipped a piece off on the interior and sent it to Bozeman to color match and make the block. There is a Notice to Suspend the contract time until the blocks, the generator, and the pumps are delivered. The five new pumps should be delivered at the Water Treatment Plant in the middle of December or early January. When the Notice to Resume is ready, the contractor will start working again and the project will continue to go forward. Chuck Dickerson asked regarding MDU's plans for the 4x4 hole they dug by the generator building. Kurt will contact MDU regarding patching the street. Other items President Poehls stated that a resolution is needed to approve the mayor's absence for medical reasons. The resolution will be on the December I 't council agenda. Bill stated that Mayor Olson is recovering at home and is looking forward to getting better. At President Poehls' request, Kurt gave an update regarding the Asphalt Supply. Joe Gentri, with Montana Rail Link, informed him that the contractor hired to dismantle Asphalt Supply came down and found that the tanks were full of product. The contractor wants to remove the asphalt when it is frozen, so he is asking for time until there is cold weather. Then they will start removing the asphalt from the tanks. Review of draft council a ends for December 1 2009 • Public Hearing: o Ordinance No. 009-11: Ordinance amending Section 2.68.100 of the Laurel Municipal Code, amending the procedure to modify the City Judge's salary. 4 Council Workshop Minutes of November 24, 2009 The public hearing will be on the December I" council agenda. Attendance at the December 1, 2009 council meeting All council members present will attend. Announcements Emelie Eaton asked that the Public Works Director give a report at the December 86, council workshop on the status of the repairs on East 80' Street and the repairs of the streets in general. Me council workshop adjourned at 7:10 p.m. Respectfully submitted, Nte?1-- Cindy Allen Council Secretary NOTE: This meeting is open to the public. This meeting is for information and discussion of the Council for the listed workshop agenda items.