HomeMy WebLinkAboutCouncil Workshop Minutes 01.31.2006 MINUTES
COUNCIL WORKSHOP
JANUARY 31, 2006 6:30 P.M.
COUNCIL CHAMBERS
A Council Workshop was held in the Council Chambers and called to order by Mayor Ken Olson
at 6:30 p.m. on January 31, 2006.
COUNCIL MEMBERS PRESENT:
x Dick Fritzler
x Kate Hart
_x_ Gay Easton
Jennifer Johnson
_x_ Doug Poehls
_x_ Mark Mace
Chuck Dickerson
_x_ Norm Stamper
OTHERS PRESENT:
Perry Asher
Mary Embleton
Keith Molyaeaux
Larry McCann
Rick Musson
Mike Zuhoski
Police Reserve appointees
Public Inout (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.
Mike Dewey, 101 West Main Street, expressed concern regarding the two-hour parking limit on
Main Street. There are twenty apartments above the Wold building where he lives, which is the
old ACE Hardware. This has been a persistent problem for many of the residents because there
is no legal place to park in downtown Laurel relatively close to the apartments. There are also
apartments above two other downtown buildings. Mike stated that a two-hour limit is not
reasonable. The city parking lot behind the bank has a four-hour limit, so the tenants have to
park in front ofpceple's houses in order to park legally. His understanding is that currently the
police enforce the parking limit on a complaint basis only. The lady in the thrill store seems to
be the only person that complains. Employees of the various businesses park on the other side of
the street all day long. Mike likes to park in llont of the bank and he parks there all day long and
does not get a ticket either. But if he parks right by the Wold building, he gets a ticket because
the lady complains and the police write a ticket. When he looks out, the street is three-quarters
filled with cars except the whole section by the Wold building is empty. He understands that her
position is that she is losing business. Mike thinks this law was probably put into effect when
ACE Hardware was drawing business in downtown and there was a high demand for parking in
that area~ He does not think that is true any longer. Mike asked the council to consider dropping
the two-hour time limit.
Police Department:
Council Workshop Minutes of January 31, 2006
Appointments to the Laurel Police Reserve Department: William Brew III, Antone
Kostelecky, Sarah Thomas, Bonita Leady, James Hucrtas, Brit Robgrlson, and Jeremy
Waldo
Chief Musson introduced six of the seven police reserve appointees that attended the meeting.
The mayor's appointment and confirmation by the council will be on the February 7t~ council
agenda. Chief Musson expressed thanks for the reserves and the work they do in the City of
Laurel. The reserves complete a minimum 140 hours of training, which is held on Mondays and
Tuesdays through May.
Mayor Olson thanked the appointees for attending the council workshop and extended his thanks
for the time they will give to serve the city.
Public Utilities Department:
· Johnson Controls - presentation on automated meter reading system
Jared Schoch and Wendy Grosvenor, of Johnson Controls, made a presentation regarding the
status of the analysis of the city's water meters.
Jared distributed information to the council, and a copy is attached to the original minutes.
Jared thanked Perry, Larry, and Mary for spending the necessary time to provide the information
and data needed to complete the analysis. They were very helpful and judicious about providing
the information in a timely manner.
The process started by trying to understand the goals and challenges and needs in the focus of the
project. The two goals of the city were to provide effective services to citizens and operational
efficiency. The challenges identified include: rising costs; limited resources; limited capital
dollars; and aging infrastructure. The needs include: how to reduce costs and increase revenues;
maximize existing resources; and modernize infiastructure. Specifically, Johnson Controls
looked at the water meter system with those thoughts in mind in terms of how to help maximize
the water meter system Essentially, the problem was that the present system is old and needs to
be updated. The question was if there was enough efficiency in the system to allow the city to be
able to get a good payback project on doing something of that nature.
The Feasibility Assessment has been completed. A Memorandum of Understanding was signed
with the City of Laurel, and Johnson Controls completed the obligation and has provided
detailed information to Larry and Perry. The next step is the competitive selection process to do
the development/design and the implementation. The development includes a full-blown
analysis. Johnson Controls did a feasibility analysis that lets them know the situation
conceptually, but it is necessary to drill down from an engineering standpoint and finalize all the
pieces of the pn~le. After that, there is a decision to move forward, and then there is the actual
construction and implementation and installation of the potential project. The city would end up
spending money as part of a guaranteed performance contracting program where it is paid for out
of the savings that it generates. Essentially, the upfront cost of developing has a price tag and
there is a price tag for the implementation piece. Essentially, if thc development piece of the
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Council Workshop Minutes of January 31, 2006
puzzle comes back at the end and works out with enough money so self-funding works well, the
cost of development and design rolls into the overall cost ofcoustruction. There is a decision
point in between there tbat allows the city to decide whether or not to move forward. There is a
cost point at the development stage and also at the implementation stage. From a process
perspective, that is the current status and the reason for this presentation.
At this point, Wendy Grosvenor thanked the council for allowing them to make this presentation.
She expressed thanks to Mary and her team for the research from the billing department on both
water and wastewater billing. She thanked Larry who for the research on water and wastewater
treatment operations. Her goal was to understand the city's water treatment pmcess and how it
relates to the revenues received through water sales. On the wastewater side, Wendy reviewed
the revenue received relative to volumes ofwastewater that is treated to see what the potential
financial impact could be to the city if changes were made in the water metering or the water
distribution and wastewater collection systems.
Wendy explained the data in the handout. The first graph showed the fresh water that is treated
and the water that is billed. There is about an 18 percent discrepancy between the two. They
want to understand the cause of the 18 percent of water that is put out into the system but for
which no revenue is recovered. Potential sources are: leakage; inaccurate meters; unmetered
city use; unmetered bulk sales; hydrant use; and line flushing. There are a variety of reasons
why unaccounted-for-water happens. The American Water Works Association says that
anywhere between five to ten percent should be acceptable for a city. Since 18 percent showed
here, they believe that revenues could be recovered for anywhere from ten to fifteen percent of
that.
Wendy then explained some wastewater data and findings. Water metering is important because
wastewater revenue is usually based on the same measured volume. On a graph in the handout,
one line represented what is billed in sewer, and another line represented the volume of water
that is processed in the Wastewater Treatment Plant. In the summer months, a lot more water is
treated than is actually billed. Some possible reasons are infiltration, which are leaks in the
collection system so irrigation water or precipitation is actually entering the system and the water
is being treated unnecessarily. Another reason could be the rate structure. Consumers might be
consuming that water and putting it back in the wastewater system, but the current rate structure
does not bill during the summer months. The city's billing for the summer months is based on
an average of usage during the winter months. Of the one hundred percent of water sold, only
about a third of that is billed for wastewater. That might be appropriate with the billing
structure, but that cannot be known for sure until they move forward.
The question for Johnson Controls was whether they could recommend that it was worthwhile to
pursue the project further. They have determined that the City of Laurel should move forward.
This was summarized on a chart that compared billed water to treated water and billed sewer to
treated wastewater. Not counting the raw water sales used for industrial uses, it was determined
that 60 percent o£the treated water passes through the wastewater treatment but only 33 percent
is billed. There could be a data error in the reported sewer volumes and wastewater treated
volumes. A detailed audit would help to determine definite answers.
Council Workshop Minutes of January 31, 2006
The sources of potential efficiency improvements include: the 18 percent unaccounted for water,
of which 8 to 10 percent is probably recoverable; the 100 percent additional wastewater revenue.
It will impact both the water revenue and the wastewater revenue. Additional wastewater
revenue could be possible if there is some discrepancy in the volmnes that are billed for
wastewater or the amounts of water hitting the wastewater system are related to the true
consumption. Perhaps a rate change would be regarding using the winter rate for billing in the
summer months. Wendy estimated a cost of about $1.4 million to replace all of the water meters
with more accurate meters and to install automatic meter reading systems on those. Estimated
potential additional meter revenue (10 percent of the water revenue currently) is about $134,459
per year. The estimate on the wastewater side would be $600,000 potential additional billed
wastewater revenue. Wendy said it is obvious that they could easily come up with a project that
would self fund out of increased revenue or avoided water treatment and wastewater treatment
costs.
As a result of the overall analysis, Jared suggested that there would be a two to twelve-year
potential simple payback period. Johnson Controls recommends that the city move forward with
this type of program. The next steps would be: decision to move forward; selection process;
investment grade detailed audit/analysis; decision to move forward; implementation; and
performance management.
There was discussion regarding the infiltration problem. The sewer trunk line project should
address the major infiltration problem. If infiltration does account for a large amount of the
wastewater processed at the WWTP, the city would not realize any additional revenue from the
meters on that water, but it would reduce the operating costs at the plant.
If the council chooses to proceed, the review would happen prior to completion of the sewer
trunk line project. The bid date for the sewer trunk line project is February 9t~, and the project
will be completed afler the 2006 irrigation season is done.
There was further discussion regarding testing and replacement of meters.
Perry explained that the city must pay for the next step in the process. If Johnson Controls gets
the award for the implementation, it will be rolled into the cost of the implementation.
Wendy explained the scope of a detailed study. Johnson Controls' focus would be specific to
water meters and would complete a survey of 100 percent of the meters. They would physically
look at each meter and record the manufacturer, pull the serial number to identify its age, and
determine meter size. A complete accounting of every installed meter would be delivered to the
city. They would first bench test a small sampling of about twenty meters to determine if
everything is running with less than I0 percent inaccuracy, if there are gross errors, or a
combination. If everything comes back pretty true, it might be time to quit the process. Testing
20 small meters and all of the large meters would cost between $8,000 and $10,000. If it is
determined that there is enough evidence to move forward with a full testing a statistical
sampling of meters, probably 2 percent of installed meters, would be tested. A detailed
engineering study of right sizing and right typing all meters, and doing the full data download
from the billing system to correlate with the flows would cost between $60,000 and $80,000.
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Council Workshop Minutes of Januory 3 I, 2006
Perry stated that the funding for this project would come out of the water and sewer funds.
Based on the initial assessment, the risk of not being able to benefit fi.om this is pretty low. It is
a lot of money, but could be very beneficial in the long run.
Wendy stated that their goal is to deliver a performance contract that self funds, which means
they guarantee the outcome and the accuracy of the meters over the life of the contract, and the
funding mechanism to pay back the municipal lease, based on state legislation that allows
municipalities to do that.
Mayor Olson thanked Jared and Wendy for their presentation.
The resolution to request proposals to implement a performance contracting project for the
installation of water meters and an automated meter reading system will be on the council
agenda on February 7th.
Clerk/Treasurer:
,, Mid-Year Budget Review
The Mid-Year Budget Review booklets were distributed prior to the council workshop.
Mary stated that the city is in good shape at the mid-point in the fiscal year. She explained the
overview of the following funds: General Fund; Lighting Districts Funds; Street Maintenance
Fund; Sweeping District Fund; State Gas Tax Fund; Water Fund; Sewer Fund; and Solid Waste
Fund. t
The Mid-Year Budget Review compares the budget to the actual revenues. At this time of year,
it is important to see the actuals at the halfway point fi.om the budgeted figures. Graphs in the
booklet showed revenues and expenditures, comparing budget to actual and last year (2004) to
this year (2005). The General Fund, Street Maintenance Fund, and the three enterprise funds
(Water, Sewer, and Solid Waste) are major funds. Gas Tax monies are received every month
and are spent every month.
The Revenue vs. Expense graphs compared income and expense and can be very revealing. The
chart from 2004 showed higher expenditures than revenues in the General Fund, which means
the city was into the reserves. This year, revenues are a bit higher than expenditures, which is
preferred. The main reason for this difference last year to this year is the insurance transfers of
$150,000 to $170,000 that must be transferred into the General Fund. The expenditures are paid
out, but the revenues are only received twice a year.
Mary spoke regarding the water, sewer, and garbage funds. Sometimes expenditures are higher
than revenues because of projects and the timing of receiving grants and loans. Garbage
revenues last year were slightly higher than expenditures, due to the rate increase. In the
enterprise funds, it is important to see revenues increasing, expenditures staying fiat, and the
cash line going up. It needs to be reviewed if that is not the case.
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Council Workshop Minutes of January 31, 2006
Mary encouraged the council to ask her any questions at any time.
Mark asked Mary her opinion of the automated meter reading system.
Mary stated that she thinks it is a good thing any time the city can invest money to improve
efficiency and to guarantee to the public that the city is doing the best it can with the tools
available. It will be advantageous to her office and staffbecsuse it will save time in the billing
arena. It currently takes about three days to manually input all the meter readings. With the
automated system, the data will download and all staff will need to do is review the data. An
automated system will ensure the accuracy of the readings. Mary was surprised to see the
discrepancy in the wastewater revenues and would like more information about it. She thinks it
is a wise investment for the city.
Doug asked Perry if the mid-year report is in line with his projections.
Perry stated that it was in line with his pmjeetions. The same numbers that created those charts
gave him the confidence that the city is heading in the right direction. Obviously, he cannot
make any guarantees, but right now the city is on solid ground and should end the year in pretty
good shape. That's the basis of his willingness to project that the city will be a little ahead next
year.
Mary concurred with Perry's projections, even though she is more conservative than Perry. The
figures were discussed at length and she supported Perry's projections.
Perry explained that he goes over the monthly reports in detail every month. If he saw even one
month where things looked funny, he would discuss the situation with the department heads.
That is the case now, and would be the case next year. The budget will be subject to constant
review and constant adjustment based on how the numbers actually come in. That is the basis of
his willingness to stick his neck out because he knows he will not let this get out of hand.
Mary agt~xt that she would bring any irregularities to Perry's attention. She has been watching
carefully how the union contract wages has affected this budget.
· Swimming pool bond issue
Mary gave a brief presentation and additional information will be provided for this complex
issue.
A general obligation bond is pledging the full faith and security of the City of Laurel to a project.
Overall legislation has limited the city's ability to do that to 1.51 percent of its total assessed
valuation for things like a fire truck, police station, city hall, etc. For recreation, it is only .9
percent of the city's total assessed valuation. These limitations are fixed by legislation, not by
the constitution. Mary suggested that a proposal should be given to the legislature to increase the
percentage. As a general rule, cities use the general obligation bonds to approve construction of
a building. The City of Laurel is seeking to build a pool. The bonds are paid back by taxes, so
the city would levy a tax every year for that purpose. The process is long and particular to a lot
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Council Workshop Minutes of January 31, 2006
of regulations and rules. MaeNan Ellingson, the expert bond counsel at Dorsey & Whitney, has
been very helpful and prepared a list of twenty items that would be the end product of all the
work that would be done from the beginning to the end of the process.
At the mayor's suggestion, Mary will compile the information into folders for each council
member.
The City of Laurel has used general obligation bonds for the downtown storm sewer and the FAP
building, both of which have been paid off. Mayor Olson emphasized the need for information
and an understanding of general obligation bonds. Perry suggested that future projects could
include city hall, a new FAP building, and the storm water system.
The limkation is .9 percent of a city's assessed taxable value. Ifa project is financed and another
project comes up, the limitations are determined by the difference between how much is lel~ of
the debt compared to how much the city is legally allowed to indebt.
Executive review:
· Resolution of annexation of Lots 1 & 2, Block 04A, Laurmac Subdivision Amended
o The resolution of intent to annex was approved on January 17, 2006.
o The properties are wholly surrounded and received city services.
o Discussion regarding charging a surcharge of 20-25 percent for water and sewer
services to properties outside the city limits
· Water district contracts are being reviewed.
· Bruce Barrett - attending February 7th meeting to discuss priorities
o Bruce Barrett will present the MDOT's official stance on projects.
o Mayor Olson encouraged the council to have questions and comments ready.
· Yellowstone Historic Preservation Board Annual Report - February 7th
o The annual report will be presented at the council meeting.
o Dick Hatfield has resigned from the YHPB, and a replacement needs to be
appointed.
· Police Commission: Reappoint Wallace Hall to a three-year term expiring December 31,
2008
o The reappointment will be made at the council meeting on February 7th.
Review of draft council agenda for February 7~ 2006
· Public hearing: Ordinance No. O06-01: Ordinance amending the zoning map of the City
of Laurel, Montana, relating to Elena Subdivision, Second Filing, an Addition to the City
of LaureL
· The new Police Reserve Officers will be appointed at the council meeting on February
7th.
Announcements:
· Doug stated that the council should submit ideas for Wal-Mart's construction in the city.
· Mark suggested inviting the City of Billings' engineer to the council workshop on
February 14th to discuss his experiences in dealing with the construction of the two Wal-
Marts in Billings.
Council Workshop Minutes of January 31, 2006
Discussion regarding the entryway zone district and the sign code.
· Mayor Olson explained the revised committee list, which will be on the council agenda
for the council's approval on February 7t~.
o Mayor Olson plans to meet with the task forces, the executive committee, and
council members for breakfast at various times throughout the next few weeks.
· Doug asked that his cell phone number be added to the committee list.
Attendance at the February 7th council meeting,
· All council members present will attend.
Other items
· None
The council workshop adjourned at 7:53 p. rrr
Respectfully submitted,
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.
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