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HomeMy WebLinkAboutMin - City Council - 1984 - 09/13 - WorkshopALLEN CITY COUNCIL CALLED - SPECIAL WORKSHOP SESSION September 13, 1984 Present: f Donald P. Rodenbaugh, Mayor (v, Council Members: Joe Farmer, Mayor Pro Tem Jim McClure Jim Wolfe Gary Koch Absent: Rex Womack Ward Paxton City Staff: Jon McCarty, City Manager Marty Hendrix, City Secretary Brent Lewis, Finance Director Ernie Hoback, Director of Public Works Guest: Lewis F. McLain, Jr., Municipal Finance Consultant The called - special workshop session of the Allen City Council was called to order at 7:42 p.m. on Thursday, September 13, 1984, in the open -space office area of the Allen Municipal Annex, One Butler Circle, Allen, Texas. City Manager Jon McCarty advised the Council that this meeting had been scheduled in order to receive and discuss the work that had been done by Lewis F. McLain, Jr., a municipal finance consultant, on the water and sewer rate study. Mr. McCarty then introduced Mr. McLain to the Council and provided background information on Mr. McLain's work experience. Mr. McLain distributed to the Council a report entitled "Water and Sewer Rate Study - Financial Requirements and Rate Design Workshop Report" and then proceeded to review in detail that report with the Council. The first portion of Mr. McLain's presentation included the rate study objectives, the working capital requirements and debt coverage of the utility fund, the financial plan, revenue high- lights, expenditure highlights, working captial, debt service coverage test, and the extra construction funding. Mr. McLain provided an extra copy of the page on the working capital requirements and debt coverage -utility fund to the Council or their reference on other areas of discussion. Mr. McLain reviewed in detail the page on the working capital requirements and debt coverage - utility fund, which showed the revenue accounts, expenditures, net change in working capital, beginning working capital and ending working capital, the working capital components, the days in the working capital, the debt coverage with general and administrative (G & A) and without general and administrative, and the percentage of proposed rate increase over each prior years, from 1982 through 1988. ALLEN CITY COUNCIL September 13, 1984 Page 2 Mr. McLain explained in detail the debt service coverage test and the Council discussed with Mr. McLain various aspects of this requirement. The Council also discussed with Mr. McLain the figures showing the debt coverage with the G & A included and the figures showing the debt coverage without the G & A, why interest income would be included in revenues, and the definition of "restricted assets". Mayor Rodenbaugh recessed the called - special workshop session at 8:42 p.m. The meeting reconvened at 8:52 p.m. The Council continued discussion on the page showing the working capital requirements and debt coverage for the utility fund. Areas of discussion were the figure of $250,000 shown in the year 1984 - 85 for water and sewer increase and how that figure was calculated. Mr. McLain then explained the analysis of key factors by customer class which showed a chart of the customer classes, the total number of bills, the average gallons per bill, the total gallons, and the existing rates. Mr. McLain then explained the rate design structures consisting of the declining block, the flat rate, and the inverted rate. Using those rate design structures, Mr. McLain advised of the steps taken in this study which consisted of the development of the financial plan, determining the rate increase time span, evaluating the rate alternatives (water), and raising the sewer rates by a general rate increase of 18.01%. Mr. McLain then explained the two proposed rate structures, Rate A and Rate B. Using a residential 3/4" meter customer class, Mr. McLain showed how the Rate A structure would be calculated, which would be a 18.01% increase in all water classes. Mr. McLain then explained the Rate B structure, which would be an inverted rate structure, with the minimum to 10,000 gallons customer class staying the same, and the above 10,000 gallons customer class increasing to the 18.01% increase. For comparison, Mr. McLain referenced the existing rate structure, which was a declining rate structure, to the new proposed Rate B, which is an inverted rate structure. There was considerable discussion by the Council with Mr. McLain on the proposed rate structures and the effects on the different water billing customer classes. In closing, Mr. McLain provided a summary of this report and his findings and recommendations. There was considerable discussion by the Council with city staff and Mr. McLain on water conversation, how development will effect these rates, the status of the second delivery point, the proposed increase in the sewer rate, the advantages of Rate B over the Rate A structure, making adjustments in the rates to be a little higher for the medium users, and a lot higher on the large quantity users. The general consensus of the Council was that a rate structure like Rate B would be preferred, however, with some modifications to raise the rates for the middle range of water customer classes, and some what higher for the heavy range of water customer classes. City Manager Jon McCarty advised the Council that the proposed scheduling of other meetings on the water and sewer rate study would be a public hearing perhaps at the October 4th regular Council meeting and adoption of the water and sewer rates for the October 18th Council meeting. asp ALLEN CITY COUNCIL September 13, 1984 Page 3 The Council had considerable discussion on the percentage of increase that would be acceptable and some modifications that could be made to reach an answer. In further discussion, Mr. McLain proposed making changes which would then be brought back for the Council's review at their regular meeting to be held on October 4th, and make a modified presentation at that time. Mayor Rodenbaugh adjourned the called - special workshop session at 11:07 p.m. 1984. These minutes approved on the 4th day of October Marty Hendri 11, CITY SECRETARY A Q��'J Donald P. XOaenbaugn, MAYORI a$8