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HomeMy WebLinkAboutMin - City Council - 1988 - 04/18 - WorkshopALLEN CITY COUNCIL CALLED - SPECIAL WORKSHOP SESSION APRIL 18, 1988 Present: Joe Farmer, Mayor (arrived at 7:31 p.m.) Council Members: Rex Womack Jerry Wilson, Mayor Pro Tem Bobby Glass Jim Wolfe Jack Pennington Absent: Jim Pendleton City staff• Jon McCarty, City Manager Marty Hendrix, City Secretary Charlotte Smith, Finance Director Guests • Lewis L. McLain, Jr., Administrative & Fiscal Consulting Services, Inc. Bob McLain, Administrative & Fiscal Consulting Services, Inc. With a quorum of the Council Members present, the Called - Special Workshop Session of the Allen City Council was called to order by Mayor Pro Tem Wilson at 7:16 p.m. on Monday, April 18, 1988, in the Council Chambers of the Allen Municipal Annex, One Butler Circle, Allen, Texas. Presentation by Lewis McLain, with Administrative & Fiscal Consulting Services, Inc., on City of Allen Water & Sewer Rate Study (Agenda Item II) Mr. McLain spoke before the Council on the need for a rate increase for the water and sewer rates. Using a flip chart, Mr. McLain listed the figures as follows: Base Revenue for Water & Sewer $2,500,000 Growth Dampening $138,000 (have not experienced a lot of growth during last two years) Capital Recovery Fees $630,000 (have not materialized) Contract with North Texas Municipal Water Dist. $220,000 (costs have increased more than projected) Water Loss $150,000 Mr. McLain pointed out that based upon those figures, there was a need for a 45$ increase in the water and sewer rates to compensate for certain areas where there have been losses. Mr. McLain pointed out the city's water system has capacity for new growth, however, there hasn't been any new growth, thus the system is costing the city money. ALLEN CITY COUNCIL CALLED - SPECIAL WORKSHOP SESSION APRIL 18, 1988 Page 2 Presentation by Lewis McLain, with Administrative & Fiscal Consulting Services, Inc., on City of Allen Water & Sewer Rate Studv (cont'd) (Agenda Item 11) Mr. McLain then referenced page 31, Section 1, of the presentation booklet that had been distributed to the Council. The figures on this page indicated the amount of revenue rate increase that was needed to bring in the necessary revenues for each upcoming fiscal year. Mr. McLain then continued his presentation by reviewing the documenta- tion that was shown in the booklet. That included objectives of the plan, steps taken in the study, approach to be taken for the update, and key changes that have taken place which have effected the rates thus creating revised assumptions. He reviewed the growth forecasts which have been revised downward, the revised assumptions that staffing levels are lower, the revised assumption drivers that average compensation levels are revised downward, which all result in the fact that operating and maintenance costs are down. Mr. McLain reviewed the revised assumptions for the G & A Charges. He then reviewed the project water costs from the North Texas Municipal Water District, and their treatment costs; projected debt, transfers to debt reserve fund, and reserve fund balance projections, the capital funded out of operations and the capital recovery fees collected. Mr. McLain then reviewed the new and expanded programs proposed. Mr. McLain then provided his revised assumptions by reviewing the revenue highlights and pointed out the dampened forecast for impact fees and explained how those fees were effected by the action of the Texas legislature in their last session. Mr. McLain explained the current status of the utility fund, reviewed the key components and balances, advised of how much income is needed, the net changes in working capital, the number of days needed in working capital, the adequacy tests, and measures of fiscal health. Mr. McLain concluded his presentation with his conclusions as listed on page 33 of the document and pointed out the summary of policy issues for the utility fund. Mr. McLain pointed out to the Council that the remaining materials in the booklet in Sections 2 through 5 represented backup informa- tion for the calculations shown in Section 1. Mr. McLain suggested that one solution to help this situation would be the restructing of the city's debt service as it relates to the water and sewer bonds. He advised that further research was needed to be done in this area if the Council was interested in pursuing this aspect. Mayor Farmer recessed the called - special workshop session at 8:32 p.m. The Council reconvened at 8:39 p.m. Discussion of Proposed Water and Sewer Rate Study (Agenda Item III) The Council discussed the situation existing on water loss as referenced in Section 5, Page 1, Item 35, and if this situation is continuing and how it was factored into the rate increase figures. There was further discussion on where the major water loss was occurring in the city. City Manager Jon McCarty reviewed with the Council the major areas of water loss and plans to overcome these losses in the future. There was discussion by the Council on the meter rehabilitation program and how many years this will take to implement. There was discussion on the use of water at Ford Park and if it was metered, and if not when it would be. ALLEN CITY COUNCIL CALLED - SPECIAL WORKSHOP SESSION APRIL 18, 1988 Page 3 Discussion of Proposed Water and Sewer Rate Study (cont'd) (Agenda Item III) There was discussion by the Council on the lack of growth that has been experienced by the city and the lack of receiving capital recovery fees. Mayor Farmer referenced a memo that was distributed at the Council's spring planning session regarding certain policies that pertain to the water department and he wondered if these pertain to the Council or city staff. City Manager McCarty clarified that these pertain to city staff. There was further discussion by the Council on the 1990 Capital Improvement Program projects and what did those entail. There was discussion on page 33 regarding the working capital reserves and what this represented and how is it shown in this recommendation. There was further discussion on the recommendation that a rate increase of 31% was needed immediately. In further discussion, the Council wonder what the new rates will have to be in order to achieve the 31%. Mr. McLain distributed additional handout information showing the comparison of water rates and sewer rates between Allen, McKinney and Plano as they exist now and with the increase. The Council reviewed the information that was shown in the handout. There was further discussion by the Council on the payment of the monies to Belz Outlet Mall and how that agreement was figured into this rate study. The Council discussed further the amount of rate increase needed in the FY 87 - 88, and FY 88 -89. There was also discussion on the contract price that the city pays to the North Texas Municipal Water District for water and how the loss water factor can effect the rate charged by the district. Mayor Farmer proposed the following changes be used to make some additional conclusions and that Mr. McLain bring back another recommenda- tion for the proposed rate increase based upon the changes as follows: 1. Reduce the water loss calculated for FY 87 - 88 to 20%, rather than the 25% shown in the presentation; and to reduce the water loss calculated for FY 88 - 89 to 10%, rather than the 20% shown in the presentation. 2. Move the maximum sewer rate ceiling from 10,000 to 14,000 gallons water consumption. 3. Underwrite all capital costs that are shown in the report, and others that are relative, with funds available from capital recovery fees. 4. Reduce the General & Administrative transfer to the General Fund from $211,665 for FY 87 - 88. 5. Execute the debt restructing plan as suggested by Mr. McLain, if it is feasible. 6. Stagger the percentage of rate increase more, don't start with a 31% increase immediately. There was considerable discussion by the Council on proposed changes as presented by Mayor Farmer. The Council discussed the reduction in the transfer of the G & A figure of $211,665 to be done in $30,000 increments. In further discussion, Mayor Farmer advised the Council that they could go forward with the recommendation from Mr. McLain as presented at this meeting. ALLEN CITY COUNCIL CALLED - SPECIAL WORKSHOP SESSION APRIL 19, 1988 Page 4 Discussion of Proposed Water and Sewer Rate Study (cont'd) (Agenda Item III) City Manager Jon McCarty requested that when Mr. McLain is making the proposed changes that he place a percentage factor on each of those items for the Council's information. There was further discussion on what dollar amount would represent a 1% reduction in rates. After further discussion, Mr. McLain advised the Council that he would work with the proposed changes and bring back another recommendation based on those factors. Mayor Farmer also requested that Mr. McLain or city staff also determine the amount of customers that are represented in the various user group ranges shown in the rate structures that were handed out. There was also discussion on the number of new customers that the city has each year and if an increase in the deposit would help to off set some of the rate increase. Items of Interest to the Council (Agenda Item VI) -Mayor Pro Tem Wilson advised the Council that he had talked with a representative from the League of Women Voters and that he was asked to pass on information to the Council regarding a candidates' forum to be held on April 28th, at Story Elementary School. He added that the program was really established for opposed candidates rather than unopposed candidates, however, all candidates were encouraged to attend. -Mayor Pro Tem Wilson advised the Council of the resignation of Joan Lineberger at the Allen Chamber of Commerce and that they were using a part-time person to fill her position at the present time. Therefore, with the interest in gathering a contingent of people to attend the EAS hearing in Austin on May 4th, "The Allen American" has agreed to coordinate the transportation for that event and to work with the city to provide public information on this trip and the need to have as many people to attend as possible. Councilman Wolfe encouraged each of the Council Members to get a list together of at least 10 people each who would support EAS and go to Austin to show their support for it. There was further discussion about car pooling down to Austin on Tuesday, May 3rd, and accommodations that needed to be made at one hotel. Mr. Wolfe also suggested a reception be held on Tuesday evening for all of the people that will be staying over Tuesday evening. It was suggested that the Council candidates announce this EAS situation at the candidates' foram on April 28th. •City Manager Jon McCarty advised that he was asked to notify the Council that Jimmy Honea, Chief Appraiser with the Collin County Appraisal District, had notified the city that the city's representative, Ken Browning, on the Board of Equalization was no longer able to serve and that the city needed to coordinate with the school district another representative to take Mr. Browning's place. There was discussion by the Council on this and the name of Don Evans was suggested as the replacement. The Council also suggested the name of Don Rodenbaugh. In further discussion, it was concluded that Don Evans would be recommended as a replacement, with Don Rodenbaugh to be used as a back-up recommendation. -Mayor Pro Tem Wilson advised the Council of the upcoming "casino night" sponsored by the Allen Chamber of Commerce to be held on Saturday, May 7, 1988, at InteCom and he encouraged all Council Members to support this activity. ALLEN CITY COUNCIL CALLED - SPECIAL WORKSHOP SESSION APRIL 18, 1988 Page 5 Adpurnment (Agenda Item V) Mayor Farmer adjourned the called - special workshop session at 10:36 P.M. These minutes approved on the 5th day of MAY , 1988. APPROVED: J FarmAr, MAYOR ATTEST: ���&� Marty Hendrix, CM , CITY SECRETARY IM