HomeMy WebLinkAbout1992-06-16 - City Commission Workshop Meeting MinutesCity Council Workshop Meeting
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CITY OF TAMARAC, FLORIDA
CITY COUNCIL WORKSHOP MEETING
TUESDAY, JUNE 16, 1992
CALL TO ORDER: Mayor Bender called this workshop
order on Tuesday, June 16, 1992, at 1:30 p.m. in
Room # 1 of Tamarac City Hall, 7525 NW 88 Avenue,
Florida.
Mayor H. L. Bender
Vice --Mayor Henry Schumann
Councilman Joseph Schreiber
Councilman Norman Abramowitz
Councilman Irving Katz
ALSO PRESENT:
John P. Kelly, City Manager
Dina McDermott, Assistant City Manager
Mitchell S. Kraft, City Attorney
Carol A. Evans, City Clerk
meeting to
Conference
Tamarac,
,
Mike Couzzo Director of Public Services/Assistant
City Manager
Mary Blasi, Finance Director
Clark Bennett, Florida Municipal Advisors
Robert Ori, Hartman and Associates, Inc.
Ellen Wood, Secretary
*************************************************************
1. Tamarac Utilities East and Tamarac Utilities West Water
Rates.
Mr. Kelly said each Councilmember has a rate study completed
by Hartman and Associates. He said Robert Ori from Hartman
and Associates will discuss the impact of this study. He said
Clark Bennett from Florida Municipal Advisors, who is
handling the bond refinancing for the City, is also present
because there is an inter -relationship that needs to be
discussed.
Mr. Kelly said a public hearing is scheduled for Friday of
this week to take action on the proposals and the time frame
is rushed. He said the rate study was pushed to help complete
the bond issuance before City Council vacation.
Mr. Kelly said in order for Council to act, this workshop is
needed so that issues can be addressed and a scenerio can be
presented by Mr. Ori. Mr. Kelly said action could be deferred
at the public hearing on Friday and put off until Thursday of
next week.
Ms. Blasi said Clark Bennett will speak in reference to what
kind of rate increase is required in order to get insurance
on the refinancing of the bonds.
C/M Abramowitz asked the professionals to answer why rates
have to be increased regardless of whether bond financing or
restructuring is done.
Mr. Kelly said the rate increase has to be done regardless
but it is going to take much more time than the presentation
by the people doing the refinancing. He said they would do
the presentation first.
Clark Bennett, Financial Advisor for the City from Florida
Municipal Advisors, said they are attempting to refund
certain water and sewer bonds and general obligation bonds.
He said today, he is concerned with the water and sewer
bonds. He said in order to get insurance and/or a rating on
these bonds, the City must meet the rate covenant test in the
1985 Bond Resolutions, which require a coverage of 1.10 times
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net revenues. He said this means the City must have revenues
that exceed the bond interest and principle payments of 1.10
times and must meet a secondary covenant that requires net
revenues plus impact fees of 1.20 times. He said at present
the City does not meet those tests. He said if the City is
going to get insurance and refund the bonds, save in excess
of one million dollars for the water and sewer system it is
imperative that the tests are met prior so that insurance can
be given on the bonds. He said insurance does reduce the cost
of interest on the bonds.
Mr. Bennett said the insurance companies are waiting action
to determine whether or not those convenants can be met
through action the City takes.
V/M Schumann asked if the City meets the covenants if the
City is self -insured and Mr. Bennett said the City would be
insured by one of the three major insurance companies and
this is dependent on how their bids come in.
V/M Schumann asked if this would be collateral for the
insurance policies and Mr. Bennett said, in the sense that
the bond covenant has to be met and this is the insurance
companies basis for concern.
Mr. Bennett said the City is only doing what it is required
to do under the 1985 bond ordinance.
Mayor Bender asked what the basis is for the bond covenant
test.
Mr. Bennett said when this bond ordinance was written, it was
written as was the custom of the day on the assessed strength
of the system. He said rate covenants are written anywhere
from a 1.10 to 1.25, depending on the strength and growth of
the system and the view of the rating and/or insurance
companies at that time. He said this particular rate
convenant was written in 1985 and it was the practice of the
day. He said it is a good rate covenant in that it is
not too high or too restrictive.
Mr. Bennett said insurance companies will not insure the new
bonds unless the City meets the rate covenant test. He said a
refunding can be done but the City would not get insurance
and eventually the current insurance company will send a
letter to the City inquiring why the City is not meeting its
current covenant. He said the City would be at technical
default which means debts are being paid but the City has
failed to meet one of the promises made to the bond holders.
Mr. Bennett said technical default means the City is not
meeting the covenants. He said each insurance company has a
surveillance unit to watch this type thing. He said the
enforcement is up to the insurance company, including
cancelling.
C/M Schreiber said he feels it is improper to take funds out
of the Utility West fund to pay for everything else in the
City. He asked if operating expenditures were reduced and the
operating revenue raised, would the City meet the
requirements.
Mayor Bender said if the City takes away administrative
functions, Utilities would have to go out and hire another
administrator for which they would have to pay.
C/M Schreiber asked about $685,000 in charges that Utility
West fund uses to subsidize the City and Mayor Bender said a
study was done and this is what the professionals came up
with.
C/M Katz said Mr. Bennett is not involved with this and
possibly it could be put off until Mr. Bennett is finished
and C/M Schreiber agreed.
I _�
C
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Mayor Bender thanked Mr. Clark for his presentation.
Robert Ori, Manager of Rates and Finance for Hartman and
Associates in Orlando, Florida, said he had a briefing
document to distribute. He reviewed the contents of the
briefing document. He said the primary purpose of the study
is to see if the water and sewer rates are adequate to meet
the City's level of service requirements, financial operating
needs, and resolution requirements. He said another aspect of
the study was to implement a water conservation rate to help
meet some of the mandates of the South Florida Water Manage-
ment District. He said the City has to be financially able to
do the refinancing. He said they want to set up a funding
mechanism to fund capital improvement programs.
Mr. Ori said Tamarac Utility West is averaging about 1%
growth per year in revenues and the East system is a little
higher. He said operating expenses have increased 12% since
1987. He said the City has really kept down expenses but when
comparing the two and recognizing that growth has stopped, a
solution is needed. He said 30% of the increase is for
charges from Broward County, which is something the City
cannot control. He said these increases have to be passed on
to the customer.
Mr. Ori said funds on hand have been used such as impact
fees, to reduce the amount of increase. He said the East side
has increased about 18%. He said the City has not raised
rates commensurate with the increases.
Mr. Ori said the external funds that are used to offset are
no longer there. He said this also shows on the debt service
coverage because it is going down. He said it was at a 1.83
in 1988 and in 1991 at a 1.22. He said the City is getting
close to the 1.20 requirement.
C/M Katz asked if the reserve was used to subsidize
additional costs of running the utility department.
C/M Abramowitz said in the equation to meet the bond
covenants was revenue plus CIAC funds. He said in 1988 if the
City had $1.2 million in CIAC funds it was part of the
equation. He said at this moment if the City has $40,000.00
in the CIAC funds it has to make a dramatic impact in not
meeting what the City is supposed to meet. He said CIAC
funds, other than being used in the equation, were only used
for new projects. He said being part of the equation is a
tremendous decrease for the equation.
Mr. Ori said another part of the equation is that if the City
does not get CIAC funds, the net revenues must meet 1.20
test.
C/M Schreiber said in 1988 and 1989 there were no adminis-
trative charges to the TUW fund and one of the years there
was no charge for property tax substitute on in lieu of tax
funds.
Mr. Kelly said there has always been administrative charges
and C/M Schreiber said the budget does not show it.
C/M Abramowitz said C/M Schreiber says one reason the City is
having problems is because the utility is paying the City for
administrative expenses. He said that is not factual. He said
in 1988, $300,000.00 plus were in administrative expenses. He
said Council was concerned that they were subsidizing the
utility department by not charging enough. He said the City
did a study because they did not know the answer.
C/M Abramowitz said there is a combination of things that put
the City where it is today. He said the City has gone from
over a million dollars to $40,000.00 which is a dramatic
drop. He said the City wanted to know what to charge the
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utility for them to pay their fair share, every department in
the City pays its fair share. He said every department is
charged expenses. He said the money charged to administrative
expenses goes into the general fund, which allows the City
not to raise the taxes. He said if there is a short fall in
the general funds, taxes will be raised.
C/M Katz said basically this had nothing to do with adminis-
trative costs. He said the difference was utilized for new
projects and to make up deficits. He said at no time was this
meant to subsidize administrative costs. He said last year
when the budget process started, he asked Mr. Kelly the
actual costs for administration to the Tamarac Utility and no
one could give an answer. He said directly after that the
study started and came up with $300,000 plus additional that
was being funded to Tamarac Utility West. He said one of the
reasons that the City was allowed to reduce the ad valorem
taxes was that this information came in and the money was
available prior to approval of the budget by the Council. He
said if the study had not come in and the money been
available as surplus, the City would have had to increase the
ad valorem tax rather than decrease. He said he was satisfied
last year that the money was not going to a slush fund but in
reality to new projects and allowance for reduction in the ad
valorem tax ate up the rest.
C/M Schreiber said under Section 7.18 of the Charter, the
utility fund cannot be billed. He said it is a user fund and
should not have money taken out for the general fund. He said
the property tax is for the general fund and should stand on
its own. He said Utility West should be charged for the
services rendered to them but they are being overcharged. He
said the 1988 and 1989 there were no administrative charges
going to Utility West. He said the property tax substitute is
not in every budget either.
Ms. Blasi said in the years detailed by C/M Scheiber, the
general fund was given $350,000.00 in administrative service
charges from TUW. She said she could show it to C/M
Schreiber. She said the in lieu of tax contribution has been
in existence for at least ten years. She said it is written
in the bond covenant and based upon a percentage of operating
revenues from the TUW fund.
Mr. Ori said the City currently has five classes of
customers: single family, multi -family, residential,
commercial, homeowners associations, recreational and
irrigation, which has subdivisions. He said they all have a
like rate structure with a service availability charge and a
consumption charge. He said the service availability charge
is the fixed charge per month for residential. He said for
TUW the single family cost is $4.65 and for commercial and
homeowners association the charge varies by the size of the
meter. He said the logic is the larger the meter and
capacity, the larger the fee. He said the system is there
always ready to serve and the customer should pay for that
peak capacity up front.
C/M Katz said the concept here is the same as a demand meter
on electric. He said they charge on a rate at the peak
amount.
Mr. Ori said the system has to be there to serve. He said
they are built for the peak demand of the system.
Ms. Blasi said in the service availability charge is a debt
service that is constant and a monthly cost with the billing.
She said this has to be done every month whether the service
is used or not. She said this up front cost is needed for
this.
Mr. Ori said many customers have zero consumption and if the
City had a 100% consumption rate they would be charged
nothing, even though the system is there to serve them. He
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said the demand costs need to be collected upfront and they
have to be there. He said the revenue also has to come in to
meet the bond covenants.
Mayor Bender said it is compiled of a gross plus an expense
which brought it up to the net. He said billing, postage,
customer service and meter reader are all included.
Tape 2
Ms. Blasi said most of the expenses are constant whether
there is usage or not.
C/M Katz said the public has to be educated.
Mr. Ori said water and sewer has highly fixed costs.
Mr. Ori said the sewer bill is based on the water meter
consumption and for the residential class is a 15,000 gallon
maximum billing threshold. He said commercial is a 100%
charge.
Mr. Ori said the residential makes up the predominance of the
rate class. He said they are about 96% of the total
customers. He said TUW has an expected growth of less than 1%
because the City is near build -out. He said TUE has no
growth, .1%.
Mr. Ori said the average residential customer used between
5,000 to 6,000 gallons per month.
V/M Schumann said it is anticipated that the residential
single family class will experience the most positive price
increase of the rates because they tend to contribute a
larger proportion shared toward peak demands. Be said
residential multi -family customers do not have high water use
because their requirements are practically all indoors. He
asked what he would use in a single family that he would not
use in a multi -family.
Mr. Ori said in the single family the average customer uses
about 5,300 gallons and the multi -family uses about 4,100
gallons. He said the single family class is more responsive
to the water conservation rates. He said 5% of the
residential customers use in excess of 15,000 gallons a month
which is 10% of the total flow. He said this is what needs to
be targeted.
Mr. Ori said multi -family does not make a big demand on the
system so the price responsiveness to the water conservation
rate will come from the single family class because they
control irrigation and reduce excessive waste.
Mr. Ori said he prepares the customer forecast and then the
revenue requirements which are expense needs. He said he
projects customer and average use. He said he raised the
average use per customer in 1992/93 because of the amount of
rainfall the City has had. He said this study was based on
the 1993 preliminary budget. He said operating expenses
account for 69% of the rate needs. He said labor, chemicals,
purchase power in Broward County is 50% of the total rate
needs and 72% of that number.
Mr. Ori said debt service accounts for 21% of the rate needs.
He said this does not reflect the potential of the
refinancing. He said the payment in lieu of tax is equivalent
to property tax, franchise fee of private utilities in the
City and is based on a 4% of prior year sales revenue and
accounts for only 3% of the rate needs. He said this is a
common type expenditure in utilities across the state. He
said utilities that do not have a payment in lieu of tax have
a utility tax. He said it is a very small dollar value over
the whole picture.
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Mr. Ori said the last major expenditure item is the capital
improvements fund from rate revenue. He said this represents
about 7% of the rate. He said consideration needs to be made
on raising the rates in this area. He said the five-year
capital improvement budget identifies $11 million in total
projects. He said many of the projects are CIAC related but
the money will run out within two years. He said these
projects have to be funded from somewhere if they are going
to be done.
C/M Katz said the alternative is not to do the project unless
it is demanded by federal, state or county.
Mr. Ori said or level of service needs. He said in order to
comply with a bond resolution the system has to be maintained
and operated to produce the revenues to pay off the bonds.
Mr. Ori said he tried to produce the lowest rate adjustment
he felt was plausible to the City and met all needs. He said
the rate covenant has to be met. He said net revenues equal
1.10 times maximum revenue service. Be said net revenue is
total revenue less operating and maintenance expense. He said
that number must be at least 1.10 times maximum debt service.
Mr. Ori said he has targeted the rate increase to meet the
1.20 test without impact fees because of the uncertainty of
those fees. He said the number was derived by looking at the
total revenues of the system less the operating expenses as
budgeted for the fiscal 1993 period. He said rates need to be
raised about $1.2 million which is about a 13.2% increase. He
said this rate increase does not recover all budgeted capital
projects. He said if $1.2 million is budgeted for capital
improvement projects, there is roughly $530,000 funded from
CIAC funds, leaving a balance of $560,000 which the City is
short.
Mr. Ori said this covers what the City is going to do on the
bonds, on the debt service. He said the 20% provides the City
coverage and is made up of capital improvements, payment in
lieu of tax (which is required from the bond resolution) and
part of the 20% cut.
C/M Abramowitz asked if in the Comprehensive Land Plan is the
City mandated to do anything in the next few years.
Mr. Kelly said the City has certain obligations to do certain
projects in the next few years. He said nothing is mandated
but the Comp Plan has to be amended in order to make changes.
C/M Abramowitz asked if the lift stations are necessary by
utility department standards for the next 2-3 years.
Mr. Couzzo said four lift stations are done per year. He said
there are 72 lift stations.
Ms. Blasi said the Comp Plan does not segregate between years
but combines the total for a five year period so the City is
not mandated to do it any one year.
Mayor Bender said everything cannot be left until the last
year, it has to divided among the five years. He said
otherwise taxes would be increased beyond what they should
be.
C/M Katz asked how much of this is infrastructure that the
City may not be responsible for.
Ms. Blasi said there is no capital improvement that deals
with new development.
C/M Katz asked if part of this is based on the City's
responsibility, compared to making it easy for a developer to
come into the City. He said it should be different when
looking at a rate schedule. He said he asked about emergency
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generators in the City and was told the City has two. He said
he questions whether certain emergency situations are
factored in.
Mayor Bender asked if the City was going to receive money
back when developments occur against City expenditures and is
that factored in.
Ms. Blasi said there would not be a reimbursement in
utilities. She said those expenses are coming out of the CIAC
fund. She said they will not affect the rates today.
Mr. Ori said in the five year projection, growth system and
funds coming back in were included. He said the City has pent
up demand where people have paid CIAC charges and have not
built yet. He said that is guaranteed revenue. He said
customers have already paid and it has been utilized. He said
he estimates high at $130,000 per year.
C/M Abramowitz said this City takes money at site plan review
not with the certificate of occupancy.
Mr. Ori said there will be a 10% to 12% increase from Broward
County next year and 10% this year.
Mr. Kelly said the City does have excess capacity due to
planning for the future. He said in the interim Tamarac could
sell to neighboring cities.
C/M Abramowitz said Tamarac was paying Deerfield Beach over
$20,000 per month to flush. He said a mistake was made when
Tamarac did not raise its rates. He said Council was anxious
to maintain a level rate and not raise rates.
Mr. Ori said to meet the 1.20 coverage a system rate increase
is needed of 13.9% of the rate revenue.
Mr. Ori said revenues are set and to get a 1.20 coverage from
net revenues on the bond 13.9% is needed. He said project
cuts do not reduce the amount needed. He said in order to do
the projects in the budget 21% increase of rate revenue is
needed.
Mr. Ori said he is not recommending the 21% because he was
told to kept it as low as possible.
C/M Katz said as low as possible but realistic and Mr. Ori
said personally he feels 20% is realistic but it is a
political question.
C/M Abramowitz asked if the City raises 13.9% today, what
would the problem be next year and Mr. Ori said there is much
uncertainty coming out in 1995. He said there is a new
replacement plan starting and the City Manager discussed
potential water sales to near cities. He said he recommended
raising rates further in 1993 by 8.5% on the water side and
12% on the sewer side which still does not get the City to
the five-year CIP. He said this year's rate increase is the
21% to provide debt service coverage. He said he is
recommending a minimum two-year rate increase.
Mr. Ori said he also wants to recommend a price indexing rate
adjustment. He said the system is near build -out so growth is
not there. He said it allows inflation to be covered by
automatic increases being set in the ordinance and approved
by Council. He said it would also guarantee a debt service
coverage. He said there are changes in the regulatory climate
coming. He said it would provide a mechanism to meet City
needs and not have massive increases. He said he recommends
after the second year increase, adopting a 3% indexing
provision.
C/M Abramowitz asked if there are any recommendations being
made other than to residential areas and Mr. Ori said, yes.
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Mr. Ori said the reasons for the rate increase are reduced
growth, rising expenditures at 4% and revenue rising at 1%
and interest income.
Ms. Blasi said the City is estimating a decrease from 1991 to
1992 of $400,000 in interest for TUW funds.
C/M Schumann asked what the 13.9% would do to the individual
home owners bill.
Mr. Ori said for single family it is about 18% at 6,000
gallons. He said he designed rates based on cost of service
for customer classes. He said there are two types of water
conservation rates in the rate design.
Mr. Ori said the residential single family class is a three
tier rate: 0-6,000 gallons per month. 6,000-15,000 per month
and more than 15,000 gallons per month. He said 6,000 gallons
is the basic amount for indoor use, the second block falls
into the sewer cap, and the highest rate is for excessive
use.
Mr. Ori said he kept the same type rate structure but on the
general services the homeowners associations and irrigation
have been charged together. He said they will all pay the
same basic facility charge. He said the rate increase for the
commercial side will be less because the fixed cost is based
on the meter and the service request is based on the service
capacity to need. He said a commercial on a 2" meter pays
$72.85 and after 2" the usage is looked at. He said Southern
Bell is a 3" user and their service availability charge is
$29.00 and will go to $139.25.
Mr. Ori said the inverted rate block is being introduced to
commercial. He said the first block is $1.12 and the second
block is $1.57. He said the irrigation has higher bills and
he recommends adopting a higher volume break from $1.04 to
$1.57.
C/M Abramowitz said he never wants to reduce a commercial
users rate but he also does not want to chase them out of
town.
Tape 3
Mr. Kelly said is the trade off the number of people in that
category from the reduction in the rate system and does it
balance out.
Mr. Ori said overall it still produces the 14% total revenue.
He said the flow charge does not quite offset the service
availability charge. He said it follows the cost of service
principles.
Mr. Ori said the commercial and the multi -family only have a
two block and the second block is higher than the
residential. He said there is a significant increase. He said
the wastewater has the same type of rates as before. He said
he is recommending that the City consolidate the debt service
charge into the service availability. He said it is the same
fixed cost but administratively easier for the City to
handle.
C/M Abramowitz said there is a 15,000 gallon cap on the
single family home for disposal charges. He asked how the
commercial is addressed and Mr. Ori said, no cap.
C/M Abramowitz said if a cost is diminishing with the 2",
their sewer is also being diminished.
Mr. Ori said that is why there is a price elasticity factor
based on studies done by South Florida Management District.
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C/M Abramowitz asked in the 2" category where there is a drop
in price, how many consumers fit that category in the City.
Mr. Ori said there are 266 commercial and homeowners
associations customers at the 2" in September, 1991. He said
they are in the same rate. He said there are 287 customers at
5/8". He said the multi -family is based on units, not
accounts.
Mr. Ori said TUE rate increase will be the same as TUW. He
said funds are available to help keep those rates down.
Discussion was held on utility rate adjustments and waste-
water.
Mayor Bender said most cities also have a utility tax to
offset the rates.
Mr. Ori said another influence is how many people are
serviced outside the city limits.
Mr. Ori said the impact is greater on the wastewater than on
the water.
Ms. Blasi said the City does not have any control over the
major wastewater charges because of Broward County and the
debt service.
C/M Abramowitz asked if other cities were looking for new
bond issues to cover problems of this nature and Ms. Blasi
said it was more infrastructure, that they could not go out
for operational costs on a bond issue.
Mr. Ori said if the City has many capital projects up front
the debt might be beneficial because the payment can be
spread out over time.
C/M Abramowitz asked Mr. Kelly how many dollars the City has
received up front for the platting process and what the City
is obligated for.
Mr. Kelly said the City is committed down the line. He said
the City is obligated to Land Section 7.
Ms. Blasi said regarding monies that may be needed in the
near future to help fund capital improvements, instead of
taking $65,000 per year savings over 19 years, the
refinancing can be structured to have the savings up front at
$200,000 per year for five years. She said the savings could
be used to fund capital projects. She said it would not
affect the 13.9%.
Mr. Bennett said the funds could be used for any purpose of
the system. He said the bond transaction is structured so
that the savings occur in the first five years. He said it
gives the City the opportunity to fund capital projects that
the City is concerned about.
Discussion was held on how to structure the bond transaction.
Ms. Blasi said if the debt service is $2.5 million per year,
to do it over 19 years the debt service will be reduced by
$65,000 per year or it can be reduced by $200,000 to make it
$2.3 million for five years and at the six years goes back to
$2.5 million. She said the $65,000 over 19 years will be more
than a million dollars. She said it is the present value of
money so it is worth more now than then.
C/M Katz said this money is limited to the utility capital
projects.
Ms. Blasi said it is reduced debt in those years. She said
the rate covenant has to be based on the $2.5 million because
it is the highest annual debt service.
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C/M Katz asked what dollar amount is being projected for
capital projects and Mr. Ori said eleven million for all
projects.
Mr. Bennett said those dollars being freed up will cost the
City less than if it borrows the equivalent money in a new
bond issue. He said it would be a higher interest cost and
expense cost over that amount of up front savings.
Mr. Kelly said no one knows what the market will be. He said
a bull market could interfere with City plans. He said this
needs to be thought about.
C/M Schumann said this needs to be laid out at the bond
refinancing so a decision needs to be made.
C/M Abramowitz said he would like to know the differential
between 19 years at $65,000 and five years at $200,000. He
asked what the money was going to be spent on and if it is
something that is a necessity or something the City would
like to do.
Ms. Blasi said there is capital budgeted this year. She said
they expect to have $650,000 left from the general reserve
fund. She said with the $200,000 the next year increase may
get down to 7.5% instead of 10%.
C/M Schumann asked if there were any time constraints on when
or how the money has to be used.
Mr. Bennett said it just means that the City does not pay
that kind of interest that year.
Ms. Blasi said it is not a revenue item but a decrease from
the debt service. She said the payment is less to the debt
service. She said it will keep down required increases in the
next few years to fund the capital improvement program.
Mayor Bender asked if the money is not used for three years
the City would have $600,000 and interest.
Ms. Blasi said the money will not be saved unless the 10.5%
increases are implemented next year and the year after.
Mr. Ori said on the net present value basis the total savings
is the same with either scenerio.
C/M Abramowitz said at the present cost of money it will be
the same. He said in the future the City would not have to
raise the rates and not cost the people anything more.
C/M Schreiber disagreed and said numbers will do anything you
want.
C/M Katz said the 10.9% projected in 1994 incorporates the
capital for the year.
Mayor Bender said it is time to close this item and there
could be more discussion at the Council meeting.
Mr. Ori said CIAC charges were not discussed and he proposed
raising them based on current costs. He said he also
recommended several miscellaneous service charges. He said
they are cost recovery type charges that help keep rates
lower.
Mr. Kelly said a public hearing is scheduled for this Friday.
He asked will Council be ready to pursue or defer this issue
to another time frame.
After discussion, Mayor Bender said action would be taken on
Friday and suggested that Council read the first fourteen
pages of the handout.
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06/16/92/elo
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Tape 4
C/M Abramowitz said TUW has 25,000 customers and TUE has
1,000 customers.
2. Discussion regarding Audit of Cable Franchise Agreement
by David-R. Griffith and Associates.
Mayor Bender called for a five minute break at 3:40 p.m. and
reconvened the meeting at 3:45 p.m. with the same people
present.
Mr. Kelly said Mr. Griffith has advised the City that he is
willing to submit a revised price quotation. He said Council
previously rejected a proposal quoted for over $30,000. He
said the new cost for an audit focused on certain task
elements is within the $16,000 threshold which is within the
amount of money refunded to the City by Continental Cable
Company when an audit was first threatened. He said it was
discussed that if it was in the range of money returned to
the City it might be reconsidered.
Mr. Kelly said a proposal has been submitted and Mayor Bender
has had conversations with them relative to what they are
proposing and other observations regarding the personal
property.
Mayor Bender said he met with Mr. Griffith and feels that
some of the tasks proposed can be disregarded to reduce the
cost or replace the work to be done. He said they want to
verify the customer coding and he feels this was accomplished
several years ago. He said this is 20 hours that can be
substituted. He said there are also other items to be
discussed.
Mayor Bender said he needs a consensus for him to advise Mr.
Kelly to put the item on a regular Council meeting so that it
can be voted on.
C/M Schreiber asked if this audit is worthwhile since several
tasks are unnecessary. He asked if sufficient funds will be
discovered to cover the costs. He asked if the books can be
seen.
Mayor Bender said that is not Continental Cable. He said the
City has gone to the Broward Appraisers Office for records on
Continental Cable. He said according to the franchise agree-
ment, Continental Cable has to let the City examine their
books. He said the Cable Company has not objected to letting
the City do that.
V/M Schumann said he wants to make sure that the City has
access to their personal property records because without it
the City is spinning its wheels. He said if this information
is confidential because of competitors in the field it is not
an audit. He said the City needs a base for what the cable
company should pay the City for what it has in the ground.
Mayor Bender said he wrote a letter regarding this to the
Attorney General. He said they are also talking about
financial statements that contain this information that they
give to Broward County and the County claims they cannot make
public. He said this has nothing to do with the franchise
agreement between the City and Continental Cable that gives
the City the right to look at the books.
V/M Schumann asked why they objected to the County releasing
it.
Mr. Kraft said the County Appraiser's Attorney said there is
a statutory prohibition against them releasing those records.
He said the records are exempt from 119 as they sit in the
appraiser's office. He said it is confidential in that office
City Council Workshop Meeting
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Page 12
unless released by a court order.
V/M Schumann said he wants to make sure that before the City
has this audit, that the City has the right or approval from
Continental Cable to look at books and records to find out
what their personal property holdings are in this City.
Mayor Bender said the City will take the necessary action. He
said the City Manager will notify Continental by a formal
letter saying the City retained this company after approval
is given to go ahead.
V/M Schumann said the letter should be sent before the
company is retained.
Mayor Bender said the City is not retaining the company now.
He said at this meeting Council is offering the consensus to
go ahead to proceed to the next step. He said the next step
is to bring this contract to Council to vote on.
V/M Schumann said, no, he is not approving the contract until
he is assured the City is going to get what it is looking
for.
C/M Abramowitz said if the City spends this money is there
the ability to recover the money or get funds that the City
has not received. He said the proper procedure would be to
get a legal opinion from the City Attorney as to whether the
City has the legal right to go in to Continental Cable and
say the City has the right to examine anything they want to
examine. He said if the proposal has a task that is not
needed, eliminate it. He said is the City going to come out
better than when going in.
C/M Schreiber asked if the City Attorney sends them a letter
and says under the contract the City is entitled and
Continental refuses to allow it, does the City have to start
legal action which will cost more money than the whole thing
is worth.
Mayor Bender said if Continental does not let the City in, it
is the basis for breaking the franchise agreement. He asked
why this City is reluctant to have an audit on any franchise
agreement. He said he finds evidence that the City has been
short changed. He said Continental Cable has their office in
Pompano. He said they write contracts for advertising and
transmit through many cities. He asked why the cities are not
entitled to a pro rated share of the revenue they make. He
said an auditor needs to check all of this.
Mayor Bender said he just received information from the
Broward County Appraiser's office on commercial personal
property. He said Continental Cable only shows $2,200,000 and
Southern Bell shows $18,000,000 for underground cable. He
said some kind of physical audit is needed.
V/M Schumann said he wants to make sure that the City gets
the complete open book audit. He said there must be a reason
why the Cable Company is withholding.
Mayor Bender said that is another reason that he wrote the
letter to the Attorney General asking them to intervene on
the City's behalf. He said the City has Ordinances where
taxes have to be collected for real estate property and
personal property. He said he wants to know why the City does
not have the right to determine the validity of the
information submitted to the County by Continental Cable.
Mr. Kelly said that the proposed contract is based on task
elements. He said there are seven tasks and the Mayor has
proposed eliminating two. He said with this type of contract
the monies are reimbursed based on the performance of each
task.
1
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F]
Mayor Bender said he does not want the work duplicated that
was completed several years ago. He said he wants these tasks
replaced with other tasks such as the personal property
aspect. He said Continental Cable is not reporting any real
estate in Tamarac. He said Continental Cable has 177 miles of
cable, transmission towers, microwave equipment and
amplifiers all over the City and this is personal property.
He said this is why an audit is needed.
C/M Abramowitz asked if Council could acquiesce with the
stipulation to make sure the City has the ability to look at
the books.
V/M Schumann said to look at anything of their operation that
the City deems advisable and not just what Continental Cable
is willing to show.
Mayor Bender asked Mr. Kraft to review the franchise
agreement and the supplement.
V/M Schumann said he agrees with the Mayor that the biggest
item is personal property situated in this City by the cable
company.
Mayor Bender said they are not reporting all the gross
revenue to the City. He said they have advertising contracts
and broadcast in other cities but the revenue goes to
Pompano. He said he wants to find out how to divide the money
proportionate to the cities.
EXPRESSION OF INTEREST ALL AGREED WITH STIPULATION THAT
THE CITY CAN LOOK AT ANYTHING THEY DEEM ADVISABLE.
3. Discussion regarding the City's Travel Allowance
Program to conform with the IRS Code.
Mayor Bender said the City has been giving $ .21 per mile
when the IRS is authorizing $ .27 1/2 per mile. He said he
would like a consensus be given to make this change.
Mayor Bender said on page 3, bottom paragragh of the
Ordinance, it should be changed to say "prevailing rate of
the IRS" rather than an amount. He said the deductible
allowed by IRS would be automatically taken care of.
EXPRESSION OF INTEREST ALL AGREED
With no further business, Mayor Bender ADJOURNED the meeting
at 4:05 p.m.
w, -
Carol A. Evans
City Clerk