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HomeMy WebLinkAbout1988-01-21 - City Commission Workshop Meeting MinutesL] C] MAIL REPLY TO: P.O. BOX 25010 TAMARAC, FLORIDA 33320 5811 NORTHWEST 88TH AVENUE 0 TAMARAC, FLORIDA 33321 TELEPHONE (305) 722.5900 January 18, 1988 NOTICE CITY COUNCIL WORKSHOP MEETING There will be a Workshop Meeting of the City Council on Thursday, January 21, 1988 at 10:00 a.m. in the Council Chambers at City Hall, 5811 N.W. 88th Avenue, Tamarac, Florida. The subject of this meeting is Square One Debt Service. -Zt. Carol E. Barbuto City Clerk AN EQUAL OPPORTUNITY EMPLOYER POLICY OF NONDISCRIMINATION ON THE BASIS OF HANDICAPPED STATUS CITY OF TAMARAC CITY COUNCIL WORKSHOP MEETING THURSDAY, JANUARY 21, 1988 CALL TO ORDER: Mayor Hart Called this Meeting to Order on Thursday, January 21, 1988 at 10:03 A.M. in the Council Chambers. PRESENT: ABSENT AND EXCUSED ALSO PRESENT: 1 1 Mayor Bernard Hart Councilman Bruce Hoffman Councilman Henry Rohr Councilman Jack Stelzer Vice Mayor Sydney Stein John P. Kelly, City Manager Richard Doody, City Attorney Patricia Marcurio, Secretary Mayor Hart said this Item would be on the next City Council Agenda. He said the purpose of this Workshop was to inform Council of the Square One Debt Service. Bill Greenwood, Director of Utilities/Engineering, said the backup Council should have contained a memo drafted to City Manager Kelly and a Resolution of Intent explaining the Square One Debt Service. He said on April 9, 1986, the Council passed Resolution No. R-86-114, authorizing appropriate City officials to execute leases for wastewater capacities with the Cities of Pompano Beach, Deerfield and Broward County. He said this Resolution lead to Resolution No. R-84-406, approving the Release of Assignment of excess wastewater capacity to the following Large Users, Coral Springs, North Lauderdale, Deerfield Beach, Broadview and Broward County. Mr. Greenwood said back then, the City decided to be out of the sewage treatment plant business. He said when the City bought the Utility, there was an existing agreement with the Regional Plant. He said the City got out of the Regional Plant and then in 1986, the City tried to rejoin the 201 Force Main and no excess capacities were available. He said none of the Large Users would agree to give up any of their capacities. He said the only way capacities were received was by leasing instead of purchasing. He said the City of Tamarac had leases with Pompano for 2 million gallons, Deerfield for 1 million gallons and with Broward County for 1.5 million gallons worth of treatment and 2 million gallons worth of transmission. He said with a lease, equity was not received for the property. He said the County refused to sell capacity property in 1986 and, after working closely with them, they finally agreed to sell. He said the City was paying for mortgage twice under the lease. Mr. Greenwood said as of January 1, 1992, the City would owe a large lump sum payment to buy out the capacities and a sinking fund was created to have the money available at that time. Page 1 1/21/ 33 Bill Greenwood said he would explain the Square One Debt Service. He said, for example, if the City had a mortgage on a piece of property for $100.00 per year and had four people owning the property, each having equal capacity, the County divided 4 into 100 for the proportionate share, which would be $25.00. He said if the City paid the debt service for 4 years, the City would be paying $100.00. He said if a new person wanted to join the property, they would have to pay for the reserve capacity for 4 years; therefore, the equity had to be split. He said the County took the total mortgage payment (debt service), divided 5 into 100 and the cost for each would be $20.00 and, since the payments were for 4 years, the cost would be $80.00. He said the new person would have to come up with a lump sum payment to buy in and the lump sum payment was reimbursed to the other Large Users, evenly, from day one. He said this was a standard concept with the County, everyone was treated the same and none carried reserve capacity. Bill Greenwood said he was recommending the City Council buy the capacity as opposed to leasing until January 1, 1992. He said under the existing agreements, the City agreed to pay the Square One Debt Service as of January 1, ;M ; however, the City was not building equity with the existing lease payments. He said the total monies in the January 12, 1988, memo are in the amount $731,972.00 and the memo suggested funding sources. He said the excess or reserve capacity would be from CIAC Funds because it would be for future development. Mr. Greenwood said the proportionate share to serve the existing customers would be from the Tamarac Utilities West Revenue Fund. He said to come up with the total monies the contingency would be depleted in the amount of $50,000.00 and the Unexpended Fund would be used in the amount of $17,400.00. He said he checked with the Finance Department and the Funds were available. At 10:10 A.M., C/M Stelzer ENTERED the meeting. Ken Burroughs, Finance Director, said the City would be saving $100,000.00 per year by buying the property. He said the Revenue Fund would be recouped in four years and he agreed with the recommendation by the Utilities/Engineering Department. Mayor Hart asked if the Funds were available now and Ken Burroughs said yes. Mr. Burroughs said the only problem would be in the Revenue Fund, which had a deficit of 530,000.00. He said the money would come from the General Fund on a temporary basis. He said the Audit Report would be released within the next few days and there were sufficient funds in the General Fund to absorb the loss from the Utilities Fund. C/M Stelzer asked if the money would come from the City's General Fund and Ken Burroughs replied, yes. Mr. Burroughs said Administrative Services would be short changed. C/M Hoffman asked if a lump sum was placed in a Fund to buy the properties being leased and Bill Greenwood replied, yes. C/M Hoffman asked if the money would be available for the first year with the exception of $30,000.00. Page 2 / 1/21/88 Ken Burroughs said that was correct plus the Utilities Contingency zudget would be spent. C/M Hoffman asked what the Contingency Fund would be used for if it was not used for this Project and Mr. Burroughs said this was the first year for the Contingency Fund in Utilities. C/M Hoffman said from now until the next budget, there would not be a Contingency Fund for Utilities and Ken Burroughs said that was correct. C/M Rohr asked if it was possible to borrow $30,000.00 and Ken Burroughs said for the initial cash outlay, the money for the Project would have to be used; however, from now until September, he was confident that the Utilities Fund would generate sufficient revenues to overcome $30,000.00. C/M Stelzer said .6 million gallons would be relinquished to Coral Springs and he asked if Tamarac would be getting money for that. Bill Greenwood said no, in the proposed Agreement from the County, the City's existing Lease Agreement would be cancelled. He said the existing Lease Agreement had 1.5 MGD lease capacity of treatment and transmission plus an additional 2 million gallons worth of transmission. He said the City would not have to be paying lease on the 600,000 gallons presently in the Lease. C/M Stelzer asked how Mr. Greenwood planned to get $188,000.00 from the Revenue Fund. He asked if fees would be raised and Mr. Burroughs said fees were not being raised. He said the City would be reducing expenses that were being paid out. C/M Stelzer said the expenses would be reduced and the difference would come from the Revenue Fund and Ken Burroughs said the expenses would be decreased and the Contingency Fund would be used. C/m Stelzer said $188,000.00 was not being taken from income; however, it was coming from expenses and Mr. Burroughs replied, yes. C/M Stelzer asked how much would be taken from the General Fund and Ken Burroughs said $30,000.00; however, the money was not being taken from the General Fund. He said transferring to the General Fund for Tamarac Utilities West Administrative Fee was being held back. C/M Stelzer said if TUW was not distributing into their General Fund, the money would have to come from another fund and Ken Burroughs replied, initially; however, he was confident that from now until September, $30,000.00 would not have to be held back. Mayor Hart asked if the City was arranging to purchase the capacity they were renting from the County and Bill Greenwood replied, yes. Mayor Hart asked if there was anything in the Lease prohibiting the City of Tamarac from relinquishing the property they have with Coral Springs. Page 3 1/21/88 Bill Greenwood said the proposed County Agreement would cancel the Lease Agreement, reallocate capacity to the City of Tamarac and then reallocate 600,000 gallon capacity to Coral Springs, which eliminates the City of Tamarac's responsibility for the payment of 600,000 gallon capacity. Mayor Hart asked if the contracts with Deerfield and Pompano were still in effect and Bill Greenwood answered, Yes. Mr. Greenwood said Deerfield and Pompano would not sell the property until 1992. He said the City of Deerfield determined they would be out of capacity soon and would like the City of Tamarac to cancel. Mayor Hart asked if the County would be increasing their capacity and if the City of Tamarac had an agreement with the County on purchasing the extra capacity. Bill Greenwood replied, yes. He said the County was designing their planned expansion at this time and expected to have the capacity on line in 1991. He said the County asked the City for flow projections to the. year 2010. He said the Utilities/Engineering Department worked closely with the City's Planning and Community Development Department on the population projections and by using the population projection growth factors, projected flows were outlined. He said in 1991, the City would still have sufficient capacity. Mayor Hart asked if Mr. Greenwood would recommend this purchase as practical and feasible for the City and Mr. Greenwood answered, yes. Mr. Greenwood said the City would not be paying for the capacity twice as it was at this time. Mayor Hart asked Ken Burroughs if he recommended this purchase as financially feasible for the City and Ken Burroughs replied, yes. C/M Hoffman asked City Attorney Doody if he was comfortable with this purchase and City Attorney Doody said Broward County currently had the Agreement which they were modifying. City Attorney Doody said he has not seen the Agreement; however, the concept of the Agreement seemed to be legally feasible. He said when he reviews the Agreement, he would notify the Council if there was a problem. C/M Hoffman said Council could not act on this matter until City Attorney Doody reviews the Agreement. Bill Greenwood said the City Staff and the City Council had misunderstood this item in the past. Referring to the Minutes of the Advisory Committee of December 29, 1987, Mr. Greenwood said the items highlighted on Page 2 were the items that caused confusion. Mr. Greenwood read the highlighted text, "Large Users with excess capacity who believe they should hold onto their capacity because it will be cheaper than the additional capacity created by the expansion project, are under a misconception. According to the Large User Agreement, current plan capacity does not remain separate from the new capacity created by plan expansion. Each Large User will pay their percentage based on total Square One cost when the current new additional capacity Debt Service costs are Page 4 1 H 1 1/21/88 combined. This process will also see Large Users Debt Service charges changing. Some will receive a rebate, some will not but, in most instances, Debt Service charges will increase. This will be discussed in detail later after the size of the plan expansion has been locked in." Mr. Greenwood said there would be a meeting next month on this matter; however, at the end of 1991 and 1992, the County's charges would be drastically increased. C/M Stelzer said the savings for the cost would be $188,000.00; however, the money saved from switching to the purchase was $137,000.00. He asked where the remaining $51,000.00 would be saved. Bill Greenwood said the existing Debt Service payment was $137,000.00 and the savings would come from not paying that amount twice. Ken Burroughs said $188,000.00 was needed from the Revenue Fund; however, the expenses were being cut $95,000.00. C/M Stelzer said the other accounts were not Revenue Accounts and he asked what the $71,954.00 Account was. xen turroughs said $71,954.00 was lease capacity fees the City paid. Bill Greenwood said the 950 Account was titled "Transfer Square One Debt Reserve Fund" and Ken Burroughs said that Fund was money being set aside for 1992. C/M Stelzer said when he asked if $188,000.00 was required from the Revenue Fund, he was told that the money would be from reductions of cost in the amount of $188,000.00. He said he could not see the cost of running the capacity reducing the $188,000.00 if the savings would only be $137,000.00 on the Purchase AoireemenE. He asked where $50,000.00 was being saved and -where the $188,000.00 figure came from. Ken Burroughs said $188,000.00 was the Revenue Share Fund of the transaction. C/M Stelzer asked if $188,000.00 was money needed from the Revenue Fund and Ken Burroughs replied, yes. C/M Stelzer asked where $188,000.00 was coming from in the Revenue Fund and Ken Burroughs said $95,000.00 would come from two accounts recently discussed. He said $50,000.00 would come from the Contingency Fund and $17,000.00 would cone from Unexpended Funds with the balance out of the Germ --al Fund. C/M Stelzer said he did not see where the savings of $188,000.00 was in the Revenue Fund. Ken Burroughs said the Reserve Fund was the Object Account within the R,z;;e sue Fund. He said the Fund was not a Reserve exactly. C/M Stelzer said $188,000.00 would not be a reduction of cost and Ken Burroughs replied, no, $95,000.00 would' be the reduction. City Attorney Doody said the backup documents indicated that a portion of the funding would come from CIAC Fund Impact Fees. He -said the Utility Department informed him %hay: the portion of the Square One Debt Service would be Page 5 J 1/21/88 paid by CIAC Funds. He said the Funds could be appropriately used for that purpose since they were portioned for the Debt One Service dealing with future development. Mayor Hart asked Mr. Greenwood to inform the County that if the Agreement was not received for review by the City Attorney before the January 27, 1988 City Council meeting, the Item would be Tabled. Bill Greenwood said the Resolution of Intent would be received and, hopefully, so would the Agreement. City Attorney Doody said if Council approves the Resolution of Intent on January 27, 1988 and the Agreement is not received, the Resolution would state, "Subject to Review and Approval of the Appropriate Agreement". C/M Stelzer asked if $543,000.00 which was being taken from the CIAC Fund had to go to Referendum and City Attorney Doody said there was no construction involved. City Attorney Doody said the Charter stated that if a capital improvement was being done that cost so much money, then a Referendum was needed. City Attorney Doody said he would inform Council if a Referendum was needed. C/M Rohr said the City would be in a better position in the future by purchasing this property. He said he agreed to this purchase because of the savings involved for the City. C/M Hoffman said the money used to buy the property would be the same money used to rent the property. Mayor Hart ADJOURNED this meeting at 10:45 A.M. CAROL E. BARBUTO, CITY CLERK "This public document was promulgated at a cost inform the general public, public officers and opinions and considerations of the City Council of $46.35 or employees of of the City $1.29 to recent of Tamarac." 1 Page 6 L�