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NOTICE OF WORKSHOP MEETING
CITY COUNCIL
TAMARAC, FLORIDA
August 16, 1985
There will be a City Council Workshop Meeting on Thursday,
September 5, 1985, at 9:00 A.M., in the Council Chambers of City
Hall, 5811 NW 88 Avenue, Tamarac, to discuss the Utility Bond
issue.
The public is invited to attend.
Carol E. Barbuto
Assistant City Clerk
AN EQUAL OPPORTUNITY EMPLOYER
POLICY OF NONDISCRIMINATION ON THE BASIS OF HANDICAPPED STATUS
CITY OF TAMARAC, FLORIDA
CITY COUNCIL WORKSHOP MEETING
TUW BOND ISSUES
SEPTEMBER 5, 1985
Tape CALL TO ORDER: Mayor Kravitz called the meeting to order at
1 9:00 A.M. on Thursday, September 51 1985, in Council Chambers.
PRESENT: Mayor Philip B. Kravitz
Councilman Arthur H. Gottesman
Councilman Raymond J. Munitz
Councilman Sydney M. Stein
ABSENT: V/M Helen Massaro
ALSO PRESENT: Jon M. Henning, City Attorney
Larry Perretti, Acting City Manager
Frank Etheredge, Finance Director
V. Diane Williams, Secretary
MEDITATION AND -PLEDGE OF ALLEGIANCE: Mayor Kravitz called for a
Moment of Silent Prayer and the Pledge of Allegiance.
Mr. Henning said the workshop will include discussion on the
revenue bonds, projects involved, where the monies will go and
possibly the rate involved to support the debt service for the
bonds. He said, in the past, they discussed that the General
Obligation Bonds would be sold first and the revenue bonds sold
afterwards that this procedure may be reversed. He asked that the
representatives present address whether it was appropriate to have
the revenue bonds first and then the General Obligation Bonds
regarding the Municipal Complex at a later date.
The City Attorney stated there has also been discussion as to
the refunding issue. He said, originally, the referendum stated
that new bonds are authorized up to 15 million dollars as needed.
He said the representatives present may want to discuss the
possibility of refunding the 1979 or 1980 bonds that were issued
to purchase Tamarac Utilities West and the mechanics for setting
up the appropriate funds. Mr. Henning said it appeared that they
would be selling 28 to 30 million dollars if they are involved in
a refunding issue. He said the bonds approved by the Court
include the higher amount and the refunding possibility and
informed that Council does have that flexibility if they move in
that direction.
Mr. Etheredge said they have projects involving $15,058,000 which
need to be done and are faced with a bond issue of approximately
$11,600,000 to fund them. He asked Council for direction as to
whether to proceed with the projects, and, if so, they would
prepare the proposals necessary to do them and to issue the bonds.
The Finance Director said, unfortunately, when they do discuss the
bonds, there will also have to be discussion on the new rate study
because if the bonds are issued, the new rate study will have to
be put into effect to finance the cost of the bonds.
Mr. Etheredge said it would increase the debt service to the city
and the utility funds.
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Mr. Henning said there is additional design work to be completed
on the Municipal Complex but noted an urgency to move forward to
meet the demands of developers to keep the system working.
Glenn Humphrey, representative of James M. Montgomery Consulting
Engineers, said his presentation deals with the rates needed to
meet the debt service requirements and the various items required
under the grant. Mr. Humphrey stated the urgency in imple-
mentation of the new rates, particularly, since it involves the
acceptance of grants and also the ability to proceed with
additional bond sales whether it be refunding or additional bonds.
He explained that they made various assumptions to determine the
debt service after additional bonds were sold. Mr. Humphrey said
if they are below that it would be to their advantage because the
rate change may remain in effect over a longer period of time. He
said the new rates should hold the city through 1988 and still
meet the debt service coverage requirements if additional bonds
are issued to meet the basic commitments in utilities.
Mr. Humphrey indicated that adjustments were made to insure that
the EPA would approve the rate system. He explained that EPA had
to be certain that the operation and maintenance costs for the
sewer system are paid for by the sewer system only. He said, in
the past, the relationship between the basic rates for multi-
family and single-family dwellings has been 70%. Mr. Humphrey
explained that the calculations were derived from two different
proposals:
1. One is that single-family and multi -family be
considered exactly the same which he did not recommend.
2. The other proposal would consider multi -family at
65% of the single-family which would insure a fairly
uniform rate increase.
Glenn Humphrey presented a slide presentation which outlined the
proposals. He said the water rate would jump to $.80 and the
sewer rate would jump to $1.50 per 1000 gallons for a standard -
sized meter. Mr. Humphrey said the single-family rate will go up
17.4% for those using less than 15,000 gallons of water and the
multi -family rate would be increased by 19.1%. He said there will
be a 44% increase in the large user charges because the volume
charges for water and sewer have increased considerably with the
average single --family user rates increased by 22.5% and the multi-
family 19.1%. Mr. Humphrey the old rate of $12.54 for multi-
family would increase to $14.94 and the average single-family rate
will increase from $18.88 to $23.12. Mr. Humphrey reasoned that
these increases were fair because the city has not had a rate
increase since 1979 or 1980 but the people who will get hit the
hardest will be the large users.
C/M Gottesman asked Mr. Humphrey to define "large user".
Mr. Humphrey answered that 15,000 gallons was the split between
the small users and the large users based on usage. He said in
the past the cutoff had been 10,000 but was increased to 15,000 so
the residents would be required to pay for sewerage volume up to
15,000. Mr. Humphrey explained that this adjustment was
determined to be the one most acceptable to the various regulatory
agencies because the city had applied for four different grants
and added they have received letters of approval from all four
agencies for this proposal. He also noted that under the old
rates the sewer does not pay for itself.
Mr. Henning asked if he was addressing the minimum service
availability charges, the variable consumption charges or both.
Mr. Humphrey replied that the minimum is where the 65% was
applicable. He said the average usage of a multi -family unit was
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65% that of a single-family unit.
Mr. Henning asked, based on the average consumption, if he was
proposing that the minimum service availability charge have this
ratio.
Mr. Humphrey said he was correct and that the minimum service
availability charge would be adjusted to that ratio but the unit
charge is calculated at a cost for every 1000 gallons which is the
same for multi -family as it is for single-family.
Mr. Humphrey said the commercial businesses will be hit fairly
hard because of the substantial increase in volume charges. He
said the water increases from $.60 to $.80 and the sewer from
$.70 to $1.50 and they do not have a cap on their usage. He said
these rates are only applicable to Tamarac Utilities West.
Glenn Humphrey said adjustments were made on the Homeowners'
Association for the three-inch meter. He said the hospital
learned that their rates increased immensely because they were
using a tremendous volume of water.
Mr. Perretti asked where the proposed new rates stood in compariso
to the rest of Broward County.
Mr. Humphrey said the proposed rates were certainly not out of
line with the remainder of the County and added that sewer is
possibly higher but water is less than most. He said he would
prepare a comparison table to present to Council as soon as
possible.
Mr. Humphrey said if single-family and multi -family dwellings were
considered as equal, the single-family average would be approxi-
mately 10% and multi -family increases would be approximately 35%.
He said considering that multi -family usage was only two-thirds
that of single-family he felt that imbalance would not be proper.
Mr. Henning said EPA and DER required preferential treatment
for the recreation areas and the surcharge to residents who live
out of city limits. He explained that in the past the city had
charged a 25% surcharge and that it will need to be removed and
absorbed by the system. Mr. Henning asked for an explanation as
to how the 15,000 gallon cap would apply to the recreation areas.
Mr. Humphrey said a review of the Homeowners' Association by the
regulatory agencies for the grant program felt it was discrimi-
natory so he removed the cap from water and sewer for the
Homeowners. He also explained that the 25% surcharge incurred by
residents outside of the city does not make a significant
difference in the total revenue picture nor would it change the
percentage increase to the rest of the residents of the city.
Mr. Humphrey felt it would be more acceptable to the funding
agencies if the surcharge was dropped since they could not demon-
strate to them an increase in cost to the city for handling. He
said the charges reflected the actual operation and maintenance
costs incurred by the rate structure.
C/M Munitz asked if he was made aware that the Florida Supreme
Court ruled in favor of the Homeowners' Association in regard to
FP&L giving them a residential rate.
Mr. Humphrey said he would have to research that and get back to
him. He said the cap was removed for calculations because of
the funding agencies but it does not mean that it has to remain
off and he would have to determine, if that were the case, if it
would be acceptable to the funding agencies. Mr. Humphrey
recommended the surcharge be deleted in order to avoid any
hangups, grantwise, but hoped there was room for negotiation and
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would include additional information on the subject to Council via
a memo.
Mr. Henning said they are encountering "two sides of the sword" in
that the city incurs a 25% surcharge by the City of Fort
because of their large water user agreement for Tamarac Utilities
East and wondered if it were possible to determine if the City of
Fort Lauderdale is under the DER and EPA regulations.
C/M Munitz said it has always been Council's contention that any
expenditures for the Municipal Complex and water and sewer
projects be refunded from monies received when the bonds were
issued. He cautioned that special attention be given to accounting
practices.
Bill Greenwood responded that the Acting City Manager, Finance
Director and himself wholly support project accounting. He said
the reason given prior to the latest adjustments to the staff was
that it would all be taken out of Professional Services from the
Revenue Account in TUW and at a later date accounts would be
rectified and clarified but that as of this date, this has not
been performed.
Mr. Etheredge said all the expenses formerly charged to Utilities
can be removed and charged to the "Construction Fund". He said he
would also remove all project expenses from the General Fund and
create a separate "Bond Fund".
Mr. Greenwood said one of the grant requirements pertains to the
user charge system and they have one method presently proposed by
James M. Montgomery Consulting Engineers which incorporates the
projected operation of maintenance expenses plus the approximately
15 million dollars of bonds. He said a second user rate was
prepared by Steve Wood as an interim basis which put the city in
compliance with the DER requirements. Bill Greenwood requested
that the "Steve Wood version" of the rate study be adopted which
was previously approved by Council but never duly adopted. He
said this version eliminated the surcharge and implemented a
uniform per gallonage charge. Mr. Greenwood said the document was
desperately needed for final approval and adoption because they
presently have the unitary Sewer Rehab_ Project which is 80%
completed and if this rate study is not adopted, the city will not
receive additional reimbursement from the State on this grant.
C/M Munitz inquired if Steve Wood's proposal was taken into con-
sideration by the James M. Montgomery study, and, if so, would it
have any effect.
Mr. Humphrey said that it would not and believed that this was an
interim step to insure that the rates were in compliance with
grants only whereas the Montgomery study covers both grant and
additional debt service and would supersede Mr. Wood's version.
Mr. Etheredge asked for direction from Council to proceed and
explained that at the time of bond issuance, the rate study will
have to be implemented.
Mr. Henning asked if they are in a position to forego the "Steve
Wood version" and proceed with the Montgomery proposal.
Mr. Greenwood said they could not because the State has approved
and is satisfied with the interim user charge system. He said the
Montgomery proposal is still being reviewed by the State for
approval. Therefore, the interim user charge system is the one
they will have to go with.
Craig Dunlap, representative of Dean Witter Reynolds, addressed
whether to proceed with the refunding of the city's existing debt
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or to issue new money. Mr. Dunlap reported that he had spoken
with Jerry Heffernan, bond counsel, and he pointed out certain in-
consistencies between the city's resolution and the official
statement and that Mr. Heffernan felt that the city should
refinance for that reason. Mr. Dunlap said there would be some
financial advantages to the city to refinance. He explained
that the rate paid on refunding bonds sets a rate of interest that
the city can earn in an escrow account where these funds would be
deposited and the higher rate paid, the smaller amount of prin-
cipal has to be issued, and the lower the rate, the higher the
amount of principal. Mr. Dunlap said there must be a 31-day
separation between the time refunding is done and the new money
is issued.
Mr. Dunlap said they could restructure the refunding of the bonds
whereby they would mature between 2005 and 2010 which is the
longer end of the yield period. He explained the new money issue
could be amortized between 1986 and 2004 and would lower the
interest rate by 1/2% which translates into a $50,000 to $60,000
debt service savings for the city if this method of financing is
adopted. Mr. Dunlap said this would be based on the assumption
that they proceed immediately and do the refunding first and the
closing could be in late October and the new money would probably
not be available until the first of the calendar year. He said
the city should implement the rates as soon as possible so that
when the material is presented to the rating agencies it would be
beneficial.
Craig Dunlap said underwriters would have to be selected for this
transaction and he recommended a negotiated sale and the General
Obligation Bonds could be sold competitively.
Mayor Kravitz asked Mr. Dunlap to submit his recommendations to
Council in writing.
Mayor Kravitz adjourned the workshop at 10:05 A.M.
Carol E. Barbuto
Assistant City Clerk
This document was promulgated at a cost of $51.80 or $1.44
per copy to inform the general public and public officers and
employees about recent opinions and considerations by the City
Council of the City of Tamarac.
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