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HomeMy WebLinkAbout1985-09-05 - City Commission Workshop Meeting MinutesMAIL REPLY TO: P.O. BOX 25010 TAMARAC, F LOR I DA 33320 5811 NORTHWEST 88TH AVENUE TAMARAC, FLORIDA 33321 TELEPHONE (305) 722-5800 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. 1 9/5/85 /VDW 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 PN 9/5/85 /VDW 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 3 9/5/85 /VDW J 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 4 9/5/85 /VDW r_J J 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. 5 9/5/85 /VDW