11-20-02 Utilities Committee - Laserfiche WebLink

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Utilities Committee November 20, 2002 Page 2 Council Member Kirsits indicated that he had received a voice mail from the Director of the Division of Environmental Services Jack Dillon indicating that he would be unable to attend today's committee meeting. Mr. Matthew S. Cullinan, Executive Assistant to the President of the University of Notre Dame, stated that following the last committee meeting it was indicated that several Council Members would be receptive to receiving information about other funding alternatives. He then introduced Mr. Steven K. Brock of Therber,Brock&Kramer,Inc. of Indianapolis. li Mr. Brock provided two (2) handouts to the Committee, the first entitled "South Bend Municipal • Sewage Works, South Bend, Indiana, Calculation of Alternative Rate Increase Percentages Including Illustrating the Effect of Borrowing $27,000, 000 to Finance the Utility's Capital Improvement Program as Opposed to Financing the $25,857,767 Capital Imp rovement Program on a Pay-As-You-Go Basis and Borrowing One Year's or Two Year's Capital Improvements in Order to Implement a One Year or Two Year Rate Increase", and the second being a"Summary" version of the first document(copies attached). Mr. Brock stated that he a CPA with an MBA and has been working in this area for over twenty years. He is serving as a consultant for the University of Notre Dame, I/N Tek and I/N Kote, and Memorial Hospital to propose alternatives to alleviate the high percentage rate increases. He then reviewed his handouts. He highlighted a letter attached to the "Summary" dated November 16, 2002 from Ethel L. Morgan, PE of HomeTown Engineering, LLC(copy attached) which provides an analysis of the expected service of the various items proposed in the capital improvement program (copy attached). Mr. Brock noted that the expected life ranges from 5 to 50 years. He then reviewed the "side by side" reports. He concluded his remarks by stating that "bonds are typically used for the majority of capital improvements". Dr. Varner inquired of Mr. Brock whether his proposals assume a "flat rate for all". Mr. Brock stated that they do assume the continuation of the same rate for all users as is currently the format in effect now by the City. • Council Member King voiced concern that but for Dr. Varner pointing out the"flat rate premise", that that is a second fundamental difference which should have been highlighted by Mr. Brock. Council Member King stated that Mr. Brock's proposals incorporate borrowing instead of"paying as you go"and a flat rate for all customers. Mr. Brock stated that the goal was to lower the % increase to permit discussion of all other alternatives. He noted that his alternatives include the flat rate concept. Mr. Cullinan emphasized that their presentation utilizes the "existing rate structure used by the city". He noted that the capital projects are the key,and it is there hope that common ground for a workable proposal would be pursued. Mr. Cullinan stated that major public policy issues must be considered and debated. He suggested that a one or two year temporary rate be considered to allow discussions to take place. Mr. Pat Cummings, Public Works Director for the Town of New Carlisle then addressed the Committee. Mr. Cummings stated that he has reviewed the bar charts set forth in the Cost of Service Study and has talked with Mr. Gilot. He stated that the Town of New Carlisle would be