Loading...
HomeMy WebLinkAbout03-27-17 Utilities �4SpUT88��d � x U y w �ACE a r a 1865 OFFICE OF THE CITY CLERK KAREEMAH FOWLER,CITY CLERK UTILITIES MARCH 27, 2017 4:25 P.M. Committee Members Present: Dr. David Varner, Oliver Davis, Randy Kelly, Regina Willams-Preston Committee Members Absent: None Other Council Present: Tim Scott. Jo M. Broden, John Voorde, Karen White, Gavin Ferlic Other Council Absent: None Others Present: Adriana Rodriguez,Aladean DeRose, Kareemah Fowler, Graham Sparks Presenters: Jitin Kain, James Mueller Agenda: Substitute Bill No. 66-16-New Water Rates & Charges Committee Chair Dr. David Varner called to order the Utilities Committee meeting at 4:25 p.m. He introduced the members of the committee then proceeded to open the floor to discussion of Substitute Bill No. 66-16. Substitute Bill No. 66-16-New Water Rates & Charges Jitin Kain, Public Works with offices on the 13th floor, stated, I just wanted to reiterate that the substitute bill before you reflects the comments received from you regarding the phasing out of the water rate increase. This is a modest increase that amounts to roughly three dollars and twenty cents ($3.20) in 2018 and three dollars and seventy-eight cents ($3.78) in 2019. Then, with the compliment of TIF funding over the next couple of years,there are certain needs that need to be met immediately. Committee Chair Dr. Varner stated, Let's correct something. The proposed increase was twenty- two percent (22%) for both years, both Mayor Pete's and Eric Horvath's Cover Letters to the Council are inaccurate. The ordinance is written correctly. I don't think anyone at this point has disregarded the notion there needs to be some repairs, the question is how we go about funding them. Is there a belief among council members that TIF should be used on a routine basis? Committeemember Oliver Davis stated, In talks with different people,there are beliefs there should be TIF. I am one of those people. There are also people that do not believe there should 455 County-City Building•227 W.Jefferson Boulevard•South Bend,Indiana 46601 Phone 574-235-9221 •Fax 574-235-9173•TDD 574-235-5567•www.SouthBendIN.gov JENNIFER M.COFFMAN ALKEYNA M.ALDRIDGE JOSEPH MOLNAR CHIEF DEPUTY/DIRECTOR OF DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK OPERATIONS be TIF funding used. What I would like to see is what the total cost would be if we paid for everything today. What percent would be needed to pay for the whole thing at this point? Committeemember Regina Williams-Preston stated, I thought last time we talked, we knew we would have to look to increasing again after year three (3) or beyond. And what's the body that oversees this whole thing?In any case, I thought I heard that every time we go to them, we have to pay $150,000. I want to also look at whether we want to move away from that. Committee Chair Dr. Varner replied, There have been times when the City has come and asked for the Council to approve a petition to remove the City from the IURC. Some communities have done that, and that's not off the table. We must find a way to get the initial resources right away but at the same time obtain a comfort level where we won't look at this for five (5) years. If these capital expenses are that critical,there must be a willingness to step in and allocate TIF dollars. If there isn't a willingness to step in, it seems to me it must not be that critical. TIFs were created for funding of infrastructure. Committeemember Davis asked, When we set up the payment plans for the sewer rates, is there any part funded by that piece of it? Committee Chair Dr. Varner replied,No, we funded bonds and there was cash available for sewer rates.No money from sewer can be used for this. Councilmember White stated, We have not had a public hearing on this particular ordinance. I don't think anyone is disagreeing that we need to have an increase. The question becomes, How do we look beyond the increase through the next three (3) years? We're looking at twenty-two percent (22%) for two (2)years. I have no difficulty using TIF at all. Committeemember Williams-Preston stated, I'm certainly in favor of using TIF. Councilmember Jo M. Broden stated, I don't think it is the wisest to use TIF for infrastructure. Also,we got to this proposal without public input. I have an issue with not sticking to our initial proposal of the five (5) year plan. I'm not wanting to delay this vote,but I think we were presented with a really smart way that has been kicked down the road. Committeemember Davis stated, I do believe the public hearing has to be heard today and I think after we hear the public and hear what they have to say, it will be good. The Administration has responded to us and our discussions. Councilmember White stated, I think there is consensus that we have to raise water rates. I think we need to raise them pretty soon. Councilmember Tim Scott stated, Every time we approach IURC, it is another$150,000. Do we need to get out of that? That issue doesn't solve this issue at hand right now. The can has been kicked far enough down the road and we need to make a decision. The longer we delay,the larger the price gets. 2 Committeemember Randy Kelly stated, I think this is a public safety issue we need to act on right away. Creative use of TIF dollars is a good idea but we need to get this rate increase passed regardless. Committee Chair Dr. Varner stated, I do agree with Ms. White in that we have to look at using TIF dollars in a judicious fashion. There is approximately $30 million coming into the TIF fund every year, half of which is cash at the ready. We can ask for some of that. I think there's a general agreement that the funding is necessary and that we need to find a way to get it done. We could have a Utility Committee meeting between now and the next full Council meeting and the Mayor or his staff could attend it. Councilmember Tim Scott asked, If we amend this, do we need to put it out for public input again? Interim Council Attorney Aladean DeRose answered,Not if the amendment is a lower rate than this. If it is higher than this proposal then yes, you would have to. Committeemember Davis asked, What if the plan is just longer, would we have to put it back out into the public hearing? Interim Council Attorney DeRose answered, This vote is only for one (1) year. The presentation to the IURC is only for one (1) year. Committeemember Davis then asked, Whatever rate is passed, how do we advocate our issue to the IURC as a Council? Is there an opportunity for the public to get involved with that process? Interim Council Attorney DeRose replied, The IURC has its own public hearing, and it could be held here in South Bend upon request. There will be a local hearing, and there will be a second hearing in Indianapolis. Councilmember Scott stated, We are voting on a bill that, with all due respect, is held at the Administration level. This is their bill. Committee Chair Dr. Varner stated, The recommendation is $3 million a year for five (5) years from TIF funds. Dr. James Mueller, Chief of Staff to the Mayor, stated, I suggest it to be highly unlikely to use Riverwest TIF, which would be to use money from west of the river to subsidize ratepayers in the 4t'District that are more affluent. Bridge funding is not a good strategy of funding basic water infrastructure. Councilmember Broden stated, So in terms of this evening, it seems as though we still have a need to address the basic questions of this proposal. We also have some basic process questions. If we can't even get this two (2) year plan, what does that mean comprehensively?And what is our back-up plan? 3 John Julian,partner with Umbaugh and Associates, stated, Regarding the IURC, they are an independent body and can do a lot of different things. Their general working practice is to review the rate request and evaluate the revenue needs as those that are identifiable, measurable and occurring within one (1) year. By that nature, they don't default to approve multi-year increases. The reason I think we have a leg to stand on here is what we're showing are needs that are identifiable but a short term funding solution with TIF that in fact lowers the need from the rate- payers. Other communities have done this. The back-up plan is one Council needs to make. I would advocate for you all approving the forty-four percent(44%) regardless of whether or not TIF is approved.Negotiating with the IURC is different than other negotiations because you're not asking for profit, you're justifying costs and need for those costs. Councilmember John Voorde stated, It seems to me based on what we've heard, we can easily justify the full rate increase. There are a lot of capital expenses that need to be addressed. I don't think they will care what we are offsetting it with because that is a local decision. If we approve this rate, we can make that decision at a local level. Mr Julian stated, Per state statute, rates that are set below the cost of service are illegal rates,just as rates set above the cost of service are illegal as well. So if you are to present to the IURC, a rate that is below the cost of service, you must also provide how you will be offsetting that shortfall. They could, actually, order you to have a higher rate if they believe your rate to be too low. Committee Chair Dr. Varner stated, It seems to me some reasonable people need to get together and come up with a solution. It's not totally the Council's responsibility, there is some other responsibility there. Committee Chair Dr. Varner then opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. There were none. He then turned the floor back to the committee for further discussion or main motion. Committeemember Kelly made a motion to send Substitute Bill No. 66-16 to the full Council with a favorable recommendation. This motion failed as it was not seconded. Committeemember Davis then made a motion to send Substitute Bill No. 66-16 to the full Council with no recommendation. This motion was seconded by Committeemember Williams-Preston and carried by a voice vote of three (3) ayes and one (1) nay (Committeemember Randy Kelly). With no other business on the agenda, Committee Chair Dr. Varner adjourned the Utilities Committee meeting at 5:23 p.m. Respectfully Submitted, avid Varner, Committee Chair 4