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HomeMy WebLinkAbout12-10-18 Utilities /�ti Spu i n 8E�0 U .,......., \,•. K„.....PEACE/-- A. 8 .- OFFICE OF THE CITY CLERK KAREEMAH FOWLER, CITY CLERK UTILITIES DECEMBER 10, 2018 4:20 P.M. Committee Members Present: Jake Teshka, Oliver Davis, Sharon L. McBride, Regina Williams-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: Bianca Tirado, Graham Sparks, Bob Palmer Presenters: Eric Horvath Agenda: Bill No. 61-18- Amending the South Bend Municipal Code to add a new Article 14 Establishing Interim Storm Water Utility Rates Committee Chair Jake Teshka called to order the Utilities Committee meeting at 4:20 p.m. He introduced members of the Committee and proceeded to give the floor to the presenters. Bill No. 61-18- Amending the South Bend Municipal Code to add a new Article 14 Establishing Interim Storm Water Utility Rates Eric Horvath, Director of Public Works for the City of South Bend with offices located on the 13th floor of the County-City Building, stated, I am here to answer any questions. Committee Chair Teshka stated, We've been through this a little bit. After the last Committee meeting, I did receive some questions from you all and I submitted them to Mr. Horvath. You all should have gotten his responses sometime late last week. Committee Chair Teshka then opened the floor to questions and comments from Committee and Council Members. Councilmember Karen White stated, I know it's been asked if other funds could be used for the six (6)month window to give you more time to really do the study. The other question was if the Rainy Day Fund could be used for the six (6)month period. Mr.Horvath replied, I don't have an answer on the Rainy Day Fund. I know it is set aside to handle major events, emergencies and so it is kind of like an insurance fund. I know there is a significant INTEGRITY' SERVICE' ACCESSIBILITY JENNIFER M.COFFMAN BIANCA L.THUD() JOSEPH R.MOLNAR CHIEF DEPUTY/DIRECTOR OF OPERATIONS DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Blvd.I South Bend,Indiana 46601 I p 574.235.9221 I f 574.235.9173 I www.southbendin.gov CITY OF SOUTH BEND OFFICE OF THE CLERK amount of money in that Fund but I don't know, legally, what the requirements are and if you could use it for something like this. There may not be restrictions but I just don't know. I'm sorry about that. Generally speaking, you can use other funds. You could use bridge funding or other funds and perf to it. The issue is we have already done the budgets for 2019 so we would have to go back and adjust. You could either go into a fund that has an existing balance, use that fund and do a bridge funding for a six (6) month gap or you could do it forever. I was proposing to move ahead with this storm water fee because it's a sustainable fund and then it sets up the funding in perpetuity on a moving forward basis. I think the City has missed an opportunity years ago to establish a fund so that we can keep up with our infrastructure needs, including our storm water needs. That is why it is important, to me, to move forward with a funding source for storm water. Any funds that have the legal ability to fund storm water, which are quite a few in the City, would be eligible for gap funding. Councilmember Jo M. Broden stated, Colloquially we call it Rainy Day but we shouldn't be confused. Committee Chair Teshka then opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. Barb Sutton, 528 Ostemo Place, stated, We were part of the flood zone last year and we hope it doesn't happen again this year. Talking to a number of my neighbors, I just wanted to let you all know that we would very much approve of the two dollar($2)per month rate to start to have funds to correct our sewer issues. That is a pittance compared to the amount of funds needs to repair the damage. I think this would be a good start to get that going. I know people have been concerned about the additional cost. For some people, two dollars ($2) a month is simply utilities. Is there a way for people to apply for help if they are having trouble with their utilities because of this additional two dollars($2)? If that puts someone over the edge financially and they can't meet this obligation, could there be funds available to help folks out? That would be a discussion question at some point but I wanted to lend my support to the fee, as proposed. Sue Kesim, 4022 Kennedy Drive, stated, As I stated before, I think we need to look at the demographics of our City.We have a huge percentage of ALICE level poverty and we have seniors who are already deciding between their food and their prescriptions, but I don't want them to lose their houses. I'm particularly concerned that, unlike other utilities, this can attach to the property tax. I don't know if you can make it not attached to property taxes. That would be something to think about. I really think we need to look at other funding methods. I think we should limit how much it can be raised in the next five (5) years. I think it is tempting to start it at two dollars ($2) and, oh, and then four dollars ($4) and then, oh, eight dollars ($8) and then, oh, twenty dollars ($20). I think you need to be really clear about the escalation and put some breaks on that. Whatever ordinance you are deciding I think you need to put some caps and parameters on how it can be raised. Don't attach it to the property tax and limit how much it can be raised. I think there is time to consider. There's not even software to put it into place. I don't think there is a huge hurry. I think you can continue it to 2019. It's not a big deal because we aren't going to start funding it anyway with the fees to people. I would hate for Council to rush into it without thinking about all the options. I would also like to point out, and I printed this out today, in terms of bonds for sewer and water, $73,865,311. So we've got close to $74 million that we owe already and I don't know if there can be a refunding of some of the bonds to wrap it in. Sometimes that is another funding mechanism to change a bond and extend it or whatever. I just really hate seeing the fee EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION I EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 2 'CITY OF SOUTH BEND I OFFICE OF THE CLERK added to the average person and those are my reasons. I hope the Council will think about those and think about better ways to fund it than the average population. Committee Chair Teshka gave the floor to Mr. Horvath for response. Mr. Horvath stated, I appreciate both of your comments. We've talked before and they are both right. We've got a hurting community and about fifty-four percent(54%) is below ALICE which looks at basic survival needs that people have. That's why when we've talked before, it is something that's important for us to look at income-based rates and to try to find ways to do differential rates on our utilities. That is something that we've started to do. There are a number of different pieces that we've got to put in place so it's not going to be a quick process but over the next number of months we will be working on that. Of course there is a financial piece to it, too, to try and figure out different ways to structure it so that we can ultimately still fund it. There is also a legal piece to it to make sure we can get it done,legally,in Indiana. This has only been done once in the country and not in Indiana. There are a couple of other folks looking at it right now so it is something the IURC is going to need to figure out what they're going to do with the program but they haven't yet. That will mostly be a timing challenge. He continued, I think that is an important next step we have to do. We will look at all of our utility rates, solid waste, waste water, water, storm water all together. In terms of assistance, there are some places we send folks for customer assistance but we do not have any City program for customer assistance. There is no ordinance enabling any customer assistance programs so if we went to an income-based rate, that would be, essentially, our assistance program. In terms of attaching this to property tax, the way this ordinance is structured, it will not attach to property taxes. This is structured so it will be in the user fees and attached to the sewer and water bills. It will be like the other utilities. Same thing with water, sewer and solid waste, if you don't pay that bill we don't take that house or collect on your taxes. He went on,We haven't issued bonds since I've been here other than refunding bonds. The reason to refund bonds at that time was because we had an opportunity for a call,the rates were lower and so we saved significant dollars doing a refund.That is a possibility that they will have specific call dates but I don't think we have any existing ones with call dates we can refund right now. So I would have to have bond counsel to answer questions more specifically but I think what would happen would be if you do an early call, you'd pay a penalty so you would be double paying for a period of time until the call date. That probably won't make sense to do unless the rates were so drastically different. There is always an opportunity to refund in the future. However, it's not like you're mortgaging your house. It seems like we would go through with a new bond issue. But if you're going to do a bond, something has to back that bond. You can't just do a bond without anything there. So utility fees can back bonds. A storm water fee could back a bond. Typically, they would have a lot of difficulty with giving us a bond for storm water if we haven't established that fund to show them we have a consistent amount of money coming in. So if we are going to do that, we probably need to back it with something else like the General Fund or something else. Committee Chair Teshka asked, Do any rate increases have to come before Council? Mr. Horvath replied, Absolutely. Committee Chair Teshka stated, So that is our assurance for the escalation piece. EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 3 CITY OF SOUTH BEND I OFFICE OF THE CLERK Mr. Horvath stated, Council one hundred percent(100%) controls that. We won't have any ability and there's nothing in the ordinance that says anyone else has the ability to raise the rate. It is always Council. So,when we go to look at impervious surfaces and put the whole proposal together that will lay out the whole framework,it will change who pays what and how much each individual pays. Some might pay more, and some might pay less depending on how it's structured. I will say that we started the rate off low in terms of fully meeting the needs. We had shared in our budget presentation that there were approximately$3 million of need every year and what we are funding with this rate was about $1 million of need. We felt it important to get this established and get moving to at least start funding storm water needs. You could put something in the ordinance for a cap but by its nature it has to come back to the Council before anything can increase anyway. Councilmember Tim Scott asked, Is there a way that maybe by the meeting this evening that you could come up with a date or a commitment to come back to Council to present to us an income- based rate? I would like to have a commitment from you. I don't know what that looks like or how long it would take but a commitment to come back to us and report if we can do it or not with the understanding we do want to do it. I would like to have a literal date and would like to know when. I think you guys could put together a date and a group to work on that. Mr. Horvath replied, I have no problem with that. We will be moving forward with that. We will have a proposal but I can only propose. I would need both Council's and the State's agreement to move forward with that. But I would think by June 1st, 2019 we could have a proposal that would lay out what we are thinking. There was a question about software, too. We can add fees to software, but it is just really tough to add. With Philadelphia's program, they do a percentage of income and they actually do it by actual income rather than a tiered structure. It would be a lot easier for us to do it by a tiered structure because then we could attach it to certain bills. If it is something like what Philadelphia is doing, we would have to go into every single bill. Even with the new software program, it would still be difficult but it would allow us to bring in a database of income and then a database of the percentage or whatever the process would be to determine their rate. But I'm comfortable that by June 1St, 2019, we will have a proposal in front of Council. Councilmember Scott followed up, Well let's make a date. I would like to follow up on that. I would like South Bend to be the first(1St) in the State to be proposing something like that. That is something we need to push downstate and I think this whole group would be there to help you push downstate. The other thing is, I wouldn't mind looking at some of the construction that is happening in our City that is using permeable paving. What kind of incentives do we give for that? Is there anything in the State or nationwide to incentivize that? I know there are requirements for retaining ponds and what not but that is for later. Committeemember Oliver Davis asked, What is your name? Ms. Sutton replied, Barb Sutton. Committeemember Davis followed up, Ms. Sutton, thank you for coming. If something were to happen to Ms. Sutton's house this year in her neighborhood, right now, no matter what happens, there would not be any funds coming out of this starting June 1. I mean, there is nothing coming out, it would happen this spring, correct? EXCELLENCE ACCOUNTABILITY ; INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD574.235.5567 vwwv.southbendin.gov 4 CITY OF SOUTH BEND I OFFICE OF THE CLERK Mr. Horvath replied, I'm not following your question, I'm sorry. Committeemember Davis asked, If something were to happen, the same thing that happened last year in February, right now, all plans on the table, there would not be any funds available for her neighborhood this year? Mr. Horvath replied,Yes, that is mostly true. Committeemember Davis interrupted, So most of it but part of it's not true? Mr. Horvath continued, When we pushed this to June 1st, and in my answers to Council, I stated there were two (2) things moving forward. One (1) was the flood inundator study which will help people determine the level the river will be at and it gives a predictive analysis of where that's going. We are partnering with the USGS on that. And the other one (1)was doing these backflow gates on the storm lines that would prevent the river from coming back into the storm sewers. Those two (2)things are moving forward with waste water funding because we felt like they were important to keep moving forward. We had to give USGS a commitment to get the grant funding and we felt it was important for those backflow gates to be on. But beyond that, there is no other funding. Committeemember Davis followed up, Where is that funding coming from? Mr. Horvath reiterated, That is from the Waste Water Fund. Committeemember Davis then asked, And that is already regardless of what we are doing right now, currently? Mr. Horvath replied, Those are established, yes. Committeemember Davis asked, So basically, that is separate than what we are talking about? Mr. Horvath replied, That is correct. Initially we would fund this Storm Water Fund as well and we were proposing starting January 1 but moved it back to June 1. Committeemember Davis stated, I just wanted you to be clear that what's happened whether this is voted up or down, that part is going to still take care of your situation and that is not contingent on this vote tonight, ok? So if that is voted down and those are voted down, whatever. That is not affecting that but it can be perceived that if we voted no that it would be affecting your situation. But your situation is covered no matter what, ok? Ms. Sutton interjected, But it's an ongoing issue for the City. Committeemember Davis continued, I understand it's an ongoing issue. And that funding of that, part of it will be ongoing no matter what,too.And so that is ongoing and that is already established in our budget, correct? Mr. Horvath clarified, Which one(1)? EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 5 41.CITY OF SOUTH BEND OFFICE OF THE CLERK Committeemember Davis asked, The part that's already established is already established all the way through? Mr. Horvath clarified, Those two (2)projects? Yes. Committeemember Davis continued, So that's established ongoing, that is what I'm telling her. That is established for 2019 and is established for 2020 or whenever or how long it's going on. So, I just wanted her to know that her neighborhood is taken care of. That's established and we took care of that. Thank you. Committee Chair Teshka stated, I would just like to clarify. Mr. Horvath, I believe you've said this many times and we don't want to give any false assurances to residents that by establishing this that all of the sudden the flooding problems are going to go away, correct? You've said that and I think this is not an emergency fund. This is s fund, rather, to help us keep up with continual improvements, correct? Mr. Horvath replied, Yes, that is absolutely true. The funding established will help us build storm water infrastructure which will help alleviate problems. On catastrophic events, there is probably no level of funding that you could throw to help the situation. The river coming up as high as it did, short of building walls through the river or the City, you're really going to have difficultly completely solving that issue. Even if you built walls, it would be stuck on the outside. I say that because I don't want to mislead people in thinking that this is a cure-all but there is significant needs that need to be met and this will help us start addressing those needs. We'll start picking them off one (1) at a time. We will start with the worst areas where we know we have major flooding problems and we will hit those areas first(18t) Councilmember Broden stated,Just a couple things but I'm going to name them, four(4). One(1), your paragraph three (3) stating the storm water user rate shall apply for a period of at least two (2) years. I mean, what would be the difficultly of saying for two (2) years and being very specific on that? Then your sentence continues and say with subsequent transition to a rate based upon the quantity, blah, blah, blah. Ok? It's as if we are identifying what we want to do before we, I mean, you probably have a good indication of the direction we want to go, but, to me, that is almost a certainty the way that is worded there. I guess I would like to see some consideration of language that indicates that we have an inclination it will go that way but after due diligence. Something that gets at that is not a done deal to go that direction because what if your data and other information points you otherwise? That is probably a small matter because I think you wouldn't have bagged that from your earlier proposal in order to get to this flat fee. So just some wording there that, I think in my opinion, would offer some clarity for some members of the public. Then going along with the impervious surface, I agree with Councilmember Scott. Looking at, and this is down the line and sort of version two (2) of this, whatever Council looks at, and I guess that is one (1) of my things. She continued, Since my tenure, I have seen some things not happen so I like tying in a specific date of two(2)years.This is in place and within two(2)years,the next Administration and Council can look at it when it comes up. But I do think when we do look at that impervious surface piece, one (1), we will have to anticipate an appeal process that will be a part of that and then two (2), I like the concept of credits or offsets of some sort. The building plans, or Code, should support developers who are trying to do right by that whether it is new build or renovation. Then I guess I EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 1574.235.9173 TTD574.235.5567 www.southbendin.gov 6 CITY OF SOUTH BEND OFFICE OF THE CLERK don't want this to be taken wrong, but I'm having a little bit of difficulty understanding. My understanding is when you look at flat fees or taxes that are flat,to me,you're going at that because you're trying to get at something simpler that doesn't get weighed down by a lot of variables and in this case a lot of staff time. Or, if you get it wrong, you have members of the public circling us in this huge appeals process. I guess in my mind, if I remember your earlier presentation, the national average is seven dollars ($7) or what is eight dollars ($8)? Mr. Horvath replied, No, it's less. It is five dollars ($5) a month. Councilmember Broden then asked, And the State average for Indiana? Mr. Horvath replied, It is actually the same. It's a little over five dollars ($5). Councilmember Broden continued, Ok, so in some regard, because of timing reasons and all the stuff that would need to go on this sort of impervious surface model, to me, we're almost adding, I don't want to say an income-based rate because flat fees, in some ways are getting us, but the national and statewide average is five dollars($5) so we are actually doing a nod to income-based at the two dollars($2),in my opinion. I know others feel differently but my next thought is to take that further. What would income-based rates look like? Are we as a Council thinking one dollar ($1) would get it done? Fifty cents ($0.50)? Or twenty cents ($0.20)? If you push that as far as it could possibly go, we could eliminate the very thing we are trying to create here to alleviate some of our City's issues. We need to be careful. I think we know the national average, the statewide average, and if Council votes in support of this, we are coming in at something that is far off those averages. So in some ways, I mean to me, we are being responsive and are acknowledging our residents' incomes already in approving this at the two dollar($2)rate. That is kind of my take on it. Councilmember John Voorde stated,This thought just came to me. Maybe you could structure this the way the County Auditor structures exemptions.There is a senior exemption but that is income- based. It's an opportunity but they would have to file to take advantage of it. So it would leave the burden on you to do the checking and that kind of thing but it works for property taxes and it could potentially work for rates without potentially putting a whole big burden on the City. It would also put a little responsibility on the property owner. Mr. Horvath asked, Is that for seniors only though? Or all? Councilmember Voorde replied, Right now it's just for seniors, I believe, yes. I'm just thinking. Mr. Horvath replied,that is helpful and that is part of the thought process going into income-based rates and that is trying to find a system that's easy to implement so you're not using the dollars to hire staff to run the program. That doesn't make sense. We want the breaks to go to the residents and not to paying for fancy programs. We're going to have a dialogue with United Way because they are doing some income-based stuff already on the heating programs. They've already got income verifications they have to do for that to make sure during the winter months that people's heat stays on, so that's one (1) possibility and that sounds like another possibility. It is our hope that someone has already been doing it and we can do it. EXCELLENCE ACCOUNTABILITY INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD574.235.5567 vwwvv.southbendin.gov 7 •CITYOFSOTJTHBENDTCommitteeChairTeshkaOFFICE stated, IOF just HE CLERK wanted to ask about what Councilmember Voorde said. Typically when folks hear the term income-based, they think of tiers based on income, right? Especially with a user fee like this, it gets real money real quick by saying if you make under this amount, you pay this or you pay nothing. I would like to see more of an assistance program or an exemption, so I wouldn't take that off the table. I would also like to say, too,just to put out there, this is not going to solve our flooding issues. We've got a lot more. This just barely scratches the surface as far as infrastructure goes. This is specifically for storm water and we are going to have to address some of those things coming up like CSO and those types of things. We're going to have to find some money and I think this is something we can bond against. I don't know and we will have to cross that bridge when it comes but we definitely have some stuff to do. Committeemember Regina Williams-Preston stated, I really like that idea. Since this is just a two (2) year kind of a trial, is it something that wouldn't be hard to do to add in that we could have an exemption for this trial period as well? Mr. Horvath replied, I would have to look into how that is formulated. Our thought was that we would get income-based rates to be our assistance program and that is how we would end up setting those. It wouldn't be necessarily just for seniors but for anybody whose income qualifies. I think the challenge is trying to figure out the most uncomplicated way as possible, in that regard. There will be some rate sensitivities we will have to look at. We will have to make some assumptions about how many people would qualify for the program. Ultimately when we go to income-based rates, it will be a revenue neutral scenario. It will mean there will be some of us paying more and some paying less. That is how the structure will work. Committeemember Williams-Preston followed up, I guess what I'm thinking is we are going to know about the income-based. What I heard was by June 1, we would have a proposal that the City would bring to Council. That doesn't mean it will start then. The Council might look at that but then you still have to deal with the State, right? That's a whole other process. My thought was since we're doing this two (2) year kind of pilot or stop gap, maybe we could try out this model and after two (2) years we could assess that and see how that worked and decide if that is the way to go. Again, I don't know how hard that would be. Councilmember Voorde interjected, The Auditor has got some sort of verification process. I don't know what it is but it works for them. Committeemember Williams-Preston made a motion to send Bill No. 61-18 to the full Council with an unfavorable recommendation. Committeemember Davis seconded this motion which failed by a voice vote of two (2) ayes and two (2) nays (Committeemember Teshka and Committeemember McBride). Council President Tim Scott broke the tie with a nay vote. Committeemember Williams-Preston then made a motion to send Bill No. 61-18 to the full Council with no recommendation. Committeemember McBride seconded this motion which carried by a voice vote of three(3) ayes and one (1) nay(Committeememeber Davis). With no further business, Committee Chair Teshka adjourned the Utilities Committee meeting at 4:59 p.m. EXCELLENCE ACCOUNTABILITY INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 1 p 574.235.9221 f 574.235.9173 TTD574.235.5567 www.south bend in.goy 8 0 CITY OF SOUTH BEND OFFICE OF THE CLERK 0R-- .;ctfully Submi ed, / J.. e Teshka, mmittee Chair EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD574.235.5567 www.southbendin.gov 9