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Home My WebLink About10-14-02 Utilities Committee tommittu librport ttitttvz Ottittittttt The October 14, 2002 meeting of the Utilities Committee was called to order by its Chairperson, Council Member Al`Buddy"Kirsits at 4:30 p.m. in the Council Informal Meeting Room. Persons in attendance included Council Members Aranowski, Pfeifer, King, Kuspa, Varner, Kirsits, Coleman and Kelly; Mayor Stephen Luecke, Public Works Director Gary Gilot, Director of the Division of Environmental Services Jack Dillon, Assistant City Attorney Aladean DeRose, Community&Economic Development Director Jon Hunt, John Skump, Richard Nussbaum, John A. Nielsen, Director of Government and Public Affairs at Ispat Inland, Inc.; Paul A. Kempf, Director of Utilities at the University of Notre Dame;Terry Bland of the *00 5,ltu i ' :vt uu*, Kathleen Cekanski-Farrand, Council Attorney;and other unidentified members of the public. Council Member Kirsits stated that this Committee meeting was called in order to continue the presentation by the City Administration on the proposed sewer rate increase from three weeks ago. Mayor Luecke stated that the City Administration would like to reintroduce a proposed sewer rate ordinance so that there would be first reading on the ordinance at the next Common Council meeting. The proposed rates which will be proposed will reflect a 57% increase across the board which is based on a cost of service study. Mayor Luecke noted that since the first sewer rate increase ordinance was withdrawn by the City Administration, they have had meetings with the larger users, They have revised the first ordinance somewhat and hope to buffer the impact on the larger users somewhat. Mr. Gilot then reviewed a handout entitled "October 14 Briefing to the South Bend Common Council Regarding Proposed Wastewater Utility Rates" (copy attached). He stated that the overall goal is to get everyone paying in relation to what they receive. Mr. Gilot then provided copies of a "Rate Review&Cost of Service Study--Revenues &Consumption"and a"Rate Review &Cost of Service Study --Revenues & Consumption--Current"; pages 17-20 of the study; as well as a chart on revenues,0&M, replacement,debt service and capital (copies attached). Dr. Varner inquired what the test year was for the information. Mr. Skump stated it was June 30, 2001. Mr. Gilot noted that the City is still far apart with the University of Notre Dame and INTEK, however the Administration hopes the ordinance will be passed by year-end. He stated that the City needs to move on the cost of serving principles since the City has over 500 miles of old sewers in its system. $100 million will be the least expensive CSO project with the Environmental Protection Agency pushing the City to make changes in the next 10-15 years. Mr. Skump stated that they have looked at capital improvement plans and believe that the pay as you go program is the best alternative,except for larger pmjects. Dr. Varner asked if the revenue projections for the next five (5) years have been included for the Council to review. Mr. Skump stated that 5-year projections have not been included and directed the Council to look at the information on page 15 of their study which shows that$19 million in revenue is needed. He stated that they can do projections based on customer growth, but have not done so. • a Utilities Committee October 14, 2002 Page 2 Dr. Varner stated that he would like the estimated revenue projections for the next five (5) years based on the type of customer and size of meters, etc. He stressed the need for the Council to know how to go from point A to point B; since the Administration is requesting $ 19.5 million in revenue. Dr. Varner stressed that the Council needs to know the number of people in each category and how they will be affected by the proposed rates so that they can see where the large increases actually will be. Dr. Varner concluded his remarks by stating that the Council could not base any amount of accuracy on the proposed rates based on the information provided to the Council to date. Therefore such calculations are necessary since they would be essential information. Mr. Dillon stated that the City Administration is requesting that the rate go from $.74 to$2.07 for those customers within the City of South Bend. Mr. Skump stated that basically the Council is requesting information from the$19.5 million figure and then work backwards and provide the detail by category. Council Member King noted that the proposed rates need to be applied to the information contained in Exhibits F and G and then you would have the information which Dr. Varner is requesting. Council Member Kirsits noted that the residential users would be picking up where larger users may be buffered. Mr. Gilot stated that that would be correct. Council President Kelly inquired how dramatic would the increases be for all users. Mr. Skump stated that they are still working on the figures. Council Member Coleman noted that the$19.5 million figure would address all of the items in the proposed capital plan. He noted that the City has been talking about CSO's along as he has been on the Council. Council Member Coleman further noted that he can not believe that the State of Indiana would not give the city some relief in this area. Mayor Luecke stated that they have been lobbying hard but have hat had a receptive audience from the state or IDEM. The cost to the City of Indianapolis is estimated to be$1 billion. Mr. Skump stated that Evansville is looking at a$60 million cost and Anderson is looking at a cost between$60- $80 million,with projects currently under way. He added that under the SRF Loan Program the monthly bills would be$65 per month per customer. Council Member Coleman inquired why the City would not front-end load this and fund it with a bond. Mr. Dillon stated that the City has made various improvements to its 42-year old building; and that the Mayor has chosen to go into debt for short-term projects. He stated that there will not sufficient revenue for 2003 for the 0 & M budget without a rate increase and there would be no capital program in 2003 without a rate increase. Mayor Luecke stated that the City has been spending $46 million per year in capital investment; and that a rate increase is separate from that. Utilities Committee October 14, 2002 Page 3 Mr. Gilot stated that a bond is typically used where there is a fixed set of plans for a project. Dr. Varner noted that he thought that the proposed rate increase was to take care of the CSO problem, and now the Council is being told that is would not address those concerns. He questioned on the CSO would be addressed. Mr. Gilot stated that$1.5 million per year would be available each year based on the rate increase; and that the City is currently in negotiations with EPA and IDEM. The City is taking the position that they should have 20 years to address the CSO concerns and EPA and IDEM is taking the position that they should have 10 years. Dr. Varner stated that his concern is that the $46 million each year would become a cash cow. He stated that the Administrations numbers are all over the board right now. He is hesitant to jump until a consent decree is presented to the City. Mr. Skump stated that a plan has been laid out for the dollars and how they would be used;noting that this is one of the more specific plans he has proposed. Mr. Dillon stated that in twenty-six (26) months the City will be required to submit a CSO development plan and that bonding would be considered for that Council Member Coleman inquired what is next. Mayor Luecke stated that 1st reading on the proposed rate increase would be at the next Council meeting scheduled for October 28, 2002, with the rates being proposed being based on fairness and sound principles. The Council Attorney noted that special notices and legal advertisements will be required. In light of those requirements,what date is the City Administration projecting for the public hearing. Mr. Dillon stated that the Council's public hearing would be the second Council meeting in November(November 25th). There being no further business to come before the Committee, Council Member Kirsits adjourned the meeting at 5:15 p.m. Respectfully submitted, Council Member Al`Buddy"Kirsits Utilities Committee KCF:kmf Attachments