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HomeMy WebLinkAbout01-13-03 Utilities itommittu *oat tti iti Committa The January 13, 2003 Utilities Committee meeting was called to order by its Chairperson, Council Member Al"Buddy"Kirsits at 4:53 p.m. in the Council Informal Meeting Room. Persons in attendance included Council Members Aranowski, Pfeifer, Kelly, King, Varner, Kuspa, White, Kirsits and Coleman; Mayor Stephen Luecke, Assistant City Attorney Aladean DeRose, John Skump, John Mountsier, Judith Jones, Tim Johnson, Ted Foti, Jim Robinson, Fred Dominik, Mark Eagan, Tom Lord, Matthew Cullinan, Robert L. Miller, Sr., Department of Community and Economic Development Director Jon Hunt, Public Works Director Gary Gilot, Director of the Division of Environmental Services Jack Dillon, Terry Bland of the 01tt4 1114 Irrihtttte, Kathleen Cekanski-Farrand, Council Attorney, and other unidentified individuals who did not speak. Council Member Kirsits noted that the members of the Council Members of the 2003 Utilities Committee included Council Members Coleman, Aranowski, Pfeifer and himself. In light of the number of individuals attempting to attend this meeting, Council Member Kirsits noted that a motion to recess and reconvene in the Council Chambers would be in order. Council Member Coleman then made a motion, seconded by Council Member Aranowski to recess the Committee meeting and reconvene the meeting in the Council Chambers due to the number of people in attendance. The motion passed. Council Member Kirsits then reconvened the Committee meeting in the Council Chambers. He noted that the purpose of the meeting was to continue discussion on Substitute Bill No. 88-02 which addresses proposed sewer rates and which would amend § 17-21 and § 17-25 of the South Bend Municipal Code (copy attached). He requested individuals who desire to address the Committee to sign in on the legal pad which is next to the microphone. Mayor Luecke then began the presentation on Substitute Bill No. 88-02. The Mayor noted that it is backed by the revised cost of service study which has been filed with the City Clerk's Office(copy attached). He noted that discussions on a rate increase began this past Summer. Originally a four- year rate ordinance was proposed, however the substitute Bill addresses a two-year period. He noted that this is the first rate increase proposed in fourteen (14) years. Mayor Luecke then summarized some of the major changes which included: that the Bill would address a two-year period and that the proposal now calls for bonding of much of the capital items. Mayor Luecke stated that he believes the substitute Bill is fair and has been based on fruitful discussions over the past several months. He further noted that he would be appointing an advisory committee to provide input for future rate proposals. John Skump of Crowe Chizek then addressed the Committee. He noted that the majority of the capital projects are now proposed to be funded by an $11 million bond issue, which would also provide some revenue for related project needs. He noted that the 50% surcharge has been dropped. He stated that a 24% increase in revenues is needed. The major shifts include flat rate plus flow rates with flat rates generating 45% of the revenue and flow rates generating 55% of the revenue. The shift would now be to 30% of the revenue from flat rates and 70% of the revenue from flow rates. He then noted that he provided five (5) handouts to the Committee Members and briefly highlighted some of the information. The handouts included a one-page chart addressing "Revenues and Consumption Prior to Cost of Service Study" (copy attached), a one-page chart addressing"Revenues and Consumption Final Rates" (copy attached), a one-page chart addressing "Analysis of Average Annual Billing with Other Second Class Cities Notre Dame"(copy attached), Utilities Committee January 13, 2003 Page 2 a one-page chart addressing "Analysis of Average Annual Billing with Other Second Class Cities I/N Tek Plant"(copy attached), and a one-page handout entitled"Analysis of Revenue from Largest Users" (copy attached). He concluded his remarks by stating that the actual increase would vary depending on usage. Council Member Kirsits then opened the Committee meeting to comments from the public. No one from the public spoke in favor of substitute Bill No. 88-02. Mr. Robert L. Miller, Sr. then addressed the Committee. He stated that he was the attorney for several Class III users and had filed a document earlier the Clerk(copy attached). Mr. Miller stated that he believes it is unfair for the Council to act on a new substitute bill which was just submitted to it by the Administration less than two (2) hours before the Council meeting, noting that he did not know how to respond to any proposed changes. He noted that there have not been good working relations on the proposed rate increase, noting that he could not follow Mr. Skump's remarks. He stated that the proposal is a significant departure since some of the largest uses will experience over an 80% rate increase while others will experience a 14% increase. Mr. Miller stated that he believes the rate increase should be across the board instead of "sticking it to the biggies". He stated that he does not believe that it is fair and that there has not been adequate time to refute it. All should bear the burden equally. He noted that it has been ten (10) days since I/NTek got the last proposal from the Administration. Mr. Miller stated that the Supreme Court has said that ten (10) days may not be enough time to file objections. Mr. Miller noted that the Common Council he believes is working in good faith but more time is needed to process all of the information and all of the alternatives. He voiced concern about rates going up in two (2) years 100 % plus, if this bill would be passed. He suggested that if it was possible that the Bill should be continued since he"cannot answer something that he has not seen". John Montsier, President of I/N Tek and I/N Kote, noted that a meeting was held last Wednesday with limited discussions. He stated that the current plight of the steel industries the rate increase will put "jobs at risk". The proposed rate increase would result in an additional $500,000 in the next two (2) years which he does not believe is justified. Mr. Montsier stated that he cannot support the change. He stated because he must travel to meet with a customer later today that Mr. Nielson would be here this evening in his place. Judith Jones of the Holy Cross Services Corporation spoke against the proposed Bill on behalf of the Sisters of Holy Cross and St. Mary's College. She noted that the average age of a religious sister is 85. They have had to cut their budget by twenty percent(20%) and have made reductions in personnel. Their sewer rates are proposed to go up 81%, before the surcharge amount. Ms. Jones noted that St. Mary's College is ranked # 1 among colleges of its size and are now experiencing decreased enrollment. She stated that the City needs to understand the negative impact, especially on businesses that are not for-profit businesses. Tim Johnson, Director of Operations at Honeywell, then spoke against the Bill. He stated that Honeywell's sewer rates are projected to increase by 54%. He stated that there has been much confusion about the process, noting that there has been a lack of opportunity to see all of the data. He noted that no one except the Committee has seen any of the five (5) documents which Mr. Skump referred to earlier in the meeting. He requested the Committee to defer action to allow further discussions and negotiations. y,, Utilities Committee January 13, 2003 Page 3 Ted Foti, Senior Vice-President of Memorial Hospital, stated that many realize the need for the overall project and that there has been a lot of give and take since the first Bill with a surcharge was filed early this Summer. Mr. Foti stated that part of the problem is that the Committee has now been presented a Bill which no one else has seen. He noted that anyone who has taken Economics 101 knows that the basics of economics is that city governments are vendors to the public and the community. City government is in place to provide services and when increases are made many believe you have been double taxed. He noted that"when the city pass on a fee we pass on a fee to the customers". He noted that no everyone believes the rates are fair and that they are"above the customary and reasonable charge". He noted that increased costs may result in deferred actions which may create a domino effect on many businesses. He stated that he would like to see more data and that a delay would help move the overall process along in the long run. He noted that Memorial Hospital provides services and jobs with over$180 million spent in this community each year. He further noted that Notre Dame brings in over$350 million into this community each year. Jim Robinson of Aramark Uniform Services stated that since he has not seen any plans that it raises problems and he requested a better explanation. He stated that his company wants to be a good partner with the city. He stated that stated that their company would be willing to support some sort of an increase which is fair to all, noting that these are very"tough economic times". He stated that their company has 155 employees and suggested that an open forum be held before final action is taken on the proposed Bill. Fred Dominik, General Manager of the Marriot Hotel, then spoke against the Bill. He asked for more information since there has not been open access. He stated that many are frustrated that they have not had any opportunity to even see what has been given out to the Committee members. He stated that the proposed increase will result in unbudgeted costs which cannot be passed on to customers. He stated that the Marriot employs approximately 150 people. He asked the Council to reconsider this measure,to get the information out to all of the stakeholders of the city. Mark Eagan,President of the Chamber of Commerce,stated that the backbone of the community is a lot of smaller companies who are employers and did not make the "top ten list". For many the economy has required many to reduce costs by reducing salaries and actual employees. He stated that all of these businesses as well as the residents need to be in the "loop of information". He questioned why everyone's bill would not go up by a certain percentage. He stated that there is much confusion over the proposal. Mr. Eagan stated that they foster business and jobs and enhance our community overall. He stated that what action the Council takes tonight will send a "strong message" to the community and to businesses. He suggested that the Bill should not be delayed if it is 24% across the board. He suggested looking at the big picture and proposals that will be made in two(2) years. Mr. Eagan stated that the big issue affects everyone. Tom Lord, a plant manager of a company in New Carlisle, stated that their plant employs 140 employees and have been here for over thirty (30) years. He stated that not enough information has been shared to justify such an increase in 2003. He said it appears that their rates will increase by 82% which will make their company less competitive and could affect their ability to compete in the future. He stated if the rates need to go up that all should be in the loop. He suggested tabling the Bill so that the stakeholders could have input to make sure that the city is doing the right thing. Matthew Cullinan of the University of Notre Dame stated that he is not intending in being in an adversarial position with the city. He questioned the process. He noted that the University is grateful to the Mayor, however the proposed increase has gone from"huge to very substantial". Utilities Committee January 13, 2003 Page 4 He stated that there has not been open dialogue on the issues and that extensive communication is necessary and important to the entire community. He stressed the need to have large and small users involved in the process. Mr. Cullinan suggested that an independent outside person be used to suggest all alternatives to the city. He stated that if this is passed it will result in more than an 80% to the University. He suggested that this be mediated so that the increase now and the increase in two(2) years would not be untenable. Council Member Kirsits then invited the City Administration to provide any rebuttal information. Mr. Skump stated that today's information is identical to what was given earlier except that it is now based on the 12-20-03 cost of service study. He noted that there have been some modifications in some of the documents. The ten (10) largest customers will experience increases between 60%to 80%. He stated that he believes that there has been"give and take". Council Member Varner inquired about the 55 %of revenues from fixed and 45 % of the revenues from flow which Mr. Skump addressed. He noted that if the fixed rates are proposed to provide 30% of the revenue and if the flow rates are proposed to provide 70% of the revenue that this "change is enormous and how it affects people will be enormous". Dr. Varner noted that if the City's proposal depends on flow and if incentives are put in place by conservation that this will result in a"huge increase again being requested by the City". Mr. Skump stated that consultation with IDEM and EPA has taken place with the proposed rate increases being based on the cost of service study and EPA and IDEM guidelines. He noted that the percentages themselves are not given as a directive. Dr. Varner inquired about the EPA and IDEM guidelines with regard to cost accuracy, to which Mr. Skump stated that their principles were used in the process. Council President White inquired if there was any consideration by the Administration for a flat 24% increase and what affect it would have on the system. She noted that she has received over forty (40) telephone calls on this issue who have voiced concerns over the amount of the increase and the overall process being used. Council President White noted that she is grateful to how much work the City Administration has put into this, but she is concerned about the significant users in light of the economy. Mayor Luecke stated that a 24% increase across the board would meet the revenue needs. He stated that the City would need to come back and set the rates for 2005 and forward. He noted that the cost of service study would provide a fair basis for the use of the sewage facility. Under the current consumption amounts the residential pay 42% which would be raised to 51% of the cost. Industrial users would pay 39% flow and 21%of the cost. The Mayor stated that they are trying to spread the cost based on cost of service principles. The Mayor added that the flow rates would be raised from 55% to 70%. He noted that they have tried to share as much information as possible and that no one has been excluded, however they did not attempt to contact everyone. Mayor Luecke encouraged the Council to vote favorably on the proposal. Dr. Varner inquired what will happen when people start conserving, especially the largest users. He stated that he believes that the"procedure may be flawed". Mr. Skump stated that variable expenses may go down and that there will be another rate Utilities Committee January 13, 2003 Page 5 adjustment. He noted that ninety (90) communities are using a similar rate structure. Mr. Skump stated that a 20% decrease would result from a"very aggressive conservation program". Council Member Kirsits thanked everyone for coming to the Committee meeting. He suggested the City Administration consider including a paragraph in the proposed ordinance which addresses a committee which would be jointly appointed by the Mayor and the Council. Dr. Varner suggested that the Council should have the right to appoint members to the Committee. Assistant City Attorney Aladean DeRose stated that she would work on such a paragraph for the proposed ordinance. Council Member Kirsits noted that the Utility Committee members include Council Members Coleman,Aranowski,Pfeifer and himself. Council Member Aranowski made a motion, seconded by Council Member Coleman that an amendment address a Committee to be jointly appointed by the Mayor and the Council be included in Substitute Bill No. 88-02. The motion passed. Council Member Coleman then made a motion, seconded by Council Member Aranowski that amended version of Substitute Bill No. 88-02 be recommended favorably to Council. The motion passed. Council Member Kirsits then adjourned the meeting at 5:55 p.m. Respectfully submitted, Council Member Al `Buddy"Kirsits, Chairperson Utilities Committee KCF:kmf Attachments