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03-27-17 Council Minutes
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03-27-17 Council Minutes
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City Council - City Clerk
City Council - Document Type
Council Mtg Minutes
City Counci - Date
3/27/2017
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REGULAR MEETING <br />MARCH 27, 2017 <br />reference to the City enacting a plan that does not fit its needs. Councilmember Davis asked Mr. <br />Julien to clarify that point for him. <br />John Julien, Umbaugh and Associates, 112 Ironworks Avenue, Mishawaka, IN, responded, After <br />you've completed your process here, we go before the IURC in the hearing format and present <br />evidence in support of the rates that are reflected in the ordinance. The IURC will judge that <br />evidence in accordance with State statute. In the statute, it specifies that rates that are set at levels <br />below the identified cost are in fact illegal rates. That was the basis of my comment at the <br />committee meeting this afternoon. Mr. Julien explained that though he could not predict how the <br />IURC would rule on the issue, the idea is that if they see that the City's water rates are too low to <br />appropriately fund necessary capital improvements, that would open the door to allowing a rate <br />increase. He stated, My experience tells me that they will probably defer to your judgment as to <br />scheduling the capital improvements that go beyond what can be paid for from the rates of <br />charges that are in the ordinance until a later period. <br />Councilmember Davis asked Mr. Julien to explain the matter further. <br />Mr. Julien responded, It's my experience that if the Administration and the Council is willing to <br />defer investment in the capital that has been identified as needed until a later period, they will <br />support that decision. If their staff strongly disagrees with what has been identified as the critical <br />capital over the next six (6) years, and feels that was is critical goes beyond what has been <br />proposed, they could order you to implement rates that are higher than what has been requested. <br />Councilmember Davis asked, So, basically, in their deferment, if we present a plan that spreads <br />out our increases to cover these kinds of needs — higher up- front, but spread out over time —then, <br />you just shared that they probably could defer to our judgment regarding that? <br />Mr. Julien responded, In the phasing plan that the City is proposing, it's not focusing on <br />deferring investment in those capital needs, it's deferring in the portion that's going to be paid by <br />the rate -payer by substituting rate -payer dollars with TIF dollars. So, it's not as if the City has <br />identified these critical needs and pushed those critical needs out past the six (6) year timeframe. <br />It says that we're going to address these planned six (6) year critical needs. We're going to use a <br />combination of water repair revenues and TIF revenues to meet those needs. <br />Councilmember Davis asked, Since, we have identified the critical needs for the next six (6) <br />years, that's probably what they will not have an issue with. You're saying now that they may <br />have an issue with how we fund the six (6) years? Is that correct? <br />Mr. Julien responded, That is part of what they're going to judge. The fact that your plan is to <br />utilize TIF dollars will be something that they're going to judge. <br />Councilmember Davis laid out a hypothetical arrangement by which there would be more than <br />two (2) rate increases, so that each increase would be smaller. Mr. Julien, What are your <br />thoughts? <br />Mr. Julien responded, My thoughts are that the commission would ask, "How can you balance <br />out what you've identified as your legal requirements with the revenues that will be generated <br />from that phased increase ?" You would have to have a definitive plan to eliminate that gap. <br />Councilmember Davis asked, And if we can come up with a definitive plan through the finances, <br />through the TIF, there is a good chance that they may consider it? <br />Mr. Julien responded, Again, you would have to present that as part of the evidence and they <br />would weigh that evidence as they'll weigh all the other facts presented in the hearing. <br />Councilmember Davis gave the analogy of a car or house payment where spreading the payment <br />period over a greater number of years means that each individual payment will cost less for the <br />payer. He asked Mr. Julien if, in his experience, he had seen other cities pay over six (6) years <br />instead of two (2). <br />Mr. Julien responded, Well, this is a different concept, though. What we talked about is that you <br />are presenting the case to the IURC, "This is our annual need and cost. This is the target we have <br />to pay for each year to keep the utility functioning." In a typical scenario, that revenue would be <br />13 <br />
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