03-27-17 Council Minutes - Laserfiche WebLink

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REGULAR MEETING MARCH 27, 201 met entirely by user fees paid by the water customer. In this phasing concept, in that period where the rates are lower, the City is injecting non -water revenues to eliminate that gap. Councilmember Davis asked, Which is the TIF part we're looking at? Mr. Julien responded, Correct. Councilmember Davis asked, If the TIF is eliminated, then if we go back to the original plan the TIF was in, we would have some issues regarding them being able to justify what we could do at that time? Mr. Julien responded, Yes. Without having that substitute revenue coming in from the TIF, the rates would have to be that full amount that would be in place for the second phase. Councilmember Karen White asked Mr. Horvath to share with the public the suggestions sent from the Council to the Administration regarding capital improvement needs. She also asked him to share the details of the decision that was made regarding the two (2) TIF districts that will be supporting the rate increase. Councilmember White stated, This is the first time that we have utilized TIF as a means of supporting this particular initiative. Mr. Horvath responded, There is a difference between communities that are governed by the IURC and those that aren't, because if you are not governed by the IURC, it's all local control. It makes it a lot easier to have phased -in rates. Mr. Horvath explained that in such a situation, the City does not have to go to the IURC to prove each year that it needs another rate increase. He continued, stating that using TIF for infrastructure is appropriate, in this case, as it allows the City to meet a short-term gap. He stated, In particular, we see that the best use for TIF is when you're using it to build infrastructure to support economic development needs in the City, especially when you get new development opportunities. We don't want it to take the place of creating sustainable rates for enterprise funds that should, on their own, be based on a cost - service basis. That is what we theoretically try to do as best as we can. Mr. Horvath moved on to the subject of how the TIF decision was made, stating, When the Council asked us to use TIF, we decided to use that for the gap —the phase -in. First thing we did was to go back to the map and looked at where these needs were and how they fit into TIF areas. I was trying to make sure that these were right in or immediately adjacent to the TIF area. The TIF areas don't cover the whole City they cover a portion of our City —so you're still going to have needs outside of that. Ten percent (10 %) of customers are outside of the City. They would be benefiting from TIF dollars that they would not be paying into, as well as anyone else who is not in those TIF districts. That is not an issue, but it is a consideration. You're essentially subsidizing the County residents' rates by using City TIF dollars, if you use TIF as a funding source. Councilmember Tim Scott stated that he was generally in agreement with Councilmember Davis but asked if spreading the payments out too thin would mean that each year would bring in too little revenue to meet critical needs. Mr. Horvath responded that the City would not get ahead, and that it would take a number of years before it could address any critical needs if per -year revenue is too low. Councilmember Davis followed up, stating, But the issue that we have is that your desire is to not use TIF as a subsidy. Councilmember Davis stated that relying on the TIF now means that, when it is no longer being used in the future, rate - payers would have to potentially deal with another rate increase to make up for the absence of TIF. Mr. Horvath responded, Maybe I should have said that it would be a short-term rate subsidy, but I don't think it's appropriate to be a long -term rate subsidy. Short-term means we do things to meet needs. Having said that, nowhere have we ever said, "We're never going to use TIF again for water." Let's be clear about that. All we're doing right now is showing the plan for these critical capital needs, and we allocated a certain amount to rates and a certain amount to TIF, and we built a plan that would be a funded plan where the sources of needs would not jump. He stated that if the City approved of a new development for which it must pay $1,000,000 in running water, "we can make those decisions in the future to use TIF dollars for water." He stated that the plan was a result of trying to compromise with the needs of some of the Councilmembers who wanted to see TIF dollars used along with a phased -in rate. 14