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REGULAR MEETING NOVEMBER 25, 2013
<br /> say why inflation numbers weren't included when you are looking at a 15-20 year plan,
<br /> shouldn't that have already been calculated in that kind of a plan. When you are looking at
<br /> buying something that is on a long term basis you think about that down the road. Could
<br /> Jennifer share thoughts regarding that? And when you work with other cities consulting them do
<br /> you go over inflation cost earlier.
<br /> Jennifer Wilson, Crowe, Horwath: When these numbers were negotiated with the DOJ and EPA
<br /> it was done on a present value basis, so everything was back down into 2007 numbers. It was an
<br /> EPA mandated formula on how that calculation was done. So a lot of the items that we talked
<br /> about with the EPA was given to us on how we had calculated and it had to be in those present
<br /> value numbers and so that is why no inflation factor was involved because they wanted to see it
<br /> in those 2007 numbers.
<br /> Councilmember Oliver Davis: Is that standard practice then when you are consulting with others
<br /> cities? Then you come back later to talk about inflationary costs?
<br /> Jennifer Wilson: Well it was mandated whenever you were doing those negotiations that you
<br /> use that exact same formula. It was the exact same formula no matter what city that we went to,
<br /> you had to use that same EPA mandated formula and use present value numbers.
<br /> Councilmember Oliver Davis: Has the formula changed?
<br /> Jennifer Wilson: You are only able to inflate the numbers according to how the EPA lets you
<br /> inflate the numbers. So at that time we were using 2007 numbers and those are the numbers that
<br /> you have to use.
<br /> Councilmember Oliver Davis: I am talking about now,have they made any changes in the way
<br /> that they do their inflation calculations?
<br /> Jennifer Wilson: We would have to use the formulas that they would give us in order to do it. I
<br /> am sure that we would be able to bring it inflated up to this time period but we would have to
<br /> redo the numbers according to the mandate of how they tell us how to do it.
<br /> Councilmember Varner: I will put this in the form of a question. Since as you know Eric, is new
<br /> to this, while he has been an Engineer for a number of years, I think that you are probably aware
<br /> that we raised rates 32%not too many years ago, we raised them 25% another time, so I guess
<br /> what I am saying, I wonder if you know that? So we are going to deal with each other, I don't
<br /> want to talk about a lack courage, I think that 9%, 32%, 25% on going for the last ten (10) years
<br /> is an exhibition of willingness if not courage on the part of the Council to go along with the
<br /> project. But I think what has happened, from my perspective, is that no one on the Council ever
<br /> had a chance to participate in this, until the package was brought to us, and then we are told you
<br /> have to do this, you have to do this, you have to do this, always with threats, always with threats,
<br /> with fines, and all these other things. I think the people who have to show the courage are the
<br /> folks that have organized this and put it together have to find a way to get it done for less. Now,
<br /> if you are telling me and I believe that this was all part of the smart sewer system (M-Net)
<br /> program, then we are going to recalibrate this in a year, and see where we are, it just seems to
<br /> me, the time to take a big deep breath is right now, and say, let's find out where we can make
<br /> improvements, let's find out how much we can reduce this, let's find out what our options are?
<br /> Having set through four(4) or five(5) of these over the years, what I know is that there will be
<br /> some unknown circumstance in four(4) years when this is up again, which won't allow us to
<br /> reduce rates, and then in four(4) years there will be another deal which won't allow us to reduce
<br /> rates. I just don't see it, everyone seems to be so proud that this is so huge, and I think we ought
<br /> to be saying instead of we're proud, I think we ought to be saying how can we afford it, how can
<br /> the folks afford it, and how can we make this workable? I really think that this is where we have
<br /> let the community down. I don't fault anybody; I think that this is a deal that got out of control
<br /> and no one was going to put their foot down. So,there is no lack of courage here, there is a
<br /> genuine concern that this could really get out of control and I hope to help people understand
<br /> that, I hope that they appreciate it, and I hope that you take it with the sincerity that I offer not as
<br /> a criticism.
<br /> Eric Horvath: I understand.
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