Minutes from October 8, 2019 Council Open Work Session

COUNCIL OPEN WORK SESSION

OCTOBER 8, 2019

6pm

Topic: Discuss Water & Sewer Capital Improvement Plan financial options with the Water & Sewer Commission and Administration:

Attendance: CP Glenn; CM Martin; CM Ringsaker; CM Zinner; CM Boyer; Mayor Martin George DeHority- Director of Finance; Tim Whittie- Director DPW; Patrick Sypolt- Director of Administration; Chief of Staff Steve Gamatoria; Water Sewer Commission Members: Bill Russell, Harry Miller, Dan Wusinich.

Meeting Highlights:

CP Glenn opened the meeting at 18:02 hours. Welcomed and thanked everyone for taking the time to attend; (No more than 6 citizens attended the work session); CP Glenn explained the Water Sewer Commission focus on the aging delivery and collection infrastructure, and has been meeting for some time to develop the following (a) an ‘up to date’ Capital Improvement Plan (CIP), that will be reviewed and updated annually; (b) a CIP implementation timeline (c) a CIP Revenue requirement; and (d) modeling projections based on current revenues and expenditures.

Water Sewer Commission member Dan Wusinich developed a modeling tool (“Sand Box”) and explained and demonstrated the model’s ability to be used to forecast current and future operating and capital requirements. Council, Commission members and Administration engaged in a very fruitful discussion as it related to:

• The CIP – “how developed and prioritized” (explanation given by Tim Whittie)
• Financial component options “pay go or borrowing” (explanation provide by George DeHority)
• Timeframe “ how much and when” (Group)
• Enterprise Funding requirements ( explanation by George DeHority & Chief of Staff)

• How to best increase revenues:
  • Discussion on Variable and Fixed costs verses Variable and Fixed Revenues
  • Demonstration the impacts of ‘Increase in Rates’ (variable revenue) verses ‘Increase in fees’ (Fixed revenue)
  • Discussion of revenues required to manage a $14M Bond debt. ( George DeHority and Dan Wusinich explained the current IRF would provide the necessary revenue to sustain the CIP and pay the debt on the bond.
  • Aside from the IRF, an internal inflation adjustment would be developed so the rates would maintain the operations costs ( salaries, chemicals, utilities, etc,)
• CM Zinner and Boyer discussed methods to insure those who least can afford any increases can be assisted.
• Bond market- George DeHority explained the Bond cycles ( Mar-Apr and Oct-Nov)-
• Assuming more debt. – As stated in the Charter, a referendum is necessary in order to assume any more debt. The Administration would have to prepare a ballot, ballot question and; legislation to move a referendum forward. ( May election or earlier- January special election)
  • Further discussion as to whether the referendum would occur during the normal May (for the October 2020 Bond Market) or a special election whereby the referendum would be presented to the public in a January Special election (for the Mar 2020 Bond Market)
  • It may be more advantages to go to the Bond Market sooner than later (October 2020 offering may not have as good rates due to the Presidential Election )

Take- Away’s

• Based on the discussion, move forward with a Special Election in January
• Need further information as to how the Referendum question would be worded
  • Rather than borrowing the entire amount at once, ladder the bonds over multiple years which would require the referendum question that would allow multiple bonds over a specific period with a definitive cap. – Patrick Sypolt will provide a sample of the wording.
• Next Council Work Session is 10/22/19
• CP Glenn reminded everyone that a Public Hearing will be held to discuss the CIP and financing