Loading...
HomeMy WebLinkAboutMinutes 12/07/1992UTILITY ADVISORY COMMITTEE Port Angeles, Washington December 7, 1992 Call to Order: Mayor Hallett called the meeting to order at 4:30 p.m. II. Roll Call: Members Present: Jim Hallett, Thomas Hunt, Gary Braun, Joe Michalczik, and Richard Wight. Staff Present: J. Pomeranz, K. Godbey, C. Knutson, B. Titus, J. Pittis, K. Ridout, B. Jones, G. Leaf, and D. McFarland. Guests Present: Joan Egan, Sound Finance, and Nick Schaffer, Daishowa America. III. Approval of Minutes: Councilman Braun moved to approve the minutes of the November 9, 1992 meeting as written. The motion was seconded by Thomas Hunt and carried unanimously. Mayor Hallett, because of guests present and their schedule requirements, opted to change the order of the agenda so the agenda items would be addressed in the following order: A, D, B, C and E. IV. Discussion Items: A. Solid Waste Rates Mayor Hallett reviewed the information submitted by Finance Director Godbey pertinent to proposed increases in the Solid Waste rates. It is recommended that a 50% increase over a two-year period be approved, with a phasing of the increase over two years. Rates would be increased by 20% in 1993 and 30% in 1994. In addition, staff has recommended a surcharge to County residents which results in a 25% increase in 1993 and a 35% increase in 1994 to address closure costs and long-term monitoring after closure. The financing on this particular bond issue is extremely complicated; a rating indication from Moodys is expected in mid-December. All of the calculations made have been done so with the assumption that an "A" rating will be received. City Manager Pomeranz -1- Utility Advisory Committee December 7, 1992 recommended that these increases be approved and, should a different rating be issued, appropriate changes can be incorporated in the rate structure. In the meantime, it is important to begin collecting the revenue. Finance Director Godbey explained some of the issues surrounding this bond issue. Certainly one of the considerations is that the City' s largest customer, Olympic Disposal, is involved in bankruptcy at the present time. Additionally, FAA has informed the City that the Landfill must be closed in five years. Before these occurrences, it was intended that this bond issue refund the 1990 issue and be wrapped around this issue, extending the 1990 issue from ten years to twenty years. It was intended to reduce the amount of annual debt being serviced in the Solid Waste Fund. However, because of the issues at hand, the fund has been placed in a precarious position which would make it difficult for rating or financing. Therefore, the City must now finance over five years which doubles the rates over a two-year period. The debt coverage ratio is driving the rates. The sale has been structured so the City wouldn't be servicing any debt until 1994; only interest will be paid in 1993. Joan Egan, Sound Finance, discussed the importance of getting the bonds rated "A". There must be assurances of a stable revenue stream. It is possible for the County to take over Olympic Disposal, which would establish a viable means of continuing the revenue stream. It is important to keep the rate increase as low as possible. Ms. Egan then discussed the differences between negotiated and rated sales. An underwriter may not be obtained because of the disclosures. Rating further from "A" result in higher interest rates. Discussion ensued concerning possible ways to decrease operating expenses, and the impacts of curbside recycling. It was pointed out that State law mandates curbside recycling by 1994; however, DOE will accept a materials recovery facility (MURF) as opposed to curbside, which would be more cost effective. Lengthy discussion was also held on closure costs, transporting garbage off the Peninsula, etc. Councilman Wight moved to recommend to the City Council that approval be given to the Solid Waste rate increases as presented. The motion was seconded by Councilman Braun and carried unanimously. The Comprehensive Plan will be presented to the Council so it may be returned to the County by January 15, 1993 and subsequently submitted to the State by February 15, 1993. It was noted this will allow the formation of a Solid Waste District. Discussion followed and the group was in agreement that discussions must be held with the County concerning the rate increases and the need to proceed with the Solid Waste District. -2- Utility Advisory Committee December 7, 1992 B. Rate Increase for IT Rate Class Mayor Hallett reviewed the information submitted by the Light Department on the proposed rate increase for the IT rate class. The mills have expressed a preference for a 2.9% rate increase as of January 1, 1993, with a billing this month for an additional 2.9% of their October, November, and December, 1992 billings. The ordinance establishing the rates would need to be amended, to include the language pertinent to a surcharge for the IT rate class. City Light Director Titus further reviewed the matter and noted a cost of service study will be conducted to determine those rate classes under-recovering and those over-recovering. All rate classes will be adjusted for parity in 1993. Lengthy discussion followed, and it was noted that, in the past, inequities had existed between residential and industrial customers. Now there appears to be a shortfall in both residential and industrial areas. Director Titus noted this would be recovered through the surcharge instituted. After further discussion, Councilman Braun moved to recommend to the City Council that approval be given to the increase for the IT rate class as presented. The motion was seconded by Thomas Hunt and carried unanimously. It was noted that it has been past practice to conduct public hearings on utility rate increases. C. System Development Charges & Latecomer Agreements Public Works Director Pittis reviewed requests made to the City, one of which involves a developer who will have to build a pump station and pump sewage to the City system. Others will benefit from this construction but will not participate in paying for the work. There is also a water system improvement needed by another developer for additional fire flow and water service. This, too, will benefit others in the general area. The proposed latecomer agreement ordinance would provide for the recovery of the developer's investment from those properties which stand to benefit from the construction. Funds would be collected by the City and forwarded to the applicant. Notice could be provided through the County Auditor's office on property titles. If this opportunity is provided to developers, it would follow that development should reimburse the City for its pro rata share of the current systems of water and sewer, or a system development charge. Director Pittis further reviewed the specifics of the proposal and asked the UAC members to review and ask any questions which may arise. Lengthy discussion followed with Director Pittis explaining the latecomer agreement process, which does not necessarily have to be applied. The decision would be left to the discretion of the City Council. The fee would be incurred at the time the water or sewer connection is made. Additionally, -3- Utility Advisory Committee December 7, 1992 the latecomer agreement could also be applicable for transportation expenses. Discussion was held conceming the current practices of the PUD and the City Light Department. Light Director Titus indicated the Light Department incorporates similar practices. The developer who builds something pays for it, sized to what is needed. However, the City determines what is best for the system and if the project is determined to be larger than what was requested, the City charges only for what was installed directly affecting the developer. There is an agreement with the developer that, for the next five years, anyone hooking into the system will pay for one-half the cost plus whatever new had to be installed for the new party. When the check is received by the City, the City gives one-half back to the developer and eventually, everyone sharing in the facility shares in an equal cost. After further consideration, Councilman Braun moved to finalize the details of the proposal with the assistance of the City Attorney and forward the proposal to the City Council for consideration. Thomas Hunt seconded the motion. Discussion ensued concerning the approval process and consideration was given to a hearing process as opposed to having the City Council make the decision as to whether the latecomer agreement process would be applied in specific instances. A vote was taken on the motion which carried unanimously. Mayor Hallett distributed a memorandum from the City Clerk setting forth the 1993 Utility Advisory Committee meeting schedule. Thomas Hunt informed the group he will not be able to attend the February meeting. Mayor Hallett excused himself from the meeting at 6:06 p.m.; Vice Chairman Hunt continued with the agenda. D. Status Report on Biosolids & Composting Director Pittis indicated the report on Biosolids & Composting was submitted for information purposes. It explains the difference in disposal methods for construction and post construction biosolids or sludge from the treatment plant. Councilman Wight addressed the attentiveness of the Pacific Northwest to environmental issues and the related costs. E. Service Territory Agreement with PUD City Light Director Titus reviewed an agreement with PUD and the City to establish service territories which would be the City limits. This establishes City Light as the provider of electrical service within the City and PUD as the provider outside the City. Further, the agreement establishes a mechanism to compensate the PUD for facilities and -4- Utility Advisory Committee December 7, 1992 customers being taken over by City Light. Director Titus reviewed the specifics of the agreement and displayed a map depicting those areas currently being served by the PUD within the City limits. He noted certain areas which should be taken over by City Light in approximately 90 days. Certain areas, such as Lower Elwha Road and the Harborcrest vicinity, would make it difficult for the City to provide service, so plans are underway for the City to buy some PUD facilities but make use of additional PUD facilities via a wheeling agreement. Director Titus discussed areas to be purchased: Airport area, Truck Route, Golf Course, Harborcrest, and the Plaza. Costs incurred should be approximately $300,000 with revenues of approximately $200,000. It was agreed that it is positive to avoid the duplication of costs as explained by Director Titus. It was noted efforts in this regard have been ongoing for a number of years, and Attorney Knutson commended the cooperative efforts between Director Titus and the PUD in order to finalize the agreement. Councilman Wight moved to forward the agreement to the City Council with a favorable recommendation. The motion was seconded by Councilman Braun and carried unanimously. Brief discussion followed concerning the impact on rates. Next Meeting: The next meeting of the Utility Advisory Committee will be held on Monday, January 11, 1993, at 4:30 p.m. VI. Adjournment: The meeting was adjourned at 6:21 p.m. City clerk4-.1 / -5-