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HomeMy WebLinkAboutMinutes-12/19/2002December 19, 2002 The Council of the City of Waterloo, Iowa, met in Special Session at City Hall Council Chambers, Waterloo, Iowa, at 8:00 a.m., on Thursday, December 19, 2002. Mayor John R. Rooff in the Chair. Roll Call: Welper, Greenwood, Clark, Jordan, Hurley, Getty. Members absent: Berry. 117856 - Jordan/Welper that the Agenda, as proposed, for the Special Session on Thursday, December 19, 2002, at 8:00 a.m., be accepted and approved. Ayes: Six. Absent: Berry. Motion carried. 117857 - Getty/Jordan that the Calls for the Special Session be received and placed on file. Ayes: Six. Absent: Berry. Motion carried. 117858 - Mayor Rooff stated that the Special Session of the City Council was called to discuss an increase in the sewer fees and to review an ordinance to set the new fees. Michelle Weidner, Chief Financial Officer, reviewed services provided through numerous funds which can be categorized into the General, Special Revenue, Debt Service, Capital Projects and Enterprise funds. The General Fund is funded primarily by property taxes and is used for police and fire protection, the Library, parks, cultural and arts activities, Planning and Zoning, Building Inspections, Airport, Mayor, City Council and other administrative functions. Special Revenue includes the Road Use Tax Fund, Local Option Tax Fund and Community Development/Housing Fund. The Road Use Tax Fund is funded by state fuel taxes and is used to maintain the 450 miles of streets, including snow removal, street sweeping and pothole repair, operate and maintain traffic signals and street lights and provide engineering services for street construction and repair projects. The Local Option Tax Fund is funded by the one cent sales tax and is used for reconstruction and repair of 450 miles of streets and provide engineering services for street reconstruction and repair projects. The Community Development/Housing Fund is funded primarily with federal grants and is used for home rehabilitation, administration of federal rental assistance program and administration of Renew Waterloo Housing Program. The Debt Service Fund is funded primarily by property taxes and administers payments for bonded indebtedness. The Enterprise Funds include the Sewer Fund and Garbage Fund. The Sewer Fund is funded by user fees and is used to operate and maintain sanitary sewer collection and treatment facilities, dispose of sludge biosolids, operate and maintain storm water collection system and maintain flood control system. The Garbage Fund is funded by user fees and is used to collect and dispose of residential and commercial garbage, collect and dispose of yard waste and operate neighborhood clean-up activities. Some general fund departments provide services to other departments, including those recorded in other funds, such as City Clerk/Finance, Central Garage and Personnel. The City Clerk/Finance Department provides services to other departments including payroll, accounts payable, accounts receivable, administration of health insurance and property and liability insurance. Central Garage provides maintenance of vehicles for all city departments. Personnel provides personnel services to all departments. Mayor Rooff stated that there have been discussions that each department should stand on its own such as administrative services provided by the City Clerk's office. Mayor Rooff said the question is how far do we go with that. Ms. Weidner reported that Generally Accepted Accounting Principles require that all expenses and revenues attributable to enterprise funds be recorded in the enterprise funds (sewer and garbage funds). If these expenses were not recorded in the Enterprise Funds, General Fund expenses (supported by property taxes) would increase. Ms. Weidner stated that since 1996 the city has required the Enterprise Funds to absorb expenses of services provided by administration departments. Mayor Rooff stated that we have an audit each year and a state audit two years ago which shows the books have been kept they way they should be kept. Ms. Weidner reviewed GASBY 34, which is a newly required reporting accounting process. GASBY 34 is a policy change, which if not approved by the council could damage the December 19, 2002 Page 2 city's bonding rate. Ms. Weidner stated if the council chooses not to pay for services provided by the City Clerk's office then we will have to increase the General Fund. Councilperson Getty stated he questions $330,000 which is transferred from the Sewer and Garbage Funds for services provided by other departments. Ms. Weidner responded that amount includes $140,000 for services provided by Central Garage and the remaining amount is for services provided by the City Clerk and Personnel Departments. Ms. Weidner stated that the funds don't pay just for wages but includes the vehicles driven by the workers, the cost for maintaining the buildings where the workers are located, etc. Councilperson Getty stated that he has been told that the city cannot use the local option sales tax fund for reconstruction of sanitary sewers during reconstruction project. Councilperson Getty stated he does not understand why we can prorate for sewer and garbage, but we cannot use the local option sales tax. Jim Walsh, City Attorney, stated this is a policy decision. If the city wants to treat sanitary sewer as part of the local option sales tax, we would have to get approval of the voters as they'approved certain expenditures for the local option sales tax. The ballot included storm sewers but not sanitary sewers. If the ballot had included sanitary sewers then the city would be able to use local option sales tax for that purpose. Mr. Walsh stated the same people who pay property taxes and Road Use Taxes pay Local Option Taxes so it would make sense to allow the use of the Local Option Tax to pay for sanitary sewers. Mr. Walsh stated the opinion from Ahlers Law Firm is that we cannot use the Local Option Sales Tax for sanitary sewers because of the ballot language. We would have to ask the voters to approve this use. Mr. Walsh stated it makes sense to do sanitary and storm sewers at the time the streets are being fixed. Mayor Rooff stated when the Local Option Sales Tax was adopted in 1991 the citizens probably would have allowed that use if they had known it would control cots to fund sanitary sewer reconstruction from the Local Option Sales Tax. Councilperson Getty stated we repair water lines with the Local Option Sales Tax. Mayor Rooff responded that valve boxes are replaced during street reconstruction and is an allowed use of the Local Option Sales Tax. Ms. Weidner reviewed the number of employees at the Water Pollution Control Facility since 1994 to 2002. In 1994 there were 47 employees and 2002 there are 32 employees. There are 3 vacant positions not counted in the 32 3mployees. Councilperson Jordan stated if we have reduced our costs by reducing the number of employees and our overhead costs, why do we need to increase the fees. Mayor Rooff responded that in 1994 the city had a 50 year old plant and the federal government required we build a new plant. This increased the Debt Service Levy $750,000 per year and $250,000 more to operate the plant. Ms. Weidner stated that wages and health insurance costs have gone up each of those years, in addition to utilities and chemical costs. Ms. Weidner reviewed the revenue, operations, and debt service for the sewer fund from 1998 through 2005. Ms. Weidner reviewed alternatives which include: 1. Increase base rate $1 and flow rate 28 cents, which raises approximately $1,450,000 and increases residential rates 14.5 percent. Rates should not need to be adjusted through FYE2005. 2. Increase base rate $1 and flow rate 20 cents, which raises approximately $1,200,000 and increases residential rates 12.08 percent. Rates may need to be adjusted for FYE2005. 3. Increase base rate $1 and flow rate 10 cents, which raises approximately $715,000 and increases residential rates 9.06 percent. If bond for sewer system improvements, rates should not need to be adjusted through FYE2005. The city would need to bond $500,000 per year and this alternative would add to the Debt Service Levy. Mayor Rooff stated the city cannot exceed $110 million in GO Bonds by the state constitution. The city is currently at $60 million. The city can issue sewer debt as that does not fall within the state constitution. Councilperson Greenwood stated he would like to fix the sewer funds until the Local Option Sales Tax is renewed, including financing $250,000 with sewer fees. December 19, 2002 • Page 3 Mayor Rooff stated the city has had only one increase in ten years, and we have built the new plant. The new plant is being run with reduced staff and lower operating costs which shows a more efficient plant. Councilperson Hurley stated if we change the Local Option Sales Tax language we are robbing from Peter to pay Paul and less streets will be reconstructed. Mayor Rooff responded that the city is not using all of those funds every year, and that 45 percent of the money comes from people living in surrounding communities and spreads the burden from our citizens. Councilperson Jordan suggested the city use the dollars from the Black Hawk County Solid Waste Commission which will result in a zero increase in sewer fees. Mayor Rooff asked if Councilperson Jordan is suggesting the funds from the Black Hawk County Solid Waste Commission not be used for the Cedar Valley Riverfront Renaissance Plan. Councilperson Greenwood stated that the council recently set policies on what are the most important issues and all council members voted the downtown should get money and improvement. If we use the $1 million we will receive from the Black Hawk County Solid Waste Commission for the sewer fund, he does not feel we will get an award for Vision Iowa funds. Councilperson Welper stated the Water Pollution Facility Plant was built for future use and 100 percent is currently not being used. Councilperson Welper suggested if we could get more cities to use our sewer plant, the cost to run the plant could go up but our rates could go down because we would be serving more people. Bob Bamsey, an engineer with Earth Tech, said the council and the partnering group made the decision to increase the plant's capacity to handle future needs. Mr. Bamsey stated that building a plant twice as big as the city needed did not double the costs, and the facility we have today treats waste to a much higher degree than the plant the city had in 1993. Mr. Bamsey stated the facility could handle the cities of Cedar Falls and Evansdale and still have capacity. Mr. Bamsey reported that the original plant was built in 1938 and parts of that plant were still being used in 1994. Mr. Bamsey stated that to have built to take care of today's need only would have been very short sighted. Mr. Bamsey stated that part of the costs is because we have to treat waste further to meet the permits. Councilperson Clark noted that option 1 costs more in the long fun after adding interest costs. Councilperson Hurley stated he is comfortable with option 1 which increases fees 14.5 percent. Ms. Weidner reported that option 1 will increase the cost $2.40 per month per household. A recess was held at 9:05 a.m. The council reconvened at 9:15 a.m. Mayor Rooff reviewed a service cost comparison with nine other major Iowa cities, including water, sewer, garbage, property taxes, and median price homes. The cost comparison shows Waterloo as fifth in sewer rates. Councilperson Jordan asked what would $1.4 million increase in sewer fees include. Mayor Rooff responded that $750,000 is for debt service and $250,000 for increased operating costs. Councilperson Greenwood noted that the council needs to be cognizant of bond covenants and balances and make sure they are healthy. Councilperson Getty stated he feels we need to take a look at funds from the sewer and garbage funds being used as charge backs to other departments. Ms. Weidner stated that no funds are being transferred out of the sewer fund in FY03. Councilperson Hurley stated that 68,000 citizens do not see the information the council sees, and the council needs to stay the course and make decisions based on facts and information. Councilperson Clark stated he treats this issue the same as the burning issue as it will force the council to find some other alternatives. Councilpersons Jordan and Getty have good ideas that should be pursued. Councilperson Clark stated he would like to fix the sewer fund for more than one year. December 19, 2002 Page 4 Clark/Hurley that "an Ordinance amending the 2001 Code of Ordinances of the City of Waterloo, Iowa, by repealing Subparagraph 6 of Paragraph A of Section 8-3A-2, Determination of Rates and Charges, of Article A, User Charges and Fees, of Chapter 3, Sewer Regulations, of Title 8, Public Utilities; and enacting in lieu there of a new Subparagraph 6 of Paragraph A of Section 8-3A-2, Determination of Rates and Charges, of Article A, User Charges and Fees, of Chapter 3, Sewer Regulations, of Title 8, Public Utilities, which includes increasing the base rate $1 and the flow rate 28 cents", be received, placed on file, considered and passed for the first time. Prior to a vote on the above motion, the following comments were heard. Councilperson Greenwood stated he has empathy for Councilperson Jordan's thoughts. Councilperson Greenwood asked if Councilperson Jordan was concerned that it would hurt those who can least afford it or the whole city. Councilperson Greenwood asked if the council needs to do something to help those individuals with the sewer rate increase. Councilperson Jordan responded that he has not had a flood of calls, but that is a concern of his and the perception that the city will transfer money from the sewer fund. Councilperson Jordan asked if we would have to raise the rates more to help those who cannot afford the increased rates. Nancy Eckert, City Clerk, reported that the city currently gives garbage exemptions to low-income and single households over the age of 65. The city uses federal guidelines for low income. It currently costs between $60,000 and $65,000 per year for those exemptions. Councilperson Hurley stated he favors option 1 because it provides stability and continuity and feels citizens would accept that rationale. Councilperson Welper stated he favors option 1 as we need $1 million for debt service and operational costs and the other $450,000 is to help build the sewer fund and balance we need. Ms. Weidner reported that the bond covenant is $3.3 million in restricted cash, and there is very little in non -restricted cash. Getty to call the question. Ayes: Six. Absent: Berry. Motion carried. 117859 - A vote was taken on the original motion with the following result. Ayes: Four. Nays: Jordan, Getty. Absent: Berry. Motion carried. 117860 - Hurley/Clark that rules requiring ordinances to be considered and voted for passage at two prior meetings be suspended. Ayes: Six. Absent: Berry. Motion carried. 117861 - Greenwood/Welper that "an Ordinance amending the 2001 Code of Ordinances of the City of Waterloo, Iowa, by repealing Subparagraph 6 of Paragraph A of Section 8-3A-2, Determination of Rates and Charges, of Article A, User Charges and Fees, of Chapter 3, Sewer Regulations, of Title 8, Public Utilities; and enacting in lieu there of a new Subparagraph 6 of Paragraph A of Section 8-3A-2, Determination of Rates and Charges, of Article A, User Charges and Fees, of Chapter 3, Sewer Regulations, of Title 8, Public Utilities, which includes increasing the base rate $1 and the flow rate 28 cents", be considered and passed for the second and third times and adopted. Ayes: Four. Nays: Jordan, Getty. Absent: Berry. Ordinance adopted and upon approval by Mayor assigned No. 4591. 117862 - Councilperson Getty stated he would like the appropriate standing committee to review reducing the cost for sewer fees for certain users, such as low-income and elderly. Getty/Jordan that the Council adjourn at 9:57 a.m. Ayes: Six. Absent: Berry. Motion carried. feltztAi- Nancy ` ckert City Clerk