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HomeMy WebLinkAbout05/11/1987 Meeting M I NUT E S e Eugene City Council Dinner/Work Session Bloch Room--Eugene Conference Center May 11, 1987 5:30 p.m. PRESENT: Mayor Brian Obie; Debra Ehrman, Freeman Holmer, Emily Schue, Jeff Miller, Cynthia Wooten, Roger Rutan, councilors; City Manager Micheal Gleason; Assistant City Manager Dave Whitlow; Cathy Briner, Eugene Development Department; Don Lutes, Riverfront Research Park Design Advisory Committee; Public Information Director Barbara Bellamy; Cathy Freedman, City Manager's Office; Public Works Director Chris Andersen; Les Lyle, Bob Hammitt, Coy Jones, George Jessie, Linda Delaplain, Sandra Gleason, Public Works; Bob Coller, John Timmons, Tom Kyle, Laurie Power, Sally Weston, guests. I. RIVERFRONT RESEARCH PARK UPDATE e Mayor Obi e opened the meeting. Ms. Bri ner presented an update of the Riverfront Research Park project time line, noting that the council tonight was scheduled to hold a public hearing on the Riverfront Research Park Special District zoning ordinance. She introduced Mr. Lutes, who reviewed a wall chart showing the process for the Riverfront Research Park project, from the study's inception in September 1985 to the occupancy of the first phase-I building(s) in 1989. Mr. Lutes reviewed the relationships of staff and groups involved in the process, adding that the chart represented the "optimum" schedule and allowed no extra time. Ms. Wooten asked about the role of the Research Advisory Committee in marketing. Ms. Briner said that committee would be working with staff on the types of tenants to be recruited. She said the marketing roles of the developer and the committee were undefined. She added that the developer was aware of the need for a proposal, and she said a marketing plan was part of the requirements included in the predevelopment agreement with the developer. Ms. Wooten asked about the source of the City's contribution for that purpose. Ms. Briner said that had not been identified. Mr. Lutes said recruiting of potential tenants was part of the developerls role. Ms. Ehrman asked to whom the Design Advisory Committee reported. Mr. Lutes said that group reported to the Riverfront Research Park Commission and to the site designer firm on all elements of the site plan design. Ms. Briner said both advisory committees had been mandated by the State Board of Higher Education and appointed by University of Oregon President Paul Olum. She added that the groups originally had been advisory to the University pres i dent, but they now were advi sory to the Ci ty Council and to the e MINUTES--Eugene City Council Dinner/Work Session May 11, 1987 Page 1 e Riverfront Research Park Commission with regard to the Master Site Plan. Ms. Briner said the groups' decisions were not binding on the Carley Group, but would go through a formal review process. Responding to questions from Mr. Rutan, Ms. Briner said important points upcoming in the process included the Master Site Plan process and the signing of an agreement with the developer. Mr. Lutes added that preparation and determination of costs would occur before the site plan was purchased. Responding to questions, Ms. Briner said it was possible that the project still might not proceed or that the developer might be changed. Ms. Ehrman asked when the installation of sewers was scheduled to occur. Mr. Lyle said about $100,000 for those improvements was included in next year's Capital Improvements Program. Mr. Lutes said installation would occur during the next construction season. Mayor Obie said he had heard from citizens who were concerned about the difficulty of keeping up with the public process. He asked whether it was necessary for citizens to attend every meeting in order to maintain a position. Ms. Briner said several opportunities remained for receiving public comment, including the third master site plan forum, tonight's hearing, a public hearing on the zone change before the hearings official, and review of the master site plan by several bodies. e Mr. Rutan asked about involvement of the governor. Ms. Briner said that had been scheduled to occur during investigation and identification of funding sources. She said Tax Increment District funds would not be sufficient, especially in the early years, and staff therefore was working on State and Federal funding sources. Ms. Briner said the governor currently had signed a $500,000 agreement for preliminary engineering work, which would be included in next year's budget. She said remaining funds had not been secured, but indications were that they would be available. Mayor Obie thanked those involved in project efforts. II. REVISED PROPOSAL ON SEWER USER RATES Ms. Andersen noted that memos, dated May 7, 1987, described factors contributing to the rate change as wastewater flow, operating budget changes, and inflation. She said the only options that appeared feasible were to increase the rate or to reduce service. Ms. Andersen introduced Mr. Jessie, who reviewed the memos. Ms. Ehrman asked about differences between actual wastewater flow figures and projections. Mr. Jessie said conservation was a small part of the difference, with the main part being caused by errors in projections based on EWEB consumption rates for commercial and industrial users. Mr. Rutan asked whether the City had incurred an operating deficit because it had underbilled or whether it was looking ahead to the need for a rate increase. Mr. Jessie said both were accurate. He said the City had received e MINUTES--Eugene City Council Dinner/Work Session May 11, 1987 Page 2 e e e less money than anticipated, and in order to pay for that difference, it had used available reserves in the Sewer Fund, which now were virtually gone. Mr. Rutan asked about the amount of reserves used to make up unreceived revenue. Ms. Andersen referred members to the last page of the memos, containing Table 4 on the subject of Rate Period Comparisons: Revenue Requirements and User Characteristics. She said reserve amounts were shown as Offsetting Revenue for Storm and Sanitary Sewer estimates, for an average amount of about $270,000 per year. She added that remaining reserves now were about $100,000. Mr. Holmer asked about the beginning balance on June 30, 1987. Mr. Jessie said the chart showing MWMC Rate Stability Reserve Projection represented the regional portion of sewer charges, while the Rate Period Comparisons represented local charges. Mr. Rutan recommended including those labels on the information. Mayor Obie noted the two-year charges for wastewater flow and asked about the cost of treating that amount of water. Ms. Andersen said the cost of treatment was a regional cost that was not directly related to the local rate structure. She added that the local system included collection and transport piping to the regional carrying system and treatment facilities. Mr. Jessie reviewed Page 2 of the memo, describing service level changes as contributing to the need for changing the sewer user rates. Ms. Andersen added that the service level had not been increased and that no new positions had been added, but that funding had been shifted from the General Fund to the Sewer Utility for more specific identification. Mr. Holmer asked what happened to the $100,000 remalnlng in reserves. Mr. Whitlow said that had been used to help balance the General Fund budget. He said similar actions had been taken with regard to the ambulance fund, adding that those actions were included in the Cityls fiscal management policies. Mr. Rutan asked whether the shift to the Sewer Fund would not compound the fundls instability. Mr. Whitlow said it would unless rates were increased. He added that other alternatives included continuing a General Fund subsidy or cutting the level of service. Responding to questions, Ms. Andersen said the position for Public Works Administration included a half-time public information coordinator and a half-time finance coordinator, both doing work largely related to sewer systems and programs. She also said the engineering and design position would involve front-counter work dealing with sewers, and the position for pump station maintenance was needed in order to maintain pump stations in residential areas. Mr. Miller asked about the impact on rates if the current yearls status quo were maintained. Ms. Andersen said the proposed rate increase was expected to result in about $510,000 in revenue. Mr. Miller noted that the fund then would have a $200,000 shortfall. Mayor Obie asked about the total budget for the local system. Mr. Jessie said the total budget was about $3 million for one year and about $5 million for a two-year period. Staff said the fund was reviewed by Budget Subcommittees B, MINUTES--Eugene City Council Dinner/Work Session May 11, 1987 Page 3 .e Operations, and C, Capital Projects. Indirect charges to the General Fund for the local utility were about 12 percent or $600,000 per year. Mr. Whitlow said indirect charges included services specific to the sewer utility. Ms. Ehrman asked about the $35,000 per year proposed for the annexation program. Ms. Andersen said the program was being handled through the Planning Department, with General Fund support in addition to support from the Sewer Fund. Mr. Whitlow said the complete annexation program would cost the City about $110,000 or $115,000 per year, and the Sewer Utility portion was about one-third of that. Responding to Mr. Rutan's question, staff said the fund received no grants or subsidies, and figures shown were gross. Mr. Jessie reviewed the third factor in the proposed rate change, inflation, showing scenarios for a second-year inflation rate of 4.5 percent, 3 percent, and 0 percent of the total budget. Mr. Jessie compared Eugene1s current combination rate with that of three other areas, Portland, Salem, and the agency serving the Beaverton-Tigard area. He noted that other areas subsidized commercial rates and might not be subject to the same Environmental Protection Agency constraints as Eugene. e Mr. Rutan asked what was included in the rates. Mr. Jessie said he did not think storm drainage charges were included in the rates of Portland or Salem. Mr. Rutan asked whether any economies of scale occurred at different sizes. Mr. Jessie said some were possible. He said levels of service differed in terms of amounts treated, but he thought the comparison shown was fair. Ms. Ehrman asked for more information about the inaccurate projections. Mr. Jessie said the consultant who performed the rate analysis two years ago had used water consumption data from EWEB to project sewer flows. He said that assumption was wrong because much water was used for irrigation or other purposes, did not flow into the sewer system and therefore was not included in sewer bills. Mr. Miller asked whether funds were used for front-end costs of new lines, in addition to maintenance of existing lines. Staff said they were, adding that sanitary costs for FY88 were expected to be $360,000 and that other new projects were expected to cost about $200,000 over the next two years. Mr. Miller asked how the funds recaptured by rates would be used. Ms. Andersen said they would become part of the ongoing budget. Mr. Jessie added that some charges for annexation would be put back into the fund. Mr. Holmer asked about the possiblity of deferring the increase or making it an annual, rather than biennial, adjustment. Mr. Jessie said the revenue requirements for the first year would result in an increase of 7 or 8 percent, and in the second year they would mean an increase of about 4.5 percent. Ms. Andersen said the first year's increase was larger because of the error in projections, which would not be a factor in subsequent years. e MINUTES--Eugene City Council Dinner/Work Session May 11, 1987 Page 4 Ms. Wooten asked about the impact of a minimum residential rate. Mr. Whitlow agreed to provide that information. e Ms. Ehrman asked whether the common mapping project included the entire metropolitan area. Ms. Andersen said that was a joint program involving the City, Lane Council of Governments, and other utilities. She said the portion of the program relating to sewers was intended to include all areas inside the city and those areas to be annexed. Mr. Whitlow said the program could be used by all utilities in the metro area, by design and planning staffs of area governments, and ultimately by police or other departments. He added that the Sewer Fund would contribute only one-third of the costs. Ms. Ehrman asked about the amounts being contributed by other utilities, and Mr. Whitlow agreed to obtain that information. He added that the program had begun about three yea rs ago. Mr. Jessie reported that the Metro Wastewater Management Commi ssion last Thursday had adopted its budget and rates. He said the proposed rates would be presented later, along with the budget. e Mr. Rutan said he thought the Cityls objectives were to maintain the same high-quality storm and sanitary sewer service that currently was received. He said he thought it was important to remember that the sewer service was one of the greatest resources in the community, although it often was taken for granted. He noted that service provided to commercial and industrial clients had an impact on economic development. He said another objective was to provide service at the lowest possible cost. Mr. Rutan said methods to achieve those objectives might include cost-cutting. He said opportunities always existed to examine overhead and occasional costs. He also suggested examining possible efficiencies in productivity that could occur without additional capital investment, postponing or limiting long-term programs, revi ewi ng whether methods of chargi ng coul d yi e 1 d greater resul ts whil e remaining fair and equitable (particularly in the River Road/Santa Clara area), and examining new opportunities for consolidation. Mr. Rutan said that in general he was not very comfortable with the issue, but he thought it was important to maintain the current high level of service at the lowest possible cost. Ms. Ehrman noted that the increase was being proposed because of an error resulting from a wrong assumption and partly because of the shift from the General Fund to the Sewer Fund. She said she shared Mr. Holmer's concern about the 1 i ke 1 i hood of future increases and was not certain about the desirability of the council IS direction toward user fees. Ms. Wooten requested information about Springfieldls process for a similar rate increase. Ms. Wooten also reported that she recently had toured the Wastewater Treatment Plant and had been extremely impressed with the state-of- the-art facility. She added that the facility had cost $75 million and had been intended for about 20 years of use. She said she thought the facility was overbuilt for current use and consequently was costing more than it should. She said continuing capital costs, in addition to an overbuilt plant, made no sense, and she was concerned about the escalation of those costs. Ms. Wooten said she also was unclear about the reason for inaccurate projections. She e MINUTES--Eugene City Council Dinner/Work Session May 11, 1987 Page 5 e asked about the percentage that could be attributed to conservation and said it made no sense to switch to a flow-based system and then to charge people for what they did not use. She added that she agreed with Mr. Rutan1s suggestion to examine cost-cutting rather than supporting an increase in this biennium. Mr. Miller said he agreed with Ms. Ehrman's observation about the impact of shifts toward user fees. He said the shi ft from the Genera 1 Fund was a IICatch 22" because it resulted in a need to compensate for those funds. He said he liked the idea of user fees, especially if they had cost-containment features that would prevent continued escalation. Mr. Miller asked when it became counterproduct i ve to charge too much, and he added that he thought more information about reducing costs would be helpful. Ms. Schue, a former member of the Metro Wastewater Management Commission, said she favored attempting to find more efficiencies. She said she understood that the increase was required because of the shift from the General Fund to the Sewer Fund, the error in projections, and inflation. She suggested that the council might consider further the idea of a two-year phasing but added that she was comfortable with the general direction. e Ms. Schue also said the treatment plant had been built with the capacity to serve 30,000 people in River Road/Santa Clara, who always had been part of the project and who soon would be served. She said she did not think the facility was overbuilt, although the full capacity was not now being used. Responding to Ms. Ehrman's question, staff said the facility would not reach capacity from the addition of only the River Road/Santa Clara area. Ms. Wooten said she understood the need for future capacity, but she was concerned about the escalation of capital costs for the facility. Mr. Holmer said he agreed with the importance of the service in terms of economic development and sustaining the community's needs. He said he expected to be faced with continuing increases and he thought they would be better addressed annually as part of the general budgetary process of the City, rather than as IIbiennial crises.1I He said he thought it was appropriate to move the positions to their area of cost, adding that he would agree to start with a rate of 59~ next year and then to adjust rates annually. Mayor Obie said he was concerned about the shift from the General Fund. He said street cleaning fees previously had been moved, and based on that, he did not favor another shift now. The Mayor also said he thought another answer could be found to the discovery of the mistake in projections than to propose an increase to the public. He suggested changing expectations in terms of accomplishments, and added that he favored a one-year inflationary increase of 3.3 to 3.5 percent. Ms. Wooten said the budget that was being presented included the transfer of expenditures from the General Fund into the Sewer Utility Fund. Mayor Obie said that was a management problem. Ms. Schue said the council had instructed staff to pursue user fees. Mr. Whitlow said transfers from the General Fund to special funds occurred only when proposed in the budget document. He also noted that a limited number of funds could receive personnel expenses. e MINUTES--Eugene City Council Dinner/Work Session May 11, 1987 Page 6 e e - Mayor Obie suggested that staff develop an ordinance and that a public hearing be held. Mr. Whitlow suggested that staff bring back more than one option. He said one option could be the original proposal, another could be the two-step process discussed, and a third could include possible cuts to the operating and capital budgets in order to keep a lower rate limited to about 3.3 percent inflation. Ms. Wooten suggested reviewing the options before holding a public hearing. Mr. Holmer said he was not certain a public hearing was necessary. Ms. Ehrman said she favored a hearing, adding that its necessity might be determined by the size of the proposed increase. Mr. Miller suggested examining another option of maintaining the General Fund as it was and allowing a cost-of-living increase in the Sewer Utility, with the positions transferred. He asked what economies could be developed or what projects would be cut. Mr. Whitlow agreed to return with at least three options, including possible productivity improvements. He said the increase was proposed to go into effect July 1. Mr. Jessie said postponing the increase beyond that date would result in a delay of several months, because of requirements about the timing of increases. He said the council also needed to ratify the MWMC budget and rates. Members agreed to postpone a public hearing until the options had been presented to the council. Mayor Obie recessed the meeting at 7:13 p.m. (Recorded by Leslie Scales) mnccmall MINUTES--Eugene City Council Dinner/Work Session May 11, 1987 Page 7