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HomeMy WebLinkAbout07/11/1988 Meeting r COUNCIL M I NUT E S July - Cecember M I NUT E S Eugene City Council 1988 8J's Restaurant--44 East 7th Avenue July 11, 1988 5:30 p.m. COUNCILORS PRESENT: Ruth Bascom, Rob Bennett, Debra Ehrman, Jeff Miller, Emily Schue, Freeman Holmer, Roger Rutan. COUNCILORS ABSENT: Cynthia Wooten. The work session was called to order by Mayor Brian Obie. 1. STATUS OF THE SEWER UTILITY Bob Hammitt and George Jessie, Public Works staff, reviewed the three services funded through the sewer utility: the regional sanitary service, or the Metropolitan Wastewater Manage~ent Commission (MWMC); the local sanitary service; and the local storm drainage service. Mr. Jessie said the Eugene Ja~. Water & Electric Board (EWEB) acts as the billing agent for sewer fees. About 40 percent of the revenue from such fees supports the regional service ' . , ... ($3.1 million), and the remaining $4.6 million supports the local services. Mr. Hammitt gave a slide show and described some of the local sanitary and storm sewer.services that are provided. He emphasized the importance of preventative maintenance of the sewer system. In response to a question, Mr. Hammitt said maintenance of the Amazon Channel is required by the agreement the City made with the Army Corps of Engineers when the channel was built. Mr. Holmer asked if the sewer system is being maintained adequately with the revenues currently generated by sewer fees. Mr. Hammitt believed that the system is being adequately maintained; however, he expressed some concern that the revenue may not be keeping pace with new systems or major replacement work that may be needed. In response to a question from Mayor Obie, staff indicated that a Federal formula is used to determine how much to charge industrial users that place an extra load on the sanitary sewer system (e.g., through the release of chemicals). Staff encourages such users to pre-treat the material before releasing it into the sanitary sewer system; such pre-treatment is often cost-effective for businesses, because it allows them to pay lower sewer -- ..- charges. ./~' ---, - MINUTES--Eugene City Council July 11, 1988 Page 1 ~ .. e In response to a question from Ms. Bascom, staff indicated that a few years ago, about about $500,000 of services ($400,000 for street sweeping and $100,000 for. leaf pick-up) were transferred from the general fund to the sewer fund. Mr. Jessie referred the council to a data sheet listing information on the amount of sewer lines in the community and the amount of maintenance work done each year. In response to a question from Mr. Holmer, staff indicated that the City follows a schedule so that all of the City's sewer lines will receive TV service during a 15-year cycle. Some lines, however, receive TV service more often. Mr. Hammitt said the local sewer rate increased in July 1987 from $5.65 to $6.13 per month for the average single-family dwelling. The average monthly local sewer fee revenue has increased from $358,000 to $388,000. Mr. Holmer asked how much of this increase was due to an increase in the number of users. Mr. Jessie said the number of single-family dwellings has increased about 1.25 percent over the last year. Mr. Jessie referred to.a eh~rt listing local sewer revenues for FY87 through FY89. Mayor Obie asked about the fluctuation in "other revenues" during this period. Staff said it would inves~igate this fluctuation and report back to the council. . Mr. Jessie mentioned four of the financial targets adopted when the sewer rates were changed in July 1987: fund operational service at current levels; maintain adequate working capital in the sewer utility fund; meet capital improvement requirements; and keep a contingency fund of $150,000 to $200,000. . ~e ~aid these goals have been met and added that the next rate review process will begin in November. Finally, Mr. Jessie mentioned that a 30 to 45 percent increase in the regional sewer charge will be necessary to replace the regional rate subsidy and to maintain existing service levels. Tony Mounts, Financial Division staff, referred the council to two six-year financial forecasts for the local sewer fund. Both forecasts assumed current sewer fee rates, the maintenance of an adequate working capital (about $1 million), the maintenance of an adequate contingency fund (about $100,000), and an annual contribution to the reserve fund of about $50,000 a year. Both forecasts were based on the list of projects in the CIP. One forecast, however, included capital expenses only for repair and replacement, whereas the other forecast included these capital expenses as well as new construction. Under the first forecast, the financial goals for the sewer fund would be exceeded and no rate increases would be necessary; under the second forecast, however, the sewer fund would begin to operate at a significant deficit in FY92. . MINUTES--Eugene City Council July 11, 1988 Page 2 e In response to questions, Mr. Mounts said the forecasts for the sewer fund were based on projects listed in the CIP; this does not necessarily mean, however, that the sewer fund is the only potential source for these capital projects. He said the forecasts were simply meant to illustrate what the financial impact would be if the CIP projects were funded through the sewer fund. Ms. Schue asked how larger sewer projects have been funded in the past. Christine Andersen, Public Works Director, said serial levies and general obligation bonds have been used. Recently, a number of financing sources have been used, including some Federal funds. Ms. Andersen said the forecasts indicate that the maintenance and operating systems currently in place are going well; significant improvements have been made in these areas over the past years. On the capital side, however, policy decisions will have to be made about how to meet major funding needs. Ms. Ehrman asked what plans were made for major capital projects ten years ago or so. City Manager Mike Gleason said this issue was not really addressed in a comprehensive way. Mr. Bennett asked about the increase in users and sewer fee revenues that would occur if investments were made in the sewer system, and whether the increased revenue would meet the cost of the investments. Mr. Gleason said the second financial forecast indicates that the current rate system would not generate enough revenue to fund major capital investments in the sewer - system. Mr. Miller asked about the impact of River Road/Santa Clara annexations on the sewer fund. Ms. Andersen said that if the annexations occurred less incrementally, the sewer improvements could be planned and made more cost-effectively. Mr. Gleason added that the operational costs of the sewer system would be spread out over more users. In response to a question from Mayor Obie, Ms. Andersen said Springfield provides administrative services to the regional sewer system (MWMC), and Eugene provides the operational services. Mr. Jessie said the total administrative cost for MWMC is $450,000. He said this represents a decrease due to a staff reduction plan. He said a performance audit recommended that between 1 and 1.5 FTE remain as administrative liaisons for MWMC. Mr. Jessie added that this gives Springfield a partnership role in the regional sewer system. Mr. Bennett said the audit gave good marks to the administrative side of MWMC. He said the political reality is that Springfield wants to playa role in the regional system. Mayor Obie asked if the administrative contract was just a buy-off meant to insure Springfield's cooperation in the regional system. Mr. Bennett did not think so. He believed that Springfield makes a strong effort to be administratively efficient. . MINUTES--Eugene City Council July 11, 1988 Page 3 - Mayor Obie said the wetlands issues poses significant problems for local jurisdictions as well as private property owners. He said this is a community-wide problem) and one entity cannot bear the entire burden. Mr. Bennett commented that he made a similar argument regarding the condominium conversion issue. Mayor Obie mentioned that industries thinking about locating in the Eugene area are pleased with the area's electricity rates, but not its sewer rates. Mr. Rutan asked if the rate increase for the regional system is needed because the system is currently overbuilt. Mr. Gleason said the regional treatment plant is more expensive to operate than treatment plants in other areas, because the plant for the Eugene-Springfield area removes a larger percentage of material from the water. Ms. Andersen added that treatment plants in other areas will reach capacity before the plant in the Eugene-Springfield area will; or) the plants in some other communities will have to be upgraded in order to meet the standards that the Eugene- Springfield plant currently meets. II. STRATEGIC FINANCIAL PLAN PROCESS Warren Wong) Finance Division) made several staff comments about the FY88 strategic financial planning process. First) the public input process was not adequate or timely) particularly because of the overlap between the - financial planning process and the annual budget process. Future financial planning should be timed so as not to overlap with the public process for annual budget review. Second) the strategic financial planning dealt with existing services) but there are a number of issues being discussed by the council that have potential financial impacts; these issues need to be incorporated in the City's financial planning. Third) the projected deficit is real and the solution should be long-term rather than a short-term patch-job. And fourth) the City1s long-range financial plan needs both council and citizen support. Mr. Wong said the six-year financial forecast for the general fund is being updated. Expenditures appear to be meeting the projected targets (the labor agreements with police and AFSCME are pending). There appear to be some shortfalls) however) on the revenue side (franchise fees) State-shared revenues, and delinquent property taxes). Mr. Wong said staff proposes several council activities for August: review the revised six-year financial forecast; ballot on services; discuss and adjust the ballot results; and discuss an FY90 budget process. He also said staff recommends that the council adopt a set of policies regarding line items such as travel) training) administration, legal services) and publications. These and other policy statements) as well as the balloting results, will provide the basis for staff to propose an FY90 budget. e MINUTES--Eugene City Council July 11) 1988 Page 4 e Mr. Holmer expressed the concern that if only one meeting is held for these activities, the council will not have an opportunity to discuss the ballot format before voting. Mr. Bennett expressed a similar concern, saying he would like an opportunity for the council to discuss the process that is used. Mr. Rutan said that before balloting on specific line items, the council needs to do some consensus-building and general goal setting. Mr. Bennett agreed that the council should address some of the broader policy issues before focussing on the specific line items. Ms. Schue agreed also. Mr. Rutan also expressed the concern that the council not pass by the recently adopted FY89 budget. He said that when the budget was adopted, his understanding was that the council would consider some of the proposals that were raised during council discussion. Mayor Obie said his understanding was that the proposals would be discussed in the context of the FY90 budget. Mr. Rutan said he would be very disappointed if the council does this. He said that if the council can reach some agreement on some proposals, it should not wait until the FY90 budget to apply them. The council decided to meet July 27 at 5:30 p.m. to discuss the financial planning and budget processes, to begin some goal setting and consensus building, and to begin a discussion of general financial policy issues. , Mayor Obie adjourned the work session at 7:25 p.m. e Respectfully submitted, ;.,~~~~., Micheal Gleason, City Manager (Recorded by Mary Feldman and Monty Hindman) MNCC 071188-530 . MINUTES--Eugene City Council July 11, 1988 Page 5