11/13/1997 (2)
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FRC
FiscalReview Committee Minutes
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Member
Member (arrived 8:44 a.m.)
Member
Member
Budget Director
Finance Director
Solid Waste Director
Solid Waste Controller
Assistant Finance Director
Superintendent, Solid Waste
Burton & Associates
Board Reporter
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FISCAL REVIEW COMMITTEE
CITY OF CLEARWATER
November 13, 1997
Present:
Daniel Fleck
Janet MacNutt
Daniel Moran
Richard Lynch
Tina Wilson
Margie Simmons
Bob Brumback
Paul Nystrum
John Scott
Jim Maglio
Robert Lockridge
Brenda Moses
Absent:
Carol Warren
Member
Budget Director Tina Wilson called the meeting to order at 8:09 a.m. at the Solid
Waste Services Building. In order to provide continuity for research, the items listed were
not necessarily discussed in that order.
Burton & Associates representative Robert Lockridge said the study reviewed the
sufficiency of the City's Solid Waste collection rates and other revenues to provide funding
for operations, maintenance expenses, capital expenditures, transfers, and reserve _
requirements for FY (fiscal year) 1998 through 2001. It has been 5 years since the last
rate study.
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Finance Director Margie Simmons said the rate study begun last year covers the
current year and next 3 years. The goal is to maintain a 3-month operating reserve.
Expenses include: 1) normal budget; 2) Solid Waste's share of the utility billing system;
and 3) a new dumpster screening program. The study model increased most costs 3 %
annually. Salary increases are estimated at 4% a year, and health insurance increases at
8% annually. A new utility billing system is needed due to year 2000 computer problems.
Conservative earnings estimates on investments are 5.5% in 1998, 4.5% in 1999, and
3.5% in 2000. Debt financing to lease purchase large vehicles currently is budgeted to
increase by 6%. Mr. Lockridge noted the study assumes no growth and no new
customers. Growth would spread fixed costs over a larger base and help offset future rate
increases.
Solid Waste Director Bob Brumback said the Burton & Associatos rate study
recommends 4 consecutive annual rate increases of 6.1 % to cover future operating costs
and special requirements. Rates were last increased in September 1 992. Rates were
reduced 4.4%, or $.075 a month, in 1994 when recycling was implemented.
Recommended increases are necessitated by: 1) anticipated CPI (Consumer Price Index)
increases over the next 5 years; 2) the need for a new computer billing system for Utility
Customer Service; and 3) a need to screen dumpsters from City-wide view. An incentive
program has been developed to pay customers $400 for large screened enclosures and
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.~ $250 for small ones. An estimated 2,000 dumpsters, at a cost of $400,000 in incentives
J and operating costs, are necessary for the proposed dumpster screening program to be ,a
success. The Solid Waste Department competes with SFI, Waste Management, Kimmons
and other companies. Rates must remain competitive. Competitive improvements have
included expansion of some routes, elimination of others, increased, staff reduction, 10%
growth in residential customers over 5 years, negotiation of reduced disposal rates for large
yard waste items and construction material, and a State grant. The importance of
providing special services for cleanups after major tropical storms and special events was
discussed. It was remarked that Clearwater cannot be "sparkling" unless waste disposal
services are maintained efficiently.
Mr. Lockridge presented Burton & Associates' rate study analysis. The rate setting
process compares future system costs to revenue required. The study determined rate
increases are generally necessary: 1) to meet debt service coverage on existing long-term
debt; 21 to meet cash requirements; and 3) to maintain reserves. Inflation raises operating
costs. Mr. Lockridge suggested after 5 years, to base rate increases on the CPI to cover
the costs of inflation.
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Ms. Wilson said during the next 3 years, $400,000 a year in CIP (Capital
Improvement Program) funds will be used to acquire commercial containers. The 1998 CIP
budget includes another $80,000 to $100,000 over 3 years for facility renewal and
replacement, the dumpster screening project, and the utility billing system. It was noted
the rate increase includes costs associated with implementing the computer system and
dumpster screening projects.
Discussion ensued regarding other cities' rates and services, and how to implement
the proposed rate increases. Member Moran moved to recommend a 6.1 % annual rate
increase in Solid Waste rates for each of the next 5 years. The motion was duly seconded
and carried unanimously.
The meeting adjourned at 10:03 a.m.
~~,k/
enair
. Fiscal Review Committee
Attest:
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Soard Reporter
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