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11/15/2004CITY COUNCIL WORKSESSION CITY OF CLEARWATER November 15, 2004 Present: Brian J. Aungst Mayor – departed 10:42 a.m. Frank Hibbard Vice-Mayor Hoyt P. Hamilton Councilmember William C. Jonson Councilmember Carlen Petersen Councilmember Also present: William B. Horne II City Manager Garry Brumback Assistant City Manager Pamela K. Akin City Attorney Cynthia E. Goudeau City Clerk Brenda Moses Board Reporter The Mayor called the meeting to order at 9:01 a.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. Presentations – None. Service Awards Seven service awards were presented to City employees. Dennis Olmstead, Public Services Department, was presented the November 2004 Employee of the Month award. The City Council recessed from 9:12 to 9:13 a.m. to meet as the Pension Trustees. GAS SYSTEM Public Gas Partners - An Alternative Source of Gas Supply CGS (Clearwater Gas System) Managing Director Chuck Warrington reviewed natural gas revenues over the past six years. Prices have been volatile. CGS is a member of Florida Gas Utility (FGU), a not-for-profit joint action agency consisting of 22 Florida governments. CGS currently has an All Requirements Agreement with FGU, which obligates CGS to purchase 100% of its natural gas supply through FGU. FGU is entering into a Gas Production Sharing Agreement with Public Gas Utilities (PGP), a Georgia non-profit corporation, made up of multiple municipal agencies. PGP's objective is to acquire and have a working interest in multiple gas wells. PGP will issue interim debt to pay the costs of purchasing interests in the gas wells. Once the gas wells are obtained by PGP, PGP will notify FGU of their percentage share of the costs to obtain the wells and FGU will issue debt to pay FGU's share of the costs. FGU then will bill each of its members their percentage share of the annual debt costs. In addition to debt costs, the costs of operating the wells will be billed from PGP to FGU, and ultimately to FGU members, including Clearwater. Each PGP member then will receive its percentage share of gas flowing from the wells, including FGU, which will further allocate the gas to each of its members, including Clearwater. As part of this agreement, CGS will be obligated to pay its share of both the annual debt payment and the annual operating costs even if the wells do not produce as anticipated. In response to a question, Mr. Warrington said FGU will join PCP regardless of whether or not the City joints. If fields do not produce, Clearwater and the other members will have to pay their share of the debt. Finance Director Margie Simmons said it is important to stabilize the price of gas and protect bondholders. Discussion ensued regarding hedging and it was indicated it guarantees a certain price. Concern was expressed in getting some bad fields. Discussion ensued regarding the threat of imported liquid natural gas being imported. Mr. Warrington said the demand for natural gas has exceeded the supply. Onshore sources will continue to be less expensive than imports. In response to a question, Mr. Warrington said “Henry Hub” pricing is the benchmark for southeastern United States. FINANCE Pass on first reading Ordinance #7366-04 authorizing Gas System Subordinate Debt, to be issued by Florida Gas Utility on the City’s behalf as part of a gas supply arrangement with Public Gas Partners. CGS is a member of FGU, a not-for-profit joint action agency made up of 22 Florida Governments. CGS currently has an All Requirements Agreement with FGU, which obligates CGS to purchase 100% of our natural gas supply through FGU. FGU is entering into a Gas Production Sharing Agreement with Public Gas Utilities (PGP), a Georgia non-profit corporation, consisting of multiple municipal agencies. PGP's objective is to acquire and have a working interest in multiple gas wells. PGP will issue interim debt to pay the costs of purchasing interests in the gas wells. Once the gas wells are obtained by PGP, PGP will notify FGU of their percentage share of the costs to obtain the wells and FGU will issue debt to pay FGU's share of the costs. FGU then will bill each of its members its percentage share of the annual debt costs. In addition to debt costs, the costs of operating the wells will be billed from PGP to FGU, and ultimately to FGU members, including Clearwater. Each PGP member then will get its percentage share of gas flowing from the wells, including FGU, which will further allocate the gas to each of its members, including Clearwater. As part of this agreement, CGS will be obligated to pay its share of both the annual debt payment and the annual operating costs, even if the wells do not produce as anticipated. This ordinance properly authorizes the undertaking of the PGP Gas Supply Agreement for the portion of the agreement that could be treated as debt rather than operating expenses. Clearwater Gas will pass the cost of its share of this debt, as well as the operating cost of CGS’s share of the operating costs of the PGP project to its gas customers as resale gas supply costs under CGS’s Purchased Gas Adjustment. CGS’s objective in participating in this PGP project is to diversity its gas supply in order to stabilize and reduce the overall cost of gas supply for CGS’s natural gas customers. In addition to this ordinance, a separate agenda item formalizes a gas supply hedging policy and another agenda item approves an agreement with FGU. In response to a question, Ms. Simmons said a “sinking fund” refers to money set aside to fund future costs. POLICE Approve an agreement between the City of Clearwater and the School Board of Pinellas County, Florida providing for temporary assignment of an additional School Resource Officer to Clearwater High School and Countryside High School, and that the appropriate officials be authorized to execute same. In June 2004, the Police Department submitted a grant application to the Department of Justice under the COPS in Schools 2004 Program seeking funding for two additional SROS (School Resource Officers); one officer to be assigned to Clearwater High School and the other officer for assignment to Countryside High School. The grant was not awarded, however, the Police Department intends on reapplying for this grant funding during the 2005/2006 grant application process. Last year, the Pinellas County School Board and City of Clearwater agreed that recent events in the schools required the temporary assignment of an additional SRO at Clearwater High School. The additional temporary position was funded from the Police Department’s budget. Although the City did not receive the grant for the additional SROs, the fact remains that the City is responsible for policing two of the largest high schools in the County, each with more than 2,000 students. Both schools have seen marked increases in drug possession, disorderly conduct, battery, disruptions, and trespassers over the past 2 school years that strain the ability of the single SRO to keep the campus safe. A second SRO in each school will go a long way in insuring the safety of students as well as the SROs. Of 16 mainstream high schools in the County, nine have two SROs assigned. Clearwater and Countryside are the only north county schools with single SROs. Under terms of the proposed agreement between the School Board of Pinellas County and City of Clearwater, the City will provide law enforcement and related services to Clearwater High School and Countryside High School during the regular school year. The additional officer assigned to each school, on a temporary basis, will provide instruction in law education, serve as a resource person, conduct investigations, provide security, maintain the peace, make arrests, and provide support services as necessary. The two requested positions in this agenda item will augment the duties of the officer currently assigned to each high school. For school year 2004/2005, the School Board will reimburse the City the sum of $27,015 toward salary expenses for each of the requested School Resource Officers. Additionally, overtime costs related to school functions will be reimbursed to the City by the School Board. The actual salary and benefit cost to the City for providing an additional temporary School Resource Officer at Clearwater High School and Countryside High School is $98,286. The total cost ($98,286) minus the reimbursement for both officers ($54,030) equals an annual salary and benefit impact to the City in the amount of $44,256 for both officers. Additionally, uniforms will cost $2,462. The Police Department is estimating a budget surplus of approximately $480,000 from fiscal year 2003/2004. The Police Department is requesting that the total cost to the City, in the amount of $46,718, be re-allocated back to the Police Department’s operating budget from the 2003/2004 budget surplus. Additionally, the difference between the actual costs and amount reimbursed is offset by the benefit of the program to the community and the Police Department. First quarter budget amendments will recognize the total increase to the Police Department operating budget of $100,748, as well as the offsetting revenue of $54,030 and the allocation of retained earnings in the amount of $46,718 for the difference. The Resource Management Committee has reviewed and approved this item. The Police Department has maintained a good working relationship with the School Board. A School Resource Officer has been assigned to Clearwater High School since January 1, 1985, and to Countryside High School since January 1, 1986. In response to a question, Police Chief Sid Klein said he did not know what the School Board is doing to address incidents at schools other than adding SROs. He said this situation is not unique to Clearwater and needs to be addressed Countywide. Most other schools in the County have two SROs. The School Board has agreed to provide its share of funding for SROs this school year. He said SRO radio communications need to be enhanced as reception in some areas of the school is poor. He said the budget surplus resulted from creatively scheduling officers for special events and reducing overtime costs. Clearwater High School Principal Nicholas Grasso said the schools’ geographic layout encourages unwanted visitors, transients, and students from other schools. He said SROs help with those situations. The school’s diverse population has an affect on incidents. The school recently hosted a multicultural youth conference, teacher training sessions, invited parents to visit, and partnered with Juvenile Welfare Board to address issues. The school offers internal counseling opportunities, role model programs, and emphasis on interactive skills. He encouraged Councilmembers to visit the school and complimented staff on their efforts. He said the school’s population has increased significantly and only one SRO is assigned. Discussion ensued regarding the School Choice Program and it was indicated it has affected Clearwater High’s population. Belcher Elementary may be located temporarily next door to Clearwater High next year, and other schools could occupy the site for temporary quarters. Mr. Grasso could not confirm if other schools would use the site. ENGINEERING Approve a work order to Parsons Water & Infrastructure, Inc., in the amount of $324,310 for engineering design services related to the Chloride Monitoring Well Implementation Project (04-0029-UT), and that the appropriate officials be authorized to execute same. The City has requested the services of Parsons Water & Infrastructure Inc. to investigate modifying the City’s water use permit (WUP) in support of raising the chloride cap of 250 milligrams per liter for each production well; a cap currently imposed by SWFWMD (Southwest Florida Water Management District). Raising the limit of the chloride cap is essential to continue current pumping rates for existing wells at Reservoirs 1 and 3 as well as for developing new groundwater sources for future water production projects. The Chloride Monitoring Well Implementation Project is the first project to be initiated from the Capital Improvements Projects recommended in the Potable Water System Infrastructure Assessment and Capital Improvements Implementation Plan, recently completed by Parsons. If successful in raising the chloride cap, the City stands to gain from being more self-sufficient in potable water production, reducing the amount of more expensive potable water purchased from Pinellas County. This Work Order covers tasks that are the first part of a project that will span over a three years. Subsequent phases of the overall larger project will be authorized by separate work orders presented for Council approval and will cover tasks to be accomplished in the corresponding fiscal year. A Preliminary Assessment Report will be developed outlining all relevant issues pertinent to the hydrogeologic conditions the City contends with in withdrawing fresh groundwater from the Floridan aquifer. A policy and/or ordinance review will be completed and a mitigation plan prepared to address those permitted and non-permitted well-users within the City who may be impacted by additional groundwater withdrawal by the City. A presentation will be made to SWFWMD outlining the goals and objectives of the overall project. The last task in this phase will involve defining preferred well sites and beginning to obtain rights to construct, own, operate, and maintain monitoring well facilities on those selected sites. It is anticipated that the objectives of this phase of the project will be accomplished in 365 days. The overall project cost, over three years, is expected to be $1,210,728, the first $324,310, of which is associated with this work order. Parsons is one of the City’s Engineers-of-Record, and this work order was negotiated in accordance with the Consultants Competitive Negotiations Act. In response to a question, Engineering Director Lisa Murrin said wells must be shut off once the cap is reached. Public Utilities Director Andy Neff said SWFWMD had established the chloride cap. Clearwater wants to maximize the production of its facilities. By increasing the cap, the City should have sufficient treatment in place to accommodate the increase. This project is critical to Clearwater’s ability to sustain and increase local water production. Staff is reviewing literature and geology and monitoring the localized effect. No return on investment calculation has been done for this project. If trigger levels are not addressed, the City may not be able to increase or sustain production. Award a contract for the Northeast Filter Rehabilitation and Marshall Street Blower Motor Control Center Replacement Project (03-0066-UT) to TLC Diversified of Palmetto, FL, in the amount of $2,395,705, which is the lowest responsive bid received in accordance with plans and specifications, and that the appropriate officials be authorized to execute same. The City of Clearwater has identified improvements and rehabilitation requirements for treatment components at the Northeast and Marshall Street Advanced Pollution Control Facilities. At the Northeast facility, the existing effluent filter needs significant rehabilitation with the electrical and control systems as well as other metallic components such as weirs and distribution channels that have corroded due to long-term exposure to chlorine gas and high moisture atmosphere. The City also identified the need to replace the Primary Sludge Pump Station Motor Control Center (MCC) at the Northeast facility. At the Marshall Street APC Facility, the City identified the need to replace the existing MCC, starter gear, and controls for the Blowers at the Main Blower Building. The MCC will require replacement and relocation to a new building to raise the unit above the flood level. Work will commence upon award and execution of the contract and will be completed within 240 days. Construction is expected to have a start date in January of 2005 and be complete by October of 2005. In response to a question, Mr. Neff said sand filters at the Northeast facility corroded because chlorine was used. The new chlorine contact station will mitigate those problems. He will provide the Council with information regarding the lifespan of the components. PUBLIC UTILITIES Pass Ordinance #7321-04 on first reading increasing domestic, lawn water, and wastewater collection utility rates by 7% effective October 1, 2005, with subsequent 6% increases to be effective October 1, 2006, October 1, 2007 and October 1, 2008 and increasing reclaimed water rates by 29.44% effective October 1, 2005, then metering reclaimed water and implementing the proposed reclaimed water rates that are projected to result in a 29.44% increase to the average reclaimed water customer effective October 1, 2006 followed by a 6% increase to those reclaimed water rates effective October 1, 2007, and October 1, 2008. The utility rate increase is needed to provide funding to maintain compliance with debt service coverage requirements supporting the continuation of capital improvement projects needed to sustain the City's utility infrastructure. Infrastructure improvements are needed to maintain compliance with federal regulations concerning water supply and treatment and the wastewater collection system, maintain reliability of the water pollution control facilities due to age of the infrastructure, and to expand the reclaimed water system. Master Plans have been completed for all of the systems in Public Utilities and the capital improvements program has been revised to meet future infrastructure needs. The last rate increase, effective March 1, 2001, provided a series of 7% increases over a 5-year period applicable to water and wastewater rates only. The last rate increase in this approval became effective October 1, 2004. These rates will remain in effect as approved. Burton & Associates has completed a water, wastewater, and reclaimed water utility rate study to cover 5 years of operations. The current study covers the period FY (Fiscal Year) 2005 through FY 2009 and recommends increasing existing reclaimed water rates in FY 2006, then adopting a new reclaimed water rate structure to be implemented when the City is able to meter reclaimed water, projected to be FY 2007. This would allow for improved equity between reclaimed water customers and water and wastewater customers, since reclaimed water rates have not been increased since 1998, whereas regular increases have been implemented to the water and wastewater rates. This study recommends increasing reclaimed water rates by 29.44% in FY 2006, implementing new reclaimed water rates in FY 2007 that would result in an increase of 29.44% to the average reclaimed water customer, and applying subsequent 6% per year reclaimed water rate increases thereafter (FY 2008 and FY 2009), thus aligning those reclaimed water rate increases with the annual water and wastewater rate increases. By doing so, the overall water and wastewater rate increases from FY 2006 through FY 2009 could be reduced to 6% annually instead of 7%, if the proposed reclaimed water rates are not implemented. Metering of reclaimed water and raising reclaimed water rates as proposed lowers the rate of increase to all water and wastewater customers, allows the reclaimed water system to become more self-sufficient over time, provides the possibility of retaining 50% SWFWMD grant reimbursements on reclaimed water capital projects, and allows more customers to be connected to the reclaimed water system over time, due to increased demand management. Also factored into the rate study are continued wholesale potable water purchases from Pinellas County at their suggested increased rates. These rates increase from the present $2.30/1,000 gallons to $3.18/1,000 gallons over the timeframe of the study. The last two years reflect information from the County indicating 7% per year wholesale potable water rate increases, due to the County’s proposed blending plant, following 3 years of 10% annual increases. Included in the ordinance changes are user fee schedule changes to align cost of providing particular services with actual expenses. Some fees were added, some were raised, and some were lowered based on current costs. A rate restructuring study also is underway by Burton & Associates reviewing water and wastewater rate structures. Public Works Administrator Mashid Arasteh said since the last rate study, staff has successfully reduced operational and maintenance costs. In response to a question, Mr. Neff said infrastructure needs are outpacing inflation nationally as cities are paying for past neglect. In response to a question, Ms. Arasteh said the ten-year plan implemented in 2001 included maintenance and infrastructure needs, however there will never be a point when maintenance is not needed. She said the rate increases will make costs more equitable for potable water consumers. Legislation prevents staff’ from predicting costs. Mr. Neff said shallow wells will have to be addressed in the future. Ms. Arasteh said if this item is delayed, some projects will not be funded. It was recommended this item be continued to schedule a public presentation. Consensus was to delay consideration of this item until December 2, 2004. PLANNING Approve an amendment to the development agreement between the Beachwalk Resort LLC (fka Clearwater Seashell Resort L.C.) and the City of Clearwater, Adopt Resolution #04-35 and approve restructuring of the funding in Capital Improvement Project 315-92267 (Coronado/S. Gulfview Streetscape) by replacing the $2 million General Fund Loan with a $2 million loan from the Central Insurance Fund. The subject site is 1.63 acres and is located at 201 and 301 South Gulfview Boulevard and 230, 300, and 304 Coronado Drive. The CDB (Community Development Board) is scheduled to review the proposed applications for Flexible Development and Development Agreement approval on November 16, 2004. When the initial agenda item was approved regarding additional funding for the Coronado/South Gulfview Streetscape, it was contingent upon the commencement of this development and anticipated the elimination of the City's responsibility to purchase the property from the developer (for $6 million) if the developer failed to commence construction by March 6, 2006. Elimination of this requirement would have released $6 million worth of funding, $2 million of that being General Fund. Since this $2 million in General Fund money will not be able to be released until March 6, 2006 and the funding for Coronado/South Gulfview is needed prior to that time, the City will need to replace the $2 million in General Fund money in the Coronado/ South Gulfview project with $2 million in Central Insurance Fund loan until such time as the requirement to purchase the property has been eliminated (March 7, 2006). At that time, a budget amendment will be made to return the Central Insurance Fund money and replace it with General Fund money. The funding for this project will be put in place upon the developer moving forward on their project and depositing the appropriate funds with the City of Clearwater. A quarterly amendment will be processed to reflect the budget at that time. In response to a question, Ms. Tarapani said an amendment is pending review by the CDB regarding use of 24 additional units from the density pool to make up for the loss of condominium units. She reviewed changes to the development agreement. While the restaurant is being reduced is size, it still will be substantial. As amenities and accessory uses would not fit in the available space, hotel rooms will be smaller and still will meet Code requirements. The same number of hotel units has not changed. A total of 405 public parking spaces, 165 valet parking spaces, and 195 hotel spaces are planned. The City has agreed not to construct public parking within a quarter mile of this project during the next five years. Concern was expressed regarding the size and mass of the project and it was questioned whether the parking would be comingledl. Ms. Tarapani said hotel and public parking may be segregated. Public parking will replace spaces displaced by Beachwalk. Engineering Director Mike Quillen said consultants have indicated the public would use the parking, as the spaces will be the only ones available in the area. In response to a question, Ms. Tarapani said the design includes step-backs and a connector bridge. The plans conform to Beach by Design. The developer has indicated the five hotel rooms proposed for the bridge level are important to the project. This would be the first hotel project built on Clearwater beach in more than 20 years. In response to a question, the City Attorney said nothing in the agreement would keep the developer from selling the property and asking a higher price. The developer is, however, required to commence the project within one year. She said the clause referencing the rental program for hotel units allows for the maintenance/renovation of rooms. In response to a question, Ms. Arasteh said the developer is required to provide 60 days notice regarding removal of pavement to allow City staff time to plan for rerouting South Gulfview. She estimated one-third of current parking spaces will be lost. Staff is working on alternatives that will provide additional parking. Discussion ensued regarding parking rates. The City Attorney said the City has the option to buy the parking spaces if the developer charges more than 25% of City beach parking rates. The City Attorney said the agreement includes a dispute resolution provision. The market most likely will influence parking rates. Staff will review local comparables and discuss their findings with the developer. Ms. Tarapani estimated the project will generate $350,000 in new ad valorem taxes annually. The developer will receive half that amount. Ms. Arasteh said cost estimates to construct the bridge are difficult to determine. Mr. Quillen said transportation impact fees have not been calculated. The City Manager said on-street parking spaces should provide a ten-year payback, with a not-to-exceed timeframe of 25 years. The City Attorney said the agreement’s legal terminology and arbitration provision are standard. In response to a question, she said the developer may install some lockers and showers. Ms. Arasteh said the facility at the base of the bridge cannot exceed Beachwalk’s designed footprint. Measurements have not been finalized. Ms. Arasteh reported the Beachwalk design is 60% complete and she did not anticipate the size of this landing to change. She will provide an updated engineering drawing of the site. The City Attorney said standard kitchens are the same as full kitchens; only 25% of the units will have mini kitchens. CITY MANAGER VERBAL REPORTS Discussion ensued regarding a replacement for Mayor Aungst on the Tourist Development Council and it was reported the County Commission has mentioned Julie Scales from Dunedin. Concern was expressed in Clearwater not having a representative. Discussion ensued regarding the need for legislation requiring TDC membership for an elected official from a municipality where the largest percentage of tourist tax dollars is collected. The Vice-Mayor is to contact the Board of County Commissioners regarding Clearwater’s representation on the TDC, and a resolution is to be drafted for future legislative action related to this issue. OTHER COUNCIL ACTION Councilmember Jonson will represent Clearwater at the FLC (Florida League of Cities) Legislative Conference on Friday. He submitted a draft policy statement was submitted. ADJOURN The meeting adjourned at 12:16 p.m.