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04/12/1990 CITY COMMISSION SPECIAL MEETING April 12, 1990 The City Commission of the City of Clearwater met at the City Hall Annex Community Room with the following members present: Rita Garvey Mayor/Commissioner Richard Fitzgerald Vice-Mayor/Commissioner Lee Regulski Commissioner William Nunamaker Commissioner Sue Berfield Commissioner Also present were: Kathy S. Rice Acting City Manager Charles Hunsicker Assistant City Manager Cynthia E. Goudeau City Clerk Item 1 - Gas System Request For Proposal Discussion. The Mayor called the meeting to order at 4:30 p.m. for the purpose of discussing the proposal for sale of the Gas Division. Commissioner Fitzgerald announced that he had a prior engagement and will have to leave the meeting no later than 6:30 p.m. Mayor Garvey stated the purpose of this meeting is to discuss the information in the Gas RFP. She emphasized it was important for speakers to keep to the issue of the RFP. She stated there are three points to discuss later in the meeting: 1) renegotiating after economics are discussed; 2) the flowchart to purchasing; and 3) the franchise fee. Charles Hunsicker, Assistant City Manager, reviewed the process that had been followed to this point. He stated possible sale of the Gas Division had been discussed for several years. He also indicated the dedication of the gas employees should be recognized. He emphasized the RFP is a request for price proposal, not a contract for sale. He stated it is a necessary ingredient to allow the City Commission to evaluate the market value of the Gas System. Errors that have been noted will be corrected and communicated to all interested parties. Those comments and corrections noted at the April 5th City Commission meeting have been incorporated and corrections have been made. In response to a question regarding what would happen to the three liquid propane gas tanks currently operated by the City, he stated they would be offered as an asset in the sale and how they are handled once purchased is the option of the buyer. Greg Smith, representing gas employees, expressed concerns regarding the provision in the RFP that allows a purchasing company to require no more than a one hour commute of the current gas employees. He stated most gas employees do not want to commute one hour. It was explained that it was believed most current employees live within a one hour commute and this was an effort to protect the employees. Concerns were expressed regarding the use of the word "myriad" in connection with the number of benefits offered to City employees. Consensus was to delete this word. Mr. Smith expressed concern regarding statistics regarding fiscal year 1988-89 not being included. It was explained 88/89 figures had not been audited and the statistical table was comparing audited figures. Concerns were expressed that Indian Rocks Beach and Tarpon Springs were not included in the list of cities using City of Clearwater gas. This will be investigated. In response to a question from Mr. Smith regarding the bidding process, it was indicated that the Commission wished to pursue a process where the bidders presented their non-economic issues and then once those issues are evaluated, the bidders would be asked to submit a price. Discussion ensued regarding at what point bidders would be out of the running. It was indicated the proposed process would evaluate the non-economic issues and bidders would be ranked on those responses. Then those that are considered best on those issues would be asked to bid the price. It was indicated that if at any time the process is unsatisfactory, the City Commission is not committed to proceed and they can re-bid. Further discussion ensued regarding rating the bidders and it was indicated that if the Commission was not concerned about the customers and the employees they would just take the highest bid. Questions were then raised regarding the protest procedure with concerns being expressed that the City Manager had final authority in a protest. It was indicated this is standard language in the City's bid procedures. Concerns were expressed that this authority should not be left with the City Manager in this matter and it was requested that "and present to the City Commission for action." be added to that clause. Mr. Smith raised concerns regarding a 6% franchise fee being proposed in the RFP package. It was questioned whether or not citizens were aware that this cost would be passed on to them. It was stated that the manner in which the bidding companies proposed to handle the franchise fee would be one of the basis for evaluation of the bid packages. Four citizens spoke in opposition to the sale with questions being raised regarding why the sale was being considered and whether or not the public would be notified regarding possible charge of the franchise fee. It was also stated the Gas Division is well run now and citizens did not want a private company taking over this facility. Concerns were expressed that rates would increase and the City would have raise taxes in order to make up for lost revenue. It was stated the public would be made aware of the possibility of the franchise fee. Discussion ensued regarding the need to set aside the principal generated from the sale of the Gas Division, if it should be sold, in order to guarantee revenue. Further discussion ensued regarding the amount of funds currently generated to the City by the Gas Division. A request was made that a clause be placed in the RFP that the City Commission, City Manager and other City officials have no interest in the sale. It was indicated all City officials are precluded by law from having any interest in this. Further discussion ensued regarding the franchise fee with it being indicated that this would be a factor used in ranking the companies. In response to a question regarding the franchise fee being in the request for proposal, it was indicated it was submitted to the Commission as part of the RFP documents. Concerns were expressed regarding the financial capability item for evaluation of the bids. It was indicated capability should have weight. Consensus was to give this area a score of 3 in the evaluation. A question was raised regarding the current gas bonds and it was indicated that $7.5 million will be needed to pay off debts, $3.2 - $3.5 million being for bond defeasance. A question was raised regarding CANDY not being mentioned in service standards. The Assistant City Manager indicated he would investigate. In response to a question regarding the bidding company having to have an office in Clearwater, it was indicated the document provides that the company shall maintain an office five days a week, with 24-hour, 7 day a week telephone contact required. Discussion ensued regarding how we had come to this point. It was indicated that the Gas Division has been discussed throughout the years. It was stated that gradually the Gas Division has begun to contribute to City funds. It was indicated the Commission had decided to look at the profitability of the Gas Division to determine whether or not it would be more cost effective to sell the division rather than to continue to maintain it as a City operation. It was emphasized the only way to make this decision is to go through the RFP process and it was asked that the Commission be given a chance to fully evaluate this issue. It was indicated a report had been submitted by R.W. back in 1987 that provided recommendations on how to better market the Gas Division. It was stated that no action was taken regarding this report. Commissioner Fitzgerald left the meeting at 6:30 p.m. Jim Lewin, Assistant Superintendent of the Gas Division, spoke, saying there would be benefits to the City of Clearwater in keeping the Gas Division. He stated Clearwater is rated as one of the best operated systems. He stated there is currently in the development phase a gas-driven heat pump which would revolutionize gas consumption in Florida. He requested the Commission keep the Gas Division and allow increased marketing of the gas services. Bill Patterson, President of the CWA, requested the Commission stop the RFP process and allow the employees to apply themselves and make the system work. Three employees of the Gas Division requested the Commission cease consideration of the sale of the Gas Division, stating current customers do not want to deal with a private company and given the opportunity they could market the Gas Division so it would double or triple its profits. It was regarded that the City of Clearwater's Gas Division is poised to expand into Pasco County for additional customers. Four citizens spoke in opposition to the sale of the Gas Division stating Gas Division employees have been cooperative and responsive and they did not want to deal with a private company. Concerns were raised that gas rates would increase. Some concern was expressed that not enough people are aware of the availability of gas. Discussion ensued regarding the need to continue with the RFP in order to determine the value of the system. Commissioner Berfield moved to withdraw the RFP and cancel consideration. The motion died for the lack of a second. No action was taken. Direction was for the process to continue with the indicated corrections being made. Item #2 - Authorization to set May 30, 1990 public hearing to present 201 Wastewater Facility Plan Update to Expand Clearwater's Reclaimed Water Irrigation System. Mr. Hunsicker indicated the State has a pre-qualification process for grant funds for reclaimed water system expansions. A public hearing must be held which must be advertised 45 days in advance of that hearing. Commissioner Regulski moved to set the public hearing for 9:00 a.m. on May 30, 1990. The motion was duly seconded and carried unanimously. The meeting adjourned at 7:08 p.m.