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06/08/1998FISCAL REVIEW COMMITTEE MEETING CITY OF CLEARWATER June 8, 1998 Present: Daniel Fleck Chair Carol Warren Committee Member Richard Lynch Committee Member Jean Stuart Committee Member Keith A. Bush Public Works Controller Rich Baier Public Works Administrator Tina Wilson Budget Director Brenda Moses Board Reporter Absent: Daniel Moran Committee Member The Chair called the meeting to order at 7:42 a.m. in the Engineering Department conference room at the Municipal Services Building. To provide continuity for research, the items were not necessarily discussed in order. Stormwater Utility Rates Public Works Administrator Rich Baier said $100 million of projects are necessary to alleviate flooding that occurs at a more frequent interval than a 20-year storm, over structures, bridges, and roadways throughout the City. Minimal stormwater revenue will be obtained from the IMR (Information Management Resources) purchase of the “Annex Site”, Drew Street Apartments, and redevelopment of the Sunshine Mall. Under current conditions, funding all system costs, including a $30 million CIP (Capital Improvement Program), would require raising stormwater fees by the end of 2003 from $3.00 to $4.76 per month per household. Factored into these rate increase proposals are approximately $100,000 a year in Pinellas County School Board fees that will no longer be provided to the City. Suggested rate increase scenarios are based on: 1) a “no growth” assumption; 2) wage inflation at 5.5% annually, other costs of 3%, 3) current interest earnings at 5.5%, scaling down to 3.5% by the end of the 5-year period: and 4) borrowing at 6% for 30 years, using annual issues of revenue bonds. Of $3.2 million in stormwater utility fees, approximately $2.7 million funds personnel, equipment, and capital expenditures. In 1991, the former City Commission made a decision to shift costs from the General Fund into the stormwater utility fund to prevent a tax increase. At that time, it was anticipated sufficient annual revenue would be left in the fund for other necessary projects. Since the inception of stormwater utility fees, only 4 capital improvement projects have been completed due to limited funds. In response to a question, Mr. Baier said Robert Lockridge of Burton & Associates has suggested incorporating an upfront aggregate of funds in 1999, and a bond issue on a levelized basis. The Commission has indicated their preference to implement a levelized scenario, with a higher first year increase. Implementing a higher first year rate increase and generating more upfront cash provides for lower increases in later years. Mr. Baier reviewed a list of CIP priority projects planned for FY 1999 - FY 2003. In response to a question, he said no funding exists for these projects. Stormwater utility rate increases will facilitate their construction. At the end of 5 years, it will be necessary to tackle how to cover additional projects. In response to a question, Budget Director Tina Wilson said Penny for Pinellas dollars were to fund the $50 million downtown pond. At that time, construction of a new Main Library, a new Memorial Causeway Bridge, and other projects were not being considered. It was remarked it is important for residents to see some of the “invisible” projects, such as stormwater drainage, being done throughout the City in order to appreciate where their money is being spent. Clearwater has not had an ad valorem tax increase for approximately 8 years. The County and the School Board have increased taxes. In response to a question, Ms. Wilson said it has not been determined if a real estate tax will be necessary if increases are approved for water and sewer service and the stormwater utility system. A Solid Waste rate increase was implemented earlier this year. It was remarked if the City’s infrastructure falls apart, there is a possibility One City. One Future. could be significantly affected. No one wants to visit an area of flooded ponds, streets, or neighborhoods. Mr. Baier said stormwater utility fees are critical to solving those infrastructure problems. In response to a question, Ms. Wilson said if this committee votes for a stormwater utility rate increase that is approved by the Commission, and the priority project list changes, those changes $500,000 or over to a single new project requires a public hearing. It was questioned how rate increases will impact businesses. In response to a question, Mr. Baier said the 5 alternate rate scenarios vary depending upon the amount of the first year increase. Discussion ensued regarding how the City arrived at the flat $3.00 monthly stormwater rate currently being charged single family households. He reviewed monthly stormwater utility rates in other cities similar to Clearwater’s population. It was remarked a $20 yearly increase is a major increase to the City’s retirees. Better communication is necessary to explain the benefits of the increases. It was remarked that no publicity is given to the many projects that are completed under budget and on time. It was suggested prior to implementation of any rate increases, the City explain to the public the benefit of studies done by consultants. It was remarked that many people do not realize how improvements made in one area of the City benefit the entire City. In response to a question, Mr. Baier said recent improvements have been made to Stevenson’s Creek, but it has not been dredged since the 1960’s. It was suggested at the next Worksession, for the benefit of the public, staff cite specific projects that will positively impact, or have positively impacted, the City. It was suggested using bill stuffers and Clearwater Magazine to inform the public of rate increases by dollar amount. Member Warren moved to recommend the Commission consider a stormwater utility system rate increase of $3 to $4 in 1999; thereafter a percentage of 4.3% annually. The recommendation includes additional information with regard to the impact of businesses be considered in their decision process. In response to a question, Mr. Baier said the suggested rate increase includes an indexing factor. The motion was duly seconded and carried unanimously. Consensus was for Chair Fleck to attend the next Commission meeting to reiterate the motion. It was remarked this committee has made recommendations based on information provided by staff. Ms. Wilson said that is why it is important to hire objective, outside consultants to provide information that this committee and other City advisory and regulatory boards can utilize prior to making recommendations to the Commission. The meeting adjourned at 9:33 a.m.