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10/29/2007 CITY COUNCIL WORK SESSION MINUTES CITY OF CLEARWATER October 29, 2007 Present: Frank Hibbard Mayor John Doran Vice-Mayor Carlen Petersen Councilmember George N. Cretekos Councilmember Paul Gibson Councilmember Also present: William B. Horne II City Manager Joe Roseto Interim Assistant City Manager Rod Irwin 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 1:30 p.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. Presentations City of Clearwater’s Wastewater Treatment Plants Receive Three Gold Awards from the National Association of Clean Water Agencies (NACWA). The City was awarded three Gold Awards from the National Association of Clean Water Agencies (NACWA) for Clearwater’s outstanding compliance records. Water Pollution Control Superintendent John Milligan accepted the awards. Financial Services Declare two Vietnam era .223 caliber weapons surplus to the needs of the City and authorize disposal through trade-in to Cole's Gunshop, Dunedin, Florida, a federally licensed dealer. (consent) The trade-in weapons were donated to the City in 1980 for utilization by the Clearwater Police SWAT Team. The SWAT team has not utilized the weapons for over 15 years and does not foresee a future need. The SWAT Team will receive five semi-automatic AR-10 rifles with bi-pod, rails, and scope that will be utilized in their operations. The trade-in weapons cannot be sold to the general public and are tracked by the federal government. The federal government has approved the transfer to Cole's Gunshop, the dealer who originally donated the weapons to the City. This will be a no cost trade. Council Work Session 2007-10-29 1 In response to a question, Purchasing Manager George McKibben said the weapons are valued at $8,000 each. Adopt Resolution 07-28 establishing the intent to reimburse certain Water & Sewer project costs incurred with proceeds of future tax-exempt financing. A Water & Sewer rate study was completed in October 2004 and resulted in the City Council approving 6% rate increases each year for FY 2005 through FY 2009. These rate increases are sufficient to provide for operations, capital projects, and debt service on bonds during this time period. A limited rate study update was completed in September 2007, which identified a need for approximately $191.3 million in capital projects from FY 2007 through FY 2012, with bonds to be issued in FY 2009 for projects costing approximately $66 million and in FY 2010 for projects costing approximately $30.8 million. In addition to the bond proceeds, rate revenues, grants, impact fees and R & R revenues will provide the balance of the project funding. The date of issuance will be determined at a later date based on market conditions. The Water & Sewer fund will be incurring expenses on these projects prior to the issuance of the bonds. This reimbursement resolution will allow for the City to be reimbursed from the Bond proceeds. In the Spring of 2008, a formal Water & Sewer Utility rate study update will be performed by Burton and Associates, Inc. for the purpose of identifying necessary rate changes to be approved for the 4 or 5 years following the last current approved rate increase in FY 2009. The 2007 limited rate study update verified that the approved rate increases for FY 2008 and FY 2009 of 6% each year is sufficient, and annual increases of 6% for several years following FY 2009 would also be sufficient to provide the revenue needed for operations, projects and debt service. Finance Director Margie Simmons said current rate studies are to ensure marketable rates are in place. The operating budget is analyzed prior to proposing rate increases. Adopt Resolution 07-29 establishing the intent to reimburse certain Stormwater project costs incurred with proceeds of future tax-exempt financing. A Stormwater Utility rate study was completed in June 2006 and resulted in the City Council approving annual 6% rate increases in Fiscal Years 2007 through 2011. These rate increases are sufficient to provide for operations, capital projects, and debt service on bonds during this time period. A limited rate study update was completed in September 2007, which identified a need for approximately $63.5 million in capital projects from FY 2007 through FY 2012, with bonds to be issued in FY 2009 for projects costing approximately $17 million and in FY 2011 for projects costing approximately $14.5 million. In addition to the bond proceeds, rate revenues and grants will provide the balance of the project funding. The date of issuance will be determined at a later date based on market conditions. The Stormwater fund will be incurring expenses on these projects prior to the issuance of the bonds. This reimbursement resolution will allow for the City to be reimbursed from the Bond proceeds. In the Spring of 2008, a formal Stormwater Utility rate study update will be performed by Burton and Associates, Inc. for the purpose of identifying necessary rate Council Work Session 2007-10-29 2 changes to be approved for the 2 or 3 years following the last current approved rate increase in FY 2009. The 2007 limited rate study update verified that the approved rate increases for FY 2008 through FY 2011 of 6% each year is sufficient, and annual increases of 6% for several years following FY 2011 would also be sufficient to provide the revenue needed for operations, projects and debt service. In response to a question, Ms. Simmons said staff does not anticipate rate increases beyond the 6% from now until 2011. Public Utilities Amend Appendix A, Division XXV, Section(2)(a) of the Code of Ordinances, changing the amount charged for a fire hydrant to current market rate and pass Ordinance 7885- 07 on first reading. The current codified price for the City of Clearwater to sell a fire hydrant is $775 each. Due to the current code, the City has not recuperated the actual costs of hydrants for years. Fire hydrants are made from cast iron, ductile iron, steel, stainless steel and bronze. The costs of metals fluctuate constantly; therefore the prices of hydrants change often. Though prices change, the need to recover costs remains. The Water Division of the Public Utilities Department purchases fire hydrants annually. The last rate for hydrants purchased was at a staggeringly low cost of $955 each, which will most likely not be seen again; the rate for the prior year’s purchase was $1,102 for each hydrant. This example shows a difference of $147 from one year to the next. The Water Division is not attempting to make a profit on fire hydrants, but requests the latitude to charge back the actual cost of the hydrant to the customer rather than ending with a deficit in supply expenditures every year. The market price stated in the ordinance means the actual price paid for the hydrant used to fulfill the customer’s work order request. There are no costs associated with this item. In response to questions, Public Utilities Director Tracy Mercer said the City currently requires stainless steel fire hydrants as their useful life is estimated to be 25 – 30 years. Developers can place their own hydrants if it meets city requirements. Legal Pass Ordinance 7901-07 on first reading, submitting to the city electors proposed amendments to the City Charter amending Section 2.01(d)(5) to reduce the restriction on the transfer of real property for workforce or affordable housing, and amending Section 2.01(d)(7), allowing the Council at a duly advertised public hearing to grant easements for underground public utilities. Discussion ensued with consensus to add language that limits the transfer of real property for workforce or affordable housing to a one-half acre. Council Work Session 2007-10-29 3 Pass Ordinance 7905-07 on first reading, submitting to the city electors proposed amendments to the City Charter, amending Article IX, Fiscal Management Procedure, deleting the requirement that revenue bonds for projects in excess of $1,000,000 be put to referendum. Concern was expressed that citizens may not understand the difference between revenue bonds and general obligation bonds. Staff will add a “Whereas” clause regarding general obligation bonds. Public Communications Director Doug Matthews detailed how the public would be informed of ballot questions. City Manager Verbal Reports Municipal Marina Rates Analysis The Marina Business Plan was presented to the Council at the October 17, 2007 Council Meeting. At that time, Council directed staff to assess the impact of several changes to the plan: 1) Eliminate the nonresidential commercial slip rate (all commercial will be at the same, lower, commercial residential rate); 2) Revise the commercial slip rate increases for FY09-FY12 from the current proposed 25%, 25%, 10%, 10% to 10%, 10%, 25%, 25%; 3) Bring fuel prices up to average market rate; and 4) Eliminate all fuel discounts except for the $0.20/gallon commercial diesel and $0.11/gallon commercial gasoline. Staff analyzed the original numbers as presented in the business plan and made the following adjustments: The original business plan was prepared prior to the June 1, 2007 10% slip rate increase and this revenue was accidentally omitted from the “Status Quo” financial presentation. The original “status quo” business plan included insufficient funds for CIP – FY08 – 12 was $40,000, $41,600, $43,264, $44,995, and $46,794. This has been increased to the amounts used if all goals met, $40,000, $80,000, $140,000, $140,000, and $140,000 to show a more realistic loss and comparison on the “status quo”. The results of these adjustments is the original status quo Income/Loss was adjusted as follows: FY08 FY09 FY10 FY11 FY12 Original Status Quo ($289,240) ($339,245) ($352,919) ($412,646) ($434,305) 10% slip rate increase $ 89,419 $ 89,419 $ 93,889 $ 93,889 $ 98,583 Increase CIP - ($ 38,400) ($ 96,736) ($ 95,005) ($ 93,206) Updated Status Quo ($199,821) ($288,226) ($355,766) ($413,762) ($428,928) The business plan proposals were added to the updated status quo to achieve the business plan results with all goals met. Council Work Session 2007-10-29 4 Staff then analyzed the annual impacts of the five proposed changes, which are now outlined individually with a description, and the impact on the Income/Loss. 1. Eliminate the nonresidential commercial slip rate (all commercial will be at the same, lower, commercial residential rate). 2. Reverse the commercial slip rate increases for FY09-FY12 from the current proposed 25%, 25%, 10%, and 10% to 10%, 10%, 25%, and 25%. 3. Bring fuel prices up to average market rate. Examples of the impacts are as follows: Diesel: Currently, diesel is marked up by $0.40/gallon from the purchase price that the City pays prior to any discounts provided. In order to get diesel to market price, the City would need to mark it up by approximately $0.71/gallon from the purchase price prior to giving discounts. It would increase the pump price by approximately $.031/gallon. Gasoline:Currently gasoline is marked up by $.40/gallon from the purchase price that the City pays prior to any discounts provided. In order to get gasoline to market price, the City would need to mark it up by approximately $0.57/gallon from the purchase price prior to giving discounts. It would increase the pump price by approximately $.17/gallon. Note: Under the current arrangements of $0.40/gallon mark up and $.027/gallon discount on diesel to commercial tenants, the City is losing funds on each gallon sold. Gross profit ($0.40 mark up less $0.27 discount) $0.13 Less: PILOT 5.5% of sales price ($2.95 x 5.5%) ($0.16) Less: Credit card fee of 2% of sales price $0.06) Loss prior to other operating costs ($0.09) Similarly, under the current arrangements of $0.40/gallon mark up and $0.11/gallon discount on gasoline to commercial tenants, the City is barely making a profit prior to other operating costs (salaries, maintenance, equipment, etc.) Gross profit ($0.40 mark up less $0.11 discount) $0.29 Less: PILOT 5.5% of sales price ($3.26 x 5.5%) ($0.18) Less: Credit card fee of 2% of sales price ($0.07) Profit prior to other operating costs $0.04 4. Eliminate all fuel discounts except for the $0.20/gallon commercial tenant diesel and $0.11/gallon commercial tenant gasoline. The business plan proposed a $0.05/gallon discount for 500 or more gallons of diesel to any boater, a $0.10/gallon discount on diesel for private recreational tenants of the marina and a $0.20/gallon discount for diesel for the commercial tenants of the marina. This proposal eliminates the $0.05 discount and the $0.10 discount and only keeps the $0.20/gallon discount for commercial tenants of the marina. The $0.11/gallon discount on gasoline for commercial tenants remains. Without bringing the rates up to market, this still results in a loss on each gallon of diesel sold to commercial tenants. Council Work Session 2007-10-29 5 Gross profit ($0.40 mark up less $0.20 discount) $ 0.20 Less: PILOT 5.5% of sales price ($2.95 x 5.5%) ($0.16) Less: Credit card fee of 2% of sales price ($0.06) Loss prior to other operating costs ($0.02) 5. Bring recreational resident slip rates up to market rates by the opening of the downtown boat slips in 2010 to $15.75 (resident and nonresident will be at the same rate). This would require a 44% increases in FY08, FY09, and FY10 compared with the original proposal of 15%, 25%, 25%, 25%, 25%. The concern is that recreational users who pay by the foot would be paying and higher slip rate than commercial users when converting the per passenger rate paid by commercial to the per foot rate until the commercial rate increases of 25% in FY11 and FY12. Finance Director Margie Simmons reviewed the Business Plan. Discussion ensued regarding rates for recreational boaters and the timeframe for bringing the Clearwater beach marina up to the downtown marina’s rates. It was remarked that amenities at the two marinas are different and will attract different types of boaters. Consensus was: 1) Eliminate the nonresidential commercial slip rate (all commercial will be at the same, lower, commercial residential rate); 2) Bring fuel prices up to average market rates; 3) Reverse the commercial slip rate increases for FY09- FY12 from the current proposed 25%, 25%, 10%, and 10% to 10%, 10%, 25%, and 25%; 4) Gradually increase recreational slip rates over time; and 5) Staff will run the numbers regarding changing the recreational residential slip rates. Staff was directed to provide thresholds for volume fuel discounts and present these revisions to the FCCMA (Florida City and County Management Association) for their input. Council Discussion Items 2008 Work Session/Council Meeting Calendar Staff requests Council direction regarding known conflicts with the 2008 council meeting schedule: The May 12th Work Session conflicts with the Pinellas Mobility Initiative meeting, which the Mayor attends. Moving this meeting to the morning would be in conflict with the Tampa Bay Regional Planning Council, which Councilmember Petersen attends. Staff recommends this meeting be moved to Tuesday, May 13 at 1:30 p.m. The October 16th Council meeting conflicts with Jazz Holiday opening day. Staff recommends this meeting be moved to Wednesday, October 15 at 6:00 p.m. The November 20th Council meeting conflicts with the Florida League of Cities Legislative Conference. In the past this meeting has been moved to Tuesday and no work session was held. In 2008, the Conference of Mayors' Winter Meeting and FLC Annual Conference do not conflict with the Council meeting schedule. Council Work Session 2007-10-29 6 Consensus was to make the changes recommended by staff. Other Council Action City Attorney Salary AND City Manager Salary Human Resources Director Joe Roseto reviewed salary comparisons for the City Attorney and the City Manager. Discussion ensued with comments that salaries for the City Attorney and City Manager are well below their peers, and that the City would have to pay higher salaries to replace them. The City has attempted to bring their salaries closer to the market average. However, due to budget constraints, it has been difficult to accomplish. Adjourn The meeting adjourned at 3:28 p.m. Council Work Session 2007-10-29 7