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HomeMy WebLinkAboutMinutes - 1/20/1997 - Finance and Personnel Committee (3) � FINANCE COMMITTEE MINUTES January 20, 1997 Members Present: Chairman Lawson, Bill Baird Others Present: Mayor Cuda, City Clerk Althoff, Alderman Bolger, Director of Building and Zoning Lobaito, Director of Public Works Batt, Bond Consultant Harold Warren. Alderman Bates arrived at 8:30 P.M. Chairman Alderman Lawson called the meeting to order at 7:34 P.M. SOUTH WASTEWATER TREATMENT PLANT BOND FINANCING Chairman Lawson informed the committee the purpose of this evening's meeting was to determine the bonding amount for the South Wastewater Treatment Plant's � expansion. Bond Consultant Harold Warren was in attendance and reviewed five debt retirement schedules at 53.6, 52.9, 52.6, $2.0 and S 1 .6 million dollars. Some discussion followed as to whether Mr. Warren's original operating revenue figures included capital development funds and whether operating expenses excluded capital expenditures. A comparison of these figures and the City's in- house water and sewer income and expense statement was made. Director of Public Works Batt noted Capital Development rates should be increased in the very near future to reflect engineering costs as well as inflationary costs. Further discussion took place regarding what percentage of Capital Development Funds should be used to defray the total cost of this project and bonding amount. Director of Public Works also informed the committee that funds needed to be reserved for the construction of an elevated storage tank and two new wells. He explained that the new wells would replace Well #1 located at the City's Public Works garage. This well is currently not in operation due to the removal of the underground fuel storage tanks and possible contamination. Capital Development Funds should technically not be used for this type of project as the wells are replacements for existing water users and not required for growth due to new development. Director Batt also noted the treatment plant could continue operating if well #1 were abandoned, however the plant itself would still have to be rebuilt and updated. �.- Finance Committee Minutes � January 20, 1997 Page Two SOUTH WASTEWATER TREATMENT PLANT (contl Some discussion followed regarding the Central Wastewater Treatment Plant's current capacity. Director Batt noted additional land will be required to expand the Central Wastewater Treatment Plant. Director Batt also noted if council wished to pursue the purchase of the McHenry Shores Water Company additional funds should be reserved for it's purchase as well as for operational improvements and costs. Wells #5 and #6 also need to be cleaned to provide higher water capacity. In the event of need, water well #1 coufd be activated, however it should be a last resort consideration. The committee also discussed the possibility of an increase in water/sewer rates. The committee considered decreasing capital expenditures this fiscal year and considering a rate increase in 1998-99. Director of Public Works Batt also noted the City of McHenry will no longer be able to pump city water to McHenry Shores residents in the event of an emergency because of the nonoperational status of Well #1 . Further discussion continued `, regarding the feasibility of upgrading McHenry Shores Water Company wells and plant rather than the Well #1 plant. Director Batt estimated the cost of a new well would be approximately $1 ,500,000 and a new storage tower 5750,000. The committee noted 52,000,000 could be utilized for the South Wastewater Treatment Plant's expansion from the Capital Development Fund leaving a balance of 5400,000. The fund will be replenished with additional capital development fees during the next fiscal year as well as reimbursements for expenses incurred with regard to the East of the River Sanitary Sewer Extension project prior to the sale of bonds. Mayor Cuda also informed the committee that absolutely no negotiations have or are occurring regarding the purchase of McHenry Shores Water Company. A new trial date for the continuance of the civil suit against McHenry Shores Water Company has been scheduled for February 19, 1997. It was the committee's consensus to review the current capital development fee rate and increase the rates to reflect a more realistic cost figure. Alderman Bates arrived at 8:30 P.M. The discussion continued regarding how much monies should be allocated to the � South Wastewater Treatment Plant from the Capital Development Fund and to Finance Committee Minutes � January 20, 1997 Page Three SOUTH WASTEWATER TREATMENT PLANT (contl increase the current capital development fund fees. Director of Building and Zoning Lobaito recommended council consider eliminating the current number of bedroom rate schedule and charge just an average rate per home and/or multi-family unit. The capital development fee increase could be reviewed as part of the council's budget discussions. Director Lobaito also suggested a yearly CPI average be built into the fee schedule as per council action with regard to the developer donation fee schedules. Further discussion continued regarding the bonding amount for the South Wastewater Treatment Plant expansion. Motion by Baird, seconded by Lawson, to recommend a 51 ,600,000 bonding amount for the expansion of the South Wastewater Treatment Plant and 53,600,000 for the East of the River Sanitary Sewer Extension for a total bonding amount of 55,200,000 subject to the use of 52,000,000 of Capital Development � monies to offset the 53,600,000 estimated cost of the South Wastewater Treatment Plant expansion. Voting Aye: Baird, Lawson Voting Nay: None Absent: Locke Motion carried. DEBT SERVICE DISCUSSION Director of Public Works Batt presented a brief history of the debt service charge origination, (attached). He noted approximately 5264,000 was generated by the 53.00/month debt charge. If the debt charge were to be eliminated council would have to create an alternative income source. Alderman Bolger recommended a decrease in capital expenditures be considered. Aldelrman Bolger stated the debt service charge was an unfair assessment as it was to pay for new development. A lengthy discussion ensued. � Alderman Baird suggested the debt service charge remain in place until 2006 when the original bond issue is paid off and a reevaluation of the current rate structure be conducted at that time. Finance Committee Minutes January 20, 1997 Page Four �. Motion by Baird, seconded by Lawson, to adjourn the meeting at 9:25 P.M. Voting Aye: Baird, Lawson, Locke Voting Nay: None Absent: None Motion carried. The meeting was adjourned at 9:25 P.M. Respectfully submitted, , ,` )�,�-�, � David Lawson, Finance Chairman � �'