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HomeMy WebLinkAboutMinutes - 8/31/2009 - Finance and Personnel Committee FINANCE AND PERSONNEL COMMITTEE MEETING � Monday,August 31,2009 Aldermen's Conference Room, 6:30 p.m. In Attendance: Committee Members: Chairman Alderman Murgatroyd, Alderman Schaefer and Alderman Wimmer. Absent: None. Also in Attendance: City Administrator Ma�ceiner, Director of Finance Black, Director of Public Works Schmitt, City Attorney McArdle and City Clerk Jones. Also in Attendance: Mr. James Ernst, 3109 Bretons Drive, McHenry, Illinois Chairman Alderman Murgatroyd called the meeting to order at 6:30 p.m. City Attornay McArdle arrived at 7:15 p.m. Discussion Re�arding Utilitv Bill Discreuancv Finance Directcr Black informed the Committee that in 2001 the City terminated its contract with Nicor Gas for utility meter reading. The City then purchased software and hired additional personnel to implement a plaxi to begin reading meter remotely using radio frequency. At that time, a meter change- out program be;an to replace existing meters and outside reading devices with new meters and remote reading equipment. Director Black noted tha.t the City expects to complete the change-out program during the 200u/2010 fiscal year with the replacement of 300 remaining meters. Director Black noted Director of Public Works Schmitt was in attendance and would answer any technical questions. �, Director Black informed the Committee that, during the change-out program, discrepancies were occasionally discovered between the water meter(on the inside of the dwelling)and the meter reader(on the outside of the dwelling). As a result, Council passed a resolution in 2002 establishing a policy for dealing with discrepancies in an equitable manner. The meter at 3109 Bretons Drive, residence of Mr. James Ernst was replaced in December 2008. A discrepancy was discovered between the meter register (inside) and the display (outside) resulting in a charge to Mr. Ernst, in the amount of $89025, for consumption which appears to not have been previously billed. The discrepancy suggests that the outside display had been malfunctioning for a number of yeaxs. Finance Depamnent personnel applied the policy esta.blished in 2002, which has been applied in the past to address similar situations with other water customers. According to the policy, customers who have occupied the building more than 24-months are responsible for water usage based on 75% of the difference between the inside meter and the outside reader. Following review of the usage pattern, and, due to the size of the discrepancy in Mr. Ernst's case, Staff discounted the bill attributa.ble to the discrepancy by more than 25%. Director Black noted this step was taken, prior to an inquiry from Mr. Ernst, to account for changes in water/sewer rates over time. T`his is done infrequently, but was deemed fair under the existing circumstances. Director Black stated that additional efforts were made by Staff to address Mr. Ernst's concems including: • The Water Division submitted Mr. Ernst's meter to the Finance Department so the meter reading could be verified; � • Staff investigated the possible causes for the size of the discrepancy; and Finance and Personnel Committee Meeting `-- August 31, 20�)9 Page 2 • The City offered to accept payments over a 3-year period for the $499.23 that has been determined to be due. Director Black stated that Staff has properly applied the policy established in 2002 to address discrepancies between the water meter and outside readers. The adjustments made to Mr. Ernst's water/sewer bill have been made in a manner consistent with how other customers have been treated under similar circumstances since the establishment of the policy. Mr. Emst addressed the Committee. He thanked the Committee, City Administrator Maxeiner and Director Black for the time they have invested in addressing this matter. Mr. Ernst stated he does not disagree with any of the information presented by Director Black. In addition to being presented with a bill in the sum of nearly $500.00, he expressed concern about the inaccuracy of sc�me of the information he has been provided. Ms. Gurrie of the Finance Department told him the meter/rf:ader had been malfunctioning for 10-yea.rs, Mr. Black told him the malfunction had taken place over a 15-year period. Mr. Ernst informed the Cornmittee that prior to replacement of the meter in 2008 the meter}►ad been at the premises for the entire time he had owned the properry,21 years. Mr. Ernst informed the Committee that he has been told that replacement of the e�rterior reader is recommended every 10 years. He inquired why the e�cterior reader was not replaced at an earlier da.te. Director Schmitt stated that the 10-year replacement is not a manufacturer recommendation but was a �. number chosen by Staff when the change-out was initiated. Mr. Ernst expressed exasperation that the City would submit a bill to anyone when it is unclear whether the meter was malfunctioning over a 10-year period or a 15-year period. Regarding his efforts to resolve the matter Mr. Ernst referred to his letter to City Administrator poug Maaceiner, dated February 6,2009. City Administrator Maa�einer provided the Committee with a written diagram explaining how a series of malfunctions could occur between the inside meter and the outside reader. Responding to an inquiry from the Committee, City Administrator M�einer stated the change-out was initiated in older neighborhoods, where a chance��f malfunction was most likely,and has nearly been completed throughout the City. Responding to an inquiry from the Committee, City Administrator Maxeiner explained that following a lengthy correspandence Mr. Ernst determined he was not satisfied with the policy alternatives offered by Staff and inquired about whether there was an appea.l process to bring closure to this matter. Chairman Alderman Murgatroyd explained that the Water Sewer Fund is a stand alone fund not a profit- generating fund, which is why the City is making an effort to recoup the revenue from the discrepancies presented by the change-out. Mr. Ernst stated that he appreciates the attention that the Committee and Staff has given to this matter,but continues to be disturbed by how they City arrived at the amount it has determined he owes. He requested that if the amount of nearly$500.00 should stand that he be provided with detailed information regarding how the amount was determined. City Administrator Maxeiner informed the Committee that while Staff is confident in the amount of water that was used, Staff is unaware of the rate of usage. He � noted that due to weaxher and other factors usage can fluctuate. Finance and Personnel Committee Meeting `-- August 31, 2G09 Page 3 Director Black informed the Committee that Staff went back through 10 years of reads. There were no red flags, no spikes or declines in patterns of use; the reader was moving continuously. He opined that the mechanism could have been malfunctioning from the beginning. Chairman Alderman Murgatroyd sta.ted that the City is making every effort to be fair and everyone is clear regarding the facts. He asked Mr. Ernst what he deemed to be a fair amount. Mr. Ernst stated he would like to give the matter some consideration. It was the consensus of the Committee that Mr. Emst should be given time to consider an amount he feels is equita,ble to resolve the matter and provide the information to City Administrator Maxeiner and Director Black by September 4, 2009. Pr000sed Finance Policies Director Black informed the Committee that financial policies, whether formal or informal, establish the groundwork for the City's financial decision making, identify acceptable or unaccepta.ble courses of action, and est�iblish parameters in which the government can operate. In practice, policies should provide guidance for our annual budget process and shauld be used as a planning tool to assure long-terrn financial stability. Additionally, he noted that establishing policies is an action the bond rating agencies view as one ind�cator of good fiscal management. � Director Black stated that municipalities create financial policies to govern a number of functions including: • Operat'vig budget; • Revenues and expenditures; • Reserves; • Debt management; • Capital improvements; and • Investments. Director Black �ioted that the City established investment and capital improvement policies in 1999 and 2002, respectivcly. For that reason, the policy presented this evening only addresses the areas of operating budge�and expenses,fund reserves and debt management. Director Black informed the Committee that Staff has developed the policies for the essential functional areas. The common goal for each of the policies is brevity and being general in nature to limit the policies from being overly complicated or restrictive. As with all policies, Director Black encouraged that the policies be updated periodically to reflect changes in conditions. Director Black stated that Staff is seeking direction from the Committee regarding the content of the financial policies. He noted that most of the policies have a broader orientation and reflect common sense practices the City cunently follows. He stated the area. that will require the most analysis is the fund reserve policy for the General Fund. He stressed the importance of establishing a specific percentage which should be held in reserve,which would be sufficient to maintain financial stability and, as such,the City will take the necessary measures to maintain. � Finance and Personnel Cammittee Meeting �- August 31, 20(9 Page 4 A discussion ensued. Chairman Alderman Murgatroyd encouraged a General Fund Balance higher than 15%. He opined he would be more comfortable if the amourrt is 25%. Motion by Wimmer, seconded by Schaefer, to direct Staff to present the City of McHeruy Financial Policies to City Council for consideration and/or approval, conditioned upon a change in the amount from 15%to 20%under Fund Reserve Policies in reference to the General Fund. Aye: Murgatroyd, Schaefer,Wimmer. Nay: None. Absent: None. Motion carried. New Business No new business was discussed. Adiournment Motion by Wim�ner, seconded by Schaefer,to adjourn the meeting at 7:28 p.m. Aye: Murgatroyd, Schaefer,Wimmer. Nay: None. Absent: None. Motion carried. � Respectfully submitted, � ,r,� � �Z._ _ Steven C. Murgatroyd, Chaii an �