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HomeMy WebLinkAboutMinutes_Workshop_06/29/1994VILLAGE OF TEQUESTA Post Office Box 3273 357 Tequesta Drive Tequesta, Florida 33469-0273 (407) 575-6200 Fax: (407) 575-6203 VILLAGE OF TEQUESTA VILLAGE COUNCIL WORKSHOP MEETING MINUTES JUNE 29, 1994 I. II. CALL TO ORDER AND ROLL CALL The Tequesta Village Council held a Workshop Meeting at the Village Hall, 357 Tequesta Drive, Tequesta, Florida, on Wednesday, June 29, 1994. The meeting was called to order at 5:00 P.M. by Mayor Ron T. Mackail. A roll call was taken by Betty Laur, the Recording Secretary. Council members present were: Mayor Ron T. Mackail, Elizabeth A. Schauer, Earl L. Collings, and Joseph N. Capretta. Vice Mayor William E. Burckart arrived at 5:10 P.M. Also in attendance were: Village Manager Thomas G. Bradford, Village Clerk Joann Manganiello, and Department Heads. APPROVAL OF AGENDA Councilmember Collings moved to approve the Agenda as submitted. Councilmember Schauer seconded the motion. The vote on the motion was: Ron T . 1rlackai 1 - for Elizabeth A. Schauer - for Earl L. Collings - for Joseph N. Capretta - for III. The motion was therefore passed and adopted and the Agenda was approved as submitted. REVIEW OF PROPOSED FY 1994-1995 BUDGETS A) Improvement Bond Revenue Fund Village Manager Bradford directed attention to Analysis of Improvement Bond Revenue Fund in the budget document, and explained that currently the Village has two funds to account for revenues and expenditures associated with the Rrcvclyd Panrr Village Council Workshop Meeting Minutes June 29, 1994 Page 2 1979 bond issue. The Improvement Bond Revenue Fund accounts for the pledged revenues for the 1979 issue and all of the expenditures are transfers out to the Improvement Bond Revenue Sinking Fund and to the General Fund. The Sinking Fund was created for the sole purpose of paying the annual debt service payment on the 1979 issue, and will be eliminated since the new bond issue no longer requires a sinking fund. The budget will be changed prior to the July hearings to reflect the deletion of the fund. The Improvement Bond Revenue Fund Analysis as of 10/1 shows fund balance approximately $53,000, estimated revenues approximately 991,000 and estimated expenditures approximately $1,350,000, all of which are transferred, leaving a balance of $40,000. Next year, following the same scenario, the fund balance would be approximately $43,000. Revenues currently pledged for the 1979 debt were paid off with proceeds from the new bond issue. The new pledged revenues will be franchise fees of $240,000 and occupational license fees of $90,620. Utility taxes will no longer be pledged. Annual payment to Jupiter-Tequesta National Bank for repayment of the new bond issue will be approximately $145,000. There will be a surplus in the Improvement Bond Revenue Fund, which will be transferred to the General Fund. The intergovernment revenue funds received monthly from the Department of Revenue will remain constant, since by special law all increases go to Dade County. B) Improvement Bond Revenue Sinking Fund Finance Director Kascavelis explained the Sinking Fund balance reported as of 9/30/94 will be depleted as a result of applying the assets of the fund to redemption of the 1979 series improvement revenue bonds, and the Sinking Fund account will be closed. Village Manager Bradford stated the breakdown of the total debt service cost was shown as $55,000 interest and $90,000 principal and there are no extra annual debt service charges, since this is basically a fixed interest bank loan. Finance Director Kascavelis stated these figures were approximate and would be changed to reflect the true amount of $142,200. C) Water Department Enterprise Fund ` Village Manager Bradford explained the Operations and Village Council Workshop Meeting Minutes June 29, 1994 Page 3 ------------------------ Debt Service Fund Analysis. The estimated revenues for the current fiscal year are $2,400,000 with operating expenditures of $1,834,000, leaving $603,000 revenue in excess of operating expenses. Debt service for this year is $334,000. Surplus that goes into Retained Earnings is therefore $268,000, or a ratio of 1.80. A ratio of 1.25 is required per the 1985 series bond covenants. Finance Director Kascavelis reported these bonds would be paid off in 1996; therefore, 1995 would be the last year the debt service would have to be funded since debt service reserve is already funded for the 1996 payment. Village Manager Bradford summarized next year's figures: Revenues $2,505,900 less Operating Expenditures $1,971,200 equals $534,700 revenue in excess of expenditures; less debt service $336,780, leaving a surplus of $197,920 or a ratio of 1.59. Councilmember Collings questioned why the increase in water revenue had not kept pace with the increase in operating expenses since step rates had been established for water and there had been new connections. Finance Director Kascavelis explained that the 8~ surcharge ($80,000) to Martin County and Palm Beach County previously shown as Water Sales was being transferred to the Improvement Bond Revenue Fund. This had been done beginning in 1993 by direction of the Council to use surcharge revenue for the Village. Councilmember Capretta stated his impression that the profitability of water was going down, not up, and that enough should be charged for water so that the profit figure would rise. With this figure rising every year, a surplus could be built up so that when a capital expenditure was necessary the surplus could be used to reduce the amount necessary to borrow. Councilmember Capretta stated the strategy he wanted followed: Start at the present and establish a time line to the year reverse osmosis is expected. Increase water rates gradually along this line to minimize impact to the community and to build a surplus that will reduce the amount necessary to borrow and then will pay the debt service plus current expenses. In response to Councilmember Collings question, Mayor Mackail brought attention to the fact that approximately two years ago the Council had considered tier leveling for water ,~. charges and but gone with a lower rate, and asked that - Village Council Workshop Meeting Minutes June 29, 1994 Page 4 ------------------------ those files be revisited to refresh the Council's memory as to the exact procedure that was recommended at that time, and that the Council consider establishing that procedure now. Councilman Capretta stated everyone using over 30,000 gallons should pay double or triple rates. Village Manager Bradford stated there is approximately $2,000,000 in Retained Earnings which is being used to fund current capital projects rather than being saved to apply towards future reverse osmosis debt. Tom Hall, Water System Manager, reported that upon implementation of reverse osmosis the average customer using 20,000 gallons or less could expect a $7.10 per month increase. Vice Mayor Burckart stated his position that reverse osmosis would not have to be instituted since the Village could probably strike a deal with Jupiter to purchase more water from them. Councilman Capretta agreed, but stated by this method the date could be pushed farther into the future and rates still needed to be gradually raised to build a surplus. The Council then discussed water company expenses. Village Manager Bradford stated the expenses were broken down into three categories: Pumping & Storage, Distribution, and Administration. Councilmember Collings pointed out Personal Services were up by 21$ above last year and with only 2.5% attributed to COLA and 2.5~ attributed to merit increases, and questioned what other items were in the 21~. Water System Manager Hall responded those items were workers compensation increases, health insurance, and increased overtime allowances, and reported that employees received pay equal to or better than most other utilities in the county. Councilmember Collings felt the Council should be aware that most cities in Florida no longer pay for family coverage for health insurance, and only a few pay a fraction of the family coverage, and that many cities had dropped COLA and were giving only merit raises. Finance Director Kascavelis responded to Mayor Mackail's question that the amount of deductible an employee would pay was $100, the amount of deductible under family coverage was $200 per person, and the plan has 80/20 coinsurance up to $2500, then everything is paid 100. City Manager Bradford responded to Councilmember Collings that the criteria used to determine merit increases was that a person who was not topped out was eligible for a Village Council Workshop Meeting Minutes June 29, 1994 Page 5 zero to 5~ merit pay increase on their anniversary date, hence the 2.5% average, and the actual amount was determined by their performance rating as determined by a 10-point rating schedule. Councilmember Capretta stated he favored getting rid of COLA and giving the manager an amount to distribute among employees in the form of salary increases, but that the manager would be required to give the non-performing employees, possibly 10~, zero so that there would be enough money in the fund to properly reward the performing employees. Councilmember Capretta stated businesses are cutting staffs with the bulk of work being done by temporary or contract workers. Councilmember Capretta stated he would like a proposal from the Water System Manager with a proposed price increase recommended to maintain a profit. He stated the Council should pick a profit margin number and the water system manager should maintain that margin by controlling costs, and if that cannot be done the water system manager should request that the Council institute a price increase. Councilmember Collings stated the operating expenses have been level while administration has gone up. Mayor Mackail asked if Councilmember Capretta was suggesting revisiting COLA versus merit increases to look at the impact on the budget, and the answer was affirmative. Councilmember Capretta stated he believed the policy should be to minimize COLA and maximize merit increases. Councilmember Collings voiced his concern with Tequesta's image of raising taxes, and stated when increasing wages by 5~ the taxpayer's expenditure was really increased by 7-1/2$ because benefits cost roughly 50~ of the salary. Water System Manager Hall stated that during the budget meeting process it had become apparent that the debt service ratio had come down and that it was time to ask guidance from the Council for a rate increase and the margin that needs to be maintained. Village Manager Bradford stated if the Council agrees with the strategy voiced by Councilmember Capretta, reverse osmosis would have to be put off and use savings for expenses when our debt ends in FY 1996 because there is not enough time to build a surplus between now and the estimated date reverse osmosis would be necessary. The law also says Village Council Workshop Meeting Minutes June 29, 1994 Page 6 ------------------------------- when the treatment facility to be under design. If even regulatory agencies can ask expansion and if we are not connections to the water completed. reaches 80~ capacity we are for one day we reach 90~ the if we are underway with new they will not allow any new system until expansion is Mayor Mackail summarized the direction to staff: Revisit the tier levels that were proposed approximately two years ago, move 30,000 to 20,000 gallons, go back into debt service assuming RO in the year 2005. Councilmember Collings stated staff should tell the Council what they recommend in terms of the tiers and whether looking down the road at the necessity of RO is real. Village Manager Bradford stated we are due for re-permitting of existing allocations with the South Florida Water Management District in 1995. The status of new wells is: Well 25 is now being drilled, easement has been received for Well 27, and most of the construction would take place on Well 26 in 1996. Councilmember Collings questioned whether South Florida Water Management has the ability to mandate our water utility out of business. Village Manager Bradford replied he felt they could but probably would not, and that Jupiter now has higher demand and wants us to get totally off their system in order to free up 1-1/2 million gallons a day or they will start charging us just like we were a retail customer. Councilmember Capretta stated we still want to delay RO as long as possible to use up water we have, wait until technology is better, and allow time to build a reserve, and that we should buy from Jupiter even though they raise prices and should fight the increases. Councilmember Collings questioned what the average household pays for water in other communities, and asked Water System Manager Hall to obtain this information. During discussion of the Capital Improvement Program, Village Manager Bradford asked the Council to be aware that part of the cost of 1995 is rollover cost since the proposed garage was not built. Other proposed capital improvements discussed were backflow preventer software, confined space entry equipment required by OSHA, facilities assessment to pay for architects' analysis of municipal facilities to bring them up to code, distribution improvements, and water system modeling, LLB, ~ Village Council Workshop Meeting June 29, 1994 Page 7 Minutes which is an analysis of the distribution network to show where deficiencies exist as to undersize or oversize lines. Councilmember Capretta suggested also using the modeling to analyze the area consisting of those customers that Jupiter might purchase. In answer to a question by Councilmember Collings Water System Manager Hall stated pipes throughout the system were a/c pipe, iron and PVC, of which none were environmentally sensitive except that a/c pipe did contain asbestos fibers but was concrete lined so that there was no hazard except when pipe was cut. He stated this pipe was thoroughly tested annually and the pipes were absolutely safe for drinking water. Councilmember Capretta recapped the strategy being recommended to the Council: A ten million dollar strategy to put in 5 RO wells to give 4 million gallons of water a day and make Tequesta completely independent by 1999. In response to Councilmember Collings question, Water System Manager Hall responded that the cost to get our own water to the customer is $1.83 and the cost to get water purchased from Jupiter to the customer is $2.50. $25,000 was included in the 1995 budget for the RO preliminary engineering. Water System Manager Hall explained the chart distributed to the Council which showed that additional water facilities should be under construction by 1996. Councilmember Capretta suggested raising rates and pushing conservation to reduce water usage. Mr. Hall suggested cost sharing with South Florida Water Management in installing moisture sensors on every irrigation system in the water system. Village Manager Bradford voiced concern that raising water rates would result in lost revenue because people would use less water, however, Councilman Capretta stated that would allow more time before R0. VI. ADJOURNMENT Councilmember Capretta moved that the meeting be adjourned. Councilmember Schauer seconded the motion. The vote on the motion was: ~:.:: Village Council Workshop Meeting Minutes "~ June 29, 1994 Page 8 ------------------------------- Ron T. Mackail - for William E. Burckart - for Elizabeth A. Schauer - for Earl L. Collings - for Joseph N. Capretta - for The motion was therefore passed and adopted and the meeting was adjourned at 6:48 P.M. Respectfully submitted, Betty our Recording Secretary ATTEST: ,:.y,_~- J ann Mangani to Village Clerk DATE APPROVED: -Q.... /~ . /y'9f