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HomeMy WebLinkAboutDocumentation_Regular_Tab 10A_12/10/1998 ~-A rr v E' ~v 7 - oM E M O R A N D U ~; ~, 04 4~ Cp '~ CO To: Village Council From: Thomas G. Bradford, Date: December 1, 1998 Subject: Jupiter Water Rate ~- Village Manager ~ f~ ~~ Dispute; Refund of Rate Increase All matters associated with the Jupiter Water Rate Dispute have now been finalized. Tequesta was successful in overturning the 910 Jupiter rate increase and the Jupiter Town Council has rescinded the Ordinance that adopted the rate on second reading at their meeting on November 17, 1998. All that now remains is the refund of the water rate increase paid by our customers and the interest on the same as was promised at the beginning of this dispute. To date, Tequesta has collected $1,752,615.50 from our customers and held the same in escrow. These funds have been invested with the State Board of Administration, which has paid an average interest rate of 5.44% since these funds were collected in the first quarter of 1995. Detailed records for each account were maintained within the Tequesta computer system. Atypical Tequesta Water System customer having a 5/8 inch meter has paid $7.00 to Tequesta for approximately thirty-three months. The typical customer will therefore receive a $231 refund, plus interest. Tequesta Ordinance No. 529, copy attached, states that ". in the event that the Village of Tequesta is successful in overturning the water rate increase imposed by the Town of Jupiter that increases can be accounted for and refunded to the customer from whom they were paid, subtracting therefrom all administrative and legal costs and attorney's fees extended by the Village relating to Teauesta's endeavors administratively and legally to overturn the water rate increase imposed by the Town of Jupiter,. ." (Emphasis added) M Since the onset of the litigation Tequesta has expended $374,474.83 on legal costs and attorney's fees. A detailed accounting of the administrative costs relative to this issue have not been kept because only reasonable administrative costs are allowed to be sought. I estimate that ten percent of my time was devoted to this specific case. Therefore, $33,000 could be added as administrative costs incurred by the Village in this matter since the beginning of litigation in FY 95/96 for a total $ 407,474.83 eligible to be reimbursed. The retained earnings of the Water Enterprise Fund are such that staff recommends the Village Council not seek to recoup our legal expenses and administrative costs from the escrow funds. Connie Holloman, Finance Director, estimates that as of September 30, 1998, the Water Enterprise Fund had retained earnings of only approximately $200,000, which represents 9% of current operating expenses. The lawsuits with Jupiter and ENCON have significantly impacted the Water Enterprise Fund retained earnings. However, $554,996 will become due to the Fund from interest earned on Bond proceeds to reimburse the Fund for up front costs incurred with the RO Plant and associated projects. If realized, this should provide a minimum retained earnings cushion. Therefore, staff recommends that we refund 100% of the escrow funds, plus 5.44% simple interest. All that remains to be discussed are the details associated with the refund. Staff proposes to send a letter to each customer advising them that the enclosed check represents their escrow money, plus interest. The question to be decided by the Village Council in keeping with previous discussions pertaining to the same, is whether or not you wish to offer the customers the option of donating all or a portion of their escrow funds to the Lighthouse Gallery New Building Fund, the demolition of Tequesta Plaza, or the new Fire-Rescue living quarters for our firefighters and paramedics, or any other viable 501(C)(3) corporation the Village Council wishes to include. The fastest and easiest thing to do is to not include an option for donation. All arrangements have been made with printers, extra checks and envelopes have been ordered and we now await your directions. If approved, we anticipate mailing the refund checks to our customers prior to February 1, 1999. It is requested that the Village Council give us direction in this regard so that we might proceed to make the promised refunds to our customers. TGB/nmh c:\WP80\MyFiles\Village Council\Council 12-1-98-2