Common Council - Regular Meeting

Okay, we're going to go ahead and call this uh committee meeting of the public works committee to order. Um I show committee in in attendance, Eric Marshall and Mike Klein. Okay. So, we are going to the purpose of the meeting was to discuss the um proposed rate increase by Marian Utilities and to go through some of that information. Um, everybody should have gotten a shared file folder with all the documents that were requested by the mayor. I do see the mayor here. Um, okay, Eric, did you have a chance to look at those? And Mike, you said you looked at some of them.

Okay. Um Robin, if you want to come up and Mayor, did you have some questions as well? Do we want them to just run through the some of the Okay. Um why don't we start with looking at um Are you able to pull those files up? Do we need to You can do all that. Okay. That way we can show them.

Okay, that's fine. Um, Robin, can you give us an update of where our where we are statuswise? I know that the IURC had to be notified when the original ordinance was vetoed and um and then if we can talk timeline for what next steps need to happen. Yeah. So, we were up against a a deadline of the end of 2025 per some of the agreements uh with the previous ordinance and the previous rate case. So, um when the the veto was announced, we let the folks know um the IURC and our lender only

our lender only. We we informed the lender, which is the SRF group, the state revolving fund group. So, um then they wanted to know what was was going to happen next. Um we told them about the January 6th meeting. So, following the January 6th meeting, just kind of as a matter of standard protocol, then we reached out to them immediately to let them know, hey, this is this is how that happened. Um the veto was upheld and uh to let them know what next steps are. So, um, it's our understanding that the SRF is in the process of sending a letter or I don't believe that we've retain.

They have retained counsel and they're sending us a letter um that is informing us about the million-doll penalty um from the grant part of the previous rate case. And then the expectation at least there's an understanding that there will also be an expectation that we um cover the cost of that council for the investigation. So we we have not received that letter yet. I don't know if the city has received that letter yet. Um I know with the holiday yesterday, we were curious to see when that was actually going to show up, but um the SRF is is putting some significant pressure on us. and by us, you guys and the utility, the city and the utility um for the agreement that we had in the prior re case. And so that agreement um if you can do a brief overview that was that we would relook at rates at the time frame that we did. Is that correct? Or they had to be reviewed and then resubmitted. Well, we need to maintain that 125% coverage for our debt service, right?

And that's that's where our rates are in danger because um we are not able to sustain that into 2026. And so that's that's the reason why we're requesting this this rate case. Okay. And so the loan that was taken out from wastewater is not considered to be stably covering that 125% 125% or well that's a that's a temporary solution but those funds are earmarked for long-term control plan projects on wastewater side. So that money has to be returned. So that's a that's a shortterm that's it's a band-aid not a cure.

Correct. Um but they don't consider that to be anything that adds to our debt service. Okay. So it essentially it it deepens the whole Okay. And obviously they're not here to talk to us to tell us what their thought process is or That's correct. I'm assuming that the letter will be kind of the first action for that. But okay,

that's that's what's got us in the the time crunch that we're in. And so there there is a sense of urgency um that we do the best that we can to come to a place of agreement on a rate increase as quickly as possible. You know, I there have been a lot of issues that we've talked about over the last several weeks, and we're happy to continue that discussion going forward as much as possible, but I feel like there's almost two separate things here because uh we are up against this this timeline. Um and the penalties are pretty significant moving forward.

Okay. Um, so of the to kind of take us back to where we can all be on the same page. The original proposal was we had a rate increase that was uh passed in for starting in 2023. And then that rate increase included a was it a threeprong rate where we it was a five-stage process or five phases. The first one was implemented the fall of 2023. Okay. The second one was implemented January 1 of 25. Phase three was implemented January one of this year.

Okay. With the subsequent phases January one of the next two years. So 27 and 28. Okay. Um and in doing so that percentage we're still looking at an additional percentage that has already been approved and will happen if we do nothing else through 2028. That's correct because the prior rate case already approved the the fivephase process. Okay. Which would get us to a point which I believe is around 15% over this year's rates. Okay. So, of the original proposal that we were looking at at the end of last year, there was a number that was 44%. That's correct.

Of that 44%, the amount that's approved through 2028 is already a portion of that 44%. That is correct. And that was roughly 26% overall, including this year. About 25 about 25 25 over what was already approved. So then that doing my math that left us in we were looking at actually a 19% increase over that approximately. Approximately. Yes. I'm using whole numbers instead of all the little minor numbers in there. Understood. Yes. Um and then we pulled a percentage of that back for the pilot amount.

Right. Because the 44% did include consideration for pilot in the amount of roughly 265,000 a year that would go to the city. Okay. So what the the proposal last year was given was to accelerate the the next three phases the one for 26 27 and 28 to combined it into 26. Well 26 is already in in place. Okay. So it would accelerate 27 and 28 and then the additional roughly 19 20% on top of that. Okay. So that's where we would have roughly 30% increase

overall from this year's rates. It would be closer to the 40. Okay. Yeah. Okay. Trying to get all my math going. Um, and that would include the amount that we need to get to to get to the 125% coverage for the bond for SRF. Yes. That would get us to a point where we believe we would be whole in moving forward. Okay. Um, at least for the immediate future. I mean, all of these things are in motion.

Okay. Um now I know the mayor asked for um to look at each individual budget year that was as a part of that study. So 23, 24, 25 and then 26. Um the documents we got included those budgets as well as the what I see is called budget reconciliation. Um and my understanding is the budget is the numbers that were projected for that year like a normal budget and the reconciliation is what was actually spent in the proper line item areas. So the year end total

essentially. Yes. That's just kind of a practice that our board has asked for. Um that's not something that state board of accounts requires us to do.

Um it's just to help us see and then it also helps us with part of the planning process for the next budget year. Okay. Um, are you good so far on that? You too. Okay. Um, and then was there at what point in those budgets and then the and then the year end reconciliation did we start seeing the the negative numbers uh where the revenues were not covering expenses. Are you looking at can Tiffany help with that or

Yeah, these guys can can certainly chime in here on this, but but I know that we've been spending down our reserves since probably 2016. Um it's it's been a long period of time where we have continued to cover additional operating expenses since that time with the reserves. Um, and the way that we made things work was to not complete capital improvement projects in that process. And that's where that money probably should have have been spent at the time. Okay. And do you have a capital um improvement plan project plan five 10 years out?

Yes. Uh, we keep a fiveyear capital improvement plan. I've got a copy of our current one here. Okay. um that I'm happy to share or we can send that on into the share file as you would prefer. Um yeah, why don't we put it into the share file? Okay, we can do that.

Okay, so committee, where do we want to start from here? Where's the best What are your guys's thought on do we want to look year to year? I know the mayor intended to do an independent study. Were we running was it Baker and Tilly was going to run it? Um to run the numbers as well just to to see for um for um the city's purposes just to kind of independently run it and see if we they come up with the same projections. Um,

for me, and some people may call this overly simple, two parts. What needs to happen to keep the wolves happy at the door without mercilessly pounding our rateayers? And then longer term, especially especially at least and especially for budgets, how do utility people, city council people, the executive branch people work together to keep this nonsense from happening again? So, um, your first question again

is what needs to happen and I presume it's as quickly as possible based on what you said earlier

to keep the wolves are at the door. How do we keep them happy without mercilessly pounding the rateayers? So, if we are able to move forward with an ordinance um similar to what we proposed here recently, as quickly as possible, and by as quickly as possible, if it is at all feasible to present a first reading of that on February the 3 and accelerate second reading and potentially suspend the rules on February the 17th to get that accomplished, that would essentially put the fire out for this moment. Okay, that's that's prec and that's good. What numbers come to mind? Percentages or whatever. Well, we are basing

that's what we're going to have to deal with,

right? I mean, the numbers that we have already presented to you guys are the numbers that we have run. Jennifer is trueing things up based on end of year for 2025. But, but essentially, it's it's going to be a very a number similar to what you've already heard. And then the second thing, how do we make adjustments moving forward? I I think increase communication. I think, you know, as you guys supply three folks to our board and the mayor supplies four folk f four people to our board, um there's always an opportunity for that influence to come in uh because they're the ones who are making those final decisions. And so I think perhaps just some added visibility on both sides uh is is the way to get that accomplished. So, what do we need to do to question one? I mean, the rate study is good. I'm not discounting that at all, but we're talking a lot. We're not doing a hell of a lot.

In in my opinion, if if we could get to a place tonight, and I assume that's what you're asking for is my opinion. If we could get to a place tonight where we could say that 40% or that Jennifer has that exact number, but the number that we had previously agreed upon, if if we could move forward with that, assuming that Baker Tilly comes back and says we don't see any problems with that, and then draft an an ordinance for February the 3, that would be my recommendation. Eric, did you have any?

Okay. So, you're basically just saying you're you're going to decrease your ask by 4%. Well, that that was uh the request of the council to eliminate the pilot portion of that, but the numbers really haven't changed. I mean, the need is still the same as what we had presented before. Well, I might be backing over things that we've already covered, but there's no other places. like capital improvement plan. Is that something that is mandated by uh some law that has to be some of those projects that you plan to do have to be done? Yes or no?

There there certainly are mandated projects. Uh one in particular is the lead service line project and that that's fairly epic. Um, this particular rate case does not specifically get into that simply because there's a longer timeline on the completion for that and there's still a lot of ambiguity about what the rules and regs are for how we complete that. But apart from that, it's just we we have we have not put capital improvement back into the system. We have not done those projects for a period of 10 years um prior to just the the five recent ones that we did with this previous rate case a couple years ago. And so just like a a vehicle, you know, everyone drives a vehicle. Um you change your oil periodically or you have someone do that, you you want to check the brakes, you want to check the fluids.

That's what capital improvement is doing for our water system. Yeah. And so it's not a mandate in the sense that the law says we have to put back in the system, but logic says if we don't, we're going to have trouble. I guess my roundabout I'm just trying to find there's no other place to to lessen the budget. Um I don't hear much discussion of that.

Well, we over the years have slimmed down on people and we have slimmed down on as many things as we possibly can. So now moving forward, we do have plans u to change uh software programs for our billing component. That's going to save us roughly around $200,000 a year. We also have some um employee adjustments coming through some high level retirements that are going to take place over the next year or two which will probably also facilitate some manner of uh structural adjustment which could be a downsizing a minor downsizing in in population again of our employees. Um but that would be done in an organic fashion rather than say a layoff scenario something like that. I I don't guess I have anything else. I don't It just doesn't seem like uh we have a good angle or a good a good way to go on this. [clears throat] It's a it's a tough spot for sure, but I think, you know, if you look at the history of the way that the utility has served the community and the quality of our water product that we continue to produce, um, you know, we we want to make sure that we are are continuing to do that at a high quality level, but if we are not able to put back into the system, we're we're going to start having some significant problems. Plus the fact that if we don't have some manner of reserve sitting there for emergency circumstances um that that also helps us dig deeper holes. So I think I've referenced this before but the Kim Road incident of a year and a half ago or something like that you know that was between three and $500,000 in a 30-hour period and and we just simply don't have the reserves to compensate for those unexpected things. Well, so I

think then I feel like the the choice we're given and I and I am a customer of yours um is we either accept a 44% increase or we plan on being um sold to a for-profit entity and pay tons more for our water more than 44%. Well, I'm not sure that the sale is is part of a possibility. I'm jumping ahead, but I just I don't know. It I I think there's people that our voters are looking at it that way.

Yeah. I you know, I can only say that the benefit to the community is the fact that up until 2023, there hadn't been a rate increase in the water since 2005. And so, the fact that those rates were kept really epically low uh for that period of time has has been the advantage to the community. And if we look at surrounding communities, and this is this is not to say that it still won't cause a hardship here. And I and I want to be sensitive to that. I do. But I know that in some of our neighboring communities like uh Fairmont and in Upland, they're paying $100 a month just for water services. And so, you know, if our average customer is paying between 25 and 30 right now, and we're asking them to up to about 30 to $35 a month, if you look at some of our neighbors, we're still We're still in a pretty good spot.

Can you tell me what um what your cash reserves are right now for the water utility? I am going from memory, but I believe it's about $425,000 in the operating fund, but that's excluding the loan from the sewage works. So, I didn't want to I I think they have about $2.2 million, but 1.8 of it is a loan. So if without that loan, you'd be at $425,000 total.

And are you guys working under the idea of having a 30% cash reserve or more than that? It's supposed to be two months. So when we calculated, it's supposed to be $656,000 that's sitting in the operating fund. And you're supposed to have, you know, additional funds in depreciation. Depreciation is set at zero. It did the right thing. It put everything to operating. It followed the ordinances. What's supposed to happen? Um, and so they're at zero at this point. And what should be in the depreciation fund?

There's no requirement, but having zero means every time you do anything on your capital, you're basically taking it from operating. So what's supposed to happen is that overage, that coverage of 25% or more is supposed to go from your operating fund down to your depreciation fund and sit there until it's ready to be used on a capital project. So there's no mandate on how much should be there, but as Robin alluded to, when you have an emergency, that's the fund you go to to make sure that you have the money to make do those emergencies. Okay. And is that depreciation balance different than what we see in a capital improvement balance? Are there two different balances for that?

Um, you have a couple of depreciation funds that are used for um for capital. I think you have an equipment and replacement and you also have another depreciation fund and is the combination of those are used on capital and I may have lost the string of your question did I so we don't have a specific capital improvement fund that's funded the depreciation fund and then operating no there's there's the combination of the equipment and replacement fund and the depreciation fund and they're used on different types of capital projects and I think that's why you delineate between the two

okay Um, so looking at what we put up on the wall is 2026 uh projected budget. Are those numbers for 2025 the budgeted numbers or are those the beginning of the reconciled year end numbers budgeted? Okay. Um and then it looks like we've got some delinquent accounts. Um, yeah, that's bad debt expense. Basically, what we're showing there is the revenue at fully build and you're not going to get 100%.

But we're getting a decent interest income.

Madam Chair, do I have a question? Can I ask a couple? Yep. Just because I wanted to all add up and ask at one time. Um, on this water utility budget on the screen, you said 2025. That was what was budgeted. Do you have the actuals yet? Are we over or under?

Okay. Could Yep. Yeah. People at home need to hear you. Yeah. Sorry, I was about to say that. Sorry. I apologize. Uh so the 2025 numbers are the budgeted numbers and then the budget reconciliations will be presented at this Thursday's utility service board meeting. But I do believe a copy of the uh budget reconciliations for 2025 are in the shared file along with the uh explanation. Okay. Just want to make sure I'm getting sure the numbers I'm all seeing. What are the final numbers?

Um other question I'm not sure who can answer. Uh did the because we already had a scheduled rate increase for 2026. Did that go into effect? Yes, those rates are in.

Okay. Um just want to make sure because I think there was some uncertainty on that on our previous meetings on whether it was going to go into effect. I I figured it would since it was already a passed ordinance. Um the other question I have is how much what's the the net loss per month in water utilities? How much are you losing per month? That's hard to um say whenever we look forward only because our billing goes out and we really never know when a customer is going to pay their bill, if they're going to pay part of it, if they're going to pay it in whole or if they're not. Um but we can certainly look back at the years for 2023, 24, 25 and um share with you what we've seen in those years.

And maybe it doesn't have to be an exact calendar month. I'm just looking for how quickly are the funds being depleted. Is it 10% roughly per month or 15%? Basically where I'm going with this is with that cash reserve, how long is it going to last? Okay,

that's kind of how much time do we have? You know, Councilman Klein referenced the wolves at the door and the attorneys. Um, you know, if we've already been upside down and we had to take a loan against another utility, wouldn't they have already been knocking our door a long time ago? I get the legalities and the contracts and all that, but we've already been upside down. And I'm just like, why all of a sudden now when we've already been losing money? So, if we have money in cash reserves, um, you know what? How long do we have on that is is where I'm going with it. I'll be happy to get those numbers together for all of you and make sure to share that. Thank you. Appreciate it. You're welcome.

Madam Chair, I I have a couple things if if possible. Um, we we've talked a lot about this, Rob and I. We talked this morning and I [clears throat] think is is we we all kind of know how we got here. This um I this is just my feelings that the 15 years or whatever of no rate increases. I think that that really hurt us to to not keep building our uh funds to where we had to get into the capital gains. Um I also think that we haven't had the communication that we that I feel as though we are going to have now. um like when and the other thing is is I know you you referenced already Robin that you got a five-year plan now to see that was the other thing I haven't seen a plan that what are we going to do to fix this what are we you know like in other words your capital improvements I don't know what that magic number is if it's 5 million 10 million whatever it is and then over five years or whatever it is what are we going to do to get to that number I mean we have to have a solid plan and work towards towards that so that we do fix this problem. And I think that um communication is going to help. I've talked with Christie on it, you know, and and uh it's just a matter of all of us working together. And I I mean, you know, the executive branch, the council, the board, uh the utilities, you know, the more we know like okay, like this issue here, like an example, when did you guys realize that this was going to be an issue? I know it was in last year, but Well, a a shortfall at the end of When did you know you was going to be in trouble for 2025?

Well, we we had to get through to see the financials through the second quarter before we could be sure of of what was going on there. Okay. That that's what prompted me to send the letter to you guys um the beginning of the fall, late summer last fall.

Okay. So to me, that's what's important that we all know at that time. And so we don't come January and say, "Here, we we know you're going to have to take at least a month because you got to go to two readings and then vote on it and we have that's your deadline. That's it." That way we can we can all be we we would have six months to uh digest this, figure it out, feel comfortable, know what it is, and we would have hit our deadline. So, I I think that we like Councilman Klein said, it's we can work we can get through this. We're going to have to have better lines of communication and I think with every all the powers to be I think we all kind of feel that way. Um but I think that's just our our biggest thing and we have an issue now. It's got to be fixed. We we have no choice. So, you know, I just um and I think that that the the citizens of Marian, I mean, let's face it, they own us. They own the They own everything and they when they hear a 40% increase, if your bill's 100, I think that they think, "Oh, my bill is going to be 140 now." So, we just got to be able to break it all down that that 44% increase doesn't mean a for, you know, and and and be transparent with this percentage goes like like you was just saying, this percentage goes to this this percent. So, then everybody understands it and we're not just all confused and trying to figure out what's going on. So that's just my two cents.

What would happen if um we didn't accelerate the rate increase? We left it spread over the next couple years, even if we increased it to that 40%, but say we did 15, 15, and 10. Um would that cause you to need to do a higher rate increase because you're not recouping it fast enough?

Yeah. The reason why we accelerated it because in your last rate case we did a cost of service study and you hired a cost of service study expert and so the rate structure changed significantly over those five phases. So instead of going so we're in the third phase and so it we to in order to reap all the benefits of what happened during that cost of service study to realign the costs among the different customer groups. That's why we're asking for the acceleration so that we can get to that point of the rates of how they're supposed to be designed on the cost allocation. I I know that's a kind of difficult, but that's why we're asking for the acceleration to get us to that flat point. And then we're saying anything that we need over that, that's just across the board increase the rates because you're going to multiple rate blocks down to one rate block. And that's where we're trying to get to the one rate block and then increase that one rate block cost for what additional funds that you're needing above that.

Okay. So would that acceleration would that cover the 125% and put towards capital improvement or is capital improvement still a different No no no it's it's all encompassing when we talk about what's needed we talk about the revenue requirements and that's what I presented to you in in my report is that includes operation taxes debt service debt service reserve funding and capital improvement funding and paying back the loan to sewer. So it's all those items together. So when we make the request, we say this is the entire revenue requirement that's needed and this is the resulting rate increase that's needed because your revenue requirement the entire pie is this amount. Jennifer, why don't you describe

Yeah, Chris brings up a good point. So where we stand right now, the IURC process will take us about 10 months to get through. So saying that we file a case in February. Likely the implementation time period is January 1st, 2027 at this point. So that rate increase one of the phase four is already going to go into effect. And so we're only ask for one more year of acceleration. So while we're talking to you now and my report showed two years of acceleration, we're really going to be at only one year of acceleration at this point.

So does that allow you to tread water then that 10 months? What what's the 10 months mean? The 10 months means Robin and our group have to keep expenses down as low as possible and they're using that sewage works loan to make it by this year and then we start paying back that loan at the end, you know, next year if we have rates in place. And do you have the breakdown or uh when we repay the loan back? It's not going to be a lump sum. We're going to be paying that back monthly or annually. Do you know approximately how that'll work?

So, it it will be upon the utility service board's management on how that loan gets paid back. Okay. So, it is supposed to be only a one-year loan, but it'll probably have to be extended at this point. Um, so it will on a monthly basis you guys on the utility service board will look and see okay where are our cash balances? How is money coming in? How is the operating fund looking? Do we want to put some in depreciation? How much of that loan we can pay back? And then also considering does the sewage works need that money back right away for the for the long-term control plan projects. So there's not a set way of how that's supposed to happen as far as I know, but it will be up to the board to make that decision.

Okay. Thank you. Okay. What um before we get too far, um was there board members that wanted to speak on this or Bob, did you have something have anything or Yes. Yeah. [laughter] When have you not been able to You have to push Yep.

to do and and u I talked to Mr. Binkard uh shortly. He was our immediate past director of this and we had attempted probably about 2016 or 2017 to come before this group to request a weight rate increase. At that time we knew the finances were getting in jeopardy. We needed that and uh we were told at least twice maybe three times perch that either this wasn't a good time or we needed to we had elections coming. So we so some of this stuff just got put off a little bit to try to get here to where we are at this time. So we're trying to work towards these things trying to remedy these. And uh and the other thing I think while we're talking percentage increases across this thing, we act in actuality I think you're looking to more like six to eight dollars per person, aren't you? Per month with this. And uh approximately a year ago, year and a half ago, our group came before you for the solid weight solid waste rate. You remember that one?

We we uh were requesting $4.50 50 cents per month uh per year and we would start at like year one 450 next year 450. Uh instead the council at that time decided all $9 would be adequate to do on the people at that time. So if $9 was a good one to do then, how is $6 now going to be something that's that's going to be a major problem with that? We still get a lot of heat for the $9, just so you know.

Okay. Well, we try to make it easy for you know, and 450 and 450. So, it would be just a gradual one. And everybody's had a uh a wa a a storm a wastewater rate increase of $2 per month per year for 15 years. And that's that's been there from IDM and EPA that was mandated for us. And the council approved that about 2010. I think it went in effect about 2011 uh at that time. So, so that one has been gradually going on for a period of years with that. I'd like to add something on that real quick. Um

and I've spoke on this at the other council meetings. Uh I don't think it's fair to compare the trash rate um conversation with this conversation. It's a different ball of wax. Uh that was a long time, a lot longer I think since we had a rate increase. And the numbers that I was given made a lot of sense. And the problem that I have with this one, and I've said this many times, is the fact that 20% raises were given over two years knowing that you were upside down. And so it was we threw gasoline or you guys threw gasoline on the fire and accelerated this and then come to us and say, "By the way, we're going to ask for even more of a rate increase." It's the process of which we got here that I have a problem with. And I have to make sure as a council member and and representing the people that there's trust in the board that these decisions are being made. I think this should have been remedied before those rating those pay increases should have been jumped 20% over a 20-year peri or a two-year period. Is that pay increases or is that the total which includes the health insurance and the health insurance increases a very substantial portion of our personnel costs because they go up considerably more per year.

Hold on a second. I got with that. I got the floor. So, okay. Um, some of that is included. It's wages and salaries and all that, but when you say wages that were increased, um, well, it was a 20% increase. So it was what 11% one year and 8 point something the other year in salaries or total compensation. Uh from what I remember and reading it was in salaries but when you increase the salaries it also increases PEF increases a lot of other things. No they have they have not gone up that much. It's health insurance and you being an insurance agent would certainly know what that I don't do health insurance. Oh I'm sorry. Nice try. Nice try. [laughter] I don't do health insurance credit here. Maybe you get another customer.

It's okay. you could we're not going to do this here. So So but but the same at the end of the No, a lot of that increase has been in the benefits of the health insurance and typically I'm happy to pull those numbers back up. We've looked at all the numbers. The whole council has looked at them

and just the fact that you were upside down and still giving these larger raises before you came to the council and asked for that. That's the problem. That's what I'm saying. It's a different situation here where it's the decision. I I'm not against paying employees the right amount. Not at all. But we're held accountable to the taxpayers and the voters and and when we made our budget decision last year to not give a raise because if we did, we would be in the red, that's being responsible. It's unfortunate and I wish we didn't have to do it. And that's a very hard thing. We get heat from our police and our fire because and all the other city employees that deserve a raise, but at the end of the day, we can't spend more than we bring in. And that's where my have a problem with those decisions of giving those raises knowing you're already upside down. You put whatever percentage you want to it, 11, eight, any of that. But when you give those raises, I do run my own payroll. I understand that you pay more taxes. It goes there. you know, there's all those other line items that go up because of a pay raise.

So, it it may not have been an 11% pay increase that year, but when you add up all the other taxes or or PEF and all that, it starts to add up really quickly.

Well, the health insurance is is probably one of the major costs that are are in that. And the utility pays 85% of each person's health care, if I remember correctly, and the employee pays 15%. Is that is that pretty much right on that? So as those as those costs go then then that 85% increase is what the utility absorbs and the 15% increase. Okay. Now you mentioned the city did not get any raises. Did they get any additional compensation like a bonus pay or anything additional to that? Yeah, because we have cash reserves and we could pull them out of the cash reserves, but we're not committing

we're not committing to any long-term raises. nor did the council approve any automatic pay raises every year.

Okay. Now, we don't approve any automatic. What we've done is take our cost of living and use that and then look at the step increase which we hired a consultant to prepare that as as an expert in the utility area so that we as a utility board are h using the expertise of people who are very familiar with this type of operation. So, they're they're very knowledgeable. That's again, we run a utility. We we're not trying to get involved in city government and to my knowledge, we have never in the past uh talked to the city said, "Hey, what outrageous we look at wages that go on in the utility. We're look at the utility industry and that's the entity to which we are charged with trying to govern."

I don't think you're I don't think you're hearing what I'm saying, though. Well, I I'm hearing you're not hearing what I'm You're just saying no, you're you're just saying we're just going to give the raises because we know what we need to do without looking at how much money we're losing. So I I don't understand where you're where you're trying to justify that.

Okay. I think COLA has always been a thing that we always try to look at. If you don't do a COLA, it's like a pay cut. You're you've got to keep pace with the cost of living. And and in reality, the ma probably the most major asset mar utilities have are the value of our employees. You start losing employees, it costs a heck of a lot more to replace them and train the new ones than it ever does to keep the ones that are in existence. So we value the employees we have as one of the major assets that Marion Utilities has has access to. That's why many of them are long-erving people. They're experienced, they're knowledgeable, they have credibility, they have uh statue and and they have the designations that are required in the professional areas in which they operate.

With that on with that right there, let me Nick, if you don't mind, I'm sorry, but like our our a lot of our specialy people, police and fire, they have to have so many searchs and they're very specially trained and we p put a lot of money in them and everything. over the last 20 years, they've went 10 years with no pay raises. And the reason why is because we didn't have the money to do it. I understand what you're saying about cost of living and cola and all that that makes sense. But if you don't have the money to give it to them, you can't give them. That's just a bad business decision in my opinion. I mean, I don't know. Mayor, do you want to speak on anything on that or

Okay, if I'm done, I'll you'll sit down. Well, and I yeah, I was gonna say I we need to find solutions, not work only on salaries because the whole budget is not 100% salaries and it's such a small portion of what's going on here.

All the cost of our operations keep rising. If we when we buy line to uh to treat the water, you like soft water here in the city of Marian, we buy Mississippi lime each year. Sure you can tell the cost of that escalates. So that's a lot of other things of operation are are increasing the cost and salaries are very small portion of the overall activity under which you're we're operating and nobody is looking really at any of the other uh costs of operation that are in here. Salaries are where everything seems to be boiled down to. Now you're shaking your head, but we do have That's not 100% correct, but Okay,

you can you can have a seat. We'll listen to the mayor now.

Well, thank you. Listen, um honor to be here to talk to the council again um concerning this issue. And um you know, I think there's the or our goal is to be as solutionoriented as possible. One thing that keeps coming up is insurance. And um one thing that does not have to happen is utilities does not have to be separate from the city on our insurance package. we can all uh come under one insurance and save actually both entities a lot of money. So that's one way that we can be go goal oriented and solution oriented. So the idea that we have to have two separate insurance packages and is uh does not have to happen. So that's that's something that we can solve probably pretty actually pretty quickly. Um and then second with that is you know obviously we had to the city switched from Anthem to UMR last year because we had to focus on you know saving money on the insurance. So when we start looking at compensation, which I don't want to harp on over too long, but when we start looking at compensation, um there are obviously ways in which we can save money and every twist and turn of that, whether it's insurance or whether it's direct salary. Um one thing I I was as I was listening, I was confused. I wanted to make sure I was understanding right. And maybe maybe somebody answer this for me. Maybe Crow. So the utilities is upside down and is losing money and does not have money. So I mean I think I everybody understand that the utility is upside down and does not have money. So, um I think that when you put yourself in situations like that, you have to start kind of picking apart everything that is done. And it's unfortunate. Um you know, because um when you run any kind of business and you're losing money, you have to make some tough decisions. And I think that um I'm not I'm not ignorant to the fact that there's going to be have some have to be some kind of rate increase to, you know, accommodate for the years of running upside down. But I think that us, you know, moving forward, you know, me and Robin working together and their team, I think that we can, you know, uh,

be really goal oriented and try to move forward in in a in a great way. So, we just got all of our documents, I believe. I think it was Friday or Thursday or Friday. I can't remember what it was. So, our our team is reviewing those. We're hope to have an we don't really have an opinion on tonight. It was too quick. So, I'm hoping we'll have an opinion by the next committee meeting on February 3rd and then um we'll be able to move forward the, you know, the appropriate rate increase from there. But again, I I think that uh the the utilities has they do a great service. Our water again, as I say every time, is um arguably the best in the state. I say it is the best in the state. So now we have to make sure and assure that um we actually have decent financial management and not run upside down. My hate that has come to this that you know after all the years and the service that so many people have been a part of for decades that we just kind of let's uh put ourselves in a position where we continue to run upside down. I think it's just not healthy and it's um and the citizens actually seem to very be very concerned about it. So we're going to do what we can um our from the administration to assure that we can you know assist the utilities and know managing their finances to get from being upside down. And I think in this situation, we've come against uh, you know, a back against the wall moment to where to get the utilities out of the financial disarray, we're going to have to do some type of rate increasing is rather large and it's going to be a tough pill for everyone to swallow. But, you know, as you've heard their financial advisor say, they're upside down in the red. So, we have to come to the rescue any way that we can help.

Okay. Thank you, Mayor Christie. Did you? Yes.

I just have a um few things to point out. Um thank you um all for collaborating with us. I just want to speak on um you had asked a question Brian about what our plan is. And I just really want to give the utmost respect to Robin, her executive team, our city council, and our board because as Bob and somebody may have mentioned, we have had a plan and we've been working on this since 2016. So, thank you for collaborating with us. Um, this plan has been put in place to because we were very well aware of the financial situation. And Nick, I commend you because as a board member, you some of your comments have really made me self-reflect like what did did I miss something in budgets and planning? Um, because why would we do certain things if we don't have the money to cover it? So, thank you for that.

I just want to say one thing real quick. I appreciate that. I just want all the board members, most of them, I'll articulate in a minute, all of you are mostly new board members. And I'm not putting this on you nor new board members. A lot of these were previous decisions. And I I have acknowledged in previous meetings about some politics. I think I did address that. There were politics before we were on the council and I addressed that. I just want to say, you know, a lot of these things were previous board, previous board members. Um, so all of you that are newer board members, uh, I don't have a problem. So, I just want you to know that.

Well, even as a new board member, I've served two different times. I've been appointed by the city council. Um, so I'm very grateful to stand up here um, and collaborate with the city, the city council, Robin, and the board. They do a phenomenal job, and we do have amazing employees. Um, but that is just something financially that we just will need to um, you know, as the we have to focus on perception is reality, right? When they first said 44%. I'm like, Brian, $44? My my bill is going to go up $44. And you freak out. Well, the perception is reality. It's not going to go up $44. It's going to go up from, if you look at this um Crow report, it's going to go up anywhere from four to a little over $8 maximum. Um and perception, not to we see it every day. They're spending $2 to $3 a day every time they stop at Circle K or what have you. But the point is we do have a plan. So on a solution matter, we have a plan. Rob and her team um the board has worked digitally to work collaborate and work together. This has not been an overnight thing. This has been a plan in place for years. Um we are asking for an adjustment because as life is lifing projects, prices go up when we have to hire a contractor for like the Chemro situation or something that happens and we have to pivot. Um, so as a board member, I just want to sit up here and I've wanted to speak a couple times and didn't have the opportunity, but I love serving this community. This is the best community. I'm very grateful to be here. This is the best water that I've ever had and I've lived in many different

states even though I was born here. And thank you for collaborating with us. And I want to commend Robin and the team and you all. We're here to make solutions. and we do have a plan. We just need to make an adjustment and we need to make better decisions. Thank you very much. Okay. Thank you, Christie.

Thank you, Erica, for letting me speak. Um, we've kind of, in my opinion, I think maybe some of the public is still confused about, well, we're talking about a 44% rate increase and they look at their bill and I'll just, for example, I'll use my bill as an example. And so I I've brought it up here on my phone. And so back in December, my total bill was $7041. And so people think, well, wow, it's going to go up 44% from that. No, look at the different line items on that bill. It's all broken down. Um, and you've got water at the top. And so my water bill is $12.86. And so my bill, you know, an average bill is going to go up anywhere from five to $8. That's where we're getting this rate increase at only on the water line. Also on there is a sewer. My sewer bill is uh $25.22. My storm water is $5. My fire protection is is uh $339. Trash pickup is $22.80. And then there's taxes on top of that of $114, which gives me a total of $7041. So, what we're talking about here tonight is only the waterline on your bill. So, if there's any confusion, look at your bill, look at your waterline, uh, and and use that figure only. And that's the rate increase that we're talking about. And so, there was a lot of social media discussion. There was a lot of social media disinformation put out there. And it had a lot of people in panic where they thought their bill was going to go

up anywhere from $40 to $60 a month. Well, I'd be screaming my head off too if that was the case. Um, but let let's pull back and and and be realistic about this. It's only the water line. But you you've got a tough decision in your your committee tonight to to make a recommendation or to move it forward and have another meeting. But I I guess my recommendation, which I don't have tonight, but just a suggestion. Um, we haven't heard anything from from Baker Tilly, and they're probably not uh ready to speak tonight by any means, but I would like to see their numbers, their investigative report come back to us before decisions are made. My suggestion only. Thank you. Well, and we have probably just a few minutes left before we need to break and move into the regular meeting. Um, I would say the next steps that we need to take, um, Mayor, you said Baker Tilly would have that by our next meeting.

If we uh we do another one on February 3rd at 5:30, we'll be good. they'll have their opinions ready by then and then I think Robinson said she would like we can have it done by uh February 17th I think realistically if we can push that to the March 3rd. So I I would be okay if we suspend the rules I mean I would be okay if you guys would like to suspend the rules and pass on the second reading but I think giving us enough time to the uh the March 3rd to be able to pull it off. So in an ideal timeline if you if you guys would oblige to this would be um we have another meeting on um February 3rd and then first reading the 17th and then second reading on March whatever that first whatever that first meeting is in March. I can't remember.

If I might I I'll let Chris explain this because he's going to do that better. But we well I'll just let him share about the next steps and and what that February 3rd meeting could and and should look like. Okay,

here's um I guess a compromise. Um I know we used that word in the last meeting, so let's talk about that. Here's one thing we can do. We can start out with the rate rates as they were originally proposed by the utility. We know I think everybody agrees those will work and give us coverage and we'll move forward with that. Now, just because you introduce those rates, may not be the rates that we end up with. So, between if you introduce a rate ordinance on February 3rd, similar to what was done before, between now and the 17th, we can meet with Mitchell and Baker Tilly and we can figure out um if that's the right rate or not. And if we all agree that it should be less, then we'll lower it for the final ordinance that at the hearing, which you're raising it up's a bit of a problem, but lowering it is not an issue. So, what I I guess one compromise is to move forward on the third with with an ordinance in recognition that we may need to true that up depending on what the Baker Tilly report says.

Okay. And I think one of the other comments that I heard the last time we went through, we were under the impression that we would send the ordinance to the IURC for their review that we it would come back to us for one final approval before it went into effect. and we found the ordinance had a line in there that said it was automatic whatever rate was put into that ordinance after the review. Um, is that a line is that boiler played or is that something that has to be in the ordinance that it automatically goes into place?

Yeah, here's how so here's what'll happen and Jennifer kind of spoke to this just a couple of minutes ago. What happens is the board makes a recommendation, your utility board makes a recommendation to you of what the rate should be. So that would need to be the first step, which they've kind of done. You then uh introduce the ordinance, uh have a second and third reading, and then you vote on it, and then it goes to the IURC for approval. And that will take 10 months.

Um and then at the end of it, it's kind of like going to a court only this is a court that has jurisdiction. It's an agency that has jurisdiction over your water utility and they will say yes, that's a good rate or no, it needs to be something different and lower it. And we're bound by that decision of the IURC. Okay? So, it's no different than a trial court. If we go to the trial court and they say, "No, you you owe um Mr. Janak, you're wrong. You owe Erica $10. I can't then pay you $8. I got to pay you $10." And and we'll be in the same boat that we'll be stuck with whatever they decide. But that is a not to exceed number. Okay. Okay.

Um so as part of our future collaboration, I would say that once you get that report back, if you could come report to us on it and let us know where we're, you know, if we can't take that out where we reapprove it again, at least we would get the results of the study and Yeah, that's absolutely not a problem. Okay. Yeah, we would we would do that regardless. Yeah. Okay. Um Sounds like we should have the Baker Tilly um report in time for the next meeting. So if we have another committee meeting set up for February 3rd,

the compromise, you said the guy said they can pull it off. So if we if you introduce the ordinance on the 3, that gives us that uh that two weeks from February 3rd to the 17th to make for everybody to collaborate to make the adjustments because we can obviously adjust the ordinance after it's introduced. Okay. So that so we would introduce an ordinance without seeing Baker Tilly's work. Well, they will um if we can accommodate them for that timeline. You can still adjust the ordinance after it's presented. We'll use the utilities numbers for now on February 3rd, but we'll true that down based upon Baker Tilly's work. Okay. Okay. Then we can make any amendments for the 17th that might be need to be done for That's exactly the second reading.

That's exactly right. Okay. And then I would say that as a part of what we're working on, we come up with something and work with the mayor's office to make sure that we have decent press releases out talking about this with examples of the water bill and how it will change the rates so that it's not a lot of information going out that may or may not be correct.

Yeah. My only thought on that is given that this could be is likely to be a 10-month process that we not jump into that immediately, but we pace that according to the IURC's decision. Well, we'll have to do something though for the public hearing portion or we'll have a whole bunch of people showing up on the 17th to speak that again may not have correct proportions and looking at the right. Yeah, we can essentially reproduce what we what we did the the first time around for that. But I was thinking if we could do something I don't want to call it dumb down but brought down to general public language I guess I'll say so because I mean I understood a lot of the numbers but not everybody does because that's that'll be a public reading on the 17th.

Yeah. Are you suggesting because what came to my mind you said that we just make a um a fake water bill and show the lines what the how it influences it where we could circle the water line and and very clearly show what it is. Okay. Yeah, I mean we can if that's possible.

We have a communication specialist who is great at whipping things up like that. So what we can do is we can actually just put out a column with, you know, usage of feet 1 2 3 4 5 and then show what their bill would be with that. And we can uh make sure to also share that with Leila. Um, our communication specialist works closely with Lea, so we can get it out on both websites. Perfect. Um, anything else from the committee?

Yeah. come. I would like for someone someone to be prepared at the next committee meeting to explain to us and everyone in fact the pros and cons of submitting this to the IRU because we don't need to belong to that for one thing if we don't want to right that's our choice to send this to them we can make our own decisions So, I'd like to know the pros and cons of moving forward and submitting this to the IRU.

Me and me and Robin had that conversation early last year. I I think we had a pros and cons list already made if we can Yeah, I believe it's just a city council ordinance that we can disband from the US. So, we don't have to be members of them or submit to what they say. Yeah, if if we could submit that to us and and see those pros and cons, I would certainly appreciate it. Thank you. And if I could add on to that, what is the expense involved with utilities to have to work with the IRC? Like how much would we save if we didn't have to? But I do want to hear the cons as well.

And then will this timeline be acceptable to the SRF so we can avoid multiple million dollars and penalties and fees and so forth?

Yes. I I because I think this is a good faith step. Well, what I'm I'm speaking for the lender and which I shouldn't do, but you're making a step to fix this. And by if you can if you can tell the SRF program, your lender, that you're introducing an ordinance and you're going to get coverage and you're going to have that here by the end of February and you're taking steps to fix that, I think that will be good enough. we will communicate that to them and if there's issues or problems I'll have Robin report back to you individually. Okay.

So to re to recap what I'm hearing is we're going to have another committee meeting on February 3rd. Um or okay

I mean obviously it's up to you but I think if we are on the same page with I'm understanding with um Mr. Chris I don't know last name I'm sorry.

Yeah. Okay. If I if I'm understanding if if we're mutually on the same page is that we can present what was already there at the current ordinance on February 3rd. So, no adjustments and the timeline between now and before the the second reading um Baker Tilly will be able to have their opinion available to if that number is the same as what is currently presented. So then at the second reading we'll be a um Baker Tilly and our team will be ready to present if we can make an amendment to that ordinance. Yeah, because and if Baker Tilly, you guys, if they come back and say, "No, we agree with that." Then we're not changing nothing anyway.

You're not considering not having a meeting, are you? Not really. No. Okay. I mean, I think the committee needs to listen and make some kind of recommendation. Yeah. I would rather have the report so we have chance to ask questions and Okay. um and contemplated if there's other things that we have that we find we have to do before we show up at the meeting and have to make adjustments or not make adjustments to the ordinance. I'm I mean that's fine with me. I just don't know the timeline they suggested. I don't know if that alters it or not, but that's I'm perfectly fine with it.

Okay. So, I'm going to put a to be determined committee meeting depending on when Baker Tilly gets their report to us. Um, but sounds like we can present at least the initial ordinance for first reading knowing we'll have a committee meeting and a report to review and then possible amendment on a second reading. That's kind of the summary I'm hearing works for you, Eric. I'm comfortable with that. Yes. Okay. Madam [clears throat] Chair, before you're done, I would just like to finish with a comment whenever you're ready. Go ahead.

I just want to make one final uh statement. Uh sitting here trying to listen some more. I'm just a little disappointed tonight. Uh I'm disappointed in Mr. Logan's comments. um as a council appointee and being on that board for so long, I feel I feel like some of the comments made were a bit uh slighted and disrespectful. Um, and I just don't think it's conduct becoming of a board member. And uh, I have kind of lost some faith and trust in his decision-m and I'm I've lost trust that he'll make proper financial decisions after hearing what he had to say tonight about giving payraises no matter what the financial condition is. It sounds like in the future I'm not going to have confidence that he's not going to just give Carblanc raises no matter what financial condition they're in in any of the utilities. And uh I'm just very disappointed and uh I just don't like the fact that it had become argumentative. I regret it got to that point. I wish it hadn't have. Um, my frustration is channeled by our rateayers that are out there. It's nothing personal and I think our rateayers have a right to be frustrated and that is my job as an elected representative and so I had to express some of those frustrations. Not in a personal way. I just think some professional decisions have not been made well on that board in the past. And so I'm just disappointed in some of those comments and how they were directed and accusatory and trying to um come after the council in that fashion. So I've lost confidence and faith in Mr. Logan. I'd ask for him to resign and if he doesn't then the

appointment that he has up this summer I'd ask the council to consider a different candidate. That's all. Okay, thank you. Any other comments or so, we're good to move forward on that recommendation to for the review and the first reading of the rate ordinance on the February meeting. Okay. Do we need a motion to that or [laughter] would you like to make that a motion? You're the chairman. You can call the meeting. Okay. Would but or to move for the next steps, I guess. So, yeah.

And I'll second. Okay. All in favor? I Thank you. Okay. Well, then we will stand adjourned. Thank you.