City Council - Regular Meeting

On Wednesday, July 8th, we're going to start off with our joint meeting with Utility Advisory Board. We're going to go ahead and call that to order with a roll call.

Eric Gentry.

David Hooper.

David Abderholden. George Ruppe.

Council. Janine Polk.

Greg Julian.

Janice Denton. Melissa Lockhart. Everyone is here then, correct? Thank you. okay we're going to start out with public input and this is for the utility advisory board so anyone wishing to address the council and utility advisory board on any matter must state their name for the record each person will be allowed to speak up to a maximum of three minutes anyone okay we're going to go ahead and move forward and we're going to go to the agenda 2a fiscal year 2027 to 2031 utilities capital improvement program in fiscal year 2027 utilities operation budget status update

Good morning, everyone, and thank you for being here and doing a joint meeting with the Utility Advisory Board and City Council. We do appreciate that. To start our meeting, we talk about, and I'm sorry, my name is Kristen Simeone, Finance Director for the record. We'll talk about the utilities construction first and then move into the operations, maintenance, and maintenance. Rehabilitation fund. So for utilities construction, we start out with the pro forma and you see the proposed fiscal year 27 through 2031. And again, the plan has already started back in 25, 26. for a lot of these projects. So all these projects you have seen before. I think there's only one new project that was added to the list. So we'll take any questions on some of those projects. But in the pro forma, you can see that a lot of the funding is coming either from transfers from the utilities OM&R fund, or estimated grants, financing, and some of the projects have the financing in fiscal year 26. So like for our SRF funding, for the RO and well field, as well as the lift station 30, BPF, MPF, and force main project, those are showing in fiscal year 26. with 50% as a loan forgiveness grant and then 50% as an SRF loan with 0% interest. And you'll see that in the actual, the documents that were provided included the prior year information, but in the PowerPoint we're just showing 27 through 31. So going over some of these projects, the first section is the $1.1 million that we do for R&R projects. It's for water main renewal and replacements, valve projects, gravity sewer, lift station projects, inflow abatement, enforced main projects. There's a little bit for utility relocations that come up as needed either because of public works doing a road project the county doing a project that requires some relocation. And we have our wastewater projects. And again, we have subject to sewer on here. Talking about this particular project, that one will probably be needed to move out based on our other priorities that we're currently working on. Additionally, these estimates are a little bit old. They're from a consultant previously. And we are still working on the design that we do have a state grant for. So once we have that design and engineering information, we will have better numbers for that. And again that project also requires us to do an assessment district for that so we would have to have time to initiate that as well. All the other projects again are projects you've seen. Any questions on the wastewater projects? on the water projects again you have a little bit of change of how we just reallocated funds between the fiscal years and that was for the RO well and the the regular plant rehabilitation so we moved more up to fiscal year 26 for the ROL because again we have that funding and we needed to move forward on that project so then some of that funds for the rehabilitation was moved out into fiscal year 27. So in total the project is the same it's just the years switched a little bit. Any questions on the water projects? Okay so then we're going to move into the operations fund and so again we have our operating revenues, transfers from water and wastewater impact fees and the increase for wastewater billings for the septic to sewer project and again if we move that out those those numbers would move out as well and again the assessments. The operating expenditures are the personnel, regular operating, and regular capital outlay. And then all the items below that operating expenditures are the renewal and replacement, which we talked about, the 1.1, the rest of the transfer that's needed for utilities construction, and then we move into the debt service. So for the debt service, we currently have RO debt service. You have your transfer to the SRF fund for the various increases that are needed. So we have to have one year's worth of debt service set aside for all of our SRF loans. So as we bring on more SRF loans, we estimate how much we would need to increase that fund for having that set aside. And then we have all the other estimated new debt, whether it's SRF or regular bank financing or bonds. But currently, we're using an SRF interest rate over 20 years for calculating this information. And then just to mention on the operating revenues, we used the consultant rate of 12% for fiscal year 27 through fiscal year 29, and then 5% in fiscal years 30 and 31. With some of the grant funding, we know we may be able to do some decreases in the future, but until we have all of our financing in place and know all of our costs, we don't suggest switching that at this time. So again, I kind of talked about a lot of this, so I'm not gonna go over it again, but one other thing about the revenues, we do estimate .5% growth and we do use averages to account for consumption changes due to rainfall or other factors. So again, we don't want to just use one particular year because that year might not be representative of an average and we don't wanna leave ourselves short when we're talking about covering our costs. um water and wastewater impact fees can fluctuate widely they were also included in the rate study and have been implemented as of january 1. this is our current rate history so you have fiscal year 2017 through fiscal year 25 our actuals and we have our projected for 2026 at this time Other revenue assumptions again though we have water impact fees helping to cover some of the RO debt service and then we're using wastewater impact fees which will start in fiscal year 27 for the wastewater treatment plant improvement project that's just starting to be completed so that one's almost online there. We did talk about the estimated annual assessments and new wastewater revenue and again that may be moved out a little bit. Our assumptions on personnel are 4% merits, health insurance currently is estimated at 8.5%. Our insurance rates did come in at 5.5% so that will come down a little bit and we'll be making those adjustments before our final proposed budget that is presented. the pension is per the actuary report spread over all funds anyone still in the defined contribution pension is per their elections workers comp insurance again we estimate 10% each year and it can come in over above that it comes in at the same time as our general liability insurance so sometimes it might move down to the operating expenditure if general liability was a little higher or Sometimes it's the opposite way, it just depends on what it comes in at. And we use very similar projections 28 through 2031. So for health we use 6%, pension we do a 5% increase and again 10% on the workers comp insurance. As far as personnel updates, the utilities department had asked for a trainee position that was in the wastewater treatment plant be reallocated to an admin assistant for the fleet division. Also in water distribution, a maintenance worker position was changed to a hydrant tech position. So there's no changes to the total position count. On the operating, again, the departments are mostly flat. Computer overhead is flat. Administration charges, we did estimate a 3% increase. However, those final allocations are determined once all the budgets are completed. General liability insurance is estimated at 5%. And again, in the pro forma 28 through fiscal year 2031, we estimate 3% increases except for general liability at 5%. just some items of note that had some increases was the additional lobbyists requested at 75,000 per year electrical and fuel increases electrical FPL is about a 5% increase it and then you've seen what has been happening with fuels so it had been closer to like 14 or 15% things are starting to come down but we'll keep an eye on it and if anything is reduced we can try and reduce it before our final proposal Tank washing at the water treatment plant is $137,000, and then the sludge hauling increase is an additional $150,000 per year. Any questions on operating? We do have Tom here, and he can answer any questions if you have any. I have a question.

I'm sorry. Janine Polk, for the record. So I'm just wondering, the $75,000 for an additional lobbyist, do we feel that we need that in anticipation of something that could come forward again?

Tom Spencer, Utilities Director for the record. It's not an anticipation of anything coming forward again. It's more to ensure that what we've put in place continues to work smoothly and as well as any type of funding opportunities that come up that support those initiatives that we put into that interlocal that we can move those forward. But we've established a great relationship with the representative through the lobbyist and we'd like to continue that.

And it says additional lobbyists. Do we already have one, or are you including the one that the city basically already has?

Yeah, the city has one, and this is the one that the utility department is paying for directly.

Okay, perfect. So they're very specific to your cause. Correct. Thank you.

i do also have one question um with the utilities that said no additional positions because they've changed positions is there a cost factor with that like an increase in pay or anything or is this just a title change it's more just a title change ensuring that that person is being utilized just for that one purpose perfect thank you i have a question uh dave hooper

With regard to the employees, you say we had a need for two employees. Now you've changed their positions. The need must still be there. So what have we given up to shift some of these positions?

So the one position was a training position that was unfilled at the wastewater treatment plant, and that position was shifted to a fleet administrative position to assist with all of the fleet paperwork and daily operations there, freeing up the mechanic to actually do mechanic work.

I understand that, but there must have been a need for them to be there because you don't just hire somebody for...

saying we need to hire someone yep um the trainee position um when those training when the training position was added even though it was added to be there if needed it wasn't always filled so and it hasn't been filled for a while so at this time they felt they had a higher need and again trying to keep costs down they're trying to we just change the position do you have an idea of how many people

I don't have that information. That would be more of an HR question. Yep.

Right, but they do have other positions, and a lot of times what happens is when someone leaves, they do bring someone in as a trainee, but they're underfilling that one position, say it was an operator C. And then as they get their license, they move up through the progression.

That's something you need to, as we all get older, you start losing employees, you don't replace them.

Yes.

You then have them to go out and contract. Yes.

And I do believe the departments do keep track of that, because we do ask if anyone knows of any retirements when we're budgeting, because if we do know someone's retiring, if they're going to fill it in-house or not, we have to determine what do we want to use as our base estimate for that position, to fill that position. And we add like say the person that was retiring was on single health insurance But we don't know who's coming in whenever we do a vacant position We fill it as for budgeting purposes as if they were taking family insurance so that we don't leave ourselves short Because if they choose family we have to cover them

Kristen, can you explain the variation in the revenues from impact fees? Because we worked hard to increase our impact fees and it doesn't look like we're getting as much money.

So that is all based on when development, first of all, applies for their impact fees and then when they actually pay for them. So we don't know which projects are coming online in any given year. We try to keep track of that through our zoning and through the utilities department and people submitting their plans. When they submit their plans, they'll say, hey, this is how much your impact fees are gonna be, but it depends. They don't have to pay them right away. They only have to pay when they are putting the meter in, I believe, correct? And so if they're starting their plans, but it takes two years for them to get on board, we might not see that revenue for two years. So sometimes you have more residential building or a residential development in a given year, and then sometimes you have more commercial. So it just depends, again, when they come on board and when they actually make their payments.

Okay, that helps.

Thank you. Any other questions? So next we just show there the divisions five-year capital outlay plan again we try to make sure we're budgeting for replacement needs of the equipment that is needed for the plant as well as vehicles or other types of equipment such as loaders or back back trucks for pump outs for this this wastewater collection and So you'll see that there and then we always have a little section for the unspecified equipment needs because again as they get out a little farther they might not know what they need yet but especially at the plants. So we leave that in there so they're still budgeting approximately 700,000 per year. Some years that's a little too low. As we get to the hour years obviously we still have a little bit of a leeway in there. Again, we're trying to use current revenue and operating reserves to fund our five-year CIP, so that's why you see that transfer. Estimated debt service on the wastewater treatment plant improvement is the state revolving loan fund. So we kind of show you which type of loans or grants are on some of these projects. The water treatment plant filtration project, currently we're estimating SRF financing. That may change. We may do bank financing or bonds. Estimated debt service for the RO expansion is the SRF grant, the SRF financing at 0%, and then the bank financing that we currently have a line of credit for on that one. We do have estimated debt service for AMI equipment using bank financing. We did receive $1 million from the state grant to help fund that project. So that will be added into the final proposal as well. We have the estimated debt service for the MPF BPF listation 30 and force main project and again This one is multiple the SRF grant the SRF financing and bank financing The estimated debt service for septic to sewer we currently use bank financing and Again, we assume that the SRF loan reserves have to go up for those SRF financing Currently we have a policy to maintain a minimum of 3.1 million operating reserve. This particular policy I would recommend should be raised. We would either like to use the percentage method like we use in the general fund or a higher dollar limit because this particular reserve has been set for many years now and with the inflation and the cost of our services, the 3.1 is probably just a little bit low of trying to at least keep at least two months of operating. And for utilities, I would even suggest possibly a three month reserve because again, it's something that we really have to maintain those services even during downtimes or other things. We do also have one other reserve, 1.5 million in an R&R capital reserve. That particular reserve was established for bonded debt covenant and when we paid off those bonds, it was decided by the council at that time to leave those funds in that reserve for one, either emergencies or if we were gonna do bonds in the future, we already kind of have some of that set aside versus having to try and come up with it at the time we would need bonds. Other considerations that we kind of look at is that in water, you can have the volatility of water and wastewater revenues. There are many factors that can affect the usage of water by residents. You have rainfall, drought conditions, watering restrictions, or economic conditions. Again, we have uncertainty in economic forecasts and continued increases in some commodities such as chemicals. We will continue to work with our consultant to explore alternative financing for all of our projected financed projects. Legislative changes can happen. There's been one that's come over the last couple years about the surcharge for unincorporated county customers. So again, if that goes away, then that has to be absorbed by all the rate users. Continue to pursue grant opportunities to help the fund and help our projects. We talked about our assumptions for septic to sewer. Again, we estimated certain grant revenues of 25%. If we weren't able to obtain grant revenues for septic to sewer, you know that would also affect the plan. We continue to pursue opportunities with Charlotte County to maybe help add these areas to their master plan for possible road and drainage funding to be contributed to the septic to sewer project. and the timing of subject to sewer projects and cost estimate increases that may be expected as this data has not been updated in several years. So now I'll open up the floor for discussion. So I guess the one thing I would ask or get consensus on from everyone is first that we're okay with the 12% increase based on what the consultants have recommended for fiscal year 27. We would bring those resolutions to you in September for approval. And then on the thought of raising the reserve balance for that, are you okay with a percentage or do you want a flat dollar amount again?

You said two months of operating? Mm-hmm, yeah, 60. How much would that raise it?

So two months would be, hold on, let me look at that real quick. Let me get my calculator. I'm sorry. So two months would be approximately $3.7 million for fiscal year 27.

So from $3.1 million to $3.7 million, are you all OK with that? Yeah.

You even suggested three months.

I did. But again, any increase at this point would be beneficial. And we can kind of do it incrementally if you want to bring it back next year. But at least we would be getting a little bit better.

So let's do the two months for now, whatever it is. So 3.7.

OK.

Sarah, I think that was consensus yes on everybody.

OK. That's all I have.

So if by chance we just all of a sudden just went into the hole, we could always take the 1.5 from the bond and actually use it for operating costs if we needed as well. So we do have a little bit of a buffer that way too.

Yes, we do have that buffer. Thank you.

Anybody else? Yes.

Yes.

Yes.

I thank you all for your time.

Thank you.

Thank you.

Do we need any comments from anybody?

Dave Abderholden, chair. I'd just like to take the quick opportunity to thank you for allowing us to come in front of you and to take the opportunity, I'm not gonna rehash, we know what happened in the year with the county, the interlocal agreement, all that stuff. I'm not here to talk about that, but I am here to give praise to Mr. Spencer, who worked long and hard many hours into the night and he pulled a semi miracle out and I wanted to on behalf of the advisory board he's a pleasure to work with and he should be commended thank you then we will adjourn this meeting and while we adjourn it we're gonna take a little recess that we can break everything down and bring the microphones back up again okay