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08-25-2008 - Budget Workshop CITY COUNCIL OF EDGEWATER WORKSHOP AUGUST 25, 2008 6:00 P.M. COMMUNITY CENTER MINUTES CALL TO ORDER Mayor Thomas called the Workshop to order at 6:00 p.m. in the Community Center. ROLL CALL Mayor Michael Thomas Councilwoman Debra Rogers Councilwoman Gigi Bennington Councilwoman Harriet Rhodes Councilman Ted Cooper Acting City Manager Tracey Barlow City Clerk Bonnie Wenzel City Attorney Carolyn Ansay Present Present Present Present Present Present Present Excused INVOCATION, PLEDGE OF ALLEGIANCE There was a silent invocation and pledge of allegiance to the Flag. MEETING PURPOSE The purpose of the Workshop was to discuss the budget for the Enterprise Fund. Acting City Manager Barlow informed Council Finance Director McKinney would be walking them through the budget and anytime they had a question he told them to feel free and stop him and ask any of the staff members that were present. Finance Director McKinney informed Council he had provided them with the complete insert for Tab 6 which had been missing previously. He also provided them the other day the corrected amendment including the Enterprise Funds Tabs 8 & 9. Finance Director McKinney started his presentation by going over Tab 8 which was the Capital Outlay that was requested from the Enterprise Funds. Councilman Cooper asked if it would be to their advantage to lease the garbage truck even though they had the money for it. Finance Director McKinney informed him they could. He felt if they had the cash they 1 Council Workshop August 25, 2008 were better off paying cash. He spoke of it costing them money to lease. Mr. McKinney continued his presentation by informing Council of the items in the Wastewater Department, the IRP Motor and the two lift pumps, were critical and must be replaced. Mr. McKinney then commented on Tab 9, the CIP, the Renewal and Replacement Capital Project Fund with regard to items that were in desperate need of replacement and/or have a mandate from another agency whether State or Federal. All of the money to pay for that was coming from either prior year appropriations or a transfer from the Water and Sewer Development Funds or the 5% mandate of revenues from the Water/Sewer Revenues. Mr. McKinney then discussed 448. He informed Council of the $96,000 that was on this page for the CIP that was 100% funded by grant revenue so there was no actual outlay from their monthly stormwater fees. Mr. McKinney then referred to Tab 6, Page 2 regarding Major Influence for all the Enterprise Funds. There was a brief discussion regarding the worker's compensation going down from $513,000 to just over $300,000, which would be about a $90,000 decrease within the Enterprise Funds due to the City's claims being way down. Councilman Cooper asked Acting City Manager Barlow if he thought it might be time or if he would be able to reinstitute the Safety Program. Acting City Manager Barlow commented on instituting the EAP Program this year. Once they finally get the final contract if they have additional revenue associated with those savings then he would like to look at the Safety program itself and incentives. Mr. McKinney then commented on the General Employee Pension Plans. He made mention of the health care cost going up by 3%. Mr. McKinney then commented on the total effect of the cost allocation in the budget year they were going through tonight being $659,125. He spoke of having some increases and some decreases with regard to insurance. Mr. McKinney then commented on Fund 440, Page 2. Within the Charter it states the annual review increase would be sufficient to operate and maintain their current facilities. He put the 440 budget together at 4.6% to maintain our facilities. If they go from 4.6% to 3% the difference would be $84,000 between the water and sewer monthly fees. Councilman Cooper asked if he could still make it budget wise if they went to the 3%. Mr. McKinney referred to Page 28 and stated at the 2 Council Workshop August 25, 2008 end of the year they are only budgeted to have $44,460 remaining. He felt when the City's consultants came in to discuss the infrastructure needs at the Water and Wastewater Plant that what would be presented to Council would be in excess of what he was presenting to Council tonight. He felt he could keep a balanced budget at 3% but there was no contingency if something catastrophic was to happen. At the current time water/sewer was maintaining almost a zero cash position every month once revenues are taken into account and the expenditures going out. They were just barely making it. He spoke of there definitely being some infrastructure improvements that needed to be done at the both the Water and Wastewater plants. Councilwoman Rhodes made mention of the inflation rate being at 9.8% which she felt would need to be accounted for in the budget as well. Mr. McKinney commented on putting things off in the past because they budget for something and a year later it was double the price. No one wants to see a 4.6% increase but their infrastructure demands it for them to stay competitive. If they don't start addressing their rates their bond advisors have told them based on their current debt their rates could not support an increased debt load. He spoke of their debt payment alone in 440 increasing this year by over $900,000 with some of that being because they are in the last two years of the debt schedule for some of their debt. Acting City Manager Barlow commented on having an engineer coming in to do a pretty comprehensive study. Essentially some of the portions of the Wastewater Plant they were going to do a comprehensive report on what needed to be addressed in the very near future so they could start to plan for those over the next five years and prioritize. Some of the repairs had been neglected over previous years. Councilman Cooper commented on noticing there was no capital expenditure for the generator. Interim Environmental Services Director Brenda Dewees informed him they had maintenance activities for all the generators throughout the City. They went out for bids for citywide maintenance and had just negotiated a new contract. As of right now, they did not recommend that they are in need of replacement of the generator this year. There was a brief discussion regarding there being a maintenance agreement on the mobile generators. It was determined both of the generators at the Water Plant and Wastewater Plant were 15 years old. Ms. Dewees informed Council they would be bringing back a proposal for a comprehensive facilities management plan for the wastewater plant and all the wastewater facilities, for that to be looked upon. Mayor Thomas felt they had to address that. He commented on climbing down the manhole by Councilwoman Rogers' house to check the pump. He asked when that was put in because it looked ancient. Ms. Dewees felt 3 Council Workshop August 25, 2008 it was probably the original from 1963. Mayor Thomas felt they needed to plan on something. Ms. Dewees informed him that lift station and the lift station by Veterans Park were both in this budget for replacement. Acting City Manager Barlow stated they also had both of those lift stations on a local mitigation strategy list and there were grant opportunities they were going to keep applying for as well. Ms. Dewees commented on there being some replacements of pieces and parts on both of those generators that had been done over the years. Mr. McKinney stated they could go back to 3% but if they look at Fund 442 and 443, in both of those funds there was a $500,000 transfer to Fund 440 to make the debt payment for the 91-93 bonds. This has been going on now for several years that the water development fee, which can be used for debt payment, was helping to support the normal operations of Fund 440. At the end of the 08-09 budget year, there would be none until Restorations etc. came on board. Those two funds had been completed depleted. This was the last year of that. They get through mid 2010 they will be okay with their debt schedules but if they don't do the 4.6% increase this year they could definitely see an even higher increase for normal operations in the 09-10 budget year. He then spoke of making a transfer from Fund 442 of $783,000 which was to help Fund 444 for the CIP and making a transfer of $587,000 from Fund 443 to help Fund 444 to fund the necessary infrastructure improvements and replacements within their aging infrastructure. Councilwoman Rhodes asked Ms. Dewees with the infrastructure problems they have if they got 2 foot of rain here how would that impact it. If they got 20 inches of rain here, do they have the infrastructure that would not fail immediately? Ms. Dewees stated any time you have that that kind of a water problem they would have their manholes inundated which causes infiltration into the sewer system which in essence ends up in your sewer system and they have to pump the water from the sewer system to the plant so they would be running at capacity and it brings in stormwater to the plant which has to be treated. Anything that would fail immediately it was hard to say. It would depend on how long the water would last and stick around and be there. It would definitely be a problem no matter what City you are in. Councilwoman Rhodes commented on doing things right now to get by. with a problem like that was there anything they were doing to get by that maybe they should not get by with. Maybe they should take care of it immediately so in case they have that problem they don't end up like Brevard County. Councilman Cooper asked if they had a plan in the works already with their lakes where they were going to start tying them in so they can transfer stormwater and things of that nature. Acting City Manager Barlow pointed out they had a consultant come in two years ago that 4 Council Workshop August 25, 2008 came in and did a Stormwater Master Plan for improvements. Eastern Shores was one example of that. He commented on identifying areas of concern that would need more improvement if they were to have a storm event. He spoke of there being grants out there that cities can apply for to purchase homes, tear them down and make a stormwater conveyance system, which they were looking at. He then commented on how it relates to the sewer system itself and things that can be done to prevent stormwater infiltration as they plan and look forward and monies are available. Councilwoman Rhodes mentioned doing it sooner rather than later. Acting City Manager Barlow informed her they were as monies became available. Councilwoman Rhodes felt that was the key phrase "as monies are available". Acting City Manager Barlow commented on looking for grant money and opportunities. He spoke about one of the initiatives they decided to do most recently being to look at the wastewater plant itself. Have an engineer go through and make a comprehensive three to five year plan on the condition of the wastewater plant, what needed to be done to maintain the current condition and offer suggestions or opportunities for expansion. They will have a list that they could prioritize and start to fund these projects over a five year period. He spoke of the next phase being to look at the infrastructure outside of the Wastewater Plant. Ms. Dewees informed him there was $200,000 in the budget to do slip lining. They have pretty much committed themselves in years past to do $100,000 of slip lining of some of the older clay pipes. Last year they did none so this year they put $200,000 to make up for not doing it last year. He spoke of there being no capital improvement projects or capital items that had been funded over the last couple of years and this being a problem they are dealing with now. Acting City Manager Barlow commented on being all about planning and not liking to react to what happened yesterday but he likes to plan and be prepared for tomorrow. Councilman Cooper asked Ms. Dewees if she had anything on her priority list that she felt they didn't need to waste time on. Ms. Dewees stated in the past they had prioritized it and did several different areas. Everything they felt was an immediate need was addressed in this year's budget. Councilwoman Bennington asked if all the Enterprise Funds could stand alone and support themselves. Mr. McKinney informed her in the budget currently as proposed everyone of them could stand alone. Councilwoman Bennington asked if that was based on a rate increase to 4.6%. Mr. McKinney informed her it was 4.6 in Water/Sewer, 10% in Refuse and 16% in Stormwater. Councilman Cooper expressed concern with having enough generators for the lift stations and asked Ms. Dewees if she felt comfortable with the number of lift stations they have available now that if they had a major power outage they would have enough generators to keep them 5 Council Workshop August 25, 2008 running. Acting City Manager Barlow commented on the hurricanes in 2004 being a good test. They had a good plan in place. Ms. Dewees stated they had enough generators for 10% of their lift stations. They also had in the Land Development Code any lift stations that had pumps of 20 horsepower more had to have onsite generators. They currently only have one lift station in the western wellfield area that wasn't being used at this point because the infrastructure and development for Reflections had not come on line. The rest of the generators they had within the City seemed to be sufficient. They have done a good job over the last four years of meeting with Florida Power & Light and having them recognize they had these areas of concern they needed to be more diligent on. Councilman Cooper stated as more developments came on they would have more lift stations. He asked Ms. Dewees if she had a formula worked out for every time she had so many lift stations to maintain the 10% they had to put on so many more generators. Ms. Dewees informed him they try to follow that program so they can be sufficient. If it is a large lift station they are going to make them put on onsite generator that automatically comes on if there is power lost. Mayor Thomas stated he heard a consensus of Council to give Ms. Dewees the go ahead and not to gamble but to have Plan B in effect. Mayor Thomas stated all of their stormwater drainage goes to the Indian River eventually. He commented on needing to protect the Turnbull Hammock system. Councilwoman Rhodes asked about the 16% increase in stormwater. She asked why they needed a study. Mr. McKinney stated on the stormwater plan he was only reaffirming what he did for 2006. They weren't really paying anything for stormwater. To balance this budget he went from $6 to $7. If they look at what was proposed in 2006, by now they would be paying close to $9 a month. At $7 per month they are covering the City's cost with $100,000 repayment to the General Fund based on the $1.4 million that was transferred to cover their negative cash not including the $300,000 they were short in the current year. He felt there was probably more than a $1 a month increase necessary for the Stormwater Fund for the overall payment to the General Fund. In 448 in the current year budget $593,000 out of the $1.44 million was for debt repayment alone. 41% of their total current budget was for debt repayment. They spent a lot on debt in prior years for stormwater. They were looking at ways to potentially refund some of that money that was paid for some of the stormwater needs. They were waiting to get the approval from Darren in their ordinances. The $7 rate per month would bring in a residential increase of $117,000 for an entire year. Mayor Thomas asked if that was enough. Mr. McKinney informed him it was to be status quo at next year's budget. It is a balanced budget. 6 Council Workshop August 25, 2008 Councilwoman Bennington stated they knew it was a balanced budget and asked if they were planning ahead any at all with this or if they were balancing it by the string of their teeth. There was a brief discussion regarding validating transfers. Mr. McKinney commented on this whole issue stemming back to a budgetary issue. He commented on operating transfers. They could still do that this year. They could say they were going to do an operating transfer to stormwater for the infrastructure improvements and that debt would go away. If that was what Council wanted him to do he would bring it up in one of their next meetings. He suggested that to the auditor and she said it was fine if it was approved. Acting City Manager Barlow then commented on the purchasing policy they recently adopted. He referred to the investment policy and those policies officially allowing Council to make those loans among funds. Mr. McKinney didn't think there was any stormwater system in the State of Florida that could stand on its own. He spoke of the infrastructure being handled by the monthly fees but the maintenance is handled by some General Fund departments in some cases. In their case they set it up as an independent, self supporting department, which it really isn't. Over 50% of their support comes from other than their charges for service. In this case, they are covering over 50%. If they look in this year's budget it is balanced with no transfer from the General Fund. They stopped that bleed in last year's budget. Councilwoman Rhodes felt they had to do something about the $1.5 million otherwise it would always be there and they would have to deal with it. Acting City Manager Barlow pointed out the auditors would continue to recognize it as well. Acting City Manager Barlow asked Council if they wanted him to bring that back to them on September 8th for consideration. Councilwoman Rhodes and Councilwoman Bennington both felt they needed to. Councilwoman Rhodes questioned why they had to pay back the debt in five years and why they couldn't pay it back in twenty years. Some of the debt of the federal government is owed to itself which she felt was really not debt. Councilwoman Rhodes felt that took care of the Enterprise thing where the user fees pay for the service. The users pay for it as opposed to all of the taxpayers. She felt it would satisfy the user pay for the service and yet not put such a burden on that fund that it would cause such a rate hike that it would distress. Mayor Thomas felt not only did they need needed a suggestion on how to handle it. informed him they would bring it back on suggestions. it brought back up but they Acting City Manager Barlow September 8th with 7 Council Workshop August 25, 2008 Mr. McKinney then commented on Fund 447 - Refuse and the 10% increase. Our current contract with Southards was $269,000 and the current year budget for recycling they are only taking in 250,000 in revenue for recycling. It is costing the City $20,000 more than they are taking in for recycling. Councilwoman Bennington asked Ms. Dewees what our percentage of recycling was in the City. Ms. Dewees stated the last time she looked we were right at about 18%. Councilwoman Bennington didn't feel that was very good. Ms. Dewees spoke of the promotional activities they are doing to try to promote people to recycle more and it is in their contract with Southards for them to help and assist them with the cost of that and they are fully willing to do that. Councilwoman Bennington felt a lot of people may not know exactly what they can recycle. She felt they could put pressure on the recycling company to help them educate people more. Councilwoman Rhodes questioned businesses being mandated to recycle 20%. Ms. Dewees commented on businesses contracting out with their dumpster services. Councilman Cooper asked about doing a survey to see if recycling was something they could turn into an Enterprise Fund. He then commented on determining whether or not it would be feasible for the City to take over the recycling. Southards is making money and the City is losing money. Councilwoman Rhodes pointed out Edgewater is not the only City he collects from. She spoke of problems they have had with recycling over the last ten years. Acting City Manager Barlow commented on taking over recycling being something they have talked about but taking care of so many projects this year it is still a priority but has fallen lower to some other things they have had to react to today. They want to put together a comprehensive study to look at the cost of the City getting back in the business verses continuing to contract out. He spoke of outgrowing the Public Works facility and wanting to obtain land across the street. He also spoke of the expansion of the Wastewater Plant, which is also located on the same site as Public Works. He spoke of needing to understand the recycling business more with regard to how much space they would need to store and how long they could store for. Councilwoman Rhodes mentioned the costs associated with the personnel that would be needed. Acting City Manager Barlow assured Council the reclaimed water also was not falling on deaf ears. Councilwoman Bennington stated she has always found when you hit people in the pocketbook is when you get their attention. If they let them know the garbage rates were going up because not enough people were recycling maybe that would be a way to go about educating people. Acting City Manager Barlow spoke of another opportunity to look at down the road which he has seen in other communities being only 8 Council Workshop August 25, 2008 allowing for one garbage can and charging for additional cans which encourages people to recycle more. He spoke of those communities not being as clean as Edgewater because of Edgewater picking up everything that is put to the curb. Councilman Cooper asked who supplied the bins. Ms. Dewees informed him that was the City's cost. Councilwoman Rhodes questioned what happens if people put everything in their bins that they think can be recycled. Councilwoman Bennington informed her the recycling people throw it on the ground next to the recycling bin. Ms. Dewees stated they are supposed to leave it in the bin. Acting City Manager Barlow commented on these being initiatives they want to look at. He spoke of wanting to encourage people to recycle from an environmental standpoint. Councilwoman Bennington was thinking if all the residents in Edgewater had rain barrels how much water they could save. Councilwoman Rhodes stated she had a rain barrel and she uses it. Mayor Thomas spoke of having new houses having a big tank and the gutters go into that tank with a pump to save that water. He spoke of it either being wet or dry in Florida. There was a brief discussion regarding doing things to save water but it costing money. They have to think of more innovative ways. Mr. McKinney stated based on their current level of service to maintain their current operations they need the 10% increase on refuse and recycling rates. He then spoke of creating a new department division within the Refuse Fund to track the recycling expenditures. Mr. McKinney informed Council they had identified a few items that have come up like the worker's comp so when they came to Council on September 8th for the first public hearing they would have all of those items to Council. Mayor Thomas then asked what they were doing for the City employees. During the tough years they gave things up but they have to give them something to look forward to in the future. He asked if they were planning something in this budget that they could look forward to. Acting City Manager Barlow informed him they had budgeted a 3% increase, which was more than what other cities were giving. Mayor Thomas commented on the recent tropical storm we had and expressed his feelings regarding the City employees being the best in the business. 9 Council Workshop August 25, 2008 Councilwoman Rhodes asked if they a mechanism in place to reward the employees for helping with the storm. Acting City manager Barlow informed her they can't recognize a select group of the employees that had the opportunity to come in and work the storm. He felt everyone of the 189 employees would have been there had it been permitted but they didn't have the work for 189 employees to do. They have to make sure they do it for all the employees. He suggested doing another employee picnic. Councilwoman Rhodes suggested they go to Publix or Winn Dixie and ask them for gift certificates for the employees of the City that worked so hard during the storm. They do it as a tax write off and as a charitable thing. Mayor Thomas wasn't happy with the 3% because of the rising cost in gas, which affects everything. Acting City Manager Barlow informed him there was opportunity there possibly and they could go back and do some number crunching. He commented on those being some of the discussions in the executive session. He suggested they further those discussions in the executive session after they get into the union negotiations. He felt there was some room for negotiations. Councilman Cooper felt the budget had been prepared very sound. He spoke of having some buffer zones. Councilwoman Bennington stated they had an election year maybe coming up next year. She doesn't want to see them put in a position where they have an election year and they have to cut to the bone. She wanted to make sure they were covered enough that they could do what they wanted with the employees and give them a reward for their dedication plus do some capital improvements that they need and cover everything and to have to worry about it being an election year. Acting City Manager Barlow reminded Council the budget they presented saved every position as well as they have a 3% salary increase. Councilwoman Rhodes stated they have also for two years asked the employees to bite the bullet and they needed to make their jobs easier somehow and stop overworking them or some kind of recognition needed to be made that they stood with them. Acting City Manager Barlow felt that was fair and agreed to present some ideas to Council. Councilman Cooper suggested they ask for a reduction in the recycling contract because he was now making twice as much as he was six months ago. Acting City Manager Barlow stated he could talk to him about that. ADJOURNMENT There being no further business to discuss, the workshop adjourned at 7:08 p.m. 10 Council Workshop August 25, 2008 Minutes submitted by: Lisa Bloomer 11 Council Workshop August 25, 2008