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07-12-1991 - Special '-' ...." CITY COUNCIL OF EDGEWATER SPECIAL MEETING JULY 12, 1991 MINUTES Mayor Wessler called the special meeting to order at 2:00 p.m. in the Community Center for Council to consider approval of Resolution #91-R-42, awarding the sale of water and revenue bonds, Series 1991. ROLL CALL Mayor Tanya Wessler Councilman Kirk Jones Councilperson Louise Martin Councilperson NoraJane Gillespie Councilman Michael Hays Interim City Attorney Nikki Clayton Acting City Manager Fred Munoz City Clerk Susan Wadsworth Police Chief Lawrence Schumaker Present Present Present Present Excused Arrived Later Present Excused Arrived Later Mayor Wessler recessed the meeting to await the arrival of Ms. Clayton. Chief Schumaker arrived during the recess and Ms. Clayton arrived at 2:10 p.m. Mayor Wessler called the meeting back to order at 2:11 p.m. Mayor Wessler stated it's been asked that this meeting be rescheduled until Monday and asked Ms. Clayton to explain. Ms. Clayton apologized for being late. She explained the notice that was publicized, because they failed to specify for Mrs. Koser that there were two resolutions, only showed one resolution so the resolution that's amending the resolution adopting the bond resolution in 1990 is going to be amended and restated. She said that is the resolution that must be considered and acted upon by Council first and then if you adopt it you must then award the sale of the bonds by the second resolution. She stated in view of the fact that the regularly scheduled Council meeting will be held Monday, to have an abundance of caution and be technically perfect, it was decided that we would go ahead, since it will not affect the sale that's been accomplished, and the people who will purchase the City's bonds were contacted and that will not be a problem with postponement. She said this will accomplish two things, you'll have a technically correct notice of the actions that will be taken in two resolutions opposed to this notice that said only one and you will have it considered and acted upon at a meeting that's regularly scheduled as opposed to a special meeting on a Friday afternoon so the constituency may be provided with more comfort as to due consideration of this matter. Mayor Wessler stated this will be included in the regular Council meeting. Ms. Clayton stated yes, to continue it for the first order of business after Citizen Comments. Mayor Wessler asked if it has to be an amended agenda. Ms. Clayton replied you'll put an amendment to the agenda and post it the same places you post your agendas and have the add on paragraph which restates the notice and separates the two resolutions. Counci lperson Gillespie pointed out one newspaper reporter is here today. Ms. Clayton stated they wanted to convene the meeting even though it's to be continued so that it could be explained to those who had the notice of the meeting so you would have an actual beginning, middle, and end to a specially called meeting and the continuation to be explained on the record. Ms. Clayton suggested a motion to continue the meeting to July 15 and schedule it the first order of business after Citizen Comments. Councilperson Martin so moved. Councilman Jones seconded the motion. Motion CARRIED 3-1. Councilperson Gillespie voted NO. Ms. Clayton asked the rationale for Councilperson Gillespie's no vote. Councilperson Gillespie replied she's having a problem with the entire situation at this time and she wants a no vote on record. Mayor Wessler asked what the problems are. Councilperson Gillespie replied she's submitting a list of questions to the City Attorney. Mayor Wessler pointed out shelll be out of town the 15th. Councilperson Gillespie stated when they were first elected and were briefed by Department Heads they asked Mr. Wadsworth if they could separate water and sewer and they were told they could and they went into a separation situation and addressed it separately all the way through. She said then she ..... .""", found the word "sewer" when they received this and it's no go and that had been her concern and she's stressed it all along. She added they all agreed water would be one thing and sewer would be another and she doesn't like SRF loans taking a second position to the bond holders. She said she understood from Mr. Mansfield and Mr. Berryhill that the SRF loans would be the sewer system complete and if they have a problem to separate out the sewer ordinance for rates from the water ordinance for rates. Ms. Clayton stated there's an easy explanation and these documents when you get to the final touches, and these are complex, and sometimes you don't have time to explain what they say. She added you have a combined water and sewer utility, and all the rate revenue is collected for water and sewer together and accounted for. Councilperson Gillespie stated no, there are two separate enterprise funds. Ms. Clayton said for accounting purposes they're combined and for business purposes it's considered essential to have water and wastewater combined because water is where you make the money and sewer is where you lose the money so the two together are complementary as opposed to stand alone businesses. She noted the sewer rate would be affected much more great ly if they don't have the water rates to even them out. Councilperson Gillespie stated they did in the past and they asked them to back out and cease to do it. Ms. Clayton explained they cannot stand alone in good utility practice, and around the State you'll find they're not separated out. She said a jurisdiction with water and sewer would often have been in the water business first and then decided they couldnlt continue dumping untreated wastewater into 1 akes and streams and so sma 11 ut il ity compan i es began to develop. She said the City of Orlando until the 60's dumped into huge drainage wells that still exist in that City but others realized they had to treat it. She explained they have primary, then go to secondary, and now this City's going to advanced wastewater treatment that you can use for reuse and discharge into Waters of the State. She said the AWT method is very expensive and it has to be spread over time as well as over a number of customers. She noted a lot of people on water systems have their own septic tanks and when they brought in the sewer it was generally for people who came later. Councilperson Gillespie stated 678 went onto the original sewer and did not abandon their septic tanks and that's another problem. Ms. Clayton said that's an issue of political will as to how you would treat those on septic and those available to sewer and the City was able to avoid confronting it. She added Florida Shores has a larger environmental issue to deal with and the utility system began with water and then sewer was added and the number of customers over which it is spread is not as many as water but it needs water rates to offset impact of unforseen treatment requirements that you have when you advance the process. She added they don't know when they'll shorten the time for you to discharge into Mosquito Lagoon. Councilperson Gillespie stated the water has always supplemented sewer in this City and Florida Shores has supplemented it from the beginning. Ms. Clayton stated that's not exactly true because rates are calculated for operational requirements for sewer on day to day basis but the sewer system when you need an upgrade that must be spread over a longer period of time then the ordinary rate on a monthly basis to a larger number of users. She said you can analyze the numbers as to who has supplemented who and youlll find there has been a meticulous effort to segregate so there's an accounting for any subsidy that may have occurred back and forth. She said because the environmental issue affects everyone in the City, whether on water or sewer or both, it's the determination of most cities that the way this City is doing it is the way it should be done. She added you cannot allocate on a house by house basis precisely the gallonage people use and charge them for it but you get close enough for government work. Councilperson Gillespie stated this addresses two bond issues, one on the BAN's and one on the water plant, and she'd prefer to pull the BANis out and roll them over and carry just the water on the bonds. Ms. Cl ayton said th i s issue is citing water and wastewater because they have a combined system but the money to be generated by these bonds is exclusively for water and water related improvements. Councilperson Gillespie stated it doesn't say that. Ms. Clayton explained the first project is refunding of the BAN's that must be taken out so you don't have prior liens and then the bond holder will have first lien on your utility revenues. Councilperson Gillespie said then SRF goes to second position and I know itls easier for the State to collect on second position if we default. Ms. Clayton explained therels no reason why the State ought not to be in a second position because they're not in the open market bidding. Councilperson Gillespie stated agreed, but said that's not what the State told her it would be with the SRF loans, they said they would be equal to the bond holders and equal is not 2 Council Special Meeting July 12, 1991 '-" ....., second place. Ms. Clayton explained there's no impact on the State because you do not care about the creditors if you are a debtor and as long as they get their money it doesn't matter if they take 5th position. Counci1person Gillespie said except past 3rd is illegal in the State of Florida. Counci1person Gillespie stated construction management is included for the full term of the bonds and th i s is awarded by th i s Counc i 1 and it shou 1 dn I t be included in the paper work as whoever is on board when this goes through stays the full 20 years. Ms. Clayton explained that's not correct and the document designates the existing engineers as those who will be relied upon and they made a substantial contribution to the document through their engineering report and it's their determination that gives the City the credit worthiness that people will purchase the bonds. Counci1person Gillespie stated they go out on the limb with us. Ms. Clayton explained not just Dyer, Riddle, Mills, and Precourt will be satisfactory to the bond holders, they want a Dyer, Riddle, or equivalent firm that will be performing the functions that gives the bond holders security the City is administering a program which is the largest program that will ever have been begun within the City. She added itls $40 million. Counci1person Gillespie stated it's an $88 million pay back. Counci1person Gillespie said we keep the right to put whoever is in charge of the oversight as this reads it's automatic and she doesn't want that. She said it also says the consulting engineer sets the rate and the Code says every July this Council sets the rates. She added she'11 give Ms. Clayton her list for her reply for Monday. Ms. Clayton explained people always have these questions about who the professionals are, why are they there, what is the specificity with which we have to deal with the bond holders in agreeing over a long term where we might be able to gear up with in house expertise, why would we need outside experts. She said they genera lly have for new issuers a requ irement on the part of underwriters and bond buyers, people on whose professional independent objective opinions you can rely. She said engineers have errors and omissions insurance which will cover some of the shortcoming of their decisions or opinions but in the meantime their opinions give a measure of comfort that the system will be operated according to best management practices and with BMP's you get an ongoing objective suggestion of rates so Council which can be effected by political reality will have someone telling them what the rates should be. She said if you end up with not enough money to pay back the people listed in the resolution and your rates are not enough and you discover that1s the problem, than you have independent engineers that the bond holders can go to who will say the rate has to be this to pay you back. Counci1person Gillespie stated there's a resolution for Dyer, Riddle to set the last rate study but we don't have to keep them to do every rate study. Ms. Clayton agreed, adding they have to say they'11 keep Dyer, Riddle or an equivalent engineer. Counci1person Gillespie stated she knew th i s was just a run of what they had before and th is doesn't app ly to th i s Council and shel11 give her the list to work on for Monday night. Ms. Clayton stated this resolution will come up for adoption and award at 7:00 p.m. and they have the public information session at 7:30. Council person Gillespie suggested she go over it with her before 7 p.m. on Monday. Mayor Wessler asked that all Council be involved if there are any changes to the resolution. Ms. Clayton said the only change would be at discussion with all the Council. Counci1person Gillespie stated Council controls what happens in this City. Mayor Wessler said she didn't get an impression that anyone would control this Council, and it didn't read that same way and she took it for what Ms. Clayton said that it was Dyer, Riddle or equivalent. Counci1person Gillespie said it doesn't say that in it, though. Mr. Munoz stated we do have a combined water and sewer system and within that we do segregate water revenues and sewer revenues, the water expenses and sewer expenses, and on this bond issue it will be about $13,650,000 and about $168,000 of that will be for bond underwriters, the same schedule as before, and it's $80,000 for issuing cost and attorneys, auditors, etc., and about $140,000 is insurance, MBIA, and about $1,129,000 of that money will go into debt service reserve fund and remain there forever and interest will go into a capitalized interest fund and we will put in an additional $1,200,000 because during the construction phase they don't have money to make interest payments so we in fact have borrowed the interest payment and wi 11 pay them from that as interest payments come due. He said they have to payoff BANis of $4,751,000. 3 Council Special Meeting July 12, 1991 .... .."" Councilperson Gillespie asked about what's left from that. Mr. Munoz replied that remains as money for the project and of this new money they have about $6,018,000 of project money plus BAN money and a portion of water impact fees, that are allowed to be used on the project. He said in 1992 weill have $1,100,000 coming from SRF back into the project. He said on exhibit 5 of the POS when you add water revenues and water expenses youlll find when you make the first Series 1991 debt service it's $155,000 and you have $960,000 of water money, either impact fees or net revenues, to make that payment of $544,000 in 1993 and in 1994 it's a debt service requirement of $1,089,018 and you have the $1,547,000 of water money. He added weill not have excess money at the end of the project to subsidize the sewer system and they're getting money from the SRF to reimburse what was spent of the $4.7. He said he had a recap on his last Things and it will be explained. He said the $4.7 million was used to defease the 1964 bonds and Gulf Breeze bonds, in turn the Gulf Breeze was previously used to defease the 1977 bonds and the 1978 was a Farmers Home Administration loan. He said he referred to the Comprehensive Annual Financial Report in his Things memo. He added he uses water and sewer bonds as gener i c terms and a 11 the fundings and projections show the payment of those debts will be out of water revenues and allowable appropriate impact fees. He said the SRF loan has as their primary security the assessment, and for those that are user fees they will be looking at net revenues of the sewer system. Councilperson Martin stated she talked to Mr. Munoz about the map looking like theylre going to the County with the piping and wondered why it was projected like that and if they expect to annex more land. Mr. Munoz said he thought that was the border around 35th and 36th Street and that's in the City limits and it's not the case to put water lines into Washington Park. Councilperson Gillespie said just so the map that goes with the bond issue is the map of the City. Mr. Munoz said this is the map of the City and the more specific map of the assessment is on the ha 11 way in City Ha 11. Council person Gi llespie asked if they picked up Arthur, Joseph, Alice, and one more that was supposed to come in the special assessment. Mr. Munoz said he'll look at the map and theylll know as soon as the people get their bills. Councilperson Gillespie said they were streets added after the 1986 draft. Mr. Munoz said this map is much more detailed and it includes portions of Florida Shores that are already sewered. Councilperson Gillespie said they're picking up all the business on Guava that were not sewered. Mr. Munoz explained it's all those that are listed in the legal description of the assessment rlistrict. Councilperson Martin moved to adjourn. Councilman Jones seconded the motion. Meeting was adjourned at 2:38 p.m. Minutes submitted by: Lura Sue Koser ATTEST: bJ~- Approved this 19thday of ~~~ MA R ._~~~""~~ \'i.. ((\\fl( . MAYOR '<:, ~ Excused ~~:~A- COUNCILPER~ZONE TWO ~ , .nV ';h-. ~ Ij~ CO N PERSON - ZONE THREE . , (Did Not Vote excused fronfm~~~rnt), j COUNCILMAN - ZONE FOUR 4 Council Special Meeting July 12, 1991