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07-10-1989 - Special/Workshop r . .... ~ ....", CITY COUNCIL OF EDGEWATER SPECIAL MEETING & WORKSHOP JULY 10, 1989 MINUTES Mayor Mitchum called the meeting to order at 5:00 p.m. in the Edgewater Library. He stated the purpose was for: negotiating with Mr. Elly Johnson for the position of City Manager, and for presentation by the Finance team for the Capital Improvements program. ROLL CALL Mayor David Mitchum Councilman Dan Hatfield Councilwoman Gigi Bennington Councilman Russell Gold Councilman Thomas Fish City Attorney Josel Alvarez Acting City Manager Susan Wadsworth Chief Lawrence Schumaker Present Present Present Present Present Present Present Present Also present were: Mr. Elly Johnson; Mr. Ron Ferland of Dyer, Riddle, Mills & Precourt, Inc.; Mr. William Zvara of Livermore, Klein & Lott; Mr. Burt Saunders and Mr. Fred Pauzar of A. G. Edwards & Sons, Inc., and Mr. Fred Munoz, Finance Director. Neaotiatina with Mr. Ellv Johnson for the position of City Manaaer - Councilman Fish stated that held talked with Mr. Johnson about the employment agreement and they came up with various terms and items and feels this is a good working docu- ment as frame work and for most of the contents. He asked Council to review it. Councilwoman Bennington asked about Number 3, Severance, in the event the City wants to terminate with cause since only severance without cause is addressed. Mr. Johnson replied that if it's with cause there is no severance pay and he wouldn't be eligible for severance pay. Councilwoman Bennington asked what was considered to be sufficient for notices and if it should be in writing. City Attorney Alvarez replied it's standard language no matter what the agreement is that notifications should be in writing rather than verbal. Councilman Gold asked if severance would stop when he re-entered employment. Mayor Mitchum replied severance is paid at one time and he noticed it's a step and escalating type of severance pay. Councilman Fish pointed out he'll earn his severance pay rather than handing it up front. Councilman Gold asked about the policy with the Society of Executives. Mr. Johnson replied they'd filed the policy with the State Insurance Commission and if it's approved, it will be 1/2 of 1% of his salary but held have to be in the program for a year. Councilwoman Bennington noted it would cost about $200 a year. Councilman Gold asked if that's been approved yet. Mr. Johnson replied itls been at the Insurance Commissioner's for 2 to 3 months but it takes awhile. Mayor Mitchum suggested they could opt into it after approval. Councilman Hatfield asked if the sick leave would be the same as other employees because other employees have a limit of 320 hours. Mr. Johnson replied held asked for it because it would be to his benefit if he left. He added that he doesnlt want any more days than others, but wanted that accumulating factor. Councilman Hatfield said he has no problems with that. Councilman Fish noted it wouldn't cost the City either way. Mayor Mitchum pointed out the last Manager came in with 80 hours. Councilwoman Bennington asked if the six months for severance pay would be the cap no matter how long he's here. Mr. Johnson agreed. Councilman Fish pointed out they'd have the option of American Society of Executives to take care of it '-" ....., which would be a benefit to the City if it goes through. Councilman Gold noted that was a big stumbling block because citizens felt they were blistered a couple of times and they don't want it to happen again. Mayor Mitchum pointed out they won't get anyone without the severance pay. Councilwoman Bennington asked if held get severance pay if he left voluntarily or has to leave for some reason. Mr. Johnson replied if he voluntarily resigns they don't owe him severance pay, but if they want to fire him he'll stand his ground and they'd owe severance pay if it were without cause. He added that if they do a background check and find cause from something in there, he doesn't have a problem in that respect. Councilman Fish stated that under Fringe Benefits, item 2E, automobile allowance, he doesn't want a City automobile but wants an allowance to use his own car for travel within Volusia County. Mr. Johnson pointed out held be reimbursed like any other employee for travel outside the County, but he feels it's better to have his own car. He added that he has the $300,000 coverage for his car to protect him and the City. Councilman Fish stated he felt $400 was a little high. Mr. Johnson disagreed and suggested they check with other cities. He reviewed the costs for maintenance and operation and insurance. He added that a lot of cities are paying car allowance for Department Heads. Councilwoman Bennington pointed out the price for maintaining a City car is for 24 hours a day whether it's used or not and he'll be using it 8 hours a day for business and the rest of the time is for personal use. Mr. Johnson stated that he's on call 7 days a week and 24 hours a day. He added that he receives $250 a month now in a City with small square mileage and he feels strongly about the car allowance. Councilwoman Bennington stated that the average per lCMA is $1,388 a year for a City Manager1s car allowance. Mayor Mitchum asked if that includes per diem or cars furnished with that figure as he feels $400 is high and $1,300 a year is low. Councilwoman Bennington replied the figures are from 1984 but she feels $400 is a little high. She added that the salary is higher than they advertised and perhaps they could negotiate the car allowance, and he wants re-evaluated at the end of six months and they could possibly adjust at that point. Mr. Johnson stated he did the analysis and feels it's necessary because of the capital improvements and the travel that will be involved. He added that a City about 20 miles South paid $50,000 for a City Manager and he feels this is reasonable and he won't ask that the car allowance be adjusted. Councilwoman Bennington asked if it will stay as long as he1s City Manager. Mr. Johnson replied unless something drastic happens for the three years of the contract. Councilman Gold asked what would fall under miscellaneous expenses. Mr. Johnson replied it would be meetings with various people. Mayor Mitchum added it would be for luncheons and out of pocket expenses. Mr. Johnson stated the health plan is the family plan because he has to insure his two children and before they covered it by Cobra. He added the 1 ife insurance is for his own protection and to protect his family so the children can finish school. Councilman Hatfield asked about the life insurance through the City. Mr. Johnson repl ied it I S over and above what the City has for employees. Mr. Johnson stated that he feels he can live with the moving expenses and it's from the old contract. Councilman Gold noted a neighbor just moved from New Jersey for $2,400 so that would be reasonable. Mayor Mitchum stated it would be cost. Councilman Gold agreed it would be up to $2,000. Councilman Fish stated that Mr. Johnson had advised him held go out on bids and take the lowest bidder. Mr. Johnson agreed he'll get at least three quotes and take the lowest. Councilwoman Bennington stated she'd added up some of what Mr. Johnson is asking with what Mr. Powers had but it doesn't include all the items since they don't have the dollar amount for vacation and sick leave and it comes to $62,000 a year with $400 car allowance per month and Mr. Powers I total was $63,528 which doesn't include car mileage but does include vacation and sick time. Councilman Fish pointed out that Mr. Powers' agreement got a lot of things behind the scenes and Mr. Johnson is asking for them up front. Councilman Hatfield noted that Mr. Powers got more benefits and less salary and Mr. Johnson is asking Council Special Meeting & Workshop Minutes July 10, 1989 2 '-' .." for more salary and less benefits. Councilwoman Bennington stated that she'd added the $2,000 moving expense which is the maximum and it may be less. Councilman Hatfield stated that if they bought a car there will be a car payment of about $300 for five years plus gas and operating expenses so he doesn't feel it's that far off and they shouldn't be hung up on it. Councilman Fish asked if held accept $350 a month car allowance. Mr. Johnson replied he prefers $400 and feels he gave a lot, and if they look at dollar for dollar, you get a lot more experience. Councilwoman Bennington noted they'll save severance pay because they III keep him for three years. Mr. Johnson commented that they know what he makes now and he took a cut in pay because he wanted to make a change and have a change in environment and move here. Councilwoman Bennington asked when he could give notice. Mr. Johnson replied he hopes to be on board two weeks from today on the 24th unless they decide to pay him for the two weeks I notice and it could be sooner. He added that he doesn't have a contract where he is and is not obligated to 30 days' notice. Councilman Hatfield asked what notice held give if he decides to leave here. Mr. Johnson replied standard is 30 days with a contract but it's not required without a contract. He agreed he had no problem with adding it to the contract under notices. Councilman Hatfield asked if held advise the Council if he decides to seek employment elsewhere. Mr. Johnson replied it depends on the circumstances and held call all five of them. He added that situations are sometimes created by people soliciting a City Manager or turmoil gets so bad the Manager loses his effectiveness. Councilman Fish asked if deferred compensation at 10% is the same rate other employees get and it's instead of the City's retirement plan. Mr. Johnson agreed that should be whatever is for the employees would go to ICMA. Councilwoman Bennington conceded on the item. Councilman Hatfield asked Fred Munoz, Finance Director, if there were any major differences on the financial items on the contract compared to Mr. Powers I contract other than salary and car allowance. Mr. Munoz replied the vacation is earned at a greater rate and the severance pay is in steps. Councilman Fish pointed out they don't have to pay him 3 months if he decides he doesn't want to stay. Mr. Munoz stated held given them a comparison and Councilman Fish noted that was on the agreement he I d worked on preced i ng th is one. Counc ilwoman Bennington stated she prefers it be up front rather than hidden behind. Councilman Hatfield agreed. Councilman Hatfield stated that Councilman Fish and Mr. Johnson had done an exceptional job of hammering this out and he praised them for the hours spent. He noted it was a very professional way to do it. Councilman Fish stated after working with Mr. Johnson on this and doing research on the compensation of other City Managers in the area, he moved they accept the employment agreement. Councilman Hatfield asked to amend Section 3 that he give 30 days notice. Councilman Fish agreed with the inclusion to Section 3 of a 30 days notice as part of his motion. Councilman Hatfield seconded the motion. City Attorney Alvarez suggested the motion include directing the appropriate City officials to execute the agreement as amended. Councilman Fish withdrew his motion and Councilman Hatfield withdrew his second. Councilman Fish moved they accept this employment agreement with the amendment to Section 3 adding 30 days notice and authorize the appropriate City officials to execute the agreement. Councilman Hatfield seconded the motion. City Attorney Alvarez suggested they change 3 to IIvotell instead of IIratell. Counci lman Fish noted that's an editorial change and asked if it needs to be included in the motion. City Attorney Alvarez replied no. Motion CARRIED 5-0. Mayor Mitchum asked about the status of the backgrounds from other cities. Acting City Manager Wadsworth said she spoke to the Captain of Cocoa Beach who had located the personnel file but there was no background investigation. Mr. Johnson pointed out the former Chief did it. Mayor MItchum asked if Council Council Special Meeting & Workshop Minutes July 10, 1989 3 'W' .."" wants to pursue this because the background from the Miami Shores current Chief said it was conducted by others and all responses are positive and he spoke very highly of him. Councilwoman Bennington asked if they requested one from Tampa. Acting City Manager Wadsworth replied she'd talked with Chief McIntosh and spoke to Phyllis from the Personnel Office. Mr. Johnson pointed out they're not in the Personnel files but are in the Police files and the Lieutenant who did the report was Jimmy Day. Acting City Manager Wadsworth said it wasn't in his office. Mayor Mitchum suggested they contact the present Police Chief and get the information they have. Councilwoman Bennington asked about Cape Coral. Mayor Mitchum repl ied that was done and it I S in the report. Counci lwoman Bennington pointed out he's been in the position 20+ years and if anything were going to show up it would have shown up by now and she'd personally spoken to several people. Mayor Mitchum stated held spoken with Ray Sittig of Florida League of Cities who spoke very highly of Mr. Johnson and he considers that a big plus and respects his opinion. Councilman Fish stated held talked with Ken Small of Florida League of Cities also. Councilwoman Bennington stated she'd spoken to several City Managers around the State and got nothing negative, even though she'd tried. Mr. Johnson pointed out that he was asked again to serve on the State Ethics Commission and he never had an investigation on himself. Mr. Johnson stated held be here on the 24th and will leave an insurance bill with Mr. Munoz. He thanked Council and said he' s looking forward to great years together. He added that he'll be talking with the staff and the City Attorney as he reviews some of the papers. He left the meeting at 5:42 p.m. Mayor Mitchum called a short recess at this time. Mayor Mitchum called the recessed meeting back to order at 6:04 p.m. He requested a motion to go from the Special Meeting into the Workshop. Councilman Fish so moved. Councilman Hatfield seconded the motion. Motion CARRIED 5-0. Presentation by the Finance team for the Capital Improvements Proqram - Mr. Fred Pauzar, A. G. Edwards & Sons, Inc. explained the session was to inform Council what steps they1d taken and the directions from City staff and repre- sentatives. He briefly recapped the planned Capital Improvements Program. He suggested they have this meeting on a regular or semi-regular basis so that in workshop session theylll be able to bring them up to date and to get directives. Mr. Ron Ferland, Dyer, Riddle, Mills & Precourt, Inc., stated the CIP objectives are to provide for public health and welfare and betterment of this community by eliminating septic tank leaking and pollution and to provide high quality water supply for domestic consumption and fire protection and to protect the Indian River quality by controlling what they discharge to the river, ground- water resources management by re-use of wastewater irrigation, and to provide paved roads throughout the City. Mr. Ferland stated the projects they have related to the programs include con- struction of a water treatment plant and wellfield expansion and they're about 50% complete on the design of the plant and will begin construction about November or December on the wellfields and about January or February for the water plant. Mr. Ferland stated another project is the transmission of the water to the center of town with a 20" main down 442 from 1-95 and a 12" line from Roberts Road to Silver Palm. He noted that construction on the transmission main will start in the January, 1990, time frame and they're 30-40% complete on that design and are awaiting borings and other information. Mr. Ferland stated the third project is the stormwater master plan and they're gathering background information. He displayed a map for the Council and the audience to review which showed water carried from all the private or public developments to the Indian River. He pointed out the intent of the Master Plan is to identify improvements to the City's primary drainage facilities and alleviate chronic flooding problems. He added that they1re developing a stormwater utility to fund this project and it should be executed in October, 1989, to coincide with the City's fiscal year. Council Special Meeting & Work;shop Minutes July 10, 1989 4 ........ .",., Mr. Ferland stated the fourth project is the Florida Shores infrastructures to provide wastewater collection in Florida Shores for current and future residents using a low pressure system with pump stations to pump to a main lift station. He added new residences will have it installed as part of the wastewater system. Mr. Ferland stated another project is the water distribution system with 6" or greater 1 ines to provide fire protection in Florida Shores because they're predominately 2" lines now and suffer pressure losses. Mr. Ferland stated the last two projects in Florida Shores are paving and drainage. He added that the installation of the wastewater re-use distribution pipelines in Florida Shores will be carrying highly treated effluent to be available to homeowners to for irrigation for landscaping. Mr. Ferland stated the fifth project is the wastewater treatment plant upgrade and expansion which will take the plant from a secondary treatment facility to an advanced facility. He pointed out they'd have to upgrade it regardless and they have no land use applications so discharge to the Indian River is the most cost effective effluent disposal. He added that expansion is to meet the Florida Shores residents load and accommodate growth. Mr. Ferland stated the miscellaneous paving and drainage projects include Turgot Avenue and Canal Street. He noted that these projects will impact the standard of living and better the property values and values will be greater than the improvements. He pointed out the longer they wait, the more costly it will be. Mr. Ferland provided Council with CIP Progress Report #1 and said they'll initiate a monthly report to keep communications open and show what they intend to do in the upcoming month. Mr. Pauzar had distributed brief memos to summarize their information. He said funding is necessary in 1989 to get the project off the ground. He said to avoid issuance of long term debt issues and financing they could get a $5 million or less loan for the City in 1989 on a tax free basis under the current tax laws. He said they did a credit analysis to see what kind of interest rate they'd be looking at and found the utility system is relatively inexpensive and users are getting a good deal with revenues adequate to pay existing debt but not adequate for debt for $5 million borrowing because there's not enough money coming into the system. He said they looked for a source as the City doesn't want to inter into a general obligation debt and looked at paying off the old debt but they have existing debt on the 1964B series and loan from Gulf Breeze and it was less than $2 mi 11 ion but because of act ions by the Federal government there are regulations that say if you refund or payoff the Gulf Breeze Pool money the City could end up with a greater tax liability than the proceeds from the new financing. He said they looked at a major bank to guarantee the cost of financing and MBI was interested but negotiations fell through. He said they concluded the only type of financing would be to go with a privately placed borrowing that wouldn't require the City in this calendar year to make any payment at all and wouldn't require rushing through with a rate increase on water and sewer until a study is completed. He added that it would be a loan from a bank or a financial institution, but not bond sales, and traditionally you go to a local bank or create a competitive environment. He said they structured documents with bond counsel and created without obligating the City a security of a 364 day one year loan with no payments due until after one year. He pointed out the City has to state that before the year is over they'll issue long term bonds or give them a guarantee that they'll raise rates or do something to provide funds to payoff the notes. He noted that the greater interest is with commercial banks and these bonds would have an opinion from the bond counsel that they1re bank qualified. He predicted the City will get approximately a 7% rate and the remainder of the money can remain in suitable investments which theylll assist the City in selecting and the City can keep the positive earnings. He stated they'll borrow close to the ceiling because anything they don1t use is an added source of income to the City and will pay its own way and more. Mr. Pauzar stated that seven institutions have gone through the process with them since they first began discussing it and the bid is due this Friday and they'll come back to the City next Monday with the interest rate. He pointed out this Council Special Meeting & Workshop Minutes July 10, 1989 5 ...... .."" will provide the money required and they'll invest it and whatever they don't use, the better off theylll be. Councilman Hatfield noted that arbitrage can be on a loan also and not just a bond issue. Mr. Pauzar agreed and said they can refer it to a BAN which is like a short bond. He reviewed how the BANis are done and the negotiations up front of the fixed rate. He pointed out it's not a publicly sold bond and it's a requirement of the lending institution to do an investigation of financial risks. Counc ilwoman Benn i ngton asked what they I d have on Monday night. Mr. Pauzar replied the final note resolution and the final results of the bids and it will require them to issue long term bonds within a year or have in some other way through revenue increases come up with funds to pay it off. He said they will not directly repay with the budget or water and sewer but with proceeds from the long term financing. City Attorney Alvarez reviewed that they1re looking at building a new water plant and installing a main distribution line for potable water, installing a waste- water collection system in Florida Shores, improving the existing sewer plant to accommodate now and future growth, upgrading the drainage in the Shores as well as points on a City-wide basis, paving Florida Shores, the wellfield, and new wells and re-use system. Mr. Ferland added that it would be Turgot and Canal Street paving also. City Attorney Alvarez continued that it's a $30 million plus program and they don1t have it in the bank and the $4.7 million loan is seed money to get it in place and begin the CIP. Mr. Pauzar agreed. City Attorney Alvarez stated the $4.7 million will be loaned to the City with a commitment by the City that they'll repay when they borrow the long term money within the year, or through water and sewer rates. Mr. Pauzar agreed, pointing out itls on page 2 of the memo entitled "Memos to Prospective Bidders". City Attorney Alvarez asked Mr. Munoz if they have revenues to pledge for the $4.7 million. Mr. Munoz replied they don1t have revenues to pledge for $4.7 million. City Attorney Alvarez stated that from a legal standpoint the procedure is very similar to procedures that will take place with the long term loan and that Council will authorize a resolution, and they have a copy of a draft, and it will come before Council on Monday night for official action. Mr. Pauzar noted it would be in final form at that time. City Attorney Alvarez noted the resolution needs modifications and it authorizes the $4.7 million loan which tells the bank that it's a real situation. He said the second step is to award the loan to the lowest bidder. Mr. Pauzar agreed and proposed it be done on the 17th also. City Attorney Alvarez stated that if Council approves this approach to the $4.7 million backed by long term or revenues, and they award to the lowest bidder, then the next step will be to close the documents which puts the money in the bank and kicks off the CIP. Mr. Pauzar agreed, noting that the closing date was set for July 31, 1989, but they're suggesting July 24th for closing. City Attorney Alvarez stated that on the 17th Council would also authorize a contract for the purchase of the 50 acres for the new plant and new wellfield and the contract will not be executed until after closing on the $4.7 million because the propoerty cost is approximately $500,000 and they can't proceed until he's told they have $4.7 million to back it up. Mr. Pauzar stated on or after the 25th is the time table if Council approves everything on the 17th. City Attorney Alvarez stated they'll have the site for the water plant and the well. Councilwoman Benn ington asked if they have to guarantee the money by rate increases or ad valorem if they don't issue long term bonds in a year. Mr. Pauzar rep 1 ied it wou ldn I t be from property taxes but from revenue or from revenues through the water and wastewater utilities. Councilwoman Bennington pointed out they'd have to raise the rates astronomically to payoff the debt. Mr. Pauzar said yes, if they don't have the financing by July of next year they'd have to come up with some way to pay it off. He added that they could negotiate another note rather than insist the rates pay it if necessary. City Attorney Alvarez stated thatls a third option and Mr. Pauzar agreed. Councilwoman Bennington asked what they'd do if the bank wouldn't want to and Mr. Pauzar assured her they would. Mr. Ferland pointed out they wouldn't obligate the long term debt and they'll have most of the $4.7 million in the bank. Mr. Pauzar Council Special Meeting & Workshop Minutes July 10, 1989 6 '- ..., reviewed some of the things that could occur as a worst case scenario. Councilwoman Bennington stated they'd invest as much as they can until they need it. Mr. Pauzar agreed they'd invest as much as possible but they may have to keep some of the money liquid. City Attorney Alvarez stated that on Monday night they'll formalize an agreement that Mr. McCallister is legally bound to sell and the City is bound to buy but it won't start until they're ready for construction. Councilwoman Bennington asked if Mr. McCallister agrees to this. City Attorney Alvarez replied this piece of property is an all cash package and they're also negotiating for the rest of the property that's not CIP connected and will have a report on that Monday night. Mr. Pauzar noted they may only be able to estimate a purchase price for land but the City shouldn't have to bear any debt interest costs. Mayor Mitchum excused Chief Schumaker and the left the meeting at 6:52 p.m. Mr. Ferland pointed out the time tables for each of the projects is in their report and it shows when the $5 million kicks out and the long term comes in and each project has a different time frame. He noted they anticipate part of the $4.7 million will be for construction of wellfie1ds and the Water Management District will be issuing a consumptive use permit tomorrow and they hope to start construction in November or December. He reviewed some of the time frames for the various projects that were listed in the report. He noted they're in the process of surveying and aerial mapping of Florida Shores. Mr. Ferland stated that they're number 2 on the Small Communities list for the State Revolving Loan Funds and based on last year's funding, they're in the neighborhood of $4.8 to $5.8 million, so they should get at least the $4.8 on a low interest loan of about 4%. He added that they're segmenting for three years and trying to get funds each time. He pointed out the State pays after the invoices are received. He stated that the resolution is structured for early payment and retire it as soon as possible. Mr. Pauzar said the note covenants and terms will apply to long term financing and bond counsel has been assisting to structure a lot of flexibility to allow the ability to prepay without penalty. Mr. Ferland stated the wastewater plant will be ready to start in July or August, 1990 and the facilities construction with Florida Shores will probably be an 18- month time frame. He added the water and wastewater plant work will be about 12 months or less construction time. Georoe Ewino asked about the figure of $41 for the collection system and $101 for impact fees and $300 for service. He noted a letter is circulating that says vacant lots will be not assessed any of these fees. He asked if that's correct. Mr. Ferland replied no, that's from the 201 Facilities Plan and was in support of the State Revolving Loan Fund and figures are over 20 years and vacant lots would be assessed $41 a year which represents the pipe lines laid in the ground. He explained $300 is an average yearly cost and a current resident pays $240 average, so it's a 25% rate increase associated with improving the water treat- ment plant. He added that the other numbers are for amortization to make it easier for cash flows and they can pay their assessments and others in one lump sum and then only pay an average of $300 a year in user fees. Mr. Ewing asked if it's $41 for a 40 foot lot or a building lot of 80 feet. Mr. Ferland replied it's per unit or per house and when they amortize and do special assessments they I 11 try to break down the costs and say that every 40 x 120 is so many dollars and if you have 3 lots, you pay 3 times. He added that $41 will apply to an 80 x 120 or minimum buildable lot and the average is 2.6 lots based on the tax records analysis. Mr. Ewing asked if one home with 4 lots would pay 2 times and Mr. Ferland replied yes, because he could sell the other 2 lots. City Attorney Alvarez suggested they have workshops every first Monday of the month at 6 p.m. prior to the regular meeting. It was agreed to do that. Mayor Mitchum requested a motion to from the Workshop to the Special Meeting. Councilman Hatfield so moved. Councilman Gold seconded the motion. Motion CARRIED 5-0. Council Special Meeting & Workshop Minutes July la, 1989 7 ......, ...... Mayor Mitchum requested a motion to adjourn. Councilman Fish so moved. Councilman Hatfield seconded the motion. Meeting was adjourned at 7:06 p.m. Minutes submitted by: Lura Sue Koser :5 ~ 'j*<J '~ ATTEST: Approved th i s "7 day of ~ ' ~8~. %~#0///?fL MAYOR Council Special Meeting & Workshop Minutes July 10, 1989 8