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08-05-2013 - Budget Workshop CITY COUNCIL OF EDGEWATER BUDGET WORKSHOP AUGUST 5, 2013 2:00 P.M. COUNCIL CHAMBERS MINUTES 1. CALL TO ORDER, ROLL CALL Mayor Thomas called the Budget Workshop to order at 2 : 00 p.m. in the Council Chambers. There was a silent invocation and pledge of allegiance to the Flag. Present Mayor Michael Thomas Councilwoman Christine Power Councilwoman Gigi Bennington Councilman Mike Ignasiak Councilman Gene Emter City Manager Tracey Barlow City Clerk Bonnie Wenzel Excused City Attorney Aaron Wolfe 2. DISCUSSION OF FY 2013/2014 GENERAL FUND BUDGET; ENTERPRISE FUND BUDGET AND RATE STUDY City Manager Barlow brought Council up to speed on where they were. They received final direction from Council to establish the maximum millage at 6. 95 mills . Mr. McKinney was going to share with them the present draft budget, which was balanced at 6.75 mills . They were going to do the rate study prior to Mr. McKinney' s presentation. They were going to talk about what initiatives that had been exercised in an effort to balance the budget as well as a summary of what was in the budget and what was not in the budget. The goal at the conclusion was to hear direction from Council before they moved towards final budget workshops, whether they were satisfied with the budget at 6. 75 mills or whether there were some additions and/or deletions they wanted to put in the budget that may increase or decrease the millage as long as they stayed within that parameter of 6. 95 mills that Council had established and that had been advertised. Finance Director John McKinney informed Council the City contracted with Burton & Associates in 2011 for the first utility rate study the City had had in eight to ten years . This was the second update since they did the initial study in 2011 . 1 Budget Workshop August 5, 2013 Andrew Burnham, Burton & Associates, went through the attached Powerpoint Presentation with regard to the Water & Sewer Utility Rate Study. (Pages 18, 19 and 20 were not discussed) Councilwoman Bennington questioned who would pay for changing the meters with regard to the commercial structures which Mr. Burnham explained for her. She confirmed with Mr. Burnham that they would have the option to change the size of the meter but they would have to pay for it in order to reap the savings. Mr. Burnham also suggested having involvement of the utility staff to make sure the request to downsize was valid. City Manager Barlow identified each one would be on a case by case basis. Councilwoman Bennington asked if they reduce the meter and are paying less for the water, where does the City' s profit go. Mr. Burnham identified they factored in allowances for the rate structure modifications of customers using less water so they would have the level of revenue they needed for the system to be whole. They also factored in a small allowance for the meter change out dynamic that may occur. Councilwoman Bennington confirmed the sewer rate was still going to be based on the usage of the water. Mr. Burnham informed her that did not change. City Manager Barlow then commented on the importance of having a rate consultant and further identified that the process was working. Councilwoman Power questioned the motels being based on per unit. Mr. Burnham informed it was based on number of rooms . Councilwoman Power asked about the rooms not all being filled. Mr. Burnham informed her that was their contention. City Manager Barlow pointed out it was the strip units as well . Councilwoman Power spoke of a salon using more than than another business may. City Manager Barlow explained they would still pay for what goes through the meter and would pay based on the availability based on the size of the meter versus how many units were there. Councilwoman Bennington pointed out in their minds they wouldn't be paying for empty units . City Manager Barlow informed her they would pay for a fraction of the availability. Mr. McKinney spoke of staff doing a review of what was provided by Burton & Associates and identified when it was done they had 16 accounts out of over 10, 000 utility customers that were further analyzed. He and the Environmental Services Director took a look at how they could offer for them to reduce their meter if they could show there was a payback within a few months . If they kept the current meter, they would see an increase in their utility bills . They would work with one of the 16 accounts if it was deemed appropriate to reduce the size of the meter. Councilwoman Power asked if that changed whether or not it was the modified rate plan or the lower and 2 Budget Workshop August 5, 2013 average user. Mr. McKinney informed her if they change a meter size the appropriate rate structure would change as well . Councilwoman Power questioned being given two options . City Manager Barlow informed her status quo or to change to the modified. Staff was recommending they change to the modified. Mr. McKinney also pointed out if they change the rate study they will be in full compliance with the AWWA standards. Councilwoman Bennington asked if they do the meter thing if it would alleviate City Manager Barlow' s concerns about some of the commercial businesses that were complaining that they were using so much water and paying so much. City Manager Barlow identified this should help them, especially the businesses with multiple units . Councilman Emter asked what impact the proposed Reflections build up would have on the rate structure and if it encompassed that type of growth. City Manager Barlow informed him that was more on availability. He also identified now would be the time to get these things in place before the new development comes on. Councilwoman Bennington felt with all that they were doing, they were getting ready for when the growth comes. Councilman Emter felt that was good planning. City Manager Barlow identified everything this Council has done well as the previous Council has been in good planning. Things implemented in years past were having a positive influence today through a great recession. City Manager Barlow felt he had consensus from Council to move to the new program. Staff would work on making the changes and they would bring it back to Council for finalization. Mr. McKinney identified they had properly noticed their utility customers through the monthly utility bill about today' s workshop as well as the upcoming public hearings in September so they were in full compliance with the required notice to their utility customers . As they devise the fee resolution for September 9th, they would make sure they incorporated the new rate structure into the fee resolution. Councilwoman Bennington wanted to know the smallest meter that could be put in and what size meters residential had. Mr. Burnham informed her 5/8" X 3/4", which was the size of the meter put into residentials. City Manager Barlow asked Mr. McKinney to walk them through the budget at this point. Mr. McKinney identified he had put a couple of extra handouts in their budget books that he delivered to them such as the PILOT/PILOFF scenarios, Option 1 and Option 2; a copy of "Where has the City 3 Budget Workshop August 5, 2013 Manager' s budgets been since 2008"; Budgets by Division, on the backside included their capital outlay projects as well as fleet replacement from 2008 to current; and a copy of the employee budget for the upcoming year. He then identified a couple of corrections he made prior to the meeting. The new total fund budget for the entire City was $33, 921, 195. Mr. McKinney started his Powerpoint Presentation by commenting on the "City-wide Budget Breakdown" . Councilwoman Bennington questioned the two employees retiring in Leisure Services being replaced. City Manager Barlow identified the vacant positions in Leisure Services as budgeted and he believed they cleared the filling of those for temporary employees and provided the budget was passed, he would be able to hire them at the conclusion of October 1st. Fire had two openings as well . He had frozen those until they can settle the budget and ratification of the labor agreements . Although they had $ .25 budgeted that had not been ratified with any of the labor organizations as of yet. Councilwoman Bennington asked about the Building Department being reduced from 3. 5 employees to 3 and what they were going to do with the other . 5. City Manager Barlow informed her they had money in there to contract out. The Electrical Inspector would be retiring and they were in the process of transitioning another employee and training him to take Mr. Conrey' s job and the Building Official would still be for this next fiscal year a contracted Building Official but they would have to replace a full-time Building Official as they see building permitting starting to increase into late 2014 and beyond was his guess . Councilwoman Bennington asked City Manager Barlow if he was proposing until they need a full-time building official that they contract that out. City Manager Barlow informed her they would get through this fiscal year with using Mr. Fischer as a contract Building Official but he thought they would start during the mid-year 2014 budget looking to replace a Chief Building Official to come on-board October 2015. Councilwoman Bennington further confirmed Mr. Fischer was going to be retiring October 31, 2013 but would be kept on under contract and would no longer be considered an employee. City Manager Barlow informed her that was correct. City Manager Barlow briefly commented on Building Official Dennis Fischer and Electrical Inspector Frank Conrey being very dedicated City employees that did everything they could to help them as they begged to let the City let them retire. Councilwoman Power asked if they would be drawing their pensions . City Manager Barlow informed her Mr. Conrey had already pulled his and Mr. Fischer was in the defined contribution plan. 4 Budget Workshop August 5, 2013 Mr. McKinney continued his presentation of the "City-wide Budget Breakdown" . Mr. McKinney then commented on the "General Fund Revenues" and "Ad- Valorem Taxes" . Mr. McKinney then commented on "PILOFF" and informed Council staff was recommending they allow them to put together the budget based on Option 2, which was what the budget book he presented them with last week was based off of. City Manager Barlow informed Council he could stand strong behind Option 1 today but as they move forward into next year and so on, he didn't know that he could hang his hat on Option 1 as far as being valid because of it being based on property values which was why they landed on pushing towards Option 2 . It was clearly staff' s recommendation to go with Option 2 . Councilwoman Bennington felt the 5% was an arbitrary figure and that now they were giving them grounds for the figure. She felt this made better sense. Councilwoman Bennington mentioned the amount being less in Option 1 . City Manager Barlow explained it was less but wasn' t necessarily which was less or more it was what they were comfortable with to be able to validate going forward. Councilwoman Bennington didn't have a problem with it since Option 2 was validated. It was the consensus of Council to go with Option 2 . Mr. McKinney continued his presentation by commenting on the "Carry Forward & Fund Balance" . There was a brief discussion regarding there being $500, 000 budgeted for City Hall . Mr. McKinney then commented on the "General Fund Expenditures" . They had a current year unreserved of $77, 124 that was built into the budget. If any of their revenues come in under projected or their expenditures exceed their projections, he only had a cushion of $77, 124 without going into the Charter reserve, which he didn't have the authority to do without Council 's permission. Mayor Thomas questioned how much more they would have if they went to 6. 95 compared to 6.75. Mr. McKinney informed him 6. 95 would bring in approximately an additional $117, 000 . Councilman Ignasiak asked if he was projecting any cost over runs this year on the 2013 budget. Mr. McKinney didn't believe so but they 5 Budget Workshop August 5, 2013 still hadn't finalized some of their pension studies so he needed to make sure what he projected doesn't go over the calculation. Councilman Ignasiak expressed concern with creating very narrow margins and very little latitude for error. Mr. McKinney informed him at the current time he didn't perceive any over runs . The only thing currently on the table was the transportation revenue that was budgeted next year at $280, 000, which he identified he was watching closely. Mayor Thomas asked how much it would be to the average homeowner at 6. 95 compared to 6. 75. Mr. McKinney informed him it would be an additional $5 per year. He reminded Council that 6. 95 would require every member of Council to be there for both the September 9th and September 23rd meeting. City Manager Barlow further explained that at 6. 876 mills they would only need the majority of Council to be present and vote in favor. If they go to 6. 95 all five Councilmembers would have to be at both meetings and all in favor at both meetings, which he cautioned. City Manager Barlow asked what the difference was between 6. 876 and 6. 95. Mr. McKinney informed him $43, 000 . Mr. McKinney informed Council he could put together a proposed budget for September 9th at 6. 95 and any difference in revenue between that, he would put it strictly as current year carry forward and it wouldn't be used for any other purpose. Councilwoman Bennington suggested taking out the $100, 000 for the City Hall reserve this year, which would give them $177, 000 . Mayor Thomas didn't think they would need to do that unless they had something that came up and they would make a budget amendment for that. Mayor Thomas got clarification that if all five Councilmembers voted in favor at the September 9th meeting and only four showed up at the September 23rd meeting that they would have to go with the 6. 876 mills . City Manager Barlow identified the second vote was the one that really counted. They are better off on the second vote if they go lower versus going up. He told Council to keep in mind that the City Hall fund was a designated fund but if something happened and they needed to reach into there they could get there but it had to be by majority vote of the Council . Councilwoman Bennington expressed concern with only having $77, 000 . Councilman Emter felt they also needed to consider that as time went on they have fluctuations in this fiscal year budget. They didn't know where they would end up. Going into fiscal year 2014, it' s the same deal. He felt the fluctuations did tend to work themselves out. They talk about a $77, 000 reserve but in fact they have a lot more than that accessible that he felt should cover everything except a horrendous situation that may occur, which was what the $2 million 6 Budget Workshop August 5, 2013 Charter reserve was for. He questioned how such an increase would affect their relationship with their surrounding municipalities in terms of their advantageous annexation. City Manager Barlow commented on the strategies they put in place several years ago with a goal to bring in their net taxes below the unincorporated area so they could offer annexation opportunities to those enclaves and the people adjacent to Edgewater, which has been the drive to drive the millage down so they could be competitive and be able to do that. He felt if they stayed within the 6.75 to 6. 876 range that they could get there this year, not knowing where the County was going with their final MSD. He further identified this may be the year where they could cross over where it was cheaper to annex into Edgewater. He spoke of receiving numerous calls and the Planning Department handing out applications to people wanting to annex since they waived the annexation fees at the last meeting. He had a call today from another subdivision that may be interested and wanted to sit down and talk with staff. He felt the initiative to bring the millage rate down so they could be competitive was working. City Manager Barlow identified although money was getting tight, they didn't have a lot of General Fund debt and they had other funds they could borrow from. Councilman Emter realized money was tight but he didn't want to jeopardize another initiative. He was comfortable with the $74, 000 they had as a cushion. Every year they rob Peter to pay Paul and the flexibility of the budget was there to accommodate that. Mayor Thomas further commented on being prepared for the unexpected. When he first became Mayor, Edgewater had the highest millage rate in Volusia County. City Manager Barlow identified the cities that had established maximum millage rates and were greater than 6. 95 were Daytona Beach, Deland, Deltona, Holly Hill, Lake Helen, and Orange City. Ponce Inlet was at 6. 5 and South Daytona was 6. 74 . Mayor Thomas further commented on Edgewater being prepared and planning for the future and the unexpected things that were going to happen. Councilwoman Power pointed out all of those Council ' s in theory set it higher than what they are going to adopt. City Manager Barlow informed Council if they leaned towards directing staff not to do the 6. 95, which was 11 . 17% over roll back and go with the 6. 876 they would be at 9. 98% over roll back. Councilman Ignasiak felt it was a significant psychological change when they go from single to double digit figures . Councilman Ignasiak asked Mr. McKinney if he was comfortable and could live with the margin in the budget. Mr. McKinney informed him he could live with what was currently proposed at 6.75 however he would feel more comfortable if they were to go around the 6. 876. 7 Budget Workshop August 5, 2013 Councilwoman Bennington commented on being on Council on and off since 1982 . She again commented on wanting to have more than $77, 000. She asked what it cost to run the City per month. Mr. McKinney informed her that 17% was roughly 45 days and that it costs over $1 million a month to operate the General Fund. He further identified six years ago the General Fund was the only fund that had cash reserves . They now have cash reserves in Water & Sewer, Refuse & Stormwater, which was something they hadn't had in many years . Councilwoman Bennington felt they were cutting it too close to the bone which made her feel very uncomfortable. Councilwoman Power identified the reserve would be like $150, 000 at the 6. 876, which was more than they thought they were going to have. Mr. McKinney informed her that was correct. Councilwoman Power spoke of having a little over $115, 000. Mr. McKinney explained that money was built into the open positions, the departmental savings, etc. He would not know the carry forward moneys that were available until he came to Council in November for the year end budget amendments . Mr. McKinney commented on being through the hardest five years . He identified in those five years the General Fund still paid in cash almost $6 million of capital outlay and they bought over $1 million in new vehicles in the General Fund. They spent $7 million in cash in the last five and a half years on much needed capital and fleet. Mr. McKinney identified he was hearing for the public hearing for September 9th that Council would like for him to put together a resolution budget at 6. 876, which was the consensus of Council . He further agreed to put the necessary budget documents together for the City Manager, the proper resolution and the advertisements based on the 6. 876. Councilwoman Power was happy they could come down from the 6. 95. Mr. McKinney continued his presentation by commenting on the "Special Revenue Fund Revenues", "Special Revenue Fund Expenditures", "Debt Service Fund", "Capital Project Fund Revenues", "Capital Project Fund Expenditures", and "Street Resurfacing" . Councilwoman Bennington questioned which streets were added for resurfacing from the original resurfacing list. Mr. McKinney informed her Joyce Street, Joan Street, Ruth Drive, Beulah Drive and 19th Street. City Manager Barlow identified a majority of the streets were predominantly in the Edgewater Acres area. Mr. McKinney informed Council this was just the current proposal and that the Environmental Services Director might have to make amendments when it actually comes time for the paving. City Manager Barlow spoke of having times where 8 Budget Workshop August 5, 2013 they have gotten a better cost on the paving and were able to add streets that were next on the list. Councilwoman Power asked if the five that came from this last one would go to the top of the list or if it was a need basis . Mr. McKinney informed her it was need based. City Manager Barlow pointed out every two years they try to do a survey and re-prioritize the streets that are the worst. Mr. McKinney continued his presentation by commenting on the "Enterprise Funds Revenues" . Councilwoman Bennington stated when they did the capital improvements for the streets and the water plant that was a twenty-year project that was almost up. She asked the situation with that. City Manager Barlow informed her the assessments were being paid off. Councilwoman Bennington was talking about the equipment which they said was good for the City' s capacities for twenty years . City Manager Barlow spoke of being in the middle of rebuilding the Wastewater Treatment Plant at about $6.7 million. The infrastructure continues to age and they continue to maintain that infrastructure. He felt it was safe to say that the infrastructure in Florida Shores, the assessment area, was doing well. Environmental Services Director Brenda Dewees informed Council they had a 50 year life cycle on PVC piping. The only expenses they had was the maintenance activities associated with the lift stations . Councilwoman Bennington expressed concern with the water capacity because at the time it was a twenty year capacity. Ms . Dewees informed her they did the sewer and then did the street paving after that. The had been maintaining that all along. They just put out $6.7 million for the Wastewater Treatment Plant so they were maintaining. Councilwoman Bennington asked if they had any plans or if they could plan for the future to have reclaimed water on the east side of U.S. #1 . Ms . Dewees reported they were on the east side of U.S. #1 now and had reclaimed water at Fire Station 55. Councilwoman Bennington mentioned having reclaimed water on the east side of U.S. #1 reducing the amount of effluent the City was putting into the river. City Manager Barlow identified that as one of his goals but he wasn't sure he could meet that goal by the time Mayor Thomas left office. Before he leaves office his goal was to eliminate any discharge into the Indian River. He further spoke of the recent progress that had been made toward that goal such as the medians being converted to reclaimed water. They also had reclaimed water at the Fire Station and were working towards the Hawks Park Ballfields . He 9 Budget Workshop August 5, 2013 promised the Mayor he would carry that torch for him in the event that isn't accomplished by the time the Mayor leaves office. City Manager Barlow recommended he get the consensus from Council to allow them to start to consider that going into next year, the things they had learned from Burton & Associates on the rate study for the utilities has planned them into the future and they are seeing the results now. City Manager Barlow spoke of not yet having done Refuse, Recycling or Stormwater as far as planning for the future. Most recently they heard the Master Management and Improvement Plan for their Stormwater Infrastructure System. Now that they know what the costs are they needed to incorporate that into the rate study looking forward. Councilwoman Bennington suggested they put that on their list of goals for next year. City Manager Barlow informed her if they gave him consensus he could add it to the goals but they could start to work in that direction as well . City Manager Barlow asked if everyone was good with staff moving towards rate studies on the others. Councilman Emter asked what a rate study costs the City roughly. Mr. McKinney informed him Water & Sewer was a little over $25, 000 for the update. City Manager Barlow pointed out they were paid by the Enterprise Funds so they were being paid by the rate payers and not the taxpayers . Councilwoman Bennington informed City Manager Barlow since he had been City Manager that they had guided them in the correct way with all of this and saved them a lot on planning ahead. City Manager Barlow appreciated the compliment but recognized staff who has educated him and allowed him to make the right decisions . Mr. McKinney continued his presentation of the "Enterprise Fund Revenues" . He then commented on the "Enterprise Fund Expenditures", "Enterprise Funds Capital Outlay", "Internal Service Funds", "Internal Service Funds Expenditures", "Future Land Acquisition" . Councilwoman Bennington questioned how they could start designing a Public Works area when they don't know where they are going to put it to begin with. Mr. McKinney informed her they had to have a conceptual thought of what it would look like so they could determine how much land was needed to get them into the next 20 years . City Manager Barlow spoke of doing a spacial needs study. He felt it was important to grab property before it was all taken and the price increased much more. Mr. McKinney finished his presentation by commenting on the "City-wide Debt" . 10 Budget Workshop August 5, 2013 Mayor Thomas questioned what the debt was in 2005 when he became Mayor. Mr. McKinney didn't have that information with him but identified it was considerably more, approximately $45 million. He then commented on the new debt they issued in the last few years . City Manager Barlow identified they had direction and were going to do the 6. 876 mills to bring back before Council . Nothing would change in the budget and at 6. 876 mills it would bring them approximately $150, 000 in undesignated funds. City Manager Barlow further commented on being concerned with the $280, 000 on the transport and brought Council up to speed. The County Council was going to talk about it at their second meeting in August. The pilot program technically was supposed to expire on the 31st of last month. They hadn't heard anything either way so they were going to continue on. If by chance they discontinue the pilot program, the $220, 000 in revenue dries up. They thought they still had about $161, 000 of outstanding reimbursable revenue that would trickle in from transports that were completed prior to July. City Manager Barlow further spoke of holding off on two firefighter positions to the tune of $120, 738 until he knew what the County was going to do. He commended the firefighters for their efforts with existing resources . Councilwoman Bennington questioned if the Fire District being looked at by the County was only for unincorporated areas. City Manager Barlow informed her that was correct and that they had a Fire District now but were looking to go to a Fire Assessment which was a flat fee, not based on the taxable value. Personally he liked the program as he had done a lot of research back when he was Fire Chief. This was already being done in Cape Coral and this was something they may bring back to Council. Councilwoman Power felt Cape Coral was not Edgewater. City Manager Barlow identified the fire assessment was a very popular approach that was being done by many cities . Councilwoman Bennington mentioned it cutting down on ad valorem taxes and everyone paying the same for the same service. Councilwoman Bennington questioned if the County goes with the fire assessment if would do away with the pilot program. City Manager Barlow commented on why he felt that wouldn't have any influence on the EMS side. Councilwoman Power questioned what the best thing for them to do would be to keep the pilot program going. City Manager Barlow informed Council on their August meeting they would have a resolution, if Council agrees, that they would send to the County Council requesting 11 Budget Workshop August 5, 2013 they allow them to continue as a full-time transport, which Ponce Inlet had already done. Councilman Emter asked when the pilot project was technically due to expire. City Manager Barlow informed him July 31, 2013. Mayor Thomas, Councilwoman Bennington and Councilwoman Power did not trust the County. Councilman Emter asked if they were continuing. City Manager Barlow informed him the City was continuing but hadn't heard anything to the contrary. Councilwoman Power asked if there had been any transports since then. City Manager Barlow informed her there had been. City Manager Barlow identified he spoke with the Ponce Inlet Manager and they were going in the same direction. Councilman Emter questioned being reimbursed for the transports that had occurred since July 31st. City Manager Barlow assumed they would be but identified they were using existing resources so it was costing them very little to take the gamble and he was willing to take the heat if they didn't. Councilman Emter felt if they reimburse the City, that was a continuation of the contract. City Manager Barlow was hoping the County made a decision before they had to see the reimbursements as the reimbursements could be almost 90 days in arrears . He hoped this would be resolved within 90 days . City Manager Barlow reminded Council on August 19th they had another budget workshop scheduled but he didn't see a need for it. Council agreed. City Manager Barlow informed Council on this Thursday from 5 p.m. to 7 p.m. the Chamber was doing an afterhours at Ramunto' s . The Indian River Lagoon seminar was scheduled in Council Chambers on August 21st at 6 p.m. He encouraged Council to be there. On August 28th was the City of Edgewater Benefits Fair from 10 a.m. to 2 p.m. Councilman Emter asked for clarification that they were still having the Regular Meeting on August 19th. City Manager Barlow informed him they would have the 6 p.m. meeting but the 5 p.m. workshop was canceled. City Manager Barlow then commented on the dedication of the employees of the City of Edgewater under the direction of their Directors. Every department was doing a whole lot more with a whole lot less . Mayor Thomas felt Mr. McKinney did an excellent job and Mr. Corder did an excellent job. 12 Budget Workshop August 5, 2013 City Manager Barlow informed Mayor Thomas based on their conversation he would make the one addition where they add the miles to the sidewalks and he was going to finalize it, print it, e-mail it and put hard copies in their boxes. This would be put on the website under Leisure Services too. 3. ADJOURNMENT There being no further business to discuss, Councilman Ignasiak moved to adjourn. The meeting adjourned at 3: 46 p.m. Minutes submitted by: Lisa Bloomer, CMC 13 Budget Workshop August 5, 2013 City of Edgewater EDGE WATER Water &Sewer Utility Rate COUNCIL WORKSHOP August 5, 2013 Presented by: BURTON &ASSOCIATES Michael Burton, President — Burton & Associates Study Andrew Burnham, Sr. Vice President — Burton & Associates Agenda Introduction of Burton &Associates Summary of FY 2011 Rate Study Results of FY 2013 Rate Study By Component: Multi -Year Financial Plan Rate Structure Analysis Local Bill Comparisons Discussion &Next Steps 2 BURTON & ASSOCIATES T TER Introduction of Burton 8v Associates Financial forecasting & rate services to local government Recognized industry experts in the area of water resources Use of dynamic interactive models and decision support process Some of our clients in the area Daytona Beach, Deltona, Bunnell, Seminole County, Orange County, St. Johns River Water Management District, Cocoa Some of our clients around the state Cape Coral, Ft Lauderdale, Clearwater, Sarasota, St. Petersburg Project Staff Mike Burton — President & Project Director Andy Burnham — Senior Vice President & Project Manager Ashley Venturoni & Kayle Moore, P.E. — Project Consultants Conducted City's last rate study (FY 2011 Rate Study) BURTON & ASSOCIATES EDGEWATER FY 2011 Rate Study: Key Issues Increases in existing debt service SRF loan principal payments to resume in FY 14 (Avg. of $1.5M per year) Funding of capital improvement program $7 million of borrowing required (annual debt service of $0.5M) Rates need to provide for adequate annual funding of future R &R Maintaining sufficient operating reserves Target: 6 months of operating & maintenance expenses Indicative of "Strong" utility systems per guidance published by the municipal utility rating agency, Standard & Poor's Maintaining sufficient debt service coverage Target: Net revenues at least 1.5 times greater than annual debt service Indicative of "Strong" utility systems per guidance published by the municipal utility rating agency, Standard & Poor's BURTON & ASSOCIATES FY 2011 Rate Study: Results Plan of annual rate adjustments to meet system requirements Water 2.5%* 2.5% 5.5% 5.5% 5.5% Sewer 9.5%* 9.5% 9.5% 9.5% 9.5% Effective Date 1/1/12 10/1/12 10/1/13 10/1/14 10/1/15 *FY 2012 increase achieved within rate structure adjustments which significantly reduced impact to low and average users Adjustments to base monthly charges Steepened the rates of the inclining block water usage rate structure City adopted and implemented recommendations of study New rate structure for FY 2012 & level of rate adjustment for FY 2013 BURTON & ASSOCIATES Scope of Study Update the Multi -Year Financial Management Plan Satisfy annual operating and capital cost requirements Ensure compliance with the terms of existing & any new debt Maintain adequate operating reserves 2. Develop Rate Structure Modifications for FY 2014 Address certain non - residential customer concerns relative to multi -unit accounts and larger volume users Enhance affordability for low volume and average users Encourage water conservation Continue to conform to generally accepted industry practice Prepare Residential & Commercial Bill Comparisons 6 BURTON & ASSOCIATES Financial Management Plan: EDGEWATEIZ Key Issues/Drivers Increases in outstanding debt service requirements BB &T SRF Refinancing payments increase by $500,000 starting in FY 2014 SRF loan payments for WWTP of $400,000 starting in FY 2015 Operating cost inflation (overall increase of 3.3% per year) Chemicals, Fuel, and Electricity: 5.0% per year Various Other Operating Expenses: 2.5% to 3.0% per year Maintaining sufficient operating reserves & debt service coverage Operating Reserve Target: 6 months of operating expenses ($2.6M in FY 2013) Debt Service Coverage Target: Net revenues at least 1.5 times greater than annual debt service Both targets are indicative of "Strong" utility systems per guidance published by the municipal utility rating agency, Standard & Poor's 7 BURTON & ASSOCIATES Financial Management Plan: E °cE`" "TER Rate Increase Requirements Plan of annual water &sewer rate revenue increases: Fund debt service, capital, and general fund transfer (PILOFF) requirements Reflects current and projected allocation of costs between systems Slightly less than FY 2011 Study and consistent with national and local trends *FY 2014 revenue increase achieved within recommended rate structure adjustments which significantly reduces impact to low and average users 8 BURTON & ASSOCIATES US CPI - Water & Sewerage Maintenance Series Annual Increase Cumulative Increase 8.0% 7.0% 6.0% v v 5.0% U 4.0% = 3.0% a 2.0% 1.0% "00-� 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 100% 90% 80% W 70% a 60% U 50% > 40% 30% U 20% 10% 0% Measures the national average change in the cost of water and sewer service to households Much more specific and relevant to utilities than overall CPI 5 year average annual increase = 6.5 %; 10 year average annual increase = 5.9% BURTON & ASSOCIATES Two options for FY 14 rates: "Across- the - board" application of increases vs. new rate structure Modest changes proposed within new rate structure: Enhance affordability and conservation pricing Recover 5% more revenue in usage charges to reduce base monthly charges Small adjustments to steepen the inclining block water usage rates Adjust base charges and amount of consumption in each block of the water rate structure for non - residential customers based upon meter size No longer bill multi -unit non - residential accounts base charges per unit Scaling of blocks recognizes that the water demands of businesses are less discretionary than residential customers and does not punish water use for services /production Common industry practices relative to the billing of non - residential customers Update base charge per dwelling unit for master - metered residential accounts based upon usage per unit as compared to single - family class Includes 2.5% water & 6.5% sewer revenue increases from financial plan Future rate increases would apply "across- the - board" to FY 14 rates 0 BURTON & ASSOCIATES Review impacts of new rates to monthly bill of the following classes of customers at various consumption levels Individually- Metered Residential 3/4" Meter (95% of customers) Selected accounts from all other customer classes (5% of customers) BURTON & ASSOCIATES I EDor GEWA TER R I2 Single - Family Residential Impacts Inside City Single Family 3/4" Meter Monthly Water & Sewer Bill Calculations Across - The -Board Increase LQa1j # of Bills % of Bills Agg. % 0_1 3 . FY I'll > Chg ' -_7014 $ ChP 11,015 10.2% 10.2% $ 23.60 $ 22.38 $ (1.22) 12,344 11.4% 21.5% $ 30.17 $ 29.45 $ (0.72) $ 31.64 $ 1.4 ,, ,. .. . . , ,_, . , $ 38.57 $ 1.8> ­;u JJ. $ 48.43 $ 2.27 i, lo,U 14.8% 70.7'11,, 5... ,. : ; U; $ 58.29 $ 2.7 5,000 11,248 10.4% 81.0W) $ 65.00 $ 68.95 $ 3.95 6.1% $ 68.14 $ 6,000 87.8% $ 74.42 $ 79.76 $ 5.34 7.2`3' $ 78.00 $ 3.511 4.6 %: 7,000 4,695 4.3% 92.1% $ 84.72 $ 91.91 $ 7.19 8.5% $ 88.76 $ 4.04 4 8,000 $ 99.52 $ 4.50 4.7% 9,000 1,800 1.7% 96.4% $ 105.32 $ 116.21 $ 10.89 10.3% $ 110.28 $ 4.96 4.7% t0,00( 1,149 1.1% 97.5% $ 115.62 $ 128.36 $ 12.74 11.0% $ 121.03 $ 5.41 4.7W 1.1,000 735 0.7% 98.2% $ 125.92 $ 140.51 $ 14.59 11.6% $ 131.79 $ 5.87 4 " n^ 535 0.5% 98.7% $ 136.22 $ 152.66 $ 16.44 12.1% $ 142.55 $ 6.33 4.6% 345 0.3% 99.0% $ 148.10 $ 166.48 $ 18.38 12.4% $ 154.93 $ 6.83 4.6% 247 0.2% 99.2% $ 159.98 $ 180.30 $ 20.32 12.7% $ 167.31 $ 7.33 4.6 % 1�,uUv 181 0.2% 99.4% $ 171.86 $ 194.12 $ 22.26 13.0% $ 179.69 $ 7.83 4.6% 16,000 131 0.1% 99.5% $ 183.74 $ 207.94 $ 24.20 13.2% $ 192.06 $ 8.32 4.5% 17,000 102 0.1% 99.6% $ 195.62 $ 221.76 5 26.14 13.4% $ 204.44 $ 8.82 4.5 %, 18,000 62 0.1% 99.7% $ 207.50 $ 235.58 $ 28.08 13.5% $ 216.82 $ 9,32 4.5% 1.9,000 53 0.0% 99.7% $ 219.38 $ 249.40 $ 30.02 13.7% $ 229.20 $ 9.82 4.5% 20,000 37 0.0% 99.7% S 231_.26 $ 263.22 5 3196 13.8% $ 241.58 5 10.32 4.5 % BURTON & ASSOCIATES ('Itv cif ,EDGEWATER Various Non - Residential Impacts Customer Impact Calculations for Selected Multi - Family & Non - Residential Accounts Across the Board Increase current Proposed Name FY 13 1 FY 14L Ch $ Chg EDGEWATER MHP LLC RM 64,000 1 ", 1" 25,35 $1,741.08 $1,459.88 $ (281.20) -16.7' $ 1,825.11 $ 84.03 4.81, NARCOR INC % BLUE GABLES MHP RM 73,000 2 ", 2" 30,30 $1,800.21 r $1,523.51 $ (276.70) 15.- 1,887.53 $ 87.32 4.9% ZAMMIT, JOSEPH OR RUTH (RIVERVIEW PINES MH PK) RM 58,000 1" 25 $ 954.11 $ 859.73 $ (94.38) -9.5 1,001.14 $ 47.03 4.9% FRIENDLY SHRS H 0 A RM 64,000 1" 44 $1,388.92 $1,191.24 $ (197.68) -14. $ 1,456.78 $ 67.86 4.9% SEAHORSE MOBILE HOME PARK, LLC RM 50,000 2" 46 $1,340.96 $1,125.84 $ (215.12) -16.0 $ 1,405.72 $ 64.76 4.8% ESMV % BEL -AIRE INVEST. RM 550,000 4" 134 $7,366.54 $7,193.04 $ (173.50) -2.4', $ 7,723.06 $356.52 4.8% " !AN MA R r 4.9% VIKAT INC (Best Western) CM 80,000 2" 20 $1,079.80 $1,026.88 $ (52.92) -4.9,/,, $ 1,132.10 $ 52.30 4.8% BELMONT HOMES CM 7,000 2 ", 1.5" 2,10 r $ 315.81 r $ 340.43 $ 24.62 7.8% $ 330.64 $ 14.83 4.7% CFA REAL ESTATE INC SUN, BANK OF VOL CTY CM 48,000 1.5" 2 $ 554.38 $ 617.50 $ 63.12 11.4% $ 578.82 $ 24.44 4.4% ALL -SUITE MOTEL INC CM 50,000 , 2 ", 2" 12,12 r$ 873.84 r$ 778.90 $ (94.94) -10.9% $ 916.80 $ 42.96 4.9% EDGEWATER METHODIST CHURCH CM 7,000 5/8" 3 $ 114.87 $ 91.91 $ (22.96) - 20.0% $ 120.53 $ 5.66 4.9% J &S PROPERTIES OF N.S.B. LLC CM 88,000 1 ", 1" 8,12 $1,155.16 r $1,150.26 $ (4.90) -0.4% $ 1,210.95 $ 55.79 4.8% INDIAN RIVER BAPTIST CHURCH OLIVO, PETER C 2,000 5/8" 1 $ 36.74 $ 36.52 $ (0.22) -0.6% $ 38.57 $ 1.83 5.0% RINGLE, JAMES OR LINDA (PALM AUTO WASH) C 38,000 2" 1 $ 492.30 $ 529.98 $ 37.68 7.7% $ 513.79 $ 21.49 4.4% C & J AUTO WASH LLC C 12,000 1.5" 1 $ 171.62 $ 204.22 $ 32.60 19.0% $ 179.60 $ 7.98 4.7`/ 13 BURTON & ASSOCIATES Residential Water 8v Sewer Bill Comparison: EDGEWATER 3,000 Gallons Flagler County Bunnell Deland Volusia County - East South Daytona Flagler Beach Titusville Volusia County - West Palm Coast Daytona Beach Edgewater (Proposed) Seminole County Edgewater_ Currgptj Oveido New Smyrna Beach Holly Hill Sanford Port Orange Orange City Ormond Beach Combined Water & Sewer Bill Survey at 3,000 Gallons per Month ►3,000 gallons or less per month represents 56% of Residential bills BURTON & ASSOCIATES Non - Residential 2" Meter Water 8v Sewer Bill EDGEWATER Comparison: 30,000 Gallons Combined Water & Sewer Bill Survey at 30,000 Gallons per Month Flagler County • , Titusville Flagler Beach Volusia County - East Bunnell South Daytona ' Oveido New Smyrna Beach Edgewater (Proposed. Volusia County - West Palm Coast Deland Holly Hill Ilk 1 1 Eewater (Current) Orange City Sanford Port Orange Daytona Beach Ormond Beach Seminole County ►Non - residential customers comprise 4.4% of customer base. Non - residential customers with a 2" meter represent 0.2% of customers. 5 BURTON & ASSOCIATES EDGEWATER Conclusions & Recommendations Multi -year Plan of Rate Increases Continues to be Required To address annual operating, capital, debt, and reserve requirements Comparable to national and local trends Consider Rate Structure Modifications for FY 2014 Address customer concerns Provide a greater cost allocation & price incentive for conservation to large users Enhance affordability for low volume and average users Continue to conform to accepted industry practice Update Financial Management Plan Portion of Study Periodically Recommend annually or bi- annually Adjust plan as appropriate to account for changes in costs, demands, growth rates, regulatory requirements, etc. 6 BURTON & ASSOCIATES ('Ify rrf � � EDGEWATER Discussion 7 BURTON & ASSOCIATES SFR = Single - Family Residential (Individually- Metered) RM = Multi - Family Residential (Master- Metered) C = Commercial /Non - Residential CM = Multi -Unit Commercial /Non - Residential (Master- Metered) 18 BURTON & ASSOCIATES I" TER FY 2014 WATER Rate Schedule: 01-f Monthly Charges &, Usage Rates Monthly Charges by Meter Size Individually Metered Residential & Commercial Meter Size Amount 3/4" $ 9.34 1" $ 23.35 11/4" $ 32.69 11/2" $ 46.70 2" $ 74.72 3" $ 149.44 4" $ 233.50 6" $ 467.00 8" $ 747.20 Master- Metered Residential 35,000+ 11/2" Per Dwelling Unit $ 7.01 Usage Charges (in 1,000 gallons) Commercial Tier 1 Tier 2 Tier 3 Tier 4 3/4" 0-2,000 2, 001- 5,000 5,001 - 10,000 10,000+ 1" 0-5,000 5, 001- 13,000 13,001 - 25,000 25,000+ 11/4" 0-7,000 7, 001- 18,000 18,001 - 35,000 35,000+ 11/2" 0-10,000 10,001- 25,000 25,001- 50,000 50,000+ 2" 0-16,000 16, 001- 40,000 40,001 - 80,000 80,000+ 3" 0-32,000 32, 001- 80,000 80,001 - 160,000 160,000+ 4" 0-50,000 50,001- 125,000 125,001- 250,000 250,000+ 6" 0-100,000 100, 001- 250,000 250,001 - 500,000 500,000+ 8" 0-160,000 160, 001- 400,000 400,001 - 800,000 800,000+ Individually Metered Single Family & Master- Metered Residential Per Dwelling Unit 0-2,000 2, 001- 5,000 5,001 - 10,000 10,000+ Rate per 1,000 Gallons $1.61 $5.35 $6.69 $8.36 BURTON & ASSOCIATES FY 2014 SEWER Rate Schedule: Monthly Charges &, Usage Rates Monthly Charges by Meter Size Individually Metered Residential & Commercial Meter Size Amount 3/4" $ 13.04 1" $ 32.60 11/4" $ 45.64 11/2" $ 65.20 2" $ 104.32 3" $ 208.64 4" $ 326.00 6" $ 652.00 8" $ 1,043.20 Master - Metered Residential Per Dwelling Unit $ 9.78 Usage Charges (in 1,000 gallons) All Customers Tier 1 Consumption All Use Rate $5.46 20 BURTON & ASSOCIATES 0 City -wide Budget Breakdown . Implemented HMO for all employees — POS is an optional employee expense All Employees are budgeted to receive $0.2 raise • Im ement PILOFF • Cost oca ' Update • City Pensi Experience Study � No employee r ductions City -wide Budget Breakdown DEBT SERVICE FUND 0% TERNAL 44 FUN1 12 °r ENTERPRISE FUNDS 47% City -wide budget of $33,921,195 ;CIAL REVE FUNDS 3% CAPITAL IMPROVEMENT FUND 2% General Fund General Fund Revenues Debt Proceeds 0% Licenses & Permits 1% Miscellaneous 1% Fines & Forfeitures 1% Intergovernmental 1% Charges For Services 4% Cost Allocation 8%— Sales and Use 44% PILOFF 6% Unassigned 2% General Fund Revenues Revenues Millage - $6.75 Emergency Transport Updated Cost Allocation Payment in Lieu of Franchise Fees Fund Balance Ad- Valorem Taxes 2014 TAX BILL Other SE Volusia Hospital District $785.67 Taxes St. Johns River Water Management District 2004- $1,165.26 $91.67 Florida Inland Navigation District Difference ($379.59) 11.67% East Volusia Mosquito Control Port Authority $ 83.12 0.85 0.88 4.74 2.08 This graphic displays what a homeowner pays in ad valorem taxes on a homesteaded property in the City of Edgewater with an assessed value of $66,754 less a $50,000 Homestead Exemption. Taxable Value of $26,944. County Wide Total Estimated Millage of $24.39773 (1) Operating Millage of $6.75 and $0.058 for Voted Debt Service Millage Option 1 Option 2 PILOFF Componet's Calculated Share of Ad Valorem Tax: Water & Sewer Stormwater Refuse Total Capital Assets @ 9 -30 -12 (per CAFR) Land 966,228 269,239 - 1,235,467 Buildings & Improvements 65,802,935 8,303,352 69,075 74,175,362 Machinery & Equipment 8,097,586 967,538 2,092,012 11,157,136 Total Capital Assets 74,866,749 9,540,129 2,161,087 86,567,965 100.00% 100.00% 100.00% 74,866,749 9,540,129 2,161,087 86,567,965 -1,000 -1,000 +1,000 74,867 9,540 2,161 86,568 FY 2012 Millage 25.0268 25.0268 25.0268 Componet's Total Calculated Share of Ad Valorem Tax 1.873.675 238.759 54.085 2.166.519 FY 2014 Millage $ 6.77 $ 6.77 $ 6.77 Total PILOT $ 506.847.89 $ 64.586.67 $ 14.630.56 $571.434.56 Water & Sewer Stormwater Refuse Total FY 2013 Charges for Services $ 8,190,400 $ 1,280,000 $ 2,375,300 $11,845,700 Percent 5.90% 5.90% 5.90% Total PILOFF $ 483.234 $ 75.520 $ 140.143 $ 698.896 Carry Forward &Fund Balance • Use of Prior Year Carry Forward — Open Positions — Departmental Savings • General Fund Reserves — Charter Reserve at $2, 000, 000 or 16.33 % of B14 • Goal of 17% — Designated City Hall • $500,000 General Fund Expenditures Beutification 2% Leisure Services 11% Streets 3% City Council 1% Non - Departmental 1 15% Community Development 4% Personnel Animal Control —�-' I% Code 1% Fire 24% General Fund Expenditures • Compensation — Step Plan Plus Employee Rai • Employee Health Insurance • Pension • Capital Outlay • Projects • City Hall Reserve • Cur nt r Unreserved �� w Special Revenue Funds Special Revenue Funds Revenues Prior Year Appropriations $514,438 Special Revenue Funds Expenditures Current Year Unreserved $510,938 Scholarships $6,500 Leisure Services $249,000 _Police Q� $21,000.�"� .rr w d Debt Service Fund Capital Project Fund Capital Project Fund Revenues General Fund Transfer $354,056.00 Capital Project Fund Expenditures Street Resurfacing Rotary Park Expansion Park Ave / Old Mission Intersection $60,000 Hawks Park Expansion $57 US 1 Sidewalks $50,0 Flagler Ave $153,978 $240,441 Street Resurfacing Anticipated Streets to be Resurfaced • Lake Avenue — North • Lake Avenue — South • Mary Street • Adele Street • Ann Street • Ocean Avenue — Flagler to Plant • Alice Street • Edith Street • Linda eet • Jeanne Str t • Fernald Stree New Hampsire to Ocean Joyce Street, ` Joan Street .Ruth Drive Beulah Drive 1911, Street u Enterprise Funds Enterprise Funds Revenues Revenues Prior Year Appropriations, $2,879,142 Transfer In, $643,001 Charges for Service, $12,448,634 Enterprise Funds Expenditures • Employee Raises • Employee Health Insurance • Pens ion • Capital Outlay • Projects s�. 1� Enterprise Funds Expenditures Stormwater Capital $839,560 Refuse $2,832,379 Public Works Complex $950,000 W &S R &R $490,000 Sewer Development $295,000 Water Development $430,000 Enterprise Funds Capital Outlay Water / Sewer Crane For Service 3 Half Ton Picks Refuse Refuse Trailer Stormwater Kubota Tractor Public Works Complex Enterprise Funds Capital Outlay • Water /Sewer — Lift Station Telemetry — 10th Street Water Line — Hart Ave Water Line Improvements — Lime Slakers at WTP — Add roof over Sludge Loading Area • Stormwater — Juniper Dr & 26th St. Culvert Replacement — Monson Dr / Riverview Dr. Exfiltration Hart Ave Drainage Improvements Internal Service Funds r 4 s a _ Internal Service Funds In government accounting, a fund used to account for goods or services given to one department by another on a cost reimbursement basis. The fund is profit and loss oriented and hence follows accrual accounting. �VWM Internal Service Funds Expenditures Employee Group Insurance 52,232,780 ri �. -a- �� � � i�. Vr �p � r f� i City -wide Debt __S Debt General Fund Animal Shelter (G. O.) $335,355 F.I.N.D. $337,019 Station 55 $690,000 Rescue 55 Lease $127,334 2013 Vehicle Leases .$160,583 — Total Debt $1,650,291 Water & Sewer Debt • Water Meters $4,183,000 • Series 2009 $5,675,000 • SRF Refinance 2012 $8,070,000 • SRF WWTP 2012 $6,347,283 — Total Debt $24,275,283 Total City -wide Debt $25,925,574 No Pending Debt Issuance for FY2014