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Home My WebLink About2004 [08] Aug 25 I I I August25,2004 Page fof4 ¡ ¡ Pursuant to due call and notice thereof, the City Council for the City of St. Joseph met in special sessiÖn on Wednesday, August 25, 2004 at 5:30 PM in the St. Joseph City Hall. i Members Present: Mayor Larry Hosch. Councilors Gary Utsch, AI Rassier, Ross Rieke, Dale Wck. Administrator Judy Weyrens. , Others Present: Public Works Director Dick Taufen, Wastewater Operator Jim Marthaler, Police Chiej Pete Jansky, City Engineer Joe Bettendorf, Bond Counsel Monte Eastvold. I I Financino - Water Filtration Plant: Monte Eastvold of Northland Securities presented the Council with' financing options for the proposed water filtration plant. The Council has previously discussed the size of the plant and requested financing options on both a 1.5 million gallon per day (MGD) facility and a 2.0' MGD Facility. Eastvold presented the following information: I Financing - 2.0 MGC Facility 20 Year Issue 25 Ye6r Issue Total Cost Issuance Expenses Total Bond $ $ 5,530,700 119.300 5,650,000 $ 5,530,700 119.300 5,650,009 Revenue Sources (Annual Requirements) Utility Trunk $ 400,000 Water Rates 64.000 $ 464,000 i 390,000 30,000 420,000 Financing - 1.5 MGD Facility 20 Year Issue 25 Year Issue Total Cost Issuance Expenses Total Bond $ $ 4,337,206 104.175 4,440,000 $ 4,337,206 104,175 4,440,000 Revenue Sources (Annual Requirements) Utility Trunk $ 335,000 Water Rates 33;000 $ 368,000 330,000 o 330,000 i i ¡ Weyrens stated that in preparation of the budget and in light of the need to increase treatment capacity, the Building Official contacted the developers building in St. Joseph to question projected building activity for 2005. Based on those discussions, it is estimated that 200 homes will be constructed in 2005. If the water access fee (WAC) remains constant, the new hom'3s will generate $ 400,000 in fees. These I payments would cover the required funding source for the filtration facility. However, Weyrens stated that WAC fees are needed to cover other debt and designating the full receipts to one project is not realistic. I Weyrens also presented the Council with a water rate comparison of the area Cities and a schedule I indicating proposed rate increases. One of the proposed financing scenarios includes additional water I revenue of $ 64,000. Based on current trends, the rates would need to be increased .25 per 100 cubic¡ feet to meet the requirement. This increase does not aI/ow for rising costs of operating a water system) , i Weyrens and Bettendorf stated that they have discussed different methods of increasing rates which included the following: increasing the minimum rate; charging a higher rate for cubic feet over a . designated number (such as 1200 cubic feet); increasing the current rate structure a constant number. Bettendorf stated that changing the rate structure increasing the fee for users over a designated usage August 25, 2004 Page 2 of 4 promotes conservation and charges the user taxing the system a greater portion of the expenditure. Taufen questioned what impact the increasing fee would have on high water users such as the St. Joseph Meat Market. It was clarified that the proposal is not to discourage business or create hardships. The Council spent considerable time discussing the size öf facility that should be constructed. Discussion included the following: · Whether or not building a 2.0 MGD Facility was overbuilding and does it create harm to a system that sits idle or not used to capacity. · While the Bond issue is projected to be spread over a 20 to 25 year time span, the bond is callable in 2012 and if sufficient funds are available the issue can be called. If growth occurs at a higher rate than anticipated, sufficient funds should be available for the expansion. · If the facility is downsized to a 1.5 MGD, expansion will be readily available and when it is expanded, the 2.0 or 3.5 MGD Facility will be the same facility as if it were originally built that same size. · Dependency on the economy for revenue sources. While those present agreed that St. Joseph is experiencing considerable growth, that could change if the housing market changes. The Council by consensus agreed that in an ideal world, the City should construct the 2.0 MGD Facility and finance the construction for 20 years. The City has received numerous requests for development and growth is immanent. However, if the housing market slows down or crashes, the City will not have the required revenue sources to retire the debt. Conversely, if rapid growth continues, the City will have the funds available for expansion as it is needed. Bettendorf assured the Council the facility will be constructed in such a manner that expansion can be constructed economically and efficiently. When the expanded facility is completed in the future, it will look and function in the same manner as if it were built as one structure. The Council agreed to construct the facility to treat 1.5 MGD and finance the project for a 20 year period. Commercial/Industrial Water/Sewer Access Fee: Weyrens stated the Council needs to formalize the methodology for calculating WAC and SAC fees for Commercial and Industrial developments. Previously the Council considered implementation of the MET Council's schedule, where access fees are determined on water consumption using industry standards. When it was presented the first time, the EDA and Council questioned the fee for Warehousing and Restaurants. Weyrens presented the Council with an illustration of the water usage of VIC West Steel, a warehousing operation. Based on the existing policy, Vie West was charged one access fee and based on the actual water use they should have been charged five. Basing the fee on the revised MET Council policy, 6.7 fees would have been applied. As a result of this analysis, the fee for industrial has been reduced from 1 unit per 7,000 square feet of warehousing space to 1 unit per 10,000 square feet of office space. Similarly, the fee for a restaurant has been changed from 1 unit per 8 seats to 1 unit per 24 seats. Utsch questioned if the proposed Ordinance is adopted, does the Council have discretion in modifying a specific use. Weyrens responded that the Ordinance gives the Council discretionary authority to modify the parameters of the Ordinance by resolution at any time. Weyrens questioned if any additional changes are requested. Hosch stated that he is not prepared at this time to adopt the WAC/SAC Ordinance and would request to delay action so that he could study the matter further. Utsch stated that the Council has been reviewing this matter for over a year and a decision should be made. Utsch requested that Councilors express their opinion at this time so that the matter can be resolved. Hosch stated that he does not feel comfortable making a decision at this time as it will have a major impact on commercial and industrial development. I I Wick questioned if the matter should be referred to the EDA for consideration. Rieke stated that the EDA has already reviewed the matter and submitted their comments when the Ordinance presented. Rieke I stated that with regard to his opinion on the Ordinance, he believes that the City is in a position to charge a property on actual usage and annually the water should be reviewed and if the consumption indicates I I I i August 25. 2004 Page 3¡ of 4 an increase in water use, they should be billed. Rieke staled that he will be voting nay on the ordinate Amendment as he believes the fee should be based on a::tual usage. I I Rassier stated that he concurs with Utsch. The City has reviewed this matter many times and it needs to come to resolution. He agreed that the matter should be placed on the next agenda and if anyone has concerns they should be relayed to the City Offices for consideration. I Eastvold stated that he is aware that the City has a number of projects under cOnsideration and I discussed the bonding limits. He recommended that if the City does in fact have bonding needs in I excess of 10 Million in 2005, that one of the projects should be funded in 2004. By financing one project this year, the City will have ample bonding capability. Hosch stated that he will not support bonding this year for the water plant as he does not see the City issuing 10 Million in debt. After discussion the ' Council agreed to review this matter if a need arises. I Water / Sewer Rates: Weyrens stated that the City will need to build a filtration facility and the Council should consider increasing the rates to begin the revenue source needed to retire the debt. The ratesl have not been increased for four (4) years and a new rate schedule should be adopted and implemented. The Council at this time should determine the starting rate increase and then review a schedule from that point. Rassier made a motion to increase the water and sewer rates approximately 7%. Effective September 1, 2004 the water rates will be billed at $ 1.45 per 100 cubic foot of water and sewer I rates $ 1.50 per 100 cubic feet. The motion was seconded by Rieke and passed unanimously. i I 2005 ProDosed BudQet: Weyrens presented the Council with a revised proposed 2005 General Fund I Budget. The information includes a projected tax impact based on historical growth of the City. In 2004 the City experienced an 18% growth increase and a 14% growth increase in 2003. Therefore, if growth is consistent with past history, the proposed budget will actually result in a decreased tax capacity rate. I Weyrens stated that the budget is still in need of revisions and the capital improvement plan is not ready for approval. Rassier questioned if the proposed budget includes all the capital requests of the I departments. Weyrens responded that it does not. , Hosch stated that he does not support the budget as presented as the levy is increased over $ 100,000. He stated that he would like an opportunity to review the budget in detail in hopes of finding a way to i reduce the levy. Hosch further stated that he will not support a budget that results in increased taxes. i Rieke stated that it is his understanding that the budget has been limited in the past and has not kept in line with the growth. If the City can prepare a budget that is more representative of the needs without a significant impact, that is what should be approved. i i Hosch left the meeting at 7:20 PM. I i Rassier stated that it is his opinion that all capital improvement requests be included in the budget and determine what impact the budget would have on the tax capacity. The Council could then decide which items will receive funding. Weyrens stated that the City is in the process of adopting a Capital i Improvement Plan, which will incorporate all Capital requests for the next five year period. That ! document will be a part of the budget process and will be completed shortly. , I Taufen stated that the Council will need to determine the fate of the former City Hall. The building' is inl dire need of maintenance and/or repair. The siding is in bad shape and the City should either paint thE! facility or install vinyl siding. Taufen also requested the Council consider boarding the windows as they are not in good shape. The Sentence to Serve Program will provide labor services for painting the facility and the City would be responsible for all the supplies and scaffolding. Taufen estimated the paint and I miscellaneous materials, including boarding the windows, to be approximately $ 1,000.00. Taufen also stated that he has been approached by the historical society that they are looking for space and are i interested in the facility. Rassier made a motion authorizing Taufen a budget of $ 1,000 to paint ahd board the windows at the former City Hall, utilizing the labor services of the Sentence to Serve Program. The motion was seconded by Wick and passed unanimously by those present. August 25, 2004 Page 4 of4 Adiourn: Wick made a motion to adjourn at 6:45 PM; seconded by Rassier and passed unanimously by th e present. I I I