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HomeMy WebLinkAbout09-28-93September 28, 1993 9325 Minutes of the Public Hearing held September 28, 1993, at 7:00 p.m. in the Council Chambers in the Municipal Building. _ There were present: Vice Mayor W. H. Schrader, Jr., presiding Council Members: J. R. Schrader, Jr., Roy H. D'Ardenne, Jr. Andrew L. Graham, E. G. Black, Jr., Robert N. Glenn Also Present: Frank Terwilliger, Town Attorney Thomas M. Combiths, Town Manager Robert J. Lyons, Asst. Town Manager Ruth A. Harrell, Clerk Visitors: Dee Lindsey, Paul Dellinger, Edward Sherman, News Media William L. Covey, Jr. Elton Dickerson Georgia Anderson Carl Anderson E. E. Robinson Mr. and Mrs. Bill Sheets Edward M. Colley Mike Ollis Christopher Lotito J. 8. Warner Roy Graham Mildred Bolen Mike Jenkins John Hawley Bill Hager Bill Aden J. B. Warner The meeting was called to order by Vice Mayor W. H. Schrader. Councilman Black led the Pledge of Allegiance and Councilman J. R. Schrader gave the Invocation. Following the roll call, Vice Mayor Schrader, on behalf of Town Council, extended sympathy to the family of Mr. Claud Kirkland who passed away September 27th. Vice Mayor Schrader stated that Mr. Kirkland had spent many hours working for the Town and had been in Council Chambers many times. Vice Mayor Schrader extended the apology of the Mayor as he had to be in Richmond today. 9326 September 28, 1993 PUBLIC HEARING WATER RATES Vice Mayor Schrader stated that the first public hearing was to hear a proposal to increase water rates by 24%. Using overhead visuals, Mr. Lyons explained the Water Fund and the current situation that we are in so citizens could understand why we are asking for a rate increase. The Water Fund is an enterprise fund, and all the revenue that is received from water rates is intended to cover all of the expenditures. Mr. Lyons gave the major expenditures for this year, including cos of pump stations, water line improvements and meter replacement. For FY 1993-94, $938,751 is budgeted, and amended budget would be $1,005,587 which is primarily due to capital improvements program. An increase of 24% effective October 1, 1993, in water rate would balance the budget in FY 93/94. For the first 3,000 gallons used rate is $6.38 and new proposed rate would be $7.91 (in Town). Mr. Lyons advised that the Town had authorized a water rate study from Ernst & Young, Washington, DC. They will take a five year look at our water rates and how to finance our improvements. Ernst & Young will have their final report in about 60 day. Also, this would be the first rate increase since 1990. From the public, Mr. William L. Covey, 1979 Peakland Drive, addressed Council, stating his property was incorporated in 1988, and he has been trying since that time to get water to his property. He was told that the Town could help him and he has paid his water and sewer hook up fee, but as yet pipe has not been placed. Mr. Covey cannot sell his property without water. He urged Town Council to help him as he has to purchase water from Radford and is now informed that he will not have water until 1994!95. He is the only one in the area who does not have water. Utilities Committee Chairman Graham asked that a committee meeting be schedule to review the Peakland line. Mr. Elton Dickerson, 1832 Peppers Ferry Road, stated he was disabled and water rates keep going up. He stated that the $30,000 used for the water study could have been paid toward the water fund deficit. He stated he cannot afford new water rates. Mr. Michael Ollis, 3847 Bainbridge Drive, advised Council that his area had water pressure problems for a long time. They felt they had received good cooperation from the Town in terms of trying to go out and determine exactly what the problem is. In looking at the slides, the question comes up if the pressure can be corrected until we get more money. In the meantime, the Town is issuing building permits for building houses and if the solution to this problem is going to be long- term, it would seem to him that the Town should put a moratorium on building permits in that area. Mr. Lyons stated that the Public Works Department and Town Engineer had placed a meter on Mr. Ollis' home this date to try to register the pressure. We have gotten valuable information and will be working more September 28, 1993 9327 on this. Mr. Bill Hager stated he felt water rates should not be raised, and Mrs. Anderson, 10th Street Ext., right outside the Town limits has a water rate of $12.76, twice the rate that the Town pays. If they go up anymore, their rate will run in the neighborhood of $15.00 and with water and sewer, for 3,000 gallons, right now they are paying $44.26. If it is raised any more, they do not know what they will do as they are on social security. Mr. John Hager asked about the increase in price of chlorine. He stated it is difficult to get because of ozone layer and asked if the Town still uses the amount of chlorine or have they switched to another chemical. He stated that other localities have switched to other types of chemicals. He asked if the feasibility of this had been looked into; and secondly, do we use as much, etc. and perhaps there is some cost savings. He also asked what the new legislation before the State Water Control Board right now would be on the Town of Pulaski, and the water filtration system. And was this part of the reason for the increase. Mr. Hawley advised that we had just gone through a plant expansion and we changed over from 150 lb. cylinders to one ton chlorine cylinders and he was not aware of any chemical that could be used for chlorine, however, he will check into this. Mr. Lyons stated that chlorine is routinely used by water systems. The new plant was designed to use chlorine. Mr. Lyons further stated that all water systems need to watch federal regulations and Virginia Municipal League also provides very valuable information. Also, it was reported our new permit from the state costs $2,200. Mr. Billy Sheets stated he was on a fixed income and could not afford a water increase. They are one year behind in their bills. He felt Council should cut from the top. Mr. Carl Anderson, residence behind old hospital, stated he had tried to get water into his home but could not get any. He spent $3,000 to dig a well and has all the water he can use. He would be glad to let people hook onto his well. Mr. Ed Colley, Twin Oaks, questioned the bond payment decrease, and the present rate will balance the budget. It will be at least two months before they have a final report. Will the 24~ rate increase continue on at that rate, or will it decrease, and how did we arrive at the 24~. He did feel it was a good bargain on the water as it was probably the best thing that we've got going. But still, for the people that are on fixed incomes, 24~ overnight, is quite an increase. Mr. Lyons stated the proposed rate increase would be effective October 1st through June 30, 1994. The Ernst & Young study is due back to us in two months and that will include recommendations for adjustments to the water rate structure to be effective July 1, 1994. When this new rate structure is put into effect, we don't know what effect that is going to have. Some people may pay more for water and some may pay less. Mr. Lyons further stated the rate was derived by Filtration Department Budget, Distribution Budget, Debt Service, 9328 September 28, 1993 PUBLIC HEARING, Cont. WATER Transfers and Capital Outlay Program totals $1,005,587. The water rate increase of 24~ gets us to that revenue figure. A gentleman asked what it costs to produce 1,000 gallons of water. Mr. Lyons stated it is projected we would have water billed at around 60 million gallons per months. Ernst & Young is taking a look at cost to produce the water.- Mr. Lyons stated we have looked at our average cost of water and the incremental cost and there are varying differences of opinion on how you define this. Also, on inquiry regarding the expense of chlorine, and why we use so much chlorine. It was recommended that we cut the chlorine. Vice Mayor Schrader stated we have certain standards we must bring our water to and it is tested periodically. The amount of chemicals used is what we need under the state guidelines as far as the testing of our water. Mr. Hawley reported that one of the guidelines, effective July 1st, was continuous monitoring of the water. Mr. Ollis asked about the Town selling less water thus reducing income from water. Mr. Lyons reported that since 1990, a decrease of about 1.5 million gallons per month had been seen. That is total, not each month that we are losing a million and half. This impacts our revenue. Mr. Lyons stated this was probably due to lesser industrial consumption. Mr. J. B. Warner, Oakhurst Ave., stated that when we reduced Magnox's water rate, they were supposed to increase consumption. In actuality, he felt they have decreased their consumption. Should we not take a look at their water rate again and see whether they have lived up to their end of the bargain. Mr. Lyons stated this was two additional steps to our declining rate schedule; that it was not a special rate for any industry. That applies to anyone wha uses that amount of water. Mr. Warner stated he was at Council the night they reduced the rat and Council will remember they were the ones that increased their consumption. Therefore, by the increase in consumption, cost of production would decrease and we could justify that decrease in rates. So far, we have gone in the opposite direction. Mr. J. B. Warner also advised he had, for many years, had low water pressure on Oakhurst Ave. and contrary to what Mr. Lyons said, the four million dollar bond issue also included a million or so for the water line out Dublin Road to loop back to Mashburn Avenue which would help his pressure on Oakhurst. The line did not appear. He wanted to know if there was anything in the new proposal to help their situation with water pressure on Peppers Ferry Road and Oakhurst Ave. Mr. Hawley stated that one of the proposed projects in the Capital Improvement Plan for 93/94 is the Mashburn Avenue connection to the water system. The line was run out Mashburn Ave. to correct the water pressure a few years ago. The installation of the new tank and the Rt. 11 tank was put in with a portion of the four million dollar bond issue money. With the addition of 420 ft. on Mashburn Ave., it will tie this new tank and line into Peppers Ferry Road. Plans are currently ready to September 28, 1993 9329 1 go out to bid. Pressure readings in this area are now 35-40. Councilman D'Ardenne stated he had received phone calls, particularly from people on fixed incomes. These calls were relayed to the Town Manager, asking that Ernst & Young include as part of their recommendations the possibility of maybe coming in with an additional tier for less than 2,000 gal. There are a lot of single, elderly people who are using much less than 3,000 gallons per month. If we can get some information, possibly from the Finance Dept., on the frequency of this and what volumes we are talking about, we can consider this when we get our report back in a couple of months. Mr. Lyons stated that we had already discussed this issue with Ernst & Young when they were here two weeks ago. They will be coming back to us with some information on this. Councilman Graham stated his opinion on the necessity of adjusting the Town water rate and the method of applying the proposed 24 increase. He was familiar with the problems concerning our Town water system, and the capital improvements and considerable amount of maintenance needed. Councilman Graham addressed the reasons we need a rate increase, and also the selling of water below cost. Further, Councilman Graham urged postponement pf any action on the proposed 24~ increase until the consultants have brought in their full report December 1, 1993. For full content of Councilman Graham's remarks, please see attached which is a permanent part of the minutes. Councilman Glenn stated he agreed with part of the comments from Mr. Graham. And there were certain comments he did not agree with. With the study coming from Ernst & Young with a completion date of December, he felt we should wait until we have the final report to make the decision. He further stated if we look at the water rate increasing approximately $1.50 per household, we will generate approximately $72,000 in additional revenue. This is an indication of balancing our current Water Fund. If some Council Members can obtain their goal, that is to come to a fixed rate or a closer to fixed rate by doing away with the bottom tier, that rate alone against the large volume users would generate well in excess of $360,000 in revenue. Councilman Glenn requested that Council wait until final report from Ernst & Young and make a decision based on all the information. Councilman Glenn mentioned that new regulations will cost a lot of money and the state mandates testing for lead, etc. He was very sympathetic with the citizens with water problems. Council is trying to find a method to make this matter less burden on everyone. Vice Mayor Schrader read into the record a letter from Councilman Crispin opposing the adoption of a new water rate until the final report is received from Ernst & Young. Councilman Crispin's letter is attached in its entirety to the permanent minutes of this meeting. Vice Mayor Schrader read a memorandum from Councilwoman Holston asking that a discount rate be set for senior citizens who live alone that would meet guidelines set by Council. She urged Council to instruct Ernst & Young to make this a part of their study. A copy of Councilwoman Holston's remarks is attached to the permanent minutes of 9330 Sepgember 28, 1993 PUBLIC HEARING, Cont. WATER this meeting. Vice Mayor Schrader advised that letters had been received from David Spangler, Jefferson Mills, David Spangler, Daynell, Inc., Charles E. Denny, and Mrs. George McPeak opposing an increase in water rates. At 8:04 p.m., Vice Mayor Schrader closed the public hearing. PUBLIC HEARING Vice Mayor Schrader opened the second public hearing regarding an BUDGET amendment to the FY 1993-94~Water Fund Budget. AMENDMENT Vice Mayor Schrader reported that if and when a rate increase is approved, there will have to be an amendment to the budget. Mr. Combiths summarized that the budget amendment is for the Water Fund Revenue which would be increased by $24,617, interest earned adjusted from $4,000 to $3,092. The total Water Fund Expenditures would be increased by $66,836, Transfers increased by about $2,300, and a Debt Service increase, and FmHA interest payment by $1,890. Councilman Graham stated that Mr. Covey had a problem on Peakland and it is not on this fiscal year. It would appear that he has paid his money for his service and we are obligated to act on this. We might have to move that into one of the priority items. Mr. Lyons stated that we are required to complete this project by calendar year 1994 per our annexation agreement. It was placed in the 1994/95 Capital Improvements Plan. Councilman Graham was concerned that we had taken this gentleman's money and had not done anything for him. Councilman D'Ardenne inquired in order for the rates to be effective October 1st, when do we need to take action. Mr. Lyons stated that we need to take action by October 1. Councilman D'Ardenne stated he felt we needed to do a little more research into Mr. Covey's problem. Mr. Hawley explained Mr. Covey's connection and survey taken. At 8:10 p.m. Vice Mayor Schrader closed the second public hearing. Councilman Glenn stated that as three members of Council, possibly as many as five, have all voiced the opinion that an additional study needs to be done, particularly as regards special rating for low income, social security, and elderly, and so moved that the motion to increase the rate by 24$, as currently recommended, be tabled until the final report comes back from Ernst & Young in December. Motion was seconded by Councilman Graham. Councilman Graham stated that he concurred with what Mr. Glenn had said, that we do have absent Council people and he would recommend that it be postponed until we receive the final report. We may also want to look into another rate for the 2,000 gallon user. Vice Mayor Schrader stated that he had heard we had not gotten what September 28, 1993 9331 PUBLIC HEARING, Cont. we paid for; he thought we had received what we had asked for from Ernst & Young. We asked that they came back as quickly as possible and tell us what we need to do to balance our Water Fund budget for this fiscal year. If we delay this a month or another two months, the 24% is going to keep rising because we have "%" number of dollars that have to be collected during this fiscal year. Someone will have to pay this. For every month we try to delay this, we are also raising the percentage. Vice Mayor Schrader agreed with the concept of the minimum user using less than 3,000 gallons and he felt something should be done. Ernst and Young are looking at this in their report. Hopefully, we can have this in place by July 1, 1994 when our new budget year begins. For this fiscal year we need to act as quickly as possible. Councilman D'Ardenne stated that when Ernst & Young made their presentation to the Council's Finance Committee, delay would mean at least a 30% increase so we will be bouncing from 24% up to 30%. We do have to balance the Water Fund. The reason Council has delayed in increasing the rates is that they wanted to do their homework and make sure that the action that we took was the correct action. Councilman D'Ardenne felt good about the direction that Council had taken. Councilman Glenn stated that he felt the staff has done a very good job in trying to gain information for them in a very timely fashion. He felt that the public was aware that if we do put this off, in two months instead of seeing a 24% rate increase, you could see a 30% rate increase, but the net effects would be about the same. The new rate that we have will probably be the rate we have beyond F/Y 1994 start up and he was concerned that if we do come back with a fixed rate concept which Ernst & Young track record-wise if often adopted or recommended to communities such as Blacksburg, then this rate increase will not be appropriate at that time based on the new fixed rates. Councilman Glenn was comfortable with the information he had, but he would be more comfortable with a final report before making a final decision. Councilman Graham stated he felt Ernst & Young were a good organization, but they are only going to give us a report as good and as accurate as Town administration gives them the figures. Everything they have, all the cost data comes from the Town Administration, and he felt study was not complicated. Councilman Graham hoped that Ernst & Young would come back with a report that would be equitable to all citizens. Motion to table this matter until a final report is received from Ernst & Young failed on the following recorded vote: Charles D. Crispin - Absent Andrew L. Graham - Aye J. R. Schrader, Jr. - Aye E. G. Black, Jr. - No Roy H. D'Ardenne - No Alma H. Holston - Absent W. H. Schrader, Jr. - No Robert N. Glenn - Aye Councilman D'Ardenne made a motion that a special Council meeting be held October 1, 1993, at 7:30 a.m., seconded by Councilman Glenn and carried. 9332 September 28, 1993 At 8:25 p.m., Councilman Glenn made a motion that Council adjourn, seconded by Councilman Black and carried. APPROVED: Attest: ~~ ~..~~~ Ruth A. Harrell, Clerk of Council ,- i e Mayor W. H. Schrader, Jr. 1