FINANCE COMMITTEE MEETING
DECEMBER 20, 2006
The meeting was called to
order by Chairman Burke at 7:30 p.m.
MEMBERS PRESENT: David Burke, John Gore, Dan Fogt
OTHERS PRESENT: Andy Brossart,
Esther Carmany, Betsy Bowe,
Tom Bulcher, Chris Hill, Ryan Horns, Lloyd Baker
AGENDA:
1)
Grant
Investigation
Mr. Burke referred to two
pieces of information; one dated December 18, 2006 to President Gore from Hull
& Associates. This information was
per a request for grant funding resources for water projects. Kara Allison reviewed the information
produced by Malcolm Pirnie in a letter to Ms. Tracie Davies dated December 7,
2006, which included funding sources for public water and wastewater projects
in Ohio submitted by Malcolm Pirnie. She
also reviewed information in her specialty, which is grant identification and
grant writing. Her letter is submitted
as part of the record. She states that
she reviewed the work of Malcolm Pirnie and found it satisfactory and that
there are other grants that could be available. She recommended the City run a grant calendar
to get better corresponding between grants and projects.
Mr. Gore stated he did not
believe it was the intent for Ms. Allison to evaluate Malcolm Pirnie’s work. He
was not aware of the December 7th letter because it had been
requested long before that. The request
was to find out what grants were available.
He had commented previously that he was not comfortable that we had not
pursued everything for the wastewater treatment plant and didn’t want to make
the same mistake for the water reservoir.
It was never the intent to
question the quality of the work.
Mr. Burke agreed. The request was to thoroughly investigate all
avenues of funding before asking citizens to produce revenue stream.
The City does not qualify for
most of the grants that are available as noted in the December 7th
letter.
Mr. Burke asked what grants
were applied for for the water reservoir
project. Mr. Hill said was there were no
grants applied for. Mr. Burke asked if
there are any grants available for which the City could apply? Mr. Hill said, “not
that he was aware of.” The list provided
is a comprehensive list, and he does not believe the City would qualify for any
of those grants because they are based on economic need, which is a function of
the area’s median household income relative to some state or national
level. Median household income for
Marysville based on the 2000 census is approximately $47,000, which is the
threshold for all of the grant programs that were identified. The other criteria is
percent low to moderate income.
Marysville’s percentage of low to moderate income households is 7 and
the criteria is generally 51%. Mr. Burke asked for the percentage for an average
community. Ms. Betsy Bowe
of Malcolm Pirnie responded that the grants identified in this list are triggered
by Distressed criteria. Low to moderate income relationship is based
on the individual level and family level of poverty in the U.S. Census. For Marysville, the individual level of
poverty is 5.9%.
Mr. Gore asked when Malcolm
Pirnie received the request to prepare this information. Response was December 4th. Mr. Gore said the letter states it is
unlikely that the City would qualify to receive grants. He commented that he had heard the same thing
regarding grants for the railroad crossing, but yet a councilman took the
initiative to make a couple of calls and came up with a commitment of
$180,000. He feels there are rocks out
there that need to be turned over. It’s
not always cut and dry. Based on the
Study, Council is being told to quickly pass this so that we can create a
revenue stream to finance or be able to borrow the money to build a reservoir,
but noted the study states in case of a severe drought, year 2020 would be in
jeopardy of a water shortage.
Representative from Malcolm Pirnie feels that refers to the increase in
future demand as projected and includes the reservoir in that
determination. The existing ground water
supply as it is now would not be sufficient to meet YR2020 demand. Mr. Gore understood it to say is that if we
don’t do anything else and with drought conditions, we’d be in jeopardy in YR2020. In other
words, it doesn’t have to be done tomorrow.
Malcolm Pirnie stated the capacity of the ground water supply based on a
prior engineering firm report is about 3MGD.
The basis for that is unclear to them.
Mr. Gore commented what we’re
trying to do here is find a way to pay for this, not only with grants but to
obviously reduce the amount we have to borrow, to be in a situation where we
have a few years to put some money away and not have to borrow as much
money. The need is there, but he doesn’t
feel it’s as critical as it’s thought to be.
Malcolm Pirnie rep. said the
capacity of the existing water treatment plant is 3.21 MGD. The current maximum day production ranges
3.2MGD, so in the summer months during peak periods of production, plant is at
capacity. Malcolm Pirnie is currently
doing a study to see what additional we can get through that plant. If successful, the capacity of the existing
treatment plant will be 4.3 MGD. There
is a (inaudible) Ethanol project that is being considered. If that project goes through, the amount of
water that they will need within the next two years will eat up all the
additional capacity that will be gained by the water study. This means that in two years, the existing
plant will be undersized with any additional growth within the City service
area. Mr. Gore stated the issue is not necessarily
whether we need to expand or whether the community will grow, but the issue is
how do we do it.
Mr. Burke stated the Malcolm
Pirnie representatives are in attendance in order to help investigate all
avenues of funding prior to passing the burden onto Marysville residents. Mr. Burke asked if they had looked at these
grants prior to the onset of this project, not on December 4. Malcolm Pirnie rep said they did not look at
grant opportunities for the water project.
They were not asked to look at grant opportunities. The reservoir project is separate from what
Malcolm Pirnie did. Ganett
Fleming did the reservoir study. He’s
not aware if they looked at funding opportunities. Mr. Burke confirmed that the water study was
produced in 2005 and that’s when the projections were made, before the Ethanol
plant was discussed.
Mr. Burke noted in Chapter 7,
Malcolm Pirnie proposed alternatives, and the best alternative was to pass
funding onto new growth. Raising tap
fees was one proposal, which has been done.
Also gave funding alternatives for water rates to keep those as
proportionate as possible to allow new growth to introduce as much new revenue
as possible. They also made the
estimation that if we don’t follow these plans in fiscal 2009 and 2010, we will
have double digit rate increases.
Malcolm Pirnie agreed. Mr. Burke
said is imperative that the citizens of this community own this facility and we
pay for it, so in essence, we’re all shareholders of it. The only way to fund and to get out of this
mess that we’re in with these high rates is to have an economy of scale,
additional users, which we cannot accommodate with our current facility. Is it possible that there are any grants or
additional sources of funding if we were to raise the rates for two years and
look for additional funding that the City would qualify for short of the end user. At the request
of the City, Ms. Bowe said they looked at the list
and tried to evaluate the potential as to whether or not Marysville, how the
City was ranked, what the percentage of success would be, whether Marysville
was eligible or not. The answer to Mr.
Burke’s question is yes, there may be something out there as a grant source
that would fit. It is not identified on
this list. There are not a whole lot of
grant sources out there that would impact a facility of this size. There are small grants through the Publics
Works Commission. Issue 2 funding for
water treatment facilities are ineligible under
infrastructure. Those funds are
prioritized and they are small based on the population allocation. There are other watershed resource grants,
based on watershed and water issues, including the U S Army Corp of
Engineers. These are subject to Federal
funding. There are some potential grants
that may not be on the list provided.
EPA would be more than happy
to sit down and go thru the list of potential grant sources that could provide
a small grant, $50,000, etc. and help the City quantify and identify what the
percentage of success is.
For the most part, Marysville
is not of the Distressed criteria or job criteria or
LMI criteria based on economics.
Ms. Bowe
stated Malcolm Pirnie would be willing to help facilitate a meeting amongst
people that are funders in the state.
Mr. Morehart
asked if the criteria for grants would differ for water and wastewater? Ms. Bowe stated
yes.
Regarding the Wastewater
Treatment Plant, Mr. Fogt noted the EPA offered to
help and do everything they could do to make the plant a reality. They promised to help get some money for that
project. That didn’t happen, but maybe they could help
with the Water Plant. City has problems
with their plant and problems up the stream with Raymond and
Mr. Burke feels there is a
lack of continuity between Administration and Council to Council. He noted purchasing the plant in 1993 and how
little of that debt has been covered and how it’s been handled, which is 20-25%
of the current bill that residents receive.
If we paid that debt, we could lower people’s water rates by over 20%. If these rates pass, he feels it’s a reprieve
from the public to allow us the ability to operate this as a business and to
pass this growth on to people. We need
to look at grants, we need to look at tap fees. Council has done three actions this year to
pass this burden on and noted to the best of his knowledge, they are the only
government group that has done that. He
expressed surprise that Administration never ask prior to December 4 to
investigate this, with or without knowledge of whether or not it be approved. We owe it to the residents. We need a plan, real forecasting and a real
commitment and a promise so that people in the future know what’s going
on. He feels the reason why Marysville
has such high rates is because no one had a plan as to how we were ever going
to bring rates down. An 8% increase
would open up a corridor of growth that allows the City a new revenue stream to
do that.
Malcolm Pirnie representative
said if you don’t increase rates based on what’s quoted in the plan, you are
looking are larger rate increases in the future.
Mr. Fogt
asked if looking at grant options is a part of the doing the study? Ms. Bowe stated
this information was put together when asked for by the City for this
meeting. She said her company writes the
grants and they can identify all potential grants for the City.
Mr. Burke stated the citizens
need a firm commitment from the City to eliminate the debt in order to lower
rates.
Mr. Andy Brossart
stated rates need to cover the debt, not tap-in fees. Tap-in fees go to pay for cash for future
projects. If you start to rely too much on tap-in fees to pay the debt, you
might benefit from reducing the rate increase, but that’s only short term, but
when development stops, you’re in trouble.
No one wants to make a loan based upon tap-in fees. Mr. Burke confirmed the tap-in fees do
produce end users that do produce a revenue stream. Mr. Brossart
agreed. Mr. Burke stated the plant that
we currently own currently produces water that people who live here now pay
for. Any additional new user would have
to pay for the additional plant to allow for extra capacity above and beyond
what the current plant produces.
The Committee recommended
having Malcolm Pirnie identify all potential grants for the Water Plant, as
well as go back to see what may be available for the Wastewater Treatment
Plant. Malcolm Pirnie agreed to help
wherever they can.
2)
Tap Fee Indexing
Mr. Burke stated legislation
is coming to Council for first reading.
This is the third in a series of things the Finance Committee has done
this year. 1) Raised the fees to a
level that was recommended in the 2005 Study, 2) They were aggressive in
multi-family users in determining their use of water. It was found that they used 70% of the water
of a single-family home. Their tap fees
should be that appropriate amount. It
was set at .7 meter equivalents per unit, 3) The Municipal Cost Index puts
municipal costs in a spectrum that’s slightly different than the Manufacturing
Index and CPI. It puts them just to
municipalities. This legislation will
hook the City’s tap fees to that index so they go up on an annual basis
proportionate to their actual cost.
Mr. Fogt
stated he’s interested in grant opportunities, but also any low interest loans
that may be available.
The meeting adjourned at 8:22
p.m.