UTILITY
FEES REVIEW COMMITTEE
CITY HALL, 100 LOCKVILLE ROAD
MONDAY, FEBRUARY 27, 2006
6:30 P.M.
1. ROLL CALL. Mr. Walburn called the meeting to order at 6:30 P.M., with roll call as follows: Mr. Hackworth, Mr. Walburn, and Mr. Sauer were present. Mr. Wright and Mr. Snyder were absent. Others present were: Mayor Shaver, Judy Gilleland, Jeff Fix, Cristie Hammond, Keith Smith, Lynda Yartin, Ed Drobina, Linda Fersch, and others.
2. APPROVAL OF MINUTES of January 23, 2006, Regular Meeting. Mr. Hackworth moved to approve; Mr. Sauer seconded the motion. Mr. Sauer, Mr. Walburn, and Mr. Hackworth voted “Aye.” Motion carried, 3-0.
3. SCHEDULED MATTERS:
A. Review and Discussion regarding 2005 water and sewer income and expenses. Mrs. Fersch stated the Committee had been provided with a summary of the City’s Debt Schedule and a break out of the Sewer Fund and Water Fund debt. She stated on the Water and Sewer debt sheet it shows there is a set timeline on the bonds, and we have a certain amount of principal and interest that we have to pay each year. Mr. Hackworth clarified that our bonds can be refinanced one time on an issue and we have done that on some, and in 2009 we can refinance the one that is due in 2023 for another 20 years. She stated further the OWDA funds cannot be prepaid and it will be paid off in 2014 and the Sycamore Creek Line with OWDA will be paid off in 2021. Mrs. Fersch stated with regard to note issues, you can pay any amount of principal you want; you can pay more in one year and less in another or you can go to bonds. She stated we want to go to revenue bonds so we can extend the life out as well as take it off of our 10-mill certificate so we will have more ability to borrow for other projects.
Mr. Walburn clarified that right now we have 4,821 paying customers for water. Mrs. Fersch stated as a minimum for water, sewer, and storm water the bill would be about $23.00 per month.
Mr. Walburn stated he had obtained some information from the City of Columbus that he was distributing to all Committee members, and in 2005 their quarterly rate for a residential customer, to include water, sewer, and storm is $137.01. He stated in 2006 the rate increased to $150.90, and for customers outside the City of Columbus their quarterly rate is $169.04. Mr. Walburn stated there are a lot of negatives for a flat rate, but you can make exceptions for low income, senior citizens, etc. He stated he was not saying a flat rate is something he was recommending, but he felt it was an alternative we should look at. He stated we could look at our debt, operating expenses, etc., and determine what we needed it to be to meet those expenses and add a percentage for increases over the years. Mr. Hackworth stated he did not know if he could support something like that because a customer with just the husband and wife do not have the same usage as a family with children. He stated with a flat rate he felt we would have people watering their yards and everything else so our usage would increase and we would actually lose a lot of money.
Mr. Walburn stated we have pending legislation for the clear well and water softener project, the additional well at the well field, and the water treatment expansion projects are not in the debt summary sheets provided tonight. Ms Gilleland stated the cost for the expansion has not been determined as yet. Mr. Drobina stated we also have an elevated water storage tank coming next month. Ms Fersch stated those figures are coming out of Water Capital so there won’t be additional debt, at least for the engineering. Mr. Hackworth stated as he understood it we were looking at converting some debt to revenue bonds, and to do that we have to look at the rate. Mrs. Fersch stated that was correct, and to do that there is a test to determine whether you can go to a revenue issue. She stated you have to take your revenue, and you look at each individual year, and you subtract your operation and maintenance and your personal service, and whatever the difference is, it must cover 110 percent of what your debt requirement would be for a given year. Mrs. Fersch stated, for example, for the water plant it is $2.8 million and you can borrow over a 25-year period, at say a bond rate of six percent. You would need a yearly coverage of $227,300. If you took the 2005 revenue and subtracted the operation and personal services, that left a balance of $136,00, so there is no way you could cover it. She stated that was just for one issue. Mrs. Fersch stated we have been living off of our capacity fees in sewer and water in order to pay debt. Mr. Walburn inquired if there had ever been a study that evaluated what we needed to charge, based on the number of customers, our debt, etc., to get ahead of the game. Mr. Walburn stated this is a business, it is a revenue generating department. Ms Gilleland stated the study we had done was by Circuit Rider, and we will need a more detailed study. She stated also that normally we do not spend our entire budget, so it won’t be as bad as it looks. Mr. Sauer stated he agreed with Mr. Walburn, it is a matter of coming down to how many users we have, and he would like to know what the average customer paid. Mr. Drobina stated in December we had less users, but in December the average gallons of water used per customer was 6,551, and that was residential and commercial. He stated the average bill for water alone would have been $20.11.
Mr. Hackworth stated as he understood it, we are expecting revenues of $1.85 million, and we have to increase the rates to be able to cover expenses plus debt service of approximately $2.2 million debt service and the ten percent, or cut expenses. Mr. Walburn stated the potential revenue from tap fees will not be as great as it was in the past. Mr. Sauer stated he would like to know the average water usage per household over the year. Mr. Hackworth stated a lot of our water users aren’t using our sewer, they are served by Canal Winchester. Mr. Walburn stated if we have the figure for average water usage, it would give the Committee a starting point. Mr. Drobina stated for last year, using the 4,821 as the total number of customers, the average usage would have been 6,744 gallons of water per month. He further stated using that same number of customers the average sewage would have been 5,646 gallons, however, all of our customers are not on sewer. Ms Gilleland stated for the next meeting we will have the average water and sewer customer bill, usage, etc. calculated out for the Committee. Mr. Sauer stated he would like to have those averages for each month of last year. Mr. Drobina stated he would get that information for the next meeting. Mr. Hackworth stated he would request the total system also. He stated currently the water rate is $2.13 per thousand, and the sewer is $4.29. He stated he would like to get a reading on what we would have to take those rates up to in order to meet our debt and operating plus the extra ten percent. Mrs. Fersch stated she could get that information. Mr. Drobina stated he would like to note that after 12,000 gallons monthly water usage the rate increases to $3.27 per thousand gallons. Mr. Sauer stated he would like to know approximately how many customers use more than 12,000 gallons monthly.
B. Review and discussion regarding user fees in surrounding communities. Mr. Drobina stated in the information he had provided to the Committee he had converted all of the information into gallons. Mr. Walburn stated it appeared that our rates are very reasonable. Mr. Hackworth clarified the proposed increase in Groveport rates has not been completed by Council, therefore, that increase was not included in this information. Mr. Sauer stated if he understood it, to get the $2.4 million to cover the expenses you would have to increase the rates $5.75 per thousand gallons. Ms Fersch stated you take one year and whatever your interest and principal amount is going to be, then you need 110 percent coverage. She stated we would need to figure what we need to have per year for all of our debt, and add ten percent more to that, to get the coverage we need. Mayor Shaver stated he thought instead of speculating, we need to have someone do the calculations and figure out exactly what amount it is that we need to increase the rates to. He stated the rates have not been raised in 15 years and Mr. Walburn stated he agreed with the Mayor because it seems each month we are just digging a deeper hole. Mayor Shaver stated he just felt we needed to have the precise figures so we can show people why we were doing this and exactly what amount we needed. Ms Gilleland stated for the next meeting she would get the information the Committee had requested this evening.
4. OTHER BUSINESS: No other business was brought forward.
5. ADJOURNMENT: There being nothing further, Mr. Hackworth moved to adjourn; Mr. Sauer seconded the motion. Mr. Hackworth, Mr. Walburn, and Mr. Sauer voted “Aye.” Motion carried, 3-0. The meeting adjourned at 7:30 P.M., February 27, 2006.
RESPECTFULLY SUBMITTED:
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Lynda D. Yartin, Municipal Clerk