REGULAR MEETING AGENDA

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. Walburn, Mr. Wright, Mr. Sauer, and Mr. Snyder were present. Mr. Hackworth was absent. Others present were: Judy Gilleland, Cristie Hammond, Jeff Fix, Keith Smith, Lynda Yartin, Ed Drobina, Linda Fersch, Bob Cramer, Dave Rossman, and others.

2. APPROVAL OF MINUTES of APRIL 10, 2006, Regular Meeting. Mr. Walburn moved to approve; Mr. Wright seconded the motion. Roll call was taken with Mr. Snyder, Mr. Sauer, Mr. Wright, and Mr. Walburn voting “Yea.” Motion passed, 4-0.

3. SCHEDULED MATTERS:

A. Review and Discussion regarding utility fee forecast. Mr. Walburn stated he would request Ms Gilleland and Mr. Cramer review the proposal the Committee received for water and sewer rate increases for a five-year period. Ms Gilleland stated at the last meeting the Committee reviewed the percentages for a three and a five-year plan and a combination for the funding of a possible wastewater treatment plant expansion. She stated the options provided were for a five million dollar option and a ten million dollar option. Ms Gilleland stated we still do not know where we are in terms of the expansion but we are considering an option for the five million dollar cost. Ms Gilleland stated the Committee had requested the percentages be converted into actual dollar amounts for the Committee to review. She stated the figures provided for water showed a 13 percent increase, and for sewer Option A was with a 16 percent increase and Option B was with a 19 percent increase. Mr. Walburn clarified that stormwater was a separate utility and was not included in these figures. Mr. Walburn stated as he understood it, we are looking at a method to increase our capacity that has not actually been approved by the EPA as yet. Ms Gilleland stated that was correct. Mr. Walburn stated it is a new technology and if approved it will be wonderful, however, if it is not approved the cost of our expansion would be greatly increased. He stated his question was if the higher rate increase proposed covered the possibility of the more costly expansion or would we need to consider another increase at a later time. Ms Gilleland stated the technology we are looking at is called an IFAS system that has been used only a few times in Ohio, so we are requesting a grant to do a pilot program and we will meet with the EPA to make sure they are in agreement with that. Ms Gilleland stated if the pilot program fails or if the EPA states they will not approve the pilot, then we would have to go to the more costly expansion plan. She stated the rate increase amounts in Option B would cover the more costly expansion. Mr. Walburn stated then, Option A would cover the cost of the expansion with the new technology if it is approved, and Option B would be necessary if the new technology is not approved. Mr. Walburn stated his point was, he did not want to recommend the smaller increase and then find in six months or so that we needed to come back and increase the rates again. Mr. Cramer stated he had thought of that as well, and it seemed that if this Committee chose Option B, there is always the ability to come back and lower rates. Mr. Cramer stated the format of his report supports the City’s ability to monitor the rates and avoid the accusation that somehow you are accumulating, at the expense of the rate payers, too much in the funds. Mr. Walburn stated even with the higher increase, our rates would still be lower than the surrounding communities. Ms Gilleland stated she understood what Mr. Cramer was saying, and it would be fiscally responsible right now, but she also has a concern with the political reality of charging people in advance for a project that we do not know is going to happen. Mr. Wright stated if we don’t, it would be like the school district, where you keep having to go back for more. He stated he would rather be in the position to reduce the rates than to raise them. Mr. Sauer stated he agreed the citizens would appreciate it much more if we would eventually lower the rates than to come back for another increase. Mr. Walburn stated if we were going to be out of the ballpark from the surrounding communities, it would be different, but we are not. Mr. Cramer stated the problem is that the City has provided water and sewer services to cheaply in the past. Mr. Snyder stated the reality is, with the ten million dollar option, you are talking about raising the rates the price of a Starbuck’s coffee per month. Ms Gilleland stated we could potentially raise the rates for one year, and then we would know how much the cost of the plant expansion would be.

Mr. Cramer stated with regard to the water rates, they have a very interesting curve. He stated if it rains a lot like it has in the past couple of months, you will see it reflected in your revenue. He stated you cannot account for that on a one-year basis; over a two, three, or five-year average you can. He stated you need to be very careful because if you implemented a rate increase for one year, you could be short again, and what it takes to catch up could be larger than the one you initially considered.

Mr. Walburn stated another area of concern to him are the customers that are outside the City. Ms Fersch stated for water they pay an additional 10 percent. Mr. Walburn stated for other communities in this area they pay an additional 30 percent for water and about 15 percent for sewer. He stated he felt we needed to look at this because he did not see why the City residents should be paying the taxes and these customers get the same service we do. Ms Fersch stated we do provide water to approximately 270 homes in Mingo Estates, and that is outside the City, but they do pay the 10 percent surcharge. Ms Fersch stated we do have an agreement with Canal Winchester for a service area where we provide water and they provide sewer. She stated we cannot increase the rates in that area. She stated, however, Mingo is separate and is totally outside of the City. Mr. Snyder stated he felt the problem was that people were not aware of the need for an increase, and if you told them you were raising the rates by 21 percent or whatever, they would be shocked, however, the dollar amount is actually not that significant. He stated further if he were not on this Committee he would not be aware of the situation. Mr. Snyder further stated we have had a lot of focus on the percentage increase, and the total dollar impact to the average homeowner is the point we need to look at, as it is not that significant. Mrs. Hammond stated from a fixed income point of view, at the end of the five years we would be looking at doubling the rates we are paying now. Mrs. Hammond stated she understood this would still be less than what surrounding communities charge, but this still will not sit well with the residents. Mr. Cramer stated with the increase, and without any capital improvements, you are looking at an entire year before you come close to breaking even. He stated he has recommended that you manage the capacity fees very carefully so that you can continue to cover those shortfalls for the next 30 years or until the rates get to the level where they can support themselves. Mr. Cramer stated he did not feel it helped to disguise the worse case scenario, and that is you could lose your utilities. Mr. Walburn stated as he saw it, if we had gone with the 12 million dollar expansion that was proposed two or three years ago, based on the figures we have now, we would have gone into default. Mrs. Fersch stated if we have a debt with EPA they will come in and tell you that you must raise your rates to a certain point. Mr. Walburn stated we do not want to find ourselves in that situation three years or so from now. Mr. Snyder stated he felt it was an education process we need to take people through. He stated he thought people took their water bills for granted, they did not know why they paid that amount, they just paid it, and the education piece was very important. He stated he did not know if we have been effective in providing that education or the reasons we need to raise the rates. Mr. Cramer stated he agreed with Mr. Snyder, this doesn’t become an issue as long as people have the service. He stated when the service isn’t there, that is when people start calling and asking why. Mr. Snyder stated he did not think the average customer really cared what surrounding communities charged, they were interested in what affects them. He stated he felt we need to educate the residents as to why they are paying what they are, why there is merit in having these increases, and what impact it will have.

Ms Gilleland stated she would still recommend going with Option A right now and then next year we would know if we were going to need more of an increase. Mr. Sauer ascertained the mechanism for scaling back rates would require a legislative action by Council. Mr. Cramer stated the process would be that a monthly report is provided to Finance Committee showing the monthly and year-to-date progress, you would check that progress against the prior year, etc., and with all that information if you see you are building up a balance, then you would re-examine the rates and you could reduce them at that point. Mr. Snyder stated in looking at the figures provided, a 19 percent increase in sewer is $2.50, or a cup of coffee. Mrs. Hammond stated she did not think you can tell people that they are only giving up something they do not do in the first place. Mr. Wright stated we need to get this right the first time or we will have the EPA in here telling us we will get it right. He stated we do not have a choice, the rates are going to have to go up. Mr. Sauer clarified that we plan on doing the wastewater plant expansion within the next three to five years because we are running out of capacity. He further stated that since we don’t know what is in front of us in terms of the pilot program that is going to take place, he felt, as a citizen, that he would like to know what he will be paying for the next couple of years so he can plan for it. He stated if that would go down, that would be great, but if the rates would go up again, he would not be happy. He stated further as a citizen he is not thrilled about having to raise the rates, but looking at the information in front of him he felt it was best to plan for the worse case scenario.

Ms Fersch stated right now we are depending on the capacity fees from growth, and if the houses stopped, that is when we would have to look at things, and further, we have to look at any capital improvements that we need to do, such as a new water tower. She stated the general fund has never supported the utilities.

Mr. Keith Smith stated, not as a councilperson but as an individual, we are trusting this Committee to come up with a fair formula to solve this problem. He stated it is not a matter of how much we can get away with, but how much do we need. Mr. Walburn stated that was correct, and he still felt the individuals outside the city should pay more than ten percent more than our city’s residents. Mr. Walburn stated he would like to see this Committee recommend Option B this evening. Mr. Cramer stated he would like to point out that the City’s expenses are growing significantly higher than the projections in the report. Mr. Walburn stated he understood that, and maybe in a year or two this Committee may need to consider another increase just because of the increase in everything, such as all petroleum products. Mr. Wright clarified this Committee would make a recommendation to Service Committee and they would forward it to Council. He further clarified that a public hearing is not required, but he thought it might be a good idea. Mr. Jeff Fix stated he knew this Committee has been working very hard on this for a good while, and he understood that we needed to take action. Mr. Snyder stated he still felt that letting the residents know why we need to raise the rates was a very important piece in this issue, and he felt we needed to figure out a way to do that. Mr. Walburn stated although a public hearing is not required, there is no reason why we couldn’t have one and he felt that would be a good idea. Mr. Snyder stated he agreed, and we needed to get the notice out to the public well in advance. Mr. Smith stated he thought Council would be amenable to holding a public hearing. Mr. Fix stated he agreed that a public hearing would be a good idea, and he felt staff and council should be prepared to make a presentation. Mr. Wright stated he agreed with Mr. Snyder that education of the residents was a very important issue. Ms Gilleland stated she agreed that a public hearing was a good idea now that we have some figures and a plan to show the public.

Mr. Snyder moved to recommend a water rate increase of 13 percent as reflected in the report provided to the Committee, and a sewer rate increase of 19 percent as shown in Option B; Mr. Wright seconded the motion. Mr. Walburn stated he would still like to consider an increase in the surcharge for outside municipality customers as a separate issue. Mr. Snyder stated he would like to have a listing of outside users at the next Committee meeting. Roll call was taken with Mr. Wright, Mr. Snyder, Mr. Sauer, and Mr. Walburn voting “Yea.” Motion passed, 4-0.

Mr. Walburn stated he would like to discuss the surcharge increase for customers outside the City at the next Committee meeting. Mr. Sauer stated he wasn’t sure if we wanted to raise the rates for those customers right away. Mr. Snyder stated he understood Mr. Sauer’s concern because we already have one issue that is going to be controversial at best. Mr. Walburn stated he could see that, but he still felt this is something we need to look at down the road.

Ms Gilleland stated staff would work on getting this legislation prepared and then we can determine a date for a public hearing.

4. OTHER BUSINESS: No other business was brought forward.

5. ADJOURNMENT: There being nothing further, Mr. Sauer moved to adjourn; Mr. Walburn seconded the motion. Mr. Sauer, Mr. Snyder, Mr. Wright, and Mr. Walburn voted “Aye.” Motion carried, 4-0. The meeting adjourned at 7:48 P.M., May 15, 2006.

RESPECTFULLY SUBMITTED:

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Lynda D. Yartin, Municipal Clerk