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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 4/15/2008 (5) PLEASE NOTE: Since the Glendale City Council does not take formal action at the Workshops, Workshop minutes are not approved by the City Council. MINUTES CITY OF GLENDALE CITY COUNCIL BUDGET WORKSHOP APRIL 15, 2008 8:30 A.M. PRESENT: Mayor Elaine M. Scruggs, Vice Mayor Manuel D. Martinez, and Councilmembers Joyce V. Clark, Steven E. Frate, David M. Goulet, Yvonne J. Knaack, and H. Phillip Lieberman ALSO PRESENT: Ed Beasley, City Manager; Pam Kavanaugh, Assistant City Manager; Craig Tindall, City Attorney; and Pamela Hanna, City Clerk 1. FISCAL YEAR 2008-09 BUDGET - 3RD WORKSHOP CITY STAFF PRESENTING THIS ITEM: Mr. Kenneth A. Reedy, Deputy City Manager; Mr. Roger S. Bailey, P.E., Utilities Department Director; and Mr. Stuart Kent, Field Operations Department Director This is a request for the City Council to review the recommended supplemental requests and capital improvement plan for the enterprise operations (water and sewer funds, landfill fund, and the sanitation fund). See pages 235-242 for the supplemental requests and pages 246-268 and 351-360 for the capital projects. This is a request for the City Council to review the annual Utilities Needs Assessment. This is a request for the City Council to review the rate recommendations for the enterprise operations (water and sewer funds, landfill fund, and the sanitation fund). This is also a request for the City Council to review the additional CIP information provided in a separate memo. This information is provided as follow-up to questions posed at the April 1, 2008 Budget Workshop. An annual review of the city's rates for the enterprise operations is consistent with the Council goals of a city that is fiscally sound and that provides high quality services for its citizens. The recommended enterprise fund operating and capital budgets address The Council's key objectives by continuing timely disclosure of the practicality of projects, including costs and time frames and ensuring that revenue streams are sufficient to meet city obligations. 1 Sanitation and Landfill Funds The city's solid waste management system is divided into two major functions: • Glendale Municipal Landfill and Materials Recovery Facility (MRF) • Residential and commercial sanitation services and residential loose trash collection. Each area accounts for expenses and revenues within an enterprise fund. Enterprise Funds are financially independent from the city's General Fund. On January 1, 2005, the monthly residential sanitation fee for residents of single family and duplex dwellings and internal customers was increased from $14.50 to $14.90, and the landfill rate per ton was decreased from $19.50 to $12.57. Subsequent adjustments have been made to the landfill per ton rate, raising it to $14.35, but the residential sanitation fee of $14.90 has not been adjusted since January 2005. The residential sanitation and landfill rate adjustments were based on an operational and financial review conducted by R.W. Beck in May 2004. In October of 2007, the City of Glendale Field Operations department engaged the professional services of R.W. Beck, Inc. to update the Sanitation and Landfill Cost of Service and Rate Design Study that was originally completed by R.W. Beck in 2004. The update incorporated the same approach and methodology that was applied during the previous evaluations. Factors for the proposed rate adjustments are based upon study findings which capture the increased cost of providing service to customers. Since 2005, the cost for equipment purchases has risen 21% and fleet operating costs has increased 53%. Rising fuel cost is a major contributor to the fleet cost increase. For example, diesel fuel rose from $1.82 per gallon in FY2005 to $3.10 per gallon in FY2009. This equates to a 70% increase in fuel costs in four years time. The sanitation enterprise fund supplemental request is for the conversion of two temporary positions to one full-time Service Worker 3 position in the Commercial Sanitation division (pages 241-242). The conversion to full-time employee is more efficient for operations due to the one-year limit on retaining temporary employees and the constant need to hire and train for the position. The FY2009-18 recommended Capital Improvement Plan (CIP) for sanitation and landfill enterprise funds is included in the budget workbook (Pages 351-360). Landfill CIP projects include major activities to prepare the north expansion area for waste disposal and closure of the south cell area. Projects in the north expansion area include soil excavation, construction of a screening berm, and installation of a landfill liner and leachate collection system. 2 Water and Sewer Funds Evaluations of the water and wastewater systems were completed in late 2003 to provide staff a comprehensive, detailed report on the future needs of the city's utilities. The evaluations made a series of recommendations for the design and construction of new facilities and infrastructure and the rehabilitation of existing facilities and infrastructure. In 2008, Utilities staff updated the Water Master Plan and the wastewater system evaluations. Based upon the initial and subsequent evaluations, the utilities needs assessment has been completed and presented to Council on an annual basis since 2003. The Utilities Department hired Red Oak Consulting to conduct annual comprehensive water and wastewater cost of service rate studies. The studies evaluate all current water rates, wastewater rates, system revenue generation and full cost recovery. The consultant provides recommendations for rate structures that will meet all revenue and debt service requirements of the Utility Enterprise Fund. Rate increases for water and sewer services are required in order for the Water Enterprise Fund and the Sewer Enterprise Fund to maintain adequate operational cash reserves and finance the 10-year Capital Improvement Program necessary for the viability of the water and the sewer systems. The water and sewer enterprise funds have three supplemental requests (pages 235- 240). Two of the supplemental requests are for increased electrical power and operating costs in wastewater operations. The third supplemental request is for a new full-time Utility System Tech 1 position to help maintain service levels in cleaning 12.5 miles of new sewer lines and maintenance of 500 additional manholes added to the wastewater collection system since January 1 , 2007. The FY2009-18 recommended CIP for water and sewer enterprise funds is included in the budget workbook (Pages 246-268). The Utilities CIP projects include design and construction of a new 10 million gallons per day (MGD) groundwater treatment plant, improvements to the Arrowhead Ranch Water Treatment Plant, and replacement of waterlines in the distribution system. On April 4, 2008, the executive summary of the Sanitation and Landfill Cost of Service & Rate Design Study conducted by R.W. Beck Inc., as well as the Executive Summary of the Water and Wastewater Rates study conducted by Red Oak Consulting were delivered to Mayor and Council. The second budget workshop was held on April 1, 2008. The topics covered included the supplemental requests for the Public Safety Sales Tax Funds, as well as the recommended Capital Improvement Plan (CIP) for all funds except the enterprise operations (water and sewer funds, landfill fund, and sanitation fund). 3 The first budget workshop was held on March 25, 2008. The topics covered included an overview of the recommended General Fund operating budget and the recommended FY 2008-09 GF supplemental requests. The Budget Workbook containing the City Manager's recommended budget for FY 2008-09 was delivered to the Mayor and Council on Friday, March 14, 2007. Sanitation and Landfill Funds At the October 5, 2004 Council Workshop, the Council agreed to move forward with rate adjustments for residential sanitation collection and landfill disposal. The rate adjustments became effective on January 1, 2005. Water and Sewer Funds At the April 3, 2007 Council Workshop, the Water and Sewer Rate analysis update conducted by Red Oak Consulting was presented. The Council agreed to move forward with a rate increase to be implemented in October of 2007. At the March 7, 2006 Council Workshop, consultant Black & Veatch updated the February 2, 2004 annual Water and Sewer Rate Analysis and presented findings and recommendations. At the February 21, 2006 Council Workshop, Utilities staff presented an update on the comprehensive infrastructure needs assessment of the Utilities Department. Glendale's budget is an important financial, planning and public communication tool. It gives residents and businesses a clear and concrete view of the city's direction for public services, operations and capital facilities and equipment. It also provides the community with a better understanding of the city's ongoing needs for stable revenue sources to fund public services, ongoing operations and capital facilities and equipment. Effective solid waste management services are critical to community health and safety. To ensure these essential services are financially sound, all revenues and expenses are accounted for in Enterprise Funds. These rate adjustments provide revenues to meet expenses while keeping rates as low as possible for residents. The expansion, replacement and rehabilitation of the utilities infrastructure will ensure that Glendale maintains its long history of providing quality water and wastewater services to its residents and businesses, while complying with all local, state and federal regulations. All budget workshops are open to the public and are posted publicly per state requirements. The budget workbook is posted online with the agenda for each budget workshop. 4 Future budget workshops are scheduled as follows: o April 22 1:30 p.m. — 5:00 p.m. If additional time is needed for budget workshop discussion, a tentative budget workshop is scheduled for April 29, 1:30 p.m. — 5:00 p.m. Prior to any formal action by the Council on changing utility rates, public notice is given and public hearings are held. Today's workshop is for information only. Decisions on the proposed budget, including the rate and fee recommendations for the enterprise operations, are not requested until the final balancing workshop, scheduled for April 22, 2008. Mr. Horatio Skeete provided additional information regarding some questions that City Council had at the April 1, 2008, workshop regarding the proposed capital improvement plan. He referenced the memo titled "Supplementary Information for the April 15, 2008, Budget Workshop Regarding General Obligation Capital Projects in the Proposed Capital Improvement Plan" that was provided to Council as part of the April 15, 2008, agenda packet. He said the material provided in the memo included an option that would allow for a 2.5 cent decrease in the primary property tax rate for Glendale property owners. He further explained that this option would realign the timing of the Loop 303 development capital project as shown in the memo (and as shown below for the purposes of these meeting minutes). TABLE 1 FY2008-09 FY2009-10 FY2010-11 FY2011-12 FY2012-13 Total Proposed CIP Loop 303 Dev $4,029,021 $6,000,549 $10,029,570 Alternative Loop 303 Dev $2,029,021 $2,000,000 $6,000,549 $10,029,570 Mr. Skeete said this realignment of the timing for this project is possible because of recent discussions with the property owners in the area. He said those discussions have focused on developing an alternative that would shift some of the financial cost of infrastructure to the private sector. He said Council could achieve a 2.5 cent reduction in the primary property tax by realigning the timing of the Loop 303 project as shown in Table 1. He said a rate decrease of more than 2.5 cents would require deferral of projects proposed for the first five years of the plan to the last five years of the plan. 5 Vice Mayor Martinez said he thought staff would bring back project reductions for both the 2.5 and 5 cent reduction options. Mr. Skeete said the supplementary memo provided to Council included a list of all General Obligation bond projects in the first five years of the proposed CIP. Mr. Skeete said Council could choose to defer any of the listed projects to the last five years of the CIP should it want to reduce property taxes by more than 2.5 cents. Mayor Scruggs asked whether they could possibly reduce moving things forward into the five year budget cycle for the next year in FY2009-10 rather than decrease current projects in the CIP to achieve a tax reduction. She wondered why a 5 cent reduction could not be achieved just by moving $6.5 million less from the CIP in FY2009-10. Mr. Skeete said the capital plan is balanced over a five-year timeframe because that is the approach the bond rating agencies require. The proposed capital plan presented to Council is balanced over the five-year period. Therefore, to lower the rate by more than 2.5 cents would require deferring projects from the first five years to the last five years of the plan. Also, one of the critical elements to be projected was an appropriate fund balance level for the general obligation debt service fund, something the rating agencies also require for a top rating. He said the city had to have a minimum fund balance of 10% of the previous year's debt service. Mayor Scruggs asked if this had to be done on the operating expense side. Mr. Skeete stated it did not because the operating expense side was subject to annual appropriation. Mayor Scruggs commented she has never seen a project not move forward due to lack of funding. Mr. Skeete stated so far it has not been the case, however, this year it might be a possibility. Mayor Scruggs discussed what she perceived as the root cause of the problem. She said it went back to the spike in home assessed valuations not being real and not destined to last. Unfortunately, the city did not take greater action last year, and had built a CIP on artificial assessed valuations, which are now coming back down. She explained that what she was being told was if they reduced the tax anymore than 2.5 cents, the remainder would not support any of these projects. Mr. Skeete stated she was correct. Mayor Scruggs said her main point was the aggregate additional burden that will be placed on the residents if they were to move forward with all of the actions proposed. She discussed what the average persons should expect in higher taxes. She added that in addition to the current taxes, the city proposes to take more than 10% more for city services between sewer, water, sanitation and property tax. She said she believed it was not reasonable for the residents to incur additional taxes. She said if anything can be done to reduce that burden she would like to find a way to do it. Councilmember Lieberman stated that although he was in favor of this reduction, he would also like to see what it does to the overall budget next year and so on. 6 Vice Mayor Martinez said Council should they move ahead with the option presented today. He said it would be possible to move forward with some CIP projects; however, projects would be at a stand still if the expected revenue did not materialize. Mr. Skeete stated that all CIP projects would be brought forth for Councils consideration. He added they would provide an analysis for each project. Councilmember Clark said her assessed valuation statement for FY 2006-07 showed she had paid 5% on the primary side and 21% on the secondary side. She noted that the primary side was proposed for reduction. She said the primary side pays for education and the money on the secondary side was also for education, county flood control and county taxes. She compared her 2006 primary tax of $73.00 to her 2007 primary tax of $75.00 and noted it had only gone up $2.00. She said she was not against reducing property tax; however, she believes there were ulterior motives involved when discussing reducing the property tax. Councilmember Clark discussed the proposed sewer, water and sanitation rate increases. She said if accepted the average bill would go up an additional $91.32 a year. She stated if they were really concerned about alleviating conditions for Glendale residents, it did not necessarily come from a two or five cent property tax decrease, but rather by addressing the enterprise fund process. She stated last year the CIP was attacked to try and eliminate the West Branch Library. She said this year, because of the reduction in the CIP; she would demand other projects be looked at first if anything needed to be cut such as the new court house, barnyard additions and land acquisitions downtown capital projects. She said the west branch library has been pushed back since its approval date in 1998. She stated it has had a six year delay and should the CIP be reduced again, she would like for it to be done in an equitable fashion. She said she did not mind discussing property tax reduction; however, it was not fair to the community for this project to take the hit again and be delayed again. CIP projects are those that brought amenities to residents and the one place they see their tax dollars at work. Mayor Scruggs agreed with Councilmember Clark on reviewing the enterprise fund process. She commented on a meeting concerning the enterprise funds. According to staff experts, there were no capital projects that can be deferred without harm to the city. She said the enterprise fund keeps increasing and perhaps there is a way to restructure that fund. She believes the whole tax issue was a philosophical issue with many view points. She stated she did have another motivation for requesting a property tax reduction: the City of Glendale likes to bench mark itself against comparable cities in the valley. Additionally, she is motivated when competing for economic development with comparable cities, Glendale's chief competitors. She said her motivation was economic development because the city was always looking to bring more quality employers to Glendale. In regard to taxes, the City of Phoenix was at $1.82 and Glendale at $1.62. She added corporate employers do look at the tax structure when considering moving to a city. 7 Mayor Scruggs asked Mr. Skeete to confirm that no projects in the first five years of the proposed program would be deferred to the last five years. Rather, the proposal being discussed today is to realign the timing of an economic development project to years when it is most likely to occur. Mr. Skeete said yes, that the Mayor's statements were correct. Vice Mayor Martinez commented on another CIP project, the Foothills Recreation and Aquatic Center. He said that project was delayed approximately five years and that such things happen and have to be dealt with as a part of doing business because things were always changing. His top priority now was the new court house. He said he would have to disagree with both Mayor Scruggs and Councilmember Clark regarding the enterprise funds. In his view, there was not much wiggle room in those areas because of the increasing costs of construction and construction materials. He said he would support decreasing project costs if doing so would not hurt residents. However, he did not see where the Council could eliminate anything. Councilmember Lieberman agreed with Vice Mayor Martinez. He said the city provides services to the community and is responsible for providing outstanding service. He also does not see where things could be cut. He discussed projects shown in the proposed CIP such as the west branch library, new court house, and the Glendale Avenue corridor redevelopment. He explained the tremendous growth shown in Glendale as compared with other cities. He supports the reduction option presented by Mr. Skeete and said this option will enable Council to reduce the city's property tax rate and keep the planned CIP projects intact. Mr. Ed Beasley said this was a good philosophical discussion. However, he did not want to give the impression that the proposed CIP was untouchable. He said staff would be happy to take them through the CIP process should the Council decide to reduce the rate more than 2.5 cents. He explained the enterprise fund was a service driven business. He said staff could certainly take a look; however, there were some things beyond their control based upon federal regulations and impacts to the community. Mayor Scruggs said she believes there is support for the realignment of the Loop 303 capital project so the city's property tax rate could decrease 2.5 cents. She added that any additional reduction would be reviewed when additional information is provided. Mayor Scruggs discussed her meeting with staff on CIP projects. She said staff was adamant there were no capital projects that can be deferred without serious harm to the city. What she was proposing was to look at the enterprise fund process in its totality. She said there were different parts to it and she would like to review them. What she proposes is to look at the administrative side of the program and see if any cost could be moved back to the general fund and so forth. Her suggestion was only to look into the administrative process, not eliminate anything from the CIP. 8 Mayor Scruggs stated they will put further discussion on property tax on hold until the next budget workshops. Staff will provide additional information on economic development. Councilmember Lieberman stated his support for material presented today about a proposed property tax reduction. Mayor Scruggs commented on the valuable tax information provided by staff that confirmed the huge success in the City of Glendale. Mr. Ken Reedy introduced the next item for discussion. He said the presentation will center on the water, sewer, sanitation and landfill enterprise funds. He said today's discussion will be about existing service areas. He introduced Mr. Roger Bailey, Utilities Department Director, and Mr. Stuart Kent, Field Operations Department Director. He said both gentlemen have completed extensive and comprehensive studies about the capital and operating needs of the respective enterprise funds over the short- and long-term. Mr. Reedy said these studies are completed annually to accommodate the rapidly changing environment of the respective operations. Mr. Reedy said the enterprise funds operate as independent budget centers so the cost of those businesses were specifically recovered in the revenue stream. Robust growth in residential development impact fees had not occurred as in previous years because of the slow economy and the slow down in the housing market. He said this decline in impact revenue has affected the revenues available for growth-related construction projects. The impact fees are strictly regulated by Arizona state laws that have changed significantly in the last few years. Mr. Reedy said the city has a business model that is used to evaluate the cost of doing business. This approach evaluates the cost of providing services for each class of customer. The goal is to calculate the costs related to a specific class of customer to ensure those customers are billed appropriately. He said he and his staff were very aware of the impact of rate increases on the customer and do not want those rates to be higher than need be. He said today's costs for construction projects, construction materials, energy and fuel have increased significantly. He said the rate recommendations are directly related to the costs of providing services. He said these recommendations were accurate representations of the cost of doing business and necessary in order for the city to continue providing a high level of quality services to the citizens. Councilmember Clark asked for clarification on the addition of one new position for the Utilities Department. Mr. Bailey said the work currently was being done by a contract employee. He said the request is to convert the contractual position to a permanent position at no additional cost. Councilmember Clark asked for further clarification. Mr. Reedy explained there was funding to pay a contract employee and staff was proposing 9 to reallocate those funds to pay for a full time employee. Mayor Scruggs commented it seemed to be a dramatically different pay scale. Mr. Reedy stated she was correct. Councilmember Clark also asked about the full-time position requested for the sanitation frontload program. Mr. Kent said temporary employees have been used in the past; however, there were problems with frequent turnover as almost all temporary employees are seeking full-time employment. He said no additional funding was needed as the funds used to pay for the temporary employee would be reallocated to pay for the full-time position. Mr. Reedy stated that both positions dealt with sustainability for the long term. Mr. Kent provided a summary of the October 5, 2004 Council Workshop where the Council agreed to move forward with rate adjustments for residential sanitation collection and landfill disposal. The rate adjustments became effective on January 1, 2005. He said Council had given direction on two key issues from a rate stand point. He said one was to move forward with a rate increase in the residential sanitation of 40 cents per month and the other was to pay off the MURF debt. He discussed the many changes since 2005 regarding the increase in equipment, materials, operating cost and fuel. He said there had been a 70% increase in the last four years that has lead to redoing all the rate analysis. He stated they were projecting a rate increase effective July 1, 2008 of $1.40 per household. The change would be move the current rate of $14.90 to the proposed rate of $16.30. This increase would still keep all the other services precisely the same. He provided other city comparisons and noted that Glendale will be in the middle area regarding comparable rates. Councilmember Clark asked for comparisons to Chandler, which was comparable to Glendale in population. Mr. Kent stated Chandler picks up their loose trash once every six weeks, as opposed to once every four in Glendale. He added landfill rates will also be going up from $14.35 to $15.79 a ton because of additional cost for equipment, fuel and steel. He said he was not aware of Chandler's fees for landfill disposal. Councilmember Clark asked why not go to Chandler's model and pick up loose trash once every six weeks. Mr. Kent stated he did not know their exact figures; however, it would probably be a marginal savings. Councilmember Clark commented it could not be said the savings would be marginal when fuel and equipment costs keep going up. Mr. Kent stated the same amount of trash would still be there and they would be taking the same amount of trips to the landfill. He said the four week schedule was efficient and ran well. They really had not evaluated the six week schedule. Councilmember Clark stated she would like to know the true cost or savings of a six week schedule. Councilmember Lieberman stated he did not agree with Councilmember Clark's assessment. He explained that about two and a half years ago, they had many complaints regarding loose trash in the city and the city manager had to add additional crews to pick up trash. He said he receives complaints on this issue regularly. One of the biggest meetings he ever had was on loose trash with over 226 people attending. 10 Vice Mayor Martinez stated he agreed with Councilmember Lieberman and stated he has heard similar problems in his district when they also got behind on trash pick-up a few years ago. Mr. Kent stated that each landfill use is free to a resident if it was less than one ton. He said they only pay the fee if it was over one ton. Vice Mayor Martinez asked if Chandler provided the same service. Mr. Kent stated Chandler did not own their own landfill; therefore they probably charged or included the fee in their monthly rate. Mayor Scruggs discussed the advantageous position the city had in owning their own landfill for Glendale residents. She complimented the staff for the quality of sanitation services provided in Glendale. She stated she supported leaving the loose trash collection on a monthly basis. She felt very proud about how clean and orderly yards looked and how citizens were remodeling there homes and staying in Glendale. She also recognized how staff had included the recyclable portion in the budget as part of normal sanitation, not just an added on. Councilmember Lieberman also commented on how fortunate Glendale was to have their own landfill. He discussed how other cities had to haul the trash out of the city for miles. He noted the landfill still had 35 to 40 years of land life left. Mayor Scruggs related a story about a lunch held at the landfill to show support and to also show how clean the operation functioned. She stated staff was talking about possibly doing it again in the fall. Mr. Kent also provided information on commercial sanitation services. He said they were projecting increases between 6% and 10% for the front load bins at businesses and restaurants. He continued discussing additional commercial recommendations. Vice Mayor Martinez commented that even though they were recommending an increase, it was still lower than everywhere else. Mr. Kent stated this was very much a market driven issue. Mr. Bailey provided a needs assessment update. He stated the needs assessment addresses issues within the water and waste water systems. It addressed improvements needed at the water treatment plant, distribution and collection system. He explained the reason for these improvements was to be able to meet the demand as well as protect public health. They need to be in compliance with all federal state and county regulations because they were a highly regulated business and a lot of what was done was driven by regulations. He noted the facilities need to be secure and constantly enhanced for the citizen's security. Mr. Bailey presented accomplishments such as the Oasis Water Treatment Plant, Upgraded the Cholla Water Treatment Plant and a web-based billing system. He said all these improvements help them meet public demand, as well as to comply with federal and state regulations. He discussed the importance of water treatment and how 11 they had to be able to meet the public demand at any given moment. They had to have a long term plan to be able to meet the demand and account for any problems or interruptions. He discussed current plans for the future. He explained they were currently in the process of designing the first ground water treatment plant scheduled for 2010. He added this facility will come on line in time to meet additional public demands. He also discussed the second ground water treatment plant scheduled for the Loop 101 area. Mr. Bailey discussed the waste production process and stated that as in water treatment, they must be able to provide service at any given moment. He stated they currently rent space from the City of Phoenix to meet the current capacity. He noted this was only a temporary solution. They are now projecting expanding the West Area Water Recreation Facility in order to meet the demand. He concluded by stating their business is to deliver water that meets all federal, state and county regulations, as well as being able to treat waste water to meet and exceed the customers expectations while maintaining public health. Councilmember Frate commented on the Oasis Water Treatment Plant. He stated he was amazed with the infrastructure and scale required to provide this service. He said water treatment services in Glendale were being run extremely well: the citizens were receiving the service for which they were paying. Mr. Bailey presented the enterprise fund process. He stated the fees customers pay actually go towards maintaining the operations that they provide 24 hours a day. He said their increase recommendation last year for 2008/09 on the water side was 13% and 10% on the waste water side. They are now recommending a 12% increase on the water side rather than 13%, which was the minimum possible to still maintain operations. On the sewer side, they are now recommending an increase of 12% instead of the previous 10%. He presented comparable information with other cities which stated they fall in the middle of comparable rates. Mayor Scruggs discussed benchmarking with other cities and how everything discussed today shows the correlation. She stated it was no different than with the property tax rate. Councilmember Frate noted the slide presentation promoted conservation. He stated that water conservation was very important and discussed water conservation appliances and water irrigation. Councilmember Knaack commented on the wonderful and well prepared job from the presenters in discussing this item in a way that was comprehensible to all. She stated the public expects a lot of things, but possibly the most important was having a reliable water source. She said water was a necessity, not an amenity. She compared buying a gallon of water at the store for $1.89 as opposed to 1,000 gallons from the city for the same price. 12 Councilmember Lieberman asked how the telemetry implemented in all the wells was working. Mr. Bailey stated that with the system in place, they were able to monitor all the facilities and operate the wells in the treatment plant. He invited the Council to visit the new central monitoring station. Councilmember Clark said she does not dispute the excellent service provided to the Glendale community. However, she wants everyone to remember that these proposed increases will increase the standard city services bill by $91.32 a year for the average citizen. She asked for further information on cities around the state regarding what they are doing differently, as well as their strengths and weaknesses. She stated she also supported looking into the enterprise fund as a whole; not in terms of rate increases but at the process. She said this rate increase will hurt the senior population, as well as people on a fixed income or who have fallen on hard times. She said should staff ask for an increase for next year, they should be able to show where the money will be going. Councilmember Clark asked a question on pages 352-354. She stated that when doing the calculations herself, every figure was higher than calculated. She provided examples on proposed purchases. Mr. Kent stated that as a part of the CIP process there was an automatic inflation process that went into the calculations. Mayor Scruggs discussed rates going up every year and how to move forward with the recommendations. She stated the recommendation was for a 12% rate increase in water and a 12% rate increase in waste water. She explained that should they move forward with this recommendation, they would also be giving as assumptive agreement to an 11% rate increase in both water and waste water and a 7.7% increase in sanitation for the next year, followed by additional increases in future years. She explained at this rate, people won't be able to afford their utility bills. She reiterated her suggestion to look at the enterprise fund to find possible ways to combat this issue of continued rate increases. Councilmember Clark said all should be aware that this recommendation implies a three year rate increase. However, she was only willing to support the current year increase. She would like to have a discussion on ways to reduce rates in future years. Mayor Scruggs said it was important for the citizens to be aware that the rate increases were recommendations going up to 2017. She noted it was alarming to see the incremental increases slated for the coming years. She agreed with Councilmember Clark on having further discussions to see where rates can be reduced. She added these recommendations were for how business was conducted today and asked if any others had any concerns. Vice Mayor Martinez said he agreed Council should look into the enterprise fund operations, however, we know that costs usually go up with inflation and these services are no different. These services are run as a business and incur costs in the course of trying to provide the best possible service. He said if you were to look to past history, the cost of everything else is also increasing. He did not know how Council could 13 change that trend for these basic services. He said the experts have reviewed the findings and have not found a better way. Additionally, he said he believes the staff had looked to other cities to find ways to reduce rates and had also come back with no real solutions. Councilmember Lieberman agreed with Vice Mayor Martinez. He said this increase was small in comparison to other necessities such as milk and gas that had increased throughout the years. He said he believes the public receives a big break in city services as compared to other necessities that have followed the trend and continued to rise. Councilmember Goulet said the discussion had turned to a doomsday scenario regarding price increases. He said this increase was supported by facts and that service decisions had to be made in order to continue to provide services to the community. He explained it does not preclude them from looking at different funds to find reductions in other ways. He stated people rely on the excellent service provided by the city. The city has had cost increases to materials, equipment etc. and has to increase rates in order to compete as a business. He noted it has become clear that people do not want the city to ever cut services. He added if the city has to increase rates, they should also find ways to give back to the community in other areas to help off-set increases. Councilmember Knaack said she agreed there was never just one way of doing something. She would like staff to look into it further. Councilmember Frate agreed with Councilmember Knaack. He stated they also need to show the value of what the public is receiving. He supports having an open discussion with the experts on how business is conducted and possibly find new ways of doing things. Councilmember Clark agreed to look at the processes and structures of the enterprise fund. Mayor Scruggs commented that the discussion was not about cutting something out of the budget, but rather on how everything is put together. She stated the consensus was to address and discuss this item before the next budget process. She discussed the many aspects that go into running this service oriented business. She agrees with looking at the process and structure of this fund. She stated that one of Council's goals was to develop ways to increase efficiencies, rather than always having to raise rates. Vice Mayor Martinez asked for clarification on sanitation vehicle replacements. Mr. Kent stated that a lot of the vehicles were lease purchases because of their heavy capital cost. In terms of a rate and operations stand point; he said it serves the city better in terms of projecting rates. 14 Mr. Beasley stated it was clear to staff to bring back additional information before the next budget cycle on this item. Mayor Scruggs stated her appreciation for the excellent work being done by members of every city department and truly believed they were providing the highest level of service to the community. She said Council was suggesting staff look for ways to absorb some costs so as to not have the citizen carry most all the burden. She thanked staff for their willingness to start a dialogue on this issue. ADJOURNMENT The meeting was adjourned at 11:00 a.m. 15