Board of Public Works and Safety

MINUTES OF THE SPECIAL JOINT MEETING BOARD OF PUBLIC WORKS AND SAFETY COMMON COUNCIL HOBART REDEVELOPMENT COMMISSION HOBART SANITARY/STORMWATER DISTRICT BOARD CITY OF HOBART Hobart City Hall, 414 Main Street, 2nd Floor Council Chambers OCTOBER 23, 2013 at 6:00 P.M. CALL TO ORDER / PLEDGE TO THE FLAG: Mayor Brian Snedecor called the Special Meeting of the Boards and Commissions to order at 6:02 p.m., followed by the Pledge of Allegiance. ROLL CALL: Board of Public Works and Safety: Mr. Lain, Mr. Ehrhardt, Mayor Snedecor Common Council: Mr. Herzog, Mr. Mendez, Mr. Maggio, Mr. Vinzant, Mr. Brezik, Mr. Claussen. Absent: Ms. Wiley Hobart Redevelopment Commission (RDC): Ms. DeBonis, Ms. Houck, Ms. Engstrom, Mr. Adams. Absent: Mr. Sakes Hobart Sanitary/Stormwater District Board (HSD): Mr. Fulton, Mr. Mandon. Absent: Mr. Sparks Also present: Dir. of Development Denarie Kane, City Engineer Phil Gralik, Project Manager Jake Dammarell, Financial Advisor from Umbaugh Matt Eckerle, Legal Bond Counsel from Faegre Baker Daniels Randy Rompola, City Attorney DeBonis, and Clerk-Treasurer Deborah Longer Members of the public and the press were also in attendance. Note: An informational packet was distributed to each Board/Commission member prior to the meeting and is attached to these minutes in its entirety along with handouts provided at the meeting. WELCOME: Mayor Snedecor thanked all of the participants for attending this Special Joint Meeting and explained the need for the four Boards to meet together to gather information and consider future needs and potential for development in the City. He stated the 61st Avenue Phase III project is moving forward and the discussion this evening will focus on the current and future needs for utilities and infrastructure along this corridor. He noted the particulars regarding lift stations and intercepters will be discussed along with financial impact and financing models, both of which will involve some future action of each Board or Commission present. 61st AVE PROJECT REVIEW: Director of Development Denarie Kane provided an overview of the three phases of the 61st Ave. Improvement Project, stating Phase I (Mississippi Street to Liverpool Road) has been completed for several years at a cost of approximately $9.8 Million; and Phase II (Liverpool Road to Arizona Street) was done with local funds at a cost of approximately $3 Million and included a waterline extension. As Phase III (Arizona Street to S.R. 51) was being planned several years ago, discussions were held with the Sanitary/Stormwater Board regarding regional storm sewer solutions in the form of a regional pond as well as the extension of the sanitary sewers along this corridor. At the time, without having a development master plan for the area, the HSD asked that sufficient right-of-way be acquired to allow for the possibility of storm and sanitary sewer extensions in the future. A waterline extension has been included in this project as an alternate depending on the costs and a detention pond is also being included along with sufficient right-of-way as requested by the HSD. Currently the project is approximately $13.9 Million with $3.7 Million as a local match. The RDC has issued 4 different bonds since 2007 for this project, supported by TIF increment for a total of $9.3 Million worth of bonds with the Federal participation, both past and future, making up the difference. At this point, the project is at a crossroads which calls for a reevaluation of some of the decisions that have been made in the past in order to anticipate the future needs. Minutes: Special Joint Meeting: Bd of Wks, Council, RDC, HSD: October 23, 2013 1 SEWER MASTER PLAN: City Engineer Phil Gralik discussed the possibility of a regional lift station and gravity interceptor sewer along the 61st Ave. corridor. He noted as he familiarized himself with the plans for this project he began to look at long term potential development in the area and was made aware of at least two parcels the City will be acquiring that currently have septic issues that will cost the city upwards of $200,000 to mitigate. Mr. Gralik mentioned that any development to the south would require additional lift stations being brought into the system with the operation and maintenance of these additional lift stations being the responsibility of the HSD but a regional lift station and interceptor sewer would eliminate the need for some of the lift stations currently in place and allow for additional development without adding individual lift stations to connect to the sanitary system. Rough estimates indicate that each lift station costs approximately $10,000 per year to operate and maintain and have a life -cycle of about 20 years where a gravity sewer could function for 100 years or more. Mr. Gralik reviewed the map provided showing the lift stations and the sewer lines proposed. He noted a gravity sewer system would eliminate 10 lift stations, focusing the flow into only 1 which would then pump into the main lift station, would require probably a 24" pipe placed at a depth of 30' to allow it to go under the creeks. He also stated the pace of the development and the lifecycles of the current lift stations in the area will drive the phases in which the lift stations would be eliminated to connect to the gravity sewer line although the phases have not yet been prioritized. He noted the goal of the southside sewer plan would eventually have all the sewers from 10th Street south connected through the gravity sewer line to 1 lift station. In order to get ahead of the development and plan for the future, building this type of gravity sewer line is proactive and the City could charge a developer an impact fee or those along the line a special district assessment to help offset the costs. HSD FINANCIAL OBLIGATIONS: City Engineer Phil Gralik reviewed the numerous projects the HSD currently has underway and does not have the ability to handle additional debt the cost of the gravity line would impose. The common sense approach is that the installation of the 61st Ave gravity line should be done at the same time the road improvements are done to avoid having to dig up part of the new roadway in the future and to avoid the additional costs that inflation over time imposes. TIF ESTIMATES AND BOND SCENARIO: Financial Advisor Matt Eckerle of Umbaugh, reviewed the financial information provided in early summer 2013, showing the current debt service obligations of the RDC, what the available debt limit for the RDC is currently, illustrative project costs and funding for the proposed sewer line in the amount of $4.5 Million and the Amortization of a proposed $4.5 Million Bond issue. Mr. Eckerle noted the TIF Area life extends to 2035 and with the available debt limit being $247,451 a lease bond would need to be issued to handle the project proposed. The Amortization for the proposed new debt is projected to be paid in full by 2027, clearly within the life of the TIF, and allowing for the extension of the bond payments for a new bond to reduce the annual debt service payments if necessary, although the interest amount would increase if extended. In a lease bond arrangement, the current TIF increment is sufficient to handle the lease rental arrangements proposed. He stated these financial projections are based only on the current amount of TIF and based on the current development. As development takes place in the TIF District, the amount of TIF revenues will increase. LEGAL MATTERS: City Attorney Tony DeBonis reviewed the tools created by the General Assembly to allow for projects to be bonded for when the constitutional debt limit cannot meet the needs of the projects. He discussed the creation of a Redevelopment Authority (RDA), a separate corporate and political body which has its own debt limit, is empowered to issue bonds to construct projects and enter into leases with other governmental entities, using lease payment to service the bond payments. He noted the Common Council would need to pass an ordinance to create the RDA, a three-person Board made up of residents of the City and appointed by the Mayor for a three-year term. The RDA would issue revenue Minutes: Special Joint Meeting: Bd of Wks, Council, RDC, HSD: October 23, 2013 2 bonds that would be retired from the stream of lease payments. The improvement project it built, the improvement is leased to the RDC which pays the lease payments out of the TIF from 61st Ave. The RDC would then enter into an interlocal agreement with the HSD to provide operation and maintenance of the sewer system and eventually, when the bond is retired, the sewer can be conveyed to the HSD to become part of its property. Attorney DeBonis also discussed a recoupment requirement with future developers in the area that they pay a share of the cost of having built this system back to the City. This requirement would be achieved through amendments to the subdivision and zoning ordinances and resolutions of the Sanitary District regarding hook-up fees and special benefit fees and those funds could potentially be used for operation and maintenance of the system as well as expansion of the system in the future. A brief overview of the Compliance Order the HSD is under with IDEM was provided, put in place to address the issue of sanitary sewer overflows and various projects are underway to eliminate stormwater from the sanitary system to reduce the number of overflows in the current system. This proposed project will also contribute to addressing this issue, increasing the capacity of handling sanitary sewage and thereby lowering the number of sewer overflows occurring. Over the years the enforcement by IDEM will become more stringent and this project will help the City's ability to stay ahead of the problem. Legal Bond Counsel Randy Rompola, Faegre Baker Daniels LLP, distributed and reviewed a chart highlighting the differences between Redevelopment District Bonds and Redevelopment Authority Lease Rental Revenue Bond (attached to these minutes). He noticed a Trustee would be involved in the role of holding the bond proceeds and disbursement of funds. The actual lease is for the sewer line improvements and would include an interest in the right-of-way where the line is placed. Attorney Rompola noted the bond market expects this type of lease and the RDA model is not a new concept and has been used throughout the years for a number of public improvement projects. The approval process for an RDA Lease Rental Revenue Bonds has the RDA adopting the Bond Resolution; the RDC approving the payment of the lease/rental; and the Common Council which would approve the issuance of the Bond and the lease/rental agreement. DISCUSSION: General questions were asked by various members of the four boards/commissions: How many members make up the RDA? Answer: Attorney Rompola stated the RDA is made up of 3 members appointed by the Mayor for a 3-year term. Is there sufficient TIF income to cover the payments anticipated? Answer: Financial Consultant Matt Eckerle stated the handout with the estimated tax increment over-estimates the coverage to make up for any dips in the collection of the TIF. It was also pointed out that the current estimated tax increment only includes known, existing development and this will grow as development occurs in the area. Attorney Rompola pointed out that the Bond Market, the rating agencies and the underwriters will consider this also to assure that the bond is not defaulted. Once the project is underway, what is the role of the RDA? Answer: Attorney Rompola stated the RDA will meet rarely after the project is underway and Bond Counsel encourages an interagency agreement so the claims for the project may be processed by either the Board of Public Works, the HSD, or the 61st Ave. Joint Commission so the RDA has no role in the actual construction. Typically, the RDA would then meet annually for reporting purposes but not have an active role after the project is underway. How does this line get the sewage to Gary Sanitary District? Answer: City Engineer Phil Gralik stated that process is yet to be defined but a future regional lift station with a force main will bring the sewage to 10th Street and connect to the existing system. Consideration will also need to be given to whether the current force main and main lift station can handle the flow from this new project. As the area develops it is anticipated that the main lift station will need upgrades. Minutes: Special Joint Meeting: Bd of Wks, Council, RDC, HSD: October 23, 2013 3 What is the projected savings if the lift stations are eliminated? Answer: City Engineer Phil Gralik state the quick answer is $10,000 per year for each lift station and if 10 are eliminated, it would be $100,000 each year. In addition, as the current lift stations are reaching the end of their life-cycle, the replacement costs of approximately $200,000 each calculates to approximately an additional $2 Million. There is also the issue of power outages at lift stations when a significant rain event occurs and generator power is required at each lift station. The gravity main will be more efficient and not require electricity to function. The savings of doing the project now also includes one staging for contractors, not having to dig up roadway area that is installed to place the sewer in the future, and inflation factors. Are there other projects pending in the TIF area that would be preventing development if the TIF funds are used for this project? Answer: Director of Development Kane noted there was a potential project south of the tracks along 69th Ave. which would require upgrades to 69th Avenue. Part of the incentive package considered for development along 69th Avenue would be an RDC contribution toward the upgrade of that road. The other discussion that has been held is the extension of a rail spur into the Northwind Crossing development to expand the potential uses in that area. Both of these incentives are not off the radar but there is no immediate need for either at this time. If the City decided to move forward with the sanitary sewer project, the RDC would need to scale back some of the expectations toward other significant projects in the future, however, if there is continued growth in the area, the increased TIF increments could be funneled into these other projects. There still will be some current and ongoing cash in the form of TIF increments that will be available for other projects. What are the borrowing limits of the RDA? Answer: Attorney Rompola stated that because it is a lease/rental situation the RDA typically does not have any constitutional debt limits. The only RDA limits are based on the ability of the RDC to pay the lease rental payments. If the City keeps growing, that entity would have the ability to continue to issue bonds upon the approval of the Common Council. What neighborhoods would be impacted by this sewer line? Answer: City Engineer Phil Gralik stated that Deep River Estates is the most obvious where the sewer will pass right next to the entrance to the subdivision. This area may be a candidate for a Barrett Bond to extend the sewers into the subdivision. For future development, the intent is that the sewer line would be deep enough that it could be extended if needed and would be more developer-driven. If there is a need for a wastewater treatment plant, where would it be located? Answer: City Engineer Phil Gralik stated that the plant could be located along Deep River in the 61st Avenue area but this is not a commitment and current plans would be for a lift station in this area rather than treatment plant at this time without eliminating the possibility of a south side treatment plan in the future. Will Hobart Sanitary bills be given to those people who use this line south of 61st Avenue? Answer: Attorney DeBonis stated that will be an agency agreement with the HSD who will bill for the service as part of the operation and maintenance of the line. This line would become part of the HSD and there would be no difference in the billing for sewers in this area. What is the projected month and date for the start of this project? Answer: City Engineer Phil Gralik stated the projected letting date is February 2015. If this sewer project were to go forward, plans need to be ready to be sent to INDOT within the next year. What is the anticipated action needed for this project this evening? Answer: Attorney DeBonis stated that no Board or Commission is being asked to take any action this evening. Ms. Kane stated the HSD will need to study this project further and will need to determine the details of the project. The Council would then need to let the RDC know whether they support the creation of an RDA and support the issuance of the debt for this project. The RDC will then need to determine whether they will lend the TIF increment to support this project rather than other projects. The purpose of this meeting was to get the same information to all of the groups gathered here to consider what direction should be taken for the Minutes: Special Joint Meeting: Bd of Wks, Council, RDC, HSD: October 23, 2013 4 good of the City and how does this lend itself to attracting new development while taking care of some of the existing problems with regard to sewers. Mayor Snedecor stated this is a new process for this City but it is not new to other areas in the State and in other states. Holding this special joint meeting facilitates the level of communication between the Boards and Commissions as the City looks as alternative ways to fund projects such as this proposal. General discussion followed regarding the costs of doing it now or doing it in the future where the costs would be higher; the impact of this project on a gateway corridor will be less if the sewer project is done at the same time as the road project; the ability to protect the TIF increment use while encouraging development along this corridor with the infrastructure improvements; the possibility of a recoupment from future developers to offset some costs of construction, operation, maintenance or back to the RDC for future projects; and the consideration of the future development for the City. Ms. Kane briefly reviewed how this current discussion arose over the past months with a convergence of new information regarding issues with septic systems and stormwater management in the 61st Ave. area, the City Engineer and the Project Manager taking another look at the sewer needs for the area and the recent analysis of the financial picture that indicated more stability than originally envisioned. She noted that the sewer project had been considered in the past but the concerns of financing had to be focused on the road project itself. With the possibility of an RDA lease/rental arrangement and all of the other factors stated, it seemed time to revisit consideration of the sewer line being included in the project, bringing these groups together this evening to understand the process, the preliminary plans, and the need for action in the near future to not impact the letting date of the project. Mayor Snedecor asked if anyone else present had a comment or a question and there was no additional comment. Mr. Snedecor thanked all for attending this evening. ADJOURNMENT: Motion by Mr. Claussen, seconded by Mr. Herzog, to adjourn the Special Joint Meeting. All aye, motion carried by all boards and commissions. The meeting adjourned at 7:15 p.m. Clerk-Treasurer Deborah Longer Presiding Officer: Mayor Brian K. Snedecor Council President Jerry Herzog Redevelopment Commission President Sheila DeBonis Hobart Sanitary District President Robert Fulton Minutes: Special Joint Meeting: Bd of Wks, Council, RDC, HSD: October 23, 2013 5