Board of Directors

MINUTES BOARD OF DIRECTORS MEETING MAY 17, 2004, AT 7:00 P.M. The regular meeting of the Board of Directors was held on Monday, May 17, 2004, at 7:00 p.m., Hot Springs Civic and Convention Center, Wheeler Room, with Mayor Mike Bush presiding. The invocation was given by Mr. Elmer Beard, and Pledge of Allegiance to the Flag was led by Mayor Bush. Mayor Bush called the meeting to order at 7:00 p.m. 1 Roll Call Roll call was as follows: Present: Directors Peggy Brunner-Maruthur, Elaine Jones, Burt Newell, Carroll Weatherford, Bill Edwards, Bob Wheeler, and Mike Bush, total 7. 2 Approval of Agenda A motion was made by Director Edwards, duly seconded by Director Wheeler, that the agenda be approved; and upon voice vote, the motion unanimously carried. 3 Approval of Minutes of May 3, 2004 Board Meeting A motion was made by Director Edwards, duly seconded by Director Wheeler, that the minutes of the May 3, 2004 Board Meeting be approved; and upon voice vote, the motion unanimously carried. 4 Recognition of Guests City Manager Kent Myers presented a retirement plaque to Mr. Warren Albright, having been employed with the Hot Springs Memorial Airport as line person since July 1973. He also presented a retirement plaque to Ms. Dorothy Garner, Operations Supervisor, Finance Department, having been employed with the City since June 1, 1976. CONSENT AGENDA The Consent Agenda consisted of the following: 5 Public Safety Report (May 5, 2004). 6 Proposed Resolution No. R-04-111 Approving Certain Bid Awards - (a) Rip-Rap - Parks Department [awarded to H&S Maintenance in the amount of $24,950]; (b) Tires - Fleet Service and Intracity Transit [annual supply contract awarded to Firestone and Retread Shop]; (c) Asphalt - Public Works [annual supply contract awarded to Martin Marietta]; (d) Blended Polyphosphates - Utilities [annual supply contract awarded to Shannon Chemical; and (e) Security Fence - Fire Department Training Ground [awarded to Security Fence and Iron in the amount of $14,220]. 7 Proposed Resolution No. R-04-112 Approving Certain Revisions to the Municipal Airport Property Management Policies; and Repealing Certain Resolutions. 8 Proposed Resolution No. R-04-113 Approving the Extension of Hot Springs Municipal Water and Sewer Service to Hidden Forest, Phase III. 9 Proposed Resolution No. R-04-114 Approving the Extension of Hot Springs Municipal Water and Sewer Service to Muncrief Subdivision. 10 Proposed Resolution No. R-04-115 Approving the Extension of Hot Springs Municipal Water and Sewer Service to Fleetwood Homes Subdivision. 11 Proposed Resolution No. R-04-116 Authorizing the Mayor to Execute an Amendment to the Contract with NRS Engineering for the Design of the Utilities Relocations Related to the Widening of Highway 70 West. 12 Proposed Resolution No. R-04-117 Amending the Substance Abuse Policy for the City of Hot Springs, Arkansas. 13 Proposed Resolution No. R-04-118 Awarding a Contract for Architectural and Engineering Services (Hollywood Trail Conceptual Site Plan and Eastside Linkage of Rotary Centennial Trailhead) to Carter and Burgess Consultants, Inc. A motion was made by Director Wheeler, duly seconded by Director Edwards, that the Consent Agenda be approved. Upon discussion, Director Brunner-Maruthur noted that item No. 070 of the Public Safety Report needs to be corrected and should read Mountain Valley instead of Mountain View. Mayor Bush then called for a vote on the motion to approve the Consent Agenda with the correction to the Public Safety Report; and upon roll call, the following voted Aaye@: Directors Brunner-Maruthur, Jones, Newell, Weatherford, Edwards, Wheeler, and Bush, total 7; motion unanimously carried. PUBLIC HEARING 14 Public Hearing on Ordinance Fixing Rates for Services Rendered by the Wastewater System of the City This being the date and time set for a public hearing on the ordinance fixing rates for services rendered by the Wastewater System of the City, Mayor Bush declared the public hearing open. City Manager Kent Myers recognized Mr. Dan Jackson, managing director and chief executive of economists.com, which is an economic and financial consulting firm with offices in Dallas; Portland, Oregon; Tampa, Florida; and Phoenix, Arizona. Mr. Jackson stated the last wastewater rate increase was in 1998, which was about five cents per thousand gallons. He pointed out that the inflation rate has been almost 15 percent, and other utilities have seen greater increases. The average water and wastewater rate has increased almost 20 percent across the country since 1998, and cable television has increased 34 percent since 1998. He commented that the Board of Directors Meeting 3 May 17, 2004, at 7:00 P.M. wastewater fund is operating at a deficit since there has not been a rate increase. The City is not able to fund its operating expenses not to mention the significant level of capital improvements. He stated that the cost to provide service to outside city limit customers is approximately 58 percent greater than the inside city limit customers, which means that as long as the inside city limit customers are paying the same rate as the outside city limit customers, the inside city limit customers are subsidizing the outside city limit customers. The City needs to spend approximately $25 million to repair and expand the wastewater system over the next decade. A new wastewater treatment plant represents less than 20 percent of the total expenditures that will be required for the capital improvements. These capital improvements are required to maintain the same service level; they are required to meet environmental standards, and there could be serious consequences with the State and Environmental Protection Agency if these capital improvements are not done. Mr. Jackson reported that they reviewed several rate alternatives with City staff and the Board of Directors during the work session last month. The recommendations are as follows: City needs to begin taking steps to eliminate the subsidy that is occurring from the inside city limit customers to the outside city limit customers, which would involve a series of graduated wastewater rate increases over the next three years. Effective June 2004, for inside city limit customers, they recommend a six percent rate adjustment increasing the minimum charge from $10.50 to $11.15 and increasing the volume charge from $2.45 to $2.60. They recommend a twenty percent adjustment in the outside city limit rates, increasing the minimum charge by approximately $2.00 per month and volume charge by about $.50 per thousand gallons to $2.94. Effective January 2005, they recommend a three percent rate adjustment for inside city limit customers, increasing the rate to $11.45 with a volume charge of $2.67 and increasing the outside city limit rate to $14.50 with a volume charge of $3.38. The final rate adjustment is recommended for January 2006; however, another inside city limit rate adjustment would not be necessary; but an outside city limit rate adjustment of ten percent would be required, increasing the outside rate to $15.95 for a minimum charge with a volume charge of $3.72. At the present time, the average ratepayer uses approximately 5,000 gallons of wastewater service in an average month. Under the current rates, that is a charge before taxes of $20.30. Under the proposal being presented tonight, in June 2004, the average inside city limit ratepayer would see their rate increase by $1.25 per month. The average outside city limit ratepayer would see their rate increase by about $4.06 per month. In January 2005, the average inside city limit ratepayer would see another adjustment of about $.58 while the average outside city limit ratepayer would see an increase of $3.66. In January 2006, there would be no change for the inside city limit customer; but the outside city limit customer would Board of Directors Meeting 4 May 17, 2004, at 7:00 P.M. see another increase of $2.81, meaning that over the three-year implementation period, the rate for inside city limit customers would increase by an average of $1.83 per month. Whereas outside the city limits, it would increase by an average of $10.53 per month. Regarding the impact fee study, Mr. Jackson advised that an impact fee is a one-time charge paid by new development to finance the construction of public facilities needed to serve it. As the City and service area continue to grow, the City will incur additional costs. It costs the City more to service more connections, to extend sewer lines to new developments, and to expand the sewer plants so there will be sufficient capacity to provide service to those new developments. However, there is a cost associated with growth. By implementing an impact fee, the City prevents existing ratepayers from funding the cost of new development. He stressed that the City cannot use an impact fee to pay for personnel, operating expenses, or subsidize the wastewater service. The City can only use the money it receives from an impact fee for construction of physical assets needed to provide service to new subdivisions and new development. He noted that the City cannot set an impact fee to control growth but can only set an impact fee to recover the cost involved with growth. He stated that developers typically oppose impact fees because it is an additional cost to the cost of development. However, there are advantages to impact fees to developers, such as providing a new source of funds which enable cities to build the additional system that will allow them to build their new development. An impact fee is a means of financing the new development, but some cities allow exemptions from impact fees for specific developments that create extraordinary economic opportunities. Mr. Jackson stated that the City has a large amount of capital improvements it needs to do over the next decade ($25 million in structural replacements and improvements), which is the primary reason the City needs to make an adjustment to its wastewater rates, as well as to consider implementing an impact fee. Over $14 million of those expenditures are for system replacement, such as pumps and pipes; and about $10 million to $11 million is actually being used for system expansion. They are recommending a schedule of wastewater impact fees based on the water meter size because under state and federal guidelines, the City has to build a certain amount of capacity for every new water meter and every new wastewater connection added to the system. The maximum impact fee for a 5/8 inch meter, which is a typical residential connection, is $802. After consulting with the Board and City staff, the recommendation is for a proposed impact fee per 5/8 inch residential connection of $500. For each additional connection of larger size, the impact fee is larger because as the meters get larger, the amount of water service and wastewater service will increase; and the amount of capacity will have to grow. Board of Directors Meeting 5 May 17, 2004, at 7:00 P.M.  Mr. Jackson explained that the cost of service was calculated in the rate study, as well as the impact fee calculated in the impact fee study, which is based on national rate-making standards. The American Waterworks Association has developed rate-making standards that are used by cities all over the country. It is a methodology and is used to determine the cost of services for each particular customer class and is used in an attempt to standardize rates throughout the country. The average water and wastewater utility is expected to increase its rates by five percent a year every year over the next decade. He stated that the recommendation will eliminate much of the subsidy that is currently existing between inside and outside city limit customers. The recommended impact fees are below the maximum that is allowable under impact fees statutes and impact fee methodology. Implementing the schedule of impact fees that they recommend will minimize the extent to which current ratepayers would have to pay for new development in the future. Director Weatherford questioned how he arrived at the $.58 cost differential, and Mr. Jackson advised that was arrived by using the standard rate-making methodology for inside city limit customers and the standard rate-making methodology used for outside city limit customers. Director Weatherford asked if he used a standard from the United States rather than from Utilities Director Don Cochran and his staff. Mr. Jackson replied that the standard represents a methodology, which is taking a nationally recognized methodology and using data specific from the City to determine the rates under that methodology. He explained that the methodology is national in scope, and the specific data is specific and unique to the City of Hot Springs, such as volumes, operating expenses, capital expenses, and capital improvement plan. They went back between three and four years on the operating expenses. As far as the capital improvement plan is concerned, they forecast that ten years forward from today. Director Edwards asked that he explain the expense of treating water from the City and County, and Mr. Jackson explained that everything depends on the system. He noted that generally the outside city limit customers are farther away from the treatment facilities than the inside city limit customers, which creates an operating cost differential. The methodologies employed were able to establish the financial cost differential as well. Director Weatherford asked if the City=s costs will increase at a greater rate than the rate of the new customers being added, and Mr. Jackson replied that a few of the Board of Directors Meeting 6 May 17, 2004, at 7:00 P.M. costs are, such as insurance costs. He added that new customers coming in means that the rate adjustments the City needs to make are not going to be as significant, and the City needs to adjust its rates immediately because it is operating in a deficit. Beyond that if the City is not growing at the extent it is growing, the rates would have to be raised higher than what is recommended. The counterbalance to that is as the City continues to grow, the City needs to spend more capital funds in building more systems, building more lines, and expanding treatment plants in order to provide service to the people who are coming into the City. At the present time, without a rate adjustment, the more customers that are added, the deeper the financial distress becomes. He pointed out that the City is losing a significant amount of money at the present time; and without some form of rate adjustment, it is going to be continuing to face a desperate situation financially with the wastewater utility. Attorney Ray Owen, Jr., Leigh Circle, speaking on behalf of a number of people, stated that he has represented several water and sewer improvement districts inside and outside the city limits. Many of them have paid themselves off and are no longer active as improvement districts. He explained that an improvement district is formed for the sole purpose of purchasing an infrastructure and borrowing the money. Once that debt is paid off, the infrastructure is conveyed to the City; and the improvement district is dissolved. Mr. Owen pointed spoke of pollution problems in Lake Catherine and Lake Hamilton during the 1960's resulting from the sewer plants on Gulpha Creek and Hot Springs Creek and Golf Links Road. As a result of these pollution problems, the Arkansas Department of Pollution Control and Ecology issued a Cease and Desist Order on March 27, 1970, directing the City to stop allowing others to make new connections to the existing sewer system or to allow any increased volume of sewage from existing customers. A committee of local citizens was appointed to study the problem and make recommendations. Working with the Arkansas Department of Pollution Control and Ecology, the Federal Environmental Protection Agency and others, the City, as a result of this study, adopted a plan to address the pollution problem by doing the following: (1) constructing a new regional sewage treatment facility to treat the sewage, not only collected within the city limits but also from the developed areas around the lake and outside the city; (2) addressing the inflow and infiltration problems of the existing old sewer mains and pipes within the City by identifying those problems and any other avenues where rain water, spring water, or other ground water was entering the sewer system; and (3) designating approximately 20 proposed areas within which sewer improvement districts would be created wherein the property owners within the district would cause sewer collection systems to be built and would be responsible Board of Directors Meeting 7 May 17, 2004, at 7:00 P.M. for paying the debt associated with the construction of those systems. The City agreed to pay for the cost of installing the major pump stations and the force mains located within those sewer districts to pump the sewage back to the new regional sewer plant. The City was actually paying for a pump station and force main located on Marion Anderson Road and Thornton Ferry Road. The regional wastewater treatment plant cost the City approximately $20 million, and the total construction of all of the sewer districts was approximately $60 million. The City actually paid for a force main going across Highway 70 bridge all the way down Marion Anderson Road to a major pump station because the plan was to treat this regionally. The same thing was done out Thornton Ferry Road, and this was recognized not as a City problem but as a regional problem. The property owners in the improvement districts inside and outside the City were paying for two things: (1) the primary sewage collection infrastructure in those districts that they paid off, which was then given to the City; and (2) since the 1980's, they have also been paying regular monthly sewer bills. The existing customers within the City, new customers within the City, and new customers outside the City will be paying through the monthly sewer service charges the money borrowed by the City to build not only the regional treatment plant to identify and solve the inflow and infiltration problem in the old existing City sewer system but also for the major pump stations and major interceptor lines leading from the new as well as the old sewer system to the new regional treatment plant. The costs being paid by the City and outside the City since the 1980's, were not only toward the cost of construction of the new plant that was built in the 1970's but were also for the first ten years of this $20 million improvement that was done in 1994. Many of the customers have been paying for ten years on a 20-year bond issue that was designed to take care of this; and if the rates are kept the same, they will be paying for the remaining ten years on that issue. They have been paying their fair share of the money that the Sewer Department spends each year on its inflow and infiltration program even though the sewer collection systems within the districts are newer and more modern materials are not as old nor as bad a shape as those sewer lines in the old part of the City. The overall concept of this regional plan was set forth in the final environmental impact statement for the construction of a wastewater treatment facility for the City in a document prepared by the Environmental Protection Agency and approved by its regional administrator on October 27, 1972. To reflect that this was a regional problem being solved in a regional way, the City not only entered into agreements with districts inside and outside the city limits to furnish the major pump stations and primary interceptors in those districts but also entered into agreements with two or more of the districts outside the city limits. The districts agreed to convey all of the sewer improvements it built to the City in consideration for the agreement by the City to operate and maintain the constructed system in a manner acceptable to the EPA and the Arkansas State Pollution Control. The City further Board of Directors Meeting 8 May 17, 2004, at 7:00 P.M. agreed to charge all customer users within the District at the same rate established by ordinance as other customer users of the city system. This further strengthened the concept that the pollution problem affecting the lakes was a regional problem being paid for equally by customer users inside and outside the City. He stated that customers within the out-of-city districts protected by those agreements are third-party; and even though the districts themselves no longer exist as a result of having their indebtedness being paid off, the customer users within the district were intended to be benefitted by this agreement. He commented they still exist and are protected by the agreement which was entered into in good faith by the District and the City. He urged that the Board contemplate its promise to charge the customer users within the out-of-city districts at the same rate as other customer users of the system. He stated that failure to do so may result in litigation which could ultimately cost the City legal fees and expenses, as well as having to refund any excess collections. Mr. Owen stated that he has seen a fact sheet of frequently asked questions regarding the proposed new wastewater rates. He said the first question is why is the City=s wastewater rates so high, and the three specific conditions in the City that impact the rate include the hilly terrain, especially around Lake Hamilton, which requires the City to maintain and operate 110 major pump stations and more than 3,500 grinder pump stations. Part of that area is within the city limits and part is outside. The second condition was that the City has an old infrastructure with many of the lines more than 40 years old. This requires a major, capital investment by the City each year, such as spending $600,000 in inflow and infiltration program to repair and replace old city lines. Due to the City=s failure to improve and expand its plant in the 1980's, the City was required by the EPA to invest over $20 million in plant improvements that were completed in 1994. About $1.3 million in annual bond payments from the Sewer Fund will be required until the bonds are repaid in 2014. He stated that the hilly terrain around Lake Hamilton includes districts inside and outside the city limits, both types of which have grinder pump stations installed. The grinder pump stations were installed to help avoid inflow/infiltration problems that plagued the rest of the city system. The engineers who designed the systems put in a new idea at that time which was a grinder pump that minimized the inflow and infiltration into the system. He said that although it is true that grinder pumps do require certain operation and maintenance expenses, it is probably cheaper to maintain and operate than it would be to operate and maintain a gravity system with major pump stations around the lake. The old infrastructure, with many of its lines more than 40 years old, is the old sewer system that existed in the City, which requires the $600,000 a year for repair and replacement of old sewer lines. He said this is a city problem only and one that the City and out-of-city customers have been paying on since they connected to the system. Both the city and out-of-city Board of Directors Meeting 9 May 17, 2004, at 7:00 P.M. customers have been paying their fair share of the annual bond issue payments for the $20 million plant improvements that were completed in 1994. The second question is why are the new wastewater rates for outside city customers higher than inside city customers. (1) the actual costs of providing services in the County are more expensive, including pump repairs and operations with most of these pumps serving county customers; (2) the City is planning to invest almost $5 million in a new wastewater treatment plant that will serve primarily out-of-city customers; and (3) the sewer system is owned and operated by the City; and the City is entitled to a reasonable rate of return from nonowner customers. Regarding the new wastewater treatment plant, he stated that the primary reason he has been told the plant is being built is not to serve new out-of-city customers but to serve customers in the western service area of the city sewer system so that the sewage pumping cost will be reduced. He said he believes the cost of new sewer districts is such that the City will not see many new sewer districts in the western part of the county that will hook onto the new plant being built. He stated he did not believe the cost benefit analysis would show that it is prudent to build a $5 million plant for the estimated electric power savings each year for pumping sewage from the western end of the system to the plant on the eastern end. He added it might be wise to delay the construction of the new facility until such time as a complete cost benefit analysis has been made. If the City decides to do that and is going to require the customers on the western end of the system to pay for that new plant, he asked that they be forgiven the opportunity to pay for the $20 million worth of improvements made on the other end because they will not be using that plant. Although the sewer system is owned and operated by the City, he believes that part of his discussion has made it clear that it is a regional problem, which should be solved in a regional manner and is not fair to the residents of districts who not only have been paying their fair share of the sewer system charges for a number of years but have also paid for the cost of construction of infrastructure within their district. He said the argument that the City is entitled to a reasonable rate of return for nonowner customers is not applicable in this situation where there is a partnership in Garland County, which has existed for many years between the out-of-city customer and the city customer to solve a problem that was adversely impacting the City. Before the City adopts a wastewater increase of any type, he suggested that the Board review every line item of the wastewater budget, including projected capital expenditures, to determine if there are any areas where funds can be cut. Director Weatherford stated that he is not for passing a rate increase until he can take a closer look at the budget. Board of Directors Meeting 10 May 17, 2004, at 7:00 P.M.  Mr. Sam Hocutt, 113 Meadowmere Terrace, said that he previously lived in the county for 17 years and was a county member of the Water/Sewer Advisory Commission in the 1990's. He stated that for many years the rates were kept at an equal level, and no plans were made for replacement of any of the existing infrastructure associated with the utilities. He asked that the Board vote for the rate increase. Mr. Beau Myers, Mt. Carmel Road, spoke against the rate increase, pointing out that the study completed by economists.com is flawed and is not valid. He added that the study fails because its authors rejected the premise on which the study is based. He stated that Manual 1 of the American Waterworks Association presents a choice of two models when setting rates B a cash approach for inside the city and the utility approach for outside the city. He said the authors of the study relied entirely on these approaches in recommending different rate increases. He noted they chose the utility approach for rates in the county, which renders the study invalid. He added that this approach is used by investor-owned utilities and for government utilities in jurisdictions where the utility is regulated by a commission or regulatory body. He commented there is nothing under Arkansas law that provides any oversight of rates set by municipally owned utilities. He pointed out that residents in the County have no protection from the City=s rate setting authority. He stated that he asked the American Waterworks law assistance manager what approach should be used when there is no PSC authority oversight and was told that a legal review may be warranted. He said the state PUC does not nor does any other regulatory body exercise any control over rates set by municipal utilities, which he interprets that the City=s authority to impose higher rates on county users is unconstitutional. In the equal protection clause of the 14th Amendment, he pointed out that the City cannot separate a group of people who cannot have any say in what the City is doing or the way their charges are set. He consulted with the Arkansas Attorney General=s Office, and they are aware a deviation exists in state law and that they have on several occasions approached the Legislature to have it corrected but to no avail. He said that a judgment handed down by a federal court is where this is headed if the City insists on following an ill-advised course. Mr. Wayne Roberts questioned when the next rate increase would be after 2006, and Mr. Dan Jackson replied he believes after the rate increase goes into effect in 2006, it will probably be between three and five years before another rate adjustment would be needed. He added that it depends on how much growth occurs and increases in expenses that are beyond the City=s control. He suggested charging everyone the same; and if inflation increases every year, place the one or two percent in there, not a 45 percent increase. Board of Directors Meeting 11 May 17, 2004, at 7:00 P.M.  Mr. Kenneth Orrell said as far as the proposed sewer plant in the 70 West area, he has not talked to anyone who is responsive to it or wants it unless the City will assure them that sewer, which will be treated in the plant, is across the lake. He suggested taking the line off the bridge and not pumping the city sewer out there. He pointed out that the sewer systems in Garland County are relatively new compared to the systems in the City, and this is to impose an unjust charge on the people in Garland County. Mr. Ted Burhenn, 264 Lake Harbor, stated he has property in the City and objected to the study itself, which is the 2004 Wastewater Rate Study. He mentioned that he asked Mr. Cochran if this was written exclusively for Hot Springs and was told that it was. Also, he was assured that it was not a revised report from another community. He read from the report which mentioned San Luis and questioned the location of San Luis. Mr. Jackson replied that it is common when writing reports to use templates from other reports. He commented this report is based on a methodology, which is implemented in several steps. He said they did not edit out a paragraph that should have been and apologized for the oversight. However, in the final draft of the report, that was actually corrected. He pointed out that because they miss a paragraph in a 150-page report does not mean the entire report is invalid. Mr. James Pomfrey, 350 Tanglewood Road, questioned what facts and figures support the statements that have been made by several people that there is a cost difference between handling the waste from the county and city. Mr. Jackson explained that the issue with operating expenses is that the City does not want to get into a situation where it would have to try to calculate a separate rate for every citizen, which would be very complicated and difficult to administer. He stated that the AWWA, in recognizing this, developed a methodology where they would treat the operating expenses as uniform between the inside and outside city limit customers. However, they would look at the capital improvement plan, the capital outlays, the depreciation, the rate of return, and would develop the cost of service differential based on those factors. He stated it is a way that can be done quickly and uniformly. Director Weatherford said he asked Mr. Cochran today why the County has to pay more than the City, and his response was that it costs the City more in power; also, Board of Directors Meeting 12 May 17, 2004, at 7:00 P.M. when the City pumps some of that sewage, it sets at one location making that sewage stronger. He stated that it costs the City more at this end, but that is different from what Mr. Jackson just stated. Mr. Jackson said that is correct and is a different way of calculating the costs of services. He added the way it was done in the study was based on the AWWA methodology for cash basis versus utility basis. A comprehensive operating cost analysis can be done of every pipe and would end up with the same answer. The issue is by doing it under the methodology, the answer will be the same while implementing a standardized rate-making methodology that allows the answer quickly and with a far less percentage of effort. Director Brunner-Maruthur said that one of the statements is that the City is subsidizing the County and questioned if that was true, and Mr. Jackson replied that it was. Mr. Don Cochran, Director of Utilities, replied to a question from Director Weatherford regarding the treatment of wastewater between the county customers and the city customers, and he asked if that could cost more to treat the wastewater. Mr. Cochran explained if there was a difference, it would be due to traveling that distance between the outside city and inside city. He pointed out that the wastewater may be in the system for more than one day. Therefore, the wastewater would be more septic, which means it would be stronger in strength and would take more treatment to process that wastewater. Director Edwards questioned if it costs more to treat it because it has been in the line longer and if it is harder on the infrastructure to pump it 15 miles than 5 miles. Mr. Cochran advised it is his understanding that inside the city the wastewater is pumped once, maybe twice. Outside the City, the wastewater is pumped anywhere from four to five times. It will cost more in operating expenses, electricity, wear and tear on equipment to pump it from outside the city than to pump it from inside the city because most of the city system is on gravity. City Manager Kent Myers stated that a comment was made earlier regarding the I&I program and the $600,000 the City spends each year, which is not benefitting the county customers. He asked that Mr. Cochran clarify that. Mr. Cochran explained that outside the City, the system is newer and is mostly a low-pressure grinder pump system. Therefore, they do not have the I&I problems, but sewer has to travel through the existing system in the city; and the county customers are using this existing system Board of Directors Meeting 13 May 17, 2004, at 7:00 P.M. in the city to transport their sewer to the wastewater plant and should share in the cost of maintaining that system. Director Brunner-Maruthur said she was not opposed to the county getting city water and questioned if the delivery of the water to the county places a burden on the city infrastructure. She said that she was referring to water and wastewater. Mr. Cochran advised there would be additional costs to delivering service to a point that is farther away from the treatment facilities. Regarding the operation and maintenance, Director Brunner-Maruthur questioned the funding for a breakdown, an accident, weather condition, or regulation from PC&E or EPA; and Mr. Cochran advised that if repairs have to be made, the money comes from the Sewer Operations Fund. He added that at the current time, the City is not collecting enough revenue on a monthly basis to offset the monthly expenses. He stated that the City is not breaking even on a month-to-month basis at this time, and the cost of providing service outside the city is more expensive because it is farther away. Mr. Russ Skallerup, Lake Hamilton Drive, stated that to raise the rates in this disproportionate manner on the county residents and adding impact fees for the builders and passing them on to the construction industry, the City needs to consider new residents who might be retiring here and the economic impact on everyone. Responding to a statement regarding county sewage traveling through the city lines that had to be renovated for inflow and infiltration, Mr. Ray Owen stated that essentially all of the sewage collected in the old districts and new districts go through lines that were built in the 1970's and are not the old lines. He commented that the old lines have been in the ground 60 to 100 years ago, and he was not aware of any lines where sewage is being collected out in the county or city districts that is traveling one of these 40 or 50 year old lines. Mr. Jim Kellstrom, 215 West Mountain View Circle, spoke against the increase and said he understands there is a need for a rate increase. However, the rates should have been increased over the past few years. Mr. E. J. Patterson, 210 Carl Drive, read a statement he distributed to the Board stating that the first sewer district was Lakeside Sewer District, which had few if any grinder pumps, so grinder pump service in and out of the City was not a factor until Burchwood Bay Sewer District was formed about two years later. In obtaining the Board of Directors Meeting 14 May 17, 2004, at 7:00 P.M. federal grants to construct the Burchwood Bay system, one of the grant requirements was to obtain a contract from the operating facility, which was the new regional plant operated by the Hot Spring Sewer Department. He said he was chairman of the Burchwood Bay Improvement District, which included about 40 percent outside the city limits with a considerable amount of that property along Lake Hamilton. Since all the people in the district were sharing in the burden of having to clean up the waters of Lake Hamilton and help Hot Springs get a building ban lifted and in order to represent all the people in the district fairly, he felt the contract could not discriminate as to whether they lived inside or outside the city or whether they were served by grinder pump or gravity. What was presented to him first was a generic copy of the Lakeside contract, which did not fairly represent the people in Burchwood Bay, and is the reason the last paragraph had to be added. At the time this was discussed in detail and met with the approval of the Sewer Department of Hot Springs, the then existing sewer committee of Hot Springs, as well as the attorney for the City of Hot Springs Water and Sewer Departments, and ultimately accepted by the EPA. In reply to Mayor Bush, Mr. Patterson advised that the district was forming in the mid-1970's to early 1980's and was completed around 1980 or 1982. City Attorney David White asked if that district was dissolved and the system deeded over to the City, and Mr. Patterson advised that it has been dissolved and was done for the people in the district. Mr. Dick Belanger, Long Island Drive, commented there has not been an increase in the last six years, and the amount of the increase (45 to 50 percent) over a three-year period is a large amount for people to handle. He suggested projecting this increase farther along rather than the three years. He stated this will not offend county residents by keeping the rates equal. Also, he was not opposed to impact fees and considers it an equitable means to include it in the mortgage; and the impact over 30 years is negligible. However, the impact of taking a nine-year plan and consolidating it down to three years is the objection by many people. He said if the Board would consider a longer term and keeping the rates equitable between the city and county, there would not be this division. He pointed out that Garland County includes Hot Springs, and that is the way it should be viewed as opposed to county and city. Mr. A. J. Simpson, Justice of the Peace for District 3, 610 Main Street, said this should be done equally and not place the burden on one group of people. He pointed out that the sewer lines in the County are relatively new where the City has older sewer lines and is not fair for the county residents to pay for the old sewer lines in the City. Board of Directors Meeting 15 May 17, 2004, at 7:00 P.M. He said that the City and County should be joined together; and there should be a new commission formed, consisting of three representatives from the City and two from the County to represent water and sewer. Mr. Paul Worley, 137 Elgin Drive, questioned the $500 impact fee; and Mr. Dan Jackson explained that it is meant for sewer system expansion, including new treatment facilities, expansion of existing facilities or new sewer lines. Mr. Worley commented that any of the independent sewer districts being formed are funded prior to forming by a bond issue. Mr. Jackson replied that the capital expenses that are included in the impact fee study are only those actually incurred by the City=s Wastewater Department. Mr. Worley commented there is no consideration for the bond issue being paid prior to the system being put on line, and Mr. Jackson replied this is for new development, not for replacement of existing development. Mr. Worley said about a month ago, he understood that the $500 impact fee was called a connection fee; and City Manager Kent Myers advised that the impact fee ordinance is not on the agenda tonight and will be considered in June. Mr. Worley asked if it was called a connection fee, and City Manager Kent Myers replied that he is confusing the two fees. Mr. Worley asked if there was an ordinance that had a $500 impact fee or connection fee prior to the last two years that has not been implemented. City Manager Kent Myers advised there was some discussion several years ago, and the Board disapproved that; but there are no impact fees in place. Mr. Don Cochran explained that he may be confusing the $500 maintenance fee on the grinder pumps with the impact fee. He added there was a $500 maintenance fee that is paid for a new grinder pump that is installed, but the impact fee will be a one-time fee for any new connection to the system and can only be used for expansion of wastewater treatment facilities or the infrastructure to accommodate or expansion to accommodate growth of the system. Mr. Worley asked if it has been applied to recently instituted sewer districts that are on line at the present time, and Mr. Cochran advised that the maintenance fee has been applied to sewer improvement districts on the grinder pumps. The impact fee has not been applied because it has not been presented to the Board. Director Brunner-Maruthur said that she was not comfortable with this ordinance, and there are five key questions she needs answered before she votes: (1) how much does the City need to increase its wastewater rates? (2) the City used the utility approach, not the cost approach; and she would like to visit with Mr. Jackson about that; (3) is the City subsidizing the County? (4) is the sewer going through the old municipal Board of Directors Meeting 16 May 17, 2004, at 7:00 P.M. infrastructure? and (5) is it constitutional? She said she will not support the ordinance until these questions are answered. She commented that she is not prepared to raise rates unless it is the only option the City has. She suggested that the ordinance be tabled until these questions are answered. There being no further discussion, Mayor Bush declared the public hearing closed. OLD BUSINESS 15 Proposed Ordinance No. O-04-29 An ordinance entitled, AAN ORDINANCE FIXING RATES FOR SERVICES RENDERED BY THE WASTEWATER SYSTEM OF THE CITY OF HOT SPRINGS; AND PRESCRIBING OTHER MATTERS RELATING THERETO,@ was taken from the agenda for consideration for its second reading. A motion was made by Director Jones, duly seconded by Director Brunner-Maruthur, that the rules be suspended; and the ordinance be placed on its second reading; and upon voice vote, the motion unanimously carried. The ordinance was then read for the second time. City Attorney David White stated there will be no vote on this ordinance tonight, and the only other discussion that would be appropriate would be a motion to table the ordinance until June 21. A motion was made by Director Brunner-Maruthur, duly seconded by Director Jones, that the ordinance be tabled for 30 days. Upon discussion, City Manager Kent Myers advised that Mr. Jackson will not be available next month and asked if some of these questions could be answered tonight. Regarding the constitutionality of the ordinance, City Attorney David White advised that the ordinance is constitutional. Director Newell pointed out that as this ordinance is drafted, it proposes Option 2, which he supports. However, the problem is that Option 2 has with it a $500 impact fee. He stated if the Board is not going to consider the impact fee until June, he questioned how the Board could consider Option 2. Board of Directors Meeting 17 May 17, 2004, at 7:00 P.M.  City Manager Kent Myers pointed out that is the reason the Board had the second reading tonight, and staff thought it would have the impact fee ordinance scheduled by the time the Board is ready for the third and final reading next month. Director Brunner-Maruthur asked if everyone was in agreement with the County using the old infrastructure for delivery of the wastewater. She added that Mr. Owen said it was not, but Mr. Cochran said it was. Also, Mr. Jackson said it was; and she wanted to have these questions answered. She questioned the difference between cash basis and utility basis. Mr. Jackson explained that the two bases are the cash needs basis and utility basis. The cash needs basis is used for public utilities for rates for residents inside the city. It uses operating expenses, capital outlays, debt principal and interest, and subtracts non-rate revenues. It tells the City how much cash it needs to run the business on an annual basis. The depreciation basis is used for private utilities and municipal utilities who have customers outside the city limits. It is based on operating expenses, depreciation expense, debt interest, and also subtracts non-rate revenues. He stated there is a difference between the two in terms of financial calculation to determine the cost of service for inside and outside city limit customers. They are both nationally recognized methodologies used for calculating the cost of service. Director Brunner-Maruthur asked by using the utility basis if his methodology would change the outcome of his calculations, and Mr. Jackson replied that the utility basis was used for the outside city limit customers. Director Brunner-Maruthur questioned if he applied the numbers for Hot Springs when he did this analysis, and Mr. Jackson replied that he did. He added that specific numbers for Hot Springs, such as specific revenue numbers, specific budget numbers, specific expense numbers, specific volume numbers, and specific numbers of customers for the City were used under the standard, cash basis methodology and the standard utility basis methodology to determine the cost of service. Director Brunner-Maruthur stated that after tonight=s meeting, she would like those numbers he used for the utility basis to get that analysis. She asked if the sewer was going through the City=s old infrastructure, and Mr. Cochran advised there is no individual pipe that takes the sewer from the county down to the wastewater plant. That sewer is pumped from outside the city through the City=s pump stations and through the City=s collection system that eventually goes to the wastewater plant on Davidson Road. Board of Directors Meeting 18 May 17, 2004, at 7:00 P.M.  Director Brunner-Maruthur asked if there is wear and tear on the city system, and Mr. Cochran advised that there is since there are more operation and maintenance costs. In addition, it impacts the capacity of the City=s existing system. He added that on Highway 7 North toward Belvedere, there is an eight-inch sewer pipe that is at capacity now; and the City cannot add anything onto it. He noted that the Fountain Lake School System pumping station was added onto it. He advised that the City has just recently turned down two developments, and one was across the street from the Belvedere Country Club where the developer was going to build 120 homes because that line is at capacity now. He stressed that the City cannot add anymore people to some of its system because the growth outside has taken up the capacity of inside the city lines. Director Brunner-Maruthur asked if the City is subsidizing the County, and Mr. Jackson advised that it is. He explained that it is based on the application of the two methodologies. There is a higher cost of service for outside city limit customers and is detailed in the wastewater rate study. Director Brunner-Maruthur asked if the numbers can be submitted on one page, and Mr. Jackson said that he can try. Mr. Ray Owen, Jr. stated that the districts do not use lines that were built more than 30 years ago. He mentioned that the lines which are most affected by the inflow and infiltration have to be replaced, and some of them have not been replaced. He stated those lines are within the old part of the City; and to his knowledge, none of the sewage generated in the county or new districts in the city go through those lines. He added that the lines they go through are lines that were put in typically 30 years ago when the new system was built. Director Brunner-Maruthur asked if the burden on the I&I is caused by the City; but for the grinder pumps, etc., the burden is from the county; and Mr. Owen replied that is correct. He added the I&I problems typically occur with the system that was in the ground more than 30 years ago. He advised there were no grinder pumps until the late 1970's or early 1980's; and most of those are in out-of-city areas. However, there are some within the City. Director Newell pointed out that the next two items on the agenda are for wastewater improvement districts out in the county to bring wastewater into the city system, and this is going to continue. Board of Directors Meeting 19 May 17, 2004, at 7:00 P.M.  Mr. Ray Owen stated he believes this is the end of the improvement districts because they are difficult to form due to the expense and no grants being available. Director Newell commented that the City could not handle the development across from Belvedere, and Mr. Owen explained that would not be an improvement district. He added that area has never served an improvement district to-date; but it could. Director Newell pointed out even if it decided to come on line, the City could not accept it. Mr. Owen stated the reason the City cannot accept is due to the lack of the size of the line through the Gorge and not for any other purpose. He said the other lines were designed in the expansion of the system, and the sewer system was designed to be able to expand the sewer system to the south, west and some extent to the east; and provisions were made in the 1970's to design the lines to be able to handle capacity for a great deal of time in the future. Director Newell asked if he was speaking against the rate increase as to how it is applied between in-city and out-of-city customers. Mr. Owen replied that he was not speaking against the rate increase; but before the City approves a rate increase, it needs to take a another look at the budget to see if there are any areas for additional cuts. He added that rate increases are needed periodically because of inflationary costs in power, chemicals, and labor. Director Newell questioned if he believed there was no rational basis to bill county residents at a higher rate than city residents, and Mr. Owen said he questions the basis of it because he does not believe Mr. Jackson took into consideration the cost of repairing the infrastructure within the City for the 40-year old pipes and older. Director Newell questioned if he thought there was a rational basis to bill county residents differently despite the growth in the county. Mr. Owen said that he believes there is a legal problem with it also. He commented he did not think every attempt has been made to control costs in the Sewer Department and to plan carefully for the future with prudence in mind. City Manager Kent Myers said that a legal question has been raised tonight that he wants to get clarified because there are some people present from the Highway 70 West area who have some questions regarding the plant and its benefit. Board of Directors Meeting 20 May 17, 2004, at 7:00 P.M.  Mr. Larry Stone, engineer, explained that in the cost of treating wastewater, the options to the City are an expansion to the existing facility, which at some time will have to be done. The construction of a plant west of Lake Hamilton will serve a fairly concentrated growing area, and some of the issues they considered were how many times sewage had to be pumped and where it went to through the pump stations through the system. They looked at a 20-year plan, the cost of enlarging pumps, the power cost, etc. Once this was done, he said it appears this is going to be more economical in the long-term even from a standpoint of bringing future growth in that area and pumping that sewage back to the City. At some point in time, he said the number of lines on the bridge have to be considered. He added that the options of growth could be limited because of the size of the existing force main. They estimate peak flows in that area already are approximately 600,000 gallons a day; and that the plant would be developed to expand in three phases over the next 25 years. The initial cost will be the greatest cost, and expansions will be less; but it will not be expanded it until that growth approaches the capacity of the first phase. He pointed out that the economics say it is logical for the City to have a second plant as compared to the option of enlarging lines and pumps and transporting it back to the existing plant. City Manager Kent Myers advised there will be a public hearing on this prior to the construction. City Manager Kent Myers asked if the City is still bound by the terms of the district agreement if a sewer district has completed its financing, paid its infrastructure, and is dissolved. Mr. Brian Albright, City Prosecutor, advised that Mr. Owen raised the issue of a third-party beneficiary argument. He added that he disagreed with Mr. Owen=s assessment of that argument in this situation. He explained this is in regard to contracts that basically have been voided for 20 years or longer. He advised that as long as the rates being charged to nonresident users are just and reasonable, there is no requirement that those rates be necessarily the same as those charged to resident users. Whether there is any other basis for the Board to base its decision, it should not be a constitutional one. Director Weatherford asked if the impact fee ordinance will be ready for June 21 Board Meeting, and City Manager Kent Myers advised that it will be considered at that meeting. Mayor Bush then called for a vote on the motion to table the sewer rate ordinance until June 21, 2004; and upon roll call, the following voted Aaye@: Directors Board of Directors Meeting 21 May 17, 2004, at 7:00 P.M. Brunner-Maruthur, Jones, Weatherford, and Edwards, total 4. Voting Ano@: Directors Newell, Wheeler, and Bush, total 3; motion carried. NEW BUSINESS 16 Sewer Claim from Kenneth and Pat Madlock, 154 Catalina Circle, for Damages Due to a Sewer Backup from a Grinder Pump Station Upon discussion, Mr. Don Cochran, Director of Utilities, advised that staff has received a request from Kenneth and Pat Madlock, at 154 Catalina Circle, for sewer damages related to a sewer backup from a grinder pump station. The Board heard this claim on February 3, 2003, and denied it. The Madlock=s brought it back to the Board on April 21, 2003; and at that time, staff recommended reimbursing the Madlock=s 50 percent of their claim. Their claim was in the amount of $23,888.85. Staff felt there was some shared responsibilities in that the Madlock=s did not have a sewer backflow preventor device on their side of the lift station, and the City did not have a backflow device on its side of the lift station on the discharge side. At that time, the Board denied the request and did not approve staff=s recommendation. The Madlock=s have returned asking now for that $11,944.42 for the Board to consider as reimbursement for the damages. He said that he did not feel he could justify the reimbursement for the full $23,888.85 at the time; and that is why he is recommending one-half ($11,944.42). A motion was made by Director Newell, duly seconded by Director Jones, that the claim be approved in the amount of $11,944.42; and upon roll call, the following voted Aaye@: Directors Brunner-Maruthur, Jones, Newell, and Bush, total 4. Voting Ano@: Directors Weatherford, Edwards, and Wheeler, total 3; motion carried to approve the claim in the amount of $11,944.42. 17 Proposed Resolution No. R-04-109 A resolution entitled, AA RESOLUTION APPROVING THE EXTENSION OF HOT SPRINGS MUNICIPAL SEWER SERVICE TO THE RED OAK SEWER IMPROVEMENT DISTRICT NO. 56; AND APPROVING AN AGREEMENT WITH SAID DISTRICT,@ was taken from the agenda and read by title only. A motion was made by Director Wheeler, duly seconded by Director Weatherford, that the resolution be adopted as read. Board of Directors Meeting 22 May 17, 2004, at 7:00 P.M.  Upon discussion, Mr. Don Cochran, Director of Utilities, stated that the District has been constructed, and the customers are ready to tie on. The agreement includes collecting and treating the sewer generated from the District, and the City will maintain and operate the District=s sewer system, including the grinder pump stations. The City agrees that no additional customers will connect without collecting a reasonable connection fee to be reimbursed to the District. The District has agreed to construct the sewer system to the City=s specifications and standards, and the District will be responsible for all costs associated with construction. The sewer system will have a one-year warranty with the contractor. In lieu of providing the City with a ten percent inventory of sewer grinder pumps, the District will make available approximately $80,000 to be paid to the City to assist the District members with the $500 grinder pump maintenance fee. These monies will be placed in the master grinder pump connection fund. Some customers will be able to share one pump so the estimated sewer pump cost for 273 grinder pumps needed to serve customers of the District is $106,000. The $80,000 will apply toward that sum of monies, which will leave the individual customer paying $95.24. Mayor Bush then called for a vote on the motion to adopt; and upon roll call, the following voted Aaye@: Directors Brunner-Maruthur, Newell, Weatherford, Edwards, Wheeler, and Bush, total 6. Director Jones was out of the meeting room and did not cast a vote; motion carried. Whereupon the resolution was declared adopted. 18 Proposed Resolution No. R-04-119 A resolution entitled, AA RESOLUTION APPROVING THE EXTENSION OF HOT SPRINGS MUNICIPAL SEWER SERVICE TO THE LITTLE MAZARN ROAD SEWER IMPROVEMENT DISTRICT NO. 60; AND APPROVING AN AGREEMENT WITH SAID DISTRICT,@ was taken from the agenda and read by title only. A motion was made by Director Wheeler, duly seconded by Director Brunner-Maruthur, that the resolution be adopted as read. Upon discussion, Mr. Don Cochran, Director of Utilities, explained the District is located near the intersection of Little Mazarn Road and Amity Road. The District consists of approximately 60 customers who will share 33 grinder pumps. The District agrees to construct the wastewater infrastructure to the City=s specifications. The contractor will provide a one-year warranty on the construction and equipment once the project has been completed, inspected, and accepted by the City utilities. The City Board of Directors Meeting 23 May 17, 2004, at 7:00 P.M. also agrees that no sewer customers outside the boundaries of the District shall be allowed to connect to the facilities being constructed by the District without payment of a connection fee to be paid to the District as long as the District shall have bonded or loaned indebtedness. The District agrees to pay the City the sewer grinder pump maintenance connection fee of $500 for the 33 pumps for a total of $16,500. Mayor Bush then called for a vote on the motion to adopt; and upon roll call, the following voted Aaye@: Directors Brunner-Maruthur, Newell, Weatherford, Edwards, Wheeler, and Bush, total 6. Director Jones was out of the meeting room and did not cast a vote; motion carried. Whereupon the resolution was declared adopted. 19 Proposed Resolution No. R-04-120 A resolution entitled, AA RESOLUTION AWARDING A CONTRACT FOR CONSTRUCTION OF HIGHWAY 70 WEST UTILITY RELOCATIONS TO BOYLES CONSTRUCTION,@ was taken from the agenda and read by title only. A motion was made by Director Edwards, duly seconded by Director Brunner-Maruthur, that the resolution be adopted as read. Upon discussion, Mr. Ted Burhenn stated he has reviewed the drawings for this project and spoke of delay in obtaining easements. He mentioned there are 200 people along that stretch of road, and the station numbers, according to the drawings, are backwards from the approved highway department. He said that the contractor needs to be made aware of the delay in obtaining easements because there are some people who will not allow the City through the property. Mr. Don Cochran, Director of Utilities, pointed out that the Utilities Department is in the process of obtaining easements; but he did not believe it would postpone the project. He added that this resolution is for only approving the bids. Once this is approved, he will get signed contracts and have a preconstruction meeting and then decide on a starting date because the contractor will not proceed until a contract is signed. He added it may be between 30 to 60 days before construction begins. Director Weatherford asked how a contractor can bid on a project when he does not know where he is going, and Mr. Cochran advised that the system has already been designed. For the individuals who may not want to give the City an easement, the City may have to use the highway right-of-way to install the pipe in that right-of-way. Board of Directors Meeting 24 May 17, 2004, at 7:00 P.M.  Mr. Steve Mallett, Utilities Engineer, explained that the Utilities Department has started collecting easements and probably has one-third of them. Also, he has talked with another one-third. However, the City does have the option of being in highway right-of-way if the City cannot obtain easements; and there are other places where the City has the option of condemnation if it is imperative to be outside highway right-of-way in certain areas. Director Weatherford asked if the contractor was aware that the City does not have all of the right-of-way in hand and may have to make a change, possibly increasing costs. Mr. Mallett advised that the contractor is aware of that. Mayor Bush then called for a vote on the motion to adopt; and upon roll call, the following voted Aaye@: Directors Brunner-Maruthur, Jones, Newell, Weatherford, Edwards, Wheeler, and Bush, total 7; motion unanimously carried. Whereupon the resolution was declared adopted. 20 Proposed Resolution No. R-04-121 A resolution entitled, AA RESOLUTION AUTHORIZING A WHOLESALE WATER CUSTOMER AGREEMENT BETWEEN THE CITY OF HOT SPRINGS AND THE CITY OF MOUNTAIN PINE,@ was taken from the agenda and read by title only. A motion was made by Director Wheeler, duly seconded by Director Brunner-Maruthur, that the resolution be adopted as read. Upon discussion, Mr. Don Cochran, Director of Utilities, explained this is a water service agreement between the City and Mountain Pine. Mountain Pine is experiencing some problems with its water treatment facility, which would result in them completely rebuilding that facility. He stated this would be more cost-effective for Mountain Pine to construct a water main and extend that water main between the City=s Ouachita Water Treatment Plant and their existing water tank. Staff recommends this would be advantageous to the City to have a wholesale customer, and the City will receive their wholesale water rate. He added that Mountain Pine will be able to sell that water at a minimum of a profit so they will still be able to make a profit and supply good service to their customers. It will also enhance Mountain Pine=s fire protection. Mayor Bush then called for a vote on the motion to adopt; and upon roll call, the following voted Aaye@: Directors Brunner-Maruthur, Jones, Newell, Weatherford, Board of Directors Meeting 25 May 17, 2004, at 7:00 P.M. Edwards, Wheeler, and Bush, total 7; motion unanimously carried. Whereupon the resolution was declared adopted. 21 Presentation of Condemnation Resolutions Mr. Bart Jones, Housing Code Administrator, gave a slide presentation on the following condemnation resolutions. He announced there are two condemnations that need to be removed from the agenda (211 East Maurice and 726 Mountain Valley). He added that he was able to work out agreements with those property owners. 21a Proposed Resolution No. R-04-122 (Condemning Certain Property at 211 East Maurice)[Removed from Agenda]. 21b Proposed Resolution No. R-04-123 (Condemning Certain Property at 225 E. Belding). City [Removed from Agenda] City Attorney David White advised that there is a temporary restraining order (TRO) against the property for drug abatement activities, and the owner has the property sold but cannot close because of the TRO. Therefore, he requested that this be removed from the agenda. 21c Proposed Resolution No. R-04-124 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (196 WAINE),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Weatherford, duly seconded by Director Jones, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21d Proposed Resolution No. R-04-125 Board of Directors Meeting 26 May 17, 2004, at 7:00 P.M.  A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (617 GAINES),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Wheeler, duly seconded by Director Weatherford, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21e Proposed Resolution No. R-04-126 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (419 MISSISSIPPI),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Edwards, duly seconded by Director Brunner-Maruthur, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21f Proposed Resolution No. R-04-127 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (100 FARNSWORTH),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Wheeler, duly seconded by Director Edwards, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. Board of Directors Meeting 27 May 17, 2004, at 7:00 P.M. 21g Proposed Resolution No. R-04-128 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (117 ALDER),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Jones, duly seconded by Director Edwards, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21h Proposed Resolution No. R-04-129 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (118 MOORE),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Weatherford, duly seconded by Director Edwards, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21i Proposed Resolution No. R-04-130 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (300 CLEVELAND),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation. Mr. A. L. Harris, 122 Pleasant, spoke against the condemnation, pointing out that he has cut the grass across the front and boarded up the windows and doors. There is also a new roof on the structure, and he plans to continue working on it. Board of Directors Meeting 28 May 17, 2004, at 7:00 P.M.  Mr. Jones stated if Mr. Harris is going to rehabilitate the structure, then he suggested that the Board give him the time to do so. No action was taken on the resolution. 21j Proposed Resolution No. R-04-131 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (701 SILVER),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Edwards, duly seconded by Director Jones, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21k Proposed Resolution No. R-04-132 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (105 CYPRESS),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Edwards, duly seconded by Director Weatherford, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21l Proposed Resolution No. R-04-133 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (321 BOWER),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Jones, duly seconded by Director Brunner-Maruthur, that the resolution be adopted as Board of Directors Meeting 29 May 17, 2004, at 7:00 P.M. read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21m Proposed Resolution No. R-04-134 (Condemning Certain Property at 726 Mt. Valley) (removed from agenda) 21n Proposed Resolution No. R-04-135 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (224 PLAIN - REAR STRUCTURE),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Wheeler, duly seconded by Director Brunner-Maruthur, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21o Proposed Resolution No. R-04-136 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (405 PINEWOOD),@ was taken from the agenda and read by title only. City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Edwards, duly seconded by Director Wheeler, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 21p Proposed Resolution No. R-04-137 A resolution entitled, AA RESOLUTION CONDEMNING CERTAIN REAL PROPERTY PURSUANT TO ORDINANCE NO. 4623 (120 MAIN),@ was taken from the agenda and read by title only. Board of Directors Meeting 30 May 17, 2004, at 7:00 P.M.  City Attorney David White asked if anyone was present to speak against the condemnation; and there being no one in opposition, a motion was made by Director Edwards, duly seconded by Director Wheeler, that the resolution be adopted as read; and upon voice vote, the motion unanimously carried. Whereupon the resolution was declared adopted. 22 Proposed Ordinance No. O-04-31 (Ordinance Approving a Short-Term Loan Agreement with U.S. Bank for the Renovation of the Hot Springs Mountain Tower) (Tabled) City Attorney David White requested that this ordinance be tabled since he received an ordinance drafted by the U.S. Bank law firm in Covington, Kentucky, late this afternoon; and it differs substantially from the ordinance before the Board. A motion was made by Director Wheeler, duly seconded by Director Jones, that the ordinance be tabled until the next meeting; and upon roll call, the following voted Aaye@: Directors Brunner-Maruthur, Jones, Newell, Weatherford, Edwards, Wheeler, and Bush, total 7; motion unanimously carried. OTHER BUSINESS 23 Board of Directors Items Director Jones announced that Fountain Lake, Lake Hamilton, and Lakeside East Labs will be celebrating Heritage Month on May 22, at 4:00 p.m., Malco Theater. It is the premier ACentral Avenue - The Heart of Hot Springs.@ Director Brunner-Maruthur reported each street light has a metal tag which starts with SL; and if street lights are out, citizens may call 1-800-ENTERGY or 1-800-368-3749. For prompt repair service, citizens need to give the street ID No. and street name. Director Edwards expressed appreciation to the Board for supporting him in the National Heart Walk on Saturday in Texarkana; and they raised $67,000 for the heart research. 24 City Manager=s Report Board of Directors Meeting 31 May 17, 2004, at 7:00 P.M.  City Manager Kent Myers gave the following report: 1. There was a successful Spring Fling Cleanup, and many people cleaned up their property during the first annual spring clean event. 2. The Farmers= Market started on Saturday at 6:00 a.m., and this year it will operate on Tuesday, Thursday and Saturday. 3. Also, there was an event at Garvan Woodland Gardens. 4. During the weekend, a main line burst in the Utilities Building and flooded the building. Operations were shut down in the building today and will reopen at 10:00 a.m. tomorrow. Total damages are between $50,000 and $100,000, including computers and copy machines; however, it is insured. 25 ADJOURNMENT There being no further business to come before the Board, the meeting adjourned at 10:00 p.m., to meet again on Monday, June 7, 2004, at 7:00 p.m. ATTEST: _____________________ APPROVED:__________________ Lance Hudnell, City Clerk Mike Bush, Mayor Board of Directors Meeting 32 May 17, 2004, at 7:00 P.M.