Budget Review Committee

BUDGET REVIEW COMMITTEE DECEMBER 13, 2012 A meeting of the Budget Review Committee was held Wednesday, December 13, 2012 at 8:25 p.m. in the Aldermanic Chamber. Alderman-at-Large Brian S. McCarthy, Chair, presided. Members of Committee present: Alderman-at-Large David W. Deane, Vice Chair Alderman-at-Large Mark S. Cookson Alderman-at-Large Jim Donchess Alderman-at-Large Lori Wilshire Members not in Attendance: Alderman Mary Ann Melizzi-Golja Also in Attendance: Alderman Arthur T. Craffey, Jr. Mayor Donnalee Lozeau Bill Mansfield, City-Wide Communications Manager John Griffin, CFO/Comptroller David Fredette, Treasurer PUBLIC COMMENT COMMUNICATIONS MOTION BY ALDERMAN DEANE THAT THE RULES BE SO FAR SUSPENDED AS TO ALLOW FOR THE INTRODUCTION OF A COMMUNICATION ASSIGNED TO THE BUDGET COMMITTEE AT THE FULL BOARD MEETING ON DECEMBER 11, 2012 MOTION CARRIED From: John Griffin, CFO, and David Fredette, Treasurer Re: Budget Review Committee Meeting of November 28, 2012 MOTION BY ALDERMAN DEANE TO ACCEPT AND PLACE ON FILE MOTION CARRIED UNFINISHED BUSINESS - None NEW BUSINESS – RESOLUTIONS President McCarthy I would actually ask for a motion to table R-12-83, 84 and 85. Alderman Deane So moved. MOTION BY ALDERMAN DEANE TO TABLE RESOLUTIONS R-12-83, R-12-84 AND R-12-85 MOTION CARRIED Budget Review – 12/13/12 Page 2 R-12-83 Endorser: Mayor Donnalee Lozeau Alderman Michael J. Tabacsko ESTABLISHING AN EXPENDABLE TRUST FUND FOR EMERGENCY PREPAREDNESS R-12-84 Endorser: Mayor Donnalee Lozeau Alderman Michael J. Tabacsko Alderman Diane Sheehan ESTABLISHING AN EXPENDABLE TRUST FUND FOR ENERGY EFFICIENCY R-12-85 Endorsers: Mayor Donnalee Lozeau Alderman-at-Large Barbara Pressly Alderman Arthur T. Craffey, Jr. Alderman Kathy Vitale Alderman Diane Sheehan Alderman Michael J. Tabacsko Alderman-at-Large Lori Wilshire ESTABLISHING AN EXPENDABLE TRUST FUND FOR THE CITY’S WATERWAYS AND WATER BODIES Alderman Cookson Mr. Chairman, when we were at communications, I know we accepted the communication from Mr. Griffin and Mr. Fredette. Did we also accept what we’ve received this evening? President McCarthy Not yet. TABLED IN COMMITTEE MOTION BY ALDERMAN DEANE TO TAKE FROM THE TABLE R-12-81 MOTION CARRIED R-12-81 Endorsers: Alderman-at-Large Brian S. McCarthy Alderman-at-Large Lori Wilshire Alderman Diane Sheehan Alderman Mary Ann Melizzi-Golja Alderman June M. Caron Alderman Richard A. Dowd AUTHORIZING THE MAYOR AND CITY TREASURER TO ISSUE BONDS NOT TO EXCEED THE AMOUNT OF ONE MILLION SIX HUNDRED THOUSAND DOLLARS ($1,600,000) FOR THE FIRST PHASE OF THE RADIO COMMUNICATIONS UPGRADE • Tabled pending Public Hrg – 11/28/12 MOTION BY ALDERMAN WILSHIRE TO RECOMMEND FINAL PASSAGE OF R-12-81 ON THE QUESTION Budget Review – 12/13/12 Page 3 Alderman Deane I take it we’re going to get an overview from the mayor or Mr. Fredette on the bond sale budget analysis. Mayor Lozeau Mr. President, thank you. The document that has been distributed tonight is in essence the same document that you received in May when we talked about the bonds and what we were looking at going forward. You will notice that columns A, B were provided in the May memo. C is what is new for this evening, the city-wide communication column. D shows you the additions of those columns. We included the CERF contributions which you had seen in May. Then column F is the total of all of those items going across. Column G shows you the increase and decrease from the prior year. G, H and I were also columns, so the only new item that you have tonight on this sheet that you have not seen is the city-wide communication column on C and how it adds across. The additional document on the back of this is similar to what again you received in May and it now just has the city-wide communications piece specifically pointed out. In May when you got it, it had the other and schools and then it listed with the asterisk the communications. We expected that to be something that we would come back and revisit. I believe Mr. Fredette is prepared to talk to you about the analysis that he did and why there’s a recommendation for the ten years and what those numbers might mean should there be questions. Mr. Fredette As the mayor said, this was our former use back in May. I know it’s six months ago. When the resolution went in on the bond, we had at it at five years to be conservative. But since then after discussions with Mr. Mansfield and John Griffin, it was determined we could go ten years. That’s why I have it shown as ten years. If you want to stay at five, you would basically just double those numbers for the first five year. A little less because you save a little money on interest. That sheet, just to go over it again, that column A is all the bonds that we have sold to date and what the payments would be on those. B includes everything that’s on page 2. What’s added on there from the last time is that city-wide communications. Everything else is basically the same when you saw it in May. Broad Street Parkway, city buildings, ERP, ladder/pumper/tower trucks, some school and other which would be mostly for school, probably from some miscellaneous programs the city wants to do. The rates used are very conservative. They are in the area of three percent. Currently today we could sell bonds maybe as low as 2.2, 2.3. The rates are at a 40-year low. Given our bond ratings, we would be able to get that kind of rate. So the rates are very conservative in the forecast. Just as it was in May, the fiscal years that we’re going to have to work very hard on to try to keep as smooth as possible would be Fiscal Years 15, 16 and 17. This is very flexible because we don’t know exactly what we’re going to sell and exactly what time. I have everything for February 1st, but it could be sold in April. It could be sold in May. And, it’s also based on the rates at the time. Of course some of these projects, the numbers move a little forward, a little backwards. It all depends. Starting in January, we’ll be reviewing all these projects with different departments and seeing what we’ll need for Fiscal Year 14. We’re selling in Fiscal Year 13, but payments will be reflected in Fiscal Year 14. Alderman Donchess Column A, are those bonded debt payments that have to be made in each year? Budget Review – 12/13/12 Page 4 Mr. Fredette Yes, those are fixed. Those are all bonds that have been sold to date. Alderman Donchess Then column B, those are additional debt payments that we would have to make if the borrowing outlined on page two is done? Mr. Fredette Yes. Alderman Donchess In 2014, we would have 33 or 34 million? Mr. Fredette No, no, no, no. Mayor Lozeau You have a 17.5. Mr. Fredette $17.5 million is the payment in Fiscal Year 14. Alderman Donchess And then added to that would be the 196? Mr. Fredette Yes. Mayor Lozeau And then that would give you the new total in column D. Mr. Fredette Yes, $17,762,000 versus last year’s amount of $17,793,000. Alderman Donchess Thank you. Budget Review – 12/13/12 Page 5 Alderman Deane The parkway bond that is all found in 13, 14, and 15? Mr. Fredette Actually the parkway bond here, the first one, is going to be sold in the spring of 2013. But remember, it doesn’t show up in the budget until Fiscal Year 14. Alderman Deane Right. So when I go out to Fiscal Year 15, I should see that $17 million additional? Mr. Fredette Yes, absolutely. Alderman Deane Which column is that $17 million found in? Mr. Fredette That would be in column B. Alderman Deane So you’re looking at the original column is the $15.6 million. Then there’s $18 million. So part of that $18 million is the $17 for the parkway? Mr. Fredette Right. Chairman McCarthy You don’t see $17 million on the first page at all, right? Mr. Fredette No. Chairman McCarthy The second page is the principle. The first year’s principle and interest on the $17 million shows up in the 2015 number. It’s part of the difference between the $15,617,000 and the Alderman Deane $18,066,163. Budget Review – 12/13/12 Page 6 Chairman McCarthy Right. Mr. Fredette It’s just principle and interest for that one year. Chairman McCarthy There’s about $2.4 million in additional debt service that year, part of which is that year’s debt service for the parkway. Alderman Deane And then goes out, what? Thirty years? Mr. Fredette They’re 20 year bonds. Alderman Deane Twenty-year bond on the $17 million? Mr. Fredette Yup. Alderman Deane And the $14.2 million is also 20? Mr. Fredette Ya. On that page two, you’ll see in column B, it says “terms.” It tells you what the bond would be on page two. Alderman Deane Okay. Thank you. Alderman Cookson I’d like to go back to the first page. I’d like to look at row 11, it’s the first time you see a number show up in B, future debts, scheduled supported as shown on page 2. What’s the comparison between column A and column B, specifically the figures $16.7 million versus the $17.5 million? What’s the delta there and where does that delta come from? Budget Review – 12/13/12 Page 7 Mr. Fredette It would be coming on page two. If you look under column C, all those items are going to be sold. So the first principle and interest payments will be made in Fiscal Year 14 for those. Alderman Cookson So the delta on Row 11, Column A and B, the difference is 804.7 thousand dollars. Mayor Lozeau He hasn’t done the subtraction. Alderman Cookson I did. Mayor Lozeau It’s the new spend. Column A is if we kept everything the way it is today with no additional spend. Column B says here’s the future spend and what its cost would be. Mr. Fredette $805,000. Alderman Cookson $805,000. Yes. Where’s the $805,000 on the second page? Mayor Lozeau It’s the payment on those bonds. Mr. Fredette The payments on bonds for Broad Street Parkway, City Buildings, ERP, Ladder and School. The city- wide communication would be found in Column C. I separated that because that’s something new from what I showed in May. Mayor Lozeau So Alderman Cookson, you wouldn’t see the $800,000 payment because on page two it’s just the total bond amount. Alderman Cookson Okay, and like Treasurer Fredette, with the addition of $196,000? Budget Review – 12/13/12 Page 8 Mr. Fredette Yes. Alderman Cookson Okay. Thank you. Alderman Donchess What are you projecting for the interest rate that leads to these numbers? Mr. Fredette The items on page two, I used a blended rate of about three percent, but that’s conservative. If things don’t change between now and the spring, which it doesn’t look like it’s going to, we should be able to sell the bonds less than three percent. Last time we sold bonds, I think it was 2.86. I think we’ll even get better than that because the rates have come down lower since then. Alderman Donchess On the merits, I’m troubled by it for a few reasons. Number one, is it really justified to sell bonds for this purpose? The last time this came up is when we went through the fire truck issue and we didn’t get into this specifically but it was said that while this was sort of the last time that we would have to sell bonds for something with a life that was that short. Number two, I don’t like the fact that we’re considering this one use in isolation against this one purpose in isolation without considering all the city’s other needs. Mr. Mansfield certainly made a compelling or at least a strong case regarding the need for this. But I remember going to a presentation over at the high school where someone talked about the replacement schedule for school technology and it was on a 100-year replacement schedule; stuff that has a useful life, a real life of three to five years. Now that has improved but if we brought that person in here and had them give a presentation, we would be at least in my mind equally or more compelling that: “Oh my God, we have to do something about this right away!” But that presentation isn’t made; this one is. We’ve got issues like school security system. I think that is moving forward, but that’s another issue. We have other educational needs that are coming up: The common core, the need to have new technology for the new assessment system, the new testing that’s going to replace the NECAP system. We’re facing, as the mayor has explained a few times, challenges this coming year: fiscal challenges, financial challenges, $3.7 million extra pension costs. We might lose as much, and this is the worse case scenario and which will probably not occur as I understand it, but $5 million loss in the state adequacy grant. If it’s not five, it could be a lesser figure. Maybe it will be nothing, but we don’t know that yet. Just earlier this year, we decided there a spike in the crime rate downtown. We said: “Well, do we need more police officers?” I think the decision was that while we can’t really afford, I think the consensus was: “Well, we should reserve some money, but maybe we shouldn’t make that expenditure now. We should study the issue. We should do an independent review.” In my mind, we still need to address the crime problem. I guess I’m asking: In terms of a systematic, rigorist budget process, shouldn’t all of the city’s needs be considered at the same time so we can decide which ones of these things really is the most important. We probably can’t afford them all. In addition, we have the challenges of loss of revenue which we don’t even understand at this point. I think the project is well thought out, but what I’m questioning is is the whole budget process well thought out? Therefore, I’m troubled by this and I’m troubled by it. Budget Review – 12/13/12 Page 9 Mayor Lozeau I can assure you, Alderman Donchess, that the budget process is very well thought out. It’s served us very well for the past five years or so and probably longer than that before I arrived. Some of the items that you mentioned are not really bondable items. The school has been consulted. When we did the presentation in May, we asked what their expectations would be for looking at bonded money. We built into this projection some of the dollars that we think the school is going to be asking for. Will there be more? There could be. They’ve got a capital improvement budget of about $4 million. Their security system, it’s intended for it to come out of that budget. I don’t see us bonding computers at the school. The life cycle, that’s been part of the problem. That’s why they built into their budget some dollars for technology. The reason I bring this in now is because our communications system has shut down on about half a dozen occasions in the last eight months. When police and fire, when their radio communications goes down, everything else pales in comparison to that. You can’t not have that system in place which is why we’ve brought the committee together, which is why the analysis has been done, which is why you’re looking at the phases. That’s why that very first phase that has to be done is what you’re considering tonight. That basic foundation that they need in order to keep the system operational. When that argument was made to me and I’ve been notified each time the communication system has gone done, it moved this up beyond anything else that we’re doing. When Motorola was in a position to discount the price so that they could book a business before the end of the year, there was just no way to not bring this forward. I don’t disagree that we should be looking at everything, but I think that we’ve done that to the best of our ability right now with all of those things that we’re expecting. I think our debt ratio is really good here which is again why we have received the Triple A rating. I don’t see a way around not doing this work right now. I see a way around looking at Phase 2, and 3 and 4 and 5; the way we were talking to see if there’s other alternatives that we can achieve. But keeping this system operational has got to be the first priority. Alderman Donchess But still we are spending in the first year $196,000 of operational money. If it’s a five-year bond, it’s 380 or 390, whatever that would be. That to me has to be balanced against other needs. Considering this in isolation doesn’t allow us to do that. The city has a strong financial position. It has several different bond ratings, but you are suggesting that the police and fire departments need this now. If this is justified because officers’ safety of either firefighters or police officers is a factor, then I think it is a bit of an emergency. But I would like to hear that from say the fire department. If this is really an emergency, if this puts people, if they really need this, if this interferes with their ability to fight fires, or has any impact on officer safety, I would at least like to hear it from them. I’m not hearing that now. I don’t know if we’re going to be asked to vote on this tonight, but if there were a normal deliberation process, and this isn’t the first time I’ve complained about stuff being brought up at the last minute. That’s happened certainly more than once or twice. If there were a normal deliberation process, we could say let’s hold this for two weeks. Let’s ask the fire chief to come in and explain to us why this is important to him. He very well may make a compelling case. Is there such time or are you saying that this has to be voted on immediately? Mayor Lozeau As the chairman mentioned, the process that I put in place was designed to give us plenty of time to have those discussions. But when the committee made the recommendation, and their recommendation includes police and fire and everybody, this is their recommendation. They have agreed that this is the number one priority right now. Communications stops. It shuts off. It’s very frightening to be out there Budget Review – 12/13/12 Page 10 and to be out of communication. It’s not only a danger to our firefighters and our police, but it is to our citizens when they are trying to respond to take care of whatever that emergency might be. That was going along. I anticipated that we were going to bring it in and talk to you in December or January; look at doing something in February, having a process like that. Mr. Mansfield, after the recommendation was made and he contacted the vendor to let them know we were moving forward in this direction, that’s when the opportunity came when they said: “If you buy it now, we’ll reduce the price by almost $600,000 and we’ll add an additional year of warranty.” That compelled me to bring it forward. That’s a lot of money. If you put that $600,000 in the bond, even more money it equates to. I believe Mr. Mansfield made the argument tonight. He’s still here. He’s welcome to come back up. These are the folks that he deals with police and fire. They are the ones saying that we need this. A committee was put together for this purpose. As I said when I came in in 2008, I started hearing about this. Every budget year that many of you have been here for, when communications comes up, we talk about the system and what the needs are. It has gotten progressively worse which is why the committee was established to look at it and to make recommendations. That’s what’s before you tonight. That recommendation. Alderman Donchess But when are you saying this needs to be voted on? Chairman McCarthy The board needs to approve it by the end of the year to take advantage of Motorola’s offer. Alderman Donchess So it would be your intention to bring this to the full Board on the 26th? That’s the correct date? Chairman McCarthy Yes. Alderman Donchess I remember meeting Mr. Mansfield many years ago. He says 20 years ago. I’m not even familiar with his current position. What is Mr. Mansfield’s current position? Mayor Lozeau He’s the city-wide communications manager. He reports to police, fire and me. Alderman Donchess I’ve actually never been introduced to him. I don’t know why. Maybe Mr. Mansfield would satisfy my concerns or again, if this is legitimately an emergency, I certainly take the point that saving $600,000 is significant. At least in my case, I would still, if this is a police or a fire situation that involves safety and they really think we should act immediately, I would still like to hear it from them. Mayor Lozeau Mr. Mansfield reports to the police chief, the fire chief and myself. So when he tells you that this is their priority and this is an emergency, that is hearing it from those three people. Budget Review – 12/13/12 Page 11 Chairman McCarthy Perhaps Mr. Mansfield could channel a few words of Lt. Mansfield on the importance on police communications. Mr. Mansfield Basically what ends up happening is the most important tool that a firefighter or a police officer has is not a hose or a firearm or a baton, it’s their communication. What ends up happening with our radio system that I notify on the committee when we’ve had failures over the last eight months. When we lose a zone controller, what ends up happening is dispatch loses the ability to dispatch calls. Dispatch loses the ability to receive emergency panic button alerts from firefighters, police officers. They are now forced to go to backup radios which are portable and mobile radios which don’t have the capability of identifying who the officer is out there or who the firefighter is that is out there. When the dispatchers are at their consoles, every time a police officer or a firefighter keys up his radio, their name shows up. It’s going to have their last name and sometimes it has their title or whatever it may be. Their name shows up every time the radio is keyed up. If they lose that capability and a panic button goes off, when the panic button goes off normally it will flash red and an alarm will go off. A very loud alarm that cannot be ignored on the console stating that the officer or firefighter, whoever it is, his name, that he has an issue. When we lose that zone controller that is the key piece that keeps those dispatch consoles together and protects those firefighters and police officers. I think the last time we lost it, I think about a month and a half ago, the dispatchers actually had to go to portable radios because they could not even use the backup radios that are tagged to the system. Can I say that, with all definite that there was an incident or issue that happened. No, I cannot say that. But I can tell you that it took approximately 90 minutes for me to bring the system back up and get it back on line where it was fully functional where the dispatchers could begin dispatching again. That’s 90 minutes. That’s dangerous. I can tell you that as soon as the system goes down or there is a failure like that, my phone rings off the hook. It’s either the dispatchers, it’s the communications personnel at fire/police or it’s the Fire Chief or the Police Chief that’s calling and saying, what’s going on, where are we at, what are we doing and even sometimes, it’s the Mayor. Not only that, everybody in the city who has a portable radio or a mobile radio is on the system. The schools, meaning the two high schools, they have a lot of radios in the schools. The reason for that is because of safety and security. They lose capability, and I’m going to tell you, they are probably quicker when the system goes out to call me than anyone else. They are either emailing me or calling me saying, we have an issue over here, we need the radios back up online and they do not know that it’s not that simple to get it back on line, wiggle my nose and make it work. I can tell you that on a couple of occasions this year, I have received emails and phone calls from the principal at Nashua High South, specifically with regards to that. I may have even received them Nashua High North. There have just been so many situations, where I received so many calls and so many emails where people are asking what’s going on, we can’t communicate. It is essential that this has to be replaced. I have been talking about this with the Board of Aldermen and the Mayor for at least four years saying we have to start thinking and planning about what we are going to do because we are running out of options for the network infrastructure of our system. It is obsolete. You cannot find parts for it. I have been begging and borrowing from everybody across the country, and I’m not kidding you, across the country, looking for pieces and parts. I have been very lucky that I received parts from people from Virginia, people from Florida, people from South Carolina that have kept me going to the point that we are at today. All of these systems are going by the wayside. The last numbers I received were across the world. These systems are across the world. There are less than 30 systems that are still out there that are running with the same exact system that we have. Everybody has moved to the new system because of the fact they cannot find parts and there is such a dire need for communications and public safety and Budget Review – 12/13/12 Page 12 everywhere else. Unless you have questions specific to that, the need is there. It is a dire need. It is an officer safety issue, it’s a firefighter issue, it’s a public safety issue with the public itself. If the officer loses communication out there, he cannot respond to call because nobody can dispatch him to the call. Alderman Donchess The 90-minute break, you would understand this whole system much better than me. But the 90-minute break that occurred and you described, was that fire or police or both? What was it? Bill Mansfield That is the entire system. Everybody operates on one system. When that fails, you lose communications with everybody across the City. That’s DPW, that’s Fire, Police, Planning, Zoning. Alderman Donchess How do the firefighters use the system? Who is talking to whom. Bill Mansfield You have dispatchers that are talking to the firefighters out in the street, you have firefighters talking to each other. You have firefighters in a burning building who are talking out, telling people to turn the hose on, shut the hose off, whatever may occur there. One of the biggest things is abandoning the building. There is a tone that is on the radios, that if the Deputy Chief, or Fire Chief or whoever is the on call person on the scene makes a determination that all the firefighters have to get out of the building, he can tone out and have the dispatchers tone out a specific tone to get those firefighters out of that building. Alderman Donchess In terms of the Police Department, are the police cruiser radios on this whole system, or is that a separate system. Bill Mansfield Everybody is on the same system. It’s all one. Alderman Donchess If this went down for 90-minutes the cruisers would be out of contact? Bill Mansfield Cruisers may or may not be in contact depending what the issue was or the failure. The dispatchers, who are the people that take the calls and dispatch the calls to the firefighters they lose the capability of monitoring and seeing who is out there when the radio is keyed up, if an emergency button goes off they don’t know it. Nobody knows it because there are no names being displayed any longer. It’s the same thing on the firefighter side. If a firefighter goes down, he is in the building, he pushes that button, they know an area that he is in and they are going to send firefighters in after him. Without that emergency Budget Review – 12/13/12 Page 13 button capability on the dispatch console, they don’t know who is pushing the panic button. Dispatchers don’t even know that somebody is pushing the panic button. But the portable radios, if they have a screen on them they will say that somebody pushed an emergency button but nobody knows who it is. Alderman Cookson Mr. Mansfield, the scenario that you described is very alarming. I guess my question as a response to what you just described to us is, with the new solution that we are contemplating this evening not to exceed $1.6 million, is there redundancy in the system so that there is no single point of failure? Chairman McCarthy There is redundancy in the old system and that is, in fact, the problem. In the case that was described there are redundant power supplies. The system is operating on one of them and inserting another one that was, in fact, faulty caused a double failure which was what resulted in the loss. I think you will find newer systems tend to use triple redundant power supplies. I don’t know if this one does or not. Most manufacturers have gone to that. Alderman Cookson Mr. Mansfield, could you respond to that. Bill Mansfield I could not respond to the fact of the power supplies or how many they have. The current system we have is redundant, but when you have a catastrophic failure especially in the power supplies that we are dealing with the zone controller, like I said, we inserted it. There is a light that is supposed to be green all the time. We inserted that. It just completely shut down the whole system. Alderman Cookson How many zone controllers do you have? Bill Mansfield One. Alderman Cookson Are there multiple zone controllers? Bill Mansfield On this type of system you cannot have multiple zone controllers. Chairman McCarthy It is a redundant system, however. It has redundant power supplies and redundant process. Budget Review – 12/13/12 Page 14 Bill Mansfield Everything in there is double. There is actually two power supplies. There are two CPU’s. There are two data tape retrieval things. Everything is in there. If I opened up that cabinet, you would see everything is double. Everything is double because you have redundancy in that. Alderman Cookson Thank you. We are just hoping that the newer system … Chairman McCarthy The issue is, the normal way that you deal with a failure is the component fails in place, fail over to the other one. You replace the broken one with a known good one and then it goes back to being redundant. In this case, there is no way to tell whether the spare that we are going to put in is known good because we have to buy it on E-Bay. Alderman Cookson I understand that aspect of it. What I’m asking about is the new system that is in place, are we going to be able to provide it with the redundant components if there is a failure? Chairman McCarthy Yes. It will be one for which components are still made. Alderman Cookson It will go to end-of-life in 10-years is what I think I understood during the presentation. Bill Mansfield We are hoping it does not go to end-of-life in 10-years. I anticipate with continued upgrades that this will keep going and going and going. Alderman Cookson Does the manufacturer have an end-of-life identified for the product? Bill Mansfield No, there is no end-of-life. Chairman McCarthy Motorola for that component will tell us at least seven years before parts are no longer available. Alderman Cookson Thank you. Budget Review – 12/13/12 Page 15 Alderman Donchess What is the rationale for going from five to 10-years? It seems like the system may not have a 10-year life, but maybe I’m wrong about that. Chairman McCarthy Much of it does, I believe is the rationale. Mayor Lozeau Some of it longer than 10. Bill Mansfield Right. Chairman McCarthy If you look at the way the bonds were supposed to work, we should never have more bond outstanding than there is value left in the thing we brought. I think it passes the 10-year test on that analysis. Alderman Donchess Mr. Chair, I think that items that we consider during the budget process to approve in any area where we are going to spend money required good justification. When we consider such items such as this outside the normal budget process, the bar is higher. That is what I expressed a few minutes ago. However, in this case, I think Mr. Mansfield has done a good job explaining for us and for the public why this is necessary not only for general operations, but the safety of police officers and firefighters. Therefore, I appreciate his explanation and despite the reservations that I had expressed before, given Mr. Mansfield’s full explanation I feel comfortable voting for it. Alderman Deane Was the question ever answered about why it was pushed from five years to 10-years, other than the fact that the life expectancy of equipment goes out that far? Is it to reduce the amount of the principal and interest on the bond that has to be paid yearly. Mr. Griffin As Mr. Mansfield described, if this equipment is properly upgraded and maintained it will have a useful life of at least 10 and hopefully well beyond. Certain components of it may be less than 10, but it’s my understanding as a member of the Committee that the proper maintenance, sometimes software, sometimes software and hardware that combination, gives me a level of comfort that it is at least 10 years. Alderman Deane Any advantage to paying the bond in 5 years rather than 10. What’s the advantage? Budget Review – 12/13/12 Page 16 Mayor Lozeau It’s about $100,000 savings in interest. Based on the savings $600,000 on the system buying it this way, we thought it was still worthwhile to go with the 10-years. As you see, there are some higher years than we would like. Alderman Deane So that’s why it was pushed out, to lower the principal and interest in the out years, so it went from 5 to 10-years? Mayor Lozeau As long as it’s legitimate to do that. Yes, to level it out. Alderman Deane Let’s agree upon legitimacy. I think that has been said numerous times. The reason from going from 5- years to 10-years after legitimacy of the life expectancy of the equipment was to lower the principal and interest to do some smoothing in the out years of some of the other bonding for the Parkway and everything else that is going to be added on. Mayor Lozeau School things that come up, yes. Alderman Deane And other things that might come up. So that explains that. The cost avoidance of the $500,000 from Motorola for year-end, similar to buying a car. This is the time to do it cause it’s year-end. Plus the additional year of maintenance which is another $75,000. There is another cost avoidance. If you’re looking at $575,000 cost avoidance on the cost of the project and then the biggest factor is the antiquated system that we currently operate with and the failure point or rate that we are experiencing which is not fair to anyone, the employees and/or citizens who pay for this stuff to begin with. I look at the concern over bringing it in last minute, but with the cost avoidance of $575,000 and the need for the equipment as Mr. Mansfield has eluded to in the last number of years, if the stuff is starting to go something has to be done about it. The term that I chaired Budget he came in each year and was like a broken record. This stuff is junk. I don’t know what you people want to do, but you better start thinking about doing something because the end is near. If you go back and look at those minutes not much action was taken and I think we have to do something. The other thing is purging those who have radios. I stated before, if somebody would get me a list of the existing and what is going to go outside so we will have additional round-up cost of radios and things we won’t have to buy because other pooling will be done so we will have some cost avoidance there as well. There is a little more control, less maintenance, less things to break. Thank you. MOTION BY ALDERMAN WILSHIRE TO AMEND LEGISLATION FROM FIVE YEARS TO TEN YEARS ON THE QUESTION Budget Review – 12/13/12 Page 17 Alderman Cookson I understand what the motion is, but for the general public, you are changing the terms, the bond, from five years to 10-years. Chairman McCarthy Yes. Alderman Cookson That’s only in the body of the legislation? Chairman McCarthy I assume so. I don’t have it in front of me. Alderman Wilshire Yes. Chairman Cookson Thank you. Chairman McCarthy Any further discussion on the motion to amend. MOTION CARRIED Chairman McCarthy We are back to the motion to recommend final passage. Any further discussion? MOTION CARRIED TO RECOMMEND FINAL PASSAGE AS AMENDED Chairman McCarthy Is there any further business for the Committee. If not is there a motion? ADJOURNMENT MOTION BY ALDERMAN DONCHESS TO ADJOURN MOTION CARRIED The meeting was declared closed at 9:10 p.m. Alderman-at-Large Brian S. McCarthy Committee Chairman