Finance Committee

REPORT OF THE FINANCE COMMITTEE NOVEMBER 3, 2010 A meeting of the Finance Committee was held on Wednesday, November 3, 2010 at 6:30 p.m. in the Aldermanic Chamber. Mayor Donnalee Lozeau presided. Members of the Committee present: Alderman-at-Large David W. Deane, Vice Chair Alderman-at-Large Ben Clemons, Arrived after Roll Call Alderman-at-Large Barbara Pressly Alderman Arthur T. Craffey, Jr. Alderman Paul M. Chasse, Jr. Alderman Kathy Vitale Also in Attendance: John Barker, IT Director Mayor Lozeau I believe Alderman Clemons is coming. I’m not sure if he didn’t know that the meeting was at 6:30 tonight. We changed it Monday, so just want to make sure. Alderman Craffey Traffic coming up Route 3 is not nice. Alderman Pressly I’ve been caught on the highway tonight too. COMMUNICATIONS From: Robert Gabriel, Purchasing Manager Re: Contract Award for FY11 Ammunition Requested by Nashua Police Department (Value: $57,701.98) Account: 531-45005-6606 Ammunition and Supplies - NPD Account Balance Remaining After Purchase: $9,244 MOTION BY ALDERMAN CHASSE TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO RILEY’S SPORT SHOP IN THE AMOUNT OF $57,701.98. FUNDS ARE AVAILABLE IN ACCT. #531- 45005-6606 ON THE QUESTION Alderman Deane I just had a question on the comment and exceptions. Was that same opportunity offered to the other folks that bid and was there a price differential between the two? They substituted different rounds, I guess. Mayor Lozeau Yes, they were afforded the same opportunity. Finance – 11/03/10 Page 2 Alderman Deane So the other people that bid were told that they could bid the switch on the two different rounds. Is that what you are telling me? Mayor Lozeau Yes, that is what I’m telling you. Alderman Deane Did they rebid with that? Mayor Lozeau Yes, they did. MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Contract Award for Single Stream Recycling Requested by Solid Waste (Value: $25,000) Account: 801-53109-8402-8500 Waste Disposal – Contract Services Account Balance Remaining After Purchase: $15,500 MOTION BY ALDERMAN CHASSE TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT, CONTINGENT UPON FINAL PASSAGE OF R-10-72 AND BOARD OF PUBLIC WORKS APPROVAL, TO INTEGRATED PAPER RECYCLERS IN AN AMOUNT NOT-TO-EXCEED $25,000. SOURCE OF FUNDING IS ACCT. #801-53109-8402-8500 ON THE QUESTION Alderman Pressly Just an opportunity to say something about this. I know it was Alderman Sheehan that brought this to the attention of the board a couple months ago. For those of us who were not doing it, of course, this is a different place. The recycling. I was surprised by it. I started doing it and what had been … Mayor Lozeau Excuse me, Alderman Pressly. We’re just making sure to recognize Alderman Clemons has arrived. Thank you. As you were saying. Alderman Pressly I hope they will find a way to publicize this more because I know I went from maybe four to one, and now it’s in the reverse. Four to one recycling just because of this knowledge. It was so simple and so easy. If this were better known, I think it could cut down on the landfill costs tremendously. I do hope that there will be some effort to really make a deal of it and publicize it maybe put it on TV or something. Mayor Lozeau We have a couple of initiatives that the Green Team is working on as well as the landfill to publicize this a little bit more. Our ultimate goal is to be able to expand the recycling program so that people have totters just like they do with their trash cans. There will be totters for recycling. We’re looking at that now. We’ve done the Finance – 11/03/10 Page 3 cost estimates to find out about implementing that. We’re looking at front-end loaders for the schools and other places. We can increase what we’re already doing within city buildings and with residents that are trying to do it. Then we have condominium associations that we’re trying to work with too that are interested in doing it. So there’s some really great stuff that everybody is working on. It’s just going to be a matter of … Alderman Pressly The difference just boggled my mind. When recycling first started, how many years ago – 10, 20 years ago – I was the first neighborhood. So I’ve been doing it since then the same old way. To move it up to this city-wide could make a huge difference. Mayor Lozeau I agree. Alderman Deane I notice under the contract sum there’s some flexibility there pertaining to the commodities market. Am I reading that right? Mayor Lozeau Yes. That’s true. Two of the bidders, both Casella and Waste Management were much more tied to the commodity’s market than IPR. That was one of the stability points that Superintendent Fauteux was looking for. As you know we had a time, Alderman Deane, when there was no market for recyclables and it became very costly for us. Alderman Deane As you know a few years back, we had a problem with the person that was taking the metal out too where they had given us a tonnage bid on the scrap and the bottom fell out of the metal market and we had to renegotiate the contract with the fellow just to get the stuff out of there. There were two or three piles down there that were approaching the size of Indian Head Plaza. Mayor Lozeau This company has been providing service to the city for seven years with annual contracts. It made sense to go out to bid again to take a look at it. This company came back to the table. I think they know us well, know our needs well, meet them well. As the superintendent told me, they provide the most stability with the least risk so it made sense and that was her recommendation. Alderman Deane So basically we’re just working off of what they are producing in revenue right? It’s covering the cost of removal? They are going to charge us… Mayor Lozeau They are going to charge us $20/ton for 40 percent of the total tonnage, the container part of the load. We’re estimating that to be about $25,000. Then they are going to pay us the $7.50/ton for paper. We estimate that 60 percent of our total recyclables are paper. Finance – 11/03/10 Page 4 Alderman Deane And that’s going to be driven on whatever the commodities market? Mayor Lozeau No. The paper will stay at the $7.50 no matter what which was one of the things that was very important. Alderman Deane Can you start from the beginning again. If we take a trailer that’s filled with recyclables, 60 percent of the trailer is paper. Mayor Lozeau Correct. Alderman Deane What have they estimated for the tonnage of the trailer? Do you know off the top of your head? Mayor Lozeau No, I don’t. This worksheet is a little bit complicated. Alderman Deane I’m just wondering once they come in and take it out, I guess the fluctuation is going to be in the commodities market with what we get in return for the tonnage on the paper, what that’s going to do to reduce our costs for having it pulled out of there to begin with. Mayor Lozeau If the commodities market is doing well, it will reduce our costs. But they are broken out by the different commodities. Each of them is using a different index on the commodities, as you can see. It’s called a yellow sheet monthly commodity price. The official board market, one was using the number 8 high for the northeast and then the other two were in the number 6, but one was mid-range, one was high. It depends on how they look at some of it. I think what’s important here is no charge for paper. We always get a floor price for paper and then the rest is dependent upon the commodity market, but we really think that we’re in a circumstance where they’ve done the estimates and what’s coming and we really think it will be around the amount that we’ve budgeted which is significantly less. Alderman Deane So there price per load is zero dollars Mayor Lozeau Right. Alderman Deane So the $25,000 that you spoke of earlier is for Finance – 11/03/10 Page 5 Mayor Lozeau The cost of what they can collect versus what it costs to remove it. Alderman Deane And the other cost here is $300 per load? Mayor Lozeau No. One of them had a cost of $300 per load. IPR, the company we’re going with, doesn’t have a price per load. Alderman Deane Here we go, 16 tons in a load. That’s what it is. And what’s the percentage for the paper? 60? Mayor Lozeau Sixty percent is the best estimate they could give us. That was an estimate from the landfill from the superintendent and her staff. Alderman Deane So we’re somewhere around 8 ½ - 9 tons, this paper. Then we’d multiply that times the $7.50, is that what it is? Mayor Lozeau Yes. Alderman Deane So we’re looking at about $65 per trailer load of revenue if the market stays at 7.50 Mayor Lozeau No. There’s a floor price of $7.50 for the paper. We will never drop below that. It’s all of the other commodities with this company that are the moving target. Alderman Deane If the price is staying at $7.50 and 60 percent of 16 tons is about 9 tons times $7.50, you’re looking at about $65 in revenue per trailer load that goes out of there that comes back to the city. Mayor Lozeau Right. I was just saying that when you said depending on the commodity market, for paper it doesn’t with this company. They’ve offered to pay us that. Alderman Deane At $7.50 a ton. Finance – 11/03/10 Page 6 Mayor Lozeau Yes. Alderman Deane And they are going to stick at that price. Mayor Lozeau Yes. Alderman Deane But there’s contract language in here that allows them to come back and renegotiate that if need be? Mayor Lozeau No, not for the paper. Alderman Deane But for everything else. Mayor Lozeau No. For everything else, it is going to depend on the commodity market. Alderman Deane The paper will always remain at $7.50 and everything else has the availability of fluctuating. Mayor Lozeau Right. Alderman Pressly This may be a very silly question. Who or when do they separate since everything goes in together? Mayor Lozeau The company that takes it takes care of that. This company here that we’re contracting with will handle the separation. Alderman Pressly They take care of separating out? Mayor Lozeau They do. Finance – 11/03/10 Page 7 Alderman Deane There’s a place in Massachusetts that does it. They bring it all in and they dump it on conveyors. It goes down and it’s all picked. They’ll pick regular trash too. It’s all combined. MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Contract Award for Project Management Services (Value: $75,000) Account: 720-3738 City Building Improvements – Hunt Bldg Account Balance Remaining After Purchase: $957,550 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO PROJECT RESOURCE GROUP IN AN AMOUNT NOT-TO-EXCEED $75,000. FUNDS ARE AVAILABLE IN ACCT. #720-3738 ON THE QUESTION Mayor Lozeau I have spoken quite often since we started working on city buildings and projects about getting a project manager on board to work with us on the multitude of projects and all the moving targets. We have found somebody that’s recommended that I have asked to come and join us tonight. Mr. Pietroniro and John Griffin, if you’ll come up with him. As I said to Mr. Pietroniro, this would not be an interview in the committee, but I think it would be very nice if you had an opportunity to meet him. In your packet, you will find both the contract and a list of recent projects that he has been responsible for, some in our community, some outside of our community that I believe gives you a really good sense of the skills that he brings to the table. He was interviewed by our building manager here, Mr. Hunnewell, and by Mr. Griffin, and then a second interview by myself and Mr. Griffin. So, we’re quite confident that he brings quite a bit to the table, and I appreciate your willingness to work within our budget. Just to give you a snapshot of why he is interested in this and what he brings to the table. Why don’t you start with that? Mr. Pietroniro Good evening, everyone. Thank you for having me here. As I told Mr. Griffin and Mayor Lozeau, I am honored to have an opportunity for this position. I look forward to it very much. I’ve been in the construction management field for quite a few years, more than I like to think of sometimes. I’ve been on different sides of the equation. I’ve been owners’ representative, I’ve been a contractor, and I’ve worked with architects, engineers and with the trades and with direct labor with the contract aspects, insurance, pretty much the whole gambit. I think I have a familiarity of all the stakeholders, what’s of interest to everyone, what’s important to everyone. I like to have that open view of any situation. I like to make sure things are in compliance with the specifications. I think that’s an important aspect. We’re talking about project management services, but project management means different things to different people. One of the duties as we’ve discussed is just kind of a clerk of the works of the position as well to ensure that you are getting the value and the quality that you are expecting on any of the projects. I feel that I am a good communicator and I have a good reputation in the industry. To me this would be something that I would be very proud of to be involved with some of these historic buildings in the city. That’s basically it in a nutshell. Mayor Lozeau Thank you for giving us a little introduction. Finance – 11/03/10 Page 8 Alderman Pressly Have you taken a tour of the buildings? Have you looked around at what we have and what’s your reaction? Mr. Pietroniro That is actually one of my action items in starting off this responsibility is to take a tour of the buildings, to meet with the boards or the end-users at each building to review the plans and programs that have been development to date. The initial phase of this is really ramping up and getting familiar with everything. I used to live in Nashua. I’m somewhat familiar with the Hunt Building. I remember when it used to be the superintendent’s office. I’m somewhat familiar with this building. I bid some work in this building actually because I am a contractor as well. I’m not familiar with the garages. I do know that those are out to bid presently. I’m somewhat familiar with the Court Street Theatre. And that’s job one, really, getting familiar with the buildings, themselves, and the programs. Alderman Deane How is this going to work? Is he going to take charge of everything? Mayor Lozeau I don’t think I would say that he’s going to take charge of everything. As you know here at city hall Jordan Institute has been playing a role in project management. At the Hunt Building, we have the architect playing a role with project management. Mr. Hunnewell is doing a lot of work here, but I think he is going to be the person that we’re asking them all to work with and through to work with myself and the CFO on the projects so that there’s one person that’s taking responsibility and making sure that everything is done on budget, on schedule, and a resource for some of the ones that I’ve talked about to go to. Alderman Deane So it’s going to be you, and Mr. Griffin and this gentleman, if hired, as running the projects. Mayor Lozeau It will be Mr. Pt will be the person responsible for the projects, and eh will be a direct report to Mr. Griffin, and I, of course, will be involved. Alderman Deane Under the construction administration, the bullet that says prepare monthly progress reports for the submission to the city. Will we get copies of those? Mayor Lozeau I hadn’t planned on giving you monthly reports on that, but I did plan on coming in much like I did with Infrastructure to give you a snapshot of where we are. Alderman Deane If the report is available, can I get a copy of it? Finance – 11/03/10 Page 9 Mayor Lozeau Certainly. As you know Alderman Deane, I had invited you to be on the building committee very early in the project so you would have had some access on. I’m happy to share. Alderman Deane As you know, mayor, some of us don’t have a lot of free time. Some of us work quite a bit. Mayor Lozeau I know. I’m just telling you that I know that you were interested, Alderman Deane. Alderman Deane I know, so the report would be a nice little instrument to have. How much more does the Jordan Institute have in this process? Mayor Lozeau I don’t know what you mean by “how much more?” Alderman Deane What else are they going to be involved in? Mayor Lozeau They’re involved in everything that is happening in the building right now. Alderman Deane And outside of this building? How much longer are they going to be involved with all these projects? Mayor Lozeau It depends on each project. They’ve done their assessment on all of the city buildings, and depending on what we do with a building, we may ask them to come back to the table again, but that would come here to this committee. Alderman Deane So currently they’re not really being utilized right now? Mayor Lozeau Just here in this building. Alderman Deane Just here in this building? Finance – 11/03/10 Page 10 Mayor Lozeau Right. And they are working with us on their assessment, completing the final assessment, exploring more information of the projects for the city. Alderman Deane I’m glad you’re hiring somebody. Good luck, sir. Alderman Vitale The only other thing I would ask is besides the reports, the reports would go directly to you as the mayor, and would there – in the very end, what would we expect to have as your final report. How do we know what the output is if we like what was done as part of the contract? I’m not saying that, but you know what I mean. In the final how do we evaluate what we got for what you are going to do for us? How do we evaluate that? Mayor Lozeau First of all, I think, the board being willing to have the work be done on all the properties was very important. At each stage what we’ve talked about is what we are doing next. So when we came in with the city hall project and the night Mr. Hunnewell came in and the Jordan Institute, that was a big picture of what the projects are going to be. In the end when that work is done, we’ll come in and tell you this is what we found, this is what we’re doing. When I came to Infrastructure and talked about some of the different projects, there was more to be done. I talked to this committee about when we found the girder on the roof that was causing a problem. I can tell you that it’s a good thing that we were up there doing the work on the cupola because we found damage with the Eagle that was on top and the brackets and braces that were holding it in place were no longer holding it in place. It was good to know. Alderman Pressly The Old Man of the Mountain re-enactment. Mayor Lozeau It was very concerning. That’s a seven-foot tall, six-foot wing spanned Eagle on the top of the building. And although it had a center rod that came through it that was holding it in place, it had rocked so often that the ball that he sat on was actually dented. Getting up there was a good thing to do. So new braces have been put in place. We found rot around the face of the clock, the frame. We fixed that work. Some of these things are really great, but it is my intention to come back in and either bring Mr. Pietroniro or Mr. Hunnewell on this project or the Jordan Institute to just say okay, here’s where city hall is. These are the things we’ve done. These are the things we’ve found. When we talked earlier about city hall, and I’ll stick with this building as an example, we talked about the price range being about $1.5 million to button up the building with energy things. Then we added on the front steps when we found that problem. Then we added on the cupola when we were looking at that. But it doesn’t include in those dollars didn’t include, any of the renovation that needs to happen at city hall. For instance, the back entries doors and the work that should be done there. Work in the city clerk’s office, carpeting. Things like that that need to be done. I expect I will be coming back and talking about that depending on how the dollars are and where we are using them. But it is my intention to come back. Infrastructure seemed to be the committee to come in and give the information to just so people were in the loop and then finance, of course, hears it as the contracts come through. But I think it will be important for you to know what you got for the money that you spent. SO we will do a report on that. I have to say, as you know Mr. Pietroniro, I am relieved to have somebody because I think Mr. Griffin and I have our hands full, and Mr. Hunnewell certainly does between his job and managing this as well. Finance – 11/03/10 Page 11 Mr. Pietroniro It’s a hard working group of people here, and I’m glad to help bring my experience to it. T hank you very much. MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Purchase of ERP Training & Testing Software (Value: $62,345) Account: 722-64040-3735 Computer Software – "ERP" System $56,345 Account: 722-94016-3735 Training – City-Wide "ERP" System $6,000 Account Balance Remaining After Purchase: $3,915,604 (2 Digit) MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND, CONTINGENT UPON APPROVAL BY THE FULL BOARD OF ALDERMEN, AWARD THE CONTRACT TO DATANGO, INC. IN THE AMOUNT OF $62,345. SOURCE OF FUNDING IS ACCT. # 722-64040-3735 ($56,345) AND 722- 94016-3735 ($6,000) ON THE QUESTION Mayor Lozeau You all have received tonight that was passed out by Mr. Gabriel. I told you when we started this project that we would put together a device for you to be able to look at so you can have a better sense of how the spending is going and the progress on the project. It’s two-sided. One side gives you the expenses, and the other side reminds you of the action that we’ve taken as we’ve gone along – which contract we’ve approved and for how much. I think we all agreed that that was a helpful tool for us going forward. There are two items on tonight’s agenda. One is the hosting services and the other is this training and testing software. Are there questions on this first one? Alderman Deane What is it doing? Mayor Lozeau Mr. Barker is here to talk as well if we need him to. This is a software program that will allow us to do training and testing. What’s really great about this one is this training and testing software will allow us to not only develop training and testing for the ERP project, but it can also be used on other software applications that we use in the city for other things which is going to be very helpful. Alderman Deane Are there any man hours from the company that will come and work with staff with this. John Barker Alderman Deane, there is $6,000 of services, training services. That’s training services from the company to teach us how to use the tool. That is in there. That equates to, I believe, three days of services. Alderman Deane Three days, $6,000? Finance – 11/03/10 Page 12 Mr. Barker That’s correct. Alderman Deane The annual maintenance fee is $8,600 a year. That’s a recurring cost every year? Mr. Barker After the initial year, there will be a recurring operational maintenance and licensing cost. There’s usually an 18 or high percent increase on most contracts. It’s not a guarantee, but that is pretty much industry standard. Mayor Lozeau So $56,000 of this is going to go in the software line on your chart, and the other $6,000 will go under implementation services. There are components of ERP that are going to be long-term, ongoing costs for the system. The hosting, which is the second, as well as software maintenance, licensing, that will be an ongoing cost in our operating budget. Alderman Deane The people that are coming, are they from Westford? They live locally? This company is in Westford, Massachusetts. Mr. Barker I believe so. I don’t believe there is any expenses for travel for them when they come up and provide the training. Alderman Deane It says on the back page, Exhibit B, $6,000 plus travel and expenses subject to the City of Nashua’s expense guidelines. We’re not paying those? Mr. Barker It’s a fixed price in there. There should be no additional expenses coming up. Alderman Pressly So this is for software. At this stage the people who are being trained are the trainers? In other words, you’re training staff so they can be the trainers and testers? Mr. Barker The training is to teach select city staff and contractors how to use this tool to develop automated training. Once we have been taught how to do that, we can develop that training for virtually any application we may want to roll out. Alderman Pressly So I think the answer is yes. This is a software to teach our people how to train others in the future. Finance – 11/03/10 Page 13 Mr. Barker It actually administers the training. It automated training so at any time when someone is using the ERP system and they say “I’m confused; I’m lost; I don’t know where I am.” It will intercede at that point and walk them through the process. Alderman Vitale You said there’s about $6,000 on the training and consulting services and that’s like three days’ worth. It does say that it’s $6,000 plus the travel and expenses such to our guidelines. What are our guidelines? Mr. Barker We’ve developed a set of standard expense guidelines that we have been using on the ERP project. I don’t have them in front of me here, but they are very stringent. Virtually every contract we do with any of the vendors around the ERP that language gets put in. Mayor Lozeau They are designed as you can imagine to protect us from expenses that we don’t think are justified and to be consistent with every vendor. Alderman Vitale That was the only thing I wondered. If, as Alderman Deane asked, are they local trainers versus somebody that we would find out is in New York and needs to fly in. Is that within our guidelines according to how the contract is? Mr. Barker The guidelines would say how much they could charge for a flight, what we would permit. The guidelines are if there are going to be expenses and they are authorized, they must meet this criteria and this procedure. Alderman Vitale So in other words, there could be flight expenses since we don’t really know where the trainers live. Mr. Barker No, this is a fixed price. But if you’re asking me what that standard expense language say, the standard expense language addresses what you can and cannot charge the city for expenses. It’s boilerplate language we’ve included here, but it doesn’t mean that there will be travel and expenses for this service. Alderman Vitale I understand that. It does say “plus travel and expenses” and I didn’t know if that “plus” should be taken out if it is included at this time. Mayor Lozeau Both aldermen are referring to Exhibit B where the language actually says that. But you are confident that even if it was “plus expenses” it’s included in that $6,000. Finance – 11/03/10 Page 14 Mr. Barker That’s correct. Alderman Craffey All these contracts that we’re approving, all these annual software maintenance fees, is there a way to get a year-to-date figure that we will be paying annually? Mayor Lozeau There is. Mr. Barker We have been developing a budget sheet that shows us on an ongoing basis what the operational costs should be for each fiscal year. There’s no total picture because we’re still acquiring these applications and negotiating what the maintenance and licensing costs will be. But as they have been coming in, we have been adding them in especially because it is important to the mayor and others to know what’s going to be the impact on the next fiscal year budget. Mayor Lozeau So the answer is yes, we will have that at some point. Alderman Craffey Is there something on the budget sheet that you’ve given us that can tell us? Mayor Lozeau It’s not there yet, as you can see. Alderman Craffey Could it be added? Mayor Lozeau As soon as we have a total. We just don’t have it yet. We’re just starting the process on the software. Alderman Craffey My question is, I know we don’t have the final cost yet, but can we add a line on here that says this is our cost year-to-date or so far in the project? Mayor Lozeau On the back side, we’ve put in there what some of that is. See how there’s a column on licensing and permitting? Alderman Craffey Right. Finance – 11/03/10 Page 15 Mayor Lozeau We’ll add it to there when we have it. Does that work? Alderman Craffey Yes. Mayor Lozeau Then we’ll do that. Thank you. MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Contract Award for Financial (ERP) System Hosting Services (Value: $661,772) Account: 722-53029-3735 Implementation Services – City-Wide ERP System $175,964 Account Balance Remaining After Purchase: $3,739,640 (2 Digit) Account: 522-57005 Information Technology – Computer Services $141,694 (FY2012), $242,904 (FY2013), $101,210 (FY2014) Account Balance Remaining After Purchase: $0 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND, CONTINGENT UPON APPROVAL BY THE FULL BOARD OF ALDERMEN, AWARD THE CONTRACT TO AFFILIATED COMPUTER SERVICES IN THE AMOUNT OF $661,722. SOURCE OF FUNDING IS ACCT. #722-53029- 3735 AND 522-57005 ON THE QUESTION Mayor Lozeau Alderman Craffey, to the point you were just making, you will see on this sheet that we have got the estimate and we know what they are going forward in the next three fiscal years so we’ve laid it out there which I think helps us with getting our arms around how big the costs are. Alderman Pressly Could you just tell us more about it. These are big chunks of money from this project. Could you give us a little bit more of a update on what it should do for us and for how long. Mayor Lozeau This is the hosting, where this will be hosted. I’ll have Mr. Barker break it down just a little bit. It might be helpful if you remind them after you had presented before, you talked about why we’re hosting it off site instead of on site. That might be helpful. Mr. Barker These core financials need to be very reliable. You need to know that they are running all the time 24 by 7 by 365. We did a study with outside consultants, and it was determined we had neither the staff nor the facilities here in the city to provide that level of reliability. The consultants said to us that those core financials, you either have to build a facility and staff to it or you need to find a hosting partner. The hosting partner leases the Finance – 11/03/10 Page 16 equipment necessary, provisions all of the services and staffing around it, and runs the computer system off at another location. If that location goes down, it comes up at another one so the city, no matter what happens here in the city that connection is always there for us. Our systems are running reliably and backed up 24 by 7 by 365 at that hosting provider, and we get a guarantee of 99.98 percent uptime. Alderman Deane Is this for three years? Mr. Barker Yes, Alderman Deane, the contract is for three-years, and it can be renewable thereafter. Alderman Deane And the cost is about $20,000 a month. Mr. Barker There are two kinds of systems. There’s the development system where you are not actually using it in production, and then the production system. There’s a lower cost for development. Development is $13,000 plus per month. Alderman Deane So the $20,242 monthly hosting fee for production system, will that ever go away? Mr. Barker As long as we are hosting, that will not go away. Alderman Deane I’m just trying to understand why we would use borrowed money to pay for a reoccurring cost. Why wouldn’t this be built into an operating budget where we are not using bonded money that we’re paying for for a number of years with interest? Mayor Lozeau Because the first part of it is part of implementation which is allowed and appropriate under the bond. After that, as defined here, there’s a portion that won’t be that which is the $141,694 and then the following fiscal year, $242,900, the following fiscal year of $101,000 which is in a complete fiscal year. Those figures will then be carried in the operating budget. There is a portion of this that is in for the implementation phase. Mr. Griffin and Mr. Barker worked with our bond council on that and which amounts were appropriate to do that with. Alderman Deane That’s nice they found that they could utilize bonded funds for operating costs. My question is why would we not just roll it into the budget instead of using bonded money? Mayor Lozeau Because it is not an operating cost, Alderman Deane, it’s part of the implementation cost. The operating costs will not be rolled in that way. Finance – 11/03/10 Page 17 Alderman Pressly When this is completed then it would be rolled into the budget? Mayor Lozeau Exactly. Alderman Pressly After the three years after this is up and running, then any.. Mayor Lozeau No, even before then. These operating expenses that we have described in this memo under this second portion where you see those dollar amounts I just mentioned in those fiscal years, those are the operating expenses that will be carried in the budget as an operating expense. Alderman Pressly Like now. Mayor Lozeau Coming up after it’s implemented. Alderman Pressly Right. Mayor Lozeau Fiscal Year 12 will be the first time we’re carrying some of that in the operating budget. Alderman Vitale So basically the four bullets under that last paragraph are all operating expenses that are going to be in the budget. Mayor Lozeau That’s correct. Alderman Pressly The one that zeros out, the account balance is zero, the second one.. Mayor Lozeau That’s because it’s the predication of what we’re going to budget. It’s not carrying money in it now because these budgets haven’t happened yet. Finance – 11/03/10 Page 18 Alderman Pressly Okay. Thank you. MOTION CARRIED UNFINISHED BUSINESS – None NEW BUSINESS – RESOLUTIONS R-10-72 Endorsers: Mayor Donnalee Lozeau Alderman Diane Sheehan Alderman Michael J. Tabacsko Alderman Mary Ann Melizzi-Golja Alderman Arthur T. Craffey, Jr. Alderman Jeffrey T. Cox Alderman-at-Large Lori Wilshire APPROVING A MULTI-YEAR AGREEMENT WITH INTEGRATED PAPER RECYCLERS, LLC FOR SINGLE STREAM RECYCLING • Also assigned to the Board of Public Works; to appear on its 11/8/10 agenda MOTION BY ALDERMAN CLEMONS TO RECOMMEND FINAL PASSAGE ON THE QUESTION Mayor Lozeau This is the resolution that follows the contract. Alderman Pressly What about the Board of Public Works? We haven’t had that yet? Mayor Lozeau Right. They haven’t taken it up yet. They will take it up before it goes to the full Board of Aldermen. We’ll have it on Monday. Alderman Pressly I see. Okay. MOTION CARRIED NEW BUSINESS – ORDINANCES – None DISCUSSION Finance – 11/03/10 Page 19 WARRANT MOTION BY ALDERMAN CLEMONS TO APPROVE WARRANT #8 IN THE TOTAL AMOUNT OF $11,603,573.90 OF WHICH $2,480,802.78 ARE ACCOUNTS PAYABLE, $5,525,281.33 ARE PAYROLL AMOUNTS, $26,780.47 ARE PREPAY AMOUNTS AND $3,570,709.32 ARE WIRE TRANSFERS MOTION CARRIED POSSIBLE NON-PUBLIC SESSION ADJOURNMENT MOTION BY ALDERMAN CHASSE TO ADJOURN MOTION CARRIED The Finance Committee meeting was adjourned at 7:15 p.m. Alderman-at-Large Ben Clemons Committee Clerk