City Council

Minutes of Work Session of Council of Ogden City, Utah, May 28, 2015 Page Minutes of the Work Session of the Ogden City Council held on Tuesday, May 28, 2015 at 5:30 p.m., in the Council Work Room located on the third floor of the Municipal Building, 2549 Washington Boulevard, Ogden City, Weber County, Utah. Present: Chair Richard A. Hyer Vice Chair Marcia L. White Council members Bart E. Blair Neil K. Garner (arrived at 5:31 p.m.) Caitlin K. Gochnour (arrived at 6:00 p.m.) Doug Stephens Amy L. Wicks (arrived at 7:18 p.m.) Council Executive Director Bill Cook Council Deputy Director Janene Eller-Smith Council Policy Analyst Glenn Symes Also present: Chief Administrative Officer Mark Johnson Assistant City Attorney Mark Stratford Public Utilities Manager Kenton Moffett Recreation Manager Edd Bridge Comptroller Lisa Stout Deputy Finance Manager Camille Cook Public Services Director Jay Lowder City Engineer Justin Anderson Public Ways and Parks Manager Perry Huffaker Deputy City Recorder Abbie Zampedri The purpose of the Work Session was to receive the FY2015 Third Quarter Financial Report; discuss specific issues in the FY2016 Proposed Budget for the following: Public Services Department, Capital Improvement Plan (CIP) projects, Proposed amendments to the Marshall White Center Fees, and a Proposed amendment updating the source information for the Consumer Price Index (CPI) calculation for utility rates; discuss the utility financial model updates; discuss the FY2015-2019 Capital Improvement Plan 3rd Quarter Report; and discuss Council business. FY2015 Third Quarter Financial Report Council Deputy Director Eller-Smith indicated the Council office is in receipt of the financial report for the third quarter of FY2015 and overall, the General Fund is projecting a shortfall of $275,000. Licenses and permits are projected to be $100,000 over budget. Intergovernmental revenues and charges for services are all projected to come in on budget. Fines and forfeitures are projected to be short $200,000. This puts the total General Fund shortfall at $375,000. Other City funds appear to be tracking with the FY2015 Budget with the exception of the Information Technologies (IT) Internal Service Fund. The IT Fund is projecting to have an excess of approximately $447,700. Comptroller Stout noted Ms. Eller-Smith has provided the high points of the financial report in her review and reiterated that the General Fund is projected to have a tax revenue shortfall of approximately $275,000. In the development of the FY2015 budget, City Administration was somewhat aggressive in projecting property tax revenues, which could be some of the reason for the shortfall. The situation could be improved upon if personal property tax revenues are stronger in the fourth quarter. There is cushion available to make up the shortfall and she is not concerned about falling below the State’s requirements for general fund balance reserves. She reiterated IT revenue is projected to exceed its budget by nearly $450,000. This is related to projects IT does for other Departments in the City, such as work completed at the Water Filter Plant project. At the conclusion of the Fiscal Year (FY) it will be necessary to amend the budget to include the excess revenues in the budget. Council member Stephens inquired as to the practice used by City Administration to project various revenue amounts in each year’s budget. Ms. Stout stated that the City’s revenues are fairly stable, but there is a committee that meets to reach a consensus on revenue projects based on a significant amount of historical data; the City’s most volatile revenue is sales tax. She noted that in most years the City’s process works and the revenue projections are nearly accurate. Council member Stephens asked if projections are ever adjusted if it becomes apparent that they are inaccurate. Ms. Stout answered yes and noted in FY2009 and FY2010 the projections were reduced by approximately two percent at the mid-point of the year. Council member Blair referenced the IT surplus and asked if the money will be placed in the general fund at the conclusion of the Fiscal Year. Ms. Stout answered no and indicated the money will remain within the IT Department. Discussion then continued regarding the formulas used to determine projections for tax revenues, specifically sales tax revenues, after which the Council thanked Ms. Stout for the information provided regarding the third quarter financial report. FY2016 Proposed Budget – Public Services Department Public Services Director Lowder stated he has been asked to address the questions in the Council packet regarding his Department’s budget. He started with question two, which asked for information regarding the change in State law that requires a separate notice for transfers from the utilities funds to the general fund. He asked for Ms. Stout’s input regarding the question. Ms. Stout noted she has received guidance from the State Auditor’s Office regarding how cities treat transfers between enterprise and general funds. When a transfer is made to the general fund, the City is required to notice all utility users to inform them of the amount to be transferred. Each year there are two transfers from the utility funds to the general fund and this year City Administration utilized the At Your Service newsletter to inform users of the transfer; City staff will meet with Council staff to discuss how to notice proposed utility transfers in future years. Mr. Lowder reviewed question three, which asked how he plans to disburse the proposed merit increase within his Department. He noted he will follow a strict pay for performance system and employees will receive merit pay based on their performance evaluation rating. His employees have been told that this is the system that will be used for any merit increases in the future and to make a change that practice at this point in time would be unfair to them; his employees have indicated they appreciate the pay for performance system. He then reviewed question four, which asked for a review of personnel changes in his Department. He noted there are many personnel changes in his Department, including:  Elimination of two (2) Water Plan Operator positions  Addition of two (2) Water Plant Tradesman  Addition of one (1) Water Production Supervisor  Addition of one (1) Backflow Technician  Addition of three (3) Refuse Maintenance Technicians  Additional of two (2) Refuse Equipment Operators  Additional of four (4) Sewer Utility Maintenance Technicians  Additional of five (5) Parks Maintenance Technicians  Addition of one (1) Recreation Supervisor  Addition of one (1) Assistant Recreation Supervisor  Addition of one (1) Recreation Maintenance Technician Mr. Lowder indicated several of the personnel changes are a result of the technological upgrades at the Water Treatment Plant, which is scheduled to be completed soon. He added many of the recreation changes are related to the changes coming at the Marshall White Center. He noted that relative to parks maintenance he feels he is still short-staffed, but he has added the minimum number of full time positions to his Department with plans to augment his staff with temporary employees to avoid failure. Public Ways and Parks Manager Huffaker addressed question five, which asked for an update on the various park projects being completed this summer. Mr. Huffaker provided a brief status update for several projects: Lorin Farr Pavilion is near completion and is in the final inspection state; Monroe Pickleball Court is nearing completion and is slated to be open to the public by the middle of June; High Adventure Park Pavilion and Restrooms project is in the plan review stage; additional pavilions throughout the City at various parks and trailheads will be completed in phases, as well as the Centennial Trail tie-in section that is located off the Green Waste Site. Council member Garner asked if the Grandview Park restroom is again open to the public. Mr. Huffaker stated that the City received RAMP funding for the restroom there and City staff has submitted a CIP request for additional funding to complete that project. Water Utility Manager Moffett addressed questions six through eight pertaining to the Water Utility Division of Public Services. Question six indicated projected water sales figures have decreased even with a proposed 1.3% consumer price index (CPI) increase in rates; staff was asked to discuss how these projections are developed. He noted that the City has used a methodology to determine projections and that methodology has worked quite well in years past, but it is not an exact science. The FY2015 projections were actually too high, so staff is recommending a projections decrease in FY2016 and that decrease is reflected as a budget decrease. Council Policy Analyst Symes asked if the decrease will have an impact on Water Utility Operations or the ability of the Division to fund needed projects. Mr. Moffett answered no. He then addressed question seven and provided the Council with an update regarding the Water Treatment Plant project. He noted that the Plant was operated at full capacity during testing and everything worked great; he is still awaiting water bacteria test results, with plans to disinfect the system over the weekend and begin flushing the system next week before additional bacteria tests will be taken. Completion of the exterior of the facility has been delayed by rain, but completion of the inner portion of the project is on schedule. General discussion regarding the operation of the Plant ensued, with a brief focus on bacteria testing requirements, after which Council member White inquired as to the anticipated life of the Plant. Mr. Moffett stated that the filters should last at least 30 years and the structure itself should last twice that long or longer. Council member Stephens asked if the completion of the Plant will result in cost savings. Mr. Moffett stated that the Plant will pump more water, but it is not necessary to man the Plant around the clock; this results in a savings of labor costs though he does not feel that savings will be realized in the first year. Council member Stephens asked for an explanation of the advantage of a new Plant. Mr. Moffett stated the new Plant was needed as the old Plant was nearing the end of its useful life. There were significant water leaks and the Plant itself was no longer structurally safe. He noted the new Plant will improve water quality. City Engineer Anderson added the bottom line is that the old Plant was no longer reliable and the City was experiencing water shortages ranging from five to 13 million gallons per day. Staff has worked hard to design a Plant that is functional and will increase the level of service for all water users as well as result in cost savings for the City. Council member Stephens stated it is important to convey that message to the residents so they understand the benefit they are receiving when they pay their monthly water bill. Mr. Huffaker addressed question nine, which asked for discussion of the Central Weber Sewer District rate increase and how the charges are affecting the Sanitary Sewer Utility. He indicated all of the City’s sewage flows to the Central Weber Sewer Treatment Plant and over time there are increases associated with the cost of doing business with that entity. Unfortunately, however, the City does not have anything built into its rate structure to absorb these types of cost increases which result in the need to pass any increases on to consumers. Council member White asked if rates are increased annually. Mr. Huffaker answered no and indicated rates are increased as needed and associated with infrastructure or capital improvements. He then addressed question 11, which asked for discussion of the potential timing of the development of a Refuse Utility rate model. Mr. Huffaker stated City Administration has been working with Lewis Young Robertson and Burningham on development of a Refuse Utility Rate Model, but the project is still in its infancy. Mr. Lowder stated staff will follow a process similar to those that have been used to develop rate models for other utilities. Council member Gochnour asked if the rate model will contemplate what it would take to implement a curb side green waste recycling program in the City. Mr. Huffaker answered no and indicated that over the past few months of the study it was determined that it is not feasible to bring curb side green waste recycling to the City at this time. General discussion ensued regarding the components of a green waste recycling program, with Council member Gochnour stating she is hopeful there will be willingness among the Council at a future date to consider a rate increase to fund a green waste recycling program. Ms. Eller-Smith stated that she noticed the budget does not include funding for the purchase of equipment to grind sidewalk trip hazards and she inquired as to Mr. Lowder’s plans for addressing that issue. Mr. Lowder noted he has been researching options available to the City for handling sidewalk saw-cuts or grinding, such as executing a contract with a private service provider. He stated he has yet to make a final decision regarding this matter. FY2016 Proposed Budget – Capital Improvement Plan (CIP) Projects Mr. Huffaker addressed questions three through five in the Council packet pertaining to Parks related CIP projects. He briefly reviewed the status of the Lorin Farr Pavilion project and the Liberty Park project, after which he reviewed the status of the Ogden Adventure Park project. He noted the Park is scheduled for completion this year; the project included construction of a pavilion and restroom facility as well as sidewalks and curb and gutter to provide storm water drainage from the Park and the surrounding area. Mr. Lowder then addressed question six, which asked for an explanation of the status of the funding for project FL007, General Facilities Improvements and how the funds will be expended. Mr. Lowder stated the funds are targeted at a project in the Facilities Maintenance Division relative to upgrading or replacement of the elevators in the Municipal Building. Ms. Eller-Smith clarified that the questions that were answered by Mr. Huffaker and Mr. Lowder relate to the FY2015 Third Quarter CIP report, which is different from the FY2016 proposed budget CIP projects. Mr. Anderson noted that an additional question regarding the Third Quarter report deals with the Grant Promenade Project. He pointed out the expenditure included in the third quarter of the CIP for that project is specific to the intersection of Grant Avenue and 22nd Street; Rocky Mountain Power had installed large conduit in that intersection unbeknownst to the City and it was necessary to work around that infrastructure. Deputy Finance Manager Cook added there are four projects within the Third Quarter report that correlate with the Grant Promenade Project due to the fact that there were a few different funding sources. As Mr. Anderson works to complete payment for all aspects of the project it will be feasible for her to reconcile all accounting for the project and provide a true and accurate statement in the final FY2015 quarterly report. Ms. Cook then shifted her focus to the proposed FY2016 budget for CIP projects and noted they reviewed some of the information to be discussed tonight during an earlier work session discussion regarding the allocation of Business Depot Ogden lease revenue; there are a few projects not relating to Public Services, such as the Trackline Business Park Infrastructure for $250,000, the General Facilities Improvements for $232,500, and the General Park Improvement Lester Park project for $151,000. Mr. Anderson focused on the CIP Project for the City-wide curb, gutter, and sidewalk replacement project. He reviewed a map in the Council packet to identify the sections of sidewalk that are included in the scope of the project. Council member Gochnour noted the City has received a communication from the Ogden School District regarding their top three new sidewalk project priorities and she asked how City Administration works to include those priorities within CIP project priorities. Mr. Anderson noted project EN004 has three categories: City-wide sidewalk projects; City-wide 50-50 sidewalks; and school sidewalk projects. Funding has been more focused on maintaining existing sidewalks, but he would be willing to consider school projects if they are accompanied with a Student Neighborhood Access Program Plan or other data supporting the need for the sidewalks. Discussion centered on the steps that can be taken to improve the 50-50 sidewalk program, with a focus on encouraging participation by private property owners throughout the City. Mr. Anderson then reviewed a list of proposed street construction projects needed throughout the City; upon approval of CIP funding he will further examine each project and determine ranking based on how badly a project is needed and the cost of each project. He noted it has not been uncommon to carry money forward from year to year to enable him to attack a higher priority project. Council member Gochnour acknowledged that the projects included in the list are not in order of priority, but she asked if there are guidelines to determine if a project should have higher priority than another. She referenced 32 nd Street and indicated that it has several patches and is in disrepair. Mr. Anderson stated that he is planning to complete an overlay of 32nd Street from Taylor Avenue to Harrison Boulevard in the coming fiscal year. He added that he works with local utility companies to coordinate street projects with other infrastructure projects to reduce the number of cuts made in any given road and he would like to consider a policy that would create a moratorium on road cuts following completion of a street project. Mr. Lowder added that every two years the street crews perform an inventory of the City streets to determine which are in need of maintenance, repair, or replacement. Council member Gochnour asked if there are any plans to continue with projects similar to the Grant Avenue Promenade throughout the City. Mr. Anderson stated that he would like to continue the design of an extension of that project to both the north and south; upon completion of the design he can turn his focus to funding the project. He noted the cost of constructing one block of roadway in the same fashion as the Grant Avenue Promenade is approximately $1.3 million. He added that he would like to consider restricting use of the Grant Avenue Promenade to certain types of vehicles, specifically prohibiting large heavy vehicles to avoid premature damage to the street. Mr. Lowder stated the street project is known throughout the State and even outside the State of Utah and that may make it attractive for local or federal grant funding; however, the design of the project must be complete before funding applications can be made. Mr. Lowder reviewed the City Owned Parking Lot Improvements project; the maintenance of City parking lots have been neglected to the point that some of them are failing and must be completely reconstructed. He then referenced the Gomer Nicholas Trust Fund and noted the money in that fund has traditionally been used to build playgrounds in City parks; money is saved over a number of years until there is sufficient funding for such a project. He discussed the Parkway Asphalt Repair project and noted that the project was added to the CIP to provide for funding for annual maintenance along the Ogden River Parkway; much of the work is done just prior to the Ogden Marathon to ensure that the surface is in good shape for that event and then throughout the summer months. He also referenced the Ball Park Infield CIP project of $20,000 and noted that for years the City has neglected recreation facilities throughout City parks; he is focused on improving these amenities so that City parks are restored and look like professional complexes. He also reviewed the Grandview Restroom project; the project has received some RAMP funding, but it is necessary to augment that funding with City funding in order for the project to be completed. He then discussed the Golf Irrigation System Replacement project; the existing system has been in disrepair for some time and the funding will be used to address water pressure issues and design flaws. Mr. Moffett reviewed the Water Utility CIP projects, including the Fire Flow and Pressure project and the Pipe Replacement Project. The majority of the CIP funding his Division has access to will be used to replace the 25 th Street transmission line, which is one of the largest feeders to the City. He noted he works closely with Mr. Anderson to coordinate any water projects with street projects to avoid additional costly street cuts. He concluded that in the next Fiscal Year he plans to pursue a CIP project to fund real-time water meter reading, which is a fixed base meter reading system that should result in cost savings and the ability to reallocate resources elsewhere in the City where they are needed. A brief discussion regarding the scope of the meter reading project ensued, with Mr. Moffett noting he is requesting the project in the spirit of water conservation; remote reading gives users access to their reader data much earlier and more often to help them identify any leak they may have in their system. Vice Chair White inquired as to the response to the equal pay program for water utility service. Mr. Moffett stated the response has been good and his Division continues to receive inquiries regarding the program. He added that the City’s new Water Conservation Specialist has been making great strides in furthering water conservation; this year he has been focused on helping residents and businesses resolve water use violations as well as providing advice on proper use of irrigation systems. Mr. Anderson then reviewed the Sanitary Sewer CIP request for a project titled Master Plan Projects; this will be similar to a CIP project in the Water Utility Division that encompasses projects called for in the Master Plan for that Division; he briefly reviewed the list of projects to be completed under that umbrella. He reviewed the list of requested Storm Sewer CIP projects, including the 36th Street Storm Drain project at a cost of $697,275; the Weber and Ogden River Restoration Project at a cost of $505,050; the Replacement of Storm Drain Inlets project at a cost of $110,100; the 9 th Street from Library to Clover Flooding project at a cost of $1,152,525; and the Downs and West Oaks Drive project at a cost of $85,000. He briefly reviewed the scope of each project and concluded the total budget for Storm Sewer CIP projects is approximately $2.5 million. There was a brief discussion about the City’s access to grant funding to assist in completion of needed CIP projects, with Mr. Lowder noting he and his staff are constantly looking for grant funding options for any CIP project his Department is responsible for. FY2016 Proposed Budget – Proposed amendments to the Marshall White Center Fees Mr. Symes explained the proposed FY16 budget includes changes made to the expenditures to reflect the Administration’s decision to take over the management of the facility. As part of the management plan for the Center, the Administration is proposing a new fee structure to better align with the mission of the Recreation Division and the activities of the patrons. The fee changes include eliminating fees for several programs that the Center no longer offers, a general reorganization of admission fees, and changes to the fees for facility rentals. Programs no longer offered at the Center include the boxing program (USABF), Heat of the Night boxing show, Lunchtime Fitness program, Girls’ Summer Volleyball, Girls’ Summer Basketball, Summer Fun Club, Early Bird Club, and the Be-tween Things for Teen’s program. All of the fees associated with these programs are proposed to be eliminated from the fee schedule. Administration is also proposing changes to the facility’s area usage fees. The proposed amendments are intended to simplify the rate structure by allowing a patron to pay one flat daily fee instead of area- specific fees. The proposal would eliminate the fees for the boxing workout, the weight room, water aerobics, and open lap swimming and would replace them with a single daily fee for facility-wide use. Fees for area-specific activities currently range from $0.50 to $1.50. The daily fees are proposed to be higher than any one specific area fee, but the intent is to allow patrons to use multiple areas of the facility without the need to pay for each amenity separately. Mr. Symes indicated the biggest change over the mid-year fee changes previously considered by the Council is the inclusion of a facility rental fee in the fee schedule. Recreation Manager Bridge addressed the questions included in the Council packet regarding the proposed Marshall White Center (MWC) fee amendments. Question one asked for additional information on the reasons for the proposed fee changes and he noted that the fees will improve the efficiency of the facility and users will be given the opportunity to pay a single fee for use of the facility. Senior citizens have also requested an opportunity to purchase a monthly pass rather than pay a daily fee for use of the facility and this proposal addresses that request. Council member Stephens asked if low-income families will be given options allowing them to purchase passes to the Center. Mr. Bridge noted the family pass fee included in the fee schedule is reduced significantly over what it would have previously cost a family to use the Center on a daily basis. Council member Stephens stated he does not want the fees to be increased in a manner that will prevent a certain population of the community from using the facility. Mr. Bridge stated that will not be the case. He then addressed question two, which inquired as to the number of patrons that pay for the use of multiple areas of the facility currently. He stated that currently there are eight to 12 patrons per day. He noted question three asked if City Administration anticipates more patrons will utilize more amenities if the daily fee covers all areas of the facility and he indicated the answer to that question is yes. Question four asked how many times per week or month the facility is rented for private events and Mr. Bridge noted the MWC is rented an average of five times per month currently. Question five asked if it is anticipated that the number of times the facility is used for private events will increase with the fee change and he noted the answer to that question is yes as well. There are plans to market and advertise the fact that the facility is available for rent to increase rental rates. Council member Wicks asked if there was any thought put into creating a kayak polo season pass for participants of that sport; she feels that would increase community participation. Mr. Bridge stated he can examine that option. Council member Gochnour suggested City Administration also consider creating a pool pass since there are many people that only use the pool for programs such as water aerobics or lap swimming. She suggested that the City compare with the School District’s fee schedule to determine an appropriate rate for such a pass. Mr. Lowder stated the difficulty with offering such a pass is ensuring that users of that pass are only using the pool because once they get past the front counter of the facility they are not heavily monitored. He noted the cost of $3.00 per day of $20.00 per month to use the entire facility, including the pool, is a bargain. Council Member Gochnour stated that the School District offers an annual swimming only pass for $100. Mr. Bridge stated he would review the School District’s fee schedule. Mr. Lowder noted every effort will be made to make the MWC valuable to the entire community. Council Executive Director Cook inquired as to the efforts that will be made by City Administration to make the transition of the operation of the facility a smooth one. Mr. Bridge stated he has been recruiting employees to work in different employment positions. He has also been working with the community to solicit feedback regarding the programs they would like to see at the Center. Mr. Lowder stated that he has also asked Mr. Bridge to hold several meetings with the senior citizens population to work to accommodate their requests for programming at the facility. There was a brief discussion regarding the potential to create an advisory committee that would work with staff to suggest and improve programming at the facility, with Mr. Lowder stating he is willing to do whatever necessary to make the transition of operation of the MWC a success. Mr. Cook inquired as to the transition date, to which Mr. Bridge answered July 1, 2015. A discussion ensued regarding general maintenance of the facility, with Mr. Lowder noting he and Mr. Bridge have worked closely with the Facilities Manager Division of the City to address immediate and ongoing maintenance issues. Council member Gochnour concluded she would like for staff to research and consider the addition of a pool only pass to be included in the fee schedule upon its adoption with the FY2016 budget. Discussion of the option among the Council and Public Services staff ensued, with a focus on whether a user purchasing a pool only pass could be kept from using other areas of the facility. Chief Administration Officer Johnson stated his proposal would be that the Council allow for staff to focus on the transition of operation of the facility at this time with plans to bring a proposal regarding a pool only pass back to the Council at the time during which mid-year fees are typically considered. The Council indicated they are comfortable with that recommendation. FY2016 Proposed Budget – Proposed amendment updating the source information for the Consumer Price Index calculation for utility rates Mr. Symes explained that as adopted with the 2012 Utility Rate Study, the City uses the Consumer Price Index (CPI) to calculate an annual increase in water, sanitary sewer, storm sewer, and refuse rates. Currently, the source information for the CPI is Wells Fargo Bank. The proposal is to change the source information to a source that is more reliable and which has information that is more readily available. The proposal is to amend the fee ordinance to establish the CPI using the U.S. Bureau of Labor Statistics – Western Region (BLS) calculation. It is believed that the BLS CPI would be more accurate, more reliable, and more accessible. The BLS CPI to be used for FY2016 is 1.3%. The proposal also includes wording to state that if the CPI falls below zero no increases would be made to the utility rates for that year. Assistant City Attorney Stratford reiterated Mr. Symes’ comments and noted because the utility rates are automatically adjusted, there is no need to change the ordinance to recognize the CPI increase. However, it is proposed that the City change the source of information that is used to determine the CPI adjustment. The U.S. Bureau of Labor Statistics calculates CPI numbers in a variety of ways and distributes information for both national and regional markets. The West Region is comprised of: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. This is the closest match to local conditions and is felt to be more useful than using nationwide numbers. The current ordinance relies on Wells Fargo Bank and in the past, the City has also used Zion's Bank; in each case, the bank could elect to stop publishing this information and could make changes to the method of calculation. While the Bureau of Labor Statistics also makes periodic changes, the information it provides is easy to find and is more consistent over time. The ordinance also clarifies how winter water usage is determined for residential properties and then incorporated into sewer rates for the following year. When the rate ordinance was adopted, relatively few water meters were read electronically. Now that most meters have been changed to allow electronic reading, it is proposed that we recognize the readings between November and April as those that are used to calculate winter usage. For the relatively few manual read meters that remain, the Water Utility Division will also use November and April readings unless there was some reason that they were not read in those months, in which case they would rely on the next closest month's reading. Mr. Stratford concluded the change to the source of CPI information does not, in and of itself, have a fiscal impact; the projections for the fiscal year 2015-2016 budget have been based on the Bureau of Labor Statistics West Region. There was a brief discussion regarding the potential to reduce usage rates when the CPI falls below a certain level, with Mr. Stratford noting City Administration is not proposing such a practice because the CPI is meant to provide the City with adequate funds to cover construction costs and construction costs typically do not decrease when the CPI decreases. Mr. Cook stated this may be an issue for the Council to revisit during continued budget discussions. Utility Financial Model Updates Mr. Symes reported in 2012, the Administration and the City Council worked with financial consultants Lewis Young Robertson and Burningham (LYRB) to develop a utility rate study, known as the Comprehensive Financial Sustainability Plan, and financial model for the City’s water, sanitary sewer, and storm sewer utilities. The rate study, and associated financial model, was used to set utility rates for each of the utilities for a five year period. The study was also used to develop financial principles for the management of each of the utility funds. As part of the study and the financial principles, it was the intent of the Council in 2012 to review on an annual basis the financial model associated with the utility rate study to determine if changes needed to be made to the model’s financial projections. LYRB Vice President Cody Deeter approached the Council and used the aid of a PowerPoint presentation to provide them with the 2015 update of the Comprehensive Financial Sustainability Plan. He has used updated 2014 actual financial reports and 2015 estimates as well as updated master plans and the Capital Improvement Plan (CIP). He referenced water rates and used a chart highlighting annual rate increases and the rate per equivalent residential connection (ERC) per month. He also referenced the days of cash on hand from 2010 to 2014, which is a measure the Council and Mayor outlined in their joint resolution regarding financial principles; this measures the City’s liquidity and the reserve available in the bank for emergency purposes. The financial policy adopted calls for the City to have 150 days of cash on hand and he reviewed a chart indicating the City has been in that range and should stay in that range for the next 10 years. He also referenced the coverage ratio for 2010-2024, noting this is another metric outlined in the City’s financial policies; the City’s coverage ratio is 1.5 and this indicates to bond holders that they could have access to a portion of the City’s net revenue. The City would operate its system first and would then have net revenue available to bond holders. He then reviewed the revenue summary from 2010 to 2024 and noted the majority of the City’s revenue comes from charges for services. The expenditure summary is more varied and includes operating costs, total capital projects, total debt service, and charges for services. The fiscal summary from 2010 to 2024 provides a comparison of revenues and expenditures for the Water Utility Division. Mr. Deeter then reviewed similar data for the Sanitary Sewer Division, noting the sanitary and storm sewer operations were previously contained within one fund, but that fund was split in 2015 and that change is positive. He noted Central Weber Sewer District increases are coming and it may be best for the City to pass that increase on to users. He noted he has also reviewed CPI increases and capital increases in the Sanitary Sewer Fund, noting there is $11 million in total projects planned for the next 10 years; these projects are identified in the Master Plan for the Division. He also reviewed days of cash on hand for the Sanitary Storm Division, noting the policy for this Division was to have 360 days of cash on hand; that metric is being met and should be met through 2022. He reviewed the coverage ratio and indicated it differs from the same statistic for the Water Utility in that most of the debt associated with Sanitary Sewer is shouldered by the Central Weber Sewer District. He reviewed the revenue summary and indicated the majority of the revenue comes from charges for services; the chart detailing the expenditure summary indicated that the majority of the expenditures are associated with the charges from the Sewer District. He reviewed the fiscal summary for the fund, identifying the cash balance, total revenue, and total expenditures; the expenditures rarely exceed revenues, which is a very positive situation for the fund to be in. Mr. Deeter then discussed the Storm Sewer Division, noting the master plan has been updated for condition analysis, there have been CPI increases, and plans to fund $82 million of capital projects over the next 40 years by developing a financial plan and strategy. He noted the days of cash on hand for the Storm Sewer fund is the same as for the Sanitary Sewer and the coverage ratio is very positive at three times the required coverage with plans to exceed after 2023 due to the expiration of debt obligations. This means the City would have improved capacity to issue bonds to spread projects over a long period of time. He reviewed the revenue summary, noting the majority of revenue comes from charges for services. Expenditures are more diverse and include total capital expenses, total debt service, other operating expenses, and charges for services. He concluded by indicating his willingness to answer any questions about his presentation. Council member Stephens stated a resident may review this report and feel the City has too much money saved in reserve accounts and they could ask why the City is not reducing user rates. Mr. Deeter stated his response would be that the City has an aging infrastructure system and the fund reserves are meant to aid the City in the event of an emergency. If an emergency were to occur and the City could not fund response to that emergency, it would be limited to a few options: discontinuing the provision of services, raise rates immediately to recoup revenue to fund projects, or go to the debt market quickly, which would result in higher costs associated with debt. FY2015-2019 Capital Improvement Plan 3rd Quarter Report Mr. Cook noted all questions regarding the Quarterly Report were answered during the previous CIP discussion. Council Business Council Calendar: Mr. Cook briefly reviewed the Council’s calendar, noting that it will be necessary to lengthen agendas for Council meetings from now until the end of June in order to complete budget discussions in anticipation of adopting the budget in accordance with State requirements. He also provided information regarding the schedule for meetings regarding the creation of a diversity charter, noting that it may be necessary to delay the scheduling of the next meeting until the end of the summer. The Council had a brief discussion about their comments to be included in the budget message, with Chair Hyer asking for a copy of last year’s budget message for him to work from. Mr. Cook then reviewed the scheduling of additional action or discussion items, such as an ordinance regarding vacation rental by owner properties and an update regarding the transit study. The meeting adjourned at 8:53 p.m. ________________________________________ ABBIE ZAMPEDRI DEPUTY CITY RECORDER ________________________________________ RICHARD A. HYER, CHAIR APPROVED: July 28, 2015