HomeMy WebLinkAboutMINUTES-2008-11-17-20083-3-7
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SPECIAL CITY COUNCIL MEETING
ROLL CALL — PRESENT:
Quorum was present.
ABSENT:
PRESIDING:
GUESTS:
Alderman Bernstein
Alderman Holmes
Alderman Moran
Alderman Tisdahl
November 17, 2008
Alderman Rainey
Alderman Hansen
Alderman Wollin
Alderman Jean -Baptiste
Alderman Wynne arrived at 6:51 P.M.
Mayor Morton
Mayor Pro Tem Bernstein
John Mastracchio
City Clerk Rodney Greene announced that in the absence of Mayor Morton, nominations for the election of
a Mayor Pro Tem are in order and that, in accordance with Council Rule 14.7, Alderman Bernstein is next on the list
of aldermen by seniority who have not served as Mayor Pro Tem.
Alderman Rainey moved by acclamation that Alderman Bernstein be elected Mayor with a second from a
host of Aldermen.
Roll call. Voting aye — Bernstein, Holmes, Moran, Tisdahl, Rainey, Hansen, Wollin, Jean -Baptiste. Voting nay —
none. Motion carried (8-0)
Let it be known that this special meeting was a result of the following Aldermen requesting a Special
Meeting: Aldermen Holmes, Tisdahl, and Moran.
At 6:51 p.m. Mayor Pro Tem Bernstein called a Special Meeting of the City Council to order in the Levy
Center. Mayor Pro Tem stated that there was a lot to be discussed and would start with the Water & Sewer Cost of
Services and Fee Study.
Mr. David Stoneback then introduced Mr. John Mastracchio / Malcolm Pirnie who has a Master's Degree
in Finance & Engineering.
Mr. Mastracchio gave a slide presentation of the Water and Sewer Cost of Service Rate and Fee Study. He
stated he would give a brief summary of the study. The study was to develop rates to recover capital and operating
costs, to provide a 10-year forecast of revenues and expenditures, to identify cost responsibility of each rate class,
and to design schedules that sufficiently and equitably recover revenue requirements. They also reviewed historical
water flow trends and projections, and reviewed historic O&M costs and made future projections. Projected sewer
capital expenditures over the next 10 years are approximated at S19 million. Water demand has decreased by more
than 16% since 1998. These historical trends have impacted both sewer and water revenues.
Alderman Rainey wanted to know why water demands were down.
Mr. Mastracchio suggested the reasons why water demands were down was due to conservation. People are
buying washing machines that use a lot less water, and many devices that are water conservers as well.
Alderman Rainey wanted to know what extent does he contributes the high sewer taxes which are based on water
usage to the decrease in water usage.
Mr. Mastracchio suggested that there may be some correlation water consumption and rate, and whether
that is water rate or sewer rate. Alderman Rainey interjected that no one knows the water rate it's the sewer rate in
Evanston. He continued to say the higher the rates go the more efforts to conserve.
Alderman Rainey stated the result is that we will be punished financially for saving water.
Mr. Mastracchio responded by saying let me continue with the presentation and we'll get to that. His
forecast concerning sewer and water O&M expenses would be a cash flow increase by an average of 4% per year on
both the water and sewer side. When looking at the debt service of water and sewer the total debt increases in the
first two years, but decreases in total debt in years 13 & 14. Looking at alternatives there are 3: (1) "Just in Time
Rate Adjustment" where you look at annual requirements and making adjustments as needed on an annual basis.
There will be a large rate increase in 2011, a smaller inflationary rate increase in 2010 & 2012, and so 2012 has a
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rate of 2.0%, and no increase in 2013, a reduction of -8.0% in 2014 and a decrease of 12.0% in 2015. (2) "Smoothed
Rate Adjustments" where the same reserve levels, same capital plan, same O&M projections and just smoothing
them out from 2010- 2012 with a 10% adjustment in 2011, 10% adjustment in 2012, and a lower one through 2015,
(3) "All At Once Up Front Rate Adjustment" with no increase in 2010, a 29.5% increase in 2011, nothing in 2012 &
2013, then a reduction in 2014 & 2015 (sewer side). Water side similar to sewer Capital Plan is the driver force for
rate adjustments. He continued to refer to the handout and slide presentation of his study. He projected capital
expenditures over the next 10 years would be approximately $70 million. Rehabilitation of eighty year old concrete
treatment basins, chemical basins, and clear wells would be $1.2 — $1.5 million dollars.
Alderman Rainey stated that the Northwest Water Commission does not participate in any kind of sewer,
but in water is the Northwest Water Commission contribution built into your numbers?
Mr. Mastracchio answered YES; he had reviewed the contract and identified the cost that should be shared.
Alderman Rainey asked with the cost that you show the expenditures to pay off the expenditures we have
the participation of the Commission, and do you show that here where that will relieve Evanston water here, and
could you give us a ball park of the percentage they will take?
Mr. Mastracchio answered "yes" to the question concerning the Commission, but wasn't sure of the
percentage.
Mr. Stoneback interjected they take 51 % approximate water consumption, therefore they participate 51.% of
the Capital Improvement Program. For things associate with the water plant pumping and treatment and
administration, they do not participate in our watering projects.
Alderman Rainey asked if at some point so that we can have a realistic picture of our burden. Could you
give a projection?
Mr. Stoneback responded by saying that their revenue is already projected in the calculations.
Alderman Wollin commented that it would be good if our citizens could see that also.
Mr. Mastracchio said that detail would be included in the rate study report that's forthcoming.
Alderman Rainey asked if the 12% increase that is included only relates to Evanston, or for everyone.
Mr. Stoneback stated it was only for Evanston. We are tied into long term contracts with our wholesale
customers Northwest Water and Skokie.
Alderman Rainey asked if it was built into the report or isn't it?
Mr. Mastracchio stated that the revenue from Northwest Water Commission is an offset to your 10 years,
and that was reflected.
Mayor Pro Tem Bernstein asked would this not cooperate in the interconnect? Mr. Stoneback stated that
Wilmette is fully paying one half. So our share is 2.2. (Bernstein).
Mr. Mastracchio continued with his power -point presentation. His charts indicated that with Alternative 1
the rates would be adjusted annually as needed with an increase of 20% in 2011. Alternative 2 the rates would all
stay below 10%. This is all calculated based on a residential customer that uses 79,300 gallons of water per year.
Pro Tern Bernstein asked who uses 79,300 gallons of water. What family size are we talking about, a
family of 4?
Mr. Mastracchio said we are probably looking at a family of 3, and it depends on how much indoor and
outdoor water that is being used. This would be an average of all your residential customers. Alternative 3 is the one
time increase in 2011 of 26.8% or a $101.00 increase per year on the water. He also stated that the water demand has
decreased, but the City's cost are primarily fixed and so because of the fixed costs have to be recovered, and that's
why increases are needed.
Pro Tern Bernstein asked if Mr. Mastracchio had he ever encountered a graduated rate based on maximum
and minimum usage, a variation rate.
Mr. Stoneback answered by saying they are going to look at toward the end of the slide.
Alderman Tisdahl asked would the residents in Palatine be paying less for water than an Evanston resident
under these rates.
Mr. Mastracchio stated that Palatine would be paying less.
Mr. Stoneback directed the attention to the present slide and said that Evanston would still would be lower
than most of the other municipalities.
Pro Tern Bernstein asked if our contract with these cities contemplate some cooperation with infrastructure
or Capital Expenditures or just with water.
Mr. Stoneback said it was strictly with water. They have to pay for improvements at the water plant, filter
filtration and administration, not the water distribution system.
Alderman Jean -Baptiste wanted to know if Mr. Stoneback could tell them the current water/sewer returns.
Mr. Stoneback responded that sewer was just over 4.5 million. but it is going to go down. If we did nothing
it would be around 8 million dollars.
Alderman Jean -Baptiste wanted to know what we've been doing over the past 10 years.
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Mr. Stoneback stated for sewer the rate in 2000 $3.10, 2001 $3.41, 2002 $3.75, 2004 $3.94, and we haven't
had a rate increase since then.
Alderman Jean -Baptiste then asked about the water rate increases.
Mr. StoneBack reported the rate was modified in 2006, and the last increase was in 1998. The single family
homes the rate went down, and with the multifamily units there was an increase.
Alderman Rainey wanted to know what the reserves were for water.
Mr. Stoneback said they were 2.5million dollars. The sewer fund the City had passed an Ordinance where
we would have another rate increase and gone to $4.16. We didn't sell that amount of water and so that put us in the
situation we are in now.
Alderman Rainey questioned Mr. Stoneback about the statement made at the beginning of the presentation
about the sewer being $41nillion and you mentioned Ridge Ave., did you mean Sheridan Road, and where is that?
Mr. Stoneback stated it was Ridge Ave. it went in as part of the project on Ridge, and we are not going to
tear up Ridge again. It's the current ongoing job.
Mr. Mastracchio suggested the following recommendations: (1) Proceed with one of the three alternatives
shown for the Water & Sewer Rates during the presentation, (2) Consider a tiered rate structure for water usage
where the rates will be adjusted according to the water usage per household, or (3) Reevaluate rates every 3 years to
identify a trend in Water usage as a discretionary process.
Alderman Rainey asked how does the Evanston residents receive relief for the sewer rates, because the
watering of our lawns in the summer does not go into the sewer.
Mr. Mastracchio stated that 80% of the water used inside and 20% used outside, then the sewer rate would
be applied to the 80% used inside. So then the sewer rate would have to be adjusted to recover the revenue form the
20% usage outside.
Mayor Pro Tern Bernstein asked about variable rates among residential verses commercial or
institutional, larger consumers, a graduated tiered rate.
Mr. Mastracchio stated it is based on looking at specific demand characteristics of those customer types. A
customer that uses water on a steady basis each day with no peaks will pay less for water and sewer, as compared to
a customer who has peaks and lows (this customer would pay more for the service).
Alderman Wynne asked would it be feasible or does it make sense to charge like the electric company
lower rates for night time usage vs. daytime.
Mr. Mastracchio said no that would not work it is totally different.
Alderman Wynne asked do we have Evanston customer that have that peak like in July.
Mr. Lyons commented that when there is a water usage high there may not be a high sewer usage. It could
be there are more washing machines being used, but that water is not going into the sewer, so the sewer rate would
be lower.
Alderman Wollin wanted to know if it were possible to have a two water system like some other cities. One
system for drinking and a second for washing your cars and things like that.
Mr. Mastracchio said that would be a difficult system to initiate for Evanston.
Alderman Rainey would like to see the accounting for all of the projects completed and still uncompleted.
Interim City Manager Russell commented that staff will take time to really frame what we may be
requesting of them and then bring back to you before we make a decision to engage them to proceed.
Alderman Jean -Baptiste noted the projected rates interest over the next few years are tied to the Capital
Plan for the next 10 years, so the major infrastructure needs that are listed we need to see more detail and history of
where we are. We need to know exactly what we are spending.
Mayor Pro Tern Bernstein wanted to know if we could have options to the time frame. He then asked for a
motion to adjourn the special meeting of City Council on the discussion of the Water & Sewer Cost Study.
Alderman Rainey moved and seconded by Alderman Holmes.
Mayor Pro Tern Bernstein asked all in favor say aye, opposed nay. We will now move into the Budget
Workshop meeting after a 10 minute break.
Voice vote taken, it was unanimous.
Mayor Pro Tem Bernstein announced that the meeting was now adjourned at 8:01 p.m.
Rodney Greene, City Clerk
A videotape recording of this meeting has been made part of the Permanent record and is available in the City Clerk's office.
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