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HomeMy WebLinkAbout03/10/2003 Work Session -. . '. .~, MINUTES OF THE WORK SESSION OF THE SPRINGFIELD CITY COUNCIL HELD ON MONDAY, MARCH 10, 2003 The Springfield City Council met in work session at Springfield City Hall, Council Meeting Room, 225 Fifth Street, Springfield, on Monday, March 10, 2003 at 6:00 p.m., with Mayor Leiken presiding. ATTENDANCE Present were Mayor Leiken, and Councilors Ballew, Burge (by conference phone), Fitch, Ralston, and Woodrow. Also present were City Manager Mike Kelly, AlC Assistant City Manager Cynthia Pappas, City Recorder Kim Krebs, City Attorney Tim Harold, Police Chief Jerry Smith, and members of staff. 1. Proposed Local and Regional Sewer User Fees. Gary Colwell was present for the staff report. He said the purpose of tonight's meeting is to review and discuss proposed local and regional sewer user rates, and to provide staff with direction on the council preferred user rate alternative. The current local and regional sanitary sewer and local drainage user rates were adopted by the council May of 200 1. Current user rates will not produce sufficient revenue to fully fund the proposed FY 03/04 budget. New sewer user fees should be considered and included in the City's rate schedule for sewer user fees and adopted by resolution of the city council. Mr. Colwell noted the information contained in the Council Briefing Memorandum (CBM) Attachment A Page 4 of 4. He referred to the options and asked council to note that although the percentages are large for the large commercial users, the actual dollar amount is not that large. Councilor Woodrow asked if street sweeping would continue in the street fund with the Transportation System Maintenance Fees (TSMF) and Gas tax or if it would go back into the sewer fund. Mr. Duey said it was his understanding that it would stay in the stormwater program because it was more appropriate. Mr. Peroutka said regarding the $400,000 cuts, about $150,000 would be in stormwater capital projects that can be deferred (riparian area acquisition study), and they may be able to delay some of the capital projects related to wet weather flow management. They had a much more aggressive CIP for doing that work than is required by that program, so they could probably take about $200,000 out of that. Mr. Woodrow asked if Council approved option 5, where would it put us in the next two years. Mr. Colwell said these new rates would take us through next year. When he puts together a rate, he typically tries to make them effective for two years. Councilor Burge said that in May of 2001 Mr. Colwell came to council for a rate increase, and now 22 months later it's another rate increase. He asked ifMr. Colwell was able to project into the future more than that, maybe five years. . . . , Springfield City Council Work Session Minutes - March 10, 2003 Page 2 Mr. Colwell said he projects out 10 years, but they get a little shaky after 3 years. Councilor Burge asked if we can benefit from those fuzzy projections. Mr. Colwell said if we could somehow stabilize a cost of benefits and other things we do not have much control over, we could probably get along pretty well with a 2-3% raise every other year for the foreseeable future. He said it's the unknowns that sneak up on us. Councilor Burge said it takes approximately 1lf2% average per year. He asked if there was a breakdown on employee benefit costs, etc. Mr. Colwell said the labor cost itself has remained fairly flat, but on the Eugene side the PERS benefit went up 26%, which is a large impact on the benefit. Mr. Colwell said the biggest increase for the sanitary charges came from a result of the conservation efforts, because we went out with a 5% increase in FYOO/Ol and essentially received a 0% increase in revenue that year -because of shortfalls of sewer flows realized at the plant. It cost us in the area of $600,000. He said that is primarily what we are catching up on. The more efficient we are the more it costs us. Mr. Burge asked what percentage the projected employee benefit cost are of user rate increases. Mr. Colwell said he could get that breakdown on how it relates to benefit costs and will get that back to them. He said it could be approximately 20%. Councilor Burge clarified these are for operating costs not capital. Mr. Colwell said yes, that is correct they are for operational only. He said the commission is I considering a one time deferral of transfer to capital to make up for that one year regional revenue loss due to shortfall of flows. With the $600,000 dollar shortfall in revenue, combined with inflation and increase in benefits, etc. They normally try to transfer about $2M a year. Staff is suggesting a transfer of $750,000 this year. The rest of the budget is essentially flat. Councilor Burge asked why we are reducing the capital transfer. That would enhance the operating fund. He said by reducing that to $750,000 we are burying our heads in the sand. Mr. Colwell said he did not believe so. He said regionally there are $11 million dollars in reserve and the large expenditures in the CIP are still out there for 4-5 years. He said even with this one time cutback we are looking pretty good. He said they just went through a process with the commission where they adopted a new financing plan and policies to get us through these capital expenditures over the next 20 years. We are looking better than other municipalities. Councilor Ballew asked Mr. Colwell about the storm drainage fees being changed from a base to being divided by households or anticipated users and how they are estimated. She asked how the change makes it better. Mr. Colwell said the way the code is written related to impervious surface there is a broad range, although now we have the capability of measuring more precisely. Discussion was held regarding the differences in the collection plans and how they affect residential and commercial properties. . Springfield City Council Work Session Minutes - March 10, 2003 Page 3 Councilor Fitch asked if Eugene is looking at their rates at this time. Mr. Colwell said he is sure they are looking, but they wouldn't divulge whether or not they were going to raise their rates. Councilor Fitch said she has noticed the biggest difference between Eugene and Springfield is the local sanitary. She said we are including additional charges that Eugene is not and asked if that was something everyone was happy with regarding our rate structure? Mr. Colwell explained that the changes in the structure only apply to the drainage fee. Our local sanitary fee is just a straight per gallon fee. The only difference in Eugene and Springfield rate information is regarding population. Springfield has 15,000 residential customers and Eugene has 40,000. Environmental Services Manager Susie Smith said there are also differences in public policy choices in Eugene and Springfield regarding having properties development ready. She said also included in the capital piece, there is about $600,000 a year debt service that we carry over. Those are two big chunks and we put quite a bit emphasis on our CIP in order to support development. Councilor Fitch would agree that doing the one time $400,000 decrease is a wise move. She said that #5 probably makes the most sense. We need to show the citizens that we are looking for ways to reduce, and that $400,000 thousand is a good faith effort. . Councilor Ballew said there are large capital expenses and we need to be careful not to decrease to a point where we later need to borrow at a higher cost. It is important to weight those things. Council consensus was that option 5 is the preferred option. 2. Discussion of Proposed Fee to Recover Comprehensive Land Use and Facility Planning Costs at the Time Property Annexes to the City. John Tamulonis was present for the staff report on this issue. He said the purpose of this work session discussion was to provide staff further direction on the proposed fee to recover costs of long-range planning efforts for urban transition (UT) areas as they annex to the City. The Council asked that staff discuss the proposed fee to cover Comprehensive Planning Cost with the Chamber of Commerce's Legislative Issues Committee and the Lane County Homebuilders. The proposed $730 per acre fee represents a substantial cost recovery of the City's long-term comprehensive planning efforts to prepare 4714 acres in the UT areas to annex to the City, to have all urban services, and to develop. . Staff discussed with the Legislative Issues Committee the proposed fee of $730 per acre paid at the time property annexes as well as the tables (Attachments 1 & 2) estimating the fees. They understood the need for the fee and were not opposed to the city's recovering costs, but had a general preference for paying the fee as the property developed (enabling its inclusion in bank financing) and not as early as annexation. They discussed possibly varying the fee based on costs in different areas but concluded that some fees might provide disincentives to redevelopment. The proposed fee would add even more incentive to property owners to develop soon after annexing their property. (Note: Nearly all annexations occur in conjunction with a proposed . Springfield City Council Work Session Minutes - March 10,2003 Page 4 development.) Staff is presenting to City Council the practical effects (Pluses/minuses) of collecting the proposed fee at various times in the annexation/development process. Staff also spoke with Governmental Affairs staff from the Lane County Homebuilders Association who indicated initially that the fee recovery was not an unreasonable goal. However, the Homebuilders' discussion would likely be broadened to assess the group's wider membership before taking an official position. Staff seeks further direction from City Council on 1) adjustments to the proposed $730/acre fee before considering the fee for the Springfield Development Code and 2) the required Public Hearing tentatively scheduled for March 17, 2003. With the proposed fees of $730 per acre and an average of 85 acres annexed annually (last 7 years), the estimated comprehensive planning costs recovered would be about $62,050 annually in the General Fund. Mr. Tamulonis circulated a hand out that highlighted the Pluses and Minuses of when and how the fee would be imposed, and told the council the recommendation is to have it paid when the annexation takes affect. He discussed other options which would include additional tracking. Councilor Ralston said he understands why it's important to keep it simple, but it doesn't seem fair to charge them the fee at annexation. He suggested charging half of it at annexation, then the other half when they want to develop. This would apply to undeveloped property. . Councilor Woodrow said if there were a fire or crime on the property, whether it is developed or not, the police and fire department have to respond. Ifit's going to be part of the city and receive city services, then we need to charge. Councilor Burge asked if this would be over and above the costs paid for by System Development Charge (SDC) funds. Mr. Tamulonie responded yes, there is no conflict between the two. Councilor Burge said this would be over a period of time. The 4700 acres they are referring to is property between the city limits and the UGB. Would these become dedicated funds for that planning purpose, or just become general operating funds? Mike Kelly said the cost that staff is proposing is the recovery cost, for the sub costs and planning and refinement plans. The decision to what should be done with the money is a council decision. Councilor Ballew said we've paid for it with general funds, and she would recommend that we not dedicate the revenues. She said over a period of time as she tries to visualize how this will work, she would like to know when it would all stop. Mr. Tamulonis said it would be a rolling cost that is adjusted periodically. He said the UGB will also change over time. Ideally when the last acre of the UGB is spent, we would have a zero balance in the account and will have recovered the full costs of investment. . Councilor Burge said he wonders how long the $730 per acre will be good for. He asked if this is being done anywhere else in the state. t, . " . . . Springfield City Council Work Session Minutes - March 10,2003 Page 5 Mr. Tamulonis said Lane County does charge a comprehensive land use fee, but he doesn't know of other cities. He did mention one point that Acting Development Services Director Dan Brown brought up that is prior to the state revamping, the City of Springfield did have a penny per square foot charge in the 1980's per acre, which translated into about $435 a square foot. Councilor Burge said he would assume this would increase significantly, given the overhead cost is 39%. He thinks $730 is a modest beginning. Mr. Tamulonis referred to table 2 in response to Councilor Burge's comments. Councilor Burge said what is troubling, is there seems to be a barrage of revenue generating proposals coming before the council, and very little cost containment dialogue. We are so focused on revenue generation, we need to take time to sit down and determine to live with what we have. Mr. Kelly said over the past year, council has requested that we bring these forward. Councilor Burge said that is ok, but both need to be brought forward at one time. That would allow council to prioritize and discuss, and weigh one against the other as far as critical need and appropriateness. Councilor Fitch said it's imperative that we monitor as we do updates and have plans produced, that they be done in a timely fashion and with a budget to them. If a product can't be produced in a timely fashion in that budget, than we get whatever we produce in that amount of time so council does not have to continually increase. She would support option #1 that we charge when property is annexed, especially if there are additional unfunded mandates. Councilor Ballew said she doesn't see the benefit of lumping revenue generating ideas and budget constraints into one. They will discuss this further at another time. ADJOURNMENT '\ The meeting was adjourned at 6:55 P.M. \ Minutes Recorder - Kim Krebs ~