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HomeMy WebLinkAbout2008 07-14 BudgetMeridian Citv Council Special Meetina July 14.2008 A meeting of the Meridian City Council was called to order at 1:00 p.m., Monday, July 14, 2008, by President Charlie Rountree. Members Present: Mayor Tammy de Weerd, Joe Borton, Keith Bird, Charlie Rountree and David Zaremba. Others Present: Bill Nary, Tara Green, Anna Canning, Stacy Kilchenmann, Todd Lavoie, Rita Cunningham, Tom Bany, Public Works personnel. Item 1: Roll-call Attendance: Roll call. X David Zaremba X Joe Borton X Charlie Rountree X Keith Bird X Mayor Tammy de Weerd Rountree: Okay. We are ready to open the budget workshop at 1:00 o'clock for Public Works. Stacy, did you have some comments you want to make first? Okay. Excuse me. We need a roll call to make it official. Green: The Mayor will be late. Item 2: Adoption of the Agenda: Rountree: She will be late. And the next item on the agenda I need a motion to adopt the agenda. Borton: Mr. President? Rountree. Joe. Borton: I move we adopt the agenda as published. Zaremba: Second. Rountree: Moved and seconded. All those in favor? Opposed? MOTION CARRIED: ALL AYES. Item 3: Presentations and Discussions of the Proposed Enterprrse Fund Budget. Introduction/Preparations Enterprise Fund > ~ z ~ '~ f ~ 1 Y •~ ~, ~ ~1~ ~ ~ r. y $t ,~ `G.l~f ate. a% t~ t # ~~ ~ C ~ S 2r d _ 1 ~:r 3 ~} tj 1 ~ ~ i ~I ~ L ji 1` 1{x Y 1 { ~, ~~A r~,~ E £Y ~` 4 E~ 1 j 1 rY i I ~~ k 1 Y ~ 4 1 t ~ .' ~ 3 1 ~ ~ 6 i ... i ~+ S f kt 3 L €SZZx h l1€1 ~ I}-.~ 1~ ~ _p ~ ~~i~ ~tl ~ ~l ~ ~~ y ,I~ 1~ _ . 1 iL ~ ~' 1 ~Y ~ ~ ~ ~ ~ ~ '~~; ~. j~~ ~~k`' ; ,~1 it ~` 1 H f tt~. r c _ ~ ~ a . a~ 1 ~. a r 4 d ~ ~~ ~4 f~~i~ ~~~~ Ile "~ ~ ~ !! ~~ ~ ~ 1~' ft ~~~`~ , . ~i ri ~ ~, ' ~`' .~ ~ €i ~ !f i ~ 1 Meridian City Council Special Meeting /Workshop July 14, 2008 Page 2 of 61 Council Budget Decisions Rountree: Okay. Stacy. Sorry. Kilchenmann: Welcome back. Doesn't it seem like you were just here? Rountree: Oh, yes. Kilchenmann: This -- this presentation will be a bit different. You know, we have talked a little bit about how circumstances have changed for the Enterprise Fund. We went through the period when we had a lot of growth. We did a lot of infrastructure improvements and got a lot accomplished and when we looked at the financials last year we talked about how assets have shifted from more liquid cash and investments and shifted down into the fixed asset section of the balance sheet. Well, now we have spent quite -- it seems like months and months, but I don't know if it's been that long -- working very hard with Tom to come up with an approach for the future. So, instead of looking at just the current period, Tom really wanted -- well, he needed to in order to plan for how we are going to do infrastructure in the future, how we are going to manage fees, how we are going to manage cash. We looked at a five year planning period and so he -- Tom and staff, Rita and Todd, have spent hours and hours and hours developing pro forma forecasts, looking at fees, looking at how they -- I mean how they feel -- the approach they need to take to build up the fund balance. So, this presentation I think is a result of a lot of work and even though it's a lot of work we have just started. We looked just at operating fees. We haven't looked at assessment fees yet and the capital improvement plan is still being refined and pushed out into longer range planning forecasts. So, this is a good start, but I want you to understand we know it is just the start and it's also been a very good team work project between the Finance Department and the Enterprise Fund. So, with that I know Tom has a lot of meat to get into and show you, so I will tum it over to him. Barry: Thank you, Stacy. Mr. President, Members of the Council, it's with great pleasure that I present to you the Public Works Department fiscal year '09 Enterprise Fund budget and also enhancements. I first would like to thank each of you for your time. I have greatly appreciated and value your time and know that we have had some difficulties scheduling this meeting and I apologize for that, but I do, again, appreciate your time and commitment in attending and helping us through this trying budget period for us. We have quite a bit of information, as has been alluded to by our finance director, so we will go ahead and just jump right in. First of all, I'd like to thank a lot of people who have made this presentation possible. Certainly the Mayor and Charlie Rountree, our Council president, their wisdom and guidance and suggestions have helped to refine this presentation. Very much so Stacy Kilchenmann, Todd Lavoie, and Rita Cunningham have been instrumental in putting together the backbone of this presentation as it relates to the financial information and also have been a wonderful sounding board as it relates to moving forward in our assessment of the evaluation of the Enterprise Fund and also recommendations as -- as we have come out of that evaluation. Becky Licari and Karie Glenn were also very important and instrumental in ~ ' ~' i ! ~ '~ ~ } Fl = ~ ~ ~, ~ ~~ q r ~, 1. {~t ~ j , a , ; ~i r ~ a ;. ~ (1 I } ~ , Y 1 ~ ` [ ~ ~4 f ~ `~ I f } i~ 5 i 5 II I ~, 1 ~ ~ ~ ~! ~~ ) ~ ~ r~ ~ 1 ~~ .1 4 ( { ( ~ ~ ~ ~ ~ +~ ~ i ~ S 1 {t - { S ~ ~ a S ! ~ ~ ~ , t F. ~ is ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ i ~ ~ ~ ~; ~ ~ { y ` ~ ~~ _f ) i 1 i ~r q ~~7 1 1 ~ li ~ ?~r~ ~ y@~ I ~t i 1 t t~~,; e t l~ ~f j Y 4 ~ 2 f ~ t ~ -¢ q~ S ~ ~' ~ ~ ~ i . 1 ~~ - i ~ ~ ~ 4 { ~ ~ ~ 1 Y ~ ~ ! ~ j ~ ~ a ~ t e ~ ~ I `r f4 y ~` ~ ( I F i { ~ S F . t t 1 ~ ,, ~ ~ u.: ~ I 1 : _ _ . rt ~ l~ ~ i F ~ ~ . ;I ~ F ~ (y .~ ~ - ~ ( F I' 1 { ~ j { SI ;~ f t t. I _ ~ ~ t 1. 4 ~ ~ r j s. i~ # i 3 ' ~ ' i i, ~ ?7 t I ~ ~ ;y 1 ? ~ ~ r. s ; ~ i c ~~' v ~; Meridian City Council Special Meeting /Workshop July 14, 2008 Page 3 of 61 the putting together of this presentation. Bob Field is a volunteer who works for us and he did a lot of the behind-the-scenes work as it relates to rates and benchmarking. Certainly Clint Dolsby, our acting city engineer and Kyle Radek, our assistant city engineer, had helped substantially provide an enormous amount of information to -- to this presentation, as did Rick Clinton and Tracy Crane from water and wastewater. And, then, our consultant Ed Squires was also instrumental in putting information as related to water infrastructure and future needs. Here is the agenda for today. We have quite a bit of information to cover and as Stacy mentioned, this is going to be a bit different, I think, than you -- than at least I have been told you have been used to. I thought we would frame the meeting with a brief agenda. We will go quickly through our departmental information, including who we are, what we do, and who we serve. We will move onto an accomplishment section that holds us accountable to things you charged us with last year. We will, then, look at the Enterprise Fund status, looking at both trends and statistics, sort of benchmarking where we are and where we have been. We will look at the Fund administration study that we worked together with finance on. We will review the administration practices that we have evaluated. We will look at the findings and, then, also I will propose recommendations as it relates to that study. Then, we will get into the fiscal year '09 budget. We will talk about our base and our enhancements and our capital replacement needs. From there we will move on and talk about at least from where we sit now our best guest as to future needs and projections as it relates to .primarily water and wastewater utilities. Then, having accomplished that, we will take an intermission and, then, after the intermission we will come back and we will begin discussions on the utility rate history and, then, look at the rate model results. We were asked to run three models as it relates to rate history -- or, excuse me, not rate history, but rates -- rates for the Enterprise Fund. Those models will be discussed. We will talk about the assumptions and the approach that we used, as well as the scenarios that we ran and, then, compare those to regional benchmarks as well. We will follow up with a summary and a conclusion and, then, allow time for questions and answers. So, moving onto our departmental information, the Enterprise Fund houses four divisions, if you will, or work groups. The Public Works division or work group, which is 24 employees or 28 percent of the Fund. The water department, which is about 23 employees or 27 percent of the funding. Wastewater Department, 32 employees, or 38 percent of the funding. And, then, we have six employees from the utility billing component of the Enterprise Fund or seven percent. Here are the general functions. You're pretty familiar with these. I don't think anyone in the audience is new to this, so we won't spend any time, but, essentially, this categorizes very, very briefly and succinctly our general components under each of the divisions I just mentioned. Here is our infrastructure map as it relates to how Meridian is shaping up, at least through time to presently. This year we added one new drinking water well that was the Bitter Creek Well. We also added eight miles of new water lines and seven miles of new sewer lines. You will notice that those numbers are markedly different than the numbers presented last year. We .had double digit mileage increases for both water and sewer. Both last year and the year prior. We have added five new pressure producing valve stations and, then, we added almost a -- well, 928 residential accounts, 120 commercial accounts, and 42 sprinkler accounts. Our existing infrastructure information is up there just for your reference. You know, essentially, we have as a total Meridian City Council Special Meeting /Workshop July 14, 2008 Page 4 of 61 for infrastructure as it relates to the city on the order of about 396 miles of water lines, 19 total wells. One booster station. Twenty pressure reducing valve stations. Just about 500 miles of sewer lines and ten lift stations that we own and operate. Moving forward into our accomplishments. For Public Works -- I will take this by group. For Public Works we updated our water and sewer model. We completed the phases 4-A, B, and C of the Black Cat sewer project, which I will detail in just a few minutes. We also implemented process changes for the. way that we coordinate our stubs and services for property owners. This helped us to reduce 100,000 dollars and what that means is, essentially, we are coordinating now the integration of stubs only when they are needed, not when we are asked to put them in. But -- and we require that the property owners who need stubs pay for those stubs when they go in. We have also developed, presented, and implemented an innovative flood hazard prevention ordinance, as you may recall, just recently and that helps Meridian become a leader in floodplain administration throughout the Treasure Valley. We also completed one and a half million dollars in water and sewer construction in coordinating with ACHD projects as it relates to road improvements. In the water division we had, again, a zero positive bacteria sample for the seventh consecutive year. That's fantastic. We constructed those new five PRV stations this year. We installed SCADA, Supervise and Control and Data Acquisition, telemetry systems at four of our pressure reducing valve stations. This helps us improve our monitoring and coordination of those stations. We completed the drilling of Well 27, although it's not on line. We also significantly reduced the brown water calls that come into the water department office from 297 in 2007 to only 57 in 2008. And that's because of a lot of the operational improvements we were able to secure out at the water division as it relates to chlorine and flushing and those sorts of things. We also completed construction of the new office or shop building for the water department. That ribbon cutting, as most of you know, was held December of last year and, then, we have increased the number of radio read meters to 40 percent. Ninety- nine percent of those commercial meters are now converted to radio read, which, obviously, is a major efficiency boost for the operational capabilities of the department. Here are some of the water divisions -- departments with a couple pictures to give you an opportunity to look at what we are doing in the field. Essentially, we connected through the Union Pacific Railroad and the joint school district property, some mains, the Bower Street main, which helped us increase our fire flow contributions by about ten to 25 percent at an overall cost of around 140,000 dollars. Our Black Cat water main project included adding 9,000 linear feet of 12 inch water main into northwest Meridian that will help us serve future development at the cost of about 750,000. If we go on now to wastewater, we can -- we have got a couple concepts there we would like to share with you. The first is that the City of Meridian is the first municipal class A reclaimed water permit we have obtained in the state of Idaho. We have also completed our third bank of ultraviolet disinfection at the wastewater treatment plant. The North Black Cat lift station is 60 percent complete. We are moving forward on the treatment expansion for the liquid phase project. That is substantially complete. Also the biosolids improvement project, which goes hand in hand with that is 90 percent complete. Both those two projects we hope to have complete by year end and online. Our facility plan was accepted and approved by the Department of Environmental Quality. We also completed the aqua diamond tertiary filtration system and we are currently designing Meridian City Council Special Meeting /Workshop July 14, 2008 Page 5 of 61 cross-disk filters to provide redundancy for that filtration system and to help us with our water reuse project. And, then, finally, wastewater pretreatment program information was submitted to the Environmental Protection Agency for review and approval and we are waiting on that. Here is a couple pictures of the plant improvements. As you know, we have -- the plant's been under a 22 million dollar expansion. Here are a couple of photos from that expansion. This particular -- these particular photos come from the stream expansion project, which includes the addition of two aeration basins, a primary clarifier, and a secondary clarifier and we are modifying the overall processes for liquid stream for a total cost of about 8.4 dollars. The project is substantially complete, as I mentioned earlier, and will help us increase our overall stream rate capacity by 65 percent. The bio solids improvement project is nearing completion as well. This project included the addition to two digesters, a control building, a centrifuge, with modifications also to the existing processes, for about 10.3 million and we hope that start up will begin in August of 2008. Here is the lift station I spoke of just a little bit earlier. We have provided quite a bit of information on this. So, I won't spend anytime on it, other than to show you at least the latest photos as it relates to overall construction process -- or progress, rather. One of the things 1'd like to comment on briefly is the recalibration of the effluent flow meter at the wastewater treatment plant and this is important, because we brought in an independent certifying agent to come in and have a look at our effuent meter and help us to understand -- you know, just to make sure that the meter was reading accurately. When that work was done we found out the effluent meter was reading high. As a matter of fact, upwards of 400,000 gallons per day high. When we recalibrated that -- and that's what you see in the graph there. You see an immediate reduction, essentially, in the amount of flow at the plant because of the recalibration, so -- so we gained, essentially, by recalibration of the meter -- it just happened to work out in our favor -- we gained almost half a million gallons of capacity. at the plant per day, which is fantastic. Additionally, I wanted to comment that our optimization efforts have yielded us about 1.2 million gallons a day of additional flow, which the Department of Environmental Quality has approved and we have also noticed the Environmental Protection Agency on that statistical analysis. So, with total improvements and upgrades, our plant capacity will be greater than ten million gallons per day by year end, which is wondertul. We have got quite a bit of room there for continued growth. Moving to GIS division accomplishments. Several accomplishments in the GIS work group have been achieved. We converted our water model into GIS. We also created a direct link from GIS to digital record drawings. This helps us easily access information electronically and reduce paper waste. We created a direct link also from valves and GIS to valve maintenance records, so that staff can download that information and access it easily. We expanded also the number of GIS users in water and wastewater engineering development services and also planning staff as well. In the future we will convert the sewer model into GIS and this will allow us to model, as well as more easily track information in our Geographic Information System. We also enhanced and are updating an accuracy processes and expand our user count. That's the hope at least. We also want to increase the training of GIS users, so that we can put more powerful tools in their hands and help them to pull information off the system that's readily available for their use and create data layers of all past city projects with links to the digital record drawings, again, increasing access to information that we currently house. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 6 of 61 We have improved also our GIS field measuring capabilities. This will allow staff to more easily and more accurately locate water and sewer infrastructure while they are in the field. We also have provided instant .access to record drawings, as I mentioned. We hope that this brings -- this brings capability to the onboard computing stations in the work vehicles to save time and fuel. So, we are hopeful to transition this also into the vehicle, again, so they have that instant access without having to drive back to the office and get it. If we move forward now and take a shift, we are going to talk a little bit about the Enterprise Fund now as we get closer into the budget presentation portion. The first thing we should do is talk about this status of the Fund. Here is at least as of the middle of June as that was about a week or two before we were going to present. I haven't gotten updated numbers yet from finance on this, but, essentially, when we look at the Fund balances and the status, a couple things I wanted to point out to you. You will notice that in September, of -- or September 30th of 2007 our beginning balance was, essentially, 36.9 million dollars. Now, since that time we have had quite a fit of expenses incurred and you get down, essentially, after you add and subtract all those expenses to a net -- this first yellow mark here, fiscal year '08, year end fund balance projection after all the amendments. This is about 4.1 million. Now, there is quite a bit of projects in construction that we have talked about over the year that are included in this number, but also there is a couple things that you should be aware of. First of all, the assessment revenue shortfall, based on the current development projections, we are expecting about a negative two and a half million dollar shortfall in revenues for the Enterprise Fund. Also we have had amendments for the fiscal year '08 on the order of about 9.1 million. So, we have spent 9.1 million more than we had budgeted and we have also taken in 2.4 -- almost two and a half less than we had forecast. That brings us to an ending fund balance, at least projected, of 4.1 million from the 36.9 in September of '07. One of the things that Stacy and I and her staff worked on was to identify ways we might be able to more effectively budget construction projects and I will talk to that a lot more later, but one of the things ultimately for now we were able to do is use a just in time capital financing strategy and, like I say, I will expand on that and explain it later, but that -- that process alone helped us to realize a savings of about 6.1 million dollars. That 6.1 million dollars gets added to the -- excuse me. Is added to the 4.1. So, you end up with about 10.1 million. If you look here we have six months of operating and personnel expenses. This is, essentially, a reserve that you will hear more about later that I'm recommending for water and wastewater that equates to about four million dollars. So, if we earmark that money for an operational reserve, then, that brings us down to 6.1 million for our projected FY-08 ending fund balance. And I will speak more to both of those key pieces as we move forward in the presentation. I wanted to just frame the conversation today by saying that the efforts of the Finance Department and the Public Works Department were really centered at being able to provide the Council an opportunity to look both historically at the way the Enterprise Fund has operated, as well as into the future. So, the next number of slides will talk about our history and, then, as we get towards rate modeling we will be talking about our future. But, essentially, we are trying to -- we are trying to display or demonstrate, essentially, a ten year or decades worth of information, five years into the past and five years into the future, and where we sit right now as it relates to both coming out of this -- the historical perspectives and moving forward, we would like in the department to Meridian City Council Special Meeting /Workshop July 14, 2008 Page 7 of 61 work more and more toward the ability to use both trending and projecting as it relates to the development of our budgets and the adjustments in our rates moving forward. We believe that this is a more responsive and reasonable way to move forward the utilities overall, small changes over time to help us achieve the goals that -- that we feel we need to achieve as a utility. So, here is an historical perspective of revenue over time. You know, we had quite a bit of revenue from '02 increasing up to around '05, a lot of this is related -- I have got to get used to these buttons. A lot of that is related to developer assessments and, you know, a lot of other things. But after around FY-05 we start seeing revenue dropping off. The revenue drop off is related to a couple of things. One of the things it relates to is the economy. We are seeing less development revenues. As I just mentioned, we took in about two and a half million less -- or I believe we will for fiscal year '08 alone, but also the revenues are decreasing as it related to usage, because we charge by the gallon, essentially, by the thousand gallons in water. What you can see over time here is that in 2002 our average users were around 15,000 gallons for water. Now, that usage has come down over time and as that usage comes down over time, so does the revenue associated with the sale for water. We do see a bit of an increase here in 2007. That correlates pretty well with the overall change in climactic situation last year when we had, essentially, a very dry season and irrigation water turned off early and we believe that a lot of folks continued to irrigate with city water, just converted over and irrigated with city water and that explains in part some of the usage increases there. So, essentially, wastewater, as you know, is an average of winter usage and so we see it a little bit more steady, increasing and decreasing throughout the years, but, really, the revenues -- the loss of revenue, as you can see, as it relates to usage correlates fairly well with -- over time. Here you go projecting -- or not projecting, but trending backwards the revenue per customer. You can see that in the water, which is the bottom line, and that relates to usage in large part, we were getting about 240 dollars per year in 2001 for each water customer and 2005 that dropped to a low of about one -- what would that be, 155 or so. One fifty there. It's come up just a little bit and, again, we believe that this is related to usage during -- for irrigation -- supplemental irrigation usage. That wastewater -- again, you can see sort of ups and downs. I'm not really sure about this data point here, but this is -- this is what the data we are trending at least historically. As you know, our operational expenses continue to rise. We take on more infrastructure, more lines need to be cleaned, .more valves need to be exercised, booster stations and lift stations need to be maintained. So, we continue to have an increase in our operational expenses, but what you will notice here is that we have flattened out a little bit between '06 and '07. Again, I don't have '08's numbers yet, but we do see a break here and a flattening out. We believe that '08 will show that and particularly '09 when we get into the discussion of our budgets you will see that and we have really been able to, essentially, curb the increases in operating expenses moving forward. If you look at our capital construction expenses over time, you can see some variability between 1999, essentially, and about 2003. But, then, after 2003 you see a marked increase in the investment related projects for the utility. So, I'm just trying to paint a picture here of revenue decreases over time, increases in costs, because we are getting to a couple slides here that are going put all of this in perspective. Essentially, in 2007 we were over 20 million dollars with capital construction related expenses. 2008 will be a hefty year as well, but we Meridian City Council Special Meeting /Workshop July 14, 2008 Page 8 of 61 don't have those final numbers yet. If you take revenue versus expenses over time, this is what the picture looks like. Now, anywhere the blue line is above the red line you have a surplus and anywhere the red line is above the blue line you have a deficit. Now, what that means is for that particular year. So, this shows a deficit and surplus changes per year for the overall financial position of the balance of the Enterprise Fund. So, if you convert this to a cash scenario, then, you get this graph here, which shows -- here is the zero line. It runs all the way across the top here. Again, you can see three years FY-03, '04, and '05. We are actually taking on a little bit more revenue than we were expensing, with '04 being the highest year, about 2.6 million. But back to '02, we were actually minus 1.7 or 1.8 million dollars and so we were -- in order to make that up we had to spend ending fund balance and that certainly has been the case starting from about fiscal year '05 all the way through to the present, in fact. Now, I don't have the final numbers for '08, but we definitely, as I mentioned earlier, are projecting additional expenses that go beyond our revenues, which is why the fund balance is declining over time. So, here, again, all of this blue area represents at least for three years in a row deficit spending, which. means that in order to make up the overall cost for operations and capital improvements and all those sorts of things, we have had to dip into our ending fund balance and that's how we have remained solvent over the past several years. As you notice, as I mentioned earlier, our projected ending fund balance with an operational reserve for fiscal year '08 is about six million dollars, so we don't have a lot more ending fund balance to rely on moving forward and that's an important point to make. This is what the Enterprise Fund balance looks like when you take all of the information and throw it together as it relates to how we have done over time. You see we have some spike here up until 2002, a little bit if a drop and, then, we -- a little bit more increases up until 2005 and, then, you start hitting to 2006 and you start seeing a very steep decline as it relates to the overall balance. As I mentioned before, we have a 10.2 million dollar balance projection for 2008, if you take out the four million that I'm going to be recommending as an operational reserve that would leave us with a 6.2 million dollar reserve. When you incorporate our enhancements and our base budget for fiscal year 2009, although we do see a little bit of leveling as it relates between FY- 08 and FY-09, we are still going negative into fiscal year 2009. Now, this fiscal year 2009 number, however, does include a reserve of four million dollars. So, it will be four million dollars higher than that as an overall fund balance, but, again, we want to earmark the operational reserve with your approval, so that we -- we are certain that in -- in specific times that we have the operational solvency that we need in order to keep the utilities running. So, this led both Stacy and I to have -- to undertake a project to look more closely at how the Enterprise Fund was performing over time, which you have seen, and also what we might want to do as it relates to moving forward. And so I'll go through this as it relates to the overall study. We undertook about a three month review, her staff, myself and some of my staff, to look at the .Enterprise Fund administration. This was, again, Public Works and Finance staff and we looked at a couple things. We looked at funds history, which I have shared with you. Also how we report our information. We looked at cash flow for solvency of the utilities. We wanted to also have a look at operational coverage. That's, again, the recommendation that I have sort of led on as it relates to having an operational reserve. Excuse me. I wanted to look also at our capital coverage, how are we doing as it relates to our ability to cover Meridian City Council Special Meeting /Workshop July 14, 2008 Page 9 of 61 our capital infrastructure needs into the future. We also are looking at capital project financing. How do we finance our capital investments? We also want to look at debt coverage, because you may -- we may need in the future the ability to take on some debt to cover some of the obligations that we might be forecasting into the future and so if we were to have to do that we also want to make sure that we can cover that debt. Again, I mentioned reserve capabilities of the overall utilities and, again, as Stacy alluded, we did not in this study look at developer assessments, there just wasn't time for us to do that as it related to putting this presentation together. We hope to undertake that endeavor in the very near future. So, the first observation that Finance staff and Public Works staff came to was related to fiscal reporting and accountability. Because we have one Enterprise Fund and we have a lot of divisions, as I mentioned at the beginning of the presentation, which draw their expense monies from this single fund, when it relates to water and sewer it's pretty difficult for us to identify specific revenues and specific expenses in the water and the sewer utilities. These are, of course, the largest -- how do I say it? They, essentially, got the largest budgets of the entire Enterprise Fund and so we wanted to make sure that we didn't have one utility subsidizing another utility and there was really no way for us to know that until we broke out the revenues and expenses. Again, that made it difficult to identify the cash position insolvency of the water and wastewater utilities and so by -- and you will see we are recommending that at least internally we separate those activities, so that we can better track our revenues and expenses for each of the utilities. We hope that will improve overall fiscal controls of each of the utilities. We also found out that we need to improve the allocation of our funding, making sure that we place money where it is most needed. So, the recommendations as it relates to this first observation are to strengthen our fund reporting and reconciliation capabilities of overall fund activity. We also want to move towards the utilization of cash position for solvency. This will help us to quickly identify and position ourselves for adjustments that relate to overall cash positions of the utility. We also feel like we need to be doing a better job sticking to budgets as it relates to projects, as it relates to reimbursement agreements, as it relates to, essentially, everything that we are doing. I mean, again, 9.1 million dollars in amendments for the year is not something we want to continue into the future. We also want to improve our project estimating capabilities and also tracking capabilities. We want to identify at least the Public Works budget gate keeper, somebody who is going to be looking more closely at both trending and projecting and financials as it relates -- the financials as it relates to the operation of the Public Works Department, utility billing, wastewater, water, we feel that that would be a major asset, because I think some of the signs that we see now were there a couple years back, if we had only been looking for them. So, we feel like -- we feel strongly that we need somebody to be looking at that, and maybe the modifications that we will be talking to later in the presentation could -- could have been discussed earlier with less significant adjustments being recommended. The budget amendment accountability -- I mentioned that. We definitely want to make sure that we don't have many amendments and that if we have amendments that we are accounting for them. And, then, we also want to make sure that we are encumbering funds which as of the just a couple months ago we started doing, so this will vastly help us to improve our overall financial tracking. The second observation has to do with capital planning and financing. We recognize that we have a near term financing Meridian City Council Special Meeting /Workshop July 14, 2008 Page 10 of 61 emphasis as it relates to projecting our financial needs for infrastructure. We -- we know that doing that limits our financing options and that's going to be -- that's pretty important as it relates to taking on debt. Full requested budget is unnecessarily straining our budgets and I'll talk with you about that in just a moment, too. We noticed that we also have no inflationary adjustments in our budgets. We are not really taking on inflationary costs as it relates to staff, at least projecting them, budgets over time for construction projects, growth, those sorts of things. We have several recommendations as relates to the capital planning and financing section. We want to better anticipate and quantify all of our capital needs and we have begun to do that and later in the presentation I will share with you at least ashort-term perspective on that. We also want to develop a longer term infrastructure and capital planning horizon. This will help us to make projections -- more accurate projections and also help us position ourself today for embracing the challenges of the future. We also believe that we need to program in our inflationary costs as it relates to the cost of doing business, keep those included, and project those out into the future. And we want to utilize a just in time capital financing strategy. I mentioned this a little bit earlier and here is an example of how it works. The way we budget currently is that we identify projects that we need and we ask for the full funding amount in the year the project first comes to light. So, for example, a water reservoir project totaling 2.25 million dollars and a plant expansion costing 1.9 million dollars, both projects of which would be multiple years in duration when you talk about design, location of property, acquisition of property, permit acquisition, preliminary and final design, construction, those sorts of things, we are talking about a multiple year project. But what we have done in the past is we have budgeted the full amount of both projects in the fiscal year we have identified the project. This unnecessarily strains the overall budget. Abetter way -- at least one better way to look at budgeting these types of projects in the future is to use a just in time capital financing strategy. Here are the two projects with their overall project life cycle. The water reservoir project in this example would take three years to construct and the plant expansion would take four years to construct. What you see here is that each of the fiscal years we identify the dollars we need and only ask for those dollars as it relates to that fiscal year. So, in 2009 you noticed in the last slide we said that we would need 11.3 million dollars. Well, we really don't need 11.3 million dollars, we will need it as the project moves forward and ultimately upon completion, but we don't need it in 2009. So, what this does is created an enormous amount of carry forward money, because we just continue to carry money forward, but we have unnecessarily strained the budget for the year we first budgeted it. So, here you will see in 2009, instead of that 11.3 million dollars, we would only ask the Council for 400,000. In 2010 we would only be asking for nine -- or 925,000, because we are moving these projects through their life cycle and asking for the money only at the time we would need the money to complete the projects. So, you can see the total for the water reservoir project is 2.25, as we suggested in the previous example, and the same with the plant expansion being 9.1. Total project costs are 11.3. But we have been able to distribute that over the project life cycle and lessen the impact to any one year of the other -- of the Enterprise Fund. This also helps us from a staff workload perspective, because it allows us to better leverage our staff and have a better understanding of the projects they are working on and the scope of those projects and also allow us to perhaps maybe Meridian City Council Special Meeting /Workshop July 14, 2008 Page 11 of 61 improve the number of projects we are working on. We could take on more projects, because we -- we realize that we are really not spending as much, so there is not as much activity as it related to the overall project and we can assign them additional projects or utilize our time elsewhere to -- in the utilities. De Weerd: Tom? Bany: Yes, ma'am. De Weerd: I think Mr. Bird has a question. Barry: Yes, sir. Bird: Tom, when you award the contract do you award it for the 2,225,000? Bany: Yes, sir. And that's agood -- Bird: And, then, what's going to guarantee if they only do 125,000 in '09 or 350 in '10 and -- in '11 they are only going to do 1.7. Barry: It's a different way of budgeting, Mr. Bird, and so -- and I have used this for a number of years in my past work, but, essentially, what you would have to do is change -- the Council would have to approve the project in its entirety, okay, but, then, only authorize the expense of the funds as outlined in the year that we have requested it. We would also have contingency monies appropriated to this, so there would, in each of these, have a certain line for contingency and let's take the water reservoir project, the 125 here could represent say for example the acquisition of easements, the filing of permits, and the preliminary design. And that's all we would scope for 2009, because we know how long that will take and we know that we can't really do much more than that with all the other things going on, unless it's a priority project and we condense the project life cycle. So, what we would do is we would ask the Council in 2009, let's just say, for the 2.25 million dollars, but only to authorize the appropriation of 125,000 for fiscal year '09. What this does is it commits us to the project, so that we know the project will be completed and that Council has approved the project in its scope and in its essential overall purpose, but Council will only be allowing, essentially -- and it's tied to each fiscal year -- the authorization of the monies needed in order for those phases of the project to move forward. Does that answer the question, Mr. Bird? Bird: Well, it answers the question, but I don't agree with it. Barry: Okay. Bird: I don't -- I think instead of simplifying your accounting you're adding to it, but that's just my pea brain. Go on with your report. 3 ~I h ~ y,' F .' a: p< j , ~: {1 ~ ,I h" is r`. t~ I ` 1. r_f j 1, ~, 1 1t ~ Y fyl ~ ~`~ rr ~ r; ~f r4 1? ;.' ii ~ ~~ ' ? ~ ~ ~ ~ i K- a ; r ~, } ?' ~ ~ ~6 1 t ~ Yi' qq ~~ 1~ ~ ~.3 ~`'f~ .I~ l- ~ f •{ _ ~ t ' ' ~~ 1 j ~ ~, i r ~: ~~ ~ c~ s ~ '~ ~. r ~! C c 3 ~ ~ 3- Meridian City Council Special Meeting /Workshop July 14, 2008 Page 12 of 61 Barry: The exercise here wasn't -- wasn't -- the goal here wasn't to simplify accounting, it was to remove the financial burden from the Enterprise Fund and free up money. This activity right here is what we have done in the -- what I'm recommending we do in the fund and that's freed up 6.1 million dollars, which closes a deficit which we would always be experiencing today, at least on paper. Yes, Stacy. Kilchenmann: I just -- I just want to point out one thing about this that in the past I think we have budgeted -- like the Black Cat trunk is a great example. We just said let's budget a whole bunch of money and we budgeted a whole bunch of money and we carried it and carried it and, then, it wasn't very accurate, because we kept. amending it and adding to it and amending it to and adding to it. So, kind of, essentially, in practice think we have done what Tom is talking about, we just haven't been very precise about it and we haven't said at the end of the project it's this much, each year we are going to budget X amount, because we really do with these big projects budget X amount, X amount, X amount differently each year. Does that make sense? Barry: It does. Kilchenmann: I guess as it was done in the past. Barry: Mr. Bird, does that help? Bird: Yeah. Go ahead, Tom. Barry: Okay. All right. Moving on to our third observation, this relates specifically to capital financing. We noticed that our capital financing is developer driven. We don't really have any city driven or very limited city driven capital improvements. Our capital infrastructure, being development driven, it's placement of infrastructure means that we don't really have as much control over where the infrastructure goes, because development is driving the location of the infrastructure. So, we may be missing out as it relates to opportunities and placing infrastructure important to the city within growth priority areas. The downtown is a good example of that. Also construction of the capital infrastructure improvements is largely by the development community. There is nothing wrong with that, it's just an observation. You could continue that practice. We could coordinate more with city financed capital projects, which largely we have done, actually, through reimbursement agreements. A great deal of our infrastructure has been placed by developers, but reimbursed by the city. Those reimbursement agreements, however, have been fairly costly and have strained, again, the budget as it relates to a series of amendments through time. Again, we have no rate funded revenue stream for capital infrastructure. We just -- we aren't programming any of our money, other than through reimbursements, which currently is about 600,000 dollars per year for reimbursement agreements. Just as an aside, we have spent more than 4.5 million in reimbursement agreements in the fiscal year '08. So, we are not sticking very well to that budget. Our current capital financing is not adequate to meet what we believe to be future capital investments needs. This is going to really challenge us in the future. We will talk about what those capital investments needs are as we get later t _ ! Ic. ..! 9 1 4 1 _ S 4 7 ~ ~ Y '1.: P~ ~ I ~~~y' ~ ,'~t ~. t! a Fll F i ' ~ R' ~..I ~ ~ ~, 777[ ~ ~ iii ~ i t ~ ~ ` i ~i ~i ~ ~ 3.! a~ ~ 'YI ~ ~: I ' J~ 1 f ~ tf 1 1 '~ {{1_ F i i T ~ «4 r2 1 I~ ~ + ~# ~ r J 4.. ~. ~ ~ ~~ ~ ~ P ~ t~ ~ ~ ' `{ f ` ) (~ 11.E ; ! 4 s t f ~{ . ~ g] Y1 ~ V, ( ~ , ~: E( iY{ . !i j ` ~ fi ~ _ i ~ ~ ~~ i ~ 1 . ~ ~ ,~~ # { ~ i a Y ~ ' ? i ~ i ~ ~ G 7 ~ ' ` ~ ~ '~~• _ i 't' 1 R~ ~ ~. ~ t ~ 3 a ~ ~ ~ ,I , i ~ S a r ~ ~s ~ R :: v~i 3 P ° F '! ~ ~ ~ ~ ~ ~ ~ ! ' 1 li li:, ~a j 4 F ' r q ~ 51 ~ . ~ Sr L': ~ ~:~ ~ '{ i 3 t . f. y I , f y7y ~ i' - - d;~ ~ ~~~ .4. ~ I Meridian City Council Special Meeting /Workshop July 14, 2008 Page 13 of 61 in the presentation. And we have very, very limited debt coverage capability. This is important, particularly if we get into a position where we are going to need to take on debt. Recommendations here are that we develop an additional dedicated capital improvement program or project revenue stream, which is financed from the rates. This would position the utilities -- not only would it help us to put -- place infrastructure where we would like infrastructure to be placed, it would also position the utility to take on debt, because currently we don't have a revenue stream by which we can take on debt. The monies that go to covering operations and maintenance are not eligible, generally, for coverage as it relates to paying back your debt on a bond. If you also take developer assessments, which is another source, a main source of revenues for the utility, banding companies will either not use developer assessments or use a very small percentage of developer assessment revenues as an adequate debt coverage payment. That means if we are only taking in on the order of three million dollars, for example, in developer assessments and bond company says, well, you can only use 20 percent of that, because it's a variable revenue. We are not going to allow you to back a bond on variable revenue beyond a certain percentage and sometimes they won't at all. That means we really have no other way to cover any debt into the future, because we don't have a CIP revenue stream and, generally, that is the revenue stream that would be used to secure the debt and cover the debt into the future for years to come. Because we don't have that revenue stream, we are not in a position to take on debt. The next thing I wanted to do is give you an example. We have talked to some bond agencies as it relates to coming up with a scenario for debt. The Idaho Bond Bank, as an example, would -- could issue municipalities a 20 year bond. This has -- this was as of two months ago. A year 20 year bond at four and a half percent would require one million dollars annually for every 13 million dollars borrowed. Okay. That's an important number. So, if we could cover a debt for a million dollars, our debt -- our debt liability would only be 13 million dollars and when you talk about a plan expansion that might cost you on the order of anywhere between 50 and 70 million, you just do the math and you can find out how much you would actually need in a capital transfer in order to cover the debt. The same thing applies to water infrastructure as well. So, four and a half percent bond, 20 years, four million dollars of debt coverage only gets you 13 million dollars of borrowed money. So, that's something to think about into the future. Borton: Mr. President? Rountree: Mr. Borton. Borton: Tom, do they -- do you have any information on the treatment of revenue streams from impact fees associated with these types of Public Works capital improvements? Barry: Well, yeah, the impact fees we are talking about developer assessments, I believe. Borton: No. If there were. If there were, we'd still exist now, but -- Meridian City Council Special Meeting /Workshop July 14, 2008 Page 14 of 61 Barry: Oh, on the impact fee. Borton: The impact fee. Barry: Again, a portion of that would be eligible to be covered, but because it's a variable, it's a variable revenue, we don't know how much growth is going to be -- let's say, for example, growth stops next year and you had relied on three million dollars of money to come in and the bond agency said, okay, we were going to allow you to take on 20 percent of that, because that's our risk tolerance, then, no matter what the percentage was, if there was no growth you would have zero dollars and you would have no way to cover your debt. So, impact fees or developer assessments, hook-up fees, whatever you want to call them, even though some of them are very different, are still related to a variable revenue. Borton: Sure. Barry: And that makes it really difficult for bond agencies to see you as attractive and also in rating your bond and oftentimes will prevent you from acquiring a debt altogether. Borton: Okay. De Weerd: Did that answer your question? Borton: It did. De Weerd: Okay. Thanks, Tom. Barry: Great. Observation four, reserve accounts. I want to just make a couple comments on what we found out. We don't have an operational reserve, but we have historically used the ending fund balance as a reserve in all of these areas. That's great when you have a fat ending fund balance, but when your ending fund balance gets very, very low you begin to cut into any kind of reserve capabilities that you have. So, we want to look at a couple different categories for reserves. One of them is operational. Another one is a depreciation reserve. This is actually pretty important as well, because as we build infrastructure and install infrastructure -- infrastructure has a shelf life. A lot pipes, for example, booster pumps, different kinds of things, will have shelf lives anywhere between 30 and 60 years. You can get away with some greater than that, some less than that. Take, for example, a well that we put steel casing into. Well, that should have a shelf life of 50 years or more, but many of our wells with steel casings are having to be replaced within 15. So, there is variability depending upon a variety of different characteristics. One thing that we should keep in mind again is no matter what the -- or no matter what the infrastructure we have, we are going to have to at sometime in the future replace all of the infrastructure that we have today. Now, it might be in 50 years, it might be 75 years, it could be in a hundred years. Nobody really knows. But what is important is that when we are required to replace it we are going to need the ~ ~ ~ ~ ~ t ~ $ ~ ~` y~ ~ : Y L - i '1 ;l t Y~ t tt .~ ~ t k ~ ~ fi fv- ~ ~~ J) I 2 { f ~~ ~ y ~ t ~ a.: ~ ~i' t i 1 ~ ,.~t ,i ~ f s '. ~ ~ ~ j . . . v ~ ~ ~ 1 ~E ~ _ ~ - ~ ~ i s tti_ ~ f ' ~ ~ ~ ~ ~ .. ~ ~ ~ ' p i ~~ t t ~ S ~ ~ ~ ~~ ~ a t ~. Y ~ ~ ~ ~ .. ~ ; -i ~ 4 ~ ~ i ~ t ~ {;.i ^ f cS~, a Y: !j ~ i pp ,;j{~-. f' . t t1 ~ I { ri i r i ~ ~ ~ i t ~ _ i i } 1 ~ ~~ ~ y ~ F k ~ , ~ '~ ~ I_ y ~ I ¢( i k (( j j I t ~ ! j ~ ~ ~ ~ 1 , ~ ~.. av r ! ~~ ~ ~ ~: ~ ~ ._.~ S j j ~ z :~ ' ~ ~ 5 r ,4x, t } 1 t ` ~ F l ~ ~ f. ~ C { f Meridian City Council Special Meeting /Workshop July 14, 2008 Page 15 of 61 money to do it. Right now our depreciation reserve is very, very small and it is one that does not compound over time. We, essentially, set aside a small portion of money and, then, if we don't use it, it goes away and we reprogram it for the next year with a very slight increase. That's dangerous as it relates to preserving the integrity of the systems we have into the future. We have no capital reserve. Now, capital reserve here isn't necessarily critical, okay? It would be nice to have, but usually capital reserves are either set aside as a capital reserve or they are the ending fund balance, provided that you have set aside an operational reserve and a depreciation reserve. So, capital reserve, not as much concern, although we can talk at more depth at the question and answer time as to what that might get you in the future. Recommendation here, of course, establish and set aside a six month operating reserve for both the water and the wastewater utility. That equals about four million dollars for both utilities. Additionally, recommend the establishment and setting aside of a dedicated and compounding depreciation reserve that grows over time as our infrastructure ages. That's going to be, again, as I say, important to do over time. And, then, of course, establish a capital reserve, but as I mentioned, this is less important. You might be able to use the ending fund balance as an alternative. The fifth observation and the last observation is the -- it relates to anticipatory planning and budgeting. One of the things we want to do is make sure that we position ourselves for revitalization projects, that we also position ourselves to take on various plant upgrades or expansions and well infrastructure improvements and new well construction and also that we meet our regulatory compliance obligations as it relates to the operation of our utilities. So, for this reason one of the things we should think about is adjusting our capital planning and financing strategies to accommodate these anticipated needs. Again, this goes back to the way we have historically, as I understand, been budgeting and that is going year by year by year looking at revenues, looking at expenses, and making sure we have a positive number. So, what we would like to do is move that horizon -- the planning horizon and the financing horizon and strategic horizon further out, so that we are in a position to make adjustments now that make a substantial difference four, five, six, seven years into the future. So, with that we will go ahead and begin our discussion by the Enterprise Fund budget and talk about, first of all, the FY-09 base budget. You have this graph in your -- in your documentation there. This talks about total Enterprise Fund, including enhancements for the fiscal year '09. You will know that the total budget with enhancements is about 23.6 million. 2.1 of that's in Public Works, which is nine percent of the budget. About 640 of that is in -- or three percent is in utility billing. Thirty-four percent or 8.1 is in water. 1'1.3 in wastewater at 48 percent. One percent in other government, which we talked about in the General Fund presentation. And, then, about five percent in General Fund transfers, which support the operation of. the entire Enterprise Fund on a division. This is the Enterprise Fund base budget by department over time. We have got this graph again. Won't really speak to it, other than to say that we have had increases as we have grown as a municipality. One of the things we did in Public Works and Enterprise Fund wise -- wide, is I challenged the staff to bring forward, you know, a fiscal year budget for '09 that was responsible, but also responsive, and one that we would be able to achieve as much reduction as we could as it related to our operations and I'm pleased to report that all staff have risen to the challenge. There is an exception, that's the wastewater group, and they rose to the Meridian City Council Special Meeting /Workshop July 14, 2008 Page 16 of 61 challenge, but we will talk about wastewater in just a minute. But, essentially, in utility billing for fiscal year 2009, as compared to 2008, we are able to achieve a 1.8 percent reduction in personnel and operating costs to the General Fund -- or, excuse me, to the Enterprise Fund. In Public Works we are able to achieve a 4.9 percent reduction from 2008 in our base budget relating to personnel and operations. And in the water department we have the greatest reduction of six percent as it relates to base budget, but, again, being personnel and operation. Now, wastewater we are showing a 13 percent increase and this percentage increase is directly related to the fact that we have 22 million dollars of new infrastructure coming on line, which are going to cost money to operate. We have new chemicals, new treatment technology, new filters, all that stuff costs -- increasing overall cost for wastewater. But what's important is that if you look at personnel and operations over the entire Enterprise Fund, our base, with all of this taken together, is -- which, again, is personnel and operating, only is increasing by 0.3 percent. So, that's virtually a no net increase over last year and we are pretty proud of that. Let's talk a little bit about our capital replacements. You have this slide. I just want to mention very quickly -- we have got about 34, 35 thousand dollars in capital replacements. You know, we have about 85 staff in the Enterprise Fund. We have several computers and furniture related to office chairs, laboratory dishwasher, mostly computers here as it relates to the life cycle of computers. We get that information from the IT department. So, it's just program the appropriate dollar values to make sure that we are keeping our waste capital replacements up to date and we have what we need in order to do our job. Move forward to the overall Enterprise Fund enhancements and I have been talking for quite some time. I know you're probably getting tired of hearing my voice, so I decided to mix it up a little bit and ask some support staff to go ahead and present the enhancements and, then, we will pick up again after that. So, without further adieu we will go with Mr. Dolsby with the enhancements for -- well, I will do utility billing, that's a fun one. I will do our enhancements for utility billing, so --okay. Dolsby: Madam Mayor, Members of the Council, good afternoon. I'm going to present the Public Works enhancements. As you can see we have one enhancement for the continuation of our storm water program. I'd like to point out at the bottom of that we have a summary of the enhancements. This year we are requesting 75,000 dollars. Last year we were slightly above this at 83. See if I can -- there it is. This is a detail of the enhancement. We just wanted to continue to develop our storm water program. We are looking into what exactly we need to do, whether we need to go to a phase two program, which would be a more comprehensive program, or whether we are going to be able to continue with what we have been doing. We also want to further develop our inspection capabilities and make sure we complying with all the appropriate regulations. So, with that I will turn it over to the water division, Rick Clinton. Clinton: Madam Mayor -- let me try that again. Madam Mayor, Members of the Council, I appreciate the opportunity to do this presentation, to present a summary of our enhancements. We have got some radio read improvements, consulting, well rehab, locating equipment, water line extensions, water main replacement, downtown urban renewal, some improvements to blending of Well 23, land and easement acquisition and some miscellaneous improvements. Number one must have skipped. There it is. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 17 of 61 Radio read program. We are asking for 183,000_ in combination of both retro fit money and registers, 137,600 of that is for retro fit money to -- to add additional use to the radio read program. One thing that I do kind of want to go back and emphasize what Tom had mentioned earlier is that our overall water department budget is down nearly two million dollars from last year's request. We were at 3.9 million dollars last year and we are under two million this year. I think everyone is fairly familiar with the benefits of the radio read program, so I won't dwell on that. Consulting we are asking for 100,000 to provide regional water supply planning and coordination study solutions for the brown water problem and pursuit of alternative water resources. Well rehab. This is a one time -- no, it's ongoing. We are asking for 150,000. I think we currently have been asking for 100,000 the last couple fiscal years and we are finding that that doesn't cover our rehab. So, we have upped it and we are taking apro-active approach that we would like to continue to do this in a more pro-active manner and stay ahead of the well rehab. Locating equipment. This is a fairly simple low cost request. Last winter when we were reading meters the snow prohibited us from finding the meters and this is just simply equipment to allow if we have another heavy snow fall year, we can find the meters, so that we can read the touch read meters in a very timely fashion. We were really handicapped last winter. Water line extensions. There is 585,000 dollars in water line extensions. A majority of that, I think 485,000 of it is for ACHD-related projects and there is 100,000 in there for flush lines to help us stay on top of the reduction in ground water that we had the pleasure of experiencing. Water main replacement. This is for the older areas of town that are outside of the downtown urban renewal area. You may recall that we had a water main rupture that got us in the news media a couple years ago and this was the start of wanting to allocate funds specifically to rehab some of the older part of town that aren't in that downtown rehab area. And, then, of course, the downtown urban renewal, we are asking for 250,000 there. Well 23 aquifer blending. This one's a fairly important one to me. Our need is to reduce the uranium content in the existing well to below the MCL by either utilizing an on-site well for blending water or two separate aquifers -- with two separate aquifers or an aquifer storage and recovery project. Basically, right now we are only allowed to run that well 59 days per year, because of the limitation on uranium. So, we really want to see us get that well operable year around. Land and easement acquisition. This enhancement and the next enhancement both, I would like to point out to the Council we would request that both of these, even though they were submitted as one time enhancement requests, are request is that they are ongoing and we have 50,000 dollars in acquisition and, then, we have another 75,000 dollars in just miscellaneous water system improvements. And guess I would make that request to the finance division as well. And that's a summary of our -- of the water division. De Weerd: Thank you, Rick. Clinton: Do you have any questions before I step away from the mike? De Weerd: Council, any questions at this time? Borton: Madam Mayor? Meridian City Council Special Meeting /Workshop July 14, 2008 Page 18 of 61 De Weerd: Mr. Borton. Borton: Rick, on the water main and high lift improvements, both inside and outside urban renewal, is there a priority list established that shows that some might need to prepare more of than quicker for some or -- or do you know -- Clinton: Chip has worked on a -- on a list of some of our older mains and some of them that he expects that need to be replaced first, yes. Borton: Okay. This funding covers additionally at least those emergency ones? Clinton: It covers a portion of it. It doesn't cover it all by any means. Borton: Okay. Clinton: It would be in the millions of dollars to replace it all, but -- Borton: How much? Clinton: It would be in the millions. Borton: Okay. Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: I did have a question. Both the water line refurbishment and the well refurbishment and a couple other things like that, is there a plan to say we want to accomplish a total replacement of the system in ten years and so that we are doing a 10th each year. Am I going the right direction? Are we thinking that way? Clinton: To some extent, yes, but I don't think we -- I think Tom kind of alluded to ghat earlier. Zaremba: I picked ten years out of the hat, I didn't really -- Clinton: Yeah. We -- I don't know that we have a good feel for how long all the pipes in the ground are going to last. Some of them will last longer than others. One of the things I think that's relevant is that it's the materials that the pipe is made out of and I think we are getting to a point where are gaining ground on the older materials, but we are not there yet. Zaremba: Thank you. f ii ! i ~ i ~ ~ ,~ n° a c7 ~ ~ ' i ~ i t , z$ 4 i~ ~ f ~ ~ 3 . ~ ~ ~ 3 ~ ~ ~~ ~ '~ i i ii i i~ ~ ~ _ ~ ~; ~ ~ ~ ; s, ~ ~ ~ g ~ ,i ~ ~ ~ r ~ ~ 1 µ ~ ~ ~ `~ "~ ,f I ~ ~ . ~ ~ i } ~ s• i 2 ~ ' i ~1` ~ €s ~ '- i ~ i ~:' i K ~: ~ ~ ! .~ ~'.. ~ E ~ I . . i7 If ~ .~ fi i ~f f_ 7 i ~ 3". i ; 1 ! 7 ,a 7 ~ j ~z_ i ~ ~ X444 ~ ~i ~ ~, ~ ~,~i ; ~ ~ ~ ; ~ f ~ ;l ~ °~ ~ ~° ; i ~ t i ~~ s 4 ~ s _ E r E t`~'. ~ .~ ~ t ~ k ~ p 1 ~ ~ < ~ { ~ ~ ~ ~ ~ ' i ~~ ~ ~ A ~ ' ~ ~ ~ ~, 3y '~ k f j +~ f" < FFFF ~ ~ ~ ~' , ' ~ l j ~ 114 4 ! .~ a~ ~ ~ ` ~i '~'? ~ ~ ~ ~ ~ ~ ~ ~ ~~ 9 ra ~ ' + i a a ~~ r y ~~ ~ ~i t t i} ff .~~ i t# ~ ~ ~ • ,~. t i 1I ~ [ x ~ 4 ~ r' $ • - r ~ r f 5 ~ ~~ : 4 j t Meridian City Council Special Meeting /Workshop July 14, 2008 Page 19 of 61 Clinton: Other questions? De Weerd: Anything? Rountree: Madam Mayor? De Weerd: Yes. Rountree: Question on the role as -- aquifer blending. You have identified two options to do that. What's the likelihood of being able to use the test well for blending and is there really a legitimate benefit crossed there? Do we know that that test well would provide us sufficient water for sufficient time to compensate for a half million dollars worth of expense? Clinton: We are about to enter a scope of service to do a study for that very thing. Originally it looked more favorable -- and, again, I'm not -- I'm not providing the consultant backed official opinion here, but I was originally hoping that we could blend the two waters and that's -- that has been my preferred choice, but it's looking like we have higher manganese in that lower aquifer and it seems to me like when we originally constructed the well we had a meeting and tried to decide which was the best aquifer to utilize. That lower aquifer, as I recall, also has higher uranium in it, so that's one of the tasks that will be coming up is to look at that and see if it is the most economical alternative to getting that well to come into compliance. The other one is aquifer storage and recovery and I don't have a whole lot of background and experience in that, but I have been advised by a couple different consultants that it may very well be a good option. I think the one thing that I want to clarify here is that a good share of this capital would be for the construction of it and not just -- that's not all just consulting money. Did that answer your question, Councilman Rountree? Rountree: Madam Mayor. I would hope that the study that you undertake would give us a benefit cost analysis and it may well be that we abandon that well and, then, we are looking at even a bigger expense. But in the long run it may be the appropriate expense. Clinton: Yeah. The one thing that I have seen trending around the Treasure Valley is that uranium is not affecting just the City of Meridian, it's affecting a lot of smaller wells and this particular well was drilled prior to that uranium rule coming online. But, yes, that's the goal is to identify those options. Rountree: Madam Mayor. My last comment is is that it may be better to budget the study this year and better budget the fix next year, unless we have a situation where we really have to get something done this next year to get that online. Clinton: And that's acceptable to us. Borton: Madam Mayor? ~ ,t r : , Yt a ~' F ( l F ; t~ ' ~ ~~ +V ~ t ~9 ~ C ~ t I s ;, °' Y:: S Er `xt ~ : ~ 1 ~ r j ~ ~' ~ l . fit. ~ } ~ ~ t u ~' y ' ~ . I~ ~ ~ 1 I a x { np f t. ! ~'f ~j r ~ ? i ~ ` r' ~ 1 ~ 3 I r ~ Meridian City Council Special Meeting /Workshop July 14, 2008 Page 20 of 61 De Weerd: Mr. Borton. Borton: I agree with what Councilman Rountree is saying. That seems to make the most sense and I don't know if it might be a net wash, but if the difference between the cost of the study and what this enhancement is goes into your enhancement request number ten for miscellaneous water system improvements, so you can still earmark funds for what you anticipate to be an expense. Clinton: Okay. Borton: So, we don't lose the opportunity to (unintelligible) study for now. De Weerd: Okay. Any other comments from Council? Rountree: No. De Weerd: Okay. Thank you, Rick. Clinton: Thank you. De Weerd: Did you pick the short straw, Tracy? Crane: Yes. Madam Mayor, Members of the Council, good afternoon. Can you hear me? Before we get started it's come to our attention that enhancement nine contains an error. Although it doesn't change the requested dollar amount, we'd like to take this opportunity to correct that. Mr. Gallaham is going to hand out updated copies, if we can turn to our budget books and pull out the -- the replaced -- the nine -- the number nine with an arrow with the one he is passing out. De Weerd: Tracy, I think most of Council know you and Gail, but, Council, do you all know these two gentlemen? Bird: I believe so. Rountree: A couple of us do. Zaremba: I have not officially met them. Crane: Trace Crane. De Weerd: They are total leaders at the wastewater treatment plant. Crane: We also have an additional enhancement number 11 that Gail is going to hand out as well. sib i t E i ~ ~ Y ~ a r y } ~s ~ ~ ~- ' ~ ~ ~ ~ ~ ~! °F~i ~ 1 i 3 F- _ t ~ ~ F~ ~ ~ t i~f ~ ~~. ~ Nc ,a i ~ 7 ti 9t ~ ~ ~ ~ i ~ '~? 3 ~: ~ ~ r ~. t ~ ~ ~ 1%l ~ ~ z ~' I 7 j i S~ ~ . ~ ~ 1 ~ ~. . , '~ F ~~ _ ~ ~ )~; f ~ ~ t' ~ i i ~ 4 f ~ 7 r ~:5~ } ~. t N_~ 'E 9 ~ v •~. i _ N ~! ~ ~ R a YI ') ~ ., ~ ~ ~l 4~ ` ~ ~ ~~ r S ~R ~, ~ C p y ~ r _i o f ~' ~ i i $ ~ o- ~ a e,sf ~ i ~ ~ v ~ k ~ {~~ ~ { l t ~ r 1 ( F ~ r f, ~" 11 ~i ~,~ :~ {{ $ ~i ~ t iF a, i t ~ ` F r i ~ t ? 1 ~` a ~ i 'i ; +~ s 3 G fi ~ ~ ~ i ~ ~ ~ ~ ~ !{ ~ ~ ~ f i ~~ 1 i ~ ~ , ~ it ~ ~ ,, c ~ '. e ~,, ~ ! ~~ ~ ~ > ~ 3~ ~ ~ t l ~ !3i t t ~ ~ I ~ ~ i f Meridian City Council Special Meeting /Workshop July 14, 2008 Page 21 of 61 De Weerd: Thank you. Crane: Okay. I will try to keep this as brief as possible. This first enhancement slide, what we are wanting to show here is that we have notably reduced the enhancement request this year. Total enhancements approved last year was 7.94 million. The total request this is year is significantly less at 2.46. Enhancement one, Professional Consulting Services, to define current and future operational and regulatory challenges and develop strategies for (unintelligible). Enhancement two is for chemically enhanced primary treatment. The chemically enhanced primary treatment aids in the removal of phosphorus, helps prevent strubite formation and may increase the plant capacity by two MGD. The remaining chemicals are necessary to control foam and provide for increased use of bio solids polymers due to growth. Enhancement three is for sewer maintenance. We have an additional -- we have a need for additional sewer line cleaning. Currently we are on about an eight to ten year cleaning cycle, but we have a goal of three to four. We have fallen behind in this area due to increased amount of infrastructure and escalating cleaning cost. This enhancement will not bring the existing schedule current, but it will establish a new four to five year schedule. As a note, these funds are not needed if enhancement five is approved. So, we are going to continue with the theme of wastewater being different. We are going to skip the slides. Enhancement five is also for sewer line maintenance. It's for a sewer cleaning truck and a camera and a camera truck as well. It provides for routine cleaning of sewer lines every three to four years. As I stated earlier, we are currently contracting and falling short of the goal. We have about 500 miles of sewer and we need to clean about 130 to 180 miles a year to meet the goal. Right now we are doing about 80. So, I have sort of a summary slide of these two enhancements. De Weerd: Tracy, hold on for a minute. Crane: Okay. De Weerd: Mr. Bird. Bird: Yeah. Trace, on that, we would also have to hire personnel, wouldn't we? Crane: Yes, sir. And that's included in the ongoing cost on this enhancement right here. Bird: And what would it be? Two people? Crane: It's two people to run the truck. Yes, sir. Bird: And one other question, Trace. Do you have an idea of what we spend a year in outside contracts doing this? Crane: Well, we have -- originally we have budgeted for -- in this summary slide it's here. :, ;~ ,- ,, . r (f S. f f' ~~ ~~ Ptv { 1 'y Meridian City Council Special Meeting /Workshop July 14, 2008 Page 22 of 61 Bird: Oh. Okay. Crane: Our current program is 180 -- Bird:. A hundred eighty thousand. Yeah. Crane: Yeah. A hundred eighty thousand is what we have budgeted. And we are just not -- oh, I can see it over here better. And we are just not adequately -- adequately getting the system clean. So, enhancement three brings that total to 480,000. It does give us a better cleaning schedule. It's improved, but it doesn't get us on the target we'd like to be. So, enhancement five, it provides the targeted cleaning schedule. It has an initial one time cost of 607 and an ongoing cost of 333,000. Although it has initial higher cost, the ongoing costs are much lower. The savings of around 146,000 a year for performing the work in house will result in a pay back of the initial investment in about four years. This equipment also will increase our ability to respond to question system blockages and overflows. Currently our response time to sanitary service overFlows are limited by the ability of a contractor to respond. This equipment would allow us to respond immediately and it's the option we are recommending for sewer cleaning. De Weerd: Any other questions on this one? Bird: One other thing. The trucks =- the trucks are included in this initial cost; right? Crane: Yes, they are. De Weerd: Okay. Thanks, Trace. Borton: Madam Mayor? De Weerd: Mr. Borton. Gorton: I think I'm looking at the sheet wrong. Is the enhancement three the 300,000? Crane: Yes, sir. Gorton: It says 480 up there. Crane: Because we took the original -- we have 180 in base budget, so we are asking for 300 more to bring it to 480. So, we have included the base budget numbers in this as well. Borton: Okay. Crane: In the cost analysis. 777777 i ~ ~ ' ,s~ p ~ ~ i _ i1 ~ et ~ a ~ ~ y i~ ; l < ~ ~.` ~a ~' ~ ~- ~ ~~ ~ ~ ~"~ ~ F. ~~ "~ i ~ ~ z ~ ~ ~ f ~j ,;~ '~ ~ ., ~ ~' ~r , ~ ~ } a:~ ~ r ~ ~- ~~~, ' ~ ' ~ t ~t ~ ~ ~ ~ ; y ~~, ~~ ~ yr; ~ '•` ~ 'S i. i ~ 3 fil + ~ 3~ ~ ? ~-;1 7 .r -1 ~ ! 12.. t ~.,, ' l 77 a tj # "'ELI ~ ~ S 1~ ~ ~ i ' ~ ~L ~~ ~ 1~ R 5 f ~ 7 ! `~ ~~ 0 ~ yY..g r ~~ ~, II V ;; ~ j ~ 9 d'F' ~ ~ ! fw 1 kk ~ t ~ , .:~ 1 , T { i ~ 1 ~ ~ + ~ I.:~ ~ 5 j .1 ~ ~• i I ~ 1 ~ ~ :.t Y. r ` ~ ` T , 777 ~ t ' n i k ~ ~ 1 ~ f j ~ ~ ~ ~ ~ ~ i , ~ 3 ~ r ~ ~ i ~ 3 - - ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ '- ~ 1 ~ i J 8 ~ e ~ i 1 ~ ~ s } ~ 1 ~ ~ ;. ~ 't 7 ~ ~~ s~ E~{ ~ ~ ~ f ~ } a S ~ ~ ~ '.Z ~ 7 Ca 't ~'. ~ ''A, ~ t ~ ~~ )~) ~ 3} 11 ~~1 I ~ 7 ~~ : t ~ 1 .{ti ~ ~ Y ~ Z _ C ~ 7 ~' @ I fit, , pp 1{' .~ a~ v ~ ~ ~ i 3 f ~' i.r3 Meridian City Council Special Meeting /Workshop July 14, 2008 Page 23 of 61 Borton: Okay. Good. Thanks. Crane: So, now we will jump back to enhancement number four. This is for computer software to improve effectiveness. An air compressor for servicing vehicles and for using air tools. Enhancement number six. This is for the design and installation of utilities in conjunction with ACHD roadway projects and other miscellaneous -- miscellaneous, excuse me, sewer line extensions and replacement. Enhancement seven is 125,000. This enhancement will provide funding for sewer improvements in the downtown corridor. We are currently working in conjunction with the Meridian Development Corporation to identify sewer infrastructure needs in the downtown area. There is no eight. So, we will jump to enhancement nine. Enhancement nine is an ongoing -- is that correct? It should be -- that slide should be just an ongoing 100,000, not a one time cost of 100,000. This request would provide us a fund to design and build wastewater system improvements that are not accounted for in other funds. This would be an ongoing program that would build a fund to be able to seize strategic opportunity when they arise. And, then, we have enhancement number ten, which is for right of way, sewer line extensions, and this is for maintenance and repair of sewer pipe lines in the right of way from the property line out to the sewer main. And Tom is going to go ahead and present number 11 and, then, when he's done we can stand for questions. Bany: Okay. Enhancement number 11 is the enhancement we spoke about during the General Fund presentation that I'm bringing to the Council`s attention. It's a new enhancement. You may recall during the General Fund presentation Mr. Siddoway, the parks director and myself, had come up with a way to partner on the Heroes Park project. There is definitely an opportunity for the wastewater and water utilities to incorporate some improvements into the park as it relates to decreasing overall potable water usage, as well as increasing the amount of reclaimed water usage. So, for that reason I am introducing enhancement number 11 for a total one time cost of 378,000. The 78,000 of that would go to the Heroes Park project as originally scoped and designed by the Parks Department. That 78,000 is for some engineering, as well as the bathroom improvements, since we have to separately plumb those for reclaimed water, and a couple other minor improvements, contingency, those sorts of things, to get us to about 78,000. We are also seeing an opportunity to expand by -- expand that project by incorporating infrastructure at the park that would help to bring or draw attention to the benefits of reclaimed water. We are not -- we want to make sure that the public has an opportunity to see firsthand the benefits and team of them as it relates to reclaimed water and we think that Heroes Park has a -- would provide a wonderful opportunity for us to do just that. We could be talking about small water features. We, obviously, are talking about the bathroom improvements. We could be talking about a water life garden and other sorts of amenities that would provide educational opportunities for the public to come and see the benefits of reclaimed water, since it is part of a larger strategy for us moving forward, we want~to make sure that the public is comfortable with the benefits of re-use and that they fully understand those benefits, so that they will work with us hand in hand in moving forward this important work. So, for that reason we are asking for a total of 378,000 for first phase of the water re-use interpretive Meridian City Council Special Meeting /Workshop July 14, 2008 Page 24 of 61 project. 1 want to mention that the -- I want to go back to enhancement three and enhancement five. Those were the sewer cleaning enhancements. You will notice they are both for sewer cleaning and as Mr. Crane had discussed, we do not need both of those enhancements, we only need one or the other. Our recommendation is to have enhancement five, since we believe, again, that the return on investment will be four years, after which we would be realizing a 146,000 dollar gain in operations every year after that. So, if we eliminated enhancement three, which was 300,000 dollars, and reappropriated that to this particular project, then, the overall increase from -- in enhancements to the Enterprise Fund, as was -- as related to what was originally submitted, would only be 78,000 dollars difference, if you followed my math on that. If not, I'm willing to take questions before we move on. De Weerd: Council? Bird: I have none. De Weerd: Did he have good math? Borton: He probably did, but can you state it one more time? Barry: Certainly. So, the 78,000 of the 378 here goes to the parks portion of the project, 300,000 we would hope comes from the enhancement number three, because we don't need enhancement three and five, so if you -- it's up to the Council to make the decision as to whether you want us to utilize contractors at reduced cleaning schedule under enhancement three or not -- or not .make any changes at all or alternatively utilize enhancement five to help us buy our own cleaning equipment and two staff, which benefits us in four years with a 150,000 dollar -- 156,000 dollars of savings annually thereafter. Did that help, Mr. Borton? Borton: It did. Barry: Okay. Great. Thank you. Zaremba: Madam Mayor? De Weerd: Yes, Mr. Zaremba. Zaremba: Just a comment from having previously lived in places where there was only one available source of water and, therefore, drinking quality water had to be used for every possible use, areas which are now suffering considerably from that choice. I have always felt it was very fortunate here that we have the canal and irrigation system. Adding this third possibility is exciting to me and I think it's a good idea. But my question is if we wanted to expand that -- Heroes Park works because there is already a line going that direction, I believe. This requires a third set of plumbing to do throughout the city if we wanted to expand it, but are you thinking that if your park goes well that we e~ }~ i T ti t 1 37 ~. ~ _} r~~ i ^~ . ~ ,i t i ~ Y `_ ~ d I i ? g ! ~~; ? ~ et 7x a - ~ _ ~~~ a ' ~ 7 ( ~ ilig~t; a P ~~ ~ 3 i ~ ~ 1 ~ f ~ ~ s 1 ~' t ~ a I # ~ t~ ~ ~ ~ F ~ ~ ;,~: ~ ~( 4 er ~ 3 ,, r G 0, ~,~, '~ ~ i ~ ~ r 4 ~~ b ,j ~ ~ ~ r ~ ( ! ~ 4 ~ 3 j i ~ I i a { ~ 1~ ~g~. - ~ _ ~S ~ S A y. ~ a t ~ ( ~ 1 ~ ~' ~ ~ .F r c~ ~` . ~ k °G i i 1~ b r p i ~ ~ !~ r ! . ~~ r f i ~ ~; ~+ ~'. 1 .i ~ t } ~ .; 3 1 ~ ~ ~, rfi ~ ~ f ~ ~ ~ ~ ~ + i , i j i } { ~ 1 r i 7. ~ , ~ ~ Y ! >, i w 1 1 i j j 3 ~: ~ ~ ~ ~ ~ ~} ~ ~4 2 ~ ~ ' ~ 1 ~ ii t i { i r~ ~ t..F ' ~ ~rt~. i ~ .2 7 ~ I~. , ~ ~ ~ ~ Meridian City Council Special Meeting /Workshop July 14, 2008 Page 25 of 61 may start talking about infrastructure to do this on a broader -- in future years, not this year? Barry: Yes, sir, that is -- Zaremba: Is that the direction we are going? Barry: That is the plan. This is the testing of the water, so to speak. We are not sure we can do the full test with 300,000, but we can get part way there. The goal here, again, is -- one of the biggest detriments in moving forward reclaimed water or bringing it into a community is the yuck factor. This is the community's tolerance for and often ignorance, really, for the utilization of reclaimed water for a water source. There are many major benefits of reclaimed water as it relates to that use of that particular resource. If you compare, for example, water quality with typical irrigation water -- Mr. Zaremba, you asked the question at the General Fund presentation last week, I was nudged quite hard by our wastewater treatment co-manager, we have the information and we actually draft that information. It's remarkable, actually. The fecal coliform numbers in irrigation water, standard irrigation water, as well as the e.coli counts, are very high in irrigation water as compared to reclaimed water, which is very very low, largely because of the chlorination that we utilize for reclaimed water. Also imgation water is not, from a water quality standpoint, regulated, but reclaimed water is heavily regulated. So, we believe that utilizing the right -- the right water for the right use makes a lot of sense as you have suggested. In moving forward, if we are successful with the introduction of this -- of this concept in the community, we would like to move forward and expand that project into undeveloped areas of the community first, after which we can, then, talk about retrofits. But retrofits are, actually, very expensive as compared to placement of new infrastructure during the development process. So, I have worked with a couple developers already between those couple. We have identified about five or more hundred acres of the opportunity here. One of the developers is across the street from Heroes Park and so that would be a great first site. We are currently taking statements of qualifications from four different consultants on helping us put together a business case analysis for whether or not this makes sense logically, technologically, financially, on a lot of different fronts and we hope to have that information for the Council to consider into future. Regardless, we believe that this project here as presented will help the community, as well as the Council have afirst-hand opportunity to see just what the benefits are of reclaimed water and thus our introduction of it at this time. Zaremba: Thank you. Barry: We are very excited about it. Borton: Madam Mayor? De Weerd: Mr. Borton. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 26 of 61 Borton: Again another question on this. And you can tell me where I'm nuts in this -- in this analysis. So, this is a new enhancement and there was a 78,000, give or take, savings to parks, which this helps create. But at first blush, you know, Isee a -- us spending 300,000 to save 78. You know, we are adding an enhancement, an initial 300 that wasn't there until parks got into a bind and it doesn't mean it's not a valid and good project. Coupled with the fact that it's -- you know, as you have described, a business analysis, which I would love to see as to whether or not this type of re-use project makes sense. I imagine it will, but I would love to see that as well. Would it make more sense to -- my comfort level at this time is to, you know, choose three of five, not do enhancement number 11, but perhaps allocate the 300, similar to what we have talked about with the water department, towards a -- I don't know if miscellaneous is too vague to call it. You know, a place to put the funds, should the analysis be completed and should it be deemed warranted to go forward, I just have concern, just running off, it sounds like it's ready fire aim, fund it, do the analysis, hope it works and that's how amendments come up and the extra 1.2 million to complete it comes up and so -- that's kind of a long --along list of concerns, but -- Barry: Thank you, Mr. Borton. I would like to respond, if I may. Whether you eliminate enhancement.11 or not, that will not prevent us from utilizing reclaimed water at Heroes Park. As you know, we will begin to irrigate all of the fields at Heroes Park with reclaimed water. So, we know as it benefits the city -- well, we know that the benefits to the city are great. We also have money available for the studying of this -- of this particular project and because we are ahead of the game as it relates to the opportunity, it is true I would not have introduced this particular project at this particular time, we would have probably seen that next year or as an amendment in fiscal year'09 after we did our studies moving forward. However, because of the parks opportunity, we feel like there is a great cost savings and a great partnership that can be had in moving forward this project now, keeping in mind that this project is not to introduce reclaimed water into the community as a source. of water for the community, other than for the city to benefit the community. So, we don't feel that it's a ready fire aim kind situation, we feel that the monies we have identified and the consultants we have talked to with the scope of work that we are receiving, we are ready to pull the trigger as it relates to studying this. This money follows up that study in several months with the opportunity to put into place the results of the study. If the study, which we have budgeted already, does not come back cost effective, we can hold back the 300,000 dollar as it relates to this project, but we would certainly like to have it allocated in the budget, so that we could take advantage of this opportunity as soon as we are ready. If Council feels more comfortable, I suppose we could reduce the overall project to 78,000 and come back with a budget amendment, but that kind of -- that -- I guess I'm a bit adverse to that, because I'm a bit sensitive to the amendments considering how we have performed in the past on those. So, I don't know if that helps at all or not. Certainly do want to put together the study first. But the study I'm referring to really is the best case analysis for taking reclaimed water and putting it to people's homes, using it in their homes. Not for our parks, but using it to their homes. We know that it will work on open spaces. We know the developers are interested in using that water on open spaces. The water itself as a source is a 24/7, seven days a week, 365 days a year source, as opposed to irrigation Meridian City Council Special Meeting /Workshop July 14, 2008 Page 27 of 61 water, which is generally bracketed by whatever water allotment they have and what the climate is and so we know that using this on open space makes a lot of sense. We believe it makes a lot of sense, particularly from a best case analysis for bringing it to new development, but that is the study that we want. to do. This particular project doesn't even -- doesn't even touch or embrace any of that. This is just what can we do at the park. Let's get -- you know, one of the things is that if we did the best case analysis and we find out it works fantastic, but the community doesn't like it, it will fail, as it has in many communities, because the communities haven't done their research -- they haven't really invested in educating the population to embrace and move forward the utilization of reclaimed water. So, I don't know if that helps explain at all or not, but that's our line of thinking currently. Borton: Okay. Barry: It also would help us to reduce phosphorus, which is an immediate concern at the treatment plant. So, it will be able to take some phosphorus loadings immediately out of the plant by applying this water to Heroes Park and other open spaces as well. So, that part we feel very comfortable with. Borton: Madam Mayor? De Weerd: Uh-huh. Borton: One last question, Tom. On the -- the enhancement, I think three and five, be either/or? Barry: Yes, sir. Borton: Is there -- if we had a decision point this year that -- by way of example, if we wanted to fund enhancement three, but the next year switch over and perhaps fund five, mean is that an option or do you have to make. your determination and choose one? Barry: It is an option, Mr. Borton. You could choose to fund enhancement three. If you start the clock today, the pay back time equivalent would be greater than 49, as we have projected, .but certainly you could do that. Borton: Okay. Thanks. Bany: Uh-huh. Okay. This is just a graph of our enhancement history. Again, we are trying to be accountable for what we have done in the past by demonstrating how we have performed. You will see it as gross picked up, so did our request as it related to capital infrastructure, largely through enhancements. 2007 it dropped significantly off. 2008 you can see where it is. And, again, compared to 2009, we do see about a 26 percent reduction in overall enhancements between fiscal year '08 and fiscal year '09. So, again, we are trying to tighten our belt, along with all of the other departments as it relates to base operations and our enhancements for capital infrastructure. This is a r ~.~'~= ~, ~: ~, Meridian City Council Special Meeting /Workshop July 14, 2008 Page 28 of 61 good time for us to begin to look forward, because now we start to change as it relates -- you know, in this presentation we talked about how historically we have done and currently what we need, but now we want to look forward and say what are the things that are on the horizon that we should really be thinking about and this gets to a brief conversation about future needs and projections. I only had an opportunity to really embrace the future needs and projections for the water utility and the wastewater utility. I haven't had an opportunity, really, to look much beyond that with the time that I have been on the staff. So, I want to do that in the future, but I'm not prepared at this time to talk about those other areas. De Weerd: I don't understand why. You have been on for six months. Barry: Thank you for your compassion and understanding. Okay. So, for the water department, when it relates to what we sort of see on the horizon -- and we have talked about this and you see it in our enhancements, we have well reconstruction and rehabilitation. We know that that's going to -- that's going to be a challenge for us in the future. Right now we have been having to reconstruct or rehabilitate about one well a year, which isn't good, but the fact that we are on top of it is and so we know that there is going to need to be monies associated with -- we will continue reinvestment in existing infrastructure. The reconstruction and rehabilitation per well costs us around 50,000 to 150,000, sometime more, depending upon the complexity of the rehab or the rebuild. If we have certainly in water some regulatory issues. We have increased fire flow requirements. What that means is that we need to have wells that can produce more and we need to have the rights in order to acquire the water. So, fire flow requirements, as they increase, so do our needs from an infrastructure standpoint. We have new water quality requirements. Often we see that not only do we get new constituents that are going to be monitored, as Mr. Clinton from the water department stated, radiological contaminant levels have been established and so that has actually put one of our drinking water wells out of commission. We have another one of our wells that just tested positive over the MCL, maximum contaminant level, and now needs to be monitored quarterly. If that well should prove to have an -- exceed the contaminant level, then, we will have to shut that well down and only utilize it for 59 days out of the year as well, depending upon the level of constituents. So, we have at least one, possibly two as it relates to uranium. Other sources of water quality concerns are disinfection of by-products, organic contaminants, arsenic, as you know, was a rule that came out not too long ago. We have been fortunate on the arsenic rule, although we do have arsenic in the valley. As each of these regulatory requirements continue to ratchet tighter and tighter and they come up with more constituents that need to be regulated, we will have an impact to our infrastructure. We will see likely, just as we have seen in Well 23, the inability for us to use existing infrastructure. So, that has a major bearing on planning into the future. A couple other things we were looking for on the horizon are alternative source reconciliation development. This is, again, related to identifying other sources of water which we are going to need as we move forward as a community. These could be coming from a variety of different sources. We want to look into that and be prepared for the continued vitalization of our community into the future. So, it needs to be some -- some funds and some- strategies developed in order Meridian City Council Special Meeting /Workshop July 14, 2008 Page 29 of 61 for us to do that. Intra-tie connectivity. One of the things that we were -- we wanted to discuss, at least with our neighbors, is the possibility and/or viability of us interconnecting some of our resources. This would be particularly important when we have times of crisis or in climatic severe long term climatic fluctuations where we may need, as a community, to come together and rely on one another in order to sustain our individual communities. So, there needs to be some study on that and possible -- that might end up being possibly projects. Of course, this would be something that we would need leadership and guidance from as it relates to the Council. So, we would not be moving forward on this without Council's authority. But it's just one of those things to be thinking about. Conjunctive management's already here, although we have our consultants diligently working on whether or not Meridian should be a conjunctively managed municipality. What their consulting costs, legal costs, a bunch of other costs associated with conjunctive management, which we are currently wrangled into. So, we have needs in that area as well. Water rights issues. Well abandonment. Acquisition of new rights. Those are very, very important things for us if we want to continue to prosper and continue to grow as a municipality. So, we are going to need to devote resources to that as well. We have some aquifer characterization studies that I feel strongly we need to be pursuing. We don't really know what's below our feet. We have an idea. We know we are pulling water from below the ground. We don't really know which aquifers have what kind of contaminants or which aquifers have different kinds of concentrations of contaminants. We don't know the volumes in those aquifers. We don't know the recharge rates. We don't know -- we don't know a lot. We don't know very much at all, actually, about our sub surFace water resource and it makes a lot of sense for us as we continue to see growth in this valley to invest in understanding the resource from which we sustain life beneath our feet and get a good handle on introducing strategies and technologies and other sorts of things to make adjustments into the future, again, to be -- to be considerate of our citizens and also prosperous as a community. The aquifer storage and recovery. This is -- this is a strategy that is used to rehabilitate wells that have full water quality. It's not always successful, but it is a project where oftentimes we can amend in situ, that just is a fancy word for in place, the geochemical characteristics of the -- of the aquifer and at a later time pull up a better water quality. That is at least the hope through geochemical restoration of the resource at the well head. Mr. Bird, it looked like you had a question. Bird: Yes, I did. Madam Mayor. Tom, on the storage and recovery on the aquifer, water -- that reclaimed water that we are getting out of the plant, is there any way we could get that to get in =- back into the aquifer, because by the time it got down there I would think it would be beautiful purified water. Is there any way we can -- if it isn't successful putting in lines throughout the city, is there any way we could at least dump it back into our aquifer at different locations? Bany: Yes, sir. I like your thinking. It's very visionary. And the next slide -- when we get to the wastewater department -- Bird: You're one step ahead of me, then. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 30 of 61 Bany: Well, no, you actually --that's very intuitive. Bird: I'm glad to see that. Bany: That's actually very much the case and that -- aquifer storage recovery, you could do a couple of things. You know, one is geochemical, which means you alter the chemistry of the water in the ground and, then, that over time helps to improve the water characteristics or the water quality that you can at a later time pull up. So, you can do that for drinking water. You can also do it with reclaimed water and a lot of municipalities, particularly in the southwest United States, like Arizona for example, they use their wastewater -- they reclaim it and they pump it into the ground and they let the ground help cleanse it as well and, then, they pull it up at another time and they have big underground basins -- natural basins that they use to pull that water up. So, we could absolutely do that. And that's part of our study when we talked about the -- I talked about the -- the four statements of qualification. Those are some of the things we want to look at. Not necessarily for particularly geochemical alteration, but also if we can divert as much flow out of that treatment plant that goes into Five Mile and put it in the ground, then, our phosphorus loading will significantly reduce and our capital cost for phosphorus treatment will likely reduce as well. So, we are kind of thinking more holistically about the entire water resource puzzle and doing what we can to put together the right strategies that make the most cost effective sense and environmental sense for the community. But I very much appreciate that comment. Moving forward for the water department. We have, again, existing infrastructure that's going to need to be replaced and, again, that leads, again, to a discussion of the depreciation financing. And, then, we hava growth related investments, which we could -- should continue to invest in. This is future needs studies and rights acquisition. We ought to be doing longer term acquisition of water rights, just as several of our neighboring communities have done, in order to insurance the continued growth and vitality of the communities with which they live and we should be doing the same. And, then, of course, introducing new wells at times when we need new wells as we grow. Which leads me to the next slide. I wanted to just talk with you a little bit about the short-term horizon. I know this is difficult to read, but we have tried in a very short order to grab all of the low hanging fruit that we could -- what we could see at least and put it into a chart that represented the next five years from a capital needs perspective. We have -- on this list we have well development, redesigns, rehabilitation, new reservoirs, urban renewal, land acquisition, water supply study, a whole bunch of different things that I have just talked with you about that we are starting to gear up for. I want to make clear that this list is by no means complete. It is the first -- the first step. And the more we learn about our infrastructure, the more we plan for it, the more we strategize about it, the more we are going to team we don't know a whole lot and that's going to lead to conversations about what we do to learn, as well as respond to the things we need to in the future to keep this town as a viable community. So, that was a first step. We expect that this number will grow through time. I wanted to talk a little bit about growth and how growth impacts the water and the wastewater utilities. Just as an example -- this is just an example. If you start with our existing population, around 76 to 78 thousand and you experience four percent growth every year into the future, which arguably is maybe not Meridian City Council Special Meeting /Workshop July 14, 2008 Page 31 of 61 sustainable or arguably is sustainable, this is just an average. So, you know, we could have years where we are at six, eight, ten percent and years we are at two and if you averaged it out over time at four percent, this is what you would look like. Each of these little arrows is a development of a new drinking water well. So, over that period you have got ten to 12 wells between now and, essentially, the next 22 years. That's about a well every other year for the most part on average. And that's just something to think about when we talk about well development costs and production costs being about a million dollars for a new well, so -- so this alone, just growth related infrastructure, represents, over a 22 year horizon, about -- and this doesn't include construction costs inflation, but, essentially, you're talking about a million, so you have got ten to 12, so talking about to ten to 12 million just for new wells. Doesn't include new lines or treatment or booster stations or any of that kind of stuff. De Weerd: So, that includes new wells and replacements? Bany: No. Just new wells. De Weerd: Now, if new wells serve 4,000 homes -- Barry: Uh-huh. De Weerd: That's pretty aggressive compared to over the last couple years what we have added. Barry: We have added quite a bit and a lot of that's for fire flow. A lot of that is for development of pressure states -- pressure zones in the city. There is a lot behind the investment in the wells in the past and, arguably, we weren't necessarily from a water capacity standpoint and we are trying to get the numbers out of the SCADA systems. We have a feeling that we weren't and maybe even, at least in one pressure zone, not able to achieve the kind of capacity requirements we would like as it relates to the water infrastructure. We may not have enough -- enough reserve supply of water in certain zones as we would like and I'm trying to pull that information out of our SCADA system and we haven't been able to do that just yet, so we hope to have that information at some point in the near future. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: Yeah. With your projection -- and I don't think you are too far off, if you don't hit four percent, but I think you're going to need 11 new wells over that many years, 22 years, but what about water rights, Tom? You know, that -- if you don't have water rights you're not going to drill a well. Barry: This is correct, Mr. Bird. Each one of these new wells would require a new water right. ~{ e~, f 1 ~ A, ~~~ ~: a~ i ~ t jt z e hf A r ~c F hh 6 r~' 7s it-~, ' ~, + Y A r. t ~ ~ ~ ' _ ~ hi r t z ~~ ~ i. t 1 ~ '' ` ,~ ~~ r~ k ? ~ t ~. ' , ~ ~ ' r z ~ ; i ~ ~~ `r ~. i ~~ ~4 ' 1 z t ~ r`{ ' ~~ ~ ~ ~~: ~~ i~ f p t~' k": 1;, ~ 1 k~ T ~~ ~ r4F P , Meridian City Council Special Meeting /Workshop July 14, 2008 Page 32 of 61 Bird: That's what I mean. Barry: And this is why if you go back to the slide -- let's see if I can get this to work. If you go back to this slide where we talked about the water department needs and I said future needs studies, that's very specific, because a future needs study is one in which the community under the law can put together a growth projection and secure water rights in the future today, so the appropriations dates are today, but, then, incorporate the utilization of those rights into the future. Does that make sense? So, each one of these -- if we can do a future needs analysis and this is what we end up with, we are going to want to preserve these rights and lock them up today and, then, as we grow we will bring on these new wells and we will not have to go and issue -- and go through the application and the hearings and all of that associated with -- with the acquisition of those water rights in order to pull the resource into each of these wells and distribute it through the community. Bird: We got every other municipality that's got water doing the same thing, so I suggest that we jump into this and get after it, because I think you're going to -- we are all going to be struggling for water rights before it's over with. Barry: Thank you, Mr. Bird. That is exactly -- Bird: Even if I won't be around to drink it 22 years from now, but my grand kids will. Barry: I'm just making a note on your comment there, because it is, again, another visionary comment and it is important and it is a strategy that we are trying to -- Bird: I make those, because I don't make very many of them. De Weerd: Oh, my gosh, I think we need a -- Bird: Make sure you make a note of that, because I don't make too many of them. Rountree: Don't remind him. Barry: Well, in any event, we -- Bird: Some of them you're not going to call visionary when I get done. Barry: Okay. But that's exactly the kind of work that we feel we need to be doing and I will bring it back later, because if you go to this -- if you go to this slide here, alot -- and this is really great timing, because a lot of this activity is what our Public Works Department staff does. Bird: That's right. ~ ~ ~ ~ T ' ~ J 1 Y.~ F ~ ~. ~ ~~ , NE ~. Y7 M L I f 1 ~ ~ ; ~ ~ ~ I t t ~ E ~ ~ ~ ,~ i d ~ f ' : ~+ ~ ~ j ~ E E ;( ~ ~ to $ ~ t : i ~ ir ~ ' ~ ~r ; u j ~ qr. ~ ~ t i ~ ~ ~ l yv ~ ) s , { S r N i . i ~ E ~ ; ' i ~~ yy j ~ ' ~ ~ ~ ~ ~ w ~ ~ ;~ i ~~' f 's ~ ~ ~ ~ ~~ ,~~ ~ ~ i ~ ~ ~ i ~ : ;~ i ~ i ~ ~ ~~ ~ ~ ~ ~~ ~~ 1 j ~ ~ ; # 4 ~ ~ F ' ~ ~ i k r f i ~ ~ ~ ~ ~F ~ ~ ; ~ . ~ ~ ~~ ff 1 ~ ; ~ ~i : ~ i p i ~ ~ . ~ ! ~ i ~ I I ~ v (( i ~ ~ ; ~ i ~ a 11 _ M1 ~1 k ~ 5 } ~f ~ ~ { +i i 9 a : ~ ~~ ~ ~ ~ Y ~ 6 } ~`~ 4 ~I ~ ~{~ L ~~ ~ ~ ~ ~ ~ ~, ~ ~~ ~ , s ; ~ s ~ l i F t ~ ~ ~ ~ ' ~ r u ~ ~ '- ?, ~ 2 ~ ~~ ~ ~ i1 i ~ ~ 'i r i ~ ~ -~~ { ~ e ~ ~ ~ ~ 7 1 . ~ ' k 1 '!'~ t `I ~ ~ ~ f { i1 ~ y i '',~ ~ ~ ~ ~~} ~ ri } i ~ ~ ~ ~ 4f , i ~ Y ~, ~ "*fffi F ye M1~ tti i L ? ~. ~~ F a / '1 ~ ji h ~ ; I ,'. r ~ I ( , F T ~ # ~ t a ~ ~ ~ ~ t3 ~ ~ ~ { ~ i ! { ~~ i R ~ r ~ ~ ~ d ~ ~ ~ f ~ ~ ~ f ~ E .S { r. , f~ ~ 7 p ~ F Meridian City Council Special Meeting /Workshop July 14, 2008 Page 33 of 61 Barry: Okay. We are, as you know, in the middle of a departmental reorganization, a realignment with staff, and what we are trying to do is retool the resources, so that we can focus on these planning efforts, because right now we don't really have the staff to be doing this work. Does that mean we need new staff or we can reposition existing staff -- we are going through the process now to answer those questions and I hope to be able to bring that back to you and have the Council's guidance as an input as it relates to that. But I just wanted to say, yes, we see a need and this is just the water department. We need to make sure that we have adequate resources to put to this need in order to get the work accomplished. Bird: Yeah. You're right. De Weerd: Mr. Zaremba. Zaremba: Madam Mayor, Ijust -- just in a similar vein, I would add that this slide also shows the importance of doing aquifer studies. I mean the question is by the time you get to well number six will there be water to draw. Bany: I really appreciate the Council's forethought in this, because that's, again, visionary and it's absolutely critical that we -- that we do just that. We don't want to be continuing to invest in the sub surface aquifer if its yield is going to be decreasing over time and it won't produce, so why invest that -- those resources into the aquifer, why not look for an alternative source. So, that's absolutely something we want to do. Thank you, Mr. Zaremba. Zaremba: Thank you. Barry: Okay. I just -- just for giggles. Some of you may not appreciate this slide, but just wanted to show you the difference between a three percent growth. This slide we talked about already, is four percent growth and the timing of new well infrastructure. This is what seven percent growth looks like. In this particular scenario we are talking about -- instead of the ten to 12 drinking water wells over the 22 year period, we are talking about 25 to 27. Now, this is at seven percent growth. As you know, we had about two or three years of 15 percent growth. So, you know, we know that's an anomaly, but is seven realistic going forward into the future? If you look at population trends nationally and internationally, what we are seeing is that the population curve is a J curve, it is not a linear curve, and we will continue to see. more and more people tomorrow than was here today and so on and so forth into the future. So, I don't know if it's seven percent growth, I just wanted to throw it out there to show you what the difference of just a menial three percent does as it relates to infrastructure. These slides are important, at least in discussing how we need to look at developer assessments into the future, which we haven't done as part of this study. Let's look at wastewater. We know wastewater has future needs and -- and we did the same exercise for wastewater as I just did in water. We know that the regulatory environment in wastewater is pretty high. We have a lot of things that we need to be thinking about. One of the biggest ones that is right on the edge, we are getting the ruling we expect Meridian City Council Special Meeting /Workshop July 14, 2008 Page 34 of 61 this summer from the EPA as it relates to phosphorus, we believe that the EPA will continue to hold the line as it relates to requiring municipalities in the Treasure Valley to remove 98 percent of the phosphorus. This is from zero, because it's not regulated now, to 98 percent. Now, what's important is the time horizon. The EPA has suggested two permit cycles. A permit cycle is generally five years, not including delays. But, however, there have been discussions with EPA as it relates to Meridian's plant, because we have biological nutrient removal, which is one step toward phosphorus removal, one step closer to phosphorus removal, there has been some interest in the EPA in requiring us to meet the phosphorus regulations in less time than would otherwise be required to meet -- other municipalities would be required to meet. So, I say five to ten years, because that's one to two permit cycles. I really have no idea, because the EPA hasn't told us. I can't tell you what it's going to be and we don't really have a good sense of the amount for phosphorus removal. The lower Boise River watershed group -- you remember Shell Durran came to speak a few couple months back and. said that the estimate for Meridian, based on the CH2M Hill analysis, was about 35 million. So, if we have got to meet the need for phosphorus removal in five years, which is one permit cycle, because we are expecting the permit this year, in one permit cycle we have got to come up with anywhere between 25 and 35 million dollars in five years. Now, I think that's conservative, but we don't want to mess around with the •regulation. And so we just need to know what's coming and we need to be prepared for it as best we can. This is a situation where we may be required by the EPA to meet the phosphorus requirement in a period that doesn't financially allow us to meet it and, therefore, we may have to take on debt in order to do it. Other alternatives you already know, suing the EPA and those kind of things. De Weerd: Yeah. And I don't think I have seen EPA actually hold you to it, as long as they see progress in other communities. David. Zaremba: Madam Mayor. This was not my idea, somebody else mentioned it, but I want to keep it alive and that is along with our effort to remove phosphorus is what can we do to prevent it from going in in the first place and I think one of the suggestions was force the supermarkets to have a surcharge on soaps that have phosphorus in them, so people know that they are paying extra for something that costs us and I know that's not a budget issue right at the moment, but I just wanted to keep those -- that kind of thinking alive. Bany: Absolutely, Mr. Zaremba. Having a phosphorus abatement program is critical in meeting the regulatory requirements and there are many municipalities that already employ those types of surcharges or outright ban the use of highly -- of high phosphorus products, for example, certain types of fertilizers, certain types of soaps and detergents. There are ordinances in place in municipalities around the country that already require or regulate reductions in phosphorus for products. So, again, a visionary statement, something we may incorporate into our overall strategy. But right now it's pretty early for us to know the best course of action moving forward, but certainly we will need to have time and sources to focus on some sort of phosphorus abatement or control strategy and that's one of the things we need to commit staff and resources towards. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 35 of 61 De Weerd: Tom, how does that happen if -- at a local level? I can't imagine code enforcement going out and checking everyone's. cupboards. That -- you know, how does that work if it's not a statewide initiative? Barry: Madam Mayor, I'm not familiar enough with those types of programs to be able to comment intelligently, but I can tell you that there are municipalities out there that do sample the storm drains coming off of various sectors of the community and utilize those water quality indices to, then, come up with fees associated with whatever constituent is trying to be controlled. So, there are ways to do some of that stuff. I have no comment as it relates to how we might want to think about that. Certainly, a lot of regulations on the books go unenforced and it's really just a strategy for EPA, you know, or for the community to say we are trying our best, but a lot of times there is not staff resources or there isn't financial resources for the monitoring and enforcement of those types of programs. Again, that's why we want to look at it as a strategy and identify whether or not it was a viable strategy for us to pursue. De Weerd: Thank you. Barry: Phosphorus is not the only constituent we have concerns about. We have other nutrients in nitrogen and other sorts of things at the plant, which are coming. We don't know when they will get here, but we know that they are coming. The requirements environmentally have tightened over the years and will continue, I imagine, in the future to do -- to do so. Water reuse, an area that we'd like to begin exploring as an opportunity for us to divert loads for whatever constituents might be coming through the plant. Imagine for a moment if we had a treatment plant in which all of the resource that we currently waste to the stream and it's highly regulated and that alone requires us to meet certain types of environmental requirements, is all of a sudden gone, because the resource is pumped into the ground or it's used through water reuse programs to irrigate the various lands around the city. Imagine if we didn't have to invest in those or wont' about those -- many of those types of environmental regulations, because the resource was diverted from surface waters, which are waters of the United States, and, therefore, under the jurisdiction of the Environmental Protection Agency. So, something to think about as part of our overall strategy. Again, water reuse, a big component of that. Aquifer storage. Again, Mr. Bird and several of you have mentioned this. What if we just took the water and put whatever we didn't use back into the ground and -- whether we used it or not, we'd put it into the ground, would that be suitable for us to help off load the loadings for various constituents. We don't know that yet. We will have to look -- you know, talk with the agencies, talk about aquifer characteristics to know what can go into the aquifer. We can't mix and pollute and those kinds of things in the aquifer, so we want to look at that holistically as well. In flow and infiltration continues to be a problem for us. As you know, particularly during irrigation season, a lot of times we will have gains in the plant from water that comes from groundwater through flood irrigation, cracks in pipes and whatnot allow for the seepage of groundwater into our pipe network and, therefore, what you see on the graphs oftentimes is higher flows at the treatment plant during the summer months and a large part of that is due to in flow and infiltration. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 36 of 61 Odor control. We want to insurance that the types of things we do at the plant are harmonious with the environment, but also with our neighbors, so we want to at same point here get real serious about the odor control capabilities of the plant in moving forward. We have lots of neighborhoods nearby and if the wind blows just right we end up with several phone calls from our neighbors on that. Master planning and infrastructure planning always critical, particularly as it relates to wastewater and water infrastructure and, of course, those are required by state and federal agencies for operation of utilities. Again, infrastructure -- existing infrastructure replacements are also very important for us, making sure that we have the money available for the time that we need to replace that infrastructure and, then, growth-related investments, including plant expansions, are also something that we are going to have to continue to think about into the future. Again, doing the same exercise in water -- in wastewater as we have done in water, we tried to grab low hanging fruit with the things we think are on the horizon in the future. This particular chart shows what we believe to be anticipated costs over the next five years for the wastewater department. Now, they are inclusive of phosphorus treatment. Now, if we are successful in getting a two permit cycle or a three permit cycle requirement from the EPA, this cost for phosphorus -- excuse me. This cost for phosphorus removal will significantly decrease. So, we are working as a consortium with the city of Boise, with the city of Nampa, the city of Caldwell and other municipalities to come together and help the EPA understand our overall hydrologic and hydrogeologic characteristics, as well as the phosphorus requirements under the various regulations, so that we can come to a mutual understanding that benefits the EPA, but it also benefits the citizens of each of the municipalities that are going to be impacted by phosphorus removal. So, this number may be high, it may be right on, we just don't know. One of the things here is that this number .does not improve -- or does not include any capacity improvements. We have, essentially, come off some significant investments at the treatment plant. We are currently -- if you remember back to the graph, we are currently on the order of around six and a half million gallons to seven million gallons of treatment per day. Our plant capacity is ten million gallons. We have got about three million gallons of cushion now. That doesn't mean we shouldn't continue to think about improvements to the plant and that's what this graph does. Here, again, we take a four percent growth factor. We talk about this blue line represents the maximum monthly flow. It's associated with population at four percent. So, based on a four percent growth we know that our maximum monthly flows are going to increase at the treatment plant. So, here is plant capacity. They represent these dark -- whatever color that is. What is it? Purple? I thought that was purple. Rountree: It looks like maroon. Bany: Maroon. Yeah. I like that. So, maroon -- and so what we see is that, you know. De Weerd: Says Charlie. Rountree: It's not green and it's not blue. ffff , ~ 4 L F i ~ Y ~ 1~ F 4 ~ ~~ ~' ~ ~ g ° 5 ~ ~ ~ z f ~ " + ~ ~ ~ ~ r i s a e f S ~, ~ ' ~ 7 a ° t ' { ~ ~ ~ i F Z ~ x l z i d ~ '~~ €~ I y ~y ~~ t i. 1~~~. @ ~ ; r i ~ ~ 4 ' ~ .f. { ~ i " ~ h ~ . z: t y _ yyy 1 ~~ s ~ ~ „c ~ ~ ~ t ~ ~~ ~ x ~F` ~ ~ t .g i ~ .: . ~ j I t ~ ~ k I q~ S t 1: i ~ .. ; ' ~ .~ ~ j ~ ~ I 3i ( t1 1` t i ;+~ ~ ~ ~ J k }~ ~ ~ ` 1 ~ ~ 1 F r ~ ~. Y [ i~ ~ l 1 ~ ~~ ~ ~ ~ ~ ~ ` ~ I 1 T E '.1 ~ ~ ~ ~ ~ i • i r r, : t ~+ 2 ~ I ~ ~ 1`~ ~ ~i is y ` s ° ~ ~ ~ s~ ~ 1~=. ~ =; ,I ~ ~ : s~ , ~ '` 3 ~, F }, 1 ~ 1 ~ 1 ~. ~ b ~ ~ ~ ~ ~{ ~ , i ,#~ J i I ' i ~ ~ x= E {, ~ T7 , i .. ~i {~ 1 ~ p j F , \ ~ j ,I ~ j ~ i ~ ~ ~ p f t s Meridian City Council Special Meeting /Workshop July 14, 2008 Page 37 of 61 Barry: We tried to be sensitive about that, Mr. Rountree. Here is 2008. We are coming off of a 1.2 million gallon flow improvement. Basically, this is our statistical analysis through optimization and a 22 million dollar recent plant expansion, which took us from about seven million gallons to about ten million gallons. If we can get chemically enhanced primary treatment, which is in enhancement that we submitted to you today for your consideration, we believe we can add another two million gallons of capacity for only a million dollars. I mean that's a steal. Of course, it's not as big a steal as doing the analysis here for pennies on the dollar, really, and to get 1.2 million gallons of capacity. So, if we can add two more million gallons per day flow in the next year, we would be sitting pretty well, at least as it related to four percent growth. We wouldn't have to have our next construction completed until 2023, back off four to five years from that to start your design and your permitting and all that kind of stuff, you need to start spending money probably in 2018, 2019, maybe 2020. So, again, we are moving forward and we need to just be considerate of these intersections here, because we want to be prepared for that and embrace that. So, here is what you see, what we expect in order to get five million gallons of plant expansion. It's escalated, meaning we have inflated the cost, because of inflation over time. If you did that, in 2024 that's going to cost you about 76 million. So, if you take a phosphorus, CEPT, and five million gallons of expansion between now and 2024, you're looking at what? Bird: A hundred and eleven million. Barry: Exactly. A little over a hundred million. So, we have got some challenges as it relates to moving forward. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: I got a question, Trace and Tom. For our expansion and what we get, I don't believe Meridian, within the next 50 years, is going to get 180,000 people. But, anyway, if they should, have we got enough acreage out. there? Because I do know there is some property that we had looked at around there to buy that attaches to it. Is that 47 acres big enough to double this plant? Crane: I'm not sure about double. I know that there has been plans for the five -- the extra five that's shown up there in the back of the plant property that we already own and, then, there has been several approaches that you can take to add membranes and maybe get it up higher than that. I am not sure I would commit to saying we could double it to 20 million. I think that's our goal -- Dan's shaking his head yes. So, essentially, they are saying we can double our capacity on the site. Bird: On the existing 47 acres. That's what I have always been told, but I just wanted to make sure that -- Crane: I see our consultant out there shaking his head yes. Meridian City Council Special Meeting !Workshop July 14, 2008 Page 38 of 61 Bird: Okay. Thank you. Barry: Mr. Bird, it is a good time to be buying property and it's something we should be thinking about as it relates to future expansion and it's just not expansion of the treatment plant itself for the processing of wastewater, but also for the refinement of that wastewater in turning it into a reuse or reclaimed water. So, there certainly is a need there as well. Okay. Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: On that same vein, it would seem a good time to be looking at perhaps future property for lift stations that don't have to be built yet, but the property could be found or other facilities. Where are wells going to go. I assume we have to own an acre or so where it's a well. Barry: Yes, sir. That's, again, very anticipatory and we want to move in that direction. We aren't in that -- we aren't able to be as anticipatory as we would like and so we will be working on those -- working on that endeavor in the near future as well. De Weerd: Joe's trying to get one of the big, you know, kudos you have given to David and Keith. Barry: Okay. Let's hear it, Mr. Borton. Oh. I'm sure something will come to you. Bird: Tom? Barry: Yes, sir. Bird: You know, I appreciate your job and everything, but I think it's time for a break. Barry: Okay. As a matter of fact -- as a matter of fact, (have -- Bird: You told me we was going to get a break. Barry: Again, visionary. Three slides and a break. Bird: Okay. Let's go. Barry: All right. Bird: I won't bother you again. F ~' c a ~_ 4 K I h 1 t ~+ 3 t ~ ~ #'~ ~ ~ ~ ~ T~_ ~ ~ ~ i r5 ~ ~ ~ s ~. d ~~ ~ ~ ( ,~ ! ~ yy~~ ~~ ~ ~ ; ~ ~ ; ~ ~ ~ ~~ .~ ~ ~ ~.~ ~-.,: 1. ~~ ~ L ~ 9 C ~4 4 ~ i i ~ ~ ~ ~, a ~ ~ Y S ~ j ~ ~ ~ ~ X ~ a d ` 1 p ~ d ~ ~ - Y ~ ~ ~ -~ F J 9 ~. ~ ~ t ~ I , i a < ~~ a y : , . ~ ~ ~ ~ ~~ ~ ~ ~ ,, ,~ 3 J ~ ,, ~ ~ ~ ~ ; ;~_ ~ ~ t K~ I x u t i 3 ~ y ', t ~ ~ 1 @ ~ ~ j ~ ~ $p ~ E t 5 ~ t ~ -. i '} ~~ ; ~ {W^' ]j e ~ i7} ~ f ~ i 1 . t i. 1. ~ ~ Y 1 ,} ( ~ S I a F 13i ~ ~ - G, ~. t i3~ ~ , a ~ ~ ~ # ~ ;' ~ ~ E S ~ ~ I' ,3~ Meridian City Council Special Meeting /Workshop July 14, 2008 Page 39 of 61 Bany: Okay. So, we have explained this slide, again, just to see the difference between three percent growth, you get something that looks like this. So, at seven percent growth we see that we need to make our first investment, not at 2024, but at 2017, which means three to five years behind that we need to have money in order to do this. That's 109 million to get a nine million dollar plant expansion with an escalated cost and, then, again, over a very short period of time another nine million gallon expansion at 138 million dollars escalated cost in order for us to keep up with steady growth of seven percent on average into the future. Again, who knows what the growth rate will be. I just wanted to throw it out there, because if we don't at least look at it, we won't be able to know what it looks like later. So, in any event, the last thing is food for thought and the Mayor pointed this out. We have about 3,500 homes, which equals one new drinking water- well and 4,000 homes .is roughly equivalent to one million gallons per day of plant capacity. So, as we continued to grow, you know, multiply those home numbers by about 2.96, which was the 2000 census, and that's what the population is and that's what we used in the graphs prior to this. So, we know that the demographics are changing, we know that the overall population growth rates are changing, but we at least have some idea as how that impacts our ability as a utility to move forward into the future. So, with that we will go ahead and take an intermission and I think some of our staff has treats for the Council. De Weerd: Hey, Tom, before we break you want to introduce everyone in the room you have with you. Barry: Absolutely. Okay. Not from our department, but certainly an important -- in a supporting role, Mr. Bill Nary on the far right there. Stage left. De Weerd: Low hanging fruit. Barry: Dan Aires in the back row on the -- on your right is our consultant for CH2M Hill, working with us on the improvements to the wastewater treatment plant. He helped put some of these slides together and I appreciate his time and effort. We also have Dennis -- oh, Dennis, what was your last name? Yeah, that's why I can't remember. Dennis Calinado for Wilbur Smith and Associates. He has been instrumental in helping us with our storm water program, as well as some other projects we have going on around the city. Let's see, again, important, but part of our department, the Planning Director Anna Canning. You know Stacy. I can't see everybody. So, Stacy, Rita, and Todd. Absolutely critical. I cannot say enough good things about our finance department. Bird: They have got -- they have got the quarters out to give you. Bang: They are great and I will be given them dollars today, so that's great. Bird: Wow. j f i ~t ~ ` " g , •' ~. 6 ~ n ~ ~ '~ ~ t ~ ~ ~a 1 ~ 'h ~4 - I ~ 't : ~ . ' : ,; ,.. ~' . e ~.} ,~ .. - (( ~;~ i.'. t> ~ ' : , +F'.:+:' ~:f t : (.. ~~;:; i ' '. } :: y r .. e' t ' : F .s . . . ..... . . % .,. :' : ~ ; :: is `..:; ' ~: i d;. , ~.j x ~. . . L: - r 6' ' ' ' ; ~ ~ka.{. : ~ ~ i;~. + : . - : ~. . ~ < :i .. a.:'+- ~ : ~ .. .. .. .. y ... ..:.:.. ....t : ~ r ~, ... 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' a e, ~b ' ~ ~ , i' ~'SS : : ( y • . .l y ~~~ A ~j'r i ; 3 . Meridian City Council Special Meeting /Workshop July 14, 2008 Page 40 of 61 Bany: Roxanne Holland, our newest engineer in Public Works. To her left or your right we have Max Jensen, engineering technician. You may know Karie Glenn, she is our senior department specialist supervisor. Becky Licari absolutely critical to helping me just keep things going, my executive assistant. And, then, let's see here, we have Robert. He's important, too. Robert's very important. He's -- we appreciate -- and, then, Bruce Freckleton, our development services manager. Back here we have -- I think you met already Gail Hammond. I can't believe I just spaced on his name. Gail Hammond. Shane Lim, our GIS manager. We have Clint Dolsby, acting city engineer. Rick Clinton, our water department superintendent. And, then, also the other co-plant manager Tracy Crane, so -- Bird: Where is Kyle? Thank you all. De Weerd: Thank you. Bany: Thank you. De Weerd: Okay. We are at recess. (Recess.) De Weerd: Okay. We will go ahead and reconvene the budget presentation for Public Works. Zaremba: Madam Mayor? De Weerd: Yes, Mr. Zaremba. Zaremba: Before we proceed, I'd like to ask a question that I have actually been holding for about an hour or so, because it wasn't directly on the subject, but it's a philosophical question that I would ask of the other Councilmen and the Mayor and probably Stacy, our finance director, to chime in on it. I am very strongly in favor of reserve funds, reserve accounts, and contingency funds, but I would ask the question in practicality whether it makes sense for each department to have their own and I can think of supporting reasons for that or for the city to have one fund as a whole that is administered as one piece of budget and builds over the years and the explanation for that probably would be that each department isn't going to hit its crisis at the same time, so I guess it's a philosophical question of what's the better way to do it. Kilchenmann: Do you want me to answer first or Council to answer first? I guess, typically, funds are -- well, they can be of several types. One, you keep hearing me talk about unrestricted a lot and that is a fund that is, essentially, what we have now, kind of a fund that everything dumps into and, then, there is funds that are legally restricted, which we have the impact fee fund, which by statute we have to keep those separate. And, then, typically, there is an operating reserve, which the city -- we haven't formally done that. We do it like every time I give you an unrestricted fund balance Isay -- and ! ! ~! i E f F i I f '. ~. 5 ~ ~-f; . -~ 1 { - : ~. gg .. d ( F z E i _ 7 i. ~ ~ , ~ j i ~ i ~~ ~~ ~ ~'' f r ~ ~~ ~ t. ~ ~ ~~ ~, 9 ~ i ' ~~ ~ ~ ~ ~ J ~. ~' ~ 1 ~i f ~ .. '~,,. ~ ~g t I~C.i ''~P ~~ ~ } ~ ~ ~ ~ ~ ~ i s' 1 '~ ~ ~ k1 f !t f ~ ~ ! ~ ? 1 s ~ 1 i 1 e 3 g ~ ~ ~ ~ ~ i ii B ~ ~J ! " ,, ~ 1 x ~ ~ ~~ ~ Y~ i~ ' ~. !~' ~ 771 1 I ~ s 1 L 1 ~ y . ~~ 7 _~ ~ fi ~ , ti ~v , t 1 ~~ ~ 1 { S q 35 ~ j ~ t ~ ~ t r _ S ~ ~ ~ ; t i j 1 ~ _ ~ I i 1 ~. . . i i qq ! s ~ , r 3 k c ~ ~` # 3 ! '~ 1 t ~!~ ; ~f ... ~t!l. i % ~ ~ 1 i '~ .'.. ~Y ~ Y. t { ~. .: f t 4 5~4 ~ ~ ~ ~ L ~ 4 i .e ~~ 1~ ~i, i I .~t ~ ~~: Meridian City Council Special Meeting /Workshop July 14, 2008 Page 41 of 61 we need to take this out, we need to take three to four months of operating reserve out. And, then, we have -- the other typically use is the Capital Improvement Fund, which we do have the Capital Improvement Fund that we have used for the whole city on the General Fund side and a lot of the -- I think the thinking in the Capital Improvement Fund was if the Council wants to identify -- like doing a savings account and they want to identify what they are saving for, so it's -- instead of just having to go back and look through the financial records and say, yeah, this came from here and this came from there, it's a way for the Council to say we have identified this source and we want it to go here. So, it's kind of a controlled tool or monitoring tool. In the case of the Enterprise Fund, they are quite a bit different, because they are afee -- they are afee -- they are run by fees. They are like a business. And so, typically, in a business it becomes more important to identify like a reserve for depreciation, a reserve for capital improvement, an operating reserve, and we just haven't done that with the Enterprise Fund, we have just chunked it all into one fund, so I don't -- does that answer your question or -- Zaremba: It does. Kilchenmann: Or does it make it more confusing? So, on the General Fund side it's more of a Council tool and like we talked about the public reserve -- or the safety fund and the -- public safety is about 80 percent of our budget and so if there is savings it's usually they can generate them, which doesn't say that that should all go into public safety, but when you have some large projects like you do, it's a way to start saving for those and identify those funds and I think that was the thinking like with the fire truck fund when it was set up, you knew you couldn't buy a fire truck in one year, but you wanted to keep working toward that goal. And so it's just a formal way to do it, I guess, rather than doing it with, you know, an Excel spreadsheet. Zaremba: Thank you. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: Stacy, correct me if I'm wrong, but, David, what I was told was the Enterprise Fund is strictly fee driven. No tax dollars go to the Enterprise Fund. Kilchenmann: That's correct. And there actually are entities that do use tax funds for an enterprise fund. McCall is a good example. Bird: Well, we don't want to be like McCall. Kilchenmann: And we don't want to be like McCall. That's a example, not agood -- well, agood example of -- ~i i k F ~iT S ~ E ~ ` 1J ; f ! ~ Z i p t ~ ~, € [~ ~3 ~S- $,1 ,t ~ ? ~ n ~ h i t r ~ i r 4 ~ ~ ; ~ ' ~ ~ t r ~ a, ~~~_ ~ ~ ; {r . :~> ~+ {' . ( } 5 ~ , y ~ / 5.' _ y a ~ ~ i 5 d ~3 f t ~' ~ t ¢ , i 7, ?, . 1 Meridian City Council Special Meeting /Workshop July 14, 2008 Page 42 of 61 Bird: It's worked for four years real good here. Our biggest problem here -- and I was going to bring this up later. Our biggest problem here is when we set our fees -- and I can tell you I know of two councilmen here that have asked, every time fees have been set, now are all expenses covered and that means replacement and everything like that and we are assured they are. Kilchenmann: Well, actually, there are -- the depreciation is in the fee calculation, but we have never -- Bird: It should be. Kilchenmann: -- accumulated that money in an actual cash -- Bird: That's very true. But that fund was 22 million dollars, the Enterprise Fund in 1998 when I come on board, when we found out what we had, after Buffington Boume when Neil come on board. So, that's what it was. We just -- Stacy, you hit it right on the head. We have got to put it in a reserve under a name, just like we do trucks. Kilchenmann: So, there is actually -- Bird: And so it is accounted for. But it's got to be figured in in the cost of our fees and the fees. Kilchenmann: And the other thing, I guess, too, to further answer your question with the Enterprise Fund, we have never separated water and sewer before and this -- and there is a reason -- we probably will do that intemally, we won't do it externally, and that's because the audit and reporting requirements, you know, if we separate them and also we would lose a lot of flexibility, because if we just do it intemally and we can report to you internally and we can probably -- we can physically set the money aside intemally, but if we actually split those apart, the flexibility and maybe wastewater does need some money from the water fund or we have something happen in water and we need wastewater money, we don't want to legally -- you know, we don't want to limit ourselves that much. Bird: It's just an internal bookkeeping that you will handle. Kilchenmann: That we will do. Yeah. Bird: And -- but as far as audits, it's the same as it goes. Yeah. I agree with you, Stacy. Kilchenmann: So, is there anymore questions for me? Because I know Tom is eager to jump right in at this point. De Weerd: He going to join the -- i f z ~ i i ~ ~. a a ~ z ~ ? a ~ _ ~ ' ~ , ~: e, ~~ w'. ~ti r ~ ~~. ~ ~ #~ i . ~~i zri ~ ~ ~ ~~ ~ r ~ x; r a e~ ~ ~ ~~' ~~`_ -~ ~ i~ ~ ~~ ~ ~ ' ~ t 1!! ~ 7 I .? i H S ~ ~ ~ a ~~ H. a ~ ~ _I ~ I ~ e 3 i i 1 1 11 . i ti a~~ ~ ' ~ r '~ ~'~! ~ r ` t ~` '~ 3 ~ ~ ~ ~ • ~' ~ 3 ~ ~ j ~~ ~ S ~ . ~ ~ '1 < ~ ~ ~ i t ~ ? 1 C n t F 1 j ~ ~ ~, SSII ~ ~ I ~ ~ , ~ ~ ~ ~ ° ~ i ~ 3[ 3 i t ~ ~ ~ k 4 [ k ~ F., 5 x'' i s 3 ~ ~ ~ _ i ~. ~~ f ~ ~ rr. ~ ~ i ~ ~ r r i ~ E.f i ~ r ~ S ~ F . 1 y ~ y t ~ ,~,; ~ t c ~ ~ ~ ¢ i p ~ 3 ~ F ~ ~ l ~~r ~ . ' tip ~ ? ~ r < 3 ~~ ~~ < ~ ~ 7 ; ~ , . ~: ~ g 4 I,~: ~ a~ ~ ~ ( i f _ ~ ` . >- a ~ _ ~ ~ ~~f 1'1 r r ~ k ~ ~ 3~~ ;; ~, ~ f ~, I ,- ~F~ ,; ~ 3 , YY ~ ~ { l ~ ~ .i E r ~ u ts- ~ ~ ~. ~ ~ ~i ~ ~ ~ c ~ Meridian City Council Special Meeting /Workshop July 14, 2008 Page 43 of 61 Bird: He likes you to be visionary now. Kilchenmann: I'm trying. Bird: Thanks, Stacy. De Weerd: Okay. Anything else, Council? Bird: No. De Weerd: Thank you. Tom. Thanks, Stacy. Bany: Thank you, Madam Mayor, Members of the Council. It's my pleasure to reconvene and continue the discussion regarding the fiscal year '09 Enterprise Fund budget. As you know, on the agenda that we talked about earlier, we were going to spend some time discussing the rate models that we came up with and the scenarios that we ran under the rate model and so the next portion, essentially, from now until the end of our presentation we will be talking about the need for us to move and look forward. We have talked a lot about what we have done and how we have performed in the past five to six years and we have talked to you about what we need currently and, then, now we are going to transition and speak to you about what we need to consider as we move forward and how we believe the projections that we have identified here require changes in what we do today to insure that we can embrace those funds and challenges into the future. So, the next portion is on, essentially, rate history, rate setting, trending, those sorts of things. And I will start by saying we, the department, as Public Works Department, as well as Stacy I know in the Finance Department, need your guidance and direction as it relates to this next section, because so much of what we do, as you know, is based upon the fee structures or the rate structure, rather, that we accommodate as a utility and so our budgets and our strategies and our initiatives and the infrastructure investments and all of those things are dependant wholly on what that fee structure or rate structure looked like. If we don't have the monies associated with the strategies we want to move forward, then, developing those strategies is really a fruitless effort. So, we really do need your guidance and we don't expect, necessarily, answers today, but we expect this to be a primer for discussion into the future and certainly if you could give us any direction at all as it relates to what we talk about here, so we can go back and bring you things to consider or whatnot, we would welcome that. So, without further adieus we will begin our discussion, essentially, on the rates. The first slide here that we are going to talk about is to look at how we did as it relates to our rate history. If we look at just the water utility and the wastewater utility, which, essentially, are the largest earners in the Enterprise Fund -- and this is because we do charge -- it's a service based utility, so we charge people fees or rates, if you will, for the services that we provide and that is providing the water service or providing them sewer service or both. Here if we look at our water rate history, what you will notice is we have the water history or the rate history divided up into our base, our -- that's, essentially, the initial charge or your base that usually, you know, counts for a thousand gallons or four thousand gallons or five thousand gallons, depending upon what municipality you're Meridian City Council Special Meeting /Workshop July 14, 2008 Page 44 of 61 in, so that's -- it's a thousand gallons -- although that rate structure has changed over time. What you see in the water base here is that between 2001 and 2002 we took a 46 percent reduction in our rates. Now, I have talked with staff about this and some of the discussion is centered -- as to the reasons behind this centered around conservation based initiatives to the fact that, you know, we didn't -- we weren't constructing a whole lot of projects, we had a pretty large fund, so there wasn't really the anticipation that we would experience what we did just a couple of years after those dates. For whatever reason, we -- all I can say is that the rate was reduced 46 percent in the base. Water usage at the same time was reduced between 2001 and 2002 by 20 percent. So, that makes the overall rate decrease about negative 66 percent in that one year alone. That's significant and plays a major roll in the loss of revenues over time. What we can see since 2002 is very, very modest increases, either zero percent increases or three, four and eight percent increases over time. But what you will see on this chart is that, essentially, the base is still much lower today than it has been even, when it was back to 2001. So, our rates, essentially, are lower today than they have been in 2001 for water base. If we look at the wastewater utility, we see a similar pattern. Wastewater revenues in 2000 -- between 2001 and 2002 were reduced by 65 percent for the base. We did take an increase of about seven percent in usage, so that makes the overall change in -- in the wastewater rate somewhere on the order of about minus 58 percent or so, I believe. So, those are important things to consider, because we want to -- we want to keep that in perspective as we move forward. If you look at these rate changes, I have shown them here in percentages, but you can see them in dollars. Not really clearly on this slide, but, essentially, this takes all of the rates in dollars for base water, base sewer, usage water and usage sewer and shows them over time. You can still see here that generally at the far end in 2008 our rate base is -- and for the most part usage fees are much lower than they were in 2000 -- well, dating back to 2000, for the most part. So, just something else to keep in mind. We did an analysis of the revenue that was lost as a result of making this change and this is an estimate. It's really our best estimate. As you know, usage has changed over time. Population has increased. There has been a couple of variables that have been difficult for us to trend and track and convert into a graph, but we say that this is kind of a minimum. This is conservative. And what we see is that in 2002 -- see if I can read these numbers here. So, in 2002 wastewater did post a slight gain of about 59,000, while the water department lost 782,000 dollars. And, then, from that year forward we have been losing money ever since as it relates to the rate. Now, this doesn't mean we have been losing money as a utility, this means that we have been losing money solely from the difference in rates that we had in 2001 or '2 to present. Okay? And as you can see, these numbers compound over time and so we believe that the overall net loss is something on the order or about 8.1 million dollars. This does not include fiscal year 2008. So, we believe that we have lost more as you continue to project into the future. want to talk a little bit about the financial challenges. What are some of the contributing factors that relate to where we are financially, because you have seen that we are trying as an organization to move into longer term planning horizons and anticipatory budgeting and strategic planning and those sorts of things. So, we want to take our lessons from the past and make sure that we have embraced what we have learned about the past as we move forward. We know that one of the financial Meridian City Council Special Meeting /Workshop July 14, 2008 Page 45 of 61 challenges that we are experiencing comes from a reduction in rates. We also know that there has been recent significant capital spending, which has been fantastic for us, but we have had a lot of capital spending in a very, very short period of time. Most communities are doing that kind of investing over much longer periods of time and, therefore, have a longer horizon on which to -- to make savings and save up to -- if you're using a pay go or pay as you go policy. So, we have had very short spending. We have reimbursement agreements. The initial pay offs that we made, as I understand in the past as it related to reimbursement agreements, was a mechanism to help us alleviate some of the administrative perils associated with the reimbursement program, but those certainly had an impact on the overall fund balance and, then, we have many many reimbursement agreements that are being paid in full upon completion of the project work. I mentioned just in the last fiscal year alone through the end this year we will have about four and a half to five million dollars in amendments for a program we have only budgeted 600,000 for in reimbursement agreements. We are, as you know, moving forward to adjusting that policy and hope to bring forward to you through some workshop amendments to the reimbursement agreement policy and ordinance. We have declining interest rates, so we are earning less. It doesn't really impact us as much now, because we have less balances, but it certainly does impact us. Recent economic trends also are resulting in less assessment revenues. We mentioned -- or I mentioned earlier that we have about two and a half million dollars less in projected assessment revenues for this year alone, largely resulting from development down turn in the economy. Rising costs of capital construction. You have certainly seen that we have increasing costs for materials. We have increasing costs primarily for shipping. We have increasing costs for oil products, like asphalt and other sorts of things. So, construction costs are increasing. And the next thing I wanted to talk with you about is to move forward into, essentially, the model that we put together for the Enterprise Fund. You may recall that we have used on our existing rate model, essentially, a one year model and this model was a complex model. It looked at several factors and it's a very good model. But it has some limitations and one of the limitations is that it really is a blinder model, meaning it only looks at the year that you're modeling, and does not project out or has no capability of projecting out what you do today and how it impacts you in the near future. It can tell you whether or not you will be solvent for the year you're running the model, but it can't really tell you if you're going to be solvent years after that. So, with the help of the finance department, we worked together to develop amulti-year rate projection model. Now, what we did in this model is we separated the operations of water and wastewater. We wanted to make sure that we could identify what the cost and the revenues for each of the utilities was. We, then, separated out from each of the water and wastewater utilities the functional areas, such as operations and capital. We not only wanted to see whether one utility -- what it was doing from a revenue and expense standpoint, but what components of that fund were actually -- we were actually able to cover. So, we separated out the operations portion both in revenues and expenditures .from the capital portion, both in revenues and expenditures for each of the water and the wastewater utilities. So, essentially, you can imagine that we took the Enterprise Fund and we divided it up into four quadrants. On the left you have water operations and water CIP and on the right you have wastewater operations and under that wastewater CIP. And that's literally what we did. Then, we Meridian City Council Special Meeting /Workshop July 14, 2008 Page 46 of 61 started looking at -- and incorporating various adjustments in the projections. We included inflationary factors, growth population for continued accommodation of assessment revenues, personnel factors, all sorts of different things to try to make sure that the model, even though it is our best guest, that it become our very best guest. So, again, as I mentioned, we included those personnel growth and inflationary factors and we projected the results and the impacts on the funds over a five year period. This allows us to set a projection and a trend going forward and to make adjustments today and see what those adjustments do moving forward. Lastly, we cross-checked the results of the existing rate model with the one year rate model. There were a few discrepancies, but, as I recall, we were within five to seven percent, at least for the fiscal year '09, which isn't too bad. So, moving forward, let's talk about the multi-year rate projection model, what the assumptions were and the scenarios that we ran. First of all, we developed three different scenarios. The scenarios each were based on all of the fund recommendations of today and the projected needs. Now, again -- and keep in mind I have given you projected needs, but it's an incomplete list. I don't have all of the conceivable projected needs into the future. We just did what we know of now and we had to start somewhere. So, again, I want to focus on this, because each scenario did include fully funding all of the FY-09 base budget and all of the FY-09 enhancement and capital replacement needs. So, we are talking about apples to apples in every scenario. Also scenarios also utilized the just in time capital financing strategy.. Again, mentioned it saved us 6.1 million dollars just today, essentially, retooling that. We'd like to continue that strategy into the future, so that we continue to not strain the fund as we move forward. That will require some changes in the way we conduct our business, i.e., coming to Council for full approval of projects, but with only limited appropriations of each of those projects. Next, the model attempts to anticipate our current revenue needs based upon our operational capital and regulatory needs. So, we are really trying to push the envelope on anticipating and projecting our needs and our time horizon. I want to make a note here and the note is that, essentially, our capital needs will increase as our system knowledge increases. That means the more we know, the more we realize we aren't doing or don't know or don't have and, therefore, are going to need to adjust. So, it's kind of like the age old adage. If you stick your head in the sand and you don't -- nothing's wrong. We don't want to operate that way. We want to be anticipatory about what we do and as a result we will be looking hard in moving forward the organization and that means that we will likely have many things to think about and to discuss into the future. Let's talk about each of the three scenarios. The first scenario I call the status quo, because what that means -- we don't do anything, we just leave everything the way it is and we continue to operate, all the -- the assumptions here are that we include all of the enhancements and the base budget that we talked about. We don't include an operational reserve. We do not include a capital transfer. We do not include a depreciation reserve. And we do not anticipate or respond to regulatory compliance needs, i.e., the phosphorus, the nitrogen, the uranium, those kinds of things. So, this is, essentially, doing it the way we currently do it. Okay. And here is what it looks like. Hopefully your monitors on your desks are -- help this be more clear. No monitors? De Weerd: What monitors? Meridian City Council Special Meeting /Workshop July 14, 2008 Page 47 of 61 Bany: Fantastic. All right. Well, up here -- so, what I have done here is you have essentially -- this is the water rates and you will want to get used to this graph, because this is going to be a graph that's going to be repeated several times, but with different numbers on it. So, what you have on the left side -- the whole graph is water and the graph on the right is wastewater. The first column here is the current water rates. The light blue is base rate and the green is usage charges. So, obviously, here -- and, then, the middle column is proposed. So, we see no difference, because we said it was status quo. We are not raising rates. We are just leaving the rates the way they are, so you have, essentially, a zero percent difference in both the base rate and a zero percent difference in the usage rate. The same thing is repeated over here. Here is sewer. Sewer base rates. You can see they are the same, because we are not making any changes from current to proposed. And, then, sewer usage, they are the same, because, again, we are not making any changes from year to year, from current to proposed. Again, zero percent difference. We encapsulate the summary of the information down here by saying the average family water -- I'm not sure I can read that. Is 15 dollars and 16 -- $15.16. That would remain the same under the proposed, meaning status quo. So, there is zero percent difference. And, then, average family for sewer, this is an average family of four, $19.94. Doesn't change. Total bill $35.10. Zero percent difference across the board. The assumptions in all of the models have been the same. We have 8,000 gallons for an average water user and 5,000 gallons for an average sewer user. So, now having said all that, this is what no change looks like. The top line represents our cash position for the water utility. The green line represents our cash position for the wastewater utility. You will notice that zero is right here and runs across the board. What happens is that although our water utility can continue -- although it's somewhat flat, continue to maintain a somewhat healthy ending fund balance. The wastewater utility does not. Because we have separated these utilities out only internally and they are still one fund, when one fund performs poorly, so will the other. And what we see here is this red dashed line, because this is what happens to your overall fund balance. Now, the fund balance is actually much higher here. Going backwards it goes way up, because you got to add water and wastewater and your points up here would be higher, but I just want to show you where it deviates and you will notice that your cash position for the water utility begins to decline to make up the lost -- or the additional expenses for the wastewater utility. So, that means that the wastewater -- even though the water utility would be solvent, all through the five year scenario, your wastewater utility is not solvent, but what happens is that the wastewater utility in 2011 becomes insolvent, but it pulls down somewhere between 2011 and 2012 your overall cash balance for the Enterprise Fund, meaning that the entire fund becomes insolvent right around 2012. That's important. What's also important here is that this scenario again does not include any reserves. So, nothing to fall back on. We are insolvent by 2012. So, that means, obviously, the status quo is not likely going to benefit us after 1211. So, we need to probably be thinking about what we can do. I just ran three scenarios and they are sort of high, medium, low, if you will, to give us a starting point of discussion. The second scenario is kind of the medium scenario. This scenario -- these assumptions include, again, all enhancements and base budget recommendations as proposed to you today. It includes an operational reserve. The Meridian City Council Special Meeting /Workshop July 14, 2008 Page 48 of 61 status quo did not. This one does include a four million dollar operating reserve. It includes a capital transfer. The capital transfer is the difference between water and wastewater. I didn't want to go into details of it here, but in the projections we can talk about it, you know, at another time, but -- so, in this scenario we do get operational reserve and a capital transfer. This is good -- this capital transfer is good, because, remember, that's what we would use if we had to take on debt into the future. It does not include a depreciation reserve in fiscal year '09. So, we would still be behind the ball in fiscal year '09 with the depreciation reserve. And it does not anticipate or allow us to respond very well to anticipated regulatory compliance needs. So, having said all of that, let's see what this scenario does. Again, the graph is important. Over here we have -- this is water on the left graph. Current rates. Proposed rates under this scenario. And the -- or the percent difference and dollar differences. So, the current rates here for water would be based at 15.16 and usage at 19.94. The proposed rates for the second scenario for the water 20 dollars -- $20.02. And that includes the base and the overall usage. So, the overall difference here is 45 cents in our usage per thousand gallons and $1.30 for the our base. So, we would be proposing under this scenario to increase the base $1.30 and our base 45 cents. So, if you go down -- and, then, we look at the sewer here. Current for our base was $4.74. We have a $3.04 usage charge. The proposed dollar amount for sewer base would be $7.94, with a usage charge per thousand gallons of $5.09. The difference in dollars is $3.20 for the base and $2.05 for usage. So, here is what the average impact to the family would be. Average family of four -- or average -- I shouldn't say of four, but average family bill -- current was, for water, $15.16. That would become $20.02. A difference -- total difference of about $4.86 per month. And, then, the average family per sewer, we have $19.94 for current. That would increase to $33.41. For a total difference of 13.47. Now, what you see here is important, because what we are able to do is adjust the rates in each utility differently to respond to the different needs of each utility. Hopefully, you understood through the earlier presentation that the needs for the wastewater utility are far greater in dollar value than they are for the water utility and, thus, you see the corresponding rate difference, 32 percent here for water, and 67 percent for sewer, for an average difference of 52 percent. Now, let's see what this does as it relates to moving forward. You're going to see a similar trend here as it relates to the water -- or, excuse me, the wastewater department, this trend is related to additional capital improvements at the plant in 2012 that -- that we need to complete. That is the same scenario -- or that's the same assumption of all of these scenarios. One thing you see here is that, again, a little bit more flat line the overall fund balance for the water utility and when we look at what's happening in the wastewater utility, we are seeing that there is a decrease significantly in 2012, but we are up above the zero mark and that's what we were shooting for. That gives us one million dollars, at best, for an ending fund balance for -- if you were to separate the two funds for the wastewater utility. Keep in mind, though, that this scenario does include an operational reserve. So, you have a safety net and it's a six month operational safety net and we also have included in this scenario, again, as a reminder the capital transfer, which in the event we have to take on debt we are in a position to do that, at least to some degree. So, the utility is solvent in this particular scenario. If we move onto the third scenario. And this is sort of the get everything scenario. The assumptions are that we are including all FY-09 base and Meridian City Council Special Meeting /Workshop July 14, 2008 Page 49 of 61 enhancements discussed, that's not changed. We are also including, just like in scenario two, an operational reserve of four million dollars. That covers both utilities. And we include a capital transfer. So, that's the same as scenario two. The things that differ are that we are adding a depreciation reserve in fiscal year '09 and that we are including some dollar savings -- we are setting aside money to respond to regulatory compliance needs in the future and we have quantified those regulatory compliance needs on the best available information we have to date. Again, keeping in mind we know we have an incomplete picture. If you look here at the model scenarios, what you end up seeing is that, again, related to current -- I will walk you through these numbers. The current base with 4.04 for water and 1.39 for usage, proposed base for water will be $5.34, with a usage charge of $1.84. Total dollar difference -- oh, excuse me. I'm reading scenario two again. Because I can't read the screen up there. So, let me start this slide over if you do not mind and correct that. Okay. The water base, 4.04, again, is our current. And water usage is $1.39 current. We are proposing under this particular scenario increase -- let's see here. Okay. Increasing the base to 5.64, with a -- for water and an increase in the water usage to 1.94. The overall difference here in base is $1.60, with 55 cents for usage being the difference. Over on the wastewater side, again, current base is 4.74. Current usage is 3.04. Wastewater increases significantly in based to $12.43 and in usage to $7.97. The percent difference here, at least in dollars or the dollar difference, I should say, is $7.69 for the sewer base and $4.93 for the sewer usage. Overall impact to the average family, again, current water, the average family is paying about $15.16. Proposed would be $21.17. A difference of $6.01. Here we are in the average family for sewer, we have $19.94, with a proposed increase of 52 dollars -- not increase, but, rather, proposed rate of $52.28. So, the dollar difference in this case would be $32.34 or 162 percent increase. The average bills are down here. Total monthly bill would be $35.10 currently or increasing that to 473.44. For a total dollar difference of $38.34 or a percent increase of 109 across the board. We are not suggesting this rate. We will not suggest this rate. But I just wanted to show you what avery -- not very, but a conservative and highly anticipatory rate would do and what it covers. Here what you see is the same sort of -- same sort of tend where you still have to make the improvements to the plan in 2012, you do see an increase in -- in ending fund balances over time for the water utility and one thing you notice here is that the trend between the first part of the five year cycle and the last part of the five year cycle shows a significant recovery after the initial investment at the plant. So, you're able to recoup your dollars much more quickly over time. Now, these particular scenarios can be run any number of different ways. The model can be run a number of different ways. But what's important here is that we now have a vehicle by which we can look into the future, to the best of our ability, with the information that we have and try to see what we need to do today to help into the future. I wanted to give you some perspective as to where we are from a rate standpoint. We did some benchmarking for the water department -- well, for water rates and, essentially, what you see here is Meridian is on the very right here. Our base rate is about $4.04, with our usage charge -- these are current of $1.39. Twin Falls, moving to the left here, shows a base of $6.84, with no usage charge. That means once you pay your 6.84 you get unlimited water. The question mark here and all of these other marks up here refer to an anticipated rate increase for this year. Twin Meridian City Council Special Meeting /Workshop July 14, 2008 Page 50 of 61 Falls doesn't know if they are going to increase their rates or not, so we just don't know. Coeur d'Alene. If you look at Coeur d'Alene, for an example, Coeur d'Alene's base rate for water 6.23, with usage of 65 cents. Now, I must say that all of these utilities have different ways of calculating base and usage. Some do cubic feet. Some do a hundred cubic feet. Others to per thousand gallons. So, we have tried to normalize all of the rates based upon a one thousand gallon assumption. So, this is per one thousand gallons. Moving over -- again, so back to Coeur d'Alene. Base is $6.23, with an overall usage charge of 65 cents. They expect their rate to increase two cents this year. Nampa, $6.68 for base and 71 cents for usage. Nampa is a little bit of a different animal as it relates to doing these calculations. So, this -- this number is per thousand gallons for the first thousand gallons, but it does not -- it changes as usage changes, so it's a variable chart. So, it's really hard to trend over time -- over usage I should say. Lewiston, they expect an increase. They don't know how much the increase is going to be. But currently their base is 5.59, with a usage of 2.32. I think you get the picture and I hope that you could read the rest of this, because I don't want to really have to go through all of these. So, essentially -- Post Falls expects a four and a half percent increase in their water rates. We couldn't get information in -- for Idaho Falls, but Boise -- United Water does not expect an increase this particular year. So, we thought that would be helpful for you to at least understand what's going on regionally. I have done the same thing for wastewater and in the wastewater group you notice that Boise is on the right and Meridian is on the left -- or, excuse me, Meridian is just to the left of it, but on the very right-hand side of the graph. Boise expects an increase of three percent. Their base is pretty close to ours and usage. So, essentially, the total between is pretty comparable. But there is a significant difference between the city of Boise and the City of Meridian. The city of Boise has two treatment plants and they are a large plant, but the City of Meridian's plant is very sophisticated. We have biological nutrient removal. We have tertiary filtration. We have a state of the art facility and we are recouping the costs for those investments. So, it seems reasonable that even though we are very low here, it seems reasonable that Boise would be a little bit lower than ours. Continuing to the left here. Nampa, $6.16 for -- or, excuse me. Yeah. $6.16 for base. $1.30 for usage. And that continues up. Again, we know that Lewiston is going to take an increase. We don't know what the increase is. They haven't decided yet. And we know, again, Post Falls is going to take a four and a half percent increase. What's interesting here is that the last four cities, Idaho Falls, Lewiston, Coeur d'Alene, and Post Falls, all have a base charge for sewer. It's unlimited sewer after that. You have to pay the monthly amount of 25.58 in Post Falls whether you use that much or not. So, again, just differences in the way rate structures work and your usage fees and your base fees are. Just something to think about as we look regionally to our neighbors. This is what the average monthly water and sewer bill looks like in all of those municipalities normalized for an 8,000 gallon usage rate for water and a 5,000 gallon usage rate for wastewater. So, we have tried to get this to match what our average users would be spending. We see that Meridian, again, over on the right-hand side is second lowest of all the municipalities surveyed. Twin Falls is the lowest. Then, we have Meridian, then, Coeur d'Alene, Idaho Falls and so on to the left. So, if I go back a couple slides, you see a theme here, and the theme is is that -- you can argue it a couple of different ways, but, essentially, Meridian's services are less than most of the -- Meridian City Council Special Meeting /Workshop July 14, 2008 Page 51 of 61 most of our regional neighbors. Here, again, the water -- regional benchmark. Meridian is on the far right. As compared to the others. The wastewater, Meridian is -- other than Boise, is the lowest among all the municipalities. And, then, that transfers, of course, to overall average bills. Twin Falls being the exception here. Meridian is the second lowest. Now, they are somewhat close here. We have fairly close numbers. But between Meridian and Lewiston we are talking about a total dollar difference of ten dollars in rate. So, just various things to think about as we -- as we continue our discussion into the future. So, in summary, our financial position has -- has many contributions or many things contributing to it. Again, energy price volatility impacts our expenses. We have increased capital spending over a short period of time, which impacts our revenues, as well as our expenses. We have local, regional, national changes in the economy, which impact our revenues and expenses as have been described throughout the presentation. A reduction in rates, as well as a reduction in consumption have both contributed to changes in our fiscal position. We have increasing regulatory requirements, which will continue to impact our future expenses and as they have had impact on our historical expenses. And, then, of course, the rising cost of capital construction. But, in conclusion, I do want to say that we have a balanced budget. Even if we did nothing today, we made no change today, we have a balanced budget and we have a reserve if you use -- so if you so choose to use the ending fund balance as your reserve, we would have a reserve that's marginal, but would be acceptable, in my opinion. In our budget we have worked very very hard to reduce our personnel and our operating expenses utility wide by 12.7 percent, with the exception of wastewater. Again, if you add wastewater in, we have a net increase of only 0.3 percent. We have reduced our enhancement requests by 26 percent over last year and using the just in time capital financing strategy, we freed up 6.1 million dollars that we can utilize either for an operational reserve or however the Council so chooses. Through this exercise we have gained a better awareness and better reporting and tracking of our financials. We have worked and are transitioning toward a longer term planning horizon. We will continue to be fiscally conservative and we will try to strive to be more anticipatory with regard to our budgeting and our budgeting approach. We see this as an opportunity as a utility, as a fund, an Enterprise Fund, to make some mid course corrections and I assert that those corrections must be made today if they are to have the greatest impact moving forward. If we do that, then, we believe that we can make better use and programming and leveraging of our existing dollars to meet our future needs. And with that I'm open to taking any questions or comments from Council. We also have ancillary staff here to help address any questions or comments as it relates to their functional area. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: Tom, I agree wholeheartedly with -- let's get -- let's get some fees added and started and it takes public hearings. I think you need to sit down with your liaison and figure out a deal. Anything that you can -- anything that you can prove cost-wise, certainly will get on board and support. I'm a rate payer just like everybody -- like all of Meridian City Council Special Meeting /Workshop July 14, 2008 Page 52 of 61 us in the room are and I don't like anything being raised, but, in the same token, we can't -- we can't continue on this path and give quality service and it seems like everybody thinks that, you know, public safety -- and it is very important. Fire and police is very important, but let me tell you something, water and sewer is just every bit as important, if not more. So, I think we need to get started. I don't know -- I'm just one councilman, but I think we need to get started with a rate fee increase that's practical, but yet is also cost covering effective and when you bring it to me I'd like to -- I'd like to see your formula, what you have got in it and how you did it, because you would be the first that I have ever asked for that I have got it, so I'd appreciate it. Barry: Yes, sir. Zaremba: Madam Mayor? De Weerd: Mr. Zaremba Zaremba: I echo Councilman Bird's ideas. I very much appreciate the forward thinking that has gone into what you have presented to us. This morning many of us were at a presentation sponsored by the government, but mostly relating to Idaho Transportation Department, and it's also true of all of our transportation departments, ACHD and others, they have come up with hugely startling figures with how much their short falls are every year and the first instinct is to ask why weren't you starting to recognize this seven or ten years ago. Well, you, on behalf of the City of Meridian, are starting to recognize this for the Public Works Department and I very much appreciate the direction that you're taking and the suggestions that you're making and if it means raising my fees -- to not do it -- and I'm always big on what does it cost not to do something. To not do it means seven years from now our fees go up 500 percent, just because we didn't plan for it and I very much appreciate what you're doing and I agree, when we need to take care of a public hearing, we need some background figures on what justifies it and where it's going to go, but I certainly justify the reserves and the -- I call them contingencies, but the planning for the future. Bird: I agree. De Weerd: Mr. Rountree. Rountree: Madam Mayor. I guess just a follow up on what David said is that the bottom line in the transportation issue is that there has not been political will to face the music. Hopefully, we will have a political will to deal with this and Tom and I have talked about this and, he's right, they are not proposing the last scenario immediately, but over time we probably want to get there. We have talked about incrementally looking at rate structure change starting soon and doing it quicker than every two or three or five years with the comfort that everything is okay, because we know it's not. For them and I think for Tom and his staff, I know they are going to need a sense from us of what -- how strong is our political will. Is it a 50 percent increase. Is it a 25 percent increase? Is it a full increase for the water fund and parcel for the sewer and do that incrementally over a f i ~ t x ~ x 3 4 ~ h~ ~ ~ f ;~ f + f ~~` ' r ~ ~ £3 ~ ~ 7 t ,~. ~ i.tr R 3 i I F 4 ~ ; ,YL. ~ ra { ~ ~ l,i~ ~ 3z i t.E ' R y s . ~~ 3 . j ~~ ~~ l l~ 1 ~ # ~ ~ i ' ~ ~ ~ ~ ~ ~ i ~ r ~ ~ y j k- * i(3 , a ~5, F ~ ~~ ~ ~ ~ ' ' ~' i ~~ g ~ ~ i ~ - ~ t q [ F~ ~ ~ ~ 1 ' S _ .-t fif ~ t ~ ~ ~. 8~ rI l ~ f '~ i ~ ! ! ~ ~~ ~ ~ ~ 3~ rr ~ #' ~ E ~ ~ ~~ ~ ~ ~ # f' ~ f ~i ~ ~ 1 ~,r i ~ ' I p , ~ ~~ , a ~ E ~ ~ ~~` { ~ i I ~ ~ G ~ ~ ~~. ~~ ~1 ~'. ~ s ~ qq 8 ~ II [ f ~ ~~ s p t r ~` k ?~ `. ~ ~ ' ~~ j ~ ~~ i l ~ ~ ~ j ;FS !f ~ ~ ~, ~ t ~ ~ ~ 9 1 4141 ~ Z ~ ; ~ a ~ i t ` ~ ~ ~~~ ~ i ~' ; ~ _ ~ ` `" ~ ~ ,~ ~ ' ! t , ; {{ 1 Meridian City Council Special Meeting /Workshop July 14, 2008 Page 53 of 61 set period of time and what time period that might be. Again, Tom said correctly that they can -- they can model, they can craft, they can put whatever assumptions we wish and whatever numbers we wish into the model and they can -- and they can back calculate what a rate might be, but they need some guidance, otherwise, we are just sitting there generating numbers and if we can tell them what number we are shopping for, they can do it quickly, as opposed to do it over a number of months. But I agree with Councilman Bird, it's something that poor direction was given six or seven years ago and we wouldn't be quite in this fix, but we would still be behind the curve in terms of inflation and needs. We have got -- we have got to do something about it. We cannot put ourselves in a situation where -- and I believe we are headed this direction, where we have to do debt financing to take care of some of the problems that we are going to have and that's not -- that's not something I'm even wanting to entertain. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: I agree with Councilman Rountree. We got to -- we got to give them some kind of direction, but this is one councilman that would sooner take the political hit with an increase. I will -- I shouldn't say never, but I don't think I would ever vote for any financial debt in this area. So, I think that we need to be practical about whatever we can back up we do. I don't like to see 109 percent increase right off the bat either, I'm like -- but -- and I think another thing, Tom, that we have talked about every year -- every year that we are going to review fees every year and there is four people -- five people sitting up here that don't see that it's done and that's certainly not you guys' fault. And that's all fees. But we just need to make sure that the fees are looked at more and more often, so -- I don't know. Zaremba: Madam Mayor? Bird: We got somebody with their hand up back there. Zaremba: Just as a personal -- De Weerd: If you will wait. Zaremba: -- comment, when we do get to talking about having fees that cover the actual costs, I will put it that way, and including the future needs and the actual costs, my instinct is to say I would more heavily raise the user portion of the fee than the base portion of the fee and my instinct on that is -- I know I, myself, as a user like to think I can have some effect on my bill by how frugal I am with my water use and the greater impact -- the greater control people think they have -- if we are going to send the meter readers out to read the meter anyhow and have a use charge, I would like to see the bulk of the recovery by being the usage chart and that gives people a sense of control. De Weerd: Well, to a degree. S ,, ~ i{ ~, 1 ~. ~} ~ 1 e ti ~ c ~ `. 33 ; r! ,', ~ ~{ ~ ~ ~: ~., 1~=~ ~ ,} ~~ Y. ':' F, && a{ , ~ F u~ Si l~ ~ 4 ~S C C 1 A ~ %` ~ 1 '. f ~ y ~' p t e ~ ~ i ~~ i ! i s l f „ a ~ ~ ~.~ ` '` ! x ~ F , # }~ } ,Y ~ ii . ~ ~ l~:. 4t ~' ~ f^ ~. }1 '. ! Ex ZQ d `. 5..( ~ ~ ~~. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 54 of 61 Zaremba: Well, not entirely, but -- De Weerd: Because the O&M goes up, so that they -- Zaremba: Yes. De Weerd: Within reason. Anna, did you have comment? Barry: Madam Mayor, while Mrs. Canning is approaching the stand, if I may comment, Mr. Zaremba, on what you just said. There are a couple lines of thinking and adjusting -- well, what we call in the industry blocking, like I say, water usage, for example. One of the concerns with blocking is it's very effective to curb usage as it relates to high water users, because the more you use the more you pay.. However, those kinds of strategies need to be made up in base, because if you rely on those variable costs for usage and people do respond to favorably and reduce that usage, now you have lost your ability to recoup overall costs. The other thing associated with the adjustments in the usage portion as it relates to the base portion is that it tends to hurt families -- larger families more, who can't reduce their usage, and it's just something to think about as a Council. I'm making no assertion one way or the other, but just food for thought, if you will. Zaremba: Thank you. Those are good points. Canning: Madam Mayor, Members of the Council, I just wanted to speak briefly about something we have already talked about and that's the adequate public facilities. So, I hate to bring up the F word, but when Freilich first came here it was to talk about adequate public facilities and cumulative impacts. Now, I don't think the cumulative impacts necessarily applies here, but I think that what Tom is doing, from my understanding, is closer to what we need for that issue of adequate public facilities. We didn't get it out of Blueprint For Good Growth. That example is not going well. But before I came from California I worked for a small consulting firm right at the time when the real recession hit California with regard to the housing bust and the slow down in development, similar to what we are seeing, and the devastation on those cities -- mean it was just huge. They just -- they couldn't function at all and I have been concerned about that ever since I got here. I don't -- I'm not an economist, I don't understand it enough, but by the way the developers talk I know they think they are paying their way and I just knew intuitively that they weren't, because I know what the cities in California were having to look as far as making sure that those rate structures really cost -- captured the true cost of development. And, usually, what it is -- it's the development from behind that's pushing this paying all the fees. So, I was thrilled to see Tom tackle this and I think he's headed in the right direction and I don't envy the decisions you have to make at all, but I just wanted to lend my support to Tom and recognize his efforts. De Weerd: So, you using the F word and C word. California. ~.~ i ~1 ~ a~'~ 3 ~ [ L ~.t ~r t ~ t ~ ~ t ~,j¢ ~ d ~ ~' 3 ~ ~~' ~ ~ ~ a d , ~ .y' s k P 3e"_ . ~ ~ r „ P~ r , ' 1 ~ ~ tr ~ I~ ~ ' i i ~ ~ , 1 ; p~_. s ~ ~ a .~ 1 ~ s r ~ 1,r 1 ~_l Ap < r y ~~ ~ a ' j. ~ a F ~.~ ,. ~ ~+ t t l ~~ ~. d ~ a " ~ x 1 ~ ~ ~ ~ . r 4{ i ~ ar } c ' , '~~ ~ ~ ~ ~ ~ ~~ '. - ~, ~ _ ~~ a ~ i ~ e ~~. ~ s ~ , .B ~~ " ~~.i ~ . - - ~ ~ ¢s.. ; i ~ _ ~ ~~ ~ 1 ~ ~ ~ ~ , ~ ~{ ~ a FpFpFp ,~ 4 ~~, , r S t ~; it. ' ~ ~ S ' f I ~ , S r p ~ } ~ j k ~ E ~ s ~ ~ r .~ ~ ? 1 ' ~, ~ ~ ~ ~ ~ i~ ~ ~ ei ~ ~ ~ ~ ~ ~ ~`~ t f J ~ ~V ~ ~ ~ ~ ~ ! ~ ~ ~ ~ '~ 1 • ' ~ ~ S i i i • : ~ ~ k f S 1. 1111 f ~ 7. ~ Z ~ ~ . e ~ . ~ ~ k ~ 1 . ~ ,. i II 11 tt t Meridian City Council Special Meeting /Workshop July 14, 2008 Page 55 of 61 Canning: Oh. Bird: I just let that go in one ear and out the other, that part of it. Canning: I'm proud of it. Bird: I don't blame you. De Weerd: Tom, I guess the bottom line question is as you prepared your budget, what was that budget -- based on what kind of rate? Status quo? Barry: Our budget was based on the status quo, yes, ma'am. We -- much of the anticipatory things we have talked about were not included -- for a large part because we are not really ready for them. We don't know what we don't know yet and we really need to devote resources to figuring that out and, then, doing our gap analysis and, then, identifying the resources, both staffing and material and financial resources, to moving forward on those -- those various initiatives that the Council, with their guidance, would help us to identify as important for the community. So, one thing I was sensitive to doing is -- you know, being my first year here I don't know the Council promises. Mr. Rountree and I have talked and I am grateful for his guidance, but I did want to present a budget for fiscal year '09 that was reasonable and responsible and does kind buy us some time on a couple of different fronts and would not compromise our fiscal position beyond what it would otherwise be had we not begun to reposition our fiscal assets and strategies. So, Madam Mayor, I'm not sure if that answers your question, but that was the goal. De Weerd: Well, I asked it knowing the answer. But I guess what -- too, we need to look at is a time frame and moving forward on your next step. Barry: Oh, I'm sorry, for the rate setting? De Weerd: Uh-huh. Barry: Yeah. And recommendations. Absolutely. And time is of the essence there. We know enough now -- maybe I misunderstood your question. We know enough now to position -- to make the mid course correction. Do we know enough to know how significant those corrections need to be -- every day we know more, but we definitely know what we need to do. You know, that secondary scenario is one that gets you kind of close. It could be a little greater or a little less than that. We just -- we have to refine it a little bit more. But particularly as it relates to what you'd like us to work on and that goes back to our enhancements and that goes back to our base budget and those sorts of things. Keep in mind, because -- I hope that you have gathered that there is an enormous amount work for us to do. We have been a department that has been -- I have got to tell you a new director -- one of the biggest things you worry about coming on board is the staff you inherit and are they competent, are they capable, are they r ~ ~ ~; 1 ~ ~ ~ { ~~ i~ ~: bb L ~ (r t~ l~ t . f 1 { ~ , .. .L~ j 7~ t t ~ f '. ~ ~. - '~~ 5C I ', ~, r ~: _ ~ s' F ~ '. ~ ~ ~ 4 n ~ -. (~ r ~ 1. !~ }~ • ~ r ( ~ 7~f~ {r~ ~ Yx t~ f, ~ ~. f, . ~ V ~f ~v t ` T~ ~~ ~ ~ t ~ f 7 t 77 i5~ ~, F~ ~ y { ~ ~. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 56 of 61 productive, are they committed and I have got to tell you that every single one of the staff that I'm working with are all of those and better. So, I feel fortunate to walk into a situation where I'm dealing with the staff that I have, because I know together we will rise up and we will accomplish whatever it is we need to to move the utilities forward. Having said that, I want the Council to know that as I challenge the staff and they rise to the challenge of identifying the new work and being anticipatory and planning and doing those sorts of things, we are identifying work that we are not doing and we are doing a lot. We are reacting in a large way to a lot of the things that we do and that's partly the thing that goes back now to committing not just the financial resources, but the staff resources to get this done. This is a full package. If you give the utility all the money it needed, but we didn't have the resources to do it what we needed from a staffing standpoint, we are going to be ineffective and that's not where we want to be. By the same token, if we have all the staff resources and limited funding, we are going to be ineffective as well. What we need to work on as a community and as a department is identifying the right mix of both staffing and fiscal resources to achieve the overall end outcome that the Council wants us to move toward. That, again, is partly the reason we are moving forward with our organizational realignment and I keep coming back to that, because the last thing I want is -- you know, be careful what you wish for. I don't want millions and millions and millions of dollars if I don't have the right resources to do it, because, then, in a couple of years you're going to hold me accountable for failing to meet the initiative when you felt that you gave me all that I needed, you know, as it related to the financial portion of it. So, this is -- this is a balancing act and we need to be very careful about where we position our time and energies and money in moving forward. Going back, Mayor, to your question about the dollars. We feel that we have enough information to at least begin the first step in mid course correction. With the Finance Department's help and others, we can -- we can very -- almost immediately look at various adjustments and scenarios that the Council would like for us to look at and report back to them very quickly. The model's constructed. We can go through at a workshop if you would like or -- and talk to you about the model and how it works. I really hesitate putting it up, because it's pretty complex and it's -- but we can summarize that and get at least a basic understanding of how it works, so yoia can agree or disagree with the assumptions that we are using and help us to refine the overall financial goals for utility. So, we are ready. I mean we just -- we just need the Council to say, yes, we are willing to entertain modifications, which I believe I'm hearing, and what those modifications should include. I have given you scenarios that have five different options. It would be nice to know what options you want us to include. Do you want us to include certain types of reserves? Do you want us to include enhancements, depreciation reserves, capital transfers, those sort of things, so that we can go back and start working on numbers and present them at a later date to you. Time is of the essence and I think the sooner we implement even the mightest of corrections today, will be much -- a great benefit into the very near future. De Weerd: Thank you, Tom. Any other comments or questions from Council? Zaremba: Madam Mayor? Meridian City Council Special Meeting /Workshop July 14, 2008 Page 57 of 61 De Weerd: Mr. Zaremba. Zaremba: I guess I would comment on using loans or borrowing to factor into this system. I, like several of the other Councilmen, I am generally adverse to that. I would prefer that we do a pay as you go system. But I would add that there are circumstances where I would consider it. The big example is the GARVEE funding for statewide transportation, where for .huge capital projects it's cheaper to build them with today's dollars and pay them back over time. I certainly would not use that for small things or things that have just showed up, but while I would be very slow to approve it, I could see that there could be a place in the mix for the big major projects. Personal opinion. Rountree: Madam Mayor, I don't disagree with that, but right now we see the train just starting to come out of the train yard at a fairly slow speed and if we can anticipate some of the things that's going to bring to us, let's do it within our budget. If EPA decides to run over us with a major regulatory compliance issue with the wastewater treatment facility, we may very well have to seek some kind debt financing to accommodate that. But if we can anticipate some of this stuff, that would be my preference. I think at this point we need to give some guidance to the Enterprise Fund and Public Works as far as some of the enhancements they have talked about and from what I have heard and those that seem to have some flexibility, I would suggest that the Well 23 enhancement be dialed back to the cost of the study and the funding of whatever might need to be done advanced for next fiscal year, that we do enhancement number five in wastewater and delete number three and direct those budgeted amounts to the new enhancement number 11, because I think that's going to pay us some big benefits in the future. De Weerd: Okay. Council, are there comments? Rountree: Those are my three or four suggestions from what I have seen. Bany: Madam Mayor? De Weerd: Yes. Barry: Mr. Rountree, I was wondering if I could get a bit of clarification on your comment relating to Well 23. Mr. Borton had made the suggestion of you that monies for Well 23 should be restricted to the studying of aquifer recharge or aquifer recharge storage and the difference would be reverted to miscellaneous water. system improvements. Is that still your is -- is that your recommendation here or are we talking about -- Rountree: My recommendation would be to cut -- cut whatever the difference is and either move that to a reserve account or an unrestricted enhancement account. Barry: Okay. Meridian City Council Special Meeting /Workshop July 14, 2008 Page 58 of 61 Borton: Madam Mayor? De Weerd: Yes. Borton: And that's correct. I used the water system improvement analogy of how the water department has allocated to that miscellaneous category, so it wasn't necessary that we go to that specific -- Barry: That's actually a very suitable location for it, if you so choose to do that. I just didn't know if we were releasing the enhancement and letting go of that money or reprogramming it into some fund which would allow us to respond once we figured out the course of action. Borton: Madam Mayor? De Weerd: Yes. Borton: Mr. Bany, would you consider that to be a visionary -- please. Bany: Absolutely, Mr. Borton. That's very visionary. Rountree: Send you kudo. Borton: I'm almost out of time. Bany: So, with that we would probably scale back the enhancement for the aquifer -- the Well 23 study from -- I'm not certain what it was originally, but to half a million 500, to about 150. That would help us with the design and we would propose taking the difference then and moving that over to water -- miscellaneous water system enhancement, which we could, then, pull from, of course, with your approval at a later date. Having said that, I'm going to maybe direct the question to the Finance Department. Mr. Lavoie, would that require us to submit a new enhancement for different -- okay. He will make. the change, then. Thank you, sir. De Weerd: I will go ahead and make changes on Well 23 item. Okay. The next addition by Councilman Rountree was to delete item number three on the wastewater treatment plant and to go with enhancement number five. Council good with that? Bird: I'm good with that. Rountree: I am. Zaremba: Yes. De Weerd: And to also include the additional item 11 as discussed and presented by Tom. Is that correct? i ~ >> ~ .(;: 1 Ak ~ i r ~ ~ ~~ i ~ ~~ 1 e ~ ~ T 4` ~ i if t j ` ~ ~Y ~ 4~, R ~ ^~ % ~ +~ 1 '; ~ s i l i c ; ~ j F '' l~ ~ ~ '. I ~ 5 } 1 ° ~ ~ j ~~ ' r ~ ~ ~ ~ ~ ~ ~ ~ 3 ~ 1 ~ I ~~ ~ i .~ k~ ~ ~ _ ~, " _ ~ f G p ~ . I f ~ ~ ~ ~ ~ ~ ~ ~ ! ~ 4 ~ l s ~ ~ > ~, ~ ~ ~ . `' ~ I ! ~ ~ i ~ ~ ~ ' s ~~ ~ ~ x ~ ~ ~ ~'` ~ ~' ~ ~' f ~ ~ j ~ ~ P ~ € 7 ~ ; + 3 6 ~~ fr U ~, a ' t if E E f i~ E j ~ s'i ~ , i ~ ~ 1 ~ + ~ ~ i~ { ~ , ~ g Meridian City Council Special Meeting /Workshop July 14, 2008 Page 59 of 61 Rountree: Yeah. De Weerd: Okay. Were there any other questions or discussion points on any of these other enhancements? Rountree: Not that I recall. De Weerd: No? Rountree: Good to go. Borton: Madam Mayor? De Weerd: Yes. Borton: Tom, can you a-mail us a copy of your Powerpoint or print it or either? Barry: Yes, sir. I think a-mail would be problematic. It's about I think 17 megs. We can do -- we can print it and put it in your Council boxes if you like. Borton: Okay. Rountree: Madam Mayor? De Weerd: Yes, Mr. Rountree. Rountree: If there aren't any further comments on the enhancements, I just wanted to thank Tom and all the Public Work folks for the good job you did and I'm not going to use the word visionary -- but the thought that you put into our future as a committee and as well your future in your working environment and the same goes to the rest of the staff, particularly finance, for helping the generation of a model that I think will be very beneficial for us. With that, Tara, if you would make a note that I would like to -- I know about one item for the August workshop and I would like to hold the August workshop to have that one item and I think that's a discussion from our friends at Meridian Heights and a discussion with Tom and staff about the model and, then, start giving some guidance from Council to them in terms of what it is -- or where our political will is going to be as far as rate increases, so we can get something going possibly in September or definitely in October. De Weerd: Well -- and once you receive a copy of the Powerpoint, if you have any other thoughts or suggestions, I'm sure Public Works would appreciate them in advance, so that they can lend something additional or change as desired. So, any comments -- and Tom and other staff leaders, I, too, appreciate how you have rallied together behind this. This is -- you know, I guess I did hear the comment, you know, why didn't we increase this over time. We have had increases. The modeling or the E t ~; i ~ ~. i ~~ r t i ~. t`` ~ 'r ra ~ y, A Y r ~y 1 R i~ it ~ f ~ i ~ it ~ A~ ~ K ' 1 [Z . ~~ `f r ?" ~ ~ £C F t e ~~ ff F. 1 ~ i Ff _. ~~ 1 i t ~ i ~ E ~ . ~ 3 1 ~. ,,, fff ~ ~4S 3 r ~s 7 . ;' Meridian City Council Special Meeting /Workshop July 14, 2008 Page 60 of 61 formula has been kind of a secret. It's been a top secret thing even from Finance and the transparency that you have brought to the process is very apparent in the data and information that was shared today and the more information and the quality of the information that you can give to the elected officials helps in us being able to tell the story as well. And so the more transparent then -- and I ,hate to say dumb it down, but, you know, we are elected officials, we need dummy it down. Rountree: They are all visionary. De Weerd: Even though we have several visionary people up here, we need to be able to tell your story, and if it makes sense it's easier to tell. And so we appreciate the thought. I mean the tremendous thought that's been put into this. It's very refreshing and, you know, it can be pretty stale information. No offense. But it is extremely important in moving forward and having -- 1 go back to one of the comments in a planning meeting we had recently and it was if you're invisible, all the better. You're invisible as long as all those systems are working the way they are supposed to and that we really maintain the mantra that what we do today is what our kids have to live with and certainly I want my kids to want to live here, I want them to have an environment that would be conducive to a healthy family and so what you're doing today sets the stage for that and my deep and sincere appreciation to that. So, Council, if there is no further business, you have -- Borton: Madam Mayor? De Weerd: Yes. Borton: I do have one question. De Weerd: Okay. Borton: Kind of out of my mind. I would love it if -- and maybe it's a September workshop -- if we can have a topic that addresses the timing of this process. I would love to have these binders in May, first of June at the latest, maybe have a presentation, not talk numbers, go back, review it, you know, be able to manipulate that spreadsheet and not do it the way we do it and talk about general process improvements and back it up and give everyone more time to choose. This is great data. I would have loved to see the Powerpoint three weeks ago and it's not your fault or anything, but that's information that would have, then, brought up questions and just create a better process. So, that's a workshop topic. I don't know if Stacy's probably got other ideas that we can incorporate into that, so -- J De Weerd: I do know other ideas have already been talked about. Kilchenmann: We do. And it would be good to do it while it's fresh in our minds, so that we don't all of a sudden, before you know, it will be next year and we will be doing the budget again, so -- and we will a-mail you the new summary of the things you just ~ ~~~ ~ 1 ~F y ~ S ~ 1 r . ~ ~ h i =i ~ ~~ ~i ~ ~ i r ~ ~j ~f j ' t ~ 7 ~ " ; _ ~ ~+',: i I ! ~ p { 99 ~1 ~ ~ . f t x n ~, x ~ _ ~ t ,~ ,~ f S~ E ( j ~ ~ ~ _t ' ' ~ ~ ~ ~ ~ ~ ~ ~ ~ g ~ Y ~r l ~ j 1 t : j ~ ; ' ~ ~ i ~ 1 ~ ' c~ ,o j a ~i ~ ~ a ~ ~ ~'~: ~ '~ ~ ~& g ~YY%Y ~TTTTT ~ CC ` F ~ ~ ~ ~ ~ ;, ~~ ~ ~ ~ E , i, t , ,' .. ~ ;~ ~ E ~ 7 ; ~ di ~ ~ ; ~ ~ ; E ,~~ ', 3 ~ ~.. ~ y ~ y ~- ~, ~j~' ~ ~ i ~ ~ ~ ~ t~ dlr.. ~ ~ i ~ ~ 9~ I ~ ;~ r t ~ ~ ~ N ~ i ~ t ~'~ , ;, ~ ~. ~ r i ~ ~ .F. i. .s ! ~ ~ S F ~ ~ ~ 1 t- 11 ~ I i6 i ~.~' ~; d~~ ' I ~ F .~~~ ~ [• ~ ~ e'. . r ~.~ '. '9. - ~. ) l' ~~ ~ ~ 4 rf ~ f Meridian City Council Special Meeting /Workshop July 14, 2008 Page 61 of 61 decided. We will go ahead and a-mail to that you, too, for the Enterprise Fund, so you can see what it looks like. Rountree: I would suggest probably October after we get through budgeting process and it's still fresh, give these guys a little bit of a break. Kilchenmann: Yeah. Just a little break before we start year end. Rountree: Yeah. Kilchenmann: But, yeah, we -- I think there does to -- we have gotten so much bigger and so much more complex, I think there does need to be time for you to get the data, go digest it, and, then, give staff time to answer questions, so like Steve, they are not running around franticly and, you know, trying to come up with answers and so forth. And, then, I think there is some suggestions from the back of the room, too. They are both nodding at me, so -- De Weerd: Okay. Very good. Well, thank you all. And I would entertain motion to adjourn. Rountree: So moved. Borton: Second. Bird: Second. De Weerd: All those in favor say aye. All ayes. Kind of. MOTION CARRIED: ALL AYES. MEETING ADJOURNED AT 4:00 P.M. (AUDIO ORDING ON FILE OF THESE PROCEEDINGS) /~/:~~ MAYOR. TAMMY De WEERD DATE APPROVE U,~t~lIt111~~~~~~'/' ~wwi__ rO s ATTEST: JAYCE . 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