LEGISLATIVE, FINANCE AND ADMINISTRATION COMMITTEE
The Legislative, Finance, and Administration Committee meeting was held on April 12, 2004, at 5:30 p.m. with Chairman Speed presiding. Members present were Mr. Ritter, Mr. Truitt, Mr. Gorman, and Mr. Shelton. Members of Council present were Mr. Carey, Mr. Pitts, and Mrs. Williams. Mayor Hutchison was also present.
AGENDA ADDITIONS/DELETIONS
Mr. Gorman moved for approval of the agenda, seconded by Mr. Shelton and unanimously carried.
Interconnection Agreement with Tidewater Utilities - Lakeland Service Area
Members received a proposed interconnection agreement that was negotiated by the Department of Public Works and Tidewater Utilities, Inc. for providing standby fire protection to Tidewater’s Lakeland Service Area. The City has proposed to purchase the materials for the extension of approximately 700 linear feet of 10" diameter PVC water main to the Lakeland Service Area. Once the main has been installed, the City will own and maintain all of the 10" water main. The cost of the estimated quantity of materials is $10,779.92. An amount of $50,000 was originally reserved in the budget for miscellaneous water distribution system improvements as indicated on pages 223 and 377 of the 2004 Annual Operating Budget. It was noted that staff budgeted $15,000 for this project.
Mr. DePrima explained that by using a proposed facilities charge of $697.13 per quarter as minimum revenue, the estimated recovery period of the City’s initial cost is between 3.86 and 5.37 years assuming no water is sold through the interconnection. Any revenue generated through the metered connection will reduce the cost recovery period. He noted highlights of the agreement, as follows: 1) Tidewater will be offered the “in City” rate since a facilities charge will be levied which guarantees the City a specific amount of revenue per quarter; 2) the facilities charge of $697.13 per quarter is based on Tidewater’s rate tariff which is approved by the Public Service Commission (if this rate is adjusted in the future, the City will agree to adopt the adjusted rate); and 3) the initial term of the agreement is five (5) years from the date of execution. Members were also provided a map depicting the proposed alignment of the new main.
Responding to Mr. Carey, Mr. Koenig stated that the quarterly payment will be received in perpetuity even beyond the estimated recovery period. The City will own the water main and if there are connections made, they will be done by the City; therefore, the service will be provided for City customers. Although the intent of the agreement is for fire protection, it was his opinion that this will serve in lieu of Tidewater expanding their facilities on-site. It also provides an opportunity for Tidewater to purchase water from the City on a regular basis in the future.
In response to Mr. Ritter, Mr. Koenig stated that the City currently serves St. Jones Commons. He noted that the City has received a request and staff has reviewed the engineering plans for water distribution plans for the Wolf Creek subdivision. Mr. Koenig also stated that there will be a double check back flow to prevent the reversal of flow through the interconnection. He assured members that Tidewater will not be able to supply the City with water - this will be a one-way connection.
Mr. Truitt moved to recommend approval of the Interconnection Agreement with Tidewater Utilities, as presented, and authorize staff to proceed with the completion of the project as soon as possible, as recommended by staff (Attachment #1). The motion was seconded by Mr. Gorman and unanimously carried.
Municipal Vehicle Use Procedure
Mrs. Mitchell, Finance Director/Treasurer, advised members that she has met with the Federal, State, and Local Government Division of the Internal Revenue Service for the review of the City’s procedures for documenting personal use of City vehicles and the City’s vendor record keeping procedures of W-9's. The City addressed the W-9 compliance issue immediately with a mass mailing to all of the City’s vendors and implemented a procedure to automatically send new vendors W-9's for completion. Mrs. Mitchell presented members with a procedure to provide the completion of the vehicle use requirement, as discussed with the IRS representative. She noted that the Police Department is currently excluded from this procedure until a response is received from the IRS, explaining that a ruling has been requested on the Police Department’s administrative personnel usage since there were differences of opinion on the regulations.
Staff recommended formal adoption of the Department of Finance - Procedure #F362 to formalize compliance with the IRS regulation compliance.
Mr. Ritter moved to recommend approval of the Vehicle Use Policy (Department of Finance - Procedure #F362) as recommended by the Finance Director/Treasurer (Attachment #2). The motion was seconded by Mr. Shelton and unanimously carried.
Interest Rate on Electric Deposit Refunds
The City has been refunding electric deposits with 5% interest since February 11, 1992. The City budgets annually an estimated $25,000 for interest on electric deposit refunds. Mrs. Mitchell, Finance Director/Treasurer, advised members that the current short-term rate on City funds is 1.17%; therefore, staff recommended that the City reduce the rate it pays on electric deposit refunds to 1% based on current rates.
In response to Mr. Shelton, Mrs. Mitchell stated that until September 11, 2001, the City was earning over 5%. It was her opinion that the interest rate should be reviewed and adjusted annually.
From a procedural perspective, Mr. Gorman suggested that, to provide guidance in the future, there should be a standard when this matter is reviewed and that the interest rate be set at 1% less than what the City is earning.
Mr. Speed questioned whether the rate must be enacted by Council or if it could be administered by staff with the possibility of having this rate adjusted according to the interest rate earned by the City in order to avoid having this matter brought before Council.
Responding, Mr. DePrima suggested that the interest rate could be attached to some index and that this matter could be included as an ordinance in the Dover Code. Concurring, Mrs. Mitchell stated that similar action was taken with regards to the pension refunds by associating them to the prime and then adding 3%, which avoids having to continuously monitor the interest rate.
After much discussion, members suggested that staff develop an ordinance as discussed to be brought back to the committee for consideration.
Revisions to the Financial Policy
Mrs. Mitchell, Finance Director/Treasurer, provided members with Draft Revised Financial Policies. She reminded members that the purpose of the Financial Policies is to present a standardized set of principles that the City follows in managing its financial and budgetary affairs. She explained that these are general statements of policies, which represent long-standing principles, traditions, and practices that will be used to guide the City in maintaining financial stability.
Mrs. Mitchell reviewed and explained each proposed revision. She stated that she has agreed with the suggestions received from Mr. Speed and that they will be included in the final draft when presented to Council for adoption. It was clarified that comments made in parenthesis are for informational purposes for this review and that they will be eliminated from the document when presented to Council for adoption. Several comments and suggestions were made by members regarding the proposed amendments. Due to time constraints, the last item discussed was item #1 on page 6 of 8 as listed under “Reserve Policy - Electric Revenue Fund”.
Mr. Ritter moved to defer the review of this policy until the committee meeting of April 26, 2004, seconded by Mr. Gorman and unanimously carried.
Discussion - Charter and Code Review
Due to insufficient time, discussion of the Charter and Code Review was deferred and will be placed on the April 26, 2004 Legislative, Finance, and Administration Committee Agenda.
Mr. Gorman moved for adjournment, seconded by Mr. Ritter and unanimously carried.
Meeting Adjourned at 7:15 P.M.
Respectfully submitted,
Stephen R. Speed
Chairman
SRS/jg
S:ClerksOfficeAgendas&MinutesCommittee-Minutes20044-12-2004-LF&A.wpd
Attachments
Attachment #1 - Tidewater Utilities Interconnection Agreement
Attachment #2 - Vehicle Use Policy