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HomeMy WebLinkAboutMinutes-10-02-79-Adjourned Regular Meeting - Joint Meeting w Water Adv BoardMINUTES OF THE CITY COUNCIL OF THE CITY OF DOWNEY ADJOURNED REGULAR MEETING JOINT MEETING WITH WATER ADVISORY BOARD OCTOBER 2, 1979 The City Council of the City of Downey held an adjourned regular meeting at 7:30 p.m., October 2, 1979, in the Council Chamber of the Downey City Hall, Mayor Kenneth J. Miller presiding. PRESENT: Council Members: Theodore H. Jackman Mayor Pro Tem William L. Greene Kenneth_J. Miller Mayor ABSENT: Milton R. Mackaig (arrived at.7:40 p.m.) Lyell W. Swearingen (arrived at 7:40 p.m.) ALSO PRESENT: Charles W. Thompson, City Manager Ervin Spindel, Director o£ Community Development onald W. Leege, Director of Finance Robert L. Shand, City Clerk -Treasurer Water Board: Joe Davis Scott Temple Irving Rosen Warren Heer Mark Morris Vice -Chairman Chairman Mr. Spindel explained the Water Rate Adjustment Program aided by a slide pre- sentation and charts. Three water rate bases exist: Zone I - Downey Municipal Water; Zone II - Park Water; and Zone III - Southern California Water. Each water base has a different quantity charge making it difficult to equate the charges. Charges have been equated on acre feet. The Downey system is $120 an acre foot Park is $185 an acre foot, and Southern California is $227 an acre foot. The system faces a 10 percent per year inflation rate and is now into the double digit phase. Mr. Spindel then rendered a projection of future water rates and operating costs. Mr. Hear commented that he had anticipated a report related more toward uni- form cost of production throughout the City. He prefers to apply the Downey rate to the whole system and add the capital necessary to improve the system for anticipated repairs plus the revenue bonds and come up with a rate for Southern California and Park systems. Mr. Heer pressed for an annual water rate review. Ms. Thompson commented to Mr. Heer that the same basic results are being accomplished in Mr. Spindel's recommendations. Mr. Heer replied he had hoped to see figures on projected sinking funds for Park or labor costs and power costs. Mr. Thompson explained the plan as presented by Mr. Spindel will accomplish the same results as anticipated by Mr. Heer. Councilman Jackman agrees with the suggestion on the basis that the basic rate is made the same and then Park and Southern California Water pay the cost of acquisition through the bond cost. Mr. Spindel said this would be accomplished by applying a surcharge to the basic rate. (The surcharge would be for hundred cubic feet of water consumed.) The bonds would run for 25 years. Councilman Jackman would not want a 25-year water bond. Mr. Thompson explained the Downey water system, based upon its present rates, was purchased, managed, and improved to a level beyond what has been acquired from Southern California and Park systems. It will take several years for the City to build up the two systems to a point where they will be equal as a rate base with the old Do•nev system. It is a matter of record that the two added systems would Council Minutes 10/2/79 (adj.) -1- ,G439 not have to be subsidized by the existing Downey system. The basic conclusion has been that the two added systems would pay for themselves. Mr. Heer proceeded to render a cost/rate projection on the blackboard to illustrate his point on how to determine an equalized water rate. Discussion followed. Mr. Davis said the Water Advisory Board prefers the ten-year period. Councilman Jackman stated this time span would be based on 11;2 percent for Downey, 7 percent for Park, and about 10 percent for Southern California. Mr. Rosen favors the 17-year duration over the 10-year suggestion. Mr. Temple feels that ten years would be a satisfactory period for the rate adjustment. Mr. Thompson recommends the longer term (17 years) because it would have greater equity. Seventeen years would still be less than the term of the bonds. Councilman Mackaig does not want the City to realize any gain on the rate adjustment. He favors implementation of the new rates as soon as possible and does not favor raising the Downey users rate up to that of either Park or Southern California systems to generate more money. Councilman Mackaig asked if the Council votes tonight or at a future date to lower Southern California and Park Water and adjust the Downey system to make them all equal, would it still be legal without any indebtedness. Mr. Thompson referred to the indenture that states the revenue from Park and Southern California systems will be sufficient to meet the bond retirement costs. A legal question exists as to whether or not the indenture requirement can be modified as a result of adding in the Downey system. Mr. Thompson said this question will be researched. The statement will have to be checked out in the bond indenture to review the exact specification. Mr. Spindel pointed out that a majority of the business and industry in the City is in the Downey water system. If the rates are increased, the people affected the hardest are the businessmen in the City. He suggested if the rates are increased or equalized to any extent, the Council should conduct public hearings. Mr. Spindel then reported the bond service payments would be: This year the debt service is $622,500 and will gradually reduce each year. By 1997 (last year on the chart) the amount would be $581,800 (the debt service payment gradually decreases each year). Councilman Greene commented that this situation almost seems to be an oppor- tunity for Council to help the people. Councilman Jackman advocates equalization of the water rates as soon as possible. Councilman Mackaig said before the Council can finalize anything regarding the water rates, the City Attorney will check the legality of any proposed rate adjustment. Mr. Spindel indicated the Water Division will require a rate increase in order to meet next year's budget. Mr. Thompson requested a study session date for considering the Reinvestment Budget. Mavor Miller set an adjourned meeting of the Community Development Commission for Tuesday, 5:00 p.m., October 16, 1979, in the Council Chamber of the Downey City Hal'_. Mayor Miller then recessed the meeting to executive session at 8:45 p.m. to discuss litigation (claim settlement). The meeting resumed at 9:17 p.m. with all Council Members present. The meeting was adjourned at 9:17 p.m. T__'ZIZ Robert L. Shand, City Clerk -Treasurer Council Minutes 10/2/79 (adj.)