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HomeMy WebLinkAbout03-22-2005 Mechanical CommitteeMECHANICAL COMMITTEE MEETING March 22, 2005 @ 6:30 p.m. Historic Depot 50 North 4t6 Avenue erman in attendance: Robert Molleck, Les Cazl, Rick Reed, Elny Hazn. er Aldermen in attendance: Larry Sazff, Jim Hartford, Craig West. ers in attendance: Mayor Jerry M. Bohler, City Clerk Nancy Whites, City Treasurer y Beaird Franzoni, City Attorney Ron Weber, Police Chief Donald Edwards, Fire ;f John Stanko, Public Works Director Cliff O'Brien, Wastewater Supt. Joe uthers, Water Supt. Greg Pollitt, Zoning Officer Clark Wilson, City Engineer Keith ~ec, Street Supt. George Spahn, System Maintenance Supt Bill Terry, Economic elopment Director David Byerly, Joe Ginger Video Service. News service from the y Ledger John Froehling, & from the Journal Staz Brenda Bowen. Others in the ence David Pistorius from First Mid States Inc., Duke Taylor, and candidate Edward Mayor Bohler introduced each Aldermen who chair the 4 committees. Public Safety & Traffic Committee Alderman Robert .Molleck, Chairman Police Report. Police Chief Don Edwards mentioned that under the Prism report, a class was taught to 77 High School Students who aze taken drivers education. Tomorrow Don said the department will select officers for training of TASER. The trainee is from Galesburg and a policy will be available before the training. Tuition will be paid for one (1) officer to be trained and he will then train the other officers. Fire Report. Fire Chief John Stanko highlighted his written report. On February 8th, they took delivery of a new hazardous materials trailer. This 26' trailer was provided at no cost, along with about $100,000 of equipment. They hope to have all equipment received and the trailer placed in service by May 1. On February 25th, they were awazded a $4,000 grant from the Caterpillar Foundation for the purchase of one of two trailers needed for the technical rescue team (TRT). Bicycle Auction. Police Chief John Stanko mentioned they have again accumlated a number of bicycles and are needing the space. In the past we have had other city property to sale at auction. All that is available is bicycles. Don suggested consigning the bicycles to an auctioneer. City Attorney Ron Weber said he could draft a resolution allowing city owned property be consigned. Alderman Carl ask if the bicycles could be donated to needy children? Motion and second by Aldermen Reed/Hazn, to have city attorney investigate to consignment and giving to needy kids. Voice vote, motion carried unanimously. Mechanical Committee 3-22-OS The Public Safety & Traffic Committee adjourned at 6:40 p.m. Streets & Garbage Committee Alderman Les Carl, Chairman Cleanup N. E. corner of IH Property. Alderman Carl mentioned that we could possibly sell the property if cleaned up and looked nicer. Cliff O'Brien said he received a letter from IEPA that no further action was needed on the property after the concrete was removed. Cliff said they could power seed it and he would take care of doing that. The Streets & Garbage Committee adjourned at 6:41 p.m. Lake, Buildings & Grounds Committee Alderman Rick Reed, Chairman Alderman Reed asked for Duke Taylor to make his request. Duke Taylor mentioned that in the Dal Baz and Lakeland area where the new water line was added 10 years ago, there is a main shut off valve that constantly gets backed into. There also is a 2 foot drop by this shut off valve. Cliff O'Brien said the city would take care of fixing it. The Lake, Buildings & Grounds Committee adjourned at 6:46 p.m. Public Works, Water & Sewer Alderman Elny Harn, Chairman Water & Sewer Bonds. David Pistorius of First Mid States Inc. spoke about his firmwho will be working with the bond attorneys Chapman & Cutler in prepazation for this bond issue. The first thing to consider is where interest rates aze at? Part of the information being handed out is a bond buyer index, and this is a graph of where bonds aze trading on a national average. It shows you basically 10 to 20 year bonds, and this average does not include the expense of the issuance. So you can see that in the national average, they are hovering in the range of 4'/z% with that index. As we aze speaking interest rates are moving, they are currently trending upwards. We're trying to lock in the most effective interest rate we can in current market trends. Here in the State of Illinois we have been doing bond issuance in the 4%2 to 43/4 % range which includes the expense of issuance. The interest rate that we worked with Keith Plavec in regazds to the feasibility study, and we used a rate of 5.75%. We want to have a bit of cushion with this trend taking place. 2 Mechanical Committee 3-22-OS First Mid States is an investment banking firm that strictly specializes in issuance of municipal bonds. We are not a bank and we offer no other banking services, and located in Bloomington. The firm is 52 years old, family owned business, and there are 9 employees in the firm. We work with all municipalitys in the State of Illinois. As an investment firm we walk you through the entire bond issuance. There are a lot of issues with this size of an issue that were dealing with. A lot of tax ramifications, a lot of IRS hoops have to jump through. We also have some EPA things we have to get cleared away. Currently we have an outstanding EPA loan. You have to get on parity with that loan. We had Chapman & Cutler to get in on conversation with EPA and we're getting in on the same page now. Alternate Revenue Bonds, what the first step is, adopting an ordinance of intent. That says you aze intending to issue these bonds. You're pledging your water & sewer rates to make payment. The second step is to conduct a public heazing. Most likely in May you can look to conducting the public hearing. The third step is to adopt a bond ordinance. We will know then what the final interest rates are, and what the principle and interest payments aze at that time. We typically begin to sell the bonds two weeks before the bond ordinance meeting. You typically receive bond proceeds two to three weeks after the bond ordinance meeting. You have an existing Alternate Bond outstanding. One of the requirements for Alternate Revenue Bonds is that you must show at 125% or 25% coverage. Lets say your principle and interest payment is giving you $100,000, we have to demonstrate that you have $125,000 available to make those payments. Not only for the new bonds, but that coverage factor goes over to the old bonds as well as the EPA loan. In our calucation with Keith Plavec doing the feasibility study for the rate increase, we factored that 125% in all considerations. We used the rate of 5.75%, again with the market trending upwazds we have to satisfy a lot of people in order to issue these bonds. We have to satisfy insurance companies who will insure the bonds. We have to satisfy rating agencys. And we have to satisfy bond counsel as well, and also the EPA. The size of the issues, anytime you issue over $5 million in bonds the IRS has a lot to say about that. The Alternate Revenue Bond, once your able to move forwazd, the authority to issue those bonds is good for 3 yeazs. When you adopt the ordinance for the full amount, you can issue part of those bonds initially, and you would still have 3 years authority to move forwazd and issue the balance. The concern with the IRS is once bonds aze issued the project has to be completed within 3 years. We aze a little behind in that project. So chances are you're not going to complete the project in a 3 year period, so we certainly need to hold back a little bit on the full issuance in that regards. Our suggestion would be to not issue the full amount here initially as the draw back to you would be what the interest rates do. You could issue the bulk of the issue up to $26 million to $28 million of the $36 million, as far as possible issuance. A couple reasons 3 Mechanical Committee 3-22-OS for that. (1) We don't want to lock in the amount, as Keith Plavec is working on a construction time line for us, as well as fmancial time line when money will be needed. (2) When you do issue over $10 million in a given yeaz, and the bonds aze not that qualified. What that means is, we cannot market the bonds locally if it's over $10 million. If we would do $26 million to $28 million initially for the bulk of the project, then we could have $8 million to $10 million left that we could issue by a yeaz or two from now on a bank qualified bases, if that money is needed. Currently the project is based upon estimates. Bids haven't been done, and the IRS would like you to initially sell what you need. Once you have the bond proceeds most likely they will go into a project fund, where they will earn interest. That's where IRS gets a little concerned. City Attorney Ron Weber mentioned that as we talk about the feasibility study at 5.75% interest rate, that's just a study, you're going to marketing to get us the best rate possible. Alderman Carl mentioned that the council has had some cirtcism because of moving forward on the project so rapidly as we did. But listening to this presentation you could see how much money we would have lost if we had not moved forward on a $36 million dollar project. A quarter of a percent is like a million dollazs in interest. Water line agreement Franciskovich/Manock. City Attorney Ron Weber mentioned this one is the old water line. Years ago an agreement was struck by them to put in a water line that the city would collect money for it, and would reimburse the original investors. Unfortunately that agreement did not get finalized and a couple of people hooked onto the line. We have been discussing to pursue those who hooked onto the line and did not pay anything, as they got on before we realize they were to be chazged for this. We have met with those people. We propose that we would give the investors a credit on their water bill for this water line an they were not reimbursed. Ron said we need an agreement documented that we have chazged others according to the agreement. Originally the water line was to service 20 homes and between 14 or 15 now have service from this line. Motion and second by Aldermen Harn/Cazl, recommend city attorney to go forward finalizing the agreement and making adjustments to the water bills. Voice vote, motion carried unanimously. Water line agreement Kinne/Waldrop. Ron Weber said this is a new line that has been added and is now in place. The owners have Pre-Annexation agreements on the water line. They want the city to enter into an agreement for those in the future who hook on to this line so they can be reimbursed. Motion and second by Aldermen MollecklReed, to authorize the city attorney to draft an agreement and resolution for Council to act on. Voice vote, motion carried unanimously. 4 Mechanical Committee 3-22-OS Raw Water Transmission Line -Ameren Cins Maurer Stutz Inc. representative to the City of Canton Keith Plavec gave an update on this project. Keith mentioned that Cliff O'Brien and himself looked at Ameren CIPS intake structure, their pumping station, and their technician main from the river to the facility. Our thought was we did not know what they were doing with their system at first. And our thought was, could we tie into it, and is in really good shape, and then to the city's water plant? At the meeting Ameren - CIPS is in the process of updating their pumping facility as they aze going to be using it. They have been very cooperative. Their facility is not useable. They have told me they would work to help us cross their property. They also would help in obtaining the easements for the city to go across from the river to the intake structure, and then to construct our own pumping station, then run a line. We have looked at this cost and primazily the cost from coming from Banner to our own pumping station, then to our own water treatment plant, versus going across their property and using their existing structure. We still recommend going to Banner where the city owns the property as versus that option. Alderman Cazl said we are looking at every cost saving available to us. Keith Plavec said they will look for grants and anything that we canto keep cost down. The Public Works, Water & Sewer Committee adjourned at 7:17 p.m. Motion and second by Aldermen Hazn/Cazl, to go into executive session to discuss Contract Negotiations with the Fire Department and to discuss the filing of 2 Grievances. Roll call. AYES -Aldermen Molleck, Hazn, Cazl, Reed. 4 AYES, 0 NAYS, 0 ABSENT. Motion carried. Alderman Sazff asking to stay for the executive session was Fire Chief John Stanko for the contract negotiations, Wastewater Treatment Plant Supt Joe Carruthers, Water Treatment Plant Supt. Greg Pollitt, and elected officials for all executive session. Mayor Bohler also asked for Economic Development Director David Byerly to be present to discuss a contract. The regular scheduled Mechanical Committee adjourned at 8:00 p.m. Recording Secretary, d.~ Nancy Whites, City Clerk 5