ROLL CALL
Members Present: Joseph Carino, Edward Havens, Jr., and William Vees
Member Absent: Robert Dickinson, Frank Ferrero, Carol Fletterick
Alternates Present: Richard Aries and Richard Siedman
Staff Present: C. Fred Shaw, Superintendent of Pollution Control
Ether A. Diaz, Recording Secretary
Chairman Joseph Carino called the meeting to order at 6:30 p.m. The following actions were taken during the March 1, 2011 Public Hearing of the W.P.C.A.
1. Proposed Changes to the South Windsor Water Pollution Control Rules and Regulations Sections 16 (“Sewer Use Charges and the Collection thereof”) to include a new Section 16.7 “Reserve Fund Policy.”
Chairman Joseph Carino reported that this is a proposed written Reserve Fund Policy to be included in the Water Pollution Control Authority (WPCA) Rules and Regulations (see Exhibit B). It is important to include a precise reserve fund policy in the regulations. Chairman Carino asked Mr. Fred Shaw to outline some of the major items in the policy.
Mr. Fred Shaw explained that the reserve policy is needed to provide guidance in ensuring that funds are set aside to help stabilize the sewer user rates over time, due to fluctuation in revenue and/or expenditures; to pay for equipment replacement above the average budget amounts and to have funds available to fund major unforeseen impacts to the Water Pollution Control Facilities. The implementation of a reserve policy will also move the Water Pollution Control Special Revenue Fund to a more sound fiscal position; this policy is consistent with good utility system management practices in wide use throughout the country.
There will be two types of reserves, the Operating Reserve and the Replacement Reserve. The Operating Reserve target will be to create a reserve fund so as to have on hand three months worth of an annual operating budget. It will be used to mitigate any decreases in fees that might have been collected due to reduced flow from users or it could also be used for any unexpected operating costs exceeding the annual operations budget.
The Replacement Reserve target will be equal to two percent (2%) of the total value of the Pollution Control Assets and will be used to mitigate any annual sewer user fee increases associated with expensive equipment replacements.
Mr. Fred Shaw explained that the intent was to provide a financial plan to stabilize user fees for the continued maintenance of the pollution abatement facility assets. The Operating Reserve shall be established over a five year period and the Replacement
Reserve will be established over a ten year period. The purpose for the Policy is to ensure the performance and continued use of the Pollution Abatement Facilities that are essential to public health, safety, economic development, environmental protection, and to the quality of life for those living and working in the Town of South Windsor.
With no further comments, Chairman Carino opened the public hearing to the public for comments.
Councilor Keith Yagaloff, 65 Pheasant Way, South Windsor, CT, came before the Authority. He reported that rate stabilization plans in an awful economy is a bad idea. He does not support that concept for the Town Council and he asked the Authority to consider that concept as part of the rate policy. He questioned how the Authority can create a rate stabilization program for sewer fees when the plan under this policy is to charge for reserve, for operating expenses and to charge for reserve for the infrastructure. He does not understand how that can be planned to pass that along to the sewer users in an awful economy.
Councilor Yagaloff sees the following problems with the proposed policy (Exhibit B). He referred to the bullet No. 1 under “Policy” which reads as follows: “An Operating Reserve is equal to a three (3) month (25%) reserve…”. He explained that this is about $700,000 of this current year; in regards to the two percent (2%) infrastructure cost, there is no rate impact analysis within the Policy telling the sewer user what the impact is going to be.
Councilor Yagaloff also referred to Bullet No. #2 which reads as follow “Until the Reserve Fund targets are met, the WPCA will transfer into the Reserve Fund all revenues exceeding expenditures after payment of debt service…”. He explained that this is at odds with the Town regarding the 1/20th payment towards the debt service of the Treatment Plant. His understanding of this policy is that policy excludes the WPCA from paying towards the debt service for the 1/20th payment due in 2013.
Councilor Yagaloff also referred to Bullet No. 1 under Procedure which reads as follows: “A part of the Reserve Fund balance will be reserved as legally required by the Generally Accepted Principles (GAA)….”. Councilor Yagaloff explained that GAAP is an accounting policy and it doesn’t have any legal ramification; therefore the language needs to be changed.
He reported that he was informed by the Town Manager, Matthew Galligan that he has spoken to Mr. Fred Shaw and Mr. Michael Gantick and that there was an agreement that at the meeting between Town Council officials and the WPCA representatives a commitment was made by the WPCA that if the Referendum pass, WPCA will make a contribution towards the 1/20th payment due in 2013 for the Treatment Plant debt service.
Councilor Yagaloff asked the Authority to defer from approving this policy as it stands until after there is a discussion about the 1/20th contribution. He believes that the policy does not account for the WPCA contribution from the reserve towards this payment. The issue of the WPCA commitment to pay the 1/20th payment has been raised in numerous
times at Town Council meetings and this commitment was confirmed by the Town Manager; however, the WPCA commitment to the Town Council needs to be in writing.
Chairman Carino expressed that all the recommendations provided by Councilor Yagaloff will be taken under advisement.
Robert Benson, West Road, South Windsor, CT, came before the Authority and expressed that he hasn’t heard what the impacts in sewer user fees pertaining to this policy are going to be. However, he believes that the State is facing difficult economic times for the Town to consider extra spending. Unfortunately, he has never seen the proposed reserve fund policy. Mr. Fred Shaw reported that the proposed regulatory change is available for review in the Town Clerk’s Office and was also noticed in the legal notice that appeared in the newspaper.
With no further questions or comments, Chairman Joseph Carino declared the public hearing closed at 6:46 p.m.
Respectfully,
____________________________
Ether A. Diaz
Recording Secretary
Originally Posted: March 8, 2011
Approved Date: April 5, 2011
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