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A. ROLL CALL
Members Present: Richard Aries, Joseph Carino, Robert Dickinson, Frank Ferrero,
Ed Havens, Jr., and William Vees
Members Absent: Carol Fletterick
Alternates Absent: Nancy Mulroy, Richard Siedman
Staff Present: C. Fred Shaw, Superintendent of Pollution Control
Ether A. Diaz, Recording Secretary
Chairman Richard Aries called the meeting to order at 7:00 p.m. The following actions were taken during the April 19, 2011 Special Meeting of the W.P.C.A.
B. NEW BUSINESS
1. Discussion in preparation for Joint Town Council Meeting on 4/20/2011 concerning Budget for FY 2011/2012
Chairman Richard Aries reported that this meeting was intended to prepare for the Joint Town Council Meeting scheduled for April 20, 2011. There is a first payment of $1.7 million due in September 2013 for the Treatment Plant Upgrade debt service. The Town Council has asked the Water Pollution Control Authority (WPCA) to make a contribution towards the 1/20th payment ($1.7 million). The meeting discussion focused on what alternatives were available to consider making this contribution. Chairman Aries explained that he has met with Mr. Fred Shaw to discuss this subject prior to this special meeting. Chairman Aries asked the Authority if they had any questions or comments is regards to the minutes of the last joint work session between the Town Council and the WPCA (see Exhibit A). Mr. Frank Ferrero commented that on Page 3 of the Town Council minutes, they reference in Exhibit A, a total amount of capital reserve in the amount of $952,000 and therefore, asked Mr. Fred Shaw to
explain what does the capital reserve involves.
Mr. Fred Shaw responded that at the Work Session between the Town Council and the WPCA, Councilor Yagaloff wanted to have specifics concerning those capital projects. There is a small list of projects in various stages of completion; therefore, fund reserves have been restricted for the completion of these projects. Mr. Shaw explained that certain funds are restricted for the Town’s use because they have been appropriated for specific capital projects. The $952,472 is the amount of available unrestricted funds. Mr. Shaw was asked to define the difference between restricted and unrestricted funds. He explained that unrestricted means that the funds are not specified for a particular purpose; however, restricted involves an appropriation of funds for a specific purpose or projects that have been
previously approved by the WPCA. Mr. Fred Shaw distributed a list of these projects, (see Exhibit B). This list was not provided to the WPCA at their previous meeting because it was been reviewed by the Finance Director. He explained that there is also a restricted $758,801 for the Treatment Plant upgrade, leaving an unrestricted balance of $952,472. However, the $952,472 is now less $259,300 due to the expense of the pipe collapsed on Chapel Road.
Mr. Shaw reported that the Town Manager explained that the WPCA could use the $952,472, plus another appropriation of $377,000 in each of the next two years to reach the $1.7 million contribution towards the 1/20th payment. However, that is not realistic because other projects are coming up; for example, Town staff is now in the process of reviewing qualifications statements from various engineering firms to do a study of the sewer system, realizing that this would mean additional work and expense.
In reviewing the Town Council work session minutes, Mr. William Vees explained that the minutes refer to the Town Council setting the user fees. Therefore, he asked who sets the sewer users fees. Chairman Aries responded that the WPCA sets the sewer user fees. He also explained that he received a phone call last year from Councilor Keith Yagaloff in which the Councilor clearly expressed that it was the WPCA authority to set the sewer rates.
Mr. Shaw explained that he was asked to take a look at what impacts would be on the sewer user fees under different scenarios should the WPCA make the full 1/20th payment and being able to meet all of the debt service and including the debt service for the pump station upgrade (see Exhibit C). He also looked at the options involved in funding Operation and Maintenance (O&M) and the Equipment Maintenance reserves. Chairman Aries asked Mr. Shaw to explain the difference between the two reserves. Mr.
Shaw explained that the Operation and Maintenance (O&M) reserve involves setting money aside to mitigate any decreases in anticipated revenues that might have been due to reduced flow from users or it could also be used for any unexpected operating costs exceeding the annual operations budget. So, the intent is to have on hand three months worth of annual operating budget to cover for those contingencies. The equipment reserve fund would provide for anticipated and unanticipated costs for maintenance repair and replacement of the components of the sewerage system so as to maintain the capacity and performance of these assets for the purpose for which they were designed and constructed. The target will be equal to two percent (2%) of the total value of the Pollution Control assets. The intent of building a reserve was to provide a financial plan to stabilize user fees for the continued maintenance of the pollution abatement facility assets.
In reviewing the list of projects under restricted funds (Exhibit B), Chairman Aries reported that one thing that the Town Council focuses on is not only the $952,472, but the additional money that will come in; therefore, he asked Mr. Fred Shaw to go over the specifics. Mr. Fred Shaw explained the following projects:
Account # 4006 - Ellington Road project: originally that project was supposed to be completed for a certain amount of money; however, $558,000 shows available balance for that project of $64,333. About $63,000 will be returned to the WPCA unrestricted capital reserve fund once the project is completed later this spring.
Account #4603 - Benedict Drive/Clark Street project: probably about $18,000 will be returned to the unrestricted capital reserve fund later this year.
Account #4627 - sewer line extension project: there is $42,000 set aside for the extension of the sewer line on Pleasant Valley Road at the intersection of Clark Street.
The Town implemented this project as part of a State project for road improvements in the area. However, the Town cannot release the funds until the State completes its final project audit which may take years.
Also, the WPCA has an ongoing reserve fund for inflow/infiltration manhole rehabilitation (i/i); the purpose of this reserve is completion of small jobs as necessary. Probably, these funds may also be used to pay the consultant to do the study for the sewer system evaluation.
The Authority reviewed the projections of future sewer user charge impacts over the next two years should the WPCA make the full 1/20th payment and a lengthy discussion followed (see Exhibit C). Mr. Shaw explained that last year, FY 2010/2011, the user fees were $340 and it was reduced to $288. The first option involves the impact on the user fees in order for WPCA to be able to make the $1.7 million available by FY 2013/2014. Mr. Shaw reported that Option 1 does not include the remainder of the debt
service which is the $142,000 per month that needs to be paid for the balance of the 20 years of the loan. However, this Option does include all of the current debt service plus the debt service for the pump stations. Currently the user fees is $288, there would be an increase of about 9% leading to a user fee of $314 and another increase in FY 2012/2013; at which the rates would be stabilized for several years.
Mr. William Vees requested including the projections without the 1/20th payment under each option. Mr. Robert Dickinson and Ed Havens, Jr. agreed.
Chairman Aries stated that he is leaning more towards Option 3 and 4, because they do include setting money aside for the reserve. He explained that building up a reserve is very important. And this reserve is intended to be reviewed each year, and therefore, adjustments can be made.
Mr. Robert Dickinson asked if the WPCA agrees to make the 1/20th contribution, how much will be left in the WPCA reserve. Mr. Shaw responded that under Option 3 and 4, the WPCA will be setting aside sufficient funds with which to accomplish the objectives in FY 2013/2014; that is why is very important to adopt the reserve fund policy now in order 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; the implementation of a reserve policy will also move the Water Pollution Control Special Revenue Fund to a more sound fiscal position. Mr. Ed Havens, Jr. agreed that it is good to have a plan in place because these are very extraordinary times and the WPCA has an obligation to keep fees as reasonable as possible
because people are really hurting in this economic time.
Mr. Frank Ferrero agreed that is important to have a plan in place allowing the Authority to be flexible without spiking the sewer user fees. However, there is a difference of opinion between some Councilors regarding building reserves; he referred to the minutes of the Town Council Work Session minutes, page 6, 3rd paragraph (see Exhibit A).
Chairman Richard Aries explained that there was a general understanding that the WPCA received approval from the voters supporting the referendum for the pumping stations. There was also an understanding that property taxes will be used towards the Treatment Plant debt obligations including the 1/20th payment. Two letters were written to the Town Council that did not receive any reply. In these letters, it was indicated that it was the WPCA understanding that the Town Council had agreed to pay the Treatment Plant debt service including the 1/20th payment using property taxes; and that should the Town Council disagree with this understanding, that they should advice the WPCA accordingly. Therefore, there was a consensus that the WPCA will be willing to contribute towards the 1/20th payment, with the
understanding that the Town Council will be responsible for the remainder of the debt service. This Town Council decision to pay the Plant debt service should be in a form of a resolution. With no further discussion, the meeting was adjourned.
C. ADJOURNMENT
Motion was made to adjourn the meeting at 8:53 p.m.
The motion was made by Mr. Ed Havens, Jr.
The motion was seconded by Mr. Robert Dickinson
The motion carried unanimously
Respectfully Submitted,
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Ether A. Diaz
Recording Secretary
Approved Date: May 3, 2011
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