CALLAWAY BOARD OF COMMISSIONERS. Special Meeting j Workshap, 11/ 29/ 2011, 6:00 PM

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1 CALLAWAY BOARD OF COMMISSIONERS Special Meeting j Workshap, 11/ 29/ 2011, 6:00 PM Mayor Meer called the Special Meeting j Workshop for the City of Callaway Board of Commissioners to order at approximately 6: 00 p. m., on Tuesday, November 29, Mayor requested an Add- On to the agenda for the Christmas One Time Bonus Criteria. Commissioner Delapp made a motion to Add-On the Christmas One Time Bonus Criteria, followed by a second by Commissioner Jones. The motion passed unanimously. Commissioner DeLapp made a motion to approve the criteria, followed by a second by Commissioner lones. The motion passed unanimously. Present: Mayor Ken Meer, Commissioner Dennis A. DeLapp, Commissioner Thomas W. Abbott, Commissioner George H. Smith, Commissioner Mike T. Jones. Also present: Attorney Kevin Obos, City Manager Judy Whitis, City Clerk Jennifer Vigil, Public Works Director Bobby Baker, Finance Director Alice Bennett, and Leisure Services Director Tim Legare. Item # 1. Solid Waste RFP Discussion Mayor introduced the item and voiced concerns regarding staff analysis and recommendation. Finance Director Bennett was introduced to explain the cost analysis. Finance Director Bennett explained that outsourcing would eliminate some costs, but not all costs to the City. The Cost Allocation plan adopted earlier in the year dictated that the costs be split between funds, including the Solid Waste fund. Outsourcing would result in the elimination of four employee positions including salaries, payroll taxes, uniforms, travel and per diem, insurance ( most), repairs for machinery, vehicles, tipping fees, fuel, etc. with a total of all the eliminated expenses being$ 391, 757. Remaining costs included % supervisor position, benefits, insurance costs, legal services, supervisor uniform, bad debt risk, te{ephone allocated to public works, postage and printing for utility billing (if solid waste did not pay their part those costs would go to water and sewer), and operating supplies tota $ 188, 541. fn 2011, the Board adopted a Cost Allocation Program by recommendation of the auditors, that plan called for Solid Waste to pay for a percentage of cost for certain things. The City would be left with $ 188, 541 plus the cost of contract with Waste Pro. Based on current budget, it is costing the City $ per month, City only charges $ If outsourced, the four trash service operators would not subsidize the street department. Public Works Director Baker has projected a need to hire one street department employee at a cost of $ 41, 151 to accommodate the loss. Outsourcing would cost the City $ 70,000 more than the current City expenditures. The Mayor and Commissioners ask about specific lines items. Commissioner Abbott commented on the ripple effect of outsourcing, and although it may look like a cost savings, the big picture is the City as a whole would operate at a greater expense. 11/ 29/ 2011, Minutes Page 1 of 5

2 Mayor Meer acknowledged that a portion of his spreadsheet was inadvertently cut off causing his calculations to be different; and that his questions had been answered, although he still supported outsourcing. Commissioner lones commented on the excellence of the service provided by the City, and also stated that a dollar value could not be placed on the amount of control that would be given up if the service were outsourced. He stated he was satisfied and it makes sense to keep services in- house. Melba Covey questioned specific line items that would remain as a cost to the City if services were outsourced. City Manager Whitis and Commissioner Abbott explain that certain costs can not be eliminated; they can only be transferred to other departments within the City such as the cost of printing and mailing utility bills. John Malone read from an he sent to the City; stated American Airlines went bankrupt because of unions; and no one has picked up solid waste from his home in seven years. Robert Thompson stated he understood the cost allocation but questioned whether or not the calculations inctuded the new vehicle expenditures. Finance Director Bennett stated they were not included in the costs that would remain to the City if service were outsourced. Jeff Goldsberry, of Waste Pro, thanked everyone for considering the proposals. He stated the benefit of having a service contracted is to guarantee prices like fuel, replacement costs, and repair of equipment. He stated Waste Pro was willing to buy two of the City' s three Solid Waste vehicles for 70,000 and aide in selling the third. He also stated that Waste Pro would be an asset during times of disaster Mayor Meer commented that there would be enough money from the performance bond to purchase trucks and re- establish the Solid Waste Division if outsourcing proved to be undesirable. City Manager Whitis responded to comments regarding reduced liability and risk, fuel costs, replacing vehicfes, and the repair of equipment; specifically stating the City already employed a Master Mechanic, and the customer service provided by City staff could not be beat. Regarding disasters, City Manager Whitis relayed experiences during Hurricane Opal, when City staff responded quickly and effectively had the City cleaned up and operational within two weeks; and questioned why the City would entertain paying additional costs to outsource when City service is going very well. Commissioner Smith inquired about the outsourcing of law enforcement to the Sherriff' s Department. City Manager Whitis responded that in that situation there was a cut and dry cost savings to the City. David Griggs, of 7111 Winona Street, commented that rates did not go up in 2010, but they went up in 2011 and were scheduled to go up in upcoming years. He asked the City to look at how to reduce the $ 188, 000 remaining costs. Commissioner Abbott agreed that cost savings should always be looked at, but that it would be irresponsible to outsource before those cost savings were identified. 11/ 29/ 2011, Minutes Page 2 of 5

3 Mayor Meer commented regarding cost allocation, saying, we all knew at the last audit, that it would be strange and different at least for the first couple of years. We talked about it at great length and decided to do this, and we knew it would be new, and it was recommended by the audit. Commissioner Abbott stated unless we are going to dig out $ 188, 000 of other parts of the City, we cannot outsource. Mr. Griggs stated that it is a management opportunity and the idea of outsourcing should not be thrown out. City Manager Whitis recommended a definitive voting decision; as it would be unfair to leave employees wondering if they have a job. Commissioner Jones agreed that a decision needed to be made. Attorney Obos stated bids could be held for 90 days. City Manager Whitis followed that a business decision needed to be made to either accept or reject the bids as part of the eventual motion. Commissioner Abbott requested the item be added to the December 13, 2011 regular meeting as it had been the first time it was presented to the Commission with staff recommendations. Item #2. Sandv Creek Utilities I Utilities Inc. Public Works Director Baker reported that staffs recommendation was to take the water distribution and wastewater distribution systems but not the water and wastewater treatment facilities / plants; he estimated that current City staff could absorb the maintenance duties and no additional employees would need to be hired. He also commented that the City had not officially provided negotiation and counteroffer guidance for staff to continue the process. Mayor Meer and Commissioner Abbott questioned whether or not the figures were based on 100% participation of Sandy Creek property owners. Attorney Obos stated projections were based on the number of current accounts, not 100% of possible accounts. City Manager Whitis stated that although the proposed rates seem high, they are reasonable in comparison to the rate increase proposed by Utilities, Inc. Public Works Director Saker identified options: 1) City acting as a wholesaler selling bulk water to Sandy Creek Utifities; which was improbable because Sandy Creek Utilities would have to pay Special Capital Extension Fees and Impact fees totaling more than $ 1. 2 Million to come on as a bulk customer; and 2) City take the system over as it is; which means maintaining grinder pumps instead of constructing lift stations. Public Works Director Baker reported the water distribution infrastructure had been decently maintained and the grinder pumps met City requirements; and that staff had worked with Attorney Obos to draft a guidance resolution. Commissioner Abbott clarified the draft guidance resolution proposed the second option and the City had no interest or responsibility for the wastewater treatment plant or its closing. Attorney Obos confirmed the intent of the draft guidance resolution. acquisition would give the City the ability to grow. Commissioner Abbott commented the 11/ 29/ 2011, Minutes Page 3 of 5

4 IL_ City Manager Whitis read the second page of the Executive Summary which listed the pros and cons of the acquisition. Commissioner Smith and Public Works Director Baker engaged in brief conversation about the integrity of the lines; with Public Works Director Baker confirming that Utilities, Inc. used Roto Rooter for maintenance and repair so there were extensive maintenance records available. Mayor Meer and Commissioner Smith inquired about pulling hard suction off hydrants, and the potential for the lines to coflapse. Public Works Director Baker explained that City lines are pressurized so that would not happen. Additional discussion included a decrease in capital costs after the first 2-3 years, how special capital extension fees and impact fees would be paid by property owners, the extensive requirements if they tried to collect the fees as a special assessment on the annual tax bill versus collection on the utility bills, water pressure, water quality, potential cross contamination, and the Health Department requirement of properties within 300' of public utilities to hook up, possibility of future development in the area around the air park, and potential grants that may be available. Steve Wisenhunt, resident of Sandy Creek, stated that Water Spigot does an annual check of everyone' s home in the area and he has no issues with the quality of water at his home; that the City should be looking at the potential expansion opportunity; he supported the City' s acquisition and stated the opportunity for annexation was attractive. Joe Ivey, Country Club Drive, questioned why there was not a fixed rate structure for everyone in the County. Commissioner Smith, Commissioner Jones, and Mayor Meer all responded. Charles Watson, of Poston Road, inquired who woutd be responsible for the grinders on the lines at sandy creek. Public Works Director Baker responded the City would be responsible. Rex Barrentine, of 1102 Country Club Drive, commented on his support of the City' s acquisition, and also favored the opportunity for annexation. Vern Mayhew, of 2000 Par Drive & 261 Sims Avenue, supported City' s acquisition; and commented the proposed City rates are lower than the proposed Utilities, Inc. rate increase. Attorney Steve Rielly, Office of Public Counsel, stated he represented the interests of the property owners and would meet with the Sandy Creek Community and explain the situation and report back to the City. Attorney Obos stated the resolution provides direction and guidelines for a counteroffer; he advised the process for acquiring a private utility would take two public hearings to approve or re}ect; and he anticipated having something to bring back to the Commission for consideration at the December 13, 2011 meeting. He reported the bid results as three responsive bidders, with the lowest being Regions Bank because Hancock Bank wanted a covenant to secure the loans. The bids are good for 11/ 29/ 2011, Minutes Page 4 of 5

5 F, j_t ti 45 days after the bid opening, and if some property owners pay up front the entire amount of the loan would not be required. Commissioner Abbott made a motion to approve the Resolution # 11-28, Commissioner lones followed with a second. Robert Thompson inquired whether or not there was influence by the adjacent private property owner; and why the rates for Sandy Creek were not the same as those for Panama City Beach. Mayor Meer and Attorney Obos stated the City will not be involved in any way in the private purchase of the land purchase where the plants are located and the rates are different because the circumstances are different; Panama City Seach does not have a Special Capital Extension Bond to repay. Commissioner Abbott confirmed the Utilities, Inc. rate proposal increase was different from its rate increase in Panama City Beach because more improvements needed to be made at the Sandy Creek plant. Jim Jennings, of Sara Lane, stated he did not support the City' s acquisition of Sandy Creek Utilities, and that Bay County should deal with the issue. Additional comments were received by Joe Townsend, and Melba Covey regarding potential profit and the lack of certainties surrounding the issue. The motion passed unanimously. Mayor Meer encouraged everyone to attend the Christmas Tree Lighting Ceremony. John Malone stated he had requested the Commission to add the USDA j Rural Development vacant apartment issue to the agenda. Motion to adjourn the meeting at 9: 05 p. m. was made by Commissioner DeLapp. LL s. Jenn' er M. igil, City Cler 11/ 29J2011, Minutes Page 5 of 5