NOTE:  This was the last meeting of this committee, so formal approval was not obtained prior to posting the minutes.

   
CALL TO ORDER
Mike Faught called the meeting to order at 4:35 p.m. in the Siskiyou Room, 51 Winburn Way.
 
Committee Members Present: Pat Acklin, Lesley Adams (via phone, not in attendance during voting), Alex Amarotico, Darrell Boldt, Kate Jackson, Don Morris, Amy Patton, Donna Rhee, Councilor Carol Voisin and John Williams
Absent Members: Donna Mickley and Rich Whitley
Staff Present:  Mike Faught, Betsy Harshman, Bryn Morrison, Mike Morrison, Robbin Pearce, Ann Seltzer, Pieter Smeenk, Lee Tuneberg, Jodi Vizzini and Steve Walker
Consultants Present:  David Kraska and Rachel Lanigan (Carollo Engineering–-via phone), Steve Donovan and Shaun Pigott (Shaun Pigott Associates)
Public: Bob DiChiro, Bill Heimann and Joseph Graf
 
APPROVAL OF MINUTES
Not available at this meeting.
 
ADJUSTMENTS TO THE AGENDA
None
 
DISCUSSIONS AND DECISIONS
Updated Financial Rate Analysis: 
Shaun Pigott went over the agenda for the meeting which included Water Utility’s Financial Position and Fiscal Year 2012 Adopted Budget; Master Plan Capital Improvement Project (CIP);  Key Assumptions in Rate Forecast; Optional Financing Strategies; Options for Mitigating Seasonal Revenue Volatility;  and Rate Comparisons. He recapped the Committee’s recommendation of constructing a new water treatment plant (WTP) and implementing the Emergency Talent/Ashland/Phoenix (TAP) pipeline.
 
Councilor Voisin questioned how the inflated costs were determined. Mr. Pigott stated it was based on an inflation factor of three percent.
 
Joseph Graf/1160 Fern St./Added the total cost reflected in the handout is more than just the WTP; it is the total CIP. The Committee agreed the wording needs to be changed to reflect this. Other discussions included infrastructure, construction schedule, funding, and possible CIP rate strategies.
 
The Committee spent a considerable amount of time clarifying advance funding and building a fund balance, current funding and levelized fund balance, and comparing the advance verses current rates over a ten year period.
 
Joseph Graf/1160 Fern St./Stated a missing piece to the graph is a fourth curve that illustrates potential rates if only the essentials of the CIP were implemented without constructing the new WTP and TAP. The Committee agreed this would be an excellent illustration and reduce the sticker shock of a $30 million investment.
 
The consultants presented an overview of the issue of revenue volatility, budgeting and water revenue forecast. The Committee looked at graphs illustrating residential use revenue, base verses use, and looked at current Ashland residential rate calculation assuming 10 ccf (units of hundred cubic feet) usage and compared it to surrounding cities. Mr. Pigott summarized the recommendation of staff and AWAC.
 
Mr. Pigott summarized the recommendation of staff and AWAC:
Increase the base rate by 10% for all meter sizes. For a typical ¾” residential meter, this would increase the base charge from $14.84 to $16.32 ($1.48) per month.  The estimated* annual increased revenue is $185,000 which offsets the shortfall experienced in previous years and provides a more stable and predictable revenue structure for the water utility into the future.  The actual effect of this increase should be monitored to determine if further revisions to the based rate are warranted.
 
*based on December, 2011 meter counts and current water rates
 
Bill Heimann/647 Siskiyou/Asked for clarification of the advance fund/base rate increase figures.  Mr. Pigott explained it as setting the stage to correct the current revenue stream by increasing the base as an immediate triage effort, and layer on top of that the rate increase to fund the master plan improvement.  Mr. Pigott added if the City makes the base rate adjustment and perceives funding the master plan with across the board rate increases, it will initially be roughly 10% of both base and use. The Committee discussed revenue, cash carry over, and how that will affect rates. Mr. Donovan added the Council will have the ability to use money from the reserve fund to pay less debt service and borrow less money. 
 
The Committee discussed communication strategies on conservation from both sides; saving money for the consumer; and saving water for the future. The City’s history of flooding and the importance of redundancy was another topic of discussion and how it will be utilized in the public outreach.
 
Mr. Faught gave a brief overview of the Sewer Master Plan which will be included in the public outreach. He stated it will require 10% increase for waste water as well. He outlined the regulatory required projects that will total $10 million.
 
Bill Heimann/647 Siskiyou/ Stated the Committee has a sales job ahead of them which should include the factual details, but he challenged the Committee to think outside of the box.  He stressed the importance of making it very clear what the City has to do regardless of redundancy, to provide water today and tomorrow. He also suggested tiering the base rate, resulting in those using a lot of water paying a higher base rate.  
 
Acklin/Boldt m/s to increase the base rate by 10% for all meter sizes.
 
The Committee discussed how the additional revenue will be earmarked if the 10% increase generates more than is projected. Interim Assistant City Administrator and Finance Director, Lee Tuneberg, clarified the 10% increase is to recover costs today; 1) in the event of over revenue, it will be factored in the subsequent years’ rate discussion with the Council; 2) if additional sales result in money set aside for future capital improvement, the Council will have the choice of not adjusting rates.
 
Joseph Graf/1160 Fern St./Stated the sales job language needs to change. Defining it as a revenue problem makes it appear the City is not looking at the cost. Adjusting rates so the prediction of revenue is better will generate more arguments than building a new WTP.
 
More discussions included stabilization fund, volatility, and infrastructure, supporting annual costs, and keeping water affordable for all citizens. Mr. Boldt suggested wrapping up discussions, vote on the motion, and discuss the public outreach. Before the vote, Ann Seltzer questioned if the proposed increase on the base rate will only address the stabilization; not the capital projects.  The Committee agreed this is correct.
 
Motion 1:  Mr. Faught asked for a show of hands in favor of increasing the base rate by 10% for all meter sizes as m/s by Acklin/Boldt. All in favor. Motion passed 8 – 0.
 
Motion 2: Morris/Acklin m/s to approve the advance funding strategy after base rate adjustment. Mr. Faught asked for a show of hands. All in favor.  Motion passed 8 – 0.
 
Public Outreach Participation:
Mr. Faught updated the Committee on the progress of the public outreach presentation and how it will be divided into a pictorial and highlight redundancy, conservation, summary of projects, and cost. He will send the draft PowerPoint to the Committee and encouraged constructive comments. He reminded the Committee of the Chamber co-sponsored Public Outreach event scheduled on March 14, 2012 at SOU Stevenson Union from 7:00 – 9:00 p.m. and the need for all to attend and have a role in the presentation. Other presentations will be the Council Study Session, February 6, and Ashland Rotary Clubs February 23 and March 6, 2012.
 
Bob DiChiro/635 Weller Lane/Stated he has listened to everyone talk about water as a commodity, yet if that supply was cut off it would feel life threatening. He stressed the City is the caretaker of the water and would like the Committee to keep in mind that water is one of the most important elements on the planet. People cannot live without water, and everyone feels they have a right to it. He is concerned that his water bill will start competing with his gas bill.  He asked the Committee to think of this when they are considering how to sell it to the people.
 
Pat assured Mr. DiChiro the Committee has had those kinds of discussions.  Cost of living, cost impact on families, and redundancy were topics of many heart to heart discussions throughout the two year process. Mr. Morris agreed water is a right; it is a precious commodity; and it is not free. Mr. Williams added conservation is about saving water, not just saving money.
 
Mr. Faught announced Robbin Pearce’s retirement at the end of the month.
 
ADJOURNMENT
Meeting adjourned at 6:32 p.m.
 
Respectfully submitted,
Jodi Vizzini, Office Assistant II