MINUTES FOR THE STUDY SESSION
ASHLAND CITY COUNCIL
Thursday, May 11, 2006 at 5:15 p.m.
Civic Center Council Chambers
1175 East Main Street
Mayor Morrison called the meeting to order at 5:20 p.m.
Councilors Hardesty, Jackson, Silbiger and Chapman were present. Councilor Hartzell arrived at 5:25 p.m. Councilor Amarotico was absent.
I. AFN Debt Service Alternatives for the City.
Administrative Services Director Lee Tuneberg explained the City has $15.5 million outstanding in full faith and credit bonds for the construction and operation of AFN. He noted the debt has been separated from the operations of AFN and stated the Council needs to identify a revenue stream to ensure the debt service payments are made. Mr. Tuneberg stated next years debt service is $866,000 and climbs each year following until it levels off at $1.43 million. He noted that these are 20 year bonds and the City has 18 years of payments left.
Mr. Tuneberg commented on the single source and "cafeteria" approaches. He stated the benefit of the single source approach is that you can see it, is it simple and direct, and easy to document and explain. He added the cafeteria approach can be beneficial in that it could be tied to multiple services, which would spread out the impact, and might be considered fairer to the community. Mr. Tuneberg provided an explanation of the tables listed in the packet materials.
Mr. Tuneberg commented on the option of utilizing the BPA surcharge. He explained that the benefit to using this revenue is that the citizens are already paying it. He stated that the plan was to transition away from the surcharge and raise electric rates, however Council could decide to retain the surcharge and use these funds to pay AFN's debt service. Mr. Tuneberg clarified staff's intent was to raise electric rates by 10% after the BPA surcharge is eliminated, however if the Council decides to retain the surcharge and use it for the debt payments, he would consult with the Electric Department about a 5% increase instead.
Comment was made noting the possibility of selling the Strawberry Lane properties and putting the money towards the debt. Mr. Tuneberg stated the sale of these parcels could yield as much as $2.0 million, however it was noted that the Council has previously discussed using this money to fund affordable housing.
Mr. Tuneberg requested that Council discuss the different avenues, reach a consensus, and provide direction so that he can bring back a proposal at the next council meeting. He stated their selection needs to be enforceable, acceptable and reliable. He added Council could decide on a revenue source for this year and then take a different approach to meet the future payments.
Mr. Tuneberg submitted a handout to the Council that identified an alternative solution. He explained this option would place a fee on the total utility bill, and would include senior and low income assistance. This option would provide adequate funds to cover the payment for next year and would cover a significant portion of future payments. He stated this fee could be easily identified and listed separately on the utility bills. If this option were selected, the BPA surcharge would be eliminated, however the City would still need to raise electric rates at the end of the year; not as much as the 10% previously proposed, but possibly by 5%. He stated this would have a net effect on the utility bill of a 4% increase.
Council discussed the options presented by staff.
Comment was made that this new alternative would not generate enough revenue to cover 100% of future years payments. Mr. Tuneberg agreed and stated this option was not the end all solution to cover the payments for the next 20 years, but it does provide the opportunity to be managed each year and could go away completely at a later date if the Council chooses to use one of the other alternatives. Using his home utility bill as an example, Mr. Tuneberg stated with this option he would see a $4.00 fee on his bill.
Council listed a variety of options that could be used to meet the debt payments, including:
|•||Selling City Property, such as the Imperatrice Property|
|•||Utilizing the $300,000 dedicated for the Council Chambers remodel|
|•||Implementing an entertainment tax|
|•||Reducing internal charges to AFN|
|•||Utilizing property tax along in conjunction with the alternate solution presented tonight|
|•||Utilizing a portion of the Transit Occupancy Tax|
|•||Reducing expenses within the City|
Mr. Tuneberg clarified that he would be bringing back a proposal at the June 6, 2006 Council Meeting and stressed the importance of making a decision on this issue. Council agreed that they were interested in a cafeteria style approach and it was suggested that each councilor provide further direction as to which options they would like to proceed with. Mr. Tuneberg stated he would email a matrix, similar to what is used with the grants, for the councilors to complete and return by the end of next week. Based on the information they provide, he will construct a potential solution and return it to the Council for their approval.
Mayor Morrison noted the Parks & Recreation Department would be returning the benches to the Plaza area and suggested that they be placed in different areas to optimize use. Council agreed to ask staff to present a relocation option when this issue is presented at the next council meeting.
Meeting was adjourned at 6:55 p.m.
April Lucas, Assistant to City Recorder