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HomeMy WebLinkAbout1992-08-18 MinutesMINUTES OF A MEETING OF THE CITY BOARD OF DIRECTORS A regular meeting of the Fayetteville City Board of Directors was held on Tuesday,, August 18, 1992 at 7:30 p.m. in the Directors' Room of the City Administration Building at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Mayor Fred Vorsanger; Assistant Mayor Mike Green; Directors Ann Henry, Julie Nash, Shell Spivey, and Bob Blackston; City Attorney Jerry Rose; City Clerk Sherry Thomas; Director of Public Works Kevin Crosson; Director of Administrative Services Ben Mayes; members of Staff, press and audience. ABSENT: Director Dan Coody; City Manager Scott Linebaugh; and Director of Planning Alett Little. CALL TO ORDER The meeting was called to order.by'the Mayor, with.. six Directors present. The Mayor asked those present to stand -rand recite the Pledge of Allegiance, and then asked that a --brief moment of respectful silence be observed..` The Mayor welcomed comments on any item on &the Agenda. He explained that in order to allow"equal attention to all items on the Agenda, the Board requests that comments be limited to 3 minutes per person per item, and a spokesperson be elected for comments made on the same issue. MAYOR'S REPORT Mayor Vorsanger reported "The Bambinos", a 10 -year old youth baseball team, had won the State Championship. He,further reported the City's American Legion team made up of 16 to 18 -year olds called "Hyland Dairy" are the State Champions, currently playing in Tupelo, Mississippi, and if successful, would proceed onto the National American Legion Finals,in Fargo, North Dakota. Vorsanger stated his intention to designate.a day for the City's American Legion Champions, as was done for•"The Bambinos" and Olympic Gold Medalist Mike Connelley. REPORT TO THE PUBLIC A report to the public and Board is presented by the City Manager at the second Board meeting of each month. This report, for the month of July, includes financial information, an update on staff activities, and items of general interest. Acting City Manager Kevin Crosson presented the City Manager's Report to the Public in Scott Linebaugh's absence. August 18, 1992 FINANCIAL INFORMATION Crosson reported on the City's balance sheet for the period ending July 31, 1992, with cash and investments totalling $81 million, and assets totalling $194.4 million. The ratio of cash and investments to total assets is 41.71%, compared to a ratio at this time last year of 42.14%. For the period ending July 31, 1992, revenues totalled $30.7 million, a $1.7 million increase over this time last year. Total expenditures for the period ending July 31, 1992 were $35.2 million, or $4.1 million more than this period last year. Crosson explained that $3.4 million of the $4.1 million increase was due to increases in capital and depreciation. CONSTRUCTION ACTIVITY Crosson reported on the City's construction activity and stated a total of 195 building permits were issued in July with a total value of $4.3 million; compared to 153 permits issued and construction values of $3.3 million in July 1991. For the first seven months of 1992, the City issued a total of 1,933 building permits for a total value of $33.4 million, compared to 986 permits issued for $33.6 million for the same period in 1991. Crosson stated that the City's construction activity is believed to be an important indicator of the economic well-being of the community. COMMUNITY DEVELOPMENT Crosson reported a number of capital improvements underway in July within the Dickson Street neighborhood, including street, sidewalk, and drainage improvements on Thompson and Boles Streets as well as housing rehabilitation projects. He reported that ten homes within the southeast target area have received rehabilitation services in 1992 including roof repair or replacement, structural repair, energy efficiency improvements, external painting, and installation of vinyl siding. RECYCLING/COMPOSTING Crosson reported that for the month of July recycling has generated 37.6 tons of glass, 55.1 tons of newspaper, and 2.9 tons of aluminum cans. In addition, the City's composting facility collected 2,069 cubic yards of brush, 52 cubic yards of leaves, and 140 cubic yards of grass. POLICE DEPARTMENT The Fayetteville Police Department reports making 755 adults and 40 juvenile arrests during July. In addition, 29 adults and 10 juveniles were arrested in a total of 39 drug-related charges, 1 August 18, 1992 ranging from 9 charges for possession of controlled substances to 13 charges for criminal conspiracy. CENTRAL DISPATCH Crosson reported that during the month of July, this division received the highest number of 9-1-1 calls for a one month period since Emergency 9-1-1 was implemented in 1988. The previous high total of calls in any one month was 1,093 in May of 1992, compared to 1,158 received in the month oftJuly. STREETtDIVISION Crosson stated that the street crews have remained active this summer with unusual weather, ,including rain, .storms, and cool weather. He reported major storms one in July,and one the first part of August, and the' street department's activity with storm damage clean-up. Following the July 2nd storm, the crews collected over 733 cubic yards of brush and over. 779 cubic. yards of brush following the August 10th storm. 1 1 WASTE WATER TREATMENT PLANT Crosson announced that the City:,has received a copy of their draft permit to discharge from the City's Waste. Water Treatment Plant, from the Arkansas Department of Pollution Control and Ecology (DPC&E). The draft permit has been reviewed by the U.S. Environmental Protection Agency ( -EPA), and as of`August 14th is under the mandatory 30 day public comment period. Crosson explained that comments on the permit must be received at the Arkansas Department of Pollution:Control and Ecology prior to the close of the public comment period on September,13, 1992. Crosson further reported Staff is working closely with the Arkansas DPC&E during the application process, and announced that the effluent limits proposed in the draft are the same as those contained in the last permit that were upheld by the U.S. Supreme Court. He further stated no additional monitoring requirements were applied to the permit. These testing requirements are considered interim with a "permit reopener" clause included in the draft. Once the permit has passed the first six months of testing, the permit may be reopened, removing additional testing requirements from the permit. Mayor Vorsanger commented with regard to the report from Central Dispatch, and the record number of 9-1-1 calls received in July which indicates active growth in this department. Director Henry inquired as to the current number of 9-1-1 calls being received inappropriately and without a need. She reminded the audience that following the implementation of 9-1-1 in 1988, • -% 1} d August 18, 1992 the City made some educational efforts to inform citizens of what constituted an emergency 9-1-1 call. Kevin Crosson responded that to his knowledge, there is not currently a problem with improper use of 9-1-1. ARKANSAS HIGHWAY & TRANSPORTATION DEPARTMENT REPORT Director of Public Works Kevin Crosson reported on the State Highway & Transportation Department's activities for which City Staff has been involved and activities in relation to the Transportation Improvement Program in which the two -county area approves each year for submission to the Highway Department. He explained that the Transportation Improvement Programs (TIP) in the past have been prepared as "project needs documents" covering a five year period. This list included projects in which each unit of government requested state or federal funding assistance. Crosson stated no funding commitments were attached to the TIP by either the State Highway Department or by the Federal Highway Administration. He further stated those projects in which funding was requested were recommended to be listed by the Highway Department; however, funding was not denied to a locality when a proper need of financing could be identified. The TIP was basically considered a reference guide or "wish list" submitted to the State Highway Department by each metropolitan center for assessment. Crosson reported the 1991 Intermodal Surface Transportation Efficiency Act has changed the previous situation. In order to receive state or federal assistance, projects must now be identified by state and local units of government in order to be eligible for funding assistance. In addition, the state is required to prepare a TIP for the Federal Highway Administration. He explained that in urbanized areas, such as Fayetteville and Springdale, all projects to be funded must be identified and prioritized for funding sequence, and the source of funding must be identified at the state, federal, and local levels. The Fayetteville/Springdale Transportation Improvement Program (TIP) was approved early in July, and has been submitted to the Highway Department for consideration. Crosson outlined the City's projects conducted this summer and their position within the TIP. He reported that early in June, Highway Commissioner Bobby Hopper called a meeting with the Transportation Committee of the Chamber of Commerce to discuss questions raised about a number of projects contained within the City's "TIP" for several years. Crosson reported that he and Director of Planning Alett Little traveled to Little Rock on July 7 to meet with Charles Venable, Chief Engineer, and Roger Allmand, Assistant Chief Engineer for Planning of the State Highway Department in an attempt to clarify these projects. During this meeting, Crosson reported that a number of communication problems existing between the City and Arkansas August 18, 1992 Highway and Transportation Department (AHTD) were ironed out, and a very important dialogue was reopened. One important aspect which was brought to light was that in the grand scope of things, Northwest Arkansas, in general, and Fayetteville, specifically, are in a much more favorable financial position than most areas of Arkansas. Crosson stated this fact can and does have a detrimental impact on the amount of funding received for a large number of the City's projects. Crosson outlined the individual projects discussed, and each project's posture within the City's TIP program as follows: 1) Commerce Drive Project - During the City's attempts to attract K -D Tools to.the area, it was felt that Commerce Drive was an important project to be included in the package to offer as an enticement to -K-D Tools. The original project agreed upon,was for 80% AHTD funding source, with the balance to be paid .by the City and Arkansas Industrial Development Commission (AIDC). Since that time, the sighting of K-D.Tools has disqualified the project from AHTD funding, ;resulting from a misunderstanding and AHTD's impression that the sighting would occur east of the Superior Industries facility. He further explained that assuming the project was funded, by another sighting, location. or expansion in this project area, the 1991, Legislature changed the funding formula for such projects to 20% from 80%. Therefore, Crosson stated that the Commerce Drive Project is basically out of the picture in'terms offa AHTD package program. 2) North Street Widening and 3) Razorback Road Extension - Crosson reported the; North Street Widening Project was recently approved for condemnation by the City Board, and Razorback Road extension has been planned from Hwy. 71 to Cato Springs for several years. Both projects have been identified as FederaltAid Projects for which Fayetteville was seeking funding. In terms of priorities, Crosson explained the AHTD requirements follow that "AHTD" will only construct one federal project per community at one time. The City has consistently over the last 8 to 10 years ranked the North Street Widening Project above the Razorback Road Extension Project. Theoretically, it was a project that could be quickly completed. Unfortunately, this project has continually been dragged .down by litigation and problems with utilities. During their meeting in Little Rock, Crosson reported the City clarified its position with the AHTD for plans to pursue condemnation proceedings on this project. Assuming that the condemnation proceedings fail, plans include the City placing the North Street Widening August 18, 1992 Project on a "deferred status category" and begin work on the Razorback Road Extension Project. Crosson announced that in the current TIP, there is only $400,000 allocated in federal highway funds for 1993, for which the North Street Widening Project would fit nicely, and in fact, is included in the 1993 TIP for funding. With respect to the Razorback Road Extension Project, Crosson reported that they have made the offer to take over ownership and maintenance of the Hwy. 180/Mt. Sequoyah section of highway in exchange for commitments on the Razorback Road Extension Project. In addition, a recommendation will be made for the AHTD to address the need for improved ingress/egress at the Hwy. 71 bypass and Hwy. 71-B College for the addition of a loop. The City is of the opinion that these two projects should be linked in return for the maintenance responsibilities for the Hwy. 180/Mt. Sequoyah Project. It is believed that the Razorback Road Extension Project will quickly become much more important to others than the City of Fayetteville. Although it is not included in the 1993 TIP Project, Staff will continue discussions with the AHTD, and it is felt that it will be completed in the near future. 4) Wedinaton Road Widening - Crosson announced that this project, widening of Wedington Road from Hwy. 71 to Garland, has been included in the City's TIP Program for a number of years and appears in the City's 1993 TIP Program. The Wedington Road Widening Project is considered critical to the City's transportation system with a number of problems needing resolved to maintain drainage and traffic in this area. Miscommunication over this project was reported with the AHTD considering a public hearing almost 2 years ago. The City, unaware of AHTD's steps toward a public hearing on this project, failed to submit positive comments on the project. Crosson reported these are being ironed out with the AHTD. Crosson further reported on five signal improvement projects currently under consideration which the Board of Directors has discussed and expressed an interest in the recent past, as follows: 1) Hwy. 265 & Joyce Intersection 2) Hwv. 16W & Hwv. 71 Intersection Crosson reported that these two projects will receive AHTD's serious consideration for funding and priority. He further announced three approved signal projects in which the City and AHTD will be scheduling for completion in the near future, as follows: August 18, 1992 3) Hwy. 265 & Township Intersection - This is to include widening of Hwy. 265 to allow for a north and southbound turn lanes funded from maintenance funds and not included in TIP. Crosson reported plans to have this project underway in the late Fall of 1992 or early Spring of 1993. Hwv. 265 & Hwy. 216 Intersection - Crosson reported this signalization project was also scheduled to begin in the late Fall of 1992 or early Spring of 1993, once construction work is completed on Hwy. 16 in conjunction with the developer in that area. 5) College & Lafayette Intersection -'The protected signal approved for this intersection is ; planned for installation this month prior to the start of the 1992 school year. Director Henry asked if the new intermodal transportation system includes historic preservation and alternative transportation, such as bicycle paths. Crosson responded the AHTD, as well as the federal agencies involved, are aware of the City of.Fayetteville's interest in alternative transportation systems, and discussions are taking place in that regard. :,, Mayor Vorsanger stated his gratification.that the City is able to inform its citizens of these problems being addressed, particularly at Township & Hwy. 265. OLD BUSINESS items that have been brought before,the Board but were tabled or no decision made to allow for further information to be presented. There was no old business to discuss. CAFR Mayor Vorsanger introduced a report from the City's auditors, Coopers and Lybrand, on the 1991 Comprehensive Annual Financial Report. Dan Schultz, Partner in the Coopers & Lybrand Firm headquartered in Tulsa, addressed the Board announcing that Ms. Danette Tegtmeier, Audit Manager for Coopers & Lybrand, was present to assist him in answering any questions regarding the financial reports he would be highlighting. Mr. Schultz reported total cooperation from the City Staff during the audit, and immediate access to any and all information and records requested. He stated that during the four years in which Coopers & Lyband has serviced the City, the quality of records has steadily improved, and he described the City's system as a quality accounting function. August 18, 1992 Mr. Schultz addressed compliance with Arkansas laws and regulations for which Coopers & Lybrand is required to test compliance. Based on the transactions tested, he reported that the City has complied with all laws and regulations. He further pointed out aspects of the "Single Audit Reports", including a list of federal and state programs under which the City participates and receives funding. Cooper & Lybrand tests the financial transactions as well as compliance with various grant agreements. The "Schedule of Findings and Question Cost", which discloses findings based on compliance testing, indicates a single situation in which the City granted money to an individual and the individual may not have complied with the grant terms. Mr. Schultz reported that the loan is in the process of being repayed as the City has placed a lien against the property in question. The "Internal Control Structure" contained in the Report represents major items of non-compliance with grant provisions and major deficiencies in internal controls, for which Coopers & Lybrand report they found none. However, Mr. Schultz reported minor deficiencies noted in their Report, which are contained in a letter to the City under separate cover. These minor items, such as suggestions for operations or accounting policies and procedures, are not material items and have been discussed with management and the Mayor, and the City is currently preparing responses. Once Coopers & Lybrand receives the City's responses, Mr. Schultz reported they will issue the private management letter in final format, including their recommendations and the City's responses thereto, and present it to the City. Mr. Schultz further reported on the City's CAFR and pointed out a transmittal letter which serves as an executive summary of all information contained in the report. He noted the table summarizing resources and sources of revenue for the City's governmental funds during the year, with total revenues for governmental operations totalling approximately $26 million and pie charts, reflecting the relative size of the City's revenues and expenditures totalling approximately $27 million. Also contained in the City's CAFR, Mr. Schultz noted the City of Fayetteville's "Certificate of Achievement for Excellence in Financial Reporting" contained in the CAFR which is given by the Governmental Finance Officers Association (GFOA). He explained this award is given to cities in the top ten percent, in terms of the format and quality of their financial reporting, and he reported that only 5-6 cities in the State of Arkansas receive this particular award. The Coopers & Lybrand report further contained their "unqualified opinion" on all financial information which they found to be in 1 August 18, 1992 accordance with the standards used by the City in financial statement preparation. Mr. Schultz stated an "Explanation" paragraph referring to the incinerator lawsuit outstanding, and until a final decision is received by the Courts, the final financial transactions cannot be tallied and estimates were made. Mr. Schultz stated that the combined "Financial Statements", "Balance Sheets", and "Operating,eStatements" contain the various fund types in which the City records its transactions. Footnotes are included which explain the City's accounting policies, detail on the City's outstanding debt, location of its investments, and how they are collateralized. "Combined and•Individual Financial Statements" provide detail of the various fund types, on a fund by fund basis, revenues, expenditures, assets,: and.liabilities for each fund maintained in the City's accounting records. s The Coopers & Lybrand report concluded with statistical information on revenues, expenditures, pension plan information, tax base, revenue bond coverages, and miscellaneous demographic information. Mayor Vorsanger reported that he has met with Coopers & Lybrand, and reviewed some of his questions with them, including the management letter, as he believes thatmembers of the Board of Directors will be interested inimplementing their suggestions. He further encouraged those individuals (interested in running for aldermen and city officials in the new city government to read the 1991 Comprehensive Annual Financial Report at their earliest convenience. Vorsanger stated his belief that more can be learned about the City of Fayetteville from this report than from any other source. Questions such as the employee pension plans, the City's tax base, and who the largest taxpayers are as well as the sources of funding and where it goes. Director Green asked Mr. Schultz if throughout the auditing process whether he found anything in the City's auditing or checks and balances procedures and management that should be brought to the Board's attention and need improvement. Mr. Schultz responded that there are eight items listed in the management letter, none of which are of a material nature, but more in the nature of "housecleaning" kinds of comments. Coopers & Lybrand generally found the City's internal controls for checks and balances to be good, and any major comments would have been included in the single audit reports provided at this meeting. Mayor Vorsanger announced that copies of the CAFR could be obtained from the Office of Administrative Services, and the Director of Administrative Services is available to answer questions regarding the CAFR. August 18, 1992 ?IEW BUSINESS CONSENT AGENDA Mayor vorsanger introduced consideration of items which may be approved by motion, or contracts and leases which can be approved by resolution, and which may be grouped together and approved simultaneously under a "Consent Agenda." A. REMOVED FROM CONSENT AGENDA B. A resolution awarding Bid 92-32 to the low bidder, Custom Supply, for the purchase of an *VHS Editing System in the amount of $18,039.00 for use by the PEG Access Center currently under construction; RESOLUTION 120-92 AS RECORDED IN THE CITY CLERIC'S OFFICE C. A resolution approving a contract with McClinton -Anchor (APAC) for the Wilson Park Pathway project at a cost of $35,782 and a contingency of $1,218; The Parks Board recommends the six-foot wide pathway along the north side of Wilson Park parallel to Prospect Street. Many citizens have requested the pathway for walkers and joggers, and with additional funding at a later date, the pathway may be extended around the entire perimeter of the park. RESOLUTION 121-92 A8 RECORDED IN THE CITY CLERIC'S OFFICE Green, seconded by Blackston, made a motion to approve the Consent Agenda. Upon roll call, the motion was passed by a vote of 6 to 0. ATTORNEY FEES Mayor vorsanger introduced a resolution authorizing payment of attorney fees to McDermott, Will and Emery in the amount of $109,615.21 for March 1-31 and May 16 thru June 15, 1992 and of $25,309.29 to the Niblock Law Firm for May 1 thru July 1, 1992, for services rendered in the incinerator disengagement and related lawsuits. Mayor Vorsanger explained that Director Nash raised the question at the Board Agenda Session regarding this item and asked that it be removed from the Consent Agenda and addressed separately. City Attorney Jerry Rose presented his memo which, as per Director Nash's request, addresses his examination of a number of billings from March 1, 1992 onward. He further explained that the statement included for the sum of $109,615.21 for services rendered by McDermott, Will and Emery from March 1-31 was taken out of sequence and presented for payment at this time since, for whatever reason, 1 j ' ' August 18, 1992 the same was never received by City Staff. Rose reported a consultation with Tom Ingoldsby at McDermott, Will and Emery, in which they' reviewed the March 1-31 statement, as well as the April/May statements, to confirm that the City was not being charged twice for services charged on these bills. Thereafter, Ingoldsby reviewed these statements with the firm's accounting department. Rose stated that it was his opinion that the City of Fayetteville was not being double charged in the March billings. Carol Conger, resident of Fayetteville, addressed the Board reiterating her question from the last Board meeting asking from what funds are these attorneys are being paid. She reported questioning whether or not the attorney fees were being paid out of the sanitation. fund, for which, she received a resounding "no" answer from four Board members. Since that time, Ms. Conger stated that her research into payment of these legal fees has uncovered a pie chart from the Solid Waste'Fund showing that these legal fees were, in fact, being paid. out of the. Solid Waste budget. In addition, she located pages in the Solid Waste Budget showing Line Item No. 550050005314.01 which appeared to continuously over the years serve as the account number for payment -of legal fees. Although the name of the account changed several times, the account number remained the same. Additionally, she obtained copies of canceled checks written from the' Sanitation Operation and Maintenance Fund to these attorneys for legal fees. Ms. Conger further reported obtaining a copy of the deposition given by Ben Mayes in the lawsuit, wherein Mayes states that, "We have paid incinerator disengagement expenses from the Sanitation Fund." When asked what particular expenses,he stated, "To my knowledge, all we have paid is the legal fees.". In closing, Ms. Conger requested clarification on exactly what fund the legal fees to McDermott, Will and Emery, and Niblock Law Firm, were being paid. Ben Mayes, Director of Administrative Services, responded that the legal fees in question were being paid out of the Sanitation Fund. Although he did not personally respond, he recalled Ms. Conger's question at the last Board meeting to be, whether the shortfall and reason that the sanitation rates were being raised, was due to legal fees being paid on the incinerator disengagement lawsuit. He concurred that the resounding answer from the City Board was "no" because the calculation for the $7.75 sanitation rate, was based on operation only, exclusive of legal fees or collection of incinerator disengagement fees. Mayes further explained that although these funds are all put into the Sanitation Fund, they are tracked individually. Carol Conger further requested verification on whether the $2.02 sanitation rate increase, as it is thrown into the pot of the Sanitation Fund, was being pulled out to pay the attorneys fees in question; for which Ben Mayes responded that they were. August 18, 1992 Ms. Conger reported that Ordinance #344, which authorized the Sanitation funds, sets out that said funds were to be used to retire the revenue bonds, which in her opinion, means "principal and interest" and not "attorney's fees". Therefore, her bottom line question is whether the City is legally paying these attorney's fees from the Sanitation Fund. Mayor Vorsanger responded that the $2.02 rate increase in the City's sanitation bills is to be used to pay off the "shortfall", the amount of money the City paid the contractor for the incinerator in progress. Carol Conger finally presented a copy of a transcript from the court hearings in the incinerator disengagement lawsuit. The plaintiff's attorney asked that revenues from the $2.02 disengagement fee be put into an escrow account as well as an injunction to hold onto these monies. Attorney Steven Pflaum replied that, "It is not necessary to have an escrow account, or for the Judge to grant an injunction, holding onto the monies collected from the $2.02 sanitation rate increase because those monies aren't going anywhere." Kevin Crosson stated Staff would be more than pleased to sit down with Ms. Conger and review the documents she refers to. He reported that Ms. Conger has not made any attempts to meet with the Administrative Staff regarding any of her questions. Ms. Conger expressed her concern that the City is setting itself up for one more lawsuit. If the judge was advised by the City's attorney, Steven Pflaum, that "these monies aren't going anywhere", and yet, the same are being used to pay legal fees to Mr. Pflaum, she sees a problem with that. To date, legal fees in excess of $2 million has been paid to these firms, and the Board is currently considering approving payment of another $135,000 in fees. She therefore suggested that the City hold off on paying these attorneys fees until they can verify whether it is legal for them to do so. Green, seconded by Blackston, made a motion to approve the resolution. Upon roll call, the resolution passed by a vote of 5 to 1, with Director Nash voting no. RESOLUTION 122-92 AS RECORDED IN THE CITY CLERK'S OFFICE ANIMAL SHELTER PARK Mayor Vorsanger introduced a resolution approving a lease agreement with the Humane Society for a vacant lot east of Armstrong Drive August 18, 1992 and south of the Animal Shelter for the purpose of developing an Animal Shelter Park. The park would be to provide areas for exercise and training, an adoption tryout area, and an activities area'with a covered pavilion, tables, and benches. The park will also allow the Animal Shelter to provide citizens with; animal care services for their pets such as washing and grooming service, obedience classes, dog shows and competitions, animal education programs, and spring rabies vaccination clinics. 1! Henry, seconded by Blackston, made a motion -to approve the resolution. Ms. Fowler, past board member since 1954,and former president of the Humane Society, addressed the Board stating that she is pleased to speak on behalf of the Humane Society and encouraged the Board to pass this resolution. She further.'expressed her delight with the Animal Shelter Park Project• and the `Board of Directors' interest. She explained the Animal Shelter Park represents another cooperative effort between the Humane -Society and the City and is a rare "cooperation" arrangement.. >N • The proposed Animal Shelter Park will serve to raise the consciousness of the community as to the City's ongoing commitment to responsible animal welfare. Ms. Fowler stated that the Humane Society believes that the Park will increase citizen awareness of services offered by the Animal Shelter and well as provide educational and recreational, facilities for a variety of activities. Director Henry stated she had missed the Board tour on this project and stated her understanding that this resolution is simply a lease agreement with the Humane Society to provide, build, and use this land immediately adjacent to the Humane Society which the City already owns. Therefore, in essence, this project costs the City nothing. Mayor Vorsanger reported from the Board's tour of this Animal Shelter Project that the Humane Society has many unique plans, including fencing this entire area, turning a good size lot that is currently not being used, into a beautiful park. Upon roll call, the resolution passed by a vote of 6 to 0. RESOLUTION 123-92 AS RECORDED IN THE CITY CLERK'S OFFICE SCADA PROJECT Mayor Vorsanger introduced a resolution offer with Motorola Corp. in the amount of with the SCADA System and approving extra approving a settlement $40,668.61 in connection engineering services for August 18, 1992 the project with the ETC Engineers in an amount not to exceed $36,327.92. Acting City Manager Kevin Crosson explained that Motorola installed the City's Supervisory Control and Data Acquisition System (SCADA) for the sewage lift stations, water booster stations, and water storage tanks. However, the project was completed after the agreed upon date in the $560,000 contract with a construction time limit of 130 consecutive calendar days. In addition, there were technical problems with the system that had to be corrected and caused the system to be unoperational for a considerable time period for which liquidated damages have been assessed against Motorola. In addition, ETC Engineers had to do extra work on the project because of the problems with the SCADA system. The additional amount of engineering services has been included in the settlement figure. Crosson stated that Staff is recommending closing out the contract with Motorola, assessing damages to the City that can be proved, and request authorization for payment of extra engineering services in relation to the work required to maintain the system until it was 100% complete. Director Henry stated that this action is simply to avoid a breach of contract lawsuit. Henry, seconded by Blackston, made a motion to approve the resolution. Upon roll call, the resolution passed by a vote of 6 to 0. RESOLUTION 124-92 AS RECORDED IN TSE CITY CLERK'S OFFICE SEWER RATES Mayor Vorsanger introduced an ordinance amending Chapter 51 of the 1990 Revised Edition of the Code of Fayetteville (Chapter 21 of the Code of Ordinances, City of Fayetteville, Arkansas) concerning monthly sewage charges and rates and excessive sewage surcharges. The ordinance was read for the first time. Green, seconded by Vorsanger, made a motion to suspend the rules and place the ordinance on its second reading. Upon roll call, the motion passed by a vote of 6 to 0. The ordinance was read for the second time. Green, seconded by Blackston, made a motion to further suspend the rules and place the ordinance on its third and final reading. Upon roll call, the motion was passed by a vote of 6 to 0. The ordinance was read for the third and final time. Mayor Vorsanger stated that this ordinance does not raise the sewer rates, but is simply a necessary action for the bond ordinance. 1 :z.� August 18, 1992 " City Attorney Rose stated that the City's bond attorney has recommended that the Board simply re -pass the ordinance which they have already passed, with the exact same rates currently in effect. rib Upon roll call, the motion passed by a vote of 6 to 0. Nash, seconded by Vorsanger, made a motion to: approve the emergency clause. Upon roll call, the motion passed by a vote of 6 to 0. ORDINANCE 3637 APPEARS ON PAGE /g3 OF ORDINANCE BOOR XIX V fir F a WATER AND SEWER BONDS Mayor Vorsanger introduced an ordinance providing for the issuance of $10,000,000 of Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1992 of the City of Fayetteville, Arkansas; Authorizing the execution and delivery of a bond purchase agreement and an escrow deposit agreement in connection therewith; Directing the transfer of moneys held in connection ,with the outstanding Water and Sewer Revenue Bonds of said city; providing for certain other matters relating thereto and declaring an emergency. The ordinance was read for the first time. Green, seconded by Blackston, made a motion to .suspend the rules and place the ordinance on its second reading. Upon roll call, the motion passed by a vote of 6 to 0. The ordinance was read for the second time. Green, seconded by Blackston, made a motion to further suspend the rules and place the ordinance on its third and final reading. Upon roll call, the motion was passed by a vote of 6 to 0. The ordinance was read for the third and final time. Barbara Moorman, resident of Fayetteville, addressed the Board stating that she was unable to attend the hearing on this issue, but having read the minutes of the hearing, she has questions on the issue concerning various aspects which the City Board also needs to consider. Ms. Moorman proceeded to inquire as to the amount of total interest to be paid on these bonds. Davis Hausam, Bond Counsel to the City, responded that over the twenty year life of the bonds, total interest paid would be $7,471,792.50. Ms. Moorman further asked if the interest on these bonds would come from water and sewer rates. Crosson responded that the interest would be paid from there. Conceivably, in a pinch, the water and sewer rates could be raised to pay this interest. Mayor Vorsanger stated that it was his understanding that these Water and Sewer Bonds were based on the City's current rates. Mr. Hausam explained that in 1990, Black & Veatch performed a rate study for the City and it projected a rate study and a bond issue August 18, 1992 for 1992 for the purpose of sewer rehabilitation. The City refunded an outstanding issue of 8 9% and gave them additional monies to complete construction projects. Mr. Hausam reported a total debt service from the 1990 Black & Veatch rate study of approximately $1.2 million to be utilized on this debt service. Under the current Water and Sewer Revenue Bond Issue proposal, the total debt service will actually be closer to an $842,000 maximum debt, for a difference of $400,000 less from the projection in the 1990 Black & Veatch rate study. Ms. Moorman stated her confusion that in the City's present budget, the interest expense has increased from $322,516 to $785,155. She received the explanation that this difference was due to the projected bond issue which was projected in the present budget. Mayor Vorsanger stated that in reviewing the City's principal and interest requirements, the largest year for interest expense is the first year, which in this case, totals approximately $557,000. Director of Administrative Services Ben Mayes verified that the current budget shows an increase in interest expense for additional borrowing. He further explained that the existing rates were based upon the fact that the City planned to issue an additional $7.2 million in debt in 1992. The 1992 budget was prepared in 1991, with the assumption and anticipation for an additional issuance of bonds of $7.2 million in 1992. Director Henry stated that the City is actually saving money because of the re -issuance and explained the City is re -financing an old issue at lower interest rates and receiving additional funds for the water and sewer system. Mr. Hausam stated that a cushion of $300,000 to $400,000 per year was projected in the rate study. Ms. Moorman asked for the projection on the average yearly interest on the bonds. Mr. Hausam responded roughly $370,000 per year. She further asked for the total expenses connected with issuance and administration of the bonds. Mr. Hausman responded that a rough total, including judiciary expenses, and underwriter's fee would be approximately $220,000. Ms. Moorman commented that it has been stated that this bond issue has something to do with the lawsuit and freezing of funds for the Capital Improvements Program (CIP). Therefore, she asked if this is the same bond issue that is mentioned in the CIP budget which states, "Current plans call for the issuance of water and sewer revenue bonds in 1992 and 1994." Ben Mayes responded that from the 1990 rate study, there was always an anticipated bond issue. He explained that this water and sewer 1 August 18, 1992 r • bond issue allows for usage to construct Phase.I of the 36" water line. In the event that the sales tax lawsuit was settled and the monies were freed up to be used for construction of the 36" water line, then those monies would be,applied to sewer rehabilitation projects and Phases II and III of the 36" water line. Ms. Moorman stated her understanding that the $33 million CIP project was for the 36" water line. Director Henry explained that this is an attempt to reduce interest expenses because they recognize that while paying a portion of the bond issue outright, this project is "pay-as-you-go" for which the City funds the remaining amount. This bond issue was therefore "incognizant" as there is expense involved in long-term, long-range projects for which a need occurs when the money is not available up front. Therefore, the funds are borrowed for something that is perceived to be of a long-term, best interest use of funds. Ms. Moorman further asked if the City'intends to issue more bonds in 1994 as stated in the 1991 CIP budget. Mayor Vorsanger responded that additional bonds .issued in 1994 would be financed from the same funds; however, they can't predict what will happen in 1994. The.. City Board approved the 1991 CIP budget which can be changed. Director Green suggested that Ms. Moorman take her list of questions to Staff to be answered. Ms. Moorman responded that she is asking the Board of Directors these questions because she feels it is important that the Board is completely clear and adequately informed on what they are voting, namely that there is an estimated total interest to be paid on these water and sewer bonds of over $7 million. Director Green added that the total interest paid is also at a very favorable rate. Barbara Moorman commented that at the end of 1991, the City's debt in general obligation bonds was approximately $31 million, and if added to the school district debt, totals nearly $42 million, which is getting close to the legal debt limit. She realizes that the proposed water and sewer bonds are not general obligation bonds; however, revenue bonds also need to be considered since interest has to be paid. Ms. Moorman reiterated her previous statement that the interest expense out of the water and sewer fund is increasing by over $300,000 per year and cited another example that the incinerator revenue bond issue is costing the City just under $2 million per year in interest expense. In 1992 alone, the City was budgeted to pay nearly $5 million in interest expenses, and July's monthly financial report indicates that the City's total liabilities are approximately $64 million. Ms. Moorman stated her August 18, 1992 belief that some bonded debt is unavoidable, as bonds are necessary for immediate completion projects. However, this is also the most expensive method and tends to make a few people wealthy while the majority pay double for their basic essential services. Ms. Moorman stated that there are other methods for raising revenues and requested the City Board consider them before passing another bond issue. Upon roll call, the lotion passed by a vote of 6 to 0. Vorsanger, seconded by Blackston, made a motion to approve the emergency clause. Upon roll call, the motion passed by a vote of 6 to 0. ORDINANCE 3638 APPEARS ON PAGE/73/ AGE/9S OF ORDINANCE 8OOX X?(0 ' OTHER BUSINESS BIDS ON AUDIT Director Henry apologized to the local CPA firm which contacted her requesting the opportunity to bid on the City's annual audit as she assumed there would be no local firm wanting to bid for only one year to perform the audit. Therefore, she requested that this local CPA firm be included on the next "Request for Proposal" list. ADJOURNMENT The meeting adjourned at 10:13 p.m.