City Council Minutes

Tuesday, October 23,2001

ST. GEORGE CITY COUNCIL MINUTES WORK MEETING OCTOBER 23, 2001, 5:00 P.M. ADMINISTRATION CONFERENCE ROOM PRESENT: Mayor Daniel McArthur Council Member Suzanne Allen Council Member Larry Gardner Council Member Rod Orton Council Member Bob Whatcott City Manager Gary Esplin City Attorney Jonathan Wright City Recorder Gay Cragun EXCUSED: Council Member Sharon Isom ALSO PRESENT: Water and Power Board Member Ross Hurst Water and Power Board Member Marge Shakespeare Water and Power Board Member Craig Booth The invocation was offered by Scott Hirschi. DISCUSSION RE KEMP STUDY: City Manager Gary Esplin explained that he hoped a discussion of this item would help to identify differences between the Alpha Engineering and Greg Kemp studies with regard to water and power issues. Council Member Gardner commented that the more the issue is studied, the better off everyone will be, and the better able the Council will be to make the right decision. Scott Hirschi advised that he approached the City Council months ago and asked for their support of an evaluation of the rate study performed for the City by Alpha Engineering. He then presented the Mayor with a copy of the evaluation done by Kemp Burdick. Greg Kemp advised that he was hired and paid by the Washington County Economic Development Council to evaluate the study done by Alpha Engineering. He then distributed a hand-out entitled Summary of Analysis of Development Impact Fee and Rate Studies and Other Observations and Recommendations, a copy of which is attached hereto as Exhibit "A." He explained that as he became involved in evaluating the Alpha study, it became apparent that the scope of work had to be expanded beyond just examining their study. He advised that his evaluation contained many references to the Alpha study, and many dialogues took place with Alpha Engineering, as well as with City staff. He then reviewed his hand-out with those present. He explained that as the City?s capital facility plan changes, so must the City?s impact fees. City Manager Gary Esplin inquired of Mr. Kemp if his study took into account purchasing power on the open market. Mr. Kemp advised that all scenarios assume purchase of power. He advised that if power rates were increased 30%, impact fees would only have to be increased by .1%. However, an increase in both would be needed for bonding. He suggested that power be rented rather than bought. City Manager Gary Esplin inquired of Mr. Kemp how the City could protect itself from what has happened this year if it rents rather than owns power. Mr. Kemp replied that protection could be had if the quantity needed was known, and for how long. He suggested that a consultant be hired to make a recommendation. City Manager Gary Esplin commented that the issue was philosophical and one of planning. Mr. Kemp advised that as far as water, implementation of conservation will help to defer the need for more water for ten years. The trade-off, however is that it is hard to conserve yet sell enough water to pay for the bonds. Scott Hirschi advised that underwriters will be able to sell bonds based on Mr. Kemp?s assumptions of power pro forma cash flow projections. However, a detailed rate study is needed on water and power to match the cost of delivery with revenues. Water and Power Director Wayne McArthur advised that the last two pages of the Water and Power Board packet contained City staff?s comparison of the two studies. Mr. Kemp commented that the City now has an opportunity to participate in a major pipeline, which will advance the time when the City has to pay for it, but will give the City excess capacity needed for the future. Water and Power Board Member Craig Booth expressed concern that the City did not raise its rates when rates were raised throughout the western United States and would have been more readily accepted by consumers. When the City finally does raise its rates, they will have to be raised so high that consumers will have a hard time accepting them. He suggested that an incremental system for rate increases be developed and implemented immediately. Council Member Gardner advised that the City has raised water rates for the last three years, and just recently reached the end of this three year plan. Scott Hirschi advised he would provide copies of Mr. Kemp?s study to City Council and staff tomorrow. City Manager Gary Esplin suggested that there is a definite benefit in refining the capital project plan and agreeing on a ten year plan for water. However, the volatile power market makes it difficult to decide on a plan of action for power. The matter will again be scheduled for the work meeting of November 29, 2001. The meeting then adjourned. _________________________________ Gay Cragun, City Recorder