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Home My WebLink About12/4/2012 - Regular1 Vinton Town Council Regular Meeting Council Chambers 311 South Pollard Street Tuesday, December 4, 2012 AGENDA Consideration of: A. 7:00 p.m. - ROLL CALL AND ESTABLISHMENT OF A QUORUM B. MOMENT OF SILENCE C. PLEDGE OF ALLEGIANCE TO THE U. S. FLAG D. CONSENT AGENDA E. AWARDS, RECOGNITIONS, PRESENTATIONS 1. Presentation by Debbie Pitts, Executive Director, Virginia Recreation Facilities Authority, regarding proposed legislation for Explore Park. F. CITIZENS’ COMMENTS AND PETITIONS - This section is reserved for comments and questions for issues not listed on the agenda. G. TOWN ATTORNEY H. TOWN MANAGER ITEMS REQUIRING ACTION 1. Presentation of the June 30, 2012 Comprehensive Annual Financial Report by Brown Edwards & Company, LLP and consider adoption of a Resolution approving and accepting said Report. 2. Consider approving Monday, December 31, 2012, as an employee holiday. I. MAYOR Bradley E. Grose, Mayor William “Wes” Nance, Vice Mayor I. Douglas Adams, Jr., Council Member Robert R. Altice, Council Member Matthew S. Hare, Council Member Vinton Municipal Building 311 South Pollard Street Vinton, VA 24179 (540) 983-0607 2 J. COUNCIL 1. Financial Report for October 2012 K. ADJOURNMENT L. WORK SESSION 1. Cost of Service Study/Water & Wastewater Rates NOTICE OF INTENT TO COMPLY WITH THE AMERICANS WITH DISABILITIES ACT. Reasonable efforts will be made to provide assistance or special arrangements to qualified individuals with disabilities in order to participate in or attend Town Council meetings. Please call (540) 983-0607 at least 48 hours prior to the meeting date so that proper arrangements may be made. NEXT TOWN COMMITTEE/COUNCIL MEETINGS: • December 18, 2012 – 7:00 p.m. – Regular Meeting – Council Chambers Meeting Date December 4, 2012 Department Town Manager Issue Presentation by Debbie Pitts, Executive Director, Virginia Recreation Facilities Authority, regarding proposed legislation for Explore Park. Summary Debbie Pitts will attend the meeting and give a presentation on the possibility of new legislation to change the status of Explore Park. Attachments None Recommendations No action required Town Council Agenda Summary Meeting Date December 4, 2012 Department Finance/Treasurer Issue Presentation of the June 30, 2012 Comprehensive Annual Financial Report by Brown Edwards & Company, LLP and consider adoption of a Resolution approving and accepting said Report Summary Representatives of Brown Edwards have been working with the Town Manager and Finance Director/Treasurer in order to prepare the audited financial statements for the Town. The firm’s responsibility is to express an opinion on these financial statements based on their audit. In their opinion, the general purpose financial statements present fairly in all material respects, the financial position of the Town as of June 30, 2010 and the results of its operations and cash flows of proprietary fund types for the year ended in conformity with generally accepted accounting principles. Attachments CAFR Statement in Drop Box Financial Analysis in Drop Box Report on Comments and Suggestions and Required Communications in Drop Box Resolution Recommendations Motion to adopt Resolution Town Council Agenda Summary RESOLUTION NO. AT A REGULAR MEETING OF THE VINTON TOWN COUNCIL HELD ON TUESDAY, DECEMBER 4, 2012 AT 7:00 PM IN THE COUNCIL CHAMBERS OF THE VINTON MUNICIPAL BUILDING, 311 SOUTH POLLARD STREET, VINTON, VIRGINIA WHEREAS, section 15.2-2511 of the 1950 Code of Virginia, as amended, requires that the Town issue annually a report on its financial accounts and records by a third party certified public accountant, and WHEREAS, the Finance Director/Treasurer’s Department worked with an independent third party accounting firm of Brown Edward & Company, L.L.P., and WHEREAS, John Aldridge of Brown Edwards & Company has forwarded his firm’s 2012 audit to the Town Council for review, and WHEREAS, the firm’s opinion letter stated that the financial statements present fairly, in all material respects, the financial position of the Town as of June 30, 2012, and the results of the Town’s operations and cash flows of proprietary fund types for the year just ending on June 30, 2012, is in conformity with generally accepted accounting principles. NOW, THEREFORE, BE IT RESOLVED that the Vinton Town Council does hereby receive and accept the Town’s June 30, 2012 audit. This Resolution adopted on motion made by Council Member ___________ and seconded by Council Member ________________, with the following votes recorded: AYES: NAYS: APPROVED: Bradley E. Grose, Mayor ATTEST: ____________________________________ Susan N. Johnson, Town Clerk Meeting Date December 4, 2012 Department Town Manager Issue Consider approving Monday, December 31, 2012, as an employee holiday. Summary I am proposing that we grant an additional holiday for all town employees for Monday, December 31. The currently approved holiday schedule includes New Year's Day, which is Tuesday. Therefore, employees would work Monday and have Tuesday off, then continue normal schedule the rest of the week. I believe it would be very appreciated by our employee team to make this a four day weekend. Many people are off already and productivity and work load are very low on a day like Monday. Additionally, the Governor has granted this day as a holiday for all state employees, Roanoke County and the City of Salem recently approved this as well. In regards to services, Police, Fire/EMS, and Refuse services would be affected whereby they still have to work, but are compensated appropriately per policy for holidays. I believe our team is well deserving of this additional day and this supports our efforts to recognize our appreciation of their hard work, without major impacts to the budget. Attachments None Recommendations Motion to approve Town Council Agenda Summary Meeting Date December 4, 2012 Department Finance/Treasurer Issue Financial Report for October 2012 Summary The Financial Report for the period ending October 31, 2012 has been placed in the Town’s Dropbox. The Finance Committee is meeting on Monday, December 3, 2012 at 5:30 pm to discuss the report and will make a presentation of the report to Council during the Council Comment Section of the Regular Meeting on December 4, 2012. Attachments Report in Financial folder in Dropbox November 5, 2012 minutes Recommendations Motion to approve the Financial Report for the period ending October 31, 2012. Town Council Agenda Summary Meeting Date December 4, 2012 Department Town Manager Issue Cost of Service Study/Water & Wastewater Rates Summary Town staff has worked with Davenport and Co. to review and finalize the work completed by Public Works regarding the cost of service study for our water and wastewater system. This study evaluates current and future operating expenses, fund balance, and capital needs over the next five years. The study then outlines the revenue needed to support the financial operating and capital needs of the water and wastewater system. Attachments Power point presentation by Courtney Rogers, Davenport & Co. Recommendations No action required Town Council Agenda Summary Utility Enterprise Fund Rate Impact Analysis Prepared by December 4, 2012 Overview Purpose – To discuss a Water & Sewer Enterprise Fund Revenue and Expenditure model that has been created to show the revenue increases million through FY 2017. Background – March 2011 – Town Council last implemented user rate increases. Fund balance for the Utility fund stands at just over $100,000 or . Ob ective s –j Continue running the Water & Sewer Enterprise Fund as self-supporting operation (i.e. no support from the Town’s General Fund).  Page 2 Users . Potential Water & Sewer Enterprise Fund Policy Guidelines • Maintain Financial Independence from General Fund by avoiding the need for any General Fund Revenues for Water & Sewer Operations. •a n a n a a er ewer n erpr se un a ance o a eas ays o operating expenditures with a long term goal of at least 180 days operating expenditures. • Target Net Revenues after Operational Expenditures to be at least 1.30x debt service requirements. The excess revenues would be available to first maintain the Water & Sewer Enterprise Fund Balance and second to further limit the overall amount of debt issued by the Town for Water & Sewer Enterprise Projects.) • The Town will work to fund all capital projects of $100,000 or less with Water & Sewer Enterprise Fund Equity. A goal of at least 5% of annual revenues shall be transferred to the capital fund each year for ongoing CIP and maintenance of the s stem. Page 3 y Historic Rate Increases 0 0%7 0% 20072006200320042005 2003-2007 0.. 0.020.0 Inflation ... Sewer 0.0 0.0 10.0 .. 2008 2011 2012 ... 2008-2012 2009 2010 Water 7.0% 15.0% 0.0% Sewer 16.7 15.0 0.0 0.0% 10.0% 0.0 10.0 Inflation 5.0 3.6 1.7(1.4) 1.1 Page 4 Inflation Source: Consumer Price Index-All Urban Consumers 1967=100 ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt CIP Historical Revenues and Expenditures 3,000,000 3,500,000 2,000,000 2,500,000 Contingencies, Transfers & Capital Total Debt Service 500,000 1,000,000 Total Operational Expenditures Total Revenues - Revenues have been just enough to cover Operations over the last five years. Page 5 Historical Fund Balance 1,600,000 1,000,000 1,200,000 1,400,000 200,000 400,000 600,000 800,000 - 06/30/08 06/30/09 06/30/10 06/30/11 6/30/2012 Budget 13 Ending Fund Balance 90 days Cash on Hand 180 days Cash on Hand Fund balance dro ed si nificantl in 2010. Page 6 pp g y Existing Utility Fund Debt Service The Town has $6.4 million of self-supporting Utility debt outstanding. Fiscal Year Principal Interest Total 700 000 2013 $428,247.52 $232,765.40 $661,012.92 2014 393,761.71 218,301.08 612,062.79 2015 357,351.88 205,560.60 562,912.48 2016 364,893.91 193,218.64 558,112.55 2017 377,675.79 180,849.28 558,525.07 400,000 500,000 600,000 2018 390,705.15 168,032.28 558,737.43 2019 403,989.87 154,447.54 558,437.41 2020 422,538.07 139,574.40 562,112.47 2021 436,358.12 123,379.40 559,737.52 2022 455,458.71 106,528.78 561,987.49 100,000 200,000 300,0002023 469,848.72 89,013.78 558,862.50 2024 489,537.44 70,824.98 560,362.42 2025 465,792.59 51,828.20 517,620.79 2026 440,188.77 34,190.46 474,379.23 2027 288 876.79 17 175.08 306 051.87 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Principal Interest 2028 215,000.00 5,375.00 220,375.00 $6,400,225.04 $1,991,064.90 $8,391,289.94 Page 7 Debt service is essentially flat from 2015 to 2024. All debt is paid off in 15 years. Debt Service Coverage Ratio 4 00 2.50 3.00 3.50 . 1.00 1.50 2.00 - . 06/30/08 06/30/09 06/30/10 06/30/11 6/30/2012 Budget 13 Debt Service Coverage VRA Legal Coverage Proposed Target Debt service coverage was strong from FY 2009 to FY 2011 but dropped Page 8 significantly . Key Assumptions • Consistent average consumption patterns. • Total Operational Expenditures grow approximately at 3.6% over the five • The Capital Improvements Plan totals $17 million to FY 2017 and is funded with 89% Bonds, 8% from WVWA and 3% Equity. 5,000,000 6,000,000 The Town is facin a 3,000,000 4,000,000 WVWA Funded Town Debt Funded considerable capital program over the next several years. - 1,000,000 ,, Page 9A detailed break out of the Water & Sewer CIP is shown in the Appendix. Scenario 1 – Operations Only; No Reserve build up/No CIP Revenue Growth needed from Water & 10% 12% Sewer Billings - Operations Only 2% 4% 6% 8% 0% FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Operations Under this Scenario Revenues are enough to cover Operations including existing debt service but does fund future ca ital or build u fund balance. Page 10 p p Scenario 2 – Operations and Reserve build up; No CIP Revenue Growth needed from Water & 8% 10% 12% Sewer Billings - Operations + Capital 2% 4% 6% 0% FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Operations Capital This Scenario adds future Capital needs including debt service along with Operations including existing debt service. However, this does not build up fund balance to the proposed policy level over five years. Page 11 A detailed break out of the Water & Sewer CIP is shown in the Appendix. Scenario 3 – Operations, Reserve build up and funded CIP Revenue Growth needed from Water & 10% 12% Sewer , building up Fund Balance 0% 2% 4% 6% 8% FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Operations Capital Fund Balance Scenario 3 includes future Capital needs including debt service along with Operations including existing debt service as well as building up fund balance to the proposed policy level over five years. Page 12 Compliance with Proposed Policy Revenues vs Expenditures 3,500,000 4,000,000 4,500,000 5,000,000 Contingencies, . 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 Total Debt Service Total Operational Expenditures Total Revenues Fund Balance - 500,000 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 1 500 000 2,000,000 2,500,000 500,000 1,000,000 - FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Ending Fund Balance 90 days Cash on Hand 180 days Cash on Hand Page 13 90 Days Cash on Hand is achieved in year 5. 180 Days would require larger revenue increases. The Town should work toward 180 Days over a longer term. Compliance with Proposed Policy 1.60 Debt Service Coverage 1.00 1.20 1.40 0.20 0.40 0.60 . - FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Debt Service Coverage VRA Legal Coverage Proposed Target Debt Service Coverage drops as the amount of new debt service increases. Page 14 Town Water & Sewer Bills versus other Virginia Utilities •For a user of 5,000 gallons per month the Town of $41.95 which just misses being in the lowest 10% of ills in Vir inia. •This is roughly 1.2% of Median Household Income. •Median bill is $66 per month of 153 Utilities Surveyed. Page 15Data from the Draper Aden 2012 Survey. Bills are based on usage of 5,000 gallons per month. Recommendations 1. Davenport continues to review assumptions for Rate Model and . 2. Town Council gives Town Staff feedback as to potential structure of rates). 3. Meet with Council a ain b ear end to review more detailed rate analysis. Page 16 Next Steps • Dec. 4, 2012 – Council work session regarding future Water & Sewer Rates • TBD – Follow up Council work session regarding Water & Sewer Rates (if necessary) • –ounc cons ers ra e ncreases v a requ re pu c no ces ear ngs. • TBD – Rate increases implemented. • Winter/Spring 2013 – Staff and Davenport to review capital spending and discuss timetable for 2013 bond issuance. • Summer/Fall 2013 – Execute Bond financin . Page 17 Appendix – Current Rate Structure Water Rates Residential (Bimonthly) Wastewater Rates Residential (Bimonthly) First 3,000 gallons or less through 5/8" mete $15.92 Next 42,000 gallons or less (per 1,000 gl) 2.94 Next 255,000 gallons or less (per 1,000 gl) 2.55 Next 700,000 gallons or less (per 1,000 gl) 2.35 First 3,000 gallons or less $23.39 All over 3,000 gallons (per 1,000 gl) 3.43 Commercial/Industrial/Insustrial Service (Monthly) Next ,, ga ons or ess per , g . Commercial/Industrial/Insustrial Service (Monthly) First 1,500 gallons or less thru 5/8" meter 7.97 First 1,500 gallons or less 11.68 All over 1,500 gallons (per 1,000 gl) 3.43 rs , ga ons or ess ru me e . First 1,500 gallons or less thru 1" meter 9.28 First 1,500 gallons or less thru 1-1/4" meter 9.66 First 1,500 gallons or less thru 1-1/2" meter 10.44 First 1,500 gallons or less thru 2" meter 13.36 " , . First 1,500 gallons or less thru 4" meter 23.44 First 1,500 gallons or less thru 6" meter 29.31 First 1,500 gallons or less thru 8" meter 32.81 Page 18 All , , . Appendix – Projected Capital Improvement Capital Improvement Program 2012 2013 2014 2015 2016 2017 Total I t t WVWA Ti k C k I t t (12 6% h )550 000 550000Improvemens o n er ree n ercep or . s are , , Repair Tinker Creek Wastewater Interceptor (Design&Const) 500,000 500,000 Improvements to WVWA WPCP, Disinfection & Solids (5.5% share) 770,000 770,000 New Backhoe/Front end loader 92,000 92,000 Deployable Leak Detectors 36,000 36,000 Portable Sewer Video Camera 20,000 20,000 Design Glade-Tinker WW Interceptor, Phase 3 35,000 35,000 D i n i r R In r r i Im r m n Replace Compact Pickup Truck 20,840 20,840 Replace Full-size Pickup Truck with snow plow 28,350 28,350 Replace Full-size Pickup Truck with high-top 27,930 27,930 Jefferson Ave Water line 248,000 248,000 Cleveland Ave Waterline 204,250 204,250 Jackson Ave Waterline 290,800 290,800 Bali Hai Water Pump 26,875 26,875 Bowman and East End WW I/I 1,300,750 1,300,750 Maple St. Waterline 163,950 163,950 Replace Compact Pickup Truck 20,840 20,840 Map and Model GIS/GPS WW 295,625 295,625 Map GIS/GPS Water 376,250 376,250 Glade-Tinker Creek WW Interceptor line renewal 1,781,600 1,781,600 Morrison Ave/Meadow St Waterline 335,675 335,675 , , Timberidge Zone Waterline 172,800 172,800 Morrison Ave Zone Watreline 119,600 119,600 Shelborne Ave PRV station 43,000 43,000 Feather Road PRV station 37,625 37,625 Montgomery Village PRV 37,625 37,625 Replace Lindenwood Water System (Design)145,125 145,125 Re lace Lindenwood Water S stem Construction 1 961 875 1 961 875 Renew Montgomery Village WW 1,397,500 1,397,500 Renew Hardy Road, Crofton & Montgomery WW 290,250 290,250 Renew Lindenwood Downstream WW 215,000 215,000 Renew West & Southend Downtown WW 1,290,000 1,290,000 Renew Crofton WW 1,290,000 1,290,000 Renew Midway WW 1,290,000 1,290,000 Renew Bali Hai/Ruddell/Mt View WW 1,290,000 1,290,000 Page 19 Total Uses 1,050,000 770,000 2,355,750 3,543,300 3,968,620 5,299,090 16,986,760 Funded by Operations - - 148,000 100,000 103,995 139,090 491,085 Town Debt Funded 500,000 - 2,207,750 3,443,300 3,864,625 5,160,000 15,175,675 WVWA Funded 550,000 770,000 - - - - 1,320,000 Total Sources 1,050,000 770,000 2,355,750 3,543,300 3,968,620 5,299,090 16,986,760 Unless the enclosed material specifically addresses Davenport & Company LLC (“Davenport”) provision of financial advisory services or investment advisory services, or Davenport has an Disclaimer agreement with the recipient to provide such services,the recipient should assume that Davenport is acting in the capacity of an underwriter or placement agent. 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