OurWeek The Grant County Record in Grant County · Public works committee · 2026-02-03 · full transcript https://www.youtube.com/watch?v=YONZIKG3fgg Exported Fri, 14 Aug 2026 22:41:22 GMT Source: YouTube automatic captions. Copied into the combined index from the marion-city-council-indexed report; same text, key prefixed by body. These transcripts are machine-generated. They garble proper nouns badly — company and personal names especially. Watch the recording before repeating any name, number, or quotation. The video is the record. ============================================================================== Indexed at https://ourweek.in/grant-county/reports/grant-county-record 0:15 Okay, we're going to go ahead and call this committee meeting to order. Uh the public works committee of the city council. Um present are members Mike 0:25 Klene and Erica Divine. Uh absent is Eric Marshall. 0:30 Um, thank you to the other council members for being here for the meeting tonight. I know that we are continuing 0:39 our discussion on the Marin utilities rate increase request. Um we have a presentation that the mayor will 0:47 introduce from um Baker and Tilly regarding their review of the data presented by uh Marian Utilities to them 0:55 as part of a shared uh file sourcing and um there's a lot of information to get 1:02 through. I think we'll give them as much time as we can and um we can do questions. What I wanted to say going 1:11 forward is that we do need to just keep moving forward. I don't think that there is any benefit in continuing to argue 1:21 about what happened in the past. Um I think that at this point there's a problem in front of us. We need to find a good solution. We need to find it 1:29 together and we need to to move forward the best way we can with the information we had have at this time. Um, and 1:38 hopefully we can all do that in in good spirits together. Fair. Yes, ma'am. Thank you. 1:45 Agreed. I will second that. 1:48 Thank you. Since you're the committee 1:50 [laughter] 1:51 should scare you. I wasn't going to say that. 1:57 We'll give this just a minute. We're trying to get the presentation up on the board so everybody can follow it. Um, mayor, would you like to step up and 2:04 introduce so we can do some of that while we're waiting on the presentation to come forward? 2:09 Yes. Um, um, good evening um, committee. Um, and thanks for for being here tonight and 2:18 um, vice president um, Erica Devine. I got to get used to saying that now. Um, thanks for um, having us. Um, Baker Tilly has had the time to do a um review 2:27 of some of the um of the situation we're dealing right now, the rape request. 2:31 They have uh information here. I think they're going to take about takes them about 30 or 40 minutes to make it through the um presentation and then 2:39 obviously they'll be here to answer any questions that they may have and they have a um I mean a lot of information to share and they have a recommendation 2:46 page at the end as well. So, um, at this time I I'll just yield the floor to them and if you need me at any time, you can always just, um, call me back up. But, 2:54 um, again, thank you so much and, um, they'll be here to, uh, go through the presentation, answer any questions you may have. 3:09 And I believe they're going to come around and hand out paper copies for us as well, so that we can take notes on those. 3:20 Um, since we are streaming, if you can make sure to hit the red button so everyone can hear you and if you'll introduce yourself and all your background for us, I'd appreciate it. 3:30 Yeah, thank you for having me. Um, we were asked to do a review of the water utility and the rate recommendation in the current ordinance. U, my name is 3:38 Mitchell Schweer. I'm a director with Baker Tilly um specializing really in our utility practice um out of the Indianapolis office. Um so the 3:47 presentation uh on the screen and then getting handed out to you is what I'm planning to walk through. Um not sure if 3:55 the presentation is able to be enlarged at all. 3:58 Well, I'm an Android guy. [laughter] This is an iPhone. 4:19 There you go. 4:22 So, I might have to have your assistance in scrolling through pages, but I'm going to start on the second page, the agenda. 4:30 just scroll up. Scroll up and down. Scroll up. Okay, appreciate it. 4:38 So, agenda here. This is the what I'm going to walk through. The first section is just a review of the historical utility metrics, uh, talking about the 4:46 cash balances, recommendations both in your bond ordinance, and then just best practices for water utilities. Uh we're 4:54 going to look at historical coverage levels requirements there and that's in regards to your debt service coverage. 5:00 Uh we're also going to look at what was approved in the last order from the Indiana Utility Regulatory Commission. I wanted to focus a little bit. 5:13 It's gonna shut off. [snorts] Okay. Appreciate it. 5:20 The next section then I know that'll come up here shortly. I'm going to do a overview of the proposed revenue requirements and the water rates. I'm 5:28 just looking at a summary of what's been proposed to the committee and the council at this point. Um wanted to focus on a couple of things that may be 5:36 brought up if this were to be filed again with the commission. And then I wanted to talk about the monthly Marian utility bills just giving an idea for 5:44 the public to see the increases being proposed not only for water but then also how they can see an impact on their overall utility bill. Um and then I 5:53 wanted to show a comparison of the water bill compared to some other Indiana utility or water utilities throughout the state. And then the last section, uh, just some overall recommendations. 6:04 And then the final two pages, uh, just giving a pros and cons of continuing to be regulated for the water utility with the IURC or potentially opting out. 6:16 So, you want to go to the next page and I'll skip that. 6:20 So the first section of the really the first two pages you'll see here is focusing on what we'll call your available cash and that's really going to be money that you can use for daily 6:29 operations and then cash funded capital improvements. Uh you also have cash balances in a bond and interest account, debt service reserve uh which are not 6:38 able to be used for uh paying for those operating costs. uh those are restricted for payments on your bond and then the debt service reserve account is really 6:47 just a shity in case a payment were to be missed. The first graph here though is you can see the operation and maintenance balance over the last 6:54 several years. Uh the minimum balance uh that is listed in your bond ordinance is two months operating. Uh you can see 7:02 here that is shown here on the black line the two months operating balance. 7:07 the balances over the last couple years have really been hovering at that line or below. Normally, when I'm looking at uh rates for either water or sewer 7:15 utilities, once your cash balances are starting to get to this level, this that is where you really need to start considering rates. Now, we will also 7:23 want to look at your depre depreciation fund. Um often utilities will set this fund at the minimum and then any surplus 7:30 is going to go in that op or in the depreciation fund. So on the next page, if you want to move there, this is looking at that depreciation or 7:38 improvement fund. This is money that is set aside for cash funded capital improvements. Um, oftent times we'll see 7:45 this fund, the balance varies over time as you build up balances and spend that down with larger capital improvements. 7:52 You can see here there's no required minimum for your bond ordinance, but typically what we're setting rates to achieve is at least one year's 8:00 depreciation or one year's capital budget. The line on this graph is currently showing a uh one year's 8:08 depreciation expense for the water utility. So you can see historically here and really starting in 22 on, we're seeing a deficient balance there. So 8:17 coupled with what we see on the prior page with the operation maintenance balance, we'd say the water utility is both from the operating and depreciation fund underfunded from their cash balances. 8:30 One of the questions asked in a couple of the other meetings was just where are things on a month-to-month basis. Uh the data we have was for calendar year 2024. 8:39 Uh this is looking at revenues and expenses. Really the summary here is taking into account all funds um 8:46 excluding excluding things like transfers in and transfers out that netted to zero which we'd like to see. 8:52 On average for this tw 12-month period the water utility was losing approximately $30,000 per month. 9:04 So onto the next page we're going to go into the debt service coverage levels. 9:08 And why this is important is the 2024 bonds that were issued with the SRF program, you had a bond ordinance that was authorized and approved for the 9:17 issuance of that debt as part of the co covenants agreed to with the Indiana Finance Authority is to maintain at a minimum debt service coverage of 125%. 9:28 And just real simple, debt service coverage is taking your operating revenues less your operating expenses and then taking that net amount divided 9:36 by what you owe annually. and debt service on the bonds. 9:40 So for calendar year 2024, taking into account uh that calculation, the debt service coverage here was 40%. So far below that, 125%. 9:51 For the test year period, which uh in the report was the 12 months ended June 30, 2025, coverage there was negative 9:58 57%. which means before we even factor in the debt service, your revenues are already deficient for your operating uh 10:06 expenditures, which we saw in the other graph as you were drawing down cash about 30,000 per month. 10:13 Wanted to also show from the rate study that was presented in December, the projected coverage that those rates would provide would be 291%. 10:23 Um that is not taking into account the loan payback. If we were to account for the loan payback amount, coverage would be 201%. 10:34 We also wanted to show what would this look like if instead of doing the additional 21% we just looked at the acceleration for phases four and five 10:43 without factoring in the loan payback, which is the 299,000, you would have coverage of about 225%. 10:50 Including the loan payback, we'd be at uh 156%. So still above that 125. And then the last bullet point on this 10:58 graph, if you were to go issue debt and it was going to be on the open market, we would typically go to a rating agency 11:05 like S&P or Moody's in that situation for their higher rating C categories A+ or above, they're looking for that 11:13 coverage metric to be 140% or above. So even with the acceleration, assuming 11:20 that we're spending at the level of the budget expenses for 2026, you would have sufficient coverage there. 11:30 So on this page, this is what was approved uh at the Indiana Utility Regulatory Commission. The box that I've highlighted there is phase five. Phase 11:39 five is the rates that would be effective in 2028, January January 1st of 2028. So just breaking this down line 11:47 by line for operating expenses, the approved amount was 3,825,000. 11:53 uh taxes other than income. This is your payroll taxes. The approval there was a little over 102,000. 12:00 The extensions and replacements. Uh so this is the money that would be used for that depreciation fund for those cash funded capital improvements 1,580,000. 12:10 The debt service was 932,000 and uh overall for your revenue requirements it' be 6,440,000. 12:20 So that would be the final phase that was approved. uh in the last order for the water utility. 12:28 On the next page, wanted to just focus in on one where we were at with the settlement that we just 12:35 discussed. So, the overall expenses approved there were 3,928,000. 12:41 For the 2023 budget, the amount budgeted was 4,371,000. 12:48 24 budget, uh a little over 4.4 million. 12:51 25 budget uh 4,626,000 and then for the 2026 budget 4.9 million. So one of the things just 13:01 howing that previous page what we've seen from an operation and maintenance standpoint is the expenses have far out 13:08 far far out exceeded what was approved in in the 20 in the phase five which is for 2028 in the rate case. 13:22 So the prior page looked at the budget that was approved for each of those years. We then wanted to look at not only the budget but budget to actual expenditures. 13:31 So in 23 the budget there was the 4,371,000. 13:36 Actual expenditures came in about 4,734,000. 13:41 And then in the 25 budget same fact pattern 4.4 million was budgeted and the actual expenditures was 4,694,000. 13:51 And then the 25 budget was 4,626,000 with actual expenditures at 4,943,000. 13:59 And then the last column there, the 2026 budget was at about 4.9 million. The operation and maintenance expenses 14:07 included in the report from December were set at 5,785,000. 14:13 So I think coupled with the fact that we saw in the prior page that the budget is exceeding what the rates have been approved for in the order. On top of 14:20 that, we're also seeing that due to some of these uh and you'll see on the next graph just some of the increases that are seen from the age of the system, the 14:29 repairs and the maintenance, we're seeing the expenses out outpace the budget as well. 14:39 So, this same graph as before, but we just wanted to break it down into cost categories. Um, so you can see we've broken it down into salaries and wages 14:47 there at the bottom, employee pensions and benefits, purchase power, chemicals, materials and supplies, contractual services, other servicevic and charges, 14:56 and then the overall increase and that increase is just comparing back to what was approved in the IUR settlement. So 15:03 overall based on the report presented in December the uh requested operation maintenance expense would be about 47% 15:12 higher than what the IURC approved in the last rate case. 15:22 So the next section is just doing an overview of uh the rates here. Again, looking at this graph on the left side 15:31 is showing what was approved under phase 5 for the 2028. Uh we talked about this a little bit earlier, broke down those 15:38 categories. Overall revenue requirements 6,447,000. 15:44 The amount that is shown in the current version of the report uh used to uh draft the ordinance would be 7,893,000. 15:52 So almost an increase of $1.5 million uh in total over what was approved in the uh rate case. 16:04 Move on to the next page here. 16:08 So just wanted to highlight a couple items as we look through that report. Um assuming it's going to go and be filed with the commission. Uh one of the 16:16 things we focused in on was the interfund loan that was done between the sewer and water utility. Uh couple 16:23 things that we wanted to note. Uh currently in the report that's not set to an actual loan amount. Um it's currently set to look at last or the 16:32 test year operating loss plus an allowance for depreciation. 16:37 Um just from experience with going to the commission, this is likely going to be something that they're going to point out and want to pull out of the rates. 16:46 Um they're going to consider this retroactive rate making. you're trying to set rates for something that happened in the past, not necessarily something coming up. Um, the other thing just 16:54 wanted to focus on is they did not approve a loan from the sewage works to the water utility in the last order. Um, that's just going to that's going to be 17:02 something that will get brought up as testimony is filed and they look at the case. 17:08 And then just a couple things on the operation and maintenance expense. Um, currently the allowance is set a little 17:14 over 880,000 or 18% over what the 2026 budget is shown. Um, just again 17:22 experience going through the rate cases at the commission. They're going to dig into really every line item of your test year operating expenses and then also 17:30 what you're increasing for the performant in the report. So the 880,000 uh increase over the budget is going to 17:38 be something that's definitely going to be picked at at the commission. Just a couple items I wanted to focus on. The second bullet point there, one of the adjustments is for retirement payouts. 17:50 Um this is really going to be a one-time expense. You're you're likely not going to have these same employees retiring every single year. They're likely not 17:58 going to include $55,000 for retirement payouts if it's going to happen one time for the water utility. likely through 18:05 either settlement or through the uh the full rate case, there's going to be some sort of amortization of that expense. 18:12 The other one we we noted was there's an inclusion of the bad debt expense line item. If if we're looking historically at the financial statements, the 18:20 starting number there was zero and the adjustment there is $128,95. 18:27 Um, again, I can't say for certain, but knowing knowing how uh detailed they're going to go through this, that's likely 18:35 going to be something that they're going to look to cut in the rates as well. The last one here, um, really just wanted to point this out as we talk about a little 18:43 bit later on a decision whether it's best for the water utility in the city to remain in the commission or not. 18:51 Included in those expenses are about $70,000. And this is for uh additional uh consultants fees to go through the 18:58 rate case again. So the estimate there is to go through the rate case would be 280,000 and that'd be advertised over a 4-year 19:06 period. So 70,000 per year would be built into the rates. 19:12 Did want to just talk about the over overall bills. So the water, sewer, solid waste and storm water. Um the far 19:20 left graph is looking at your current rates as of 2026 since we did just have rates go into effect for both sewer and water. 19:29 Uh you can see here as was discussed in the last meeting there's no proposed increase in the trash fee or in the 19:36 storm water. So those are fixed. I know percentages have been thrown out. Just wanted to make it clear that the only percentage that would be impacted by any 19:44 proposed or adopted increase would be the water utility bill. 19:48 So, the current rate, and this is all assuming a user using 4,000 gallons, um, this is kind of a statewide metric that SRF will use when they're looking at uh, 19:57 communities across the state. The current bill, including fire protection, would be $29.88. 20:04 If we were to accelerate uh, both the phase four and phase five increases, that water bill would be $33.58, be an increase of $3.70. 20:15 And then if we did an additional 21% on top of the acceleration, the water bill would be $40.52. 20:24 So an additional increase of $6.94. 20:27 So doing both the acceleration and the 21% would result in a bill increase for an average user of a little over $10. 20:38 The next page just compares water bills for Marian 4,000 gallons again compared to others throughout the state of 20:46 Indiana. Really focusing on communities in this area. Uh you can see there on the the third bar graph is the current rate for 2026 to $29.88. 20:57 Under the acceleration, it put you about in the middle of the pack, $33.58. 21:02 And then with the acceleration and the additional 21% that's the $40 $40.52. 21:09 So just to give a comparison of where you would land compared to some of the other communities. Um one thing I will always say when talking about this graph, this is really a point in time. 21:20 This is not to say that none of these other communities are currently considering rates or have plans to increase rates at some point in the future. 21:35 This next slide, what we wanted to talk about a little bit was when the last rate case went through the commission, 21:42 there was a restructuring of the rate structure for the water utility. Um, you had and you still have four blocks. 21:53 Your customers move through the blocks as their consumption increases. 21:58 As part of the last rig case, there was the final result was compressing the four blocks into one. So, we wanted to 22:06 show kind of the impact for different levels of customers from that rate case. 22:12 Um, you can see the first one here is a 2,000galon bill for 2025. Their bill would be $184. 22:22 26, they would see a 6% increase. 19 It' be at $195. 22:28 5% increase for 27, $19.99, and then a 9% increase for the final phase, $21.79. 22:41 Wanted to then show some of the larger customers due to the compressing of due to the compressing of those blocks, what the impact would be to some of them. 22:51 I'll just uh I'll focus here on the 100,000galon user. their bill would have been $44243. 22:58 They would have got a 16% increase uh leading into 2026 uh $512.94, 23:07 an 8% increase then uh in 2027 uh $55355 and then an 8% increase in the final phase at $59823. 23:20 One thing uh just as we reviewed the cost of service study and this has been adopted at the IRC. One thing to just point out is the shifting of 23:30 a lot of your cost was shifted from more of a fixed revenue that you would receive at the water utility to more of a variable cost. So instead of having 23:38 the uh guaranteed revenue you'd see from some of those base charges and fixed charges, you're putting more reliance on 23:45 customer usage. So to the extent your usage would vary whether you had a dry or wet season, you could see a big shift in your revenues just from the 23:53 consumption level of your customers. So that's just something we wanted to point out uh so you can see what was occurring 24:01 uh in that cost of service study and the ultimate rates that were adopted with the commission. 24:07 So a couple recommendations as we were reviewing the data provided. Um the overall one I think we just need to take 24:15 at this point a pause on this rate adoption. Um a couple things to consider before going forward and adopting rates. 24:22 The second bullet point, I think this is really one of the important factors for both the utility and the council and the 24:29 mayor to consider is whether you want to continue to be in the regulatory commission or potentially opt out. And 24:37 on the next couple slides before we get there, we'll talk about that in a little bit more detail. 24:42 Um, we need to have a discussion on the inter fund loan with the IFA. Um, to our knowledge, they are not aware that this 24:49 has occurred or they are not they have not approved the interfund loan. When you issued the 2024 bonds, one of the 24:58 covenants in the legal documents with the IFA is that prior to encourage prior to incurring any financial obligation 25:05 for the water utility, you would have to file a parody consent with SRF and get their approval. Um, so I think assuming 25:13 that has not occurred, that discussion would need to be had with them. Um, and see what that see how they would like 25:20 you to remedy that issue before moving forward. 25:24 Um, finalizing the financial statements for 2025. Uh, we'd like to be able to see where things landed with both revenues and expenses. Um, so we could 25:34 make a full recommendation on rates there. 25:37 um review and prioritize the capital improvement plan. Uh just seeing what is going to be necessary the next couple years and potentially look at phasing in 25:46 the rate increase instead of adopting it all at once. I think just uh just digging out of where we've seen the water utility the last couple years. 25:56 It there may be a point where some of these capital improvements need to be prioritized and ones that are not necessity deferred if even an option. 26:05 And that leads into the next one really the considering the phase in of the water rates to try to mitigate the increase on customers. 26:12 Second to last bullet point, we wouldn't loan any more money to the water utility, whether that's through a loan from the city or another loan from 26:20 water. Um unless that's going to be approved with the IFA and rates are going to be in place to do that. Um that I think is just going to lead to 26:28 additional uh uh issues with the IFA and the debt that you have with them. So just I mean potential options diverting 26:36 claims or potentially gifting cash from the city and recovering that through a payment low tax. That's an option we've 26:45 done with a utility, another regulated utility that was in a similar position. 26:50 Um and then the last one here is just consider cost sharing opportunities between the city and any other utilities. seeing if there's ways that potentially some of those operation and 26:58 maintenance costs could be lowered where you could do a phase in of rates and potentially still meet your debt service coverage levels with the SRF and continue to pay your debt. 27:12 So, the last thing I said uh was I think one of the important things here for the city to consider is the pros and cons of 27:19 continuing to be regulated with the commission. There's quite a few bullet points here on this slide. I'm not going to read through all of them. 27:27 Really, the pros for the city of opting out of the Indiana Utility Reg Regulatory Commission is that you have then local control of your rates and 27:35 charges. Um, another benefit being the speed at which you can increase your rates. Um, I think in the last meeting the discussion was had if your report is 27:44 to be filed with the commission, you then start a 300 day process before rates would be improved. Um, so that's going to take that's going to be a long 27:52 lead time. So potentially anytime you run into a circumstance where you need to increase rates, it's going to be a long process before that happens and 27:59 you'll see situations like this where you are potentially uh drawing down some of your cash balances. 28:06 The other one I wanted to really just point out is the cost of going to the commission. Um as I talked about earlier, a full regulated case at the 28:15 commission can cost anywhere to from $200 to $300,000 for professional fees. 28:20 Um when it gets filed with the commission, it really is a full uh essentially like a legal court case that 28:27 gets uh we would file uh on behalf of the utility. Your consultants would file a report. There's then another party, 28:36 the office of utility consumer council that would review the report and all the workpapers. They do essentially what we're doing right now. They they're 28:44 reviewing the request and then they're making suggestions on if they believe the rates that are being calculated in 28:51 the report are just and fair for the end consumer. 28:55 Knowing that um with the cost of going to the commission really to maintain your increases in 29:03 operation and maintenance expenses, we would suggest that you'd go to the commission every year, every other year. 29:10 So if you're thinking about that, you're incurring $200 to $300,000 to file a case every year. So some of your larger 29:17 regulated utilities are going to the commission every year to raise the rates. And one of the reason that needs 29:24 to occur is when we do a rate case, you would start with your test year period and you can only then project out your expenses for one year beyond that. So, 29:33 if you're if you went into the rate case and they approved you for $4 million, it's going to be that $4 million for how many phases you have your rates. They're 29:41 not going to allow you to include inflationary increases into the rates. 29:44 It needs to be fixed, known, and measurable. And in the commission's eyes, inflation is not fixed, known, or measurable, so it's not allowed. So I 29:53 think that's one thing you if you were to look at the last order if you look at the operation and maintenance expenses you'll see that the line item for operation and maint expenses is pretty m 30:02 pretty much fixed in those five phases other than in phase five when they actually decrease the amount due to some of the rate case expenses falling off. 30:15 Um, another benefit, you also have a little bit less compliance work. Uh, annually there's a report that's required to be filed with the commission at the end of April. Uh, that report 30:23 wouldn't be required going forward. So, a little bit less administrative burden on that behalf as well. 30:31 And then the next slide, just some of the pros of being in the commission. 30:37 I don't know if it'll go to the next page, but really the pros here is you kind of have the checks and balances that I mentioned. your consultants would file 30:45 on behalf of the water utility. You do have a second party looking into the financials of the water utility and doing kind of a checks and balances that being the OUCC. 30:55 Um it adds a layer of protection over litigation of your rates. Um the thought there is that these were approved by the IURC. If someone were to file suit 31:04 against me, you have some backing there that it was approved by the commissioning body. Um, it really then 31:12 also forces utilities to actively manage your day-to-day operations. You're filing those annual reports. Um, it's 31:19 forcing you to prepare financial statements and kind of see the results on an annual basis. And it can be unpopular politically to uh withdraw 31:28 from the IURC. One just being uh if your consumers are thinking that you're just arbitrarily raising rates and you don't have that third party approving it. 31:39 So with that, I would welcome questions on everything that's been presented so far. 31:53 May the first question I wrote down, it's on page 11. 32:01 And when you looked, and I this is for either Robin, you, I don't care, whoever can give me the answer. Um, when you 32:08 looked at the increase for the proposed rate increase and there's the the jump 32:15 in contractual services, did you look at why was that a blip? Is that a trend? Did you look at just the dollar figure or the cause for it? 32:27 We did not look at the trends other than the one that was pointed out was the rate case expenses. So, there's the 280,000 built into there for that. 32:37 So just excuse me. So it's just looking at the dollars, not [clears throat] necessarily the cause for Okay. Exactly. 32:46 Well, yeah, the cause there would be the following of the Ray case for the 280,000. Thank you. 32:59 And I have another in looking at the pros and cons of leaving the IURC. 33:06 Did you talk with other What are examples of other towns that have done this? Did you talk with them and what they say if you did? 33:14 So all water utilities were regulated at one point with the regulatory commission. Um over time a lot of them have opted out. A lot of the ones you 33:23 see remaining in the commission are some of the larger cities. So just some examples, Fort Wayne's regulated, Elcart, Southbend, Evansville, and then 33:31 some of your regulated utilities like Citizens, Indian-American, they're they cannot opt out. So they are continued to be regulatory or regulated. Um I think 33:40 though one thing to consider with those communities is just the scale of their revenues they're bringing in versus what's being spent at the commission. If 33:48 you're a, I don't know, Fort Wayne or an Evansville, you're bringing in $50 million a year in revenue. 250 to 350,000 is a lot less than your utility 33:57 that's built bringing in under $5 million. Thank you. 34:10 Mike, please. 34:13 Um, how how many cities are still in the IURC like comparable to our size? 34:21 Like a lot of those ones you just mentioned was like larger than we was, but I would need to look on their website. 34:26 They have a listing of all the exact cities at and we can provide a link for that. Um, myself I maybe work with one or two that's your size or smaller. 34:37 So not very many there. No, not not too many. Okay. 34:44 Why is it that we can opt out and um what I don't really recall what the pros 34:51 were. You didn't really go through a lot of pros as to why we're in it. 34:56 Why you're in it? Well, you were all water utilities were in it to start with. So, it wasn't you didn't opt into the commission. You just 35:03 haven't opted out. Really, the pros or the biggest pros, I think, is going to be the checks and balances for your cons your customers. Just knowing that 35:11 there's a third party that is reviewing the rate studies and making sure that the board, the council, anyone with the city, you're not just continuing to 35:19 raise expenses and raise rates on your customers. 35:33 What is the com what would approximately be the completion date for the 2025 financial statement? 35:48 [clears throat] 35:49 Hi, Jennifer Wilson with Crow. um they will be seeing the cash um operating fund has been we're closing it out with 35:58 all the non-accrual entries and the utility service board is getting that report on Thursday and then we need to 36:04 add the fixed assets acrals for add additions for any capital that was done and then they should be done at that 36:11 point in time so we can we'll have the operating stuff done here this week um but then additional stuff having to do 36:19 with construction will be done in a week or two. 36:36 This may or may not be the time, but I would like at some point to hear the we I mean we've heard one side. I'd like to 36:44 hear not side one aspect. I'd like to hear the utilities response aspect or 36:51 whatever also. And I don't know what the timetable is, who goes what when, but I'd sure like to hear it. 37:01 And and one other question, if we pause adoption of the rate ordinance, what happens to the bonds? And what is there a cliff we're going to walk off or what? 37:20 Good evening. I'm Chris Janok with Bose McKinnon Evans. I've been the city's done your utility work for probably 15 years now. Um, we've had a lot of 37:29 discussion about the bonds. Well, let's talk a little bit about the the the timeline. We have not seen the report until today. Probably a lot of you 37:36 haven't either. So, the the only thing the numbers are the numbers. So, um, I've known Mitchell a long time, uh, who 37:44 presented. He does a good job. He and Jennifer are just going to have to agree on the numbers. I whether those are I think everybody agrees a rate increase 37:52 needs to be had. It's just a question of how much and the timing and are there some other options we can pursue in 37:58 terms of so the only thing I would say is that I would take qualms with what Mitchell said. Nobody goes to the 38:06 commission every year. That's it's it's it's cost prohibitive. 38:10 um by four or five years at best, but it's it's good if the city can get on a program where it evaluates its rates a 38:18 little bit more often than it has. Um whether you regulate it or not, um let's talk about the bonds. That's 38:27 really what your question is. Are we on, you know, we're kind of on the gauntlet here? Um I've talked to the SRF program and convinced them that you would be 38:35 introduc Well, I convinced them. I I told them that the plan was to introduce an ordinance tonight and we are working towards a solution. 38:43 Now you're going to ask me what does that mean? What? Give me a timeline. Is it going to happen next week? They're going to No. And so they they they had intent they had hired their own 38:51 independent law firm and they were getting ready to send a letter making a demand that we fix this immediately by a date certain. And what they want to see 39:01 is a plan. I think Mitchell's right. uh they want to see a plan that talks about how you're going to repay the loan and 39:08 they want to see coverage and indefinitely postponing the ordinance. 39:14 Um that's not what they're going to look for. In fact, they've asked they've asked me to call them tonight on the way home and let them know what happened 39:23 here tonight. Um so that I I I don't know that we I'm not saying we have to do this tomorrow, but I think we need to 39:31 move forward pretty quickly. And I again, you're going to ask me what that means. I don't know. I can't speak for them, but indefinitely postponing it. If 39:39 I if I had my brothers, I would ask that you introduce the ordinance tonight, but let's if we need an extra couple weeks 39:47 to take a look at this and evaluate the 25 numbers and evaluate options, and we tell them, we're going to come back at your first meeting in March and do this. 39:55 Yeah, that might work. I I don't know. I just don't know. But I have told them that you would the plan was to introduce it tonight and he said that's fine. Let 40:04 me know that that's happened and where we're going with this and I need to see a report that shows that we're not underwater and I need to have a report 40:12 that shows that um the sewer utility is going to get paid back. So whether 40:19 Yeah. So and but we can evaluate options sharing costs all all of those are possibilities but we we just need to get 40:26 there sooner rather than later. And this this is a question for both you and Baker Tilly. 40:36 Is the the B the the rate ordinance would seem to be both important and urgent. 40:43 Is opting in or out of the IRC important and urgent or just important? 40:50 Well, here's my I don't know if you all have you tried to opt out before. or I got the sense 40:58 maybe that you tried to opt out 15 20 years ago because here's how the process works. 41:05 You want me to talk to you a little bit about that? Is that okay if I talk to you about that? It's more important that you start to solve the rate issue to answer your first question. So I think 41:14 that's urgent. Um whether you decide to opt out now or later, I think that's a decision you all need to make and that 41:22 that's your decision to make. Um here's how it works. You basically introduce an ordinance, you have to send 41:30 notice out to all the customers at least 60 days before the date on which you're going to h hold a vote on it. Uh you have to send notices to you have to hold 41:38 two public hearings. I think isn't Marian still a secondass city. Is that right? Yeah. So it's two public hearings in a secondass city. Hold a public 41:47 hearing and then you can vote on it. Um, and within 60 days after the vote, people can file a petition with the city 41:54 and if it meets the requisite number of signatures, then it has to go to a referendum. And the referendum, depending on the time, and we're 42:01 probably too late for May, maybe it's either going to be November or May of next year, and we just can't wait that 42:08 long to do something. So, we're the pro I don't have any problem with the pros 42:15 and the cons except for the how often you file a raid case. But we have a bit of a time problem now. And you'll have a 42:23 decision to make. Do you want to go forward and try to get your rates changed right away so you can get yourself right side up? And if you wait 42:30 to see if the the opt out goes through, that'll that could take several months. 42:36 So you have you have a decision there to make. 42:39 Does the utility have an opinion about staying in or get opting out? 42:49 Well, we've we've discussed some of the pros and cons. Um, one of the things it also would keep us from astronomically 42:59 increasing rates. Uh, because it's not just the low end of things that they're looking at. They're also going to look at the high end of things. And so, there is a boundary on both sides of that. Um 43:09 but as Chris mentioned in this moment our priority really is trying to get right side up with the water utility and 43:17 you know the the whole discussion about we have to get above that 125% 43:23 mark but after that it really is about capital improvement and I don't know if you guys have seen some news here 43:31 recently somebody let me on to this but uh Anderson apparently is struggling uh they have an aging in infrastructure 43:38 and their water loss during this cold snap with broken pipes and whatnot is is causing tremendous trouble. And I would 43:46 hate for us to get to that point. You know, we've we've waited for so long, you know, the budgets that you just saw 43:53 in the presentation there there's no capital improvement going on at all. And so anything above that is going to go back into the system for that purpose. 44:04 And we've got projects lined up waiting to go. It's just a matter of making that right. So, in the long run, you know, if 44:11 if we've got the council's support moving forward to to have regular rate discussions and that that's going to be 44:17 met um with approval on a regular basis, I think it's possible for us to get out 44:24 of the IURC and do okay. But for the immediate future, I think we really need to focus, as we've kind of said, on the the more urgent matter of one one problem at a time. 44:36 Can you answer while you're still standing there, Robin, for me? Um, I know that I have seen at least three 44:44 breaks and repairs in the last two to three weeks. Can you tell us how many you've actually had? 44:51 We've had nine. Okay. Um, and what um, aside from the lead service line with 44:58 project, what are your initial estimates for immediate capital improvements? 45:05 So, we've got approximately $17 million worth of projects that could be done pretty quick in pretty quick order. And 45:13 some of them obviously are higher priorities than others, but that does not include uh a discussion about main 45:20 replacements or about lead service line removal. 45:24 Okay. And remind me what we what project we did with the SRF funds and the bond. 45:29 Sure. We did five projects with that. We redid two overhead tanks, water towers. 45:34 Okay, we did a small section of main replacements. We did the meter replacement project. Okay. 45:41 And then we did a small section of lead service line removals. 45:49 Brian Robin, before you sit down. Okay. Um uh the the nine breaks that the gentleman backwards was is that within the last year? What time frame was that? 45:58 That's just a week. 46:02 That's why [snorts] I don't work utilities. Just since the first of the year here. 46:06 Okay. Wow. Um and I I I know that you know we got to be at the 125 and I mean 46:12 I I don't think any of us will disagree there's going to be a rate increase and I personally am in favor of you got to 46:20 build up your capital gains because Murphy's law just seems to always raise its head when it happens. So what you 46:28 presented I know that would take us to almost 300% 291%. 46:36 And then if we did just acceleration, it's 225, which is still over. 46:41 I mean, I know you're going to want as much as you can, but what what is your minimum thing? Like, right? Like I I don't want 46:49 to throw this all on the taxpayers all at once for the past, but we also have to take care of what you guys need. So, where is that? 46:59 Well, I'll go back to the financial advisors for that. and and the 125 is is what we we have to have, right? 47:05 Um and you know, for the bond ratings, if I understood correctly, 140 plus is is what is preferred for that. Um, and 47:14 it's just a matter of, you know, we we've not had these the opportunity to do capital improvement projects for so 47:20 long that if we phase this out again, you know, especially if we're going back to the IURC, by the time we get where we're supposed to be, you know, as as 47:29 Mitchell shared, the plan was good when it was put in place, but it was for a time in the past. And so by the time we got to the present, we're behind and 47:37 going into the future, we're further behind yet. And so that's that's going to continue to happen. So if we need to, 47:44 you know, we need to get above that mark so that we can actually gain some ground back. So I don't know what that exact 47:51 number is per se. 47:55 Yeah, that's what I'm just think because like where they was looking at the budgeted and actual, we're behind the eightball before we even start the year 48:03 every year. We got to get we got to figure out how to not be behind the eightball, right? And keep in mind too that assuming that we are going to move 48:11 forward with this fairly quickly, um you know, by the time we get to a point of implementation from the IURC, 48:19 phase four will have already taken place and and so that acceleration um is is just it's minimal. 48:27 Really, we're talking about 28 for the most part. 48:29 We're we're really going to be talking about accelerating one phase, not not two. Okay. Thank you. 48:38 And one other question and this may be for the financial advisors the when we do the 48:45 when we do any type of rate increase you were talking about what has already been pre-approved and include inflation 48:55 there's probably not a legal way to ask the question I want to ask is how do you how do you phase that in any way is that 49:03 through capital improvement projects is that through creating a good strong capital improvement project. 49:10 Um, two different ways. All right. 49:13 If you're doing rate increases locally, we typically will look at historically what your operating expenses by category have increased over whether that be a 49:22 five or 10 year period. And we will include in future phases knowing that you do experience inflation. So, locally 49:29 it's allowed. You can do that. um at the commission you that that's not allowed in their rate filing. So what some 49:37 utilities like you said will do is they'll have a capital improvement plan that'll be supported by their consulting engineer saying these are needs that we 49:44 have and they will build an allowance into the rates knowing that maybe two or three years down the road they're not going to be able to accomplish all those 49:52 and some of that's going to shift towards operation and maintenance expenses. So a lot of times we'll see in the regulated cases they're setting coverage levels in those future years 50:00 relatively high knowing that it's probably going to come in a little lower when actual operations increase. 50:08 So, does the IURC look at that and say, 50:16 "Okay, you plan so much for capital improvements as a part of your rate, but instead you rolled it into your operating expenses, and do they then 50:25 start questioning what operating expenses are?" They will always question operating expenses in every case you go. That will be a question you'll get. They'll 50:33 they'll typically bring up your prior capital improvement plan and they'll say on this list, what did you and did you not accomplish? Um it's usually then a 50:41 fight forward to say, "Yeah, this these are the reasons why we didn't accomplish those. They're needs that we still have. 50:46 We intended to do them, but again, we had cost increases that had to I mean, we had to pay money somewhere to be able 50:53 to pay our expenses." So, it it it does get brought up at the commission to answer your question there. 50:59 Okay. And with this floater loan that we did to cover from wastewater to water that the utility 51:07 board did and the utilities did. Um, if the IURC sees that and throw pretty 51:14 much takes that amount out of this rate increase, what does that look like? What does that end up looking like? Let me see if I have that factored here. 51:23 Did you show us that on one of the pages? I showed you the difference in the coverage level if we include the loan or not, but I haven't showed the adjustment for the revenues to not 51:30 account for the 300,000. So, just for example, on page seven, the fourth bullet point, including 51:39 including the debt service. So, if we were to assume that you filed the case and you got approval for the loan repay payback of about 300,000, that that 51:48 impacts your coverage level from the 225 down to to the 156. Um, we didn't factor though what that would be if they were 51:57 to just take that line item out of your revenues though, which is potentially something they could do um, when you 52:04 file that case. Just arguing that that is a retroactive rate making. You're trying to make up for things that happened in the past that weren't approved. 52:13 So essentially if they pulled it out your revenues will if they pulled it out they would allow increase to the increase would would lower. 52:22 It would come out your your 21% which is on top of the acceleration would be decreased. Okay. 52:31 But if we still have to pay that back then that's going to have to be paid from some other bucket is what you'd have to figure out. That's likely going 52:39 to be deferring capital improvements or uh finding some way for operation maintenance expenses to come down. 52:49 Um yeah, that if if it's not approved, it's not going to be a revenue requirement that you're going to be building up cash for to pay back. It's going to have to come from some other 52:57 source, but they won't stop us from paying for it from somewhere within the water utility. 53:03 I I'm not 100% certain. There's going to have to be a plan that be worked out with them as well as SRF because like we said, SRF is going to want to 53:11 see that paid back because it's a loan that they did not approve um based on the legal documents that were filed for the 2024 bonds. 53:19 Okay. 53:24 Mitchell, do do you have a recommendation on rate increase on where we should need to go at least? Uh we 53:33 don't have an overall rate recommendation just with a percentage. 53:36 Um I think one of the things we'd like to see is those 25 financials and where things landed. I know we've we could use 53:43 budget 26 as a starting point, but I think we'd like to be able to see where things actually came in on 25. Just looking at the history, it's shown that 53:51 the operation and maintenance expenses have come in over budget. So I think getting an idea of where 25 was. And I think what's important too is just 53:59 having some of those discussions with SRF and figuring out how do they want you to go about paying this loan back and then what do we think going through 54:06 the commission they would ultimately approve in your rates. I think those two are pretty uncertain for us to tell you this is what you need to go and approve and file with the commission. 54:20 Mr. Okay. 54:21 Well, you just answered my question and I was just gonna ask you Mike, you just answered my question that I was 54:30 going to ask you and that was would it be your recommendation that we wait on the 2025 uh financial statement to come out? 54:39 Yeah. 54:40 So, and you're saying yes on that. My next question would be this. And there's a statement on page uh 19 54:49 uh the cost of a fully integrated little little litigated little litigated 54:57 Yeah, that too. Sometimes my words uh don't come out right. Case can fall in the range of $200,000 to $300,000 55:05 depending on the type of rate study across the board versus cost of service. 55:10 Now, who pays for that? Of course, the water users pay for that. And so that's that's a lot of money that that has to 55:18 be uh accounted for in this rate increase. Um where the next line would 55:26 be a traditional rate study would cost between 20,000 and $75,000 depending on 55:33 the type and complexity. And so a traditional rate study, that's basically 55:40 what you're doing here, isn't it Mitchell's? 55:43 It is. And that that is contemplating that you're not going to the commission. 55:47 That adds those extra expenses of going through the testimony, the data request, and then the settlement and ultimate uh order that you'd receive on that case. 55:56 Right. And then on the bottom of that page on 19, um, the pros for the city in 56:03 for staying in the IURC is the finances of the utility are still monitored by the by the state board of accounts. 56:12 Well, wouldn't they be still monitored by the state board of accounts whether they're a part of the IURC or not? 56:18 They they are. that what we're saying there is that one of the arguments for why why consumers want you to stay in the 56:26 commission is that you have that oversight. What we're saying here is you do have oversight. You have to have audited financials from the state board of accounts. So, okay, it's not 56:34 when you come out of the commission, it's not a free-for-all now on raising rates and doing things that you're not supposed to legally from a utility standpoint. You still have checks and 56:42 balances both at the local and the third party with the state board of accounts. 56:45 Sure. Okay. Just wanted to make clarification on that to make sure I understood it and also that the public understands that and the type of monies 56:53 that were talking about staying within the IURC versus getting out of the IU 57:00 IURC and that's I know that's down the road several months, but it's something to seriously consider because that's a 57:09 serious cost savings to the water rate users. Thank you. 57:16 Go ahead, Michael. So, if this is for whichever you guys arm wrestle, um, if 57:23 we start the ball rolling tonight, pass general ordinance one, at least on first reading, get it to public hearing with 57:31 the caveat that we all know it may be amended, will that um, make the SRF folks, will that please them? Will that 57:41 calm them down? or are they gonna say, "Come on, give us something certain." Yeah, I'm just asking. No, no. And here's kind of the steps. 57:49 So, yeah, you could introduce it tonight and that's what they're hoping you do. 57:53 So, that that would be a good first step. And and what I and and if you're open to this, this is a proposal. I 58:02 think we spend the next three or four weeks working uh collaboratively with 58:08 Baker Tilly and and Crow to see if we can reach some sort of consensus on what the rates ought to be. And then if it's 58:17 less than what we've proposed in this initial ordinance, we will uh just because you're introducing it tonight. 58:23 So that's all you're doing tonight is introducing or first reading, I'm not sure what you all call it, that doesn't mean it's passed. That doesn't mean the new rates are in effect. That just 58:32 starts the process and we could lower it down the 17th maybe a little fast. Uh but what I I would go and tell them we 58:42 have a timeline and a solution in place and it's in the notsodistant future. I think that would get you ac I offer no 58:49 guarantees. I can't speak for them, but I think that would get you across the finish line. 58:53 But that'll let them know we're taking it seriously and they might exhale a little bit. 58:58 That That's right. because they're they're concerned about whether the city council and the city has the political will to raise the rates and cover their 59:05 obligations to the SRF program. And at least you would show you're taking the steps necessary to start that process and you're taking it seriously. 59:16 I agree 100%. I mean, we are definitely taking it serious. We know what's got to be done. That's what I That's what I told my whole thing is like I'm glad because 59:26 Jennifer from Crow, she's giving us the options what the utilities want. Baker Tilly Mitchell is kind of giving us 59:33 their like when when we first did this uh fivephase thing in what was it 22 or somewhere in that ballpark. 59:42 I know that like the utilities they they worked on for a year to come up with what's the right way at that time that 59:49 they think and I just want to make sure that we make the right decision. That's why I don't want to just push something through just to push it through. I want 59:57 it to be right because I mean there's there's a lot on this, you know, there's a lot that needs to be done. There's a lot riding on it and repair money. It's important. 1:00:05 Yeah. That's like and Mitchell, I don't know. Did you have an opinion yet from Baker Tilly on if we did the acceleration, you know, 1:00:13 and got us at the 200 and what was it 25 or something like that percent compared to not putting the other 21 on 1:00:22 to take us to 391? I mean, do you guys have an option or a opinion on that yet or are you still waiting for um preliminary opinion uh pending what 1:00:32 we'd see in 25 is even with the acceleration I think you're going to have to have a plan forward. Um, based on what I showed, you can see the cash 1:00:40 balances are not sufficient. You're not meeting coverage levels. I'm not going to say that there isn't a rate increase that needs to be done for the water utility to get back into a financial 1:00:48 position just due to what we've seen with the increases in the expenses. Um, the exact amount. Um, I like we said, I think there's still some variables that 1:00:57 need to be worked out. One of the big ones being the loan repay repayment, how that's going to be factored. Um, the other thing I just kind of wanted to 1:01:04 point out was when Chris was talking about the process, letting SRF know that there's a plan in place. SRF will still know that your 1:01:13 rates are not going to be coming in for at least another 300 days once you file that case. So, it's not going to be these rates are adopted and right away 1:01:22 you're starting to build up cash balances. There's going to be another almost year where you're going to have to figure out at the local level how you're going to pay the loan back. how 1:01:31 are you going to continue to operate with the expenses we've seen rising. So I think I mean long story short I we don't have 1:01:37 an exact uh recommendation on the percentage we can work on that over the next whatever period of time that's set for the council but I think there are 1:01:46 some hurdles that just need to be considered and some I guess tough tough convers conversations on the expenses and the capital improvements that'll be available with the cash shuts coming in. 1:01:57 Okay. So you think but the acceleration that's the minimum and then it's just a matter of how much from that point we figure out I I definitely think you'll need the 1:02:05 rates for at least the acceleration based on what you've seen from the operation maintenance expense just outpacing what was approved in that last phase. 1:02:12 Thank you Mr. Burner. Yep. 1:02:17 We've been sitting here for an hour and six minutes. We've yet to hear from the mayor. I would like to have uh Mayor Morurell uh give us pros, cons, what you 1:02:27 feel that you've heard over the last hour or so, sir. 1:02:35 Well, I appreciate you. I know you always calling me. I appreciate that. Um well, again, this is a lot of great information. I think that um one thing 1:02:43 that we're going are landed on is that there going to be have some be some type of rate adjustment and I'm hoping that you know all of our teams can work together to figure out what that is. I 1:02:51 always come up with some crazy ideas and some some crazy theories and um I don't know how this will work but I'll put it out there and see you know we could 1:02:58 always as a city um give the $1.8 million city utilities to um pay their 1:03:06 pay their loans back. Um, I think that could be something that would ideally hope help their um their situation. So, 1:03:12 if we gave gave them as a city um the 1.8 million or actually what if we just we just paid the loan back for them and then that might be able to have us um 1:03:22 only be able to do the ex the needed acceleration to be able to move that forward. That's a idea. Obviously, all the financial teams can work together to 1:03:29 see how that plays out. Um but again, you know, I think that um finding a solution to move forward is is key now. And I think that um 1:03:38 everybody's all working together. Me and Robin met this earlier this week and talk about some different solutions. So I'm hoping that you know from this from this experience and from this time we'll 1:03:46 be able to um moving forward be able to uh you know work collaboratively to be able to get all the things done that 1:03:53 that are necessary. But in the meantime, and I think in the um the uh in the immediate future, it's 1:04:01 undeniable that we're going to have to do some type of rate increase. Um and what I'm hoping is that we can do a collaboration of paying that loan back 1:04:10 for the city to the um for the utilities and um then that will maybe put us in a position to be able to do the minimum amount of um percentage increase um ideally just acceleration. 1:04:22 Mayor, are you talking about loan or gift? No, I think we just paid it. 1:04:27 We just paid I think they owe 1.8 million. We just paid at 1.8. So, if I could add Go ahead, Nick. 1:04:35 Uh, mayor, uh, came up perfect time. 1:04:38 I've literally been waiting to ask that question, so I'm glad he brought that up. Uh, the idea of essentially, we'll 1:04:45 say, gifting repaying the $1.8 million back to utilities. uh since they were so kind to rescue the city many years ago. 1:04:54 Um you know, in my heart of heart, I feel like that could be just the right thing to do. But the question is, if we do 1:05:00 that, would that I know we wouldn't have an exact number, but would that help um 1:05:09 lower the need or let's just say [clears throat] lower that rate increase need? like would that would you still 1:05:17 need the same rate increase if the city paid back the original loan given to the 1:05:23 city from utilities? Would that help us uh and take that burden off of the rateayers? 1:05:31 I don't necessarily need a number. I just want to know in theory would that help lower the need to increase rates even more? 1:05:40 I think Mitchell explained it. I'm going to give you a typical lawyer answer. 1:05:43 I'll dance around for a second, then try to get right to the heart of it. Uh Mitchell's right. Uh in the sense that 1:05:51 one of the things we're going to have to show the SRF program is not only that we're taking this seriously and we're going to get right side up, we have to show them how we're going to repay this 1:06:00 loan. So, um and I haven't seen the loan documents, so I don't know exactly what they say, but we have this push and 1:06:07 pull. We have one state agency telling us, "You got to pay that money back and you need to show me a plan." and you have another state agency who's not 1:06:15 going to be real excited that the loan was made in the first place. Now, I have I think we'll be able to get over that, but we're going to when it comes to 1:06:23 calculating coverage, the SRF program is going to want to make sure a we have 125% coverage and we show how we're going to pay the city back. So the 1:06:31 answer to your question is yes. That will help the utility and that will mitigate the need for as large of an increase because we won't have to show 1:06:40 coverage for for both the outstanding bonds and the loan we have to pay back the sewer utility. Now where that makes us land, I don't know. But in theory, 1:06:49 your your question is a good one and that's the answer. 1:06:52 That that's got to help though. I mean, because they wouldn't be paying the city back. It's just and I'm agree with you, Nick, too. Just for my two cents. 1:07:00 what happened years ago that you guys forgave. I I feel like we owe it to you. 1:07:06 It should be done, too. Um, but yeah, I would think that that's got to help. I mean, I'll just let everybody know. Anybody want to give me 1.8 million? 1:07:13 It's going to help my situation. No doubt. So, I don't know. I think that was a a pretty pretty big gift there. 1:07:22 Can I make a get up to the mic, Christie? You gota get up to the mic. 1:07:30 Good evening. This is Christy Barney. I serve on the utility board. Um that is um a wonderful 1:07:39 um recommendation if that is possible since it is clear that both parties are still collaborating and waiting on the 1:07:47 end of the year 2025 financials. if that is a possibility, they could figure that 1:07:55 in to see if we could have actual confirmation that we could lower that rate when we come back here. If they 1:08:04 could play that into a role when they're doing um their figures with the final 2025 budget, um I think that that would 1:08:13 be wonderful. I just want to recommended that. 1:08:17 Yeah. So, I think if I'm putting all my thoughts in together, so we uh as a city, I'll come to the council and ask for $1.8 million to be given to the 1:08:25 utilities to pay off their loan. And then um the uh as they're working on the fin on the financials, they can factor 1:08:33 that in and then that will see what the rate increase uh will need to be. And obviously, we're hoping that will be significantly lower um than what is currently proposed. 1:08:45 I just think I mean to me that would be yeah because we're figuring out how to help the utilities the city be all right 1:08:52 and then ultimately the rate increase for the citizens to be no more than what we have to so I don't know Mr. 1:09:02 I'm a little confused. Um, so if we pay back the loan, then we are no longer required to the 125% figure. 1:09:11 Still have to do that even though we don't we're not indebted. 1:09:14 There there's two loans. One's to the SRF program that has the 125%. Okay? 1:09:19 And the other is the loan from the sewer and that's the one we would pay off. SRF program wants a healthy utility. So, they're going to say, "You show me how 1:09:28 you're going to pay that other loan back to the sewer department." And so, if you have that, if that's gone, they won't be worried about that. And quite frankly, I 1:09:37 will tell you that that would I don't want to get too far a field here, and I'm acting like I'm speaking for the SRF program, but I think there's two things 1:09:44 you could if if this seems like it's a reality. If you introduce the ordinance, that doesn't mean that's where it's going to end up because we're going to 1:09:51 try to end up with something lower. And I also let the SRF program know that we're going to solve this sewer loan possibly through a gift from the city or 1:10:00 it's redevelop. I I think that will land very well. I think that will land very well. 1:10:04 Are there any negative ramifications to the city gifting money to the utility because I don't I haven't heard any. I'm hoping there aren't any. 1:10:14 There's no legal impediment to you doing that. But I'll I'll let Marty speak to that. But I but I I think that that can be done. 1:10:25 Okay. Um, for time purposes, we need to be wrapping up because we've got another meeting to open up at 7. Um, 1:10:34 Mr. Marshall, Mr. Klein, do you have a recommendation that we should take to council or no recommendation? 1:10:42 Well, let me What time frame do you guys need to come back with numbers we may or may not want to plug in? 1:11:00 I think our our recommendation would be to get the numbers for 25. Um we wouldn't have to have the discussion with SRF on the loan assuming that the 1:11:08 money is gifted. Um we could use those numbers come back at the March meeting and be ready for um adoption of the 1:11:16 ordinance if the intended plan is to still introduce that tonight. um like like what was discussed at the last meeting. You can introduce the ordinance 1:11:24 and you can always lower the rate when you come back for final adoption. So I think that would be our recommendation and it doesn't slow down the process then. 1:11:33 Okay. At some point there had been discussion of fasttracking this and doing something on the 17th. We can put 1:11:42 that in obeyance then. Right. I I think assuming that the money is going to be gifted that create or that alleviates at 1:11:50 least one of the headaches with the SRF program putting pressure on you to show that coverage target if they know there's a solution and that rates are 1:11:58 being considered and will be getting you to that 125. I don't see an issue from uh from their perspective as long as 1:12:05 they know there's a path forward and they understand that it's going to take time at the commission though too. 1:12:15 Do you have a recommendation? [laughter] Yep. 1:12:22 So, just to let you know too, we just finished the financials that are going to be presented to the utility service board. And if you take out the $1.8 1:12:30 million, the utility still has $430,000, which is lower than what it needs to be at the two months required. And there's 1:12:37 no other funds in the depreciation funds or anything else like that. So, I just wanted to let you know this having a gift of $1.8 million. The original goal 1:12:46 of that was to get them through the year of 2026 because you're going to have more expenses than you do revenues. And 1:12:56 so, the goal of that revenue that monies was to get tied them through this year. 1:13:02 So, just to let you know that they had if they really had to pay it back, they could, but it'd be minimal amount of money that's that's sitting in their in 1:13:10 their funds to operate and they wouldn't have anything really to go back on for the rest of this year. 1:13:17 But if it's but if it's gifted or $1.8 million, that definitely helps them get through this year, get through this rate 1:13:24 process, and alleviate a lot of pressure. that improves their cash flow basis knowing that correct 1:13:32 it would not have to be pushed pushed back at some point. Correct. Correct. 1:13:37 So if the council and the city's legal minds can work their magic and come up with 1:13:46 something to introduce at the 17th meeting about the million8. 1:13:51 Would we want to have another meeting like this before the meeting on the 17th? 1:13:59 because that gives more concrete numbers to work with, right? 1:14:05 I think they were asking to do another meeting, the first meeting in March to skip over the next meeting to give them four weeks. 1:14:15 Okay. I was talking about another committee meeting like this just to Hey, if we can get out of a meeting, 1:14:23 right? Is that correct? you wanted four weeks more to collaborate and just talk with him. We can go ahead and we can start the process to approve the 1:14:30 1.8. I I'll talk with a legal team and see where I want to get the money from, but we can go ahead and start the process to approve the 1.8 now. But as 1:14:37 far as the rate increase portion, they need to wait until the first meeting in March to hear that. 1:14:43 Okay. Mayor, what um from the city's point of view, do you have an opinion on going ahead and going ahead with the 1:14:51 first reading tonight and then we can always amend it after that or uh 1:14:58 I think we need to Yeah, we could because we could always amend it or change it. 1:15:07 Yeah, it's okay. We go we go ahead and introduce it tonight and then I don't know how do we because we do a second do um we'll figure it out. We introduce it 1:15:15 tonight and but in March is when we'll can finalize um what it looks like. So maybe it's a first reading and then can we suspend the second reading until March? 1:15:23 Yeah. Then the second reading in March. Okay. 1:15:30 So, it sounds like what we're aiming for is recommending to go ahead and go through 1:15:38 first reading tonight, pushing out second reading to the first meeting in March, potentially a committee meeting before that meeting in March if we need 1:15:47 to go over any details so we know what our amended ordinance would be if we're amending it. 1:15:53 And meanwhile, the mayor will work on the other details. And the committee's recommendation would be do pass on first reading. 1:16:01 At least first reading. 1:16:03 Yeah, that's what I'm I'm comfortable with that. Yes. Okay. Okay. All in favor? 1:16:09 I Okay. Well, then we will make that recommendation. Anything else for the good of the committee tonight? 1:16:17 Move we adjourn. 1:16:20 Second. We will stand adjourned until the next one. Thank you.