HomeMy WebLinkAbout06/01/1981City Council
June 1, 1981
Page Two
Minutes
- 12:00 Noon
Rudy Muravez, Finance Director, stated that upon the request of the council, he
has provided supplementary information on the sequence of events which led up
to the water bill, and submitted a report dated May 25, 1981 listing in chrono-
logical order the sequence of events. He continued that the problem the Water
Department had with regard to high readings was that they must be verified. He
said in this case a second verification was required, a reading was taken which
' was abnormal; and then a second reading was also abnormal from the first reading.
He stated that it wasn't until the service order was completed that Mrs. Stacey
was contacted. He continued that with regard to Mrs. Stacey's account, the
application of a two -week standard for notification would result in a credit
190 HCF of consumption against her last bill. Using a standard of immediate
notice, then a credit of 380 HCF of consumption would be applied against her
bill. Additionally, since the previous location of the meter was confusing to
the meter readers, it may be found that its relocation did have a benefit to the'
dity'and that the service connection charges of $335.00 be waived. His recommend-
ation would be that the city apply an adjustment based upon a two -week standard
for notice and waive the service connection charges. He also recommended that
in the future when such problems arise, that the city be authorized to make pro-
rated billing adjustments based upon an assumption of shared responsibility when-
ever the period of notice exceeds two weeks from the initial reading date.
On a question from Councilwoman Dovey regarding the computer equipment that would
enable people to know that there is an abnormal reading, Rudy Muravez described
a program called an otillocorder, a small hand -held terminal -and a computer which
will read into it an acceptable high reading and low reading based upon what the
historical consumption of that account has been over the last two years. He
said the recorder would prompt the readers into the device and will look up the
high -low limit; if it is not acceptable it will call for verification on the
spot. This should drop substantially at least 50 to 75 percent the number of
rereadings. He added that it would enable the city to easily need the two week
requirement.
Mayor Billig questioned the line and movement of the meter itself and why it
continued to be in that spot.
Dave Romero, Public Services Director, stated that when the original water meter
was set the water line went up Lizzie Street to the Junior High access road and
that there were no mains past this house. He said that in 1958 the Gallagher
subdivision was developed but the main didn't run past the Stacey House, which
at that time was the Bowden House, so there was no change in meter. Approximately
5 years ago, a_.water: main was extended partly across the frontage of the house
but there was no change and no connection. He continued that this last year
the water mains were connected and again there was no request so the meter
stayed where it was. Technically, when the meter was relocated the Stacey's
should have paid for a share of the main; however the city didn't require it,
therefore the Stacey's had already received a very favorable ruling from the
city. He said it was an advantage to the city to have it in front of the house.
Councilman Settle felt the two -week standard was appropriate and supported the
staff recommendation with regard to the prorating of the lulling so that Mrs.
Stacey would not be responsible for so large a bill. He reiterated that a two -
week standard was a reasonable standard.
Councilman Bond had no problems with the recommendation.
Councilman Dunin supported the two week recommendation and the other recommended
' proviso that the person still has the right to appeal to the council if he is
still not satisfied.
On motion of Councilman Settle, seconded by Councilwoman Dovey, that the two -week
standard be adopted, the adjustment amount as indicated in the staff report is
the amount to be paid by Mrs. Stacey, and that staff be directed to prepare a
policy statement for prorated billing adjustments based on consumption whenever
the period of notice exceeds two weeks. Motion carried.
AYES: Councilmembers Settle, Dovey, Bond, Dunin, and Mayor Billig
NOES: None
ABSENT: None
City Council
June 1, 1981
Page Three
Minutes
- 12:00 Noon
2. Council to review consultant report regarding Sonic Cable
TV rate increase.
Geoff Grote, Legal Assistant, stated that the report involves a review of a
document from the Telecommunications Management Corporation for a non - exclusive
franchise of the city, including a financial analysis of Sonic Cable TV._ He
said that at the request of the council, an agreement was entered into and is
pending preparation of the report which is now completed and awaiting council's
review. He concluded that a hearing has been scheduled for June 9 for citizens'
input and recommendations from the council.
Mr. Pilnek, gave a thorough review of the analysis page by page, and briefly
explained the procedures and methods used. He added that there was a previous
analysis done by Jones Telston at the request of the Cable TV, and that they
have gathered basic data from their consultants' report and from the company
itself which includes a 9 -month operating financial statement for the period
ending December 1, 1980. They have provided revenues and expense data on an
actual basis for the 9 -month period, information on capital investments and
depreciation schedules. He said that he was aware of the fact that the dis-
tribution of the system serves a number of adjacent communities, and explained
that the costs are allocated on a pro rata basis based on subscribers or total
planned miles in the city. The cost numbers in effect are best guesses in
accordance to the allocation procedures, and enables some difference in what
the costs would be. He continued to explain the cost figures and rate bases
page by page as outlined in the report, and how they were arrived at. In con-
clusion, he pointed out in the report that all of the calculations are made
only considering certain services excluding pay TV and HBO. He reiterated that
cities do have the power to regulate basic rates but don't have the power to
regulate pay TV rates, and added that HBO rates were within the power of the
company. He stated that the council was being asked to act on a rate increase
that affects only the basic service and the company can on its own increase rates
in pay service. He urged the council to consider how well the company is doing
financially as the result of all the services and issues. He said that the
financial rate of return was not the only thing that was important; that items
such as quality of service, comparable rates, and if the company is living up
to the terms of the franchise agreement.
Councilman Settle asked Mr. Pilnek' how he arrived at the 15 -year for depreciation.
Mr. Pilnek explained that each company has the choice when it sets up its initial
account records to establish a range which the IRS allows. 15 years is normal for
the older systems, aid for the newer systems the general trend is for shorter
depreciation life in that the system wears out more and technologically things
are changing so rapidly that the equipment will be obsolete in 8 or 10 years.
He suggested that.the council base its decision on achieving some level rate of
return through an increase in the service rate with the added expectation that
the company will have to do its part and raise the pay TV rate also.
Councilman Dunin asked if the rates are established what would be a reasonable
rate of return in California.
Mr. Pilnek replied that.companies give different answers, but thought that 18
to 20 percent was an average for the rate of return that they achieve on all
their systems.
Tom Butch, Vice- President of Sonic Cable TV, gave some background and noted that
Sonic Cable TV was one of the few companies that was solely cable. After some
discussion a formal letter was submitted to the council on July 3, 1980 indi-
cating a request for a rate increase in using Assembly Bill SB 199. Several
meetings occurred between July and November and it was agreed that resolution
would be made that the City Council and Sonic had agreed to a 6 -month period of
time in which a rate study could be made. Sonic agreed to the concept of the
rate study and asked Fred Bolte to do a study for Sonic; the city received a
copy in March, 1981. He believed that Sonic wishes to work with the city to
resolve the problem and option of going to Assembly Bill SB 199, and wanted to
work closely with the city.
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City Council Meeting
June 1, 1981 - 12:00 Noon
Page Four
Bill Hargen reviewed the report to give the council more of an in -depth solution.
His conclusion was that the rate increase was justified and he accepts the basic
application but makes some arbitrary changes in the expense category. He stated
that the city may approve a smaller increase and then urge the company to make
up the difference on the pay TV. He believed that..that effectively puts the city
in the business of rate control on pay TV because the only relevant investment
is basic service. To say that there is not an adequate rate return is to de-
prive the company of an adequate return on the basic pay TV service.
Mr. Pilnek pointed out some problems that have to do with Figure 5, and explained
how he arrived at the projected expenses. He explained the franchise fees and
how he arrived.at the bad debt factor. He felt that the allocation was basically
wrong and that the bad debt for pay TV carries the same error and said that they
were experiencing a 2 percent bad debt on pay TV as compared to 122 percent that
has been allocated by this city. He explained the installation fees and refund
procedure for subscribers and concluded that the net effect was that the under -
statement of expenses totals about $55,484 which he had a problem accepting as
a guide.
Councilman Settle felt that with regard to the figures the consultants didn't
get the proper data and that somehow there were misconceptions. He suggested
that the company agree to a 30 -day extension to get some final figures put to-
gether so there is not contradictory information. He recommended setting public
testimony for June 9 and thought that the public would be aggravated by the
figures. He would move to continue to a July meeting for a final determination.
Megan Tutel felt that the rate increase was justified and will provide Sonic with
a fair return on their investment. She suggested that rather than give the full
increase give a smaller increase and expect us to make up the difference with pay TV
revenues. She said that pay TV revenues could not be regulated by municipalities
and to repress rates for basic service thereby prohibiting a fair rate of return
on investment forces the company to increase its pay TV rates.
Fred Bolte stated that he prepared the other consultants' report and said that
the diminution factor for every 10 percent increase in rates you lose part of
your HBO rates. In his report he used 15 percent as the diminution factor. He
agreed with Mr. Pilnek that the total between line difference may not be that
great but that there are some inconsistencies. He felt he had demonstrated
that the pay system is subsidizing the local system to some effect. He felt
that the rate increase was justified and urged the council to grant . it now.
Geoff Grote, Legal Assistant, summarized Assembly Bill 699 as covered on page 18
of the report, outlining the requirement for allowing a franchise to deregulate.
He stated that state legislation requires delivery of 20 channels of service to
subscribers and penetration of less than 70 %. It was his opinion':that Sonic did
not qualify to deregulate right now. There has been a dispute as to how many
channels are actually in service. He said that the interim agreement that was
entered into should not be used without a written discussion with the company,
and said that the decision was due on June 10.
Megan Tutel stated that the bill provides for two methods of deregulation; one
is absolute and the second is a charge where the rates are automatically reduced.
The CPI formally is available for systems which provide between 10 to 20 channels.
It was her opinion that the company be entitled to automatic rate adjustments
and her position hasn't changed.
Councilman Dunin:.. stated.. that ...if.. the ::council:;makes:a: decision and the applicants
are not:�:satisfied -they `can.:appeal.:to:. the coiirts._,:He.�ipointed out that a1T._the
council'iss discussing `is. the -rate increase, and thought that it should be
approached from the strictly business point of view to consider how much of this
will be necessary and how it can be justified.
Rudy Muravez commented on the issue of the base rate, that the city cannot regu-
late the rate but can approach the resources used to provide service. He felt
that it was a symbiotic relationship in that HBO does not exist without a basic
system in place.
City Council Minutes
June 1, 1981 - 12:00 Noon
Page Five
Councilman Bond stated that if the council does not give a justifiable raise
the investor may buy T- bills. He felt that with the findings from both studies
the requests are reasonable. He didn't see the Assembly bill as being a threat
but as a fact of life. He hoped that the council could make a decision on
June 10.
Mayor Billig was disappointed with the report and did not believe that it gave
her the kind of information she had requested at the last council meeting where
this rate increase was considered. She said she was not happy with the inform-
ation provided on pay TV and that it was important to know what the expenses and
revenues are to make a reasonable decision. She reiterated that more in -depth
information was needed and felt that the council should know what pay TV is really
giving the customer. She said that she would make her decision on a continual
free exchange of information and based upon complete accurate data.
On motion of Councilman Settle, seconded by Councilwoman Dovey, to move this dis-
cussion to the June 9 agenda for public hearing at that time, and that closer
classification be made between what is being said by the various parties in-
volved with regard to the paid rates and the reasonable rate of return. Motion
carried.
AYES: Councilmembers Settle, Dovey, Bond, Dunin, and Mayor Billig
NOES: None
ABSENT: None
The council took a 15- minute break at 2:05 p.m. The meeting resumed at 2:20
p.m.
3. Council discussion of the 1981 -1982 Capital Improvement
Program (continued from April 28, 1981).
C.I.P. #13 - Police Station Expansion
Police Chief Nueman stated that on May 5 the council had its first review of
the Police Facility project which amounted to $660,000. At that time Council
contemplated an addition of 4600 square feet plus a remodel of 1500 square feet
to the existing facility which would make it more functional than it is. He
stated that the department is basically out of office.space and that they have
needs within the facility to rework and expand. He reviewed the options being
considered: 1) To lease a building across the street from the department which
is available and costs $55,228; 2) To lease purchase or purchase a modular
which would require expansion or loss of parking space. In the cost analysis,
they didn't feel this option was advantageous because there would be add -on
costs exceeding the initial amount; 3) To expand over the carport which was
built only as a heliport possibility. This would cause parking problems and
would also not get the square footage needed; 4) 3- phased expansion to expand
the police facility over the next three fiscal years. Costs would be $475,000
taken from $665,000 which would be a savings of $185,000. There would also be
an energy savings of $125,000 for next fiscal year, which would be for HVAC
modifications. He said that phase 2 would be $285,000 which would complete a
4800 square foot Butter -type building addition except for the lower floor, which
would include a wing for the investigations section and new entryway. Finishing
the lower floor would amount to'$50,000. He stated that going to a modular
constructed building there would be more interior flexibility in terms of offices.
He felt that master planning the entire facility would give 15,000 square feet
of space with a new buildings a new parking lot with substantially the space
needs required for the next 15 to 20 years, He said that he was willing to
forego the expansion across the street if he can be assured of starting work
this-year on the facilities. He is asking for an increase in budget and allo-
cated resources for leasing the space across the street. He recommended going
with option #4.
Councilwoman Dovey liked the idea of saving the amount of money, was willing to
consider the steel structure and the phase out.
Councilman Dunin felt that if the council approves the modular building that would
enable to tie the visual aspect to the existing building without too much cost.
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City Council Meeting
June 1, 1981 - 12:00 Noon
Page Six
Councilman Bond agreed with combining C.I.P. Items 13 and 14.
Councilman.Settle asked if there was a flexibility to tie any solar capacity
to the structure.
Police Chief Nueman
were a lot of areas
by modifying part o
looked at.
Mayor Billig had no
savings in terms of
stated that solar may not be that cost effective, that there
of the study that made some suggestions and that hopefully
E the existing building as well as the equipment it could be
problem supporting it based on the new design and the cost
incorporating energy conservation items.
Police Chief Nueman stated that it was essential that it be phased, and that
the council will have to make a decision as to giving $125,000 as opposed to
$150,000 the first year.
Councilman Bond left the meeting at 2:45 p.m.
C.I.P. #2 - Mission Plaza - Nipomo Phase
Geoff Grote stated that there may be included in the description a site for the
Community Center, depending on the council's preferences.
Councilman Dunin questioned whether the Mission Plaza should be included in parks,
civic center, or what funding it should come under. His objection was the fact
that it had never been established how much money would to to the park and if it
was to be defined as a civic center or special project then it should be a
separate category from the Plaza.
Mayor Billig stated that council has decided that the Mission Plaza and the Civic
Center will be one integrated project.
Discussion to separate Item 2 into three categories: 2a) land acquisition; 2b)
building capital improvements; and 2c) other facilities.
Council consensus to keep the Jack House separate from Parks Development.
Charles Andrews, Planning Commissioner, was concerned over the use of water
resources for landscaping and trees, and said that the Planning Commission as
a body felt that there was a strong consensus in establishing the priorities
that came up.
Mayor Billig agreed that the council should be thinking of ways of reclaiming
water. Upon general consensus, the council agreed to the following additions
and deletions:
Parks $1,945,000
(Grand Ave.) - 90,000
(Bandstand) - 10,000
::19845,000
Laguna Park 3509000
' 2,195,000
Jack House 70,000
2,265,000
(Park Facility) 50,000
$1,815,000
Mayor Billig asked the Council to be giving thought on whether they wish to
support the Los Osos Valley Road Overpass Project which will cost over $2,000,000.
$568,000 was appropriated by the last Council out of FAU funds. This is a state
project. She felt that the Council should not support the initial design portion
unless the city planned to support the project entirely as it would be money down
the drain to go only part way.
City Council Minutes
June 1, 1981 - 12:00 Noon
Page Seven
Councilman Settle stated he felt the project was worthwhile but he could not
see that the money was available at this time.
Dave
Romero, Public Services Director, reminded the
Council that these FAU funds
would
need to be used by 1983 or the city would lose
them.
ant; Ann McKibbin, Personnel Director; Roger Neuman, Police
4.
Council adjourned to Closed Session to
discuss Fire Negotiations.
5.
Council reconvened in Regular Session,
Councilman Bond absent.
C -1.
6. There being no further business to come before the meeting, Mayor
Billig adjourned the meeting at 6:00 p.m.
Pamela Voges, Acting City Clerk
�r
APPROVED BY COUNCIL ON:
By Olivia Grande, Recofditig Secretary
July 7, 1981
M I N U T E S
ADJOURNED MEETING.OF THE CITY COUNCIL
CITY OF SAN LUIS OBISPO
TUESDAY, JUNE 2, 1981 - 7:00 P.M.
COUNCIL CHAMBERS, CITY HALL, 990 PALM STREET
Pledge
Invocation by Reverend John Wingfield, Unity Church
Roll Call
Councilmembers
Present: Alan Bond, GlennaDeane Dovey, Ron Dunin, Allen Settle, and
Mayor Melanie Billig
Absent: None
City Staff
Present: Lee Walton, Administrative Officer; George Thacher, City
Attorney; Pamela Voges, Acting City Clerk; Henry Engen,
Community Development Director; Geoff Grote, Legal Assist-
ant; Ann McKibbin, Personnel Director; Roger Neuman, Police
Chief; Dave Romero, Public Services Director; .lack Kellerman,
Building Inspector; and Olivia Grande, Recording Secretary.
C -1.
On motion of Councilman Settle, seconded by Councilman Dunin,
claims against
the City for the month of June, 1981 were approved and ordered
paid subject to
the approval of the CAO. Motion carried, all ayes.
C -2.
On motion of Councilman Settle, seconded by Councilman Dunin,
the following minutes were approved as amended: May 5, 1981 - 7:00 p.m. and
May 14, 1981 -
7:00 p.m.
Motion carried,
all ayes.
C -3..
On motion of Councilman Settle, seconded by Councilman Dunin,
contract pay estimates
and change.orders were approved and ordered paid.
Motion carried,
all ayes.