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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. D 1 1 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. 1 1 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.