muc meeting minutes
May 27th, 2010
Municipal Utilities Commission
May 27, 2010
The Municipal Utilities Commission met on Thursday, May 27, 2010 at the Council Chambers, 305 Gay St., Cambridge, Md. Mayor Jackson-Stanley convened the meeting at approximately 6:30 pm.
Present: Mayor Jackson-Stanley
Glen Ford, MUC Commissioner
Andy Pasden-MUC Commissioner
Rex Marshall-MUC Commissioner
Gary Newcomb-MUC Manager
Carrie Hall-MUC Asst. Manager
Kevin Johnson-MUC Asst. Superintendent
Greg LeBlanc-DPW Asst. Engineer
Mayor Jackson-Stanley asked for approval of expenses for the Month of April 2010.
Mr. Newcomb said he wanted to point out a couple of items. Ck#20659 in the amount of $30,544.80 to City of Cambridge represents three charges. The second quarter of office utilities which is split between City Hall and MUC. The second quarter was $2,369.60, the first quarter was $1,432.66 and the balance of $26,742.54 was MUCs' portion of Workman's Comp Ins. With that we did go over the projected amount for this year. It did go up substantially. Next year it will go up to just under $35,000.
Mr. Pasden asked if we had any claims?
Mr. Newcomb said he can only answer for MUC and we have had none.
Mayor Jackson-Stanley stated the City has had very few claims. Everything else is basically in line for normal expenditures. The $48,972.92 was Bay Restoration which we collected and send to Comptroller of Md. Total expenditures for April $178,161.61 includes Salaries & Bay Restoration. Anytime our expenditures exceed $120,000 , it is a little bit more than what we have as income.
Mr. Marshall made a motion to approve expenses, seconded by Mr. Pasden, Passed.
Minutes for the April 22nd, 2010 meeting were submitted for approval.
Mr. Pasden motioned to approve the minutes as presented, seconded by Mr. Ford. Passed.
Mr. Newcomb said the necessary changes have been made to the contract as Mr. Collison requested. There are liquidating damages of $150 per day if the well is not substantially completed in 180 calendar days. Mr. Newcomb asked for approval to sign the contract and he thought it was appropriate for the Chairman to sign the contract.
Mayor Jackson-Stanley asked for any questions before we make a resolution to sign the contract.
Mr. Pasden made a motion that the MUC board signs the contract for the new well, seconded by Mr. Marshall, to sign the agreement with Uni-tech Drilling Company and The Municipal Utilities Commission for the new well. All in favor, passed.
Mr. Leblanc asked when do they plan on starting the work?
Mr. Newcomb said, pending the signing of the contract, probably the end of June.
Mayor Jackson asked how long to completion?
Mr. Newcomb said they think 75 days.
Mr. Newcomb handed out new projected summary information. The first revision of the budget is salaries. The original budget included increments to eligible employees and of course there will be none for this year. Also there will also be furlough days. In operational and distribution expenses, the original showed $376,324 which will now be $350,415. This is lower than last years budget because furloughs were implemented after the budget was adopted. Transportation, no change. Maintenance, no change. Other operation expenses, no change. This does reduce the total operational and distribution expenses from $963,724 to $937,815. Looking at salaries for administrative, this will reduce it from $308,899 to $288,907. Payroll taxes and fringe benefits, no change. Under general and administrative. General insurance had to be amended from $50,000 to $74,000. The changes in the salaries and insurance are reflected in the total of operating expenses. This slightly reduces our original budget from $1,687,123 to $1,665,222.
There is another reduction we have to take into account under income. Under revenue projections, everything is still there. Under unappropriated funds, the sewer service reimbursement, the current year we budgeted $98,000, City Council reduced our amount by $50,000 and the actual amount we received was less than that and we have been informed in the next fiscal year we will receive none. As manager of the MUC, Mr. Newcomb found that to be a little troubling, due to the fact we do have charges associated with collecting the sewer charges on behalf of the City. The Mayors salary, a portion of this comes from the Sewer Service fund, a portion of Mr. Kinnamon's salary comes from the sewer service fund but now we will get no funds from the sewer service fund.
Mr. Pasden asked if we know what it costs us to provide those services?
Mr. Newcomb explained we have a formula that was established years ago by the auditors of that time, and was determined to be representative. It was implemented from MUC like an enterprise fund such as the City Marina. The Sewer Service fund was set up to only cover operations. That's where those numbers original came from. Portions of office salaries, actual water used at the treatment plant and a portion of benefits from salaries make up this formula. With all this into consideration, we are looking at next year, if the revenue projected materializes we are still looking at a operating loss of roughly, $50,000. Mr. Newcomb's question is, do we want to submit a budget in which we would have to use funds from our reserves to balance the operation. He stated he was expecting to get maybe half from the sewer service fund but not anything.
In next years budget there is no capital equipment, no vehicles, we do have some money to do some waterline work, no additional money can we cut for improvements. With the loss of the sewer service fund, it greatly hurts us. There is also the antenna lease on the water tank for $15,000 a year which we started, to cover the maintenance on the tanks to offset the cost and the City now takes that into their budget. I think that City looks at MUC a little differently. The building on High Street was sold for approximately $260,000 and the City kept that. Mr. Newcomb said he is pro MUC and he sees these changes starting to affect us. One of the items that is coming up is the extension of the utilities to the Tech Park. There is an agreement with the city and county, the county to pay 76% and the city 24% of 1.2 million. Since some of that is the extension of the water line, we are going to be asked to pay a portion of the debt service associated with that.
He asked and hoped that the Chairman of MUC would take this into account and would have a great impact on the operation of the MUC. A negative impact, in his opinion.
We would be in better standing if the City would look at the MUC a little differently.
The MUC operates entirely on water sales. 50% of people in Cambridge get a water bill for $7.90 a month. If you ask the customer, they would not say their water bill is $7.90 but $36.65. That $7.90 has to pay all operational costs, salaries, benefits for employees, retirement for employees. We have done well over the years to keep costs to a minimum. We will probably have to raise rates for revenue next year.
Mr. Pasden asked if it is possible to raise water rates without raising the sewer amount?
Mr. Newcomb explained the last rate we increased the water rate and reduced the percentage for sewer and generate the same money amount. The last increase the sewer was 290% and was reduced to 250%. It was recommended to the City to reduce the sewer amount to 230% at that time and that gave them a 1% overall increase in the sewer amount. Another source would be a customer service charge that would not affect the sewer. Delmarva Power and Chesapeake Utilities have the charge on their bills. Another problem I see, the City is to raise the disposal fee this year and this will also show up on the water bill. The amount we heard is $5.25 that would make the minimum water bill $41.90 of which we still only receive $7.90.
Mr. Pasden asked if we are required by some statue to collect sewer?
Mr. Newcomb responded, by City Code.
Mr. Marshall asked if the city cut the sewer service fund because we have a reserve fund?
Mr. Newcomb said he thought that was a factor.
Mayor Jackson-Stanley said that is not entirely the case. A lot was taken into account as we worked through the budget. The sewer service fund was put on the table and she said she was going to use that as a proposal. The budget has not yet been approved. It is not an easy decision. She is the person responsible for the budget. She will take this discussion back with her and try to crunch some numbers, at least try to get us out of the hole.
Mr. Pasden asked if the Mayor thought this would be a temporary measure?
Mayor Jackson-Stanley said it is an unusual event.
Mr. Pasden said these things seem to create their own legacy over time.
Mayor Jackson-Stanley said she would hope and project that this would not be a year after year occurrence.
Mr. Pasden said he understands the situation.
Mayor Jackson-Stanley said, one action on one hand has now put another in a deficit and we can't go into a new budget year in the red.
Mr. Newcomb asked the Mayor not to take offense in what he has said. He is speaking on what he feels is his responsibility as a manager of MUC.
Mayor Jackson-Stanley said this is an unusual situation and should only be a one time occurrence. This is her hope. We need to work together. She is working tomorrow and her email will be blazing with this conversation.
Mr. Pasden said it will not make any difference who raised the bill or why, just that it is raised.
Mayor Jackson-Stanley said she understand and will be addressing this tomorrow.
Mr. Pasden said on the news the house sales are better and job rate is looking up, is there any way the revenue projections would be understated?
Mr. Newcomb said he doubt it.
Mr. Pasden asked if the problems we found would make a difference in the meters at the Hyatt and Mushroom Canning?
Mr. Newcomb said we have seen a difference and with the new measuring element, we now can data log the use and get print outs. It is a plus.
Mr. Newcomb said he hates to go into the new year in the red. Do we want to project a budget using reserve fund to balance the budget.
Mr. Pasden said he sees no other option. We could go down by percentage and reduce each item to balance the budget, but how realistic would that be?
Mr. Newcomb said he does have some money in budget for expenses which we may not use for repairs. The same as this year, our revenues were not as projected but we have been fortunate in our expenses.
Mr. Pasden said we show a deficit due to us not getting the revenue we expected from the City. He said he would hate to show we balanced the budget without that money when in fact we can't. We would be sending a message that it is okay.
Mr. Newcomb said he agreed 100%.
Mayor Jackson-Stanley asked Mr. Pasden, should we show a deficit?
Mr. Pasden stated yes and show that we will take the money out of reserves.
Mr. Ford said he agreed with Mr. Pasden.
Mr. Marshall said he also agreed.
Mayor Jackson-Stanley asked for a motion.
Mr. Pasden motioned to approve the 2011 budget as submitted by Mr. Newcomb showing the deficit of $49,222 to be covered from reserve funds, seconded by Mr. Marshall. All in favor, passed.
Leak at Locust & High St.
Mr. Newcomb explained, we found the leak we have been looking for. It looked like the Gas Company from directional drilling went thru an abandoned line and sewer line and the water was running right into the sewer. This was corrected on May 17th. Running the numbers, Mr. Newcomb said with the ¾" line with 52 lbs of pressure, we were 58 gallons a minute and work out to be 2.5 million gallons a month of which was going into the treatment plant.
Mayor Jackson-Stanley asked if they affects our unaccountable water?
Mr. Newcomb said most definitely but not on this report.
Mayor Jackson Stanley said we have had problems with manhole covers bubbling up on Talbot Ave. Would this be related?
Mr. LeBlanc said it is not related.
Mr. Pasden asked how long since the Gas Company did this?
Mr. Newcomb said it was about a year before we moved from High St. The Gas Company was probably unaware that they hit it because it was going right in the sewer.
Mayor Jackson-Stanley said she thought it would be appropriate to contact Chesapeake Utilities to get in touch with the City concerning this matter.
City, County Tech Park Utilities Cost
Mr. Newcomb said he briefly mentioned this earlier. The MUC is going to be looked upon to pay a portion of cost to extend service out to the proposed Tech Park on Bucktown Rd. He does not know yet what the numbers are going to be or the term of 5 or 10 years. This will be a project where we will have a debt. Also with the Christ Rock Extension, the costs for extension was $600,000 over the lowest estimate but as of today, MDE will find the additional funding.
Mayor Jackson-Stanley said she understood today there was a meeting to discuss the size of the water line to the Tech Park and it was agreed to keep it at 16" as previously discussed. We want to get it right the first time.
Mr. Newcomb informed the Commission we had a thorough inspection from Miss Zoe Goodson of MDE. She reviewed everything, and found everything in good shape. He was hoping to have her report but we have not received it yet. She did say that this is one of the finest facilities that she visits. She said she doesn't visit us often because she has other areas of more concern.
Mr. Newcomb said we have a few repairs. Nothing too major.
Four new services
April Pumpage was 56,528.000, billed 48,981,000 and unaccountable 7.5 million or 13%.
Looking at the General ledger, our total reserves stays at about $870,000.
Mr. Pasden said that is $870,000 but we have to pay for the well.
Mr. Newcomb said $325,000 for the well.
Mr. Pasden said our unencumbered reserve is $500,000
Mr. Newcomb said that would be correct. Under income, the one that bothers him the most is residential is down and municipal. Revenues are going to be down.
Expenses starting with Acct#5180 down to the bottom of the page are well under budget.
Acct#5340 is well under spent and will help with the reduced revenue. The only item that is well over budget is the General Insurance of $21,652.
Monthly consumption report was looked over with the Sewer report.
Mrs. Carrie Hall stated she will not be retiring as she previously stated and she was glad she did not jump into it so quickly.
Mr. Newcomb said he also wanted to mention that Carrie is a very happy mother, her son graduated from University of Maryland, Summa Cum Laude.
With no further business, Mayor Jackson-Stanley adjourned the meeting at 7:32 by motion of Mr. Pasden, seconded by Mr. Ford.