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HomeMy WebLinkAbout2009-04-06 Finance Committee Minutes FINANCE COMMITTEE April 6, 2009 Minutes Councilors: Stone, Wheeler, Bronson, D’Errico, Hawes, Blanchette, Palmer, Gratwick, Nealley Staff: Cyr, Barrett, Moore, Ring, Ryan, Hupp Others: Eric Russell 1. Consent Agenda A motion was made and seconded to approve the Consent Agenda, Item a. a. Quitclaim Deed – 66 Second Street 2. Bids/Purchasing a. Farm Tractor – Airport – Southworth Milton - $44,750 Cyr said the farm tractor is one of the items that the Committee has reviewed prior to the item going out to bid. It will replace a tractor that is used for maintenance work at the Airport including the access roads. The request is to award the bid to the low responsive bidder, Southworth Milton, in the amount of $44,750. There was one bid with a lower price but that particular piece of equipment did not meet specifications relating to transmission, lift, cylinders, tires, wheel base, weight, etc. The City owns all of the attachments that will be used on this piece of equipment. Responding to Stone regarding the specs, Cyr said it is often based upon a piece of equipment. Staff tries not to tailor it to a specific size that only one manufacturer can provide and also allows for acceptable alternatives. Responding to Gratwick, Cyr said it is the model number that is bid. Barrett said that the City does not bid based on someone’s ratings. Gratwick asked how specs are evaluated in terms of the excellence of the manufacturer. Barrett said that the City is not an expert in all areas. In the case of tractors, staff puts together a spec to meet the intended needs; i.e. engine size, the weight. Cyr said that if staff is concerned about any bid issues they are very open in sharing the information. She also noted that staff doesn’t always recommend the low bidder for the sake of a low bid. A motion was made and seconded to approve staff recommendation. b. Window Renovations – Economic Development – Bangor Abatement - $11,050 Cyr noted that this also is an item which has been discussed at a recent Finance Committee for work at 49 Florida Avenue which is a property managed by BanAir and leased at $24,000/annually plus utilities. There were 20 bids received and staff recommended the low bidder, Bangor Abatement in Hampden and not to go with the alternate. With the thought of a limited budget, the alternative was a deduction to remove some of the painting, fix up window and door trims. The base bid is the low bid being recommended by staff. A motion was made and seconded to approve staff recommendation. c. Sodium Bisulfite – WWTP – JCI Jones Chemicals - $16,300 Cyr stated that this is a chemical used at the Treatment Plant. There were 5 bid responses and the award recommendation is to JCI Jones Chemicals, the low bidder at $1.63/gallon. The total bid amount represents the estimated annual quantity. Responding to Nealley, Moore said he has seen some wide swings in pricing in both directions. Cyr said that in some cases suppliers are hesitant and would like a bulk contract. Sometimes a higher price is paid for not taking large quantities and deliveries. A motion was made and seconded to approve staff recommendation. d. Waive Bid Requirements – Plant Control System Upgrade – AutomaTech - $25,923 Moore said this is part of a two-year program at the Treatment Plant. Last year, the computers that run the Plant were replaced. This year, he had planned to replace the software that actually runs the computers and software that allows staff to see what is happening within the Plant. This item is the latter part; i.e. computers, monitors and upgrade of software. Moore would like to waive the bid requirements in order to use the system which the Plant has used for the past eight years. Automa Tech installed the original software and computers eight years ago. They understand the system and their price per hour is competitive in the New England market. A motion was made and seconded to approve staff recommendation. e. Waive Bid Requirements - Impeller Replacement – WWTP – Aqua Solutions - $24,550 Moore said this is an unexpected maintenance item at the Kenduskeag Pump Station on Washington Street. The impeller is a huge piece of the pump. The current one is still operating and in service but there are two holes in the impeller as a result of the sand and grit pumped through them. Its efficiency has diminished. He asked permission to waive the bid requirements as he would like to purchase the original equipment manufacturer piece of the impeller rather than go through third party manufacturers. In response to Bronson, Moore said the current pump was installed in 1997. Moore expects the life expectancy of the new impeller to be longer. At the Plant, there are units that have over 30 years of service. A motion was made and seconded to approve staff recommendation. f. Bangor Waterfront Park – Community Develop – S.H. Bridges - $1,775,564 Cyr noted that this bid and the revised project with Pam Shadley has also been previously discussed by the Finance Committee. The plan approved by the Business and Economic Development Committee for the next phase of the waterfront development went out for bid. Staff was concerned that the estimated engineering budget compared to the actual dollars available were quite a distance apart so the City bid with three alternates. Staff’s recommendation is to award the entire project to S.H. Bridges including the base bid and alternates 1, 2, and 3 in the amount of $1,776,000 in total. If approved by the Committee, Ring noted that it will require full Council approval. S.H. Bridges is a local firm that did the Hogan Road Extension project last year. Ring has checked projects undertaken by the company and has also checked their references, and he noted that he is very comfortable with the bid and the firm. In response to Stone, Ring noted that the City requires a 100% performance and payment bond, which is standard in the industry. A motion was made and seconded to approve staff’s recommendation to the full City Council for its final action. g. Waive Bid Requirements – Stormwater Engineering Contract Ring said that the City was recently notified that it has received about $2.8M in stimulus dollars to undertake stormwater improvement projects. There are three areas - equipment purchases are needed at about $270,000; work in the Penjajawoc Watershed at $877,000; the Birch Stream Watershed at $1,690,000. There are specific timeframes associated with performing the work. Ring indicated the need to secure consultants as the work load cannot be done in-house. He, therefore, requested authorization to work with consultants to further develop designs in both the Birch Stream and Penjajawoc Watersheds in order to put the items out for bid and to meet deadlines. Ring proposed to use the firm of SMRT in the Birch Stream. SMRT has done the preliminary work and the City is pleased with the results. Some portions in the Birch Stream area need to be done in the aeronautical area and because of their expertise in this field staff proposes to use Edwards and Kelcey. In the Penjajawoc area, there are a total of eight projects. The City has worked with several consultants in developing the draft watershed management plan and the types of projects to be undertaken with the stimulus funds. Ring would also propose using some of these consultants as well as others with experience in site plans on private property. Many projects, if not all in the Penjajawoc watershed area, will involve private property. Ring said the request is to waive the usual procurement process and utilize the consultants who are best aligned and experienced with the type of necessary work in order to perform the work in a timely manner. The consultants would need to submit specific proposals and costs which would then be reviewed by DEP before contracts are entered into by the City. Gratwick noted that these are mandated projects. Responding to Gratwick, Ring said the cost to do all of the projects that will hopefully produce the water quality standards that need to be attained will be approximately $10M. The City will be looking for other funding sources. In the meantime, the projects were submitted by staff with the expectations that they met guidelines but also projects that can be more easily done and expected to produce positive and measurable results early on. A motion was made and seconded to approve staff’s recommendation. th 3. Update from 175 Birthday Committee th Palmer said there are two pieces to the request. One is for 175 City birthday commemorative magnets. The cost for 5,000 magnets is $624, and th the designed magnet will portray the 175 Logo. The magnets will be given to the Canoe Race participants in their race packets. The magnets will also be sold along with t-shirt sales. The cost per unit is 12 cents/each and magnets would be sold for $1.00. Nealley noted that with the sale of 624 magnets it would become revenue neutral. The second request deals with advertising in The Maine Edge. Stone asked about t-shirt sales. Palmer noted that the year is not yet over. Other than on February 12, t-shirts have not been sold in public gatherings. Nealley pointed out there are several upcoming events at which the items will be displayed for sale. Responding to Stone, Palmer asked for two separate votes to be taken on the th two separate requests. He noted that the 175 Committee is not working with the Bangor Daily News in terms of the expense involved. He said that 25 years ago over $100,000 was expended on the City’s birthday at that time. The time capsule was donated at no cost to the City. There have been several in-kind donations. The committee was billed for use of the civic th center for the February 12 event even though there was a basketball court in the middle of the program. A lot is being done for very little. Palmer said th he did see that the 175 Committee would be returning to the Council for additional expenses. It will mostly be in-kind and the Committee will deem what is appropriate for events going forward. Palmer said that he will be at the Canoe Race finish line selling the t-shirts and magnets. He thanked Walter Ryan from the City’s Central Services Department for his work in the design, costing out the items, etc. Gratwick asked Palmer about expenses versus revenues. Palmer said that the t-shirts should be revenue neutral. A motion was made and seconded to recommend approval to purchase the magnets. Palmer then spoke about $500 for The Maine Edge. Mike Fern of the Edge has been working with City staff and provided several one page spreads throughout the year targeting a market that is a younger market that otherwise wouldn’t happen. When approached to do a special section insert with the Bangor Daily News, the expense was much higher. He also noted that donations of $500 from Fiesta Shows, there are commitments of $500 from Mt. Hope Cemetery Association, $250 from NH Bragg. The City’s involvement for The Edge advertising would be at $500 which would be available within the already approved Community Development budget. Responding to Stone, Barrett said the City contracts with Mt. Hope Cemetery for them to maintain the City cemetery that is adjacent and included in their property. Nealley said that based on the calendar there is a wide range of events. He thinks that The Maine Edge has a reputation of providing a calendar of events. He proposed adding wordage to promote other sponsors. Nealley th noted that he is a member of the 175 Committee. Palmer said that the Council cannot and will not solicit funding. The previously mentioned donations were completely unsolicited. A motion was made and seconded to approve The Maine Edge advertising piece of the request. Nealley noted that he did not vote on either item because of his membership on the Committee. It was noted that Nealley did not have a conflict. Palmer thanked the Committee. 4. Revision to Master Transaction Agreement – BNRC Cyr noted the need to revise a portion of the City’s and Bangor Nursing and Rehab Center’s Master Transaction Agreement has come up in relation to the City’s upcoming bond issue. At a prior committee meeting, Cyr had explained that the bond issue would fund the new fire station 6 as well as reimburse the City for funds it has expended on behalf of the BNRC in accordance with the Master Transaction Agreement that the City executed. A due diligence meeting took place with the City’s bond attorney and financial advisor and, in looking at the Master Transaction Agreement, and the two said that the City is not granting a loan but a loan that needs to be paid back. The agreement is written in such a way that under miscellaneous there is a section stating that upon the termination of the line of credit one-half of the annual net cash flow of BNRC shall be used to repay the City the costs associated with the $2.25M City capital contribution described earlier in the agreement. Cyr said the reason this section was included in the agreement was if the facility did very well as a standalone entity it should make the taxpayers whole. Frankly, at the time it did not appear the entity would do well on its own. It no longer appears as a grant which is a qualified tax exempt use. It looks like it is a private purpose use under bond law. It has never come up in the past because any debt issued by the City associated with this has been such a small portion of the overall bond issue. Language was drafted to maintain the integrity whereby the City would ask BNRC to reimburse the City if it does well but not to repay the $2.25M directly as a repayment of the debt. Cyr noted that it has been converted into a payment in lieu of taxes. Some of the language was also changed. Originally the agreement noted that ½ of the annual net cash flow of the facility and the recommendation is to change it to ¼ of the annual net operating cash flow. Staff’s recommendation is to amend the Master Transaction Agreement by replacing the original 9 a. with the revised 9 a. which calls for a payment in lieu of taxes based on annual net operating cash flow making it similar to other payment in lieu of tax agreements. Responding to Nealley, Barrett said currently BNRC would need to pay 50% of any profits back to the City towards the $2.25M that the City will eventually give BNRC for capital improvements until that is paid back. Under the new proposal, BNRC would make a payment in lieu of taxes that would not be tied to any specific number. Any year that BNRC makes a profit, they would pay up to 25% of that profit to the City as an in lieu of tax payment against 50% of whatever their taxes would be if they were a taxable entity. Barrett said that if the change is not made, the City would be required to borrow the money as taxable money whereby the City could end up paying 6% rather than 4%. In response to Gratwick, Cyr said the current bond rating is Aa 3 and a Aa minus, one from Standard and Poors and one from Moody’s. On average, the City has borrowed in the area of 3½ to 4% average interest costs on debt. She expects this debt issue to be at that level if not lower. Wheeler said the revised provision means that in future years BNRC will pay 25% of any net cash flow to the City. There is no limit to the length of time that these payments will be made. Cyr said that is correct with the only limiting factor being that it would not exceed 50% of what their tax would be if they were a for profit organization. Blanchette said this is similar to when Bradford Commons went from a for profit entity to a non-profit entity. To simplify this, she said this will bring the BNRC agreement in line Bradford Commons and the bonding house will look favorably at the City. Palmer noted the success rate of BNRC and its Board. A motion was made and seconded to approve staff’s recommendation. Stone commended Cyr in the area of the bond ratings. Erik Russell, Bangor Daily News and Dedham resident, asked Chair Stone to entertain a public comment. Stone invited Russell to the table. On behalf of the BDN and with all due respect to Council Chair Palmer and other members th of the 175 Birthday Committee, he expressed disappointment that the City has chosen not to advertise with the Bangor Daily news in favor of The Maine Edge. Given his coverage of the City along with his predecessors, he felt a personal slight noting that The Maine Edge doesn’t pay a lot of attention to the City unless it serves their interest. The BDN has a rich history in the City and he said it was too bad that that was not rewarded. Russell felt certain that the advertising staff would have worked with the City. Because he does a good job in covering the City, Russell feels the City will gain free advertising but he is disappointed. th Responding to Russell, Palmer said that the 175 Birthday Committee has been in discussions with the BDN advertising department many times. Because the City is a bureaucracy, it does tend to run slow. He has been in constant communication with the BDN and he said it was not the City, its th agent or its 175 Birthday Committee that pulled the plug on these negotiations. It came from the BDN. Palmer said he regrets it although he is th not convinced that the 175 Committee would have gone with the BDN because of the financial constraints. The Committee is doing a lot with a little th and trying very hard. Again, he stated that the 175 Committee did not pull the plug on the negotiations. In the future when there are other events, Palmer said he would be willing to work with the Bangor Daily News. The City and the BDN help each other and have for over 100 years. Stone noted that the Committee would take a brief recess and then move into a Council Workshop Session. Barrett said that the Council will be discussing the potential to apply for a COPS Grant whereby the Police Department could seek up to six additional patrol officers through a federal grant that at the moment has no match. The question is whether the City should apply and, if so, for how many officers. The Finance Committee adjourned at 6:00 p.m.