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HomeMy WebLinkAbout2000-05-01 Finance Committee MinutesFinance Committee Meeting Minutes May 1, 2000 Coundlors Attending: Pat Blanchette, Gem/ Palmer, Judy Vardamis, Michael Crowley, Dan Tremble, Nichl Farnham Staff Attending: Edward Barrett, Dave Pellegrino, Norm Hellmann, Ron Heller, Dave Little, Arthur Stockus, Jim Ring, Bob Farrar, Jeff Cammack, Brad Moore, Don Winslow Meeting convened at 5:02 p.m. 1. Consent Agenda a. Matured Sewer Lien - 17 W Street Approved. 2. Bids a. Roof Replacement - Fire Department Roof Systems of Maine ($21,890) This includes the two lower roofs in the Cenral Fre Station and will =plate all the roof work at Central Fire. Recommendation to go with Roof Systems of Maine, the low bidder. Approved. b. Residential Refuse Collection - Public Works Sawyer Environmental ($296,000) Staff initially wanted to negotiate with Sawyer to renew the contract. This Committee decided to put out to bid for this service. There were four actively interested companies, however only two submitted bids. The low bid was from Sawyer and came in $40,000 less than what would have been paid under the negotiated contract that they were proposing 2-3 months ago. Staff is pleased with the figure of $246,000 the first year and $253,380 annually thereafter. Staff recommends approval. Councilor Palmer asked about the recycling piece. Dave Pellegrino answered that R Is out an bid and they are having a pre -proposal conference on May 16. The final bid would be sometime toward the end of May. Approved recommendation. C. Leather Uniform [ is - Police Department Ben's Uniforms, Inc. ($23,090) There were a number of bids received with two bids that were not responsive. Smyma Police Distributors of Georgia would not come and fit the mats and Wise Uniform would not provide a choice of a zipper or a snap down Flap on the sides of the jacket to accommodate the officers gear. Ben's Uniforms, of Massachusetts, was the low responsive bidder at $300 each for the 75 coats far the patrol officers and $295 for the motorcycle contingent. Ben's currently provides the regular uniforms for the Police Department. The jackets are American made and meet the regulations pertaining to the clean clothes act Approved 9-1. J. FncrkURTruck-Waste Water Treatment Plt Maine Material Handling ($47,480) This Is a truck with a special attachment that Is used to maneuver the large boxes that sludge at the treatment plant is placed in. The recommendation is to go with the low bidder of $47,480, Maine Material Handling of Bangor. Dave Pellegrim explained that this was not a perfect bid Situation. W.D. Mathews of Auburn was given some erroneous Information about an addendum and did not submit a bid. There was an Issue about the special attachment that goes on the machine. At one point, staff talked about delaying the bid and putting out an addendum so that they could clarify those concerns about the attachment. This was communicated from Wastewater Treatment Facility employees to a third bidder. It was then decided not to do that and an addendum was not put out. As a result, they did not submit a bid even though they did not get an addendum. Staff fess it is a shared responsibility and it was decided that the other two bids shouldn't be thrown out bemuse they met all the specifications. Dave spoke to representatives at W.D. Mathews about the miscommunication and decided that It was not fair to the other two bidders who did everything they were supposed to do. Addendum are the only thing that can change the bid and they must be In writing. The individual at W.D. Mathews knows the procedure. He was told something and didnt check on it. The low bidder was Maine Material Handling. Approved recommendation. r - .1-11 The Finance Director explained that staff has had recent discussions with representatives of the Children's Museum who are requesting assistance in financing approximately $1.6 million in capital needs. The Children's Museum has raised $3 million in pledges. $1 million has been received thus far; $1 million has yet to be pledged. These pledges will be coming in over the next 3-5 years. They have construction costs that have to be met during the balance of this calendar year. They need the $1.6 million in fronting In order to finance the receipt of those pledges over time. They have set up an amortization schedule that is matched to the flow of their pledges coming in. Assuming that the pledges come in as they currently expect them to, by December 2001, they would have 3.4 times the funds on hand necessary to pay the City back. Ron Heller pointed out that there are always risks attached to something like this. He points out that about Vo of the money has not been pledged yet and the estimates of cash Flows in the door are actually estimates and could vary significantly. The fundraiser for the Children's Museum has assured staff that the default rate on the pledges currently in hand would approximate about 1%. Ron checked with the tlbrary, ant their default is about the same, which gives validity to that number. Councilor Crowley asked if the City went ahead with this arrangement, what would it do to the qty's financial capacity to fund some of the priorities that have already been talked about. Ron answered that this would be a loan and doesn't feel it would impinge the ability to finance any projects. Ed Barrett pointed out that as long as the City follows the cement policies about reserves, there shouldn't be an effect. Under the Fund Balance Policy, there should be approximately $4.1 million in General Fund Undesignated Reserve. Instead of investing that $1.5 million in a government security, It would be canted as an Investment and a can. The Charter sets a requirement that the City can not carry more than 10% of the operating budget as an undesignated fund balance. The Charter sets a goal of 5-10%. It is not a legally mandated must -haw:. Councilor Tremble questions whether the City should be loaning money. The City Is behind the project; however the City is not a bank. Councilor Crowley commented that he doesnt question the Integrity of the donors or the people who have pledged, but the City has an ambitious agenda on Infrastructure issues and he is sensitive to taking on more than they should. One Issue raised when the City made the decision to support the museum by providing space was whether other non-profit organizations In the community would look for the same courtesy? If the City is open to one, they need to be respectful of others. Councilor Blanchette commented that every Council that is elected has the option and privilege to do what they want to do. Future Councils may do it differently. Ed Barrett commented that this is a policy Issue that the Council needs to give consideration to. It is a project that the City has been very supportive of over time and should continue to be supportive of it There are some potential downsides. He Is not concerned with collecting the pledges that have been made, but there is a difference between what has been made to date and what Is required. There is somewhat more of a risk in this type of Investment than he would be totally comfortable with from the point of view of public money management. It may be helpful to speak to the representatives of the museum to see what their other alternatives are and differentials in Costs. Ed does feel It is a valid request and that the Council should give some consideration mostly as a policy decision on whether or not W do this recognizing that there is a nsk and it does create the potential of situations where there may be other requests. Council on differentiate this situation in that the City owns the building. Councilor Palmer commented that with the library situation, the City's Finance Director is an ex -officio member of that board so the City has some participation. Does the City have the same type of relationship with the Children's Museum? Sean Falrcloth from the Children's Museum answered that Councilor Aube is on the Board of the Children's Museum and the board would probably be open to the possibility of staff involvement. Councilor Palmer asked what would happen if there were cost overruns and how would that Impact on the capital needs. Sean Faircloth answered that they do have in the capital campaign budget a contingency set forth and a building committee that contemplated the numbers. There Is $10D,000 set aside in that campaign for contingency. Sean Fancloth pointed out that they spoke to almost every bank in the community and they suggested that they seek some kind of bond financing. The Children's Museum then met with the Cry's Finance Director and started considering other possibilities. The Museum's Finance Director commented that when It comes down to hard dollars, the amount of savings by being able to go through municpal financing at a rate of 5.5% as opposed to a traditional bank loan, is considerable. The estimated cost saving is $80,000. Ron Heller commented that this is taxable financing. There is a taxe empt route that Is available to the Museum, but that would be fairly expensive as well. Sean Faircloth commented that Ed Barrett's comment about the remaining amount that needs to be raised is a valid point. The City set a deadline for $2 million In pledges by June of 2000. They currently have $3 million, and they haven't reached the year anniversary of the formal capital campaign for this project. Sean agrees that the level of enthusiasm in the community has been demonstrated with the dollars. The City, wRh 8s Investment of the building, is the lead investor in the project. The next Investor of such a major opacity is the Stephen and Tabitha King Foundation with their $900,000 pledge. When viewing it as a significant portion of the downtown strategy of the community and that the project is an educationally based projei the combination of those factors make it a somewhat unusual situation that may be repeated in the future, but If It was, It would be one that would be worthwhile to consider. Councilor Crowley commented that it was a stretch to justify spending taxpayer's dollars on the front end. Not because he does ft believe in the museum, but he is conservative on what the City should be funding on behalf of the taxpayers. It is understood that this project is a great potential revenue generator for the downtown area. Councilor Tremble commented that they have tion a great job and the project will be great for downtown; however, he also has a concern with financing. Councilor Palmer is very supportive of the museum but Is not prepared to make a decision today. He would like more time ro get more information from the Museum and staff. Councilor Famham feels the City has already Invested and shown their commitment. She has confidence in the organization and pledges that have already been put forward. She feels it is a short-term ban as a way to get the lowest possible fnarifing and best possible deal they can on the construction part of the project and something the City has already invested In themselves. It makes sense to help them save the most possible money and do it in the most efficient way possible. It just happens that the City has the best deal right now on a bond rate. For Councilor Farnham, It makes sense to save money In this particular project that they have already invested In. Councilor Vardamis agrees with Councilor Farnham. The numbers look good and there Is total support in the community. Councilor Crowley asked if the Museum has approached financial institutions with the request that they provide them with the amount of money needed at a rate that is comparable to what the City is capable of doing and give them a gift in- land credit for the difference of whatever they typically would charge to a customer. Sean Faindoth answered that the banks came back and indicated that they would be giving the best they possibly could, which had to do with the tax- exempt bond and the difference in the way that it is financed. In speaking with several different banks, their response was that they'd be willing to do ft, but coming to the City may be the wisest route. Most of the banks have already given sizable pledges and have shown their commitment. Ron Heller pointed out that for them to achieve the lowest possible cost of funds away from the City's lending, they'd have to go on a tax-exempt basis which means they would have to Issue through the City or FAME. Councilor Palmer made a motion to table until the next meeting so that the Council can review the information further. Councilor Cmwley seconded the motion. Councilor Blanchette commented that she would like to ask the Council Chair to have a workshop with the full Council so that they can all get a chance to review the information and voice their opinions. Councilor Palmer amended his first motion to a motion to ask the Council Chair to have a workshop with the full Council. The motion was seconded. Atter the workshop, the issue will go before the full Council. Sean Fairdoth Indicated that he would be available for any Councilor that may wish to meet with him to disc any aspect of this Issue. 4. Employee Assistance Program Anceal At the last Committee meeting, the Employee Assistance Program was awarded to Heafthworks. The City Manager received a letter from Miles Theeman of Affiliated Healthcare appealing the decision to award to Healthworks. Mr. Theeman explained to the Committee that they are prepared to withdraw the formal appeal at this time. He did, however, present further Information to the Committee. Councilor Blanchette thanked Mr. Theeman For coming to the meeting. It Is felt that the decision was made that is best for the City. 5. Personal Property Tax Abatement- Quality Cash Reolsters Ben Birch, City Assessor explained that the Assessing Department has been assessing Quality Cash Registers for what they thought were cash registers at various locations within the City. Quality Cash Registers is actually a service agency where they do the repairs. They do not own any of the cash registers. When the Department was notified in January of this Issue, Ben abated the FYoO taxes. They have requested that they receive reimbursement for the three previous years. In order for an abatement to be issued for the prior years, the Council has to issue the abatement. Ben commented that he feels the FY99 taxes should be abated because there was an error in the Assessing Department when the declaration was retumed "no property" and staff felt that meant no declaration and it was assessed. The prior years, they did not return anything to the Department, so Ben feels they are only due one additional years' abatement. The abatement amount is $130.90. Committee approved an abatement for the FY99. '�]t17i,T2-7f+.7•I.7RnUF?itFiiG7' Staff suggested the following language be added to the standard bid proposal format: "In addition to price, one or more of the following factors may be considered in determining the bid which Is most advantageous to the City: delivery time, parrs and service availability, prior vendor performance, and life cycle costs If such costs are available or may be reasonably estimated." By inserting this language, It would be made dear to the bidders as well as to the Committee that factors other than simple bid price can enter into the determination of that proposal which is most advantageous to the Qty. This will not create a local preference. Councilor Crowley asked if this language is added, would there be a redundancy somewhere else in the policy? Ed answered no. Most of the bids specify "low responsive bidder". These are the factors that the Committee would be looking at in determining whether that bidder is responsive or not Dave Pellegrino commented that a lot of the factors are already part of the formal request so this doemt change the bid process that drastically. This was designed to give the Committee more comfort in considering some of the other Imes. Councilor Tremble commented that he would like to see a local preference for the Qty in some part of the polity. In lieu of proposing a local preference section in the policy, he would like to go ahead with this change, but eliminate the part that says the City does not have local preference. Councilor Blanchette asked what that would do to the policy. Dave answered that it would change it. It would be a reeducation of a lot of individuals that are going to have expectations. He would be opposed to taking out that particular paragraph. He will follow what the Committee Instructs him to do; however, it is not his recommendation. Councilor Crowley wondered if this could be added to the forms and tested for the next several months. This may be all that is needed to meet the objectives without deleting or adding language to the current policy. Councilor Blanchette asked if Councilor Tremble agreed that they try this approach for six months and If It doesn't work, go back and look at it again. Councilor Tremble answered that he felt It was a good step but he feels strongly that the language be changed. Councilor Farnham asked how to gauge success or failure of the language. Dave answered that it Is a rare occurrence. Ed agreed and In looking at all the bids in FY99, there only a few Instances where the difference between a local and non -local bidder was less than 5%, and, In all of the 5, the difference was between a Bangor bidder and a bidder in the area. Councilor Crowley feels that one way to measure success is whether or not they have the latitude to make decisions and use some discredon when looking at a tough call. If this language on a document that went to a vendor submitting a bid gives that flexibility, then It works. If along the way, it still doesn't work and the Committee feels backed into a comer or at odds, maybe It needs to be stronger. Councilor Tremble feels that if it Is decided in a few months that this is working, it should become part of the polity. Councilor Tremble moved that this language become part of the procedure on a trial basis. Councilor Crowley seconded. 7. Executive B. Executive Session: Poverty Abatement Approved. Wth no further business to discuss, the meeting adjoumed.