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.