HomeMy WebLinkAbout1998-03-03 Municipal Operations Committee MinutesMmicipal Operations
Committee Minutes
March 3, 1998
Councilors Attending: Mike Aube, Nichi Pamham, Michael Crowley, I'm Tyler
Staff Atteading: Edward Bmev, Erik Stompfel, Bob Favor, Don Gross
Others Attending: - Resume Saucier, Royce Day, Craig Colsm
Meeting convened at 5:06 p.m.
MMuG
Bob Faster indicated that the Municipal Review Committee is emending the current fust
amended and restated solid waste disposal agreement with the Penobscot Energy
Recovery Company. The City maid into this agreement in 1990 and is now being asked
to amend that agreement to sell= a much changed landscape with respect to the
operations of the Bangor Hydro-Elecadc Company. N simple terns, communities are
being asked to lower their tipping fees through the year 200 and than the fees would be
stabilized through 2017. PERC would be remmang their$50 million debt through
FAME and by doing that their debt repayment schedule would be Pushed am 15 years,
which drops the bond payment. This is how the savings are achieved so that they can be
passed along in a 3 -way split between PERC, Bangor Hydro and the Municipalities.
Bangor Hydro is paying sumficantly more than what the market would otherwise cense
them to pay. They approached the Municipal Review Committee 2.5 years ago with this
problem and it has taken the three parties the past two years to renegotiate the Parody
Proposal. Bangor Hydro will get aneffative mm reduction from approximately .II per
KWH down to a.09 par KWH rate. They have agreed to honor their power purchase
agreement through the year 2018 and they will be getting $3 million a year as a rebate
from the distributabal cash that was generaroi from the pint. The towns willbe getting
stabilization of their tipping fees and more importantly they will be getting a stabdumbon
of the PERC plant operating starts and the waste disposal option. Without this agreement
there is some question about whether or out the plant will be able to continue to operate
and/or what the tipping fees would ultimately be for the communities. The City is
currently paying $50/ton with estimates made then the tipping fee could have gone up as
high a $lWhon without tee continued stream of revenue from Bangor Hydro Electric.
The towns will also receive a split in the distnbutabal cash (approx. $3 million/year). The
towns will receive 1 million stock warrants from BHE and have agreed to a strike price of
$7/sbare. The towns have 10 years in which to exercise those warrants. The option to
purchase a small piece of the PERC plant will be gives, so thea by the and of the operation
of the plant, the City would be pan owner in that facility width will provide ongoing rights
in terms of what will be happening at the and of the contract with Bangor Hydro. 1n [emus
of PERC, they will be getting better security that BHE will be able to honor the power.
pwchase a®eervem through the end ofthe30 year warrant. Theygetthesewrityof
knowing that the communities are going to exercise their right to extend the man=
through 2017. PEKC will have a reduced bond payment stream because of the refinancing
which will create the dismbutabal cash that can go back m PERC, the communities and to
BHB. Bob explained that the proposal has been reviewed by a number of different
entities,both a me local level and the state level. The MRC has been m front of the
legislature asking for assistance in restructuring the deal and both times may have assisted.
The public utilities commission has reviewed the proposal and has given their OK. FAME
has also reviewedand given then OK. The communities are now being asked individually
to go back and amend the solid waste disposal agreements, which is the &W piece of me
puzzle.
Councilor Tyler will not be participating in any discussion or vote on this issue, due to a
conmm ofinderest
Councilor Aube asked what the rationale was behind waiving the right to purcbase the
plant in 2004? Bob eplai drat PERC wants to know drat ifthry are going m
restructure the debt through 2002, mar the communities are going to continue to bring
bash to me than. Without that knowlWge, when 2004 comes, the City is free to do what
theywant,andtheplamispaidoE: Erik Stumpfel went onto say that the City had the
option to condone the wnrran for 15 years or to purchase the plant a book value or
throw that out altogether.
Councilor Aube asked how 6.5 was arrived a given the currant market and how does mat
look given a projected market? Currently BBE indicates that they could purchase power
"for 04. The independent firm hired made some financial projections and the 6.5 was
developed as part of their internal rationalization at where power might be at some point
m the &rare. The &m looked a the current operating a pensa and the debt service and
what sale price for power would be required to pay those expenses without significantly
impacting tipping fees. By leveling out the debt service and mending it, the price of
selling the power lowers.
Councilor Aube asked about communities that do have the option of continuing under the
existing solid waste disposal agreement. At this point, they would not share m the
refinancing Are they sharing the refinancing from 20M on or from dr signing to that
point in time? Bob answered that they would continue to get a distribution based on their
egging solid waste disponi agreements with PERC.
The goal of the City throughout the agreement with PERC, from day one, is to try to
provide a guaranteed oudet for the tong at areasonable price. This is the second time
the City has gone through this. PERC bas been in operation since 198?. This contract
projecbsoutW2017. Other plans in Maine are significantly more epensive. Staffis
requesting a recommendation to the Council, which will approve me second amended,
restated and extended solid wane disposal agreement and also ratifies and coMums
our participation as a charter member of the Municipal Review Committee.
Committee approves recommendation.
Joe McNeil explained to the Committee that the Maine Transit Association in
conjunction with the DOT is having the North Annual Bus Rodeo. Bass Park has been
seleetedasthedteforthisevem. The rodeo Committee has asked The Bus to provide
two large busses for use in the compefitiom The participants are fully licensed
operators. The City insmance carrier indicated that there would be no problems
associated with the insurance end of it. Approved.
The Bangor Housing Authority has asked The Bus to provide a bus shelter for tenons
at Birch Circleonl160O1tio Street. This would some two groups of individuals,
Rainbow Trader Park and Birch Circle, The Housing Authority has indicated that they
would contribution the local match of20So and provide its assembly and placement.
The federal government would cover the remaining 80% of the cost Approved.
Don Goss, Administrator of the Nursing Facility, updated the Committee on the status
ofthe City Nursing Facility. The Statistics Report shows three positive changes in the
second quarter: "ad use increased, private payers increased and total occupory
increased. Forthe report, the Citybudgeted subsidy has been removed, so as to look at
the facility from an operating point of view. This is why the budget shows a loss of
U19,000. Theresuksarea@ertwoquarins, The YTD loss exceeds the budge[ because
occupancy has been below budget. Councilor Aube asked how this compares to prior
years. ]3d Hamett«plaived thmthiswas dose to acted last year. Itwasayearagothat
aoarpnnryfegbtlow 90%. Pnebudgetwasbesedonanocwpocymteofabout90%.
Donexplamedthat the Facility has submitted the Residermal Careapplication to the State
andtheseshouldbesomeprelnnhn kdicafionbytheendofne#week. 1nordertoget
approval for the residential care ficeme, some of the nursing facility reimbursement has
to be given up. Other Revenue Source: Staff needs to come up with away to get
reverme firm the space that is used. Uutifies are being paid, but no revenue is coming in.
Discussions are taking place with Cbarlie Mitchell to see if the space can be used for
thempy that is provided to City employees for workers' comp durations. Staff wilt
continue to look at ways to bring m revenue. St Joseph's Hospital has filedwith the
state an application w concert some of the space in their facility to a skilled musing un¢
(20 beds). Don wrote to the DHS asking to get the information as the state begins to
make decisions about that application. This will allow staff to make comments. With
regard to facility assessment, Don's suggestion is that this bonding has been utilized for
health core for 35 years and Don asked Camemer Associates to perform a facility
assessment to answer the quesdon of what needs to be done to the building to insure that
it will is fractions] for another 35 years. The report should be ready m about 2 months.
Dan pointed out the allowable costs per patient day and also showed what was actually
paidby Medicaid. Therifferenceisa$24.85per day loss. Don feels that one thingthat
can be done to help the present situation is to look at the fixed casts, depreciation and
interest and workers' camp. With fired costs, you get reimbursed. Routine costs
including electricity, waren/sewer, are. In looking at the facility assessment, it was noted
that the facility is running water cooled compressors for all the refrigeration an water is
being run through the compressor constantly and the water is log. There is
approximately $2,000 per year in sewer bills just for the water running through the
compressors Part of the review will be looking at these issues. Councilor Aube asked
where staff was at in tams of timing for the governance structure recommendation from
the Council? Ed Barrett explained that staff has done same work on this, but it is
premature to make my comments at this time.
Erik Stumpfel explained that there are three separate ordinances regulating sexual
oriented businesses that are pending before the planning board. This is the smallest of the
three. There is an ordinance which prohibits back room nudity in commercial
esmbGshuges and that nd'vaoce was adopted in 1994 after a business owner approached
the City at staff level to ask what the City's response would be if the operator located a
peep show m the City of Bigger Baud on the original concepts ofwhstthese businesses
were Oke, the penalty range established in the ordinance was a minimum of $10 and up
to S100perviolation. Recommendation hope Council is that the penalties for violating
this ordinance be increased, This proposal would increase them from the current levels
to a unknown penalty of $l00 per violation and a mxdmuu of $1000 per violation.
Compiler Aube asked if$100 a reasonable mount or could it be higher? Erikexplamed
that yes it could be higher. There are ordinances in other jurisdictions regulating
cammereial nudity, none which has this particular prohibition Most of be models looked
a we from other states Councilor Crowley asked what u the City's cost? Ed stated that
the war could be as high as $3000, maybe higher. 11 would depend upon the case. Erik
stated that in almost every case, the loss is not recovered. The intent is to have fines
which are sigodoen enough to dna the behavior. Councilor Crowley slated that if the
est can not be recleaned, there should be a significant fine, or not have a &m. Erik
explained that the other ordinances circulating on adult entertainment, the range of fines
is $500 for the &A violation, $1000 for a repeat violation, except for the drafts in which
a landowner is involved, which are land use violations. In the Ind use case, thou drafts
set the minimum penalty at $500. Under Maine Law, if you don't have an ord once
provision m a land use case, the minimum penalty is $100 per day and the maximum
penalty for the fust violation is $2500 per day and there are mandetory attorney's flues.
Councilor Aube concurs with Compiler Crowley. lnreadingthis, ifit is to be a deterrent,
$100 is insufficien. Should the minimum be set at $500? Councilor Tyler commented
that under State law, there are certain classifications of crines that range ftarm'E (low
end) to "A" (felony). Can the levels of these linea be contrasted with sometiung that
would be akin under violations of those statutes so that the different violations can be
weighed. Erik will look at this further and put together more information. Councilor
Crowley recommends changing the amount to $500 to $5000. The Committee agrees
with the r econvnendation and this issue will be looked at again when ENr has the
inforasuan together.