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HomeMy WebLinkAbout1997-08-18 Finance Committee Minutes • Finance Committee Meeting Minutes August 18, 1997 Councilors Attending: Don Soucy, Jim Tyler, David Leen, Joe Baldacci Staff Attending: Edward Barrett, John Murphy, Ron Heller, Anne White, Penelope Olson, Mary-Anne Chalila Others Attending: Kathi Murray, Frank McGarry, Arvilla Vercelles, Fred Vadarmis, Douglas Clendenning Meeting convened at 5:00 p.m. 1. Bids: a. Garland Street Sewer Separation Project (Engineering Department) Lou Silver, Inc., of Orono ($271,293.10) The Engineers estimate for this project was $298,784. The low bidder is Lou Silver, Inc. This is a bid that will have to go to Council and staff recommends approval. Councilor Tyler asked why there was only a rating of good instead of excellent. Ed Barrett explained that in recent years, • Lou Silver has probably done a little better than a good job, but there were some issues on some projects early on with clean up and keeping the worksite clean and completing the odds and ends at the end of the job. Recommended to Council for approval. b. Kenduskeag Crib Wall Replacement (Engineering Department) Wyman and Simpson of Richmond ($144,690.00) This is the repair and replacement of the Kenduskeag Stream Crib Wall which is the retaining wall behind the County Building and Police Station where there has been some failure. The Engineering estimate was $185,000. The bid came in at $144,690. $108,000 will come from the Federal Emergency Management Agency (FEMA) as a result of the floods that were suffered a year ago July. The remainder will come from a capitol reserve that was appropriated from fund balance earlier this year. Wyman and Simpson were the low bidders. John Murphy explained that the wall will be rebuilt with a Gabian Wall which is wire baskets filled with rocks. This particular contractor has a lot of experience with the State MDOT, has very favorable references, and it is staffs recommendation to approve the contract. Recommended to Council for approval. 2. Purchase of Two (2) X-Ray Screening Units for the Airport Department Penelope Olson explained that the Airport has been fortunate to be given, from the State, excess screening equipment that they have. This is a new piece of equipment that is not top of the line and Astrophysics has agreed to take this piece plus one of the old Airport units and provide two • top of the line screening units for $49,500. This is part of a project of replacing one unit each • year for the next four years. Staff needs to act quickly on it, because Astrophysics needs to be able to sell the unit before it becomes obsolete. Staff is asking that the Committee forego the bid process. Astrophysics is the top rated producer of Airport screening equipment. Approved. 3. Council Order 97-346 Authorizing the Issuance of Up to $575,000 Aggregate Principal Amount of General Obligation Bonds and a Tax Levy Therefor There are two items included in this bond order which is supplemental to the bond order which was passed a few months ago. One is the acquisition of a compressor and related electrical equipment at the Sawyer Arena. This was discussed in quite a bit of detail during the budget session. The loan would be assumed on this equipment, paid off and the equipment would belong to the City. The second item involves the Nursing Facility. It was hoped that staff would have more information for the Committee on some of the alternatives that were discussed at the Workshop by now, but staff does not yet have all of that information. Some of the issues that are outstanding have to be resolved. Given that the proposal for the Nursing Facility requires the relocation of Health and Welfare, staff has been trying to determine their space needs and the potential availability of space. This could have a significant impact on the timing of this project. Depending on how much of Health and Welfare is moved, staff is looking at 8,000-12,000 square feet. If Health and Welfare were to move into another location, that space would have to be completely ADA compliant at the time of the move. This means that staff may have to either enter into a RFP for someone to retro fit or build the space needed. Staff is still trying to get a better handle on what the value of the license at the Nursing Facility would be if it was decided to go through the sale process and is also trying to get a better • handle on the exact procedure to follow for a sale. Finally, staff wants to take another look at cost projections that were put together for the retro fit. It was hoped that a decision could be made prior to issuing the bonds in September, but more time may be needed to get some of these issues outlined so that the Council has all the information they need to make a good decision on how they want to proceed. HOW TO PROCEED: In terms of how to proceed,there are a couple of choices. One choice would be to amend the bond order to eliminate the funding of the renovation and expansion at the Nursing Facility. If this is done, staff would like to come back as quickly as possible with a new bond order so that this doesn't drag on. The second option would be to consider leaving it in the bond order, but not necessarily borrowing the money. The Committee would authorize it, but not include it in the bond issue unless there was a separate order passed by the Council authorizing staff to go ahead and do so. It could be funded through the proposed bond issue that is being looked at, or look at issuing bans for a one year period and then rolling it into a bond issue in a subsequent year to avoid any additional costs. Staff could look at funding those costs up front, and reimbursing ourselves further down the road. Edward Barrett recommends amending the order to eliminate this project. Councilor Soucy asked what the time frame would be before the information is ready for the Committee. Ed Barrett hoped to have the information ready in written form sometime next week. • At that time,there will be another workshop with full Council to discuss the alternatives which were requested. Another option would be to gradually phase out of the nursing home business. Councilor Soucy asked if, after deciding to sell the license, the City go ahead with renovations? Ed Barrett said no. There are certain restrictions that would want to be put on a sale of license that would need to be thought through as part of a RFP process. We would basically ask people to propose what they would pay for the license as well as how they would address certain issues like the fact that there are existing clients in the facility that need to be cared for. They would have to indicate how long they would be willing to operate the facility at its current location, what their longer term plans are, and if they will stay there and operator longer than a year, staff would look at the issue of them paying the City for use of the building because that is a cost that they can recover through the cost formula. Sawyer Arena Councilor Baldacci asked, financially, how would staff rate the expectations of profitability of the arena. Ed Barrett explained that last year money was lost on the facility because of competition. The year before, an operating profit was made. By assuming this cost, and terminating all the agreements with Bangor Youth Hockey, the actual expense side of the operation goes down. Ed feels there is a good chance of breaking even. If the liability is not accepted, Bangor Youth Hockey will default on their note and the bank will repossess the equipment. There is a significant number of people that use this facility during the winter. After the budget adjustments were made, it improved the bottom line of the facility. Councilor Baldacci's concern is that the City may be in the long term business of subsidizing this business because of the competition. He would hope that as the Committee goes • forward with the discussion on the bond issue that there is some idea to turn towards a longer term financial plan. Ed explained that this is in the works. Dale Theriault is looking into other improvements that might be made so that this facility can be used for other purposes when it is not being used for ice-hockey. Some possibilities are indoor soccer, roller hockey, etc., which might increase revenue. Ed will put together some information on utilization as well as updates on how this affects the operating expenses. It has, in the past, carried its operating costs until this last year with the increase in competition. Councilor Soucy feels it is hard to determine what the long range effect will be on the competition because the first year people used the new facility but it is not known yet it everyone was pleased with it. It's possible some may come back. It may take a few years to realize the full effect of the competition. As part of this deal,the City will be putting a surcharge on Bangor Youth Hockey for using the arena. Comments from others attending meeting: Nursing Facility Roger Day. The CNF has lost money all along. Mr. Day feels a subsidy of$449,000 is an unrealistic amount. He doesn't see how the City can justify spending$400,000 more. Ed Barrett explained that the proposal that is made is that by investing$400,000 in the facility, we will be able to take over part of the building currently used by Health and Welfare to put in residential care beds which are needed in the community and that those beds would then give us a facility that instead of simply offering nursing home care, offered a range of care across the spectrum, from residential care to sub-acute • care. With this investment, the consultants have estimated that the City would get back to about a break-even point in a couple of years. If the City chooses not to do this, we will continue to lose larger and larger amounts of money each year. The Council will have to decide whether or not that kind of investment should be made. Mr. Day doesn't feel that the City of Bangor should subsidize other towns. Bangor residents are subsidizing the facility. Councilor Soucy explained that the City can not limit to Bangor residents. Kathi Murray explained that the patients that are there are paying their own way. It is the empty beds that are creating the loss no matter what town they come from. Ed Barrett explained that if the residency was back up to the 98%, the City would not have to subsidize the facility. The most immediate problem is that the occupancy is 80%, which is where the loss comes in. Arvilla Vercelles (Bangor Resident) asked how many patients are being cared for by the State and what is the cost? Anne White explained that she doesn't know of any that the State is completely paying for. The patient pays some of the cost. Is there a choice between taking a private patient or a medicaid patient? Kathi Murray explained that no one is turned away unless they don't fit the qualifications for licensure or if the facility is unable to care for them. Why aren't the beds being filled? Anne White explained that the facility's occupancy rate is actually better than some of the other nursing homes in the area. The state has decided that you have to be sicker now to be in a nursing home and similarly you have to be sicker to be in a hospital. The standards that have been set up are much higher now than in the past to be able to enter a nursing facility. This order as it was first read will be on Monday, August 26th Agenda. There will be a second, revised order that will eliminate the Nursing Facility project for now. To go forward to borrow the • money in the future, we must go back through the same process, and at some point there will be a workshop on this issue, which will probably be within the next couple of weeks. Committee directed staff to draft a substitute order which would include only Sawyer Arena. 4. Emergency Flashing Light Bars - Police Department Approved •