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12-11-1972 MinutesCity of Salina, Kansas Commissioners' Meeting December 11, 1972 The Regular Meeting of the Board of Commissioners met in the Commissioners' Room, City -County Building, on Monday, December 11, 1972, at four o'clock p.m. The Mayor asked everyone to stand for the Pledge of Allegiance to the Flag and a Moment of Silent Prayer. There were present: Mayor Jack Weisgerber, Chairman presiding Commissioner Leon L. Ashton Commissioner Robert C. Caldwell Commissioner Norma G. Cooper Commissioner Mike Losik, Jr, comprising a quorum of the Board, also: L., 0. Bengtson, City Attorney Norris D. Olson, City Manager D. L. Harrison, City Clerk The Minutes of the Regular Meeting of December 4, 1972, were approved as mailed. STAFF AGENDA AN ORDINANCE was introduced for second reading entitled: "AN ORDINANCE ratifying and confirming a contract with Earth Excavation, Inc., for the construction of certain improvements in the City of Salina, Kansas, and providing for the issuance of temporary notes to pay the cost thereof, pending the issuance and sale of bonds." (Engineering Project 72-551 - Part I - for Water and Sanitary Sewer improvements in Parkwood Village Addition) A motion was made by Commissioner Ashton, seconded by Commissioner Cooper to adopt the ordinance as read and the following vote was had: Ayes: Ashton, Caldwell, Cooper, Losik, Weisgerber (5). Nays: (0). Carried. The Mayor approved the ordinance and it is numbered 8262. The ordinance was introduced for first reading December 4, 1972. AN ORDINANCE was introduced for second reading entitled: "AN ORDINANCE ratifying and confirming a contract with Brown and Brown, Inc., for the construction of certain improvements in the City of Salina, Kansas, and providing for the issuance of temporary notes to pay the cost thereof, pending the issuance and sale of bonds." (Engineering Project 72-551 - Part it - for Storm Sewer and Paving Improvements in Parkwood Village Addition) A motion was made by Commissioner Ashton, seconded by Commissioner Cooper to adopt the ordinance as read and the following vote was had: Ayes: Ashton, Caldwell, Cooper, Losik, Weisgerber (5). Nays: (0). Carried. The Mayor approved the ordinance and it is numbered 8263. The ordinance was introduced for first reading December 4, 1972. AN ORDINANCE was introduced for second reading entitled: "AN ORDINANCE ratifying and confirming a contract with Earth Excavation, Inc., for the construction of certain improvements in the City of Salina, Kansas, and providing for the issuance of temporary notes to pay the cost thereof, pending the issuance and sale of bonds." (Engineering Project 72-552 - for Sanitary Sewer Improvements for Brown and Brown Addition and the 81 Drive-in Theatre) A motion was made by Commissioner Cooper, seconded by Commissioner Caldwell to adopt the ordinance as read and the following vote was had: Ayes: Ashton, Caldwell, Cooper, Losik, Weisgerber (5). Nays: (0). Carried. The Mayor approved the ordinance and it is numbered 8264. The ordinance was introduced for first reading December 4, 1972. AN ORDINANCE was introduced for second reading entitled: "AN ORDINANCE establishing the monthly water rates to be charged and collected for water service furnished to users of the waterworks system of the City, amending Section 35-55 of The Salina Code amd repealing the existing section, providing for an effective date of January 1, 1973." Dean Owens, representing Rural Water District Number 3, was present and presented the Commissioners with a Memorandum. He said he thought this form of memorandum might expedite this matter, but prior to the consideration of this ordinance on second reading, the Water District would like to bring to the Commission's attention a situation it feels should be considered and attention given to the possibility of charging the district with the water it uses as though it were a single consumer, rather than charge it as multiple users through a single meter. The distinction being the district is not given the same rates as individual customers outside the City, it is given a flat rate which is comparable to an apartment house, or a trailer court or other multiple residential establishment which is served through one meter. 1 11 1 He said, "We do feel there are a number of factors which are unique with respect to the water district that differentiate the water district from other water users outside the city and, very briefly, the district is not objecting to an increase in water rates but rather would like to be considered as a single customer, rather than as multiple residential' customers outside the City, as is presently a part of the ordinance, and is to be readopted in the proposed ordinance enacting the new rates. This provision in the ordinance, Section 35-55 (4), in effect provides that the district be charged the rate applicable to multiple residential users metered through one meter." Mr. Owen continued, "I would like to point out to you some of the factors which we believe differentiate the district from the apartment house or mobile home situation and for that matter the Capehart Housing Sub -division, which is also basically on this same rate. The water district has constructed and will maintain, at its cost, the distribution system and meters for each of its customers, will bill its customers, and will stand any collection costs or losses so that to the City, the district is one consumer for billing purposes and collection purposes. The district has built one standpipe out near Smolan which does provide some storage capability for the district and then to level its demand for water, as opposed to other districts or other users who simply turn on the tap, the water comes directly out of the City water distribution and requires the City to meet all of the maximum demands of all its customers at any given time. To that extent the water district does have some storage capability of its own. We feel this differentiates the district from the Capehart area or other direct demand customers. These basically are the reasons why the district is asking that this be reconsidered at this time. It really consists of a request by the district to be treated as other single customers outside the City, rather than multiple customers with one meter, residing outside the city." Mr. Owen went on, "With the memorandum, we provided some cost comparisons and percentages in order to show, somewhat graphically, how the water billing differentiates between city customers and the water district. The dollar amounts are quire substantial and of course reflect the fact that the district has constructed its own water distribution system and the debt incurred in that construction has to be retired; so that where a Salina customer, under the proposed rate schedule, say consuming 745 cubic feet of water, would have a water bill of $3.74. The water district consumer would have a water bill of $13.34; and we are not saying that this is entirely inequitable, by any means, but we feel that to the extent that the district is paying a flat rate for its water and not given the graduated rate afforded to other volume users, that the rate schedule should be reconsidered." The Mayor and Commissioners, City Manager, and Mr. Owen discussed water meters, and the cost of water for the Salina customer and customers outside the City Limits, the effects of minimum water rates charged Salina customers. A motion was made by Commissioner Ashton to table this for further study, and to adopt the water rate ordinance as read in order to get the rates established, so they can be put into effect by the first of the year. Commissioner Cooper asked if the ordinance would have to be amended because it does set the water rates. Commissioner Ashton said they are not complaining about the rates, they just want the distribution set up a little differently. It would effect the income, but it would not effect the rates. Commissioner Losik asked the City Attorney for a legal opinion. The City Attorney explained that, "The water district is asking for a reformation of their contract with the City of Salina. Section 35-55 (4) was enacted at the time we entered into a contract with that rural water district, because we had no such provision in our ordinance relating to rural water districts before that. This ordinance merely confirms the provision that is in their contract at this time. Now, if you would like to go ahead and adopt this ordinance, as Mr. Ashton has indicated, naturally these rates are going into effect for the district as of January 1; however this certainly -would not prohibit you, in January or February, or anytime you wanted, to contract with the water district, which you would actually be doing, You have a contract with them to furnish them with water at that given rate, so if you did amend their contract, by mutual agreement, then you would amend this section of the ordinance to conform with whatever you might do. So you can go ahead and adopt the ordinance, as Mr. Ashton said, but you are going to be charging the district at these new rates until such time as you amend their contract." The motion was seconded by Commissioner Losik. The following vote was had on the motion to adopt the ordinance as read: Ayes: Ashton, Caldwell, Cooper, Losik, Weisgerber (5). Nays: (0). Carried. The Mayor approved the ordinance and it is numbered 8265. The ordinance was introduced for first reading December 4, 1972. The City Attorney submitted a written report on the provisions relative to the separation of funds in the Water and Sewerage Department of the City of Salina, and asked the Commissioners if they had any questions, Commissioner Losik said, "I do, because first of all, what you have is correct, and what I had recommended is also correct in the procedure to accomplish this is in the realm of our authority. For example, first of all we must understand that I don't think any of us would just arbitrarily want to separate these two funds if it meant that we must immediately take and recall all of the existing bonds at a 3% premium, but we also must recognize that we are going to have to recall those outstanding bonds and pay this 3% premium when we re -issue new bonds, or we are not going to get anybody to buy a second lien." The City Attorney explained that, "There is one provision in the bonds that provides that if the revenue of the Water and Sewerage Department exceeds 135% of the amount needed for debt services, then the City may then issue additional revenue bonds for the Water and Sewerage Department on a par basis with the outstanding issue; but we would have to be able to show that we have revenues in excess of 135%, a net required for debt service. If we can show that, then the bond covenants say we can issue additional revenue bonds on a par with the original issue." Commissioner Losik said, "On that same token then, according to the minutes of the last meeting, this isn't what you told us. Now on the basis of that, unless we can show, even if we were to show a combined 135%, which is the factor which is required for debt retirement on these bonds, if one or the other of the portions of the sources of these revenues in the combined is inadequate, this is the area that we must upgrade immediately so that it would maintain this, otherwise one part of this utility, for example, the Sewage Department will be operating at 150% as opposed to 100% on the other. This is the point I am trying to bring out in here, is that sooner or later we are going to have to establish something along these lines or we are going to find we are going to have the same situation existing that has existed where it has been recognized from an accounting procedure, but nothing has been forced to be done, and as a result, this thing has slipped along now since 1962. So really in essence what we are doing is one portion of our income is far exceeding what would be the normal requirement to get favorable rates and facilities and the other is completely deficit. So on this basis is what we have to establish this. Now as far as just arbitrarily just retiring it and paying the premium, no, this is being ridiculous, but sooner or later, somewhere along the line, anytime you are going to try to issue, if you can get those, and they will purchase them on a par, this is fine, but this would have to be done, but if it can't be and there could be a time when it can't be, then what do we do? Somebody is going to have to adjust rates." Mr. Olson said he spoke with Mr. Ray Reed, President of First Securities of Wichita. He said, "He mentioned the same thing, in a little different manner that. Larry did, and that is that all future improvements and extensions of the system become a part of the system. This is what Larry was referring to as far as the bonds being able to be issued at par, if you maintain 135% of the amount necessary for bond retirement, principal and interest. He mentioned to me, from a practical side, that the combined utility is more efficient and effective. The third point he mentioned is today's interest rate would be substantially increased over the old interest rate, or the interest rates of the old issue, plus the $74,250 required to recall the issue. He mentioned that universally now, throughout the Country, that municipalities either have or are combining their utilities. He is not aware of any who are divorcing them. He mentioned an interesting one I thought. He gave an example of a small community where their present water plant is privately owned today, and the city is being forced to put in a sewer system. The interesting part of this was that the city now finds itself in a position of having to buy the private water system in order to install and initiate a procedure for which they could collect and pay for the sewer system. The next, and last thing, and I think this gets somewhat to the point you are raising, Mr. Losik, and I put some figures on the blackboard so I could see them for myself. I would be glad to bring those in here, as to how you determine whether the water utility is or is not making money. Mr. Reed points out in the feasibility study, that you have a direct relationship between water consumed and sewer discharge. In other words, in his feasibility report, he gave three plans for determining a sewer rate charge or sewer use fee. First, where you would, monthly, have a table and base charges upon water consumption. Second, is basing it upon what they call Winter water consumption, and the third is an arbitrary flat figure of $1.00 or $2.00 a month, regardless of how much water you use. First Securities recommended the second alternative and this was the one accepted by the City Commission at that time, using the Winter rates of January, February and March. This eliminates the person having to pay sewer charges for water used for irregating his lawn _— or for air conditioning. These are the two major examples, where the water does not reach the sewer system. Another point, and this is a very direct relationship;he stated, and had in his feasibility report, an exception should be made for someone who may use water in commodities which they manufacture, such as a bottling plant, a wash rack if they do not discharge back into the sanitary sewer, and manufacturing of cement blocks or redi-mix cement. 1 We do have the provision in the ordinance for these particular and special users to adjust i their usage fee, as we also have for the individual who may use wells for his air conditioning. Wilson and Company has provided this service to a number of users here in Salina where thei domestic water from the municipal utility is less than what they discharge into the sanitary sewer. There is an engineering study and adjustment made and they would be paying more for the sewer use fee than the water that they would take our of the city system. Conversely for the bottling plant for example, they would use a higher water consumption and put less water into the sewer, so they can obtain an engineering study and determine the amount of water going into the sewer, and they would pay on that basis. So with these adjustments available and being used, it leaves the comparative water users and sewer rates being very directly related. Now if you want me to, I will be glad to pull this blackboard in here to show you very quickly where one study shows the City to be making money in the Water Utility and one showing we are losing money in the Water Utility." Commissioner Losik asked, "Which are we doing? If you are going to show that we are making money and then show we are losing money, what are we doing?" Commissioner Cooper said, "I think everybody understands that with the water and sewer department when you get ready to sell a bond issue, because it would be a larger issue than if it were for just one select department, that you get a better interest rate, but what I don't understand is that last week, you explained to us that if we have a new bond issue that it would be same as a second lien. Well, you said the bonds would have to be recalled, that nobody is going to buy a second lien on something like this." The City Attorney explained, "I think what I said was this, I wasn't City Attorney at the time these bonds were issued and I hadn't researched it, but unless this provision was in the bonds that you could issue additional revenue bonds. Now some have them and some don't and I wasn't aware that this one had it. Some have the provision in there that if you have these reserves, that you can issue additional bonds at par; now, at the time I said it would be a second lien, I was not aware that this particular provision was in the original bonds that were issued. And as long as it is in there, and as long as the revenues for debt service exceed 135%, you can issue additional revenue bonds on par with the outstanding issue." Commissioner Cooper asked, "The way the thing is drawn up, because that clause is in there, we can continue issuing additional revenue bonds. Does this also restrict us to committing both water and sewer funds to the repayment? In other words, should we so desire, for whatever reason it might be, if not this Commission a future Commission, could they say. the water improvements will be paid for only out of water revenues? The way it reads now, we can't. All future bond issues will require the funds from both water and sewer anytime we issue a bond obligation for improvement." The City Attorney said, "State Law says as long as you have a combined water and sewerage utility, all funds shall be deposited in this common account. It doesn't say they may be, it says they shall be. So as long as you have a combined department, the State Law says you shall deposit the money." Mayor Weisgerber suggested having Woods and Durham, who is doing the audit, judge whether the breakdown is accurate or not, as to whether our actual water revenue is covering the water bonds. The City Manager explained his chart. The first is a study made by Ron Webster. The second by Dean Boyer, who analysed it and went more in depth as far as how much to charge a 5/8 meter or 3/4 meter, and the last is the Wilson and Company study. R. Webster D. Boyer Wilson and Company Water Sewer Water Sewer Water Sewer Sanitation Water Supply ) Softening & Treatment) 100% 100% 100% Pumping Supplies ) Distribution Customer Accounting & Collection 100% 100% 75% 16% 9% Administrative and General 68.1% 31.8% 68.2% 31.8% 59% 39% 2% Sewage Treatment and Collection 100% 100% 100% Bond and Interest 68.2 31.8% 68.2% 31.8% 54.2% 45.8% You can see very readily that if we charge 68% as compared to 59%; 100% as compared to 75% to the water, you are going to have a substantial difference. So this is why one report will stipulate in the particular area of water, you might be losing money, and in the other report, you might be making money, but in the combined utility, as Mr. Reed explained to me on the phone, with the direct relationship between the sewer use charge and water consumption, it appeared to me,if I got the message right from him, that this was an either and/or situation. Each one of you. as an individual home owner or as a business, would be paying a relatively fair share, if one did ascertain that one utility has to carry the other." Commissioner Cooper commented, "Well I don't know, I thought what brought this entire situation to the surface was the fact that certainly it isn't easy to separate the water and sewer, because one goes with the other. It is difficult to have one without the other, but the idea was in the area of capital improvements and things that need to be done on long range planning that you try to establish your ... because they are businesses and not a tax subsidized situation, you try to establish your rates so that whatever you want to do in the area of water improvements, your rates will provide the funding for, and the same holds true in the area of your sewer lines and treatment plant. This is what it is all about, or at least this is how I felt about it. I don't know how anybody else feels about it, These are my feelings." Commissioner Losik said, "Well that is exactly what it is all about, is to make sure if one is losing money, you are going to have to correct it immediately to prevent it. If they are both operating on a par and maintaining the factor that is required to get the bonds issued, then you have accomplished something, and it is just that simple. In the past we have had stories, just today for example, brought out the fact that you can compute it anyway you want. It is just depending who you are trying to convince of what to get an answer; but from 162, according to the information from this City Hall, is that the Water Department has been losing money. Now I don't know why that figure would come out that way, but that is the way it has been being told." Commissioner Ashton suggested it be set up to determine which figures or percentages would be adequate to give a pretty good feeler, then have a category on the Balance Sheet and Profit and Loss Statement which comes out every month, and then using the percentages you could figure this right on the monthly reports. Commissioner Losik said that would be fine, because it could be spotted immediately, if it is going to be a problem area, and this is exactly the whole key behind this all. Mr. Harris, Director of Administration, commented, "I think we have lost sight of something here, and I see Mr. Srack in the audience. He was the City Manager at the time that this came about in 1961. Since that time, and this is what they told us in the feasibility report that we no longer have two utilities, we have one. We have a water and sewerage department. We don't have two departments, and I think in fact we wouldn't be required to actually have two fees, we could have a water and sewer fee. I certainly don't see anything wrong with keeping track of what comes in and what is spent for both areas for water distribution, production, and all that; and operation of the sanitary sewer system, but I don't think we were required to. I think we could live by our covenants and do away with the sewer fee, as an example, just have one fee for the utility, and incorporate it all into one rate. I don't know that that is really too important, but the reason I mention this is I do get the feeling in all the conversation that we have had about it, that we have overlooked the fact that it has been the combined utility since 1961. 1 don't think the Water Department has lost money. As it has been pointed out, it depends on how you are going to prorate some of these costs. We have not had the resources or revenue to do some of the capital improvements needed in the water system. I put together some figures that are still different from that, it just depends on how you are going to prorate those certain charges. The thing I want to point out is that we have one utility and not two." AN ORDINANCE was introduced for second reading entitled: "AN ORDINANCE providing for the amendment of Zoning Ordinance Number 6613 and the Zoning District Map therein and thereby adopted and providing for the rezoning of certain property within the City and prescribing the proper uses thereof." (Rezoning of Lots 1, 12, and 13, Block 7, Replat of Faith Addition to District "B" (Two -Family Dwelling House District). Rezoning to -District "C" (Apartment District) was requested in Petition Number 3283, filed by Harry Sinsabaugh and George Etherington. A motion was made by Commissioner Ashton, seconded by Commissioner Caldwell to adopt the ordinance as read and the following vote was had: Ayes: Ashton, Caldwell, Cooper, Losik, Weisgerber (5). Nays: (0). Carried. The Mayor approved the ordinance and it is numbered 8266. The ordinance was introduced for first reading December 4, 1972. 1 AN ORDINANCE was introduced for second reading entitled: "AN ORDINANCE prescribing the corporate limits of the City of Salina, Kansas, including land described in Ordinance Numbers 8227 and 8244, and repealing Ordinance Number 8188." (Required by State Law) A motion was made by Commissioner Losik, seconded by Commissioner Ashton to adopt the ordinance as read and the following vote was had: Ayes: Ashton, Caldwell, Cooper, Losik, Weisgerber (5). Nays: (0). Carried. The Mayor approved the ordinance and it is numbered 8267. The ordinance was introduced for first reading December 4, 1972. A MOTION was made by Commissioner Caldwell, seconded by Commissioner Cooper to introduce an ordinance for first reading appropriating money from the various funds to pay payrolls and claims against the City of Salina, Saline County, Kansas, for the calendar year of 1973, as provided in Kansas Statutes Annotated 13-2601. Ayes: (5). Nays: (0). Motion carried. Ordinance Passed: \C ,� QN ig 1�7z Number: $2�g A LETTER was received from the Metropolitan Planning Commission recommending the approval of the amendment of Petition Number 3287, filed by F. E. Baringer to change the name of the circle on East Crawford from East Crawford to East Crawford Circle. (Mr. Baringer's original petition requested that Lots 14 to 18, inclusive, Block 6, Rolling Hills Addition be named Aspen Circle). The Metropolitan Planning Commission feels that a change to Aspen Circle would be confusing, as it does not relate to Aspen Road, located to the north of East Crawford. Mr. Baringer was present and stated that he had used Aspen Circle as a suggestion, but he did not want it named anything with Crawford in it. Mayor Weisgerber commented, "I think you might understand why they might object to Aspen Circle, with that other street in that same area, this could get quite confusing. I am not sure what their thinking would be about an entirely different name." A motion was made by Commissioner Caldwell, seconded by Commissioner Losik to refer the petition back to the Metropolitan Planning Commission to consider another name. Ayes: (5). Nays: (.0). Motion carried, THE CITY ENGINEER reported on Petition Number 3291, which was filed by Katherine Richter for better lighting between Franklin and Wilson on South Tenth Street, and recommended the petition be denied. Commissioner Losik commented, "On this, there are the required number of lights there, but they are of the old type, so what you have stated in the report, if we were to replace this one, then we would probably be forced to replace them all. You would have a bad situation, one bright light in a whole bunch of dim lights." The City Engineer replied, "That is correct. In fact, this particular light is a mid -block light, and this particular light would cost 56¢ a month additional." Mayor Weisgerber asked how many lights would be involved to upgrade the whole area. The City Engineer explained it involves an area from Ninth Street west to Centennial Road and from Crawford Street south to Magnolia Road, and the net increase to upgrade that whole area would be $1,045.00 a month. A motion was made by Commissioner Losik, seconded by Commissioner Cooper to accept the recommendation of the City Engineer and to deny the petition. Ayes: (5). Nays: (0). Motion carried. The City Attorney said the next two items on the agenda concern Industrial Revenue Bonds for the Javelin Corporation. He explained that in October, an ordinance was adopted to issue $400,000 municipal revenue bonds to purchase an existing structure and remodel it and to equip it for a tire recapping service. Immediately after it was passed, and before it was published, a hitch developed in the site that had been selected. They failed to exercise their option and it fell through. Now they have selected a new site, which is on North Street, immediately north of the area they were going to use, but it is unimproved land, and they will be required to build, or to construct a building. They have contacted a local firm to do this, and this does increase the cost somewhat. Now they are asking that we repeal the existing ordinance and adopt another ordinance and re -issue Industrial Revenue Bonds for $440,000 instead of $400,000 which you previously agreed to, and because of this we do need to repeal what we have on the books." A motion was made by Commissioner Losik, seconded by Commissioner Ashton to introduce an ordinance for first reading repealing Ordinance Number 8257, which provided for the issuance of $400,000 Industrial Revenue Bonds for Javelin Corporation. Ayes: (5). Nays: (0). Motion carried. Ordinance Passed: �Q� ,,,, 14 197x_ Number: 726 A motion was made by Commissioner Losik, seconded by Commissioner Ashton to introduce an ordinance for first reading, "Authorizing the City of Salina, Kansas, to acquire the real property hereinafter described and to construct and purchase buildings, improvements machinery and equipment to be leased to Javelin Corporation, authorizing and directing the issuance of $440,000 principal amount of Industrial Revenue Bonds, Series October 1, 1972, of said City for the purpose of providing funds to pay the cost of acquiring the real property hereinafter described and to construct and purchase buildings, improvements, machinery and equipment to be leased to Javelin Corporation, prescribing the form and authorizing the execution of a lease by and between said City and said Company." Ayes: (5). Nays: (0). Motion carried. Ordinance Passed: �jp_��IR I 7 Number: �Z 1 0 COMMISSION AGENDA "DISCUSSION OF THE ACTUARY STUDY." (Sponsored by Commissioner Ashton) Commissioner Ashton commented, "I think we have all received a copy of the letter from the Martin Segal Company, regarding the preparation of an actuary study to upgrade our present pension plan for our police and fire departments. Since this has to be done by someone that is approved by the State, if we go into KP&FRS for employees present Iy hired, we have one option, and that is the Segal Company; so I would like to move that we accept the Segal Company proposal to prepare an actuary study to determine how much money it would require to bring up our retirement for our police and fire departments; and I would move that if it is feasible, and if it can be worked out, that all new employees who are hired after the first of January of the coming year, come under KP&FRS:'' The motion was seconded by Commissioner Caldwell. Commissioner Losik commented, "I am all for this, I think this is something we should have worked on sooner, but the point is, do you have any recommendations as to how we will handle the ones that are under the present plan?" Commissioner Ashton replied, "This will have to be determined by the actuary. The figures I have been able to find, if we put the present employees under KP&FRS it would cost about $125,000 at this time, to place them under the 16% for the first year, and then this will vary depending on how the retirement system is set up and it could run from 16% to 20%, so I am asking for a feasibility report to see if we want to continue our own pension plan or whether we should try to incorporate all of these under KP&FRS." The City Attorney introduced Mr. Crowthers, from the Kansas Publie Employees Retirement System in Topeka, and said he would be glad to answer any questions the Commissioners might have. Commissioner Cooper asked Mr. Crowthers if he had had his meeting with the employees in the two departments. Mr. Crowthers replied that he met with them on August 15th and there were two different sessions, one with the firemen and one with the policemen. He said there were about 40 to 50 individuals from each department present at these sessions. He added that he met with Mr. Harris and Mr, Abbott after that to discuss costs and timing on the study. Mayor Weisgerber asked Mr, Crowthers why the State ties with just one actuary so the City has no choice? Mr. Crowthers replied, "The reason behind this is that it is provided by Statute and administrative regulation that it will be the same actuary. The rates for each individual employer, under the division of KPERS you are talking about, the Kansas Police and Firemen's Retirement System, is a separately computed rate for each city, rather than a rate for the entire system, as is true for the KP EPS system generally. The police and fire are very specialized, and these rates are based on the calculation of an actuary employed by the system and recommended to the Board. The Board certifies the rate so that down the road, when the city starts getting the bill, you know what it is going to be. 't jfl -+ o+y��f I ! The first year it is 16%, but after that it is going to be what the actuary recommends and is certified by the Board. The reason for, number one, requiring a study before you come in is so you will have some idea that you don't think that it is going to be 16% and suddenly find out that it is going to be 20% or 25% of the covered payrolls. It has with some cities in the past. The second thing, the reason for requiring one actuary for everyone that comes in is, I think that since it is near the end of the year a good example would be; we could take our figures to an expert to be computed as to the income tax we would owe, and you would probably get different answers from different people who have expertise in these areas, because of their approach and the interpretation of the regulations. Well, the same is true with the actuary, if they adopt assumptions or use a different mortality table, what seems like a very insignificant thing of a 2% or 1% in the interest assumption can result int% or 3% of the covered payroll difference in the employer rate, and since you are going to be eventually paying the bill and the citizens of your city are going to have to come up with the money to make the payments, you might as well have the benefit of the actuary that is actually going to be making the recommendations, rather than one that might use different assumptions." The Mayor called for a vote on the question. Ayes: (5). Nays: (0). Motion carried. "THE KANSAS - DENVER WAGE STUDY FOR CONSIDERATION." (Sponsored by Commissioner Caldwell.) Commissioner Caldwell read excerpts from the minutes of the February 14th meeting, He said, "We had a letter of recommendation from the City Manager, on Page 4 of the 1972 Budget that the Commission consider having the present classification and salary schedule updated. Since that time, cost of living increases and merit raises have been given, but after 6 years of rapidly changing conditions, it would be well to have a competent, independent professional study made of the City's salary schedules, its job classifications, fringe benefits, etc. Let's be fair and honest, both with the employee and with the tax payer who foots the bill. This goal can be accomplished and I would hope that city employees would not feel the need to organize in order to receive a fair wage and fair treatment. When budget time comes, the City's employees should be heard, both as to their personal desires and needs and as to their suggestions for improvement within their departments. These improvements might include equipment, etc. "In the February minutes, we had a motion made that we consider bringing in a competent professional to make this survey, and that was passed on a 3 to 2 vote that we do this. "In the May 8th minutes, we did have Mr. Hugh Catherwood here from the Kansas - Denver Associates to explain this to us, and it reads here Mr. Catherwood said, 'The main objectives of the project are: 1. To identify the kinds of work actually being done by city employees and to insure that like pay is given for like work; 2. To make,comparisons between city jobs and like kinds of work in local private employment, to ensure that city pay rates are neither higher nor lower than those in private industry; 3. To ensure that the titles of city positions accurately reflect the duties actually performed and to provide a system for classifying such jobs for the purpose of recruiting, selecting, training and promoting employees; 4. To make city employees feel that their pay is fixed on a fair and objective basis. Mr..Catherwood continued that the new classification and pay study will benefit the City only to the extent that the revisions are adopted and the changes made.' "And in the minutes of July 10th, Mr. Catherwood presented it to us and a motion was made by Commissioner Cooper, seconded by Commissioner Ashton to accept the report for study. Now, we have had it for some time, and in talking with Mr. Abbott, somebody pretty close to Mr. Catherwood when he made this study, I make the recommendation that we consider this so it can be in effect January first. "I think we considered Plan "A" and talked about it, thay have an actual schedule worked out for it. It also stated that we would not need a further study of this because the personnel director would keep it up to date. This is on Schedule K of the Pay Plan. I don't know how you feel and we do have someone here to explain it to us, and I think Mr. Abbott feels like this is a well made plan. It may have a few flaws in it like most plans, but I do think it would be a workable thing for the City." The motion was seconded by Commissioner Ashton. Commissioner Cooper commented, "Where he quotes a 3 to 2 vote, it was not as just a pay raise for the city employees." Commissioner Caldwell replied, "That is true, it was also considered with Senate Bill 333." Commissioner Cooper said, "Where I did make the motion we accept the salary study that Mr. Catherwood explained when he was here and visited with us for a short period of time, at that time I had an idea because there were two suggestions made by this study that the different plans were going to be kind of projected out in terms of dollars and cents before we evaluated them. This is one of the reasons, Mr. Caldwell, we didn't go any other place with them, but this is what I am saying, that we would try and work out what these costs would be in terms of dollars and cents and then sit down and evaluate it and review it and try to decide which one would best for our local needs, so I am in favor of a pay plan. Now which one of these I still don't know at this time. I think it is important that we have some general idea of what it is going to be in actual dollars." The City Manager explained the two approaches of implementing the pay plan. Plan "A", is where you have step a,b,c,d, and if money is available, to go from one step to the next higher dollar amount, regardless of what the letter designation at the top of the page happens to be. This would require $31,835.00 for the general operating portion of our budget. Plan "B" is to transfer the employee who was at step 'c', for example on the old plan to step 'c' on the new plan, and this plan for general operating would require $103,391.00, and you don't have the money for it. You have available $53,790 in the budget. You do have money to put in Plan "A" and you would have a balance of $21,955 left over. I suggest in those instances where the salary increase would be very nominal, that staff be permitted to take that employee to the next step and that will take up some of the balance. Mayor Weisgerber asked if that would throw the whole thing out of whack? The City Manager assured him it would not. Commissioner Losik asked which plan Commissioner Caldwell was referring to. Commissioner Caldwell said, "I am referring to the one we can afford. The thing I like about the plan here is you will never go down, you will always go up, you will always have a step forward." Commissioner Losik said, "I am like the rest of us. I have some reservations with this whole particular recommendation because there are some bugs in it that won't adapt themselves to our operation here. Frankly, I have always supported and encouraged better job security, better working conditions, better fringe benefits and better pay plans for employees. Now as far as I am concerned, I feel we should go ahead with this, but frankly in about six months I am going to ask for a review of the City's organizational structure and a manpower study and after those are completed to re-evaluate and re -adjust this particular thing, so that we can really get it going, and I think this is the key. Get these people going in a good method here, so they know where they are going and how to get there." Commissioner Cooper said she studied this report after it was presented during the summer, and was ready to go on it shortly after that, but it never got on any calendar or any agenda, so she said it got cold on her. She said, "We decided to go with the one pay program, but are we also going to decide and try to implement some of the other suggestions that were made in the study?" Commissioner Caldwell said he can only go with what is on Page 2 of the Plan, with the continued administration of the plan. The City Manager commented that, "A copy of the plan was provided to all the employees and Mr. Catherwood did come back and make himself available for a couple of days in order to visit with them." The Commissioners and City Manager discussed the pros and cons of adopting the complete pay study, with all the recommendations, and flat cost of living increases. The City Manager said, "I don't agree with Mr. Catherwood in the respect that annually the study should be updated. I feel as though we are not going to get out of whack that much by going with the cost of living, and if next year's budget is anything like this year's, we are not going to have the money to get the cost of living across the board. I feel we ought to have an objective independent,,whoever he is or she is, do the study approximately every three years. Go with the cost of living next year, and the following year, then the third year dig it out again and see where we are off." Commissioner Losik commented, "I am going to be very honest here and straight forward. The reason I want to pin this thing down, I want to see a pay raise for our people. I have always said this. I asked which one of these installations of the plan you accepted, based on Schedule K, because I feel either one is good, let's do the best one we can afford, but I also feel that this next item on the review of the plan, the continuing administration of the plan, I am like Norris, I disagree with this other on Mayor Weisgerber reviewed the motion, that it only included the actual salary schedule and that there was no mention about adopting all that is suggested in the study, then called for a vote on the motion. Ayes: (5). Nays: (0). Motion carried. THE MAYOR, with the approval of the City Commissioners, made the following appointments: Building Code Advisory Board Homer Wells, Mechanical Engineer, reappointed for a three year term to June 1, 1975. Dean Owens, Attorney, appointed to fill the unexpired term of John Weckel, who resigned, to June 1, 1973. Housing Authority Eugene Yockers, reappointed for a four year term to September 11, 1976. Electrical Code Panel Robert Constable, Attorney, appointed to fill the unexpired term of Phil Aldrich, who moved away from the City, to April 6, 1977. Cultural Arts Commission Linda Burnett, appointed to fill the unexpired term of Peggy Rodgers to April 28, 1974. PUBLIC AGENDA TREE TRIMMING AND TREATING LICENSE APPLICATIONS for 1973 were filed by: Lowell Montgomery, d/b/a Montgomery Termite and Pest Control, Bridgeport, Kansas, for treating. Cecil Heart, d/b/a Cecil Heart's Tree Service, 615 Montrose, for trimming. The City Clerk reported the applicants have paid the required fee, and have the required bonds and public liability insurance on file. A motion was made by Commissioner Losik, seconded by Commissioner Caldwell to approve the 1973 Tree Trimming and Treating License applications. Ayes: (5). Nays: (0). Motion carried. A REQUEST was received from Eloise French, d/b/a Radio Cab Company and Yellow Taxi, Salina, Kansas, to increase the taxi cab fares to allow a charge of 50(t for the first 1/5th mile of transportation and 10(t each additional 1/5th mile thereafter, and 95(t for the first 1/5th mile from Midnight to 5 A.M. Commissioner Caldwell said, "At the time we granted a rate increase for Mrs. French, I think we said that sometime in the near future, there may be another request for an increase for fares. Transportation is kind of rare in Salina. We don't have any bus lines, and if we loose the taxicabs, I am sure we would just be out. I am sure there are some people with fixed incomes that might frown on any rate increase. I would like to make a motion that we grant this rate increase at this time, and introduce the ordinance for first reading." The motion was seconded by Commissioner Ashton. Commissioner Caldwell added, "I think it would be to Mrs. French's benefit at the end of the fiscal year that she come up with her internal revenue report to present to this commission for consideration." ! ! annual adastments. l agree we here and I feel we don't need every should have the cost year to have this I i of living deal filled in thing re -studied. So this is why I am saying this. We don't want any misunderstanding that we are going to adopt his recommendation on this one item. I am 100% with you. Plan 1 which is the first one here, based on Schedule K and then to review the plans and continuing administration of the plan. These are the things I would like to see go into this motion and.implemented to be effective', the first of January. There is no misunderstanding about the rest of it. The rest of it we can look over and go with it, but this will get the thing off and running, so we are not talking about something different. We just want to make sure we have a thorough understanding of the motion." Mayor Weisgerber reviewed the motion, that it only included the actual salary schedule and that there was no mention about adopting all that is suggested in the study, then called for a vote on the motion. Ayes: (5). Nays: (0). Motion carried. THE MAYOR, with the approval of the City Commissioners, made the following appointments: Building Code Advisory Board Homer Wells, Mechanical Engineer, reappointed for a three year term to June 1, 1975. Dean Owens, Attorney, appointed to fill the unexpired term of John Weckel, who resigned, to June 1, 1973. Housing Authority Eugene Yockers, reappointed for a four year term to September 11, 1976. Electrical Code Panel Robert Constable, Attorney, appointed to fill the unexpired term of Phil Aldrich, who moved away from the City, to April 6, 1977. Cultural Arts Commission Linda Burnett, appointed to fill the unexpired term of Peggy Rodgers to April 28, 1974. PUBLIC AGENDA TREE TRIMMING AND TREATING LICENSE APPLICATIONS for 1973 were filed by: Lowell Montgomery, d/b/a Montgomery Termite and Pest Control, Bridgeport, Kansas, for treating. Cecil Heart, d/b/a Cecil Heart's Tree Service, 615 Montrose, for trimming. The City Clerk reported the applicants have paid the required fee, and have the required bonds and public liability insurance on file. A motion was made by Commissioner Losik, seconded by Commissioner Caldwell to approve the 1973 Tree Trimming and Treating License applications. Ayes: (5). Nays: (0). Motion carried. A REQUEST was received from Eloise French, d/b/a Radio Cab Company and Yellow Taxi, Salina, Kansas, to increase the taxi cab fares to allow a charge of 50(t for the first 1/5th mile of transportation and 10(t each additional 1/5th mile thereafter, and 95(t for the first 1/5th mile from Midnight to 5 A.M. Commissioner Caldwell said, "At the time we granted a rate increase for Mrs. French, I think we said that sometime in the near future, there may be another request for an increase for fares. Transportation is kind of rare in Salina. We don't have any bus lines, and if we loose the taxicabs, I am sure we would just be out. I am sure there are some people with fixed incomes that might frown on any rate increase. I would like to make a motion that we grant this rate increase at this time, and introduce the ordinance for first reading." The motion was seconded by Commissioner Ashton. Commissioner Caldwell added, "I think it would be to Mrs. French's benefit at the end of the fiscal year that she come up with her internal revenue report to present to this commission for consideration." Commissioner Cooper said, "I would like to say, I have a different idea than Mr. Caldwell. I understood that the taxicab company said they would like to have another rate increase in the Fall, and the Commission, I thought only agreed to review. I don't think at that time we agreed to automatically give them another rate increase. I have given some thought to the cab operation in the City of Salina, and from the statements the cab company has given to the Commission at this time, I am unable to decide whether a rate increase is justified or not. I do believe under the present operation from the material that we have received, that it would be better if the City Commission just simply require the cab company to be licensed and inspected and post their rates and also require that they give public notice if they are going to change them,.but I am not sure we have any business establishing their rates. This is supposed to be a free enterprise system. Anybody can operate a cab company who wishes to do so, provided they meet the same requirements, so Mrs. French's position is one that says if she doesn't have the rate increase, she is going to go out of business. Well, I don't want to find myself in a position, with the information that I have available to me, of making that decision for her. I think it should be her decision. If she can't make it a profitable business, so that she can operate her cabs I would much prefer that she find this out through her own experience as opposed to my saying you can only charge so many cents per mile. I don't think whether we grant a rate increase or not has anything to do with whether we have a cab company in town. I think Mrs. French is trying to operate a cab company, whether we grant her a rate increase or not, she would probably continue trying to operate a cab company, but I don't know what you are going to base your rate increase on. Surely not this information." Commissioner Ashton commented, "I think you are right on that Norma, that it is her decision to make, but I feel as long as we don't go along with the increase, the responsibility lies on the Commission because it is not a successful operation and if we go along with what they are asking and wanting, if it ceases to be a going business, then it is their responsibility and not ours and this is why I am willing to grant this rate increase with the anticipation that they can upgrade their cabs and give the service to the community that it needs." Mrs. French was present and said, "There is no way I can operate on thirds. I have been to other cities and talked and spent a day in Lawrence, which is sort of on our population, and they are on sixths, so right now I am operating at one-half of what that man is, and he is buying used cars. I need equipment. These cars have too many miles and I can't buy equipment until I see how I am going to pay for it, and the only way I can pay for it is through a rate increase, but I am not foolish enough to price myself out of business. I would like to stay in business. I'll run this equipment out. I am not planning on quitting tomorrow, but neither can I go on unless I see a possibility. We have had this business 36 years, and you don't walk away from something you have had 36 years without trying every possible way to make the thing pay." The Commissioners, and Mrs. French discussed the problems of running a cab company. Mayor Weisgerber reviewed the motion to approve the rate increase as of the first of the year, and that Mrs. French should file the year's financial report when it is completed, and called for a vote on the motion. Ayes: Ashton, Caldwell, Weisgerber (3). Nays: Cooper, Losik (2). Motion carried. Ordinance Passed: wee_ �g Iq�� Number: S'23 1 A LETTER was received from the Housing Authority of Salina, requesting the Commission give consideration to the following: A. Resolution authorizing execution of annual contributions contract and general depositary agreement and issuance of project loan and permanent notes. B. Consolidated Annual Contributions Contract. C. Permanent Note D. Project Loan Note. Members of the Housing Authority said they would be glad to answer any questions. Commissioner Cooper asked for clarification of "Consolidated Annual Contributions Contract"', and asked if the $969,090.00 figure is an annual figure?' Mr. Worth replied, "No, it is not an annual figure. Most of it is to go to purchase the FHA owned houses. There would be a balance of it to cover operating expenses during the period of repayment of the loan, so it is a one time figure." He also explained that we asked for 75 two and three bedroom houses as they are, which will be rehabilitated. FHA is exploring the possibility of converting an additional 25 later to four, five and six bedroom houses. Commissioner Cooper asked how much Federal funding we receive in Salina for low cost housing on an annual basis? Mr. Worth said it would be approximately $25,000 annually. Commissioner Losik asked if the initial negotiations for these FHA houses were on an "as is" basis, and now the figure considered is on a rehabilitated price? house. Mr. Worth replied that is correct. Commissioner Losik asked how much they allow for the rehabilitation of the average Mr. Worth replied that it is $3,400.00. Commissioner Losik asked about the average cost per house. Mr. Worth replied that it is a little over $9,000, as an average. Commissioner Losik asked why they didn't let us go ahead with the original deal of us rehabilitating them locally. Mr. Worth replied, the Engineer came out from HUD and looked at all of them, and they thought since FHA have their contractors pretty well established, they could do it more feasibly or more efficiently than we could, and he agreed because we would have to seek bids from the contractors and set up new standards. They have theirs set up and their inspectors and so on, so we decided to go ahead on their basis. Commissioner Ashton asked if there is a certain percent of interest involved in the total figure. Mr. Worth replied, "There is an interest rate that is paid each year. The notes eventually are sold on the private market to investors, and are renewed each year and there is an interest rate there. They are tax exempt of course, and the rate this year is a little over 4% on the last notes that were sold." Commissioner Losik asked, "In lieu of taxes, there would be approximately 23-24% of what taxes normally would be off those properties, wouldn't it?" Mr. Worth replied, "Yes, you are right, it would be $3,000 as opposed to $10,000." A motion was made by Commissioner Ashton, seconded by Commissioner Caldwell to adopt the Resolution as read, and authorize the Mayor to sign the appropriate documents. Ayes: Ashton, Caldwell, Cooper, Losik, Weisgerber (5). Nays: (0). Carried. The Mayor approved the Resolution and it is numbered 3133. A MOTION was made by Commissioner Losik, seconded by Commissioner Ashton that the Regular Meeting of the Board of Commissioners be adjourned. Ayes: (5). Nays: (0). Motion carried. i D. L. Harrison, City Clerk 1