ORDER-2019-88 : AMENDING REVISED ORDINANCES Amending Melrose Revised Ordinances, Chapter 228, Article IV, Section 228-30 (Sewer Rates Established) as set forth herein.

Transcript (~57 min @ 1:58:20)

Speakers identified by voice; unnamed voices are numbered within this recording. Auto-caption text — verify against the video.

▶ 1:58:07 Kate Lipper-Garabedian: order that these particular documents we've heard about tonight checking it all in favor of that aye opposed and now the order is before you as amended all in favor I motion to

▶ 1:58:20 Peter D. Mortimer: recommend for passage the order as amended thank you motion to recommend

▶ 1:58:25 Kate Lipper-Garabedian: the order as amended be by alderman Mortimer seconded by Alderman Tramontozzi all in favor aye opposed okay thank you very much your time next order on our

▶ 1:58:39 Kate Lipper-Garabedian: our agenda is order number 2019-88 amending revised ordinances amending melrose revised ordinances chapter 228 article 4 section 228-30 sewer rates established as set forth herein and we're still

▶ 1:59:09 Speaker 6: under suspension of rules i believe so maybe we could have mr shenna come up and yep that would

▶ 1:59:17 Speaker 6: be very helpful if our dpw director could talk a little bit about this order so the order um

▶ 1:59:46 Speaker 7: the order amends the sewer rates and it's um the presentation i gave before is relative to this order we're up we're here um between patrick and i we can absolutely try to answer any questions you may have relative to the order of how we set it or the budgets that ultimately support that these

▶ 2:00:10 Monica C. Medeiros: rate support I'd like to move to include with this order the memorandum handed

▶ 2:00:23 Monica C. Medeiros: out today from mr. Shana the FY 20 public works water and sewer budget presentation and also the memorandum from mr. de la Rousseau that he handed out earlier today the city of melrose water and sewer in direct cost allocation to services second

▶ 2:00:45 Kate Lipper-Garabedian: second so we have a motion from alderman Medeiros seconded by alderman Zwirko to add to the order these two documents that we've received tonight all in favor aye opposed

▶ 2:01:10 Manisha Bewtra: thank you um thank you both for being here tonight um i wanted to first ask sort of uh how you go about determining when you um raise the base fee versus the volumetric

▶ 2:01:22 Manisha Bewtra: um sorry i just need to pull up in my notes i'm like looking in too many places but

▶ 2:01:36 Manisha Bewtra: um flipping back and forth in this very thick binder right so i guess um with regards to our sewer rates um the decision was made to increase the base fee this year and um and there have been questions that have come up as to that decision making process around um base fee versus um like how do you go about making that

▶ 2:02:03 Manisha Bewtra: decision sorry starting there so the consultants and the committee agreed

▶ 2:02:11 Speaker 7: that we were looking to capture 10% of fixed operating costs through our base fees and that protects the system against the volatility that volumetric rates tend to create mm-hmm that's just how about that's how we go about it been adjusting sewer to get to that level so that we and uh water was already at that level those are the adjustments that we've made against the base speeds are guaranteed and the volumetric rates depend on consumption and i think again just to add that if i may um

▶ 2:02:52 Speaker 4: through the chair is that and the memorandum from uh our consultant on the second page he talked about how that was a goal established by the city as the second during its rate study in 2016. so that's been a a goal of the city is to bring that up to to match the water at 10 percent um and that would be it so this would be the last lego that um lab they both be at 10

▶ 2:03:34 Manisha Bewtra: watering so excellent um and can you also speak to um again in the water and sewer rate committee we spoke about um discussions that have been had previously about uh residential versus commercial rates and I think to me when we were having that conversation um and again I think I'm sort of mashing together water and sewer uh even though I know our order specifically about sewer rates but when we had that conversation it sort of struck me as some of the same conversations we have on our on our city operating budget in terms of because we are 95 percent residential the um splitting the rate uh and the impact of um splitting the rate when we have such little commercial like what impact that might actually have and and how that decision

▶ 2:04:27 Speaker 7: making process has gone i think that you know that's when we look a little bit at the makeup of our top users and a lot of our top users are residential properties they may not be single family or multi-family homes but it's the um it's oak grove village it's the steel house um i'm just grabbing a few of the examples from the top 10 of 15 at franklin condo franklin manor condos um the coolidge um the congregational retirement homes i mean those are our top users

▶ 2:05:08 Speaker 7: i'm switching to commercial isn't going to really first of all it doesn't incentivize the more you use the more you pay conservation approach that volumetric rates have and secondly there aren't a lot of heavy commercial users the commercial users are already paying the top user of water is the hospital and they're already at the top of the list even with the current rate structure

▶ 2:05:38 Speaker 7: i mean this is a great structure that we feel confident in and consistently consistency helps the community the ability to only have they know okay two thousands might cut off when i'm over it that type of consistency i think helps the end user it helps your consumer and that's why straying from it isn't something that i don't believe the committee would recommend actually we haven't recommended and the more you study these top users the more you realize well it's working this type of rate structure works for the for our type of users we're over 95 percent residential in this community maybe even higher and we have a volumetric rate which is again simple straight

▶ 2:06:33 Manisha Bewtra: to the fact and is easy for people to understand um apologies i've jumped back and forth so many times in my notes um tonight and i'm a little out of sports but um uh well a couple other things

▶ 2:06:56 Manisha Bewtra: that have come up i think that frequently come up and if you address some of these in your presentation but i wanted to just take another moment to um i guess spend another minute on on our rates as compared with other communities um in this memo that you had passed out earlier

▶ 2:07:24 Manisha Bewtra: i think it was exhibit 10 which will be attached did we already make the motion to attach those um will be attached to the order exhibit 10 community comparison average yearly household usage um it shows melrose um in the middle of the listed communities and i think another thing that that folks don't always know is that we're this is more of an apples to apples comparison correct

▶ 2:07:51 Manisha Bewtra: compared to this is this is average water use this is average water use um so i guess my question is

▶ 2:07:57 Manisha Bewtra: sort of can you elaborate on this perception that we have one of the highest water rates um or water and sewer rates in in the mwra system i mean this is we don't make these

▶ 2:08:09 Speaker 7: this information up it's right in the mwra um information that's available to everybody and when you apply our average use to everyone to our rates and everyone's average use to their rates you can see we fall in the middle of the pack very close to it slightly above it but nowhere near the top belmont mill belmont milton lexington stonem reading newton winthrop brookline and chelsea are all above us and our ability this year to maintain our rates will hopefully push us even further down this list next year as other communities rates are continuing to increase i'd also like to offer all the way on the right of that column is senior discounts our senior discount program has always existed and and we'll continue moving forward in fact we even expanded it a few years back to include seniors and condos of the group above us one two three four five six of the nine don't offer discounts to their seniors as well so not only does it cost more for average use they also don't offer any type of relief to seniors so those are those are all things that come into play and and that's what this demonstrate this um this graph demonstrates um i guess going back to my earlier question

▶ 2:09:41 Manisha Bewtra: regarding i guess why is this particular list of communities versus this is not the full list of

▶ 2:09:52 Speaker 7: communities in the mwra system correct this is a hundred percent water and sewer right that's

▶ 2:09:55 Manisha Bewtra: that's when i was an apple to apples versus some communities only use some partial sewer

▶ 2:10:07 Speaker 7: some of partial water some of partial both not everybody relies on the mwra 100 for both

▶ 2:10:10 Manisha Bewtra: so when we're comparing our rates we should be looking at it in kind of again with these comparison communities and for those who can't see the the memo that we're looking at um communities that are it's a list of like about 20 plus communities um and we're literally smack in

▶ 2:10:34 Manisha Bewtra: the middle um i think you addressed what you've been doing with regards to ini quite well another question that came up consistently was around the reserves and the recommendation from various consultants in the past to have a higher rate of reserves and how we as a city have chosen to keep our reserves at 10 um can you speak to that decision-making process as well as concerns from the community about why not dip into that 10% a little bit further yeah a couple of things what one

▶ 2:11:16 Speaker 4: is that we going back as far as fiscal 2013 when we first embraced on the water and sewer needs of the community and what we needed to do to restructure it determination was made that at 10% for reserves both water and sewer the consultant at that time recommended 20% I think if I recall correctly which we did not embrace we have been working with the 10% we met that goal we our objective was over a five-year period to reach that goal so when the rate increases were seen they incorporated a segment for the reserve requirement that is there's no longer necessary we've met our ten percent on incremental basis now we do reach that a very small margin that is provided from available funds and that is something that both the outside auditors and the employees are certifying Bank they embrace that because as I said before that type of of reserve provides some assurance a level of assurance that in the event that you don't take in the revenue anticipated for water or sewer you're not going to harm the city's general operating budget to have to compensate for that loss that's not that's not what they want to see they want to see they have it's no different than quite frankly the ambulance or mount hood they don't want to see those funds that you know if you don't address them properly and manage them properly that the city begins to start to have to um you know pick up for their deficit so you need those reserves it's exactly we did the right thing um in fact right on the letter from uh david fox uh refer tell us financial consultants he says right here that the fact that melrose has been able to increase its revenue from fixed charges while at the same time maintaining moderate to no great revenue increases adequate reserve fund levels insufficiency renewal and replacement of the city infrastructure is applaudable um so we can again consistency we have our target thank goodness to this board they adopted the 10 percent and we've reached that and that means a tremendous amount um to both the rating agencies as well as the outside auditors because it's the right thing to do and it's a level that they feel is reasonable and right now i see no reason to change that just to follow up on our auditor

▶ 2:14:01 Speaker 7: a little bit there are two orders before this board this evening that look to reappropriate retained earnings so we're fortunate we've reached up we've reached a plateau we were at 10 we still have retained earnings that we've collected and we're very excited to present a program where we can go back and invest in infrastructure and equipment without borrowing money so we've reached we've we've we're at our reserve amount and now we still have some funds available to uh to reinvest in the and and that's what we can talk about a little more detail we'll

▶ 2:14:40 Manisha Bewtra: get to those words great thank you um i wanted to know one more thing that i in the um the information presented by the mwra they also had noted um when they came to do a presentation to the water and sewer rate committee and again this is in the packet of materials is that um they used to spend a lot of time in melrose due to flooding because we're a topographic bowl that creates hydraulic hydraulic challenges but again they acknowledge all the work that's been done over the last several years to more aggressively address our flooding ini issues leak detection etc so um i just want to thank you for your work uh it's obviously under a lot of public scrutiny and um it's a tough uh tough position to try to set these rates

▶ 2:15:43 Manisha Bewtra: and i think you've done so in a way that um looks at both uh kind of how can we have modest increases while also um being responsible about maintaining some reserves so thank you president

▶ 2:16:01 Jennifer L. Lemmerman: thank you thank you very much for this information um just to go back and address a few um or i think there's only two more questions that we heard this evening um that i wanted to from in our public hearing um so you did provide information in the attachments regarding how many employees are paid um from this budget by department which is very helpful so appreciate that um could you take a moment to just talk about how that percentage is determined so i could speak to the public work

▶ 2:16:30 Speaker 7: side patrick will speak to the other the other departments um the public works are in that master list and we we look at the workload and what they do where by no means are we in a legal consulting firm or a consulting firm that tracks every hour of every day but for the most part we have we get a good feel of what they're working on what the project workload is and we make adjustments on a year-to-year basis for instance if you look at last year's records and compare them to this year's records my percentage percentage of the director of public works onto water and sewer has gone down because i feel that my workload projecting forward is going to be more on the administrative side and with other budgets and facilities and highways and other agenda items that are coming forward then with water and sewer this fiscal year so we adjusted that down there may be others we adjust up depending on the workload and who's doing what but that's what we do on the public works side and i've provided this breakdown on on on the public works administrative side on a yearly basis this way we can start to establish records and start to see how we transform yet a year publicly the other departments are addressed in patrick's um indirect um

▶ 2:17:56 Speaker 4: information and if i may in particular i would really as a point of information if people would look at the memorandum that was dated june 6 of 2016 i think it's every telling on how these indirect costs for water and sewer have been determined in their percentages. And I think that the detail included every single form that I filed with the Department of Revenue on each fund for those years. But what's important on top of that is that if you look on Section D, which is in this handout under fourth index,

▶ 2:18:38 Speaker 4: It says combined indirect costs as part of total waters or enterprise fund expenses. Since fiscal 2013, you'll see those percentages for 13, 14, 15, 16, 17. The average was 11.2%. If you take what is in the packet now that I just gave you, this evening for the average. Right now, for this year, we have, for purposes of information, the five-year average is 11.12. So going way back then to now, you'll see that we don't, you don't see those spikes, which would be an indication that something's not right or out of balance you don't see the the down all of a sudden down and it goes up for some unreasonable reason um we've been very consistent here um this year five-year average from 16 to 20 will be the lowest indirect cost in the city over the last five years you see that the cost on total for indirect is down forty seven thousand two hundred and forty eight dollars from last year and my own allotment of time is down by five percent because i have a structure in place now that have much more confidence in and if you go back to this memorandum here which a lot of people unless you're inside the building and work as you know in the capacity that we do i wouldn't understand that in order to get where we are it took a tremendous amount of time to comply with the department of revenue requirements i indicated before as i indicated in here they actually wanted We wanted to see reports from us on a consistent basis. We showed we were adhering to what we had indicated we were going to do after we sent those to them. And it takes time to develop policies, procedures that are effective. As you do new enterprises, you bring in, for example, you install new meters, that takes an extra effort. You do monthly billing, that's an extra effort. Whether you pay someone on the outside to do that and set that up, or you do it, it's not for free. If we identify what those costs are in this packet, I think I'm very proud of the fact that the consistency and the detail that we provide, my opinion is second to none. Every year since we started this practice, the Department of Revenue has approved our tax rate. The year they came out where we did not follow practices that were consistent and that did not have the reserves that we have today, thank God. They said that if we didn't change, if we didn't bring in a consultant in, if we didn't establish reserve funds, if we didn't set up new structure and new programs which we have done successfully, that they would not set our tax rate. And again, for the purposes of the public, it's in the law that in the event that they have any sense that indirect costs are not being appropriated to apply, they will not set the tax rate. each and every year we submit all the detail to them they've they have approved that tax rate each and every year I don't need anyone else to tell me that what we're doing is right or wrong they are the experts and I go by their

▶ 2:22:01 Jennifer L. Lemmerman: side thank you yes the information provided certainly does show consistency across the years and an individual yearly basis for each department it sounds like based off of how mr. Shannon described his process and if it's the same throughout that the department heads being the people who are creating the budget along with you and who are you know closest to and have sort of direction over the individual employees are able to kind of look at how much they believe those employees will be spending on these tasks specific to

▶ 2:22:36 Speaker 4: these budgets is that correct correct that would be my me like I trying to critique the indirect cost for say the town of Saugus if I didn't work there And if I was an employee, if I wasn't in finance, and assuming that I understand how they allocate cost, that would be the same thing. I'm inside here. That's what we do. And we have our own Department of Revenue rep who's specific to Melrose, and that's what they do. They monitor. They guide us. They help us. And that's why it works.

▶ 2:23:04 Jennifer L. Lemmerman: Thank you. You're welcome. One more question. um you addressed the usage of the various city buildings the the water usage which is very helpful information that will be included when this is all attached um can you address um the question was made about the decision to move water usage by the city out of the departmental budgets

▶ 2:23:27 Speaker 4: can you address that i certainly can it's actually in this packet as well um

▶ 2:23:44 Speaker 4: It's relative to powers in Sullivan, it's April 28th, 2016, and what I'll do is I'll just pass this out again, another copy, to make it a little easier for everyone.

▶ 2:23:58 Speaker 3: Thank you, sir.

▶ 2:24:00 Speaker 7: Thank you, Pat. One more? Pat, one more?

▶ 2:24:07 Speaker 7: Yeah, I was going to give it to him. Thank you.

▶ 2:24:20 Speaker 4: and just to go on this this again is from dick sullivan he's uh the partner of the firm of powers and sullivan and this was again april 20 2016. um we we asked we inquired about what would be best practices in water and so in fact i could read this if you'd like into the record sure sure this is dr mr delarusso you have inquired as to what would be considered best practices and water and so enterprise funds as it relates to the cost of water provided to city departments specifically u.s whether or not an individual department should have a line item within their respective appropriation reflecting the estimated cost for water and source services or should such costs simply be recovered in the respective enterprise funds while there is nothing to prohibit charging departments for water usage it has been my experience to see such costs recovered in the respective enterprise funds and not and not at the individual department level this accounting methodology is also consistent with what we see in our other municipal clients in summary i believe the city's current system of accounting for city usage of water and sewer to be appropriate and considered good practice sincerely richard l sullivan cpa mba partner so again as i had indicated uh previous uh it was last week this is who i work with these people uh the people that i value the judgment i specifically asked him what was um best practice and he responded in writing and it's part of the record thank you and this was in

▶ 2:26:08 Jennifer L. Lemmerman: 2016. can you remind me excuse me what year we made that change um i actually kind of have to

▶ 2:26:14 Speaker 4: go back and check the exact date okay for you i will do that that would be great thank you very

▶ 2:26:26 Speaker 6: much absolutely thank you thank you thank you yes i think so unless maybe yes i think next i don't

▶ 2:26:37 Monica C. Medeiros: know. Could you perhaps take a look at the memo that was included with this order from yourself, Mr. De La Rosa to the mayor. And I this is in what is that? Well, we're in discussion

▶ 2:26:52 Monica C. Medeiros: of the sewer rates right now. It's 2019 dash 88. And so it's

▶ 2:27:04 Monica C. Medeiros: the uh oh on the rates itself and i think there's some perhaps some some typos here because uh it is talking about the proposed fy19 sewer rates and then later on the proposed fy19 water rates and um in particular the proposed fy19 sewer rates and i believe that probably should be fy20 sewer rates So I'm wondering if you can just go over what the actual changes are.

▶ 2:27:32 Speaker 4: May I ask what the date is?

▶ 2:27:34 Monica C. Medeiros: It says for meeting date June 10th, 2019 at the top.

▶ 2:27:40 Speaker 4: Oh, meeting date June 10th?

▶ 2:27:42 Monica C. Medeiros: 2019.

▶ 2:27:46 Speaker 4: All right, the different, I don't have that one here. I'm sorry, I don't have that here. Okay.

▶ 2:27:50 Speaker 7: The changes are in the base fees. The changes are in the base fees? The changes are in the sewer base fees.

▶ 2:27:57 Monica C. Medeiros: So, okay, so if you can see what the old base fee and the new base fees are

▶ 2:28:13 Speaker 7: Up to one inch meter is going from $19 and 95 cents to $24 and 90 cents One inch to one and a half inch meter is going from seventy eight dollars and forty eight cents to ninety seven dollars and eighty cents

▶ 2:28:33 Speaker 7: Two inch meters are going from $122.37 to $152.43. Three inch meters are going from $224.76 to $279.99. The base fee for a four inch meter is going from $371.07 to $462.18. cents and the base fee for a six inch meter is going from 736 dollars and 83 cents to 917 dollars and 67 cents no change is proposed but the first or second step of the consumption rates and and

▶ 2:29:14 Monica C. Medeiros: you have the consumption rate at eleven dollars and sixty two cents and the uh force the first step up to 2 000 cubic feet and the second step over 2 000 cubic feet to be 14.64 cents correct okay so those uh numbers are correct on the memo it's just that it is showing as proposed fy 19

▶ 2:29:40 Speaker 4: sewer rates and so i have to go check that memo i'll have it with him sorry so

▶ 2:29:43 Monica C. Medeiros: i believe that should be updated and then the fy 19 water rates is on the same

▶ 2:29:52 Monica C. Medeiros: same memo and showing an old base fee and a new base fee yes okay so that's what's in our order for iqm2 and and since that's there and i i mean i'm i'm anxious as i'm sure my colleagues are to uh you know move this on and so on but since that's there and that you know we've just received new documents that are about half inch thick at least tonight and i think that it's you know we really honestly have not had a chance to fully digest this and certainly i don't think the public has and there is the typo in the memo um that i don't know where that memo came from

▶ 2:30:42 Speaker 3: i don't have that memo i don't need it i don't need a point of order yes so this is what i have

▶ 2:30:56 Michael P. Zwirko: so the point of order i wanted to raise is that um the memo that's being referred to is attached to the order in iqm2 however there was a packet of materials that were provided to us by uh mr shena this evening exhibit one proposed sewer rate changes um is a memo to mayor galen ferna from john shenna the director which is essentially a cut and paste of the memo that's attached to the order however i will point out that the memo that is in iqm2 alderman medeiros correctly states that there does seem to be a scrivener's error in the top line of each table where it says proposed fy19 that should read proposed fy20 but the remainder of the memo both in iqm2 and the one that was provided to us this evening is correct for for sewer for sewer but unfortunately it does have

▶ 2:31:41 Speaker 6: an entire order table that says that the monthly charges are going to change the water for water

▶ 2:31:50 Michael P. Zwirko: rates yes which is not correct uh on the lower table correct but they when they were red i i apologize so when they were red they are the rates themselves were correct thanks for the clarification

▶ 2:31:59 Speaker 6: thank you for that clarification alderman Zwirko and alderman medeiros you were saying thank you

▶ 2:32:03 Monica C. Medeiros: and so yeah so we since obviously we did get this tonight and and yes there's a correct memo in the

▶ 2:32:13 Monica C. Medeiros: in the documents that were handed out tonight you know that's not available to the public and um you know i i think we should continue to have our discussions we're all here ready and prepared to have this discussion but at the same time i i think it would be wise of us to perhaps hold this order from a final vote to another night or move it forward without recommendation just for the purposes of you know allowing the public and and us to to digest this a little bit more um in the in the meantime um i was hoping i know you did mention and i'm sure it's in one of these um you pulled out a map about how much has been done in ini and i know we have our city engineer here who's i believe been working diligently on that and i was hoping that perhaps she could give us an update on that and um what that means for things like come up and walk you through

▶ 2:33:13 Monica C. Medeiros: the present the information that's here what that means for unaccounted for water and how you know that factors into our our rate setting because the more we can do to reduce some of the

▶ 2:33:32 Monica C. Medeiros: leakage thank you sure so could you just talk a little bit about uh what's happened this past year and and what you're planning for next year and sure and kind of where we stand as a whole

▶ 2:33:43 Speaker 9: sure so um i won't walk through the whole presentation but just on the first slide if you have it in front of you um you'll note that we're now into spending what's considered phase 11 money from the mwra um what's available to us right now is phases 11 and 12 and we we can access phase 12 as soon as we've spent 50 of phase 11. so we're quickly working our way through the phase 11 money and then we'll have uh just over a million dollars um plus some interest to apply for for the next phase as soon as we're ready and what we're using that phase 11 money for right now is we're finishing up the work that we started in the first five sub areas um

▶ 2:34:26 Speaker 9: it might actually be the most helpful to just go to that second to last page with the map and then the last page which is the ongoing and next steps the

▶ 2:34:38 Speaker 9: second last page shows the areas with the shading that's not quite as dark the five areas looks like four but two are adjacent to one another those are the areas that we started in we spent the phase nine and ten money investigating

▶ 2:35:05 Speaker 9: those areas and then and then doing rehab in those areas and we've almost completed the sewer lining that we identified needed to be done and the open cut repairs in those areas but the open cut is carrying over into that phase 11 money so with the phase 11 money we're finishing the open cut project which has four locations left four larger locations left and then a couple spot repairs and then we're now starting our investigations in the next area which is the four sub areas all contiguous sub areas right in the center of town where we'll be starting over with the camera inspections nighttime flow isolation and then manhole inspections and smoke testing and then we aggregate all that data to determine again what needs to be lined what mantles need to be lined what pipes need to be replaced dug and replaced um and that should that will likely consume all of that phase 12 money to perform the actual repairs and like john had said earlier if you look at the map at just how much of it is now shaded you know we're approaching 50 of the of the community um where we've done our investigations and our subsequent repairs and then if you look at the table on the last page that just shows the timing of what we're

▶ 2:36:33 Speaker 9: doing um just to point out the the sub areas that we started in are in the top half of the table and then the new sub areas are in the bottom half and i just want to stress that just because we're we've made it through those first five sub areas we're not done in those areas we identified other problems that require going back and revisiting some of them are private inflow connections and then there's also sub area 15 which was one of the first five areas had the greatest inflow so rainwater coming into the system of anything in the city 23% or so of the inflow in the entire city comes into that one sub area so we presently have five flow meters that we've deployed in that sub area to try to hone down on where those problems are what neighborhoods uh swains pond have penny road um dexter road that whole corner of the city it's actually a pretty big sub area it's that whole area on the bottom and you said 23 of of inflow which is rainwater induced

▶ 2:37:44 Monica C. Medeiros: I and I and can you speak to how inflow affects our rates sure so it affects it

▶ 2:37:48 Speaker 9: in two ways one just on a gallon per gallon basis just like any infiltration or any wastewater we pay per gallon a large component of the MWI assessment for sewer is just per gallon and then on top of that there's a surcharge for the peak month and so the rainfall rainfall is really when we see those spikes in our peak month so it impacts that as well so if we can get that down it's

▶ 2:38:24 Speaker 7: pretty good bang for the buck to get that down we do intend to come back at some point this summer to request additional authorization to borrow additional funds so we can continue the program moving forward both water and

▶ 2:38:35 Monica C. Medeiros: And do you have any kind of estimate of, you know, how much a reduction will be from the work that's planned for FY20?

▶ 2:38:44 Speaker 9: Yeah, we have the reduction from the first portion.

▶ 2:39:01 Speaker 9: And this is the same information that we would have presented previously, because the tough thing is you don't know how much you took out until you do the pre-flow isolation, and then you do post-flow isolation. Until you do that, you really don't know how much you took out, because sometimes the problems are not in the sewer mains themselves. They're coming in from people's private laterals, and you can't really control that. You can encourage people to replace their laterals, but you can't force them. So we had showed previously that in the first five subareas, we estimated that on an annual basis, we've removed between 202,000 gallons per day and 303,000 gallons per day. We will have similar estimates for the next areas after we've conducted all of this work right now.

▶ 2:39:53 Monica C. Medeiros: Thank you. Thank you very much. I appreciate that greatly. And I know that really is the right thing to do, and of course it helps the whole system

▶ 2:40:07 Monica C. Medeiros: it helps mostly so since we're able to not increase the volumetric rate yeah that's that's

▶ 2:40:19 Monica C. Medeiros: okay um and maybe this is uh better for mr de la russo um the

▶ 2:40:27 Monica C. Medeiros: it looks like we're having pretty hefty free cash balances um over 700 000 in the sewer enterprise

▶ 2:40:44 Monica C. Medeiros: fund um has this been a particularly is there something about the the year this year is i mean we've had a lot of rain so i know that can mean we're not going out watering the lawns and so on but that does seem like it's it's pretty substantial amount of retained earnings are we

▶ 2:41:04 Monica C. Medeiros: charging more than we should on the rate you know are there other environmental factors that are have caused that to be so high which fund are you just uh i'm so i was looking at another memorandum that uh mr shenna had dropped off for this for an order coming up saying that there's uh sewer enterprise water and sewer enterprise funds each have a free cash balance of 738 945 dollars and seven hundred and eighteen thousand nine hundred and twenty nine uh respectively

▶ 2:41:49 Monica C. Medeiros: so that seems like it's you know knowing that we are putting money aside from the rates for reserves it seems like that's pretty substantial retained earnings balance and is there something

▶ 2:42:02 Monica C. Medeiros: that's caused that to be so high is that higher than we you know and we could for instance apply some of that to the rate to bring the rate down so is there some reason that we shouldn't yeah i

▶ 2:42:21 Speaker 4: think if you take a look uh the letter from rafael said we got that john thank you point of order

▶ 2:42:45 Michael P. Zwirko: madam chair this questioning is this for two orders that's further down on our agenda because i still think we're on item three is that correct i'm talking about rates we're still on the

▶ 2:42:53 Speaker 6: sewer rates and we're addressing the analysis of an increase in the base fee i thought we were

▶ 2:42:59 Michael P. Zwirko: talking about free cash i thought the question for mr del russo was on free cash i think it's

▶ 2:43:08 Monica C. Medeiros: it sounds like it's related insofar as there may be yes so uh through through the uh chair to alderman Zwirko the rates that we set for water and sewer if we bring in more than we expend the sewer fund itself will have free cash or retained earnings and since we've brought in over seven hundred thousand dollars in retained earnings in the sewer fund it leads me to believe that we may be charging more for the rates

▶ 2:43:43 Michael P. Zwirko: than we need to I I guess I understand how the water and sewer rates work and and the the free cash balances i i just i'm trying to understand which order we're on

▶ 2:43:53 Kate Lipper-Garabedian: there's certainly and i think i think we don't have to have a debate about this we're on order number two zero one nine dash eighty eight and it's reasonable i think to ask what the balance is and and the sewer fund and so far as we're discussing fees and whether it's appropriate to raise certain fees i think it's all related okay thank you um some of the answers to that

▶ 2:44:16 Speaker 4: question um first and foremost is if you take a look at the retained earnings calculation from the department of revenue those the retained earnings that are represented are not just for one year so if we hadn't used those retained earnings as we say they carry forward to the next year and hopefully they'll turn into available free cash but then you have to take away your encumbrances your warrants payable and then any um undesignated accounts receivable

▶ 2:44:50 Speaker 4: that are left over that's how you come up with the 738 945 water and the same for saw but it's not apples to apples we're not we're not overcharging at all in fact raphaelis would indicated that he would not recommend that we reduce the rates in fact communities that do do

▶ 2:45:11 Speaker 10: that end up in a lot of trouble when they try to go sporadically which we have avoided this

▶ 2:45:15 Speaker 4: This is an article, April 13th, 2018, Residents to Pay for Errant Water and Soil Budget Forecast and the Stoneham, where they ended up having to have a big rate hike in that current year

▶ 2:45:33 Speaker 10: because they had went ahead and applied to reduce the rate previous.

▶ 2:45:36 Speaker 4: As a result, they ended up with a significant shortfall.

▶ 2:45:42 Speaker 10: what we have avoided and we that's a goal should be to avoid these kind of actions because when

▶ 2:45:47 Speaker 4: when you start to manipulate that that's when problems start because you can't control consumption no one is i can't and no one in this room can control consumption just to reinforce these

▶ 2:45:58 Speaker 7: retained earnings are not just from last year no they're from at least three years of carrying over retained earnings year to year to year now at a point where we're looking to reappropriate the return retained earnings but included in that window is also a few years back when we had that heavy drought and summer consumption was at levels that we've never seen before and you have the chart the charts i passed out show three years of consumption and you can see that year three years ago where our summer consumption was extremely higher than it has been the last two years that that use and the revenue generated from that use is in that retained earnings figure that's before you tonight we just didn't act on it three years ago or two years ago but we're ready to move

▶ 2:46:53 Speaker 6: forward this year and reappropriate it okay thank you thank you thank you vice chair roizal thank

▶ 2:46:58 Speaker 10: you in the listing of the rates that you gave a few minutes well earlier this evening

▶ 2:47:06 Robert A. Boisselle: And from exhibit one, proposed fiscal 20 sewer rates. I go to exhibit nine, fiscal 20 proposed lower right hand corner. There seems to be some differences in the numbers.

▶ 2:47:25 Robert A. Boisselle: Is the exhibit nine a later number or an earlier number?

▶ 2:47:35 Speaker 7: the exhibit one is the final numbers exhibit one is the final exhibit one shows the proposed rate um changes that we're that we're proposing okay well what i'm saying is both of them say propose

▶ 2:47:46 Robert A. Boisselle: yeah and the numbers you're giving is one proposed and exhibit nine shows a second series of numbers exhibit one is the final so exhibit one is the final okay now um patrick uh concerning i also see here proposed monthly billing uh we are there how many people are actually doing monthly uh payments for water is out of the population we have the monthly billing expert here i'll let

▶ 2:48:16 Speaker 7: Let her come up with the statistics. It's about 800.

▶ 2:48:22 Speaker 10: Out of a total of what?

▶ 2:48:24 Speaker 7: It's about 10%.

▶ 2:48:26 Speaker 10: How much?

▶ 2:48:32 Robert A. Boisselle: We have about 8,000 residential customers. Okay, is there any outreach program? I mean, some of the hearings that we had in the past.

▶ 2:48:37 Speaker 7: We put notices in every bill last year, at least once, notifying people. offer monthly billing if this is what you have to do to to opt in it's an optional program we're not forcing people to go that route some people have really liked it and others have just ignored it because they don't want to pay 12 bills they prefer to pay four a year it's their option so we we cycled through the city over the course of last fiscal year offering this and putting this note and now it's just a general note if somebody wants to switch they can contact us and um and we could do it we see a lot of the changes happen at a real estate transaction where people sell new people come in oh you do this and oh i'm interested i'm not interested but right right now it's around 10 it's lower than we originally estimated we thought more people would be interested in it but we we do we do push it as much as we can um and we'll probably put it back out i have to work out the scheduling but we'll probably put it back out on another round of um

▶ 2:49:47 Robert A. Boisselle: yeah at least once a year just make that effort to get out there and uh people the economy has changed and they're what they're looking at their water bills and they may want to have a quicker

▶ 2:49:59 Speaker 7: look at it and so forth well it's a really good indicator because i mean if you switch to monthly you get you get your consumption um usage that much faster so you can you can find it's an indicator of a problem and um and our water billing team is very good lisa patterson um downstairs in the office and the whole group of the meter readers they even reach out to people now if if we see that your consumption may have changed or we see a spike there's a way the program red flags that account and lisa has reached out to people and sometimes it's a leaky toilet sometimes it's the three kids that have moved back from college for the summer so whatever the reason may be switching to monthly does give you the opportunity to better better monitor your consumption that said you can still do it quarterly and if there's an issue we can still come out and get the information from these new meters to help you through that problem and that lisa and the whole team downstairs is excellent at that well since the public is

▶ 2:51:04 Robert A. Boisselle: paying their bills on a monthly basis instead of quarterly is there any initiative for some sort of discount i mean we're getting our money in faster we don't offer a discount

▶ 2:51:16 Speaker 7: we don't charge more though i mean it's costing us more to issue 12 bills than it is for so i guess the discount is that we're not charging more okay good enough thank you thank you madam chair

▶ 2:51:35 Kate Lipper-Garabedian: just as a final maybe hopefully these will probably the final question or remain on this order but if someone's looking at the document that's online right now and we've addressed that it should say fiscal 20 sewer rates for quarterly billing customers and there's an old base fee and a new base fee so anyone can take a look and see how much their quarterly bill will go up on the base fee if i'm a if i'm living in an apartment or if i'm living in a single family home or i'm a business owner which of these which of these um metered sizes am i likely to be should

▶ 2:52:11 Speaker 7: i look at the majority of residential homes and smaller businesses have one inch or less so it's the first possibly the second the majority of the community is in that first grouping

▶ 2:52:24 Kate Lipper-Garabedian: and so just for the record that means that the majority of folks will either see a five dollar quarterly increase on their base fee for a total of twenty dollars um or about a little less than twenty dollars per quarter for a total of eighty dollars correct thank you anyone else with

▶ 2:52:50 Michael P. Zwirko: questions or what's the yes alderman's workout thank you madam chair is there any urgency to passing these orders this evening and further if they would they were successfully passed or recommended for passage this evening they presumably would come before the board on

▶ 2:53:04 Speaker 7: june 17th for ultimate passage well we do need a budget passed by the end of the fiscal year so we can operate on july 1st thank you subsequently the rates have to support the budgets yes

▶ 2:53:23 Monica C. Medeiros: i'd like to move to move this forward without recommendation to the full board so that would mean that we would be able to take a final vote if we want to at that date but we could still have more discussion second we have a motion to

▶ 2:53:37 Kate Lipper-Garabedian: move this order forward to the full board without a recommendation made by Alderman Medeiros seconded by Vice Chair Boisselle on discussion Alderman Zwirko

▶ 2:53:46 Michael P. Zwirko: Thank You madam chair through the chair curious as to why without recommendation I understand that we want to have these items uploaded for the public to view So I guess I just don't understand why without recommendation sure yeah I

▶ 2:54:05 Monica C. Medeiros: stated earlier I mean we we got you know more than you know at least a half an inch worth of documents today handed to us we have something here that you know

▶ 2:54:21 Monica C. Medeiros: doesn't doesn't show the accurate you know the accurate rate changes because being FY 20 I'm inclined to support these when it moves forward to full board which is why you know I think we could probably and I didn't hear a tremendous amount of opposition but at the same time I think we should have the opportunity to hear from our constituents about some of these things

▶ 2:54:46 Speaker 5: and to really digest all the information that's been passed up to us so we have a

▶ 2:54:50 Speaker 6: motion made and do we second any further discussion on the motion all in favor aye aye any opposed

▶ 2:55:00 Speaker 6: okay so we will move this forward to the full board without a recommendation which will allow

▶ 2:55:10 Kate Lipper-Garabedian: us to discuss it a little additionally all right fourth order before us tonight is order number For 2019-89, in appropriation from account number 6000-319000, sewer retained earnings in the amount of $575,100 to various accounts as set forth herein.