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HomeMy WebLinkAboutTB Minutes 1977-07-18 / Y7 TOT4N OF ITHACA SPECIAL BOARD MEETING July 18 , 1977 - 5 ° 00 p . m . At a Special Meeting of the Tom Board of the Town of Ithaca , Tomp� kins County , New York , held at the Town of Ithaca Offices at 126 East Seneca Street , Ithaca , New York , on the 18th day of July , 1977 , at 5000 p . m . , there were PRESENT * Walter J . Schwan , supervisor Andrew W . McElwee , Councilman Noel Desch , Councilman Victor Del Rosso , Councilman Robert N . Powers , Councilman Shirley . Raff- ensperger , Counci lcuoman . . . . ALSO PRESENT * James V . Buyoucos , Town Attorney rc71Z-r#(1iL 4 , � e2KE , Representatives/ of the Media ABSENT : Catherine A . Valentino, Councilwoman PROPOSED BORROWING ON REVENIJE ANTICIPATION NOTES ( $ 330 , 000 ) BOLTON POINT WATER PROJECT Supervisor Schwan reported that it appeared necessary at this time to borrow up to $ 330 , 000 . This matter was discussed at the meeting of the Southern Cayuga Lake Intermunicipal Water Commis - sion on July 11th and at that time they adopted the following resolu� tion " RESOLVED , that the Chief Fiscal Officer of the Town of Ithaca is hereby authorized to borrow , on behalf_ of the Towns of Lansing , Ithaca , and Dryden , and the Villages of Cayuga Heights and Lansing , on Revenue Anticipation notes , a sun not to exceed $ 330 , 000 , only as needed , for a period of one year , for the purpose of paying retainaqe due contractors between now and December 7 , 1977 , under the 5 % retainage provision of the contracts , the need for such borrowing arising out of - ( l ) loss of . water revenue due to late start-up of the system , ( 2 ) the 7 . 8 % interest due February 10 , 1977 on second year Bond Anticipation Hotes 'o� $ 8 , 000 , 000 and ( 3 ) principal and interest payment due . Angust 15 , 1977 on $ 7 , 000 , 000 bonds , " Supery�-. sor S hwan explained that in order to pay the interest due on the $ K, 000 , 000 Bond Anticination . Notes on February 10th , it was necessary to use ri a from the construction account . The 7 . 8 % interest rate raised the total second year interest cost by $ 200 , 000 above estimates . Change orders raised the contract price by $ 112 , 000 and selling 20 -year bonds raised the first year principal payment by $ 75 , 000 . The monies borrowed or proposed to be borrowed on Revenue Anticipation Notes will have to he paid back out of annual revenue and it will take two to three years to retire them . There will prob- i ably be a renewal o £ part of the borrowing next year . Money will need to be borrowed by the 15th of August . Mr . Berkey noted that his figures indicated expenses of $ 871 , 000 as against an income of $ 800 , 000 and said that that con - cerned him . Supervisor Schwan said he had not added in the benefit levy income of $ 265 , 000 . With the inclusion of the benefit levy there is income o :. $ 1 , 055 , 000 . The benefit levy is derived from the $ 25 . 00 per unit charge . Supervisor Schwan said there will be sufficient funds to amortize the proposed $ 330 , 000 borroing in two to three years . Town Board Minutes - 2 - July 18 , 1977 ' roe i. i Councilwoman Raffensperger asked how it happened that it is now necessary to borrow $ 330 , 00 since the water rate was raised 185 ° over the adopted schedule , and it was said at that time the increase would compensate for the fact that the water system would not be operational for the third quarter . At the end of the year , she said , another adjustment was made , in the way water charges were collected to take care of the fourth quarter difficulties . Since the difficul - ties appeared to have been taken care of in two ways , she asked why the Commission is now in difficulty . Supervisor Schwan said he agreed that it appeared the diffi - culties were taken caiie of at that time:, , He said , however , that every- body receiving Holton pdint water was not paying for it at the Bolton Point rate , since the Commission did not think at that time they had the authority to do that . � 'u tiier , as part of putting the plant in operation money was spent dri things ,the Commission did not foresee . Councilman Powers asked if these d:kp:enses could not have come out of the contingency fund . Supervisor SChxan said there were no funds left in the contingency account : Councilmah Powers asked why these eXpen- ses were not brought before the Town board for approval , just as approval is sought for the proposed borrowing : Supervisor Schwan said the expenses were approved by the Tovyh Board when they approved the Bolton Point warrants . , Councilwoman Raffensperger asked if nter- est payments come through the warrants , Supervisor' Schwan said they did not ; that the Commission expected to pay the interest do the . Bond Anticipation Notes partly out of the construction account . The con- struction account included an item of $ 100 , 000 for interest and there was a contingency account of $ 175 , 000 . The first dear ' s interest was paid with money earned inCertificates of Deposit , but it was never contemplated the construction account could pick up the second year ' s interest . $ 100 , 000 for interest was put in the construction account because the Commission thought it would help . As it turned out , there were $ 75 , 000 of start-up items ( for personnel , materials , trucks , etc . ) Purchased between April 1 and August 1 . That came out of the construc - tion account . Further , there were at least $ 112 , 00 of change orders which were approved at the end of the contract year . Actually , on a $ 6 . 4 million construction budget , the change orders altered the con- tract price by less than 2 % , which is exceptionally small . It did , however , have to be taken out of the construction account . Council - man Desch noted that the construction budget was unrealistically tight , based on the early economic necessities . Councilwoman Raffensperger said the financial information made available to her indicated that there was money available to pay the interest due on February 10 , 1977 on second year BANS of $ 8 , 0000009 This expense , she said , was not unexpected and there was a presumption there was money to do it . Supervisor Schwan said the presumption was that there was a $ 300 , 000 surplus , but the fact is there was no surplus . Councilman Desch noted ( 1 ) that the bids came in very high to begin with , ( 2 ) there was the New York financial crisis and the resulting extra point of interest , and ( 3 ) it was necessary to get into permanent borrowing earlier than the Commission would have- wished . Councilwoman Raffensperger noted that there is not a great deal of difference in interest cost ( $ 25 , 000 ) since the issue is a 20-year issue as against the 30-year issue originally con- templated . She said , therefore , it must be the other factors which have brought about the present crisis . Supervisor Schwan agreed that was probably true ; that the Commission was terribly concerned when the bids came in over estimates and they were faced with a projection which could run as high as $ 9 , 000 , 0009 Supervisor Schwan conceded that the Commission probably did not budget enough contingency money out of the $ 81000 , 000 , that is , as much as they would have had not the bids come in so high . There was no slack . The Commission was concerned that if they tried to " sell " a project in excess of $ 8 , 000 , 000 , the project might not " fly " at all , and at that time the Commission was already obligated to the engineers for $ 300 , 000 . It would have required an increase in the tax rate of $ 1 . 00 per thousand in each participating municipality for two or three years to pay off the engineers . Councilman Desch said the alternatives were ( 1 ) to proceed or ( 2 ) to wait for some undetermined period to re-bid the project and face the fact that there would be insufficient water to provide to the customers . Town Board Minutes - 3 - July 18 , 1977 Councilman Powers noted that when these decisions were being made , they were being made on a set : 6f circumstances no one at this table had ever faced ; that most decisions are based on past experience and no one on the Commission was . . in a position to make the kind of decisions necessary since the circumstances were so extraordinary ; there was no basis for the cost , .of materials ; the interest rate was uncertain . Councilman Desch commented that had the New York crisis been forecast the project might not have been initiated . Councilwoman Raffensper5 tdk. did not understand why the Commis - sion , as recently as : October arid ; tiovember still felt it was in a ten- able cash flow pbsitiofi4 Supervisor Schwan said the reason is that the change orders had 'riot come in and the � � Commission did not have the final figures on the contracts and what the retainages were . Super - visor Schwan explained that three items are held back , ( 1 ) the 50 retainage , ( 2 ) butstandirig claims ; and ( 3 ) ' " punch list " items for unfinished work . it is now known that contractors retainage is $ 335 , 062 . 67 , unfinished work or Claims $ 42 , 000 , or a total of $ 377 , 062 , and there is a balance of about 51 , 600 in the construction account . Councilman McElwee noted that in an $ 81000 , 000 project , to be off by only 4 % in projections i well within reasonable limits . Councilman Desch said the main problem is ih cash flow , resulting from the high- er than anticipated start-up costs and the time needed to get into operation , Councilman Del Rosso said he was not so much concerned about the money which has been spent ( since the books are audited and monies accounted for ) but he was concerned about whether the ormbission has thought this matter out and thought far enough ahead tat , in fact , this $ 330 , 000 will carry it over the hump , and that there will not be another crisis in 18 months or so , since there is nothing worse than going into a revenue anticipation situation , and not being able to meet the amortization costs . Supervisor Schwan agreed and said the actual need is for $ 286 , 000 , but that the Commission felt borrowing Of up to $ 330 , 000 should be authorized to be on the safe ( conservative ) side . Councilman Del Rosso said revenue estimates should be conserva - tive and expenses well covered so that this Board will not be back in 18 months and embarrassed by a need for an additional borrowing . Supervisor Schwan noted again that the Revenue Anticipation Notes could be amortized in two or three years , and , it appears , there will be no need for additional borrowing requests , other than the request to renew the RANs . He said there are a few unresolved matters in the Bolton Point system , including cracks in the concrete in the walls , which has been known ever since water was put in the filter . There is an agreement between the Commission , engineers , and contractors as to how the repairs will be made . There is a possibility that part of the retainage will sit for another year . If the contractor repairs the wall , the money will be withheld for a proper time to make sure the repair works . It is possible only a $ 250 , 000 borrowing will be necessary . The sum of $ 330 , 000 is only a maximum amount . RRr . Berkey asked uhy the retainage amount should come as a surprise to the Commission . Supervisor Schwan said the final figures were not available because of the change orders . Mr . Berkey said the maximum final figures would be 5 % . The Commission should know that when the work was completed , the maximum amount would be 5 % of the contracts . He said he ' did not understand why this could not have been budgeted down the line . Councilman Powers explained that the retain- ages were known but the change orders were not known , Mr . Berkey asked why there were 'change orders in the amount of $ 112 , 000 . He said he assumed a change order is a problem in engineering . Super- visor Schwan explained that Masciarelli Construction Co . (who . construc - ted the transmission main ) planted shrubs and removed trees in certain cases in compliance with requests from property owners . These requests were complied with to avoid the expense of condemnation proceedings . Further , there was a problem with the City of Ithaca in getting per- mission to cross Six Mile Creek . That held up the progress of the project and was one of the reasons the system was not on the line Town Board Minutes - 4 - July 18 , 1977 earlier . : , Further , the City said the Commission could open the gate at Van Attas Dam , and then they reversed themselves , and it was neces sary to obtain the service of a diver . There were a number of other unforeseen items which ddveloped gradually , some having to do with moving .. ipe ; having to bore under a County road and encountering solid rock , and having to . open cut and blast instead . Another change order came about . because of a requirement . of, the Village of Cayuga Heights engineek , which cost the project $ 25 , 000 to $ 30 , 000 for a different treatment of the road than specified by the engineers . Mr . Berkey asked if , that here hot the result of an engineering mistake . Super- Visor , Sch� ian said that was not the case ; if the engineer specifies one method , and the Village engineer insists on another method , it is not the engineer ' s . fault . Mr . Berkey asked if the engineer should not find out what the requirements of a particular municipality are . The Supervisor said they do not have their requirements written doom , In response to a question by Councilwoman Raffensperger about actual cash on hand as against recent estimates of cash on hand , the Supervisor said the Commission will have on hand on August 15th pretty close to $ 750 , 000 , Yt will be necessary to make a principal and inter- est payment on the bonds of $ 626 , 000 - - but , he said to Councilwoman Raffensperger , she was looking at an operations and maintenance budget which does not relate to the construction budget . Operations and main- tenance , he said , did not come into being until July 15 , 1976 when the first $ 2650000 of benefit levy was received . Prior to that it was all construction account . Now there is a construction account and an operations and maintenance account . Once the contractors are paid , the construction account will be closed , and only operations and mainten- ance will remain . The Supervisor estimated that the operations and maintenance , including principal and interest payments , will be in reasonable balance next year and the year after , because each year from now on there will only be one principal and one interest payment . Mr . Berkey said he was concerned over what he called " informal bookkeeping . " He asked if the Commission has a detailed financial statement with all the figures which have been mentioned at this meet- ing ; if the Commission has a financial statement which they are send- ing to each of the municipalities which will show source of income and amounts of expenses projected over the next three or four years to show that they will not be in a borrowing situation again , The Super- visor said there is no long range projection beyond this year . Mr . Berkey said if there is no projection for next year , how does the Com- mission know it will be able to amortize the notes . He said he hoped the Town Board would not make any endorsement of the proposed $ 330 , 000 borrowing until such time as they have a projected budget indicating the debt service involved and how it will be paid back . The Super- visor said the Town Board has a budget submitted by the Commission for approval . It was annual expenses for this year . It happens , he said , that this year is one in a thousand , a double debt service year . After this year , there will be three obligations , ( 1 ) interest on the bonds , ( 2 ) principal on bonds , and ( 3 ) operations and maintenance . Mr . Berkey said he would like to see ( 1 ) a detailed budget indicating what the expenses are and why they are needed , ( 2 ) how the debt service will be paid off . He said it would be very poor business practice to make a decision without seeing this specific basic finan- cial statement . He hoped the - 'own Board would , in fact , ask to see that kind of financial statement before they authorize a borrowing . He said he tho4ght the failure to do that is one of the reasons the the borrowing zs . proposed now rather than having been anticipated a year ago . The Supervisor said he would convey Mr . Berkey ' s concerns to the Southern Cayuga Lake Intermunicipal Water Commission . He noted also that the Commission on July 11 , 1977 adopted a resolution authorizing the borrowing . The minutes of that meeting are available . . The resolution adopted appears on the first page of these minutes . / SI Town Board Minutes - 5 - July 18 , 1977 Mr . Berkey asked ( since there is no financial statement show- ing how the borrowing;- will be paid -off ) ' how , without a budget projec - ted beyond this ;year ; the Commission . knoEas it will be able to pay off the borrowing ; The Supervisor said there is income of $ 1 , 065 , 000 and expenses something over $ 800 , Ob0 . , , . AMr � A3erkey ' skid -,v- then , there is no need to borrow any . m ney . Thd upervisor agreed this is so for next year , but it is this year which is the unusual ' year when two Enterest payments had to : ` be made . Councilman Desch said the projected budget for next year will include repayment Of the interest on this borrow° ing . Mr . Berkey asked : if the projected budget for next year would allow for . repayment of the interest and dart of the principal include `' his proposed ;RAN of $ 330 ,; 60Oo The Supervisor said no , be - cause it was not . anticipated at ;. the time a Mr ' ' Berkey said if there is no current : budget '. for next . year . which includes this borrowing , how does the Commission knoisyinhere it is and . what it is . about . He said he could not . understand that kind . df business practice . Councilman Powers , in an attempt , to clarify the situation ; said Mr . Berkey. might be asking about , a .. final budget , not a projected . hudc% The final budget will include this item , Items are ' not included in a budget until they are known ; One does not conjure up that there is going to be a borrowing , There will be included debt service on the . borrowing when the final budget is drawn up for the Commission . He said he was sure it r�iill be included , but it is not in there yet . Mr . Berkey reiterated his position that all the figures are available ; that there should be pay off projections available to the municipalities ; that he was unhappy with the informal bookkeeping pro cedures ; that it is poor business practice not to have the figures available . Air . Buyoucos wanted it noted that the attorneys fees are an undetermined item at this time ; that his office is trying to arrive at a figure under that originally budgeted . Upon questioning by Councilwoman Raffensperger , the Super- visor said a budget will be available about the same time the Town of Ithaca ?�udget is put together - ® toward the end of September , that the Commission has anticipated there will be sufficient revenues to retire the RAFIs in two to three years without raising the water rate , that the construction account will disappear ; that the greatest part of the money to be borrowed will not be needed until December . Coun- cilman Desch noted that the debt service will stabilize after the first year . Motion by Supervisor Schwan ; seconded by Councilman McElwee , IT IS RESOLVED AS FOLLOWS & ( 1 ) The Town of Ithaca , Lansing and Dryden and the Villages of Cayuga Heights and Lansing are authorized to issue revenue antici- pation notes in an amount not to exceed $ 330 , 000 for the purpose of pairing the retainage due to contractors for the construction of the above system , said sum to be paid between the date hereof and December 7 , 1977 pursuant to the provisions of the construction contracts which permitted retainage of 5 % of sums due to the contractors . ( 2 ) Such notes shall be issued in anticipation of the collec - tion and receipt of annual revenues from the operation of the Southern Cayuga Lake Intermunicipal water project , such revenues being the revenues described in Section 25 . 00 of the Local Finance Law , includ- ing water rents received from the sale of water in the service area of the project . According to the budget adopted by the Southern Cayuga Lake Intermunicipal ITater Commission on behalf of the participating municipalities , it was estimated that for the year 1977 the revenue from the sale of water Tn7ould be $ 840 , 000 collected in quarterly amounts of approximately .$ 210 , 000 for the fiscal year 1977 . The uncollected revenues as of the date of this resolution are those due and payable for the quarters ending September 30 and December 31 , 1977 , Town Board Minutes = 6 - July 18 , 1977 ( 3 ) It is estimated that the revenues to be received will be in excess of the amount of this note . ( 4 ) This note shall be the joint and ' several obligation of the above named municipalities , namely , the Towns o £ , Ithaca , Lansing and Dryden , and the Villages of . . Cayuga Heights and Lansing . The note shall be due and payable not later than one year from the date of issue and such note may be sold at either public or private sale at the best interest obtainable by the Chief Viscal Officer provided that the interest does not exceed any limitation imposed by law . The full faith and credit of said municipalities are hereby pledged to the punctual payment of the principal of and interest on any and all notes issued pursuant hereto . ( 5 ) The Chief Fiscal Officer of the Town of Ithaca is hereby authorized to execute the above note and to make principal and inter4 est payments on the note from the revenues received from the sale of water of the Southern Cayuga Lake Intermunicipal water project . Councilwoman Raffensperger asked if it were necessary to vote on this at this meeting - 6 if it were an emergency . The Super- visor said he needed the authorization no later than August 4th . It might be possible to wait another . week but no longer , Mr . Berkey asked what portion of the borrowing the Town of Ithaca will be respon- sible for . The Supervisor said about 56 % . Mr . Berkey asked if it was proposed to borrow $ 330 , 000 rather than $ 300 , 000 . The Supervisor said that was so even though he personally did not feel all of the $ 330 , 000 would be needed . The Supervisor said the Commission has recommended $ 330 , 000 and he was moving that amount in the resolution . He said ; however , the Town Board could legally authorize only $ 300 , 000 - - or even refuse to authorize any borrowing . After these final questions a vote was taken , Del Rosso , Raffensperger , Powers , McElwee , Desch and Schwan voting Aye , There were no nays . The motion was thereupon declared duly adopted . CHRISTOPHER CIRCLE TANK Supervisor Schwan stated there is no time to get the tank painted by September 1 of this year -- when the students will be returning to the area . Mr . Berkey suggested the Bolton Point system apparently was not furnishing sufficient water pressure so that the tank could be drawn down for painting . The Supervisor said it was not a question of pressure . During the heavy demand on the system , he said , it is simply not advisable to paint the tank . He said , fur- ther , no contractor will paint the tank after September 1st . The steel gets too cold for a successful painting job . AREA SPEED LIMITS . ' Based upon the opinion of Howard Stevenson , Jr . , County Superintendent of Highways , that the Department of Transportation will not act on area speed limits without a formal resolution of the Town Board , the Board acted as follows ° Motion by Councilman McElwee ; seconded by Councilwoman Raffensperger , TIHEREAS , the Town of Ithaca is a first class town of popula- tion exceeding 16 , 000 with an urban character in areas being developed adjacent to the City of Ithaca whose population just exceeds 26 , 000 , and WHEREAS , many highways in this area of high topographic relief have severe grades , sharp curves , narrow travel lanes , narrow shoulders , and direct private access driveways limiting traffic speed , safety and capacity , and Y3 Town Board Minutes - 7 - July 18 , 1977 TIHEREAS , the flatter areas of the Town have been developed with one house and one driveway on each side of every 100 feet of highway , more or less , and T-dHEREAS , the Town of Ithaca would like to be uniform in speed regulation , and TMEREAS , the City of Ithaca which is surrounded by the Town of Ithaca and the Village of Cayuga Heights , which is within the Town of Ithaca , have enacted a 30 miles per hour Area Speed , NOW , THEREFORE , BE IT RESOLVED .* That the Toem Board of the Town of Ithaca petition the New York State Department of Transportation to establish a 35 miles per hour Area Speed , and , further , That a 30 miles per hour Area Speed be established for all interior subdivisions . ( Del Rosso , Raffensperger , Powers , McElwee , Desch and Schwan voting Aye . relays a none ) ADJOUR11M1ENT The meeting was duly adjourned . Edward Le Bergen Town Clerk