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May 26, 2006     Barnstable Patriot
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May 26, 2006
 
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Minority report on fire district study?.... CONTINUED FROM PAGE A:1 method by which an internal financial analy- sis comparing Barnstable's cost of service to that of comparable towns was prepared for the committee. He noted that the majority of the other towns did not provide combined fire-rescue services,and he was concerned that figures for the other communities were based on FiscalYear2000 numbers whileBarnstable's were for FY 2004. Sullivan complained also that members had been given four possible dates for a final meeting to vote on the document, and the day chosen was one duringwhich he could not at- tend. He objected alsoto Councilor Jan Barton, the group's chairman, refusal to let Hyannis commissioner Dick Gallagher participate as a member in his absence. "Introducing aminority report at this point is not appropriate," Barton said Wednesday, "because everyone was given an opportunity to do so before the report was printed out. I sent that out, asked people if they had com- ments, changes. Ireceived nothing back from anyone." Barton said she would present the report to the council last night. It recommends that the council appoint a committee to create a Request for Proposal for an independent re- viewof whether Barnstable'sfive independent fire districts are serving the town "in the most efficient and effective manner possible." "If they accept it, they can take further ac- tion," said Barton. "At that point , when and if the motion is introduced , the public and anyone would be able to comment, which was the intent. " Barton noted that "there are no figure s in the report because the members "realized there were so many variables, that it was so extensive that it was really beyond our pur- view. That was actually at the point when we felt that an objective , thorough study was called for, and that was the consensus of the committee." Sullivan's department was well represented at the table , Barton said, notingthat Hyannis firefighter Paul Medeiros was a member. "If Paul Sullivan had any concerns,he could have relayed them to Mr. Medeiros ," she said. "Mr. Medeiros did have one comment to make on the report and we did change it." No provision was made in the council's charge to the committee for members to be re- placed by substitutes, according to Barton. Waterboard looks to capital plan, rates... CONTINUED FROM PAGE A:1 in the context of what they could do to rates. "Everything we're talking about makes good business sense, but then you add it up and you start backing up," Krau said. The numbers the board used, however, made things look worse thanthey actuallyare. As part of its rough-number planning, the board included$600,000for the added cost of long-term debt service, which can be covered through available revenues. The budgets for thisyear and the new fiscal year that starts July 1do not include the full weight of debt service for the $10 million acquisi- tion price. The town did not move to fully finance the acquisition debt last year because of pending litigation regarding the sale. That resulted in a savingsto the division this year, but once fully financed , it will represent about $500,000 in added expenses, according to town finance director Mark Milne, who did not attend the meeting. The $500,000 saved on debt costs this year and next was placed in a temporary capital account to address some of the more immedi- ate needs, Milne said, but will be available to cover the debt service once bonded. Milne add- ed that the town has an application in to the state's water pollution abatement trust for low- interest financing, which could save additional money in long-term borrowing costs. The rough numbers alsoincluded money to build a reserve account for the system's capital needs, and an additional amount for annual maintenance improvements. At the meeting, the board worked to develop an idea of what future expenses would be to determine what level of rate increase would be needed to support them. "I'mjust tryingto get a handle on what we're talking about and also how to approach it,"Krau told her fellow board members. While attempting to reconcile future budget needs and revenues , there was a sense among board members that part of the difficulty is aresult of the terms of the town's acquisition: $10millionfor the com- pany to be paid off by future water revenues. The deal was described by board member Bill Elkins at one point as a horse designed by committee , "or a camel." Even so, there was also recogni- tion that there 's little to be done about that. "The problem is, it is what it is," Elkins said. Still, board members are inter- ested in what the expectations for revenues and rates were going into the purchase. In the presentation to the town council in advance of the water company purchase in March 2005, the expectation was that the company's $2.6 million in annual revenues would cover operational expenses, including annual debt service, but provide no cushion for capital expenses, conservatively identified at that time in the $12 million range for a five-year pe- riod. With regard to rates, it was suggested that 5-percent annual increases over 10 years would be needed to cover those expenses. In a phone interview Thursday, Milne said those financial assump- tions remain,andit willbe the water division's capital needs that drive future rate increases. The board has asked for a video copy of the March 2005 presenta- tion to evaluate the expectations going into that purchase and what the board now foresees. As an aging system that received little maintenance over the years, identifying other capital needs is not difficult. Revised estimates identified perhaps $55 million in improvements over the next 10 or so years, but there are options on ju st how to approach those needs, water division supervisor Hans Keijser said. Keijser said he discussed the remaining 2006 budget with Milne, who he said was comfortable with where things are. The board will also review non- water revenue sources to see what potential they offer for increasing water division income. While that's viewed as a necessary and worth- while exercise , board members agreed that the bulk of what's needed for building future rev- enues will come from water rate increases. Other Cape Towns To help guide their thinking, board members visited or talked with other water departments on Cape to see what revenue and expense models exist. A variety of rate structures are utilized across the Cape , but most aren't necessarilydriven to recover all water department costs,accord- ing to board member reports. Barnstable'sdecision to makethe water division a fully self-fundin g enterprise fund is proving unique among other towns. The general sense was that the revenue and ex- pense requirements of an enterprise fund are seen as too restrictive, not allowing tax money to flow in when needed , or excess water revenue to flow back to the town. The three Barnstable fire district water departments have weaned themselves off the tax rate for operations ,pushing expenses fully onto water revenues. Some tap tax dollars for larger capital items. Centerville-Osterville-Marstons Mills and Harwich do operate as enterprise funds, Krau said. Hyannis water to move to flat rate for all users The Hyannis Water Board voted to eliminate the descending rates schedule for water usage , which provides a lower rate after a certain level of usage and benefits only high-volume users. That type of rate schedule islegal for privately-owned water companies,but not for publicly operated suppliers. Arate hearingwillbescheduled for mid-late June to allow comment on the change,which the board saidwas simplyto bring rates into compliance with state law. A broader rate hearing is expected inthe future once the board has abet- ter understanding of revenue needs and available rate structures. The actual needs of the system will be refined with the help of ahydraulic study that will identify weak points in the system and guide the capital plan for present and future needs. Proposals for that study have been received and willbe the subject of up- coming executive session meetings of the board to select a vendor. 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