City Commission Worksession Minutes 01-11-2021

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                        CITY OF MUSKEGON
                      Monday, January 11, 2021
                              5:30 pm
                     City Commission Chambers
                          REMOTE MEETING



Present: Vice Mayor Hood (Muskegon, MI), Commissioners Rinsema-
Sybenga (Muskegon, MI), Emory (Muskegon, MI), Johnson (Muskegon,
MI), Ramsey (arrived at 6:00 p.m. – Muskegon, MI), and German
(Muskegon, MI).

Absent: Mayor Gawron

2020 CAFR Presentation – Eric VanDop from Brickley DeLong
The City’s June 30, 2020 Comprehensive Annual Financial Report (CAFR)
will be distributed to the City Commissioners via email and hard copy. The
CAFR will also be available on the City’s website. The CAFR includes the
annual independent auditor’s report as required by state law. At this time
the CAFR is being formally transmitted to the City Commission. The CAFR
has been prepared in accordance with all current Governmental Accounting
Standards Board (GASB) pronouncements and also includes the single
audit of federal grants received by the City.

Eric VanDop from Brickley DeLong presented highlights from the 2020
audit to the City Commission. Discussion took place and Commissioner
comments were received.

This item will appear on the agenda for consideration at the regular
meeting on Tuesday, January 12, 2021.

FY2020-21 Sewer Rate Adjustment - Finance
As the FY2019-20 Comprehensive Annual Financial Report was finalized it
became evident that the Sewer Fund was in a $3.5 Million deficit. This
deficit will require an immediate rate increase of 20% effective January 1`,

In FY 2018-19 the Sewer fund had a $979,425 operating loss and in
FY2019-20 had an operating loss of $1,435,021. These losses were
directly related to the high water level and infiltration into our system and
have created a deficit of $3,595,965 in the Sewer Fund.

During the calendar year 2019 the City billed about 1.7 million units of
sewage usage which equals 1,271,600,000 gallons, in the same period the
county treated and billed us for 2,090,510,000 gallons. This means we are
paying to treat 1.64 gallons for every gallon we bill. From FY2018-19 to
FY2019-20 our costs to the County for treatment increased 19.5% however
during the same period of time our revenues increased only 2.2%

The sewer rate has increased by 5% in each of the last two fiscal years and
as you recall staff had proposed an 8% increase for the current fiscal year
however the Commission only approved a 5% increase. At this time staff is
proposing a 20% increase. For the current fiscal year this increase is
expected to generate an additional $900,000 in revenue. For the current
year we are hopeful that the increase will create an operational surplus and
lower the deficit in the Sewer, however there will still be a deficit in the
sewer fund for the current fiscal year. We are hopeful the deficit will go
away in FY21-22.

I have attached an updated budget reforecast that only includes the
operational budget for the current fiscal year for the Sewer Fund.
Unfortunately, our usage is down which is why the revenue reforecast
increase is less than $900,000. The 2nd Quarter Budget Reforecast will be
presented to the Commission at the first meeting in February.

Discussion took place regarding the increase in sewer usage and the
sewer rate resolution will be on the agenda for consideration on Tuesday,
January 12, 2021.

Special Event Fees for 2021 – City Clerk
Staff is requesting those events held in 2019 ONLY be allowed a 50 %
discount up to the amount of their 2019 invoice for DPW Services, to waive
their application fee this year, and allow the City Manager and Public
Safety Director to evaluate policing services actually provided after each
event and determine if a discount may be given. This waiver/reduction of
fees does not apply to new events or events that did not take place in 2019
or events that are not paid up-to-date with previous events.

The City recognizes that our established events in Muskegon have been
seriously impacted this past year and some may not be back. Several staff
members met with many leaders of such events to listen to their needs.
Staff then met to develop ideas how we may assist understanding staff is
also running with less resources. Staff’s recommendation is to allow a 50%
discount for DPW services (ex. If the invoice for 2019 services was $4,000,
the discount can be as much as $2,000. If their 2021 invoice is $5,000, they
receive a $2,000 discount). Police Department services are different
because they are actual costs that the City does incur. The Public Safety
Director has indicated he is willing to evaluate the services needed, if the
even had a well thought out plan for safety that was implemented and
followed the guidelines set by the police department. Larger events are
required to have a meeting with staff to cover such details. These changes
are only suggested for 2021.

Discussion took place regarding this item and it will appear on the agenda
for the regular meeting scheduled for January 12, 2021.

Public Comments – Public Comments were received.

The Worksession Meeting adjourned at 7:40 p.m.

                                   Respectfully Submitted,

                                   Ann Marie Meisch, MMC – City Clerk

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