UTILITY COMMITTEE

The Utility Committee Meeting was held on October 24, 2005, at 5:30 p.m. with Chairman Carey presiding. Members present were Mr. Ruane, Mr. Sadusky, Mr. Cregar, and Mr. Snaman. Mr. Slavin, Mr. Ritter, Mr. Hogan, Mr. Salters (arrived at 6:04 p.m.), Mrs. Williams (arrived at 5:49 p.m.), and Mayor Speed were also present.

AGENDA ADDITIONS/DELETIONS

Mr. Sadusky moved for approval of the agenda, seconded by Mr. Snaman and unanimously carried.

Exemptions to Senior Citizens Report

Members were reminded that during the FY 2006 Budget Hearings, staff was directed to research the option of providing senior citizen discounts for the newly created customer charges for water and wastewater services. The current customer charge is $1.25 each for water and wastewater services.

Mrs. Tieman, Senior City Administrator, provided information regarding surveys of other communities; input from Ms. Jean Holloway, Training and Education Manager for the Region 3 Environmental Finance Center at the University of Maryland; correspondence from Mr. Lester Guthorn, City’s Investment Advisor; and comments and suggestions from Mr. Charles McDowell, City Bond Advisor. Mr. McDowell indicated that any discounted service might be prohibited by our bond covenants; however, the Water and Sewer Bond Resolution could be amended. This solution would not be without costs and complications. It is estimated that it would cost the City approximately $280,000 in interest on a refinancing to change the Resolution, as well as the issuance cost of the bonds.

Mrs. Tieman advised members that this charge began in July and that, to date, only one (1) complaint has been received from a senior citizen regarding the charge. Due to the concerns of the City’s financial and bond advisors and the lack of complaints regarding this matter, staff did not recommend creating an exemption for seniors at this time. As an alternative, it was suggested that Council could review the tax exemption to qualifying seniors to cover the $30 annual customer charge ($1.25 plus $1.25 per month times 12 months).

Mrs. Tieman stated that this charge could be offset by increasing the tax exemption for senior citizens from $50,000 to $60,000. The $10,000 difference at the .33¢ tax rate would provide a $33 credit for the year.

Responding to Mr. Ruane, Mrs. Tieman indicated that senior citizens do not use very much water and, therefore, average less than 3,000 gallons per month, which would have resulted in a monthly cost of $22.54. Although he respects the concerns of members, Mr. Ruane felt that Council conducted a fair assessment and he does not feel that evidence has been produced to warrant providing an additional exemption to senior citizens. Concurring, Mr. Sadusky suggested that this matter be reviewed next year.

In response to Mr. Cregar, Mrs. Tieman stated that there are approximately 412 senior citizen exemptions provided by the City. Multiplying 412 by $33 totals $13,596, which would be the revenue loss realized by the City if the credit were to be provided by increasing the tax exemption for senior citizens as suggested.

Mr. Ruane suggested that it would be more appropriate to further consider such a concept during the Budget Review.

Mr. Cregar moved to recommend that Council authorize staff to develop an ordinance amending Section 102-183 (b), by increasing the amount of the exempt assessed valuation from $50,000 to $60,000, to become effective for those billings due on or before July 31, 2005, and that it be presented to the Legislative, Finance, and Administration (LF&A) Committee for their review and recommendation to Council. The motion was seconded by Mr. Carey.

Responding to Mr. Carey, Mr. DePrima explained that it is too early in the fiscal year to determine how the revenue shortfall would be recouped. The ideal time to consider such a change would be during the mid-year review when staff is prepared to present actual expenses, revenues, and propose adjustments accordingly. At this time, any suggestions for acquiring the funds would be speculation. However, he noted that this would be a General Fund expense.

Mr. Ruane reminded members that the City recently amended Section 102-183 of the Dover Code (ordinance adopted by City Council on May 23, 2005) that increased the exemption amount of assessed valuation from $25,000 to $50,000 for senior citizens. Mr. DePrima also indicated that Council lowered the age limit to qualify for the exemption, which allowed for more qualified seniors.

Mr. Snaman noted that the purpose of the proposal was to provide relief from the water/wastewater customer charges to our senior citizens. Due to the costs involved, it has been proposed to accomplish this relief through property taxes. He relayed concern that the City could be in jeopardy of circumventing the issue and did not feel that the City should take such a risk.

Mr. Cregar moved to recommend that the matter be referred to the Legislative, Finance, and Administration Committee to be discussed during the mid-year budget review. The motion was seconded by Mr. Carey and failed (Mr. Snaman, Mr. Sadusky, and Mr. Ruane opposed).

The motion recommending that Council authorize staff to develop an ordinance amending Section 102-183 (b), by increasing the amount of the exempt assessed valuation from $50,000 to $60,000, to become effective for those billings due on or before July 31, 2005, and that it be presented to the Legislative, Finance, and Administration Committee for their review and recommendation to Council failed (Mr. Snaman, Mr. Sadusky, and Mr. Ruane opposed).

Mr. Snaman moved for adjournment, seconded by Mr. Sadusky and unanimously carried.

Meeting Adjourned at 6:09 P.M.

Respectfully submitted,

Carleton E. Carey, Sr.

Chairman

CEC/jg

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