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DSAC Minutes 12/05/2001 RDecember 5, 2001 TRANSCRIPT OF THE MEETING OF THE DEVELOPMENT SERVICES ADVISORY COMMITTEE Naples, Florida, December 5, 2001 LET IT BE REMEMBERED, that the Development Services Advisory Committee, in and for the County of Collier, having conducted business herein, met on this date at 3:30 p.m. In REGULAR SESSION, in Conference Room "F", Horseshoe Drive, Naples, Florida, with the following members present: CHAIRMAN: ALSO PRESENT: Mohan Thampi, PUD Administrator Edward Perico Tom Masters, P.E. Charles M. Abbott Marco A. Espinar Brian E. Jones Dino J. Longo C. Perry Peeples, Esq. Herbert R. Savage, A.I.A. Thomas R. Peek, P.E. Peter H. Van Arsdale, Esq. John M. Dunnuck, III David Correa Bryan D. Milk Dalas D. Disney, A.I.A. Page 1 December 5, 2001 James Anderson, Public Utilities David Hagan, Greeley & Hansen Engineers Roger Howell, Greeley & Hansen Engineers Robert J. Ori, PRMG Tom Wides, Public Utilities Joe Cheatham, Wastewater Director Page 2 December 5, 2001 MR. MASTERS: Okay. With that we have a quorum. We will call the meeting to order. Anybody have any additions or modifications that they would like to make to the agenda? No? MR. DUNNUCK: I move the agenda be approved. MR. PEEK: Second. MR. MASTERS: All in favor. (Unanimous response.) MR. MASTERS: Any opposed? (No response.) MR. MASTERS: Motions carries unanimously. a chance to review the minutes from November 2nd. comments or corrections to that? MR. PEEK: I only have one comment. I'm listed as listing being present, and I was absent, if you want to correct who was here and who wasn't here. MR. MASTERS: Thank you. Anything else? MR. SAVAGE: Mr. Chairman, I think I was absent, wasn't I? MR. MASTERS: I think you were. Perhaps we should go ahead and review the sign-up sheet and compare it. MR. SAVAGE: There was something in here. Because it says in here, "Mr. Savage: You mean the public utilities?" So I must have been here; right? You have to draw attention to yourself, you know. When you get older, you will find that out. With those corrections noted, anybody like to make a motion to approve? MR. PEEK: I move approval. MR. SAVAGE: Second by the same. MR. MASTERS: All in favor? (Unanimous response.) MR. MASTERS: Any opposed? (No response.) Everybody had Anybody have Page 3 December 5, 2001 MR. MASTERS: Minutes are approved. Having just gotten the November 14 minutes, I think we will hang on to them for the next approval. With that we can move on to staff announcements. MR. DUNNUCK: A couple of brief announcements. First one being probably one that is going to be the most -- you-all will want to discuss it today and pass some sort of motion and let the board know. A couple of weeks ago the board reviewed budget cuts and had made some proposals to cut back on all the budgets understanding the economy and some of the issues that are out there, and one of the things that they did adopt was twofold; one was a hiring freeze, a three-month hiring freeze, that any position will have to be held open for three months until it can be filled and also a 3 percent reduction in all budgets, including Fund 113, which is, you know, development fees. And I wanted to pass that along to you. You know, we had -- I had some discussions up in the county manager's office regarding whether it was appropriate or not understanding what we are trying to do with some of the other issues that we have going on with personnel and knowing the state building code is coming forward, but I think the overall sentiment was we need to be consistent as a county in all the funds. And if we can cut back and find a way to do so, we are going to. Because I think public perception out there has been that we created this big budget this pass year and that this is one way that we can prepare ourselves for next year with all the transportation issues that will becoming forward with the budget. MR. SAVAGE: Mr. Chairman, John Hubba and Colonel Schmidt, how about -- MR. DUNNUCK: Well, that's the other announcement, and that is he is scheduled to begin on January 7th. MR. SAVAGE: Oh, so that was not a three-month delay? MR. DUNNUCK: No. No. That position was open. Page 4 December 5,2001 MR. projected MR. MR. For more than three months. The board is going to confirm him next Tuesday.. MR. VAN ARSDALE: Mr. Chairman-- MASTERS: Go ahead, Dino. LONGO: Does that mean you are going to reduce your budget by 3 percent? DUNNUCK: Correct. LONGO: In what areas for 1137 You mean just overall or -- MR. DUNNUCK: Well, overall they are going to do a renewal of budget structure. If you have a list of, you know, kind of object code type things that define what we are supposed to use it. It's overall basic fund is the bottom-line pricing. If you run out of money in one object, it doesn't mean that you can't spend any more than that; it just means that you are running a negative balance through other object codes. So they are going to reduce it 3 percent on the bottom line, and it's up to us how we reduce it. There were proposals -- you know, a lot of our departments are personnel dominated and -- that we reduced, quite frankly. And the way that I look at it is we have a decent amount of overtime in our budget right now; we can reduce 3 percent and can still be using the majority of our budget for the year on overtime, up until the January 1st deadline-- you know, through that deadline to get us through that influx. If the economy starts to recover later in the year, I'm of the opinion the board is going to reconsider some of these things, especially if we are running low on the funds. And understanding that Development Services has nine million dollar reserve, so -- MR. LONGO: Do they think we are going to be down 3 percent in our building permit revenues? MR. DUNNUCK: Well, they didn't look at it from a revenue side. I mean, specifically they didn't go one by one and say, Page 5 December 5,2001 "Here are our projections." Because I tell you our first two months of projections have been-- while we were up in October in building permits, we were down in revenue. But then November -- we have had -- November was a huge month, frankly. And we are ahead of what you will project out for the year right now at this point in time. I think that is consistent with the anticipation with new building codes. And now with the idea of impact fees, I'm sure we are going to see a big December. MR. LONGO: Are we going to see the revised budget and when? MR. DUNNUCK: Well, I can submit a bottom-line revised budget to you for the next meeting. That's not a problem. MR. VAN ARSDALE: Excuse me. Are we talking about that -- the policy? MR. MASTERS: Yes. MR. VAN ARSDALE: I will just circulate this. It is a memo I sent to the commissioners. I think we need to do something about this because it's pure idiocy. In other words, this department is running -- the building permits generate 4 1/2 million dollars a year surplus, and the staff has been instructed to cut back 3 percent. We know we are going to get slammed with additional permits because of impact fees, because of changes to the building code -- and it looks like the building code is probably going to be revised January 1 st. We can't -- I have been calling the commissioners myself-- and it's lunacy. In other words, it's one thing to cut tax or cut revenue -- cut expenses if you can take that money and build roads and provide tax relief, but this -- this department is running in such -- in such an illegally obscene surplus already -- in other words, with permit fees paying for planning, paying -- paying for code enforcement, paying for this entire building-- the maintenance of this building, and we have been talking about it for two years. Page 6 December 5,2001 You know, at our subcommittee level, we are finally starting to get a grip on what we need to do which is probably going to be -- you will see in my e-mail to them, we need to -- you know, probably going to need additional staffing. We are probably going to have to recognize wages to get to the best people to do the best job, and this thing is totally counterproductive to what we have been trying to do. It's illogical because -- there are -- building permits fees can only be used to run the building department; that's a state law. And we are violating the heck out of it right now. We have been going along with it, because we are hoping to -- to come up with enhanced service -- meet the ten-day turnaround objective, which was originally established when this building was built ten years ago or whatever. I don't care to see the budget. It's silly to think about 3 percent. I think that's about one hundred seventy or seventy-five thousand. John, I think this group has to kind of get out in front on this issue and just say it's unacceptable. This is an enterprise fund. The users are paying for it. The users are overpaying for it. That was one of the issues in our subcommittee is the county- wide policy that the category of employees who review plans can't get overtime. They get comp time. They don't want comp time. They want more money. They don't work, so we don't get overtime production. That's the kind of stuff that we have to address. The money is there -- just like when we talked to Ed Riley about what it would take to get his department to turn this plans around in five days instead of forty, he told us -- we gave it to him, and he took care of it. That's where we have to go on building. And this thing with 3 percent is just crazy. So I would hope we can at least do a resolution or something here today and say that that enterprise funds -- in other words, where the user pay -- certainly ones that were running on the surplus be exempt from this county- Page 7 December 5, 2001 wide policy. I guess with that I will make a motion that the Chairman send a recommendation to the board that the building department, the 113 Fund, be exempt from the county-wide 3 percent reduction -- you know, it just doesn't make any sense. MR. SAVAGE: I will second that motion. I would hope that you use some of the facts that we just heard here in the letter to the County Commission. MR. MASTERS: Any further discussion? All in favor of the motion? (Unanimous response.) MR. MASTERS: Any opposed? (No response.) MR. MASTERS: That's pretty strong. MR. SAVAGE: It should be. MR. VAN ARSDALE: It's wrong. MR. MASTERS: If anybody has any additional ideas to the memo here, which I will hang onto, I'll start to draft something in the next couple of days. If anybody else has any thoughts towards that, please feel free to e-mail them to me. MR. DUNNUCK: That's all. MR. MASTERS: That's it under old business. We will move on to utility impact fees. MR. WIDES: Good afternoon. For the record, Tom Wides, Public Utilities Administrator. Good afternoon. Folks, back, I believe, in the early part of November we came to you with our master plans and our utility rate studies, impact fee studies in particular. And at that meeting, I believe, it was decided that we work with your subcommittee, DSAC subcommittee, which we have made a presentation to that group. Since that time we have also been to the Board of County Page 8 December 5,2001 Commissioners last -- at the last meeting and made a recommendation that we, in fact, enact the master plans and the rate -- excuse me, the impact fee studies and the rate studies related to water and sewer. At that meeting we, in fact, suggested to them -- we gave them a presentation of what we had come up with in terms of the numbers, and we are now going back on the -- next Tuesday, and we are going to ask them at that point in time to approve the master plans, the rate studies, and the impact fee studies. The reason we are here today is we would like to come back to -- at the very least to answer some of the questions that had been asked in the previous discussions that we had both with your committee and the subcommittee of the Development Services Advisory Committee. So having said that, we have two approaches we can take with you this afternoon. We have, in fact, a -- two prepared presentations. On the other hand, if you would like to cut to the chase, at the back of some of the presentations we actually have made an attempt to answer some of the specific questions that you have asked. We can take either approach. It's really -- it's your pleasure here. MR. PEEK: How long is the full presentation? MR. WIDES: Probably could take a couple of hours to be honest with you. MR. SAVAGE: You mean today? MR. WIDES: Quite frankly, we can give you the slimmer version. I think you have seen a good part of this. MR. MASTERS: I believe after the last presentation -- you went through the majority of the presentation. The outstanding information that we are awaiting on, I believe, was just a final tweaking of the numbers that you were going to go back and see if there were any other areas that you thought you could reduce the fee slightly by areas that maybe duplicated the fee. MR. WIDES: Also to answer some specific questions about Page 9 December 5, 2001 how some of the information was developed. MR. MASTERS: I think we are all in favor of the short version. MR. VAN ARSDALE: MR. MASTERS: Peter. MR. VAN ARSDALE: at the DSAC going over this. Can I ask one? We went to the -- we spent three hours And, frankly, our questions and comments were irrelevant, and I think the same will be true for this meeting. I mean, with all due respect, this is -- this is going on without us. We want -- in other words, we asked a simple question -- which I think anybody would -- when you spend hundreds and hundreds of thousands of dollars for the previous study and this study, the answer should be there. And, you know, why is -- why are the rates doubling? And I would be curious to know, but it's irrelevant whether we care because this is going. So, I mean, I must be honest about it. Why waste everybody's time. If we ask questions or if we make recommendations or whatever, this thing is on the fast track. It has been from the start. We asked at least time to get questions, we said we could have special meetings, but that is not happening. So I was, frankly, pretty insulted of having spent the time last time, and, you know, what -- whatever we hear now is going to be a waste of our time too. They don't care about our questions or recommendations. MR. LONGO: Mr. Chairman. MR. MASTERS: Yes. MR. LONGO: We did have a subcommittee meeting on this two weeks ago. We did spend three hours on the subject, and they made their presentation. We did ask for some specific questions at the end of the meeting. We asked for more information to come back and meet again on it. We were told, basically, that information would not be available to us in time because they were going to make that presentation on Page 10 December 5, 2001 November 28th in full before the Board of County of Commissioners without a recommendation from this committee or subcommittee to the full committee. I think that's wrong. I think that it is on a fast track, and it has completely bypassed this full committee. By ordinance we have not reviewed it. And if you ask us what the subcommittee recommendation would be today, it would be no recommendation because we weren't given enough information and enough time to compile it and decipher and come up with a recommendation. I have three people that were sitting on that committee with me that day, and I don't think it's right, and I'm going to fight it all the way through December 11 next Tuesday. I don't know if the county attorney has seen this. He had not seen this when we reviewed it. It's a three-hour presentation, a six- month study that we are supposed to look at, decipher, and come up with some decisions in 3 hours. We were basically told -- and I have the meeting minutes from that meeting -- we weren't going to get that information. It was going to go forward. MR. MASTERS: Okay. With those comments I would say let's go ahead and go with the short presentation. Hopefully address most of that. MR. WIDES: Tom Wides, again. If I may respond to the one comment. I believe at that meeting we did pass out copies of the rate study and the impact fee study, the study itself and the bodies. In terms of the information, I believe you do have the information for the last few weeks. But no matter, we will proceed and David-- David Hagan from Greeley and Hansen and Roger Howell from Greeley and Hansen. If you-guys could move through the slides quickly and move to the back where we really want to focus, I would appreciate it. Page 11 December 5, 2001 MR. HAGAN: I was at the subcommittee meeting. We did come up with some questions that we hope that. We answered near the end of that presentation. I'm going to talk about the wastewater master plan, first of all, and then Roger is going to talk about the water master plan. One of the bases of the plan -- and a number of things went into the population projection that were used. You can see here the county -- and this is historical -- October 1 population for the county. The county population has increased based on the census information in ten years by 62 percent, but the water and sewage district, which excludes Naples and Marco Island, increased 91 percent during that time. One of the things that we used was the BEBR population projections, which are in high, medium, and average derivatives. And you can see they vary quite a bit when you get up to 30 years. And we have used the -- we have used the high for the projections, but also we don't go out 30 years. We are only going out 20 years in our study. This is a 20-year planning study. We also looked at the county buildout populations, and the planning section has estimated the buildout to be within the county, the urban areas of the county, 465, 000, and that exclude the rural areas, Immokalee and Everglades City. But within that is also the City of Naples and Marco Island. If you take that out the total buildout, in this water and sewage district is 394, 000 excluding the rural fringe. So we looked at what the BEBR population projections look like for just the water and sewer district -- and not the entire county -- just the water and sewer district compared to this buildout number of 394, 000 and saw that the high projection -- winds up going up beyond what the buildout is when you get way out there. So we saw that we needed to modify that for -- for our use. Page 12 December 5,2001 We also then looked at the rural fringe and made a low-range and high-range projection of what the population may be in that rural fringe. And, of course, while we were doing this work, rural fringe committee was meeting, and that information was being developed. So we kind of had to take off on our own tangent to get to this number (indicating). But this buildout population of about 109, 000 all includes OrangeTree, which the county is committed to serving by 2011. So we -- we took the buildout for the existing water and sewer district, added the highest, which was the rural fringe and OrangeTree, and about 500, 000 is what we used as the buildout for the entire expanded water and sewer district including the rural fringe. The -- of course, I noted that the high BEBR projection predict populations of 30 years greater than the buildout projections, so we modified our conservative growth approach to use the high. BEBR projection for 10 years, and that assumes that the BEBR -- average BEBR value in 2030, so there is kind of a knee in our curve where it goes up at a higher rate at first and then levels off within the existing water and sewer district. This is the results of the projections where we had a conservative approach and a moderate approach. And then the dashline in between is the -- is the planning section estimates, and they -- we all start out at the same point, because they used our number to start out with their projection, and then our projection for the conservative approach actually diverges a little bit because we are adding on areas like the rural fringe. You can see the bold green line at the bottom is the estimate from the 1997 facilities plan, which was the -- which was the previous report done about five years ago. And you can see that where in 2000 it was about 15 percent lower than our current estimates, and then -- we are showing a faster rate of growth as well. Page 13 December 5,2001 This is the estimated total population for the water and sewer district. It kind of shows how we have built up the population projections. And initially this area in here is our existing water and sewer district, and then there were some things that were added on like potentially serving Golden Gate City. Of course, you are committed to serving OrangeTree, but also serving, perhaps, some areas that are now unsewered. Out at this time this -- the reason I show you 2011 up here, that is as far as the impact fee study goes so that -- anything that happens out here is irrelevant, basically, to the impact fee because the impact fee was based on projects that happened through about that time. So Areas A through D -- you know, earlier I showed the buildout of being about -- over 100, 000. But at this stage we are only showing about ten or twelve thousand as a population for Areas AtoD. This line up here is the total population (indicating) and essentially represents the populations that would still be on septic tanks or -- or not connected to your sewer system. For the north county plant, we have -- in your consent order, you are committed right now to expand the plant by 2005 to the 30.6 value. But we have worked with DEP and reasonably got approval for expanding in two phases; so that by 2005 you can only. Expand by half of that capacity. You can see in the first few years that capacity was not needed. At the south plant, you're expanding the plant currently to 16 MGD. You can see that we are showing that you could be at a slight deficient in the next couple of years. But an interconnection is also being worked on that will be available to handle those additional customers during -- by that time. With that, Roger Howell will talk about the water master plan. MR. HOWELL: Thank you. Roger Howell, Greeley and Page 14 December 5,2001 Hansen. Very quickly go through this. These are the same slides that we showed before of where -- the water treatment plant requirements. There two existing plants are represented by the gray and the yellow. You can see that even with the next proposed expansion that that capacity of your two existing plants are exceeded by about the year 2012. So we have two new future water plants to make up that difference. This is the result of the water master plan, the capital improvement costs. And, again, these -- that will change from before -- but the total for the first 5-year CIP is about 470 plus or minus million and -- that's the average for the next 20 years of projects is about 400 million dollars every five years. Of course, the impact fee is only looking at those first two blocks, and these costs are escalated at 5 percent per year. So by the time you get out to 2012, 2016 in today's dollars -- that is probably twice of what it will be in today's dollars. Now, one of the questions that came up before is the obvious one, why is the impact fee being doubled? I think this shows a lot of the reasons why it's going up so substantially. In the previous master plans that were done -- I think this came up during our subcommittee meeting of-- the proposed water improvement projects total 23 million as compared to the same period now of 158 million dollars. On the wastewater side it was less than -- you know, it's more than a factor of ten difference. It was 26 million before and 268 million now. So it's almost an order of magnitude difference in projects identified. The earlier population forecast that David showed, we were at 14 percent at our starting point in 2000 based on the census data versus of where they were projecting in 1996. Our rate of increase is actually higher. So it just makes the differences that much greater as Page 15 December 5,2001 you go out in time. The earlier master plan did not include escalation of cost due to inflation. So the current impact fees are based on projects that were identified in 1996 using 1996 dollars. Now, the construction cost index based on the engineering news record construction cost -- that's a widely used index -- and I'm sure most of you are familiar with it -- has gone up 15 percent alone since 1996. And, in effect, what that does -- you know, you are using 1996 forecast dollars to pay for current-day projects. We now have under CIP a total of 47 water projects as compared to 3 earlier. And part of that is due to the fact that the concurrent master plan was taking a much more holistic approach to the water system needs. Some of the main high-dollar key projects that are identified in those -- in those 47 projects that were not concluded in the previous master plan are the need for the 12-million-gallon-a-day expansion of the south water plant that's the result of 34 million. And as you can see it's 8 1/2 million for relocating pipelines in county right-a-way and new water transmission on Immokalee Road -- and these are just some of the key ones, but-- Tom. MR. WIDES: Tom Wides for the record. Just one point I think we need to make here -- maybe if we can go back one chart-- actually one more. As we look at those costs, please recognize that you have both impact-fee-related capital costs in there and user-fee-related capital costs. Now, if we can flip back forward to where we were, as you look at those projects, those are not all impact-fee-related capital projects. A good example is the automatic meter reading installation. That has been identified as a user fee in relation to capital costs. I think there are some others in there that you might be able to relate to. Page 16 December 5, 2001 But, again, we are looking at that -- originally that chart showed you the total dollar differential of all capital projects that we were looking at. Our next step has been to go back in and differentiate those costs between impact-fee eligible and user-fee eligible. MR. VAN ARSDALE: You are saying you haven't done that? MR. WIDES: No. No. We have done that. As part of our impact fee studies and part of our rate studies, we went from the point where we had the capital cost in total to then differentiating them between the impact fees and the -- and the user-fee-related capital costs; that has been done. That is part of the studies that we have completed. MR. HAGAN: This shows the water treatment plant capacity -- the forecast of 1996 water master plan compared to what we have in the 2001 master plan. You see we are pretty close by 2005. They had a 7-MGD expansion of the south plant, and we are currently doing an 8. But that capacity in that earlier master plan was good through 2015. We are showing the need for 72 million gallons a day by 2015; so that's almost a double in water MGD. Question. MR. VAN ARSDALE: I guess -- this is kind of the area I was focusing on. And maybe I will let you go through it. MR. HOWELL: I only have a couple of more slides. MR. VAN ARSDALE: Yeah, okay. This is quite higher. MR. HOWELL: Also, the bid prices for construction for treatment plants have been considerably higher than the earlier estimates. In 1996 the water treatment plan expansion was estimated at $4.75 -- at $3.20 a gallon in the current master plan. We are using $4.75 a gallon; that's based on the current bid price that we just got. Now, that may not seem like that much, but when you are talking about 8 million gallons times $1.55 per gallon, then it's real money. Now, the -- and on the wastewater side, the 5-MGD expansion Page 17 December 5,2001 was estimated at 19.5 compared to our current estimate of 40 million. It's more than doubled. There is also about 12 million dollars in cost in the current CIP associated with the conditions of the consent order, and that's more the equalization tanks and innerconnections and the like. MR. SAVAGE: But to get back to Tom's point, is that a user fee, that cost, or is that a future impact fee cost? MR. HOWELL: It's a combination. MR. WIDES: I believe on the consent order you do have a combination of costs that you deal with. I will ask Roy to speak to that a little bit. Roy Anderson. MR. ANDERSON: Yes. For the innerconnections, when we are designing the innerconnections, we have to look into the future as well as present conditions. There is a sharing of those expenses between impact fee and users. But some of the costs -- so it's a combination of sources. MR. HAGAN: Likewise, with the equalization tanks, some of that is for existing customers and some is for future flow. It's designed for future flow and existing customers. MR. LONGO: But all the conditions of the consent order aren't they a result of the plant being late and produced late for the extra holding tanks? MR. ANDERSON: No. The consent order was present as well as futuristic. In fact, the requirement that we do a master plan came under the consent order. So they wanted us to look forward, so the de-equalization tanks could be put in were based on future projections. They told us to go with a 10-million gallon expansion in the north plant. MR. LONGO: But my point is, we would not have a consent order if we had the plant done on time. MR. ANDERSON: It was a combination of the capacity as well Page 18 December 5,2001 as operational considerations. But given that we got into the consent order, then we had to comply with everything that was in there. MR. LONGO: Okay. That does not answer my question. MR. HAGAN: The county was operating -- you know, the master plan they had to go from was based on low numbers as well. The forecast -- the real flows were higher than what was forecast. MR. ABBOTT: A real quick question. Do you only do this every five years to look at these rates and such? This should not be a surprise. MR. HAGAN: The last one was done in 19 -- water master plan was 19 -- MR. ABBOTT: Yeah. But couldn't somebody have given it thought in '96, '97, '98, '997 MR. WIDES: Well, let me try to address it again. Tom Wides. Someone could have. Okay. No one did. Okay. MR. ABBOTT: That's a terrible comment. MR. WIDES: I won't argue that. Okay. What I will argue is that our intent and what we have already said that we will do is going forward we will look at these rates, okay? Look as these needs are on an ongoing basis, on an annual basis, as far as the rate studies are concerned. Okay. I can't change history, but I can only say what we have said, that we will do going forward. We have -- we have graphs and charts, which I won't drag you through today, that will show you how we got behind the curve on where impact fees should have been related to growth activities. Impact fees now, should they be higher today than they are today? I would argue based on some of the data I have seen it should be higher today. Would it be a doubling? be higher than they are now. MR. ABBOTT: I understand that. No. But they would already It is just that I think my customers would fire me for this level of performance. Page 19 December 5,2001 MR. WIDES: I understand what you are saying. I don't disagree with what you are saying. But all I can do from here is look forward. And I can accept your statement that we should have been doing this all the way along. We didn't. That is the fact. MR. VAN ARSDALE: Is there any recommendation in this proposal to adjust the impact fees based on the cost increase annually? MR. WIDES: We have -- what we have said we would do, rather than cost increase annually like an inflation rate impact fees, we said we will go back and do the impact fee studies on an annual basis so we are getting a current look all the time. Rather than just adjusting for inflation, we look at our projects statuses out there and see what is coming on stream and see what we decided to do, et cetera. The only risk that I would have in an inflation adjustment is that assume everything that you plan that year is still going to go forward. That could change dramatically. There could be different needs. There would be greater needs. MR. LONGO: You are adjusting for inflation 5 percent every time on top of the 5 year-- 3 years previous, and you have a 30 percent contingency over the life of the plan. That's not right. If you are going to adjust and look at these fees every 3 years, you should not be setting fees now for 30 years. MR. WIDES: We are not setting fees for 30 years. MR. LONGO: Okay. But you are basing it on projections for population out over 30 years. MR. WIDES: 10 years. MR. LONGO: years. MR. WIDES: We are basing it on the projections over the next Okay. But you are reviewing it every three master plan studies have looked out over a period of 20 years. Dino, let me try and be more specific here. The What Page 20 December 5,2001 do we need to plan for over 20 years? They have also took a look at what are the populations buildouts, okay? But when it came down to capacity planning, I guess they would call it, and the basis for our impact fees and our rate studies were done on that ten-year horizon from today out ten years. MR. HAGAN: Actually, the rate studies was a five year. MR. WIDES' Well, they were five years with a look forward to the fact that you will have spending over that ten-year period. I guess the point is we are not going out 30 years and saying, "Let's build for the whole 30 years." MR. LONGO: In a time of deflation, why are we adding for inflation at 5 percent, and why are we adding more than what inflation typically is as the average? MR. WIDES: First off, at a time we know inflation has been low, but it has been continuous, we felt that 5 percent was not unreasonable. And I will ask our folks to talk about the planning stages in terms of the 30 percent contingency, okay, in terms of the stage of the design, is 30 percent appropriate? And I think Roy Anderson, our director of engineering, can speak to the 30. MR. ANDERSON: Typically, I think 30 percent is certainly justified in this case because, you know, after a project is bid and before you start construction, usually a 5 percent contingency is used. Prior to bidding you normally use a 10 percent level of contingency. Prior to design, on the other hand, engineering, plans, and specs you use 20 percent. And then prior to planning you use something like 30 percent. That's really where we are. We are actually -- in some of these we are really pre-preplanning further way down the road. So we feel that 30 percent for futuristic planning for projects that are really not very well defined is justifiable. MR. LONGO: There are still dollars -- your impact fees and your user fees are being based on that methodology? Page 21 December 5,2001 MR. ANDERSON: They are. They are. But we have the ability to revise them every three years, and we are going to take another look every year. True, we are going to be going ahead on some of the treatment plants right now for the next -- they are going to be built right out -- and they are going to be hefty size for the next 20 years. But for the vast majority of the projects that we have on the ten-year window, we are going to have an opportunity for another shot at those. We will be able to update for actual inflation, actual costs. And it will be a constant refinement process. MR. LONGO: Can you explain to us how the 30 percent actions works in the capital program? Is that 30 percent per year? 30 percent over the next 10 years or 20 years? One of the questions that I have and I wrote down is estimates for the master plan documents contain contingency allowances for up to 30 percent in the capital program. Rather than build this one-third into the current impact fees, allow for the adjustment of the triannual impact fee review and adjust accordingly as these numbers are refined. Why can't we do that? Why does it have to be -- MR. ANDERSON: Because the vast majority of the projects are out to the future and they are not well-defined, so we have overall taken a 30 percent factor and applied it to all the projects. MR. HAGAN: Can I add something? One, even when they look at it next year, it will be a ten-year look ahead. So they will be -- they will do that on the uncertainty of what -- what definition of the projects will be out ten years. That 30 percent was not added to the 2002 values because we defined those projects well enough we did not have to add a contingency. So that 30 percent will always go from Year 2 to Year 10. Next year the 2003 numbers will be defined, and those won't include the 30 percent contingency, but projects beyond that in Years 2 through 10 will. MR. LONGO: You are telling us those projects are refined or Page 22 December 5,2001 defined right now subject to review in 3 years. MR. HAGAN: Or annually. MR. VAN ARSDALE: Let me ask, one of the things that we are looking at here is sort -- in other words, would you say that the rates are -- you are setting the rates at the current proposed level because of the next five years? Or would they be the same if you only did the five-year projections? You are basing your rates on the ten-year projection from what, right now? MR. ORI: My name is Robert Ori, Public Resources Managing Group. I was the engineer group -- I'm not an engineer -- the consultant that developed the impact fees that you saw. Let me just take a step back, and I will try and answer your question too. First of all, after we presented to you-all the first time and met with the subcommittee, we did go back and look at that time projects. I think, as I recall -- I don't have those numbers with me, but I think we were in excess of the $6, 000 range at one point -- some of you-all may have remembered that -- and now we are at the $5,500 range. There was about a $500 reduction in the previously presented impact fees to you from what we are today. The $5,500 was presented to the subcommittee -- to let you know it has not been changed since then. When we did our analyses, as I mentioned last time, I picked ten years for a reason. One is, I wanted to make sure we captured a fairly good project stream that is out there, No. 1. And, No. 2, I have a partial expansion -- expansion this year and expansion next year -- I want to make sure I captured the full expansion. And, 3rd, I want to make sure the transmission graphs -- we had enough ERCs that the transmission graph was marked to the capacity there. The other thing that I wanted to' mention to you. One is the population. We have talked about a lot of population. That is very critical. It's very critical to the plan of the projects when the capacity must come online. What I did not do was Page 23 December 5,2001 say, "Okay, if I have got 20, 000 people coming on in the next five years" -- I didn't divide the capital cost with the 20, 000 people. I divided the capital cost by the amount of the ERCs that plant will serve. Whether they come on or not is one -- whether the people come to the county or not is one thing, but I divided by the ERCs that the plant would serve. So that is something that I want to mention to you. If we had a plan expansion in 2009, I didn't try and recapture all of those dollars by 2011; that can serve people out in 2015. I wanted to make sure that you all recognize that. I have not looked at the five-year projection. I have been asked to do that. I will bring that -- do that. I did look at that ten. I thought it was reasonable. I don't know if it will go up or down relative to five years because I will still link it to the capacity that is being added on in that five-year period, to let you know what I did do. The other thing we did do, we looked at existing versus future- related projects. I think the floating-relations facilities was mentioned at the wastewater facilities, I believe it was. We did recognize those that were adding onto existing customers and those that would be included in the impact fee and try and recognize those splits as we went forward. So the impact is not going to recover all the cost. The 400 million dollars, we are not even going to get close to that from the impact fees we are getting. I wanted to point that out to you. So the short answer is I have not looked at the five years. I couldn't tell you whether it's going to be higher or lower. Would it be higher than today's fees? I can say with 100 percent certainty it will be, obviously. MR. VAN ARSDALE: One of the things on a previous slide, I think in the year 2005 that number was -- from the old study it was, like, 30 million gallons a day projected, and your projection was 40. Page 24 December 5, 2001 So we are real close four years from now. MR. HAGAN: That was the master plan in comparison of what the water capacity was back estimated in '96 and what it would be as of 2005. I think that's what that slide was. MR. VAN ARSDALE: Yes. MR. HAGAN: They are close. MR. VAN ARSDALE: Yes, they are very close. Part of the justification of the doubling of the rates is that "Well, whatever we paid for back in the '96 and '97 was inadequate and missed all of these things. On the other hand, if you look at it in 2005, you know, three years from now -- or certainly ten years out from -- eight years from where they did it, they did it -- they did a reasonable projection in terms of requirements, and they also -- in setting the rate, they actually so far have gotten us to where -- yeah, this one here -- the rates has gotten us to where we are at. The problems haven't been money related. It hasn't been we haven't had money to build capacity. We have not managed our affairs well enough to build to capacity. So we have had a surplus in -- MR. HOWELL: See, I don't know that -- I'm not sure that I quite agree with that statement. By looking at this chart for 2005, yes, the capacity projections are very close to each other. I will not sit there and argue that; that's what it looks to me also. However, on the money side if the water facility was 23 million dollars -- and I can tell you I think the -- if I remember right, the filing fees around 70 million dollars. The cost is not the same. The capacity is the same. I think the cost is grossly underestimated. MR. HAGAN: IfI speak 3,006 (sic) it would say 39,512.95. We are spending money to have another -- That's very critical. That's a timing issue, and we have to recognize that. MR. VAN ARSDALE: I guess what comes to mind is -- is I Page 25 December 5, 2001 wasn't here for '96 and '97, but I'm sure those fellows that gave us the numbers there said, "They are wonderful numbers, and this is what you can build your plant on, "and what kind of assurances are there in place now that these numbers aren't as good as the old numbers? MR. WIDES: Let me try and respond. Tom Wides, for the record. What I think we have been -- we want to show you here today is -- for example, when those -- when that study was done in '96 and '97, okay, they, A, were using census numbers from 1990 as their base -- as their starting point and using those numbers in '97 and '98 and showing a much lower growth rate in the county. The new numbers that we are seeing are showing a much more dramatic growth increase with -- if you -- if you except the premise that much of this starts from population estimates, okay, I think they are strong drivers here as to how much money you are going to spend to put capacity in place, okay, and we are seeing much higher growth numbers. We are testing the gallons per day of the usage per capita and saying, "We need this much capacity in place, "so it is driving much larger numbers. Now, is this better than the study that was done a few years ago? Is it worse? You could argue that only time will tell. But what I can tell you is that I think this group has done the due diligence to try to make sure that we have done -- that we have done the very best we could with the information that we have available. Will the prior group say the same thing? I would assume they would. But we are standing here today saying, "These are the costs that we recognize are out in front of us right now." We will go back next year and look at these again. They may go up. They may go down slightly. They may not change next year. But I can't tell you they did a good job or bad job, okay. I can tell you we are pretty comfortable with the kind of work we have put into this in terms of trying to get the right information. Page 26 December 5,2001 MR. MASTERS: Tom Peek. MR. PEEK: Tom Peek for the record. Let's assume for a moment that we agree with your analysis for your projections on population and the facilities that are needed and even the construction costs that you have estimated for those. Help me understand why we have a -- I think I heard Mr. Ori say combined we have a projected $5,500 impact fee -- MR. ORI: That's correct. MR. PEEK: -- of which 30 percent is a contingency, if I understand correctly. Let me go through my question, and then you can respond. If I heard correctly 30 percent of it is a contingency, we are going to review impact fees every year. Why wouldn't it be appropriate to carry a standard 10 percent construction contingency? You are going to review it every year. You can make adjustments annually to accommodate whatever changes in construction costs you identified. And you can reduce from the top, 20 percent off of the proposed impact fee or equivalent of $1,100. Lower it down to $4,400, and get it back into some range that is not killing everyone with sticker shock, frankly. Help me understand why that is not a feasible project. MR. WIDES: I feel your question is similar to what Dino was asking. I feel it's a similar type of question. Why not pull in the percentages and next. Year you will know better. And I think our response to that has already been that, in fact, what will happen is that next year we will look ten years and ten years ahead and ten years ahead. We are at some point going to run the risk of running short of impact fees covering that capacity, because we are not just looking -- we're not just looking ten years ahead and next year we are going to look nine years ahead with better knowledge. We are always going Page 27 December 5, 2001 to be looking ten years out. We will always be having that question of, "What is the appropriate contingency?" It won't go away next year when we do another rate study. It won't go away the year after that. We will always be incrementally looking ten years out. You will always have that level of uncertainty as you go out. MR. PEEK: I'm not arguing that you are not going to be looking ten years every year. What I'm arguing is that if you have got a 30 percent contingency built into it and you are building that every year so that the dollars that you collect in 2002 are going to be, perhaps, 30 percent more than you will need. MR. WIDES: Or right on the head or short. You have got a lot of sides. MR. PEEK: -- you are going to look. 30 percent contingency for the next year, I haven't seen that kind of a contingency in a construction budget in a long time, if ever. MR. WIDES: The only way I can respond to your statement is that you have already heard from our engineering director. On those projects literally on the drawing board, we didn't feel 30 percent was unreal. We keep these projects to that great -- to that large degree out there on the drawing board 30 years -- almost 25 years of it, I believe, so your constantly -- was very large projects out there with something on the drawing board that we don't know how good that cost is going to be. And I don't think we are in a position where we can afford to say, "Okay, let's say trim it back to something more reasonable," when we -- when we felt that 30 percent was a reasonable number to use given the state of these various projects? MR. THAMPI: Mohan Thampi, project manager. The bids have been coming in very high in the Naples area for construction projects. And, you know, the low bids -- the range of the low bids and high bids are -- like, for example, the water plant 25 million. We had six bidders. The next closest was 40 million. And -- and you Page 28 December 5,2001 saw the two examples which Ron pointed out. You saw the one -- the wastewater project went up 100 percent from what was already submitted, and the water plant was about 30 percent more. And this is how the contingency looks in -- I mean, in our committee if you had the contingency, that's how you cover those costs. But Naples is an expensive area. We don't have skilled laborer. The contractors have to bring in -- for water and wastewater plants, which -- we are using the highest level of technology here. MR. HAGAN: Rob Ori again. I wanted to mention on the 30 percent as Mr. Hagan said it was not -- the 30 percent was not in the fiscal year 2002 capital costs. It was only in the projections thereafter. If you think 20 percent right off the top, you wouldn't quite get that in the calculations. Plus we have some existing capital dollars that has a capacity -- blended into the rate that will drive the rate down to let you know about that. Also, if you look at the analysis that you have relative to the cost of treatment, water and wastewater, that per-unit rate per gallon times the level of service. If you remember, that 250 is a reduction from the level of service back in 1996, '97. That number is greater than the impact fee that we are recommending today -- that -- that is the treatment side, not including the transmission. That does not quite answer your question here, but I wanted to point that out as we go. As you do your 20 percent, it's not quite dollar to dollar as you are thinking. But will it reduce when you pull it out? Yes, you would reduce it. No doubt. MR. DISNEY: If I could interject one item on this issue. What I'm hearing here and -- I mean, the suggestion from Tom is something that we have been talking about for quite a while in our subcommittee meeting. The way it has been stated, if I understand it, you are going to review it on an annual basis. You can get no more than one year behind. It's no different than any of us here with a Page 29 December 5, 2001 business plan, a one-year, five-year, ten-year business plan. You can only get one year behind if you are reviewing it on an annual basis. You make your adjustments on an annual basis. I think it's perfectly reasonable to not have that type of a contingency in there. MR. LONGO: Plus you are adding a 5 percent inflation. MR. ORI: I want to mention there to -- I don't disagree with the one-year behind on the collection of cash to the impact fee. I don't disagree with you. Okay. The flip side, when we look on the plan for the monthly rates and charges for our existing rate payers, that are also getting a rate adjustment as we all know. We have talked about that. The question that I pose to you is what fee do we use for the five-year projection? Do we use the one that is the one year behind? We assume that the fee that we have today -- that will be a critical assumption to look at. I'm not saying we can't look at either one of them; that is not the issue. As we look at five-year planning from a rate side, you know, what will we do there also? I know we will come back and look at rates every two or three years also. It appears right now we need a two-step increase in rates coming also to meet the capital program. It's a pretty big issue. I wanted to mention that. I think you are right from a cash-collection standpoint. I would tend to agree with you. MR. ANDERSON: I think you are right from the standpoint of projects that are pretty much ready to go. You are talking a one-year plan, what you say is absolutely right, is 30 percent contingency is not appropriate. But the fact of the matter is we have a ten-year plan we were looking at. We are projecting projects are going to look like eight and ten years out, and we really don't know. We all know what has happened with environment regulations becoming more stringent -- NB Syndrome, Good Neighbor Requirements. And our experience has been that usually those kinds of things are drivers to increase the Page 30 December 5, 2001 costs. For example, on the environmental side we have got a lot of our costs of our water and wastewater plants now go into deep injection wells, which we didn't have to worry about as much previously. And, you know, that's a major project component. Things like wetlands and mitigation, that has to be incorporated. These are uncertainties that we really have to err on. And in terms of the scenario I gave you earlier about as a project progresses your contingency declines, I think you have to admit that when you are planning development projects over a long term that you probably use a very similar approach that if something is going to be built five years out you tend to want to use a larger contingency. I think that coupled with the fact that, you know, we constantly are going to be moving forward with these ten-year plans, I think it's certainly sound to carry a healthy contingency. MR. DISNEY: I would say that I agree 100 percent with Mr. Peek and that is that never on a project -- and I have done some pretty substantial projects in my career-- have I ever carried a 30 percent contingency. I mean, that's huge. That's just huge. MR. ANDERSON: For a project you are not going to start construction for six years down the line? MR. DISNEY: Well, I guess I would say that if you are going to look at it on an annual basis, those are reviewed with the process as well, and you continue to refine that, and your numbers change on the project. MR. VAN ARSDALE: Let me ask to make a point. In other words, the impact fee that you pay is for capacity that is available when you come online, isn't that a fair assumption? MR. WIDES: Yes. MR. VAN ARSDALE: In other words, ifI pay the impact fee when I pull my permit -- and let's say my project is going to be Page 31 December 5, 2001 completed in 12 months, that capacity has to be there and that's the cost of my capacity. I really don't care -- it really should not be relevant what the cost of capacity is any -- anytime outside of that window. So your contingency -- in other words, the fact that costs may double in five years shouldn't be borne by a rate payer that is paying for capacity in 12 months. So how do you explain that? In other words, if you are adjusting it every year and all of a sudden you have a big bump because the state says you have got to make pure water coming out of the wastewater plant, well, those people that are going on that new plant pay for that capacity. So I think Tom's point is really well made that -- I mean, especially when you do a review every year and adjust it. You shouldn't -- it's hard to justify any contingency. MR. WIDES: Well, first off, what I'm going to say is that I'm not looking at next year. I am looking at the next ten years. To begin with I can't design, build, and bring to completion a plant in under five years; that's the first contingency. So I can't look at just the next year or two ahead. MR. VAN ARSDALE: Let me stop you. Who is going to pay for that plant that you are going to build in five years? The guy that pays his impact fee tomorrow or-- MR. WIDES: In fact -- MR. VAN ARSDALE: -- or on January 2nd? In other words, you are setting the rate saying the guy that pays an impact fee on January 1st to come online at the end of the year is going to pay a 30 percent contingency because of what that plant may cost you in five years. MR. WIDES: Well, you can-- MR. VAN ARSDALE: Right? MR. WIDES: You can look at it that way. MR. VAN ARSDALE: You say I can or I can't? Page 32 December 5, 2001 MR. WIDES: You can. MR. VAN ARSDALE: That's how I am. MR. WIDES: That's your opinion. I accept that. MR. VAN ARSDALE: It's not an opinion. MR. WIDES: I accept that as your opinion. That's what I accept it as. Now, I will also tell you that I can't plan for every person that comes out there, whether they are going to build in six months, a year, two years or five years. I know I have to build capacity out there for the person at the front end of that five years and the person at the back end. I can't go in and determine ever slot in time as to when you are going to come on. So I will suggest if I have to put that capacity in place, I have to put that capacity in place for all the folks that will be using that capacity newly coming onto the system. I built that five million gallons for the first person in, and I built that five million gallons for the last person in. I have had to build it for both. Or when that first person came in, I wouldn't have any room for them. MR. VAN ARSDALE: No, you adjust it. You have the capacity for the first guy in, so your cost is fixed. MR. WIDES: No, you don't. That's not true. That's why I have to go build that plant. I'm not going to build a 3 50 gallon plant. I'm going to build a 5-million-gallon plant that will service that first guy in. I can't -- I can't build a plant increments if that very first person in has got to be served by a five million or whatever million gallon capacity facilities. MR. VAN ARSDALE: But if he comes in 2002 and you don't get the plant built until 2005 -- MR. WIDES: Right. MR. VAN ARSDALE: -- his capacity -- the cost to provide him with service has already been paid for. Page 33 December 5, 2001 MR. WIDES: In fact, if we look at our impact fees, if you look at the impact fees and where we have been sitting at with the rate of inflation, I have built the capacity, but I'm running behind on my impact fee collections. If we have been doing that -- MR. VAN ARSDALE: Okay, but-- MR. WIDES: If we had been doing impact fee adjustments every year, as I say we haven't, okay, we might still be asking for fifty-seven, fifty-eight hundred dollars in impact fees. But, in fact, our base number that we are coming from might well be much closer than a doubling affect. MR. VAN ARSDALE: But if-- adjusting your current rates to catch up is fine, but that's not contingency. You are saying your contingency is to charge the guy now for a plant that he's never going to use. MR. WIDES: I don't think we are seeing -- I don't see it the same way. MR. VAN ARSDALE: No, we don't. It doesn't make sense. MR. WIDES: I apologize. But I beg to differ with you. MR. MASTERS: Let me clarify a bit -- and I think what he's saying -- and looking around the table here, we are all pretty much nodding our head and agreeing here is the person coming online today that is paying his impact fee today for the plant that is going to come online -- that is already online probably -- but he's paying an impact fee for what is here now -- Basically he shouldn't be paying the 20 percent contingency for a projected use somewhere out there. He should be paying 100 percent of what the demand is most recent to where he is actually paying the impact fee. MR. WIDES: If I'm right at the number capacity where we are now -- because we have people who have already come in with their PUDs to build two, three, four, five years back-- and they may not be Page 34 December 5, 2001 in the ground yet -- but I have had to reserve capacities for them, okay, that next person in, what are they going to take? They are going to take my new capacity. MR. MASTERS: Right. But the point -- our argument is at the point in time that he's taking it, it's no longer five years out and no longer should have a 30 percent contingency. We know what that fee is or was, because it's being paid right now for the most recent construction -- or has been paid in the past. MR. WIDES: No. MR. VAN ARSDALE: If the guy comes in to Lely Estates where their capacity -- maybe that capacity was built ten years ago -- MR. WIDES: No, the-- MR. VAN ARSDALE: -- let me finish this thought -- he pays -- in other words, he's paying a higher rate, even though that -- even though that plant may be at full capacity. I mean -- I mean, may be fully ammoritized and paid for and everything. He's paying the higher rate; right? MR. WIDES: Yes, he is. But is he paying for that plant, or is he paying for capacity? He's not paying for that plant. He's paying for capacity throughout the county because his sewer, as an example, may never go to that south plant. It may get innerconnected up to the north plant. Now, someone has got to pay for that too. This is not a -- this is not a little -- we are not building little pockets. We are trying to develop an entire community. MR. VAN ARSDALE: Right. But I think the point is if you annually adjust rates to be more based upon your cost to provide the service, you don't need a 30 percent contingency. MR. WIDES: But if I'm always looking five and ten years ahead rather than just looking at the next year, and I'm driven to look five and ten years out ahead because I have to understand my capacity needs and my production cycles, I can't afford to just look at Page 35 December 5, 2001 the next year. I will always have that 30 percent contingency in here. Now, I will say when you get to the back of our cycle, when we start to get to a -- near a buildout stage and our project starts to dwindle off where we are not talking about building two and three additional plants, at that point in time your projects are, A, not as large. Okay. You are reaching your buildout stage, and you are not having -- you are not looking at so many major projects out there with such questionable cost levels when you get to the back. But right now we are still looking at tremendous projects that are coming onboard in those later years. MR. MASTERS: Perry. MR. PEEPLES: I'm not sure that either side is going to come to an agreement on this. I do have a question. Has the 30 percent contingency been used in other jurisdictions in other counties? And if it has, has it ever been challenged in court? MR. WIDES: I personally can't answer that. I don't know if anyone here can speak to that. Ron? MR. PEEPLES: Have you seen the 30 percent? MR. ORI: I have seen construction contingencies in master plans that have been relied upon development in impact fees 30, 20, 10, 5 -- I just can't pick a number. But I have seen them. MR. PEEPLES: But my question is, you have seen 30 percent contingencies used in the master plan as a basis for establishing impact fees? MR. ORI: No, I cannot say it was 30 percent, because I didn't go calculate them. Normally I have seen the contingencies in the master plan that have been relied upon in the impact fee. The other thing to keep in terms of the future, a lot of impact fees is designed to recognize the next incremental capacity. That's what you have got to replace; that's what you have got to build for your growth; that's why we are looking at ten years. You have got to Page 36 December 5, 2001 get the next incremental of capacity also. It does take -- but I have seen contingencies -- without a doubt I have seen them. I cannot say they were as high as 30 percent. I have seen 30 percent contingencies. But -- for example, in Hillsborough County they used 50 percent in the initial planning stage of all their projects. That's about where they are. As your project progresses, obviously, your knowledge of the project gets more and more known. You have actual cost versus contingencies. I think that's what was being said earlier. Almost every impact fee study that I have seen has been based on some forward-looking master planning document. You are trying to get the average rate for the growth that is coming. The other thing to keep in mind is, how do you use the fees? The relationship -- we are trying to calculate a rate for fee. It has got to have a reasonable nexus to the use of the fee; that's the other issues. I mean, if we look next year and the fee should be 5,200 instead of 5,500, there is a decision to be made. Do you lower the fee because now you have more known costs, or the costs of pipe dropped 50 percent and we get grant money; that's why, I think, they want to look at this rate every year to try and track it so we don't go out of whack again to make sure that we are fully recovering the house; that is what I think is going on here. MR. MASTERS: Herb. MR. SAVAGE: I have a solution for this. I will ask each of us to do this. Eighteen thousand dollars is the most expensive lot on Marco Island when we developed Marco Island. That same lot today gets one million dollars. That house that was built in that area today has many, many times improved its value -- and whoever owns it. And I would venture to say when that man sells that lot for one million dollars, wouldn't it be wise to get him to volunteer some of that million dollars to the county, say, to help pay for those things Page 37 December 5,2001 which are now a hell of a lot more valuable, you see? Couldn't that be happening? See, we sit here and worry about something down $500, $5,500, $6, 000, you know, and ten years from now it will be -- he could get ten times as much for the house. MR. ORI: I don't disagree with you-- Robert Ori. I don't disagree with you. That's one of the reasons we tried to allocate the costs from existing and future. That's why you see the rate increase. The homeowner is going to pay for some of those costs through increased rates, obviously. MR. SAVAGE: I think he can volunteer monies to the county after he sells it for a million dollars. MR. ORI: If you look at the old general development deal where you come to Florida and here is your plot of land, and we'll pay for utility for $100 -- utility agreement. Those are reallY big issues right now because we know a cost of $100 to provide utilities service. That kind of follows in line with what you said. That's why we try to split the projects apart from what was provided in the master plan. MR. MASTERS: Dino, do you have a question? MR. LONGO: I need to make a couple of points. I think one is because of all this discussion, obviously, you can see why the subcommittee could not come up with a recommendation. I have a couple of talking points I just want to point out to the subcommittee -- to the full committee first. And my biggest question is, why are we looking on the revenue side to start with? Here is the question. You intend to spend 43 million dollars on your three deep injection wells to dispose of effluent at the same time you have 70 potential customers waiting to purchase that water. Okay. Hook up the customers, reduce the demand for potable water, reducing the capacity of the expansion at the water plant, generate utility revenue, protect surficial aquifers, Page 38 December 5, 2001 and save the 43 million. MR. WIDES: Dino, can we possibly respond to that? MR. LONGO: Oh, sure. MR. CHEATHAM: The deep well injections is for wet weather flows. We use -- customers that stand in line for water only when it's dry. And they only want it certain times of the year. When we have rainy events like we had September 29th, we have water that has to go somewhere. And in order to put it, that's why the deep well injection has to be built. MR. LONGO: What is going to happen to the 200 million gallons per day that you have right now? In addition the county purchased large tracts of land to allow effluent to percolate at 200 million gallons a day. And then you want to put three more injection wells on top of it. What happens to that 200 million? Are we just -- abandon those percolation ponds? MR. CHEATHAM: As things change in time, if we have ASR technology where everybody had their own ASR in developments -- and in the wet weather you put all the water down in the ground and then brought it back up during the dry season, that can push off the need for injection wells. We don't have that right now. ASR's technology is years down the road. MR. LONGO: And that's my point. We haven't really taken a look at it. I mean, these questions aren't coming from these guys. These are coming from some very good professional people. MR. THAMPI: Where do you get 23 million dollars? I mean -- MR: LONGO: From studies. MR. HAGAN: He has two deep well projects. Dino, one at the north plant, I believe, it's 14.3 million. And at the south plant we have additional deep well -- deep injection well, I believe, is at 5.5 million. So the total was slightly less than 19 million for those. MR. LONGO: And you don't plan on doing three? Page 39 December 5, 2001 MR. HAGAN: One at the south end and two at the north. MR. LONGO: So that is a total of three. You are telling me it's 19 million, not 43 million. I stand corrected if you can show me those facts. My next question is -- this hopefully is correct-- you plan on spending 48.3 million in land acquisitions -- and I know this question has been asked to the staff-- on -- without fully stating the feasibility of your four or five plants instead of maybe three plants. You guys sat here and told us yourself you don't have all of that worked out because rural fringe is not set in stone yet. We are planning -- and all of your numbers are based on building five plants instead of maybe three and planning on a capacity -- because you are on one side you are telling us everything is based on all of this very positive growth and based on three years -- of the last three years historical data, permanent revenues, and so forth and so on -- but we are in deflation, we are in a recession, and we are getting ready to pass -- or ask the county commission to vote on a proposal to spend all of this money when we are not looking at the revenue side of things as well. I mean, three deep injection wells as if-- it's on 20 million dollars is still a substantial amount of money if we don't need to do it. What happens to the 2 million gallons per day percolation ponds? Do we just abandon them and waste the money that we have spent on them? MR. THAMPI: We did a study and the lowest cost is deep injection well. Whether there is wet weather or whether the water can be used for public access, you have to put it down in deep injection wells. There was a consent order related to that a few years back, where the DEP told us -- MR. LONGO: Where is your current capacity of storing effluent right now? Page 40 December 5,2001 MR. CHEATHAM: We have about a day and a half; that's it. MR. VAN ARSDALE: Is there any consideration given to a closed-loop system? MR. CHEATHAM: Wet is good. MR. VAN ARSDALE: Back into the water system is -- MR. MASTERS: I will tell you as a large effluent customer at the Vineyards that we constantly monitor what is available, and we are always trying to see what is available. There isn't an excess of effluent that is available. And as I sat through several meeting with all the other effluent customers. I think everybody is in agreement that is knowledgeable in that area has been watching that market agrees that that's the only way that we can handle storing effluent during times when there is no demand and then bringing it back online during peak times when demand far outreaches what is available; that's simply a storage method. But it's something that will have to occur when and if additional customers come online no matter what. That is still something necessary. MR. VAN ARSDALE: Aren't there some communities that have a closed loop where effluent goes into the water? MR. ORI: There is one in Texas. There are very few of those. The public really doesn't like the idea of reclaimed water going back to drinking water. MR. VAN ARSDALE: I know they don't, but, I mean, it happens in rivers all across the country. Is there a cost benefit to that? Or is -- it certainly takes care of the effluent in terms of surplus because you never have -- I mean, because you are using more water than you discharge, so you never have a surplus of effluent, so you don't have to do a deep well injection. I'm just curious. MR. ORI: The state does not permit them. MR. VAN ARSDALE: I don't know if anybody has tried. I know it's political. In other words, if we are talking about how to Page 41 December 5,2001 save money, it may be that if you going to go do a rate increase -- because I guess deep water injection is going to hit the sewer rate customers too -- maybe that is something that you should just at least throw it out there. Maybe it's worthwhile. MR. ORI: I don't think -- I don't think that's in the next 30 years that's probably feasible. MR. SAVAGE: You and I will be here though. MR. ORI: Correct me if I'm wrong, but there has been a lot of discussion of use of reclaimed water or effluent water up in the Tampa/Hillsborough area, take it back up the Hillsborough River and bring it back down, as it goes up and comes down and cleans itself in the river -- whatever or something like that. And that has taken a lot of scrutiny just to even discuss that. I hate to say that. Your idea is great. Take the effluent put it back in -- MR. VAN ARSDALE: With the-- MR. ORI: -- go to the wastewater plant. Better quality than we pump from the water. MR. MASTERS: Let's jump ahead and go to Dino. MR. LONGO: Back to the question, though, Tom, you are talking about on one hand we don't have enough effluent to go back to the effluent customers, but we are planning on building three more deep injection wells for the effluent that we don't have to go to the customers. That doesn't make sense to me. MR. THAMPI: No. MR. WIDES: Dino, if we can respond. I think Joe might be about to -- MR. LONGO: Then put the 70 customers online. MR. CHEATHAM: What we would like to do is put all 70 customers online right now during wet weather and have them store it somewhere. There is nowhere to store it. We are talking right now with the folks at Fiddler's Creek. They have a problem. They don't Page 42 December 5, 2001 have -- they don't have any well water down there to use or any reclaim water. They have to use potable water for irrigation. If we can give them water during the wet season and they can store it somewhere, we can give it to them. We can give it to the Vineyards or whoever who wants to store it. There is nowhere to store it. The deep well injection is the only place that we have that is permitted by the state right now to put water during wet season. That's the only alternative we have. Now ASRs is the future. We are trying. The county is on the forefront of all the county utilities around trying to get ASRs, but we are having a battle, and it's years away. MR. LONGO: Let's go to my next question I asked about the feasibility of looking at three plants instead of five -- MR. WIDES: Dino, can we respond to that one? MR. LONGO: Sure. MR. WIDES: There is a chart a little further down here that we tried to address exactly that question. If I may, I'm saying "Why not one large plant?" Which is basically another way of saying you have two now, why don't you just do one more? Here is a number of things we run into. Dave, if you would. MR. HAGAN: David Hagan. We did look at the fewer number of plants, and we -- we recognized that for one thing, three new plants allowed the reclaimed water that was produced to be near the customers. One of the problems that some communities have, like Tampa, they have one plant, but when they start looking at reclaimed waters, their customers are so far away they have these large transmission lines to get the water back to them. This kind of models the St. Petersburg where they have four plants -- and they are -- they were, like, the first in the state to use reclaimed water. They have four plants, and those four plants are close to where their reclaimed water customers are. So that -- that Page 43 December 5,2001 was one thing that when we looked at these rural fringe areas that it -- it seemed to jump out. We wanted three plants so we could have a plant near OrangeTree that would serve Area A and B and also the OrangeTree area. And then-- and then the one for Area C and another one for Area D. And the one in Area D would also take some of the future customers from the south area-- MR. HOWELL: But all three of those future plants are bringing in flow from the existing water sewer district, because the capacity of the two plants that you have now are going to be exceeded by sometime in 2001 to 2012. That film has to go somewhere. MR. HAGAN: It will be way out beyond the 20-year planning period. MR. HOWELL: As we said these existing plants aren't large enough. Also, the long force mains lead to odor problems. We are down here in Florida where the wastewater temperatures can be 80 and sometimes even 90 degrees during the summer. The long force mains create big odor problems. We are trying to avoid that. If you have wastewater sitting in pipelines a long time, it just leads to odor. So these were some of the considerations that we had to come up with the three plants. We looked at a two additional plant alternative, but it ended up with three, partly for these reasons. MR. WIDES: One more thing here, too, is in terms of that odor control, we are back to a situation where Joe has just experienced just very recently, we are being forced to retrofit our lines right now with scrubbers to, in fact, minimize that odor control even with the runs that we have today. So we are experiencing it right now without even talking about getting into those additional plants. MR. ORI: One thing I wanted to mention, too, that David mentioned as an example, the City of St. Petersburg, the four plant type of scenario. We're doing some work with St. Petersburg, and I Page 44 December 5, 2001 think -- if I'm not mistaken -- every plant has one or at least deep wells -- some have three and there is one DMA plant -- I mean, one or two million flow or 15 -- I don't remember what it is, but they have two to three deep wells. They have the best reclaimed water program in the state, if not the country. But they have deep wells solely for backup, and the permit requires it to have the backup and the alternative disposal. I wanted to mention their are deep wells are there in lieu of. MR. MASTERS: Dino has one more. MR. LONGO: The conversion from AADF flow methodology to MMDF methodology is erroneous in rearriving at a 1.3 peaking factor, since this factor was taken during the flooding events brought on by Tropical Storm Jerry in 1995. The single and nominally event should not be the basis for designing plant capacity. MR. WIDES: Well -- Tom Wides for the record-- Dino, I will lead it off and hand it off to the engineering experts here. First off, I believe as part of your consent order, we were driven to, in fact, look to a peaking factor, look to the maximum month basis of measuring our flows to avoid situations like, in fact, happened in March. Joe, I will turn it over to you and maybe give a little more detail. MR. LONGO: Let me ask, is that a true statement? MR. CHEATHAM: No. The State of Florida mandates the peak factor based on the average flows we see as far as the peak month goes. We look at the peak and the average flows during the peak. It's not based on Hurricane Jerry at all -- or Tropical Storm Jerry. The state has mandated on our permitting that we permit these plants maximum. If you don't design the facilities for max month, you run into the problem that you have in during every season when you have the max flows the plant can't handle the average. You have Page 45 December 5, 2001 to handle the maximum month. MR. LONGO: I understand that. I guess my question would be, was the max month happened to be when Tropical Storm Jerry happened to come through here in 1995.9 MR. CHEATHAM: It's possible. It could have been one of the max months. We look at the max month every year. That 1.3 is pretty much -- MR. HOWELL: I have the data here from '94 through '00, and the -- this is the south plant. It was 1.4, actually, in 1997. And it tracks pretty closely to the 1.3 as an average. But it has been as high as 1.4. MR. ORI: Rob Ori again. Actually, Dino, the seven-year average, it was exactly 1.3, if you really want to know. It ranged from low 1.1 -- the number that I have -- combining the two systems together, north and south, was 1.1 last year. One reason, we had no rain at all, and we had another event of 152 which may have been a high storm event like you are talking. The other years '95 is 120. The next is 131. It seems to be pretty -- that's a three-month continuous. That's not a maximum. That's three month average; that is even lower value. I think it's a pretty reasonable number relative to what we are looking at. MR. MASTERS: Dalas, go ahead. MR. DISNEY: The question that I asked at our subcommittee meeting that hasn't been answered here, maybe you have the information. To date we have talked virtually 100 percent about residential impact fees. Nothing has been said about commercial. What are the commercial impact fees related to this ordinance? MR. WIDES: We do have that information. MR. ORI: I don't think I have the numbers in front of me. I would have to calculate it for you. Why I talk residential impact fee is really the residential fee per ERC, which is the standard residential Page 46 December 5,2001 customer. You are absolutely right. But it is the link to the nonresidential fees. I think in Collier County they base it -- based on meter size. So if you were a one-inch meter, you pay 2 1/2 times that because you have an implied demand of 2.5 times that of the ERC inch meter; that is based on insitaluanious and hydraulic flow dimension divided by the American Water Works Association based on the services; that's how it's done. It's really common. The Florida Service Public Commission utilizes these factors, and a lot of their rates making activities -- that's how it's applied -- how is it applied to the nonresidential? It's based on the size of the meter. MR. DISNEY: In other words, the commercial impact is equally substantial? MR. ORI: Same proportion, that is correct. MR. MASTERS: Go ahead, Peter. MR. VAN ARSDALE: I have a question. Does your-- well, first thing, when you go into a place like, I guess, OrangeTree is one of the places where the new plant is proposed or providing service, isn't there -- or let's say you go into a district or area there is no service, does your cost include all of the infrastructure to provide service, pipes? MR. WIDES: When all the -- when all the main infrastructure is between the plant and any existing plant already. So basically the interconnect, infrastructure -- do we go into every neighborhood? Definitely not. Okay. I think that's a fair statement, Joe. We are providing that main-line infrastructure. We are not going into every possible neighborhood or-- MR. VAN ARSDALE: Who pays for the lines that. Serve the residences? Do you do assessments? MR. WIDES: Exactly. MR. ORI: Or the new development -- Page 47 December 5,2001 MR. WIDES: In many cases if it's new development, the developer may put that in, okay, deed it back to the county after the fact for maintenance purposes, but, in fact, you know the developer will then, in fact, assess his new homeowners or new property owners for that same amount. In addition, if there is existing situations as there are today, when you talked about assessments, in fact, what we have had is areas -- pockets of folks who do not have water or sewer service who have come to the county and said, "We would like to get that service. "In fact, we will form a municipal benefit service area to, in fact, assess those folks for that cost -- MR. VAN ARSDALE: So-- MR. WIDES: -- to bring that sewage plant to them. MR. VAN ARSDALE: I guess the point of my question that I'm trying to understand that if your ERC calculations are -- they recognize or they -- they don't make any adjustments but -- is there a large variation in costs to provide service between the different neighborhoods? For instance, somebody that is building a new home in an area that has all of its mains in place and he has to run 100 feet of pipe to tap into it as opposed to someone who is getting the plant and everything that has to be built new, they are paying the same ERC rate; right? MR. WIDES: Yes, they are. I guess what I would say, first off, I guess -- not guess, what I would say, first off, that person that is running 200 feet or less, they are just not running into that one pipe. They are running into our entire network. They are not just being served by that one pipe and that one plant potentially. They are being served by that entire network as is that other person who may be off farther. They are all being serviced by the network, not by that next incremental ton-- gallon, excuse me. MR. VAN ARSDALE: But just -- do you have an opinion as to Page 48 December 5, 2001 what the differential is in terms of the hard cost to provide cost service based on someone, let's say, that is out in OrangeTree as opposed to one that is a long-established district that needs no capacity? Because we are not a network. I mean, we are just -- it was only this year that we became a network between the north plant and the south plant, so -- MR. WIDES: But the real -- MR. VAN ARSDALE: -- that may be where you are headed, but the impact fee should pay for that and not the people that have already sort of been on and had the service already. MR. WIDES: Well, I guess there is probably a couple of things that I see here. Number 1, if you say that we are not going to network, we may end up with more plants than we are talking about now because they are all -- MR. VAN ARSDALE: I'm not suggesting that. I'm trying to focus on one size fits all ERC. To me they are -- maybe it's not an issue. But should the ERC out in Orangeblossom (sic) be at a higher rate than the ERC in some established neighborhood? MR. WIDES: At that point I'm going to say that established neighborhood is using the network. It's not using just that -- that small facility. That's the whole idea behind getting this network in place so that, in fact, we can optimize the usage of our capacity rather than being overcapacity of one facility and under -- which may have an existing neighborhood, okay, but them being undercapacity or overcapacity in other situation. You want to be able to balance and move it throughout the network. I may be at the way -- south end of the county -- my sewage could end up at the north end. I have to pay for that infrastructure too. MR. MASTERS: The short answer to that question would be basically the amount of infrastructure that requires to service that one Page 49 December 5,2001 unit someplace would be dependent upon the amount of density. If you have one acre someplace, it will cost you much more to service that than it would be if you had 20 units on that same acreage. MR. VAN ARSDALE: It would be the same ERC; right? MR. MASTERS: Right. Go ahead. Tom Peek. MR. PEEK: But the fact is that with impact fees we are only paying for treatment capacity, and we are not paying for local collection system -- local collection fee and plant -- MR. ANDERSON: Treatment plants and major pump stations and major interceptor sewer are the bulk components of the interceptor system but not the local collectors -- MR. VAN ARSDALE: Not the local? MR. ANDERSON: The large pipes. The largest, yes. MR. SAVAGE: Mr. Chairman, I think we have talked enough about this. I would like to ask what is the recommendation of our subcommittee so that we can go ahead and move on. We are not getting any more -- MR. MASTERS: I think Dino has already stated that the recommendation of the subcommittee was a non-recommendation to bring before us now, so we are hearing the same information. And we need to probably make a recommendation based on that. MR. PEEPLES: I know we have talked about a lot of things. I think this is something that we have not yet talked about. I have seen the presentation on the master plans, and I was very happy to hear you say that the impact fees are not based upon everything that we have seen in the master plan; it's only based upon that portion that is attributable to new growth, not to existing facilities. Where is that information? Is that something that is available as to how you go from the master plan to the impact fees themselves? MR. WIDES: Yes. First off, there have been copies of the -- of both studies passed out to the subcommittee, but we also have our Page 50 December 5,2001 rate consultant here. He did have a presentation or discussion he can speak to this afternoon also. You can hear it verbally today. MR. ORI: I did have a presentation. I didn't want to present. I didn't realize you were not here at the last presentation. I apologize for that. It was fairly lengthy how we calculated the fees in general. The rate study was passed out that showed the progression of the capital program, for example. Just give you an example of how I went through. First, we looked at the CIP as it exists, the master plan. We recognize -- that master plan starts, by the way, the fiscal year 2002. Parts of that master plan was completion of projects going on in 2001, for example, would be the 5-MGD extension of the north wastewater treatment plant is an example. We first aggregated all of those costs together and said, "What are they?" Are they transmission? Treatment? Distribution or collection? Do they apply or not apply?" That's what we did first. Then we said those that were treatment and transmission should be recognized through the benefit existing users or future users or both. For example, the flow equalization tanks, the program that David mentioned, that has benefit to existing and future users. We recognize this. We allocated the costs between the two, and then we eventually brought it down in terms of what is the capacity of those units in the future and then arrived at the rate. We did work it down. In the rate study, it's there. But I can give you my card too. If you want to call me and kind of-- it's easier to talk with numbers. I didn't want to spend an hour going through it. I already presented it twice. But, if you like, I can show you. An example of the cost that we did recognize would have been a wastewater treatment plan expansion. A cost that we did not recognize would have been the Goodland -- or the Pelican Bay line upgrades for all the residents. We would not have reflected that. Both of those dollars may have been in the 400 million, but they were Page 51 December 5,2001 not fully recognized in the impact fee. Finally, the last thing we did, if there were cost, upgrades or replacements that were to the assets that had existing capacity to benefit future users, we have to recognize what that current cost is. I had a slough of retirements I estimated also that -- I'm taking this treatment plant out and put a new one in, let's say. There is still excess capacity there -- I backed all of this treatment plant out. I didn't want to double count it. And how I estimated that was by using the 2001 master plans and working backwards, which is a lot higher than the original costs. I tried to do that. It's in there. And if you get a copy and have a question, I can walk you through the process. We can pick one project, and I can take you all the way through it. MR. WIDES: Tom Wides. I do have extra copies today of the impact fee studies, so those are also available today too. MR. VAN ARSDALE: Just a couple of questions. What was the cost of this study? MR. WIDES: If you look at the master plans, the impact fee, and the rate study, I'm putting these altogether in excess of $750, 000. MR. VAN ARSDALE: Do you know offhand what the previous study cost? MR. WIDES: I'm sorry. I really don't know offhand. MR. THAMPI: $500, 000 and it was an update to it, so I would say it was -- MR. VAN ARSDALE: What are you budgeting for the annual review? MR. WIDES: We have not budgeted the annual review yet. That will be done next year. And we will do it at that point in time. I would expect it would not be nearly this expensive because we are really building everything from scratch including on the impact fee and rate study side a modeling program that will actually -- that will Page 52 December 5,2001 not have to be redeveloped, I wouldn't expect -- tweaked, but not redeveloped. Again, how much? It's much too early for us to tell. We are focused on trying to make this happen first before we go forward. MR. LONGO: Has the county attorney's office seen and looked at the master plan and the impact fee schedule? MR. WIDES: Dino, as of this week-- two things; No. 1, we have delivered copies of the master plans and impact fee studies to the county attorney's office. And also when we did the executive summaries for all of the five categories, for the two master plans, for the impact fee studies, for the rate studies, and for the reclaim studies; those all were reviewed by the county attorney's office as part of our normal discussion with the Board of County Commissioners. MR. MASTERS: Before we lose a quorum, I would love to entertain a motion. Is anybody prepared? MR. VAN ARSDALE: Back to-- MR. MASTERS: A lot of these questions I don't know that are relative -- MR. VAN ARSDALE: I don't think so. I would not make a motion -- I mean, like I said earlier, I don't think we have had time to really fairly assess this issue. On the other hand, I think if we just say that that's going to be irrelevant. And one of the things that I think became, at least pretty obvious to me, there is not a lot ofjustification for the 30 percent contingency, particularly in view of the fact that a rate review will be done every year. It's a huge amount of money that is just a shot in the dark. And so, I guess, I think what -- I would like to make a motion that we recommend that the contingency be set at 10 percent, not 30 percent in view of the fact that annual rate reviews, rate studies will be made providing information to then adjust contingencies or projections or costs of living on an annual basis. No sense in voting Page 53 December 5,2001 this thing up front like that. The motion is to reduce the contingency amount to 10 percent instead of 30 percent. MR. MASTERS: Anybody care to second? MR. SAVAGE: If you make it 15, I will second it. MR. MASTERS: It's at 10 right now. MR. PEEPLES: I will second it. MR. MASTERS: Okay. We have a second. Is there any further discussion on the motion? MR. DISNEY: One additional item -- not necessarily to the contingency of 10 percent. The biggest issue has bothered me all along is the push to get it done and implemented. Implementation time is January 1; that's just slightly over two weeks from the board approval. I don't know of another impact fee that has been less than 90 days after board action to give the community enough time to react to this and to get differing fee structures involved in new projects. I would suggest that it's appropriate to have a longer time frame between the board action and the actual implementation. And I would sure love to say that I would love to see it 90 days -- a minimum of 90 days from the board implementation. MR. MASTERS: Let's finish our discussion, and, perhaps, we can revisit the motion. MR. JONES: Putting myself in the shoes of the consultant, if you were projecting this into the future, as difficult as that is and coupling that with a 20 million dollar plant that actually cost 40 and a 25 that actually cost 38, those aren't just off a little bit. You are looking at 100 percent -- I think the problem is there. How would you like to forecast into the future for something that cost double what it's projected to cost? I think therein lies more of the difficulty in trying to set aside for these new plants. MR. VAN ARSDALE: Are you saying that in favor of the 30 Page 54 December 5, 2001 percent contingency? MR. JONES: I'm not -- I'm just making a general comment. I can see where a 30 percent contingency would -- would be proper given those facts. MR. VAN ARSDALE: I think it's more -- becomes more obvious because of the amount of time has lapsed from the past rate study and now. I mean, I think -- you can't -- you shouldn't say that the rate we set in 1997 is going to be sufficient for the next five years, because that -- and by -- so I would say if we were doing-- if we were setting the rate and we weren't going to do another rate study for five years, I would say 30 percent is probably proper. In view of this fact that part of this plan commits to doing a rate study every year and possibly a CPI increase the rates and looking at costs and other costs associated through the regulations and whatnot, that is the time to do your rate increase rather than have -- what happens to the -- let's say they are wrong. Let's say you don't need the 30 percent contingency. It was a huge mistake. How about all the people that had to pay that this year? MR. MASTERS: Right. MR. SAVAGE: And so why do it. MR. LONGO: What Tom is asking -- Tom Wides is asking you to do today is make a recommendation to the board. Now, that's just part of it. Are you asking that we approve the master plan as presented with that caveat? MR. WIDES: Yes. MR. VAN ARSDALE: No, I'm not going to approve it. I think we said we are not going to approve it because we don't have sufficient time. But to be realistic just to say we are going to say anything about it -- I guess what I'm saying is we don't feel we have sufficient time to review the entire plan, which I think is the general consensus. But in view of the fact it's more likely going to get passed Page 55 December 5,2001 next week, we might -- I think it's very realistic to say -- to ask to lower the contingency; that's a big chunk of the rate. MR. MASTERS: Let me go next -- I guess I misunderstood your motion. I was under the impression that the motion was to recommend approval with those caveats. I think that we have to recommend approval or denial; one way or the other. I don't think we can continuously say, "Guys, we want to stick our feet in the mud one more time, "and say, "You didn't give us enough time." We need to make a decision. It is important that as a committee we can get information and act on it. Yes, we may not have had every luxury of a lot of time, but we have had information put before us -- and enough information, I would hope, for us to make a decision one way or the other. I feel strongly we would need to be supportive or nonsupportive of something, but we can't just continually say, "We have not had enough time. We are not going to tell you whether we like it or not." MR. PEEPLES: We are going to red flag the fact that we feel as a group that 30 percent is excessive; that's what we are going to do; that's our service to the board that we are putting a red flag on that issue. MR. SAVAGE: Mr. Chairman, are we going to approve -- I guess I don't-- MR. VAN ARSDALE: Whether we approve it or disapprove it is irrelevant. It's going to pass. So I don't care how we get our recommendation to reduce the contingency in. If it's more palatable to recommend approval and -- but recommend approval with the contingency set at 10 percent -- and modify the motion to give it a 90-day implementation schedule, that will be my motion, I guess. I really don't want to vote to disapprove it and ignore the issue on contingency, because I think that's a very valid point that I would not put the staff in a box -- it's just a guess. It's a wild guess to figure out Page 56 December 5, 2001 how we may be short. If we review rates ever year, we should not -- MR. MASTERS: Would you like to maintain your second on the restated motion then? MR. PEEPLES: I want to be sure that I understand the restated motion. Is the motion to approve this subject to the fact that we are recommending that the contingency be at 10 percent rather than 30 percent and the implementation date be moved back to 90 days -- MR. LONGO: March !st. MR. MASTERS: That's the way that I understand it. MR. PEEPLES: Yes, that's what I thought I was seconding the first time. So, yes, I would like to second it. MR. MASTERS: Okay. Any last discussion on the motion? MR. ESPINAR: Mr. Chairman, I don't know. Would you consider an amendment to your recommendation here? Instead of pigeon-holing and saying 10 percent, can we just red flag the contingency? Because I hate to handcuff these individuals and pigeon hole and say, "It will only be 10 percent" or 20 percent or 30 percent and let the experts, you know, pick what percentage of contingency is appropriate. It's obvious that 30 percent is not going over well here, but I just hate for us to sit there and say, "We are going to recommend approval with only 10 percent." Can we recommend approval contingent upon that the Board of County Commissioners, "Please, investigate this issue a little bit more closely"? Rather than nailing a number down. MR. VAN ARSDALE: MR. ESPINAR: Well, just hate to pick a number. MR. VAN ARSDALE: year to 40 percent. MR. MASTERS: Thirty percent is arbitrary. 10 percent is too. It's 5, it's 10, it's 20. I If 10 percent is wrong, they set it next That makes our point pretty clear. Page 57 December 5,2001 MR. SAVAGE: Mr. Chairman, I would like to ask the parties involved, what do you think of the 10 percent rather than 30? What is your feeling about it? MR. WIDES: My feeling after being through this for the last approximately 6 months, I felt the 30 percent was reasonable. Okay. I think at this point in time to -- to, in fact, reduce the number to 10 or 15 because it is more palatable -- if that is the reason, if that is the reason -- I don't think that's a good basis to make that suggestion of 10 percent. MR. VAN ARSDALE: What is the basis of 30 percent; for one year? MR. WIDES: For one year. MR. MASTERS: I think we have already heard that. MR. WIDES: I cannot say it was for one year. We are looking at planning a horizon here. We are not looking at one year. We are looking out over a horizon. If you say one year, I will say, "Absolutely it's too high." If you tell me you are planning a horizon -- you have heard from our folks. And as you said, the best experts that we have here, that, in fact, over that horizon, 30 percent is not an unreasonable number. MR. SAVAGE: I call the question. MR. MASTERS: With that being said, all of those in favor of the motion aye. All in favor of the motion. MEMBERS: (Partial response.) MR. MASTERS: Those opposed. MEMBERS: (Partial response.) MR. MASTERS: Can I see a show of hands, please? COURT REPORTER: You need them to state their names. MR. MASTERS: All in favor again. Okay. COURT REPORTER: I need names, please. MR. MASTERS: Oh, okay. We have David Correa in favor, Page 58 December 5, 2001 Peter VanArsdale in favor, Tom Peek in favor, Perry Peeples in favor, Brian Jones in favor, Tom Masters in favor. All those opposed. MR. SAVAGE: Savage. MR. MASTERS: Dino Longo, Dalas Disney, Marco Espinar. Motion carries. MR. SAVAGE: Mr. Chairman. MR. MASTERS: Yes, sir. MR. SAVAGE: Why even have a subcommittee? Why even have them? MR. MASTERS: Most of the time it works. Okay. MR. DISNEY: Just a final comment. The thing that really, I guess, bugs me about this whole process with this particular issue is that we were brought an issue last month at this meeting, given a lengthy presentation and very little data, very little data to take away with us. We spent numerous hours at a subcommittee meeting reviewing additional data. I have a pile of paper that is eight inches high that I have been trying to wade through. We were told it was not a first reading, but it ended up being a first reading at the Board of County Commission's meeting. And we have simply wasted a tremendous amount of time. I put a lot of effort into this, and I could have just sat back and coasted, and it all would have happened just the same. I just feel like we were -- this whole process has been a horrible railroad. I just wanted to get that on the record. MR. CORREA: Mr. Chairman, I would like to make a statement. I have a concern what will this do to the affordable housing market in this area, and how will people who are in fixed incomes and lower incomes, how can they afford to move into this community? MR. MASTERS: I don't know that anybody here can answer that. Page 59 December 5, 2001 MR. VAN ARSDALE: It will be tough. MR. DUNNUCK: I will take a quick stab at that. For the record, John Dunnuck. We recognize that impact fees are escalating. We have another six impact fees that we are going to RFP on, as a matter of fact, in a couple of weeks, you know, to update. One of the issues that we have going on is an affordable housing issue by our county commission to take a look at these type of issues and where we can discount impact fees for affordable housing. MR. LONGO: Sir, I thought that was illegal. I thought you could not discount or waive impact fees. MR. DUNNUCK: You can defer. They are looking at deferrals, which basically pay back over time, ways of making it a little bit more palatable. That is an issue that is being headed up by one of your county commissioners. They are looking into that issue. They will probably have a report. It's probably not going to be for another year realistically. If you would like to get in contact with that committee or at this point you would like to express their concern over it, certainly we will pass that along to them. MR. CORREA: This will be my last appointment. My appointment is up as of this month. I won't be back. I will get in touch with the commission and ask them that very same question. I said, "What is going on for the affordable housing market?" I feel something should be done. MR. THAMPI: You are delegators. Why didn't you delegate $400, 000 more instead of a quarter of a million in cost? MR. WIDES: Mohan. MR. LONGO: Let me respond to that, okay. Number 1, the impact fees that you are proposing here does not affect us as developers. We don't pay that. When you go to buy your new home, it affects you. Okay. Today you add $3,000 extra on a Page 60 December 5,2001 house, you put 300 people out of a home in Naples. MR. THAMPI: Why don't you build more $100, 000 homes? MR. LONGO: It's supply and demand. We provide a service. MR. THAMPI: Yeah, it's supply and demand. MR. WIDES: Mohan - MR. MASTERS: We are not going to solve that problem today. Peter, do you have something? MR. VAN ARSDALE: I would just like to, if we could, address Dalas's issue. I would also like a motion that the chairman of the DSAC write a letter to the county commission advising them of our concerns about the process, the review process, and the scheduling of the review process, and that by April 1 st of 2002 that the commission establish a formal timeline, rate review process for impact fees so that we can know of-- you know, give us something to follow so we can know if we even need to waste our time coming out here. I think we need -- MR. SAVAGE: I second it. MR. VAN ARSDALE: That makes sense. MR. MASTERS: We have a motion and a second. John, is there anything -- there is something now that establishes the correct procedures of bringing something through the subcommittee and committee? MR. DUNNUCK: I believe the ordinance does not get into the level of procedurally how much time you need to be given for a certain thing-- MR. VAN ARSDALE: We need to direct. Do they want us to review it? MR. DUNNUCK: -- but what I will take, you know, at the very least is direction. You know, I think that's probably a good idea on your behalf to send that letter. What I will take is that direction, though, on my behalf to develop something for you-all to take and Page 61 December 5, 2001 review so that when we come through with this next rate schedule -- beforehand within the next month or so, I will provide you what I think the timeline should be for review and get your feedback. MR. VAN ARSDALE: Once a rate study has been completed, what is the review process? MR. MASTERS: We have a motion and second. Any further discussion? MR. DISNEY: Just a additional comment in relation to this whole thing. To further support my disappointment, the e-mail that I sent to all the commissioners about this, I got responses from two of them. One of the commissioners just referred it on and essentially blew it off. The second one responded back with a very short kind note telling me that he was told emphatically that this committee had reviewed this ordinance prior to the first reading. Of course, I responded to him, no, that wasn't the case. We were still in the process and receiving additional information. So somehow through some process the commissioners have been led to believe that this committee already reviewed and evidently passed off on this particular ordinance. MR. WIDES: May I respond to that also? COURT REPORTER: We need to stop. I am out of paper. MR. MASTERS: Everybody just hold up. (A short break was held.) MR. MASTERS: We are back in business. I would like to call the previous motion to a vote. All in favor? (Unanimous response.) MR. MASTERS: Any opposed? (No response.) MR. MASTERS: Peter, I will be looking for your assistance on this letter as well. Okay. I would like to go ahead and table the annual report issue on Page 62 December 5, 2001 MR. LONGO: board -- MR. PERICO: MR. LONGO: here. I don't believe any of the subcommittees have met since our previous -- MR. LONGO: On construction code. I have two. MR. MASTERS: Yes. MR. LONGO: I have a question for Ed Perico. Are you going before the board next Tuesday with your enacting or putting into ordinance? MR. PERICO: No. MR. LONGO: So legally January 1 st we cannot enact the building code, the new building code. MR. PERICO: It does not have to be by the board. MR. LONGO: I thought the statute require that we enact the ordinance that allows us to enact the building code? MR. PERICO: Not the code. The code is mandated. It does not have to be approved by the board. MR. MASTERS: Let me jump in here. David Ellis had mentioned to me that the house voted today to delay the implementation-- not the 60-day delay -- I don't know if this makes sense. MR. LONGO: Delay implemented-- MR. MASTERS: The Senate voted to delay implementation. Apparently, the House voted today to even delay it longer than that. It's going to go back to the Senate, and they could ignore that, stick with 60 days or whatever. I guess my next question is, do we have a Yes, they have been done for months. Part of that statute was to form this advisory committee, and we decided we are going to do this with the Board of Adjustments and Appeals. MR. PERICO: Appeals. Page 63 December 5,2001 MR. LONGO: Is that legally covered? I mean, can we do that? MR. PERICO: That's what I was told by the commission. MR. LONGO: And FEMA is gone. John, do you know if anything is going on with FEMA and where we are? MR. DUNNUCK: No, I don't have the latest update. The last I knew we were dealing with finalized documents. You know, we had some good areas in the challenge that we had kept finding as far as -- there were definitely some gaps in their material, and we were in process of channeling that. And it was -- Bob Devlin has been working with that one. And I will get a report, and I will send out an interim letter. MR. LONGO: The last report I got was we were kind of being stonewalled by FEMA as far as getting reports back or information back. They wanted to charge us, like, $18, 000 for the whole study, when we don't need the whole study. We directed Thomas Sealey to go back and just ask for those parts of the study that he needed. I think he physically had to go up there and wait and say, "I want this page. I want this page. I want that page" so we could get our cost done on it to, No. 1, just disseminate the information that we needed. Hopefully, John can get that back to us soon via e-mail or, whatever, fax. We are getting very close to our 90-day appeal period coming to an end. MR. MASTERS: Thank you. With that we will quickly move on to any member comments. I know Marco said-- MR. ESPINAR: Yeah, I have got some comments. I will be brief. I know everybody wants to go home. About a week and a half ago I was watching TV. I was kind of bored changing channels, and I started looking at the planning commission. I know I need a life. But what caught my attention, the planning commission, there was a little heated debate, and the chairperson was really disturbed. What Page 64 December 5, 2001 they were disturbed about was sort of a misleading -- staff misleading the board. Okay. It caught my attention, so I investigated a little bit further. What I found was this board -- first of all, the subcommittee land -- the land development subcommittee looked at the beach events and vehicle-on-the-beach issue. And we voted to recommend denial. This board looked at that issue. Okay. And voted 4, 2, 2. Okay. Four for denial. Two for approval, and two individuals abstained. Okay. And if you look in the minutes on page 11, there they are. It is clearly stated there. What staff submitted to the planning commission on the first go- around was DSAC recommends approval. Staff had ample time to defend -- hey, I'm Mr. Typo. I have made a lot of typos in my life. They had ample opportunity to verbally convey that that might have been a typo. They never did. It was not until a third party, who was The Conservancy, stood up and said, "Excuse me. We were there, and that is not what happened." They changed it for the second go- around. Okay. The second go-around says, "No recommendation based on 4-2 vote with two abstentions. This is what I caught on TV where the chairperson goes, "Wait a minute. How can you have a four, two, two with no recommendation?" You know, that's -- that doesn't happen. I could understand that there was no formal motion done because it was no quorum; that's what you state. You state "No formal motion due to lack of quorum." But you don't sit there and mislead a board. Now, I'm not talking the issue about beach events. That's irrelevant. It's the bigger issue of any vote opinion or comment from this or any other committee or subcommittee being misrepresented to another board. And this is where I told Dalas just a second ago. I'm going to tie this in with his. Where the Board of County Commissioner's was here -- misled to believe that we had already looked at this. I mean, it's just coincidence that I tied it in Page 65 December 5,2001 with that. I'm sorry, gentlemen, but I have a serious issue that I find is disturbing. I'm sorry. Like I said, I'm not here to discuss the issue. I'm here to discuss the fact that this is misleading. MR. MASTERS: Thanks for bringing that to our attention. Anybody else have anything that they would like to add? With that do I entertain a motion. MR. PEEPLES: I make a motion to adjourn. MR. PEEK: Second. MR. MASTERS: All in favor. (Unanimous response.) MR. MASTERS: Any opposed? (No response.) MR. MASTERS: Thank you. There being no further business for the good of the County, the meeting was adjourned by order of the Chair at 5:45 p.m. DEVELOPMENT SERVICES ADVISORY COMMITTEE THOMAS MASTERS, P.E., CHAIRMAN TRANSCRIPT PREPARED ON BEHALF OF DONOVAN COURT REPORTING, INC., BY EMILY C. UNDERWOOD, RPR Page 66