MINUTES OF MEETING
CORAL SPRINGS IMPROVEMENT DISTRICT
The regular meeting of the Board of
Supervisors of the Coral Springs Improvement District was held Monday, April
21, 2003 at 4:00 P.M. in the District Office, 10300 N. W. 11 Manor, Coral
Springs, Florida.
Present and constituting a quorum
were:
Robert D. Fennell President
William Eissler Secretary
Karl Miller Vice
President
Also present were:
Gary L. Moyer Manager
Dennis Lyles Attorney
Donna Holiday Recording
Secretary
John McKune Gee
& Jenson
Roger Moore Engineer
Rich Hans District
Staff
Bill Joyce District
Staff
Mr. Fennell called the meeting to
order at 4:00 p.m. and Mr. Moyer called the roll.
Mr. Moyer stated the bid tabulation
is included in your agenda package and as you can see we received a very strong
response. The low bid was submitted by
Florida Fish Farms, Inc. in the amount of $11,224.00.
Mr. Miller stated we have dealt with
them before.
Mr. Moyer responded that is correct.
Mr. Fennell asked what is going on
with the proposed bill?
Mr. Miller stated I looked on the
internet site and it said that the proposed bill was taken off the calendar as
of March 5.
Mr. Lyles stated I believe another
bill has been substituted. It has been
amended, not in terms of our particular issues but I understand the current
bill that has been referred to four committees has an addition to include
Nassau County in the Florida Inland Navigation District. I don’t know why or where that came from. The Senate has done a staff analysis that has
been posted on the internet and has different conclusions than what has been
discussed in the past in that the bill as proposed would not affect this
District or North Springs. It would
affect four other Districts in Broward County but not these two because we are
not originally 298 Water Control Districts, we are improvement districts. I don’t have the latest from our lobbyist, Mr.
Book. There was some objection from
other Districts and landowners in Broward County about this bill possibly
affecting them and I believe in an attempt to compromise with those entities,
the bill was to be revised to include a population threshold so it would only
affect Districts in a county of 1.5 million population that have a population
within the District of 5,000. Then it
was proposed to be increased to 10,000 but to my knowledge that amendment is
not in the bill yet. There were
objections from people who are involved in Districts in Palm Beach County on
the basis that Palm Beach County will soon reach 1.5 million in population and
therefore, some Districts there might be affected in their opinion negatively
by this legislation. As a compromise,
the bill was supposed to be amended to include a sunset provision which will
cause the bill to automatically cease to exist as of the end of 2004. The only election it would ever affect would
be November 2004 in Broward County and then it would sunset and be of no
effect. That apparently appeased the
people in Palm Beach County but I am told the bill in its present form does not
have a sunset provision in it.
Our proposal to amend 189 generally
to allow boards in urbanized districts to voluntarily convert to that electoral
system that we put in our correspondence to Representative Ritter, has not been
taken up.
Mr. Miller asked when does the
session end?
Mr. Lyles responded two weeks.
Mr. Miller asked what is the
likelihood of this getting through?
Mr. Lyles responded I think the
priority is low. I don’t know how hard one or more legislators will
push to get this through.
Mr. Moyer asked if they sunset the
bill at the end of 2004, when our election rolls around in 2008 what happens?
Mr. Lyles responded we could
continue to be covered by that language that sets up how we run our District
elections but we haven’t seen the language because it hasn’t been inserted into the draft bill.
Mr. Fennell stated we have an
election coming up in June.
Mr. Moyer stated one of the things
we talked about last month was to do a newsletter and advise about the election
and further about the election conversion.
When we started to talk about what was going into the newsletter, there
wasn’t
enough specificity to do the newsletter to say, here is what is going to happen
in terms of the general election format versus a landowners format. My intent is to get the newsletter out as
near as we can after May 2, when we know one way or the other if we will be a
general election format in 2004 or not.
Mr. Fennell stated we need to
announce the election and it is only proper that we do it in the newsletter to
make it as widely known as we can.
Mr. Miller asked is it unheard of to
extend the session if they are unable to get things resolved?
Mr. Lyles stated they would not
extend the session for issues like this.
It would be for something like a budget problem.
FOURTH ORDER OF BUSINESS Consideration of Request for Increase in
Engineering Fee Schedule
Mr. Moyer stated Mr. McKune prepared
a spreadsheet which he is distributing and I prepared one with a little bit
different focus.
Mr. McKune stated my spreadsheet
represents Gee & Jenson rates before and after the fact compared to six
other engineering firms. There are two
groups of numbers and the upper number is based on an actual invoice that we
previously sent to the District in the amount of $4,026.00 as you can see in
the first column. The second grouping of
numbers on the bottom is a larger invoice with a different spread of
categories; that actual invoice amounted to $12,024.50. The spreadsheet applies the hours invoiced to
the various engineering firms based on their existing rates and our proposed
rates. The shaded columns represent the
rates we proposed last month. The entire
array of numbers going across to the right is ranked from low to high. If you look at the upper invoice grouping you
will see that we are close to the lowest and are the second low of all of those
firms. Looking at the bottom array of
numbers you will see that we are in the middle of the six. That basically is the direct comparison that
you will see going forward if you were to approve our rate increase.
Mr. Eissler stated this amounts to
an 18% increase. Would this be
retroactive in any way?
Mr. McKune responded no.
Mr. Eissler stated in talking with
engineering firms I am familiar with, based on hourly charges, you are probably
not the highest but you are right up there with the leaders at the new
rates. That is not bad or good, but just
what I found. Is an 18% increase
immediately warranted?
Mr. McKune responded I don’t want to belabor the point of percent
increases but we get into this discussion sometimes with the public when we are
dealing with water and sewer rate increases and the people love to look at a
percentage and complain that it may be 6% to 8% per year when in fact it
relates to $5.00 per month on their water and sewer bill. They don’t care to see it that way but will gladly
write a check for $300.00 to FP&L and know they have to pay a fuel
surcharge. There is always this
dichotomy between one perspective versus another depending on the subject. You are right, it is an 18% increase but that
is just the way the numbers work out. It
actually covers a long period of time.
It is for a six year period from one fixed rate to another.
Mr. Eissler asked was the last rate
increase six years ago?
Mr. McKune responded three years
from today and it is proposed for three years going forward. The rates charged to the District three years
ago were lower and continue to be lower than the rates we quote to others because
we give you the economies of the lack of several overhead expenses such as
business development and that type of thing that we don’t have.
We enjoy a very good, continuing relationship. That is reflected on the chart.
Mr. Eissler asked do you know the
number of hours you bill the District each month?
Mr. McKune responded it could be up
to 200 hours.
Mr. Eissler stated that puts it in a
different light. We are not talking
2,080 hours per year we are talking about 200 hours per month.
Mr. Fennell stated we have two different
engineering groups.
Mr. Moyer stated what Mr. Moore does
on the Severn Trent side is more or less engineering overview and coordination
with Gee & Jenson and working with Bill Joyce and other on-site personnel
as it relates to primarily operation and maintenance problems. Gee & Jenson’s primary focus is on construction and
design. Ours is on operation and
maintenance. Mr. Moore does get involved
because at some point design becomes operation and maintenance. He does get involved in overseeing the design
process and somewhat on the construction side as well. His primary focus is on O & M.
Mr. Eissler stated this will be
reflected on work authorizations in the future?
Mr. McKune responded that will
reflect on labor in the future, whether it be on new capital programs or
continued work they are doing now.
Mr. Miller asked do you recall the
percentage of the last increase?
Mr. McKune responded no.
Mr. Moyer stated I don’t think it was 18% but more in the order of
6%.
Mr. McKune stated it would have been
up to a point in time that would have taken us to a non-loss position at that
time. That is the interesting part about
rates. We first give you what is called
a discount on the hourly rates that we normally charge and try to make it
appropriate to that period of time.
Those rates remain in effect one, two or as in this case three years,
and it is adequate to make a fair profit initially and for the next two years
we earn less and less until we are told by our comptroller that it is time to
increase the rates because we are losing money.
Mr. Eissler asked are you losing
money on this project?
Mr. McKune responded no. When we improve the rates from our
perspective to a “make us whole” position, we then start to earn less in the future so the next
time we get an increase, we catch up. We
are always in a net loss position. This
proposal will carry us forward three years so we don’t lose for the remainder of the time. It is designed to carry forward. Previous rates were designed to be in effect
for one year but they lasted much longer than that.
Mr. Miller stated inflation is
currently less than 3%. Is there any way
to phase this in rather than 18% all at once?
Mr. Fennell stated I get a
publication on salaries of engineers and the amazing thing is that the salary
of engineering has been at the cost of living for the last thirty years. Basically an engineer is earning the same
today as he was thirty years ago just adjusted for the cost of inflation. That I can see as legitimate. My feeling is cost of living increase is fine
and anything above that is too much.
Mr. McKune stated I totally
disagree. The cost of living does not
represent all the costs to the company, such as medical insurance and workers
comp. My cost of living is what goes
into my paycheck. I don’t get these rates but there are increases in
the engineer.
Mr. Eissler stated I have no
objection of paying a fair price for work done and there is no crime in making
money. I would rather phase it in over a
period of time rather than get hit with that big of an increase at once.
Mr. McKune stated let me look at the
cost increases per year starting the last time the rates were increased which
was three years ago. Look at the ensuing
three years to bring us to the current time and take that as a given, whatever
it is, based on what I can pull out of our archives of actual cost increases
and beyond that forecast one year into the future and let that be the basis.
Mr. Miller asked wouldn’t the increase three years ago been done to
compensate for the projected additional expenses over that time?
Mr. McKune responded no.
Mr. Moyer stated I think Mr. McKune’s approach is getting closer to where I think
it is reasonable and that is go ahead and look at what we did three years ago
and verify that in fact it was to bring them to what the level of services was
costing three years ago and if the CPI was 2 1/2% or 2% each year, look at
those adjustments so that will bring you to a base rate today and then going
forward we will adjust based upon an index and let him come back annually and
submit a letter to the Board and say, we desire to adjust according to an
index.
Mr. McKune stated I would be willing to look
at an index but I submit that the index may or may not be reflective of the
costs we have to pay.
Mr. Fennell asked what are the
consequences of doing nothing?
Mr. McKune responded obviously we
continue working under the old rate schedule.
Mr. Eissler stated I don’t think that is realistic. If these rates were put in place three years
ago, I can see a justification for a rate increase. My problem is 18% at one time is a little
hard to take.
Mr. Fennell stated I suggest a cost
of living increase for the past three years which would be fair and then
negotiate on a yearly basis going forward.
It can be based on the cost of living or on the averages in the chart.
Mr. Miller stated the problem that I
have in dealing with averages is that it is easy to get out of context without
knowing how many hours will be billed in a particular year by each category and
we only have a chart with four out of a dozen categories. It is easy to get the numbers skewed.
Mr. Moyer responded based on the
information submitted by all these engineers, we could go back and do all of
the categories that Gee & Jenson has in their proposal and give you a
similar chart. I picked the four that I
thought would be most indicative of what we would use except I didn’t go on the design side, but I can do
that.
Mr. Fennell stated the other side of
this is that he is guaranteeing rates three years in advance.
Mr. Eissler asked is three years a
normal practice in this business?
Mr. Moyer responded no, the common
practice is that the engineer reserves the right to come back every year and
ask for an increase based upon some index.
Mr. Eissler stated I don’t see anything wrong with that. I think that is reasonable.
Mr. McKune stated if you will look
at the 3% per year logic, you have 3% for the last three years which is 9%,
give us 3% for the upcoming year and that is 12% and that will allow us 12% out
of the 18% and next year we come back for the other 3%.
Mr. Fennell stated the only real
basis we have are the average rates.
Mr. Eissler stated I like the
proposal that we go back three years and give them a cost of living increase
over the past three years and wait a year.
Mr. Miller stated after we verify
the fact that that was done.
Mr. Eissler stated according to all
of these numbers, they are at the low end.
Mr. McKune stated you realize if we
drop back from the 18% to some lower number, we end up being much lower in the
chart because the proposed rates reflect the 18%.
Mr. Fennell asked what other
information do we need to make a decision or do we have it all now?
Mr. Eissler responded I think it is
here. We can propose a given percentage
and put it in effect for one year and review it at the end of one year. Are the numbers from other engineering firms
accurate?
Mr. Moyer responded yes, these are
current and are actual proposals submitted to Districts within the last year.
Mr. Eissler stated I propose a 10%
increase and review it at the end of one year.
In the interim you can get all the data you require. At 10% it puts them in competition with other
firms.
Mr. Miller stated it is
difficult. Obviously we don’t have access to their financial
records. We don’t know how well they are doing. There is an arrangement between Gee &
Jenson and the District that has gone on for a long time that is a factor. I think we need to look at our notes from the
last time they had an increase and if in fact they were playing catch-up then,
maybe something in the area of 8% of 9% to bring things up to date would work.
Mr. Eissler asked do you want to
delay it?
Mr. Fennell stated I think the
information is here and it is a question of opinion at this point. You have put forward a proposal of 10% and
review it in one year and I will go along with that.
Mr. Miller asked are we assuming
inflation at what percent?
Mr. Fennell stated I’m looking at the average rates and where it
would put them and it puts them in the ballpark.
On MOTION by Mr. Eissler seconded by Mr. Fennell
with all in favor an increase of 10% was given to Gee & Jenson to be
reviewed at the end of one year.
2. Update on Construction
Mr. Fennell asked that a proxy form
be provided to the Supervisors.
William Eissler Robert D.
Fennell
Secretary President