The Duncan Banner

Opinion

March 3, 2013

More city questions, answers

DUNCAN — A conversation about Duncan with City Manager Jim Frieda, prompted by a recent series of stories in The Banner, continues today.

  Question: How much money does the city have in its reserve fund?  Is there a benchmark you seek or a goal you maintain? What triggers its use?

  Frieda: We have $1.68 million in unrestricted funds. Our current focus is to reduce unfunded liabilities and debt. Not being able to meet our monthly bills, not being able to meet billing for our wholesale electricity, having a catastrophic failure in our electric services or facing a need for immediate monies would trigger its use.  

  Question:  Are revenues for city utilities considered profit?

  Frieda: The City/Duncan Public Utilities Authority (DPUA) has to satisfy all the same expenses as investor-owned utilities (labor costs, equipment, materials etc.). Net revenues, however, are not paid to investors. They are returned to citizens who purchase water and electricity, supporting fire and police departments, animal control, street repairs, water line breaks, city lakes, airport improvements, parks, cemetery, swimming pool and all the things that make Duncan a great place to live.

  Question: Are you pleased with the Honeywell project? Is the more accurate reading affecting city revenue? What is the payout date?

  Frieda: Meter accuracy has improved. The project has increased revenues. In the long run, utility billing will be enhanced and the process to identify meters that are functioning properly will be simplified. A memo I wrote in February 2012 said, in part: “The project has been a painful process. It has required many painful and sometimes contentious (steps)…to acquire the product desired in a manner and time represented in the contract documents. The city has been reluctant to release funds because various portions of the contract were behind schedule. It appears…Honeywell was motivated by our refusal to release funds, rather than a desire to please customers.”

  More than a year after the contract completion, the City remains in a situation where readings are received, on the average, at a 97 percent rate for use in the billing cycle. That means additional manual input is necessary. As a result, negotiations to improve the warranty and the product continue.

  The payout date is Sept. 15, 2030.

  Question: Would you like the city to have more input in directing how revenue generated from the earmarked half-cent economic development tax is distributed?

  Frieda: This is a difficult and sensitive question. Let me be clear. My answer is mine alone and does not infer a council opinion.  DAEDF has a dedicated, professional staff that works diligently to draw business here. Its board members have a myriad of talents and unquestionable business experience. But we must remember, the tax may only be collected by the municipal government with revenues transferred to the Economic Development Trust Authority. A contract between DAEDF and the Trust allows the Foundation to use those revenues for economic development. The fund contains in excess of $9 million. All of the funds are secured by interest bearing investments.

  It is fair to say the Foundation, because of the contract, is concerned with industrialization only.  That said, I would like to see the city have input in directing how the half-cent is utilized.  We have a good relationship and that’s important. I would, however, like to see the city have a greater impact on the process.

  Question:  Streets have been a major Duncan problem for decades. What happens should the proposed May general obligation bond election fail?

  Frieda: Our staff has been diligent in putting together a plan for street improvements. It is a good plan. I have been open about the size of our existing debt -- $54,846,543.94 – and the fact we spend $6 million a year for debt service. It has been my goal to reduce debt. But to borrow more money to repair streets while paying off the $10 million we borrowed (in 2007 for street repairs) is just bad business. If the bond fails, I will try to direct additional capital improvement funds to street maintenance. Doing that, of course, means using funds earmarked for other projects.

  Question: Are you pleased with changes made to better manage city investments and funds?

  Frieda: Yes. I am pleased the Mayor and Council participated in making changes. They were done in open session and insure an active role of the Mayor when the investment committee meets. They approved the investment policy as it relates to the type of investments the City can make. The City also changed the type of contract it had with its investment advisor to allow the City to take a more active role in decisions. It allows the staff and Mayor to exercise discretion in the process. I just felt the City did not have sufficient control of investments. The contract with our advisor needed some modifications with the City approving the contract modifications and the Mayor signing for the City.

  NEXT WEEK: Leisure time activities are the subject.

 

edarling@duncanbanner.com

580-255-5354, Ext. 130

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