CITY OF ROCKY RIVER

FEBRUARY 5, 2007

The Committee-of-the-Whole was called to order by Mr. Hagan, President of Council, at 8:30 p.m.

Council Members Present: Mr. Gollinger, Mr. Moran, Mr. Hunt, Mrs. Bartolozzi,

Mr. Long, Mr. Hagan

Absent: Mr. Hurtuk

Administration: Mr. Linden

Law Director: Mr. Bemer

Press: Mrs. Mackenzie, Mr. Saylor

UNFINISHED BUSINESS:

Ordinance No. 5-07: Mr. Hagan noted that this ordinance deals with bids for the emergency repair of storm and sanitary sewers and was read for the first time two weeks ago. He turned to Mr. Linden for further details. The Safety-Service Director explained that when bids were initially opened, one bidder appeared to be lower on some items. However, in examining records of past repairs needed, it was noted that in that first bid, additional unspecified costs could be levied in these situations. This was not the case with the second bidder, Fabrizi, so it was decided that the bid should be awarded to Fabrizi. Mr. Linden explained to the first bidder that the City cannot commit to charges which are unspecified.

Ordinance No. 6-07: This ordinance would authorize the rezoning of a property on Forestview to Local Business which would enable Dollar Bank to use the property for parking and other purposes. Mr. Gollinger noted that it was read for the first time at the last meeting and referred to the Planning Commission. He said that he has had dialogue with the Building Commissioner about possible satisfactory solutions, but he will wait to hear the opinion of the Planning Commission. Property owners in the area have been notified.

MISCELLANEOUS BUSINESS:

Proposed Right-of-Way Legislation: Mr. Bemer indicated that, after discussing this with the Mayor, it was decided to share this proposed legislation with Mr. Mackay, the City's Consulting Engineer for his opinion. The Building Commissioner and the Economic and Community Development Director will also be consulted as to whether it is appropriate to provide restrictions on above-ground constructions with a potential safety impact on traffic or pedestrians. He asked that discussion be deferred until reports are received on how to provide the control needed over situations so that Bonnie Bank does not recur.

Mr. Hagan asked if restrictions are placed, whether the installation on Bonnie Bank would be grandfathered or could be prohibited.

• •Mr. Bemer responded that it could not be prohibited now because it would be ex post facto law. However, modifying the buildout would still be open to negotiation.

Mr. Hagan confirmed that this will be brought back to Council in a timely fashion.

Mr. Bemer recommended that the proposed legislation be reviewed by Mr. Gollinger's Planning, Zoning and Economic Development Committee. He noted that Cleveland Heights is deliberating along with other communities. This proposed chapter has PUCO designations so there is no unnecessary redundancy.

• •Mr. Gollinger commented that he will schedule a meeting as soon as he has a time frame on the legislation. He would like to do this as quickly as possible so that the City can protect the right-of-way.
• •Mr. Bemer expressed hope that Mr. Mackay can review the proposed legislation in the next two weeks.

Mrs. Bartolozzi recommended an article in the November/December issue of Ohio Cities and Villages entitled "Effectively regulating Cable and Video Programming Services as Technologies and Regulatory Environments Evolve". She found the article very interesting as it discussed the best and most effective way to control the situation. Mr. Long agreed, saying that it provided good background material to update his understanding of the problem.

Commuter Rail Resolution: Mr. Bemer noted that a January 31 e-mail from Ken Prendergast reaffirmed that no financial obligation would attach to the passing of the sample resolution. A meeting has been scheduled downtown for February 23 at 1:00 p.m. to address the entire project. The resolution has already been passed in Cleveland and Lakewood. Mr. Bemer mentioned that Mr. Prendergast, an advocate of participation in an exploratory study, is available for questions or dialogue.

Mr. Hagan asked if Council would like the resolution formally presented so that discussion can proceed and a vote can be taken.

Mr. Gollinger noted that there has been dialogue, and he agrees with comments that the commuter rail plan does not seem to benefit Rocky River, so it makes sense not to expend funds. Further, comments from his constituents has been negative. The City lacks space for parking and other resources to benefit the depot area. Current spaces would be taken by commuters, leaving fewer for shoppers. For him to favor pursuit of the topic, he would have to hear from residents that they are in favor of it. He does, however, favor moving forward so that Council can make a decision.

Mr. Bemer commented that the project is intended to spur development. At this point, no city has residential, retail or parking space. Part of the project cost is to provide information on development to make rail and depots viable. What is being proposed is keeping an open mind to exploratory studies to see whether or not this is viable for communities on a regional basis. For Rocky River, however, a serious issue is what it might do to the Quiet Zone.

Mr. Gollinger asserted that only Council determines issues tied to land use. This is not a city prone to new development. There are developers looking for opportunities, but the City is built out. Mr. Gollinger said that Council needs to look at serving the needs of the constituents.

Mr. Long wondered if the commuter rail traffic would pass through Rocky River without stopping if this Council votes no on this measure.

• •Mr. Bemer observed that this would be a reasonable assumption, but could not say yes or no.

Mr. Hagan noted that this resolution was to see if funding for a study is available. He suggested that the resolution be brought to the agenda, and asked the Sun and West Life to publicize the issue to let residents know that it will be before Council for discussion.

Mrs. Bartolozzi said that she did not have a problem obtaining more information or evaluations. Her most pressing concern is that the City not be placed in the position of working against itself with the Quiet Zone.

Mr. Hagan observed that if they are successful, the rail will come through Rocky River. Whether there will be economic benefit is not sure. He would, however, like to begin the process of consideration to see where it leads and asked the Law Director to present the resolution.

Mr. Moran suggested that during the investigative process, our City's needs and concerns for the Quiet Zone can be brought forward to the group.

Mr. Hunt acknowledged that he has received a handful of phone calls concerning this issue, and an e-mail from Nicholas Miller who was concerned about the increase of traffic and how it would impact the Quiet Zone.

COMMITTEE REPORTS: NONE

NEW BUSINESS:

Mr. Gollinger expressed concern about the right-of-way legislation. The news media has published dialogue between AT&T and neighboring suburbs. In our City, moving forward with this may require the use of outside legal services. In the budget process this year, $75,000 received under the agreement with Cox Cable was set aside for playground equipment in the City Hall park. He asked if there was any sentiment for deferring the replacement of the equipment to see if the funds are needed to engage legal counsel to represent the City's interests pertaining to the AT&T

project. Historically, these funds are used for playground equipment, but there is no rule which says this must be done, and he suggested holding the project in abeyance in case the funds should be needed.

Mr. Bemer indicated that he will address this issue with Mr. Thomas.

Mrs. Bartolozzi questioned using funds from Cox which are typically turned back into the community, for legal expenses to fight direct competition with cable for the community's entertainment dollar. She said she would have a problem taking money from Cox to fight AT&T.

Mr. Gollinger said this is an issue of community improvement, an issue which has had an impact on residents. He was looking for uncommitted funds in case outside counsel should be needed.

Mrs. Bartolozzi said that she had no problem with outside counsel if it should be necessary to move forward, but it may be possible to structure the right-of-way legislation so that this does not become an issue, and outside counsel is not necessary.

Mr. Hagan said that Mr. Thomas will be consulted to see if funds are available for outside counsel if those services are necessary.

Mrs. Bartolozzi asked if Council is ready, following the presentation by Mr. Nielson of the Cleveland Water Department, to move forward with legislation and discussions of whether or not the agreements should be passed.

• •Mr. Hagan indicated that when the amended agreements are received, Council may wish to begin the legislative process and be open to debate. He suggested that two separate ordinances may be appropriate for separate discussion on each issue, although they comprise a package.

As there was no further business by members of Council, the meeting was adjourned at 9:10 p.m.

________________________________ ______________________________

Brian F. Hagan Misao Kurokawa

President of Council Clerk of Council

CITY OF ROCKY RIVER

FEBRUARY 5, 2007

PUBLIC MEETING - CLEVELAND WATER AGREEMENTS

The Public Meeting to discuss the City of Cleveland Water Agreements was called to order by Mr. Hagan, President of Council, at 7:00 p.m.

Council Members Present: Mr. Gollinger, Mr. Moran, Mr. Hunt, Mrs. Bartolozzi,

Mr. Long, Mr. Hagan

Absent: Mr. Hurtuk

Administration: Mr. Linden, Mr. Mackay

Law Director: Mr. Bemer

Press: Mr. Saylor

The meeting was opened with the Pledge of Allegiance.

Mr. Hagan then shared background information on the water agreements, noting that in the past, the Mayors and Managers Association had concerns about the maintenance of water lines in the suburbs and founded the Suburban Water Council of Governments which had discussions with the City of Cleveland about suburban water issues.

He then introduced Council's guest, J. Christopher Nielson, Water Commissioner of the City of Cleveland who was present to discuss the proposed water service agreements. Mr. Nielson introduced his assistant, Lynea Reindel and Margaret Jackson, regional coordinator for the system. He explained that in the early 1980's, when agreements for water service were executed, they contained provisions for a suburban council because of concern about local water issues. Such a group was not formed until several years ago when the Suburban Water Council of Governments (SWCOG) was established. Since that time, he said, it has been a productive relationship, with issues raised and resolved.

Water rates were increased January 1. One issue is that many feel that the rates for service are disproportionate to the cost of service. In Rocky River, rates are 75% higher than in Cleveland; in suburbs farther away rates are 100% more, and in the highest areas like North Royalton and Twinsburg, they are 130% more than Cleveland rates. As rates increase, the same multipliers are applied and the rates increase proportionately; many felt that these increases are out of proportion. The SWCOG has asked Cleveland to take over the water distribution system in the suburbs. At present, Cleveland owns all assets except for smaller diameter water mains (under 20"). Communities are not all able to afford to make necessary capital investments and do not have the ability to design and construct the improvements. The suburban request was that Cleveland incorporate local water mains and take over their management and ownership. Also included in the request was a decrease in rate multipliers to make the first group of suburbs 50% higher than Cleveland, the second 75% and the farthest 100% more than Cleveland rates. A cost of service survey was undertaken and Mayor Jackson was elected when the survey was under way. Mayor Jackson is a proponent of regionalism and proposed a regional solution which would incorporate an economic development component.

Mr. Nielson then reviewed the proposed regional Water Service and Economic Development Agreements, referring to a printed visual aid. The major components of the proposed agreements are amendments to the existing Water Service Agreement (WSA), an Economic Development Agreement, an Asset Transfer Agreement and the water main renewal selection process and evaluation criteria.

Under the current agreement, the Cleveland Water Department (CWD) owns water treatment plants, storage, pumping stations and mains greater than 20" in diameter. The municipalities own smaller mains, typically 8" and 12". Cleveland repairs all the local distribution mains, and that would continue. At present, however, municipalities are responsible for capital improvements: cleaning, lining, other capital repairs and replacement.

Under the new agreement, the municipalities would transfer ownership of the distribution mains and related appurtenances to the CWD which would continue to perform repairs and maintenance and would also be responsible for capital investment (cleaning, lining, replacement) in the distribution mains.

Highlights of proposed contract for water service include:

• •A minimum 20-year term with automatic renewal in effect from year to year.
• •The amendment may be cancelled by either party upon written notice at least 5 years prior to termination, but not until 15 years after the amendment execution date. Mr. Nielson said this was necessary so that Cleveland could be assured that they could recoup costs over a longer period of time.
• •Despite termination, CWD will have the right to operate the distribution system.
• •Termination will not affect the validity of the Asset Purchase Agreement or CWD's ownership interest in the distribution system.
• •The municipality is responsible for initial installation of fire hydrants, but then they would transfer to CWD which would take over responsibility. CWD would then handle all hydrant replacements.



• •Mr. Linden asked if that would apply to hydrants struck by cars. Mr. Nielson said that it would, but that they would expect the cooperation of the police department or fire department to identify those responsible if possible.

Highlights of the Joint Economic Development Zone (JEDZ) Agreement include:

• •The agreement will be executed between Cleveland and the other JEDZ city (Rocky River) for a 20-year period. (The agreement would not apply to Rocky River and any other city.)
• •Cleveland would extend the Water Service Agreements and assume the water main replacement role.
• •Rocky River (or any other JEDZ city) would agree to limit real estate tax abatements to less than 75% for not more than 10 years.
• •There would be a ban on income tax abatements, but other allowable incentives.
• •There would be income tax sharing for moves within the zone (between Cleveland and Rocky River). This means that the losing JEDZ party would receive 50% of future income tax revenues for 5 years from jobs in existence immediately preceding the move. Mr. Nielson commented that, at the request of the Mayors and Managers Association, this provision apply to companies with a payroll of $500,000 or more.
• •If the agreement is terminated between 15 and 20 years, this obligation would survive for the gaining party.

Highlights of the Asset Transfer Agreement:

• •Local water lines (distribution system) would be transferred to CWD. This is necessary because CWD must borrow money to improve the system and their attorneys have said that they cannot borrow money on assets they do not own.
• •Distribution system means mains and appurtenances, including easements and real property interests.
• •CWD will not be liable for any prior liabilities.
• •Assets revert to the municipality if CWD terminates the WSA.

Mr. Nielson then quickly reviewed the steps necessary to implement changes. These were primarily the signing of agreements.

How the project selection will be made:

CWD has proposed a 5-year $50 million program. Mr. Nielson said that this is a significant investment, but not enough. With a number of issues to address, this will be just a start. The steps in the approval process will be as follows:

1. Suburbs propose projects and CWD adds known problem mains.

2. CWD Technical Review Committee scores projects based on evaluation criteria and compiles a master list.

3. CWD submits project list to SWCOG for comment.

4. The Public Utilities director grants final approval and seeks legislation to implement projects.

5. New project requests are submitted every two years.

Mr. Hagan asked about a project which involves a total reconstruction like the one planned for Lake Road which has been planned for several years. It would be in the best interests of the City to replace the water main and to make this a top priority for the City's list of projects.

• •Mr. Nielson said that there are many criteria and as yet, he has not seen the break history on this street. As yet there is no list of projects. A second letter will be mailed shortly which will be accompanied by a revised agreement including details not addressed in the original and language changes suggested by other cities. He noted, however, that there will be no changes to the Water Service Agreement.

Mr. Mackay, the City's Consulting Engineer, asked how many communities have signed thus far.

• •Mr. Nielson said that only Parma Heights has executed the agreement. However, Euclid, S. Euclid and Orange have authorized their mayors to sign, and University Hts. is pending. CWD has asked that those cities wait until the revised agreement has been drafted. Mr. Nielsen has met with approximately a dozen communities with more meetings pending.

Mr. Mackay has requested that Cleveland provide a break history of the mains in the City. This would give some idea of whether or not the City would reap any benefit from this agreement. With older mains, there could be a real benefit.

• •Mr. Nielson said that shortly they will have the age of every main in the system. He cautioned, however, that soil conditions tell more about whether or not the main will survive. There are four criteria for evaluation of the projects submitted:

1. Water main break rate-reflects structural integrity

2. Fireflow deficit- indicates capability of water main to provide fire protection

3. Water quality problems-indicate need to clean and line mains or to enhance circulation.

4. Protection of new pavement-requires coordination of water main and street construction projects.

The SWCOG has requested that the protection of new pavement be weighted more heavily than the other criteria, so it will be given 2 to 3 times the weight.

As to the contracting mechanism, there has been concern, but the Water Department intends to write a check if a relining or replacement is part of a larger project, insisting only on inspection privileges.

Discussion:

Mr. Gollinger, referring to Mr. Mackay's request for break rates for mains, asked if he could have break rates for the system to give him a better idea of where this city stands in comparison to others in the system.

He then asked the following questions with responses from Mr. Nielson:

Is the $50 million to be spent just for the suburbs or also in Cleveland?

• • It is just for the suburbs.

Is the project list binding or, in the event of an emergency repair, will the list would be revised?

• • In the case of a true emergency, e.g. if three blocks of water mains had to be replaced, some reranking might be necessary.

Will $50 million scratch the surface of necessary work in the suburbs?

• •It would scratch the surface, but barely. Replacement of the existing unlined pipes in the suburbs would cost $2.8 billion. In the next 100 years, that amount must be spent, and the SWCOG has asked the City to fund this project and take it on. The $50 million allocated will be enough to get started. Once the mains are owned by Cleveland, it will take the responsibility with the costs built into the rate structure. The Water Commissioner foresees an expenditure of $20 million per year in ten years.

Are there funds set aside in payments of homeowners for replacement of water mains? If so, will those funds will be returned to the City should it decide that participation is not in its best interests.

• •There has never been a reserve fund established for replacement of suburban water mains, and there is not adequate funding of any capital investment. Repairs are budgeted, with operating costs at $130-$140 million per year. That is why these agreements are being discussed.

Water rates increased as of January 1. If the City chooses not to participate, will any funds be returned?

• •No.

Will incoming funds be spent for water department operations only and not go to the General Fund?

• •Transfers are made to the General Fund only for services. The City is prohibited by law from funding the General Fund.

This contract is designed for Rocky River to give up its water lines. If the City decides not to participate, would Cleveland turn over its trunk mains?

• •That is doubtful because Cleveland will need those lines to provide service to cities like Westlake and Bay Village which are beyond Rocky River.

Mr. Gollinger commented that Rocky River has always demonstrated a willingness to work with the CWD. Now there are new aspects to the basic relationship which are not without challenges. He believes that market forces should govern moves, although the overall concept of incentives makes the issue more complex.

Mr. Moran asked about staffing of the CWD if all communities participate in the agreement, and about oversight of the contracts.

• •Mr. Nielson responded that cities would not be responsible for oversight of the contracts unless the contract is part of a larger project and a city's oversight would simplify the process. As to staffing, a $50 to $100 million capital program is currently under way and has two years to go. Those handling that program can take on further responsibilities; the only need may be for a specialist in cleaning and lining.

Mr. Hunt commented that the JEDZ Agreement will have a relatively minor impact on this community, so he has focused on the Water Service Agreement. He expressed concern about the contractual language used, including "best efforts", and asked Mr. Nielson for his understanding of the term.

• •The Water Commissioner answered by saying that $10 million will be funded annually. Cleveland will borrow money for the program and will be legally bound to spend it or be in bond arbitrage. Some may be in reserve funds to take care of projects that come up on an emergency basis. The language is necessary because some years, projects may not be completed as scheduled and go into the next year. In that case, $7 million may be spent one year and $13 million the next.

Mrs. Bartolozzi asked about communication between the CWD and the SWCOG. If a prioritized list should be revised, would it be returned to the SWCOG for further comment?

• •Mr. Nielson acknowledged that there is no provision for that action in the agreement. However, the Cleveland City Council requires that a report be made, and he indicated that communication among the communities involved will be a priority.

She then asked if early adopters of the Agreement would "go to the front of the line" in projects.

• •The Water Commissioner said that if few communities agree, there will be $50 million with only a few places to invest. Mrs. Bartolozzi wondered what would happen if all 65 agree, and how much could be done with $50 million. Mr. Nielson reminded her that repairs will be made, no matter what happens, and if everyone agrees, it would be a regional priority.

Since $50 million will not cover all needs, she then asked what happens after five years, and whether this will go on indefinitely.

• •Mr. Nielson responded, yes. The five-year period is the first phase and experimental, and Mr. Nielson suggested that cities submit projects whether or not the agreement has been signed, so that a plan for future expenditures can be made.

Finally, Mrs. Bartolozzi asked how much Cleveland invests on its own.

• •The Water Commissioner responded the oldest parts of the system are in good condition and that $5 to $6 million a year is spent on relining and $1 million is spent on replacement.

Mr. Long's question was, "Of all cities, what was the biggest sticking point?"

• •Mr. Nielson explained that if the city offers tax abatements, then the income tax provisions might be difficult. If not, the next biggest issues are the asset transfer and the method by which projects are prioritized. Cities wonder if they will ever see a local project done.

Mr. Bemer noted that there is no provision for return of the water lines, but that it is a transfer in perpetuity.

• •Mr. Nielson agreed that it is at the discretion of the City of Cleveland. He said that it could be a dilemma, and he has heard that the lines are sometimes not considered an asset, but a liability.

The Law Director asked if the lines would be returned if Cleveland runs out of money.

• •The Water Commissioner said that because there will be more repairs if capital improvements are not made, that would be an incentive to make the investment.
• •Asked about who will be on the review committee, Mr. Nielson indicated that it would be entirely up to the CWD at the request of the SWCOG.

Mr. Bemer then asked if there is an absolute sharing of revenues in the JEDZ, wondering if the closing of a large chain store and the opening of another in a different city would be considered a relocation in the JEDZ.

• •Mr. Nielson said that this is a "gray area" and would probably be decided on a case by case basis.

Mr. Gollinger asked if funding will continue at the end of the five year period.

• •Mr. Nielson asserted that it is the intention of the agreement, but he does not believe that there is a provision that dictates that the fund continue. However, he pointed out that it is to everyone's interest that it go on.
• •Mr. Gollinger then wanted to know if, once a project has been approved, funds would be encumbered even if an election or the end of the year were to delay the project. Mr. Nielson said that it would.

Finally, he asked if the mains were to revert to Rocky River because Cleveland terminates the agreement, whether our City would have to reimburse Cleveland for the improvements.

• •Mr. Nielson said that if Cleveland terminates the agreement, Rocky River would be obligated to pay for the improvements.

AUDIENCE PARTICIPATION:

Fred I. Sokol, 20021 Parkview, stated that Cleveland wants Rocky River's water lines, to impose a ban on tax abatement and share our income tax. He asked how Rocky River will ever be able to lower its income tax. Further, how can Rocky River compete economically?

• •Mr. Nielson said that property tax abatement is limited, not prohibited. Further, tax sharing is for five years, and raising or lowering income tax is Rocky River's concern. In return for the asset transfer, the CWD will take on the obligation for capital improvement in local water systems from now on.



• •Mr. Hagan explained that at present, if a water line needs to be relined or replaced, the City must bear that expense as it did recently on Lakeview and Westover. If this agreement were in place, the CWD would be responsible.

Mr. Sokol said that with the new agreement, Rocky River would not be able to compete in the future.

• •Mr. Hagan pointed out that this City has never used tax abatement. He emphasized that the sharing of income tax would be only for businesses with a $500,000+ payroll at the time of the move and only for five years.

Mr. Nielson indicated that the City will receive a letter with an updated economic development agreement. Every question will be addressed in some form by the revised agreement. This will be a mutual agreement in the best interests of both cities. Mayor Jackson has been creative in making possible the framework for future development. He said this is a good agreement, placing business responsibility where it should be and addressing infrastructure needs.

Mr. Bemer asked about the percentage of increase in water rates.

• •Mr. Nielson said that over four years, the average increase will be $.34 per mcf in Rocky River.



• •Mr. Hagan confirmed that the increase will be in effect regardless of the agreements, and estimated that it would cost the average homeowner $2.50 per quarter or $10 per year.

In response to Council's question of a time frame for a response on the agreements, Mr. Nielson said that in order to get projects prioritized for 2008, a response would be necessary by May or June, at the latest.

As there were no further comments from members of Council, the Public Meeting was adjourned by Mr. Hagan at 8:25 p.m.

______________________________ ______________________________

Brian F. Hagan Misao Kurokawa

President of Council Clerk of Council