Monticello Offers Low Electrical Rate For Interested Industry To Locate Here

The Monticello City Council met March 27 to vote on an electric rate to make the city of Monticello utilities compatible with other power companies to offer to an industrial prospect that is considering locating here.

City Manager Bob Schwartz reported that two helicopters landed in the industrial park two weeks ago, and the investors met with community leaders.

The prospective industry would be a large user of electricity—a larger user of electricity than anything Monticello has ever provided thus far, said Mr. Schwartz.

Mr. Schwartz premised his recommendation with the fact that there was no guarantee the company would locate here. He told the council that by passing this rate, it would be personally delivered to the prospect and the investors interest could be raised once the proposed rate is presented.

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Mayor Standifer said that this was what the council had talked about, that it was promising—it’s in our industrial park.

Councilman Larry Thurman asked “Is that site the largest site in the park?” His response was that it was about seven acres.

Councilwoman Katherine Alexander said that a commercial company was needed to help out the residential. Having more commercial and industrial electricity users would ultimately help offset residential costs.

Mr. Schwartz said, “This rate is lower than they propose. It’s based on a 24 hour operation that runs all of the time.” The cost of electricity used at night is cheaper being that less is being used entirely throughout the city, he said.

Councilman Randy Strozier asked “do the citizens benefit from this, too?” He was inquiring about lowering electricity for citizens.

Mayor Standifer said, “this puts us in the driver’s seat to offer electricity to a larger industry that will bring roughly 40 jobs initially and hopefully about 150 at full operation. It’s great for the city and for Georgia.”

Mr. Schwartz informed the council that “we contract so much power from MEAG and sell 66% of that currently. We should in fact have $7,000 a month [profit] from that whereas this month, we are currently at about $239 [profit] with the economy, a warm winter and other factors.

“If we sell a lot more, then that will have a tremendous effect on our rate,” Mr. Schwartz said.

Mr. Thurman asked if existing companies (already operating in Monticello) will benefit from this?

Mr. Schwartz replied, “No. It’s so big that it’s not on any other level.”

Mrs. Alexander addressed that this would help jobs and the tax base. “I don’t see much negative. We need business and we want to put our best foot forward. We want and need businesses.”

Mr. Strozier stated, “I understand and it’s all well and good, but if we can do that for a business, why not for a citizen.”

He continued after some back and forth with Mr. Schwartz, “when it comes to the citizens it’s tit for tat. At the end of the day, the citizens are having a hard time paying their light bill.”

Mr. Standifer commented to Mr. Strozier that he was missing the point. Councilman Cornell Williams added that the sewer and water rates were also going up.

Mr. Standifer stated that this was not a rate for residents. Mr. Williams said, “the citizens make up the city.”

Mrs. Alexander then said, “the entire state and the citizens of Monticello want business. If they heard you right now they would be in the streets with pitchforks…You, each of us, are the citizens, we are the changers. You are welcome to make a motion, make changes and bring it to us. You have to make a motion and have something to back it up.”

Mayor Standifer said, “a large power supply will take a burden off the citizens. All we’re saying is that there has to be a balance. A give and take. We can lower electric rates, we can do it next month, but the hit has a direct affect on another area.

Mayor Standifer said, “we have to lower the rates for this business to make us competitive with other companies.”

At a certain usage level, entities such as businesses, industries, schools, etc. can shop for the best price, so Monticello is competing with Ga. Power, EMC, whoever.

Mr. Strozier posed the question, “what if this company goes next door, to Permatherm or Harris Sample Book, and inquires about rates.”

The response was that if Permatherm used and was the same size, then they would also pay these rates. Permatherm pays the rate for a business of that size. The new company pays less per kw/h.

Mr. Strozier asked “how long might it take for the company to reach full capacity,” and Mayor Standifer replied, “one to two years.”

After discussing the rates, Councilman Stozier asked where the monies come from for the actual building which was an incentive to locate here. Mr. Schwartz gave several figures and said that the city and county and the state all gave incentives.

There are SPLOST monies allocated for the Development Authority and it would come from that rather than directly from the city budget.

Mr. Thurman made a motion to accept the proposed power rates, and Mrs. Alexander seconded. In the comments before the vote, Mr. Strozier said that this needs to be looked at in depth for all of the monies allocated toward it.”

The rate passed 3-1 with Councilman Williams against. Councilman Bobby Jacobs was absent for the vote.

Mr. Thurman also inquired if this rate was set in stone now that it was passed should the investors not come here, and he was informed that it could be amended or abolished if needed.

Also up for vote at the meeting was a water and sewer bond issue. Mr. Schwartz recommended that the bond be refinanced under the same terms. It would save the city $238,000 over the life of the bond which is the next 11 years.

Mr. Schwartz informed the current council that the money was borrowed about 10 years ago to improve water and sewer. He said that all of that money had been used, and it still has to be paid back. The initial amount was $3.7 million and there is $2.25 million remaining. He said that this was the time to refinance. There are no tricks, just the same terms.

Mr. Strozier asked what the actual cost was to actually do it, if all of the fees are included in that.

His response was that the refinance would cost $33,000, however that was already deducted from the profit amount.

Mr. Strozier also asked if the city saves $235,000 what will the consumer get?

Mr. Standifer agreed, that the consumer should receive something.

Mrs. Alexander noted that savings is over the next 11 years. Mr. Standifer said this will be crucial for the upcoming budget planning beginning in the coming months. He wants the money to go toward the citizens.

Mr. Williams asked if the citizens will still have to pay for water and sewer increases. Mr. Schwartz said if you have or want to treat sewage, yes.

Mr. Strozier asked why can’t “we lock in a rate for six months to a year?”

Mr. Schwartz responded that depends on the budget. That rates will be adjusted accordingly each year.

Mayor Standifer added, “we have to maintain infrastructure, for water sewer and gas. We have to look at the savings.”

Mr. Schwartz said, “if you don’t do this, you will have to budget an additional $238,000.

Mr. Strozier commented “the city is benefitting which I see but the citizens need to get some benefit.

“We’re here to make the decisions. And the citizens are benefitting. We’re doing the city a just favor by reviewing and lessening the bond,” said Mayor Standifer.

Mr. Schwartz said that the money will not be in the city until December 2012.

Mr. Strozier said, “I’m going to vote for it but the citizens aren’t gaining anything.”

The mayor responded, “you are the citizens. It’s not like the Monticello is a franchise and making a ton of money. We’re saving $238,000.”

Mrs. Alexander made a motion to secure the bond, with Councilman Thurman seconding the motion. The bond issue refinance passed unanimously.

Work Session

In a work session held after the special meeting the council discussed the legality and wanted clarification from the city attorney on favoring a particular entity for round-up donations, such as the Jasper County Community Food bank.

The council heard from Sabrina Cape, CPA for the City of Monticello who gave a background and preliminary explanation that touched on where the finances are and why they are that way historically.

She opened by saying that her role was not to tell the City Council what to do, but rather explain for understanding and clarification.

She explained that government has a lot of moving parts, and that the past plays a key role and should not be looked upon critically, but to rather look and learn to alter what exists today.

She explained that there is a general fund, water, electric, and gas premise and that each should stand on its own financially as an individual. She handed out a pie chart with slices identified to better understand the whole of finances.

She explained that the general fund is comprised and funded 25 percent by utilities and it has been for at least the last 10 years. She told of the top three expenses in Georgia cities, and took the balance sheet and broke down each individual part explaining assets are what the city owns, liabilities are what the city owes, and the net is the difference between the two.

Her major concern was the general rule that the utility numbers should be three months of what it costs the city, at all times on the balance sheet.

With her findings, Ms. Cape explains that the electric balance was good, the water was about $70,000 short, and the gas was $559,000 short. She also noted that gas and sanitation monies were the most difficult to recover.

She explained that the funds have been this way with a deficit for a while, and that historically Monticello has done it this way.

Mr. Strozier asked Ms. Cape, “what would it take for the electricity rates to go down? She responded that services would have to be eliminated to citizens, or a fusion or utility provider to come in.

Mr. Strozier said, “so technically even if we get a large user, the citizens don’t see a break.”

Ms. Cape said, “I disagree, when the revenues come in the citizens will not necessarily see a reduction on their bill. They can see an improvement in capital—better lines, better water.”

Mr. Strozier said, “it’s a benefit, not a savings.”

Ms. Cape replied, “yes, it’s an immediate benefit but not a savings. Every prospect [the city] gets from Economic Development will always benefit from the economic development side. An increase in revenues equals an increase in capital which equals an increase in infrastructure. The only way for utilities to make money is to build….Your debt is fixed, capital is what you want to do.

She continued, “sometimes a lower rate may seem good, but capital decreases which is more hurtful in the long run. Rate structure is most important.” Ms. Cape said that she was impressed that things in Monticello have not gotten worse, but as a financial person, she would like to see the city become stronger financially.

Mayor Standifer reminded the council that to take from one part of the pie, meant that somewhere in the pie has to decrease.

Ms. Cape said that if one of the biggest customers is behind, i.e. Georgia Pacific that is $160,000 in arrears, used to pay bills, and does no longer, there becomes a problem.

The council heard from Police Chief Bobby Norris on what the Police Department needs are. Chief Norris said that he would like to have four more officers, but he would take what ever the city could afford.