February 24, 2015 Complete Agenda

MAYORANDCITYCOUNCIL

WORKSESSIONTuesday,February24,20151:00P.M.

AClosedSessionisscheduledfrom10:00AM1:00PMtodiscusslegal,contractualandcollectivebargainingmatters.

AGENDA

1. CALLTOORDER

2. REPORTONCLOSEDSESSIONTuesday,February24,201510:00a.m.1:00p.m.

3. ACKNOWLEDGEMENTSANDRECOGNITIONS

4. COMMENTSFROMTHEPUBLIC AnypersonwhomaywishtospeakonamatterscheduledfordiscussionontheWorkSessionAgenda

maybeheardduringCommentsfromthePublicforaperiodofthree(3)minutesorsuchtimeasmaybedeemedappropriatebytheCouncilPresident.Anyonewishingtobeheardshallstatetheirname,addressandtheAgendaitemonwhichheorshewishestospeak.

5. NEWBUSINESS

A. ReportonOceanCityCenterfortheArtspresentedbyRinaThaler,ExecutiveDirectorand

MarianBickerstaff,BoardPresident

B. RequesttoApproveOceanCityDolphinSculpturePlazapresentedbyChrisTrimper,OCDCPublicArtCommitteeChairman

C. PresentationofCrownCastleProposaltoInstallCellularNetworkinOceanCitypresentedby

RebeccaHunter,GovernmentRelationsManager

D. DiscussionofQualityAssuranceProgramEfficiencyImprovementspresentedbyDeputyChiefFireMarshal

E. WaterandWastewaterRateStudypresentedbyFinanceAdministrator

6. ADJOURN

WORK SESSION -MAYOR AND CITY COUNCIL TUESDAY, FEBRUARY 24, 2015

2. Report on Closed Session February 24, 2015 10:00 a.m. - 1:00 p.m. Legal, Contractual and Collective Bargaining

Matters

NOTICE OF CLOSED SESSION OF MAYOR & CITY COUNCIL OF OCEAN CITY

AUTHORITY: State Government Article: Section 10-508(a) Annotated Code of Maryland PURPOSES:

1. To discuss: (i) the appointment, employment, assignment, promotion, discipline, demotion,

compensation, removal, resignation or performance evaluation of appointees, employees or officials over whom it has jurisdiction; or

(ii) any other personnel matter that affects one or more specific individuals;

2. To protect the privacy or reputation of individuals with respect to a matter that is not related to public business

3. To consider the acquisition of real property for the public purpose and matters directly related thereto;

4. Consider a matter that concerns the proposal for a business or industrial organization to locate, expand or locate in the state; 5. Consider the investment of public funds; 6. Consider the marketing of public securities;

X 7. Consult with counsel to obtain legal advice;

8. Consult with staff, consultants or other individuals about pending or potential litigations;

X 9. Conduct collective bargaining negotiations or consider matters that relate to the negotiations;

10. Discuss public security if the public body determines that public discussion would constitute a risk to the public or public security, including; a) the deployment of fire and police services and staff; and b) the development and implementation of emergency plans 11. Prepare, administer or grade a scholastic, licensing or qualifying examination;

12. Conduct or discuss an investigative proceeding on actual or possible criminal conduct;

13. Comply with a specific constitutional, statutory or judicially imposed

requirement that prevents public disclosures about a particular proceeding or matter; or

X

14. Before a contract is awarded or bids are opened, discuss a matter directly related to a negotiation strategy or the contents of a bid or proposal, if public discussion or disclosure would adversely impact the ability of the public body to participate in the competitive bidding or proposal process

DATE AND TIME: Tuesday, February 24, 2015 10:00 a.m. PLACE: City Hall SUBJECT: Legal, Contractual and Collective Bargaining Matters VOTE: UNANIMOUS OTHER: FOR: AGAINST:

ABSTAIN: ABSENT:

REPORT OF CLOSED SESSION OF THE MAYOR AND CITY COUNCIL OF OCEAN CITY

Prior to this open session of the Mayor and City Council being held on Tuesday,

February 24, 2015, a closed session was held on Tuesday, February 24, 2015 at

10:00 a.m. The following is a report of the closed session.

1. A statement of the time, place, and purpose of the closed session is attached.

2. A record of the vote of each member as to closing the session is attached.

3. A citation of the authority under the law for closing the session is attached.

4. (a) Topics of Discussion: Legal, Contractual and Collective Bargaining Matters

(b) Persons present:

Mayor Richard Meehan Council President Lloyd Martin City Manager David Recor Council Members Doug Cymek; Dennis Dare; Wayne Hartman; Matt James;

Tony DeLuca City Solicitor Guy Ayres Miles & Stockbridge Counsel Marc Sloane Police Captain Mike Colbert Human Resource Director Wayne Evans Finance Administrator Martha Bennett City Engineer Terry McGean Executive Office Associate Diana Chavis Action(s) taken:

Motion to close meeting: End Time:


4. COMMENTS FROM THE PUBLIC

Any person who may wish to speak on a matter scheduled for discussion on the Work

Session Agenda may be heard during Comments from the Public for a period of three (3) minutes or such time as may be deemed appropriate by the Council President. Anyone wishing to be heard shall state their name, address and the subject on which he or she wishes to speak.


5. NEW BUSINESS

A. Report on Ocean City Center for the Arts presented by Rina Thaler, Executive Director and Marian Bickerstaff, Board President

TOWN OF

The White Marlin Capital of the World TO: The Honorable Mayor, Council President and Members of Council FROM: David L. Recor, ICMA-CM, City Manager RE: Ocean City Center for the Arts DATE: February 18, 2015 ISSUE(S): Report on Ocean City Center for the Arts SUMMARY: Rina Thaler, Executive Director, and Marian Bickerstaff, Board

President, will present the 2013 Annual Report, which was distributed in October 2014, and share program and event highlights.

FISCAL IMPACT: Not applicable RECOMMENDATION: Not applicable

1st Class Resort & Tourist Destination

ALTERNATIVES: Not applicable RESPONSIBLE STAFF: Not applicable COORDINATED WITH: Not applicable ATTACHMENT(S): 1) 2013 Annual Report

2) Building Community through Art 3) PowerPoint

Agenda Item # 5A

Council Meeting February 24, 2015

MISSION

To promote the visual arts in the Ocean City area through education, exhibits, scholarships, programs and community art events.

VISION To be a vibrant, fiscally sound arts organization with community sponsorship, service

and valued membership benefits, offered in a spacious and functional facility.

The new Ocean Center for the Arts, located at 502 94th Street, Ocean City, Maryland

is the home of the Art League of Ocean City, founded in 1963.

PRESIDENTS MESSAGE:

We happily celebrate our first full year of operating the new Ocean City Center for the Arts. The dreams

of so many have been realized through the creation of the spacious new Center allowing for expanded

programming for people of all ages.

Affirmation of the ALOCs significant contribution to the community has come from elected officials,

artists, residents and visitors alike. We are delighted in the attendance at our monthly exhibit receptions,

our class registration, membership and corporate sponsor growth, and so many willing volunteers who

support our staff. And, with our expanded programming, we have experienced a 44% increase in our net

income from the prior year.

Because sustaining our mission is critical, the Board of Directors sought professional help in preparing a

strategic plan for the near future with a goal of good stewardship coupled with measured expansion of

our programs. We are grateful for the public support and generosity of our donors and sponsors and the

ability to be operating from a financially healthy positon. We will continue to work hard to meet your

expectations. Yours in Service,

Marian Bickerstaff, ALOC Board President

Making An Impact in the Community 2013 was a landmark year for the Art League of Ocean City as we opened the

new Ocean City Center for the Arts during our 50th Anniversary year!

(Data Collected from May-December, 2013)

11,120 VISITORS

873873 STUDENTSSTUDENTS

752752 MEMBERSMEMBERS

174174174 ART CAMP ART CAMP ART CAMP KIDSKIDSKIDS

10,24110,241 WEBSITEWEBSITE

VISITSVISITS

6,4516,451 VOLUNTEERVOLUNTEER

HOURSHOURS

Grand opening CelebrationMarch 1, 2013

Thank You to all of our generous donors and corporate spon-

sors who have supported the Art League of Ocean City in its

mission to promote the visual arts in the Ocean City area. We

are grateful for the support of each and every gift.

2013 Annual Campaign Donors

LEAVE A LASTING IMPRESSION!

Are you looking for an opportunity to honor loved ones or immortalize your creative thoughts? Consider purchasing an Impression Paver in the Ocean City Center for the Arts front courtyard. The durable bricks are available in two sizes4x8 and 8x8 at a cost of $100 and $150 respectively. For more information about the pavers and ordering, visit our website at www.artleagueofoceancity.org .

Junis Adkins Jeff and Jamie Albright Nancy Barrett Marian Bickerstaff Patricia Bielecki Castle in the Sand Ed & Emmy Challenger Roland and Sue Dennis Sandra Esham John & Betty Everson Carl Forsberg Nancy Fortney Gerilyn Gaskill Julie & Bill Gibbs Gudelsky Family Foundation Louise Gulyas Barbara & Ron Hager Anne Hanna Evelyn & Jack Hartman Phyllis Gillie Jaffe

Drs. Phyllis & Leonard Jaffe Judy & Chris Kahl Thomas & Dorothy Kelso Fay Kempton Andrew Kennery Judy King Josephine Kingsley Jeanne Landau-Cohen Buck Mann Ursula McMahon Barbara Melone Kim & Jim Morgan Jeanne Mueller Wayne & Ginny Outten Outten & Golden* Barbara Patrick Clark Prichard Dave and Sally Rivello Russ and Anita Roberts Nicholas Ruggieri Barbara & Donald Schmid

Herb and Judy Schoellkopf Emily & Paul Schwab Virgil and Jeanne Shockley Judy & Graham Slaughter Ann & Terry Terrell Rina and Jeff Thaler Jon and Judy Tremellen Janet Trimper Tyler & Company PA Margery Violetta Ropko Kim & Jim Wagner Joann & Ed Wehnert Joel and Patti Wiedermann Gee & Betsy Williams *Matching Corporate Gift

Corporate Benefactors Atlantic Planning Development & Design Clarion Resort Fontainebleau Hotel Donaway Furniture Frescos Restaurant Mackys Bayside Bar & Grill

Corporate Patrons Community Foundation of the Eastern Shore Delmarva Power Glitter & Gold Tyler & Company, P.A.

Corporate Sponsors Atlantic Dental Cosmetic & Family Dentistry Bayside Skillet Berlin Interventional Pain Management BJs on the Water Bonfire Restaurant Candy Kitchen Shoppes Charter Financial Group Fagers Island Ltd Harrison Group Kay Ayres Interior Design, Inc Kokkinos Creative Jewelers Mann Properties Maryland Coast Towing Ocean City Elks Lodge #2645 Old Pro Golf

Corporate Friends Ayres, Jenkins, Gordy & Almand Bank of Ocean City Barbara Melone, Realtor Insurance Management Group Katy Durham & Rick Meehan, Realtors Ocean City Parrothead Club Pacos Paradise Inc

In-Kind Donors Chesapeake Landscaping Clean Team

BJ's on the Water Blu Crabhouse & Raw Bar Blue Ox Bar & Grille Bull on the Beach Catering by Macs Centerplate Catering Clarion Resort Coffee Beanery Desserts by Rita Fagers/ Hotel Atlantic Fresco's Restaurant Galaxy 66 The Globe The Green Turtle

Planet Maze/Lasertron/Lost Galaxy Golf Princess Royale Ocean Front Hotel Robin Walter Day Spa Russell T. Hammond Surveying. LLC The Framing Corner Trattoria Lombardis Vanderbilt Weddings D3 Corp East Coast Property Mgmt

Harpoon Hannas The Hobbit Hooked Lighthouse Sound Liquid Assets Macky's Mothers Cantina Phillips Pirates Den & Galley Pickles Pub Princess Royale Rosenfeld's Jewish Deli Seacrets Simmer Time

Thank you to the generosity of the homeowners, volunteers and participants who continue to

make this annual event our major fundraiser.

Restaurant Reception Donors

Something Magical Happens Here

ARTISTS PAINT 0C

2013 SCHOLARSHIP WINNER,

ISABELLE IAMPIERI

BROWN BOX THEATRE NINA VARIATIONS

BOARD OF DIRECTORS

PRESIDENTMarian Bickerstaff 1ST VICE PRESIDENTEmily Schwab

2ND VICE PRESIDENTKaty Durham

TREASURERKaren Turner

CORRESPONDING SECRETARY

Jamie Albright

RECORDING SECRETARY

Emmy Challenger

Ann Terrell

Barbara Melone

Barbara Patrick

Barbara Tyler

Gayle Widdowson

Judy Tremellen

Karen Tomasello

Kim Wagner

Lisi Ruczynski

Michelle Fager

Nancy Fortney

STAFF Rina Thaler, Executive Director

Jacquie Warden, Katie Rosinski,

Mallory Hanback & Nancy Barnas

2013 STRATEGIC GOAL ACHIEVEMENTS

Financial Stability Conducted a financial audit. Continued to maintain a sufficient Operating Reserve Fund. Created an annual fund appeal.

Programming Surveyed members to determine interest and assess demand. Attracted a more diverse mix of artists working in all media . Increased number and variety of classes, lectures, outreach and events.

Operations Hired an Executive Director and additional staff. Created comprehensive policies and procedures for operations and oversight. Upgraded bookkeeping and data management systems.

Marketing Upgraded the website and began using social mediaFacebook, Twitter & Instagram. Use of radio and local TV media .

2013 KEY INCOME & EXPENSES COMPONENTS

OPERATING EXPENSE

OPERATING INCOME

The Art League of Ocean City is a 501(c)3, organized in the state of Mary-land. A copy of our current financial statement is available upon request by contacting the Art League of Ocean City at P.O. Box 3503, Ocean City, MD 21843. (Phone 410.524.9433). Documents and information submitted to the State of Maryland under the Maryland Charitable Solicitations Act are available from the Office of the Secretary of State for the cost of copy-ing and postage.

Building Community Through Art The mission of the Art League of Ocean City is to promote the visual arts in the Ocean City area through education, exhibits, scholarships, programs and community art events. The vision of the ALOC is to be a vibrant, fiscally sound arts organization with community sponsorship, service and valued membership benefits, offered in a spacious and functional facility. The ALOC is the only non profit organization in Ocean City dedicated the enrichment of life through the visual arts. Its home, the 7500 sq ft Ocean City Center for the Arts is a destination for fine arts featuring 2 galleries, 5 artist studios, an art library, multiple classroom spaces and a pottery studio. Clients Served: 16,909 visitors in 2014 (30,000 since new building) 1,258 art instruction students 3,000 children including art camp and school trips 7,000 volunteer hours logged (6 FTE) Programs Include: Monthly Art Exhibits featuring regional and local artists Offsite exhibits at Conv Center & Chamber Youth Art Shows ( twice yearly) Empty Bowl Project with Diakonia Artist Paint O.C. A Plein Air Event Art with a Heart- Outreach programs Free Art Talk Series Art Scholarship Awards Summer Art Camp with OC Rec Dept Play it Safe- Tie Dye Teacher Professional Development Arts Alive- assist Town of Ocean City with event Creative Fundraising ACS, Humane Society

UPCOMING HIGHLIGHTS

February 24, 6-8PM: "Travelwalk: Poems and Images

March 21, 5-8PM: Empty Bowl Project Soup Dinner

April 7, 6-7PM : Artists Rights and Copyright Law presentation

May: Brown Box Theatre: "Boxer Shorts"

June: " I Remember When I Paint " film and workshop

August: Patrick Henrys exhibit Moments in Color, Texture, and Light

September 17-18: Sand Castle Home Tour


5. NEW BUSINESS

B. Request to Approve Ocean City Dolphin Sculpture Plaza presented by Chris Trimper, OCDC Public Art Committee Chairman

TOWN OF

The White Marlin Capital of the World

TO: The Honorable Mayor, Council President and Members of Council FROM: David L. Recor, ICMA-CM, City Manager RE: Request to Approve Ocean City Dolphin Plaza DATE: February 17, 2015

ISSUE(S): Request approval for the OC Dolphin Plaza SUMMARY: In 2014, the City Council approved Ocean City Development

Corporations (OCDC) request to install a dolphin sculpture and base at the southwest corner of Route 90 and Coastal Highway, near the OC Tennis Center. In December 2014, the OCDC hired Harkins Construction to create a concrete base at the sculpture location. The dolphin sculpture, designed by David Turner of Turner Sculpture, is complete and ready for installation. The OCDC intends to install the sculpture on Tuesday, April 14, 2015, which is also International Dolphin Day. As part of this public art project, the OCDC is requesting approval from the City Council to install a plaza at this same site to complement the sculpture. The OCDC and its Public Art Committee are recommending that the plaza consist of brick pavers, a masonry wall, and landscaping. The masonry wall with brick face will be located on the west side of the dolphin sculpture and represent an attractive background. The wall will also contain donor plaques recognizing individuals and organizations who contribute significantly towards this public artwork project. There will be ground mounted lighting as well as lighting on the top of wall.

FISCAL IMPACT: $30,000 through OCDC fundraising and OCDC Public Art Fund.

All funds for this project will be raised through private contributions to the OCDC, which is classified as a charitable nonprofit organization. Contributions for this project are tax deductible. Initial fundraising began in 2014. Fundraising strategies will be expanded in 2015.

RECOMMENDATION: Approve project as presented.

Revitalized Ocean City: Development and Redevelopment

ALTERNATIVES: No alternatives suggested. RESPONSIBLE PARTY: Chris Trimper, Chair, OCDC Public Art Committee

Agenda Item # 5B


COORDINATED WITH: Hal Adkins, Director of Public Works Susan Petito, Director of Recreation & Parks

ATTACHMENT(S): Plaza design plan with dolphin sculpture

PROJECT TITLE

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2014131.00PROJECT NO:

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MARK DATE DESCRIPTION

SHEET TITLE

PROJ MGR:

2010COPYRIGHT

www.beckermorgan.com

EN EIT U

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410.546.9100Salisbury, MD 21801

312 West Main St. Suite 300

Dover, DE 19904302.734.7950

309 S Governors Ave

910.341.7600

Wilmington, NC3205 Randall Parkway, Suite 211

Wilmington, NC 28403

Dover, DE

Salisbury, MD

GNERA C

IH E

A101

WES WES

PLAZASCULPTURE DOLPHIN OCDC -

OCEAN CITY, MDHIGHWAY62ND STREET & COASTAL

CONCEPT PLANS

AS NOTED

2/3/15

1' 4"

WALL CAPCAST STONE

8" CMU

DUR-O-WALL @ 16" O.C.

#4 @ 16" O.C.

3 #4 CONT.

CONCRETE FOOTING

STACK BONDFACE BRICK TYPE 1

STACK BONDFACE BRICK TYPE 1

8" CMU

16' 4"

3' 0"

3' 0" MIN.

1' 6"

4' 0"

2' 0"

1' 0"

1"

4"

CONTRACTORTO BE COORD BY CONDUIT FOR LIGHTING

"21RECESSED

ACCENT BANDS

RECESSED STACK BONDACCENT BANDFACE BRICK TYPE 2

RECESSED STACK BONDACCENT BANDFACE BRICK TYPE 2

BY CONTRACTORTO BE COORDINATEDMANUF AND MODELWALL TYPICAL.FIXTURE THREE PER FLOOD LIGHT

BY CONTRACTORTO BE COORDINATEDMANUF AND MODELWALL TYPICAL.FIXTURE THREE PER FLOOD LIGHT

FOR TYPESSEE ELEVATIONFACE BRICK

TO INSTALLATIONOWNER PRIORSIZE & LOCATION WITH PLAQUE. COORDINATEDONOR RECOGNITION

5.0'

2D

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5D

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YP.

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TYP.

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REMAINEXISTING ELECTRONIC SIGN TO

PROPERTY LINESHA - RIGHT OF WAY/

EXISTING SIDEWALK

SEE PLANTING LISTLANDSCAPE BED -

TREES TO REMAINEXISTING MEMORIAL

CURB TO REMAINEXISTING CONCRETE

DESIGN :XXX OR EQUALLIGHTING - BASIS OF GROUND MOUNTED SITE

DESIGN :XXX OR EQUALSITE LIGHTING - BASIS OF GROUND MOUNTED

BASIS OF DESIGN :XXX OR EQUALON CAP OF MASONRY WALLSITE LIGHTING - MOUNTED

SEE PLANTING LISTLANDSCAPE BED

SEE PLANTING LISTLANDSCAPE BED

SEE DETAILED VIEWSDONOR PLAQUES.WALL WITH INSETRADIUSED MASONRY

EXISTING GRADES AS REQUIRED& PARKING LOT. COORDINATE WITHCONNECT TO EXISTING SIDEWALK STAMPED CONCRETE SIDEWALK

TO REMAINPARKING LOTEXISITNG

TO BE RELOCATEDEXISTING SIGNAGE

TO REMAINPARKING LOTEXISITNG

TILE VENEER DETAILSSECTIONS FOR CERAMIC IN PLAZA. SEE ENLARGED FOR SCULPTURE CENTEREDCONCRETE PEDASTALREQUIRED

AND REPAIR AS& RAIL PATCHEXIST. DECK

A101

3

TENNIS CENTEREXISTING

& SCULPTURERADIUSED WALLPLAZA WITH

AREASLANDSCAPE

SIDEWALKEXISTING

LOTSPARKINGEXISTING

SIDEWALKEXISTINGWALKWAY TO CONCRETESTAMPED

AREALANDSCAPE

XXX OR EQUAL2/A101 BASIS OF DESIGN:SAND BED - SEE DETAILBRICK PAVERS OVER

DETAIL PAVER/SLAB 32B1SCALE: 1/2" = 1'0"SCALE: 1 1/2" = 1'0"SCALE: 1" = 20'0"

SITE PLAN

2A

4 PLAZA PLAN

MASONRY WALL DETAILS

5SCALE: 1/8" = 1'0"

2" BEDDING SAND

AGGREGATE BASE6" COMPACTED STONE

TYP.COMPACTED SUB-GRADE

INSTALLATION DETAILSFOR COURSING & ADDITIONALREFER TO MANUF. DETAILSBRICK PAVERS- SIZES VARY.

PRELIMINARY

12/1/14ISSUED:

NOT FOR PERMITSNOT FOR CONSTRUCTION

FURTHER REVISIONSSUBJECT TO

DESIGN CONCEPT ONLY

OUTLINE SPECIFICATIONS & RENDERING

DEMOLITION PLANSCALE: NTS

REMOVE EXISTING CONCRETE CURB

REMOVE EXISTING CONCRETE SIDEWALK

EXISTING MEMORIAL TREE TO REMAIN

REMOVE AND RELOCATE EXISTING SIGNAGE

AS REQUIREDREPAIR AND EXTEND DECK RAILINGEXISTING STEPS TO BE REMOVED

1D

2D

3D

4D

5D

OF NEW SIDEWALKREQUIREMENTS WITH INSTALLATION EXISTING SWALE COORD.DRAINAGE

OF NEW SIDEWALK CONNECTORSIGN AS REQ'D BASED ON LOCATION RELOCATE EXISTING SHA SPEED LIMIT

STATUE INSTALLATIONFOR DETAILS RELATED TO SEE STRUCTURAL DRAWINGS

BE REMOVED. SEE DEMO PLANSEXISTING SIDEWALK TO


5. NEW BUSINESS

C. Consideration of Crown Castle Proposal to Install Cellular Network in Ocean City presented by Rebecca Hunter, Government Relations Manager

TOWN OF


TO: The Honorable Mayor, Council President and Members of Council THRU: David L. Recor, ICMA-CM, City Manager FROM: Terence J. McGean, PE, City Engineer RE: Crown Castle Right of Way Agreement DATE: February 18, 2015

ISSUE(S): Consideration of Crown Castle proposal to install mini cell tower sites in Ocean City

SUMMARY: The City has been approached by Crown Castle, Inc., a

telecommunications company, with a proposal to install a Distributed Antenna System (DAS) cellular network in Ocean City. The DAS network would improve cellular bandwidth and signal strength. The majority of installations will be on DPL poles which are regulated by the Maryland Public Service Commission; however, Crown Castle has also requested to place some installation on the Boardwalk and other City owned structures.

FISCAL IMPACT: A fee for rights to use City Right-of-Way would be negotiated. RECOMMENDATION: Schedule a public hearing on this topic and then determine which, if

any, City facilities would be acceptable for use by Crown Castle.

More Livable Community for Residents

ALTERNATIVES: Reject Crown Castles request to use City facilities. RESPONSIBLE STAFF: Terence McGean, City Engineer COORDINATED WITH: Hal Adkins, Public Works Director

Guy Ayres, City Solicitor ATTACHMENT(S): 1) Crown Castle presentation

2) Crown Castle FAQ Document 3) Photo of typical DPL pole installation 4) Photo of typical decorative street light installation

Agenda Item # 5C


Town of Ocean City City Council Work Session

02/24/15

Crown Castle NG Atlantic

DAS Presentation

| 1 Proprietary & Confidential | 1 Proprietary & Confidential

Crown Castle - Company Background

Crown Castle, through various subsidiaries, provides wireless carriers with the infrastructure they need to keep people connected and businesses running.

Approximately 40,000 towers, 13,000 small cell nodes and 6,000 miles of fiber

The nations largest provider of shared wireless infrastructure with a significant presence in the top 100 US markets with a total enterprise value of over $30 billion dollars.

The Foundation for a Wireless World.


Crown Castle At-a-Glance

In business for 20 years

NYSE:CCI; Market capitalization of over $30 billion

Fortune 1000 Company

S&P 500 Company

Total revenue of more than $3.0 billion

Total enterprise value of more than $30 billion

Our customers include the wireless communications companies Sprint, T-Mobile, AT&T, and Verizon Wireless who accounted for approximately 90% of Crown Castles 2013 revenue

We have CLEC status licenses and other necessary legal and regulatory documents to operate small cell networks in 46 states and the District of Columbia

Nationwide, we have over 450 existing agreements with jurisdictions and over 300 existing agreement with utility companies

The Foundation For a Wireless World.


Crown Castle Is A True Ally For Your Community Collaboration:

We involve you, the carriers, and nearby residents in every major decision, so you have a say in the solutions that are deployed.

Local presence: We have people working in offices nearby who understand your community and know how to get things done quickly. National footprint: Our status as the nations largest shared wireless infrastructure provider means we have strong relationships with all the wireless carriers at the local, regional, and national levels, so we can maximize new revenue opportunities for your community. Public safety: You get space on each new tower we develop to use to expand your public safety network. Buying power: Where commercial value doesnt existfor example, when developing new infrastructure for a public safety networkwe can use the clout of our purchasing department to get you the best price possible. Flexibility: Our solutions utilize a mix of your undeveloped land, buildings, and existing public utility poles, traffic signal poles, streetlights, or other owned or controlled property. Single point of contact: No need for your staff to deal with the hassle of negotiating with each wireless carrier. We handle all that for you and are here for any questions or concerns you may have. Community outreach: We have a best-in-class community outreach team that will develop community-friendly solutions and proactively meet with residents to make sure their concerns are heard.



New Revenue and Wireless Solutions We take a proactive approach to developing solutions that address both an entitys unique challenges and its wireless broadband infrastructure needs.

RF Analysis, Planning and Design

Zoning Ordinance

Marketing of Existing Assets

Industry Leading Market Tools

Land and Rooftop Development

Distributed Antenna Systems (DAS)

Monetizing Revenue Streams



What is DAS (Distributed Antenna System)?


| 6 Proprietary & Confidential | 6 Proprietary & Confidential Title - populate in "Footer"


Examples of DAS Node

The Foundation for a Wireless World.


Ocean City Photo Simulations



Ocean City Node Locations - Overview



Next Steps

1. Execute Franchise or Right-of-Way Use Agreement between Town and Crown Castle

2. Define Specific Permit Processing and Review Requirements for DAS

3. Discuss Scheduling Requests and Requirements for DAS Deployment

4. Evaluate Additional Services Crown Castle Can Provide the Town



Thank You FOR FURTHER INFORMATION PLEASE CONTACT:

Thank You FOR FURTHER INFORMATION PLEASE CONTACT:

Rebecca Hunter (425) 591-9356 [email protected]

MD GUIDE July, 2014 Version No. 1.0

A Local Officials Guide:

RESPONDING TO A TELECOMMUNICATIONS APPLICATION

FROM CROWN CASTLE NG ATLANTIC LLC (Crown Castle)

Maryland

Crown Castle has submitted to you an application under the federal Communications Act for access to the public

rights of way to construct facilities necessary to provide telecommunications services. In order to assist you in

analyzing and responding to Crown Castles application, Crown Castle sets forth below answers to common

questions raised by local officials upon receipt of such an application.

Q. Who is Crown Castle?

A. Crown Castle is a next-generation communications company that provides managed RF transport

and backhaul services to wireless communications service providers, including mobile network operators and

public wLAN service providers. Crown Castles innovative and cost-effective RF-over-Fiber (RFoF) transport

solution enables wireless service providers to expand their coverage and/or capacity throughout metropolitan

regions and in dense urban and isolated suburban areas. Crown Castle is a nationwide company that operates

regional subsidiaries throughout the United States. More information is available at www.crowncastle.com

Q. What kind of service does Crown Castle provide?

A. Crown Castle provides Telecommunications Services. Specifically, it carries voice and data traffic

handed off to it by wireless providers (such as cellular and PCS). It carries that traffic via its fiber optic lines from

antennas located on utility and/or street light poles to a central switching-like location, and from there, either

back to another antenna or out to the public switched telephone network or Internet.

Q. What is Crown Castle asking of the Municipality?

A. Crown Castle is applying for the right to construct, operate, manage, and maintain a

telecommunications network in the public ways of the municipality in compliance with the municipalitys

ordinances and permitting requirements in order to serve its wireless customers and to improve wireless coverage


and capacity in the Municipality. To that end Crown Castle has submitted a proposed form of right of way use

agreement (RUA) that asks for the following:

the right to enter into the public way to provide telecommunications services;

the right to utilize Municipally-owned streetlight poles and traffic signal poles for an agreed annual fee for

the collocation of Crown Castles facilities;

the right to utilize third-party-owned property (utility poles) in the public way for deployment of Crown

Castles network;

the right to utilize any available Municipally-owned fiber for an agreed annual fee for the collocation of

Crown Castles facilities; and

the right to utilize any available Municipally-owned conduit for an agreed annual fee for the collocation of

Crown Castles facilities;

Q. How long do I have to respond to Crown Castles application?

A. Under federal law, local authorities must act on Crown Castles application, in writing,

expeditiously. Unreasonable delay or a failure to act expeditiously has been held to constitute an unlawful barrier

to entry under federal law.

Q. What information can I require from Crown Castle?

A. Local authorities may only request information directly related to Crown Castles physical

construction in and occupation of the public rights of way. Local authorities are prohibited from inquiring into

the legal, technical, or financial qualifications of Crown Castle or other matters unnecessary for the local

authoritys ability to oversee Crown Castles construction and manage the public rights of way.

Q. Am I permitted to impose restrictions on Crown Castles use of the public rights of

way?

A. Local authorities are permitted only to manage Crown Castles construction and physical

occupation of the public rights of way. This has been held to include matters such as requiring insurance or bonds

and imposing standard construction permitting and safety regulations. This authority has also been described as

extending to the time and manner of construction.


Q. Can the Municipality regulate Crown Castles activities as a telecommunications

provider in the public rights-of-way?

A. No. Section 253 of the Communications Act and Maryland law prohibit local authorities from

regulating the provision of telecommunications services.

Q. Am I required to treat Crown Castle in the same way as the Municipality treats the

incumbent local telephone company?

A. Yes. Local authorities must treat competitive providers, like Crown Castle, in a competitively

neutral and non-discriminatory manner. As a result, local authorities cannot impose on Crown Castle

requirements or fees that are not imposed on the incumbent Bell Company, Verizon.

Q. Who will own the equipment utilized in Crown Castles network and what impact

does that have on Crown Castles rights?

A. Crown Castle will own the fiber by means of which it provides RF Transport Services in all cases.

The optical repeaters and antennae may be owned by either Crown Castle or its carrier customers; however, in all

cases the optical repeaters and antennae will incorporated into the Crown Castle network, even if title remains

with the customer. Under Maryland law, a telephone company is defined and interpreted expansively to include

operators who both own and lease property to provide telecommunications service. Because under its tariff and

agreements, Crown Castle will use and operate property and incorporate such property into its network, including

the optical repeaters and antennae, those facilities are part of Crown Castles network and accorded the same

rights as the rest of Crown Castles network facilities.

This is a new model that Crown Castle is pioneering and with which the Municipality may not be familiar. Thus,

although title to certain equipment may remain with Crown Castles customer in a particular installation, that

equipment will nonetheless constitute a part of Crown Castles network and may also remain part of the

customers larger wireless network in an overlapping circles architecture. In all cases, permit applications will

be submitted either solely by Crown Castle or jointly with its customer, and Crown Castle will be responsible to

the Municipality under the applicable permit in all cases.


Q. What are the consequences if the Municipality fails to respond to Crown Castles

application or restricts its right to provide its services?

A. Local authorities are required to act on Crown Castles request within a reasonable time. The FCC

has determined that a presumptively reasonable time for applications to attach to an existing facility is 90 days

and for applications to install a new facility is 150 days.

Q. Has Crown Castle been certified by the State to provide telecommunications

services?

A. Yes. Crown Castle has received a Certificate of Public Convenience and Necessity from the

Maryland Public Service Commission.

Q. Is Crown Castle a wireless provider?

A. No. Crown Castle is not licensed to provide wireless services and does not control any wireless

spectrum. Crown Castle is a carriers carrier whose customers are wireless providers.

Q. What facilities does Crown Castle need to install to provide service in our

community?

A. Crown Castle provides its service with a combination of fiber optic lines connected to small

wireless antennas, optical repeaters, and associated equipment. Thus, it must generally install a certain amount

of fiber optic cable, either underground or on existing utility poles. In addition, it must install small wireless

antennas and associated equipment on utility poles and/or streetlight poles, typically located in the public rights

of way. When possible and appropriate, Crown Castle may lease capacity on existing fiber optic facilities owned

by the Municipality or other providers, thus diminishing the physical impact of Crown Castles installation.

Q. Will Crown Castle use existing utility poles?

A. Crown Castle will generally seek to collocate its facilities on existing utility or streetlight poles,

typically located in the public rights of way. To the extent that it will be using privately owned utility poles, Crown

Castle has entered into (or is in the process of entering into) any necessary pole attachment agreement. The

federal Pole Attachment Act governs the rates, terms, and conditions that private utility pole owners may impose

on Crown Castles access to such poles.


Q. Will Crown Castle need to install any new poles of its own?

A. Generally, no; however, if there is no available infrastructure, or if the Municipality does not wish

to allow Crown Castle to attach to its streetlight or traffic poles, Crown Castle may need to install its own utility

poles. In such cases, Crown Castle will comply with all lawful local regulations governing such installations.

Q. What are the benefits from Crown Castles entry into our community?

A. First, Crown Castles service allows the wireless carriers to expand the coverage and capacity of

wireless services, with less intrusive facilities. Traditional wireless technologies have suffered from dead spots

and bandwidth capacity limitations. Crown Castles combination of fiber optics and lower antennas helps wireless

providers eliminate dead spots and increase bandwidth needed for emerging and future services.

Second, Crown Castle introduces competition that will help provide more service choices and more competitive

prices for consumers.

Q. What are Crown Castles rights under Federal law?

A. Section 253 of the Communications Act grants Crown Castle the right to provide

telecommunications services and prohibits municipalities from imposing requirements that prevent Crown Castle

from providing telecommunications services or that have the effect of prohibiting Crown Castle from providing

telecommunications services. Court decisions applying Section 253 have held that any municipal requirement

that materially inhibits Crown Castles ability to compete is preempted. This includes imposing on Crown Castle

requirements such as fees or franchises that are not imposed on the incumbent telephone company. Ultimately,

municipalities may not exercise discretion over whether Crown Castle can access the public rights of way and

provide service.

Section 253 reserves for municipalities only the authority to manage Crown Castles physical

occupation of the public rights of way (i.e., construction permitting and safety issues). Crown Castle complies

with all applicable and lawful local permitting requirements concerning construction in the public rights of way.

Q. Are harmful radio frequency emissions an issue with the equipment related to

Crown Castles service?

A. No. The wireless antennas associated with Crown Castles service produce RF radiation at levels

well below the FCCs permitted maximums for general-population, uncontrolled exposures, which are themselves


conservatively low. Indeed, the facilities associated with Crown Castles services are categorically excluded from

the FCCs requirement for routine environmental compliance testing for RF exposure.

LARSON D.A.S. LIGHT POLESDESIGN DRAWINGS

C.L. Upper Antenna27-0

T.O. Base Cabinet3-8

T.O. FRP Pole24-6

T.O. Structure30-0

LARSON CABINET HOUSES SUP-PORT EQUIPMENT FOR D.A.S. STRUCTURE. ALL EQUIPMENT CAN BE INSTALLED AND MAINTAINED BY A SINGLE INDIVIDUAL THROUGH LOCKABLE PANEL DOORS.

All imagery and text within this document is proprietary of Larson Camouage LLC. The concepts herein have been developed exclusively by Larson Camouage LLC., any reproduction or unauthorized use of the concepts and information is prohibited.


5. NEW BUSINESS

D. Discussion of Quality Assurance Program Efficiency Improvements presented by Deputy Chief Fire Marshal

TOWN OF


TO: The Honorable Mayor, Council President and Members of Council THRU: David L. Recor, ICMA-CM, City Manager FROM: Fire Marshal David Hartley RE: Quality Assurance Program (QAP) Recommended Efficiency Improvements DATE: February 2, 2015

ISSUE(S): Outsourcing QAP data management, correspondence and billing SUMMARY: In 2001, the QAP was adopted by ordinance with approximately

1,700 fire protection systems with an associated fee of $25 per system. In 2005, by Resolution, the fee was increased to $30 per system to cover the cost of the program. Today there are approximately 2,500 systems managed in the QAP. QAP data management, correspondence and billing are currently done in-house. Outsourcing these procedures to a third party web-based system will allow employee work hours to focus on field operation, the timely enforcement of fire protection systems deficiencies and non-testing, will ensure that property owners receive quality service by verifying code compliance of third party inspections, and encourage a goal of increasing the number of systems tested and billed annually.

FISCAL IMPACT: Based on the current inspection fee of $30, estimated cost of

outsourcing data management, correspondence and billing to a third party web-based system is +/- $10 per system or $22,000. Projected FY16 revenue for the QAP is $66,000.

RECOMMENDATION: Send out a Request for Proposal (RFP) for outsourcing portions of

the QAP for a third party web-based system, and draft amendments to ordinance that allow the changes.

Excellent Service through a High Performing Town Organization

ALTERNATIVES: No staff recommended alternatives. RESPONSIBLE STAFF: Fire Marshal David Hartley

Deputy Fire Marshal Ryan Whittington COORDINATED WITH: Budget Manager Jennie Knapp

Finance Administrator Martha Bennett ATTACHMENT(S): 1) Current QAP Code Chapter 34 Article V

2) Estimated Budget Impact Examples

Agenda Item # 5D


Ocean City Fire Marshals Office Estimated

Quality Assurance Program

Budget Impact Examples

Using estimated FY 16 budget revenue numbers for the QAP as an example:

Budgeted $66,000 in revenue for the QAP, which would be 2200 systems tested and reviewed

at $30 a system

2200 (systems) x $30 = $66,000

With 2200 systems reviewed at a fee of $35 or $40

2200 (systems) x $35 = $77,000

An increase of $11,000

2200 (systems) x $40 = $88,000

An increase of $22,000

Estimated Fee for outsourcing is $10 per system

2200 (systems) x $10 = $22,000

Projected revenue less fee

@ $30/system; $66,000 - $22,000 = $44,000 actual revenue



With improved data management and a refocus of employee hours on non-tested and

delinquent systems, we estimate increasing the number of system tested and billed annual by

10%, which is 220 systems or;

@$30 - $10/system x 220 = +$4,400

@$35 - $10/system x 220 = +$5,500

@$40 - $10/system x 220 = +$6,600

ARTICLE V. - QUALITY ASSURANCES PROGRAM

Sec. 34-121. - Purpose; intent.

(a) The purpose of this article is to assure that the fire protection system provided in the Town of Ocean City will function as intended in the event of an emergency; also to assist the owners of the fire protection systems in receiving proper service from the contractor/company who install, test, and inspect and/or perform maintenance for the fire protection systems.

(b) The intent of this article is to provide the Office of the Fire Marshal with the resources and a mechanism to respond to complaints and inquires regarding the fire protection systems, also follow-up on inspections reports that show deficiencies within the systems and to verify that the systems have been corrected and in operational condition in the Town of Ocean City.

(Ord. No. 2001-7, 4-2-2001)

Sec. 34-122. - Definitions.

(a) Fire protection systems. Any fire alarm device or systems or fire extinguishing device or systems, smoke control/smoke management device or systems, or their combination, which is designed and installed for detecting, controlling, or extinguishing a fire, or otherwise alerting occupants or the Fire Department, that a fire has occurred.

(Ord. No. 2001-7, 4-2-2001)

Sec. 34-123. - Periodic inspections, testing, and maintenance.

(a) Periodic inspections, testing, and maintenance of fire alarm signaling, fire suppression, and any other fire protection systems, devices, and equipment shall be conducted in accordance with the appropriate National Fire Protection Association's Code and Standards, as adopted and/or modified by this Code. The required inspection, testing, and maintenance service shall be conducted by a sprinkler company licensed by the State Fire Marshal Office, for all other systems a competent company or by an approved owners representative at the intervals established by the National Fire Protection Association's Code and Standards, as adopted and/or modified by this Code.

(b) Before testing any fire protection system which is connected to a central station or connected directly to the fire communication center, notification shall be given to the central station or fire communications before initiation of the tests.

(c) It shall be the responsibility of the owner of the protected property to see that the required periodic inspection, testing, and maintenance of the system are conducted, as well as having the system serviced whenever an unexplained activation of the system occurs or if the system is found to be inoperative.

(Ord. No. 2001-7, 4-2-2001)

Sec. 34-124. - Inspection, testing, and maintenance services.

Inspecting, testing, and maintenance is required for all fire protection systems, devices, and equipment installed within the Town of Ocean City. The inspection, testing, and maintenance service shall be conducted by a sprinkler company licensed by the State Fire Marshal Office and for all other systems by a competent company or by an approved owners representative at the intervals established by the applicable National Fire Protection Association's Code and Standards, as adopted and/or modified by this Code. Upon completion of the inspection, testing, and maintenance service, an approved certificate of inspection from the fire protection company, which includes all the inspection, testing and maintenance criteria set forth in the applicable NFPA code and Standards, shall be submitted to the Ocean City Fire Marshal Office.

(Ord. No. 2001-7, 4-2-2001)

Sec. 34-125. - Certificate of inspection.

(a) A certificate of inspection from the appropriate National Fire Protection Code is required to be forwarded to the Office of the Fire Marshal for the Town of Ocean City after each inspection/test is conducted on all fire protection systems that are required to be inspected, tested, and/or maintained by this article. The certificate of inspection must be submitted to the Office of the Fire Marshal within 30 days of the completion of the required inspection, testing and maintenance by a sprinkler company licensed by the State Fire Marshal Office and for all other systems by a competent company or by an approved owners representative. A certificate of inspection shall be completed after each periodic inspection, testing, or maintenance and shall be maintained on site as part of the permanent systems record.

(1) The fire protection company shall, within 30 calendar days of performing the inspection, test or maintenance, submit to the Office of the Fire Marshal a completed inspection form.

(2) If the certification of inspection form for the fire protection system(s) has not been submitted within 30 days, the fire protection system(s) shall be classified as not being in compliance.

(Ord. No. 2001-7, 4-2-2001)

Sec. 34-126. - Submission of fees for certification for fire protection systems.

(a) At the completion of the required inspection, testing, or maintenance for each fire protection system, the owner or an approved owners representative shall submit the appropriate fees as referred to in section 34-128

(1) All fees required to be submitted under section 34-128 shall be submitted to the office of the Fire Marshal within 60 calendar days of the date of the inspection, testing, or maintenance.

(2) If the owner or owners representative has failed to submit the required fee(s) within 60 days, they shall be found in violation of this Code.

(Ord. No. 2001-7, 4-2-2001)

Sec. 34-127. - Code guidelines for inspection, testing, and maintenance.

Systems Appropriate Code

(a) Fire Alarm Systems NFPA 72 "National Fire Alarm Code"

(b) Sprinkler System(s)

(c) Fire Pumps

(d) Standpipe Systems NFPA 25 "Standard for the Inspection, Testing, and Maintenance of

Water-Based Fire Protection Systems"

(e) Fire Suppression For

Kitchen Hoods

NFPA 96 "Standard for Ventilation Control and Fire Protection of

Commercial Cooking Operations"

(f) Generators NFPA 110 "Standard for Emergency and Standby Power Systems"

(g) Smoke Control Systems NFPA 92A "Recommended Practice for Smoke-Control Systems"

(h) Smoke Management

Systems

NFPA 92B "Guide for Smoke Management Systems in Malls, Atria, and

Large Areas"

(Ord. No. 2001-7, 4-2-2001)

Sec. 34-128. - Certificate of inspection for fire protection systems fees.

The Mayor and City Council of Ocean City shall, by resolution, adopt a fee schedule for the review of certificates of inspections submitted under the terms of this article.

(Ord. No. 2001-7, 4-2-2001)

Secs. 34-12934-200. - Reserved.


5. NEW BUSINESS

E. Water and Wastewater Rate Study presented by Finance Administrator

TOWN OF


TO: The Honorable Mayor, Council President and Members of Council

THRU: David L. Recor, ICMA-CM, City Manager

FROM: Martha Bennett, Finance Administration

RE: Water and Wastewater Comprehensive Rate Study

DATE: February 10, 2015

ISSUE(S): Water and Wastewater Rate Study for 2016-2020

SUMMARY: This report presents the background, conclusions and

recommendations of the water and wastewater cost of service

study. The study is predicated on the use of a cash flow analysis

to support the pricing of utility services using a planning period

of 5 years (Fiscal Years 2016 - 2020).

FISCAL IMPACT: Water Fund revenue can be reduced 13.7% in 2016 and 4.6% by

2020 due to less capital costs and debt. Wastewater revenue

projected increases are 4.4% in 2016 and 15.4% by 2020 to

fund needed capital projects, debt and operating costs.

RECOMMENDATION: Hold a public hearing for proposed rate changes.

Financially Sound Town Government

ALTERNATIVES: Leave at current rates and do not go forward with needed

maintenance and capital projects for water and wastewater

infrastructure improvements.

RESPONSIBLE STAFF: Martha Bennett, Finance Administrator

Jim Parsons, Public Works Chief Deputy Director

COORDINATED WITH: Charlie Felin, Wastewater Superintendent

Bud Iman, Water Superintendent

ATTACHMENT(S): Comprehensive Water and Wastewater Rate Study Executive

Summary. http://oceancitymd.gov/oc/departments/finance/

Proposed Rates: Current 2016 2017 2018 2019 2020

Water Fixture $ 2.60 $ 1.60 $ 1.60 $ 1.60 $ 1.60 $ 1.60

Wastewater Fixture 8.45 8.80 8.95 9.85 9.45 9.60

Fixture Rate - Combined 11.05 10.40 10.55 10.95 11.05 11.20

Water Usage per 1000 gallons $ 3.40 $ 3.70 $ 3.90 $ 4.00 $ 4.00 $ 4.20

Average Bill:

11 Fixtures & 6,000 gallons/month $ 182.75 $ 181.00 $ 186.25 $ 191.35 $ 193.55 $ 198.80

Percentage change in total bill (0.96%) 2.90% 2.74% 1.15% 2.71%

Agenda Item # 5E


WATER & WASTEWATER RATE STUDY SUMMARY

A. Executive Summary

This report presents the background, conclusions and recommendations of a water and

wastewater cost of service study. The study was completed by updating the cost of service

financial model previously developed by Municipal Financial Services Group in 2005 and

updated in 2009. The study is predicated on the use of a cash flow analysis to support the pricing

of utility services using a planning period of 5 years (Fiscal Years 2016 - 2020).

1. Background

The water and wastewater financial model was updated/reviewed using the following

data/documents:

Actual revenue and expenses for Fiscal Years 2013 & 2014.

The FY 2015 and proposed FY 2016 operating budgets for Water and Wastewater.

The current capital improvement plan, reviewed by Whitman Requardt & Associates

(WR&A).

The current number of fixture counts and the amount of water sold over the past four

fiscal years.

The current cash balances within the Water and Wastewater Fund.

In addition to updating the model with the items listed above, the model took into account the

use of impact fees to fund growth-related capital costs. This was accomplished by examining

each individual capital improvement project to identify if the project or a portion of the

project is attributable to growth. As a result of this analysis, the Towns water and wastewater user rates exclude growth related capital costs. All of the assumptions used in the

model (i.e. growth in fixtures, inflation of the expenses, etc.) were also reviewed to ensure

that they are still valid based upon review of historical data.

The following conclusions and recommendations were developed during the course of the

review/update of the financial model.

2. Operating and Maintenance (O&M) Costs

The water system has an estimated operating budget for FY 2015 of approximately $5.0

million; the wastewater department has an estimated operating budget for FY 2015 of

approximately $8.4 million for the same period. For purposes of this study it was assumed

that operating costs based on FY 2015 budget would increase at a rate of 1-2% annually.

3. Capital Costs

The water and wastewater systems both have adequate capacity to meet the Town of Ocean

Citys current and projected demands for these services. At this time no major additions or expansions of either the water of wastewater utilities are anticipated. Engineering consultants

from Whitman & Requardt reviewed the Capital Improvement Plans (CIP) for both the

water and wastewater departments and provided recommendations as to the timing and

costing of some items in the CIPs and proposed other items for inclusion in the five year

plans. No major changes to the water or wastewater CIPs were recommended.

The total estimated expenditures in the water system CIP for FY 2016 FY2020 are approximately $14.2 million; the wastewater system CIP for FY 2016-2020 estimates capital

expenditures of about $28.2 million.

4. Revenue Requirements

The total revenues required in FY 2016 for the water system (including operating costs, debt

service, capital costs, and reserves) are approximately $6.2 million. The wastewater

requirement for the same period totals approximately $13.6 million.

5. Other Income

The amount of other income from miscellaneous fees and charges other than rates is minimal

for both the water and wastewater departments. The total other income for the water system

in FY 2016 is $247,000 and the wastewater system estimates other income of approximately

$312,586. It was also assumed that some of the existing reserves in the wastewater system

would be drawn down to allow the Town to gradually increase wastewater rates instead of a

large rate increase immediately.

In addition, the wastewater system receives payment for providing collection and treatment

services to West Ocean City, which has a capacity of 1.0 million gallons per day reserved for

it. The agreement with Worcester County requires that West Ocean City pay 7.14% of capital

costs and operating costs based in their percentage of flows. In 2014, 10.5% of flows were

from West Ocean City.

6. Net Reserve Requirement

The net revenue requirement is simply the total revenue requirement minus any other income

from sources other than user charges. The net revenue needed from rates for the water

department in FY 2016 is approximately $151,402; the net revenue requirement of the

wastewater system for the same period is about $533,763.

7. Identification and Evaluation of Alternative Rate Designs

In the prior rate study, several alternative rates designs (e.g., declining block rates, unit cost

rates, etc.) were examined and compared them with the rate structures and the factors unique

to the Town of Ocean City (large swing in peak demands, types of customers, etc.).

For the water system, the commodity charge applies to all water consumption. This will

avoid penalizing low volume users while billing all water customers for their share of the

fixed capital costs.

Commercial fixtures are counted on an equivalent fixture basis. All customers of the

wastewater system are billed the same rate per equivalent fixture.

8. Conclusions and Recommendations

Based on our review of the data, the following conclusions are based on the rate model:

The Towns system provides all of the necessary cost information for the water and wastewater systems to allow for a straightforward allocation of costs and calculation

of rates.

The Towns budgeting and accounting processes identify all of the costs associated with providing water and wastewater services, including reasonable allocations of

Town overhead costs such as information technology, finance, and accounting.

The current cost allocation method used to determine the wastewater charges for

West Ocean City recovers the fixed capital costs associated with reserving 1.0 MGD

of capacity and providing for the collection and treatment of wastewater from West

Ocean City.

Both the water and wastewater systems have an operating reserve of 2% of the total

operating revenue requirement for their respective systems to provide for unusual of

unexpected operating costs and provide some flexibility in smoothing or leveling out potential rate increase over time.

Both the water and wastewater systems have a repair, replacement and rehabilitation

(3R) reserve to provide funds for large cost items or projects of this nature without corresponding large or sudden increases in rates.

The water systems flat rate fixture charge of $2.60 per fixture should be reduced to $1.60 per fixture (based on an average of 11 fixtures per account, the average

quarterly charge would be $17.60).

The water system should increase the commodity charge from $3.40 per 1,000

gallons to $ 3.70 for all metered water consumption each quarter (for an average

water customer using 18,000 gallons a quarter, this would amount to about $ 66.60).

The wastewater systems quarterly flat rate fixture charge of $8.45 should be increased $8.80 per fixture (based on an average of 11 fixtures per account, the

average quarterly charge would be $96.80).

Vacant lots should be charged a service availability fee of $56.10 on a quarterly basis.

The fee is a flat rate based on the capital related portion of the bill for an equivalent

dwelling unit (or 11 fixtures). This fee should be charged for both the water and

wastewater system (currently the front foot assessment only covers the wastewater

system). The water system portion of the charge is $1.60 ($1.60 x 11 fixtures). The

wastewater system portion of the charge is $38.50 ($3.50 x 11 fixtures).

In addition to the rate changes recommended above, the Town Council should

consider adopting the scheduled rates increases over the next five years for both the

water and wastewater departments. These increases are especially critical to the

wastewater system, where reserves are being drawn down to in 2017 for debt service

and will allow for a gradual increase to a level where rates are self-sufficient. In

addition, gradually increasing rates in small increments to cover rising costs will

hopefully avoid larger, more drastic rate increases in the future. The proposed rate

schedule for the period covering fiscal years 2016 2020 is presented below:

Proposed Rates: Current 2016 2017 2018 2019 2020

Water Fixture $ 2.60 $ 1.60 $ 1.60 $ 1.60 $ 1.60 $ 1.60

Wastewater Fixture 8.45 8.80 8.95 9.85 9.45 9.60

Fixture Rate - Combined 11.05 10.40 10.55 10.95 11.05 11.20

Water Usage per 1000 gallons $ 3.40 $ 3.70 $ 3.90 $ 4.00 $ 4.00 $ 4.20

9. Comparisons

In order to compare the proposed water and sewer rates with similar communities the

following table was developed. It demonstrates the quarterly water and wastewater bill for

an average residential customer (someone using 6,000 gallons per month with 11 fixtures).

More detail is shown in Schedule 14 of Water and Sewer Rate Model.

Municipality Note Water Sewer Totals

Ocean City, MD (current rates) (2) $ 89.80 $ 92.95 $182.75

Ocean City, MD Proposed (2) 84.20 96.80 181.00

Annapolis, MD (2) 100.48 98.53 199.01

Berlin, MD (2) 56.10 175.35 231.45

Newark, MD (2) 148.50 175.50 324.00

Ocean Pines, MD (2), (3) 110.50 120.50 231.00

Salisbury, MD (2) 53.82 133.38 187.20

Virginia Beach, VA (2) 103.11 92.43 195.54

West Ocean City N/A 121.50

NOTES: (1) - Based on Domestic Fixture Count of 11, and Metered Water Consumption of 6,000 Gal. per Month

(2) - Based on Average Metered Water Consumption of 6,000 Gal. per Month for a 3 Mo. /90 Day Period

(3) - Also includes EDU (Equivalent Dwelling Unit) of $54.00 per quarter

B. General Information

The Town of Ocean City provides potable water to a small year-round population of 7,800,

which swells to a summer weekend population of almost 300,000. This drastic shift in

population is evidenced by significant seasonal fluctuations in demand for water, which

varies from an average consumption of 5.9 MGD to a summer peak of almost three times that

quantity. Early in 1994, the Town also took control and ownership of the wastewater

treatment plant and wastewater collection system serving the Town; previously, the

wastewater system had been owned by Worcester County, and the Worcester County

Sanitary Commission. The wastewater system also has fluctuating seasonal demand, ranging

from less than 3 MGD of flow in the winter to more than 13 MGD on a max day in the

summer.

A summary of this usage data is provided as Schedule 3 of the Water and Wastewater Rate

Model in the appendix of this report, listing consumption data for the past five years in

thousands of gallons.

C. Operating and Maintenance Costs

The operating and maintenance costs for the water and wastewater utilities were developed

from the Town of Ocean Citys current budgets for fiscal year FY 2015 and proposed budget for FY2016. These costs were then adjusted annually by an inflation factor of 1-2% to

estimate the budgeted costs for FY 2017 and beyond. The budgets are quite detailed and

comprehensive; in addition to basic costs such as salaries and benefits, supplies, heat and

light, routine maintenance, etc., detailed data is also provided for costs such as

interdepartmental costs such as information technology, accounting and finance, insurance

and capital items that may not be large enough to include in the Towns CIP such as minor equipment and repairs.

1. Water System O & M Costs

Operating and maintenance (O&M) costs for the water system are categorized into five

groups administration expenses, distribution costs, costs attributable to operation of the water plants, meter installation costs, and meter repair costs. The total estimated

administration budget for FY 2016 is nearly $979,948. The largest cost within this category

is for the operating transfer of interdepartmental costs of approximately $ 545,537 which

represents the reimbursement by the utility for support services provided by the Town (e.g.,

human resources, finance, and accounting). The water distribution cost component is

budgeted at nearly $ 1,289,469, with salaries and benefits making up over half of the budget

total.

The costs budgeted for the operation and maintenance of the Towns water plants make up almost half of the total water system O&M budget. The three largest costs components

relating to the water plants are salaries, energy, and supplies. These three items total

approximately $1,674,380 out of a total budget of over $ 2,179,791 for plant O&M. The

meter installation budget of $137,522 is primarily made up of $ 75,000 for parts and salaries

of $43,793. The major costs elements in the meter repair budget of $ 293,241 are salaries and

benefits which constitute over half of the estimated costs in this category.

A detailed breakdown of the total estimated O&M costs of $4.8 million for the water

department is shown in Schedule 4 of Water and Sewer Rate Model, which is presented in

the Appendix to this report.

2. Wastewater System O&M Costs

The budgeted O&M costs for the wastewater system were developed within four groups administration expenses, collection system costs, wastewater treatment plant costs, and the

expenses associated with laboratory services. The total administration costs of approximately

$1,455,845 has three major components the operating transfer for interdepartmental expenses of $762,126 (as discussed above, this represents the reimbursement by the utility

for support services provided by the Town such as human resources, finance, and

accounting); salaries of nearly $449,702; and insurance expense of $95,094. Within the

collection system, over half of the budget of approximately $1,172,526 consists of salaries

and fringe benefits.

The operating and maintenance expenses associated with the wastewater treatment plant are

the largest expense group within the wastewater system, with a total budget of nearly $5.4

million. The largest cost components of this group are salaries and benefits which are more

than one third of the budget, energy expenses of $ 463,500, and supplies of more than $

638,000. The laboratory services budget of $331,972 primarily consists of salaries of

approximately $282,123 and supplies of $ 37,205.

A detailed breakdown of the total estimated O&M costs of $8.4 million for the wastewater

department is shown in Schedule 4 of Water and Sewer Rate Model, which is presented in

the Appendix to this report.

D. Capital Costs

The capital costs associated with the water and wastewater systems are separated into two

separate categories existing debt service and capital improvement projects. The Towns CIP and capital budgets were reviewed by staff from Whitman & Requardt, Inc., and

incorporated into the master plan for each system and capital project section of this report.

The assumptions made as to the funding of future capital projects and purchases of fixed

assets, either with cash or through the issuance of debt are reported in this section.

1. Existing Debt Service

The water system has outstanding debt with a total principal balance of approximately $3.2

million. This principal amount is scheduled to be repaid over the next 13 years with

scheduled interest payments totaling almost $ 532,000.

The wastewater system has over $27 million of outstanding bond issues at this time. This

principal amount is scheduled to be repaid over the next 18 years with scheduled interest

payments totaling almost $8.9 million.

The total existing debt service for both the water and wastewater systems are presented in

Schedule 8 of the Towns water and wastewater rate model shown in the appendix to this report.

2. Expected Capital Improvements

The expected capital improvements were derived from the Town of Ocean Citys CIP for the water and wastewater departments. The engineering consultant members of our project team

from Whitman Requardt Engineers reviewed the water and wastewater CIPs with a focus on four areas the timing of the items as scheduled on the COP, the adequacy of the costs listed in the CIP, any recommended additions or deletions from the current CIP, and any regulatory

issues that may warrant additional consideration.

As a result of their review of the water department CIP, Whitman Requardt had the following

recommendations:

Water Main Upgrades $ 1,075,000

Raw Water Main to 66th St 845,000

Treatment Plant Improvements 970,000

66th Street Water Plant - land 1,250,000

66th Street Water Plant - design & construction 5,500,000

Conversion To Automatic Water Meter Reading 600,000

1st Street Water Tower 4,000,000

Total Water Fund Capital Improvements $ 14,240,000

As a result of their review of the wastewater department CIP, Whitman Requardt had the

following recommendations:

Wastewater Mains 15,000,000

4th Secondary Clarifier & Improvements 6,000,000

Elevate Incoming Electrical Gear - treatment plant 1,251,450

Ocean outfall lining under beach dune line 1,166,000

Replace Pista Grit Unit 400,000

Oxygen building SCADA upgrades & repairs 600,000

Primary Influent Building MCCA - Replacements 425,000

28th Street pumping station 1,825,000

Chloring contact chamber expansion 1,500,000

Total Wastewater Capital Improvements $ 28,167,450

The water and wastewater system CIPs are presented in Schedule 7 of the Towns water and wastewater rate model in the appendix to this report.

3. Cash Purchases of Assets

For purposes of this study, it was assumed that a portion of assets identified in both the water

and wastewater departments CIPs covering the current fiscal year and the next will be funded with cash outlays. The funds would come either from rates or cash on hand or in

reserves for the water and wastewater departments and is found on Schedule 7A.

4. Anticipated Debt Service

At the time of this study, new debt financing for capital projects is anticipated for both the

water and wastewater utilities over the next few years. For rate modeling purposes, it was

estimated that certain items in the water and waste water CIPs would be funded by issuing

bonds during the period from FY 2016 FY 2020.

The estimates made regarding the funding of the water and wastewater capital projects with

cash outlays and the issuance of debt are presented in Schedule 15B of the water and

wastewater rate model shown in the appendix to this report.

E. Revenue Requirements for Water & Wastewater Rates

The revenue requirements for the water and wastewater systems are simply the total revenues

needed by each utility to pay for the total amount of O&M costs, capital costs, plus any

reserves established. The cash needed to meet the revenue requirements can come from a

variety of sources, such as permits, hook-up fees and other miscellaneous charges. This

section summarizes the various cost components of the water and wastewater revenue

requirements.

1. Water System Revenue Requirement

The revenue requirement for the water department is split into two major components operating costs and capital costs, as discussed in Sections C and D (above) of this report. The

total estimated operating costs of approximately $4.4 million for the water system consist of

the costs for administration, distribution, water plants, meter installation and meter repairs. In

addition, the operating reserve allows for unusual or unexpected one-time charges that may

arise over the year, or can buffer the impact of lower than anticipated water usage during an

excessively wet or dry year. For purposes of this study, an operating reserve base of 2% of

the total budget operating costs is included, which amounts to approximately $97,500.

The capital costs component of the water departments revenue requirement has three elements capital expenditures to be funded with cash, existing debt service, and projected debt service for future capital expenditures not funded with cash. For purposes of this study,

it was assumed that new debt would be issued to pay for approximately $4 million in capital

expenditures during fiscal year 2016 along with $6.7 million of the capital projects planned

for fiscal year 2020. The total payments for the existing debt service are almost $663,392 for

FY2016.

In addition, the Repair, Replacement & Rehabilitation (3R) Fund is a reserve to assist in paying for major projects that were capital related, and to help alleviate possible spikes in the revenue requirement when major projects are required. Typically, utilities with the 3R reserve use a percentage of the net book value of their systems assets. For purposes of this study, the reserve was calculated at one percent of the water systems net book value of approximately $15 million, or about $150,000. This calculation is shown in Schedule 9 of the

appendix to this report.

The FY2016 total revenue requirement for the water department therefore consists of total

estimated operating costs of $4.4 million and capital costs of approximately $1.8 million, for

a combined total revenue requirement of $6.2 million. The water systems revenue requirement calculations are presented as Schedule 10 in the appendix to this report.

2. Wastewater System Revenue Requirement

The wastewater system revenue requirement is also split into two components operating costs and capital costs. The operating cost component totaling approximately $7.8 million

consists of the budget costs for administration, the collection system, and the wastewater

treatment plant and laboratory services (as discussed in Section C). As with the water system,

an operating reserve is charged to allow for unexpected or unusual expenses. The operating

reserve of 2% adds approximately $168,500 to the total operating revenue requirement for

the wastewater system.

The capital cost component of the wastewater departments revenue requirement also has three elements capital expenditures to be funded with cash, existing debt service, and projected debt service for future capital expenditures not funded with cash. For purposes of

this study, it was again assumed that new debt would be issued to pay for approximately

$24.6 million in capital expenditures during fiscal years 2016 and 2020. The total payments

for the existing debt service are about $3.1 million for FY2016.

As with the water system, a Repair, Replacement & Rehabilitation (3R) Fund assists in paying for major projects that are capital related, and to help alleviate possible spikes in the revenue requirement when major projects are required. As stated above, utilities with a 3R reserve use a percentage of the net book value of their systems assets. The reserve for the wastewater department was calculated at one percent of the water systems net book value of

approximately $53.3 million, or about $533,700. This calculation is shown in Schedule 9 of

the appendix to this report.

The FY2016 total revenue requirement for the wastewater department therefore consists of

total estimated operating costs of $7.8 million and capital costs of approximately $4.9

million, for a combined total revenue requirement of $12.7 million. The water systems revenue requirement calculations are presented as Schedule 10 in the appendix to this report.

F. Other Income

In order to determine the amount of revenues required from user charges it is necessary to

estimate the level of income that the water and wastewater utilities will receive from other

sources, such as interest income, permits and fees, and miscellaneous other charges to water

and wastewater customers.

1. Other Income

The water department has limited sources of revenues other than the user fees currently

charged. Additional revenues are anticipated from interest on delinquent accounts in the

amount of $4,000 sales of materials and services of $30,000 and water connections services

(which are discussed below) of $165,000. The total estimated income from sources other

than water rates for FY2016 is $216,255.

The wastewater department has several additional sources of income other than user fees.

The largest revenue sources are plumbing permits which provide about $66,000 and lab fees

which generate about $90,450. Total revenues from sources other than wastewater rates are

estimated at $272,194 for FY 2016.

The total other income for the water and wastewater departments is summarized in Schedule

6 of the Towns water and wastewater rate model in the appendix to this report.

2. Connection Charges

One of the revenue sources other than user fees for the water and wastewater utilities is

connection charges. These fees are based on the estimated costs of the Town to install a

water meter and hook-up to the water system or connect to wastewater system. The charge

for installation of a water meter varies depending on the cost to install the meter, ranging

from $1,500-$2,000 for a 1 meter to $25,000 to $30,000 for a 10 meter. Connection charges for the wastewater system can range from $4,500 to $8,500 depending on the size of

the service connection and street width and are reviewed on a regular basis to ensure they

adequately reflect the cost of the service provided.

3. Impact Fees

The Town of Ocean City uses impact fees or system development charges which have been

are billed to new customers since 2005. Impact fees are charged to help pay for the costs

associated with expansion of the utilitys capacity. As of June 30, 2014, debt service for expansion of water system capacity exceeded impact fees collected since 2005 by

$1,143,387. Debt service for expansion of wastewater capacity exceeded impact fees

collected since 2005 by $1,406,476.

4. Costs Related to Wastewater Service for West Ocean City

The wastewater treatment plant in Ocean City provides sewage treatment for the sewage

flows transported to it from West Ocean City, which is outside the corporate limits of Ocean

City. The sewage is transported across the bay via a dedicated pipeline, and then flows

through Ocean Citys collector system to the plant at 65th street. In a typical situation, Ocean city would charge West Ocean City a sewer rate higher than the rate that was charged to

residents of Ocean City. The use of higher rates for service outside the boundaries of a

municipal utilitys service area is a fairly typical method to reimburse the utility for financial risks taken (e.g., the responsibility for debt issued to build capacity for use outside its

corporate limits) and for the use of the utilitys credit.

The agreement between the Town of Ocean City and Worcester County transferring the

assets and liabilities of Sanitary District #1 (basically, the Ocean City Treatment Plant) to the

Town of Ocean City requires that Ocean City charge Worcester County for sewer service

provided to West Ocean City on the same basis as sewer service is charged in Ocean City.

That is, the Town of Ocean City is precluded from charge the County any profit or surcharge

for service provided to West Ocean City.

The basic principal of utility rate-making is to identify or allocate costs to those customers,

customer groups or customer classes who are responsible for the costs which are incurred.

This approach has been followed in developing rates within Ocean City.

For rate making purposes, West Ocean City is one customer; the bill is sent by Ocean City to

Worcester County, which then bills the residents of West Ocean City. The calculation of the

amount that is charged for service to West Ocean City is exactly the same as that used in

Ocean City, and includes no profit or surcharge.

Capital costs are allocated on the basis of the higher of capacity used or reserved.

Worcester County requested that 1.0 MGD of capacity be reserved for West Ocean

City; this amount of capacity is sufficient to serve existing residents of West Ocean

City, and accommodate the growth that is expected in West Ocean City. This amount

of capacity represents approximately 7.14% of the total capacity of the Ocean City

Treatment plant, so 7.14% of the annualized capital costs for the treatment plan

(equal to approximately $210,800 in Fiscal Year 2015) are charged to West Ocean

City.

Operating costs are allocated based on the quantity of sewage treated from West

Ocean city as a proportion of the total flow treated at the plant. West Ocean Citys flows, on an annual basis, is approximately 10-11% of the total flow to the plant,

resulting in an allocation of $633,787 in operating costs to West Ocean City for Fiscal

Year 2015.

The total cost of treating sewage from West Ocean City includes both the costs of

building the plant (reflected principally as annual debt service on bonds for which

Ocean City is now and will be responsible) and the costs of operating the plant.

The allocation of costs to West Ocean City is presented in Schedule 11 of the Towns water and wastewater rate model in the appendix to this report.

5. Availability Charge for Vacant Lots

The capital costs of the water and sewer system are fixed; that is when capacity is

constructed, the costs related to paying for the capacity must be paid by Ocean City, whether

or not the capacity is currently being used. The most obvious example of this situation is the

construction of water and sewer systems to serve seasonal customers, who use the capacity

on only an irregular basis, or for part of the year.

A less obvious cost but just as real for Ocean City is the building of capacity for vacant lots;

Ocean City must have the capacity to serve these lots, but does not know when construction

will actually occur on the lots. It is equitable and

February 24, 2015 Complete Agenda

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