Commercial electric customers in Owensville are a step closer to some relief with utility costs under a proposal being considered by aldermen.

Following discussions Nov. 3 at their regularly scheduled meeting and again during a workshop two nights later, city officials have instructed their attorney to review a plan which could lower the demand meter charge for qualifying businesses. Aldermen hope to be able to make budget adjustments for the 2009-10 fiscal year to eliminate demand meters entirely by next summer. City officials agreed they wanted to review the city’s Economic Development Rate (EDR) to make it fair to all city commercial rate customers.

“I’m just concerned about the competition issues,” said Ward 1 Alderman Sam Britton, elected this past April, on Monday. “We might be promoting unfair competition issues in that area down there. There are some very unhappy people down there that should have got it (the EDR) but didn’t.”

Britton’s reference was to Carty’s Chicken Shack. Owners of the business, said City Administrator John Tracy, have not made a formal application for the EDR but have told city officials they upgraded their electric service to handle three-phase equipment. Tracy said the existing criteria for obtaining the EDR was based on new or increased load demand and an expansion of services at a new or existing business.

Ward 2 Alderman Rob Borgmann pointed out that the city currently has three appli-cations pending for the EDR. “We don’t need to do anything until we get these settled,” Borgmann said. He suggested the board “hold off until we have our workshop and get it sett-led across the board.”
Board members also wanted input from Brian Epstein, Ward 1 alderman and president of the board who was unable to attend the meeting last Monday. Discussion was tabled Monday and he was present for the workshop.

At the workshop, aldermen and Mayor Jesse Loeb agreed that lowering the demand rate from $8 to $5 as previously discussed could benefit new and existing businesses. As proposed, the rate would be lowered for a 5-year period. Epstein asked if the lower rate should be tied to expansion. Tracy offered his opinion saying the EDR should be tied to businesses producing sales tax revenues for the city and not simply a service business. Tracy said the existing criteria being reviewed does not require a certain number of employees be added to a business to qualify for rate reductions nor does it list how many people a business must employ, or add, to receive the EDR.

Tracy said Tuesday he did not expect a final version of the EDR criteria to be ready for final approval when the board meets again on Monday (7 p.m. Nov. 17) at City Hall. “The new EDR criteria is being worked on,” said Tracy.

Mayor Jesse Loeb told business owners attending the Nov. 3 meeting they were being careful not to make a decision before examining all financial aspects of the EDR. It was noted reductions in income could cost up to $53,000 if all the businesses took advantage of the rate offer.

“We’re making sure we not cutting money too much in the electric (department),” said Loeb.

“I want to get it over and done with,” said Kamler. He continued noting the city needed to take some action to help struggling businesses. “If we need to bite the bullet…” he said interrupting his own thought before adding, “we’ve got to be fair to everybody. A lot of issues have been put on the board.”

Kamler and Britton came on the board in April. While some residents and business owners have expressed frustration at the process, Tracy noted that was exactly what it is…a process that takes time.

City officials have been meeting regularly in closed sessions since June in an attempt to find a way out of the MoPEP contract and to find  a new service provider (see page 3 for a story on the city’s RFP for evaluation of the worth of the city electric services).

Current EDR applications are being considered for JnL2, Inc., The Cafe´, Co., and McDonald’s. JnL2 was on the agenda Nov. 3 for approval but the board tabled that action until they could meet as an entire group in their workshop session. “Some people weren’t offered these options (before),” said Tracy on Nov. 3. “There are three (requests) now and there may be more coming forward.”

Tracy cautioned the board they need to understand the “fiscal impact on the budget. I think we need to take a look and make an intelligent, sound decision,” said Tracy.

Patients First, Select Powder Coating, Miller House and Pub, and Central Tire all have received the EDR. Select Powder Coating and Central Tire also have MoDAG loans. “We’re monitoring this to see if anyone else qualifies,” said Epstein at the workshop. He noted the current criteria was “pretty foggy.”

Kamler noted JnL2, McDonald’s and The Cafe´, Co., all appeared to qualify for the EDR. They would need more information from Carty’s before taking any action.

Aldermen did approve JnL2’s request for a $100,000 MoDAG loan with monthly payments over a 5-year period at 3-percent interest. MoDAG funds come from a revolving grant awarded to the city. The city loans the money to businesses for expansion ventures. As the money is repaid, the city is able to loan it out to other businesses through the revolving loan program. Original grant funding was provided by the Missouri Department of Agriculture.

JnL2 provided collateral for the loan, noted Tracy when he presented the security agreement which became Ordinance No. 1002 on a 3-0 vote.
Mike Edgcomb, owner of the Owensville McDonald’s implored aldermen to take action to help local businesses with a break on electric rates. Citing an increase of 5.5-percent in food cost last year, he did not raise prices. He said, however, he would have to raise his dollar menu items to $1.29. “It’s getting pretty serious out there,” said Edgcomb noting he expected his store’s sales tax revenues to decrease 8 to 9 percent overall this year.

Edgcomb said he was trying to help keep the city’s sales tax revenues flowing but high utility costs were hurting his bottom line. “I can not compete against you people (at City Hall),” said Edgcomb.  “I’ve got to raise prices. I’m only going to succeed if the city works with me. In this business world out there it’s sick.”

He noted his utility costs have risen from  $56,000 in 2004 to $83,000 last year.

Epstein said he would like to give the EDR to all businesses in town. But, he added, he had a fiscal obligation to the entire town to consider when making a decision on the proposed rate change.

Edgcomb countered saying, “additional sales will offset (electric) income reductions.”

Don Jost, owner of Jost Tire, Co., put the city’s demand meter rate structure in perspective.

It wasn’t pretty either.

Selling and changing fewer tires, therefore using less electricity, could get his business off the demand meter. “I can make more money cutting services and getting rid of my demand meter,” said Jost. Then, holding his index finger an  thumb about an inch apart, Jost added, “I’m that close to being off demand.”

Kamler suggested the board form a citizens committee, complete with a mission statement, to help address the situation. Realistically, he said, the board was looking at eliminating the demand meter altogether by July 2009 when the next fiscal year begins.

“We’re working quite diligently and washing our hands of this entire mess,” said Mayor Loeb as the workshop concluded.