SPRINGFIELD UTILITY BOARD 223 A STREET, SUITE F SPRINGFIELD, OR MINUTES: December 13, 2017

Transcription

1 SPRINGFIELD UTILITY BOARD 223 A STREET, SUITE F SPRINGFIELD, OR MINUTES The regular session of the Springfield Utility Board was called to order by Chair Willis at 6:10 p.m. ATTENDANCE: Board: David Willis, Chair; John DeWenter, Vice Chair; Pat Riggs-Henson; Mike Eyster; Virginia Lauritsen. Staff: Jeff Nelson; Bob Fondren; Sanjeev King; Greg Miller; Dave Embleton; Bart McKee; Nick Amann; Cindy Flaherty; Joe Leahy, Attorney for the Board. Others: Ed McMahon, Home Builders Association of Lane County. ACTION ITEMS: CONSENT AGENDA MINUTES: November 7 Budget Committee Minutes & November 8 Board Minutes ACCOUNTS PAID: November 2017 APPROVAL OF PURCHASE: 1. Sole Source 177 / General Pacific Itron Meters for the Electric Division. Under Sole Source 177, the Electric Division staff recommends purchase to General Pacific / Itron for the purchase of 4,500 ERT meters for a total of $202,500 (Exhibit A). * Mike Eyster motioned, and Pat Riggs-Henson seconded, to approve the consent agenda, as amended to include revisions to the November 8 Board Minutes. This motion CARRIED unanimously. Prior to approval, Vice Chair DeWenter requested that revisions be made to the November 8 Board minutes, as follows: 1) On page 4 of the draft minutes, second sentence of the second paragraph from the top of the page, change the wording The Board also met with to read instead Board members Willis and DeWenter also met with. 2) On page 13 of the draft minutes, second sentence of the third paragraph from the top of the page, change the wording August 2016 to read instead August BUSINESS FROM THE AUDIENCE: None.

2 Page 2 BUSINESS FROM THE BOARD: Proposed 2018 Budget Jeff Nelson gave a brief review of the presentation he gave last month on the proposed 2018 budget and referred to his overhead presentation (Exhibit B). There were no public comments during the first public hearing, held on November 8, Mr. Nelson said. We are having a second public hearing this evening. After brief discussion, the Board thanked Mr. Nelson for his presentation. Public Hearing to Gather Input on SUB s Proposed 2018 Budget The proposed 2018 budget has been reviewed in its entirety and it has been recommended for approval by the Budget Committee, said Chair Willis. He then opened the public hearing at 6:29 p.m. and asked if anyone wanted to make public comment. Jeff Nelson wanted to share that SUB received customer correspondence regarding concern of water rates and general concerns about those increases and the inability to perhaps irrigate their lawn, in combination with concern about sewer rates. He noted that SUB doesn t have control over sewer rates, as sewer charges are linked to water usage, and not SUB s water rates. Mr. Nelson explained that SUB tries to inform the customer of what SUB is responsible for. No further action was necessary. As there was no other public comment, Chair Willis closed the public hearing at 6:31 p.m. Consideration of Resolution , Approving the 2018 Utility Operating Budget Mr. Nelson recommended the Board adopt Resolution , approving the 2018 Utility Operating Budget, and as recommended by the Budget Committee. * Virginia Lauritsen motioned, and Pat Riggs-Henson seconded, that the Board adopt Resolution , approving SUB s 2018 Utility Operating Budget as presented and as recommended by the Budget Committee (Exhibit C). This motion CARRIED unanimously.

3 Page 3 Proposed Water Rate Increase Jeff Nelson gave a brief review of the presentation he gave last month on the proposed 5.0% water rate increase, noting that if the rates are adopted by the Board, they will be effective on all billing statements rendered on or after January 1, Mr. Nelson began his presentation by referring to his overheads (Exhibit D). Mr. Nelson noted there were no public comments during the first public hearing, held on November 8, and we are having a second public hearing this evening. Mr. Nelson noted that after consideration of public comments, if any, we will be pleased to respond to public comments. Public Hearing to Gather Input on Proposed Water Rate Increase Chair Willis opened the public hearing at 6:36 p.m. and asked if anyone would like to make public comment regarding the proposed water rate increase. As there was no public comment, Chair Willis closed the public hearing at 6:37 p.m. Consideration of Resolution , Approving Water Rate Increase Mr. Nelson recommended that the Board consider adoption of Resolution , as presented. * Mike Eyster motioned, and John DeWenter seconded, that the Board adopt Resolution , approving the water rate increase, as presented (Exhibit E). This motion CARRIED unanimously. Consideration of Proposed Board Policies Vice Chair DeWenter deferred the draft Board policies, at this time, to allow the Board additional opportunity for deliberations on proposed Board policies. BUSINESS FROM THE GENERAL MANAGER: System Development Charges Jeff Nelson noted that Ed McMahon with the Home Builders Association of Lane County is with us tonight. Mr. Nelson

4 Page 4 said he d reached out to Mr. McMahon and a few other developers who had expressed interest in the status of SUB s development charge methodology. Mr. Nelson explained that the Board approved a consultant to work with SUB on the current methodology, as well as potentially evolving to looking at a new methodology, or potentially coming up with new System Development Charges (SDCs). That process, in terms of review and recommendation, is still under development. We are expecting to have a public hearing in 2018, at which time we will reach out to those on our interested party list, which would include the Home Builders Association and anyone else who would want to have copies of the proposal. The Board would then go through a public hearing process and gather input from developers or other interested parties. Jeff Nelson shared that Deb Galardi, with Galardi Rothstein Group, sends her regrets as she unexpectedly fell ill today and was unable to attend tonight s Board meeting to present this presentation. Mr. Nelson referred to the overheads (Exhibit F) and reviewed SDCs with the Board. He noted that SDCs recover capital investments to serve growth. They are also referred to as Development/Redevelopment Charges (DRCs), impact fees, capital recovery fees, and connection fees. There s a one-time charge at the time of connection. He then reviewed the general process for fee development, and what would be SUB s responsibility versus developer responsibility. SUB s responsibility, being repairs, as opposed to fees recovered by developers at the time of development. SUB is required to have an Interested Party list. The methodology update notification period is a 90-day notice of public hearing and 60-days for methodology review, where interested parties would be able to have the proposal available to them, before the first public hearing. There is a 60-day limit to challenge adopted methodology, and there s project list updates that we re needing to review. He reviewed current charges and explained the different levels for development charges. He explained that in upper level areas, we have storage and pumping facilities and those have SDCs associated with those lots that are in those particular levels served by specific upper level facilities.

5 Page 5 Mr. Nelson reviewed the Advance Funding Policy, and explained that the mechanism for developer reimbursement is that the developer who wants to develop lots requires new facilities pay SUB. Then, if new or other development occurs that benefits from those new facilities, SUB reimburses the original developer on a pro-rata basis. Developers provide up-front investment funding of upper level storage of about 70% and for any pumping facilities that are needed, they pay 100% of that cost for new facilities. The structure, right now, is that we have a 10-year reimbursement contract. If development occurs and the investment is made, and if development occurs within 10-years that benefits from those new facilities, then reimbursement to that original developer happens. This only applies to the Water Division DRCs or SDCs only. On the Electric side, there is no state law structure with regards to SDC methodology. SDCs apply to water, waste water, and storm water. He added that developers bear the risk if additional development does not occur within that contract period. There are different terms and mechanisms that were discussed and brought forward by our consultant. Mr. Nelson explained there are SDCs that are the obligation of the developer (or developer consortium). These include System- Wide SDCs, which applies to all development; and Limited Area SDCs, which applies to specific geographic area (e.g. upper level pumping/storage). There s also Local Improvement District (LID), which is the obligation of property owner(s) (which may change over time); and Temporary Access Fees, which is the obligation of the developer (or developer consortium). He then referred to a slide titled Other Funding Approaches which details each of these mechanisms, and explained that different mechanisms have different profiles for the utility and for the developer. The consultant brought forward an example of a developer consortium, rather than a single developer, that work with each other and the utility to come up with some sort of a master agreement and understanding about how costs would be recovered to serve a development in a particular area. Different mechanisms have different risks for the utility and the developer. He further explained there is the Advanced Funding Agreement, which is pay-as-you-go (which is the current practice); and there is the Advanced Funding Agreement -

6 Page 6 Financed, which means the Board could be approached with how much it s going to cost and with the Board s discretion, SUB could be reimbursed by the developer by paying over a specific period of time instead of paying 100% up front. Again, explained Mr. Nelson, there are System Wide SDCs where all development pays for facilities based on system capacity needs over an unknown period of time; and there are Limited Area SDCs where development in a specific area pays for facilities based on area capacity needs over an unknown period of time; there s also Local Improvement District (LID) where properties in a specific area pay for facilities based on a pro-rata basis over a specific period of time; and then there s Temporary Access Fees which can apply to any of the previously listed conditions/mechanisms where a permanent solution is in place and where practical. Next steps, added Mr. Nelson, are; 1) evaluate fee levels: preliminary assumptions are that storage and pumping will continue to be funded by developers (pay-as-you-go); temporary fees/charges for temporary service may be allowed at the General Manager discretion with funding and funding agreement in place for permanent service; the SUB Board may elect to allow financing of developer costs to SUB on a case-by-case basis (e.g. Veteran s hospital proposal); 2) update policy documents: consistent with Oregon Revised Statues (language and requirement); and 3) Board review/adoption: the process will include SDC project list, SDC methodology, and timing/phasing of fee level adjustments. Mr. Nelson asked the Board if they wanted to give any direction, at this time, related to those preliminary assumptions, as outlined. In response to Mike Eyster s comment about the possibility of stretching out the 10-year reimbursement plan, Joe Leahy responded that a 10-year reimbursement period may be statutory according to state law. His experience, added Mr. Leahy, is that most developers want to turn those lots right away, because not only is SUB going to get paid, but the developer is going to get paid. Mr. Eyster then expressed his interest to hear from Ed McMahon with the Home Builders Association of Lane County, and asked him if he would like to comment at this

7 Page 7 time. Mr. McMahon shared that he has been in his current position for 20 years, and he s always found SUB s SDC methodology and Board actions around that as the one to follow, and appreciates SUB s financial responsibility. The concern he has is that he knows the state SDC law has a lot of flaws in it and was hoping to tackle that at the last legislative session, but that didn t happen. He added that it s not going to happen at the joint session of the state legislature either. A lot of new methodologies are being presented that brings in a lot more money, but also prevents those first time home buyers from experiencing benefits of homeownership. He wants to encourage SUB to keep the balance that it s had, as its history has been outstanding, and to keep up the good work. In wrapping up his presentation, Jeff Nelson thanked Mr. McMahon for taking time tonight to share his comments with the Board. Enterprise Risk Management Jeff Nelson explained that the Board is going through the process of identifying priorities. Mr. Nelson felt it would be helpful for the Board to have a structure in place in order to operate under the same foundation and building blocks associated with how you evaluate risk and then, ultimately, how that aligns with the Board s priorities. He then began his presentation on Enterprise Risk Management (ERM) and referred to his overheads (Exhibit G). He said ERM includes the methods and processes used by organizations to manage risks and seize opportunities related to achievement of their objectives. It identifies events, assesses those events, it determines a response strategy, and monitors progress. Mr. Nelson explained that ERM can be used to support the Board s current and ongoing process in identifying Board priorities. The International Standard Organization established ISO Risk Management Standard to provide principles and guidelines on risk management. There are a lot of reasons why ISO has been adopted by others, as it supports a wide range of activities; it s not prescriptive, in terms of if the Board does it one way, somebody else within SUB has to do it the same way it allows flexibility, in terms of the tools that you use; but the overall framework is starting with the same foundation, the same approach, the same methodology.

8 Page 8 Mr. Nelson added that traditional operational risks have focused on negative impacts, but what ISO looks at is both risk management in terms of strategic objectives and it looks at risk, as being the effect of uncertainty on objectives, and the effect can be positive or negative. The ISO process is where you identify the risk, perform an analysis, evaluate what the likelihood is, then after you do a risk treatment, you evaluate what that progress was. Essentially, he said, ISO is consistent with his way of thinking of risk. He explained that there s the implementation process, which consists of the mandate and commitment (by the Board), an ERM leader (the General Manager), the design of the framework, implementation, monitor and review the framework, and improvement of the framework. When the ERM process is implemented, it can take some time to implement, and can take more staff. As staff integrate ISO ERM, they become Risk Champions/Risk Owners. He feels it s more effective for the organization to have more decision making be delegated, to the degree that people are following the same risk management practices. Eventually, everyone is a Risk Manager. Mr. Nelson then reviewed a slide on evaluation tools called a Heat Map that looks at the likelihood and impact of risk from lowest (yellow) to highest (red). However, SUB may want to have a heat map for positive risk and a cool down map for negative risk. This tool can be used to prioritize. SUB s ERM would focus on positive and negative effects. It could assist in identifying external risk (lower control) and the internal risk (higher control). And we re looking at global vs. national vs. regional vs. state vs. local vs SUB. It provides organizational continuity in the event there are leadership changes, and promotes a risk management culture. In regards to next steps, he recommends the Board consider using ISO for its governance and identification of priority issues, work with the general manager to provide some recommendation on additional next steps, and may want to include this topic at future work session to discuss further. On the management side, we can identify some early adopters within the organization in the implementation process in the management functions of the utility (HR/Safety, IT, Water Quality, and others).

9 Page 9 After brief discussion, the Board consensus was to not pursue implementation of ISO ERM, at this time, until after the general manager and staff have had a chance to implement it within the organization, and to have Mr. Nelson report back to the Board with future updates on the process. Telecommunications Update Board Travel and Reimbursement Update Board Discussion of Future Work Sessions/Calendar and Board Agenda Items Jeff Nelson shared a brief update with the Board on Telecommunications. We have presented an overview to the public, we ve been speaking with internet providers, and talking with the City of Springfield. We also have future meetings planned. Jeff Nelson reviewed the Board policy on travel and reimbursement. Part of that policy includes reimbursement, and as in the case of a meal receipt, the requirement is that the Board provide the detail associated with that meal receipt (an itemized list of what the purchases were that made up the total on the receipt). Bob Fondren confirmed that receipts are required for expenditures of $25.00 or more. He also explained that there is a new tax bill where detailed/itemized receipts may be required for all expenditures, and he will update the Board when that change takes place. Jeff Nelson shared a tentative schedule to address Board priorities for Mike Eyster let him know that he will not be able to attend the February Board meeting, and we originally scheduled an Executive Session to discuss Rainbow Water District issues. This will need to be rescheduled in order to allow all Board members be present to discuss this issue. He then asked the Board for guidance on how they d like to proceed, in regards to the tentative schedule. Chair Willis said, in addition, the Board still needs to meet in special session to discuss the draft Board policies regarding the General Manager Performance Evaluation and the Board s Performance Evaluation. Board consensus was to schedule a Special Session to further discuss these policies in January He said the list of Board priorities are based upon the commentary, the work/special session meetings, and the joint

10 Page 10 EWEB meeting. He then referred to the Priorities for 2018 as Identified by the SUB Board in the Board binders, which includes the Tentative Schedule to Address SUB Board Priorities (Exhibit H). After brief discussion, the Board consensus was to schedule any necessary Special Work Sessions and Executive Sessions to be held immediately prior to Regular Session Board meetings. Board consensus was to also condense minutes for these Special Sessions and Executive Sessions. Activity Events and Meetings ADJOURNMENT: Jeff Nelson reviewed upcoming community events with the Board, as well as a brief update regarding the 2018 APPA Legislative Rally in Washington, D.C. in February. The meeting was adjourned by consensus at 7:35 p.m. David Willis, Board Chair ATTEST: Jeff Nelson, Board Secretary