PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY COMMISSIONERS MEETING. DRAFT AGENDA January 8, :30 PM

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1 PLEDGE OF ALLEGIANCE PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY COMMISSIONERS MEETING ELECTION OF COMMISSION OFFICERS DRAFT AGENDA January 8, :30 PM DESIGNATION OF COMMISSION REPRESENTATIVES Washington PUD Association (WPUDA) Public Utility Risk Management Services (PURMS) and Enduris Skagit Council of Governments (SCOG) CONSENT AGENDA 1. Approval of Agenda 01/08/19 2. Approval of Minutes 12/11/18 Commission Meeting 3. Ratification of Vouchers 12/18/18; 12/26/18 4. Approval of Vouchers 01/08/19 5. Project Acceptance South Norris Street, Burlington Freeway Storage (Burlington) YMCA Fire Line South LaVenture Road (Mount Vernon) 6. Modification to Existing ESRI GIS Mapping Software Licensing Agreement TREASURER S REPORT November 2018 AUDIENCE COMMENTS OLD BUSINESS 7. Manager s Report 8. Quarterly Report Customer Service Department NEW BUSINESS 9. Policy #1002 Final Short Term Disability Benefit - Ratify 10. Water Policy Manual Housekeeping Revisions Appendix A, Tables A-1 through A-9; Section Ratify 11. Port of Skagit County Invoice-Fiber Optic Cable Size Increase (Chuckanut Interchange) MISCELLANEOUS COMMISSIONER COMMENTS ADJOURNMENT JUDY RESERVOIR ELEVATION

2 Agenda Item #2 MINUTES OF THE REGULAR MEETING OF THE COMMISSION PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY, WASHINGTON December 11, 2018 The regular meeting of the Commission of Public Utility District No. 1 was held in the Aqua Room of the utility located at 1415 Freeway Drive, Mount Vernon, Washington, on December 11, The meeting was called to order at 4:30 PM. Those Commissioners in attendance were: Robbie Robertson, President; Eron Berg, Vice President; and Al Littlefield Secretary. Also in attendance were: George Sidhu, General Manager; Peter Gilbert, Attorney, Mark Handzlik, Engineering Manager, Sally Saxton, Treasurer and Kim Carpenter, Clerk of the Board; Audience: Judy Littlefield, Diane Robertson, Les Walker; Jason & Haley Graham; District Employees: Mike Fox, Kathy White, Gary Chrysler, Kevin Tate, Mark Semrau, Brian Henshaw, Bill Trueman, Chris Shaff, Chris Zemp and Luis Gonzalez. Commissioner Littlefield led the Pledge of Allegiance. Commissioner Littlefield moved to approve the Consent Agenda for December 11, 2018: 1. Approval of Agenda 12/11/18 2. Approval of Minutes 11/27/18 Commission Meeting 3. Ratification of Vouchers 12/04/18 No Voucher Nos ($154,863.16) 4. Approval of Vouchers 12/11/18 No Voucher Nos , Payroll Check Nos ($553,852.50) No Voucher No ($22,841.75) 5. Project Acceptance Woodside Division 6 &7 (Mount Vernon) Washington Street Waterline, Pat Wardell (Mount Vernon) Mount Vernon YMCA Hoag Road and YMCA Off-site Water Improvement (Mount Vernon) Bentley Place Multi-family, North Township Road (Sedro-Woolley) The motion passed. There were no audience comments. Under Old Business: 6. Manager s Report - Manager Sidhu reported on the following: The Drinking Water Task Force met in the Aqua Room yesterday for the last meeting of the year. DOE proposed four studies to better define where issues are with exempt wells and to allow the Task force to focus on solutions. The group discussed meeting again prior to the beginning of the legislative session on January 14. Discussion ensued. District fees and charges itemized in Appendix A of the Water Policy Manual are being revised. Construction Cost Index (CCI) will be 0.8% Commission Meeting 1 December 11, 2018

3 Agenda Item #2 after originally being estimated at 7%. The appendix will be updated and brought before the Commission for ratification at the Commission meeting of January Quarterly Report Human Resource Department HR Manager White presented the quarterly report for Human Resources including updates regarding staffing, bargaining unit negotiations, policy and AP&P revisions, goals, upcoming safety policies, employee training day and in house scheduling of Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis, and updating job descriptions. Commissioner Berg asked what time employee training day begins; HR Manager White replied 8:00 AM. 8. SkagitNET, LLC Operating Agreement Update Manager Sidhu stated that items sent to the Commission for review included a letter proposed reversing the roles of Treasurer and Auditor, the updated Operating Agreement and proposed Interlocal with the Port of Whitman and asked if the Commission had any comments. Commissioner Littlefield stated that item #8 6.4 in the agreement did not read right and suggested a change. Commissioner Berg moved to approve the SkagitNET Plan of Operations Document. The motion passed. Commissioner Berg moved to authorize the General Manager to sign the change in Treasurer/Auditor roles document. The motion passed. Manager Sidhu stated that if the Commission has any other comments to get back to him and he will pass them along to IT Manager Chrysler and Sara Young, Port Director of Planning and Facilities. Under New Business: 9. Software Project Schedule and Contract Modification with Harris Computers Systems Manager Sidhu reviewed the project schedule and proposed contract modification. Commissioner Berg moved to authorize the General Manager to execute a contract modification with Harris Computer Systems for configuration work related to the conversion of the District s fixed assets in the amount of $82, The motion passed. 10. Short Term Disability Benefit Policy Revisions Action Manager Sidhu stated that the policy revisions were presented and adopted at the last meeting and submitted to the state. The state replied with comments and requested revisions which are included in the updated draft in Commission meeting notebooks. Manager Sidhu requested authority outside of this meeting to finalize the policy by year end and subject to ratification at a meeting in January. Commissioner Littlefield moved to approve and authorize the General Manager to sign Policy #1002 Short Term Disability Benefit with minor material changes requested by the State Employment Security Department (ESD), subject to ratification at the next regular Commission meeting in January. The motion passed. 11. Resolution No Establishing Positions and Salary Ranges Action Manager Sidhu presented Resolution No , A RESOLUTION OF THE COMMISSION OF PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY, Commission Meeting 2 December 11, 2018

4 Agenda Item #2 WASHINGTON, ESTABLISHING POSITIONS AND SALARY RANGES FOR NON-UNION STAFF AND SUPERVISING EMPLOYEES. Commissioner Berg moved to adopt Resolution No as presented. The motion passed. 12. System Development Fund (SDF) Request Veteran s Park Park Development Manager Sidhu presented a request for use of SDF for conduit installation in conjunction with the Veteran s Park Development Project for future Supervisory Control and Data Acquisition (SCADA) needs of the District. Commissioner Berg moved to authorize the use of up to $8,500 from SDF for the installation of 3-inch HDPE fiber optic conduit in conjunction with water system line extension improvements required of the Veteran s Park Project in Sedro-Woolley. The motion passed. 13. Hearing-Customer Service Issue Jason Graham Manager Sidhu stated that Mr. Graham requested a hearing under the Water Policy Manual Section 2.8 to dispute a decision requiring installation of a RPBA device on his plumbing system his property which contains a laundromat and residential units. Commissioner Berg stated that the Commission decision under 2.8 is binding and the burden of proof is on Mr. Graham. Mr. Graham presented his position Engineering Manager Handzlik presented a rebuttal on behalf of the District. Discussion ensued regarding various issues associated with cross connection control protection and access to the premises by District staff for inspection. Commissioner Berg moved to table the issue until January 8 to allow for inspection of the property and that the compliance timeframe be similarly extended in the letter to reflect the stay of this process for completion of the inspection. The motion passed. 14. Recognition of Commissioner Robertson s 18 Years of Service at Skagit PUD Manager Sidhu thanked Commissioner Robertson on behalf of the District s customers and employees for his 18 years of service and highlighted the significant District projects he has been involved with. He stated the District will miss his depth of knowledge, not just about the District but regarding issues on the state level as well. Commissioners Littlefield and Berg commented positively regarding serving with Commissioner Robertson and his passion and dedication to the District. Commissioner Robertson thanked everyone and stated that he is proud to have been involved with long term planning for the District. Although the Commission sets policy he commended the work and effort of employees, as plans could not come to fruition without the employees, regardless of who sits in his chair. Commissioner Berg asked that Commissioner Robertson not be shy, but to come back periodically. Manager Sidhu presented Commissioner Robertson with a glass service award in honor of his service. At this time, President Robertson recessed the regular meeting to go into executive session per RCW (b) regarding acquisition of real estate for an approximate duration of minutes. He stated that there may be a decision made when the meeting reconvenes, if audience members would like to return. Commission Meeting 3 December 11, 2018

5 Agenda Item #2 The executive session convened at 6:32 PM in Manager Sidhu s office. President Robertson reconvened the regular meeting of the Commission at 6:39 PM in the Aqua Room. Commissioner Littlefield moved to authorize the General Manager to acquire the necessary easements for the Judy Reservoir to Mount Vernon Transmission Pipeline from Raymond Sundstrom and Vicki Tisdel for the negotiated amount of $10,000. The motion passed. Having no further business to come before the Board, Commissioner Robertson moved for adjournment. The motion passed and the meeting of December 11, 2018 was adjourned at 6:40 PM. Respectfully submitted: Kim Carpenter Clerk of the Board Commission Meeting 4 December 11, 2018

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12 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Interest Rate PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY TREASURER REPORT AS OF NOVEMBER 30, 2018 Balance of District Funds Investment of District Funds % 32% General Revenue Fund $6,195,697 Local Govt Investment Pool $16,083,465 83% 1% Capital Project Fund 220,324 Cash 821,670 4% 36% Construction Fund 7,024,943 Govt Agencies/ Securities 2,500,000 13% 18% System Development Fund 3,408,117 0% 6% Debt Service Fund 1,133,986 7% Bond Funds 1,422, % Total Funds $19,405,135 Total Funds $19,405, % District Fund Segments General Revenue Fund Bond Funds Capital Project Fund Debt Service Fund System Development Fund Construction Fund Investment of District Funds Govt Agencies/ Securities Cash Local Govt Investment Pool ## Rates of Investment Interest Received Market Value vs. Face Value of Government Securities FFCB FNMA LGIP FHLMC RFC FNMA 1,000, , , , , , , , , ,000 Fed Farm Credit Bank (mat 2/18) Fed Home Loan Mtg Corp (mat 7/18) Fed Natl Mtg Assn (mat 10/19) Resolution Funding Corp (mat 7/20) Face Value 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 950, ,000 Fed Natl Mtg Assn (mat 2/19) $500,000

13 PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY TREASURER REPORT For the month ending November 30, SYSTEM REVENUE FUND DEVELOPMENT CAPITAL PROJECT FUND FUND DEBT SERVICE FUND Capital Projects Restricted Debt Reserve Bond Sinking Bond Reserve COMBINED COMBINED COMBINED COMBINED Resources: External Revenue: Water Customer Receipts 1,933,109 1,933,109 1,595,325 1,606,284 1,402,487 System Development Fees 58,380 58, ,978 98,567 28,700 Capital Contributions 55,810 55, , ,494 36,148 Grants LUD Assessments, Interest, Penalties 20,847 20,847 14,246 21,508 27,699 Investment Income 5, ,384 5,863 2, ,837 30,935 8,124 3,326 1,064 Non-Operating Revenues 118, ,482 2,342 29,371 9,603 Total External Revenue 2,112, ,384 64,243 2,982 20,925 1,837 2,217,564 1,941,546 1,900,550 1,505,701 Debt Proceeds: Debt Proceeds - DWSRF Loan Draws Debt Proceeds - Dept. of Ecology Loan Debt Proceeds - Bonds 0 4,200, Total Debt Proceeds ,200, Transfers from Other Funds 1,000, , ,253, , , ,894 Total Revenue 3,113, ,384 64, ,329 20,925 1,837 3,470,831 6,404,678 2,186,531 1,765,595 Operating Expenditures: Operations and Maintenance 997, , , , ,903 Utility and Excise Taxes 107, , ,606 85,345 83,454 Total Operating Expenditures 1,105, ,105,006 1,043,624 1,003, ,357 Capital Expenditures: Capital Projects 151, , ,009 1,212,401 1,655, ,481 Total Capital Expenditures 151, , ,009 1,212,401 1,655, ,481 Debt Service Payments: Interest Expense 234, , Federal Tax Credit for 2009B Bonds Principal Payments 766, , Total Debt Service Payments 1,000, ,000, Transfers to Other Funds 252, ,000, ,253, , , ,894 Total Expenditures 2,509, , ,000, ,332,203 2,519,157 2,944,972 1,426,732 Increase (Decrease) in Fund Balance 604, (807,599) 64,243 (745,591) 20,925 1,837 (861,372) 3,885,521 (758,441) 338,863 Services sold: ERU's Services Re-Activations (under 10 years) Re-Activations (over 10 years)

14 PUBLIC UTILITY DISTRICT NO. 1 OF SKAGIT COUNTY TREASURER REPORT For the eleven months ending November 30, % YTD 2017 YTD 2016 YTD 2015 REVENUE FUND SYSTEM PERCENTAGE ANNUAL DEVELOPMENT OF BUDGET CAPITAL PROJECT FUND COMBINED BUDGET FUND DEBT SERVICE FUND REALIZED Capital Projects Restricted Debt Reserve Bond Sinking Bond Reserve COMBINED COMBINED COMBINED connections: 25,878 25,575 25,394 25,142 Resources: External Revenue: Water Customer Receipts 21,289,659 21,289,659 22,889, % 19,717,763 17,172,261 16,552,302 System Development Fees 1,562,741 1,562,741 1,100, % 1,487,216 1,212,085 1,161,801 Capital Contributions 1,487,131 1,487,131 1,319, % 1,458,047 1,209, ,850 Grants 412, , , % 0 87,341 0 LUD Assessments, Interest, Penalties 172, , , % 240, , ,990 Investment Income 55,183 2, ,832 49,236 27,603 1,230 12, ,693 78, % 108,265 53,138 8,903 Non-Operating Revenues 177, ,798 45, % 189, , ,171 Total External Revenue 23,422,721 2, ,832 1,611,977 27, ,323 12,568 25,388,065 25,972, % 23,201,477 20,055,465 19,146,017 Debt Proceeds: Debt Proceeds - DWSRF Loan Draws 2,962,410 2,962, , % 3,984, , ,286 Debt Proceeds - Dept. of Ecology Loan 1,148,849 1,148,849 1,192, % Debt Proceeds - Bonds 0 2,694, % 4,200,000 6,300,000 0 Total Debt Proceeds 1,148, ,962, ,111,259 4,187, % 8,184,027 7,124, ,286 Transfers from Other Funds 3,975, , ,501, ,510 8,592,360 6,154, % 6,670,273 7,159,120 5,712,726 Total Revenue 28,546, ,041 3,100,242 1,611,977 3,529, , ,078 38,091,684 36,314, % 38,055,777 34,339,249 25,387,029 Uses: Operating Expenditures: Operations and Maintenance 11,822,232 11,822,232 12,328, % 9,829,223 10,554,850 10,733,301 Utility and Excise Taxes 1,072,735 1,072,735 1,158, % 1,001, , ,944 Total Operating Expenditures 12,894, ,894,967 13,486, % 10,831,087 11,437,747 11,577,245 Capital Expenditures: Capital Projects 5,554,951 1,717 3,018, ,556 8,823,790 19,900, % 11,946,583 7,877,690 6,453,189 Total Capital Expenditures 5,554,951 1,717 3,018, , ,823,790 19,900, % 11,946,583 7,877,690 6,453,189 Debt Service Payments: Interest Expense 604, , , % 410, , ,610 Federal Tax Credit for 2009B Bonds (31,601) (31,601) (63,201) 50.00% (33,058) (33,093) 0 Principal Payments 3,447,408 3,447,408 3,416, % 2,934,306 2,395,941 1,370,941 Total Debt Service Payments 4,020, ,020,491 4,219, % 3,311,771 2,756,040 1,616,551 Transfers to Other Funds 4,396, ,000 3,812, , ,592,360 6,154, % 6,670,273 7,159,120 5,712,726 Total Expenditures 26,867,359 1,717 3,018, ,556 3,812, , ,331,608 43,761, % 32,759,714 29,230,597 25,359,711 Increase (Decrease) in Fund Balance 1,679, ,324 81,676 1,143,421 (283,367) 10, ,078 3,760,076 5,296,063 5,108,652 27,318 Services sold: ERU's Services Re-Activations (under 10 years) Re-Activations (over 10 years)

15 SKAGIT PUD DEBT REPAYMENT AMOUNTS AS OF NOVEMBER 30, 2018 Senior Lien Bond Debt Department of Ecology Loan Debt Public Works Trust Fund Loan Debt Drinking Water State Revolving Fund Loan Debt Coupon Rates Current Rate Mature Date Beg Bal Interest Rates Mature Date Beg Bal Interest Rates Mature Date Beg Bal Interest Rates Mature Date Beg Bal 2008 Refunding 3.5% % 4.25% Jul 2018 $8,835,531 Gilligan Cr Property 2.00% Oct 2038 $1,148, SRD 0.50% Jul 2021 $10,000, Clearwell 1.50% Oct 2021 $1,803, B BAB 2.7%* %* 3.66% Jul 2029 $3,660, WTP Controls 0.50% Jul 2022 $10,000, SVV Distribution 1.50% Oct 2021 $704, Revenue 2.65% % 2.65% Jul 2036 $6,300, Josh Wilson Rd 0.25% Jun 2031 $3,342, SVV Controls 1.50% Oct 2021 $64, Revenue 2.65% % 2.65% Jul 2037 $4,200, Division St Tank Design 1.00% Jun 2018 $300, Transmission Line 1.50% Oct 2022 $1,758, WTP Controls 1.50% Oct 2022 $77, Division St Tank Const 1.50% Oct 2037 $10,004, Mountain View Consol 1.50% $1,224,221 Year Principal Interest Interest Rate Range Principal Interest Interest Rate Principal Interest Interest Rate Range Principal Interest Interest Rate Total *(after 35% tax credit) % 4.25% % 1.00% % $ , , % 3.72% 13,101 22, % 1,281,201 25, % 0.50% 766, , % $3,309, , , % 3.79% 49,626 22, % 1,281,201 19, % 0.50% 766, , % $3,330, , , % 3.79% 50,687 21, % 1,281,201 13, % 0.50% 766, , % $3,314, , , % 3.79% 51,705 20, % 738,777 7, % 0.50% 615, , % $2,598, , , % 3.79% 52,745 19, % 176,282 3, % 500, , % $1,913, , , % 3.79% 53,753 18, % 176,282 3, % 500, , % $1,904, , , % 3.79% 54,885 17, % 176,282 3, % 500,203 97, % $1,895, , , % 3.79% 55,989 16, % 176,282 2, % 500,202 90, % $1,886, , , % 10.00% 57,114 15, % 176,282 2, % 500,203 82, % $1,876, , , % 10.00% 58,223 13, % 176,282 1, % 500,203 75, % $1,871, , , % 10.00% 59,432 12, % 176,282 1, % 500,203 67, % $1,861, , , % 60,627 11, % 176, % 500,203 60, % $1,495, , , % 61,845 10, % 176, % 500,202 52, % $1,487, ,945 91, % 63,062 9, % 500,202 45, % $1,302, ,153 75, % 64,356 7, % 500,203 37, % $1,295, ,547 59, % 65,650 6, % 500,203 30, % $1,287, ,381 42, % 66,969 5, % 500,202 22, % $1,280, ,599 24, % 68,304 3, % 500,203 15, % $1,272, ,064 7, % 69,688 2, % 500,202 7, % $854, ,088 1, % $72,155 $13,042,935 $3,534,378 1,148, ,191 6,168,922 84,502 $10,417,620 $1,456,468 $36,111,865 Total Principal Outstanding: $30,778,326 $ Change from previous month: $1,000,920 Drinking Water Loans payments Total Interest Outstanding: 5,333,539 Total Debt Repayment: $36,111, Weighted Interest Rate: 2.09%

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