COMMISSIONERS OF PUBLIC WORKS Minutes of July 25, 2013

Transcription

1 COMMISSIONERS OF PUBLIC WORKS The regular meeting of the Board of Commissioners of Public Works was held on Thursday, July 25, 2013 at 10:00 a.m., in the Boardroom at 121 West Court Avenue. In attendance: Arthur C. Bush Steve Reeves Wayne Bartley Bill Patrick Michael G. Monaghan Jeff Chapman Jeff Auman Chris Trainor Henry O. Watts Carlos Cometto Teresa Lake John Wiseman Jeff Meredith George Petersen Lynn Young Jerry Smith David Tuck Jimmy Fowler Eduardo Noriega Stacia May I. Chairman Watts called the meeting to order. The invocation was given by Chairman Watts. II. III. Chairman Watts gave the statement of compliance with the notification provision of the Freedom of Information Act. Approval of Minutes: A motion was made by Commissioner Monaghan and seconded by Chairman Watts to approve the minutes of the regular meetings of June 13, 2013 and June 27, 2013; the motion was unanimously approved. IV. Financial Statement: A. Ms. Lynn Young, the First Relationship Manager with Countybank, introduced herself to the Commissioners as the new account manager working with CPW. Mr. John Wiseman with Greenwood Capital then provided an investment report for January 1, 2013 through June 30, 2013, noting a second section was also included in the report that covers positioning of the account and the interest rate market. He began with the main Investment Account 1802, noting proceeds of bonds that matured through June 30, and income paid. Mr. Wiseman commented on working with the portfolio accounting software provider in order to better represent monthly pay downs of mortgages. He referred to the list of holdings in the account that are still outstanding, consisting of municipal bonds, U. S. Treasury Bonds, Federal Agency Bonds, and government backed mortgage securities. He continued with a performance report of account 1802, pointing out that it was a year-to-date compilation of two prior reports for the previous six months. He moved to the debt service reserve fund account 2047,

2 Page 2 reporting on the proceeds of the bonds and income paid through June 30. He referred to the list of current holdings still outstanding in the account, which is comprised of U. S. Treasuries and Federal Agencies. Mr. Wiseman continued with the performance report of the account through June 30. He then reported on the Revenue Bond Proceeds Account 2097 since He pointed out the Colleton County municipal bond that was invested and called by the paying agent, originally at par, had been corrected and funds were received at a 102% premium on the bond. Mr. Wiseman noted positions outstanding in the bond proceeds account, a Treasury Bond and a few Federal Agency Bonds. He noted a performance report year-to-date of the account. He then referred to the Gas Rate Stabilization Fund 2129, the proceeds, and income payments of bonds that matured or were called through June 30. He noted that less the outstanding positions, there were some municipal bonds, U. S. Treasury Bonds, and Federal Agency Bonds shown in unrealized gains and losses. Mr. Wiseman noted the performance of the account through the first six months. He followed with a report on the Electric Rate Stabilization Fund 2172, including realized proceeds and income of bonds that matured through the first six months, and outstanding positions consisting of Municipal Bonds, U. S. Treasuries, Federal Agencies, and one mortgage-backed security. He pointed out that with the rise in interest rates, the value of assets moved lower; it is still unrealized loss but assuming it is held to maturity, would get the par amount back. He commented that this account had not had many interest payments to offset the move in the value of the assets. Mr. Wiseman then reported on the second section of the report showing the positioning of the account. He referred to an account summary from the Main Investment Account from its inception, pointing out a growth chart. He stated that characteristics of the account showed an average current yield of 2.5%, for a 3.2 year maturity. He noted account allocations of municipal bonds, government-backed mortgage bonds, U. S. Treasury Bonds, and Federal Agencies, and some cash, in the hope of taking advantage of higher interest rates. Commissioner Monaghan noted an additional amount of $658,000 shown as net position, and asked for clarification with whether the proceeds from a revenue bond are put into the investment account until used. Mr. Wiseman responded that this is the Main Investment Account alone and was not a compilation of all accounts. Mr. Wiseman referred to a chart showing the U. S. Treasury yield curve from the beginning of the year through the current week. He noted that around the two year portion of the yield curve from the beginning of the year, rates had moved higher fairly dramatically. For example, on the ten-year it moved from about 1.7% yield up to 2.6% that morning. He stated that yields and prices in bonds move in opposite directions. If funds had been invested in the ten-year treasury on January 1 and then everything sold this week, that would

3 Page 3 represent a total loss of 5%. Fortunately, bonds are held until maturity so that you get back your principal at maturity. Mr. Wiseman explained positioning in the rate environment beginning with a duration allocation chart and by noting that there needs to be some flexibility in the front end of the yield curve, which is the 33% that comes due effectively within one year. Also, there should be funds invested further out of the yield curve to take advantage of higher yields. Mr. Wiseman discussed the reason rates are rising, noting that economic data was better, and provided a chart on the initial jobless claims. He referred to a chart from the National Association of Home Builders with a sentiment index showing a move up in housing. He stated that there had been an increase in rhetoric about the Federal Reserve pulling back on the massive amount of stimulus they had injected in the economy. One reason is to purchase U. S. Treasury Bonds; there is talk that the fed may move back and stop purchasing as many treasuries as in the past. As they lessen their purchases, it puts pressure on the bond market that looks to have moved ahead of that. He concluded with a chart showing money flows into bond mutual funds versus equity mutual funds since the recession of five years ago. He stated that some funds are starting to come out of bond mutual funds. He summarized that the belief is that the economy will continue to show modest improvement with longer rates going back to the highs of the year, at about another 25 basis points; short-term rates should remain pretty stable. B. Chairman Watts asked about other services charged shown on page 37 of the financial reports; Ms. Lake responded that she would get back with an answer. Commissioner Monaghan asked when the federal building utilities would go away; Ms. Lake responded that it was a ten-year agreement; Manager Reeves noted that about six years remain. Ms. Lake noted that the federal building pays an additional 10% each year so that CPW is decreasing each year as the federal building pays more. As of July of 2013, they are paying 55% of their bill. Commissioner Monaghan expressed appreciation to Ms. Lake for the clarity of the reports provided. Commissioner Bush asked about the relationship between CPW and the City of Greenwood, after noting that it had come up during his interview process. He added that the Council seemed sensitive about it, and expressed a desire to gain better understanding. Mr. Patrick explained that within the revenue bond issues where the CPW has issued bonds, and because the income stream to pay the bonds for the bond folks is revenue from utilities, the bond holders in the bond documents provide that CPW may not provide any free service to anyone, including the City of Greenwood. Therefore, the City is billed and those bills are accounted for, but also, as an agency of the City or as the City for utility purposes is what the CPW is, the CPW is owned by the citizens of

4 Page 4 the City of Greenwood. Provided in the bond issue, if the CPW has excess funds, that is the reason for waiting until the audit is completed, the CPW can vote to transfer some of those excess funds to the City. The agreement has been to do that on the basis of their utility bills, plus additional funds up to a total of $1.2 million. Manager Reeves added that the bond requirement is only the utilities, plus $175,000; the Board has chosen to add to that $175,000 so that they are actually contributing the free utilities, plus an additional $512,000 this year. Commissioner Monaghan stated that the concept is that this is done in lieu of a franchise fee; Duke Power pays the franchise fee, but as part of the City, and although not done formally, this is in lieu of a franchise fee. Manager Reeves added that the written agreement is the utilities, plus $175,000, per the bond documents and that is a requirement. Mr. Patrick clarified that certainly it is not a requirement, but in passing the Resolution today, you will have in effect said that is what you will do, but it is not legally required to be done in the agreement or otherwise, beyond what is in the bond document. Commissioner Monaghan noted that it is done through an exchange of checks; the City s utilities are paid by them, then CPW reimburses the City for what is paid. Mr. Patrick added that if there are not excess funds, the City would still have to pay their bill. It is important to the City that funds are managed well enough so that there are excess funds available in order to do that. With no further questions or comments from the Commissioners, the financial statement was accepted as information. V. Business: A. Manager Reeves read the Resolution for the Exchange of Checks with the City of Greenwood as follows: Be it Resolved by the Commissioners of Public Works (CPW) of the City of Greenwood that, simultaneously with the payment by the City of Greenwood to the CPW of the City s outstanding bills in the amount of $696,989.23, which represents the CPW s charges for street lighting, fire hydrant rental and other utility services provided to the City, in the amount of $774,002.23, during the year 2012, less the charges for fiber optic services in the amount of $86,400.00, plus $9, representing utility bills for the Federal Building, the CPW does hereby determine that the CPW shall pay into the General Fund of the City the amount of $696,989.23, plus $512,397.77, which includes $86, representing the charges for fiber optic services, for a total of $1,209,387.00, such amount having been determined by the Commissioners to be surplus monies based on information supplied to them by the CPW s auditors.

5 Page 5 A motion to authorize the Resolution for the Check Exchange was made by Commissioner Monaghan, seconded by Commissioner Bush, and unanimously approved. Commissioner Monaghan pointed out that the $86,000 is being used by the City for two additional police officers. B. Manager Reeves recommended acceptance of the low bid from Carolina Meter, Inc., for water meters with ERT modules. A motion was made by Commissioner Monaghan, seconded by Commissioner Bush, and unanimously approved. C. Manager Reeves recommended acceptance of the low bid meeting specifications from Daparak, Inc., in the amount of $14,197.84, for a progressive cavity pump for the water treatment plant. He noted that the other two lower bidders did not meet the specifications; some parts, equipment, and training charges were omitted. Commissioner Monaghan asked if the specifications were clear; Mr. Tuck responded that they were. One had included installation that was not in the specifications. A motion was made by Commissioner Monaghan, seconded by Chairman Bush, and unanimously approved. D. Manager Reeves recommended approval of the low bid meeting specifications from Eaton s Cooper Power Systems c/o Line Equipment Sales, in the amount of $40,656.30, including tax, for three (3) voltage regulators and controllers. He pointed out that there were a couple of lower bids that did not meet the specification requirement for Cooper controllers. Mr. Meredith noted that tax had to be added to several that had not included tax. Commissioner Monaghan inquired about paying tax since it is in the line of production; Mr. Meredith responded that taxes have to be paid on all of our equipment since we are only a distribution provider. If we were generating electricity, certain equipment would be tax free. Manager Reeves noted some tax relief on some items at the water treatment plant. A motion was made by Commissioner Bush, seconded by Commissioner Monaghan, and unanimously approved. E. Manager Reeves explained for the benefit of Commissioner Bush that the electric substation located near the City maintenance shop has been in existence for sixty or seventy years and is in need of retrofit. The materials

6 Page 6 have already been bid for the retrofit project; this bid is for the labor to install those materials. He recommended acceptance of the low bid from Pike Electric, in the amount of $117, He pointed out that $370, was the amount shown on the bid tabulation form from Pike Electric; that price is inclusive of all materials. They will provide a payment and performance bond based on the full amount. A motion to accept the low bid from Pike Electric was made by Commissioner Monaghan, seconded by Commissioner Bush, and unanimously approved. F. Manager Reeves provided history of the elevated tank maintenance agreement, noting that it was a fourteen-year agreement approved as the low bid several years ago from Utility Services. He pointed out that the agreement requires renewal on an annual basis; we must either accept or decline at this time in order to provide adequate notice should the decision be made to decline. Manager Reeves recommended acceptance of year five of the agreement, in the amount of $224,950.68, adding that the amount was lower than the previous year by around $140,000 because less work is required for this year. Commissioner Bush asked for an explanation of a ROV inspection; Mr. Chapman responded that stands for a remote operated vehicle that is sent down into the tank to videotape. Chairman Watts commented that all tanks must be maintained and painted inside and outside. A motion to renew the elevated tank maintenance agreement for year five was made by Commissioner Bush, seconded by Commissioner Monaghan, and unanimously approved. G. Manager Reeves reminded the Commissioners of the adoption of the Red Flag Resolution several years ago, which provides for prevention of identity theft. The Resolution included a committee of employees to oversee the program; the only change recommended is to replace two committee members with Ms. Teresa Lake and Mr. Wayne Bartley, both are replacing their predecessors. A motion to amend the Red Flag Resolution as recommended was made by Commissioner Bush, seconded by Commissioner Monaghan, and unanimously approved. Chairman Watts noted that the former CFO s name was still on some documents; Ms. Lake responded that would be checked. Manager Reeves commented on there also being some bank documents in need of signatures

7 Page 7 today. Commissioner Monaghan asked about the Equal Payment Plan (EPP), specifically, noting within his own account a surplus amount of $1,000; however, the guys had come out to fix his pool furnace and there was $100 plus charge for that service. He stated that was added to the EPP amount and asked if that is done to everyone; adding that if there is an excess, why would that affect the monthly amount that is paid. Mr. Bartley clarified that the repair amount was added onto the bill rather than subtracting from the balance. Manager Reeves stated that it should not add to the monthly amount. Mr. Bartley expressed an understanding that any additional charges for service work would not be subtracted from equal payment; that is a nonutility charge so it would not come off the equal payment amount. Commissioner Monaghan asked Ms. Lake to look into it; Mr. Auman recalled a previous discussion with the programmer, at which time the determination was made that sometimes there will be a surplus that could go down depending on usage, and especially with gas customers. There could be a large surplus in the summer that gets eaten up during the winter months. The concern was that should someone have a $700 repair and that is taken from the surplus, they could come up short at the end of the EPP when it is settled; they would then get a bill for $700. Mr. Chapman recalled a similar situation when he was told that if there is a $700 bill and if that is paid out of the EPP, that would throw off next year s EPP amount because that unit would be recalculated as usage. Mr. Cometto commented that he was also told that only utility charges can be used to calculate the EPP, which is why any services are paid separately. Including the service charge in the computation would throw off the amount for the following year. Mr. Auman noted that in any given year, EPP can either be right or way off, based on prior history and factoring in an extra warm year or extra cold year. Ms. Lake concluded that they would look into it and get back with Commissioner Monaghan. H. Ms. Lake noted that copies of the annual Red Flag Report were provided, and that based on the plan, there is an annual requirement for the committee to review policies and procedures. At that time, the committee also makes sure that the red flags on accounts are being monitored and extra checks are in place with anything that comes up fraudulent. Ms. Lake reported on a committee meeting on July 3, at which time it was determined that no other changes were needed at this time, other than the name changes just adopted. She reported on 27 red flaggable incidences for the period of July 1, 2012 through June 30, 2013; some were customers who were concerned that someone knew their social security numbers and that could be used without their consent. Those customers requested that a password be put on their account or that they had to show identification in person to change or open something new. She stated that there were ten items where individuals paid

8 Page 8 by credit card in good faith, mostly through I-voice; it was their card but they did not recognize SC.Gov on their credit card statements and reported them as fraud. By that time it was too late to take off the credit card report so it had to be run back through. She noted three that were actual credit card frauds where a customer had used someone else s credit card to pay their bill without their permission. She stated that we may or may not receive the money for those three, totaling $892. Ms. Lake stated that $675 of that amount was an account where a lady paid with a credit card belonging to someone from Texas. The account has since been marked as inactive. Even if they pay with a fraudulent credit card, if the account is active, it gets posted back to their account as due and must be paid or services will be terminated. For the three accounts marked as inactive, unless they come back for a new service, there is no way to collect the money. Ms. Lake reported that with the $675 amount, the lady came in this week requesting new service. She was told that the old account must be paid in full before new service can be set up. The address was flagged to make sure that we receive payment before she is allowed new service. Chairman Watts asked if there are any legal repercussions of using credit cards fraudulently; Ms. Lake responded that it is turned over to law enforcement. With those three incidences, law enforcement was called, and all the information was turned over to them, including the information of the lady from Texas. VI. Other Business: 1. Manager Reeves requested a date for a photographer to come here for a new portrait since the addition of Commissioner Bush to the Board. The Commissioners agreed to August 8, which is a regular meeting date. 2. Manager Reeves noted that the State of the City and County presentation would take place on Friday, August 9, with registration starting at 11:30 a.m., at the American Legion. All three Commissioners expressed the desire to attend. VII. Executive Session: A motion was made by Commissioner Monaghan and seconded by Commissioner Bush to go into Executive Session for personnel and contractual matters, and to receive legal advice in the case of questions from Commissioner Bush that are appropriate for discussion during Executive Session; the motion was unanimously approved.

9 Page 9 At the conclusion of Executive Session, the meeting returned to open session. There was no action taken as a result of discussion during Executive Session. Commissioners then discussed issues not appropriate for Executive Session in an effort to assist Commissioner Bush. VIII. With no further business, the meeting was adjourned. Approved:, 2013 Secretary