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HomeMy WebLinkAboutMinutes - November 24, 2014 - UBCITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, NOVEMBER 24, 2014 — 6:30 P.M. The Utility Board/City Council of the City of Azusa met in regular session, at the above date and time, in the Azusa Light and Water (AL&W) Conference Room, located at 129 N. Azusa Avenue, Azusa, California. Chairman Gonzales called the meeting to order. Call to Order Pledge to the flag was led by Boardmember Uriel Macias. Flag Salute ROLL CALL: Roll call was taken by Secretary Cornejo. Roll Call PRESENT: BOARDMEMBERS: MACIAS, ALVAREZ, ROCHA, GONZALES ABSENT: BOARDMEMBERS: CARRILLO ' ALSO PRESENT Also Present Elected Officials: Secretary Cornejo. Staff Members: Interim City Manager Penman, City Attorney Ferre, City Attorney Martinez, Utilities Director Morrow, Police Captain Chavez, Assistant Director of Resource Management Lehr, Finance Director Paragas, Interim Human Resources Director St. Peter, Assistant Director Customer Care Solutions Kalscheuer, Assistant Director of Water Operations Anderson, Administration and Financial Services Manager Johnson, Utility Program Specialist Reid, Assistant Director Electric Operations Langit, Senior Administrative Technician Cawte, Assistant/Deputy City Clerk Hernandez. PUBLIC PARTICIPATION Public Part Mr. Jorge V. Rosales addressed the Scheduled Items stating that he believed it was not a loan to the City as J. Rosales the funds had been unofficially transferred, and the adoption of the items was a formality; he reviewed his Comments utility bill, and concluded that the consumer was paying for the water loan, as he did not see added charges on his electrical bill, due to the water fund funding the general fund; he further expressed concern regarding unpaid loans that AL&W made to the former Redevelopment Agency, and the interfund loans that never seemed to get paid. UTILITIES DIRECTOR COMMENTS Util Director Comments ' Utilities Director Morrow wished everyone a Happy Thanksgiving; he invited the Board to the SCAPA Legislative Briefing & Holiday Lunch, December 18,2014,11:30-2:00 p.m., Pacific Palms Resort, Cityof Industry; he presented the drought yard signs and doorknob fliers that were distributed to residents; he gave an update on the Redevelopment Lawsuit that was appealed, stating that it will be a lengthy process, and staff was hopeful that the results would be in favor of the City. UTILITIES BOARD MEMBERS COMMENTS The Board wished a Happy Thanksgiving to everyone and their families. Boardmembers Comments CONSENT CALENDAR: Moved by Boardmember Rocha, seconded by Boardmember Alvarez, to Consent Cal approve Consent Calendar Items D-1 to D-8, Boardmember Rocha abstained from Item No. 1, as he was not present at that meeting, by the following vote of the Board: YES: BOARDMEMBERS: MACIAS, ALVAREZ, ROCHA, GONZALES ABSENT: BOARDMEMBERS: CARRILLO The minutes of the regular meetings of October 27, 2014, were approved as written. Minutes 2. The amendment in the amount of $20,000 to the Blanket Purchase Order issued to Olympic Staffing Blanket P.O. Services, a Temporary Employment Service, for the fiscal year ending June 30, 2015, was approved. Amendment 3. The following Resolution No. UB -13-14 was adopted and entitled: Reso UB -13-14 EV Off -Peak A RESOLUTION OF THE CITY COUNCIL AND UTILITY BOARD OF THE CITY OF AZUSA, Charging CALIFORNIA, APPROVING REVISION OF ELECTRIC UTILITY RATE SCHEDULE EV Discount TITLED "ELECTRIC VEHICLE OFF-PEAK CHARGING DISCOUNT" TO ENCOURAGE OFF- PEAK CHARGING OF ELECTRIC VEHICLES BY RESIDENTIAL CUSTOMERS 4. The Foundation and Slab Project W-276 was accepted, the Notice of Completion was approved and NOC Prcj. City Clerk's Office was authorized to have the Notice of Completion executed, recorded and filed it at W-276 the Office of the Los Angeles County Recorder. 5. The formal Request for Qualifications (RFQ) was waived, and a three-year professional services Sustainable agreement was awarded to Sustainable Environmental Management Company d.b.a. Huls Env Admin of Environmental Management, LLC for the administration of used oil recycling payment program in Used Oil amount of $19,140. Program 6. The following Resolutions Nos. UB -14-14 and UB -16-14, accepting the Grant of Easements for the Easements Properties located at Rosedale Subdivision in City of Azusa, Tract 54057-21 Lots 5,6,17 &18 owned Rosedale by Azalea Rosedale, LP and Rosedale Land Partners 11, LLC, were adopted and entitled: A RESOLUTION OF THE UTILITY BOARD / CITY COUNCIL OF THE CITY OF AZUSA ACCEPTING A CERTAIN GRANT OF PERMANENT EASEMENT AND DIRECTING THE RECORDING THEREOF and the City Clerk was authorized to file the easement documents with the Office of the Los Angeles County Recorder. 7. A contract was awarded to Western Paving Contractors Inc., sole source, in an amount of $20,600, plus Western a 10% contingency, for paving the intersection of 9th Street and Pasadena Avenue. Paving 8. The scheduled Utility Board meeting of December 22, 2014, was canceled. SCHEDULED ITEMS Sched Items Update of Water Fund Cash Reserve Policy by adoption Resolution No. UB -15-14 to set the minimum Reso UB -15-14 unrestricted cash reserve target for the Water Fund at $19 million. Update Water Fund Policy 11/24/2014 PAGE TWO J Utilities Director Morrow presented the item, and addressed the comments posed at public participation, stating that it was an update to the Water Fund Reserve Policy; the water fund was strong and the reserve amount was more than a year of operating expenses; there were no plans to use those funds, as staff had been able to lease some of the water rights for several million dollars; suggestions were made that the interfund loans made from the water fund to the general fund be formalized; the reserve policy was adopted in 2008, with a contingency of 60 days operating cash flows, and the proposed change was to increase it to 90 days, which would be in consistency with the electric reserve policy; the current water reserve requirement is $25 million, with a contingency reserve of $1.5 million; based on the $4 million interfund loan, staff recommended to increase the contingency requirement to $5 million per year, as the current capital spending has been approximately $2.5 million per year, and to reduce the water fund reserve to $19 million. Boardmember Alvarez expressed concern that the water department could use $10 million quickly should there be expenses on capital improvements. Utilities Director Morrow responded that there could be circumstances where the funds could be needed, but it had not happened in recent memory; capital projects are part ofthe annual budget, there were no foreseeable future projects where the reserve funds would need to be used, but it could happen, hence the reason to have the reserve; however capital projects are budgeted for outside of the reserve, and the reserve is available for emergencies. Boardmember Macias stated that an example of large projects was the water treatment plant; he asked how the plant was financed, what the rate of interest on the loans was, and what would be the downfall in making such loans. Assistant Director Kalscheuer responded that the 2000 filtration plant was budgeted through a 2006, $55 million revenue bond, $35 million were used for the plant and the rest for infrastructure related to Rosedale, which was one of the largest project in approximately 50 years; for large projects such as the plant. Utilities Director Morrow noted the preferred approach would be to do bond financing, instead of using the reserves, which should be replenished quickly if used; there was interest imposed on the interfund loans, which was equal to the market rates; the loan was short term and would be outside the reserve target, the proposed amended reserve of $19 million is a good amount to have in relation to the total annual budget of $25 million. Boardmember Alvarez asked if there were any outstanding loans, and if payments were being made on time. Finance Director Paragas responded that there was an outstanding capital loan that was made several years ago, an additional loan that had a small balance, and both loans were being paid; the reader board loan was made to the former Redevelopment Agency, due to the dissolution of the Agency it prevented the City from receiving revenues from the loan, and it was currently on standby pending the decision of the State Controller; no funds were transferred from AL&W regarding that loan, it stayed with the Successor Agency and was part of the pending litigation. E. Alvarez & G. Morrow Comment U. Macias & G. Morrow Comment E. Alvarez & S. Paragas Comment City Attorney Ferre stated if the Board required additional information on re -payment of loans, it would J. Ferre need to be addressed under the item on the agenda regarding loans, as the item being discussed was for a Comments change on reserve policy. Boardmember Alvarez stated that he understood that the item presented was a general practice and that it E. Alvarez & needed to be done; however, should such practice continue, the water fund could be depleted and suggested S. Paragas that this should not be an ongoing operating practice; formalizing the loan would force the general fund to Comment re -pay it, and he saw this as a positive approach. Director Paragas responded that the loan was not related to funding the current general fund deficit, they were specifically related to addressing cash flow; the process was an accounting procedure, as the water fund had unofficially been funding the general fund for several years, and formalizing the loan would give the general fund the opportunity to build reserves; she anticipated that the loan would be re -paid within 7 years; the dissolution of the Former Redevelopment Agency was a setback, if the properties that were purchased under the Redevelopment could be sold, it would help the general fund. 11/24/2014 PAGE THREE Interim City Manager Penman stated that the budget problems were not revenue but expenditure problem, D. Penman and everyone would have to do their part to help alleviate the situation. Comments Boardmember Macias offered a Resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, SETTING Reso UB -15-14 CERTAIN RESERVE POLICIES FOR THE WATER UTILITY ENTERPRISE FUND. Setting Reserve Policies to the Moved by Boardmember Macias, seconded by Boardmember Rocha, to waive further reading and adopt Water Fund Resolution No. UB -15-14, by the following vote of the Board: YES: BOARDMEMBERS: MACIAS, ALVAREZ, ROCHA, GONZALES ABSENT: BOARDMEMBERS: CARRILLO Approval of $4 Million Water Fund Loan to the General Fund. $4 Million Water Fund Utilities Director Morrow presented the item stating that formalizing the loan was a positive approach; there Loan to the had been financial challenges to the general fund, and he hoped that the shortfall would soon be resolved; General Fund this type of activity needed to be documented; the $4 million loan wasexpected to be re -paid in 7 years, and the water fund could afford to make the loan; he felt that they can't afford not to do it, as there was sufficient funds in the water fund cash reserves above the newly approved $19 million reserve target. Moved by Boardmember Macias, seconded by Boardmember Rocha, to approve a Loan Agreement to make a temporary loan from the Water Fund to the General Fund of $4 million, and to authorize execution of the necessary documents by the Interim City Manager and the Director of Utilities following acceptance of the Loan Agreement by the City Attorney, by the following vote of the Board: 'YES: BOARDMEMBERS: MACIAS, ALVAREZ, ROCHA, GONZALES ABSENT: BOARDMEMBERS: CARRILLO STAFF REPORTS/COMMUNICATIONS Staff Rprts Fiscal Year (FY) 2014/15 First Quarter Budget Report for Water and Electric Funds. FY 2014/15 Quarter Report Administration and Financial Services Manager Johnson, presented the first quarter financial report, stating that staff reviewed the financial status of light and water, and the numbers she presented were preliminary and audited. The water cash flow was slightly negative due to early year capital projects and $1.3 million purchase of water that showed expenses higher by 28% of budget; revenues were at 29% budget, even though sales were down by 9% compared to the same quarter last year; the phase 3 drought rates helped stabilize revenues; debt service coverage for the year was good at 1.74; cash balances are approximately $25 million excluding a $4 million loan to the General Fund; overall water is operating as anticipated for the time ofthe year. The first quarter for the electric fund was very strong; cash flows were positive at about $1.47 million, due mostly to higher retail revenues; sales were up approximately 6%, compared to last year, due to warmer weather, increased usage by the new waste management facility, and more residents occupying the Rosedale Development; expenses were on track at 25% of budget, the debt coverage was outstanding at 16.62, and the cash flow was at $24.4 million. New Solid Waste Laws: AB 1826 and AB 1594. ABI 826 & AB 1594 Solid ' Utilities Director Morrow stated that the California Governor signed two bills related to solid waste; AB Waste 1826 implemented organic recycling, and the new requirements would come into effect April, 2016-17; during negotiations with Athens, staff inquired about the organics recycling program for commercial facilities, and the automated trash collection was proposed to facilitate this; staff will meet with Athens to 11/24/2014 PAGE FOUR discuss how they can assist with the organic recycling. AB 1594 implemented organic waste management; last year the Utility Board approved a contract with Recycled Wood Products (RWP) in Pomona, which benefited the ' City as it continues to claim green waste tonnage as part of its diversion, which may change in 2020; typically greenwaste cannot be claimed for recycling when used for alternate landfill cover; the contract with RWP allows greenwaste to be re -processed and the City to get credit; the contract expires with 2018, with two 5 year options to extend; hence the bill may not impact the City, but it will be a problem for other cities. Azusa Water Supply Strategic Options Update. Water Supply Strategic Utilities Director Morrow stated that the Water Division continued to work on the water supply strategic Options Update options, and progress continued to be made; the Water Master In -Lieu Program was a new proposal made by the Watermaster, the program might require AL&W to open its USG -8 connection with MWD to import treated water, other agencies within the basin may similar "in lieu" connections, and AL&W canjoin them in order to offset some of the cost; the water would come from the Colorado River as the State Water Project is very low in water. Canal Protection Update. Canal Project Update Assistant Director of Water Operations Anderson gave information regarding the water that is supplied to the water treatment plant and runs from a high steep hill north of the plant; the hill had not been a problem, because it had vegetation and when it rained there was not much deposit of dirt and soil into the canal; after the Colby Fire the rain caused dirt to sweep into the canal; the canal would be covered temporarily with traffic plates; the plates are 8'x15' in size and weight 5,500 lbs. each; the most vulnerable spots, where the 'dirt coming down the hill was visible, would be covered. Utilities Director Morrow stated that this was a trial and error project for staff to find out if this approach would work; last year the storm events indicated the key locations that need to be addressed; the plates were being rented, and they could be removed after the rain season; staff will re-evaluate if it was an efficient approach, and re -install them next year if needed. Drought Update. Drought Update Utilities Director Morrow stated that there were 3 rain events in Northern California over the past couple of weeks, which put them ahead from last year on the water supply, but it continued to be below normal; Azusa had 2 rain events, but it also continued to be low; Azusa should get an allocation from the State Water Project, but the expectations are low, as the drought is still bad; there were hopes for snow pack in Northern California, as well as on the local mountains; some water companies in the low basin were able to purchase water; due to Azusa's high location, the water that is taken as it comes down from the river; the two basins where the City pumps its water have been stabilized. Smart Grid Project Update. Smart Grid Project Update Assistant Director Customer Care Solutions Kalscheuer gave an update stating that the deadline to submit Request for Proposals (RFP) for the Smart Grid Project was October 2, 2014, 6 proposals were received, the proposals were reviewed and they were wide in terms of cost; three firms were selected to be invited for interview in January 2015. ' Utilities Director Morrow stated that a larger portion of the State was operating under smart grid meters for electric that can provide customers real time information, and can be used to gather information for reliability purposes, as well as for restoration and outage management; the project would allow staff to gain intelligence on the water network, to be able determine leak locations or loss issues with real time 11/24/2014 PAGE FIVE information; staff believed that there maybe several issues of losing water due to the high rate of water loss in the distribution system during the night, but staff cannot determine where the problem initiates; the pipes are decades old, they could potentially leak, and being that they are underground they are difficult to detect; ' it could also be possible that customers could be bypassing the system to take free water. Utilities Director Morrow responded to a question posed by Boardmembers Macias and Gonzales stating that the current meters can be bypassed by installing a pipeline bypassing the meter; the impact of AMI on current meter readers was part of the evaluation; there was a possibility that one or two positions may no longer be necessary; however, he will notify the Board ahead of time should positions be eliminated. Moved by Boardmember Macias, seconded by Boardmember Alvarez, and *unanimously carried to adjourn the meeting. TIME OF ADJOURNMENT: 7:25 P.M. r--4 %.� Wm mm"- RESOLUTION NO. UB -1-15. Next Meeting: January 26, 2015, 6:30 P.M. I*Indicates Boardmember Carrillo was absent. 11/24/2014 PAGE FIVE Adjourn