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HomeMy WebLinkAboutMinutes- July 23, 2003 - UB 44.1111-, AZUSA CITY OF AZUSA MINUTES OF THE SPECIAL MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL WEDNESDAY, JULY 23, 2003 - 6:30 P.M. The Utility Board Members of the City of Azusa met in regular session, at the above date and time in the Azusa Light and Water Department Conference Room, located at 729 N. Azusa Avenue, Azusa, California. Chairperson Chagnon called the meeting to order. Call to Order ROLL CALL Roll Call PRESENT: COUNCILMEMBERS: HARDISON, STANFORD, ROCHA, CHAGNON, MADRID ABSENT: COUNCILMEMBERS: NONE Also Present ALSO PRESENT: City Manager Cole, Director of Utilities Hsu, Administrative Technician Yang, Assistant City Manager Person, Information Systems Administrator Graf-Gaynor, City Clerk Mendoza, Deputy City Clerk Toscano. Public Participation Pub Part None. None An item of subsequent need arose after the posting of the agenda regarding a personnel matter Item of sub and it was moved by Councilmember Stanford, seconded by Councilmember Chagnon and Sequent unanimously* carried to agendize it under the Closed Session portion of the agenda as follows: Need Government Code Section 54957, Public Employee Discipline/Dismissal/Release. Closed Sess The CONSENT CALENDAR consisting of Items II-A through II-F, were approved by. motion of Con Cal Councilmember Stanford,seconded by Mayor Pro-Tem Rocha and unanimously carried. Agenda Approved item II-D, regarding the Water Main Installation Project was removed from the Agenda by Utilities -- Director Hsu. A. The minutes of the regular meeting of June 25, 2003, were approved as written. Min appvd B. Approval was given to waive formal bidding procedures and approve the agreement with Agmt w/Huls Huls Environmental Management, LLC, for administration of the City's used oil block grant Used Oil program. Block Grant C. Authorization was given to advertise for bids to replace water mains for four separate Wtr Mains projects: W-186/Alameda Avenue;W-187/Old Mill Road;W-188/Pasadena Avenue; and W- Rplcmt 189/Stein Lane. D. REMOVED FROM THE AGENDA.Water Main Installation Project of Sixth Street Distribution. REMOVED E. Authorization was given to issue a purchase order to Pacific Systems Electric in the amount Pacific of$20,848.80 to perform necessary upgrades and repairs to the gasoline tank located at the Systems Water Division's Gladstone Maintenance Yard. Upgrades F. Approval was given to adopt the plans and specifications for furnishing and installing Plans &Spec underground electric substructures along Gladstone Street between Vincent and Vernon Underground Avenue and the City Clerk was authorized to advertise for bids. Elec substrc. SPECIAL CALL ITEMS Special Call None. None Scheduled Items Sched Items Director of Utilities Hsu presented a request to increase the power purchase with PPM Energy, Dir of Util Inc., from three megawatts to six megawatts of wind powered electrical energy. He stated that Comments this is very viable and a cost effective way for the City to meet and exceed the renewable energy portfolio standard. He stated that the purchase will constitute an additional 4%of energy to serve retail load and when combined with the previous purchase and City's Hoover energy, it will provide the City with approximately 11%of renewable energy to serve its retail load. Further,that the proposed PPM contract is a fixed price contract for the next twenty years. Moved by Councilmember Stanford, seconded by Mayor Madrid and unanimously carried to Agmt w/PPM approve the purchase of three additional megawatts of wind power from PPM Energy, Inc. Energy, Inc. ("PPM") and to authorize the Mayor to execute the agreement with PPM for the purchase of six Purchase of megawatts once the final agreement is prepared for the purchase of wind powered electrical Wind power energy. Staff Reports/Communications Staff Rpts Director of Utilities Hsu invited all Board members to the High Winds Project Dedication Dir of Util Ceremony on Thursday, September 18, 2003. He stated that PPM Energy will be holding the High Winds ceremony in Solano which is located about '/z hour from Napa. He stated that the developer will Project hold a dinner on Wednesday, September 17th and that the next day the bus will leave the hotel at Dedication 9 a.m. and the dedication ceremony will be from 11 a.m.- 1 p.m. He asked that members advise Ceremony him if they will be attending in order to make arrangements. 9/18/03 Director of Utilities Hsu presented the Power Resources Report stating that there is nothing Pwr Rsrse extraordinary in the report. He provided an update on the rating agency issue, stating that for Ratings water and electric Moody was A2 for water and electric, Standard Pool-water AA and electric A. Water &elect 07/23/03 PAGE TWO Director's Comments Dir Corn City Manager Cole addressed the Utility Board regarding its Technology Policy, stating that at the City Mgr last meeting staff had shared that it seemed preferable to switch to fiscal year basis for the Comments existing Technology Allowance for Utility Board members versus an arbitrary date like the first of Tech Allow the month, which the Utility Board accepted. He stated that staff had also thought that the Discussion allowance covered new hardware as well as services and he proposed that all Board members - receive a $2,000 allowance per year, $166.00 per month to cover all services, including cell phones, DSL lines, pagers, fast lines, etc. He detailed the proposal. Discussion was held regarding the way it's handled currently. Mayor Madrid stated that there should be a policy that states everything very clearly. Information Technology Administrator Graf-Gaynor advised that she has reconciliation of all bills paid and explained the phone service that is now used by the City. City Manager advised that they have a written hardware technology policy now. Utility Funds Transfer Policy-Discussion was held regarding the return on investment from the Utility Funds Utilities Enterprise Divisions with Councilmembers stating that a return on investments should be Transfer realized and reinvested for use for the betterment of the stakeholders, which are the residents of Policy Azusa. It was noted that there is a lack of a policy to establish parameters for what, where and Discussion how to deal with the return on investments. There was a question about what to do with the revenue after it goes to the general fund, how much funds should/can be used and how much is too little or too much. Director of Utilities defined the Franchise fee, and In-Lieu Tax, but questioned the Allocations. He Dir of Util voiced concern that the level of allocations totaling $1.4 million, are without a formula or Comments justification for this amount. City Manager Cole responded stating that allocations are service charges for the services provided City Mgr to the Utilities building/department, i.e. Accounting, Purchasing, Human Resources, etc. He Comments responded to questions posed stating that allocations are levied on Sewer, Light,Water, Prop A and Prop C Funds. Chairperson Chagnon stated that the allocations should not be so expensive as the Utilities Council/Staff Department could possible contract out to do its own payroll, etc. and that there should be a fair Comments assessment. Mayor Madrid commented that she prefers return on investment and franchise fees instead of allocations. Director of Utilities Hsu provided a short history of the In-Lieu Tax. He further stated that he will visit with Acting Finance Director Kenoyer to see how he arrived at the $1.4 million allocation cost and to see if they can be reduced. City Manger Cole provided a summary of the legal environment principles, the City of Roseville and Proposition 218. Director of Utilities Hsu addressed the rate of return or return on investment stating that today the Dir of Util electric and water return interest are transferred to the General Fund. He stated that since interest Comments goes up and down, how do you determine how much is appropriate. City Manager Cole explained that they are talking about looking beyond interest and into the profit, rather to be tied to interest, as it fluctuates. He described examples of combinations of funds that may be used, i.e., % of net income, interest income, etc. Lengthy discussion was held regarding a process to determine how and how much money to allocate, and the need for a policy to be in place. Chairperson suggested that the issue be sent back to Director of Utilities to work on a policy and get the specific information for the issue. Additional discussion was held regarding allocations and how Finance arrived at the figures on the Add'I twelve page report. Each Councilmember expressed concern regarding calculations and Discussion fluctuations of the allocations and noted that there is a need for an allocation mechanism of how to measure them so everyone will understand how they work. 07/23/03 PAGE THREE City Manager Cole recounted what Councilmembers have agreed on at this meeting as follows: City Mgr "that there is agreement that there should be in addition to the 10%transfer(2%Franchise,8%In- Comments Lieu Tax) there should be an annual return on investments that should strike a balance between the ownership stake, historic, and on-going that should be used for the benefit of the owners and the desire to keep the two enterprise funds solvent and operating on a capital basis and therefore the policy should attempt to have a predictable formula for allocating that income,one that starts with a base amount that when possible is transferred and then a percentage on top of that base amount that would be earmarked over and above on a very good year and that allocations would only come into the picture if they could agree on a citywide formula that make some sense that everyone's happy with and that would then factored in and since the net income would be reduced then therefore the transfer from whatever fund would be reduced, so it should be hold harmless, it shouldn't affect the fiscal health of the utility nor the return on investments to the owners". He then talked about keeping the general fund whole on operations, but, that any annual spike should be set aside for CIP, and not for hiring people, etc. Director of Utilities Hsu responded to question regarding a recent power outage in the Stater Dir of Util Brothers and Sizzler shopping center. He also stated that Monday,August 1 1 th at 4:30 p.m. will Comments be the Sub-Station Groundbreaking. Assistant City Manager Person also announced that there will be a workshop on August 1 1 th on Ass't City Mgr Pubic Strategies and Code Enforcement at 6:30 p.m. at Light and Water Conference Room and Ancmt there will be no Utility Board meeting on August 25th and no Council meeting on August 18`h It was consensus of Councilmembers to adjourn. Adjourn TIME OF ADJOURNMENT: 7:38 P.M. SECRETARY NEXT RESOLUTION NO. 03-C63. 07/23/03 PAGE FOUR