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HomeMy WebLinkAboutMinutes - Minutes - Citizens Utility Advisory Commission - Meeting Date: 12/6/2017 lob FINAL MINUTES: CITIZENS UTILITY ADVISORY COMMISSION • :. . : : :.OASIS WATER CAMPUS .070:NORTHERN AVE: . GLENDALE;_ARIZONA.85303 :. ..:DE .:: . - : . . CEMBER 6,:2017 6:0Q P.M. : . 1; : CALL TO ORDER: :_ - .: :•• .Chair Jonathan:Liebman-called the meeting.to order;at 6:00 p.m : : 2: : : ROLL CALL : I Present Chair.Jonathan.Liebman Vice.Chair Ronald Short; Commissioner:Robin Bern/hill Commissioner.Amber Ford; Commissioner Robert Gehl; Commissioner Stephen DeAngelo 3. : .CITIZEN COMMENTS. None. : . 4: :APPRO.VAL:OF THE MINUTES. _ : - Motion by.Commissioner-Gehl, Second by Commissioner Ber hill,:t0'.: approve the::November:1, 2017 meeting minutes as:.written: :Motion,carried 5 :- DIRECTOR'S REPORT: .:: Michelle Woytenko,:.Director of Field Operations,provided:an.update of the Bulk :Trash:Program:changes presented to Council.and.Council's response: Ms: :: Woytenko's .update included the following: At the.last Council meeting, Staff:presented.three proposed changes to-the : _:• • Bulk.Trash Program:- I. Changing the off-weeks.for thebulk trash;pick-ups;, : 2::changing the bulk:trash.placement from Thursday.to Saturday,.and 3:. :. :.increased:enforcement: Council gave consensus:to move forward with increased enforcement: : =_ The Mayor:felt that changes:to the calendar and of-weeks would be: confusing for residents C.ouncilmember Clark acquiesced with the consensus vote. Councilmember.Clark had initially asked staff to research j. : changes,to the calendar because her district always had bulk trash putout andpickup during the holiday.weeks: •The Bulk Trash Calendar will:remain as-is: Chair. Liebman thanked'staff for their:time in researching, preparing,:and. presenting .the proposed changes to the Commission and Counciil,- Ms;Woytenko • thanked the Commissioners for their time on review and suggestions. Ms. Woytenko introduced City Attorney Nancy Mangone, who presented information on the Landfill's legal proceeding with Vieste to the Commission. Ms. Mangone shared a brief background of herself. Ms. Mangone provided a detailed history and explanation of Vieste's operations at the land fill, the contract between the City of Glendale and Vieste, and the subsequent dispute and lawsuit regarding the contract. In general, Vieste has an operation located at the landfill and was taking the recyclables from the landfill to sell for profit. Vieste claimed that the City was responsible for removing the debris and trash from the recyclables and the City disagreed. The lawsuit was basically in regard to which party was responsible to sort out the trash. The City's stance was that the City was only required to deliver the trash to Vieste, not sort the trash. Vieste insisted that the City had to take all yard and organic waste out of the trash before delivering to Vieste, which would cost the City $5 to $7 million annually. The case has been in court for approximately two years. In August 2017, the judge ruled in the City's favor in a Motion for Summary Judgement, especially regarding the sorting of the trash. In November 2017, a second Motion for Summary Judgement was ruled in the City's favor resulting in $500,000 in damages awarded to the City and ruling that both Vieste and its parent company are liable in the suit. Ms. Mangone noted that this week, she will be filing to recoup attorney fees. Ms. Mangone stated that the City had a 30-year lease with Vieste and has sent a letter terminating the lease. Vieste has to dismantle and remove the equipment on the property. Ms. Mangone commented that this will free up the vacant land for staging use when construction on the north landfill begins. Chair Liebman inquired if Vieste was current on the rent for the lease. Ms. Mangone stated that Vieste paid the rent for the first year, but not for 2016 and 2017. Ms. Mangone noted that Vieste owed approximately $100,000 for past rent, which is part of the $500,000 in awarded damages. Chair Liebman inquired if the damages awarded were included in the proforma when staff presented the utility rate increase. Ms. Woytenko stated that at that time, staff could not count on any of these funds being awarded. Ms. Mangone noted that this phase of litigation is over, however, Vieste has threatened to appeal and if so, the City will incur attorney's fees to defend the appeal. Commissioner DeAngelo inquired about the structure that Vieste may leave behind. Ms. Mangone explained that the structure is basically an open-air, shell of a building on a concrete pad with some sorting equipment. Ms. Mangone noted that Vieste took out bonds to fund the structure and the bond holders are irate. Ms. Mangone stated that the City told the bondholders that they could take the structure, but it may cost them to dismantle it. Commissioner Berryhill thanked Ms. Woytenko and Ms. Mangone for an excellent report. 6. SALT RIVER IRRIGATION CONTRACT AUDIT Dan Hatch, Financial Administrator, Water Services, presented information to the Commission regarding the Audit of the Salt River Irrigation (SRI) contract. The presentation included the following: •Salt River Irrigation Contract Audit Background • For decades, the City performed the zanjero and repair services • In 2012, Salt River Irrigation (SRI) was contracted to provide urban irrigation services for residents and parks •The current contract is in the second year of a possible five years •At the request of the Mayor, the City Auditor's Office conducted an audit • In an email to the Glendale Star, the Mayor stated, "I'm satisfied with the audit and the City is taking measures to make corrections. It saved money for our taxpayers and also improved the system and that's what's important." •Salt River Irrigation Contract Audit Observations •Annual contract amount overspent • Invoice payments need to be made in accordance with contract terms • Invoices did not have supporting documentation for materials and services •Salt River Irrigation Contract Audit Recommendations • Departments should develop controls to ensure total expenditures do not exceed contract amount • Departments should develop controls to ensure payments for materials and services are made in accordance with contract terms • Departments should ensure adequate backup is obtained to support invoice detail •Salt River Irrigation Contract Audit Response and Action Taken •Water Services and Parks departments will meet regularly to review SRI total expenditures until the new City financial system is implemented. •Water Services support staff will make additional reviews of invoices for correct pricing and support documentation •Submit RFP for new contract to clarify material and service terms The Commissioners were also provided with the City Auditors Office Memorandum from Candace MacLeod, City Auditor, to Kevin Phelps, City Manager, dated August 18, 2017, which provided details on the background between SRI and the City and the audit findings and recommendations. Chair Liebman inquired as to how staff interpreted specific terms of contract differently from the auditor. He also asked if changes to the process based on the recommendations would begin. Mr. Hatch replied that the changes would begin immediately. Commissioner Berryhill commented that Mr. Andrew Walker, owner of SRI was in attendance to address the Commission regarding the audit. Chair Liebman replied, that according to process, the Commission would discuss the agenda item and Mr. Walker would be provided with five minutes for comment. Commissioner Berryhill wondered why an addendum for a cost override was not done with the SRI contract at that time. Mr. Craig Johnson explained it was staffs impression was that the compensation for the entire term of the contract could not be exceeded. That's not how the auditor interpreted it. Going forward, staff will ensure that it can expend the funds needed for the contract services to keep the water out of street. Vice Chair Short stated that the audit seemed very detailed and wondered if this contract was treated differently. Mr. Hatch replied that the staff goes through about two to four audits each year. The Auditor's job is to make sure the City's assets are being safeguarded. The SRI audit was absolutely not unique in its treatment. Mr. Johnson commented that he welcomed the auditor and the audit findings regarding to processes and procedures. Mr. Johnson stated that staff takes the audit very seriously and staff wants the users and contractors to receive improved services from the contracts. Mr. Johnson relayed with this being the first contract with Parks included, staff could have communicated better with Parks and Recreation. Mr. Johnson commented that staff is getting water out of the street, although he has heard from citizens that there are still leaks. Mr. Johnson noted that staff is working with an old system, but the goal is to keep water out of the street. Mr. Johnson added that the City is not undertaking the full repair overhaul of the entire system because it is a great expense. The City does not own the system, but it is responsible for operations and maintenance. Vice Chair Short inquired if the capital cost of$15,000 has been exceeded. Mr. Hatch stated the budget has been spent and the budget is different from the contact amount. Chair Liebman asked if the exceedance of the contract triggered the audit. Mr. Johnson replied he just knows the Mayor's Office requested the audit. Commissioner Berryhill asked what period of time did contract cover. She asked if the department will amend the contract. Mr. Hatch responded that the department will seek a new contract. Chair Liebman introduced Mr. Andrew Walker of SRI. Mr. Walker read a statement as follows: Commissioners, thank you for providing me the opportunity to come here and speak to the auditors' summary and the City's staff responses to the observations as reported in the Glendale Star. Let me start by saying Glendale is my home town. I went to high school here. After a four-year enlistment as a light infantry soldier, I returned home to Glendale. I got married in Glendale. My friends and family are in Glendale as are many of my associates. I've worked hard and have made numerous sacrifices to build a reputation as a reliable and honest contractor who operates at the highest levels of trustworthiness, integrity, and competency. It's disheartening for me to open up my hometown newspaper and read that my organization has acted inappropriately or is billed irresponsibly in its conduct with my community. I've already received feedback from associates, including former high school teachers, who told me that the audit report looked horrible for my company. It's not possible for me to estimate how many of my associates have read the article and were left with the same impression. Nor is it possible for me to determine the number of potential customers who will not consider doing business with us after reading the inaccurate audit summary. My company's reputation has already sustained damage as a result of the auditor's inaccurate summary and I can't allow any further damage to be inflicted. So again, I thank you for the forum. I first became aware of the audit summary on November 24 when I read the article in the Glendale Star reporting on SRI overcharging for services, charging for unauthorized services, failing to provide supporting documentation with invoices, and failing to submit quotes for major repairs and charging for materials that should have been included on predetermined rates. I was surprised because references were made to statements made by City staff about procedural and contractual changes that had supposedly already been implemented and funds that would be recovered from SRI for overcharges. My first assumption upon reading the article was that the reporter had sensationalized the facts, trying to create a story. So, I immediately went to the Glendaleaz.com website to read the audit for myself. I immediately became alarmed by what I read because it was clear to me that the auditor had not been given complete and accurate information and that any ambiguity in our agreement was conveyed as wrongdoing on SRI's part. I was also confused because, as I read the audit, I realized that City staff had been given the opportunity to respond to each of the auditor's observations and each of them chose to concur with the observations rather than provide clarification or ask me to provide clarification. So, what I've done is compiled emails, contractual directives, SRP water orders, and other supporting documentation to refute the charges against my organization. It is my intent this evening to address those allegations and answer any questions that any of you may have. While the damage due to the inaccurate audit summary has already been inflicted on my organization, it's my hope that my statements will become a matter of the public record this evening and will provide the public with a more accurate representation of my relationship with the community. So, if I only have five minutes, I can't address each of these. I would like to. I don't know if you'll let me, Commissioners. Chair Liebman replied that the protocol is five minutes and the Commission does not answer questions or ask questions. Mr. Walker asked for a notification once he reached five minutes. Mr. Walker continued: I will just speak directly to the charges related to Water Services and leave Parks and Recreation out of it just for the sake of time. Prior to the contract being signed at a meeting April 2016 attended by City staff John Henny, Mark Fortkamp, and Dan Hatch, as well as SRI staff, Andrew Walker myself and Nathaniel Miller, Water Service was informed of our concern that given the current condition of the irrigation infrastructure, the budget resources were insufficient to support the irrigation operations. John Henny reassured SRI staff, saying "If there's not enough money, we'll just go to Council and tell them we need more money." SRI agreed to sign the contract with the understanding that additional resources would be made available to bring the infrastructure up to operational standards. A second meeting was held in March 2017 prior to signing the first-year extension agreement where SRI expressed the same concerns as the year prior. John Henny gave similar assurances, saying there are contingency funds available to assure the infrastructure will be maintained at an operational standard. Mr. Walker was notified that the five-minute time limit had been reached. Mr. Walker thanked the Commission for its time. Chair Liebman thanked Mr. Walker. 7. COMMISSIONER COMMENTS AND SUGGESTIONS The floor was opened for Commissioner comments. Commissioners Gehl and Berryhill felt that Mr. Andrew should have been allowed more time for his comments. Chair Liebman replied that he was following the protocol for the time allowed for public comments. Vice Chair Short wondered if it was possible for Mr. Walker to submit documentation for discussion at another meeting. Commissioner Ford wondered if this was the proper forum for Mr. Walker's presentation. 8. FUTURE AGENDA ITEMS Future agenda items include the following: •January: Planning for 2018 Strategy and Agenda Topics 9. NEXT MEETING The next regular meeting of the Citizens Utility Advisory Commission will be held on January 3, 2018 at 6:00 p.m., at the Oasis Water Campus, 7070 W. Northern Ave., Glendale, Arizona, 85303. 10. ADJOURNMENT Motion by Commissioner DeAngelo, second by Commissioner Gehl, to adjourn the meeting at 7:03 p.m. Motion carried 5—0. The Citizens Utility Advisory Commission meeting minutes of December 6, 2017 were approved on the 3rd day of January 2018. Denise Kazmierczak Recording Secretary