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HomeMy WebLinkAboutMinutes - Minutes - Citizens Utility Advisory Commission - Meeting Date: 3/1/2017rip. Citizens Utility Advisory GI-E`14�E Commission Oasis Water Campus 7070 W. Northern Avenue March 1, 2017,6:00 P.M. FINAL MINUTES I. CALL TO ORDER — 6:00 p.m. IL ROLL CALL: Present: Chairman Jonathan Liebman, Vice-chairman Ron Short, Commissioners Amber Ford, Ruth Faulls, Robin Berryhill, and Robert Gehl Staff: Water Services -Craig Johnson, John Henny, Doug Kupel, Ron Serio, Dan Hatch, Megan Sheldon, Thomas Relucio, and Sally Melling Recording Secretary; Public Works -Jack Friedline, Michelle Woytenko, and Phil Mercier; Customer Service/Finance-Paul Lopez; Public Information Officer -Roberta Bonaski III. APPROVAL OF MINUTES OF PREVIOUS MEETINGS Approval of the Final Minutes, February 1, 2017 meeting - Motion for approval made by Comm. Gehl, seconded by Comm. Ford. APPROVED 6-0 IV. DIRECTOR'S REPORT — Craig Johnson, P.E., Water Services Director • Mr. Craig Johnson provided updates to the Commission on Mr. Friedline and his meeting with the city manager and individual Council members Program information and reminder of financial analysis seen on December 20, 2016 Information of why rate increases need: last rate increases for each department Long term plans with anticipated benefits Summary of information to be provided to CUAC • Reminder that Water Services is slightly behind Public Works on information being presented Both departments have models Staggered information presentations so CUAC can analyze separately and easily ACTION: NO ACTION REQUIRED, INFORMATION ONLY V. DISCUSSION OF WORK PLAN FOR PUBLIC WORKS POLICY ISSUES Mr. Jack Friedline, Public Works Director, presented information to the Commission. • Anticipated Work Plan 1St meeting (tonight): Rate Model Review tonight with brainstorming sessions at later meetings 2,d CUAC meeting: Reduction in service level reductions with projected cost savings Possible ways to increase fees to hit projected benchmarks and best methods to implement them City of Glendale Water Services Department • 7070 West Northern Avenue • Glendale, AZ 85303 • (623) 930-4100 March 1, 2017 Citizens Utility Advisory Commission Final Minutes Page 2 Develop possible solutions package recommendations for Council Possible Council Workshop presentation date of May 2, 2017 3`d CUAC meeting: develop Council presentation of solutions package presentation to public, CUAC to fine-tune draft presentation Second half of May and first half of June -3 to 6 public meetings to be held June -staff to compile public input on solutions package; CUAC to review, refine, and revamp August -Council Workshop to present CUAC recommendations September -Council voting meeting November 1 -Possible effective date Mr. Johnson explained that firmer timelines would be developed at a meeting set for Thursday, March 2 Ms. Michele Woytenko, Public Works Deputy Director, gave updates to the Commission. • Information on costs such as insurances, indirect charges, special event costs, and utility charges previously requested was distributed to the Commission • Other Valley cities' rates, costs and services, and recent rate increase information was also distributed; she indicated that Scottsdale, Gilbert, Avondale, and Tempe are comparable to Glendale in services provided Residential Rate Model information presented tonight by Phil Mercier, Public Works Business Analyst using 10 years of historic data for cost adjustments • Revenues and total expenses were presented Revenue streams Cost of services Operating expenses Net earnings from the operations Capital expenses i.e., costs of replacement vehicles Fund balance 3 scenarios shown for possible rate increase and results One total increase at once -a 30% increase (Immediate relief on the fund balance at first but without any inflationary projections built-in, the department's ending fund balance would not improve from where it is currently) Incremental increases split into 3-a 15% increase (Provides relief for the ending fund balance, and due to the higher overall increase the deficit is smaller in 2023-2026) Two scheduled increase in consecutive years, and then $1.00 total every year in perpetuity (Counters inflation and capital expenditures) Mr. Friedline offered that the current Council could accept the first two increases and leave any following increase to a future Council to approve Possible solution options (some but not all) Adjusting personnel and resource counts, Average waste tonnage per household, Recycling collection frequency Street sweeper frequency Flexible work schedules Changing purchasing methodology of assets Route & tonnage swap with neighboring municipalities Container size specific pricing Bulk collection options -volume limits, service reductions beyond bi-monthly, on call only Out -sourcing some or all residential collections March 1, 2017 Citizens Utility Advisory Commission Final Minutes Page 3 • Critical need is building a new office with space for staff lockers to get out of the trailers but could be financed with bonds Questions from CUAC with answers in parenthesis: ✓ Why the significant jump in cost of service in FY 2018-19? (Answer: Vehicle wear and tear, pay increases from the Class and Compensation Study done by the city, change in holiday pay now being counted in overtime pay for crews, health care increases, built-in inflationary costs; trend of significant increase in bulk trash tonnage so additional crew included) ✓ How is the fund balance percentage of the contingency budget arrived at on the summary spreadsheet? (10% of the prior year's revenues calculated by the Finance Department.) ✓ Is the department cash and carry? (Yes.) ✓ Is this a total budget for the entire city including residential and commercial solid waste services? (No, just residential.) ✓ Is there a separate fleet for commercial trash pick-up? (Yes, there is.) ✓ Clarification was requested on residential vs. commercial budget figures. (Residential and commercial solid waste share the same fund balance due to the Finance Department's set- up, although attempts are made to maintain residential as a separate stand-alone process. Commercial trash pick-up does not lose money and could subsidize the ending fund balance.) ✓ Will the Commission be looking at anything on commercial services? (Not at this time. It is hoped that by the end of May, numbers will be available for public presentation to substantiate no fund losses from the commercial side.) ✓ Do contracts all expire at the same time? (Assigned staff member oversees competitive contracts and ensure customer satisfaction.) ✓ What do net earnings from operations consist of? [Net earnings minus cost of service, and og&a (operating, general, and administrative expenses)] ✓ What is revenue? (Collections from residential services plus on-call services, vehicles sold at auction, interest returns, and late fees.) ✓ Where do landfill fees go to? (That information to be presented during the Landfill model portion.) ✓ How many people would be laid off if services reduced? (None or very few. Reductions would be handled by attrition.) ✓ What top 5 options are optimal for savings? (Bulk item, sweeping, hazardous waste and recycling pick-up frequencies; and volume of containers for discounts on smaller size but new smaller containers would entail a cost) ✓ Please provide a table showing costs of privatizing pick-ups and street sweeping. (That will be created.) ✓ Has leasing been explored? (The Finance Department does not like the carrying charges and prefers cash -n -carry basis.) ✓ Could households share a recycling bin? (People do not want to share bins.) ✓ What percentage of bins are individual versus alley bins (shared by several households)? (Less than 15% are alley bins.) ✓ Could trucks be easier on the bins to extend the life? (Yes, they could be. Approximate costs of a bin are $70 for bin & delivery.) ✓ Are there any industry changes coming in the next 10 years? (No.) ✓ Could collection services be done every 2 weeks? (Yes, if a variance is obtained from the state and county.) ACTION: NO ACTION REQUIRED March 1, 2017 Citizens Utility Advisory Commission Final Minutes Page 4 VI. WATER SERVICES RATE MODEL REVIEW Craig Johnson, Water Services, Director; and Rick Giardina, Raftelis Financial Consultants, Inc.; who presented information to the Commission. Mr. Johnson began with a summary of revenue increase drivers - Economic downturn prevented requests from coming forward Resources are now at point of needed updates and replacements, risks Financial forecast to be presented was briefly summarized Costs (raw water, electricity, maintenance and technology costs) have increased, water conservation has impacted revenues, fund balance policy, debt service ratio Capital outlay, department is pay-as-you-go entity for projects, helps reduce risks; capital projects were delayed Department held the line on Operating & Maintenance costs Some direct operating costs were absorbed Water is stand-alone fund; does not receive any money from General Fund City is already predominately built -out, city is in capital repair and maintenance mode Rate increase history provided Mr. Giardina presented training information to the Commission on Ratemaking 101 for Any City, USA (which was not specific to Glendale's data). • Background, purpose, and roadmap of process • Capital drives water and sewer; compared to other utilities, they are the most capital intensive "animals" out there; this drives need to make investments & revenue requirement that customers are asked to pay • Key Rate Study Components: Financial plan -long term forecast of cash flows of all primary city utility functions Will forecast annual water/sewer revenue increases Optimal CIP financing strategy Adequate cash reserves/fund balance Adequate debt service coverage Cost of service study -determines amount of revenue that must be recovered from each customer class based on costs they impose on the utility Recognizes differing service characteristics Varies by customer class Rate design Revenue requirement for each customer class determined using AWWA-WEF cost allocation principles Allows the utility to recover revenue for each customer class to achieve specific policy objectives Broad latitude to implement desired rate designs Two parts: service/base charge (fixed) and volume rate per 1,000 gallons (varies) Two sources of revenue for Water Services Department - user charges (the monthly bill for water used, sewer charge, and solid waste) and Development Impact Fees -one time fee for newly built homes to recover costs incurred by city to serve the residence Various factors influence customer demand: weather, rainfall, conservation efforts, economy March 1, 2017 Citizens Utility Advisory Commission Final Minutes Page 5 Cost of service factors vary by customer class: size of meters needed, total water use, types of water uses, types of residences -single family versus multi -unit housing, on-going monthly costs (meter reading and customer billing) Questions from CUAC with answers in parenthesis: ✓ Where is Raftleis in the Rate Study process? (Raftelis is analyzing the current processes in use, infrastructure condition, studying the Water and Wastewater Master Plans, and data review phase.) ✓ Where does Commission feedback enter into the information collection process that Raftelis is doing? (Feedback will be used at the Annual Revenue Requirement from Rates and Evaluating Customer Bill Impacts stages. Cost of service evaluation should not involve Commission input and uses only technical data from department figures and projections.) Mr. Johnson discussed setting aside Wednesdays in March and April for meetings to bring the Commission up to speed for possibly an April or May Council Workshop presentation. Mr. Johnson explained that a possible two-phase increase had been discussed with the Council about one in 2017, skipping the election year of 2018, and a second increase in 2019. He outlined the schedule meeting dates for the Commission for both Water Services and Public Works. Comm. Gehl stated he cannot commit to such an intense time commitment since he is a volunteer and has work and family responsibilities. He expressed concern that he is being thrust into this, and this intense schedule is about the 2018 elections. Vice-chairman Short stated he has a prior commitment for his Home Owners Association (HOA) responsibilities. Chairman Liebman also has the same HOA commitment. Comm. Gehl said he feels the Commission has gone from working at a snail's pace to over 100 miles per hour and he has a bad feeling about it as if people are suddenly shocked that rates need to go up. He explained he misses (work) staff meetings on every Wednesday he attends a Commission meeting. Mr. Johnson addressed the public meetings locations and frequencies; and the need for a possible change of venue for upcoming Commission meetings to handle increased public attendance. It would be up to the Commission if they attended Councilmembers' district meetings and other public outreach meetings. NO ACTION REQUIRED VII. CALL TO THE AUDIENCE No audience members spoke. VIII. FUTURE AGENDA ITEMS Water Services 5 -Year Financial Plan Future meeting schedule IX. COMMISSIONER COMMENTS Commissioners Faulls and Berryhill both thanked the departments for informative presentations and good discussions. March 1, 2017 Citizens Utility Advisory Commission Final Minutes Page 6 Vice -Chairman Short stated he understands the commitment requirements asked of the members will be hard but stressed the importance of the work being undertaken, now and for the future. Comm. Ford expressed concern about the accelerated meeting and deadline timelines, and would like to see a finalized timeline at the next meeting compiled of date requirements and information for both departments. She also has misgivings about the intensity of the schedule. Chairman Liebman stated he sees a challenge with the timeframes and cautioned that timelines would need to be revised if at any time the Commission does not feel like full understanding has been achieved. X. NEXT MEETING: March 8, 2017, 6 p.m. XI. ADJOURNMENT — Motion to adjourn was made by Vice -Chairman Short, seconded by Comm. Berryhill. MOTION APPROVED 6-0. The meeting adjourned at 8:55 p.m. Respectfully submitted, Sall Melling