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07-24-2007 CAPE FEAR PUBC UTILLTY AUTHORITY ORGANIZATIONAL MEETING SECOND SESSION JULY 24, 2007 6:00 PM MINUTES Attendees: Authority Members: Bill Caster Robert Greer Matt Hunter Kathryn Johnston Jim Quinn Gene Renzaglia Burrows Smith Steve Thomas Jason Thompson Absent: Charles Wells Municipal & Financial Services Group (MFSG): Edward J. Donahue Dave Hyder Steve Kaii-Ziegler Larry Tropea Lisa Zitomer George Rest Chris Guvernator RJ McCall. LLC Roger McCall The meeting commenced at approximately 6:00 PM. This meeting is being reconvened from the July 18, 2007 meeting of the Cape Fear Public Utility Authority. Chairman Hunter requested that Jason Thompson be sworn in as a member of the Authority which was completed by Susan Wynn, Notary Public. Chairman Hunter addressed the Employee Breakfast and Celebration to be held on July 25, 2007. Recognizing that some Authority members are new to this process, it was 1 indicated the newer members may have a certain level of discomfort in attending and answering questions, and that they not feel obligated to attend. Should questions be presented to members, the feeling was that they could direct individuals to the Chairman for a response. L to attend those sessions that did not conflict with their schedules. Minutes from the first session held on July 18, 2007, were distributed and reviewed by Secretary Steve Thomas. Jason Thompson indicated that they reflect that he was not, in Secretary Thomas moved that these minutes be accepted as altered, second by Gene Renzaglia. Motion passed unanimously. Chairman Hunter indicated that the Executive Committee has not yet met with the first meeting being tentatively scheduled for Friday, July 27, 2007, at 9:00 AM to inspect potential office space at 320 Chestnut Street. Chairman Hunter will contact Charles Wells to confirm this. Any issues for the Committee should be presented to the Chairman. Arrangements have been made to preview the possible office space with Ed Donahue. Kathryn Johnston presented updates to the Human Resources Committee indicating that she and Gene Renzaglia have been requesting individuals from the City and County serve on the HR Committee. The City (Al McKenzie) and County (Andre Mallette) HR Directors were invited to serve on this Committee and both have agreed. The Authority members were solicited for suggestions for other participants and names were presented from the City side, Denise Matroni, and from the County side, Cathy Morgan. Possible first meeting to be held after the first breakfast. It was discussed that the Committee bring recommendations to the Authority as a whole with the Authority voting upon those recommendations. The Finance Committee update was not available. Jim Quinn presented updates to the Search Committee for temporary legal counsel. Individual attorneys were contacted, among those being John Wessell who has worked with Wrightsville Beach. It was determined, however, that Mr. Wessell would have a conflict of interest. Jeff Kerr was also another point of contact even though he is retained by a large firm. After further review, larger firms were considered with contacts made with Ward & Smith and Dan Martin. They indicated that there would be no conflict of interest and would like to make a bid for this opportunity. Jay Kneeson of Smith, Moore was contacted, with this being a larger firm with offices in other cities, and he is checking into this solicitation for their services. A job description or list of services that would be required was requested of Edward Donahue who presented to Jim Quinn those requirements that he felt would be needed. They are: Review and negotiate inter-local agreement being drafted by the City and County estimated time: 40-50 hours 2 estimated time: 20 hours Assistance in negotiating an employment agreement with the General Manager and any other contracted employees estimated time 40 hours General legal advice on an as-requested basis estimated time 10 hours per month. Additional individuals and large firms will continue to be contacted and supplied with this list of requirements to solicit proposals from each; number of hours, types of issues, etc. The Search Committee (Jim Quinn, Bill Caster, Rod Andrew) will review each proposal, and optimally be able to present to the Board at the next meeting, August 7, 2007, to be voted on. Chairman Hunter invited Edward Donahue to start the presentations by the MFSG staff on the briefings for the overview and critical issues. Please reference 26-page handout to the Authority members. Human Resources: Larry Tropea (reference pages 2-5) -City and County employees are motivated, know the business -HR Employee Work Group has done an outstanding job -Employee benefits need to be addressed differences will be discussed and decision-making addressed -Some salary ranges not competitive in the local market; Authority will need to address these need to be competitive to enable hiring and retaining best individuals available -There are questions and concerns from the City and County employees -Cafeteria benefits plan was recommended -Draft organizational chart developed and to be presented to the HR Committee along with process to populate - responses have been received. Approval of organizational chart will be required. Fifty-two additional job descriptions have been written with approximately 34 remaining. A pay classification system remains to be developed. -HR policies and procedure manual being developed to present to the Authority for approval -Authority needs to decide whether to wait for the hiring of the General Manager before filling some of the key positions -Whole administrative side of the Authority will need to be hired since they will not be transferring over from the City and County (approximately 30- 40 people: Accountants, IT, HR). It was estimated that it would take between 90-100 days to staff these positions. Chairman Hunter stated that the Authority is unified and that they need to go in parallel to fill all of these positions rather than delay until a General Manager is hired. 3 -Larry Tropea will request a meeting with the HR Committee to review -Steve Thomas volunteered to be on the HR Committee -Burrows Smith requested a copy of the employee benefits. Finance and Rates: David Hyder (reference pages 6-9) -Operating budget for the City and County for FY 2008 presented with a principal outstanding debt for the City and County of $150M -Capital expenses for the City and County for FY 2008 - $100M -Operating Revenues for the City and County for FY 2008 - $46M annual debit service is not included -City and County water and utilities funds are in good shape -Capital improvement plan required over next 5-10 years resulting in rate increases -City has adopted increase in water and sewer rates 5% water, 10% sewer -City and County adopted same connection fee for a typical, new customer of $4,500. This was accomplished via the Advisory Committee process -County contributes sales tax subsidy of $1.9 M to the Authority continuing at this rate for five years and being phased out over following five years. -Need to start writing policies and procedures for Purchasing, Finance and Accounting -Key element adoption of water and sewer rates preliminary study completed in December 2006 -Need to develop budget for Authority draft is approximately 95% complete. Interim budget needs to be adopted with a timeframe of September 2007 -Develop opening balance sheet for the Authority -Develop a plan on transitioning City and County leases and contracts -Insurance requirements for the Authority need to be addressed -Transferring of City and County debt (City debt general obligation, certificates of participation, revenue bonds) (County debt certificates of participation). Revenue bonds have to transfer to Authority; certificates of participation and general obligation bonds need to remain with the City and County. Feasibility study needed to transfer Revenue Bonds stating Authority will meet the coverage, with bond counsel validating coverage will be met -cies/ procedures; budget adoptions; rate structure; keeping rates affordable; water conservation and rate increases. Session broke for a 10 minute recess at 7:05 PM Capital Improvement Program 10-12) and Operation and Maintenance (reference pages 13 and 14) 4 -10-Year CIP draft consists of approximately 87 projects of which 60% are wastewater and 40% water with a total cost of approximately $400M. (average $40M/year). Dominating are a few large projects consisting on the water side of the Sweeney Plant expansion, the raw water main work scheduled by the City and the County Well fields are more than one-half of the CIP along with the North East Interceptor and the wastewater plant upgrades. -Master plan for wastewater for City and County is relatively current and fairly integrated, so no need to update. Updated water master plan for integrated utility does need to be commissioned in short term. -Approving an integrated Authority CIP is essential -Policy decisions are needed for the water and sewer projects -Standard operating procedures - City has 30/35 established both on the water and sewer side with the possibility of adding a few more -Engineering standards need to be addressed in combining the best of both the City and the County -Policy decisions will be required regarding cross training on water vs sewer; level of service; treatment of developer requirements and water reuse. Information Technology Roger McCall, RJMcCall (reference pages 15-19) -Authority will need to leverage technology over the coming years; does not exist at time and needs to be built at the cost of approximately $3-5M over the next five/six years -Top priority for Day One would be to have billing and customer information systems, financial management system presenting a position and consistent view to the customer -Key assumptions high level of customer service; future integration; short term and the County assets have capacity to support some Authority requirements -Options were to keep both systems and bill Authority customers from both; using either the City or County System and run locally or using the County System (HTE) , have it hosted somewhere else as a service contract back to the Authority -An Application Service Approach (ASP) is recommended which is hosted somewhere else, a service contract not licenses or purchases with a 3/1 or 4/1 go live which is recommended from a cost standpoint over a three- year contract -A decision from the Authority is needed as to moving forward with getting a contract in place with HTE Governance and Legal Edward Donahue, MFSG (reference pages 20-22) 5 -It was recommended that the Authority board function at a policy level rather than an operational level -Care needs to be taken with conflicts of interest and fiduciary responsibility -It was recommended that the Authority board not be involved with review of all contracts but should spend reasonable time on those of significance -Chain of command was addressed with the understanding that more of this responsibility would fall on the General Manager -Articles of Incorporation and Bylaws have been approved -Inter- -Transfer operating permits, assets and liabilities -Adopt policies, procedures and plans over next several months Communications Lisa Zitomer, MFSG (reference pages 23-26) -Communications, to date, have focused on the internal (employees) keeping employees apprised of process of consolidation; -Plan to maintain the website, hotline, newsletters, informal office visits as well as an employee breakfast and celebration -Public Education Employee Working Group would like to do working group interviews with the City and County Managers as well as the Chairman of the Authority; either broadcast on government TV or in the newspaper or a handout - -Create a Communications Committee to act as a policy advisor to external communications Questions and Answers Larry Tropea, MFSG -Mr. Tropea stated that the Authority needs to focus on providing the best water/wastewater services; best maintenance and operations of the facilities; education has to become a top priority for the Board and the General Manager; environmental programs a top priority and having the right people in the right place -Jim Quinn questioned who would be the spokesperson for these ideas to the public: Mr. Tropea: the Authority, General Manager and some of the very knowledgeable employees -Steve Thomas asked what the most important qualification for the General Manager should be: Mr. Tropea: strength of character to tell Authority what it needed to hear as well as ability to follow policy directions from the Authority once decisions had been made Old Business -Chairman Hunter stated that he had some questions pertaining to the 6 from the last meeting with the Secretary cosigning. Revisions can be concerns present a problem. New Business/Authority Member Comments -Rod Andrew would like to have put on the agenda for the next meeting the further discussion of the Cape Fear Public Utility Authority name before materials are imprinted with this name. Jim Quinn suggested a contest or write-in campaign to help name the organization. Chairman Hunter stated that due to the amount of work that needs to be addressed, it does not need to be put on the next agenda -Chairman Hunter asked Jason Thompson what his number one concern was for the Authority and Mr. Thompson elected to agree with all the -Jason Thompson suggested to the Authority that Rules of Order be adopted. It was stated that these are already contained in the Bylaws -Chairman Hunter dislikes meeting table setup requesting a circular or semi-circular setup in the future. Discussion of format of the meeting to be discussed at the next Executive Committee Meeting in addition to meeting room location. A briefing after the Executive Committee Meeting addressing where the Committee will be meeting and general format -Office space at 320 Chestnut to be previewed for Executive Committee meeting location Chairman Hunter requested a Motion to adjourn the meeting at 8:15 PM. Motion by Rod Andrew; second by Burrows Smith Motion passed unanimously. The next meeting of the Authority is scheduled to be held on Tuesday, August 7, 2007, 8:00 AM, at 230 Government Center Drive, Suite 135, Human Resources Training Center, Room 401. Respectfully Submitted Kathleen Fulford 7