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CFPUA 03 14 2012 Minutes CAPE FEAR PUBLIC UTILITY AUTHORITY REGULAR MEETING AND RATE HEARING MARCH 14, 2012 Members Present: James Quinn, Chairman Patricia Kusek, Vice-Chair Gene Renzaglia, Secretary Mike Brown, Treasurer Charlie Rivenbark, Councilman Neil Anderson, Councilman Rick Catlin, Commissioner Jason Thompson, Commissioner Cindee Wolf J.C. Hearne, II Larry Sneeden Staff Present: Matt Jordan, CEO Jim Flechtner, COO Cheryl Spivey, CFO Karen Durso, Assistant to the CEO Carey Disney Ricks, CCO Frank Styers, Director of Engineering Beth Eckert, Environment and Safety Director Tom Morgan, H.R. Director Nancy Johnson, Customer Service Director Christene Mitchell, Engineering Manager Kent Harrell, Engineering Manager Mike Richardson, Water Treatment Superintendent Ken Vogt, Wastewater Treatment Superintendent Melinda Hoggard, Accounting Manager Julia Vosnock, Procurement Manager Gary McSmith, Senior Project Engineer Tige Brubaker, Project Manager Attorney Present: Linda A. Miles, the Miles Firm, PLLC CFPUA MINUTES 3.14.2012 Page 1 Guests Present: Jeff Ling, PhD, Evergreen Solutions, LLC Tony Boahn, McKim & Creed Eric Williams, HDR Tommy Esqueda, Brown & Caldwell Dan Dawson, W.K. Dickson Jim Ianucci, New Hanover County Brian Kaiser, Myrtle Ventures, LLC Michael Lee, Smith, Moore and Leatherwood Tyler Newman, Business Alliance for a Sound Economy Call to Order, Determination of a Quorum, and Opening Comments. Mr. Quinn called the meeting to order at 9:00 a.m. and declared a quorum present, with all members in attendance. He welcomed the new members and reminded Board members they needed a work session to discuss growth policies. Adoption of the Agenda. Mr. Renzaglia moved to approve the Agenda as presented by staff. Mr. Rivenbark seconded the motion, and it passed unanimously. Authority Member Oaths. Mr. Quinn introduced two new members, Mr. Sneeden and Councilman Anderson. Ms. Pope administered their Oaths as Authority Members. Resolution and Presentation Recognizing the Honorable Ronald W. Sparks, P.C. Mr. Quinn read a Resolution thanking Mr. Sparks for his commitment to the Authority, the citizens of the City of Wilmington and New Hanover County, employees, infrastructure needs and committee service as a Board member. Ms. Kusek moved to adopt the Resolution. Mr. Thompson seconded the motion, and it passed unanimously. Mr. Quinn presented Mr. Sparks with the Resolution and a plaque commemorating his service from December 2008 through February 2012. member and CFPUA MINUTES 3.14.2012 Page 2 Mr. Sparks thanked Mr. Quinn, the full Board and Authority staff. He asked the Board to remember the employees, who had performed admirably during bad times, and to keep infrastructure needs in mind in the future. Mr. Sparks received a standing ovation from those present. Approval of Minutes. Ms. Kusek presented the minutes, with corrections to typographical errors and clarification from Mr. Styers on the amount of an engineering contract. Mr. Rivenbark moved to approve the minutes as corrected. Mr. Renzaglia seconded the motion, and it passed unanimously. Public Comment (general). Michael Lee was present to address the Board regarding an easement issue. The Board agreed brought an easement issue and possible condemnation discussion to the Board. Consent Agenda. Mr. Quinn presented the Consent Agenda, as follows: 1.Authorization for the CEO to issue a Request for Proposals for Revenue Recovery Services; 2.Authorization for the Chairman of the Board and the Chairman of the Finance Committee to execute an audit contract with the firm of Thompson, Price, Scott, Adams, and Company, at a price of $95,150 for a three-year period; 3.Approval of the Post-Issuance Monitoring of Compliance for Tax-Exempt Debt Policy (no budget impact); 4.Authorization for the CEO to enter into a contract with Mechanical & Environmental Control, Inc., for Med Floc Polymer emulsion for water treatment, at an estimated cost of $50,400; 5.Authorization to enter into a Mutual Aid Agreement with New Hanover County, the City of Wilmington, and the Towns of Carolina Beach, Kure Beach, and Wrightsville Beach to provide assistance in times of disaster, with no immediate budget impact. 6.Authorization to enter into an Interlocal Agreement with the City of Wilmilgnton regarding infrastructure improvement projects and authorization for the CEO to execute the associated Memoranda of signature authority for construction contract change orders. 7.Authorization for the CEO to purchase two suction lift pumps to function as duty pumps for Pump Station No. 2 (Woodlawn), not to exceed $32,000; CFPUA MINUTES 3.14.2012 Page 3 8.Authorization to review the Rates & Fees Schedule to include a charge for hauled wastewater from customers located within the service area where connection is unavailable and to review the present description of the Hauled and Miscellaneous Waste Fee of $0.03 per gallon; 9.Authorization for the CEO to execute a change order with State Utility Contractors for -inch force main, not to exceed $405,630.48, provided in CIP; and 10.Authorization for the CEO to execute a contract amendment with McKim & Creed, PA, and not to exceed $26,000 total, provided in the CIP. All items on the Consent Agenda had been reviewed by the Finance Committee. Mr. Styers answered a clarification question from Mr. Rivenbark regarding pricing for Item 10. Mr. Renzaglia moved to adopt and approve the Consent Agenda. Mr. Brown seconded the motion, and it passed unanimously. Rate Presentation and Public Hearing. Ms. Spivey explained the rate model used by the Authority and summarized the data that is incorporated and evaluated for rates. The rate model is based on the costs of providing service while covering revenue requirements and anticipating no increase or decrease in the volume consumption of water. The proposal would increase the water fixed charge by $1.13 and the sewer volume charge by $0.45 per 1,000 gallons. The average customer uses 10,000 gallons. Ms. Spivey showed comparison data from other utilities in the state, with the Authority remaining in the mid-range in pricing. Staff answered clarification questions from the Board. Mr. Quinn opened the public hearing on rates at 9:39 a.m. There were no speakers on the subject of rates, and Mr. Quinn closed the hearing at 9:40 a.m. New Business, Administration Reports. Operations Report: Messrs. Flechtner and Richardson reported on a switch from surface water (Sweeney Plant) to groundwater (well system) in the Southern area of the County. Customers in the subject area will be notified, and the change in water source is expected to last for two to three years until the Southern transmission main is completed. Public Relations Report: Ms. Ricks distributed two informational pamphlets that will be distributed to customers. She reported that the North Carolina Stewardship Index, a study by the School of Government, ranked the City of Wilmington the most efficient in providing services of CFPUA MINUTES 3.14.2012 Page 4 25 municipalities studied. The study analyzed charges for basic services, including water and sewer rates. Ms. Ricks reported that the Authority received a 55 percent approval rating in a recent Civitas poll. Ms. Ricks reported that the contractor on the Third Street Streetscape project will have Third Street completed to Grace Street before the Azalea Festival. Authority staff will participate in a shopping center. Mr. Brown, Chair of the Public Relations Committee, requested that Board members consider serving on the Committee. Ms. Miles requested a closed session at the end of the meeting to discuss a potential claim. She also had a Resolution and revision to the Public Comment policy to be discussed during the Executive Committee report. CEO Report: Mr. Jordan summarized the Environment and Safety report for the month of ammonia violation at the Walnut Hills plant. There were three accidents, one of which was OSHA recordable. The OSHA recordable rate has decreased and is below industry averages. New Business, Committee Reports. Executive Committee: Mr. Quinn presented the Committee recommendations for Authority Officers to complete Fiscal Year 2012, as follows: Mike Brown to fill the unexpired term of Burrows Smith as Treasurer and Finance Committee Chair, serving through June 30, 2012; Pat Kusek to fill the unexpired term of Mike Brown as Vice Chair, serving through June 30, 2012; Gene Renzaglia to fill the unexpired term of Pat Kusek as Secretary, serving through June 30, 2012. Mr. Quinn moved to approve the slate of officers, and Mr. Rivenbark seconded the motion. There were no nominations from the floor. There was no discussion, and the motion passed unanimously. CFPUA MINUTES 3.14.2012 Page 5 Mr. Quinn reminded the Board that there would be new officers elected in June and that a Nominations Committee would develop a proposed slate of officers. He requested Authority members to consider serving as officers and reminded them of the time commitment. Mr. Quinn has discussed Committee memberships with the newly appointed members. Public Comment Policy Revision and Associated Resolution. Ms. Miles presented a revision to the Public Comment Policy, as requested at the February Authority meeting. The revision would allow public comment on agenda items at the discretion of the Board. Mr. Quinn read the supporting Resolution into the record. Following a brief discussion and clarification questions, Ms. Kusek moved to revise the policy and adopt the resolution. Ms. Wolf seconded the motion, and it passed unanimously. Human Resources Committee: Mr. Hearne asked Mr. Morgan to give the report for the Committee. Mr. Morgan introduced Dr. Jeff Ling of Evergreen Solutions, LLC., to summarize the results of Evergreen Classification and Compensation Study for the Authority. Classification and Compensation Study. Dr. Ling summarized the methodology used by his firm employees. Evergreen staff used the current Authority job descriptions, employee questionnaires called Job Assessment Tools, focus group discussions, personal interviews for follow-up with staff, and surveys of salaries and benefits from 20 market peer organizations. Employees in the focus groups were concerned about internal equity, appropriate job descriptions, and market adjustments. Some employees recommended that evaluations be completed with the fiscal year rather that the calendar year. The average tenure of an Authority employee is nine years. 0.7 percent above market average, midpoint salaries are 4.3 percent below market average, and maximum pay ranges are 7.4 percent below market average. The majority of employees are below Dr. Ling answered clarification questions from Board members regarding the methodology, the data collected, and peer groups queried for the study, including private sector engineering firms. Mr. Renzaglia reminded Board members that all employees did not receive reclassification or an pay increase at the time of consolidation. Evergreen offered options to implement its recommendations. For budget preparation, the H.R. Committee endorsed the following option: (1) an updated pay structure with the maximum of each grade being increased by 2 two percent; (2) salary adjustments ranging from .5 to 2 percent CFPUA MINUTES 3.14.2012 Page 6 depending on tenure; and (3) reclassification of positions that were identified as being below market. The total cost of the recommendation would be $354,385.88. The Committee also endorsed a two percent merit increase for budget considerations. Messrs. Jordan and Morgan answered questions regarding the market adjustments and merit increase proposals. Ms. Wolf moved to approve the Committee recommendations for budget purposes. Mr. Renzaglia seconded the motion, and it passed unanimously. Employee Health, Dental, Life, Accidental Death and Dismemberment, and Long Term Disability Insurance for FY2013. Mr. Morgan presented four options for employee health insurance that had been reviewed by the Committee. The Authority is self-insured, with the plan administered by Blue Cross and Blue Shield of North Carolina. Mr. Morgan reported that United Healthcare, Cigna Coresource, and Penn-Western had declined to quote due to non- competitiveness. Following analysis, the Human Resources Committee endorsed renewing the current self-insured PPO plan with no change in benefits or funding factors. Mr. Morgan answered questions from Board members regarding the differences in plans and the option of a high-deductible/consumer driven plan, and the Board discussed option for coverage. Board members asked if employees had expressed preferences for health coverage. Mr. Jordan reported that employees had not been surveyed but that his regular meetings with employees show that benefits are a high priority in which employees are passionately interested. Mr. Morgan added that the Evergreen focus groups revealed that maintaining insurance benefits continues to be of high importance to employees. Mr. Hearne moved the Committee recommendation of maintaining the current self-insurance PPO health plan with no change in benefits or funding factors, and to continue the funding of dental insurance at the current ratio. The life insurance, accidental death and dismemberment, and long-term disability insurance are in the second year of a three-year contract, with no change in premiums. Ms. Kusek seconded the motion. Following clarification questions, Mr. Morgan requested that Mr. Hearne amend his motion to include direction for the CEO to execute the appropriate contracts. Mr. Hearne amended his motion, and Ms. Kusek agreed. Ms. Wolf, Ms. Kusek, and Messrs. Quinn, Brown, Sneeden, Rivenbark, Hearne, Anderson and Renzaglia voted in favor of the motion. Messrs. Thompson and Catlin were opposed. Motion carried, nine to two. Clerk Evaluation and Consulting Attorney. Mr. Quinn reminded the Board that the Clerk evaluation was outstanding. He stated that the Board needed a mechanism to provide feedback to the law firm contracted as consulting attorney to the Authority. Mr. Renzaglia reported on the protocol used for the Clerk evaluation in the past. Mr. Thompson moved for the Board to CFPUA MINUTES 3.14.2012 Page 7 conduct the Clerk evaluation and develop a mechanism for feedback to the attorney. Mr. Brown seconded the motion, and it passed unanimously. The Authority recessed at 11:25 a.m. and reconvened at 11:40 a.m. Finance Committee: Mr. Brown asked Mr. Styers to present the recommended Capital Improvements Projects. Mr. Styers reported that staff had removed two projects from the CIP following the February 23 CIP workshop for Board members and that staff had met individually with Board members to review the CIP and answer questions. The Finance Committee recommended further workshops for CIP discussions. The currently recommended CIP totals $25,018.000 in projects. Staff requested approval of the CIP for budget development. Mr. Rivenbark moved to approve the CIP, and Ms. Kusek seconded the motion. Mr. Thompson stated that Finance Committee voted three to one not to recommend the CIP. service pay down. The analysis showed that the Authority could issue $12,000,000 of additional debt in FY13 without increasing rates in a future year. Mr. Catlin asked if the CIP could be reduced to $12,000,000. Mr. Brown asked to be excused from the meeting. Mr. Thompson moved to excuse Mr. Brown. Mr. Hearne seconded the motion, and it passed unanimously. Mr. Brown left the meeting at 11:50 a.m. The Board continued to discuss the CIP. Mr. Thompson compared the current SDC revenue to the SDC revenues to those when the Authority was formed. He cautioned the Board to think about the long-term consequences of the CIP. Mr. Renzaglia stated that he did not vote for the CIP because of the methodology used regarding expansion and had sought clarification from staff. He supported another CIP workshop. Mr. Renzaglia further stated that the Authority faced big expenses in its early days because of upgrades, plant expansions, and repairs. He believed the Board should be pro-active for the future and stated that the CIP evaluation process developed by staff could be used to identify projects crucial to the organization and the community, allowing the Board to avoid future problems with infrastructure. The Board discussed the potential for partnerships with other governmental units to address CIP needs. The Board discussed the need for a growth workshop with County and City representatives. Mr. Quinn called for a vote. Mr. Catlin offered a substitute motion to direct staff to prepare a $12,000,000 and report on the consequences of cuts. Mr. Hearne seconded the motion for discussion purposes. Messrs. Catlin, Renzaglia, Anderson, Hearne, and CFPUA MINUTES 3.14.2012 Page 8 Thompson voted for the motion. Ms. Wolf, Ms. Kusek, and Messrs. Quinn, Rivenbark, and Sneeden were opposed. The substitute motion failed. Mr. Quinn called for a vote on the original motion to approve the CIP as presented by staff. Ms. Wolf and Ms. Kusek voted in favor of the motion. Messrs. Renzaglia, Quinn, Anderson, Rivenbark, Thompson, Catlin, Hearne and Sneeden were opposed. Motion failed, eight to two. Mr. Rivenbark moved to direct staff to vet the CIP, make further recommendations for the CIP, and present a revised CIP at a Board workshop. Mr. Catlin seconded the motion, and it passed unanimously. Other Finance Business. Ms. Spivey reviewed the budget calendar, with the addition of bringing the CIP to the Board in April. She referred the Board to the February financial reports in the Agenda packet. There were no questions regarding the February financials Growth Workshop. Board members agreed on the need for a growth workshop to develop the directed to find days when Board members and City and County representatives were available, as well as the Harrell conference room, for workshops. Closed Session. Mr. Renzaglia moved to enter closed session to discuss a claim with legal counsel. Mr. Rivenbark seconded the motion, and it passed unanimously. The Authority entered closed session at 12:35 p.m., with Ms. Miles, Ms. Mitchell, Ms. Pope, and Messrs. Jordan, Styers, Flechtner, and McSmith remaining. The Board received reports from staff and legal counsel regarding a potential legal claim related to an easement acquisition. The Board provided direction to legal counsel. Open Session. Mr. Rivenbark moved to return to open session. Ms. Wolf seconded the motion, and the Board returned to open session at 12:50 p.m. Michael Lee and Brian Kaiser joined the meeting. The Authority entered into a cost-sharing pump station. Messrs. Lee and Kaiser, and Ms. Miles reported on acquisition issues for an easement which had never been recorded by New Hanover County representatives. Mr. Lee requested that the Authority consider condemnation by eminent domain on the subject property. CFPUA MINUTES 3.14.2012 Page 9 Closed Session. Mr. Thompson moved to return to closed session to discuss contract negotiations. Mr. Rivenbark seconded the motion, and it passed unanimously. The Authority entered closed session at 1:10 p.m. received further reports from legal counsel and staff, and provided direction to counsel. Open Session. Mr. Rivenbark moved to return to open session. Mr. Thompson seconded the motion, and it passed unanimously. The Authority returned to open session at 1:19 p.m. Mr. Quinn asked if any Board member wished to move to condemn the subject property. There was no motion to condemn by eminent domain. There being no further business to come before the Authority, Mr. Rivenbark moved to adjourn. Mr. Hearne seconded the motion, and the Board adjourned at 1:20 p.m. The next regular meeting of the Cape Fear Public Utility Authority will be Wednesday, April 11, 2012, in the Lucie Harrell Conference Room, New Hanover County Administration Building, 230 Government Center Drive, Wilmington, North Carolina. Respectfully submitted, Donna S. Pope, Clerk CFPUA MINUTES 3.14.2012 Page 10