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Home My WebLink AboutMinutes - May 10, 2011 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, MAY 10, 2011 A. Roll Call bv Citv Clerk An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, May 10, 2011, commencing at 7:00 a.m. Present: Council Member Katzakian, Council Member Nakanishi, and Mayor Johnson Absent: Council Member Hansen, and Mayor Pro Tempore Mounce Also Present: City Manager Bartlam, City Attorney Schwabauer, and Assistant City Clerk Robison B. Topic(s) B-1 Receive Presentation Regarding Fiscal Year 2011/12 Budget (CM) City Manager Bartlam briefly introduced the subject matter of the fiscal year 2011/12 budget as it relates to the three utilities: electric, water, and wastewater. Deputy City Manager Jordan Ayers provided a PowerPoint presentation regarding the fiscal year 2011/12 budget. Specific topics of discussion included overview; electric utility overview, organizational changes, salary and benefit increases, capital projects, and reserves; water utility overview, total salary and benefit increases, revenues, capital projects, and reserves; and wastewater utility overview, salary and benefit increases, revenues, capital projects, and reserves. In response to Mayor Johnson, Mr. Ayers and Mr. Bartlam stated that, with regard to the two-year service credit, only one of the three positions in electric utility has decided to accept the offer, the budget reflects only the one position, and staff will come back in September with revised figures once the 90 -day offer period is closed. In response to Council Member Nakanishi, Electric Utility Director Liz Kirkley stated there are approximately 46 employees in the Electric Utility Department. In response to Mayor Johnson, Ms. Kirkley stated that the duties of the buyer and electric apparatus mechanic both consist of overseeing inventory and the merger of these two positions into an electric materials technician is suitable for electric utility. In response to Mayor Johnson, Mr. Ayers stated that the increase of $740,137 in salary and benefits for electric utility only includes the one position that accepted the two-year service credit and the revised organizational structure that was approved during mid -year budget adjustments; however, this figure will be modified following further restructuring and employee concessions. In response to Council Member Katzakian, Mr. Ayers stated it is likely a second electric utility employee will accept the two-year service credit and the lowest level apprentice position would be eliminated. In response to Mayor Johnson, Ms. Kirkley provided an update on the west side power line project, stating that the $500,000 would go toward the preliminary and engineering feasibility studies, which have not yet been undertaken, and to date there has been no word from the California Independent System Operator regarding transition charges. Continued May 10, 2011 Council Member Nakanishi requested staff provide Council with a comparison of reserve policies for other utilities. In response to Mayor Johnson, Mr. Ayers stated that the purpose of the reserve policy is to repair a transformer or a component failure, but not to rebuild an entire substation. In response to Council Member Nakanishi, Mr. Ayers stated that the 25% reserve policy for the water utility was adopted in the rate model. Mr. Bartlarn added this type of policy is typical in the industry and is different than the electric utility policy because it is based on a percentage of operating costs. Council Member Nakanishi provided an example of a local business owner who recently expanded his restaurant and questioned why the building permit and development fees were so high, to which Mr. Bartlam responded that this particular business owner converted his business from a retail use to a restaurant use, which is one of the highest wastewater users, and more than doubled the size of the building; therefore, the fees were similar to a brand new restaurant. Further, Mr. Bartlarn confirmed that wineries are paying a surcharge for their wastewater usage. Approximately 58 cents on every dollar of wastewater expenses goes toward permit compliance in the state, and Mr. Bartlam and Public Works Director Wally Sandelin stated that the rates are projected to increase by 5 percent this year and up to 10 percent for the subsequent year. In response to Mayor Johnson, Mr. Bartlam stated the County is processing another truck stop in Flag City on the east side of the frontage road across from Flying J and is annexing an additional strip for the purpose of a parking lot, which would be added to the existing property in the service district. There is no wastewater usage occurring on the added strip of land, the truck stop property was anticipated in the original service district agreement, and there is no expansion of the capacity. Further, Mr. Sandelin responded that this new addition would put the capacity at 60 percent. In response to Council Member Katzakian, City Attorney Schwabauer stated that the City has not yet received its wastewater permit from the State Board and there is one year remaining on the five-year permit. Mr. Sandelin added that, if the City does not receive the permit within this time frame, it will need to re -start the process. In response to Council Member Nakanishi, Mr. Bartlam stated that the decrease in revenues in electric utility is a result of fewer power sales, less energy consumption, and fewer businesses than three years ago. Ms. Kirkley added that Rob Lechner, Manager of Customer Service and Programs, should be commended for promoting solar and energy efficiency programs, which has resulted in a decrease in electric usage. She further responded that staff is currently working to address the issue of renewable energy. Ed Miller expressed concern that the $1.3 million increase for the three utilities is due to salaries and retirement benefits and suggested that Council put an end to raises and contributions to retirement funds. Mayor Johnson responded that revenues and expenses are stable; however, the issue of medical, pension, and workers compensation costs are beyond the City's control and staff is attempting to address the matter through labor relations. Efforts have been made with four groups, but there is more work to be done and this is not an instantaneous fix. Mr. Bartlam reiterated that the figures presented are worst case scenario and do not include the management reductions, employee concessions, and early retirements that have been negotiated thus far. The figures continue to change based on negotiations, and he stated that N Continued May 10, 2011 concessions and/or reductions in staff will ultimately make up the difference in this figure. Myrna Wetzel questioned whether the City has enough in its reserve policy to cover a catastrophic event, such as a flood or tornado, to which Mr. Bartlam responded that the balance of the reserve policy would be used toward such an event and it would depend on the severity of the catastrophe. In response to Council Member Nakanishi, Ms. Kirkley stated that the cost to replace a transformer would depend upon the configuration and type of transformer, but could cost as much as $1.5 million. C. Comments by Public on Non -Agenda Items None. D. Adwournment No action was taken by the City Council. The meeting was adjourned at 7:40 a.m. ATTEST: Jennifer M. Robison Assistant City Clerk AGENDA ITE CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Receive Presentation Regarding Fiscal Year 2011/12 Budget MEETING DATE: PREPARED BY: May 10, 2011 Deputy City Manager RECOMMENDED ACTION: Receive presentation regarding Fiscal Year 2011/12 budget. BACKGROUND INFORMATION: The Fiscal Year (FY) 2011/12 budget is built on a number of basic tenets, not the least of which is continued employee concessions. Currently, management is meeting with all labor groups to come to agreement on a package of concessions that will allow the City to present a balanced budget. Staff will delay the release of the draft budget until mid-May in order for those negotiations to proceed. Staff expects to have a balanced budget ready for Council consideration in early June. In advance of publication of the document, staff is planning a series of presentations that will provide Council and the public with the basic parameters that form the foundation of the budget. The Shirtsleeve Session on May 3, 2011 focused on general economic issues the City is addressing in the budget process along with General Fund revenue projections. Today's discussion will focus on the three utility funds of the City: Electric, Water and Wastewater. FISCAL IMPACT: Revenues for the Electric Utility are projected to be $68,001,190. Revenues for the Water Utility are projected to be $42,783,890. Revenues for the Wastewater Utility are projected to be $18,050,750. Projected expenses that will be presented represent a 'worst case scenario', in that projected expenses have not been reduced for any concessions, early retirements or staff reductions that may occur. JA/ja �I�M.n "�Avm Jordan Ayers Deputy City Manager APPROVED: Bartlam, City Manager udget City Council Shirtsleeve Session May 10, 2011 Overview Utility Funds o Electric • Water • Wastewater Electric Utility Overview I IElectric Utility Enterprise Fund Cash Balance Beginning Cash Balance * Revenues Expenditures Net Difference (Revenues Less Expenditures) Audited Audited Estimated 2008-09 2009-10 2010-11 2010-11 2011-12 Actuals Actuals Budget Actuals Budget 11,339,624 12,003,103 12,232,699 12,125,835 9,957,907 135,317,676 64,716,745 73,269,270 66,682,233 68,016,190 134,654,197 64,594,013 76,618,920 68,850,161 72,680,520 663,479 122,732 (3,349,650) (2,167,928) (4,664,330) Cash Balance Ending Cash Balance 12,003,103 12,125,835 8,883,049 9,957,907 5,293,577 * Local cash, excluding NCPA General Operating Reserve (GOR) 3 Electric Utilit Electric Utility [ZffbE!S & F.MMACUM & Resouffurs Ftmw— F old Sennoes supon&mr �C MIRY EkK&nc Lim - Afp-m* I ,Vffiaf AXkF&*5bWfiM AgkFAMiShMOM " Immk Smrkw Fjockwum .TeEhfficim I CmCstruCffCww Uwraennrmm usift serkioe- Ctmmm*3r MI + fftwbibuFmn PIWWNW 1 60 §02m"E REAW Mffbmina E3scftw=A D-*ffFM TeCIVNEIwan utmity Eqdpwg-rd 40 Uoa-Im;nmB-ft (90 S4mimcw E]eK*ri-- TFERibNashoobw —7 Elemtrz-- FOFFHT� E]eK*FiC .. EkK&nc Lim - Afp-m* I ,Vffiaf AXkF&*5bWfiM AgkFAMiShMOM " Immk Smrkw Fjockwum .TeEhfficim I DsMbut FUfforing SuDomimw Fjochic" Techfficiun -W fftwbibuFmn PIWWNW 1 60 Mffbmina E3scftw=A D-*ffFM TeCIVNEIwan 40 Uoa-Im;nmB-ft 2011-2012 Electric Utility Org. Changes I m Approved in May 2011 • Restructure Operators o Reduce 1 position • Offer 2 -year service credit to 3 positions effective December 31, 2011 o Net impact expected to be reduction of 1 position .2 Electric Utilitv Org. Changes m FY 2011/12 Budget m Eliminate 1 Meter Reader • Merge functions of Buyer and Electric Apparatus Mechanic into Electric Materials Technician position o Eliminate Buyer position • Merge duties of SCADA Technician into Electrical Technician o Eliminate SCADA Technician • Transfer Senior Storekeeper position to Public Works N Electric Utility I m Total Salary and Benefit increase over FY 2010/11 o $740,137 Electric Utility Capital Projects I 12 kV Underground Cable MaInI $111001000 Fixed Nelwork $7501000 230 kV Inlerconneclion al While Slough $500,000 Sireellighl Grounding and Fus'ing $4801000 Electric Utility Reserves Purpose Basis FY 2011/12 Target loperating Reserve 90 days cash $161363�000 Capital Reserve Largest distribution system contingency $500,000 NCPA General Operating Reserve NCPA identified items $9,300,000 Total Target $267163JO00 ,Estimated FY 2011/12 Reserve $181096�600 Water Utility I Revenues Audited Audited Estimated 20,539,017 2008-09 2009-10 2010-11 2010-11 2011-12 19,172,067 Actuals Actuals Budget Actuals Budget lWater Utility Enterprise Fund 6,837,880 (6,152,196) (2,423,471) Cash Balance 3,282,110 Beginning Cash Balance 13,434,921 20,272,801 24,717,657 14,120,605 12,442,496 Revenues 17,343,265 13,019,871 20,741,980 20,539,017 43,723,940 Expenditures 10,505,385 19,172,067 23,165,451 22Y217,126 40,441,830 Net Difference (Revenues Less Expenditures) 6,837,880 (6,152,196) (2,423,471) (1,678,109) 3,282,110 Cash Balance Ending Cash Balance 20,272,801 14,120,605 22,294,186 12,442,496 15,724,606 10 Water Utility I m Total Salary and Benefit increase over FY 2010/11 o $426,187 11 Water Utilit m Revenue increases to offset the costs for treatment plant construction m Funded by bond proceeds • Service Charge revenue up 1.5% • Includes $662,050 interest subsidy on the Build America Bonds 12 Water Utilit m Capital Projects o Water Treatment Plant ( $28,778,000) • Begun March 2011 • Expected completion August 2012 o Water Meter Phase I Construction ($2�3001000) o Water Meter Phase I I Plan/Design ($4807000) 13 Water Utilit m Staffing plan for Water Treatment Plant to come to Council later this calendar year 14 Water Utility Reserves I • Target is 25% of operating expenses • Target for FY 2011/12 equals $174167600 • FY 2011/12 Estimated Reserve is $400,606 (net of $15,324,000 for PCE/TCE clean-up) 15 Wastewater Utility lWastewater Utility Enterprise Fund Cash Balance Beginning Cash Balance Revenues Expenditures Net Difference (Revenues Less Expenditures) Cash Balance Ending Cash Balance Audited Audited Estimated 2008-09 2009-10 2010-11 2010-11 Actuals Actuals Budget Actuals 6,766,472 7,499,323 6,077,513 6,831,614 2011-12 Budget 5,481,418 11,146,850 11,885,017 17,054,390 15,732,041 18,050,750 10,413,999 12,552,726 17,733,825 17,082,237 19,143,940 732,851 (667,709) (679,435) (1,350,196) (1,093,190) 7,499,323 6,831,614 5,398,078 5,481,418 4,388,228 16 Wastewater Utility I m Total Salary and Benefit increase over FY 2010/11 o $182,651 17 Wastewater Utility m Revenue increases to offset the costs for biosolids dewatering facility m Funded by bond proceeds m Service Charge revenue up 5.0% 18 Wastewater Capital Projects I m Biosolids Dewatering Facility o $4,455,000 m Main Replacement Project #5 o $2,080,000 m Perm it/Com pl iance Related Studies and Projects o $410,000 19 Wastewater Utility Reserves I • Target is 25% of operating expenses • Target for FY 2011/12 equals $272687100 • FY 2011/12 Estimated Reserve is $4,388,228 20 21