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Home My WebLink AboutMinutes - March 22, 2016 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, MARCH 22, 2016 A. Roll Call by City Clerk An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, March 22, 2016, commencing at 7:00 a.m. Present: Council Member Johnson, Council Member Nakanishi, Mayor Pro Tempore Kuehne, and Mayor Chandler Absent: Council Member Mounce Also Present: Deputy City Manager Ayers, City Attorney Magdich, and Deputy City Clerk Farris B. Topic(s) B-1 Second Quarter Fiscal Year 2015/16 Water, Wastewater, and Electric Utility Department Financial Reports (CM) Public Works Utilities Manager Lance Roberts provided a PowerPoint presentation regarding Fiscal Year 2015/16 water and wastewater financial reports. Specific topic of discussion included Wastewater Fund cash flow summary, wastewater operating results, wastewater funds cash balances, Water Fund cash flow summary, water operating results, water funds cash balances, bad debt write off, and water/wastewater utility activities. Council Member Johnson commented that he had heard the Van Ruiten Winery downtown tasting room, Cellar Door, was closing and inquired as to whether or not that winery had the same agreement as Michael David Winery in which the winery agreed to host a downtown tasting room as part of the wastewater agreement. City Attorney Janice Magdich stated she will research the agreement. In response to Mayor Pro Tempore Kuehne, Deputy City Manager Jordan Ayers confirmed that wastewater revenues are exceeding expenses. Council Member Johnson commented that citizens often raise questions about base cash, percentage of target, etc., and asked if, in the future, staff could modify the presentation to demonstrate whether "days cash" and "percentage of target" were increasing or decreasing, as it adds transparency to the process. Mr. Ayers responded that staff will provide this information in graph or bar chart form next quarter. In response to Mayor Pro Tempore Kuehne, Mr. Ayers confirmed that the City's fiscal year ends on June 30. In response to Council Member Johnson, Mr. Ayers responded that bad debt write off has been fluctuating a bit but not moving dramatically. In response to Mayor Pro Tempore Kuehne, Mr. Ayers clarified that bad debt write off for both wastewater and water is 0.3 percent, which is very good. In response to Council Member Nakanishi, Mr. Ayers stated most of the bad debt write off is for residential customers. Mr. Roberts reported that, in the last quarter, water crews responded to 12 City leaks and fielded 12 taste and odor complaints; water quality remains good but there has been an uptick in complaints about taste and odor due to customer conservation of water and the City not flushing 1 lines; 756 million gallons of water were produced; wastewater crews responded to 39 blockages, 16 public and 23 private; the average daily flow of wastewater was 4.6 million gallons per day; and there were no sanitary sewer overflow incidents or discharge violations. In response to Council Member Johnson, Mr. Roberts responded that the State may reduce regulatory constraints in the spring to allow more flushing, but it is a balancing act between water conservation and flushing the lines. Due to citizens' conservation efforts, the water is sitting in the lines longer, causing the taste and odor issues. In further response, Mr. Roberts explained that the City is not doing quarterly flushing, as was past practice; the only scheduled flushing is in relation to the water meter installation program; and this year's water meter installation project will replace more pipeline, approximately 4.6 miles, so more flushing will be done this year than last. In response to Council Member Nakanishi, Mr. Roberts explained that it is difficult to estimate how much water is used for flushing, as it depends on water quality, and varies greatly. Council Member Nakanishi commended the City water crew that recently repaired a leak in his neighborhood. In response to Mayor Chandler, Mr. Roberts stated staff has researched ways to repurpose the water used for line flushing; there is new technology available that circulates and treats the water before returning it to the water system, but the technology is brand new so the regulatory requirements involved with it are unknown. Council Member Nakanishi encouraged staff to further investigate the new technology. Mr. Roberts added that staff had considered collecting the flushed water in a water truck for transportation to local parks for irrigation use, but this had not proven to be financially feasible. Interim Public Works Director Charlie Swimley stated that if a flurry of complaints are received in a particular area, then staff will flush those lines. Council Member Nakanishi stated staff should investigate using a water truck to haul the water to local parks for irrigation use. Electric Utility Director Elizabeth Kirkley provided a PowerPoint presentation regarding the Electric Utility (EU) Fiscal Year 2015/16 Quarterly Update. Specific topics of discussion included Electric Utility Fund cash flow summary, Reserve Policy, electric utility funds cash balances, power sales, Energy Cost Adjustment, revenue, Electric Utility Fund operating results, power supply costs, bad debt write off, load coverage, electric utility activities, and Certificate of Excellence in Reliability. Council Member Johnson questioned when the Capital Reserve/largest contingency number was last reviewed. Ms. Kirkley responded bids are currently being reviewed for the new transformer, and when staff returns to Council with the final selection, it will also provide a recommendation on the reserve/contingency, but she did not think it will increase. In response to Mayor Pro Tempore Kuehne, Ms. Kirkley explained that, while the Northern California Power Agency (NCPA) operating reserve is nearly twice the target amount, the City receives interest on that money; Mr. Ayers, who is on the NCPA investment committee, tracks NCPA investment policies and returns; and there is a settlement at the end of the budget year. Mr. Ayers further explained that NCPA charges fluctuate and the true -up settlement comes at the end of the budget year. In response to Mayor Chandler, Mr. Ayers explained that NCPA charges members based on budget projections, but at the end of the year, when actual costs are known, there is a settlement, which may be positive or negative; last year the City received approximately $600,000, but other years money was owed. Mr. Ayers further explained that he checks NCPA's investment returns and decides if the City needs to adjust the amount in the reserve. In response to Council Member Nakanishi, Mr. Ayers confirmed that NCPA is receiving a higher rate on investments. 2 In response to Mayor Pro Tempore Kuehne, Mr. Ayers explained that NCPA requires the City to post a security deposit based on the volume of power and gas being purchased, and the number fluctuates. Ms. Kirkley reported there are currently nine vacancies in Electric Utility. Mayor Pro Tempore Kuehne inquired as to the number of trouble calls, and Ms. Kirkley stated she would provide that information. In response to Council Member Nakanishi, Ms. Kirkley stated that copper wire theft has not been a problem recently; the more significant issue has been sabotage of street lights to darken areas. Mayor Pro Tempore Kuehne questioned the number of incidents of electricity theft, and Ms. Kirkley stated she would provide that information. Mayor Pro Tempore Kuehne questioned how entire streets could be missing lighting. Mr. Swimley stated some areas, such as Cabrillo Circle and Peach Street, were annexed in without street lights and the residents did not want them added. Ms. Kirkley further stated that staff is working with Neighborhood Services Manager Joseph Wood to determine if residents want street lights added now. Mayor Pro Tempore Kuehne questioned whether the old street lights provided better coverage than the new light -emitting diode (LED) lights. Mayor Chandler commented he felt it was a matter of opinion. Ms. Kirkley stated the new LED lights provide better illumination for the streets, while the old high-pressure sodium amber -colored street lights dispersed a wider pattern but did not provide as much illumination on the streets; some citizens are unhappy because the new lights do not illuminate private property, but that is not the purpose of street lights. In response to Mayor Pro Tempore Kuehne, Ms. Kirkley stated she would provide information on the life -span and operation cost of the new lights. Council Member Nakanishi noted the lighting on his property is better since installation of the new lights. Ms. Kirkley responded there are different patterns and applications for different types of situations. Council Member Johnson inquired where the 14,000 feet of underground cable was installed and as to the resolution of the situation in the Lakeshore Drive and Timberlake Circle area in south Lodi, where the underground cable was found to be shorting out. Ms. Kirkley responded she will provide that information. Ms. Kirkley commented that the decorative post tops will be installed by EU staff, which will take longer but cost much less; a pilot project will be starting soon, as there are two different types of decorative street lights; and staff will be setting up a test area and providing information so the public will have the opportunity to provide feedback. Council Member Nakanishi commented that the public often perceives EU as raising electric rates to generate revenue to run the City and questioned what guidelines are in place for setting rates. Ms. Kirkley explained public utilities are not allowed to make a profit and the most recent rate increase, which was more than a year ago, was to fund capital maintenance of $20 million to maintain reliability. Mr. Ayers congratulated the Electric Utility Department on receiving the Certificate of Excellence in Reliability from the American Public Power Association and noted that the Average Service Availability Index of 99.9946 attained by the City equated to just 30 seconds of electrical outage per customer per year. Council Member Johnson noted that Public Works and Electric Utility began to give quarterly reports to provide Council with more details on the management of those utilities, but the problem 3 which brought about the increased reporting seems to be resolved; he questioned whether there is still a need for quarterly reports or whether semi-annual reports would be adequate. Mayor Chandler questioned if the quarterly reporting was an undue burden to staff. Mr. Ayers responded that quarterly reporting is written into the City ordinance and regulatory agencies look favorably on quarterly reporting as well. Council Member Nakanishi stated that, at a time when citizens want to have an oversight committee formed, he believed the quarterly reporting should continue. Mayor Chandler expressed his agreement. Mike Lusk stated he prefers to pay his utility bill with his credit card, but on the last billing cycle, that option was not included on the bill; in order to utilize his credit card, he was required to go to the Finance Department in person. He questioned why notice was not given as to the discontinuance of the credit card option. He further noted there was no line in the Finance Department and questioned whether this is now the norm. Mr. Ayers responded that he will check on the credit card payment issue and that the lines in the Finance Division fluctuate widely. In response to Mayor Chandler, Mr. Ayers confirmed that changes have been made to the staffing configuration to help with the lines, and that this is the first he has heard of an issue with credit card payments. Mr. Lusk inquired as to when the sewer base rate changes, to which Mr. Ayers responded that upcoming wastewater rates are based on water usage for December 2015, January 2016, and February 2016, and they will take effect on July 1, 2016; he further responded that water rates change each January 1, refuse rates change each April 1, and sewer rates change each July 1. In response to Mr. Lusk, Mr. Ayers stated the Police Department is scheduled for 71 sworn officers; the department is down five or six officers, but some candidates are presently going through the background process; and the Fire Department is fully staffed, including the three candidates currently enrolled in the Fire academy. Alex Aliferas reported the U.S. Post Office has suspended mail delivery to residents in his neighborhood due to dogs running loose in the area, and a homeless person is living in the alley near 505 East Locust, between Cherokee Lane and Garfield Street, leaving trash and debris. City Attorney Magdich responded she would report both problems to the Watch Commander at the Police Department. C. Comments by Public on Non -Agenda Items None. D. Adjournment No action was taken by the City Council. The meeting was adjourned at 7:56 a.m. ATTEST: Pamela M. Farris Deputy City Clerk 4 TM CITY OF LODI COUNCIL COMMUNICATION AGENDA ITEM AGENDA TITLE: Second Quarter Fiscal Year 2015/16 Water, Wastewater and Electric Utility Department Financial Reports MEETING DATE: March 22, 2016 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: Receive utility financial reports for the second quarter of Fiscal Year 2015/16. BACKGROUND INFORMATION: In accordance with the Lodi Municipal Code, quarterly financial reports are to be prepared for the Water, Wastewater, and Electric Utilities. Highlights of the operations and financial performance of each utility will be presented at the meeting of March 22, 2016. FISCAL IMPACT: None directly related to the preparation of the report. However, the presentation is intended to keep the Council apprised of the financial conditions of the major municipal utilities. FUNDING AVAILABLE: Not applicable. APPROVED: Jordan Ayers Deputy City Manager phen Schw auer, City Manager Public Works Department Water/Wastewater FY 16 Quarterly Update (Ending December 31, 2015) City Council Shirtsleeve Session March 22, 2016 1 Wastewater Fund Cash Flow Summary (Ending December 31, 2015) 2 Budget Actuals % of Budget Revenue Sales 14,977,300 7,314,421 49% Development Impact Mitigation Fees (wastewater & storm) 297,050 174,238 59% Other (interest, septic, misc.) 1,152,580 110,028 1 Total Revenues 16,426,930 7,598,687 46% Expenses Operating 7,141,550 2,996,100 42% Capital 7,144,000 718,996 10% Debt Service 3,679,130 2,563,375 70% Cost of Services Payment To General Fund 1,068,000 534,000 50% Total Expenses 19,032,680 6,812,471 36% Beginning Cash (Operations Only) 6,492,871 Ending Cash (Operations Only) 8,260,602 Days Cash (Excluding Capital) 267 % of Target 298% 2 Wastewater Operating Results (Ending December 31, 2015) 3 Budget Actuals % of Budget Personnel $ 3,498,010 $ 1,556,303 44% Supplies, Materials, Services $ 2,162,550 $ 822,343 38% Equipment, Land, Structures $ 447,500 $ 11,276 3% Other Payments $ 302,110 $ 255,834 85% Utilities $ 723,880 $ 350,344 48% Work for Others $ 7,500 $ - 0% Total Operating Expenses $ 7,141,550 $ 2,996,100 42% 3 Wastewater Funds Cash Balances (Ending December 31, 2015) 4 Operating (530) 8,260,602 Utility Capital / Infrastructure Replacement (531) 5,731,776 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service) (1,485,838) Wastewater IMF (533) 87,440 Rate Stabilization Reserve (534) 500,000 Storm Drain IMF (535) 795,613 Total 13, 889, 593 4 Water Fund Cash Flow Summary (Ending December 31, 2015) 5 Budget Actuals % of Budget Revenue Sales 13,362,400 6,538,469 49% Development Impact Mitigation Fees 202,630 128,666 63% Other (interest, tap fees, water meters, misc.) 992,100 1,033,066 104% Total Revenues 14,557,130 7,700,201 53% Expenses Operating 6,408,790 3,300,726 52% Capital 4,637,914 2,016,285 43% Debt Service 2,968,610 1,049,303 35% Cost of Services Payment To General Fund 780,000 390,000 50% Total Expenses 14,795,314 6,756,314 46% Beginning Cash (Operations Only) 7,830,372 Ending Cash (Operations Only) 8,621,654 Days Cash (Excluding Capital) 327 % of Target 363% 5 Water Operating Results (Ending December 31, 2015) 6 Budget Actuals % of Budget Personnel $ 2,470,280 $ 1,327,068 54% Supplies, Materials, Services $ 1,521,450 $ 628,505 41% Equipment, Land, Structures $ 122,000 $ 19,633 16% Other Payments $ 1,479,560 $ 1,036,931 70% Utilities $ 706,650 $ 288,590 41% Work for Others $ 108,850 $ - 0% Total Operating Expenses $ 6,408,790 $ 3,300,726 52% 6 Water Funds Cash Balances (Ending December 31, 2015) 7 Operating (560) 8,621,654 Utility Capital / Infrastructure Replacement (561) (1,951,686) IMF (562) 109,149 PCE/TCE Settlements 10,639,902 PCE/TCE Rates (565) 4,198,248 Total 21,617,267 7 Bad Debt Write Off (Through December 31, 2015) 8 # Of Accounts Amount % of Sales Wastewater 374 $22,219 0.3% Water 374 $20,762 0.3% 8 Water / Wastewater Utility Activities Operational • Water Distribution • Water Production • Collection System • Wastewater Treatment Regulatory • SSO's • Discharge Violations • Monitoring and Reporting 9 Electric Utility Department FY 16 Quarterly Update (Ending December 31, 2015) City Council Shirtsleeve Session March 22, 2016 1 Electric Utility Fund Cash Flow Summary (Ending December 31, 2015) Net Increase (Decrease) Beginning Local Cash Balance Budget Actuals % of Budget Revenue 15,092,264 GOR Balance Sales Revenues 68,406,500 39,091,821 57% Development Impact Fees 126,620 56,700 45% Other Revenues (interest, misc) 4,153,660 2,801,605 67% Total Revenues 72,686,780 41,950,126 � 58% Expenses Purchase Power 40,511,240 21,031,441 52% Non Power 12,927,730 5,064,855 39% Capital Projects 4,125,470 421,601 10% Debt Service 8,393,280 6,681,746 80% Cost of Service/transfer to GF Capital 2,354,000 1,177,000 50% In -lieu Transfer to General Fund 7,082,070 3,541,035 50% Total Expenses 75,393,790 37,917,677 50% Net Chg in Bal Sheet Accts (2,005,588) Net Increase (Decrease) Beginning Local Cash Balance (2,707,010) 13,065,403 2,026,861 13,065,403 Ending Local Cash Balance 10,358,393 15,092,264 GOR Balance 10,326,979 Total Reserve Balance 25,419,243 Reserve Policy Target 23,155,000 % of Target 110% 2 Electric Utility Reserve Policy (Ending December 31, 2015) Purpose Basis Target Actual Operating Reserve 90 Days Cash $ 17,776,000 $ 15,092,264 Capital Reserve Largest Distribution System Contingency $ 1,000,000 NCPA General Operating Reserve NCPA Identified Items $ 4,379,000 $ 7,084,602 NCPA MPP/GPP Balance MPP/GPP Security Commitments $ 3,242,377 Total Target $ 23,155,000 $ 25,419,243 3 Electric Utility Funds Cash Balances (Ending December 31, 2015) 4 Operating (500) $ 11,419,397 Utility Outlay Reserve Fund (501) $ (4,110,158) Public Benefits Fund (504) $ 1,042,528 IMF EU Substation and Transmission (505) $ 945,467 Solar Surcharge Fund (506) $ 216,379 Environmental Compliance (508) $ 5,578,651 NCPA— General Operating Reserve (GOR) $ 10,326,979 Total $ 25,419,243 4 Power Sales (Ending December 31, 2015) Power Sales (kWh) Customer Class Budget Actual Residential 156,193,116 85,360,705 Small Commercial 158,882,854 87,243,851 Large Commercial/Small Industrial 43,630,792 23,980,945 Industrial 84,113,304 47,180,494 TOTAL 442,820,066 243,765,995 Revenue ($) Customer Class Budget Actual Average Rate Residential $ 28,115,151 $ 15,228,117 $ 0.1784 Small Commercial $ 26,507,615 $ 14,993,102 $ 0.1719 Large Commercial/Small Industrial $ 5,996,382 $ 3,692,427 $ 0.1540 Industrial $ 7,787,352 $ 5,178,175 $ 0.1098 TOTAL $ 68,406,500 $ 39,091,821 $ 0.1604 5 ECA Revenue (Ending December 31, 2015) Customer Class Q1 Q2 Total Residential $ (204,936) $ 572,700 $ 367,764 Small Commercial $ (211,688) $ 628,590 $ 416,902 Large Commercial/Small Industrial $ (55,724) $ 178,043 $ 122,319 Industrial $ (58,184) $ 298,607 $ 240,423 Total ECA Revenue $ (530,532) $ 1,677,940 $ 1,147,408 6 Electric Utility Fund Operating Results (Ending December 31, 2015) 7 FY16 Budget FY16 Actual % of Budget Personnel $ 7,683,990 $ 3,303,009 43% Supplies, Materials, Services $ 3,291,920 $ 914,524 28% Equipment, Land, Structures $ 146,000 $ 52,489 36% Other Payments $ 1,756,310 $ 771,907 44% Utilities $ 49,510 $ 22,925 46% Total Operating Expenses $ 12,927,730 $ 5,064,855 39% 7 Power Supply Costs (Ending December 31, 2015) 8 Budgeted Year to Date % of Budget Generation $ 30,606,344 $ 16,491,910 54% Transmission $ 8,576,540 $ 3,848,696 45% Management Services $ 1,328,356 $ 690,835 52% Total Power Supply Costs $ 40,511,240 $ 21,031,441 52% 8 Bad Debt Write Off (Ending December 31, 2015) 9 # of Accounts Amount % of Sales Electric 374 $ 38,912 0.10% 9 Load Coverage 140,000 120,000 100,000 s 80,000 2 60,000 40,000 20,000 1 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Coverage Target Load Load coverage meets/exceeds Risk Policy targets in all quarters. 10 MWh Load ROC Matrix Target Load Coverage (Including Purchases) Q2 — 2016 108,896 80.0% 80.6% Q3 — 2016 132,019 73.3% 74.0% Q4 — 2016 105,363 63.3% 66.3% Q1 — 2017 102,789 60.0% 64.4% 140,000 120,000 100,000 s 80,000 2 60,000 40,000 20,000 1 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Coverage Target Load Load coverage meets/exceeds Risk Policy targets in all quarters. 10 Electric Utility Activities • Staffing • Safe work practices 4 zero lost time accidents • Over 14,000 feet of underground cable replaced • Lodi Shopping Center infrastructure completed • After hours trouble calls 4 20 -minute response time • Collected approximately $4,000 on electricity theft accounts 4 >50% increase from prior quarter • LED Street Lights • APPA Certificate of Excellence in Reliability APith-NPubic en Pubic Power Association CERTIFICATE OF EXCELLENCE IN RELIABILITY nits 1s to acknowledge that Lodi Electric Utility has achieved excellence in reliability by significantly otrtperformingthe electric industry national average as reported by the Energy information Ad rni Hist ration_ eReIi±bilityTra ker March 3, 2016 Dale kiliopael J. Hyland 8e for Viae Preaiderrt, Engineering Eeriaea 12 Jennifer Ferraiolo From: Janice Magdich Sent: Tuesday, March 22, 2016 12:20 PM To: City Council; JoAnne Mounce - External; Alan Nakanishi - External Cc: Steve Schwabauer; Jordan Ayers Subject: Follow-up from Shirtsleeve Meeting At this morning's shirtsleeve, Councilmember Johnson asked if it was a condition of Van Ruiten Winery's wastewater connection that it maintain a downtown tasting room, in light of rumors that Van Ruiten would no longer be a part of the Cellar Door. First and foremost, I have confirmed that Michael/David and Van Ruiten Wineries will continue to jointly operate the Cellar Door, under the management of Michael/David Winery, with re -opening of the tasting room set for April 1st. By way of background, on June 15, 2005, the Council authorized the city manager to enter into an industrial waste connection agreement with Van Ruiten Winery to allow a wastewater connection to the City's industrial wastewater system based on the certain conditions, including the opening of a tasting room downtown. On March 15, 2006, a similar agreement was reached with Michael/David Winery and Jessie Grove Winery to truck industrial effluent to the City's industrial wastewater treatment plant at white slough. The 2006 agreement also required a downtown tasting room and allowed for Michael/David, Jessie Grove and Van Ruiten Wineries to jointly open a minimum 2000 square foot downtown tasting room. Jessie Grove currently has a standalone downtown tasting room which satisfies the condition of its agreement with the City and Michael/David and Van Ruiten have jointly operated the Cellar Door for last several years and as noted above will continue to operate their downtown tasting room. Regards, Janice Javd,ce p. Maced%cl^ City Attorney CITY OF LODI 221 West Pine Street Lodi, CA 95240 209-333-6701 Telephone 209-339-0763 Facsimile Jmagdich@Iodi.gov The content of this e-mail, and any files or attachments, may be of a confidential nature or contain information that is protected by the attorney-client privilege and/or the attorney work -product doctrine. It is intended to remain exclusive to the parties involved. If you are not the intended recipient, you are hereby notifed that any review, dissemination, distribution, or copying of this message is prohibited. If you have received this message in error, please delete it immediately and notify the sender. 1