HomeMy WebLinkAboutMinutes - November 18, 2014 SSLODI CITY COUNCIL
SHIRTSLEEVE SESSION
CARNEGIE FORUM, 305 WEST PINE STREET
TUESDAY, NOVEMBER 18, 2014
A. Roll Call by City Clerk
An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held
Tuesday, November 18, 2014, commencing at 7:03 a.m.
Present: Council Member Mounce, Council Member Nakanishi, Mayor Pro Tempore Hansen,
and Mayor Katzakian
Absent: Council Member Johnson
Also Present: City Manager Schwabauer, City Attorney Magdich, and City Clerk Robison
B. Topic(s)
B-1 First Quarter Fiscal Year 2014/15 Water, Wastewater and Electric Utility Department
Financial Reports (CM)
Deputy Public Works Director Charlie Swimley provided a PowerPoint presentation regarding the
first quarter fiscal year 2014/15 water and wastewater financial reports. Specific topics of
discussion included cash flow summary, operating results, and cash balances for both water and
wastewater funds, bad debt write off, and water and wastewater utility activities.
Council Member Mounce asked if there were any factors of the report that may not be clear that
Council should be aware of, to which Mr. Swimley responded in the negative, adding that the
negative numbers in the report reflect items that do not yet appear in the fiscal year accounting.
In response to Mayor Katzakian, Deputy City Manager Jordan Ayers stated that in the wastewater
fund there is a 2004 debt issue that will end in 2024, a 2007 issue that the City would look to
potentially refinance that ends in 2037, and a 2012 debt issue that ends in 2024. Mr. Ayers stated
that information regarding the City's debt service schedule, as of June 30, 2014, can be viewed
on the City's webpage.
Mayor Pro Tempore Hansen suggested that the webpage include a tracking mechanism to report
how many visitors view the information, to which Mr. Ayers responded that could be done and
handled by in-house staff.
In response to Mayor Katzakian, Mr. Ayers stated that, in the water utility, there is only one debt
issuance in 2010 for the surface water treatment plant, which would end in 2024. At the time this
debt was structured, there was little value in refinancing the debt as it included a "make whole
call" provision. Mr. Ayers reviewed the specifics for the water and wastewater debt services, as
reported on the City's website.
In response to Mayor Pro Tempore Hansen, Mr. Swimley confirmed that, if there were another
dry year, the City would continue to have ample water supply. City Manager Schwabauer further
explained that it would need to be a wet year in order for the City to receive its banked water and
the bank does not expire until six to eight years beyond the expiration of the 40-year water
agreement. He felt confident that the City would ultimately draw upon its banked water.
In response to Council Member Mounce, Mr. Swimley stated that the Woodbridge Irrigation
District (WID) receives some of its water from East Bay Municipal Utilities District (EBMUD).
In response to Mayor Pro Tempore Hansen, Mr. Swimley explained that staff has a process that
televises new pipelines in new subdivisions in order to ensure pipes are installed correctly. The
camera system is small, approximately the size of a shoe box, and has tracks, wheels, and a
cable that feeds video back to the truck. This is standard maintenance practice and is done
before the system can be activated in a new subdivision. This process is similarly used on
existing systems to check on conditions.
In response to Mayor Pro Tempore Hansen, Mr. Swimley and Mr. Schwabauer stated that the
City discharges water to the river approximately five months out of the year during winter months
and for the remaining seven months the water is recycled. This is possible because of the
treatment plant and the agreements with the farmers to use recycled water for irrigation purposes.
Council Member Mounce questioned when the City is notified by WID about any upcoming
limitations on its water allocation, to which Mr. Swimley responded that he was unsure but would
contact WID to inquire about it. Mr. Schwabauer added that, because of EBMUD, winter water is
almost always available and with all of the water supply allocations the City is likely pulling over
4,000 acre feet a year.
Electric Utility Director Elizabeth Kirkley provided a PowerPoint presentation regarding the first
quarter fiscal year 2014/15 electric utility financial reports. Specific topics of discussion included
the electric fund cash flow summary, reserve policy, cash balances, power sales, energy cost
adjustment revenue, operating results, power supply costs, bad debt write off, load coverage, and
activities.
In response to Mayor Pro Tempore Hansen, Ms. Kirkley reported that the department currently
has one vacancy that remains to be filled. In further response, Ms. Kirkley stated that the bad
debt write off is lower than it typically is, which is attributable to the change in the electric utility
billing cycle.
In response to Mayor Pro Tempore Hansen, Ms. Kirkley stated that the 230 kV Interconnection
Project is estimated to be operational in 2021/22; however, she was unsure when actual
construction would begin. Ms. Kirkley stated that Pacific Gas & Electric now has a project team
working on this project, due in large part to efforts by Council Member Johnson.
In response to Council Member Nakanishi, Ms. Kirkley stated that the City did not receive many
applications for the current vacant position, primarily because there are few candidates who have
the necessary experience and qualifications for this position. She stated that four applicants will
be interviewed for the position.
In response to Mayor Katzakian and Mayor Pro Tempore Hansen, Rates and Resources
Manager Melissa Cadek stated there is funding available on an annual cycle for commercial solar
projects, the funding will begin again in January, and there has been little interest on the
commercial side, therefore, the program was made available to residential customers. She added
that, due to the significant cost of installing solar energy, many businesses take advantage of less
costly energy efficiency projects instead to save money. Ms. Cadek confirmed that solar energy
project funding will continue until 2017, and she stated that staff is working on a solar guide book
for residential and commercial customers, which staff will begin advertising.
In response to Mayor Pro Tempore Hansen, Mr. Schwabauer stated that Business Development
Manager Adam Brucker has assumed the responsibility of working with commercial businesses
and, to date, he has met with about half of those customers.
In response to Mayor Pro Tempore Hansen, Ms. Kirkley stated that the designation RP3 (Reliable
Public Power Provider) means that a public utility is meeting industry standards and providing
consistent reliable power to customers, which is a positive economic development tool.
In response to Mayor Katzakian, Ms. Kirkley stated this designation is for public power agencies
and she was unsure which surrounding agencies, if any, did not have this designation.
In response to Mark Chandler, Mr. Ayers stated that once a utility account is closed for non-
payment, the City attempts to collect the debt. After a 90-day period, the account is turned over to
a collection agency. The number depicted on the bad debt write off slide represents the
percentage of accounts turned over to the collection agency. Mr. Schwabauer added that default
of a utility bill is not solely electricity, but also water, wastewater, and refuse.
Council Member Mounce expressed concern that these routine quarterly reports typically indicate
that no problems exist in the utility funds; however, the City Council will consider a 5 percent
electric utility rate increase at its meeting tomorrow evening, despite there being no indication
over the last ten years that the utility was struggling. She believed it was more palatable to
implement small, incremental increases each year versus a significant increase that many people
cannot absorb into their budgets. She suggested that a greater effort be made to design the
quarterly reports to accurately demonstrate the health of the utility and to plan accordingly with
reasonable, incremental increases. Further, Ms. Mounce stated that, in a recent article, the
California Policy Institute rated Lodi 91 out of 482 California cities as being a financially stressed
city. She suggested the City consider utilizing the League of California Cities financial outlook
program so that the City can prevent rate increases like the one being presented tomorrow night.
In response, Mr. Schwabauer stated that the water and wastewater utilities built a stepped-in
approach with rate increases and each year it reviews the rate model to keep an eye on the
health of the funds. Unfortunately, the electric utility did not have such a rate model until
Ms. Kirkley brought it forward, and the item on tomorrow's agenda is to begin that program,
including an annual review component, to monitor the health of the fund and avoid being in this
same position in the future. In regard to the article on the City's economic performance, the
California Policy Institute reviewed four factors: status of reserves, receipts, expenditures, and
general fund debt and pension obligations. The result of being ranked 91 out of 482 cities
equates to a 1 in 500 chance of the City filing bankruptcy. There are a number of other cities that
appear to have better financials that, by the group's estimation, would go bankrupt before Lodi.
Mr. Schwabauer stated that the City has made significant improvement over the years with regard
to reserve amounts, income, and capital improvements, adding that the Institute did not review
Lodi with any detail before reporting this ranking of California cities. He further added that staff
would take a second look at the League's financial tool, as it appears to have been updated since
staff's last review.
Council Member Mounce also suggested that staff look into improving the City's website, to which
Mr. Schwabauer responded that this task has already been assigned to Mr. Brucker.
Mayor Katzakian stated that Santa Clara has financial software that is user friendly and not too
costly that may adapt well with Lodi's system.
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:
Jennifer M. Robison
City Clerk
1
Public Works Department
Water/Wastewater
FY 15 Quarterly Update
(Ending September 30, 2014)
City Council Shirtsleeve Session
November 18, 2014
2
Wastewater Fund
Cash Flow Summary
(Ending September 30, 2014)
Budget Actuals % of Budget
Revenue
Sales 14,513,620 3,616,879 25%
Development Impact Mitigation Fees (wastewater & storm) 128,860 (3,561) (3%)
Other (interest, septic, misc.) 236,500 114,119 48%
Total Revenues 14,878,980 3,727,437 25%
Expenses
Operating 6,133,870 1,370,224 22%
Capital 9,986,823 661,108 7%
Debt Service 3,684,380 1,938,159 53%
Cost of Services Payment To General Fund 1,068,000 267,000 25%
Total Expenses 20,873,073 4,236,491 20%
Beginning Cash (Operations Only) 1,130,789
Ending Cash (Operations Only) 2,272,441
Days Cash (Excluding Capital) 57
% of Target 63%
3
Wastewater
Operating Results
(Ending September 30, 2014)
Budget Actuals % of Budget
Personnel $ 3,115,650 713,325$ 23%
Supplies, Materials, Services $ 2,030,950 376,001$ 19%
Equipment, Land, Structures $ 72,500 11,593$ 16%
Other Payments $ 212,930 121,001$ 57%
Utilities $ 696,840 148,304$ 21%
Work for Others $ 5,000 -$ 0%
Total Operating Expenses $ 6,133,870 $ 1,370,224 22%
4
Operating (170) 2,272,441
Utility Capital / Infrastructure Replacement (171) 11,116,621
Capital Reserve (172)
(Fund used to pay White Slough COP Debt Service) (1,512,487)
Wastewater IMF (173) 59,214
Rate Stabilization Reserve (174) 500,000
Storm Drain IMF (175) 684,143
Total 13,119,932
Wastewater Funds
Cash Balances
(Ending September 30, 2014)
5
Water Fund
Cash Flow Summary
(Ending September 30, 2014)
Budget Actuals % of Budget
Revenue
Sales 13,070,870 3,714,663 28%
Development Impact Mitigation Fees 130,250 0 0%
Other (interest, tap fees, water meters, misc.) 968,330 (28,464) (3%)
Total Revenues 14,169,450 3,686,199 26%
Expenses
Operating 5,601,270 1,679,205 30%
Capital 7,978,335 723,316 9%
Debt Service 2,969,860 0 0%
Cost of Services Payment To General Fund 780,000 195,000 25%
Total Expenses 17,329,465 2,420,866 14%
Beginning Cash (Operations Only) 5,045,957
Ending Cash (Operations Only) 6,891,023
Days Cash (Excluding Capital) 331
% of Target 368%
6
Water
Operating Results
(Ending September 30, 2014)
Budget Actuals % of Budget
Personnel $ 2,082,630 575,682$ 28%
Supplies, Materials, Services $ 1,283,580 212,751$ 17%
Equipment, Land, Structures $ 73,000 15,623$ 21%
Other Payments $ 1,402,660 669,689$ 48%
Utilities $ 664,400 205,460$ 31%
Work for Others $ 95,000 -$ 0%
Total Operating Expenses $ 5,601,270 $ 1,679,205 30%
7
Water Funds
Cash Balances
(Ending September 30, 2014)
Operating (180) 6,891,023
Utility Capital / Infrastructure Replacement (181) (469,171)
IMF (182) 44,056
PCE/TCE Settlements 10,870,788
PCE/TCE Rates (185) 4,337,763
Total 21,674,459
Bad Debt Write Off
(Through September 30, 2014)
8
# Of Accounts Amount % of Sales
Wastewater 214 $19,013 0.5%
Water 214 $17,297 0.5%
9
Water / Wastewater Utility
Activities
Operational
Water Distribution
Water Production
Collection System
Wastewater Treatment
Regulatory
SSO’s
Discharge Violations
Monitoring and Reporting
1
Electric Utility Department
FY 15 Quarterly Update
(Ending September 30, 2014)
City Council Shirtsleeve Session
November 18, 2014
2
Electric Fund
Cash Flow Summary
(Ending September 30, 2014)
Budget Actuals % of Budget
Revenue
Sales Revenues 65,214,970 20,520,108 31%
Development Impact Fees 100,000 (294) 0%
Other Revenues (interest, misc) 2,902,080 873,441 30%
Total Revenues 68,217,050 21,393,255 31%
Expenses
Purchase Power 39,552,170 11,112,059 28%
Non Power 11,020,060 2,533,923 23%
Capital Projects 2,607,160 238,283 9%
Debt Service 8,196,050 4,964,010 61%
Cost of Service/transfer to GF Capital 2,354,000 588,500 25%
In-lieu Transfer to General Fund 7,033,360 1,758,340 25%
Total Expenses 70,762,800 21,195,115 30%
Net Chg in Bal Sheet Accts (1,512,911)
Net Increase (Decrease) (2,545,750) (1,314,771)
Beginning Local Cash Balance 12,632,503 12,632,503
Ending Local Cash Balance 10,086,753 11,317,732
GOR Balance 9,291,599
Total Reserve Balance 20,609,331
Reserve Policy Target 23,680,000
% of Target 87%
Electric Utility Reserve Policy
(Ending September 30, 2014)
3
Purpose Basis Target Actual
Operating Reserve 90 Days Cash $ 17,080,000 $ 11,317,732
Capital Reserve Largest Distribution System Contingency $ 1,000,000
NCPA General Operating Reserve NCPA Identified Items $ 5,600,000 $ 6,049,222
NCPA MPP/GPP Balance MPP/GPP Security Commitments $ 3,242,377
Total Target $ 23,680,000 $ 20,609,331
4
Operating (160) $ 4,086,005
Utility Outlay Reserve Fund (161) $ (3,452,986)
Electric Rate Stability Reserve (162) $ 2,171,622
Public Benefits Fund (164) $ 4,729,148
IMF EU Substation and Transmission (165) $ 749,159
Solar Surcharge Fund (166) $ (4,437)
Environmental Compliance (168) $ 3,039,219
NCPA – General Operating Reserve (GOR) $ 9,291,599
Total $ 20,609,331
Electric Funds
Cash Balances
(Ending September 30, 2014)
Power Sales
(Ending September 30, 2014)
5
Power Sales (kWh)
Customer Class Budget Actual
Residential 149,631,130 50,753,353
Small Commercial 158,637,238 47,212,180
Large Commercial/Small Industrial 46,038,101 12,945,063
Industrial 85,854,348 24,756,172
TOTAL 440,160,816 135,666,768
Revenue ($)
Customer Class Budget Actual Average Rate
Residential $ 25,778,344 $ 8,592,614 $ 0.1693
Small Commercial $ 25,213,790 $ 7,515,074 $ 0.1592
Large Commercial/Small Industrial $ 6,005,969 $ 1,821,805 $ 0.1407
Industrial $ 8,216,867 $ 2,590,614 $ 0.1046
TOTAL $ 65,214,970 $ 20,520,108 $ 0.1513
ECA Revenue
(Ending September 30, 2014)
6
Customer Class Q1 Total
Residential $ (274,436) $ (274,436)
Small Commercial $ (234,844) $ (234,844)
Large Commercial/Small Industrial $ (65,304) $ (65,304)
Industrial $ (186) $ (186)
Total ECA Revenue $ (574,769) $ (574,769)
7
Electric Fund
Operating Results
(Ending September 30, 2014)
Budget Actual % of Budget
Personnel $ 5,531,190 $ 1,531,187 28%
Supplies, Materials, Services $ 3,297,530 $ 484,276 15%
Equipment, Land, Structures $ 644,930 $ 446,653 69%
Other Payments $ 1,478,210 $ 60,183 4%
Utilities $ 68,200 $ 11,624 17%
Total Operating Expenses $ 11,020,060 $ 2,533,923 23%
Power Supply Costs
(Ending September 30, 2014)
8
Budget Actual % of Budget
Generation $ 30,360,720 $ 8,515,296 28%
Transmission $ 7,752,480 $ 2,100,698 27%
Management Services $ 1,438,970 $ 496,065 34%
Total Power Supply Costs $ 39,552,170 $ 11,112,059 28%
Bad Debt Write Off
(Ending September 30, 2014)
9
# of Accounts Amount % of Sales
Electric 214 $25,139 0.12%
CY 15 Load Coverage
10
MWh Load ROC Matrix
Target
Load Coverage
(Including Purchases)
Q1 – 2015 103,195 73.0% 74.3%
Q2 - 2015 113,571 63.0% 70.0%
Q3 – 2015 138,315 60.0% 67.8%
Q4 - 2015 108,219 60.0% 66.6%
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Q1 - 2015 Q2 - 2015 Q3 - 2015 Q4 - 2015MWh Coverage
Target
Load
Load coverage exceeds Risk Policy targets in all quarters.
11
Electric Utility Activities
•230 kV Interconnection Project
•Customer Programs Outreach
•Staffing
•New Residential / Commercial Developments
•Capital Improvement Program
•Large Commercial / Industrial Customer Outreach
•Rating Agency Reviews
•APPA Reliable Public Power Provider Review