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HomeMy WebLinkAboutMinutes - May 15, 2018 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, MAY 15, 2018 A. Roll Call by City Clerk An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, May 15, 2018, commencing at 7:03 a.m. Present: Council Member Chandler, Council Member Johnson, Council Member Kuehne, Mayor Pro Tempore Mounce, and Mayor Nakanishi Absent: None Also Present: City Manager Schwabauer, City Attorney Magdich, and City Clerk Ferraiolo NOTE: Council Member Johnson participated in the meeting via teleconference. NOTE: Council Members Chandler and Kuehne left the meeting at 7:57 p.m. B. Topic(s) NOTE: The following items were discussed out of order. B-2 Third Quarter Fiscal Year 2017/18 Water, Wastewater, and Electric Utility Department Financial Reports (CM) Utilities Manager Lance Roberts provided a PowerPoint presentation regarding Water/Wastewater Fiscal Year 2018 quarterly update. Specific topics of discussion included Wastewater fund cash flow summary, operating results, cash balances, and planned Capital projects; Water fund cash flow summary, operating results, cash balances, and planned Capital projects; and Water/Wastewater Utility activities. Electric Utility Director Elizabeth Kirkley provided a PowerPoint presentation regarding the Electric Utility Department's Fiscal Year 2018 quarterly update. Specific topics of discussion included Electric Utility fund cash flow summary, cash balances, reserve policy, Capital Improvement Project five-year spending plan, power sales, Energy Cost Adjustment revenue, operating results, power supply costs, load coverage, Risk Oversight Committee report, and City Council strategic areas of focus. In response to Mayor Pro Tempore Mounce, Ms. Kirkley stated she will provide Council with the exact amount of reserves held at Northern California Power Agency. Mike Lusk referenced an earlier comment by Council Member Mounce regarding front sidewalk easements and the responsibility for maintaining and paying for the landscaping, stating it is a Proposition 218 issue and utility rate payers should not be forced to pay it. Further, he posed questions regarding the southwest water tank storage project and whether it will be paid for in advance of collecting the impact mitigation fee, which would place an undue burden on water rate payers with increased rates. With regard to impact mitigation fees, he pointed out the expected budget, actual budget, and reserve cash account seem to contradict one another. Deputy City Manager Andrew Keys explained the budget entries in the PowerPoint, pointing out the amounts are as of March 31, 2018, as well as the projections made by staff going forward. Public Works Director Charlie Swimley confirmed the current cash balance of $958,000 for impact mitigation fees is earmarked to go toward the water tank project. Mr. Lusk further commented on the second agenda item relating to the budget, specifically asking why the revenues for the water and wastewater utilities are different in that one is higher and the other is lower, yet they are tied together by usage. Mr. Schwabauer stated there is money going in and out of each revenue 1 source that can change the picture and, in this case, Proposition 84 grant funding is causing the increase in the wastewater fund. In further response, Mr. Keys and Mr. Schwabauer explained the concept of planning for multi-year projects and how rate revenues are applied to cover such projects. Mr. Lusk summarized by reiterating his opposition to co-mingling Proposition 218 and general fund matters. B-1 Receive Presentation Regarding Fiscal Year 2018/19 Budget (CM) Deputy City Manager Andrew Keys provided a PowerPoint presentation regarding Fiscal Year 2018/19 Budget - Utility Fund. Specific topics of discussion included Electric Utility overview, revenues, expenses, Capital projects, and reserves; Water Utility overview, revenues, expenses, Capital projects, and reserves; Wastewater Utility overview, revenues, expenses, Capital projects, and reserves. Mayor Pro Tempore Mounce strongly urged the City to ensure Northern California Power Agency (NPCA) does not receive any more money from the City than is absolutely required, based on her concern that if NCPA were to dissolve or go bankrupt the City could be held responsible for its liabilities, including the unfunded California Public Employees Retirement System liability. Mr. Keys pointed out the reserves with NCPA are in a general operating reserve trust account that is only held at NCPA for Lodi; it is not a credit to NCPA, nor can NCPA spend the money. C. Comments by Public on Non-Agenda Items None. D. Adjournment No action was taken by the City Council. The meeting was adjourned at 8:13 a.m. ATTEST: Jennifer M. Ferraiolo City Clerk 2 Fiscal Year 2018/19 Budget Utility Fund Presentation Presented by: Andrew Keys, Deputy City Manager Overview •Utility Funds Electric Water Wastewater 2 Electric Utility Overview 3 Estimated 2015-16 2016-17 2017-18 2017-18 2018-19 Electric Utility Enterprise Fund Actuals Actuals Budget Actuals Budget Cash Balance Beginning Cash Balance 16,582,191 24,278,513 22,327,219 30,501,095 29,951,255 Revenues 76,230,734 70,840,461 73,996,630 73,692,530 73,615,090 Expenditures 68,534,412 64,617,879 75,393,812 74,242,370 75,129,490 Net Difference (Revenues Less Expenditures)7,696,322 6,222,582 (1,397,182) (549,840) (1,514,400) Cash Balance Ending Cash Balance 24,278,513 30,501,095 20,930,037 29,951,255 28,436,855 Fund Balance as a percentage of expenses:35%47%28%40%38% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2019 With Estimated Actuals for FY 2015-16 and FY 2016-17 and Comparative Budget FY 2017-18 •Revenues $381,540 lower than FY 2017/18 budget Customer charges - $173,020 higher Solar surcharge* - $293,710 lower Environmental compliance - $106,490 higher Work for others - $490,000 lower * Program ended 12/31/17 Electric Utility 4 •Expenses are $264,300 lower than FY 2017/18 budget Salary & benefits - $315,460 higher Supplies, materials & services - $1,002,780 lower Capital projects & equipment - $399,080 higher Electric Utility 5 •Vehicles - $264,000 •Underground system improvements - $1,100,000 •Facility improvements - $1,035,000 •Distribution capacity program - $960,000 •Industrial SF6 circuit breaker replace - $525,000 •New development infrastructure - $100,000 •Overhead system improvements - $100,000 •LED streetlight retrofit - $90,000 •Streetlight maintenance - $90,000 •230kV interconnection project - $60,000 Electric Utility Capital Projects 6 Electric Utility Reserves 7 Purpose Basis 2018/19 Target Operating Reserve 90 days cash 17,701,000 Capital Reserve Larges distribution system contingency 1,000,000 NCPA General Operating Reserve NCPA identified items 5,013,000 Total Target 23,714,000 Estimated FY 2018/19 Reserve 28,436,855 Projected Reserves at 120% of target. Estimated 2015-16 2016-17 2017-18 2017-18 2018-19 Water Utility Enterprise Fund Actuals Actuals Budget Actuals Budget Cash Balance Beginning Cash Balance 6,755,522 5,567,984 3,732,376 4,902,165 4,611,635 Revenues 13,760,559 13,818,330 14,722,520 14,458,430 14,448,540 Expenditures 14,948,097 14,484,149 21,799,725 14,748,960 13,500,210 Net Difference (Revenues Less Expenditures)(1,187,538) (665,819) (7,077,205) (290,530) 948,330 Cash Balance Ending Cash Balance 5,567,984 4,902,165 (3,344,829) 4,611,635 5,559,965 Fund Balance as a percentage of expenses:37%34%-15%31%41% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2019 With Estimated Actuals for FY 2015-16 and FY 2016-17 and Comparative Budget FY 2017-18 8 Water Utility Overview •Revenues are $273,980 lower than FY 2017/18 Charges for services - $294,110 lower Development impact fees - $44,380 lower Investment earnings - $34,510 higher Settlements - $30,000 higher Water Utility 9 •Expenses are $8.3m lower Salary & benefits - $373,500 higher Supplies, materials & services - $59,650 lower Capital projects & equipment - $8.6m lower Water Utility 10 •Vehicles - $120,000 •Water meter phase 8 - $1.5m •Wells/water taps - $440,000 •Facility improvements - $235,000 •PCE/TCE activities: $275,000 Water Utility Capital Projects 11 •Target is 25% of operating expenses •Target for FY 2018/19 equals $2,732,550 •FY 2018/19 estimated reserve is $5,559,965 Water Utility Reserves 12 Estimated 2015-16 2016-17 2017-18 2017-18 2018-19 Wastewater Utility Enterprise Fund Actuals Actuals Budget Actuals Budget Cash Balance Beginning Cash Balance 13,853,935 17,462,307 8,587,775 19,473,784 20,601,484 Revenues 16,939,087 16,940,258 18,950,180 16,970,750 19,820,600 Expenditures 13,330,715 14,928,781 19,195,084 15,843,050 19,541,930 Net Difference (Revenues Less Expenditures)3,608,372 2,011,477 (244,904) 1,127,700 278,670 Cash Balance Ending Cash Balance 17,462,307 19,473,784 8,342,871 20,601,484 20,880,154 Fund Balance as a percentage of expenses:131%130%43%130%107% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2019 With Estimated Actuals for FY 2015-16 and FY 2016-17 and Comparative Budget FY 2017-18 13 Wastewater Utility Overview •Revenues $870,420 higher than FY 2017/18 Charges for services - $99,280 higher Development impact fees - $196,670 lower State grant reprogrammed at $900,000 higher Wastewater Utility 14 •Expenses $346,800 higher than FY 2017/18 Salary & benefits - $343,000 higher Supplies, materials & services - $59,650 lower Capital projects & equipment - $151,950 lower Wastewater Utility 15 •Vehicles - $135,000 •Storage pond expansion - $4m •Electrical upgrades/SCADA - $1.2m •Upgrade blowers - $750,000 •Relocations, pump/equipment/facility upgrades - $555,000 •Main #7 replacement - $200,000 •Field #5 road repair - $150,000 •Northeast sewer lift station pipe replacement - $60,000 •Collection system enhancement - $20,000 Wastewater Utility Capital Projects 16 •Target is 25% of operating expenses •Target for FY 2018/19 equals $3,117,980 •FY 2018/19 estimated reserve is $20,880,154 Wastewater Utility Reserves 17 1 Public Works Department Water/Wastewater FY 18 Quarterly Update (Ending March 31, 2018) City Council Shirtsleeve Session May 15, 2018 2 Wastewater Fund Cash Flow Summary (Ending March 31, 2018) Budget Actuals % of Budget Revenue Sales 15,108,850 11,017,419 73% Development Impact Mitigation Fees (wastewater & storm) 1,266,190 416,404 33% Other (interest, septic, misc.) 2,575,140 505,442 20% Total Revenues 18,950,180 11,939,265 63% Expenses Operating 8,098,738 5,052,327 62% Capital 6,523,657 767,570 12% Debt Service 3,465,000 2,116,567 61% Cost of Services Payment To General Fund 1,107,690 826,868 75% Total Expenses 19,195,085 8,763,332 46% Beginning Cash (Operations Only) 15,100,601 Ending Cash (Operations Only) 16,886,901 Days Cash (Excluding Capital) 579 % of Target – 90 Days Cash on Hand 643% 3 Wastewater Operating Results (Ending March 31, 2018) Budget Actuals % of Budget Personnel $ 3,577,482 2,834,054$ 79% Supplies, Materials, Services $ 2,726,298 1,202,584$ 44% Equipment, Land, Structures $ 674,398 144,339$ 21% Other Payments $ 406,160 302,316$ 74% Utilities $ 686,090 549,035$ 80% Work for Others $ 28,310 20,000$ 71% Total Operating Expenses $ 8,098,738 $ 5,052,327 62% 4 Operating (530) 16,886,901 Utility Capital / Infrastructure Replacement (531) 105,342 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service) (1,650,000) Wastewater IMF (533) 1,187,474 Rate Stabilization Reserve (534) 500,000 Storm Drain IMF (535) 931,925 Total 17,961,642 Wastewater Funds Cash Balances (Ending March 31, 2018) Amounts above reserve target are held for scheduled capital maintenance 206% 326% 429% 643% 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 14/15 15/16 16/17 17/18 Actual Reserves vs. Target Target Actual Wastewater Planned Capital Projects 5 FY 17-18 FY 18-19 FY 19-20 FY 20-21 Villa Fiore Reimbursement 930,000 Lockeford Street Imprv. 100,000 MSC Security Improvements 35,000 Misc. System Relocations 35,000 35,000 35,000 Misc. Wastewater Taps 40,000 40,000 40,000 Collection System Capacity Enhancement Projects 20,000 200,000 Main Replacement Project #7 200,000 2,000,000 Northeast Sewer Lift Pipe Repl. 60,000 Vinewood Storm Water Pump Rehab 100,000 Vehicles /Equipment 450,000 135,000 150,000 150,000 Upgrade Blowers 750,000 Irrigation Improvements 1,200,000 700,000 Digester #4 Cleaning 220,000 Field #5 Catwalk Repair 40,000 Lagoon Cleaning 300,000 Pump & Equipment Upgrades 175,000 345,000 Corrosion Repairs 250,000 Electrical/Screen/SCADA Design 660,000 Electrical Upgrades/SCADA Construction 1,200,000 7,024,000 3,653,000 White Slough Recycled Water Storage 300,000 4,000,000 Field #5 Road Repair 150,000 Miscellaneous Future Projects 100,000 100,000 Totals $3,275,000 $9,900,000 $8,769,000 $3,978,000 6 Water Fund Cash Flow Summary (Ending March 31, 2018) Budget Actuals % of Budget Revenue Sales 13,136,300 9,743,515 74% Development Impact Mitigation Fees 520,690 251,256 48% Other (interest, tap fees, water meters, misc.) 1,065,530 321,820 30% Total Revenues 14,722,520 10,316,591 70% Expenses Operating 6,826,960 4,384,638 64% Capital 11,185,415 3,582,947 32% Debt Service 2,967,660 846,250 29% Cost of Services Payment To General Fund 819,690 610,868 75% Total Expenses 21,799,725 9,424,703 43% Beginning Cash (Operations Only) 3,082,176 Ending Cash (Operations Only) 4,004,565 Days Cash (Excluding Capital) 188 % of Target – 90 Days Cash on Hand 209% 7 Water Operating Results (Ending March 31, 2018) Budget Actuals % of Budget Personnel $ 2,865,815 2,199,378$ 77% Supplies, Materials, Services $ 1,644,295 614,603$ 37% Equipment, Land, Structures $ 110,000 20$ 0% Other Payments $ 1,543,100 1,177,509$ 76% Utilities $ 563,750 393,128$ 70% Work for Others $ 100,000 -$ 0% Total Operating Expenses $ 6,826,960 $ 4,384,638 64% 8 Water Funds Cash Balances (Ending March 31, 2018) Operating (560) 4,004,565 Utility Capital / Infrastructure Replacement (561) 63,073 IMF (562) 958,080 PCE/TCE Settlements 9,512,243 PCE/TCE Rates (565) 4,044,774 Total 18,542,735 Amounts above reserve target are held for scheduled capital maintenance 264% 238% 145% 209% 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 14/15 15/16 16/17 17/18 Actual Reserves vs. Target Target Actual Water Planned Capital Projects 9 FY 17-18 FY 18-19 FY 19-20 FY 20-21 Water Meter Program 3,600,000 3,630,000 2,350,000 Lockeford Street Imprv. 400,000 Water Taps 75,000 75,000 75,000 Misc. Water Mains 50,000 50,000 50,000 GAC Replacement 300,000 300,000 Meter Shop Design 50,000 200,000 Southwest Gateway Water Tank 900,000 900,000 Water Plant Generator 300,000 MSC Security Improvements 25,000 35,000 Well 7 Pump Rehab 175,000 Well 14 Pump Rehab 166,000 Well 15 Pump Rehab 175,000 Well 16 Pump Rehab 206,000 Well 17 Pump Rehab 191,000 Well 24 Rehab 165,000 Well 27 Treatment System 70,000 800,000 Vehicles/Equipment 20,000 120,000 40,000 41,000 Totals 3,860,000 5,125,000 5,156,000 1,463,000 10 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 18 Quarterly Update (Ending March 31, 2018) City Council Shirtsleeve Session May 15, 2018 2 Electric Utility Fund Cash Flow Summary (Ending March 31, 2018) Budget Actuals % of Budget Revenue Sales Revenues 69,828,170 53,679,113 77% Development Impact Fees 143,470 88,161 61% Other Revenues (interest, misc) 4,024,990 3,316,409 82% Total Revenues 73,996,630 57,083,683 77% Expenses Purchase Power* 41,822,160 30,111,766 72% Non Power 14,557,637 8,263,822 57% Capital Projects 3,923,135 1,533,402 39% Debt Service 5,538,340 1,589,484 29% Cost of Service/Capital Xfer 2,393,690 1,791,367 75% In-lieu Transfer to General Fund 7,158,850 5,369,137 75% Total Expenses 75,393,812 48,658,978 65% Beginning Cash Balance (6/30/17) 22,713,089 Ending Cash Balance (3/31/18) 31,425,912 Reserve Policy Target 23,301,000 % of Target 135% *Includes delayed postings to the General Ledger 3 Electric Utility Funds Cash Balances (Ending March 31, 2018) Operating Funds* $ 20,104,655 Utility Outlay Reserve Fund $ 687,500 Public Benefits Fund $ 2,121,320 Impact Fee Fund $ 592,013 Solar Surcharge Fund $ 428,665 Greenhouse Gas Fund $ 7,491,759 Total $ 31,425,912 *Includes funds held locally and at NCPA Electric Utility Reserve Policy (March 31, 2018) 4 Purpose Target Actual* Operating Reserves $ 22,301,000 $ 30,738,412 Capital Reserve $ 1,000,000 $ 687,500 Total Target $ 23,301,000 $ 31,425,912 Cash balances support City Council approved reserve requirements and provide funds for pay as you go Capital Improvement Projects. *Includes cash held locally and at NCPA Capital Improvement Project 5-Year Spending Plan 5 Project FY 17-18** FY 18-19 FY 19-20 FY 20-21 FY 21-22 Distribution Capacity Program $131,000 $960,000 $250,000 $250,000 $250,000 Underground Maintenance* $1,500,000 $1,200,000 $1,200,000 $1,200,000 $1,200,000 Streetlight Maintenance / Repair $35,000 $90,000 $50,000 $50,000 $50,000 LED Streetlight Improvements $90,000 $90,000 $200,000 $200,000 $200,000 230 kV Interconnection Project $25,000 $60,000 $60,000 $60,000 $0 Overhead Maintenance $300,000 $100,000 $200,000 $200,000 $200,000 Substation Maint / Improvements $100,000 $525,000 $350,000 $650,000 $1,500,000 Building & Security Improvements $430,000 $1,035,000 $50,000 $50,000 $50,000 Vehicles & Equipment** $15,500 $264,000 $350,000 $250,000 $370,000 Total Projects $2,626,500 $4,324,000 $2,710,000 $2,910,000 $3,820,000 *Includes work for others. **Includes estimated actuals. Power Sales (Ending March 31, 2018) 6 Power Sales (kWh) Customer Class Budget Actual Residential 151,255,540 124,075,415 Small Commercial 160,043,844 117,763,381 Large Commercial/Small Industrial 49,188,321 34,252,680 Industrial 71,906,433 52,367,315 Total 432,394,138 328,458,791 Revenue ($) Customer Class Budget Actual Average Rate Residential $ 27,937,783 $ 22,219,831 $ 0.1791 Small Commercial $ 27,302,858 $ 20,050,551 $ 0.1703 Large Commercial/Small Industrial $ 6,939,313 $ 5,259,941 $ 0.1536 Industrial $ 7,648,216 $ 6,148,790 $ 0.1174 Total $ 69,828,170 $ 53,679,113 $ 0.1634 ECA Revenue (Ending March 31, 2018) 7 Customer Class Total ($) Residential $ 891,235 Small Commercial $ 1,082,682 Large Commercial / Small Industrial $ 333,621 Industrial $ 494,720 Total Revenue $ 2,802,258 8 Electric Utility Fund Operating Results (Ending March 31, 2018) FY18 Budget FY18 Actual % of Budget Personnel $ 8,906,935 $ 6,240,970 70% Supplies, Materials, Services $ 3,836,042 $ 1,078,840 28% Other Payments $ 1,730,760 $ 903,602 52% Utilities $ 83,900 $ 40,410 48% Total Operating Expenses $ 14,557,637 $ 8,263,822 57% Power Supply Costs (Ending March 31, 2018) 9 Budgeted Year to Date % of Budget Generation $ 29,919,900 $ 21,969,597 73% Transmission $ 10,503,530 $ 7,041,451 67% Management Services $ 1,398,730 $ 1,100,718 79% Total Power Supply Costs $ 41,822,160 $ 30,111,766 72% Load Coverage 10 MWh Load ROC Matrix Target Load Coverage (Including Purchases) Q3 – 2018 135,758 80.0% 88.8% Q4 – 2018 104,752 77.0% 81.9% Q1 – 2019 99,306 67.0% 64.2% Q2 – 2019 111,308 60.0% 66.4% Includes power purchases through 3/31/18 as approved by Risk Oversight Committee (ROC) Q1 - 2019 power purchase scheduled for ROC review June 2018 11 Risk Oversight Committee Report •Power Purchases Completed •Additional RPS Resources Approved –Ukiah Geothermal –NCPA Solar Project No. 1 •Cap and Trade Activities •Hydrology Conditions Update •230 kV Project Update 12 City Council Strategic Areas of Focus •Customer •Technology •Financial •Reliability •Workforce