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HomeMy WebLinkAboutMinutes - November 5, 2019 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, NOVEMBER 5, 2019 A. Roll Call by City Clerk An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, November 5, 2019, commencing at 7:03 a.m. Present: Council Member Johnson, Council Member Mounce, Council Member Nakanishi, and Mayor Pro Tempore Kuehne Absent: Mayor Chandler Also Present: Deputy City Manager Keys, City Attorney Magdich, and City Clerk Ferraiolo NOTE: Council Members Johnson and Mounce participated in the meeting via teleconference. B. Topic(s) B-1 Presentation Regarding Authorizing Lodi Electric Utility to Purchase Supplies through Long-Term (Two-Year with One-Year Extension) Contracts (EU) Electric Utility Superintendent Tim Combs provided a PowerPoint presentation regarding blanket purchasing agreements. Specific topics of discussion included current purchasing process, emergency orders, proposed process, and recommended action. In response to Mayor Pro Tempore Kuehne, Electric Materials Technician Michael Koinzan explained the City currently purchases materials from roughly 12 to 20 vendors, depending on the type of material being purchased. The difficulty associated with going out to bid three to four times a year is the heavy weight of some of the items and cost to ship products from outside the state, which results in staff bidding through local vendors; however, a number of them do not submit bids due to the small quantity of the orders. Council Member Nakanishi stated this change in process is reasonable and questioned if it will be brought back to Council via an ordinance amendment. Deputy City Manager Andrew Keys stated this new process will change from putting dozens of staff reports on an agenda for small purchases to instead Council approval of blanket authority to purchase items up to a specific dollar amount over a two-year period. In further response, Mr. Combs explained the impact on customers when adequate supplies are not in stock in the warehouse, including delays in projects, temporary arrangements for utility customers, exposure to safety issues, and customers without power. In response to Council Member Mounce, Electric Utility Director Jeff Berkheimer stated the primary impact on customers is running out of supplies, such as a certain height of pole, which results in rescheduled or delayed projects. In further response, Mr. Combs confirmed that the process would include a blanket bid up front with an expectation to purchase a certain amount of product over a specified term limit, but the items would be purchased on an as-needed basis. Such a contract would be written with flexibility in the end should the City not meet the fully anticipated purchase amount in the contract. He stated this is a trial process and staff will track the savings. Council Member Mounce stressed that this trial period have an expiration date so Council can evaluate the success or failure, as well as actual savings, and decide whether or not to continue with the proposed practice. In response to Council Member Johnson, Mr. Combs stated staff met with vendors regarding this concept and they verified the City would likely get better prices if there was a commitment for bigger quantities of items. Many vendors follow this same concept with other utilities. 1 In response to Mayor Pro Tempore Kuehne, Mr. Combs stated it is easier to store smaller supplies, such as bolts, but the Department lacks adequate storage space for larger items like transformers and cable. Council Member Johnson suggested it may be time for the City to seek out additional storage space in the community. Mr. Combs stated storage is only part of the problem; the bigger problem is the timing of receiving equipment quickly and increased pricing by buying in smaller quantities. Mayor Pro Tempore Kuehne stated this purchasing concept makes sense, especially with the volume of products. Council Member Mounce stressed that this be done on a trial period to ensure it works well before making it a permanent process. Deputy City Manager Keys explained there is a risk associated with the City storing items because the City takes on the health of those items during the storage life. Staff's proposal is for Council to approve a two-year initial contract with a one-year extension as a trial period, after which staff will report back to Council. Mr. Keys added that staff can add a component to the quarterly updates to track the savings associated with this contract. Mayor Pro Tempore Kuehne stated he felt an annual report was sufficient. In response to Council Member Mounce, City Attorney Magdich reiterated that the concept is for a two-year contract with an option to extend for one year. Council Member Mounce stated she was amenable to the term of the contract so long as Council has an opportunity to review the success/failure rate in order to decide if this should become the norm going forward. Mike Lusk, member of the public, questioned if vendors will pass on warehouse storage costs or carry fees to the City since they will be storing items until the City needs them; if prices will be locked in for the term of the contract or if an escalation will be built into the agreement; and if these costs will be passed onto ratepayers. Further, with PG&E's demand on materials in California, particularly during emergencies or severe weather events, he questioned if there is any guarantee that materials set aside will still be at the vendor's warehouse and available for Lodi when needed. Mr. Berkheimer explained that the concept proposed by staff is common in the utility industry in which staff evaluates the day-to-day needs on a yearly basis and enters into a contract with a vendor who has an expectation of what it will sell during that timeframe. Currently, many suppliers do not bid on smaller quantity items and prices fluctuate greatly depending on what is going on in the industry. If the City were to bid larger quantities, it would not be susceptible to PG&E's run on items. Additionally, he stated that building a storage warehouse is more complex because staff would also have to inventory the items and make trips to multiple sites to pick up items for jobs, which would spread Utility staff even thinner. Mr. Keys added that vendors are storing materials for all utilities, not just for Lodi, and the City would just draw from its supply. Additionally, Lodi is not the largest agency vendors are supplying. Lodi's needs will be smaller, but big enough to compete. B-2 Fourth Quarter Fiscal Year 2018/19 Water, Wastewater and Electric Utility Department Financial Reports (CM) Public Works Utilities Manager Lance Roberts provided a PowerPoint presentation regarding the Fourth Quarter Water and Wastewater Financial Reports. Specific topics of discussion included Wastewater Fund cash flow summary, operating results, cash balances, five-year financial forecast, and planned Capital projects; Water Fund cash flow summary, operating results, cash balances, five-year financial forecast, and planned Capital projects; and Water/Wastewater Utility activities. 2 Council Member Nakanishi questioned whether new development is paying for added wastewater infrastructure for new growth, to which Public Works Director Charlie Swimley stated that the impact fee is designed to help the debt service owed on the prior upgrades to the treatment facility and the monthly service charge that each house needs to contribute, which is how rates are determined. Council Member Mounce stated the impact fee does not cover the cost of new development and questioned if new development is paying its share of the water treatment plant. Mr. Swimley stated the City's rate base has subsidized the impact fee program and the impact fees needed to pay for the debt service associated with both the wastewater and water treatment plants. It will take time, and staff tracks the costs and reports on the debt service each year. Mike Lusk, member of the public, reiterated his previous remarks about new development not paying for itself and the negative impact the reduced impact fees had on ratepayers, who ended up subsidizing developers. Further, he stated the Community Facilities District (CFD) was created to cover the building industry and pick up the slack. He questioned when the building industry will catch up; how much in impact fees were collected in the last three years; and when the amount will equal the percentage of the original amount calculated in 2012. He stated impact fees were supposed to pay for capital infrastructure needs spread across the board and the CFD does not cover Proposition 218 costs. Further, he disagrees with the CFD because some citizens are charged the fee, while others are not, which is an inequality that will haunt Lodi in the future. Council Member Mounce pointed out that the CFD helps maintain specific neighborhoods so they look nice and feel new, as well as provide money for police and fire. She stated there should be a similar district on the east side to clean up the area. In response to Mr. Lusk, Council Member Mounce stated the CFD covers landscaping and maintenance of those specific areas in the district and only a portion of the money goes back to the general fund. Mr. Keys stated Lodi's CFD is $540 a year, whereas other cities around the state are double or even more. This is a Proposition 13 issue, and municipalities have to find ways of generating more revenue. He added that creating a district on the east side would require a vote of residents on the east side and establishing such a district in an already established neighborhood has a higher hurdle than telling developers to place a tax on future residents through a vote of one landowner. Electric Utility Rates and Resources Manager Melissa Price provided a PowerPoint presentation regarding Electric Utility Department quarterly update. Specific topics of discussion included Electric Utility Fund cash flow summary, cash balances, Reserve Policy, five-year spending plan, five-year financial forecast, power sales, ECA revenue, operating results, power supply costs, load coverage, Risk Oversight Committee Report highlights, and Strategic Areas of Focus highlights. In response to Council Member Nakanishi, staff stated it would research the increased costs as a result of the mandates on solar power usage. In response to Mayor Pro Tempore Kuehne, Electric Utility Director Jeff Berkheimer stated staff is exploring a meter deployment pilot project to swap out meters with improved technology that would reduce staff time in dealing with customers who have their power disconnected and reconnected repeatedly. The new meters would reduce field visits, speed up reconnection times, and reduce volatile situations when disconnecting power at residences. The costs for the program include the meters, software hosting, and licensing fees. Council Member Mounce pointed out that the costs include software management in perpetuity. Mr. Keys explained a key benefit of these meters is that those who pay to restore their power at the end of a business day will have a greater chance of having the electricity switched back on 3 through one of these meters versus waiting for staff to make a field visit, which could delay power restoration until the next business day. This would also reduce overtime for staff to turn power back on after hours. Mayor Pro Tempore Kuehne stated he supports the new technology and the pilot program. Council Member Mounce stated the City should not leave someone without power over a weekend, and these new meters will not guarantee there will be someone available to switch on the power through this technology if someone pays their bill at 5 p.m. Customers are still subjected to the same problems. C. Comments by Public on Non-Agenda Items None. D. Adjournment No action was taken by the City Council. The meeting was adjourned at 8:22 a.m. ATTEST: Jennifer M. Ferraiolo City Clerk 4 1 Electric Utility Department Blanket Purchasing Agreements City Council Shirtsleeve Session November 5, 2019 2 Current Process CURRENT BID PROCESS – Electric Utility stocks approximately 719 various material items that are necessary to construct and maintain the Lodi Electric System. The current process is: •We complete the existing bidding/purchasing process multiple times throughout the year prior to ordering common Electric Utility stock materials. •We are asking vendors to bid on smaller quantities due to minimal storage space at our facility therefore needing to repeat this process more often. •Some vendors won’t bid on these requests due to the small quantity. •This overall process takes 2 or more months for us to receive some of the materials that are necessary to construct and maintain the electric facilities. •We pay a higher unit cost due to the low purchasing volume. 3 Emergency Orders Lead Times: •It is common for some materials used in the Electric Utility to have 2+ month lead times to receive materials. •If we do not have this material in our warehouse this may have a negative impact on our customer. •If we are able to commit to long term contracts some vendors are able to maintain stock at their facility in northern CA. We are able to receive this material within a few days. 4 Proposed Process PROPOSED PROCESS – We would like the ability to secure bids from vendors for a 2 year purchase agreement with a 1 year extension clause using the existing standard bid process. The Benefits of the proposed process are: •By committing to larger volumes and longer terms, some vendors have the ability to stock materials at their local facility to expedite the delivery process to us in daily and emergency situations. •We would have the ability to secure reduced pricing by agreeing to 2 year terms with many of the vendors we currently utilize. •Since we would be committing to larger purchases over a 2 year period we also have the potential of competitive bidding between vendors. 5 RECOMMENDED ACTION: Lodi Electric Utility would like to secure long term (2 year) contracts with a 1 year extension clause through the standard bid process. We would request long term bids for all normal stock electric materials from vendors This will result in better unit cost pricing and improved immediate availability of materials for daily and emergency events. Recommended Action 1 Public Works Department Water/Wastewater FY 19 Quarterly Update (Ending June 30, 2019) City Council Shirtsleeve Session November 5, 2019 2 Wastewater Fund Cash Flow Summary (Ending June 30, 2019) Budget Actuals % of Budget Revenue Sales 15,208,130 15,854,205 104% Development Impact Mitigation Fees 1,062,470 1,107,580 104% Other (interest, septic, misc.) 3,550,000 2,989,579 84% Total Revenues 19,820,600 19,951,364 101% Expenses Operating 9,030,022 7,363,347 82% Capital *15,026,800 7,566,064 50% Debt Service 3,343,510 3,156,047 94% Cost of Services Payment To General Fund 1,083,710 1,083,710 100% Total Expenses 28,484,042 19,169,168 67% Beginning Cash (Operations Only) 13,083,439 Ending Cash (Operations Only) 15,537,563 Days Cash (Excluding Capital) 491 % of Target – 90 Days Cash on Hand 547% *Of the remaining capital budget, $1,471,283 or 9.8% of the total budget was rolled to the next FY in encumbered contracts. 3 Wastewater Operating Results (Ending June 30, 2019) Budget Actuals % of Budget Personnel $ 4,906,132 3,883,038$ 79% Supplies, Materials, Services $ 2,670,360 2,004,606$ 75% Equipment, Land, Structures $ 280,000 341,091$ 122% Other Payments $ 406,160 316,065$ 78% Utilities $ 739,060 795,657$ 108% Work for Others $ 28,310 22,890$ 81% Total Operating Expenses $ 9,030,022 $ 7,363,347 82% 4 Operating (530) 15,637,563 Utility Capital / Infrastructure Replacement (531) 685,813 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service) 238,268 Wastewater IMF (533) 1,129,801 Rate Stabilization Reserve (534) 500,000 Storm Drain IMF (535) 1,223,264 Total 19,414,709 Wastewater Funds Cash Balances (Ending June 30, 2019) Amounts above reserve target are held for scheduled capital maintenance 5-Year Financial Forecast 5 FY 18-19 Actual FY 19-20 Budget FY 20-21 Forecast FY 21-22 Forecast FY 22-23 Forecast Available Cash $15,537,563 $11,886,190 $13,214,700 $11,136,900 $6,005,100 Days Cash 491 342 379 312 164 Reserve Target $2,861,039 $3,114,500 $3,185,000 $3,258,500 $3,333,500 % of Target 547% 380% 421% 347% 183% Wastewater Planned Capital Projects 6 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Villa Fiore Reimbursement 682,200 Lockeford Street Improvements 103,360 20,680 Candy Cane Park 28,000 Storm Drain Trash Handling 10,233 750,000 750,000 MSC Security Improvements 70,000 Misc. System Relocations 35,000 35,000 35,000 35,000 Misc. Wastewater Taps 635 40,000 40,000 40,000 40,000 Collection System Capacity Enhancement Projects 33,679 200,000 Pipeline Condition Assessment 1,931 Main Replacement Project 1,966,345 2,600,000 2,000,000 Northeast Sewer Lift Pipe Repl. 7,141 Sewer Lift Station Wet Well Rehab 250,000 Kofu Storm Water Pump Rehab 200,000 Salas Storm Water Pump Rehab 200,000 Vinewood Storm Water Pump Rehab 116,800 Lincoln Storm Pump Rehab 75,000 Vehicles/Equipment 80,772 150,000 150,000 75,000 75,000 Upgrade Blowers 750,000 Irrigation Improvements 201,091 845,931 750,000 Plant Maintenance Improvements 113,000 320,000 250,000 260,000 Compliance Studies and Reports 200,000 200,000 200,000 200,000 Aeration Diffuser Replacement 500,000 NCPA Maintenance Generator 150,000 Pump & Equipment Upgrades 107,066 Electrical/Screen/SCADA Design 271,617 900,000 600,000 Electrical Upgrades/SCADA Construction 1,000,000 7,000,000 White Slough Recycled Water Storage 3,980,788 354,467 Miscellaneous Future Projects 100,000 Totals $7,563,658 $6,632,078 $2,095,000 $5,550,000 $8,310,000 7 Water Fund Cash Flow Summary (Ending June 30, 2019) Budget Actuals % of Budget Revenue Sales 12,872,190 13,344,472 104% Development Impact Mitigation Fees 476,310 528,885 111% Other (interest, tap fees, water meters, misc.) 1,100,040 1,588,167 144% Total Revenues 14,448,540 15,461,524 107% Expenses Operating 7,308,745 6,424,473 88% Capital *4,673,273 1,356,218 29% Debt Service 2,969,160 2,807,513 94% Cost of Services Payment To General Fund 821,900 821,900 100% Total Expenses 15,773,078 11,410,104 72% Beginning Cash (Operations Only) 6,931,797 Ending Cash (Operations Only) 6,792,346 Days Cash (Excluding Capital) 247 % of Target – 90 Days Cash on Hand 274% *Of the remaining capital budget, $623,036 or 13% of the total budget was rolled to the next FY in encumbered contracts. 8 Water Operating Results (Ending June 30, 2019) Budget Actuals % of Budget Personnel $ 3,408,915 2,893,386$ 85% Supplies, Materials, Services $ 1,563,660 1,322,303$ 85% Equipment, Land, Structures $ 105,000 16,347$ 16% Other Payments $ 1,647,500 1,546,026$ 94% Utilities $ 483,670 537,561$ 111% Work for Others $ 100,000 108,850$ 109% Total Operating Expenses $ 7,308,745 $ 6,424,473 88% 9 Water Funds Cash Balances (Ending June 30, 2019) Operating (560) 6,792,346 Utility Capital / Infrastructure Replacement (561) 409,611 IMF (562) 1,644,497 PCE/TCE Settlements 9,159,188 PCE/TCE Rates (565) 4,013,282 Total 22,018,924 Amounts above reserve target are held for scheduled capital maintenance 5-Year Financial Forecast 10 FY 18-19 Actual FY 19-20 Budget FY 20-21 Forecast FY 21-22 Forecast FY 22-23 Forecast Available Cash $6,792,346 $2,982,844 $3,543,344 $4,146,544 $5,019,444 Days Cash 247 98 114 131 155 Reserve Target $2,479,040 $2,768,500 $2,829,000 $2,891,000 $2,951,500 % of Target 274% 109% 127% 145% 174% Water Planned Capital Projects 11 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Water Meter Program 652,540 5,980,000 1,000,000 1,000,000 Lockeford Street Imprv. 237,566 48,250 Water Taps 21,385 75,000 75,000 75,000 75,000 Misc. Water Mains 50,000 50,000 50,000 50,000 Water Meter Replacement Program 75,000 75,000 GAC Replacement 3,871 300,000 300,000 300,000 300,000 Meter Shop Design/Construction 1,760 200,000 Water Plant Generator 300,000 MSC Security Improvements 70,000 Well 7 Pump Rehab 175,000 Well 14 Pump Rehab 170,000 Well 16 Pump Rehab 166,000 Well 17 Pump Rehab 185,000 Well 21 Pump Rehab 200,000 Well 22 Pump Rehab 166,000 Well 3R Pump Rehab 170,000 Well 24 Pump Rehab 171,851 Well 25 Pump Rehab 200,000 Well 27 GAC Treatment & Standby Generator 70.000 820,000 Well 28 GAC Treatment 80,000 950,000 Vehicles/Equipment 120,000 158,000 40,000 50,000 50,000 Totals 1,088,973 7,926,250 2,447,000 1,905,000 1,750,000 12 Water / Wastewater Utility Activities Operational Water Distribution Water Production Collection System Wastewater Treatment Regulatory SSO’s Discharge Violations Monitoring and Reporting Electric Utility Department FY 19 Quarterly Update (Ending June 30, 2019) City Council Shirtsleeve Session November 5, 2019 2 Electric Utility Fund Cash Flow Summary (June 30, 2019) Budget Actual % of Budget Revenue Sales Revenues 69,708,150 67,961,354 97% Development Impact Fees 178,820 244,989 137% Other Revenues (interest, misc) 3,728,120 4,498,678 121% Total Revenues 73,615,090 72,705,021 99% Expenses Purchase Power 40,699,940 38,487,208 95% Non Power 14,986,240 11,753,934 78% Capital Projects 4,324,000 2,060,872 48% Debt Service 5,522,890 1,732,064 31% Cost of Service/Capital Xfer 2,399,040 2,399,040 100% In-lieu Transfer to General Fund 7,197,380 7,197,380 100% Total Expenses 75,129,490 63,630,498 85% Beginning Cash Balance (6/30/18) 26,573,007 Ending Cash Balance (6/30/19) 37,009,865 Reserve Policy Target 23,714,000 % of Target 156% 3 Electric Utility Funds Cash Balances (Ending June 30, 2019) Operating Funds $ 23,514,217 Utility Outlay Reserve Fund $ 1,000,000 Public Benefits Fund $ 3,382,259 Impact Fee Fund $ 886,260 Solar Surcharge Fund $ 318,195 Greenhouse Gas Fund $ 7,908,934 Total $ 37,009,865 Electric Utility Reserve Policy (June 30, 2019) 4 Purpose Target Actual* Operating Reserves $ 22,714,000 $ 36,009,865 Capital Reserve $ 1,000,000 $ 1,000,000 Total Target $ 23,714,000 $ 37,009,865 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 18-19 Actuals FY 19-20 Budget FY 20-21 Forecast FY 21-22 Forecast FY 22-23 Forecast Distribution Capacity Program $75,516 $600,000 $800,000 $625,000 $1,100,000 Underground / Overhead Maint $1,281,309 $1,400,000 $1,400,000 $1,400,000 $1,400,000 Streetlight Maintenance / Repair $3,492 $50,000 $50,000 $50,000 $50,000 LED Streetlight Improvements $71,822 $250,000 $250,000 $250,000 $250,000 230 kV Interconnection Project* $0 $500,000 $0 $0 $0 Substation Maint / Improvements $424 $1,400,000 $800,000 $0 $300,000 Building & Security Improvements $208,037 $2,000,000 $155,000 $35,000 $35,000 Work for Others $304,781 $350,000 $350,000 $550,000 $550,000 Vehicles & Equipment $115,490 $0 $830,000 $432,000 $330,000 Total Projects $2,060,872 $6,550,000 $4,635,000 $3,342,000 $4,015,000 *Includes planning and design costs only 5-Year Financial Forecast Looking Ahead 6 FY 18-19 Actual FY 19-20 Budget FY 20-21 Forecast FY 21-22 Forecast FY 22-23 Forecast Available Cash $37,009,865 $34,414,155 $32,352,429 $30,925,366 $28,187,461 Days Cash 191 185 168 156 139 Reserve Target $23,714,000 $22,512,000 $23,033,267 $23,568,483 $24,035,671 % of Target 156% 153% 140% 131% 117% Power Sales (Ending June 30, 2019) 7 Power Sales (kWh) Customer Class Budget Actual Residential 157,969,253 149,670,533 Small Commercial 158,823,735 155,964,400 Large Commercial/Small Industrial 49,847,066 44,834,283 Industrial 68,408,946 60,097,598 Total 435,049,000 410,566,814 Revenue ($) Customer Class Budget Actual Average Rate Residential $ 27,288,494 $ 27,713,015 $ 0.1852 Small Commercial $ 26,883,003 $ 26,350,979 $ 0.1690 Large Commercial/Small Industrial $ 7,717,784 $ 6,974,866 $ 0.1556 Industrial $ 7,818,869 $ 6,922,494 $ 0.1152 Total $ 69,708,150 $67,961,354 $ 0.1655 ECA Revenue (Ending June 30, 2019) 8 Customer Class Total ($) Residential $ 1,540,981 Small Commercial $ 1,566,325 Large Commercial / Small Industrial $ 484,774 Industrial $ 593,701 Total Revenue $ 4,185,781 9 Electric Utility Fund Operating Results (Ending June 30, 2019) Budget Actual % of Budget Personnel $ 9,457,360 $ 8,106,154 86% Supplies, Materials, Services $ 3,874,880 $ 2,612,368 67% Other Payments $ 1,575,100 $ 971,518 62% Utilities $ 78,900 $ 63,894 81% Total Operating Expenses $ 14,986,240 $ 11,753,934 78% Power Supply Costs (Ending June 30, 2019) 10 Budget Actual % of Budget Generation $ 28,510,770 $ 27,671,733 97% Transmission $ 10,591,000 $ 9,080,061 86% Management Services $ 1,598,170 $ 1,735,414 108% Total Power Supply Costs $ 40,699,940 $ 38,487,208 95% Load Coverage 11 Includes energy purchases through September 2019 as approved by the Risk Oversight Committee (ROC) 12 Risk Oversight Committee Report Highlights •Forward Energy Purchases •Cap and Trade Activities •NCPA Solar Project •Antelope Solar Project •Western Base Resource Update •2018 Regulatory Reports •GHG Spending Plan Revisions •230 kV Project Updates 13 Strategic Areas of Focus Highlights •Customer –EV Strategy and Rebates –Customer Survey •Technology –Outage Management System –Meter Deployment Pilot Project •Financial –Stable Reserves •Reliability –Wildfire Mitigation Plan •Workforce –Recruitments