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HomeMy WebLinkAbout1986-12-01 Min - Board REGULAR MEETING December 19 1986 The regular meeting of the Board of Directors of the Truckee Donner Public Utility District was called to order by President Maass at 7:07 P.M. in the Tahoe Truckee Airport Inn conference room. ROLL CALL: Directors Cooley, Corbett, Hamilton, Sutton and Maass were present. EMPLOYEES PRESENT: Mary Chapman, Pete Silva, Tom Buckhouse, Bruce Grow, Dave Rully, Peter Holzmeister and Susan Craig. CONSULTANTS PRESENT: Rick Blumenfeld and Keith Fukui from Arthur Andersen and Company, Counsel John Phelps, Consulting Engineer Keith Sauers. OTHERS PRESENT: Among those present in the audience were Gordon Wells, Dick VanLandingham and Marigrey Fish. ELECTION OF OFFICERS Upon the Chairman calling for nominations, Director Hamilton nominated Director Corbett for President of the Board. There were no other nominations, and Director Sutton moved that a unanimous ballot be cast for Director Corbett; seconded by Director Hamilton. All Directors, aye, by voice vote. SO MOVED. President Corbett took the chair and opened nominations for the office of Vice President. Director Hamilton nominated Director Sutton for Vice President. There were no other nominations, and Director Maass moved that a unanimous ballot be cast for Director Sutton; seconded by Director Hamilton. All Directors, aye, by voice vote. SO MOVED. Director Sutton nominated Director Cooley for Treasurer. Nominations were closed and Director Hamilton moved that a unanimous ballot be cast for Director Cooley; seconded by Director Sutton. All Directors, aye, by voice vote. SO MOVED. APPROVAL OF MINUTES Director Hamilton moved that the minutes of September 15, 1986 be approved as written; seconded by Director Sutton. All Directors, aye, by voice vote. SO MOVED. Director Maass moved that the minutes of September 29, 1986 be approved as written; seconded by Director Hamilton. All Directors, aye, by voice vote. SO MOVED, Directors Sutton and Corbett mentioned they have several corrections to the draft minutes of October 6 and would submit them in writing to the Secretary so they may be copied to the Board. Ao STATEMENT OF GENERAL FUND AND BILLS FOR BOARD APPROVAL. -1- loom*" The list of bills for Board consideration was inadvertently omitted from the Board packet and, therefore, put over to the December 15 meeting. MANAGER'S REPORT The Manager had noting to report at this time. PUBLIC INPUT There was no public input. CORRESPONDENCE Proposition 55 - Safe Drinking Water Bond Law of 1986 The Manager advised that the Safe Drinking Water Bond Law of 1986 has made $100,000,000 available for improvements to domestic water systems. Low interest rate loans up to a maximum of $5,000,000 are available based on the ability of the water system to repay the loan. The priority list is now being created and pre-applications received by January 14, 1987 will be included on the priority list. After some discussion, President Corbett directed the Manager to schedule a Water Committee meeting in order to prepare a list of projects and the pre-application. The matter is to be placed on the December 15 agenda for Board direction. S14UD/SPPCo interne Mr. Holzmeister mentioned the SMUD/Sierra Intertie News Letter which was recently received by the District. Truckee Donner Recreation and Park District Steve Randall, Superintendent of the Truckee Donner Recreation and Park District , appeared to request a waiver or reduction of fees for the modification of electrical facilities for the Truckee swimming pool renovation project. The PUD's fee for upgrading the service is $2,558, including connection and facilities fees. Director Sutton noted that fees are charged to all special districts; she indicated she would have a problem with waiving fees for the Recreation District. Mr. Phelps announced that he is counsel for the Recreation and Park District, but was not made aware of this matter prior to the meeting. Director Hamilton moved that the Board deny the request of the TDR&PD; seconded by Director Sutton. No vote was taken. MOTION DIED. Director Cooley stated he has some questions that he would like answered by an attorney. Director Maass moved that the matter be tabled to the next meeting; seconded by Director Sutton. All Directors, aye, by voice vote. SO MOVED. The Board agreed that he should place his questions in writing -2- •-. for review and answer by Martin McDonough. The Board is to be copied with the response, and the matter placed on the December 15 agenda. Director Sutton also asked that Mr. McDonough comment as to if we are a nation of laws instead of men and whether the men that sit on the board have to uphold their own laws. The Board gave no direction regarding Director Sutton's request. REVIEW AND ACCEPTANCE OF 1985 AUDIT PREPARED BY ARTHUR ANDERSEN & CORPANY Keith Fukui of Arthur Andersen and Company reviewed the electric financial statements with the Board. He noted there was a significant increase in cash balances in restricted funds, specifically the new building fund. The working capital for the electric operations also increased. Mr. Fukui reviewed with the Board the long-term debt, and noted that the District renewed an installment note payable relating to the computer in December of 1982, and a note relating to a line truck in April of 1984. The terms of the notes provide for monthly installments of principal and interest. There is also a note payable to the U. S. Department of Energy; the first annual payment was due December 1 , 1985. Mr. Fukui indicated there is a lot of capacity for handling more debt in the Electric Department. With respect to the pension plan, Mr. Fukui stated that the District maintains a noncontributory defined benefit pension plan covering substantially all employees who have at least one year of service. Working in conjunction with the District , Arthur Andersen & Company determined the plan was overfunded and contributions to the plan were reduced accordingly. The disclosure regarding a lawsuit filed by a former general manager against the District alleging wrongful termination of employment and defamation and seeking damages of $600,000 was included in the audit. Mr. Fukui noted that the District plans to defend against this lawsuit and believes that the ultimate outcome will not have a significant impact on its financial position. With respect to the Water Department , Mr. Fukui advised that working capital has decreased. A significant portion of the operations are being funded by up-front fees paid by customers. The promissory note payable to the U. S. Farmers Home Administration incorporates indentures which require the District to establish certain accounting funds. These funds essentially encompass all of the cash flows of the water operations. The indentures allow use of the funds for the necessary expense of operating and improving the District. The FmHA indentures , which secure the promissory note and bonds, require the District to establish and maintain rates and charges to produce net revenues equal to not less than 1.2 times the aggregate amount of the principal and interest due within the next 12 months. In addition, they require the District to establish separate special accounting funds. Since the promissory note and bonds were issued, the District has not met and /000�_ fulfilled the requirements of certain indenture covenants. In the event of default, the interest and principal could be declared due and payable immediately. As a result of the District's failure to meet certain of the -3- •., indenture covenants , the total amount of these obligations has been classified as a current liability in the financial statements. Rick Blumenfeld suggested the District contact Sam Sperry, Bond Counsel, and ask for resolution of this problem. Director Maass stated he thought the District should solicit proposals to correct the FmHA covenant problem from Bond Counsel used by the District in forming the non-profit corporation this past summer; Director Sutton said she felt the PUD should pursue resolution of the problem through Mr. Sperry's firm, since they did the original work. Mr. Holzmeister advised the Board that he has requested Mr. Sperry to correct the problem to no avail. Director Sutton asked the Chairman to write a letter to Mr. Sperry asking him to .follow through on this matter, and Counsel Phelps said he would suggest some wording that will tend to prompt Mr. Sperry's cooperation. SO MOVED by consensus. Director Maass moved, and Director Hamilton seconded, that the Board accept the audit for 1985 prepared by Arthur Andersen & Company. For the record, Director Sutton stated that the preliminary audit is dated April 11, 1986 and the Board did not receive a copy until November 26. Responding to her question as to differences between the draft and final audits, Mr. Blumenfeld noted that wording relating to the Ward lawsuit was changed slightly, He also advised that preparation of the final audit was held up due to waiting for the legal opinion concerning probable outcome of the Ward case. In reply to Director Sutton's question, Mr. Blumenfeld stated that Arthur Andersen & Company has not provided a written management letter, but they do have discussions with employees on an on-going basis, provide feed-back and suggestions regularly. The motion made by Director Maass and seconded by Director Hamilton to accept the 1985 audit was restated. ROLL CALL: Sutton, no; all other Directors, aye. SO MOVED. Director Sutton moved that the District solicit proposals for the 1986 audit as soon as possible from all qualified firms; seconded by Director Cooley. ROLL CALL: Cooley, aye; Hamilton, no; Sutton, aye; Maass, no; Corbett, no. MOTION FAILED. Director Maass moved that the District retain the firm of Arthur Andersen & Company to prepare the 1986 audit subject to receipt of their written proposal. With Director Maass' permission, Director Hamilton seconded the motion and amended it to include that Arthur Andersen would provide a letter of recommendation to accompany the audit report, and that it and the preliminary audit would be copied to the Board. ROLL CALL: Sutton, no; all other Directors, aye. SO MOVED. Director Sutton said she feels it is good policy to change auditing firms every three or four years. There was discussion as to how Arthur Andersen is to communicate with the Board in the future, and the Board indicated it would make a determination and advise the auditors. PUBLIC HEARING - THE 1987 BUDGET - ORDINANCE INCREASING ELECTRIC RATES - ORDINANCE INCREASING WATER RATES -4- ,�... The public hearing to discuss the 1987 budget, electri( and water rate increases was opened at 8:35 P.M. The Manager advised that the proposed budget requires an 11% electric rate increase and 13% water rate increase. He provided an analysis of what the increase would mean to the customers of the District in their monthly bills. It was Mr. Holzmeister's suggestion that a cost of service study be done during 1987; he has included funds in the budget for this purpose. Discussion ensued regarding the sinking fund, debt service, future improvements , Proposition 55 (The Safe Drinking Water Bond Act of 1986) , need for additional revenues, and Sierra Pacific's upcoming rate reduction. Manager Holzmeister provided the Board with a comparison of PUD rates with other utilities. T tf-�15 that staf f would like to include in the budget which were cut by the Manager (which include PCB disposal, up-graded computer, automated meter reading, wire puller, a computer for the engineering department, telemetry maintenance , water operations training and storage tank repair) were discussed at length as well as how inclusion into the budget would affect the rates. Director Maass moved that the budget and rate increases be adopted as is and t'zat staf f come back to the Board at mid-year to again review their requests for additional items. MOTION DIED FOR LACK OF A SECOND. There was no public input or questions. Director Hamilton moved, and Director Maass seconded, that the public hearing be closed at 9:50 P.M. All Directors, aye, by voice vote. SO MOVED, Manager Holzmeister calculated how the additional items requested by staff would effect the rate increase to the customers. There was discussion regarding the Safe Drinking Water Bond Law of 1986 under which the District will most likely apply for a grant or loan for water system improvements. Director Hamilton moved that the Board adopt the amended budget (which will Include funds for PCB removal, up-graded computer, automated meter reading, wire puller, a computer for the engineering department, telemetry maintenance , water operations training, and storage tank repair). If a substantial grant is obtained under Proposition 55, the water rates can be rolled back. The motion was seconded by Director Corbett. ROLL CALL: Cooley, no, stating the District has $1 million Ir the special fund, $5 million in the new building fund , and SPPCo is reducing their rates; Hamilton, yes; Maass, yes, with reservations; Sutton, no; Corbett, yes. SO MOVED. Director Maass moved, and Director Hamilton seconded, that the Board adopt /1010� Ordinance No. 8606 establishing water rates as amended (the proposed 13% increase plus a 3% increase to cover the additional items requested by staff). ROLL CALL: Cooley, no; Hamilton, yes; Maass, yes, Sutton, no; -5- Corbett, yes. SO ORDAINED. Director Maass moved that the Board adopt Ordinance No. 8607 changing electric rates as amended (the proposed 11% increase plus a 1.3% increase to cover the additional items requested by staff); seconded by Director Hamilton. ROLL CALL: Cooley, no; Hamilton, yes; Maass, yes; Sutton, no; Corbett, yes. SO ORDAINED. STATUS REPORT ON NEW DISTRICT COMPLEX; POSSIBLE DIRECTION At this point in the meeting, 10:13 P.M. , Director Cooley left. The Manager advised that the certified wage reports have not yet been received from Value Builders. After some discussion, Director Sutton moved that the new building status report and consideration of related payments, change orders, etc* be placed on the agenda for the second monthly meeting. The motion was seconded by Director Hamilton. All Directors, aye, by voice vote. SO MOVED. Director Maass moved , and Director Hamilton seconded , that the Board approve payments to Dale Cox in the amount of $19,090.60, SEA in the amount of $12 .632,68, and Jensen & Doyle in the amount of $4,591. ROLL CALL: Cooley, absent; all other Directors, aye. SO MOVED. Director Maass moved that the Board approve the requisition for release of funds from the Bank of America in the amount of $371 ,461. The motion was seconded by Director Hamilton. ROLL CALL: Cooley, absent; all other Directors, aye. SO MOVED, CONSIDERATION OF PROGRESS PAY ESTIMATE FOR I14PROVEMENTS AT WELLS A & B Consulting Engineer Sauers noted that Resource Development has completed 55% of the contract for construction of new buildings at Wells A & B, mechanical work on each well discharge, and electrical and telemetry work which will allow normal operation remotely from Ski Lodge Pump Station. Periodic Estimate for Partial Payment No. 1 is in the amount $46,422. He has completed most work which could be delayed by inclement weather. The remaining work includes installation of mechanical fittings, motor control centers and related telemetry equipment within the buildings. Mr. Sauers recommended payment to Resource Development in the amount of $41 ,780 - 90% of the earned amount. Director Maass moved , and Director Hamilton seconded , that the Board approve payment to Resource Development in the amount of $41 ,780 for Partial Payment No. 1 , Improvements at Wells A & B. ROLL CALL: Cooley, absent; all other Directors , aye. SO MOVED, CHLORINATION Director Maass asked that Counsel Phelps' letter concerning chlorination be placed on the next meeting agenda for consideration. After discussion, it A-^ was decided to hold a Water Committee meeting with Ben Karoly and Jess Morehouse prior to the Board meeting. -6- ADJOURI MEYT There being no further business before the Board, Director Hamilton moved that the meeting be adjourned; seconded by Director Maass. SO MOVED by voice vote at 10:25 P.M. TRUCKE DO NER PUBLI UT LITY DISTRICT By Jo L. Corbett reside t Pre red by- ` Susan M. Craig, Deputy District Clerk smc/d5a.27 -7-