HomeMy WebLinkAbout11 Broadband LAFCO Agenda Item
r`�-TRUCKEE DONNER
-44ic Utility District
Memorandum
To: Board of Directors
From: Peter Holzmeister
Date: July 15, 2004
Subject: Cost allocation factors
Why this matter is before the board: We are processing the request for activation of
the latent broadband power through the LAFCo. As part of the LAFCo review, they
have asked that the District adopt a policy or method for allocating shared costs among
the electric, water and broadband business units. LAFCo wants assurance that
broadband will pays its fair share of such costs. Only the board can adopt such a policy
History: LAFCo gave conditional approval to activation of the latent power enabling us
to offer broadband services. Final approval was to be contingent upon the District
submitting a risk mitigation plan to assure that water and electric rate payers would not
subsidize broadband. The board recently approved such a risk mitigation plan and we
submitted it to LAFCo for its review.
The review is progressing. We have been asked to provide additional information and
clarify some of the documents.
New information: LAFCo has asked that the board formally adopt a policy defining the
allocation of shared costs among our electric, water and broadband utilities. I have
prepared the attached draft resolution for your consideration. It defines a method of
allocating costs. It follows essentially the same procedure we have used for years in
allocating shared costs between water and electric. Now, with the addition of
broadband, the allocation method shifts some costs from water and electric to
broadband.
Recommendation: I recommend that the board adopt the resolution establishing a cost
allocation method for use when the broadband business unit is active.
Public Utility District
R '`solution No. 2004- ZZ
Establishing A Cost Allocation Method for Use When
the Broadband Business Unit is Active
WHEREAS the District intends to initiate provision of broadband services in the near
future; and
WHEREAS the broadband business unit will be operationally integrated into the overall
District organizational structure and as such will benefit from overlapping organizational
functions that provide services to water, electric and broadband units; and
WHEREAS the broadband unit will be required to pay its fair share of the costs to provide
said overlapping services; and
WHEREAS the District wishes to establish policy defining the method by which the cost of
overlapping services will be allocated among water,electric and broadband business units;
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors as follows:
1. The following allocation method is hereby adopted:
Allocation Title Allocation Factor Costs Being Allocated
Labor Overhead Total productive labor FICA, medical insurance,
dollars pension, workers comp, etc
Transportation Labor dollars using Operation and maintenance of
Overhead vehicles the fleet
Administration Total productive labor Commonly used supplies
Overhead dollars (paper, pencils, pens, gloves, etc)
Construction Labor dollars applied to Work order accounting
Overhead construction work orders misc. engineering and planner
costs GIS mapping labor
Inventory Overhead Dollar value of material Cost of purchasing and
Issued from warehouse warehousing function and
insurance of warehouse material
Billable work order Dollar value of purchases in Cost of purchasing, warehousing
material purchases billable work order for items not run thru inventory
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Building Overhead
Shared Space Direct labor Propane, electricity, building
maintenance and repair
Directly Used Square foot charge Propane, electricity, building
Space reviewed annually maintenance and repair
Certain departments of the District perform tasks whose costs shall be allocated among
the electric, water and broadband business units in the following manner.
Department and or Function Allocation to Electric, Water, Broadband Respectively
Board of Directors 33.3%, 33.3%, 33.3%
General Manager 33.3%, 33.3%, 33.3%
Admin Services
Billing 55%, 35%, 10%
Meter reading 75%, 25%, 0%
Accounting 33.3%, 33.3%, 33.3%
Supplies / expenses 33.3%, 33.3%, 33.3%
Professional services 33.3%, 33.3%, 33.3%
Except where direct allocation is appropriate
Insurance Combination of allocation methods: property value
revenues, etc.
Safety 33.3%, 33.3%, 33.3%
Planning
Public Benefits All electric
General salaries 70% 30%, 0%
Conservation Direct allocation
Home show 33.3%, 33.3%, 33.3%
Supplies / expenses 70%, 30% 0%
Professional services Direct allocation
Marketing 40%, 40%, 20%
Support Services
General salaries 33.3%, 33.3%, 33.3%
Supplies / expenses 33.3%, 33.3%, 33.3%
Communication
Base station 33.3%, 33.3%, 33.3%
Truck radios Direct allocation
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PASSED AND ADOPTED by the Board of Directors at a meeting duly called and held
within the District on the day of , 2004 by the following roll call vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
James A. Maass, President
ATTEST:
Peter L. Holzmeister, District Clerk
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