MINUTES OF BOARD OF COMMISSIONERS' MEETING

LANSING BOARD OF WATER AND LIGHT

Motion was made by Commissioner O’Leary, seconded by Commissioner Callen, to approve the minutes of regular session held August 22, 2000 and closed session held September 12, 2000.

Paul Hufnagel, 2545 Oxford, Lansing, addressed the Board as president of the Greater Lansing Labor Council. He expressed the Council’s concern about the BWL’s recent hiring of a labor consultant to discourage the employee organizing effort. Mr. Hufnagel spoke about the long history of labor unions and their importance in the community. He cited examples of projects completed in record time by union labor and the cooperation between contractors, the City and the building trades. He expressed concern that the democratic process would not take place. He asked the Board to reconsider its decision to utilize a consultant, and provide the employees an opportunity to run an election without interference by an outside consultant.

BWL employee Curt Gates, Business Manager of IBEW Local 352, spoke about the latest effort by the labor consultant and some BWL senior management. He reported that the vote scheduled for September 22nd was cancelled due to the labor consultant contesting the "community of interest" issue between the clerical and technical groups. He stated that lack of trust was an issue raised by employees through the last employees’ survey and that hiring a consultant to discourage unionization efforts has disturbed an already frustrated group. He emphasized that employees are the issue; they make the BWL work.

Present were Commissioners Aquilina, Christian, Creamer, Murray, O’Leary and Royal. Absent were Commissioners Callen and Duncan.

Repairs to the Steam Main Serving General Motors. General Manager Pandy reported on restoration work completed to date on the 20-inch steam line serving General Motors that ruptured on June 27. The line was restored with full service on September 7. Remaining work is targeted for completion by September 30. Current expenditures to date are approximately $2.2 million. Final costs are projected to be approximately $3.0 million as compared to the original budget amount of $4.1 million.

Corporate and Process Measurement. General Manager Pandy reported on corporate and process performance measures for fiscal year 2000-01, in which employees are eligible to receive bonuses based on various measures concerning financial, customer, internal business processes and employee learning and development. The measures are linked to corporate measures and the business plan. The implementation schedule for the new compensation system, variable pay plan and balanced scorecard was reviewed. Discussion centered on the importance of defining the key priorities and appropriate weighting for the measures. Mr. Pandy reported that some of the measures are being revised to better align them with BWL goals.

Ottawa Station Matters. The Committee of the Whole resolved in closed session (6:23 p.m.) to meet with the Staff Attorney regarding strategy in connection with pending litigation related to the Ottawa Street Station. The meeting of the Committee of the Whole was then opened to the public (7:10 p.m.).

Moved by Commissioner O’Leary, seconded by Commissioner Duncan, that the Committee of the Whole Report be received and placed on file.

General Manager Pandy reported that the potential vendor has executed the Joint Pre-Development Agreement. He handed out a copy of the agreement, noting that some minor changes had been made to the document as compared to an earlier version provided to the Commissioners. Mr. Pandy reported that he received positive feedback on September 25th from the Mayor and his staff to continue to investigate the feasibility of development of a major portion of the Ottawa Street Station. He handed out an article entitled, "Telecom Hotels Come on Line," which appeared in the September 11, 2000, issue of Engineering News Record (ENR). Mr. Pandy noted that this development use is occurring all over the United States and that it is not unique to Lansing.

Motion: Following a question and answer period, motion was made by Commissioner O’Leary, seconded by Commissioner Creamer, to authorize the General Manager to enter into a pre-development agreement for the Ottawa Street Station.

Present:   Commissioners Callen, Duncan, O’Leary and Royal.
Absent:    Commissioner Aquilina

WHEREAS, The Board’s Rules of Administrative Procedures specify that the Board is to appoint a Director, Corporate Secretary and Internal Auditor, respectively, at the first regular meeting in July of each year, be it

Motion by Commissioner O’Leary, seconded by Commissioner Creamer, that the Personnel Committee Report be received.

Motion by Commissioner Callen, seconded by Commissioner O’Leary, that the resolution to reappoint the charter staff positions (#2000-9-3) be approved.

Motion by Commissioner O’Leary, seconded by Commissioner Callen, that the resolution authorizing compensation increases for the Director and General Manager, Director of Metrics and Audits, and Corporate Secretary (#2000-9-4) be approved.

GENERAL MANAGER’S RECOMMENDATIONS

Moved by Commissioner Callen, seconded by Commissioner O’Leary, that the resolution be approved.

Discussion:  General Manager Pandy reported that the resolution proposes the modification of the capital budget to include the steam reinforcement and relocation of the steam service. This was a part of the original $7.6 million estimate to serve General Motors (GM), based on a financial analysis done in October of 1998 (a copy of the analysis was handed out). Also handed out were copies of the BWL’s obligation and estimated cost for this project and the most current summary of electrical load changes for the GM’s Lansing Grand River Assembly Plant. Mr. Pandy indicated that even by GM’s own estimates, the electrical load has grown by approximately one third. Since April,1999, the load was roughly 100 percent higher than the BWL had anticipated in its conservative financial projections. Mr. Pandy reported on projected loads for GM ’s Mid-Michigan Plant in Delta Township. Based on projections, the BWL’s investment for these projects should generate more revenue resulting in a positive return earlier than the year 2004.

In response to Commissioner Callen’s question relative to anticipated costs due to increased projected demand, General Manager Pandy said that installation costs for additional substations to serve GM’s Grand River Plant will be funded by the central utilities complex development. He noted, however, that the BWL is evaluating future needs for another circuit from Eckert Station, which is not included in this year’s capital budget.

There being no objections, the order of business was slightly modified to hear the General Manager’s remarks before discussing plans for the upcoming Board Retreat.

Response to Public Comments Relative to the Union Election. General Manager Pandy responded to public comments regarding the union election issue. He acknowledged that there is a question with regard to what constitutes a "community of interest" between groups of employees. This issue relates to questions raised by some employees on whether technical and clerical employees should be represented within the same bargaining unit. Mr. Pandy reported that there was a flaw in the Michigan Employment Relations Commission (MERC) notice, which did not provide a standard ten-day notice of the election date. The manner in which MERC sent the notices to the union and to the BWL was a technical flaw that caused a delay in the election date of September 22, 2000. The purpose of ten-day notice is to allow all eligible employees an opportunity to arrange their schedules to participate in the election.

Financial Statistics and Trends. General Manager Pandy handed out copies of a financial report titled, " Selected Historical Financial Statistics and Trends for Fiscal Year ended June 30, 2000," prepared by Chief Financial Officer Dana Tousley. This information will be discussed in more detail during the upcoming Board retreat. An analysis that looks at ratios and other financial indicators is being prepared by Director of Metrics and Audits Kellie Willson and will be available shortly.

General Manager Pandy responded that Gabriel Hall is a labor relations professional who was retained by the BWL during the 1988 unionization effort. His purpose is to guide management with respect to conducting an informational campaign and the avoidance of unfair labor practices under the Public Employee Relations Act. Mr. Hall has expertise on how the Michigan Employment Relations Commission (MERC) is to conduct its affairs and what its rules are. Mr. Hall has conducted interviews with managers in an effort determine the major employee issues. Mr. Pandy and Staff Attorney Wilhite noted that it is not the role of the consultant to contact the clerical or technical employees who are eligible to vote in the election. The consultant’s contact with union officials is limited and is normally in front of a MERC official.

Staff Attorney Wilhite responded that a notice was received from MERC advising that an administrative hearing on the issue of "community of interest" is set for October 6th. The election will be set by MERC some time after the hearing.

Commissioner Duncan asked for an explanation of the BWL’s potential sale of 800 MHZ radio frequencies, as reported to the Board in the meeting packet.

General Manager Pandy responded that in the 1980’s, the BWL applied for and was successful in receiving a Federal Communications Commission (FCC) license for radio frequencies in the 800 MHZ band used by the BWL for its radio communications system, which includes an interconnect to telephone capabilities. Mainly the BWL utilizes those frequencies for its own communications; i.e., electrical and water operations and emergency situations. The BWL has provided frequency access to other City of Lansing departments such as Public Service, Forestry, and Parks and Recreation who pay the BWL for the service. Nextel Communications acquired those frequencies, which the BWL has had and operates under its license, in an FCC auction process.

On motion by Commissioner O’Leary, seconded by Commissioner Duncan, that the absences of Commissioners Christian and Murray be excused.

BWL employee, Joseph Davis, commended the Commissioners on topics chosen for their retreat. He emphasized the importance of addressing human resource management, particularly employee issues related to training and staffing and the BWL’s strategic plan. He stated that it is his hope the BWL will still be part of the community in ten or twenty years from now and that he would continue to be one of its employees.