MINUTES OF THE BOARD OF COMMISSIONERS' SPECIAL MEETING

LANSING BOARD OF WATER AND LIGHT

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Tuesday, November 19, 2002
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The Board of Commissioners met in special session at 5:40 p.m. in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan.  Chairman Ron Callen called the meeting to order.

The Secretary declared a quorum present.

All said the Pledge of Allegiance.

Chairman Callen welcomed John Elashkar as the Interim General Manager.  He stated that Mr. Elashkar will be responsible for the day-to-day issues of the BWL, and will also assist in helping to fill the position for a permanent General Manager.  Chairman Callen also thanked Bill Cook for acting as interim General Manager for the past two months.

TRIBUTE

Whereas, It is with respect and appreciation that we recognize Ernest J. Christian for his dedicated service as a Second Ward Commissioner of the Lansing Board of Water and Light (BWL); and

WHEREAS, Ernest Christian was appointed to the Board of Commissioners on June 3, 1991, and served on the Board with distinction.  He was elected Chairman of the Board in 1997 and served as Chair of the Finance Committee, Chair of the Human Resources Committee, and Chair of the Nominating Committee; and

WHEREAS, Highlights of his eleven years on the Board include major Board accomplishments in areas such as overturning the potential sale of the BWL to Utilicorp in 1992; relocating the Customer Service Center and Administration Building and realigning employee work locations to renovated facilities at 730 Hazel, 830 Hazel and 1232 Haco Drive in 1998; water extensions to serve Alaiedon Township, Bath Township, City of DeWitt/DeWitt Township and East Lansing-Meridian Township (1999-2000); construction of a new central utilities complex to serve the General Motors Grand River Assembly Plant and construction of a chilled water system to serve downtown buildings (2000-2001); and

WHEREAS, Ernest Christian has served with consistent professionalism and integrity.  His role as a Commissioner provided expertise in financial reporting and analyses.  His leadership guided the Board’s mission of assuring that electric, water and steam are reliable and delivered at the lowest price possible.

RESOLVED, That the Board of Water and Light Commissioners hereby expresses grateful thanks and appreciation to Ernest J. Christian for his dedicated service on this Board.  In Special Session this 19^th day of November, 2002, we wish Ernest and his family the very best and well-deserved happiness and fulfillment.

Discussion:  Commissioner Duncan thanked Ernest Christian for his service to the BWL and wished him well in the future.

Moved by Commissioner Royal, seconded by Commissioner Callen, that the resolution be approved.

Action:  Carried unanimously.

APPROVAL OF MINUTES

Motion made by Commissioner Wonch, seconded by Commissioner Haggart, to approve the minutes of regular session held October 22, 2002 and special session held October 25, 2002.

Carried unanimously.

Moved by Commissioner Wonch, seconded by Commissioner Marin, to approve the minutes of the Closed Meeting held October 25, 2002

Action:  Carried unanimously.

PUBLIC COMMENTS

THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING.

No persons spoke.

COMMUNICATIONS

No communications or petitions.

EXECUTIVE COMMITTEE REPORT

The Executive Committee met on November 12, 2002 at 5:30 p.m. for the purpose of reviewing a draft Request for Proposal (RFP) for Executive Search Services for a Director and General Manager of the Board of Water and Light.

Committee members in attendance were Chair Ron Callen, Vice Chair Diane Royal and Commissioner Marin.  Commissioners Tim Haggart, Robin Smith, and Nancy Wonch were also present.  Committee member Nancy Duncan was absent.

The Committee recommended changes to the draft and agreed to review a final draft before sending out the Request for Proposal (RFP) for Executive Search Services.  It is anticipated the RFP will be mailed the week of November 18, 2002.  Selection of a search firm should be made by the end of December.

It is the intent of the Commissioners for the executive search to be an open process.  As the search process moves forward, the Commissioners agreed on the importance of involving customers, employees and retirees, and community leaders in obtaining their views in the selection of a Director and General Manager.  Interim General Manager John Elashkar will develop a flowchart detailing the search process and timetable for broad publication.  No action was taken at this meeting.

The meeting adjourned at 7:12 p.m.

Respectfully submitted,
Ronald C. Callen, Chair
Executive Committee

Moved by Commissioner Haggart, seconded by Commissioner Marin, that the Executive Report be approved as presented.

Action:  Carried unanimously.

GENERAL MANAGER’S RECOMMENDATIONS

Background materials on items presented are on file in the Office of the Corporate Secretary.

The BWL purchased a Mudcat SP-915 Dredge (Dredge) in 1986 for the purpose of reclaiming sludge from the Riverside storage ponds; and

The BWL stopped using the Dredge for this purpose in 1988 when it completed removal of the two lower ponds; and

Synagro Midwest, pursuant to a Rental Contract dated August 13, 2002, rents the Dredge; and

The Rental Contract allows Synagro to purchase the Dredge subject to the requirements of the BWL Purchasing Policy and the Lansing City Charter; and

Synagro, pursuant to a letter from Mark Miller, Operations Director, has offered to purchase the Dredge; and

BWL staff has reviewed the request and recommends that the Board accept the offer; and

The BWL Purchasing Policy requires the Board to approve disposal of obsolete assets with a fair market value of over $15,000; and

Disposal of such assets may be made by competitive bid, public auction, or other appropriate means.

RESOLVED, That the Board authorize the General Manager and Corporate Secretary to execute a Bill of Sale conveying to Synagro Midwest, Inc. the BWL’s Mudcat SP-915 Dredge for the sum of $21,090, calculated as $25,000 minus $3,910 in rental fees paid by Synagro since August 13, 2002.

Staff Remarks:  The Board purchased the Dredge in 1986 for reclaim of lime sludge from the BWL’s Riverside storage ponds.  The original purchase price was $109,905.  The Dredge was used for this purpose from 1986-1988.

Discussion:  Commissioner Wonch asked if this was an “as is sale.”  Interim General Manager Elashkar responded that it is, and also that the dredge will not be needed by the BWL in the future.

Moved by Commissioner Royal, seconded by Commissioner Marin, that the resolution be approved.

Action:  Carried unanimously.

Resolution # 2002-11-4
SECOND AMENDMENT TO DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS

RESOLVED, That the Second Amendment to the Lansing Board of Water and Light Defined Benefit Plan (DB) for Employee’s Pension is hereby adopted effective as stated therein; and

RESOLVED FURTHER, That the Second Amendment to the Lansing Board of Water and Light Employee’s Defined Contribution (DC) Pension Plan is hereby adopted effective as stated therein; and

RESOLVED FURTHER, That the Chairman of the Board of Commissioners and the Corporate Secretary are hereby authorized to execute said Second Amendments and related documents on behalf of the BWL.

Staff Remarks:  These amendments relate to changes in federal law contained in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).  The amendments must be adopted prior to December 31, 2002.  The amendments listed below do not change any employee benefits, but do change some of the limitations imposed by law in each plan.

DB Plan

Section 3.C – Annual Compensation Limit changes from $150,000 to $200,000
Section 8.B.4(f) – Defined Benefit Dollar Limit changes from $90,000 to $160,000
Section 9.A.8(b) – Plan will now allow rollovers to 403(b) plans and 457(b) plans.

DC Plan

Section 2.1(h) – Annual Compensation Limit changes from $150,000 to $200,000
Section 5.3(d)(8) – Maximum Annual Addition changes from $35,000 or 25% of compensation to $40,000 or 100% of compensation
Section 6.4(b)(3)[b] and Section 4.4 – plan will now allow rollovers to 403(b) plans and 457(b) plans.

Participants in both plans will receive notice in the form of a letter describing the plan amendments.  Submission to the IRS for a determination letter is not required, since this language has been pre-approved by the IRS.

Discussion:  Commissioner Royal asked if the employees have been informed of this change.  Chief Financial Officer Dana Tousley stated that he would be sending an informal letter to employees notifying them of the change.  These changes are effective as of January 1, 2002, and are mandated by federal law.

Moved by Commissioner Royal, seconded by Commissioner Wonch, that the resolution be approved.

Action:  Carried unanimously.

Resolution # 2002-11-5
AMENDMENT TO THE BOARD’S RULES OF ADMINISTRATIVE PROCEDURE

RESOLVED, That Sections 1.1.1, 1.1.2 and 2.1 of the Rules of Administrative Procedure be amended to change the frequency of regular Board meetings as follows:

1.1.1    The Board of Water and Light (BWL) Commissioners shall hold regular quarterly BIMONTHLY meetings on the fourth Tuesday OF THE MONTH in the Board Room, 1232 Haco Drive, or at such other place as the Board shall determine, unless a regular meeting is rescheduled as provided herein.

1.1.2    A schedule of dates, places and times for each regular quarterly BIMONTHLY meeting to be held during the calendar year shall be adopted by the Board in October NOVEMBER of each year.

2.1       Publication of Dates

A notice listing the dates of the regular meetings shall be published annually in a newspaper of general circulation in Ingham County at least three days prior to the time of the regularly scheduled meeting in January.  At the regularly scheduled meeting in October NOVEMBER of each year, the Board shall name the newspaper in which the notice shall be published.

Discussion:  Corporate Secretary Mary Sova stated that this change will need to go to the City Attorney for approval as to form.  The rules will then be transmitted to the City Council and will become effective after their approval.  Commissioner Callen noted that the quarterly Board meetings were not frequent enough to take care of the many duties of the Board.

Moved by Commissioner Royal, seconded by Commissioner Duncan, that the resolution be approved.

Action:  Carried unanimously.

Resolution # 2002-11-6
BOARD MEETING SCHEDULE

RESOLVED, That regular meetings of the Board of Commissioners be set for calendar year 2003 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings:

2003

Meetings will be held in the Board Room located in the Board of Water and Light Customer Service Center, 1232 Haco Drive, Lansing, at 5:30 p.m.

RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing State Journal the week of January 5, 2003.

Moved by Commissioner Marin, seconded by Commissioner Wonch, that the resolution be approved.

Action:  Carried unanimously.

TREE MAINTENANCE SERVICE CONTRACT (see amendment below)

RESOLVED, That the Interim General Manager be authorized to extend the current contract for utility tree maintenance service with Nelson Tree Service, Inc. for a one month period of January 1, 2003 through January 31, 2003.

Moved by Commissioner Wonch, seconded by Commissioner Duncan, that the resolution be approved.

Discussion:  As background information, The Board approved Resolution No. 2002-7-6 on July 23, 2002, which authorized staff to continue to use Nelson Tree Service for the period January 1, 2002 through December 31, 2002.  It also directed staff to proceed with issuing a Request for Proposals (RFP) for a “Tree Maintenance Service Contract” for Board approval and a new contract effective January 1, 2003.

Interim General Manager Elashkar requested the Board’s consent to extend the deadline from December 31, 2002 to January 31, 2003 to provide staff additional time to develop a performance driven RFP.  Following discussion, the Commissioners concurred that the January 31^st deadline date was not realistic and suggested extending the date by two months to allow staff sufficient time to put together a comprehensive package and conduct a thorough evaluation of the bids. It was clarified that two months meant not later than the end of February 2003.  Commissioner Royal noted that the tree-trimming contract has been under scrutiny by the Board for several months now, and reminded that timing in awarding a new tree-trimming contract is of the essence.  Interim General Manager Elashkar stated that his goal is to present the team’s proposal to the Finance Committee in mid-January for review and subsequent Board approval on January 28, 2003.

Moved by Commissioner Wonch, seconded by Commissioner Smith, to amend the resolution as follows:

Resolution # 2002-11-7
RESOLVED, That the Interim General Manager be authorized to extend the current contract for utility tree maintenance service with Nelson Tree Service, Inc. for a one month period of January 1, 2003 through January 31, 2003. not to exceed two months from January 1, 2003.

Action:  Carried unanimously.

On a related issue, Commissioner Callen noted that all contracts are being reviewed by the Material and Services Management Resource Center to identify sole source contracts that need to be evaluated.  A report will be submitted to the Board on this matter in the near future.

UNFINISHED BUSINESS

There was no unfinished business.

OLD BUSINESS

There was no old business.

NEW BUSINESS

There was no new business.

RESOLUTIONS

WHereas, It is with great appreciation for his many contributions to the Lansing Board of Water and Light and to the people of the City of Lansing that we honor Charles M. Creamer; and

WHEREAS, Charles (Charlie) Creamer was appointed to the Board of Commissioners of the Lansing Board of Water and Light on October 6, 1997 as an at-large member.  During his term on the Board, he was elected Chair Pro Tem and Vice Chair.  He also served on the Executive, Finance and Nominating Committees; and

WHEREAS, During Charlie’s five years of service on the Board, he was highly committed to his role as an officer of the City and contributed to the common good of the Board of Water and Light and the City of Lansing.  He was always prepared and thoughtful during all deliberations and his knowledge and expertise on matters of governance, policy, and business enterprise was invaluable.

WHEREAS, On behalf of his colleagues, employees of the Board of Water and Light, and the citizens of Lansing, we offer our sincere gratitude for the time, energy, and talent he devoted as a Commissioner of the Board of Water and Light; and

RESOLVED by the Board of Commissioners, That a unanimous accolade of praise and tribute is accorded Charlie Creamer for his many contributions to the Lansing Board of Water and Light and to citizens of the Lansing community.  In Special Session this 19^th day of November, 2002, we wish Charlie and his family our best wishes for the future and continued success.

Moved by Commissioner Callen, seconded by Commissioner Duncan, that the resolution be approved.

Action:  Carried unanimously.

GENERAL MANAGER'S REMARKS

John Elashkar to Draft an Action Plan.  Interim General Manager John Elashkar thanked Commissioner Callen for his remarks at the beginning of the meeting and for the confidence shown him by the Board.  He stated that he is in the process of meeting with staff, employees and Commissioners to obtain input on the issues facing the Board of Water and Light.  An action plan with a framework for the organization to move on and be ready to meet the challenges of the future will be assembled to present to the Commissioners.  The plan will form the basic criteria as well as setting performance standards for the next Director and General Manager.  Mr. Elashkar noted that over the next few months, the Commissioners will make a significant time commitment during the search process in the selection of an executive search firm and a new Director and General Manager.  Mr. Elashkar is in the process of preparing an executive search activities flowchart with target dates for review by the Commissioners.

Belle River Bonds Refinanced.  Interim General Manager Elashkar reported that the Michigan Public Power Agency (MPPA) refinanced more than $280 million of Belle River Revenue Bonds.  The annual savings associated with this refunding are on the order of $2.9 million per year.  The associated BWL savings are 64.29% of the MPPA total or $1,864,400 per year.  The refinancing rate went from 5.2% to a new refinancing rate of 3.9%.

Fuel Supply Coal Price Reduction for 2003.  Interim General Manager Elashkar reported that the BWL currently maintains two, two-year coal supply agreements.  Both agreements cover the years 2002 and 2003.  Each agreement provides the BWL with the opportunity to establish a market price realignment after the first year fixed price.  As a result, coal prices will be reduced approximately 7% for deliveries in 2003.  This translates to approximately $3.5 million on the coal burn requirement on an annual basis.  An extension will be renegotiated next year or new contracts will be drawn up.

Energy Cost Adjustment.  Interim General Manager Elashkar reported that the Energy Cost Adjustment (ECA) permits the monthly adjustment of retail rates for the purpose of recovering the actual cost incurred of supplying electricity to retail customers.  This adjustment enables the BWL to charge or credit, in any given month in order to take changes in the price of electricity and/or fuel into account.  All residential and general service rates are subject to the ECA.

In February 1999, the BWL froze its ECA at $.001 per kwh sold.  The rationale for the freeze was to accumulate revenue during a period when fuel costs were declining, in order to pay for BWL investments required to permit the burning of a lower cost fuel.  The freeze remains in effect until February 2, 2003.  Staff is currently reviewing this issue and its applicability for the future. 

Vulnerability Assessment.  Commissioner Duncan asked for information on the Vulnerability Assessment.  Commissioner Royal noted for the record that Special Projects Director Clyde Dugan provided an update on the Water Vulnerability Assessment in closed session (November 19, 2002), and the Commissioners did concur with the information that was presented.

COMMISSIONERS’ REMARKS

Commissioner Royal welcomed John Elashkar.  She also thanked BWL employees for their open-mindedness and new ideas brought forward identifying issues to better the BWL.
Commissioner Haggart welcomed John Elashkar, thanked Bill Cook for acting as interim General Manager, and thanked BWL employees for their support of the Capital Area United Way Campaign.

Commissioner Wonch welcomed John Elashkar, thanked Bill Cook, and also thanked BWL employees for the support and enthusiasm that has been exhibited for the Commissioners’ determination in moving the BWL forward.

Commissioner Marin welcomed John Elashkar and thanked Bill Cook.  She expressed her appreciation to administration and the union for working together to resolve differences in order to move forward.  Commissioner Marin reported on the American Public Power Association (APPA) Policymakers’ Workshop, which she recently attended.  She will be providing an informative article handed out at the seminar entitled “Legal Responsibilities of Boards.”

Commissioner Smith welcomed John Elashkar and expressed her appreciation for the wealth of experience he brings to the BWL.  She also thanked Bill Cook for stepping in at a critical time, and also all the employees for the unity that has been expressed through a difficult time.  She thanked staff and the Board for the thoroughness of the training provided for Commissioners.

Commissioner Callen stated that he is pleased John Elashkar is willing to meet with the Commissioners individually in order to better understand the BWL’s new direction.  Commissioner Callen noted that the review of the Request for Proposal for Executive Search Services has been completed for mailing on November 20, 2002.  Bids from the search firms are due on December 6, 2002.  Commissioner Callen handed out an article from BUSINESS WEEK entitled “The Best and Worst Boards,” dated October 7, 2002.

EXCUSED ABSENCE

None.

PUBLIC COMMENTS

THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT.

No persons spoke.

CLOSED SESSION

Moved by Commissioner Royal, seconded by Commissioner Marin, that the Board move into Closed Session to continue discussion of a confidential written legal opinion (6:30 p.m.).

Action:  Adopted by roll call vote:

ADJOURNMENT

On motion by Commissioner Royal, seconded by Commissioner Marin, the meeting adjourned at 7:44 p.m.

/s/ Mary E. Sova, Secretary
Filed with Lansing City Clerk
November 26, 2002