MINUTES OF THE BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT
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Thursday, January 30, 2003
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The Board of Commissioners met in rescheduled session at 5:30 p.m. in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairman Ron Callen called the meeting to order.
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Present: |
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Absent: |
Tim Haggart –1 |
The Secretary declared a quorum present.
All said the Pledge of Allegiance.
APPROVAL OF MINUTES
Motion made by Commissioner Duncan, seconded by Commissioner Wonch, to approve the minutes of the Special Board Meeting held November 19, 2002.
Carried unanimously.
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 one spoke.
Present: Commissioners Callen, Haggart, and Marin
Excused Absence: Commissioner Royal.
Resolution 2003-1-8
The Human Resources Committee met on January 9, 2003 at 12 Noon to review
the status of the BWL Pension and Benefit Plans.
Chief Financial Officer Dana Tousley presented an overview on the role of the Human Resources Committee and its relationship to the Pension Fund Trustees. The Human Resources Committee reviews all pension plan reports on behalf of the Board and presents its recommendation to the Pension Fund Trustees. The Trustees are charged with implementing the provisions of the pension plans. The Trustees are fiduciaries and have certain duties in the administration of the Pension Fund. Oversight responsibilities include the following:
Investment policy compliance
Specific pension fund investment objectives
Diversification of the portfolio
Meeting prudent standards for selecting investment alternatives
Monitoring the fund performance
Selecting a money manager
Currently, the Chief Financial Officer is responsible for the control and management of the assets of the Defined Benefit and the Retiree Benefit Plans, as monitored by the Pension Fund Trustees. Although a process is in place, the Committee requested that staff review current internal controls in the management of pension fund assets and to explore other options, such as an outside money manager, to further enhance internal control.
The Committee also requested a review of actuarial alternatives to address the sharp increases in the recent past in the actual cost of health care insurance. Management will need to address the supplemental VEBA contribution (for retiree health benefits) the BWL makes in fiscal year 2004.
Mr. Tousley reviewed the pension plan documents. Detailed reports and disclosure information were provided in a packet to all the Commissioners prior to the meeting.
The Human Resources Committee recommends that the Pension Fund reports be referred to the Pension Fund Trustees for action.
There being no further business, the meeting adjourned at 1:00 p.m.
Moved by Commissioner Royal, seconded by Commissioner Marin, that the report of the Human Resource Committee be approved (Resolution # 2003-1-8).
Discussion: Commissioner Callen stated that during the meeting there was significant discussion on internal controls. The BWL is not in question, but the focus was on events happening in the nation and with the local United Way situation. Staff is looking into whether the BWL needs to improve its internal controls.
Action: Carried unanimously.
Present: Commissioners Callen, Duncan, Haggart, Marin, Royal (by speakerphone), Smith, and Wonch.
On January 14, 2003 (5:30 p.m.), the Committee of the Whole met to discuss and consider two multi-year contracts.
General Counsel Larry Wilhite presented an overview on the process used by a special team of staff members to select the proposed seven law firms for placement on the Board of Water and Light’s (BWL) Special Counsel Approved List for a two-year period. Eight proposals were received in response to the BWL’s request for proposals. The expertise of the seven firms selected was reviewed as well as a firm-by-firm comparison of rates, and other relevant factors. The Committee also reviewed the BWL’s legal fee expenditures for the past three fiscal years. Mr. Wilhite reported that over the next two years he and Associate Attorney, Amy Cavanaugh, plan to develop in-house expertise in four basic areas; namely, Bankruptcy, Environmental, Labor and Real Estate to reduce special counsel fees.
The Committee engaged in lengthy discussion on ways to reduce outside counsel expenditures and how large jobs could be assigned to firms on the Special Counsel Approved List.
Commissioner Callen recused himself from discussions due to a potential conflict of interest with one of the law firms on the proposed special counsel list.
Moved by Commissioner Wonch, seconded by Commissioner Haggart, the Committee of the Whole recommends the approval of the following resolution:
Resolution #2003-1-1
Special Counsel Approved List for Period Commencing February 17, 2003 to
February 17, 2005
RESOLVED, That the following law firms be placed on the Board of Water and Light Special Counsel Approved List for a two-year period commencing February 17, 2003 to February 17, 2005:
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1. |
Canady Law
Offices |
RESOLVED FURTHER, That the list be submitted to the Lansing City Attorney, and upon his recommendation and opinion, then to the Lansing City Council for final approval in accordance with the Lansing City Charter.
The Committee further requests the following:
That Workers’ Compensation Laws and Regulations be added to the list of in-house expertise.
That the names and expertise of attorneys who will be generally responsible for providing services to the BWL be provided to the Commissioners prior to the regular Board meeting on January 28, 2003. (A listing of names and expertise of attorneys who will be generally responsible for providing services is attached to this report – see Attachment A.)
That parameters be recommended to determine which special counsel services should be brought to the Board for approval prior to the work assignment. The Committee requested more information on the operational aspects of this procedure to assure the approval process does not become a barrier. (Staff’s recommended procedure is attached to this report – see Attachment B.)
That periodic updates on legal fee expenditures be presented to the Committee.
At the July 23 2002, the Board directed staff to solicit proposals for vegetation management services. A project team was assembled and an outside consultant was engaged to assist with the bidding process. The request for proposal process was reviewed by Doug Wood, Manager of System Integrity and Customer Projects.
An effective Vegetation Management program is required to provide:
Reliable electric service to the customer
Safe working conditions for employees
Safe environment for the general public with sensitivity to customer expectations at the lowest possible cost.
To meet these requirements, the BWL has adopted national standards and a policy that:
Protects the healthiness of the tree while meeting clearance requirements
Is similar to other utilities
In addition, the BWL has:
Promoted the “right tree in the right place” program through National Arbor Day, Local Nurseries and the “Louie” program.
Taller electric distribution poles than the average utility.
Made use of alternative electric line design in certain situations as necessary.
Provided information on the BWL web site.
Staff plans to develop a contract administration manual that will provide:
Requirements for contract compliance
Contractor performance evaluation criteria
BWL and contractor relationship
Staff will be evaluating other recommendations made by the consultant for implementation as appropriate; i.e., database enhancements for contract compliance and added industry benchmarking of program performance.
Moved by Commissioner Marin, seconded by Commissioner Haggart, the Committee of the Whole recommends the approval of the following resolution:
Resolution # 2003-1-2
Award Three-Year Vegetation Management Services Contract to Wright Tree
Services
Terms and conditions as provided in the November 26, 2002 Vegetation Management for Electric Lines Owned and Maintained by the Board of Water and Light specifications.
Annual vegetation management costs will be controlled by the BWL through work issued to Wright. This work will be based on obtaining a 4-5 year trimming cycle, emergencies, capital work and budget considerations. It is estimated that annual costs will be on the order of $750,000, not including the cost of capital work and major storm response, which are highly variable.
There being no further business, the meeting adjourned at 6:45.
Respectfully submitted,
Nancy Duncan, Chair Pro Tem
Committee of the Whole
Moved by Commissioner Duncan, seconded by Commissioner Smith, to approve the Committee of the Whole Report as presented.
Action: Carried unanimously.
Moved by Commissioner Duncan, seconded by Commissioner Royal, on the approval of the resolution for Special Counsel (Resolution # 2003-01-1).
Discussion: Information previously requested by the Commissioners on the law firms was provided in the Board packet. Commissioner Duncan asked if the written information satisfactorily addressed the concerns raised. Commissioner Royal stated that she was satisfied with the information, but noted that four of the 29 attorneys named were women, and that she hopes this low percentage will improve in the future. Where time is not an issue, staff recommendations will be brought to the Board; where timing is an issue, the General Manager has the authority to approve staff recommendations and report to the Board.
Action: Carried unanimously.
Moved by Commissioner Duncan, seconded by Commissioner Marin, on the approval of the resolution for Vegetation Management (Resolution # 2003-01-2).
Discussion: Commissioner Marin thanked staff for bringing more bids from which to make an informed decision. Commissioner Smith also thanked the staff for optimizing the bid process.
Action: Carried unanimously.
COMMITTEE OF THE WHOLE REPORT
Present: Commissioners Callen, Duncan, Haggart, Marin, Royal (by speakerphone), Smith, and Wonch.
On January 22, 2003 (5:30 p.m.), the Committee of the Whole met to interview three finalists for executive search services to assist the Board of Commissioners in the identification of qualified candidates for Director and General Manager of the Board of Water and Light. The finalists were Charles Blockett, Jr. & Associates, Hiring Solutions, Inc., and Langley and Associates. Following a structured oral interview and deliberation, the Committee of the Whole selected the following firm and recommends Board approval:
Resolution # 2003-1-3
Award Contract to Charles Blockett, Jr. and Associates for Executive Search Services to Select a Director and General Manager
RESOLVED, That the Interim General Manager is hereby authorized to negotiate a contract with Charles Blockett, Jr. and Associates, Inc. for “Executive Search Services – Director and General Manager, ” and be responsible for administration of the contract and progress reporting to the Board.
There being no further business, the meeting adjourned at 8:00 p.m.
Respectfully submitted,
Nancy Duncan, Chair Pro Tem
Committee of the Whole
Moved by Commissioner Duncan, seconded by Commissioner Wonch, to approve the Committee of the Whole Report.
Action: Carried unanimously.
Moved by Commissioner Duncan, seconded by Commissioner Smith, on the approval of the resolution for Executive Search Firm (Resolution # 2003-01-3).
Action: Carried unanimously.
Commissioner Callen acknowledged Mr. Blockett who was present in the audience.
Background materials on items presented are on file in the Office of the Corporate Secretary.
Resolution 2003-01-4
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RESOLVED, that a three year contract for long distance telephone service be awarded to Accxx Communications. The estimated annual price over the three-year period is $11,486.
Staff Remarks: The BWL is currently on a month-to-month agreement with Quest Communications for long distance telephone service. Current BWL bills total $1,900 per month. Bids were solicited from six vendors with only two responding. The other bidder was Quest Communications ($18,233/year). This contract is estimated to save $34,000 over the current monthly rate for the three-year period.
Moved by Commissioner Duncan, seconded by Commissioner Marin, on the approval of the resolution for Long Distance Telephone Service (Resolution # 2003-01-4).
Discussion: Commissioner Royal noted that Quest Communications was the primary supplier of service to Accxx and asked if this could cause a problem. Mr. Elashkar responded that based on economics, Accxx was considered the best value. Accxx has been in operation about three years.
Action: Carried unanimously.
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RESOLVED, that a two year contract for Internet Service be awarded to Sprint. The annual price over the two-year period is $11,220.
Staff Remarks: General Manager Elashkar reported that approximately six-years ago, the BWL contracted with PSI Net for its Internet Service. Fifteen months ago, PSI Net went bankrupt. The BWL is currently on a month-to-month agreement with Sprint to provide connectivity to the Internet for the BWL. Bids were solicited from three vendors. Sprint’s proposal results in the lowest annual cost. Other bidders were Ameritech ($10,500/year plus $1,708 changeover cost), and AT&T ($12,156/year plus $1,308 changeover cost). The contract will save the BWL $3,240 over the current monthly rate for the two year period.
Moved by Commissioner Wonch, seconded by Commissioner Duncan, on the approval of the resolution for Agreement for Internet Service (Resolution # 2003-01-5).
Discussion: Commissioner Smith expressed concern that the award was made to the same company with whom BWL had a month-to-month contract. She questioned why Sprint didn’t contact the BWL sooner stating that an extended contract was better than a month-to-month basis. General Manager Elashkar responded that the month-to-month agreement was a convenience to the BWL.
Action: Carried unanimously.
Resolution # 2003-01-6
Designated Representative and Alternate Designated Representative – Clean Air
Act
RESOLVED, That Richard Peffley and Nick Burwell are respectively named the BWL’s designated representative and alternate designated representative for the purpose of reporting to the Environmental Protection Agency (EPA) under the Clean Air Act; and
RESOLVED FURTHER, That the designated representative and alternate designated representative are authorized to bind the BWL by their respective actions, inactions and submissions with respect to the Clean Air Act.
Staff Remarks: The Clean Air Act requires the owners of an affected source to name a designated representative pursuant to 40 CFR 72.20 and recommends that the owner name an alternate designated representative pursuant to 40 CFR 72.22.
The designated representative or alternate designated representative is required to sign and certify all submissions under the Clean Air Act.
In 1993, the BWL, pursuant to Resolution No. 93-8-7 had authorized the filing of a certificate of representation naming a designated representative and alternate designated representative, John Elashkar and Roy Peffley.
On October 1994, the BWL filed a revised certificate of representation naming Jack Hill as alternate designated representative to replace retiring Roy Peffley.
On March 27, 2000, the BWL filed revised certificates of representation naming Richard Peffley and Nick Burwell as the designated and alternate designated representatives.
This resolution validates the submission of March 27, 2000 to the EPA.
Moved by Commissioner Duncan, seconded by Commissioner Marin, on the approval of the resolution for Representative and Alternate Designate representative for EPA (Resolution # 2003-01-6).
Action: Carried unanimously.
Motion to Convene in Closed Session: By Commissioner Wonch, seconded by Commissioner Smith, to go into closed session for the purpose of discussing the settlement of a litigation claim (5:55 p.m.)
Approved by a roll call vote:
Yeas: Commissioners Callen, Duncan, Marin, Royal, Smith and Wonch.
Nays: None
Absent: Commissioner Haggart.
The Board Meeting reconvened in open session at 6:15 p.m.
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WHEREAS, the Board of Commissioners, by Resolution 2001-5-9, authorized the Assistant General Manager to negotiate the terms and conditions for settlement of the litigation it has filed against its insurer in the Federal District Court, Western Division, Docket No. 5:00-CV-131 and titled as Lansing Board of Water and Light v. Deerfield Insurance Co.; and
WHEREAS, the Board of Commissioners has been advised as to the merits of the case, the potential adverse judgment, and the cost associated with this matter through trial; and
WHEREAS, the Assistant General Manager and General Counsel with concurrence of the BWL’s Special Counsel have negotiated a settlement of the litigation and recommend that the Board of Commissioners approve such settlement.
RESOLVED, That the Board of Commissioners authorize the General Manager to settle this lawsuit by paying $850,000 to Deerfield, and execute all documents related to the settlement of this matter.
Moved by Commissioner Royal, seconded by Commissioner Duncan, on the approval of the resolution for Settlement of Litigation Claim with Deerfield Insurance Co. (Resolution # 2003-01-7).
Action: Carried unanimously.
UNFINISHED BUSINESS
None.
NEW BUSINESS
None.
RESOLUTIONS
None
GENERAL MANAGER'S REMARKS
The Chairman and General Manager’s Meeting with Mayor Benavides and City Council. General Manager John Elashkar and Board Chairman Ron Callen met with Mayor Tony Benavides on January 22 to discuss BWL issues. They updated him on the executive search process and provided a chronological report on efforts to develop Ottawa Station. Mr. Elashkar will review the Mayor’s goals to determine how the BWL can participate with the City. Commissioner Callen reported that a joint meeting with the City Council is being planned for the near future to keep the Councilmembers updated on BWL transitional activities and discuss issues of mutual interest.
Survey on Employee Satisfaction This Spring. General Manager Elashkar reported that the BWL Employee Satisfaction Survey will be slightly modified to serve three purposes: 1) serve as a gauge from previous surveys to measure our progress, 2) create a base line for the new General Manager to provide a benchmark from that point forward, and 3) get feedback on the qualities and characteristics of a new General Manager. The Employee Survey will supplement the Employee Input Form on the selection of a new General Manager to be distributed separately to employees by executive search consultant, Charles Blockett, Jr.
Commissioner Callen reported that in addition to meeting with Mayor Benavides, he and General Manager Elashkar met with the City Council’s Committee of the Whole on January 23 to brief them on the executive search process and the operational and financial status of the BWL.
On behalf of the Boys and Girls Club Board, Commissioner Marin thanked the BWL for sponsoring a Boys and Girls Club event.
Commissioner Wonch commended General Manager John Elashkar and the staff for the organization’s smooth transition while the search for a new general manager is in process. She stated that the BWL’s success in continuing to function appropriately is a testament to the dedication and loyalty of the employees.
General Manager John Elashkar commended General Counsel Larry Wilhite and Assistant General Manger Bill Cook on negotiating a fair settlement of the litigation claim with Deerfield Insurance Company.
Commissioner Callen acknowledged the efforts of staff and commissioners in bringing forth each of the resolutions and issues discussed this evening.
Commissioner Callen acknowledged the presence of Paul Pratt, Assistant Ingham County Drain Commissioner and Legal Counsel, who was in the audience.
EXCUSED ABSENCE
On motion by Commissioner Wonch and seconded by Commissioner Duncan, that the absence of Commissioner Haggart be excused.
Carried unanimously.
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 one spoke.
On motion by Commissioner Royal, seconded by Commissioner Duncan, the meeting adjourned at 6:35 p.m.
/s/ Mary E. Sova, Secretary
Filed with Lansing City Clerk
February 10, 2003
ATTACHMENT A
(Per Committee of the Whole
Report of 1/14/03)
NAMES AND
EXPERTISE OF ATTORNEYS WHO WILL BE
GENERALLY RESPONSIBLE FOR PROVIDING SERVICES TO THE BWL
ATTACHMENT B
(Per Committee of the Whole Report of 1/14/03)
1. In matters where timing is not an issue such as issuance of bonds or rendering of an opinion, staff will recommend for Board approval a law firm, from the approved list, to be retained and the names of the Attorneys responsible for providing the services.
2. In matters where timing is an issue, the General Manager shall have the authority to approve staff recommendations to retain a law firm from the approved list. The General Manager shall submit to the Board a quarterly report detailing special counsel expenditures for the quarter and for fiscal year to date.