MINUTES OF THE
BOARD OF COMMISSIONERS' SPECIAL MEETING
LANSING BOARD OF WATER AND LIGHT
_________________________
Tuesday, July 8, 2003
___________________________
The Board of Commissioners met in a Special Meeting in the Boardroom of the
Administrative Offices, 1232 Haco Drive, Lansing, Michigan.
|
Present: |
Commissioners Ronald C. Callen, Nancy
W. Duncan, Tim Haggart, Ifield P.
Joseph (arrived at 5:35 p.m.), Connie
Marin, Diane R. Royal, Robin M. Smith, and Nancy A. Wonch. |
|
Absent: |
None. |
The Acting Secretary declared a quorum present.
Chair Callen called the meeting to order at 5:30 p.m.
Motion made by Commissioner Royal, seconded by Commissioner Marin, to approve the minutes of the regular meeting held May 27, 2003.
Carried unanimously.
Motion made by Commissioner Royal, seconded by Commissioner Duncan, to approve the minutes of the special meeting held June 7, 2003.
Carried unanimously.
Motion made by Commissioner Royal, seconded by Commissioner Wonch, to approve the minutes of the special meeting held June 10, 2003.
Carried unanimously.
THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON THE SUBJECT OF THE SPECIAL MEETING.
Director of Communications John Strickler introduced and thanked Police Chief Mark Alley for his role as chair of the HOPE Scholarship Fund. This fund provides scholarships to attend Lansing Community College to Lansing middle school students if they promise to stay in school and make good grades. Board Chair Ron Callen presented a check in the amount of $14,247.69 to Chief Alley. The check represents half the proceeds from this year’s Chili Cook-Off. Chief Alley stated that to date they have raised $1.7 million towards the goal of $2.5 million. Several of the Commissioners commended Chief Alley on the excellent program that is benefiting young people.
EXECUTIVE COMMITTEE REPORT
Commissioners Present: Ron Callen, Nancy Duncan and Diane Royal.
Staff Present: Interim General Manager
John Elashkar, Director of Metrics and Audits Kellie Willson, and Corporate
Secretary Mary Sova.
The Executive Committee met on June 20, 2003 at 1:30 p.m. to discuss the framework of an Employment Agreement for the new Director and General Manager of the Board of Water and Light.
The structure of the employment agreement will be based on the following:
· Employment Term
· Compensation
· Housing Incentive
· Moving Expenses
· Benefits
- Paid Time Off
- DC Pension Plan
- Group Life and Health Insurance
- Dental
- Flexible Spending Account
- Deferred Compensation
- Other disability insurance plans
and employee welfare benefits made available
generally to management employees of
the BWL
- Vacation
- Automobile
- Club Memberships
· Reimbursement of Expenses
· Termination
· Disputes
· Duties
Once a final Employment Agreement is negotiated with Sanford B. Novick, it will be submitted to the Board for approval.
There being no further business, the meeting adjourned at 2:30 p.m.
Respectfully submitted,
Ronald C. Callen, Chair
Motion made by Commissioner Wonch, seconded by Commissioner Marin, to approve the minutes of the Executive Committee Meeting held June 20, 2003.
Carried unanimously.
Resolution
2003-7-1
AMEND BOARD RESOLUTION 2003-6-8 AND EXTEND THE TIME TO NEGOTIATE AN
EMPLOYMENT AGREEMENT WITH SANFORD NOVICK
WHEREAS, the negotiation of the General Manager Employment Agreement with Mr. Sanford Novick has been delayed because of his travel, and
WHEREAS, the Executive Committee and Mr. Sanford Novick have been negotiating in good faith.
NOW THEREFORE BE IT RESOLVED, That the Board Resolution #2003-6-8 be amended to authorize the Executive Committee to continue the negotiation with Mr. Novick until a mutually satisfactory agreement is reached, but in any event no later than August 1, 2003.
Moved by Commissioner Duncan, seconded by Commissioner Marin, on the approval of the Resolution to Amend Board Resolution #2003-6-8 and Extend the Time to Negotiate an Employment Agreement with Sanford Novick (Resolution # 2003-7-1).
Discussion: Commissioners expressed concern over the
length of time it is taking for an agreement to be reached with Mr.
Novick. General Manager Elashkar
reported that he faxed the Employment Agreement to Mr. Novick on July 3; Mr.
Novick sent it to a friend for review.
He also reported that Mr. Novick will be in Lansing the week of July 21
and will bring the employment agreement with him. Commissioner Callen said he has talked with Mr. Novick and that
agreement in principle has been reached with Mr. Novick, and he will begin
employment in August, 2003. The
Commissioners asked that the process be expedited. General Manager Elashkar agreed to contact Mr. Novick and convey
the wishes of the Board. The Board
would like to have final approval of the agreement at the Board Meeting on July
22.
Action: Carried unanimously.
Resolution 2003-7-2
AMEND BOARD RESOLUTION 2002-10-5 TO EXTEND THE EMPLOYMENT TERM OF
THE INTERIM GENERAL MANAGER
WHEREAS, Board Resolution #2002-10-5 authorized the Executive Committee to negotiate an Employment Agreement with the Interim General Manager, and
WHEREAS, the Term of the Employment Agreement with the Interim General Manager expired on July 1, 2003, and
WHEREAS, the Employment Agreement with the new General Manager has not been negotiated and the new General Manager hired.
NOW THEREFORE BE IT RESOLVED, That the Board authorizes the Executive Committee to negotiate with the Interim General Manager a mutually agreed upon extension to the Term of the Employment Agreement.
Moved by Commissioner Wonch, seconded by Commissioner Royal, on the approval of the Resolution to Amend Board Resolution #2002-10-5 to Extend the Employment Term of the Interim General Manager (Resolution #2003-7-2).
Action: Carried unanimously.
Residential Customer Survey. Communications Director John Strickler
presented the results of the Residential Customer Survey. The customer survey is conducted by Market
Strategies, Inc. (MSI), a marketing research group based in Livonia. MSI surveys a large number of electric and
gas utility customers; they are able to give good benchmark data so that BWL
can compare itself with other electric utilities. MSI surveys approximately 70 utilities, most are investor owned
and some are public utilities. The
survey showed modest improvements from 2002 in Favorability. The BWL compares favorably in electric rate
perception and customer service.
|
CATEGORY |
ELECTRIC |
WATER |
RATING |
|
Overall Satisfaction |
86 |
79 |
from 2002 |
|
Favorability |
80 |
from 2002 |
|
|
Value of product delivered |
86 |
85 |
from 2002 |
|
Reasonableness of rates |
77 |
75 |
electric = - water from 2002 |
|
Reliable service |
93 |
93 |
electric = - water ¯ from 2002 |
|
Restoration |
87 |
76 |
from 2002 |
|
Service reputation |
83 |
85 |
from 2002 |
Twenty-two percent of customers surveyed indicated they would consider leaving
the BWL if another utility was available that offered the same rates as the
BWL. This is of concern, yet is
consistent with past surveys. It
underscores the importance to keep BWL rates 10% below our competition. Commissioners expressed a concern on the
number of African/Americans surveyed.
It was noted that the number of minorities surveyed is not an accurate
representation of our demographics. The
survey indicated that customers are pleased with the telephone and walk-in
service provided by the BWL, knowledge of employees in responding to their
billing concerns, and the readability of BWL bills.
MANAGER’S RECOMMENDATIONS
Background materials on items presented are on file in the Office of
the Corporate Secretary.
Resolution 2003-7-3
CLEAN AIR ACID PROGRAM
WHEREAS, the BWL as a regulated source, desires to comply with the Clean Air Act Acid Rain program which regulates emissions of pollutants such as sulfur dioxide (S02) and Nitrogen Oxides (NOx); and
WHEREAS, the BWL is required to maintain a reliable supply of electricity sufficient to serve the needs of its customers; and
WHEREAS, the BWL desires to utilize the most cost-effective strategy of complying with air emission limits for regulated sources while maintaining a reliable supply of electricity to its customers; and
WHEREAS, the purchase, sale and trade of emission allowances is deemed to be a cost effective strategy of complying with the Clean Air Act; and
WHEREAS, the BWL Board of Commissioners have appointed a Designated Representative and Alternate Designated Representative who are authorized to legally bind the BWL in matters pertaining to the Acid Rain program; and
WHEREAS, the General Manager, after consultation with the Designated Representative and Alternate Designated Representative, desires to establish guidelines for the purchase, sale and trade of emission allowances and to make such purchases, sales and trades of allowances as necessary to maintain a reliable supply of electricity for its customers.
RESOLVED, That the Board of Commissioners authorizes the General Manager to establish guidelines for the purchase, sale and trades of emission allowances and to make such purchases, sales and trades of emission allowance as necessary to maintain a reliable supply of electricity to its customers and comply with the Clean Air Act in a cost effective manner.
Moved by Commissioner Wonch, seconded by Commissioner Duncan, on the approval of the Resolution on Clean Air Acid Program (Resolution #2003-7-3).
Discussion: A quarterly report will be given to the Commissioners on what was sold and traded.
Action: Carried unanimously.
Resolution 2003-7-4
RELEASE OF EASEMENT – EASEMENT NO LONGER NEEDED FOR THE OPERATIONS OF BOARD
OF WATER AND LIGHT
WHEREAS, Donald R. DuCharme and Marlene DuCharme, husband and wife granted an easement to the City of Lansing, a Michigan municipal corporation and the Board of Water and Light forever, such rights as recorded in Liber 514 of Miscellaneous Records, Page 983-5, in the Register of Deeds, Eaton County, Michigan, July 14, 1976; and,
WHEREAS, Dennis M. and Diana L. McPhee, husband and wife, the new land owners of Parcel 7, Original Plat, Delta Township, Eaton County, Michigan have requested the release of the easement, more specifically described as follows:
Property Description: The West 68.73 acres, more or less, of the East fraction of the Southwest fractional quarter (1/4) of Section 4, Town 4 North, Range 3 West, Delta Township, Eaton County, Michigan, except that parcel of the said East fraction commencing at the Southwest corner of said East fraction of the Southwest fractional ¼; thence N00°29’05”W, 716 feet; thence N89°29’35”E, 487 feet; thence S00°29’05”E, 716 feet; thence S89°29’35”W, 487 feet to the place of beginning.
Easement Description: Beginning at a point N89°29’35”E, 1320.18 feet and N00°29’05” W, 716.0 feet from the Southwest corner of Section 4, Town 4 North, Range 3 West, Delta Township, Eaton County, Michigan; thence N89°29’35”E 487.0 feet; thence S00°29’05”E, 666.0 feet; thence N89°29’35” E, 20.0 feet; thence N00° 29’05”W, 686.0 feet; thence S89°29’35” W, 487.0 feet; thence N00°29’05” W to the bank of the Grand River; thence Southwesterly along the bank of the Grand River to the West property line; thence S00°29’05” E to the point of beginning.
WHEREAS, this easement is not needed for the operations of the Board of Water and Light.
NOW THERFORE BE IT RESOLVED, That the Board of Commissioners of the Board of Water and Light release, discharge and vacate the easement on the above described property and that the Mayor of Lansing is authorized to execute the release of easement, subject to the approval of Lansing City Council. Further that the Corporate Secretary be directed to record the release of easement with the Eaton County Register of Deeds.
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Staff Remarks: Dennis M. and Diana L. McPhee,
requests that the Board of Water and Light vacate this general easement that is
no longer needed.
Moved by Commissioner Joseph, seconded by Commissioner Marin, on the approval of the Resolution to Release an Easement no longer needed for Operations of the Board of Water and Light (Resolution #2003-7-4).
Discussion: There will be no cost to the BWL.
Action: Carried unanimously.
Resolution 2003-7-5
BUDGET MODIFICATIONS – ERICKSON STATION WESTERN COAL CONVERSION AND
ECKERT STATION NOx COMPLIANCE PHASE 2 PROJECT
RESOLVED, That the budget for the Erickson Station Western Coal
Conversion, Phase 1 & 2 Project (Proj. No. 99-106) be increased from
$20,705,000 to $25,725,000. This project includes modifications to safely and
efficiently burn Powder River Basin (PRB) coal and install overfire air. These
modifications will reduce Plant NOx emissions to comply with Clean Air Act
(CAA) Regulations and reduce fuel costs.
The increased budget costs are due to required modifications not
included in the original project scope, and actual equipment and material costs
and estimated installation costs, which exceed original estimates. The original project budget was developed by
staff utilizing a Western Coal Conversion Study completed by Sargent &
Lundy in 1997.
BE IT FURTHER RESOLVED, That the budget for the Eckert Station NOx Compliance Phase 2 Project (Proj. No. 02-130) be decreased from $4,275,000 to $3,275,000. This project includes overfire air installations and burner modifications on each boiler for Eckert Units 1 – 6. These modifications will reduce Plant NOx emissions to comply with the CAA Regulations. To date the overfire air and burner modifications have been completed on four of the six Eckert boilers. Costs have been less than the original budget and the full load NOx emissions reduced more than the original project projections.
--------------------
Staff Remarks: These recommended budget changes increase
the total cost for both projects from $24,980,000 to $29,000,000 or
approximately a 15% increase. The BWL
NOx Reduction Strategy proforma completed in January 2002 estimated a 15 years
present worth of $9,006,584 (included both Projects 99-106 and 02-130). The proforma included projections for
capital costs, future generation levels, PRB fuel cost reductions, MDEQ NOx
allowances, NOx reductions using PRB coal, NOx reductions for overfire air and
burner modifications and the purchase cost for NOx allowances. Based on the total capital cost increase of
$4,020,000 the proforma for 15 years present worth is reduced from $9,006,584
to $5,301,935. This is the only
remaining viable alternative that had a positive present worth in the initial
proforma. In accordance with the
original NOx Reduction Strategy, staff will continue to evaluate remaining work
to identify areas where these cost increases can be minimized.
--------------------
Moved by Commissioner Duncan, seconded by Commissioner Wonch, on the approval of the Resolution for Budget Modifications – Erickson Station Western Coal Conversion and Eckert Station NOx Compliance Phase 2 Project (Resolution #2003-7-5).
Discussion: The Commissioners questioned what will be done differently in the future to assure more accurate estimates. General Manager Elashkar reported that he has been working to improve the capital project process and associated controls.
Action: Carried unanimously.
Resolution 2003-7-6
SALE OF REAL PROPERTY – 1016 HEALD PLACE
WHEREAS, the following parcel, located at 1016 Heald Place, in the City
of Lansing, is no longer needed for the operation of the Board of Water and
Light.
Description: Lot
5, Block 13, of “Lansing Improvement Company’s Addition to the City of Lansing,
Michigan”, L. 2, P. 14 of Ingham County, Michigan Plats. A drawing of the parcel is shown in the
attached Exhibit “A”
NOW THEREFORE BE IT RESOLVED, That the General Manager and Corporate
Secretary are authorized to sign all documents necessary to convey this parcel
to Frook Plumbing & Mechanical, Inc. for the sum of $12,000.
FURTHER RESOLVED, That this sale is expressly conditioned upon the
following: Approval of the Lansing City Council and compliance with any other
limitations contained in the Lansing City Charter or Codified Ordinances of the
City of Lansing.
Staff Remarks: In the past, the BWL utilized this property
for a well site which contained Well 30-07.
This well was abandoned and plugged in June 2002 due to contamination of
the groundwater in the area. This
parcel was identified in a FY2002 study as property no longer needed for BWL
purposes and listed for consideration of future disposal. As the adjacent property owner on both sides
of this parcel, Frook Plumbing & Mechanical, Inc. has expressed an interest
in purchasing this parcel. The $12,000 price was arrived at as follows:
Appraised value of the property
|
$ 5,000 |
|
BWL make ready
costs (estimated) |
$ 4,500 |
|
Cost of appraisal |
$ 1,500 |
|
Misc. BWL overhead
costs |
$ 1,000 |
|
Proposed sale
value or cost |
$12,000 |
Moved by Commissioner Wonch, seconded by Commissioner Duncan, on the
approval of the Resolution for Sale of Real Property (Resolution #2003-7-6).
Action: Carried unanimously.
Informational Item – BWL Property on Grand Avenue. Commissioner Callen asked why the BWL is leasing two parking
lots on Grand Avenue to Lansing Community College rather than selling the
property. General Manager Elashkar
responded that Triangle LLC has an option to purchase this property, so the BWL
cannot sell it. LCC understands that
the property may be sold.
None.
MANAGER’S REMARKS
Restructuring Chilled Water Debt. General Manager John Elashkar reported on
one item on the Finance Committee Agenda.
The BWL is proceeding with restructuring the chilled water debt to
pre-refund bonds to take advantage of low interest rates. As of July 8, 2003, the rate of interest was
3.7% as compared to the 4.1% shown on the agenda. This should reduce the debt service on the chilled water bonds by
about $1million per year.
COMMISSIONERS’ COMMENTS
Commissioner Joseph commented on the APPA Conference he
recently attended. He enjoyed the
wealth of experiences and thanked the BWL for the opportunity to attend this
function.
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.
EXCUSED ABSENCE
None.
Commissioner Joseph left at 6:40 PM.
Moved by Commissioner Royal, seconded by Commissioner Marin, that the Board convene in Closed Session to discuss pending litigation (6:40 p.m.).
Action: Adopted by roll call vote:
|
Yeas: |
Commissioners
Callen, Duncan, Haggart, Marin, Royal, Smith |
|
Nays: |
None |
|
Abstentions: |
|
|
Absent: |
Commissioner Joseph. |
OPEN SESSION
The Board returned to open
session at 8:10 p.m.
Resolution 2003-7-7
LAWSUIT OF JOSEPH PANDY, JR.
At a special meeting of the Board of Commissioners of the Lansing Board of Water & Light held on Tuesday, July 8, 2003, the following resolution was offered by Commissioner Tim Haggart and seconded by Commissioner Connie Marin.
WHEREAS, on September 10, 2002, the Board of Commissioners determined not to continue the employment of the then acting General Manager, Joseph Pandy, Jr., and
WHEREAS, at the time, the Board of Commissioners chose not to publicly state in a formal resolution the reasons for the Board’s determination to end Mr. Pandy’s employment relationship so as to avoid a public discourse that could impair the former General Manager’s future opportunities and since, as an “at-will” employee, no specific reasons were required to be stated, and
WHEREAS, upon discovery of additional bases that supported the Board of Commissioners’ September 10, 2002 action, the Board saw no reason for formal action on those bases for the reasons previously stated herein, and
WHEREAS, Mr. Pandy has now filed a lawsuit against the Lansing Board of Water & Light (“LBWL”) that challenges the Board of Commissioners’ action on September 10, 2002, which lawsuit asserts, in part, that Mr. Pandy’s employment was terminated without cause, and
WHEREAS, cause for termination of Mr. Pandy’s employment existed at the time of his termination and was also evidenced by facts discovered after September 10, 2002.
THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS AS FOLLOWS:
1. Although the Board of Commissioners firmly believes that the General Manager served “at will,” on and before September 10, 2002, cause existed that warranted the termination of Mr. Joseph Pandy, Jr. and such cause constituted willful gross misconduct that was seriously injurious to the LBWL. Further, subsequent to September 10, 2002, the Board of Commissioners learned of additional conduct by Mr. Pandy that would also constitute cause for his termination.
2. The facts that the Board of Commissioners finds constituted cause for Mr. Pandy’s termination generally include, but are not limited to, the following:
A. Mr. Pandy directed that significant contracts for the provision of water service be executed that contained terms and rates that were injurious to the interests of the LBWL and its customers.
B. Mr. Pandy directed that significant contracts for the provision of chilled water service be executed that contained terms and rates that were injurious to the interests of the LBWL and its customers. Mr. Pandy’s acts in this regard were particularly egregious because his choice of technology to be used was more expensive to install and operate thereby subjecting the LBWL and its customers to unnecessary cost and continuing expense.
C. Mr.
Pandy committed breaches of trust by withholding information from the Board of
Commissioners, failing to disclose critical information on matters before the
LBWL, and failing to properly research critical issues, all of which
jeopardized the Board of Commissioners’ ability to fulfill its duty to the LBWL
and its customers.
D. Mr.
Pandy jeopardized and attempted to thwart the internal audit functions of the LBWL
by withholding information from the LBWL’s internal auditor, by failing to
notify the internal auditor of facts critical to her responsibilities, and then
engaging in a practice of intimidation when the internal auditor disagreed with
Mr. Pandy’s actions.
E. Mr.
Pandy undermined the human resources function at the LBWL by directly
interfering in that function and intimidating those who disagreed with his
actions.
F. Mr.
Pandy violated the LBWL’s Internet Use policies by sending and receiving highly
inappropriate e-mails. These actions
were not only in direct violation of LBWL’s policies, they exposed the LBWL to
potential liability and injury to the LBWL’s reputation that would be contrary
to the LBWL’s responsibilities to its customers.
G. Mr.
Pandy allowed to exist within certain parts of the administration of the LBWL a
serious lack of internal controls that led to misuse or unaccounted or
unaccountable expenditures of LBWL funds.
H. Mr.
Pandy fostered an environment where favoritism was practiced in violation of
the LBWL policies.
I. Mr. Pandy failed to carry out Board of Commissioners’ directives.
J. Mr. Pandy created a climate within the LBWL that deteriorated employee morale, increased labor relations strife, marginalized employees who raised questions, caused key employees to leave or threaten to leave their employment with the LBWL, created potential liability for the LBWL, and demonstrated a lack of the leadership necessary for an organization with critical responsibilities to the citizens of Lansing and to its customers.
Moved by Commissioner Haggart, seconded by Commissioner Marin, on the approval of the Resolution on the Lawsuit of Joseph Pandy, Jr. (Resolution #2003-7-7).
Discussion: After lengthy discussion, the above resolution was adopted.
Action: Carried unanimously.
ADJOURNMENT
On motion by Commissioner Wonch, seconded by Commissioner Haggart, the meeting adjourned at 8:40 p.m.
/s/ Mary E. Sova, Secretary
Filed with Lansing City Clerk
July 16, 2003