FINAL – APPROVED BY BOARD 3/22/05

MINUTES OF THE BOARD OF COMMISSIONERS' MEETING

LANSING BOARD OF WATER AND LIGHT

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Tuesday, January 25, 2005

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The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan.

The Secretary declared a quorum present.

Chairperson Smith called the meeting to order at 5:30 p.m.

APPROVAL OF MINUTES

Motion by Commissioner Joseph, seconded by Commissioner Haggart, to approve the minutes of the regular meeting held November 23, 2004.

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.

Ron Byrnes, BWL retiree, expressed concern with information management presented to the Commissioners at the January 11, 2005 Committee of the Whole meeting.  He referred to a letter sent to the Commissioners from the BWL Retirees’ Club Pension and Benefits Committee, dated January 18, 2005, incorporated herein by reference, with facts in response to management’s report entitled “Retirees’ Pension Adjustments – Summary,” and discussed at the January 11^th meeting.  Mr. Byrnes disagreed with staff’s statement that the IBEW cannot negotiate for retired employees.  He stated that the IBEW and the BWL have a long history of bargaining for currently retired employees.  He also stated that a promise to review pensions every three years with a one-year look back was made based on a Personnel Committee Report, dated November 25, 1996 and approved by the Board on November 26, 1996.  He further noted that pension increases were given in 1991, 1995, and in 1998 increases were considered but not given.  In 2001 increases were considered and granted.  Mr. Byrnes urged the Board to evaluate the facts presented by the Retirees’ Pension and Benefits Committee and to vote NO on the proposed Board Policy on Retiree Pension Changes (Board Agenda Item 10.b).

John Pollard, 1718 Blair, Lansing, stated that as a rate payer and an owner of the Board of Water and Light (BWL) he is opposed to the BWL helping to set up barricades last July when Vice President Cheney was in town, regardless of whether it was done for a republican or democratic candidate.  Also, he is opposed to BWL employees putting up Christmas lights in Old Town Lansing.  He addressed several issues; namely: (1) BWL statements made to the Lansing State Journal on the lead issue with regard to the Commissioners limited knowledge about the problem when it became public last summer; (2) the termination of former General Manager Joseph Pandy, Jr., (3) the job demotion of Virginia Cluley and the dismissal of David Cluley, and (4) complained about the unreasonable amount he is being charged to receive records requested under the Freedom of Information Act (FOIA).  Mr. Pollard stated that he filed five FOIA requests and the BWL’s cost to disclose the records is unreasonable.  He alleged that the records requested are the same as those provided to the Lansing City Council.  Mr. Pollard warned that the BWL has two weeks from this night to address these issues and provide him with the information requested under FOIA, otherwise he is taking this matter to the next level.

Jim Dravenstatt-Moceri, BWL employee and member of the IBEW Local 352 executive board, reported that for several weeks the BWL Lead Task Force has been working to develop a recommendation to assist in staffing the water department for lead replacements and for inspection of the CSO project in connection with the water main, domestic and commercial water lines and chlorination.  He said that a CSO inspector could also oversee and inspect lead replacements to assure the installation meets BWL standards.  Eleven positions are being recommended consisting of three CSO inspectors, four operators, two mechanics, and two administrative positions.  Once the bidding process is completed, the task force will present its recommendation to the Board.  Mr. Dravenstatt-Moceri said that IBEW supports the task force’s recommendation and urged the Board’s support when this matter is presented for action. 

COMMUNICATIONS 

Letter from Ronald T. Byrnes, Chair, BWL Retirees’ Club Pension and Benefits Committee, dated December 30, 2004, regarding cost of living allowance considerations for retirees in the Defined Benefit Pension Plan

Placed on file.

Freedom of Information Act request from John Pollard of Fair Share Coalition of Lansing, dated January 17, 2005 for information on payments made by the BWL for outside legal counsel in 2002-2004.

Referred to management.

Letter from Ronald T. Byrnes, Chair, BWL Retirees’ Club Pension and Benefits Committee, dated January 18, 2005 regarding information presented by staff at the January 11, 2005 Committee of the Whole meeting.

Placed on file.

An E-mail from the BWL Retirees’ Club Pension and Benefits Committee, dated January 21, 2005, expressing concern with management’s position concerning Defined Benefit Pension Plan adjustments.

Placed on file.

COMMITTEE REPORTS

Resolution 2005-1-1

COMMITTEE OF THE WHOLE REPORT

Present:  Commissioners Callen, Calkins, Duncan, Joseph, Rios, Smith, and Wonch.

Absent:  Commissioner Haggart.

A meeting of the Committee of the Whole of the Board of Water and Light was held at the Executive Offices, Lansing, beginning at 5:30 p.m., Tuesday, December 14, 2004.

CSO/Water System Construction Update

John Matuszak, Senior Engineer of Customer Projects and System Integrity, gave an update of the CSO/Water System Construction project.  His first report was presented to the Commissioners in May 2004 regarding his analysis of the process used to implement water system improvements in conjunction with Lansing’s CSO abatement program.  The report provided a brief background of practices and procedures used in the CSO program and evaluated two main issues that were of major concern to the BWL; namely, the frequency of plugged water meters in CSO project areas and the quality of inspections performed by field inspectors.  The seven action items planned for implementation during the 2004 construction season to improve the performance in these two areas and to address other CSO issues, as described in his initial report, were summarized. 

Mr. Matuszak presented an update of the 2004 construction activities and the progress that has been made.  It was reported that for the most part, water improvements are being installed and inspected by competent and capable contractors and inspectors; construction methods and materials are in conformance with BWL standards and specifications; when variances from standards occurred corrective action was taken; the frequency of plugged meters and facility damage were lower in 2004--there were 34 plugged meters in 2003 vs. 6 in 2004 and 41 damage events in 2003 vs. 18 in 2004; customer complaints have remained relatively low; and work has progressed on developing standards and specifications which are more concise and logical.  With few exceptions, methods and materials used in the water main installation process were in accordance with applicable construction standards and specifications.

(Commissioner Duncan entered the room at 6:51 p.m.)

Mr. Matuszak noted that there are areas where improvements are needed, as demonstrated by the service installation problems, which occurred in the 018E project area.  Based on his field observations during the 2004 construction season and meetings with representatives from the City of Lansing, project contractor and project engineer, nine specific actions are recommended for implementation before the 2005 construction season:

1. Maintain the current practice of using City of Lansing inspectors.
2. Abandon the current practice of installing partial service replacements.
3. Have BWL personnel approve water service line installations.
4. Continue the process to update construction standards and specifications.
5. Conduct additional training for inspectors and contractors
6. Check for inoperable water valves before commencing CSO projects
7. Improve customer notification and water interruption report forms
8. Include the “water complaint” component in the system-wide complaint reporting system or do manually if this is not possible.
9. Revise the Service Investigation Order system to “flag” recurring water service problems.

Staff gave assurance that for the 2005 construction season, specifications and standards would be clear enough so that contractors are held accountable.  Staff plans to present an update report to the City Council at a later date.

Six-Year Financial Plan. 

Sr. Vice President of Finance Dennis McFarland reviewed the BWL’s Financial Plan for 2005 – 2010.  Mr. McFarland’s presentation had two purposes:  To fulfill the commitment made to the Board last spring that staff would come back with a financial plan and to provide context for consideration when the strategic plan is discussed.  The financial plan is an important tool for the Commissioners to understand the impact various actions will have on the utility’s financial situation.  The Board’s direction and guidance was requested throughout the discussion. 

The following BWL financial goals were highlighted:

·        Maintain Credit Quality

·        Ensure adequate liquidity

·        Maintain rate competitiveness

·        Efficient and appropriate use of capital

·        Financially independent utilities

The base forecast and known and projected changes from the base case were reviewed in depth.  The financial plan forecasts that the BWL will need to develop both operating and rate strategies to overcome a projected revenue deficiency of approximately $63 million over the next six years.  Without the financial plan, the utility faces a cash flow shortfall of more than $80 million over the same period. 

Mr. McFarland reported that the Government Accounting Standards Board (GASB) has recently issued a GASB statement requiring public entities to include in their financial statements the unfunded liabilities for health benefits of current and future retirees.  Currently that figure is estimated at $181 million for the BWL.  Amortizing the obligation over a 30-year period would result in an additional $5 million of annual expenses over the BWL’s current health care costs.

In reviewing strategic issues, it was pointed out that the financial outlook requires operating and productivity efficiencies and future revenue enhancements.  Risk factors that impact the financial plan are: 

·        Weather

·        General Motors Consumption

·        Environmental Regulations

·        Wholesale Power Prices

·        Inflation

·        Coal Prices

·        Interest Rates

Following discussion, staff was directed to prepare alternatives to meet revenue requirements for discussion and deliberation at the next Committee of the Whole meeting to be held January 11, 2005. 

Strategic Plan

General Manager Sandy Novick presented a draft Strategic Plan to help identify the key priorities of the BWL over the next three to five years.  Identification of priorities and their endorsement by the Board of Commissioners will help BWL management and all employees to focus on the key elements of the mission of the organization and thus supports that mission.  The proposed strategic plan provides broad direction in the areas of Customer Service, the goal of Operational Excellence, Financial Performance, People Excellence, and the impact BWL wants to make on the Quality of Life in this community. 

In developing the Strategic Plan, staff’s work began with a review of the Vision Statement, first adopted in 1997, and continued with detailed discussion of the core values to be incorporated into daily decision-making.  The Strategic Plan and Financial Plan, which along with the recently developed Balanced Scorecard, will provide the BWL with the vision, values, and dollars needed to guide the utility in the future.  Mr. McFarland clarified that the Balanced Scorecard measures the critical performance metrics while the Strategic Plan lists the strategies and projects intended to improve the performance of the BWL. 

Mr. Novick noted that in discussing the overall strategic direction, executive staff rejected an approach that would promote the BWL’s expansion into areas outside of core utility competencies.  Instead, it was agreed to concentrate on services the BWL is chartered to provide and on fulfilling our mission with greater precision and effectiveness. 

Following discussion, the Commissioners gave their support to the proposed strategic plan.  Management will keep the Board regularly apprised of its efforts and progress in implementing these priorities.  A series of meetings with employees will be conducted by General Manager Novick and his team to discuss how the financial and strategic plans will work together with the BWL’s Balanced Scorecard.

Board Travel Policy

Resulting from recent concerns regarding meal reimbursement using nationally accepted limits of corporate expenditures for geographical areas where the BWL business is conducted, it was suggested that the Board’s Travel Policy be amended to clarify this concern.  On November 23, 2004, the Board approved a revised Travel Expense Policy.  The purpose of the revised policy was to establish guidelines under which the Commissioners and Board staff appointees will be reimbursed for travel expenses incurred when engaged in authorized travel and who expend BWL funds for travel purposes.

In an attempt to simplify the process of meal reimbursements, it was suggested to allow a flat daily maximum amount with documented costs. 

Following discussion, the Committee of the Whole voted to recommend approval by the Board to amend the Travel Expense Policy.  This item will be on the Agenda under Resolutions for the January 25^th Board meeting:

Michigan Public Power Agency and Midwest ISO

Senior Vice President of Operations Bill Cook reported that implementation of Regional Transmission Organizations (RTO) accompanied by changing energy markets are altering how wholesale power will be bought and sold in the future.  In the Midwest, the Midwest Independent System Operator (MISO) is the RTO impacting the BWL.  Beginning in March 2005, the new MISO energy markets are scheduled to begin.  This will represent significant changes in how wholesale power sales are transacted.   Staff plans to bring forth a recommendation to the Board at the January 25th meeting proposing that the BWL submit its five-year notice to the Michigan Public Power Agency (MPPA) of its intention to leave the MPPA Power Pool Project.  A full report will be made at the Board’s Committee of the Whole meeting on January 11th with details regarding MPPA Power Pool operating issues.

Ottawa Station

The agenda topic with regard to the Ottawa Station was not discussed, as this item was held for discussion at the next Committee of the Whole meeting on January 11, 2005.

There being no further business, the Committee of the Whole adjourned at 8:37 p.m.

Respectfully submitted,
Ron Callen, Chair Pro Tem

Motion by Commissioner Joseph, seconded by Commissioner Rios, to receive the report.

Action:  Carried unanimously.

Resolution 2005-1-2

COMMITTEE OF THE WHOLE REPORT

Present:  Commissioners Callen, Calkins, Haggart, Joseph, Rios, Smith, and Wonch.

Absent:  Commissioner Duncan.

A meeting of the Committee of the Whole of the Board of Water and Light was held at the Executive Offices, Lansing, beginning at 5:30 p.m., Tuesday, January 11, 2005.

Continuation of Six-Year Financial Planning Discussion

Sr. Vice-President of Finance Dennis McFarland resumed discussion from the last Committee of the Whole meeting held December 14, 2004 regarding moving from a financial forecast, which the Board started discussing last spring to a six-year financial plan to manage the BWL’s operations.  Using a series of charts, Mr. McFarland reviewed the base case forecast presented in July 2004 and most recently updated to reflect some recent events, which incorporates the effects of the labor contract, the new accounting and funding for post retirement benefits and health care benefits of current and future retirees, and additional capital for IT infrastructure and other minor items. 

As requested at the last Committee of the Whole meeting, various alternatives to meet revenue requirements were presented.  A revised sheet replacing the copy included in the meeting packet of alternatives to meet revenue requirements was circulated.  Mr. McFarland explained that the rate impact will vary between the electric, water, steam and chilled water utilities.  Assuming no cross-subsidies, electric rate increases will be modest, water rate increases will be above the projected rate of inflation, and steam could face double-digit annual increases for the next five years.  The original presentation called for even rate increases for electric, water and steam over five fiscal years beginning in FY 2005.  Mr. McFarland presented two alternatives for evaluation by the Commissioners.  Alternative 1 is based on a lump sum increase in FY 2007.  Alternative 2 consists of equal increases in FY 2006, FY 2008 and FY 2010.  

(Commissioner Smith entered the meeting at 5:50 p.m.)

(Commissioner Rios entered the meeting at 6:00 p.m.)

There was lengthy dialogue with regard to the magnitude and timing of rate increases along with philosophical views on cost classification, cost allocation, rate design and cost containment/cost management.  The Commissioners preferred reviewing rates every two years rather than even increases over five fiscal years.  Phased-in rates are considered financially prudent and needed to maintain the strength of the BWL and to move forward without committing to a long-range rate plan.  The importance of educating the public well in advance on the rationale for the increases was discussed.  The BWL has to demonstrate it has done everything it can to reduce costs, before going to the public with rate increases.

(Commissioner Wonch left the meeting at 6:22 p.m.)

The Committee of the Whole supported management’s recommendation to proceed with the process of designing rates to implement increases for the electric, water and steam utilities tentatively based on the following rates and timetable:

Proposed Rate Increases:

In March, staff will report back to the Committee of the Whole with additional information, based on input and discussions held today, with respect to “what ifs” to translate them into final rate increase recommendations.  A formal proposal will then follow with a recommendation to schedule a public hearing for public comment prior to taking Board action.

MPPA/MISO Recommendation

Sr. Vice President of Operations Bill Cook resumed discussion from the December 14, 2004 Committee of the Whole meeting with regard to BWL concerns with the Michigan Public Power Agency (MPPA) Power Pool.  He reported that over the past year-and-a-half, in preparation for the changing wholesale power market, the BWL has expressed numerous concerns to the MPPA Power Pool and staff members associated with anticipated Pool operations, MPPA Pool contract administration, and preparation for the Midwest Independent System Operator’s (MISO) new wholesale power market.  Mr. Cook discussed the following concerns in detail:

  §     New markets are increasingly more complex.

  §     MPPA is too small to have or obtain the required skills and tools to effectively complete.

  §     MPPA staff is moving the Pool toward a “black box” type of situation with respect to individual member understanding and oversight.

  §     The Power Pool Contract pledges control of generation to MPPA.

  §     The current path is taking MPPA down the road in which MPPA office staff performs most of the scheduling, dispatching and checkout and settlement duties.

  §     MPPA leadership, communication and member involvement in preparation for the new MISO energy markets has been lacking.

  §     It makes no sense for the MPPA Pool to dictate BWL unit operations involved in a sale to third parties.

  §     The BWL is dramatically different from the other seven Power Pool members.

  §     MPPA’s MISO energy market implementation may result in the BWL being left with significantly higher costs, and reduced benefits from its resources.

  §     Settlement under MISO energy markets will be a large task.

  §     BWL dispatching related charges associated with the Power Pool for next year are estimated at $695,000.  This constitutes 50% of the Pool costs.

  §     The MPPA Power Pool Contract is based on capacity being sold at a “market rate” and energy being based on an average cost plus arrangement.

  §     Over the past year-and-a-half, the BWL has expended considerable resources trying to reach a workable methodology with MPPA staff for future Pool operations.

  §     Just as in the early 1990’s when the MPPA Power Pool participants recognized the benefits of joining forces to create a larger organization for the benefit of all, BWL staff believes that as the market changes, the BWL and MPPA Power Pool must affiliate themselves with an organization of sufficient size that they can stay abreast of changes in the marketplace on a regional and national level.

Mr. Cook reviewed the BWL’s actions to date.  He noted that BWL management has repeatedly expressed its views at monthly MPPA meetings.  Multiple letters and e-mails have been written conveying the BWL’s concerns.  A proposed resolution was presented for discussion.  This resolution is needed in preparation of giving notice to MPPA of the BWL’s intention to terminate its participation in the Power Pool Project.  Mr. Cook emphasized that this notice only involves the Power Pool.  The BWL will remain in other projects at MPPA.  He further stated that the BWL staff has been working with MPPA over the past year-and-a-half to resolve concerns over MPPA Power Pool changes being done to meet the changing wholesale electric market.  The BWL is concerned over a perceived lack of leadership, planning, communication, technical skills and expertise as well as oversight demonstrated by the Pool in anticipation of the MISO-Midwest Market Initiative implementation.  The BWL is working with MPPA staff and another member city to try to resolve its concerns for the next six months.  If a successful resolution cannot be met, staff would begin discussion with MPPA on an expedited exit from the Power Pool. 

Following discussion, the Committee of the Whole voted to recommend that the Board approve a resolution to terminate the BWL’s relationship with the MPPA Power Pool Project.  This item will be on the Agenda under the General Manager’s Recommendations for the January 25^th Board meeting.

Defined Benefit Pension COLA Issue

At the November 23, 2004 Board meeting, several retirees raised some issues related to retiree benefits and requested a clarification as to whether the Board of Commissioners resolved to periodically review retirees’ pensions with the intention of making possible increases to Defined Benefit (DB) pension amounts.  Based on this inquiry, the Commissioners requested that staff provide them with background information summarizing the history of pension changes and adjustments that may help clarify if any promises were made to the retirees.

A report prepared by Human Resources Director Mary Dwyer, incorporated herein by reference, was presented with a chronology of activities regarding possible pension adjustments for DB retirees.  Mr. Novick commented that a review of this matter is pending by the BWL’s General Counsel Amy Cavanaugh on the legal perspective of whether the BWL is obligated to give a cost-of-living allowance to DB retirees.  He noted that an interesting complication is Ms Dwyer’s position that the union does not negotiate for retirees.  Mr. Novick pointed out that a recent actuarial valuation report clearly indicates there was no commitment on an ongoing basis for the BWL to do anything; consequently, funding requirements were not factored in. 

Following a lengthy question and answer period, the Committee of the Whole voted to recommend that the Board approve a resolution authorizing management at its discretion to review and recommend changes to retirees’ pensions to the Board of Commissioners for consideration.  This item will be on the Agenda under Resolutions for the January 25^th Board meeting.

Ottawa Station Update

General Manager Sandy Novick updated the Commissioners on the potential development of the BWL Ottawa Station.  He reported that based on preliminary discussions that City and Board officials have had with representatives of the State of Michigan, it appears that the State is willing to explore the possibility of becoming an anchor tenant in the redeveloped Ottawa Station.  If this redevelopment is successful, it would bring jobs, investment and commerce to Lansing’s downtown riverfront. 

General Counsel Amy Cavanaugh distributed a draft resolution declaring a portion of the Ottawa Station as surplus.  She explained that the resolution is based on the following contingencies:

  §    Reserving a portion of the building for the BWL chillers

  §    Reserving utility easements and the riverfront property that is 25 ft. from the river has to be kept within the City’s control by ordinance

  §    Performing a three-dimensional survey, or a condominium survey, that would protect BWL interests listed in #1 and 2.

A formal resolution will be brought to the Board for action at the next meeting.   The resolution would permit the BWL to offer the surplus portion of the building to the City of Lansing.  Transfer details are yet to be resolved

The Committee of the Whole voted to recommend that the Board approve at its regular meeting on January 25, 2005 a resolution to declare a portion of the Ottawa Station as surplus.  This item will be on the Agenda under the General Manager’s Recommendations for the January 25^th Board meeting.

Triangle Property Update

General Manager Sandy Novick reported that the River Street Triangle, LLC (developer) was unsuccessful in the lame duck session of the legislature in getting a lease proposal approved by the State of Michigan Joint Committee on Capital Outlay to construct an office building at Kalamazoo Street and Grand Avenue.  This project is one of three agreements with the City.

Since the lease proposal with the State was not approved, the Commissioners concurred that it would now be appropriate to provide a thirty-day notice to River Street Triangle, LLC to achieve agreement on an amended contract.  The notice would request the developer to provide a non-refundable deposit of $100,000, which represents 5% of the purchase price, to maintain their purchase option on the BWL property known as the Coal Storage Site, located at Grand and Shiawassee.  At the end of the thirty days, if the non-refundable deposit is not paid, the BWL is to give cancellation notice in accordance with the River Street Triangle, LLC, agreement and the property would then go back on the market.  Instructions for the General Manager will be formalized by resolution for Board action at the January 25, 2005 regular meeting. 

Mr. Novick reported that he recently met with the Mayor to make him aware of discussions to be held by the BWL Committee of the Whole and the plan to recommend to the Board that the BWL’s agreement with River Street Triangle, LLC be amended to allow the agreement to continue through June 15, 2005, only if a mutually agreeable document to amend the agreement is signed by February 25, 2005 and the developer pays the BWL a non-refundable option fee.  If the developer does not sign a mutually agreeable document to amend the agreement and does not pay the non-refundable option by February 25, 2005, a written notice of termination would be sent to River Street Triangle, LLC.  Mr. Novick indicated that he would also advise the City Council of the Board’s proposed amendment.

Following discussion, the Committee of the Whole voted to recommend that the Board approve at its next meeting a resolution to amend the BWL’s agreement with River Street Triangle, LLC.  This item will be on the Agenda under the General Manager’s Recommendations for the January 25^th Board meeting.

There being no further business, the Committee of the Whole adjourned at 7:45 p.m.

Respectfully submitted,

Ron Callen, Chair Pro Tem

Motion by Commissioner Callen, seconded by Commissioner Haggart, to receive the report.

Action:  Carried unanimously.

MANAGER’S RECOMMENDATIONS

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

Resolution 2005-1-3

Whereas, the Lansing Board of Water and Light (BWL) is a member of the Michigan Public Power Agency Power Pool (MPPA), and;

Whereas, the electric wholesale market is and will be experiencing major changes in the near future, and;

Whereas, the BWL staff is concerned that the MPPA Power Pool may not be large enough or have sufficient expertise and resources to effectively compete in these new markets, and;

Whereas, MPPA’s current implementation approach to meet these upcoming changes may result in higher costs, increased risk, decreased BWL participation in the managing of its assets, and;

Whereas, BWL staff has been working with the MPPA Staff and other municipal Power Pool member cities to alter the MPPA Power Pool implementation, with limited success, and;

Whereas, to exit the MPPA Power Pool a five-year advance notice is required.

Therefore Be It Resolved, That the General Manager is authorized to submit to MPPA, the Lansing Board of Water and Light’s notice of its intention to terminate its relationship with the MPPA Power Pool Project.

Be It Further Resolved, That staff will continue to work with the MPPA Power Pool for a period of six months from the date of this resolution to resolve its differences such that the BWL may remain a member, but following this period, staff will work with MPPA Pool members to effect an expedited exit from the Pool.

Staff Remarks:  This resolution is needed in preparation of giving notice to MPPA of the BWL’s intention to terminate its participation in the Power Pool Project. Staff has been working with MPPA over the past year and a half to resolve concerns over MPPA Power Pool changes being done to meet the changing wholesale electric market. The BWL is concerned over a perceived lack of leadership, planning, communication, technical skills and expertise as well as oversight demonstrated by the Pool in anticipation of the Midwest Independent System Operation- Midwest Market Initiative implementation. The BWL is working with MPPA staff and another member city to try to resolve its concerns, but to date no progress has been made. It should be noted that this notice only involves the Power Pool. The BWL will remain in other projects at MPPA.

Motion by Commissioner Joseph, seconded by Commissioner Callen, to approve the resolution.

Discussion:  Commissioner Callen commented that this is not an easy resolution to support, however, the Board has benefited from significant discussion with staff.  Commissioner Smith concurred, adding that Director of Operations Bill Cook has taken a lot of time to lay out what this action means for the Board of Water and Light.

Action:  Carried unanimously.

Resolution 2005-1-4

WHEREAS, the BWL, the City of Lansing, the Michigan Department of Labor and Economic Growth (DLEG) and the Michigan Economic Development Corporation (MEDC) have mutually agreed to explore options to redevelop the Ottawa Street Power Station (Power Station) property in Lansing as set forth in a Memorandum of Economic Development Process (Memorandum), attached hereto as Attachment A; and

WHEREAS, the Power Station property is legally described as follows:

COMMENCING AT THE CENTER POST OF SEC. 16, T. 4 N., R. 2 W., NOW CITY OF LANSING, INGHAM COUNTY, MICHIGAN; THENCE ALONG THE EAST-WEST 1/4 LINE OF SEC. 16 N 89° 59’ 00” E 527.87 FT.; THENCE N 00° 01’45” W 330.00 FT. TO THE N.W. CORNER OF BLOCK 99, ORIGINAL PLAT OF THE TOWN OF MICHIGAN, NOW CITY OF LANSING, AS RECORDED IN L. 2, PP. 36-38 OF INGHAM COUNTY PLATS, AND THE POINT OF BEGINNING; THENCE ALONG THE EAST LINE OF NORTH GRAND AVENUE N 00°01’45” W 519.77 FT. TO A FOUND R.R. SPIKE ON THE CENTERLINE OF VACATED IONIA STREET; THENCE ALONG SAID CENTERLINE DUE EAST 67.07 FT.; THENCE S 00°05’02” E 151.16 FT.; THENCE S 89°58’55” E 244.01 FT.; THENCE N 01°08’14” W 303.91 FT.; THENCE N 17°19’58” W 75.72 FT.; THENCE N 07°00’36” W 173.29 FT.; THENCE N 45°00’36” W 56.87 FT. TO THE SOUTH LINE OF E. SHIAWASSEE STREET; THENCE ALONG SAID SOUTH STREET LINE S 89°58’00” E 36 FT., MORE OR LESS, TO THE WEST EDGE OF THE GRAND RIVER; THENCE SOUTHERLY ALONG THE WEST EDGE OF THE GRAND RIVER 990 FT., MORE OR LESS, TO THE SOUTH LINE OF VACATED E. OTTAWA STREET (THE NORTH LINE OF BLOCK 99 OF THE ORIGNAL PLAT OF LANSING); THENCE DUE WEST 204 FT., MORE OR LESS, ALONG THE NORTH LINE OF BLOCK 99 TO THE POINT OF BEGINNING, SUBJECT TO EASEMENTS, LICENSES AND RESTRICTIONS, AND CONTAINING 2.9673 ACRES OF LAND, MORE OR LESS.

WHEREAS, the City of Lansing and MEDC will jointly issue a Request for Proposals to developers to re-develop the Power Station property in accordance with the Memorandum (the Project); and

WHEREAS, the Project is intended to be mixed use, including office space for the State of Michigan; and

WHEREAS, any accepted development plan for the Project is to include that the BWL will retain ownership and use of a portion of the Power Station property for utility purposes, including use for the chillers within the building and utility easements in the property outside the building, and that the City of Lansing or BWL retain at least the portion of the power station property within twenty-five (25) feet of the Grand River; and

RESOLVED, That subject to the conditions precedent in this Resolution, the Board declares the Power Station property surplus, except for the chillers, cooling towers and other appurtenances within the building and utility easements in the property outside the building, and offers to release jurisdiction of the surplus property to the City of Lansing. The conditions precedent are 1) the completion of a three-dimensional or condominium survey to identify and legally describe the interests the BWL and the City of Lansing will retain in the property, and 2) the execution of documents, such as a designation of condominium units and utility easements, maintaining an interest in a portion of the property for the BWL’s uses. All property not identified in the documents describing property interests to be retained by the Board is designated “surplus.”

FURTHER RESOLVED, That the surplus property will be transferred at a future time to the jurisdiction of the City of Lansing if the City passes a resolution accepting city jurisdiction over the surplus portion of the Power Station for a mutually agreeable redevelopment project.

Staff Remarks: The City of Lansing, in conjunction with the Michigan Economic Development Corporation (MEDC), has proposed a viable use of the Ottawa Street Power Station building that includes the State of Michigan as a tenant. An RFP will be issued to developers, who will be required to incorporate the BWL’s current use of the building into their proposed design. Although staff is still investigating the best way to protect the BWL’s on-going interests in the property, a condominium arrangement seems likely. Before the RFP can be issued, however, the Board of Commissioners must designate the portion of the property not used for the chiller operations and other utilities as “surplus.”  This resolution leaves unresolved the decision as to whether the City of Lansing will accept jurisdiction over the surplus portion of the property or the surplus will be directly transferred to a developer with City Council approval.

Motion by Commissioner Calkins, seconded by Commissioner Joseph, to approve the resolution.

Action:  Carried unanimously.

Resolution 2005-1-5

WHEREAS, the BWL and River Street Triangle, LLC (“River Street”) are parties to an agreement dated May 17, 2001 (“Agreement”) whereby River Street agreed to purchase certain BWL property located at the corner of Shiawassee and North Grand Avenue in Lansing (“Property”) for $1,997,070.00; and

WHEREAS, the agreement requires River Street to comply with certain conditions precedent, including the simultaneous purchase of property from the City of Lansing in the same vicinity; and

WHEREAS, the agreement states that if River Street fails to meet the conditions precedents within thirty-six (36) months of the date of the agreement, the BWL may terminate by giving written notice to River Street.

WHEREAS, forty-four (44) months have passed since the agreement was signed, but the conditions precedent have not been met. During those forty-four months, River Street has not paid any amount to restrict the BWL’s ability to sell the Property; and

WHEREAS, the Board believes that a non-refundable deposit is appropriate if River Street wants to continue to restrict the BWL’s ability to sell the property.

RESOLVED, That the Board authorizes the General Manager to amend the Agreement to allow the Agreement to continue through and including June 15, 2005 only if, by February 25, 2005, River Street 1) signs a mutually agreeable document to amend the agreement, and 2) pays the BWL the non-refundable sum of One Hundred Thousand Dollars ($100,000), which may be applied to the purchase price if River Street closes on the Property on or before June 15, 2005.

FURTHER RESOLVED, That if River Street does not 1) sign a mutually agreeable document to amend the Agreement, and 2) pay the BWL $100,000 by February 25, 2005, the Board gives the General Manager authority to give written notice of termination to River Street.

Staff Remarks: Since May 2001, the Board of Water and Light’s property located at the corner of Shiawassee and North Grand Avenue in Lansing has been subject to an Agreement with River Street Triangle, LLC, giving that developer the right to purchase the property.  River Street did not pay for that right. According to the terms of the Agreement, the BWL now has the ability to terminate.  Although staff still believes that development of the parcel would be beneficial both for the BWL and the City of Lansing, they also believe that it is inappropriate to allow the developer to continue to restrict sale and development of the property without the payment of an option fee.  Therefore, staff recommends giving the developer the opportunity to amend the Agreement and agree to pay the BWL an option fee of $100,000.  If River Street Triangle, LLC elects not to amend the agreement, staff recommends that the BWL terminate the Agreement.

Motion by Commissioner Callen, seconded by Commissioner Joseph, to approve the resolution.

Action:  Carried unanimously.

(Commissioner Wonch entered the room at 6:00 p.m.)

UNFINISHED BUSINESS

No unfinished business

NEW BUSINESS

No new business.

RESOLUTIONS

BY THE COMMITTEE OF THE WHOLE

Resolution to Amend Travel Expense Policy

WHEREAS, by Resolution No. 2004-11-10, adopted November 23, 2004, the Board of Commissioners approved a Travel Expense Policy for Commissioners and a Travel Expense Policy for Board Appointees.

RESOLVED, That the meal section of the Travel Expense Policy for the Board of Commissioners and the Board staff appointees be amended as follows:

Reimbursement will be made based on actual documented costs, but will not exceed nationally accepted limits of corporate expenditures for geographical areas where the Board of Water and Light business is conducted A MAXIMUM DAILY AMOUNT OF $70.00 WITH RECEIPTS. 

RESOLVED FURTHER, That the Travel Expense Policy is subject to annual review and adjustment as recommended by the Internal Auditor.

Motion by Commissioner Wonch, seconded by Commissioner R