Approved by the Board:  October 30, 2006

 

MINUTES OF THE BOARD OF COMMISSIONERS REGULAR MEETING

 

LANSING BOARD OF WATER AND LIGHT

 

_________________________

Tuesday, September 26, 2006

 

_________________________

 

 

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

 

Present:           Commissioners Gary Calkins, Ron Callen, Robert Cochran, Joseph Graves, Semone James, Santiago Rios, Julee Rodocker, and Robin Smith.

 

Absent:            None.

 

The Secretary declared a quorum present.

 

Chairperson Smith asked all to rise for the Pledge of Allegiance to the Flag.

 

Chairperson Smith called the meeting to order at 5:46 p.m.

 

APPROVAL OF MINUTES

 

By motion of Commissioner Calkins, seconded by Commissioner Graves the minutes of the July 25, 2006 regular meeting were unanimously approved.

 

By motion of Commissioner Calkins, seconded by Commissioner Graves the minutes of the August 14-15, 18, 24, and September 1, 2006 special meeting were unanimously approved.

 

PUBLIC COMMENT

 

THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT AND ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT.

 

Mike Brown, President of Capital Area United Way expressed his gratitude to the leadership and employees of the BWL for their support of the United Way campaign each year.  CAUW increased its goal by $200,00 to $5,700,000 for the year and the BWL has also increased its target goal by $5,000.  He went onto state that the needs of the community have increased and therefore he hopes for a successful campaign.  Lastly, Mr. Brown thanked Dick Peffley, Interim General Manager for his comments and stated that he looks forward to another great year of partnership with the BWL.

 

Commissioner Smith welcomed new Commissioner, Julee M. Rodocker.

 

COMMUNICATIONS

 

None.

 

COMMITTEE REPORTS

 

Resolution 2006-9-1

Board of Water and Light Commissioners

August 10, 2006

 

Council President Harold Leeman called the joint meeting to order at 4:05 p.m.  The meeting was held at 124 West Michigan Avenue, City Council Conference Room, 10th Floor, City Hall, Lansing.

 

Councilmember’s Present:  Sandy Allen, Joan Bauer, Kathie Dunbar, Brian Jeffries, Tim Kaltenbach, Harold Leeman, Randy Williams, and Carol Wood.

 

Commissioners Present:  Gary Calkins, Robert Cochran, Joseph Graves, Semone James (arrived 4:53 p.m., Santiago Rios, Robin Smith.  Absent:  Ron Callen.  (Note:  2nd Ward Vacancy exists.)

 

City Staff Present:  Jack Roberts Chief City Attorney, City Attorney Brigham Smith, Randy Hannan Assistant Chief of Staff, and Diane Bitely Interim Administrative Secretary.

 

BWL Staff Present:  General Manager Sanford Novick, Sr. Vice President of Operations Bill Cook, Sr. Vice President of Finance and Administration Dennis McFarland, General Counsel Amy Cavanaugh, Mark Nixon Communications Director, Corporate Secretary Rhonda Jones, and Calvin Jones Governmental Affairs Analyst.

 

The purpose for the joint meeting was for the BWL to present an update to the City Council on the topics listed below.

 

Packets of information derived from the Commissioners and presented to Council were handed out during the meeting on the request of Board Chair Robin Smith that involved special issues of concern relative to the BWL.

 

1.  Budget Process – Board Chair Smith explained the budget process and advised Council of the measures that BWL staff and Commissioners go through in helping to create a budget.  She further advised Council that management initially proposed a 35% steam rate increase in addition to other potential cost reduction measures that the Commissioners were not willing to consider at the time.  The cost reduction suggestions included plant sales, increased health care premiums, and no employee raises, among others.  After further budget discussions, the Commissioners recommended a 65% steam rate increase based on the information available to them.  However, in the interim and prior to the Commissioners recommendations, some major account customers were communicating with the BWL and staff advised that they were going to recommend a 35% steam rate increase.  Board Chair Smith further explained that they expressed concern to management in considering such a high rate increase when they felt that other cost cutting measures, which could be implemented had not been sought out.  She further stated that the BWL attempts to keep its utilities separate thereby; one utility does not subsidize the other. 

 

Commissioner Calkins advised that during the budget review process, the Commissioners had opportunity to discuss the impact of the proposed 35% steam rate increase and its implications.  He went onto state that steam business customers were under the impression that the steam rate would increase by 35% based on managements’ previous discussions and recommendation.  However, after much discussion, the Commissioners agreed to recommend a 65% rate increase based on budgetary and organizational needs.  At which time, Commissioner Calkins further stated that a 100%+ steam rate increase would not be out of the scope of recommendations if it were based on the cost of doing business.

 

Commissioner Graves stated that he concurred with Commissioner Calkins perspective of the rate and budget process discussions regarding steam.  He further explained that they had access to a computer software program that allowed them to run scenarios and obtain estimated revenue information based on the parameters that they had chosen.  Commissioner Graves also advised that his primary concern is that of the electric ratepayer.  He felt that the 1.5% electric rate increase was feasible for residential customers and expressed concern regarding the maintenance of low rates for that specific customer base.  Commissioner Graves further explained that the lack of cost cutting measures in other areas help to result in the 65% steam rate increase proposal.

 

Commissioner Rios stated that during the rate deliberations, they heard from several customers who advised the Board of the severe impact that a 65% steam rate increase would have on their respective business.  Some of those customers included Lansing Community College, Michigan Catholic Conference, LEPFA, apartment managers and downtown local churches.  He further stated that management did not provide them with adequate information to make sound decisions and thus the process was very difficult in accessing their options.  Commissioner Rios also stated that the pending steam rate increase will not resolve the issues as they actually need 135% rate increase to fully address the problems at hand.  He also explained that they were not aware of the exit fees associated with the GM plant closing and the possibility of claiming up to $18,000,000. 

 

Additionally, there were no discussions of how the GM payout would affect the pending rate steam increase.  Commissioner Rios went onto state that there was no clear managerial direction or any consideration for BWL customers.  He also advised that the Commissioners did not want to entertain the idea of selling plants nor laying off workers, which also effects the steam proposal as they did not consider those options as viable cost cutting measures.    

 

Commissioner Cochran stated that a cost of service study should be done every year to provide information prior to rate change deliberation.

 

Councilmember Wood asked what was the vote on the 65% steam rate increase?

 

Commissioner Graves responded to Councilmember Wood’s question by stating that it was unanimous. 

 

Board Chair Smith commented that a cost of service study was completed for electric and water.  She went onto advise Council that they had previously attended an APPA conference to learn more about the process and search for different options.  Board Chair Smith further explained that the steam rate was not based on a current cost of service study and that GM plays a roll in determining how they proceed.

 

Councilmember Wood asked the question, what is different now as opposed to March 2006 when the last meeting with GM occurred? 

 

Commissioner Rios responded by stating that at the time they were concerned that GM would file for bankruptcy and so there were sensitivities involved in that situation.  However, discussions have since progressed in that area.

 

Councilmember Allen asked whether or not the rate increase would be 65%?

 

Board Chair Smith responded by explaining that she could not say whether the rate would increase or decrease.  However, she went onto explain that the rate deliberations are scheduled for August 15th and a decision would be forthcoming. 

 

Councilmember Allen asked if the Commissioners had considered offering early retirement packages as a means to cut costs?  She also asked if the BWL had thought about increasing its rate to franchise areas?

 

General Manager, Sanford Novick responded by stating that they had not considered increasing its franchise rates as the BWL is currently under contract and the electric and water utilities do not subsidize steam.

 

Councilmember Kaltenbach asked what does the 65% steam rate increase represent in dollar figures?

 

Senior Vice President of Finance and Administration, Dennis McFarland responded by stating that it represented $4,000,000 proportionally.

 

The Commissioners went onto advise Council that keeping the utilities separate requires the budgetary monies to come from another source.  There was a plan to convert customers to another resource, which has since reduced the number of steam users.  They further explained that GM is not in violation of their agreement.  They have an option of paying a lump sum amount or amortizing over a period of time.  Therefore, the BWL expects payment within 3.5 years.

 

Council stated that the meeting was scheduled to bring the two groups together so that they may work as a team.  They also expressed concern over the level of negativity coming from the BWL as a whole. 

 

A suggestion was made to look at partnering with the City to save money on healthcare.

 

Councilmember Wood asked the BWL who decided to handout the document and its associated contents.

 

Board Chair Smith responded by stating that it was compiled at the last minute as they were still trying to determine what was going to appear on the agenda.

 

Commissioner Graves went onto state that he did not have a chance to review the packet nor have input as to what was contained within it.

 

2.  Internal Auditor.  Board Chair Smith reported that the Internal Auditor position has been open since January 2006.  She went onto state that since that time they have hired a search firm to look for a permanent auditor and they will hire an Interim Internal Auditor to temporarily assist the Board.

 

3.  Human Resources Review.  Vice Chair Rios reported that the Executive Committee has made a recommendation and will bring it before the full Board for a vote next week.  He went onto state that it is an audit of the human resource department and the Board of Water and Light in general.  Commissioner Rios also stated that the information obtained from the audit would also be used to look at future practices.  

 

4.  BWL Commissioner Vacancies.  Board Chair Smith stated that they have seven Commissioners on an eight person Board thus she is requesting an update on the status of filing the vacancy.  She went onto comment that it makes it difficult to fully function as a Board when you take into consideration vacations, work schedules and things of that nature.

 

Council President Leeman stated that the issue is currently before the Committee of the Whole.  He went onto state that one of the council person’s missed the interview process and they are attempting to bring that individual up to date. 

 

Commissioner Graves expressed concern over the candidates’ response to a specific question relative to the evaluation of the General Manager that was asked during the interview process. 

 

Commissioner Rios responded by stating that it was a mute point since the General Manager’s evaluation will occur next Monday.

 

Commissioner Graves then stated that it was not mute because in his opinion the response exhibited a level of naivety regarding the situation and in general.

 

Randy Hannan, Assistant Chief of Staff stated that Julee Rodocker had been a candidate for 70 days and they are still waiting for Council’s decision.

 

Councilmember Dunbar responded to Commissioner Graves comment by stating that most candidates would have stated that they could participate in the evaluation process, as they would have been expected to start working right away.

 

Commissioner Calkins disagreed and stated that he did not participate when he first became a Board member because he did not feel that he had adequate knowledge to make a decision of that nature regarding someone’s career.

 

Councilmember Jeffries stated that he thinks Council is struggling with what is needed to compliment the Board of Commissioners at this time.  Therefore, it is difficult to make a decision.

 

Board Chair Smith responded by stating that she was asked to present to Council a concept of an ideal candidate, which she thought to be someone who is diverse, financially knowledgeable and represents the community.

 

Commissioner Graves stated that his ideal candidate would have strong finance, accounting and human resource skills.

 

Commissioner Cochran stated that regardless of why the nomination is being held up, they still need another Commissioner to help decrease the workload and enable them to make legal decisions.

 

Council President Leeman advised that the Mayor’s request to trade Commissioner Rios and Commissioner Callen’s ward position was declined.  He went onto state that the re-appointment of Commissioner Rios has not been brought before Council at this time.

 

Councilmember Dunbar indicated that she did not feel that the current Commissioner nominee has a set agenda.  She went onto state that she believes that someone with an institutional background can still be effective.  Councilmember Dunbar also stated that she further believes that anyone who comes before Council right now will be highly scrutinized.

 

Commissioner Cochran expressed concerned that the meeting was moving into potential litigation issues and thus he decided to leave (6:00 p.m.).

 

5.  Management.  Councilmember Jeffries requested a response to the packet handed out during the meeting from BWL management and anyone else who may have input on the subject matter. 

 

After further discussion, it was suggested that the information presented was slanted and did not represent the sentiment of the entire Board.  Although, other Commissioners indicated that it was representative of some of the issues that had been brought to their attention.  Commissioners Calkins and Graves also expressed concern that this was the first time that they had seen the document and thus they did not have opportunity for input nor review. 

 

Commissioner Rios expressed concern that Council would attempt to advise the Commissioners on how to evaluate the General Manager.

 

Councilmember Jeffries indicated that that was not their intention.  He went onto state that Council did not want to weigh in on the subject matter.  However, they did want to know what to expect, as they will have to deal with the fallout of the situation, such as in the matter of former General Manager, Joseph Pandy. 

 

Commissioner Graves stated that in November 2005 the General Manager was given good remarks but he received the performance review in January 2006.  Therefore, since that time something has occurred to change the overall sentiment.

 

Councilmember Bauer indicated that she understands the magnitude of Commissioner appointments and how it affects the City and its residents.

 

Councilmember Wood went onto state that that is why full consideration is taken into account which results in further scrutiny of any potential Commissioner candidates.

 

Following discussion, it was agreed that joint City Council and BWL Commissioner meetings are beneficial to both parties to express concerns and maintain dialogue.

 

6.  Public Comment.  BWL retiree expressed concern over hearing that BWL retiree benefits should be increased by 5%, which he felt was significant.  He also stated that the $40,000,000 fund set aside for retiree health benefits should be put to use on their behalf as he understands that it is specifically set aside for health care use only.

 

GM retiree stated that the GM shutdown was well known ahead of time, except for the fact that it closed 6-months earlier than originally announced.  He went onto state that the shutdown information should have been taken into consideration during the budget planning process.

 

Board Chair Smith stated that all of the information in the document handed out earlier in the meeting is of public record.  She went onto apologize for not giving opportunity to the Commissioners to review said document.

 

The meeting adjourned at 6:30 p.m.

 

Motion by Commissioner Cochran, seconded by Commissioner James to receive the Joint City Council/BWL Commissioner Report as presented.

 

Action:  Carried unanimously

 

Resolution 2006-9-2

COMMITTEE OF THE WHOLE REPORT

August 30, 2006

 

The Committee of the Whole of the Board of Water and Light met at the Executive Offices, Lansing, beginning at 8:00 a.m. on Wednesday, August 30, 2006.

 

Commissioner Rios called the meeting to order and asked the secretary to call the roll.  The following members were present:  Commissioners Robert Cochran (teleconferenced at 8:18 a.m., physically arrived at 8:40 a.m.), Joseph Graves, Semone James, Santiago Rios, Julee Rodocker and Robin Smith.

 

Absent:  Commissioners Gary Calkins and Ronald Callen

 

Public Comment

 

There were no public comments.

 

STRATEGIC PLAN FOR STEAM BUSINESS AND BUDGET MONITORING

 

The Commissioners had lengthy discussion on the process to be used in creating a strategic plan, rate strategy and budget monitoring for the steam business relative to the 3-part motion passed on August 15, 2006 for the next three to five years.

 

Dick Peffley, Interim General Manager stated that Bill Cook, Vice President of Operations and Dennis McFarland, Vice President of Finance and Administration met with the former General Manager prior to his resignation to discuss the motion and its implementation.  As such, Mr. Cook summarized managements’ thoughts on the topic which include the following:

 

 

 

 

 

 

 

 

Commissioner Graves asked whether or not the strategy would include getting out of the steam business.   Mr. Cook responded by stating that they never assumed that the BWL would get out of the steam business.  Mr. McFarland then stated that getting out of the steam business would require a separate piece of analysis.  By November, they could provide ‘structured analysis’ that presents the issues, policy concerns and possible options.  However, they would not be prepared to present a clear plan within 90-days of how to get out of the steam.  A decision of that nature would take more time to help ensure its completeness and accuracy.

 

Commissioner Rios stated that he believes the analysis should start with the implications associated with abandoning the steam utility, which includes policy and financial ramifications and using this as a foundation to determine a possible strategy.  He went onto state that a part of getting out of the steam business may be to sell portions of it or perhaps convert our present customers to an alternative source.  Commissioner Rios stated that he did not know if that is the case but perhaps they should operate from that point of view. 

 

Mr. McFarland stated that they are going to try and address the issue by using the assumption of staying in the steam business and then utilizing the scenarios in terms of knowing that the steam rates are always capped in terms of what we could charge our existing customers relative to the cost of gas.

           

Commissioner Rios stated that there maybe policy, customer service, and political reasons why they should not get out of the steam business.  However, he stated that he thinks they should first begin to look at this from a strictly financial perspective and add the other considerations to help determine a plan.

 

Mr. McFarland stated that they are two parallel tracks.  The first one deals with the scenarios previously mentioned in which we develop the best plan possible based on what is available and the other is in which we determine how to abandon the steam business.

 

Commissioner Smith stated that abandoning the steam business must be the first question we address.  She went onto state that they could not base their decisions on GM as there are too many changes.  However, the notion must be, are we going to be a steam provider or not, if we are then we must take into consideration the political and financial ramifications.  Commissioner Smith went onto state that it would be beneficial for them to know the results of the 2001/02 growth plan as there are parallel tracks.  However, the most important one is whether or not to remain in the steam business.

 

Mr. Cook stated that he also thinks that it has to be on two tracks because in order to decide to stay in the steam business then you have to decide what it will take to do so.

 

Commissioner Rios stated that they are receiving criticism for staying in a business that does not make financial sense and those are the questions that they have to address.  He went onto indicate that they need to be able to state, here are the reasons why we cannot abandon the steam business.

 

Commissioner Cochran asked if we have explored other opportunities such as building an ethanol plant across the river on the vacant GM land and if anyone has spoken to other steam utilities to inquire about something of this nature.

 

Mr. Cook stated that they have spoken to other district heating and steam utilities for opportunities to add load but they have not targeted alternative uses to date.

 

Mr. McFarland indicated that the other part of the equation to the steam issue is how to recoup the investment already present in the steam business.  He went onto state that one must look at recovering from existing customers based on competitive rates versus how much can be recovered from selling the facility or for the BWL to pay to abandon it.  Mr. McFarland also stated that if we cannot fully recover the cost of the investment from steam customers then as a public power entity what may occur is that our other customers would eventually have to absorb those costs.    

 

Commissioner Rios stated that he is currently looking at the problem from a deficit standpoint even with the 35% rate increase.  He went onto state that part of the strategy has to be how much the ratepayer can bear and determining that respective limit and whether or not it is less expensive to do something different.  Commissioner Rios also stated that we are in a situation where we have to decide whether we are going to move forward or not and to address the issue from a realistic viewpoint.  He also indicated that it is probably not feasible for the BWL to ask its other customers to pay for a lost leader.

 

Commissioner Smith stated that the Board might have to revisit the issue of cross-subsidization as a means to possibly address the issues of recouped losses and cash flow.  She also stated that one of the downtown customers advised her that had they known the steam rate was going to increase by 65%, then they would have probably looked at other alternatives or carriers and this may be true for other major steam users as well.

 

Commissioners Graves stated that he agreed with Commissioner Rios’ characterization of where they are today in respect to steam.  He went onto state that he could not support allowing electric customers to subsidize the steam utility. 

 

Commissioner Cochran stated that they have a responsibility to the citizens and all aspects of the city including the business, growth and health environment which may mean spreading steam cost to the electric utility; if it would benefit the city as a whole.  He went onto state that he did not think the Board should narrowly focus on itself.

 

Commissioner Graves stated that he understood the relevant impact that Commissioner Cochran is referring to in regards to downtown and he recognizes that the BWL is a part of the marketing and expansion of the area.  However, in his judgment he is not going to ask a low and medium income family to subsidize the Radisson, the Chamber or GM.

 

Commissioner Smith stated that she understood the point that Commissioner Graves was making in that if subsidizing steam causes electric rates to increase then that is not the scenario she is promoting. 

 

Commissioner James asked if the cost of converting to an alternative source would be included in the analysis. 

 

Mr. Peffley stated that he would make sure that it is included in the report.

 

Mr. McFarland stated that the resolution also specifically speaks to the GM termination fees.  He went onto state that they have had some preliminary discussions regarding the accounting for the current year.  However, due to the sensitive nature of the negotiations it is difficult to discuss the issue without comprising the process.  Mr. McFarland confirmed that the BWL has billed GM for $17 million, $8 of which is fairly firm and $9 million of which, is currently under dispute by GM.  Therefore, the best-case scenario would be to receive $17 million.  

           

After a lengthy discussion, the Commissioners agreed to seek a legal opinion from Amy Cavanaugh, General Counsel as to whether or not they can further discuss the issue within the confines of an Executive Session. 

 

Budget Monitoring

 

Mr. Peffley stated that a significant portion of this fiscal year’s shortfall has been made up and they are looking at other opportunities for continued improvement.  Mr. Cook went onto to state that they are scrutinizing every position that is being filled at the BWL to ensure its necessity and timeliness. 

 

Mr. Peffley went also stated that things look much better now than they did when the 3-part motion was initially passed.

 

Commissioner Rios indicated that he was glad to hear this information because the intent of the 3-part motion was to receive this type of information on a month-to-month basis so that they can keep abreast of the financial matters at hand.

 

Mr. McFarland clarified that the present estimate loss of $500,000 comprises all four utilities (electric, water, steam and chilled water).   However, if you look at them individually, electric will profit $4 million, water will lose $700,00, steam will lose $1.2 million, and chilled water will lose $700,000, which speaks to the issue of subsidization.

 

After further discussion, it was agreed that staff would provide the Commissioners with detailed monthly financial reports that take into consideration any significant pending items that will impact the budget.  The report will also include a present estimate with reconciliation on the budget on a year-to-date basis as well as detailed information relative to each utility.  The end result of providing such information will be to eliminate any budget item surprises at fiscal year end.

 

Commissioner James asked why the BWL was not a part of the bid for the Mason project?

 

Mr. Cook responded by stating that we made a proposal, which stated that Mason would be responsible for our cost of service and the piping to connect to us.  He went onto state that they provided what they felt was a fair offer and Mason decided to do the project themselves.  Mr. Cook also stated that they are currently dealing with an under market value sale to Delta Township that they are trying to renegotiate.  In the meantime, Michigan State has expressed an interest in taking our water and the East Lansing Meridian Water Authority wants to renew their contract.  Mr. Cook also indicated that we have a commodity that people want.  However, we have to ensure that the pricing is correct and we do not want to take long-term commitments of building capacity on their behalf unless they are going to reimburse our customers.         

 

Commissioner Rios asked how far off were the terms with Mason?

 

Doug Wood, Director of Engineering responded by stating that we were actually pretty close but he thought that Mason just wanted to have control over their own water supply.  Additionally, they are not going to condition their water to have soft water.  Therefore, price may have been the driving factor in their decision.

 

Commissioner Smith stated that it is beneficial for them to have this type of information to help obtain the contract in Mason as well as others like it.

 

Mr. Cook stated that Delta Township is not the only under-market value contract that we currently have and they have been working hard to clean those up.  To date we are receiving incremental costs but it does not cover the cost of service.  He went onto state that one can sell at incremental cost for a short period of time but the Delta contract is perpetual and you cannot continue to do so indefinitely.  Mr. Cook also stated that the critical issue at hand right now is Delta Township, as the BWL is requesting a significant rate increase of 50% - 100% to bring the agreement up to the cost of service.  Mr. Cook also added that they told Delta Township that we were providing services that they are not paying for and as such they advised them to either pay for the services or install the infrastructure.  Delta Township decided to build a water tower at the corner of Snow Road and Michigan Avenue at a cost of $5 million to address the issue. 

 

Commissioner Graves stated that he did not think that Lansing customers should subsidize the suburbs.

 

Mr. Peffley added that the systems are not going to subsidize the suburbs.

 

Mr. Cook added that if we are going to sign a 5-year contract on incremental costs plus margin, then we could create revenue to leverage our assets.  However, if we are going to do this over a 30 to 40 year period where the township assumes some of the risks then you could probably look at a cost of service type analysis.  He went onto to state that he agreed with Commissioner Graves in context.

 

The Commissioners agreed that perhaps curtailing our sales pitch to include the benefits of our water quality would encourage the purchase of said product relative to projects such as Mason’s.  Commissioner Rios also encouraged utilizing the relationships that Calvin Jones, Governmental Analyst has with the townships to help with this process as we have a marketable product with the capacity to serve area communities.   

 

Commissioner Graves stated that they had received a six-year financial forecast that projected structural problems with the budget over time.  He went onto to state that he would like Mr. Peffley to review the material to see if he concurs with the projections, as he is convinced the problem is real but he wants to know Mr. Peffley agrees.  Commissioner Graves also stated that they are entering into the bargaining process and he thinks it best that they know as much as possible to help determine if this would make the stated problems any better or worse.

 

Commissioner Cochran made a friendly amendment and requested that in addition to reviewing the projections, Mr. Peffley also revisit the assumptions made in the six-year forecast and access their validity.

 

Commissioner Rios recommended that the Finance Committee work with Mr. McFarland in regards to Commissioner Graves and Cochran’s request. 

 

GUIDELINES FOR INTERIM GENERAL MANAGER

 

Commissioner Rios stated that they need to workout some details and recommendations from the Executive Committee.  However, he asked the Commissioners to make a few comments regarding Mr. Peffley in a roundtable format and they are as follows:

 

Commissioner Rios asked Mr. Peffley to feel the liberty to two explore new areas and take action.  He went onto state that Mr. Peffley has the Board’s support and they recognize that he has tough decisions ahead of him and extends his support of positive action to move to the next level.  Commissioner Rios also complimented Mark Nixon, Director of Communication on the handling of the lead water report and he went onto state that he needs Mr. Peffley’s recommendations whether he thinks the Board of Commissioners will like them or not.  He also went onto state that he values Mr. Peffley’s honesty and directness.

 

Commissioner Smith asked to receive Mr. Peffley’s recommendations based on his operational experience.  She also stated that she saw him as stabilizer and bridge, which she feels is very critical in the weeks to come and in also giving the BWL direction.  Lastly, Commissioner Smith advised Mr. Peffley that communication is key and she also complimented Mr. Nixon on his handling of the recent lead water report.

 

Commissioner Rodocker stated that she is happy to be here and is looking forward to learning about the BWL.  She went onto to state that Mr. Peffley seemed very approachable and genuine and she is looking forward to getting his recommendations and working with him.

 

Commissioner Graves stated that he did not want to reiterate what had already been said. However, he is also looking forward to working with and supporting Mr. Peffley.

 

Commissioner James also expressed that she was looking forward to working and supporting Mr. Peffley.  She also advised Mr. Peffley to let them know what he needs from the Commissioners as he has been here longer than they have and will probably be so long afterwards.

 

Mr. Peffley stated that he appreciated the question and will need the Board to keep that sentiment in mind as they have some difficult decisions ahead of them.  He also stated that he would seek the Commissioners guidance as they move forward.

 

Commissioner Cochran asked Mr. Peffley to keep the openness and humility that he currently possesses.  He also asked the Commissioners to give Mr. Peffley a little time to get accustomed to the position and not to expect miracles from him.  Commissioner Cochran also stated that he thinks that the BWL’s public image is in good hands under Mr. Nixon’s direction.

 

Commissioner Rios stated that National Public Power Week in October is a good opportunity to tell people what is going on at the BWL.

 

Mr. Nixon stated that he would like to discuss his communication ideas with the Commissioners after the Customer Survey presentation is conducted.

 

The meeting adjourned at 9:35 a.m.

 

 

Respectfully submitted,

Santiago Rios, Chair Pro Tem

Committee of the Whole

 

 

Motion by Commissioner Graves, seconded by Commissioner James, to receive the Committee of the Whole report as presented.

 

Action:  Carried unanimously.

 

Resolution 2006-9-3

HUMAN RESOURCE COMMITTEE

September 5, 2006

 

 

The Human Resource Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 8:30 a.m. on Tuesday, September 5, 2006.

 

Commissioner Cochran called the meeting to order and asked the secretary to call the roll.  The following committee members were present:  Commissioners Robert Cochan and Julee Rodocker.

 

Absent:  Commissioners Joseph Graves and Santiago Rios.

 

Public Comment

 

There were no public comments.

 

ESTABLISH PARAMETERS FOR HUMAN RESOURCE AUDIT

 

The Commissioners met to discuss the human resource audit.  Commissioner Cochran stated that he did not want to establish predetermined goals and targets for the audit.  Michael Goree, Growth Strategies Consulting, Inc. indicated that he would work with Rhonda Jones, Corporate Secretary and the Human Resource department to gather the research information that he needs in which to begin.  The first step in the process would be to request documentation relative to the Board of Water and Light, which includes items such as the organizational chart, strategic plan, union contract, Board minutes, annual report, and safety records in addition to others.  Mr. Goree will request and review approximately 30 documents prior to initiating any discussion with employees, management and union representation.  He also stated that it is ok for employees to contact him directly and that their conversations will remain confidential.  His schedule is flexible and he will make himself available to speak to employees either before or after their respective work hours.

 

Commissioner Cochran indicated that the hiring procedure is an area of interest to the Commissioners.  At which time, Mr. Goree advised that as long as he has access to the Board of Water and Light’s written materials and employees then he would be able to make a sound analysis.  Commissioner Cochran also advised Mr. Goree that all of the items on the proposal list have equal weight.

 

The target completion date is 60 days and if it appears that the project is moving outside of the original scope then Mr. Goree will bring that to the attention of the Board prior to its occurrence.  Although, the process will be open and nothing hidden, Mr. Goree may contact Amy Cavanaugh, General Counsel for clarification relative to the Open Meetings Act.  He will also provide verbal updates to the Board on a regular basis at their discretion.  However, the final report will be a written document.

 

The meeting adjourned at 9:18 a.m.

 

                                                                                    Respectfully submitted,

                                                                                    Robert Cochran, Chair

                                                                                    Human Resource Committee

 

 

Motion by Commissioner Cochran, seconded by Commissioner Rios, to receive the Human Resource Committee Report as presented.

 

Action:  Carried unanimously

 

Resolution 2006-9-4

EXECUTIVE COMMITTEE

September 14, 2006

 

 

The Executive Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 8:00 a.m. on Thursday, September 14, 2006.

 

Commissioner Smith called the meeting to order and asked the secretary to call the roll.  The following members were present:  Commissioners Gary Calkins (teleconferenced), Robert Cochran, Semone James (teleconferenced), Santiago Rios and Robin Smith.

 

Public Comment

 

There were no public comments.

 

CHARLES BLOCKETT & ASSOCIATES – INTERNAL AUDITOR SEARCH

 

The Commissioners met with Charles Blockett of Charles Blockett, Jr. & Associates, Inc. to discuss the hiring search process for the Internal Auditor position.  Mr. Blockett provided a copy of key activity dates and candidate profile questions.  The activity dates provide an estimated timeframe in which to fill the position and the profile questions are intended to give the Commissioners and management an opportunity to convey their ideal candidate attributes.  In addition to the above, Mr. Blockett will provide candidates with as much information about the Board of Water and Light as possible to ensure that they are familiar with the organization.

 

Commissioner Calkins stated that Glenn Holloway, former Internal Auditor expressed an interest in returning to his former position as his present employer is downsizing.  Commissioner Smith confirmed that she had received an email from Mr. Holloway indicating that he is interested in returning to the Board of Water and Light as the Internal Auditor provided the Commissioners are receptive to the idea.  Mr. Blockett stated that he is amendable to modifying his contract if the Commissioners choose to bypass the national search process and return Mr. Holloway to his former position.  The Commissioners agreed that they could allow for the consideration of Mr. Holloway as a candidate without special consideration and recommended moving forward with the national search as originally planned.

 

Mr. Blockett proceeded to state that there would be six weeks of postings and the interviews would preferably be conducted by December 25th.  Prior to then the candidate list would need to be reduced to ten individuals by November 21st.  Mr. Blockett went onto state that he recommends forming an advisory committee of current employees who would have the opportunity to participate in the interview process of the aforementioned candidates’ with his assistance.

 

After discussion, it was decided that the Executive Committee would forward the internal auditor hiring search information to the Committee of the Whole as a recommendation to accept Charles Blockett’s proposal as presented. 

 

INTERIM GENERAL MANAGER EMPLOYMENT AGREEMENT

 

The employment agreement for the Interim General Manager position was presented and discussed.  Dick Peffley, Interim General Manager further explained the fourth item on said agreement that addresses the provisions for minimally returning him to his former once his current assignment has ended.  As such, Mr. Peffley introduced an amendment to the original proposal that essentially request a four-year agreement as the Director of Production at market rate with performance based wage increases, that would take effect if he is not appointed as the permanent General Manager. 

 

The Commissioners discussed the issue and were supportive of Mr. Peffley’s amendment including the salary wage and membership to the University Club as held by former General Manager’s.  However, to ensure that the agreement language did not conflict with existing Board practice and also did not create a barrier to change for production, Amy Cavanaugh, General Counsel was directed to work with outside counsel to determine the appropriate employment language.  

 

CORPORATE SECRETARY EMPLOYMENT AGREEMENT

 

Ms. Cavanaugh began by stating that she has been working with Rhonda Jones, Corporate Secretary relative to her employment agreement.  They have reached consensus on the language and clarified all other questions and concerns.  However, Ms. Jones presented an amendment to the proposal regarding a severance agreement.  The Commissioners had not received an updated draft copy of the employment agreement nor the proposal.  After discussion, the Commissioners directed Ms. Cavanaugh to draft a legal opinion and to also seek outside counsel regarding the matter.

 

After discussion, the Executive Committee decided to refer the employment agreement matters for both the Interim General Manager and the Corporate Secretary to the Committee of the Whole.

 

The meeting adjourned at 9:15 a.m.

 

 

                                                                                    Respectfully submitted,

                                                                                    Robin Smith, Chair

                                                                                    Executive Committee

 

 

Motion by Commissioner Calkins, seconded by Commissioner Rios, to receive the Executive Committee Report as presented.

 

Action:  Carried unanimously

 

Resolution 2006-9-5

FINANCE COMMITTEE REPORT

September 21, 2006

 

A meeting of the Finance Committee of the Board of Water and Light was held at the Executive Offices, Lansing, at 3:00 p.m., Thursday, September 21, 2006.

 

Finance Committee Chair Semone James, called the meeting to order and asked the secretary to call the roll.  The following committee members were present:  Commissioners Robert Cochran (alternate), Gary Calkins, Semone James, and Robin Smith.  Commissioner Julee Rodocker was also present.

 

PUBLIC COMMENT

 

There was no public comment.

 

EXTERNAL AUDITOR PRESENTATON FOR FISCAL 2006

 

Senior Vice President of Finance and Administration Dennis McFarland reported that the external auditor, Plante & Moran conducted an audit of the BWL Enterprise Fund for the fiscal year end June 30, 2006.  Mr. McFarland proceeded to introduce Plante & Moran representatives, Douglas Rober, Partner and Scott Wallas, Associate in charge of conducting the onsite audit.

Mr. McFarland advised the Commissioners that they would need to act on two resolutions after the audit presentation.  The first of which is the accounting treatment for the General Motors (GM) costs and the second of which is the acceptance of the financial statements and filing of said statements and the audit results with the City of Lansing. 

Mr. Rober began to discuss the audit, the high-level information relative to the BWL activities for the year, the management letter and the required communication letter relative to the finance committee.  He went onto state that they performed audits on and issued unqualified opinions provided that the Board approved the status of the FAS 71 treatment of the GM cost of the BWL Enterprise Fund and the three Employee Benefit Plans, which includes Defined Contribution Benefit Plan, Defined Benefit Plan and the Retiree Benefit Plan and Trust (VEBA).  Mr. Rober further stated that the primary objective of the audit is to test the financial information of the BWL that has occurred during the year in order to issue an opinion.  The critical component relates to internal controls, which primarily addresses process controls and those individuals involved in the process and the segregation of the two items, which provides a safeguard between the assets and ensures proper recording.  He also explained that internal controls are the responsibility of the BWL to initiate, observe and control.

Copies of the management and audit committee letters were included in the Finance Committee packet.  Furthermore, copies of the presentation were handed out during the meeting that highlighted certain aspects of the audit.  The audit committee letter speaks to the responsibility of the auditor and management.  Whereas, the management letter specifically speaks to auditor comments, recommendations and management responses.  Those topics of interest include the following:

 

 

Mr. Roper further explained that in conjunction with an audit, there is a concept of materiality, which is a threshold financial dollar amount in which a financial statement could be misstated but would not be significant enough to affect a reader’s judgment.  He went onto state that the BWL has a number of accounting policies in conjunction with financial practices.  There are three items of interest that Mr. Rober brought to the attention of the Commissioners and are also noted and addressed in the financial statements.

 

1) Significant Accounting Policies

 

Note 6 of the financial statements regarding the adoption of SFAS No. 71 in accounting for a new landfill site requiring environmental remediation.

 

Note 6 of the financial statements regarding the adoption of the SFAS No. 71 in accounting for the General Motors termination fees and related steam asset impairment.

 

Note 15 of the financial statements regarding the adoption of GASB 45 to account for various postretirement medical benefits.

 

2) Management Judgments and Accounting Estimates

Significant estimates that BWL used in relation to its accounting policy in relation to the landfill cost and the General Motors termination fees.

3) Audit Adjustments

 

An adjustment was made to record a liability to General Motors in the amount of approximately $1,900,000 associated with prior overbillings of steam service due to metering issue.

Mr. Roper stated that the settlement liability amount was $600,000 effective   June 30, 2006.

An adjustment was made to record a $400,000 reserve for obsolete inventory.

Mr. McFarland went onto state that it is BWL policy to obtain Board approval when they apply FAS 71 in regards to recognizing revenue and expense relative to the GM contractual termination fees.

 

Mr. Roper also reported that management decided not to make adjustments on invoices that arrived after June 30, 2006, which totaled approximately $200,00.

 

Mr. McFarland responded by stating that there is normally some amount of paperwork that is received after the due date, as such, they decided to record the amount in the 2007 fiscal year. 

 

Commissioner James asked what was the auditor’s recommendation?

 

Mr. Roper responded by stating that they would recommend that it be recorded in the proper period.

Commissioner Smith asked if there are any issues to the auditors’ knowledge that have not been addressed?

 

The auditors responded by stating, not to their knowledge.

 

Mr. McFarland then reported that there is still one outstanding issue, namely coal procurement.  He went onto reiterate that it is Board policy that they receive prior approval when applying FAS 71 on a perspective basis.  Mr. McFarland explained that that if they did not use FAS 71 then they would need to recognize an income of $17,000,000 and an expense of $12,000,000 from GM.

 

Mr. Roper advised that if the auditor letter were going to be used for an offering (bonds) then the BWL would need to seek prior approval from Plante & Moran in regards to the use of their name.  He further stated that there was no disagreement with management in how the accounting at the BWL is handled.

 

Mr. Wallas reviewed the contents of the presentation handout that included operating expenses, significant fuel costs, operating income (loss), kilowatt hours generated versus purchased, and bond debt service requirements.

 

After said review, Mr. McFarland explained that the BWL’s early adoption of GASB 45 requires the company to fund an unfunded liability for healthcare.  He went onto further state that the unfunded liability is $173,000,000, which must be fully funded within 30 years.

 

Mr. Wallas continued to review the presentation and went onto refer to the coal inventory controls referenced in the management letter.  He stated that it has been a reoccurring issue from year to year.  However, several changes were made, an outside vendor was brought into review the contracts and after several discussions with employees and management they feel that they will be able to change the comment assuming that the information supports what they expect to find.  Mr. Wallas went onto state that the comments are relative to the emergency coal situation and not the regular coal purchase process.  

 

Mr. Rober further explained that coal is a significant item of cost for the BWL which means that it should have significant controls so that no one person or a small group of persons have significant control over procuring, purchasing, approving nor the recording of coal.  In the past, it appeared to them that the process was too concentrated and the comments have appeared on the audit for a couple of years.  During the current year, the internal control process has been improved which strengthen the control process.  However, while conducting their audit they did not see the same internal review level specifically related to coal purchases made outside of the typical contract.  Mr. Rober went onto state that if they can obtain the documentation support to show that the coal purchases did have levels of review and approval that were not concentrated in that particular group then the draft copy of the letter can be revised.  If the information they locate supports what they expect to find then they would change the management comment for this associated topic.

 

Mr. McFarland reported that they are in the process of establishing a formal risk management policy and the installation of the new SAP will improve existing controls.

 

Commissioner Smith asked the auditors how would the Board know if the safeguards are in place?  She also asked if they would provide concrete information to let the Board know that it is in place?

 

Mr. Rober responded by stating that his comments do not address what Mr. McFarland is referring to.  However, the goal is to make sure that outside coal purchases are reviewed outside of the person who ordered the coal.

 

Charles Moore, Interim Internal Auditor asked if prior years show that someone ordered the coal, approved it and paid for said purchase?

 

Mr. Wallas responded by stating yes, that that appeared to be the problem in the past.

 

Mr. Moore then asked who was supposed to approve the process?

 

Mr. Wallas responding by stating that it appears that Sanford Novick, former General Manager approved the purchase due to the nature of the situation.

 

Mr. Moore then went onto ask that in the normal process who should approve the process?

 

Mr. Wallas explained that Ron Ishimoto – issues the bid, an outside consultant reviews and approves the contracts, then it proceeds through the following individuals for final approval:  Plant Manager – Director – General Counsel – Vice President of Operations – General Manager.

 

Mr. Moore asked if it was a good market rate or an acceptable rate?

 

Mr. Wallas stated that as an external auditor that is not something that they would normally assess as they are not coal experts, which is why the outside consultant was hired to review that process.

 

Mr. Peffley responded by stating that they received 8 – 10 bids for the small amount of coal that they purchased.  The Purchasing Department evaluated the bids and they did receive a good market rate.

 

Commissioner Calkins asked why the documentation was not available?

 

Mr. Wallas stated that it might have been but they did not look far enough but it is probably available. 

 

Following lengthy discussion, it was agreed that the establishment of a formal risk management policy and the installation of the new SAP would improve existing controls. Provided the Commissioners have reasonable assurances that the safeguards are in place and functioning properly.  It was also recommended that management should ensure that any potential liability issues are readily recorded.  It was further suggested that with the new SAP project, a change in software would require extensive documentation.  Therefore, this would be an excellent opportunity for the BWL to review all of its controls and determine how SAP affects them both operationally and financially.  

 

In addition to the above, Mr. Moore suggested to Mr. McFarland that the Commissioners receive a monthly progress report on the implementation of the SAP program.

 

Commissioner James responded by asking when would management start presenting status reports to the Board?

 

Mr. McFarland replied by stating that they would begin to do so once the deliverables are complete which should be within 2-weeks.  He went onto state that the SAP project is currently in the design phase.

 

Commissioner James asked about the status of the budget?

 

Mr. McFarland reported that they are currently $6,000 under budget.  He went onto explain that he currently receives weekly reports full of jargon and operational lingo that would need translating to be of any relevance to them.

 

Mr. Moore then advised that if the Commissioners received the reports and found them to be too much information then they can advise Mr. McFarland of such and perhaps reduce the reporting to a monthly basis.

 

Upon further discussion, it was agreed that Mr. McFarland would provide the past 6-weeks worth of SAP activity reports with a cover letter that summarized the contents of the information.  It was also agreed that a presentation of the project would be forthcoming and the Commissioners would continue to receive the weekly reports until further notice.  

 

Amy Cavanaugh, General Counsel, mentioned that she and Brandie Ekren, Associate Attorney is working to compile a list of BWL policies.  The policy review will take place in approximately 2-weeks and implementation will take longer.  She proceeded to state that they would make recommendations to the Vice Presidents and see if there is agreement to implement said recommendations.

 

Commissioner Smith responded by stating that she is concerned that the lack of policy is what leads to lawsuits and other issues.

 

Upon further discussion, it was explained that the comment regarding the Custody of Checks was not an indication of improper use.  It is simply a risk, which they do not believe appeared on last year’s audit comments.  Gennie Eva, Manager of Financial Services confirmed that the auditor recommendation has been implemented.  Mr. Rober advised that for future audits they can recommend a list of previous audits and whether or not the item has been addressed.

 

Commissioner Calkins stated that in the past with other auditors, they were made aware of deficiencies and able to correct them while the auditors were still present.  Therefore, the comments were made within the auditor letter to reflect the corrections.

 

Commissioner Smith advised that if it is within the scope of Plante & Moran’s work then she would like them to check and see if custody of checks was a previously noted item.

 

After further discussion the following recommendations were made:

 

Moved by Commissioner Calkins, seconded by Commissioner Smith to bring forth a recommendation to the full Board for the Board of Water and Light management to implement all of the auditor recommendations.

 

Carried unanimously.

 

Moved by Commissioner Smith, seconded by Commissioner Calkins to bring forth a recommendation to the full Board to accept the statement of financial accounting standards (SFAS) #71 establishing deferred recognition of GM termination fees and a regulatory asset for related steam system impairment.

 

Carried unanimously.

 

Moved by Commissioner Smith, seconded by Commissioner Rodocker to bring forth a recommendation to the full Board to submit the fiscal year 2006 Audited Financial Statements for the Board of Water and Light Enterprise Fund as having been reviewed and hereby accepted as presented.

Carried unanimously.

 

On motion by Commissioner Smith, seconded by Commissioner Calkins, the Finance Committee adjourned at 5:06 p.m.

 

                                                                                                Respectfully submitted

                                                                                                Semone James, Chair

                                                                                                Finance Committee

 

Motion by Commissioner James, seconded by Commissioner Rios, to receive the Finance Committee Report as presented.

 

Action:  Carried unanimously

 

Resolution 2006-9-6

COMMITTEE OF THE WHOLE REPORT

September 26, 2006

 

The Committee of the Whole of the Board of Water and Light met at the Executive Offices, Lansing, beginning at 3:30 p.m. on Tuesday, September 26, 2006.

 

Commissioner Smith called the meeting to order and asked the secretary to call the roll.  The following members were present:  Commissioners Gary Calkins, Ron Callen (arrived at 3:35 p.m.), Robert Cochran, Joseph Graves (arrived at 3:40 p.m.), Semone James, Santiago Rios (arrived at 3:55 p.m.), Julee Rodocker and Robin Smith.

 

Absent:  None.

 

Public Comment

 

There were no public comments.

 

MICHAEL GOREE – UPDATE ON HUMAN RESOURCE AUDIT

 

Mr. Goree reported that he has received very good support without question from Human Resources, the union, and many others.  He has met with 200 employees thus far and is scheduled to meet with Customer Service on October 5th and 6th.

 

Commissioner Cochran advised the Commissioners that he requested Mr. Goree to attend the Committee of the Whole meeting because everyone is interested in his report.

    

CHARLES BLOCKETT – DISCUSS INTERNAL AUDITOR SEARCH PROPOSAL

 

Mr. Blockett indicated that the interviews for the Internal Auditor position would take place in mid-December.  He also stated that four items have been handed out to the Commissioners thus far, which include the timeline, candidate profile, job announcement, and the print media.  He went onto state that anyone who applies for the position will receive a copy of the job announcement, which will also appear online with different websites.  The Commissioners discussed the possibility of ensuring that candidates have utility experience due to the learning curve relative to utility regulations and the length of time the current position has been vacant.  After further discussion, Mr. Blockett recommended that the Commissioners avoid limiting their candidate pool and it was agreed that they could give more weight to those with utility experience.

 

MPPA CONFIDENTIALITY AGREEMENT

 

Bill Cook, Senior Vice President of Operations indicated that there are up to four developers who are interested in building generation in Michigan.  However, they cannot have open discussions with the MPPA unless its participating members sign a confidentiality agreement.  As such, anything stamped confidential by MPPA and provided to the BWL will be kept confidential.  Nevertheless, this will not prevent the Board of Commissioners from having discussion on the topic.

 

Moved by Commission Calkins, seconded by Commissioner Cochran, to move the MPPA Confidentiality Agreement to the full Board for approval.

 

Carried unanimously.

 

UPDATE ON ORGANIZATIONAL CHANGES

 

Dick Peffley, Interim General Manager reported that Jack Hill, Director of Safety is scheduled to retire but will remain with the BWL until May 2007.  He also reported that Pete Thelen, Engineer is also scheduled for retirement and has agreed to remain with the BWL for an additional year in effort to avoid loosing key staff members during pivotal safety issues.  Mr. Peffley went onto report that the incident rate has decreased by 25% and workers compensation has decreased by 40% respectively.  He also stated that Mary Dwyer has recently accepted the position of Manager, Environmental Engineering.  Mr. Peffley went onto explain that this is not a newly created but a position that was scheduled for posting within the next 2-weeks.  He further stated that upon his conversation with Ms. Dwyer, she agreed that it was best for the BWL. 

 

Commissioner Graves asked if the Environmental Department is being minimized or if the BWL will lose something due to the transfer?

 

Mr. Peffley responded by stating that the BWL still have vital people in the area and Nick Burwell is critical to the organization.

 

Commissioner Graves asked Mr. Peffley if he was going to speak to the issue of the Chief Financial Officer?

 

Amy Cavanaugh, General Counsel responded by stating that Dennis McFarland, former Vice President of Finance and Administration has asked that if the Commissioners address him that it be done in closed session.

 

Mr. Peffley advised the Commissioners that the interim status would remain in effect until he knows how quickly the General Manager process will proceed.

 

Commissioner Rios, Chair Pro Tem entered the meeting at 4:02 p.m. and assumed the roll of Chair for Committee of the Whole meeting.

 

DISCUSS THE SELECTION PROCESS FOR THE GENERAL MANAGER POSITION

Commissioner Cochran reported that in a phone conversation with Michael Goree, it was suggested that the Commissioners enter this process thoughtfully, carefully and transparent.  He is not recommending that they wait for the completion of his report but perhaps they may want to give the organization time to absorb recent changes. 

 

Commissioner Graves suggested that they should not delay the process and in fact they should move quickly to initiate it, which he thought previously took 6-months.

 

Commissioner Smith stated that the previous search took 7-9 months and that she does not think that there is any harm in creating and shaping the process.

 

Commissioner Calkins stated that he does not support the Interim General Manager making a lot of decisions because the new General Manager will want their own person such as, in the Chief Financial Officer.  He went onto agree that they should proceed expeditiously.

 

Moved by Commissioner Graves, seconded by Commissioner Calkins, to write and create a Request for Proposal (RFP) for the hiring search firm for the General Manager position.

 

Carried unanimously

 

Upon further discussion, Commissioner Smith advised that she would like direction from the Human Resource Department in posting the RFP.

 

CONTRACT DISCUSSIONS FOR INTERIM GENERAL MANAGER AND CORPORATE SECRETARY

Moved by Commissioner Smith, seconded by Commissioner Cochran to go into executive session to discuss a legal opinion presented by Melissa Jackson of Foster, Swift, Collins & Smith, P.C. protected by the Open Meetings Act exemption MCL 15.268(h).  (4:30 p.m.).  The roll was called.

 

Yeas:  Commissioners Calkins, Callen, Cochran, Graves, James, Rios, Rodocker and Smith.

 

Nays:  None

 

Absent:  None

 

Carried unanimously.

 

Moved by Commissioner Smith, seconded by Commissioner Cochran, that the Committee of the Whole meeting return to open session.

 

Carried unanimously.

 

The Committee of the Whole meeting reconvened in open session at 5:28 p.m.