Approved by the Board:
MINUTES OF THE BOARD OF COMMISSIONERS'
RESCHEDULED MEETING
_________________________
___________________________
The
Board of Commissioners met in the Boardroom of the Administrative Offices,
|
Present: |
Commissioners Robert Cochran ( |
|
Absent: |
None. |
The
Acting Secretary declared a quorum present.
Chairperson
James called the meeting to order at
APPROVAL OF MINUTES
Motion
by Commissioner Joseph Graves, seconded by Commissioner Peter Kramer, to
approve the minutes of the regular meeting held
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.
Phil
Lemke, BWL employee, thanked Commissioners and staff for the support he has
received since his accident.
John
Pollard spoke against the proposed rate increase. He believes that the Board of Water and Light
(BWL) are losing its customer base because of the utility costs in this
area. He cited the number of home
vacancies in Lansing, the number of people living in poverty, and the senior
citizen discount. Mr. Pollard also
thinks that rates for BWL customers outside of the City of
Jim
Harken of
Steve
Rulison,
Dorothy
Alagna spoke against the proposed rate increase. She and her husband are retired and on a
fixed income and noted that the 7% increase is way out of line.
Steve
Goodwin of
Leonard
Wilson,
Michael
Cole of
COMMUNICATIONS
Letter
from Robin M. Smith dated
Received
and placed on file.
Letter
from Rev. Joe Huston, Sr., Minister of Central United Methodist Church dated
Received
and placed on file.
E-mail
received from Mark Mitchell,
Received
and placed on file.
Letter
from the State of
Received
and placed on file.
Message
from Marilyn Ford, 1501 Shubel, Lansing dated
Received
and placed on file.
COMMITTEE REPORTS
FINANCE COMMITTEE REPORT
Finance
Committee met at the Executive Offices, Lansing beginning at
Acting
Finance Committee Chair, Semone James called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Semone James and Peter Kramer (arrived
at
Absent: None.
Public Comments
There
were no public comments.
Water Bonding Resolution
Susan
Devon, Chief Financial Officer (CFO) introduced Warren Creamer, Bond Financial
Advisor with Robert W. Baird and William Danhof, Bond Counsel with Miller,
Canfield, Paddock & Stone. Staff
sought Board approval of the proposed tenth supplement to the Amended and
Restated Bond Authorizing Resolution, dated
In
response to a Commissioner question, Mr. Baird clarified that rating agencies
tend to rate overall performance and not just legal covenants. Reducing the rate covenant to 125% increases
the BWL’s rate flexibility as it looks towards more significant capital
improvements, by removing antiquated covenants that require the BWL to set
rates to produce revenues in excess of normal operational maintenance
administration at levels, which would provide recovery of 150% of maximum
annual debt service requirements. In
response to another question, it was noted that the BWL is fairing
extraordinarily well against other public utilities. It was further advised that AAA ratings
amongst electric utilities is typically an indication that an organization has
more funds in the bank than necessary and could make better decisions with
respect to rates and ratepayer money. In
addition, the significant benefit between negotiated and open bonds is its
flexibility. Investors tend to pay more
money for bonds if they have particular features; the more complicated the
transaction the more often one would see a negotiated sale. Mr. Baird suggested that the BWL consider
selling the proposed bond on a negotiated basis, which would give the BWL an
opportunity to re-familiarize itself with the process. It is not a decision that the BWL must make
right now. However, the process tends to
be very open and fluid in that it is real time whereas, one is allowed to
adjust rates based on demand and supply for given maturities.
On
motion by Commissioner Graves, seconded by Commissioner Cochran, the
Committee of the Whole agreed to forward the Tenth Supplemental Revenue Bond
resolution to the full Board for consideration.
Action:
Carried unanimously.
Internal Audit Reports
Susan
Pifer, Director of Internal Audits provided an update with respect to internal
audit reports issued to date. In
response to a Commissioner question, Ms. Pifer noted that any issues that arise
during the course of an audit are typically presented to and addressed by the
CFO. More specifically, she spoke to
issues regarding the coal book inventory and shipping and receiving of the coal
entries into the general ledger.
Although, both issues are currently being addressed, the first one is
relative to coal scales being used by the BWL and its vendor in determining
their accuracy with respect to current standards. The second item is primarily an issue of
internal control whereas; the buyer is making entries into the system and may
need support and training in this regard.
It was noted that the Associate Internal Auditor and Manager of Internal
Controls and Tariff Administration could be sent to provide additional training
and oversight relative to this issue. In
addition, Ms. Pifer also asked the Board of Commissioners to consider the
addition of an Audit Specialist to assist the Internal Audits and Metrics
Department (IAD) and to also perform the most perfunctory audits. The additional position would not exceed a
variance of $25,000.
On
motion Commissioner Graves, seconded by Commissioner Kramer, the
Committee of the Whole agreed to add an Audit Specialist position to the
Department of Internal Audits and Metrics at a variance not to exceed $25,000.
Discussion: Commissioner Cochran asked if the variance
amount was sufficient?
Ms.
Pifer noted that IAD currently has a positive variance but it should be noted
that the Board would see a larger amount next year.
Action:
Carried unanimously.
Sarbanes-Oxley Update
Susan
Pifer noted that external auditor audit fees are expected to increase due to
the implementation of Sarbanes-Oxley standards.
The update noted an estimated increase of approximately 15 – 20% in
audit fees. In response to a
Commissioner question, Ms. Pifer advised that she expects to receive a firm
number from the BWL’s auditors as to what they should expect to receive for the
next audit cycle scheduled to begin in March/April 2008.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Semone M.
James, Chair
Finance
Chair
The
report will be filed with the minutes of the
COMMITTEE
OF THE WHOLE
The
Committee of the Whole of the Board of Water and Light met at the Executive
Offices, Lansing beginning at
Committee
of the Whole Chair, Julee Rodocker called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Tony DeLuca, Joseph Graves (teleconference), Semone James, Peter Kramer, Frank Lain,
Julee Rodocker and Sandra Zerkle.
Absent: None
Public Comments
Lansing
City Mayor Virg Bernero commented on the Ottawa Station project by highlighting
the tremendous historic opportunity of such a development. He also thanked the Accident Fund, Christman
Company and the Board of Water and Light (BWL) for their partnership efforts in
this endeavor. The project will bring
five hundred new jobs, $130 million in private investments, riverfront
reinvention, and downtown rejuvenation.
It was noted that it has been a long process but it is a testament to
the possibilities and talent of the community.
Mayor Bernero went onto urge support and thanked the BWL for what they
have done thus far.
Kelly
Rossman-McKinney of the Rossman Group and Secretary of the Lansing Economic
Development Corporation (EDC) made remarks regarding the Ottawa Station
project. Ms. Rossman advised that the
Ottawa Station building is a huge landmark for those persons who have lived in
By
unanimous consent the Committee of the Whole agreed to change the order of the
agenda items. As such, an Update on
Ottawa Station Facility was moved to the first agenda item.
Update on
J.
Peter Lark, General Manager advised that there are two resolutions before the
Committee of the Whole. The first
resolution declares the entire
Dick
Peffley, Executive Director of Operations proceeded with the Ottawa Station
update and acknowledged Robert Trezise and Karl Dorshimer of the Lansing
Economic Development Corporation and Jim Cash and Anthony Pecchio of the
Christman Company. Mr. Peffley provided
the Board of Commissioners with a project summary sheet that gave specific
details pertaining to the expenditures, savings and revenue of the
project. He also offered the
Commissioners a copy of the survey and complete appraisal if needed or so
desired. In addition, Mr. Peffley noted
that the Ottawa Station project is an opportunity for the BWL to turn a cost
center into a revenue source. By request
of Commissioner James, Mr. Peffley gave an overview of the summary sheet and
provided explanation regarding various components of the project as well as
additional information. Listed below are
the highlights of said discussion. (See
Attachment)
·
Expenditures
to date total $313,000. This includes
outside attorney charges for the development agreement, stack removal, BWL sign
removal, and BWL engineering labor for the chiller. All parties agreed to assume responsibility
for their individual attorney fees. Last
fall $50,000 was allotted for stack maintenance. However, due to the budgeted temporary
repairs and the lack of value relative to the future development. It was decided to remove the stack at a cost
of $218,000, which is included in the total cost of $313,000.
·
Expenditures
after sale total $1,910,000. This
includes outside attorney charges to close the deal and construction of the new
steam facility, which is the BWL’s responsibility to fund.
·
Negotiated
property sale price of $275,000 (adjusted original $1.00 price to offset exit
costs).
·
Capitol
budget reduction totals $6,525,000. The
budget reduction includes replacing the boiler and turbine room roofs, exterior
maintenance, lead paint, asbestos abatement and soil removal, stack repairs,
and pigeon dropping cleanup. The
negotiated property sale price ($275,000) and the capitol budget reduction
($6,525,000) equates to a onetime savings to the BWL of $6,800,000.
·
Annual
budget savings total $87,000. This
includes maintenance and security, utilities, and insurance premiums.
·
New
annual revenue totals $635,000. This
includes estimated revenue figures for electric ($195,000), water ($16,000),
steam ($117,000; negotiations in progress), and chilled water ($307,000;
negotiations in progress).
·
The
Accident Fund development agreement will not be signed until September
2008. However, chiller construction will
begin spring 2008.
·
There
are two facilities currently within Ottawa Station that consist of chilled
water and steam. The BWL has been
allocated $20 million to relocate the chilled water facility to Pine and
Allegan, which is the site of the State of