MINUTES OF THE BOARD OF COMMISSIONERS' MEETING

LANSING BOARD OF WATER AND LIGHT

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Tuesday, August 24, 1999
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The Board of Commissioners met in regular session at 5:38 p.m., in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan.  The meeting was called to order by the Chair, Diane Royal.

The Secretary declared a quorum present.

The Pledge of Allegiance was said by all.

APPROVAL OF MINUTES

Motion was made by Commissioner Christian, seconded by Commissioner Werbelow, to approve the minutes of regular session held July 27, 1999.

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.

Councilmember Sandy Allen (2^nd Ward) appeared before the Board to ask for BWL support as a sponsor in the Celebrity Lip Sync Review to be held at the Lansing Community College (LCC) Dart Auditorium on October 24th.  This annual fundraiser benefits the LCC Foundation and provides funds for scholarships to those who meet the academic criteria and financial need.  A brochure with details of the fundraiser will be provided to General Manager Pandy.

The Board will take this matter under advisement.

SPECIAL CEREMONY

General Manager Pandy recognized Dorne Croley and James O. Macklin with the following proclamation:  (They were present to receive their plaque.)

On May 17, 199, Lansing experienced a severe windstorm causing loss of power to as many as 15,000 customers.  Following the storm, you were on an outage call and had stopped to examine damage in the back yard of an elderly BWL customer.  When you went to the customer’s door to inform them of the work that would be going on in their yard, you noticed the smell of gas and the residents seemed disoriented.  You reported it to Consumers Energy, alerted the Fire Department paramedics, and made sure the residents evacuated their home.  It was, in fact, a gas leak, and your immediate action and follow-through averted a possibly fatal event.

We, at the Board of Water and Light, would like you to know that your efforts and dedication to customer service and public safety are acknowledged and appreciated.

General Manager Pandy also recognized Lawrence Taylor, Jayne Hoxie, Charles Murphy, and Joseph Scott and read the following proclamation:  (Charles Murphy was present to receive his plaque.)

On Sunday, July 25, 1999, you assisted in the rescue of a BWL customer from her burning home.  The ladder you put up to her second floor stairwell window enabled her to exit her home without having to pass through the smoke-filled main floor.  The Fire Department reported that she would not have survived the thick smoke had she attempted a main floor escape.  The homeowner was additionally grateful to for saving her dog, Buddy, by breaking down the locked, front door, which allowed him to escape.

We, at the Board of Water and Light, would like you to know that your efforts and dedication to customer service and public safety are acknowledged and appreciated.

There was a round of applause in honor of these employees.

COMMUNICATIONS

No Communications.

REPORTS OF COMMITTEES

The Committee of the Whole Report for the meeting held August 24, 1999, will be presented to the Board at the regular meeting of September 28, 1999.

GENERAL MANAGER’S RECOMMENDATIONS

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

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ANNUAL COMMODITY PURCHASES

Resolved, That the estimated 12 month requirements of the following commodities for use in Dye and Wise Road Water Conditioning Plants, Moores Park Steam Plant, and Eckert and Erickson Electric Generating Plants be purchased.  Pricing is firm through August 31, 2000.  Commodity quantities are released as required over the 12-month period.  All commodities were competitively bid in accordance with the BWL Purchasing Policy and Procedures.  Below is a summary of the lowest and best-evaluated bids.

Motion by Commissioner Christian, seconded by Commissioner O’Leary, to adopt the resolution.

Action:  Carried unanimously.

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PROVIDE TEMPORARY LABOR SERVICES

Resolved, That the BWL issue a Purchase Order for SkillTech Employment to provide temporary labor services to the BWL for a three-year period commencing August 1, 1999 and expiring July 31, 2002.  The expected value of these services will be approximately $572,000 per year.

Motion by Commissioner Werbelow, seconded by Commissioner O’Leary, to adopt the resolution.

Discussion on Policy:  Commissioner Murray questioned why would something of this scope come to this Board for approval.  General Manager Pandy reported that past policies and practices are currently being followed to approve multi-year contracts with outside vendors.  He noted that the message is clear this Board would like to be more involved in substantive issues and strategies and less involved on administrative matters. Staff has been reviewing the policies to suggest guidelines for certain types of contracts and dollar limits to come before the Board for authorization.  Commissioner Royal noted that the Policies Committee will soon be analyzing the policies before they are brought to the Board for approval.

Action:  Carried unanimously.

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WHOLESALE WATER SERVICE AGREEMENT

WHEREAS, the East Lansing-Meridian Water and Sewer Authority (ELMWSA) requires additional water supply and desires the Lansing Board of Water and Light (BWL) to provide such source of supply for a 10 year term; and

WHEREAS, the BWL has sufficient excess capacity to provide a source of water supply to ELMWSA and such provision of supply will provide a financial benefit to the BWL and its customers; and

WHEREAS, the BWL and the ELMWSA will mutually benefit from water storage and pumping facilities to be located in Alaiedon Township by the BWL; and

WHEREAS, the ELMWSA has offered to provide up to four emergency interconnections to the BWL water service area in Bath Township.

RESOLVED, That the Board enter into a Wholesale Water Service Agreement with the East Lansing - Meridian Water and Sewer Authority, Ingham County, Michigan to provide and sell Conditioned Water to the Authority, to participate in joint storage and pumping facilities and to purchase water from the Authority during an emergency.

RESOLVED further, That the General Manager and Corporate Secretary are authorized to sign the Wholesale Water Service Agreement in such form as approved by the Staff Attorney.

Motion by Commissioner Christian, seconded by Commissioner Werbelow, to adopt the resolution.

Action:  Carried unanimously.

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RESOLUTION DECLARING INTENT TO REIMBURSE PROJECT EXPENDITURES WITH BOND PROCEEDS AND AUTHORIZING PUBLICATION OF NOTICE OF INTENT TO ISSUE BONDS

WHEREAS, the Board of Water and Light (the ”Issuer”) proposes to issue its taxable bonds (the “Bonds”) to finance the cost to acquire, design, build, and equip a “Central Utilities Complex” at the General Motors Midwest 1 Assembly Plant to be located in Lansing, Michigan hereinafter described as (the “Project”); and

WHEREAS, it is anticipated that the Issuer will advance all or a portion of the costs of the Project prior to the issuance of the Bonds, such advance to be repaid from proceeds of the Bonds upon issuance thereof; and

RESOLVED BY THE ISSUER, as follows:

1.     The Project shall consist of the acquisition, design, construction and equipping of a Central Utilities Complex with three (3) ancillary and related facilities and associated equipment: (1) a utility services building, (2) a waste treatment building, and (3) a cooling tower.  The utility services that are to be provided include the following: (a) a compressed air system, (b) chilled water systems for air conditioning and process requirements, (c) hot water systems for building heat and process requirements, (d) a process cooling water system, (e) a de-ionized water system, (f) primary electric service distribution, (g) a water treatment system, (h) a waste water treatment system, (I) air handling equipment, and (j) an energy management system.

2.     The maximum principal amount of obligations expected to be issued for the Project is $100,000,000.

3.     The Issuer hereby declares its intent to issue Bonds to finance the costs of the Project, and hereby declares that it expects to reimburse the Issuer’s advances to the Project as anticipated by this resolution.

4.     The Bonds shall be authorized by proper proceedings subsequent to this resolution.

5.     Staff is authorized and directed to publish in a local newspaper of general circulation a notice of intention to issue bonds substantially in the form attached, with such changes as are approved by bond counsel, BWL counsel and staff.  Staff is further authorized to execute certificates and make filings with governmental entities in order to secure necessary governmental approvals.

6.     All prior resolutions and parts of resolutions insofar as they may be in conflict with this resolution are hereby rescinded.

Discussion:  Commissioner Werbelow clarified that this resolution does not obligate the Board to issue any bonds.  The action comes at the Special Board Meeting, tentatively scheduled for November 16, 1999, when the bonds are sold.  This resolution is a preliminary step that does not commit the Board to do anything.

Motion by Commissioner O’Leary, seconded by Commissioner Werbelow, to adopt the resolution.

Action:  Carried unanimously.

UNFINISHED BUSINESS

At the April 27, 1999, regular meeting, General Manager Pandy told the Board that he would be submitting a resolution for Board authorization to file a full application in October for a Waterfront Redevelopment Grant for the commercial redevelopment of Ottawa Station.  The deadline for the fall round of grants is October 1, 1999.  In depth details of the redevelopment project will be provided once the confidential nature of the project can be released.

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STATE OF MICHIGAN WATERFRONT REDEVELOPMENT GRANT - APPLICATION FOR OTTAWA STATION

WHEREAS, the Lansing Board of Water and Light has decommissioned its Ottawa Power Station, and

WHEREAS, the Lansing Board of Water and Light will invest a total of approximately $4,500,000 in costs to dismantle and remove equipment from the Ottawa Station, and

WHEREAS, the Lansing Board of Water and Light believes that the Ottawa Station and associated real estate should be redeveloped as a commercial urban entertainment center, with elements of theatre, lifestyle retailing, theme restaurants, and clubs, and public access to the Grand River frontage, and

WHEREAS, the Lansing Board of Water and Light is mindful of interest in developing the Ottawa Station expressed by Centertainment Division of AMC Entertainment, Piper-Wind Architects, and Clark Construction Company, all of which have experience in the development and construction of urban entertainment centers, and

WHEREAS, the Lansing Board of Water and Light Commissioner’s have been informed of the State of Michigan’s Waterfront Redevelopment Grant application process, and have reviewed the Lansing Board of Water and Light’s application for a grant, and substantively all of the representations made in that grant application.

resolved, That the Director and General Manager is hereby authorized to submit the Lansing Board of Water and Light’s Application for Waterfront Redevelopment Grant for the Ottawa Station/The Power Tower.

Motion by Commissioner Werbelow, seconded by Commissioner O’Leary, to adopt the resolution.

Action:  Carried unanimously.

NEW BUSINESS

Chairwoman Diane Royal announced standing committee assignments.

RESOLUTIONS

No additional resolutions.

GENERAL MANAGER'S REMARKS

Stamp-Rite Claim Settlement.  General Manager Pandy reported that the BWL’s Risk Manager, Gerald Blanchard, received notification that a claim settlement has been negotiated with Wendall Parsons and Stamp-Rite, Inc.  This claim stems from a water main break that occurred in 1996 at the Dye Water Conditioning Plant that flooded the Stamp-Rite building.  Three insurers who agreed to defend the BWL in this matter will pay this claim.  The suit of Hastings Mutual Insurance Company, insurer for Stamp-Rite has not yet been resolved.  A settlement offer has been extended, but it has not been accepted.

Public Hearing on Chilled Water District.  General Manager Pandy reported that the Lansing City Council held a public hearing on August 23rd with regard to the rezoning of 327 South Walnut from an E-2 Local Shopping District to a G-1 Business District and also a request for Special Land Use to construct the Chilled Water Facility.  Six persons spoke at the hearing with questions about the aesthetics, noise levels, vibrations, and neighborhood environment.  Mr. Pandy briefed the Board on plant design options presented at the hearing.  He reported that the BWL retained Stanley Consultants, Inc. to design and engineer the district cooling facility.  Stanley has calculated the noise level from the chilled water plant to be about 74 decibels (db) at a height of 30 feet above the ground and 11 feet away from the chilled water building.  This noise level compares to normal conversation listed at 70 db; at street level, the noise would be lower.  The matter now goes to the City Council Committee on Planning and Development for scrutiny.

Financial Performance Reviewed.  General Manager Pandy presented an overview of the BWL’s financial performance comparing FY 1998 with FY 1999.  Financial results declined in FY 1999 to a net income of $11.6 million representing a 3.3% return on net fixed assets, which is below our target of 5%.  After paying $6.4 million return-on-equity to the City, the BWL’s return on assets was 1.48%--our target is 4%.  Significant items that affected the negative net income were reviewed.  It was noted that the negating effect of buildings General Motors has torn down and operations they have phased out have impacted the revenues.  Some additional revenue will be coming from new wholesale water customers.  Discussion followed regarding how maintenance items are expensed.

Capital Project Approvals.  General Manager Pandy reported that in response to concerns raised at the July Board meeting, staff has reviewed the capital project approval and reporting process.  A procedure is in place of bringing capital projects to the Board wherein the Board would authorize capital projects either as part of the annual budget, or by specific resolutions adopted during the year.  Any commitment beyond the Board’s authorization would require the General Manager’s approval.  Should commitments or expenditures be forecasted to exceed 15% of the original authorization, the project will be brought back to the Board for concurrence before proceeding.  Staff is examining the whole issue of capital projects, their justification, and the amount of contribution required from customers and developers to pay for the projects.

BWL Property at Comfort Street/Glenrose Avenue.  General Manager Pandy reported that the City is showing interest in acquiring the BWL’s Comfort/Glenrose Avenue property, previously utilized for coal ash landfill.  The City is interested in a 14-acre parcel along the river for future park use.  A summary outline on aspects of this property was handed out.

REMARKS BY COMMISSIONERS

There were no remarks.

EXCUSED ABSENCES

By Commissioner Christian, seconded by Commissioner O’Leary, that the absences of Commissioners Aquilina, Callen and Creamer be excused.

Adopted unanimously.

PUBLIC COMMENTS

THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT.

ADJOURNMENT

On motion by Commissioner Christian, seconded by Commissioner O’Leary, the meeting adjourned at 6:23 p.m.

/s/ Mary E. Sova, Secretary

Filed:    August 27, 1999

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Marilynn Slade, City Clerk