minutes ways and means monday, december 14,

8/14/2019 MINUTES Ways and Means Monday, December 14,

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MINUTES

Ways and Means

Monday, December 14, 2009 1:30 p.m.

10th Floor, Conference Room

City Hall

CALL TO ORDER

The meeting called to order at 1:29 p.m.

ROLL CALL

Councilmember Carol Wood, ChairCouncilmember Tim Kaltenbach, Vice Chair absenceCouncilmember Derrick Quinney, Member absence

OTHERS PRESENT

Diana Bitely, Council Staff

Arnie Yerxa, Internal AuditCalvin Jones, BWLPeter Lark, BWLBrigham Smith, LawAngela Bennett, FinanceSusan Devon, BWLGennie Eva, BWLShaun Krick, Plante & Moran

Jean Young, Plante & MoranCarl Calille, Citizen

APPROVAL OF MINUTES

None.

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PUBLIC COMMENT

None.

ACTION/DISCUSSION

BWL Financial Report

Mr. Lark introduced Shaun Krick and Jean Young from Plante & Moran.

Mr. Krick reviewed the financial report. He reported that the General Motors bankruptcy had adirect impact on the Board of Water and Lights finances, which resulted in lower revenues andoperating costs. He further reported that there was an increase in purchased energy due to the

Green Initiative with Granger, and the energy purchased from Belle River cost less.

Councilmember Wood questioned how much of the bond debt reflects the CSO work.

Mr. Lark stated that although they issue a water bond, he only knows that forty million was usedfor water. This water bond includes both CSO work and lead pipe replacement.

Mr. Krick stated that the Board of Water and Light would pay off approximately 35% of its totaldebt within the next five years.

Councilmember Wood questioned the debt incurred from the General Motors bankruptcy.

Mr. Lark responded that General Motors, under the agreement, were supposed to pay Board ofWater and Light approximately $12.8 million dollars. That amount was included in the oldGeneral Motors and therefore, with the bankruptcy. It is expected that the Board of Water andLight would receive a portion of that amount, but nothing near the actual debt.

Councilmember Wood questioned if part of their payment could include possession of the landsurrounding the old General Motors.

Mr. Lark indicated that they did look into it; however, at this point there is no way to do this withthe bankruptcy filing. General Motors may not be averse to selling some of the property at avery reasonable price, as they do not appear to have a need for using the land.

Councilmember Wood questioned the effect on the Board of Water and Light with the newGeneral Motors since they are using fewer resources than have been contracted.

Mr. Lark stated that every time General Motors does not work for a month it costs BWL $1.5million in lost revenue. In conversations with the plant manager, on May 1, 2009, they plan to

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work their way up to three shifts at the Delta Township plant. We are seeing those numberscoming back a little bit, but it is not possible to predict their future success.Councilmember Wood stated that Council is concerned about payment on equity and the impactthat General Motors closing down has had on the Citys budget.

Mr. Lark stated that for FY10, he guesses that the revenues to the City for the PILOT will beright up near as largest they have given the city. $10.7 in 2008, $10.3 in 09, we expect $10.7 forFY10. We could pay more if their revenues increase through GM adding a shift, but based ontheir current projections, they expect $10.7 million.

Councilmember Wood questioned the rate hearings and proposed increases.

Mr. Lark stated that the date set is January 21, 2010. Management will present material to theBoard of Water and Light Commissioners and they will make those decisions. We are looking atan increase to cover mandatorily created endeavors, such as a renewable energy program, which

we are required to invest and collect certain costs. The only increase is in electric to be used forrenewable energy. Water would increase by $1.19 per month, due to a slight increase incommodity itself.

Councilmember Wood questioned how the furlough days affect their bottom line.

Mr. Lark indicated that they were projecting a net income. After the first quarter, theyprojected a net loss of $13 million. We are now projecting a net loss of $10 million in October,and they hope that this number decreases. We hope to cut costs through the furlough program sowe have cut the overtime by approximately half. For the last pay period we had cut it 70%,however, these numbers are based on the last couple of weeks, but it is very dependent upon theneeds, such as water main breaks, etc that will factor in. We wanted $1 each from bargainingand non-bargaining units. There will be eight furlough days beginning on 23 December. Wereduced the pension for both as well to $500 from $1,000. If they have the money at the end ofthe fiscal year in the designated account, they would replace the $500 which was taken away tohelp with the deficit. We have tried to get everyone involved in helping to cut costs andsuggestions are welcomed from BWL employees. It has brought the BWL employees closertogether.

Councilmember Wood questioned how the next years CSO would be affected. Three areas willnot be done this coming year.

Mr. Lark indicated that it is very positive for their revenue. We have fallen somewhat behind incapital expenditures, so to the extent that they plan to spend a little less in the next year, thatallows us to take that out of the capital expenditure and improve their financial bottom line.

Councilmember Wood questioned where they are with lead pipe replacement.

Mr. Lark indicated that they are ahead of schedule, but they are not rushing to do so as it costsmoney and they will definitely meet the schedule and if they end up ahead, then so be it.

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Councilmember Wood extended her appreciation for todays report and question and answerperiod.

ADJOURNThe meeting adjourned at 2:08 p.m.Submitted by,Diana BitelyAdministrative SecretaryLansing City CouncilApproved by the Committee on __________________.

Appropriate documents attached to original set of minutes.

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minutes ways and means monday, december 14,

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