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12/01/2011 - Minutes .� «-6 RECEIVED Salt Lake City FEB 2 f 2012 Public Utilities Advisory Committee Minutes CITY R E C O R D S IT December 1,2011 The Public Utilities Advisory Committee meeting was held at 12:00 noon on December 1, 2011 at Little America Hotel, 500 South Main Street, Salt Lake City, Utah. Committee members present were Jan Striefel, Dick Gaddis, Dwight Butler, Dixie Huefner, Allen Orr and Larry Myers. Salt Lake City Public Utilities employees present were Jeff Niermeyer, Tom Ward, Jim Lewis, Florence Reynolds, Chuck Call, Stephanie Duer, Linda Jennings, Kurt Spjute, Bill Meyer, Mitch Elis, Arlene Larsen, Wes Ing, Mark Stanley, Ryan Broadhead, Randy Bullough, Kelly Brown, Giles Demek, Nick Kryger, Kirk Anderson, Karryn Greenleaf, Dale Christensen, Brad Stewart, Michael Gill, Laura Briefer, Sybilla Dalton and Zee Smith. Also in attendance were Lehua Weaver and Carlton Christensen, SLC Council Office; Rusty Vetter, SLC Attorney's Office; Mike Devries, MWDSLS; Steve Clyde, Clyde Snow; Scott Martin, Shawn Draney & Joe Novak, SC& M; Kathy Loveless MWDSLS; Paul O. Skeen Hansen, Barrett & Maxwell. Financial Report by Independent Auditors—Hansen, Barrett & Maxwell Paul Skeen, partner with auditing firm Hansen, Barnett and Maxwell, quickly reviewed the financial statements for those attending the Public Utilities Advisory Committee meeting at Little America. Mr. Skeen stated this is the 7th year of doing the audit for Salt Lake City and its entities. Mr. Skeen said that he appreciated the work and effort of Jim Lewis, Kurt Spjute and the staff for the hours spent compiling the report. Mr. Skeen mentioned that as auditors they were tasked with reviewing not every transaction that occurs, but through risk based sampling they examined how Public Utilities accounted for the activites during the year. He explained how they provide an opinion as to the fairness that statements are presented. He discussed the bond coverage and the importance it has for the soundness of the Utility even with the amount of debt that the Department has incurred. Asking for questions, one of the board members asked if they provided suggestions or improvements to Public Utilities even though it appears that we have good processes. Mr. Skeen mentioned, they often do suggest ways to improve or assist in improving processes or suggest alternate accounting options. These are not significant enough to bring to the board or other management as a concern and are often worked with through the finance staff. (note: Since many of the processes that we follow are mandated through the City central finance procedures, there are few changes that would occur at Public Utilities that would modify how we are required to follow some processes). r-1 two Financial Report—Jim Lewis Mr. Jim Lewis —Thanked the Financial Auditors for their remarks. He then stated that all three funds ended the year in good financial condition even after the wet spring and summer season and related lower water sales. He presented a chart showing water deliveries by year from 1990 thru 2011. The chart depicted that water deliveries have decreased each year over the last five years. The next chart showed the daily water deliveries for the prior two years 2010 and 2011. Mr. Lewis stated that the two years are very similar in water usage. He stated that in both years the normal water use bell curve has moved about 20 days later into the summer season reducing water sales in both years by 5 to 9 percent compared to 2009. The next chart presented operating revenue for water, sewer, and stormwater for years 2010 to 2011. Mr. Lewis stated that water sales decreased slightly over last year due to the wetter than normal spring. He stated that sewer and storm water revenue are up due to rate increases in both funds last year. The next slide presented operating costs by year from 2010 thru 2011. Mr. Lewis stated that all three funds had expenditures higher than the previous year, but were below the approved budget limits. The Water Fund incurred additional water purchases and legal fees. The Sewer Utility Fund incurred additional costs as the expanded treatment process came on line and additional costs associated with the flooding, which affected both the sewer and stormwater funds. The next chart depicted the amount of funding for capital improvements for the Water Utility. Mr. Lewis stated that the chart provides details on the amount of funds generated and disbursed by the utility each year. He stated the difference between the receipts and disbursements equals the amount of funding available to finance capital improvements. He stated that under the current forecast the Water Utility will not be generating enough funding to cover the depreciation rate in the budget year 2013. Water rates will need to be increased in 2013 to continue a strong capital improvement program. The next slide was for the Sewer Utility showing the same comparison of receipts to disbursements. Mr. Lewis stated that because of the 2009 and 2010 bond issues and related debt service payments the utility will only generate $5 million per year for capital improvements over the next five years. The Sewer Utility is currently in fair financial health, but the fund will also need to raise rates by 2013 to continue a strong capital improvement program. The next slide provided the same information for the Stormwater Utility. The Stormwater Utility since its inception has provided $3 million per year for capital improvements. Due to the issue of revenue bonds in 2005 and 2011 with the related debt service payments, the amount of funds available for capital improvements went down in 2009 and will again in 2012. However, due to two rate increases implemented this past year the fund will be able to generate over $2.5 million per year over the next five years. Mr. Lewis then presented slides showing performance indicators comparing our agency with 300 other major water and sewer utilities across the nation. Mr. Lewis stated that the information presented is the result of an AWWA Research Project which the Department has participated in over the last seven years. He stated that in most areas the Department measures exceptionally well compared to other similar agencies. Our debt ratio, return on assets, O&M cost per million gallons, Wastewater cost per account and per million gallons are better than the average of the study group. During the next two months the Department will be reviewing the cash flow plans and capital improvement programs for each fund as they prepare next year's budget. N tap Presentation of Resolutions—Jeff Niermeyer Director, Jeff Niermeyer read the Resolutions of Appreciation from Mayor Ralph Becker to Jan Strifel and Dick Gaddis. Both Jan and Dick have completed 8 years of service as members of the Public Utilities Advisory Committee. Mr. Niermeyer personally thanked Jan and Dick for their service and said that the Department of Public Utilities and the Committee has benefited from their service and is a better organization because of their participation and input on issues and programs of the Department. Year End Report—Jeff Niermeyer Director Jeff Niermeyer told the Committee that the department had a good year even with many challenges. Last year at this time, he had been out all night with an oil leak on Red Butte Creek. The oil leak has been cleaned up and the stream is now in recovery. He expressed his appreciation to the management team and other colleagues in attendance for their efforts that along with the Public Utilities Advisory Committee and the Mayor's Office, have contributed to the department's success and support of the City Council. This has translated into good services that the department can offer its customers. This has resulted in customer service ratings of over 90 percent, which is an exceptionally high rating for the utility business. The department sends out customer service surveys to every seventh customer that the department comes into contact with. Mr. Niermeyer highlighted some of the department's accomplishments: He recognized Wastewater Facilities manager Dale Christensen and Giles Demke for outstanding compliance of the wastewater treatment plant's NPDES permit requirements. The plant was recognized by the National Association of Clean Water Agencies for 17 years of perfect NPDES permit compliance. Niermeyer, noted that this is an exceptional accomplishment particularly since the treatment plant has experienced construction activities over this same period. He said that this is an astonishing record. Niermeyer also recognized the accomplishments of the department's drinking water treatment plant operations for compliance of the second phase of the Partnership in the Safe Drinking Water Act. He recognized Water Quality Administrator Florence Reynolds, Mitch Ellis, Bill Meyers, Mike Gill and John Haslam for their efforts of compliance and improvement of the water quality coming out of the treatment plants. Niermeyer recognized and thanked Stephanie Duer for her efforts in preparing the Annual Report and calendar. He noted that there had been good comments on the calendar this year because it covers a lot of the educational programs the department is trying to get out to the community. The department had one of the largest, if not the largest capital improvement programs ever M undertaken. It was a challenge to get these projects out. The Orange Street project is finished. And the department opened bids last week for the Folsom Avenue Storm Drain project that will eliminate having the "rocket cones" on North Temple during the run-off season. Ifs been a good time for constructing these large projects, and as an added benefit helped the local economy. Niermeyer thanked the City Council for their support. Niermeyer said that historic Utah Lake Pumping plant located on the outlet of the lake and the inlet to the Jordan River has for over one-hundred years been under the direction of the Board of Canal Presidents. The pumping plant is critical to Salt Lake City ability to meet its exchange agreements and to use the mountain stream waters. The plant has been operating with antiquated equipment, which requires upgrading. During the past year the 10 different entities who benefit from the facility negotiated an agreement to incorporate under the name of Utah Lake Water Users Association. Currently, the design for the upgrade is underway. Challenges Director Niermeyer referred to a slide of the Willow Heights lake, which is part of the the property the city acquired about 10 years ago with the aid of a grant from the Lee McCallaster's Conservation Fund. In this view, the proposed SkiLink will be visible across the skyline of the picture. He continued by describing the land ownership and management of the Wasatch Mountains (Wasatch) as a complex process, with the federal government, Salt Lake County and Salt Lake City having joint responsibilities, requiring close coordination and common goals. Also, within the Wasatch are various commercial endeavors, subdivisions and mining claims. Most recognize that the Wasatch is a treasure that characterizes what Salt Lake City is all about— providing the back drop to the city, providing water supply, providing economic opportunities in the Salt Lake Valley and within the mountains themselves with ski, dispersed, and wilderness recreational opportunities. Protecting the Wasatch began with the arrival of the pioneers in 1847. They realized if they were to be a thriving community, water supply would be critical and the watersheds would have to be protected. Protection of the watersheds has been challenging along the way, beginning with mining activities and their effect on the watersheds. Over 107 years ago, a new relationship was formed with the newly established U.S. Forest Service. The City has articles that describe the first head of the Forest Service, Gifford Pinchot visiting the area to develop programs to restore the watersheds and water quality by inclusion in the Salt Lake Forest Reserve. Tree farms were established and these trees planted to re-grow the Wasatch Forest. In 1914, the city went to Congress for legislation to further protect the watersheds from City Creek to Mill Creek. Again in 1934, as the city continued to grow and rely on the water supplies from Big and Little Cottonwood, additional federal legislation was passed to balance the impacts of mining on the water supply. In the 1950s there were a number of reports on watershed protection and the use of new technology. Up until this time the only treatment of the city's drinking water supply was screening and disinfection with chlorine. However, with rising pollution levels in City Creek, the federal government required Salt Lake City to take action to alleviate the problem or face the loss of interstate commerce privileges. The canyon was closed to public access and a new water ' treatment plant was constructed to treat the creek water supply. b a. Over the years the city has developed ongoing strategies to the water supply based on lessons- learned. It's a fact that watersheds can be overused to a point that they become unusable. City Creek was closed for 15 years to allow this resource to recover from overuse. The canyon was literally loved to death. Niermeyer noted that likewise we have magnificent ski area terrain and back country dispersed skiing opportunities in which many people look at developing businesses or activities within the watershed areas. The department has prepared a slide showing the various proposals that have been floated over the past 25 years designed by yellow dots on the watershed map, which if all were approved would have led to significant development within the watersheds. Without a strong commitment to watershed protection and the balancing effect of federal, state and local jurisdictions, the watersheds would be much different today if all of these projects had been allowed without trying to strike a balance between development and watershed protection. The department has developed a portfolio of watershed strategies: The City Council has continued to support a dedicated watershed land and water rights acquisition fund • Keep it Pure Program, which launched an education campaign to help inform the public of the importance of the watersheds • Strong development review program • Ongoing partnerships and collaborations with forest service, the county and with NGO's government organizations • Regulations and water quality standards All of these have served us well in the past, but now there are many more voices that have a stake in the dialog; and all of these voices tend to have agendas that have their rules, their regulations and not all of them are complimentary to each other, in fact some are opposed to each other. Niermeyer said that as he has looked to the future challenges it raises the question, "Are the strategies that we employed in the past going to be adequate to continue to protect this resource that we so heavily rely on for many aspects of our community?" He said that we are going to continue growing in population and face the impacts of climate change. There will be competing interests in developing versus protection of the watersheds.And finally are we going to apply the lessons learned about the valley's watersheds, such as the history of City Creek; he asked, "Can we love these resources to death?"The record shows that even though everybody cherished City Creek Canyon, it was basically over used and its environs and water degraded. Continuing,Niermeyer said that there are multiple layers of jurisdictions and planning documents covering this same area: The Forest Service Plan (2003), the Salt Lake City Public Utilities Watershed Master Plan(1999) and the 20 year-old Salt Lake County Canyon Master Plan that recently was updated. There are varying degrees of funding that occur throughout these agencies. Today, these public agencies are really struggling for funding, requiring prioritizing where they spend their available funds. Decisions are often driven on immediate needs, not for L. long range planning, so in his opinion this results in a piecemeal approach to planning. a • Niermeyer expressed that because of these competing interests, complex regulatory environment and lack of community vision between all of the stakeholders, unlike in the 1980s when consensus was build, it does not exist today. As a result many of these conflicts today are or will end up in court. There has been a fundamental change in the political environment, which can be seen in Congress where there is much debate, but very little action because of polarized positions. As a result of this inaction, the trust in government is at an all time low. Niermeyer believes that local government is closer to the people and more effective in solving problems. • Niermeyer noted that it is becoming more and more difficult to solve problems. Looking to the future, he posed a question regarding how to overcome these obstacles and find different ways to approach these problems. He noted that there is a growing recognition across the West of this dilemma and referred to a paper written on this subject by the ex-mayor of Missoula, Montana Daniel Kemmis, entitled "Collaboration as an Emerging Form of Democracy." The paper addressed the conflict in Montana between those who wanted to harvest and benefit from the state's resources such as mining and timber versus others representing watershed, preservation and environment interests. These opposing groups were fighting all of these fights to stagnation. A group of stakeholders got together and found areas that they could agree upon and excluded those that they couldn't agree upon. The group then worked on solutions and moved forward on those they could agree upon. What they have found, and there is case after case that is starting to emerge, that if you put people together that have even been mortal enemies, often coalitions can be built to find balance between the competing interests. There have been many good examples of this happening at the local level. However, the process is very challenging. The members have to set aside their strong egos and past positions and be able to hear other points of view. Furthermore„ agreed upon solutions are difficult to implement because they are forced to go through the body of regulatory processes such as NEPA and in our case, Salt Lake City's ordinances and master plans.Also, the process requires the assistance of skilled mediators. However, looking to the future this is a model that we may want to adopt willingly or may be forced into in order to continue to balance the demands on the treasured resources of the Central Wasatch. Niermeyer said that he had the privilege of working with Mayor Becker. He has spent a lot of time trying to understand and cultivate his own skills in collaborative consensus building. Niermeyer's sense is that the City Council is open to this notion and that all of the voices need to be heard, not just the special interests through a transparent and open government. Now that the Canyons Master Plan goes forward and with the SkiLink issue and its impact on the watershed, Mayor Becker is wondering if this is the time to rekindle a broader dialog including many stakeholders in an effort to come to a consensus opinion-- and if consensus occurs, how to lock it into the regulatory framework. Mayor Becker will be testifying before Congress tomorrow regarding the SkiLink legislation. He has had dialogs with members of the congressional committees and the ski agencies to see if we can put a hold on this legislation, so that it can be looked at in a holistic and thoughtful approach to look at what's good for the community on many levels. The future of the Wasatch will be our challenge this coming year. Meeting Adjourned at 1:46 aA a