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).
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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
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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
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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
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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
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