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12/18/1986 - Minutes MINUTES411 411 Pn°74.5 PUBLIC UTILITIES ADVISORY COMMITTEE Christmas Luncheon and Meeting of December 18, 1986 Public Utilities Advisory Committee Christmas Luncheon began at 12: 00 noon. Committee members present were : Chairman Marvin Tuddenham, Virginia Lee, Vaughn Wonnacott, Richard Chong, Paul B. Keyser and F. R. Robinson. Charlie Wilson, Joe Novak , Nick Sefakis , Ray Montgomery, Wendell Evensen , Jim Lewis, Craig Hansen, Bill Farmer, George Jorgensen, Jim Matsomori , Dick Christensen , Ed Erickson, Kevin Killpack, Tom Krumsick, Barbara Despain, Anna Wilson and Chris Oakden were also present. Chairman Tuddenham called the meeting to order at 1 : 00 p.m. in the Sun Valley Room at Little America Hotel . He explained to the Members that Mr. Hooton could not be present because he is attending to some very important business back in Washington with regard to the Trust for Public Lands and the property at the mouth of Little Cottonwood Canyon. AGENDA ITEMS The first item on the agenda is approval of the Minutes of November 20, 1986. Chairman Tuddenham asked the members if anyone has any comments regarding the Minutes . Virginia Lee asked if , when Wendell was explaining that the funding was in place for the construction of the the Little Dell Dam, did he mean for the re-location of the highway. Wendell said "no, the total funding is actually in place" . Chairman Tuddenham asked if there were any other comments , Richard Chong moved that the minutes be approved, Virginia Lee seconded the motion, with all voting "Aye" . DIRECTOR'S REPORT The report on Diking of Great Salt Lake Plan was given by Chief Engineer, George Jorgensen. George explained to the members of the Advisory Board that there is a little report in their packet on the Diking, but just as a review, most of you know that the Great Salt Lake keeps rising and is causing some problems. Last year the Governor and the Legislature finally broke loose with some money to mitigate some of the flood damage due to the lake. As part of that scenerio they allocated to Flood Control of Salt Lake County $3 . 8 million dollars to mitigate flooding problems. Two of the problems that they have affect our Wastewater Treatment Plant. A little bit of background on that , last Spring during one of the storm events we had enough flow in the sewer canal that it actually backed-up and we over topped our chlorine basin by a couple of inches or so. Since then they have come up with a plan of how to handle that. There will be two phases : ( 1) a permanent pump station on the oil drain just up stream from Page 2 our discharge point, and the reason for that is because if you were down stream you would have to pump our effluent over that dike , so they moved it up stream. At some meetings with the Flood Control, we agreed to place part of the facility on our property and in exchange for that they are raising the walls to our chlorine basin. ( 2) diking the canal to 2300 North and also out past the Jordan River. Both of those projects are under construction at this time. The exterior walls of the chlorine basin are almost in place and they- are starting to work on the interior walls . The criteria for that was dictated by the State that they would design it for lake elevation of 4213 with a 2-foot windsage . With that in mind, that 's how we set all the numbers and elevations for the diking . He asked if there were any questions on that. Chairman Tuddenham asked if they were on schedule. George said as far as he knows everything is on schedule . Mr . Robinson asked if 4213 is a reasonable figure. George said he really doesn' t know, but, the original report that came out had a number of 4216 and for whatever reason it was reduced down to 4213. Mr. Robinson asked what would happen if it went over 4213. There was some discussion about this between the members and Bill Farmer said that if it ever got higher than that there would be some major problems and at that time there would have to be another program. George said that the worst case scenerio would be that the backflow would cut off our effluent channel and cause us to pump our effluent. Wendell Evensen gave the report on the Safe Drinking Water Act (SDWA) . He said several years ago they passed the Safe Drinking Water Act and Congress gave to EPA the responsibility for monitoring local water supplies and making sure that they are safe for culinary purposes. Last year they were not satisfied with the action that EPA had taken so far, so they came out with the SDWA Amendments and they're actually pushing EPA into regulating more elements in the drinking water supply. We don' t know what effect this is going to have on us ; however, there are two concerns that LeRoy brought home from a meeting that he went to a month ago that indicated we could have some pretty high expenses associated with regulations . One was the fact that they' re thinking about making it necessary to disinfect all public water supply sources . What that does to us in Salt Lake City is, whereas we now pump directly out of the ground water wells into the system, under this new program we could conceivably have to provide disinfection and chlorination at each one of those wells . That ' s quite a requirement because most western cities take water out of the ground and simply pump it into the system, they don' t disinfect ; however it is safe because we have aquifers that are protected by clay layers and we constantly test the water. They say that they will have some rule in place by December of 1987 . Right now they are working on criteria that will exempt certain water systems , so we ' re waiting to see what will happen. 411 • ,Page 3 The other one is that at one time they wanted to lower the turbidity standard from where it is now about 1 NTU, they wanted to lower it down to 1/10 NTU, and that would really be difficult to accomplish because we have pretty muddy streams in the Spring. Gayle Smith who is with the State Bureau of Water Supply, went back to testify on this standard and he asked what is their warrant for this. He pointed that we 've never had a case of any water born disease coming from treatment plants, if they are operated properly. As a result of his testimony and everything they have heard, EPA is now thinking of dropping the standard down to 5/10 which would still give us some problems due to muddy water in the Spring, but it is something we can live with . - Mr. Robinson asked what is the problem with turbidity. Chairman Tuddenham explained that turbidity cuts down on the effectiveness of chlorination, and that it is just part of the process of making the water safer. The members discussed this matter a little bit and Virginia Lee asked if there is anyone who can be called about this. Wendell suggested to contact the State Bureau of Public Water Supply when public comments are asked for. He will keep the Committee informed. AUDITOR' S REPORT Jim Lewis passed out an official Auditor's Report to all of the members. He then introduced the two Auditors who worked on the audit, Ed Erickson and Kevin Kilipack, and announced that Ed would be saying a little about the audit and answer any questions that anyone might have . Ed went through the financial statement with them first, he said their opinion is a little bit different from last year; it is still a unqualified opinion, it is a qualified opinion. They have had to write a middle paragraph to inform other agencies that the water and sewer utilities are just a segment of the City and does not reflect the financial position of Salt Lake City Corporation. Property and equipment are obviously the largest assets ; in the Water it increased approximately five million dollars and the Sewer had about a thirteen million dollar increase which reflected a signifi- cant investment for the Treatment Plant. Also, the long term receivable decreased by $1, 280, 000, which relates to the first land transfer in the mouth of Little Cottonwood Canyon by T. P. L. On the liability side and equity, if you compare this statement to last year' s, you will notice that there is not an overdraft reflected in the liability, each utility account has an overdraft balance in the pool cash account of Salt Lake City; however, this year we have made a determination that it would be more reflective of the utili- ties true position to net that overdraft by reducing the cash balance on the asset page . s . Page 4 Fund equity has increased in both funds, four and a half million in the Water Utilities and about eight and a half million in the Sewer Utilities . The total asset picture is well over a hundred million combined and shows a very strong financial position between the two Utilities . Our statement of earning and operating revenues had about a 7% increase in the Water Utilities and a slight decrease in the Sewer Utilities due to that rate reduction that came into effect which was a 16% decrease ; however, our total revenues in the Sewer only went down a little over 1%. Operating expenses were held somewhat in line, about a 7% increase in the Water Utilities and a little under 7% in the Sewer Utilities . As you can see our net earnings for the year 3. 4 million in the Water and almost 8 million in the Sewer, are about $480,000 less than last year in each one of the Utilities. Statement of changes and financial position, a couple of highlights, working capital provided from operations-the Water Utilities provided 5 million dollars from their operations after you add depreciation expense and Sewer Utilities over 9 million, both of these figures are very comparable to last year. In the Sewer especially, there is a significant amount of property equipment additions, as a result there is actually a decrease of working capital in the Sewer Utilities, about a million and a half dollars; however, Sewer Utilities still have seventeen and a half million in working capital . The Water Utilities had a increase this year of 1. 2 million which leaves an excess of 7 million, and a large amount of that money is to be used on projects which are already in place. All footnotes are very basic, note D. on the long term receivables discusses the fact that one million two hundred eighty thousand was collected. There will be a final payment due beginning in October 1988, so hopefully that can be resolved and won ' t effect the Utilities cash flow. One new footnote on Page 13 relates to the refunding bonds that were issued. These financial statements do not reflect the new bond issues since it was after June 30th; however, it was significant enough that they felt they should include it in a footnote . Then, there are some letters that are required to issue to the bond trustee , the first letter is just a schedule of the investment balances controlled by the Trustees and the construction fund is totally expended now. The next letter they ask for assurance that the Utilities complied with the bond resolution and covenants . The only covenant which was not met was the one regarding the delinquent accounts and the 60 day requirement. With the reissue of the new bonds, the covenant concerning delinquent accounts was changed to 75 days . The next letter relates to net revenues , the bond requires that you have 1 . 25 ratio with net revenues that exceed your debt requirements . The net revenues are four and half times the debt requirements, which reflects a large cushion. • 410 Page 5 Finally, some other information that they asked for is consumer information as well as information regarding insurance policies . The last document we have included in this financial statement is our management letter to you, the first is somewhat standard where we explain the system controls and management responsibilities . In the last paragraph we say that our study evaluation disclosed no condition that we believe to be a material weakness ; however, there was one matter that we felt needed to be brought up, with the understanding that it has already been corrected, there were certain customers that were under special agreements with the Sewer Utility and due to some problems with their meters, that did not get billed for a seven month period. That was roughly a $200,000 amount that finally ended up getting billed at year-end, so obviously there was some cash that was not available to Public Utilities that should have been there . There was a question raised at that time regarding insurance for public bond and if it should include the Board of Directors. The members discussed this for a time and decided to have the issue put on the agenda for the next Public Utilities Advisory Committee Meeting to discuss it in more depth. 1986 OVERVIEW The 1986 Overview was given by Craig Hansen. Craig said that there were four significant, leading achievements in 1986, he lists them as follows: ( 1) Began the Little Dell Project with assistance from the Metro- politan Water District and Salt Lake County. ( 2) Re-financed bonding which freed up some funds for additional projects. ( 3) Suplemental Repayment Program for the CUP and acquiring the 2/7ths interest in the Jordan Aqueduct ( 4) Proceeded with scheduling on the 201 project and completing projects at the Pre-Treatment Plant . ( 5) Started to look at our own people and utilize them in their areas of strength. Craig passed out a copy of the Public Utilities Annual Report at the beginning of the Lunch, he wanted everyone to know that this was only a proof and they will be perfecting it before actually publishing the estimated 2,000 copies. • Page 6 COMMENTS Virginia Lee wanted to know what was happening with regard to replacement of the aqueduct. Nick Sefakis said that they have commenced work on installing the liner and is expected to be com- pleted sometime in the Spring . Chairman Tuddenham, along with everyone else, wanted to thank LeRoy for the nice Lunch. They all appreciate the Host, even if he couldn' t be there . Paul Keyser moved to adjourn, it was seconded, and everyone responded with an "Aye" . The meeting adjourned at 1: 52 p.m. 78: 40/co p C)BO a J:� r • • • 4 PUDIC UTILITIES ' NJ RATE MAME SEVER UTILITY FIN) ATTPaPEVP II PRIOSED CA 1 ROA Et R 4ARS1FW?TITFRR PLANT E'PPNSICN ASCFJANJARY 1987 EXISIRND LAD FIRCHASE R EU:GET CPERATDD 201 RARE CXTI4ECTICN CPERPNENS CAPITAL DEBT SERVICE PLANT AND PBCPO.S3)1EW YEARLY NET RARE YEAR REV%NJE I RFASE FEES &1.AINT P?PEDDTIURE pans M)DIFICATICNS MAJOR SDER 16 MSD PLANT TOTAL INTEREST C701 HOW 1% 1% 1% 3% 3% LINE CII)SI.32M EST COST 5.5% 9(CThIEJ;CASs BALANCE 2,500,000 1.08*1982-83 6,793,230 1,469,113 495,890 5,450,495 726,938 275,995 50,375 2,254,380 403,620 5,158,131) 1.C8*1983-84 6,390,025 5,710,438 736,C00 5,025,392 503,947 864,917 713,160 5,724,097 665,135 11,547,232 1.03*1934-85 6,335,43O 5,707,8E 1,172,951 4,938,634 1,384,905 854,955 371,830 5,665,925 1,532,562 18,745,719 .90* 1935-86 6,855,864 5,856,609 789,145 5,170,357 1,015,831 852,670 7,723,723 2,655,13D -3,916,093 1,521,564 16,351,190 .90**1986-87 6,63O,700 5,1E8,200 956,100 6,012,507 3,755,800 425,000 7,075,073 -4,463,330 700,000 12,587,810 .90 1937-88 6,747,507 5,219,882 965,661 6,192,832 3,8E8,474 7O1,181 5,43,223 2,000,000 -5,267,710 560,637 7,880,737 .90 1938--89 6,814,92 5,272,031 975,323 6,378,66 3,984,523 701,182 2,000,000 -1,938 433,391 8,312,129 .90 19 9 90 6,883,132 5,324,802 985,071 6,570,029 4,104,064 701,182 2,000,000 -182,270 452,610 8,582,469 .90 1990-91 6,951,963 5,378,050 994,921 6,767,130 4,227,186 701,158 2,000,000 -370,539 462,772 8,674,703 .90 1931-92 7,021,43 5,431,830 1,004,871 6,970,143 4,354,002 701,153 2,000,000 75,O00 -642,119 461,056 8,493,63) .90 1992-93 7,091,698 5,486,14 1,014,919 7,179,248 4,484,622 839,587 75,0)) 1,154,309 496,008 10,143,956 .90 1993-94 7,162,615 5,541,010 1,025,069 7,394,625 4,619,160 699,587 933,900 31,421 558,703 10,734,079 .90 1994-95 7,234,241 5,596,42O 1,035,319 7,616,464 4,757,735 701,764 1,013,416 -223,399 584,789 11,095,470 .90 1995-96 7,306,583 5,652,384 1,045,672 7,844,958 4,900,467 701,764 13,618,355 -13,063,9O4 233,725 -1,61,706 .90 1996-97 7,379,649 5,708,908 1,056,129 8,C8O,3O7 5,047,481 697,070 14,026,903 -13,707,075 -435,171 -15,823,951 .90 1997-98 7,453,446 5,765,997 1,066,691 9,322,716 5,198,906 837,070 14,447,710 -15,33O,2E9 -1,254,824 -32,459,044 .90 1993-99 7,527,930 5,823,657 1,077,357 9,602,37 5,354,873 697,316 -1,225,592 -1,815,887 -35,500,523 .90 1999-0 7,603,260 5,831,894 1,088,131 9,89O,4613 5,515,519 837,316 -1,530,020 -1,990,779 -39,021,127 TOTAL 126,233,787 95,995,34i 17,435,216 126,407,422 67,804,487 12,370,872 21,377,34 12,655,130 44,240,24 -45,141,236 3,619,914 -41,521,127 * ECRU'YEARS 1932 THEdU 1985 ARE ACTUAL CAST AMIIIIS OOL LECIFD. ** 1936-87 ARE CURRENT H1A'ETED AMSUNIS. 1. OPERATING REVENUE, 201 RARE INCREASE, AND CLINF3TICR4 FEES ARE ESTIMATED TO C4@7 BY 1%'THRU THE TOMEI''YEARS 1937-2000. 2. CPERNPME AND CAPITAL STENDTIIRESE ARE EXPECTED TO INCREASr BY 3%PER YEAR T(HJ THE LSDCST YEARS 1937-200D. 3. DEBT SERVICE IS THE ACTUAL ItTal2BST EXPREE AND PRINCPLE PA)MRP REQUIRED CN THE REELII)ID 1936 83505. 4. INEEI3EST IS ESTIMNIED EAST)CN 5.5%CN PRICE4 YEARS BALANCE AND 2.5%ON THE YEARLY NET TOTAL FOR THE E(II3E'YEARS 1937-2000. 5. PUriET F YEAR 1997 93(PERA1TONS AND NAINIENANCE COSTS NAVE PEEN INCREASED EL 1,0(0,00O TO ADJUST FUR SIARIUP CF NEW PLANT. 6. L1.1. u±JJ NON PLANT IS ESTIMATED AT OOST1AG 324 IN 1936 DaLARS ADJUS INE FOR INFLATION AT 3%THE OOSP INCREA7S TO$44,240,234. ! ' • • • 1UPLIC UPILIIZES SUER UTILITY FIND i i i i•ESIM I SCHEE I E OF TREALMENT PLANE IIQ+ADJN? 7/1/82'IHU 6/30/89 FIX-AL FIX AL FIS:AL VIS'AL FI.S'AL FIS.'AL FIX-AL TEEN 1983-84 1934-85 1934-85 19135,36 1936-87 1937-88 1938-89 IDEAL REPARFA`E46 r PLANE UPGRADE 74,960 3,375,075 812,450 4,262,45 MIN PLANT LEGRADE 2,439,957 2,260,000 4/6999,957 ENERGY REaNERY 1,689,934 601,00D 2,269,934 ADMWCPS Cm /LAB Brags 1,180,000 1,180,000 SIIE IM'LOVE• 97,112 31,095 12,207 '3]I0;N F7rfFR AND 80LSDS CENE 842,927 5,157,073 6,000,000 IFSTG9 CF 1RICKLIBE FIL1IER 21,150 281.,150 567,300 MAINEENFN AND EQUIP SA7Z4E 525,000 525,000 E113INEER N DES1E26 325,7E39 126,881 572,546 1,025,196 `7IiflP INJFXlICN ADD EQUIP 50,375 274,944 72,877 121,194 519,39O 9371N1ARY CLARIL1F1j/ZLEE:EPPLE 117,447 117,447 INSiATrCN OF DIGE'SI1:R 77,418 77,418 OCNCIRME BLECK BJILDIN3 10,000 10,000 0 TOTAL 50,375 718,1E0 371,830 7,723,723 7,075,073 5,43F.,223 21,377,334 1. THIS 5PAThIIENS DAPS N1f INCLUDE 61s)IN iovE 1ENiS OF 6,749,892 EXPENDED LI1RI%411E LASE ECUR YEARS. fl? FEB 1 - i 67 LEROY W. HOOTON, JR. - 1\ !}i -mimor *ism1i J 1� ,�, DIRECTOR DEPARTMENT OF PUBLIC UTILITIES JOSEPH S. FENTON WATER SUPPLY & WATERWORKS PALMER DEPAULIS SUPERINTENDENT, WATER RECLAMATION WATER RECLAMATION MAYOR WENDELL E. EVENSEN, P.E. 1530 SOUTH WEST TEMPLE SUPERINTENDENT SALT LAKE CITY, UTAH 84115 WATER SUPPLY & WATERWORKS February 10, 1987 ?- ff 4/1411 The Honorable Palmer DePaulis C} Mayor of Salt Lake City AP�';C)\1 324 South State Street/Fifth Floor Salt Lake City, UT 84111 FEB Dear Mayor DePaulis : C,1 RQc RE: Public Utilities Advisory Committee Attached are the minutes of the Public Utilities Advisory Committee meeting of December 18, 1986, which were approved in the committee meeting of January 15, 1987 . I request that the minutes be approved at the mayor' s executive meeting and filed in the city recorder ' s office . Yours truly, ICJ►-He o LEROY W HOOTON, R. Directo LWH:mf Attach: cc: City Council