12/05/2013 - Minutes RECEIVED
Salt Lake City MAR 2 4
Public Utilities Advisory Committee 2014
Minute
December 552013 CITY RECORDER
The Public Utilities Advisory Committee meeting was held at 12:00 noon on December 5, 2013
at Little America Hotel, 500 South Main Street, Salt Lake City, Utah. Committee members
present were Dwight Butler, Dixie Huefner, Allen On, Larry Myers, Kent Moore, Roger Player
and Jani Iwamoto. Salt Lake City Public Utilities employees present were Tom Ward, Jim
Lewis, Chuck Call, Jesse Stewart, Dennis Potts, Leon Peterson, Kirk Freeman, Dave Pearson,
Stephanie Duer, Linda Jennings, Kurt Spjute, Bill Meyer, Arlene Larsen, Wes Ing, Mark Stanley,
Ryan Broadhead, Randy Bullough, Kelly Brown, Giles Demke,Nick Kryger, Kirk Anderson,
Karryn Greenleaf, Dale Christensen, Brad Stewart, Laura Briefer, Mark Christensen, John
Haslam, Mark Noble, Jason Brown, Marty Bright, Sybilla Dalton and Zee Smith. Also in
attendance were Lehua Weaver & Sean Murphy, SLC Council Office; Rusty Vetter, SLC
Attorney's Office; Mike Wilson, MWDSLS; Tom Godfrey, Kathy Loveless, John Kirkman and
Don Milne, MWDSLS Advisory Board Members; Rob Abercrombie and Paul Skeen, Eide
Bailly; Ted Barnes, Clyde & Snow; Scott Martin, Shawn Draney & Dani Cepernich, SC&M; and
Holly Hilton, SLC Mayor's Office.
Approve Minutes of Oct 24, 2013 Meeting
Committee member Kent Moore moved and Committee member Jani Iwamoto seconded the
motion to approve the minutes of the October 24, 2013, meeting as amended. All members
present voted aye.
Financial Report by Independent Auditors —Eide Bailly
Paul Skeen informed the committee that the auditing firm Hansen, Barnet and Maxwell has
merged with the auditing firm Eide Bailly this past year. So Eide Bailly did the audit for Salt
Lake City Public Utilities this year. Paul Skeen is the managing partner with Eide Bailly and he
presented the audit report. Mr. Skeen quickly reviewed the financial statements for those
attending the Public Utilities Advisory Committee meeting at Little America.
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 activities during the year. He explained how the audit provided an opinion as to the fairness
of how the 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.
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Mr. Skeen stated this was the 9th year of doing the audit for Salt Lake City and its entities. Mr.
Skeen said that he appreciated the work and effort of Mr. Jim Lewis, Kurt Spjute and the staff
members for the hours they have spent helping to compile the report.
Mr. Skeen mentioned that 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 through with the finance staff.
Mr. Skeen asked if there were any questions? Hearing none, he then thanked the accounting team
once again and wished everyone a very Happy Holiday Season.
Financial Report—Jim Lewis
Mr. Jim Lewis thanked the Financial Auditors for their remarks. Mr. Lewis then stated that all
three funds ended the year in good financial condition with the help of a very warm and early
spring that increased water sales equal to last year. Mr. Lewis presented a chart showing water
deliveries by year from 1990 thru 2013. The chart depicted that water deliveries were down for
2010 and 2011 and then increased for both 2012 and 2013 due to warmer, drier springs. He stated
the chart also shows an anticipated amount for the current year ending June 30, 2014, which is
below the last two years. The next chart showed the water consumption on a daily basis. Mr.
Lewis stated that this shows how much the weather affects water revenue. During the hot dry
spring water revenues were $5 million higher than the prior year, then as we came into July and
August the summer rain storms reduced sales by the same $5 million dollars. He said this is
where Mother Nature giveth and taketh away all within a five month period. The next chart
presented operating revenue for water, sewer, and storm water for the fiscal year 2012 to 2013.
Mr. Lewis stated that water sales increased due to warm spring weather. He stated that sewer
and storm water revenues are up over last year due to the rate increases in both funds.
The next slide presented operating costs for the fiscal year ending June 30, 2013. Mr. Lewis
stated that the water fund had expenditures higher than the previous year due to additional water
purchases. The Sewer and Stormwater Utilities had expenditures higher than last year due to the
expansion of the cleaning and maintenance programs. 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 2015. Water rates
will need to be increased in 2014 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, 2010 and 2012 bond issues and related debt service
payments the utility will only generate less than $2 million per year for capital improvements
over the next five years. The Sewer Utility is in the worst financial health of the three funds and
will need to raise rates this next year to continue a strong capital improvement program and debt
service coverage. The next slide provided the same kind of information for the Stormwater N
Utility. The Stormwater Utility since its inception has provided $3 million per year for capital
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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 2014. However, due to prior rate increases implemented this last year the fund should be
able to function without a rate increase over the next five years.
Mr. Lewis then presented slides showing performance indictors 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 American Water Works Association Research Project which the
Department has participated in over the last ten 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. However, a new indicator was added last
year on the number of employees eligible for retirement. The Department currently has over
39.4% of its employees that will be eligible for retirement in five years. 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.
Year End Report -Tom Ward
The Work We Do
Mr. Tom Ward welcomed everyone to the annual Public Utilities Advisory Committee Luncheon.
Mr. Ward stated, this is the time of year that we provide the results of our independent financial
audit, which was presented to you, and provide you with an update of the happenings and
directions at Public Utilities.
"He stated: as the Deputy Director it is my honor to provide this year's update, and thank each
of you for your support and contribution to our efforts again this year.
As some of you may know, the Director, Jeff Niermeyer, is away on a well earned vacation
which was planned a long time ago. Mr. Niermeyer has asked me to extend his most sincere
thanks and appreciation to each of you. He promised that he would be getting some appropriate
rest and relaxation."
Mr. Ward informed everyone that he is proud and honored to work with such honorable and
dedicated people. "Each of you are here because you share our dedication for serving the people
of our community, and share in our passion for stewardship of our environment."
He added "Mr. Benjamin Franklin is known to have said "when the well runs dry, we all know
the worth of water." We do our job best when folks don't even notice we are there. Here at
Public Utilities we take great pride in doing our job so well that few of our customers ever have
to experience an interruption of the quantity, or quality, of our product and services. We do our
job best when folks don't even notice we are there."
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What does Public Utilities do? d10
• We take care of people and the environment in which we live. Without clean water and
sanitation, our community simply would not be here.
• When you turn the tap,the water runs fresh clean and clear. We drink, cook, wash and
have adequate water to run the business and commerce of Salt Lake City.
• We make sure that when you flush the water disappears without a fuss.
• We purify your wastewater so that it is a valuable water, energy and renewable biosolids
resource, rather than a pollutant.
• We make sure that the flood waters don't flood and the rivers stay clean.
• And now we make sure the street lights come on at night.
All of this may sound simple, but if you think about it, there are few jobs or services which
require 24 hours a day, 7 days a week, 365 days a year operation. Where everyone, everywhere
uses your product or service.
That means at all times of every day of the year, we have folks operating each of our treatment
plants, staffing our dispatch center to answer your calls for emergency repairs, and visiting each
of our critical wells, tanks and pump stations.
When emergencies happen and they happen often enough, our Public Utilities staff are called
out during weddings, children's plays, and family outings.
Sometimes our teams of dedicated employees are called to cancel or interrupt a vacation to
respond to an system emergency. When the call comes, our people are there to do their jobs.
Our employees do their job to keep you and your families safe from floods, your homes free
from sewer backups, your water running and safe to drink and the lights on. Let me thank our
employees on behalf of the nearly 500,000 residents and daily commuters who rely on our
services each day to lead a"normal" life.
Mr. Ward once again thanked everyone and wished everyone a Happy Holiday Season on behalf
of the Department of Public Utilities.
Meeting Adjourned at 1:22
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