COMMISSIONERS OF PUBLIC WORKS

Minutes of July 25, 2005

The regular meeting of the Board of Commissioners of Public Works was held on Monday, July 25, 2005, at 4:00 p.m., in the boardroom at 121 West Court Avenue.

In attendance:

Gene P. Hancock , Steve D. Reeves, Jr., Scott Banks, Jean Martin,         

Michael G. Monaghan, Denise Giannetti, Ken Barnett, Bill Patrick,                                       Jeff Auman, Mark Amick, Jeff Fowler, Jeff Meredith, Stacia May, Michael Nix,

Ron Lemon, Rebecca Steifle      

I.              Chairman Monaghan called the meeting to order and Commissioner Hancock gave the invocation.

II.                 Chairman Monaghan gave the statement of compliance with the notification provision of the Freedom of Information Act.

III.               Chairman Monaghan noted a correction to the minutes of June 20, 2005, on page 2 of the Financial Statement section, and asked for the word “not” to be removed where the following is stated: “Chairman Monaghan stated his concern with not overstating Accounts Receivable.” He noted an additional correction to the minutes of July 12, 2005, on page 1, and asked that “CPW property” be added in parenthesis after the word “gate” where it states the following: “Chairman Monaghan stated that Mr. Whittle has not made his gate yet.” A motion was made by Commissioner Hancock to approve the minutes of the June 14, 2005 work session, the June 20, 2005 regular meeting, and the July 12, 2005 work session with changes. Chairman Monaghan seconded and the motion was unanimously approved.

            Chairman Monaghan changed the agenda order to allow Item A. under New Business to be presented before the Financial Statement. Ms. Steifle with the CountyBank spoke briefly followed by Mr. Michael Nix with Greenwood Capital. After distributing copies of investment reports, he then referred to page one, “Realized Gain/Loss” showing two issues purchased, one in February and one in March of 2005. Those particular issues were called so those bonds were purchased and maturities were 5/09 and 3/10. He stated that these particular bonds were actually bought for that purpose; they were purchased to be called, so they served their purpose. Page two shows “Unrealized Gains and Losses” which stands as a Federal record of the current assets in the account. The position of cash under “Cash and Equivalents” of roughly $4.3 million is mostly cash attributed to the additional deposit to the investment account. Mr. Nix stated that he met with Ms. Giannetti to talk about the expectations for those funds, with a portion being shorter-term in nature, and a portion to be invested more in the overall term of the account. He stated that a period was seen over the last several weeks where the yields are starting to move up, and in that environment, he tends to sit on cash and look to reinvest at higher rates. The ten-year bond yields have gone up from 3.95% to 4.25% in a very short period of time which will be favorable for the account from a cash flow standpoint as they invest these funds. He then referred to assets and noted that the first grouping shows treasury bonds and the next section is agency bonds. The current yield on the account in investible assets is running around 3.5 – 3.6%. Cash is earning about 2.6%, with money in the money market being invested and should be fully invested in the next thirty days. The last page is a performance report showing the account started with $5 million, there was a contribution of another $5 million, a withdrawal representing the management and custodian fees on the account, the realized and unrealized gains, the accrued interest, and the portfolio value. The total return on the account for the first six months was 1.9% versus the benchmark, Lehman Brothers Government Index with a return of 1.1%. He stated that the overall feeling on performance basis is good versus the benchmark; they also feel good about the position of the account and reinvesting cash at higher rates. He stated that in looking at the economic environment, there has been a significant roller coaster ride in rates attributed to some outside forces that include the London terrorist attacks, and the revaluing of China’s currency. The feeling is that if energy does not start to come down and some of the macro-pressures are not relieved, we will continue to see continued decelerating growth, not necessarily a recession, but growth is decelerating going into the later part of this year. There has been a significant change in the short end of the yield curve; the long end has not done a lot. He added they feel a lot easier about putting money to work at these levels than in a longer term environment of two to five years versus one to two years. Chairman Monaghan asked about liquidity and Mr. Nix stated that they look at short maturity to make sure there are bonds coming due to match up cash flow needs. He stated that the instruments bought are very liquid, particularly U. S. Treasury. Chairman Monaghan asked about the “Net Gain/Loss” column and specifically whether it is for each investment or for the time period. Mr. Nix responded that it is for the life of each investment and takes into account the issue since it was purchased, any change in value, and any interest received. Currently, this is only four to six months but as this account extends out there are issues for multiple periods you will see them over and over again. Mr. Nix concluded by stating that he and Ms. Giannetti plan to meet periodically.

IV.              Financial Statement:

            Chairman Monaghan asked about the difference between tapping fees this year and last year. Mr. Reeves responded there was a change in methodology whereby last year we were charging tapping fees and providing materials at a different rate; this year we gave a different rate to developers. If they would provide materials, we specked materials to them, but gave them a different rate. Chairman Monaghan inquired about tapping fees in gas and tapping fees charges of $3,270 shown in the gas schedule. Chairman Hancock responded that 100 feet are run for $20 and extra footage charged after that. Mr. Reeves stated he was not sure if that goes to that particular line item, but we would determine what did. Commissioner Monaghan then referred to page 7 of budgets and noted that Energy Supply and Control was 165% of budget. Mr. Lemon commented that a truck was purchased that was not budgeted. Ms. Giannetti stated there was a correction to the worksheet after it was printed. That would be corrected for next month and the budget will be larger. Chairman Monaghan asked about “Gas Work on Customer Premises” also at 195%. Mr. Reeves stated that just at a glance it appeared to be another wrong budgetary number. Ms. Giannetti stated the wrong numbers were only in Energy Supply and Department 51. Chairman Monaghan also noted 1,967% over budget in fiber optic operations and the water plant at 456% over budget. Mr. Meredith stated that fiber is probably the bond project upgrades and Mr. Reeves noted that reimbursement was approved last week from the Bond Fund back into the General Operating Fund. Mr. Meredith stated that there are two bond projects for fiber upgrades not shown in the budget amount. When materials were ordered, we pay for it and it is still showing up against the budget.            

V.                 New Business:

B.     Mr. Reeves asked Mr. Auman to explain two spreadsheets that were in the agenda package and the recommendation for a GIS consultant. Mr. Auman referred to the phase 1 sheet and stated that they first determined the things to evaluate and set a percentage. He explained that each consultant was rated by percentage based on experience, cost, similar project work history, location in proximity to Greenwood, and on-site versus remote support.  He then explained how they arrived at a breakout of the experience factors by going through the bidders and job classifications submitted. Chairman Monaghan inquired about a mathematical difference between the second bidder and the others. Mr. Auman stated it was because they actually bid 1,069 hours instead of 800 hours. A motion was made by Commissioner Hancock, seconded by Chairman Monaghan, and unanimously approved to award the GIS consulting project to GST Consulting for a total amount of $52,000.

C.     Chairman Monaghan stated that he would like to give consideration to local vendors and have a statement on the purchase order so that at our discretion we can give some consideration to a local vendor. He added that he had asked around and some counties and cities do but they give a percentage. For instance, if a local guy is within 1% or 2% of the low bid, the Board has discretion to award to them. He stated he was not sure about that and asked for an opinion from Mr. Patrick. Mr. Patrick stated his understanding about what Chairman Monaghan was saying to be that if the local vendor is within $100 - $200, or some dollar figure, and the Commission reserves the right to give consideration to a local bidder who may be low but not the lowest, or to give consideration to a local bidder. He added that in doing that, you would need to define “local” and whether that means Greenwood County, the City of Greenwood, or what that means. Mr. Patrick stated that in the past with vehicles, the notice had to be on there, but on the request for bids there was a statement included reserving the right to accept or decline any and all bids. He stated that on occasion we have given consideration to a local bidder and noted the factors in the minutes. If we are going to make it part of the policy and put it on the purchase orders, it has to be defined pretty well. He stated the opinion that there would be fewer questions with putting something in the minutes than putting it on the request for bids or in the policy. He stated that when considering an individual bid, you can choose the next lowest bid from a local bidder if it is within so many dollars and have that as part of your reasons noted in the minutes. Chairman Monaghan asked if could be done if the only reason is because he is local. Mr. Patrick asked what was in the request for bids about accepting or rejecting bids. Mr. Reeves said that typically it would say that CPW has the right to reject any or all bids. Mr. Patrick said he would work on a statement that would not tie your hands specifically to a percent or amount, but would let you reserve the right under certain circumstances to give preference to a local bidder if that makes sense, and have something for review before the next meeting. Commissioner Hancock stated his concern with being legal and running into anti-trust.

D.    Mr. Reeves stated that the Gas Purchasing Agreement with SCANA Energy Marketing, Inc. has now been received and added that Mr. Lemon has copies with him and a signed copy from SEMI. Mr. Reeves stated that we are through analyzing the Agreement and if the Board wishes further analysis that would be fine. He stated that he had an e-mail with a recommendation from Mr. Jim Byrd to go ahead and approve the contract, and Mr. Patrick has also looked at it as well. Mr. Patrick added that this contract has had more analysis and attention than any he had dealt with since 1969. Mr. Lemon stated it was essentially what he and Chairman Monaghan had gone over already; the language had been changed but none of the basic concept had changed. Mr. Barnett stated there were some differences of opinion on wording and they had backed off a little on some of the things we were requiring if things went bad with the contract. We had to basically come back to where we gave them about as good as they gave us in different situations like catastrophic events.  Mr. Lemon added we are on level ground with them, and are protected in a catastrophic event such as Enron meltdown. Mr. Barnett stated there is still one open issue, our WSS storage. In order for SCE&G to use it like we need to use it, they have to have title. We have gone through it and there is a way to do that, but we also have to ask to change the contract with Transco to give title to SCE&G in this timeframe, with some stipulations to SCE&G in our contract that would require an amendment to the contract.   They cannot do it without that because of the regulations. If they don’t hold title, then literally the WSS storage is no good to us because they are  acting as our agent but do not have title. Chairman Monaghan asked about changing to someone else at the end of the contract. Mr. Barnett stated that would be part of the amendment. Mr. Lemon added that we release the capacity, they are managing our capacity and part of capacity management is storage. As it is currently structured, they can manage everything but the WSS because of how the FERC has changed the way it has been managed over time. We can convert that to allow whoever the asset manager is for our capacity to do that. It is not specific to SEMI, it is specific to who we allow to manage our assets. Mr. Patrick stated that the problem right now is how that is to be handled; it is an evolving issue with FERC and Transco and the regulations have not been finalized. There is no indication this will be finalized immediately, so the SCE&G folks have said they know this has to be dealt with, but it does not have to be dealt with right now. They feel it is better for both parties to deal with it after the regulations are finalized. Both parties acknowledge that the contract would need to be amended when that happens. Mr. Patrick then stated his agreement with SCE& G with being comfortable waiting until that is finalized to amend the agreement. Mr. Patrick stated that both parties recognize it will have to be amended; SCE&G has worked in good faith throughout and been reasonable. The pricing mechanisms are favorable to us in the contract and the contract language is entirely fair to us. He added that in an ideal world, there are some things we would like to have a little bit more in our favor, but we have not gotten the short end of the stick on anything. Chairman Monaghan asked Mr. Patrick if he felt comfortable with the title transfer and if he thought we would lose our storage at the end of this contract. Mr. Patrick responded that we have not yet agreed to transfer that title and we would be putting that off until we get to the point of having to do it. Mr. Lemon added that in anticipation of that happening, we have an agreement with SEMI that they cannot move the gas without our agreement. Mr. Patrick stated that if we do have to do the title transfer, which we anticipate that we will, there will be a mechanism for the re-transfer of that title to us when this contract comes to an end. A motion was made by Commissioner Hancock to approve the Gas Purchasing Contract with SCANA Energy Marketing, Inc. The motion was seconded by Chairman Monaghan and unanimously approved. Chairman Monaghan thanked everyone for their hard work.

E.     Mr. Reeves stated that staff recommends the bid from Line Equipment in the amount of $17,550 based on lowest cost of ownership for three (3) 225-KVA pad mount transformers. A motion was made by Commissioner Hancock to approve the bid from Line Equipment, seconded by Chairman Monaghan, and unanimously approved.

VI.       Other Business:

1.   Mr. Reeves reminded the Commissioners of a luncheon with       Congressman Gresham Barrett on August 3 at the Inn on the Square and        asked the Commissioners to let him know if they planned to attend; a        Congressional Breakfast hosted by CPW at the Operations Center on       August 11 at 7:30 a.m. with Gresham Barrett and our local delegation; and asked for a date for the annual Safety BBQ. Mr. Reeves stated that            October 7 was good for Chairman Monaghan but he had not heard from         the other Commissioners.   

2.   Mr. Reeves stated we have finally received the plaque in memory of       Commissioner Tammy Stoner and asked for direction from the Board for       placement. The Commissioners directed Mr. Reeves to place the plaque in the downstairs lobby area.

3.   Chairman Monaghan thanked Mr. Fowler for attending the meeting.

4.   Chairman Monaghan asked if Quality Chrysler was on our repair list. Mr. Reeves responded they are not on the repair list; we have an agreement with Ballentine Ford and were finding that on some of the Chrysler products, Ballentine Ford could not make the repairs and was then sending them straight to Quality Chrysler and then getting them back. We worked out an arrangement with Quality Chrysler for certain Chrysler products to honor the price agreement that we have with Ballentine.

5.  Chairman Monaghan inquired about sales tax. Ms. Giannetti stated that customers do pay sales tax as part of the rate. Mr. Reeves added that he   did not think sales tax was paid on the electric portion of the bill. Mr. Barnett added that with industry, they have to provide proof of tax exemption; some have and they are not taxed. Chairman Monaghan asked how we recoup that sales tax. Mr. Barnett stated that if they have a sales tax exemption in our system, they are not taxed the sales tax. That also comes out on our report showing up as a category that we do not have to pay sales tax on either. Chairman Monaghan stated he would get with Denise later for further explanation.

6.   Chairman Monaghan inquired about the incentive study with Charles Schulze. Ms. Giannetti stated they met on July 14 and then Charles sent  some notes on July 21. Mr. Reeves stated he had received an e-mail today from him assuring us that he is working diligently.          

7.   Chairman Monaghan inquired about annexation of Northside Baptist   Church. Mr. Reeves stated his understanding that the church was annexed.  The article in the paper said we had agreed to install hydrants behind the church and we have not agreed to do that. We have a meeting  lined up with the City Fire Department to address the issue.

 8.  Chairman Monaghan asked about the progress on rebidding the water  plant project. Mr. Reeves stated his understanding that we are still trying  to finalize how we will rebid. The rebidding of the major contract also affected one of the previous integration bids and we have to decide how that will be incorporated now. 

9.   Chairman Monaghan inquired about credit card processing. Ms. Giannetti stated that she has the information from the vendors and would get with Mr. Auman and ASI to see what it would take to get it implemented into the system. She will then bring the different rates offered by the two companies back for a decision. Mr. Auman stated that a lot is already in the system on the ASI side, there are just a few pieces to make the particular vendor work.

10. Chairman Monaghan inquired about getting the 2005 minutes on the   website. Mr. Auman responded that he had started updating them today. Mr. Auman added that his department has picked up and started doing       some work for the Sheriff’s Department and the 911 Center.

11. Chairman Monaghan noted that still only $1,300 of the $43,000 budgeted had been spent on propane tanks. Mr. Reeves stated that Mr. Whittle addressed that last month and now has it where it is operational but other upgrades will be made prior to the winter season.

12. Chairman Monaghan inquired about the city pond property. Mr. Reeves stated his understanding that the last discussion was leaning toward waiting until sewer gets in there. Chairman Monaghan stated his desire to not wait forever. Mr. Reeves stated that he has Chairman Monaghan wanting to move on this, Commissioner Hancock wanting to wait for sewer, and he had not heard from Commissioner Watts about what he wants to do. Commissioner Hancock stated that it is not costing us anything, and that in fact money is being made by growing timber and the highest value of the property will be when the sewer line goes through there.  Commissioner Hancock added that he had asked about sewer to       the prison and was told it could not handle a development as well.  Chairman Monaghan stated he wanted to get started and if we needed to  look into getting sewer started, that we should look at the cost.  Commissioner Hancock stated that if you work with a developer, then you can see what you can do with sewer. He added that a plan for some  kind if infrastructure is needed first. Mr. Reeves stated that probably the best avenue is to work through Metro to see if there is a schedule for putting in sewer. Commissioner Hancock stated that there is not and Mr. Patrick added that there is no reason to put sewer in unless there is some  kind of development. Mr. Reeves asked Mr. Fowler what happens first,  development or sewer, what does he need to have to sell. Mr. Fowler stated this has been discussed in another instance. You can put together a plan that you can take to a developer and you might get your highest best use of it just like it has sewer on there if there is an agreed to piece of the plan that says if this is done, sewer will be run, and the developer either knows the cost or knows how they can get the cost rebated. You can build a plan, but you have to think like a developer at that point. Mr. Reeves stated we would work with Metro to put together a plan.

13. Chairman Monaghan inquired about the increase of sewer reimbursement from $500 to $800 and whether the City has increased their portion. Mr. Reeves stated that so far, the City has said they cannot afford to increase their portion.

15. Chairman Monaghan stated that Commissioner Watts had a question at the last meeting about the utility pole rental agreement with Sprint. Mr.  Patrick stated he did not know what progress Mr. Roper has made if any. Mr. Reeves added that we do not know who to talk to; it is hard to find someone at Sprint who stays in a position long enough to say they can talk with us. Commissioner Hancock inquired if there was anything in the agreement stating that rates cannot be raised. Mr. Patrick responded that he did not think anything says that it cannot be changed. Mr. Patrick responded that it is not in Sprint’s interest to do anything with it, so they do everything to drag their feet. It may be that we just have to figure out some kind of notice to give them and give them an ultimatum.   Commissioner Hancock stated that the original intent was to share poles.  With all the other pole agreements, there is a precedence to raise the rates,  and if they do not want to pay the rate, they can get off the pole. Mr. Patrick stated that is happening in a lot of places and they would follow up on it.

16. Chairman Monaghan stated that he and Commissioner Watts had discussed labeling assets. Mr. Reeves stated this was a project when Stan Smith was here and it was never started. He added he thought the labels were ordered.

17. Chairman Monaghan inquired about the softball team.

VII.            With no further business, the meeting was adjourned.