COMMISSIONERS OF PUBLIC WORKS

Minutes of August 24, 2006

The regular meeting of the Board of Commissioners of Public Works was held on Thursday, August 24, 2006, at 10:00 a.m., in the boardroom at 121 West Court Avenue.

In attendance:

Gene P. Hancock    Steve D. Reeves, Jr.         Vickie Gorham

Bill Patrick               Michael G. Monaghan   Denise Giannetti

Vicki Knott              Charles Schulze               Henry O. Watts

Melinda Bishop       Ken Whittle                      Jeff Fowler

Curtis Burnett          Richard Gentry               Ron Lemon

Scott Banks              Jeff Meredith                   Stacia May

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

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

III.               A motion was made by Commissioner Monaghan and seconded by Commissioner Watts to approve the minutes of the July 27, 2006 regular meeting; the August 10, 2006 regular meeting; and the August 9, 2006 special meeting. The motion was unanimously approved. Commissioner Watts stated his appreciation for the quality of the minutes.

IV.              Financial Statement:

                  Commissioner Monaghan referred to page 14 of the financial report and asked about the 91+ days in accounts receivables ($671,000) and whether bad debt is written off and if bad debt set-off is inclusive of the $671,000. He asked if any of the $509,000 in bad debt written off was in the $671,000. Ms. Giannetti responded that it is not. He asked if the balance of $618,000 in bad debt set-off was in the $671,000, and if all of the $671,000 in the total claims submitted to DOR. He asked if at one point there was $1,180,000 in bad debt.  Ms. Giannetti responded that was potential bad debt because the $671,000 has not actually been written off. He stated his understanding that the bad debt set-off is included in the $671,000 (91+ days). Ms. Giannetti responded that is the amount sent in. Mr. Patrick stated that he was not sure that the $618,000 would necessarily be in the $671,000; some would be in the $671,000 but some would be out of the $509,000. He added that you don’t “not send” it to the Tax Commission once it is put in bad debt written off. Mr. Patrick clarified those going to the Tax Commission as anything that is more than $50, less than three years old, and is beyond 90 days. Commissioner Watts asked if everything over three years is written off. Ms. Gorham responded that it still shows as bad debt on our system; that would still be a part of what is showing as bad debt because we have not written any accounts off of the bad debt system in a long time. Mr. Patrick stated that the bad debt system would be more than $509,000; this is just the part that was put into bad debt during this year. Ms. Giannetti added that information is retained in case the customer comes back later. Mr. Patrick stated that some of the $618,000 would be in the $671,000, but not necessarily all of it. Commissioner Monaghan asked what triggers them going to the DOR. Ms. Gorham stated that if it has been written off, it is more than $50, and is less than three years old. Commissioner Monaghan stated that he was confused because they said the $618,000 was in the $671,000, or a large portion of it. None of the $671,000 is written off. Mr. Patrick stated he was not sure that Ms. Gorham and Ms. Giannetti were making the same distinction of bad debt. From Vickie’s standpoint, it may be different than from the actual accounting standpoint.  Ms. Gorham stated that as far as she is concerned, if it is over 90 days, she considers it bad debt and it would go to the DOR for collection. Mr. Reeves added that if it is less than 90 days, it does not, so none of that can be in the $671,000. Mr. Patrick stated that the $671,000 is over 90 days. Commissioner Monaghan asked if the entire $671,000 is in the DOR. Ms. Giannetti responded that it depends on the timing because she only sends them once a year, per the program. Mr. Patrick stated that basically they send it the first of December so that when people start applying for a tax refund, the DOR has it, and there is no use in sending it until that time again the next year. Commissioner Monaghan stated that his understanding was that the total claims sent to the DOR is a mix of the 91+ days and the year-to-date written off. Mr. Patrick added that it might be something beyond the year-to-date written off; it might be something written off last year or a couple of years ago, but are resubmitted each year.

                  Commissioner Monaghan referred to page 3 and noted gas sales are $4.5 million less than budget and operation expenses are $6 million less than budget. He noted $1 million variances in both areas in the electric department. He pointed out that budgetary income is $1.2 million better than last year. Ms. Giannetti responded that revenues are off in the gas department because the projected revenues were based on what they thought the cost of gas was going to be. Because the cost of gas was a lot less, the revenues and the expenses for that item are going to be a lot less. She stated that she looked at the volumes to see if they are comparative and they are. Based on what the month-to-month projections were for the budget and what has actually happened, it is all coming from the actual cost of gas. She stated that we did over budget, but we over budgeted in both places. Commissioner Monaghan asked about the variance in the electric department. Ms. Giannetti stated that she had not looked at actual consumption with the electric department, but would look at it. Manager Reeves noted that prices have been constant with the wholesale rate; the only variance would be a fuel component.

                  Commissioner Monaghan noted that in the audit review of 2005, Ms. Smith suggested that a task force be formed to look at the new requirements for GASB 43 & 45. Ms. Giannetti responded that Ms. Smith is to provide contact information. Commissioner Monaghan asked if this will have any implication on the ability to get bonds. Ms. Giannetti stated that she did not think it would because it is an industry-wide thing. Mr. Schulze added that bond raters will have reflected this.

                  Commissioner Monaghan asked about a special report he had requested previously on expenses and annexation costs. Ms. Giannetti stated that the first rebates were just being issued and there is not a lot of information to put on a spreadsheet at this point. She informed the Commissioners of 16 rebates totaling $4,072 issued since the program started, and that the first checks were done a few days ago. She stated this would be included in the August financial statement. Mr. Whittle noted that the total amount could actually be more. Ms. Gorham concurred and added that several were applied to past due bills rather than receiving checks.

                  Commissioner Monaghan asked about a suggestion made by the Countybank to develop an official Investment Policy and asked if any work had been done. Ms. Giannetti stated she was working with Michael Nix on a preliminary policy.

                  Commissioner Monaghan asked about the credit card test run. Ms. Giannetti stated the first card was run through the test environment yesterday and one should be run through the live environment today.  If it runs through the portal smoothly today and hits the bank correctly by Friday or Monday, then they will run it through the internet portal through the website to make sure that clears through. Mr. Reeves added that Mr. Auman is also working on a rebate so that if somebody got a credit back and had paid through the credit card, the credit goes back on the credit card. Commissioner Monaghan asked about electronic bill paying programs through the bank. Ms. Giannetti responded that it is an option that we will offer, as well as electronic checks, and the consultant is looking to see if it will interface. She concluded by stating we should be ready to take some credit cards by September 1. Commissioner Watts asked if something would be sent to inform customers. Ms. Giannetti stated that once we know the process works, we will put something in the lobby and drive through. After a month or so, we will start putting it on the bills and maybe on a banner.

                  Commissioner Monaghan asked about the program for tagging assets. Ms. Giannetti stated that the fixed assets (equipment and vehicles) have been tagged. The bar code equipment to tag the small assets was just received, but Jeff Auman has not programmed it yet. Once it is programmed, then we can begin working on tagging the small items. Commissioner Monaghan asked if assets are matched against the balance sheet as they are tagged. Ms. Giannetti stated that there is nothing on the balance sheet to match it to. Commissioner Monaghan asked if things that are not on the balance sheet will be added as they are tagged. Ms. Giannetti responded they will be if they are over a certain dollar limit, which is $5,000, per the capitalization policy. She stated that there is some big equipment out in the yard that does not meet that level but needs to be tagged so it can be tracked. Commissioner Monaghan asked about the procedure as things are acquired. Ms. Giannetti stated they will also go out and audit those things every year.

                  Commissioner Monaghan noted that on page 12 of the financial report that maintenance is less this year than last. He asked if it is worthwhile to promote maintenance in our bills. Mr. Reeves responded that if the intent is to make it more widely known that we provide that service, then the answer is yes. Mr. Reeves added that it would probably raise the anger of our friends in the HVAC business to do that, but it is certainly something we can do. We have chosen not to do it in the past. Commissioner Monaghan stated that we should at least think about it. He noted that we are getting less business. Mr. Whittle responded that it is starting to pick up now. It is a seasonal type thing and usually picks up right before it gets cold. Commissioner Monaghan asked about yearly maintenance. Mr. Whittle responded that we have some that are basically on an annual basis, but sometimes they wait a little later to call. Mr. Reeves added that most of the service work is done prior to the heating season around August, September, and October. Commissioner Monaghan stated that he did not think many people know what a benefit they have there. Mr. Reeves stated that it is probably not widely known that we do this service. Mr. Reeves added that although we are slightly in the hole, it is covered through rates now anyway. Commissioner Monaghan stated his view that this would promote the use of gas because of having the service. Mr. Patrick stated that you would likely have some criticism from local contractors who say CPW is doing this and does not have to pay any taxes and they do have to pay taxes and it is an uneven playing field. He added that this has been an historical sort of thing that this would come up.

V.              New Business:

            A. Mr. Jeff Fowler with the Economic Alliance gave a quarterly report. Mr. Fowler reported on annexation of the Countybank, Zimmerman, and Corley properties. He stated that they finally figured out how to do all of the incentive packages, and the annexation process was started on Monday. The exact language of the incentive package itself is not fully complete, but first reading has been done and also on the incentive package. He noted a pretty detailed laundry list of things that need to be cleared before the final reading set for October 2, 2006. He stated that Mr. Zimmerman has talked with Mr. Reeves about the exact language that should be in the covenant to make sure that CPW is protected. One thing that has to be resolved is the closing dates on the land. He stated that this is somewhat complicated because there is actually a grant going out instead of receiving the long-term cash tax rebates, so the City has to close on a piece of land. They obviously have their due diligence on that land.  They have started that process. That should take about thirty days and, and we should be able to keep the October 3 close date.  He explained that years ago the Supreme Court decided that to be able to convert a tax stream into a fee stream, you are required to have a partner county. We have to have a partner county and Newberry County is normally ours with anything we do, whether it is an industrial project or where we offer tax incentives. He stated there is already a master multi-county industrial park drawn up for the County and it will be added to that and Newberry has to have a reading to approve that is in there. Commissioner Monaghan asked Mr. Meredith if we are alright as far as hooking up power, and Mr. Meredith responded that we should be fine.  Commissioner Watts asked if we can hook up before annexation. Mr. Reeves stated we will hook up before annexation is complete as long as the process has started, and since they have had first readings, we would go ahead. He added that the only detail yet to be worked out is some language with Sam Zimmerman to protect our investment for the infrastructure that we will be reimbursing. Mr. Reeves stated that he has a call in to Jimmy Brailsford through the SCAMPS organization for some language to help protect us there as well.  Mr. Fowler reported that he has not had his calls returned from Advance Auto and they have not been very cooperative in terms of trying to get them in. Mr. Reeves stated that they have not been interested in annexation, but they have asked us for service. Commissioner Monaghan asked if we can hook them up, and Mr. Reeves responded that we are going to hook them up. He added that we may have to take it down, but we will hook them up. Mr. Fowler suggested to Mr. Reeves that they compare notes on Advance Auto after the meeting. Mr. Reeves stated that he ran into Howard Corley earlier this week and he is still anticipating annexation. Chairman Hancock asked if Howard Corley owns the land or is leasing it, and Mr. Fowler responded that he is leasing the land. Chairman Hancock asked what Advance Auto has to do with annexing if Howard Corley owns the land. Mr. Fowler responded it is between them as to whether they would actually lease the property if it were in the city. Mr. Fowler added that the person he is talking with at Advance Auto does not seem to have an opinion on it. Mr. Reeves stated that we have understood the same through our conversation with Mark Amick. Mr. Fowler suggested that they put it in with Howard’s annexation and do the whole piece of property instead of trying to carve it out. Commissioner Monaghan asked what it would take to get that done. Mr. Fowler stated that they would do the same as is being done right now with Zimmerman. The first reading of annexation and the first reading on the incentive agreement would be the next meeting. He added that the agreement has not been completed because how the property goes in is a little different. The full Zimmerman property had to go in to be able to get to the Countybank for annexation.  With Howard Corley, it is very easy to annex any part because you are just crossing a road. In the incentive agreement it states that any time there are capital improvements to the land, and he is adding a building, it is an automatic annexation into the city. The other pieces of property stay outside the city for the time being until there are capital improvements.  The reason he wants it that way is so that he is not paying the city taxes until there is actually somebody on the land. With Zimmerman, the reverse was done at his request and he is receiving 100% rebate on his city portion until there are capital improvements. Mr. Fowler stated that first reading on the Corley property should happen at their next work session.  Mr. Reeves added that there is no change on the Timms property until he resolves some of the business license issues with Steve Brown. Mr. Fowler informed the Commissioners of discussions on the Anderson property annexation. Mr. Fowler stated that at some point he wanted to sit down during an Executive Session to explain the reasons he is holding up BioTech Incubator. Commissioner Monaghan stated that could be done after the meeting and Mr. Schulze asked to sit in. Mr. Fowler reported that the Ernst Healthcare Rehab Hospital will have 150 new jobs. He stated that an announcement on the project on Highway 25 at the National Textiles building will probably be held off until November or December because of some problems with the project. He stated that if that does not work out, this building is extremely marketable and there were others interested. He stated that the project they were trying to help Abbeville get is not going to Abbeville because of the new costs associated. He stated they have asked them to make sure the incentive package works with the state and have pretty much given them free reign. The project originally started at about 40 jobs and $7 million in investment. They will sign a new agreement with the state guaranteeing 100 jobs and $18 - $20  million in investment. Two other projects from marketing trips to Baltimore and California will be happening quickly. Mr. Lemon asked about Techwood. Mr. Fowler responded that there are questions with the bid process that went out for the intersection. Since state money is being spent, anytime there is a bid process, there cannot be favoritism and we do not want to cut anyone out. They bid the project and it did not go to everyone in the county. The project is a small intersection and right now that is going back to bid. He stated they have advised them on bidding the project based on credentials to a general contractor. Techwood feels like they have lost 60 days and are on a fast track now. Mr. Lemon asked about Oliviet Laverel and Mr. Fowler stated they had just moved in and he is working in Greenville. His engineering company is the Fletcher Group who has provided him a little space for the next couple of months. He has a short list now of general contractors and it does not look like he will use a local contractor. Mr. Fowler stated he did not know their anticipated   groundbreaking, but they have started on air permits.    

B.     Manager Reeves recognized employees who played a key role in the Legislative Breakfast hosted for Gresham Barrett. Employees who helped were Barry Mayfield, Ron Anderson, Shane Duncan, William Hawkins, Anthony Jackson, Tracy Haynes, Charles Clinemyer, Vernon Lewis, Scott Banks and the entire water department, Stacia May, Greg Moon, Mark Falls, and a special thanks to Kathy Davis who spearheaded the entire effort.           

C.     Manager Reeves reminded the Commissioners of discussions last month about the possibility of revising the Gas Incentive Policy because of a case where a homeowner had three heating units. In that particular case, only one incentive would have been granted. He then recommended that incentives be granted in multiples on a 50,000 BTU basis. In that particular case, there was a 60,000 BTU, a 40,000, and another 40,000 BTU heating unit. With the original policy they probably would not qualify but for one rebate. Mr. Reeves stated his belief that this would be unfortunate when someone is putting in that much heating capacity and it is all natural gas. He recommended an amendment to the policy to include increments of 50,000 BTU. A motion to amend the Natural Gas Incentive Policy to include increments of 50,000 BTUs was made by Commissioner Monaghan and seconded by Commissioner Watts. Mr. Patrick asked if there is such a thing as a 100,000 BTU unit, and then noted that the policy now reads “In the case of multiple units”. He stated that it may need a little editing so that it would not be restricted to multiple units only, for instance if you had one unit that was 100,000 BTUs or more. Mr. Patrick stated that the amendment should read “In the case of a unit or units being installed in a single residential structure of 100,000 BTUs or more, incentives will be paid for each increment of 50,000 BTUs”. Upon the advice of Mr. Patrick, the motion was unanimously approved.

D.    Manager Reeves explained a request from the Partnership Alliance whereby they have a number of prospects coming in and are spending more than typically budgeted on a monthly basis. They have requested an advance payment of our October payment of $42,500. A motion was made by Commissioner Monaghan, seconded by Commissioner Watts, and unanimously approved.

VI.       Other Business:

1.      Commissioner Monaghan asked for an update on the Grace Street Park. Manager Reeves responded that he is waiting on Billy Nicholson to call so they can go out and look at where we could hypothetically put a property line.   

2.      Commissioner asked for an update on annexing Wilson Creek. Mr. Reeves stated that we have not given up; it is a matter of how we could get there to get it annexed. We had looked at four or five property owners we would have to get. We had all of them in agreement except one and probably had a way to get around that one. We have not done anymore. Commissioner Monaghan stated that they are about to start up the UV at West Alexander and it would be a good idea to track additional load that unit put on because at some point, they will do the same thing at Wilson Creek. He stated that if you go to Wilson Creek, you have all of the contiguous land there that could be available. Commissioner Monaghan asked if we can supplant Duke Power at the BioTech building. Mr. Reeves stated that according to his reading of the law, we cannot on any existing facilities, but if they annex, then prior to service it is their choice and they can choose us to serve any new load. He added that a tariff that expires at a certain time is the type of thing we have been talking about using as a test case. Jimmy Brailsford believes that in certain cases where there is an expiration of a rate tariff or that allows a certain timeframe for disconnect of service, they could terminate the contract and then us come in and serve the entire load. Mr. Meredith stated that all of Duke’s rate tariffs give a 60-day response. The only thing that would be different would be if they signed an interruptible agreement with some type of incentive agreement similar to Piedmont Tech where they actually have a contract, then that contract dictates. Even in that contract, it has a 60-day clause once the initial term is up. Commissioner Monaghan asked if we have a good understanding of the agreement Metro has. Mr. Meredith stated they would fall into a general tariff which is 60 days. Commissioner Monaghan noted that the building where they do the sludge uses a lot of electricity. Mr. Reeves stated that with the size of the customer, it is definitely worth us pursuing, but the rate structure we have was going to generate $150,000 in losses. It would cost us more to serve than we would get from them. We are also working with Sheree Brown on some rate revisions that may lessen that somewhat. Chairman Hancock stated that we need to follow up on the gas when they finish the lines at Metro we are upgrading now. We need to get that off of propane. Mr. Reeves stated that since that is at the Metro plant, the request would have to come from Metro.

3.      Mr. Richard Gentry reported that “Get Well” cards have been printed and distributed to the Homebuilder’s Association. A little over fifty were mailed out to developers. He stated he was working with Jeff Auman and Ken Davis on a new test website.

4.      Commissioner Watts asked who is doing janitorial service. Mr. Reeves responded that Jani-King will be until September 3. We are having a special quick bid process and will open bids tomorrow at 3:00 p.m. He stated that he would call the Commissioner for approval.

5.      Commissioner Monaghan asked if there are any vehicles that will go to auction. Mr. Burnett stated there is one bucket truck and he is waiting to get a price.

6.      Commissioner Monaghan requested that the time of the September 14 meeting be changed to after lunch. Mr. Reeves stated that he would need a Commissioner to come for the bid opening at 10:00 a.m. at the main office, and Commissioner Watts stated that he was available. The Commissioners agreed to change the meeting time to 1:30 p.m. at the COC.

7.      Manager Reeves informed the Commissioners that the Partnership annual meeting would be at the Inn on the Square on the following day at 12:00 noon.

8.      Manager Reeves stated that he had received a Mutual Aid Agreement from Southern Gas Association as a result of Hurricane Katrina last year. A number of gas systems were damaged and they could not get enough assistance to help restore service. They have asked for a Mutual Aid Agreement in the southeast region for natural gas. Mr. Reeves stated that he had read the agreement and it seems fine. He added that Mr. Patrick should probably look it over before final approval. Mr. Reeves stated that it would be ready for the September 14 meeting.

VII.      Executive Session

            A motion was made by Commissioner Monaghan, seconded by Commissioner Watts, and unanimously approved to go into Executive Session to discuss contractual and industrial development matters.  

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