COMMISSIONERS OF PUBLIC WORKS

Minutes of September 14, 2006

A regular meeting of the Board of Commissioners of Public Works was held on Thursday, September 14, 2006, at 1:30 p.m., in the Conference Room of the Greenwood Commissioners of Public Works at 810 Bypass 225 S. W.

In attendance:           

Gene P. Hancock       Steve D. Reeves, Jr.         Vicki Knott

Curtis Burnett            Michael G. Monaghan   Kenneth Barnett

Scott Banks                Richard Gentry               Henry O. Watts

Jeff Meredith              Denise Giannetti             Melinda Bishop

Stacia May                 Ron Lemon                     Vickie Gorham

Melinda Bishop          Cary Bishop                    Jeff Fowler

Jeff Auman                 Ken Whittle

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

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

III.               New Business:

A.     Jeff Fowler with the Partnership & Economic Alliance gave an update.  He reported on an announcement for Ernest Health Rehab in mid October with about 200 new jobs. He stated that he will be leaving next week to go to Frankfort for two weeks to close project Blackburg. They should announce about 100 jobs at year end. SPF (pet food ingredient company) located on Highway 25 will start grading out at the beginning of December and will be contacting CPW about hookups. This will be a $10.5 million investment. The Techwood buyout did not take place; they are in the process of working out a rail issue with the state. He explained that a state grant cannot be used to put down rails, which is an expense of about $750,000. The County has stepped up and said that they will subtract that amount from the grant and it will come out of County coffers. We cannot reimburse ourselves with state money. They are waiting to hear back from CSX, finishing their air permits, and bidding the road contract. He noted that the rail also helps with Blackburg, the German company who originally looked at Greenwood and Abbeville. The project got bigger than anticipated and would have required them to build an additional building in Abbeville, and they did not want to do that, so they came back and looked at Greenwood. He stated that they were initially cut from the list because of not having a rail, so the Techwood rail has helped with this project. Mr. Fowler reported on the annexation process for four projects. The Countybank is moving forward, and Corley is moving forward.  He stated that they have finally contacted Advance Auto  through their lawyers. The benefits of coming into the City have been explained and there is no objection from them. Manager Reeves stated that he had received a form letter from Duke about Advance Auto suggesting all of their facilities use Duke Power Company because they receive a corporate rate. Because it was a form letter to their general contractors suggesting they use Duke Power Company, we have not taken down the temporary service and are continuing to serve them and will do so until we get word. Mr. Reeves added that he wants Jeff Meredith to hear from their corporate side before we discontinue service. We are not willing to accept just a form letter. The contractor asked us to serve and we will continue to do so until we hear something different. Mr. Fowler stated that Tripp Padgett is the local contact for Howard Corley on Advance Auto. He has talked with their attorneys and doesn’t foresee any problems; it is a non-issue to them as to whether they are in the City. Mr. Fowler stated that they will get a 70% rebate on taxes; they were able to provide a monetary figure to show them that with additional city services, that puts them in a credit. He stated that from the City side, Zimmerman at this point has agreed to annexation. Copies of documents from his attorney came, but there is an issue with the money CPW is putting up and the enforceability of the contract. Mr. Reeves stated that he talked with Steve Brown and it is $350,000 from the City and $150,000 from CPW. Mr. Reeves stated that this would be discussed in Executive Session. Mr. Fowler continued with discussion of Piedmont Health Group and stated that he will try to get Charlie and Jamie to get with them this week. They are showing a lot of interest. Mr. Reeves added that they are definitely interested even though it will cost them more money to be in the City. They were able to explain the advantages of City fire and police protection because of better response time. They will have people in the facility 24/7 and liked the idea of City police patrol for security. Commissioner Monaghan asked what Piedmont Health Group will do. Mr. Reeves responded that it is a mini-hospital and they will provide surgical procedures and a sleep lab. Mr. Fowler added that they will be in competition with the hospital but will not be competing with the Ernest Healthcare Rehab. It will be a 43,000 square foot facility and is already contiguous to the city. He then gave an update on the Biotechnology Park and reported that he talked with Dr. Stevenson and advised him on how to approach the City. He stated that the biggest thing is that they cannot commit councils to incentive packages before a company comes in; they can at least commit to guidelines for new companies. For instance, if a company does not see an advantage to being in the City and would rather locate right outside the City when they would rather have them in the Biotech Park. He stated that this runs the gamut from lower taxes which lowers the assessment rate from 10.5 to 6%, to the amount of additional tax rebate they would receive depending on a sliding scale of investment in jobs.  Mr. Reeves stated that he and Mr. Brown met with Dr. Stevenson who is willing to proceed with annexation of the entire site of 189 acres, but wants to talk about whether CPW will extend the services rather than them having to do that. Mr. Reeves stated that he told him he thought the Board would agree but there would have to be a vote. Mr. Fowler added that while in D. C. last week, they met with the congressional delegation and received a lot of help from them. The next step is to have Paul Kelley make a presentation to CPW, the City, and the County about what they want to do there, what is needed, and why they can’t go to the state for funding.  Mr. Fowler stated that he heard through the grapevine that National Textiles was delaying their project. He added that after doing some checking, he found that they are not delaying and are looking at expanding. He stated that an announcement is expected around November. Their primary facility will be a distribution facility where they will be making some product. They will be significant users of power and gas for raw material, just not a lot of people associated with it because it is so highly automated. Mr. Gentry noted that he had received an e-mail from Charlie asking if anyone had talked with Ernest Health about annexation. Chairman Hancock noted that the “2” classification on fire protection is a big thing for promoting Greenwood. Mr. Fowler concluded his report by stating that a high-end furniture store is coming in next to Fairfield Inn.

B.     Manager Reeves explained that bids were opened for janitorial services because we were in dire need of retaining new services. Six companies showed up for the mandatory site visit and three bids were submitted. Carolina Cleaning Company submitted a bid of $65,547.12; Sizemore Janitorial came in at $60,282.16; and Spearman Janitorial at $70,800. He stated that he and Ken Barnett interviewed the two low bidders and asked a number of questions so as to not run into the same situation as with the previous provider, and to have a clear understanding of our expectations. In talking with them, it became obvious that Sizemore is another franchise situation like with Jani-King and Carolina is a locally owned family operated business. The folks at Carolina are doing the work themselves and are extremely responsible. They will always personally supervise and make sure everything is done properly. Mr. Reeves stated that he was very pleased so far with their work, and all in attendance were in agreement that cleaning has greatly improved. Mr. Reeves recommended Carolina Cleaning Company and noted a thirty-day termination clause. A motion was made by Commissioner Watts, seconded by Commissioner Monaghan, and unanimously approved to approve the bid from Carolina Cleaning Company.

C.     Manager Reeves informed the Commissioners that the state asked us to pass an ordinance to enter into an agreement to collect delinquent bills through the Setoff Debt Collection Act. He stated that since we do not do ordinances, we left the wording identical but changed it to a resolution. He added that this is a standard form stating they agree to work with us on the collection of this debt. A motion to approve the Resolution was made by Commissioner Watts, seconded by Commissioner Monaghan, and unanimously approved.

D.     Manager Reeves asked Ms. Giannetti to explain an additional $73,681.57 owed to the City of Greenwood. He added that in essence, during the transfer of checks the City sent us too much due to an error in the accounting report we sent over to them. Ms. Giannetti explained that there was an error from the period of time during the year when we switched from accruing street lighting to starting to bill for some of that. In auditing those numbers afterwards, it appears that we had over billed for that particular thing. A motion was made by Commissioner Watts, seconded by Commissioner Monaghan, and unanimously approved to refund $73,681.57 back to the City of Greenwood.

E.      Manager Reeves explained a request from the City of Greenwood where they are in the process of building a new parking area at Rick’s Uptown Café. They are asking for participation from CPW in the form of designing, installing, and paying for the lighting at an estimate of $25,000. They are also asking that CPW provide irrigation for the landscaping, which includes a tap, installing a meter, and lines at an estimate of $10,000, for a total estimate of $35,000. A motion was made by Commissioner Watts, seconded by Commissioner Monaghan, and unanimously approved. Chairman Hancock noted that this would be included in the annual exchange of checks.   

F.      Manager Reeves reminded the Commissioners of a request presented at the last meeting for a Mutual Aid Agreement from the Southern Gas Association. He stated that Mr. Patrick has since reviewed the Agreement and found it to be standard. Mr. Reeves recommended approval of the Mutual Aid Agreement and noted that CPW would be added to a list along with other associations in the southeast in case of catastrophic events. A motion was made by Commissioner Monaghan, seconded by Commissioner Watts, and unanimously approved.

G.     Chairman Hancock stated that he had requested that advertising with the Ninety Six and Ware Shoals High Schools be placed on the agenda for consideration. He noted that since we advertise with Emerald High School and Greenwood High School, and since both are gas and water customers, we should do the same for Ninety Six and Ware Shoals. Mr. Reeves recommended purchasing a banner or some equivalent with their Booster Clubs and placing an ad in their yearbooks. A motion was made by Commissioner Watts, seconded by Commissioner Monaghan, and unanimously approved. 

H.     Chairman Hancock acknowledged receipt of a letter from Greenwood Municipal Federal Credit Union requesting the use of the COC assembly room for their annual meeting on Tuesday, February 20, 2007. Chairman Hancock asked Mr. Reeves to let them know that it will be available.

I.        Manager Reeves informed the Commissioners of a recommendation from Mr. Lemon to release excess capacity for natural gas on an annual basis. In the past, this has been done on a monthly basis from time to time. Mr. Lemon explained that he and Mr. Bishop met with our asset manager, SEMI, to discuss what they are seeing in the market under similar circumstances. By releasing it for the year, we would almost double what we have been seeing when releasing it month to month. When we release excess capacity it means that we have firm capacity we have paid for on the Transco pipeline system; what we don’t use for our customers, we release to the market for somebody else to use, and they pay us a portion of our cost. We would not want to release or “abandon” that capacity because it is really difficult to get rid of it once you have it. Mr. Lemon stated that five years or so prior to now, there were times when we were using it because we had the demand on our system. Recently demand has fallen off and there is excess capacity. He stated that studies have been done with Sheree Brown to determine the excess, and the recommendation is to release a minimum of 3,105 DT. That is a segmented portion of the pipeline that we have on a year round basis, the Sunbelt pipeline.  By releasing it for a year we can just about double the value of what we have been receiving. The risk of releasing that capacity is that our interruptible customer may be interrupted more often than they have. Last year they were not interrupted at all and the previous year, it may have been once or twice. We can offer them alternate service if we know we are going to be interrupted by trying to buy delivered gas which may be more expensive. Since we interconnect with a pipeline with South Carolina pipeline now, we can also get delivered gas off their system. We can mitigate the risk to our industrial customers that they may be interrupted. Mr. Lemon added that under no circumstances have our R & C customers required more capacity than we will have after releasing it; we will have a little over 22,000 of capacity and the largest one-day use a number of years back was 19,000 for residential and commercial customers. They are not going to be at risk; our industrial customers may, but not for any prolonged period, and there are alternatives for them, and they all have alternate fuel sources. Commissioner Monaghan asked if there were schemes for Fuji to go electric. Mr. Lemon stated that we had a total demand on the system of about 21,000; if we approve the release of the 3,100, we will have right around 22,000. We will not ever have gotten into the curtailment mode. We always can be curtailed if we don’t get all of the gas we are buying due to force majeure; the pipelines freeze off, or things of that nature, they can be interrupted. We can’t control force majeure. Commissioner Monaghan asked if Solultia uses it for feedstock. Mr. Lemon responded that Solutia uses other fuel and have been using bottom of the barrel fuel oil. We have had them on for the last six months. Commissioner Monaghan asked about how the weather might affect this, and Mr. Lemon responded that they had looked over a five-year period of time where there were both very warm and very cold winters. He stated that last winter was the warmest in 112 years, and he actually excluded that from his analysis because it was outside of the standard deviation. Commissioner Watts asked if we had ever exceeded 21,000. Mr. Lemon responded that we have not ever exceeded 21,000/day of peak demand. Normal everyday demand in winter season runs about 19,000 to 20,000. Commissioner Monaghan asked if this would be for a year and what happens if Jeff Fowler lands a big gas consumer. Mr. Lemon responded that we are only releasing it for a year. He added that we are talking about the peak winter season; this will not be an issue during the summer. If there is a need in the short term, we could go out and buy delivered gas, or buy capacity. We may not have to buy the capacities because with the new interconnect with South Carolina Pipeline, we could take delivery from them. There are a number of alternatives to keep our current customers on if something happened outside the norm. Commissioner Watts asked when this would start and Mr. Lemon responded that upon approval, he would call SEMI and ask them to start working on the release. This is within the context of our current Asset Management Agreement and does not require a contract change. A motion was made by Commissioner Monaghan to approve the release of the excess capacity as recommended. Commissioner Watts seconded and the motion was unanimously approved.

J.       Updates were provided on the following issues:

1.      Mr. Gentry reported on four incentives paid for primary heat source, two water heaters, and one range. He stated that Ms. Gorham reported that about $2,200 is about to be released to Justus Builders. He reported that he had attended a seminar on Natural Gas 101 and Leadership Greenwood. He will also be attending Electricity 101. Mr. Reeves stated that we should be able to include a report on incentives now in the monthly financial report. Mr. Lemon added that they met with a fertilizer company out of Toronto who is looking to locate a facility outside of Donalds. There is a gas line about a mile and a half away. They met with them and got load factors. Right now it is probably less than a two year pay out to lay a line over. This is in an existing facility and they are looking to build 40,000 to 50,000 square feet of manufacturing where they will use a dryer for fertilizer. They would use about 300 DT/day for seven days per week. They want us to furnish the low pressure lines to the plant (about 8,000 feet). Mr. Whittle added that we can probably pick up some propane customers along the way.

2.      Manager Reeves reported on credit card payments and stated that we were ready to go, and then we were stopped indirectly by the state. The American Gas Association, the Municipal Association, and the AWWA have alerted us that  a company by the name of Emergis is filing lawsuits against utilities who use the process we were going to use to run credit card payments. They are claiming the patent on the process. We have been advised to hold off until this is resolved. Commissioner Monaghan asked if electronic payments would be different, and Mr. Auman responded that is exactly what the patent is for, any kind of electronic payment, either through the office or over the internet. They are specifically going after utilities with regard to us receiving any kind of electronic payment. Mr. Auman stated that they have already won one fairly substantial lawsuit in Florida, and now SCGOV’s lawyers have started working on a response. They are offering several options whereby they will either rewrite the software around the patent; come to an agreement with the company for loyalty fees; or send a legal opinion letter stating that we do not feel we are breaking the patent.

3.      Manager Reeves asked Ms. Giannetti to report on the task force for GASB 43 & 45. Ms. Giannetti stated that she had gone online and downloaded information on GASB 43 & 45 and put out feelers for what other companies and utilities are doing to comply. She stated that she would follow up so they can start to get information together to start the process.

4.      Ms. Giannetti reported that there are no further developments with the Investment Policy she was working on with Michael Nix. Commissioner Monaghan stated that he thought there should be a policy book for the Commissioners. Manager Reeves suggested they continue this discussion later.

5.      Manager Reeves stated that one of the items opened at the bid opening earlier today was for carpet and tile replacement at the main office. He noted the worn condition of the carpet and that it was budgeted for 2006. He stated that only one bid was received for carpet and one for tile out of the eleven companies who were asked to bid. He noted that they did not open either of the bids. Ms. Gorham called some of them after the bid opening and was told by a couple that if we were to rebid, they would try to submit a bid. Mr. Reeves asked for guidance from the Commissioners. The Commissioners directed Mr. Reeves to rebid the carpet and tile, and to open bids at a special bid opening on Friday, September 22. Mr. Reeves noted that he would not be in on Friday and that Mr. Barnett, Ms. Gorham or Mr. Burnett would be available. He stated that a recommendation would be ready for the next meeting.  

6.      Manager Reeves updated the Commissioners on rate studies. He stated that during a conference call with Sheree Brown this week, they decided to propose delaying the implementation of any rate change until early spring or even late winter of 2007. With water, Ms. Brown is recommending an 8% increase. Mr. Reeves stated that he would like to talk a little about this because of the time coming up in 2008/09 when water will literally lose about $2.5 million of annual debt payments, and we will immediately go into a profit mode. He stated he was not in favor of the 8% increase; he is leaning more toward 5%. Gas was 0% change, with no increase recommended except to tweak the interruptible rates a little bit through new design delivery type packages to those customers. There is 0% increase with electrical, except for a few in the large power sector, with the hospital being the biggest. We would need to look at that impact. Because with residential we are looking at 0% gas, 0% electric, and possibly 5% on water, Mr. Reeves suggested waiting until spring. He stated that if we do it now, we may be looking at tweaking something else again next year. By waiting, we could possibly skip a year. The Commissioners were in agreement about not wanting to raise water rates by 8% and to wait until spring for further discussion.  Chairman Hancock asked about fire departments using fire hydrants to have car washes. Mr. Reeves responded that we have been checking them. Chairman Hancock stated there is supposed to be a car wash across from Solutia on Saturday. Ms. Gorham said that she would have the on-call person ride by and check to be sure that it is metered.

IV.              Executive Session:

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

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