Sep 13, 2021 Public Utilities Board on 2021-09-13 9:00 AM

Okay, it is 903 and we have a quorum, so it's called to order the Public Utilities Board meeting for the City of Denton on Monday, September 13th. Before we go into public comment period, I'd like to welcome Mr. Larry Beck to the Public Utilities Board. He'll be a good addition. Does anybody in the audience wish to speak? Do we have anyone on the phone wishing to speak? No, ma'am, no callers for today. Thank you. We have a closed session scheduled. If there are any board members who want to go into closed session to ask questions about item A that's on the consent agenda, does any board member wish to go into closed session? Okay, seeing none, we don't need a closed session. Do we have any board member who wishes to pull an item off of the consent agenda from items A through J? I see none. Do we have a motion to approve items A through J? I'll move approval. Second. All in favor say aye. Aye. Opposed? That carries. Item 3A, consider approval of the minutes from August 23rd, 2021. Do we have any corrections or changes? Do we have a motion to approve? So moved. Barbara moves. Do we have a second? Second. All in favor say aye. Aye. Opposed? That carries. Item B, consider recommending the adoption of an ordinance for the city of Denton, a Texas Home Rule Municipal Corporation, to execute a contract with Classic Chevrolet for light duty trucks. Good morning, board. Morning. My name is Terry Kader. I'm figuring out how to share the screen here. My name is Terry Kader. I'm the fleet superintendent for the city of Denton. This contract is a five-year contract for the purchase of light duty vehicles. Light duty vehicles would include sedans up through one-ton trucks. Just a little background on the current contract we have or the previous contract with a local vendor here, James Wood, and we purchased approximately 35 units annually off the contract. Over the life of that contract, we purchased approximately 100 vehicles and we anticipate pretty similar on this new contract as well. This contract, the previous contract did not include police pursuit vehicles, TAHOs, and we began purchasing General Motors products in about the year 2010, so we've been standardized to GM for the last 11 years. Just some examples of light duty vehicles that would be your pickup trucks. They could be with a regular pickup or they could have utility beds. Some of the lighter platforms of one-ton can carry utility beds as well. Sedans, electric vehicles, hybrids, the police TAHO on this particular contract has included support vehicles for the fire department, and then any other sedans or trucks that the city uses. There's a picture there of a new Equinox that was just purchased for the police department. I wanted to go over a couple of advantages for having a contract like this, and I think one of the biggest advantages is that it reduces the time for procurement. Yes, sir. Yes, sir. I have a quick question. What's the current make-up of the fleet in terms of cars, sedans, trucks, SUVs, or do you have that information? I don't have the exact numbers in front of me. It's a variety, probably a lot more trucks and SUVs currently than there are sedans. We'll see in the future, a lot of automakers are ceasing production of sedans. We're going to see a lot more pickup trucks and a lot more utility vehicles as well as a lot more electric EV platforms become available. Thank you. For procurement time, a lot of our departments are in high need of having their vehicles replaced and over the last two years since COVID had, it's been a struggle. It's not business as usual and this next purchasing cycle won't be any different. Automakers are still struggling to get the chips needed to build the vehicles and just having a contract is going to help that in the fact that the vendors have already reached out to us to get an idea of how many vehicles and what type of vehicles we're going to purchase this year. So they have an allocation and our vehicles are already included in that allocation so we don't have to wait until, we don't have to wonder if there's going to be build spots left for the vehicles that we want so that's a big plus. This contract also includes discounts for parts and repair services, body shop services, these are things that we would normally send out anyway to the local vendors and of course the standardization of the fleet is important because it just creates efficiencies through training, through having parts on the shelf for the vehicles and the need for specialized tools and equipment to include diagnostics and that type thing. This contract includes all available GM models and future models will be added to the contract as they become available right now so that trucks, vans, SUVs and electric vehicles are all part of the contract. It is a three-year contract with two one-year renewal periods and the discount for body shop work is 15% for parts and labor on body repairs and we send a significant amount of those out for repairs since we don't have the capability to perform those services in-house. We think we're going to purchase probably 40 vehicles annually and spend just an average of 1.2 million, of course that all depends on the five-year replacement schedule which vehicles become eligible for replacement and then as the departments determine their needs what vehicles will be added to the fleet so we've included a slide here showing the planned replacements for this next coming year and if you do the math you'll see it doesn't add up to 1.2 million because some of this contract is maintenance or repair, some of the contract is additions that I don't have, those will have to be approved before we can add them to the list and it also includes lower amounts in the initial terms of the contract because we all know prices will increase over the next five years so initially we won't be spending that 1.2 but at the end of the contract we're probably overall six million dollars and that's only if we need to spend that, that we're not obligated to spend it's only as departments need so I included a slide on the replacement criteria because that's always a point of interest and in our replacement most of our sedans and light trucks in this category are ten-year life cycles, our police patrol vehicles are in seven-year life cycle. I'm not so concerned about the age of the vehicle, I'm more concerned about the maintenance cost of the vehicle so age isn't a very high weight factor for us in fleet but mileage and maintenance costs are so these are trigger points that tell us it's time to take a look at replacing that particular vehicle and we try to get 100,000 miles out of a typical truck and 130 out of a police vehicle. We will typically do that on patrol units because they run a lot. We may not reach the life cycle in pickups and sedans necessarily or when we do it's going to be over the ten-year life span which is okay as long as we can still procure parts for that unit and as long as the maintenance points aren't over five so in our fleet system it tracks cost of vehicles and the life cycle cost for maintenance is zero to ten points and at five that's the place on the curve where it's advantageous to start looking at replacing that vehicle once it gets up towards eight or ten points you're really putting more money into maintenance than you should be and you should look at replacing that or you should have already replaced it so that's kind of our criteria. Five points represents half of the initial cost of the vehicle in case you're wondering about that. Question? Yes. How do you decide, let's see, how do you decide what you get, what goes electric, what stays? That's a great question. So the first thing we look at is the needs of the department and what platforms or vehicle that will are available that will suit their particular needs and then the next thing we look at is the engine driveline and the actual platform hybrid or electric so if the department has a need for a certain type of vehicle and it is available as an electric or a hybrid we will definitely take a look at that and we'll have a committee that's put together to look at each purchase and see and then the committee will be made up of various department personnel as well so we'll be taking a look at the purchase and see what suits the needs of the department, what's available and then can we go electric with it because electric vehicles are going to be the future and a lot of that depends too on our charging capability. What is, would you know, what is the policy about the employee taking home? I understand the wisdom of having a police and take his police car home because I think that is a deterrence but how do you decide within the department who takes their vehicle home and who just drives to work and gets in the city vehicle? The fleet department doesn't necessarily make that decision that's left up to the departments but primarily it's police and fire right now, there are some departments that have to respond when they're called out, water and electric has some take home vehicles but it's limited, it's limited to those people that are on call for a particular incident so the majority of take home vehicles in the city are emergency type vehicles. Thank you. Billy? Yes sir. I guess my question is about moving to classic from James Woods, how did that happen? Well when we put the bid out we submitted it to four different dealerships within the city of Denton and I think a lot of it had to do with timing and the fact that the auto manufacturers are still up and near about what they're going to manufacture and how many they're going to manufacture so my understanding was that when we put the bid out the pricing for next year 2022 models hadn't even been given to the manufacturers yet, it wasn't right to the very end before the bid could be submitted but our local dealer chose not to submit a bid this time. Okay. Well that makes that easy. Yeah. Yes sir. Where is classic based? Classic is in Grapevine I think, Richardson I believe, Grapevine, yes sir. We, that's it for the presentation, I'll be happy to answer any other questions, yes sir. This purchase is based on the needs for what you currently, can you hear me okay, I better, I've always been guilty of that, based on what you currently have in stock or does this look at future needs as we grow, is that. This does have vehicles added in for future needs but it also primarily looked at our five-year replacement plan that we currently have so we looked at the next five years what's becoming eligible and then we know about what the fleet growth has been in the past and that's what I used to predict, how many units we might add to the fleet in the future and we put that in there as well. Thank you. More questions. Madam Chair, before we move on I just wanted to recognize Terry and his staff, you know they recently recognized, they received a gold level award for the Clean Cities Coalition, this is the second year in a row so I think the City of Denton does a really good job of making sure we're aware of the environmental impacts that our fleet has on the local region, so. That's wonderful, congratulations. Thank you very much. All right, do we have a motion to approve item B? So moved. Okay, we move. Second. Devin seconds. All in favor say aye. Aye. Opposed? That carries. BMC, consider recommending the adoption of an ordinance with the City of Denton, a Texas Home Rule Corporation, authorizing the City Manager to execute a contract with Primors T&D Services LLC. Good morning. Good morning. Good morning. Well, I'm trying to get it to go bigger. Good morning, I'm Brad Watts, Operations and Maintenance Line Division Manager and this morning I wanted to talk to you, give a presentation about our overhead maintenance construction contract and my glasses are going to fog up so I might have to step back or pull them down, but I'll give it my best shot. First I'm going to give you a little bit of background, you know, about our overhead contract. We currently are just, you know, came out of a contract that was our overhead construction and maintenance contract and now we're, you know, trying to renew a new one and that's going to supplement our in-house staff force with qualified personnel and some things that kind of drive, you know, having a contract with a contractor would be emergency response, large projects and unfortunately now staff shortages with COVID, you know, employees being sick or having to be quarantined and then, you know, back on the emergency response, you know, a prime example is, you know, Louisiana, Mississippi and the coast with the hurricanes. We don't get them up here, knock on wood, but we do have ice storms and, you know, we can get remnants of a hurricane and then the City of Denton, the RFP, requested a full service contractor capable of providing overhead line construction and maintenance services. These services will include, but are not limited to, installation of new or replacement of existing overhead and underground electrical facilities on the system. All electrical construction material will be provided by the City of Denton. And back on the main utilization of this contract will be pole replacements. Currently in, well, in 2019, DME initiated a pole inspections project that inspected the existing 12,000 poles within DME's infrastructure that's supporting the 352 miles of overhead conductor. These poles that are on our system, they range from installation from the 1960s to current time. So far, we've inspected around 75% of our overhead infrastructure to date and we have identified 1,199 poles to be replaced, having replaced 170 so far of those poles. The overhead construction lines make up 43% of DME's infrastructure. The other remaining, of course, is the underground. And this is some pictures of our poles that we've replaced and a good, good picture will be the picture on the right. When they're inspecting poles, they're not just inspecting from the ground up, they're inspecting from the ground down because the ground down is usually where you're going to have the damage on your poles, where, whether it be rot or insect infestation on it or just, just a bad pole. And that's a really a good picture of what that'll look like when we find them. And with this, we're seeking approval of a contract for the supply of overhead electric lines construction and maintenance services for the city of Denton with Primor's T&D services for five years and the not to exceed amount of $15 million. And of that $15 million, I mean, we've got different types of poles out there. We've got single phase, B phase, three phase, which is one, two, or three phases. And every pole can be unique as far as changing it out, as far as getting just a price to change that pole out. It's going to vary based on, is it in a back alley, is it up on the street, or what all's on there, cable, cable TV, telephone, transformer services. I mean, it varies, you know, greatly, but with that, I'll answer any questions y'all might have. Yes, sir. I have a question. Yes, sir. You said you, in your presentation, you replaced 170 poles so far. Yes, sir. Out of 1200 out of a 75% inspection rate. So I'm curious what pace you intend to replace the poles at if you have that many to replace. Over this three to five-year period? That's a good question. We, when they, when the pole inspector gives us the inspections, it's broken down, it kind of rates them from really bad, which we call priority, to another type of a priority pole, which is not as bad, and then it goes down from there. The pole's working, it's not a danger pole, and currently the priority pole, that's number one on our list, and so we stay on top of those. I mean, they're changed out immediately. When we get the inspections report, and we get them weekly, the crews are sent out, whether it was a contractor or an in-house crew, the pole is changed out right then. I mean, we get it off the system, and we'll also rank them down from that. I mean, from priority down to the least, you know, that's not dangerous. And so we'll, we work backwards on that from our really bad poles to not as bad poles. And to answer your question, as far as how fast, as fast as we can do it, I mean, because it's... Well, I'm just curious, because if you've identified roughly 1,200 so far, and you've only replaced 170, I don't know what percentage of that 1,200 you consider priority. I would say, out of the, I probably, well, I mean, it would be really low percentage, because we've only identified, I think the number's 30 priority poles that were just dangerous poles, and then from there out, I don't have those numbers, but I can get them for you. Just from my own thinking, so you looked at the 1,200 poles and replaced 170, and you've got 30 more to do, so that's 200, so that's about, what, 1,615 percent, thereabouts? Yes, sir. Okay. Thank you. Oh, button. There you go. Thank you, Chair. So, we have 12,000 poles, and you said you've inspected 75 percent of the infrastructure? Yes, sir. So 8,000, 8,000 have been inspected? And is, like, expected life, like, 50 years or 30 years? Usually, I mean, that can range, I mean, depending on the soil and things like that, you know, how much moisture is on the pole, but I mean, a good number is 30 to 35 years is what a pole will last. Okay, and I guess, I mean, in the last 20 years, we've replaced hundreds or 1,000 poles, I guess, over, as needed, this seems like it's an ongoing, you know, a never-ending process. It is. I mean, every year, you want to inspect some 10 percent of your poles or, you know, some amount of your poles, and then you're going to be replacing, of those 12,000 poles, you can say in 30 or 40 years, you're going to replace all 12,000, so you expect to replace whatever that is, 500 a year. That's very possible. Yeah, and part of this is, as the city's grown, that pole was installed 20 years ago or 30 years ago, they're just now starting to age out as like, as kind of areas of the city have expanded. If it's going to be a permanent ongoing process, would it be better over time for the city to just expand its staff and take this work on, you know, and this can be in a five or 10-year period, but if we're going to be replacing 100 poles a year, 200 poles a year, 500 poles a year, you know, in five years from now, could we have a plan to have enough staff to do the inspections and do the replacements in-house? Good question, Mr. Taylor. I'm Chris Ludrick, the executive manager of operations. So one thing that we should state is this pole inspection task that we took on is new. We have not done that in the past. There was not a pole inspection program in place, so we were more of a reactive. So we would have a pole break. We had the infamous windstorm of Bonnie Bray that took down the entire line, and then we would go repair it. So to be more proactive, we hired a company that's actually doing the pole inspections for us, and that will be periodic going forward. So maybe you only need it every five years. But this first allotment of this 1,200 poles, that's because we looked at every pole in the city, even ones that have been in the ground for a year. So to give us a benchmark, so we'll bring in this contractor to get this big, you know, this big glut of backlogged bad poles out of the way, then going forward, it would be much more manageable. And Brad's guys, if they do have time, so if there's staff available, we can change out the poles ourselves. But we'll elect to use the contractor to carry the bulk of this so that our maintenance crews aren't tied up all the time working on that. But yes, definitely going forward, it should be a much more manageable task that we can take care of in-house. Thank you. You're welcome. Go ahead. Thank you. Kind of as a corollary to Mr. Taylor's concern, has your department weighed the merits and cost of treated wood posts as opposed to metal posts? I couldn't hear all the questions. Has your department weighed the merits and cost of treated wood posts versus metal posts? Would there be? That would be an engineering question that I'm in the industry, I mean, that's an ongoing question that's been supported, but that would be an engineering question, and we'll certainly get that for you. Okay, but there's nothing just at the top of your head that says one's better than the other? Yes, sir, Mr. Beck. So the costs are significantly more for the metal poles than they are for the wooden poles. The initial cost or the overall? The initial cost, and you also have to remember that those, unless you put galvanized poles everywhere, which is not the standard in distribution because it's very unsightly, that those poles also rust as well. So they have a life expectancy just like the wood poles. So the wood poles are very easy for our guys to work, and as we try to maintain a 30-minute outage on repairing those poles, they're just very easy to work with. So they are by far the industry standard electric guys talking in the lights, I believe. Another question. Another question separate from that, I'm assuming just based on my observation that as new developments come in, we don't do the above-ground electrical, it all goes underground, is that correct? That is correct. All new construction for residential is underground. Any thought to replacing what we got above ground to underground as it allows, as conditions allow? Yes, sir. We do. The cost difference is significant, maybe three times. So we would take budgetary constraints in mind. We also take reliability. So if a circuit in our Kings Row area, that part of town, a lot of those lines are in the backyards. They're very hard for us to get to. So those are things that we do consider as far as, "Hey, when we replace this line, do we need to put it underground?" Unfortunately, some of the construction techniques where you have fences backing up to fence and that line runs in the back, it's not very conducive to put it in an underground circuit because all of those houses are fed overhead, you would have to convert every service for every house. So it is definitely something we look at and we actually do have a budgetary category that we put in our budget every year to transition some existing overhead to underground. Right now the logistics of it makes it pretty difficult. Yes, sir. That's correct. Thank you. Well, Mr. Beck also pointed out that the council did ask us to look at potentially undergrounding certain areas of the city. We are currently working through that and do plan to have a report back to the council. We'll also share with the PUB sometime before the end of this month. Just understand that it'll be a big ticket item. But again, it was a response to one of the council priorities I think from a year ago that we're still working on, but we'll get that to you. I think it was just a few years ago that you redid Southridge, you replaced all the lines out there. Yes, ma'am. If I'm remembering correctly. All right. Any other questions? Do we have a motion to approve item C? So move. Thank you, Devin. I'll second. Okay. Larry seconded. All in favor say aye. Aye. Opposed? Motion carries. Consider recommending the approval of an ordinance amending the city's fund balance policy related to the utility fund reserve levels. Good morning, Chair, PB members, Nick Vincent, Assistant Director of Finance. I'll do my best to talk as loud as possible with this mask on. Okay, so welcome to Mr. Beck, glad to have you on the Public Utilities Board to continue our conversations regarding the fiscal year 2021-2022 budget. A little bit of recap. So if the PB or members, we did complete a detailed fund balance analysis this spring of the city's fund balance policy for the utilities. Based on that result of that study, we were looking to increase the reserve requirement for the electric utility, and that's what today's conversation is focused on. Sir, could you speak up or move the microphone up? Let me. Thank you. Can you hear me better, Mr. Rybak? All right. Let me speak up a little bit. And if you didn't, Mr. Rybak, if you didn't hear me, I can repeat what I said. So in the spring of this year, we completed a detailed analysis for the utilities fund balance policy. And basically what we did is we looked at the city's current policy, compared to other cities and other locally owned municipalities in the area. Based on that survey, what we recommended through the budgeting process was to increase the reserve targets for the electric utility and keep it the same for the other utilities. So today's conversation is to formalize that, to adopt a policy that supports that recommendation. And then what I'll do, these pro formas were presented to the public utility board during the budgeting process, but what I wanted to do just with the new member on the public utility board and the rest of the members as a recap, since it's been a couple of weeks, is just walk you back through it. We won't review it in detail like the budgeting process, the public utility board has already approved this, but I definitely want to show you the fund balance targets. So you can see we do budget in electric, we show a five-year forecast for the utility. You can see the proposed fiscal year 2022 budget, and this budget will go forward to city council for adoption next week. And this budget starts October 1st. So you can see planned revenues for the electric utility total 245.7 million, with total expenses totaling 240.7, and you can see that number right here. So ending net income of 4.9 million for the electric utility. And what I want to do is draw your attention down here, you can see the engine reserve for the electric utility is 123.3 million. So currently, when Winter Storm URI had come forward this last year, we looked at these reserve targets and it really kick-started that fund balance analysis that we'd started. So as I said, based on those results of that study, we are looking to increase it. So currently, the reserve target for the electric utility, you can see here at the bottom of your slide, the minimum is 16%, with the maximum being 21%. That equates to about 38.5 million for the minimum and 50.5 million for the maximum. We did feel this was too low, and based on the feedback we got from PEB, we're looking to increase that. So the new minimum that we're proposing is 100 million, which equates to 46%, and the maximum being 150 million, which equates to 69%. And you can see the value of that is 110.7 and then 166.1. Water utility, we're not looking to make any changes to the water fund balance policy, it is sufficient based on the research that we did in that analysis, but did really quickly want to show you the 2022 column. We do show a 10-year forecast of the water utility, you can see it here in this column. Revenues of 52.2, expenses of 51.2, so net income about 998,000, yes sir. Quick question, it looked like on the electric utility, the revenue stream was declining over the period of years going out to 25, 26, whereas on the water, it appears to be going up. I was just curious if you know what's driving those forecasts up and down. That's a great question, Mr. Ryback, so during the budgeting process, you may have heard the city is actually in the process of doing a full rate filing for our T-cost rate of returns, our transmission assets, so the city gets a rate of return for investing in the transmission system. So we are taking the conservative approach, assuming that that T-cost rate of return will go down, but we're yet to know how much it'll go down to, so that's the reason that revenue is decreasing. Okay, so fiscal year 2022 is 52.2, as Mr. Ryback had said, that revenue does increase in fiscal year 2031, we are forecasting about 63.5 million, looking at those different growth assumptions in the community. Expenses in fiscal year 2022 is 51.2, net income about a million dollars. Ending reserve fund balance for the water utility is right here in this blue, you can see 20.5 million is ending reserve. Current reserve target for the water utility is 120 days, with the maximum being 180 days. You can see the value of that, so 16.5 million being the minimum, 24.8 being the maximum. Wastewater utility, this does include drainage, so when we talk about drainage, it is part of the wastewater fund. Fiscal year 2022, you can see 38.6 million in revenues, 37.9 in expenses, net income about 740,000, with that ending reserve target of 15.8. Not looking to make any changes to wastewater, you can see the minimum being 100 days, that equates about 11.5 million, and then the maximum being 140 days, which is about 16.2 or 16.1. Water waste, we show a five-year forecast for this fund, so you can see the preliminary, which is actually the proposed budget that the PUB did approve, revenues of 39.8 and expenses of 37.2. Ending reserve, you can see the reserve target here, which is 8.9 million. We do show a separate reserve for the vehicle replacement fund, since they are heavily reliant on vehicles, so we do show that separate, but you can see the current reserve targets at the very bottom in the pink, the minimum being 51 days or 14%, the maximum being 65 days or 18%, so 6.9 million, or 6.7. So we do have a public hearing on the budget tomorrow. City Council is scheduled to adopt the budget, the tax rate, and the utility rates next Tuesday, so we encourage you to listen to that meeting as we go forward to the City Council to get them to adopt it or seek their approval. And that is the presentation. - Other questions? Okay, seeing none, do we have a motion to approve item D? - I move approval of item D. - Thank you, Billy. Second? - Second. - Thank you, Lee. All in favor say aye. - Aye. - Opposed? That carries. Management reports. - Madam Chair, Board, just a quick update here for the agenda items. Obviously, we don't have this populated, but we did send to you a draft of the comprehensive solid waste management strategy. Brian Borner is on the line if you have any questions. We do plan to come back to the Board in November to actually do the work session, so you've received that document now quite a bit in advance, so you have an opportunity to review it and be prepared, but again, Brian is on the line if you do have a question about that. And then for the future or new business action items, obviously, that was one item that's been included in the comprehensive solid waste management strategy is on recycling, residential composting, and then DME is still working on this update on the 4CP impact of solar installations. We do plan to have that to you here in the next couple of meetings, and then finally, we are still working on a legislative update to provide to you. As you know, there's now a third special session that's been called, but again, as soon as we have that information, we'll forward it to you just in the status report. So with that, I'm happy to answer any questions or if there's anything else you'd like to discuss on that. - Questions? All right. That brings us to concluding items. Does any Board member wish... Oh, yes. I'm sorry. Did you have a question? - I was wondering if I could add a future agenda item for consideration by the Den Energy Center. I was wondering if we could have a look at their emergency preparedness planning in the wake of our delightful winter storm, if they've made any changes that we would like to be aware of. - Okay. Concluding items is a perfect place to do that. - Absolutely. - Anything else? Any Board member wish to put any agenda? Okay. Maybe Larry, you can tell us a little bit about yourself. I think some of us know you a little bit. - Well, this is not my first time in this Chamber, as some of you all most should know. Along with Devon Taylor, I served in the Planning and Zoning Commission, which opened my eyes quite a bit. So I've been in Denton since I came up here to go to school in '74, met my wife. She was going to T.W. while I was going to North Texas State, and we've had two kids. I lost my daughter last year as a result of COVID-related complications, but my son gave me two grand babies, so I've got that to look forward to, and I'm looking forward to working on this board. - We look forward to having you here. - Thank you. - All right. I guess it's 941. Do we have a motion to adjourn? - That's me. - That's your job, Billy. We are adjourned.