WEBVTT

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 >> Okay, it is nine o'clock and we do have a quorum, so we're called to order the public

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 utilities board meeting for March 25th, 2024 for the city of Denton.

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 Cassie, did anyone register to speak?

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 No.

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 Okay.

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 And we'll go into the consent agenda.

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 Does any board member wish to pull an item from A through D?

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 Okay.

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 I see none.

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 Do we have a motion to approve the consent agenda?

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 >> So moved.

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 >> Thomas moved.

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 And do we have a second?

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 Second?

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 Devin, seconds.

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 All in favor say aye.

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 >> Aye.

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 >> Carries.

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 Approval of minutes for March 24th, 2024.

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 Do we have any changes or corrections?

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 Do we have a motion to approve?

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 >> So moved.

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 >> Billy moves.

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 Do we have second?

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 >> Second.

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 >> Thomas seconds.

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 All in favor say aye.

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 >> Aye.

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 >> Opposed?

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 Carries.

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 All right.

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 Item B.

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 >> All right.

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 Good morning.

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 >> Good morning.

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 >> Members of PUB.

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 I'm Vispa Pandavong, AD of Finance, and I'm here to talk about the Wells Fargo Letter

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 of Credit.

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 So just to give you some background on the ERCOT credit and collateral protocols.

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 So before October 1st, DME or the state of DIN had a $40 million unsecured line of credit

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 with ERCOT.

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 And we were basically saving cash to supplement that from time to time.

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 So after October 1st, the ERCOT protocol changes.

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 They said, you know, no market participants will get any unsecured line of credit going

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 forward.

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 And we as a city, we went out and did a RFP, and we looked at the options that they gave

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 market to market participants, which was cash or letter of credit.

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 So -- >> There's a question on that.

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 So is that going -- is that an escrow -- how is that treated, the cash?

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 >> So like -- so right now cash, yes, the cash is sitting with ERCOT as like an escrow

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 account.

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 >> It goes to ERCOT?

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 >> Not under -- okay.

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 Gotcha.

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 Thank you.

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 >> So just to talk about the letter of credit program in general.

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 So this program is going to cost around $500,000, and it's going to be for three years.

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 Drawdown is not anticipated, you know, currently when we move forward signing for the letter

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 of credit.

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 And in the event of a drawdown from the letter of credit, the city has multiple options to

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 basically explore financing those dollars.

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 So now staff recommends the use of the letter of credit for a couple reasons.

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 It really protects the city liquidity.

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 Also the city will be earning interest when the cash is sitting here with us.

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 And then the third thing is to really meet the ERCOT protocols or requirements.

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 So staff is here today to request for the city and DME to basically authorize or recommend

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 to sign the Wells Fargo letter of credit up to $60 million.

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 >> Questions.

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 Go ahead.

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 Devin first.

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 >> Excuse me.

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 What is the annual cost to maintain the line of credit?

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 >> Around $500,000.

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 >> And so of $60 million, that's a fraction of a percent, like 0.3% or something like

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 that?

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 >> Correct.

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 >> Okay.

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 Thank you.

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 >> Yes.

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 Go ahead.

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 Rob.

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 >> I may have misunderstood, so the $500,000 is for each year.

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 It's not for the full three years.

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 >> Correct.

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 $500,000 each year.

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 >> Thank you.

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 >> And how much do we have sitting with ERCOT now that will come back to us?

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 >> I think it was around a little bit over $30 million, somewhere around there roughly.

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 And that number fluctuates because ERCOT pretty much dictates how much cash we have to send

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 over.

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 And then we have some time to actually send that cash over.

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 There's a period that ERCOT provides us.

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 >> Okay.

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 Other questions?

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 >> How's the LOC treated on it?

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 Is that going to be a long-term asset, is that what that is?

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 >> This one is a letter of credit, and this is not going to be revolving.

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 So it's up to that $60 million, and once we draw it down, then that's all you get to draw

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 down.

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 >> Okay.

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 >> So it basically gets subtracted from that $60 million.

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 >> Okay.

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 >> Further questions?

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 Do we have a motion to approve?

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 >> Move approval.

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 >> Okay.

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 All in favor?

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 >> Aye.

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 >> Aye.

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 All right.

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 Thank you.

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 >> Thank you.

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 >> All right.

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 The next item is consider recommending the adoption of an ordinance directing the publication

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 for notice of intention to issue 84,770,000 in principle amount of certificates of obligation.

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 Good morning.

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 >> Good morning.

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 Randy Klingle, Treasury Manager.

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 I also have one presentation for the second agenda item as well.

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 >> Okay.

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 >> So let's go together.

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 >> So I'll call that one too.

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 >> Yes, please.

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 >> Consider recommending the adoption of an ordinance directing the publication of notice

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 of intent to issue 177,560,000 in principle amount for certificates of obligation.

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 >> Yes.

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 >> Thank you.

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 >> Thank you.

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 >> I'm here just to have a brief presentation regarding the certificates of obligations

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 requirement for notice of intent, and that is the first reason that we do them.

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 The most important reason is that it's required by law and is required for us to publish this

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 notice of intent in our local circulation, which for the City of Denton is the Denton

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 Record Chronicle, and we will publish that twice in consecutive weeks as well as putting

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 it on our website for the entire period time that is required.

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 In addition to that, we must pass the bond parameter ordinance within 56 days of the

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 first issuance of the post on the Denton Record Chronicle, and we'll be coming back to you

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 with that bond parameter later in the summer.

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 Most of the slides that you will see today are the project list from the utility funds,

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 which are also in your backup, and will illustrate the budget amount in the capital project plan

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 versus what we're going to NOI with.

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 So our first budget here is the solid waste budget, which reduced their NOI budget notification

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 from the original budget by about $2.8 million.

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 They're looking at pushing the cell formation out to future years, and I believe the other

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 thing was just making a priority on the fleet shop, so they moved some monies around there

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 for that purpose, for the notice of intent.

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 Question?

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 Yes, sir.

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 Could you go back?

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 I'll go back the other way, yes.

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 You want to push it?

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 There it goes.

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 What's the difference between new additions and replacements?

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 New additions and replacement vehicles, I don't have the extent of that.

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 I'm assuming purchasing new vehicles versus replacing old ones.

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 Is that correct, Eugene?

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 Or would you like to elaborate?

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 Good morning, Eugene McKinney, Deputy Director of Solid Waste and Recycling.

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 So a new addition is supported by growth of employees, growth of the community.

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 So as the community grows, we need more equipment to move forward, and the replacement is once

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 those vehicles reach their service life, where there are no, you know, the end of life, it's

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 time to get a new car, it's time to get a new truck, because if you keep them beyond

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 the service life, it costs us more and more to maintain them.

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 And do you have an estimated number on the vehicle replacements?

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 That three million or two million, how many vehicles are you thinking about replacing

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 with that number?

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 Yes.

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 And I don't have a number right off hand, you know, an estimate of, you know, just to

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 give me an idea.

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 Well, typically we see on the collection side, we can see anywhere from five to seven to

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 10 vehicles per year depending.

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 And what happens, there's some history behind it, because we forewent some opportunities

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 in the past, and we kept them longer, so we're trying to get back on track with that.

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 But something to keep in mind here with that overall cost is that the equipment prices

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 now look a lot different than they do now than five, 10 years ago, right?

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 So we took a huge spike.

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 I think we were using a 3% inflationary factor when we ordered from year over the year.

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 We've seen that number double and triple now just because of the microchip issues and getting

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 metal and different things factor into that large amount.

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 Thank you.

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 Thank you.

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 All right.

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 So solid waste, 4.1 million.

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 We moved to the water fund, which reduced their notice of intent budget to about $60

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 million, which is about $22.5 million reduction.

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 And most of this, generally speaking, is some of these projects, a lot of these projects

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 are still in design, so they couldn't move forward with, you know, tangible builds and

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 starting the projects.

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 And so that is the reason for the reduction for some of the water.

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 Wastewater projects remain the same from budget, so they're still on target for needing what

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 they thought during the budget process.

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 And last, we have the electric fund, which is reduced also about $22.5 million, and they

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 just did a complete revamp of reviewing their project list from the time that they created

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 the budget.

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 So in all the notice of intentions, we have $4.1 million for solid waste, and in the utility

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 system project list is total with the issuance cost and flexibility pricing included $177,560,000

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 for the notice of intent at this point.

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 And our next steps, if you recommend this, I will take it to council on April 2nd to

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 post the notice of intent and continue through that process.

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 Then I will be back in May to you, and then eventually to council for the bond parameters

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 ordinance with the last look of the last project, that will be the final list.

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 And then June is the potential sale with proceeds being received in late July.

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 Kind of our standard outline of the bond process.

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 Any questions?

00:11:01.000 --> 00:11:02.000
 Questions?

00:11:02.000 --> 00:11:03.880
 Go ahead, Billy.

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 Just on the DME side, you've got an NYI for feeder extensions and improvements that went

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 down substantially.

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 Is that due to availability of those materials?

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 I'm sure Jerry is coming up.

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 Am I right?

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 There we are.

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 Hi, Jerry.

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 Can everybody hear me?

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 Just making sure.

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 Jerry Felder, engineering manager at DME.

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 Much like the other departments, sometimes we look at the projects and we say, okay,

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 this is probably not going to start until a certain time.

00:11:32.720 --> 00:11:36.160
 We also, if you look at feeder extensions and improvements, some of that has to do with

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 the new line extension policy we have where the developers have to pay.

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 Some of that comes in the new residential commercial, but also the new line extension

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 policy affects the feeder extension improvements, which helps us reduce that down.

00:11:49.240 --> 00:11:50.240
 Okay.

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 All right.

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 Simple.

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 Thank you.

00:11:53.240 --> 00:11:56.640
 Other questions?

00:11:56.640 --> 00:12:00.400
 Do we have a motion to approve both these items?

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 Actually, we'll vote on them individually.

00:12:03.240 --> 00:12:04.240
 Thank you, Marcia.

00:12:04.240 --> 00:12:05.240
 Thank you.

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 You keep me so honest.

00:12:06.240 --> 00:12:07.240
 Okay.

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 Do we have a motion to approve item C?

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 So moved.

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 Devin, second?

00:12:10.240 --> 00:12:11.240
 Second.

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 Thomas, second.

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 All in favor, say aye.

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 Aye.

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 Do we have a motion to approve item D for the notice of intent to issue $177,560 million?

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 So moved.

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 Devin, moved.

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 And Billy, just second.

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 All in favor, say aye.

00:12:27.040 --> 00:12:28.040
 Aye.

00:12:28.040 --> 00:12:32.240
 Okay.

00:12:32.240 --> 00:12:33.240
 Management report.

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 Madam Chair, members of the board, today we have a couple of items for you.

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 The first one is on voting requirements.

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 I'll go ahead and turn it over to Marcella.

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 She can walk you through that.

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 Hi, I'm Marcella Lenn, senior deputy city attorney.

00:12:46.320 --> 00:12:51.840
 Just really quickly, just a little bit of education for both me and y'all is going through

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 the voting requirements.

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 So our code of ordinances, which was provided in the management report, requires that you

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 vote unless there's a conflict of interest.

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 So the only permissible abstention under our code is if there's a conflict of interest

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 and you fill out the conflict of interest affidavit.

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 If you have questions on something or you're not sure that you're ready to vote on it,

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 you can move to postpone, especially if the rest of the board feels similarly.

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 And then another option would obviously just be voting no.

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 So our votes are recorded and shared with city council, so city council is made aware

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 of kind of how the discussion happened at PUB, but just so you guys know, going forward,

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 we do require a yes or no vote unless there is an event of a conflict of interest.

00:13:37.760 --> 00:13:39.680
 Yes, Rob, go ahead.

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 Is the ethics board involved with any of the actions that you just mentioned?

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 Only if there's a question on the conflict.

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 So if the board member comes forward and submits the conflict of interest affidavit and we

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 review it and that's kind of submitted, I don't think the ethics board is involved with that

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 unless there's a question from another board member that wants an ethics opinion on whether

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 or not that is a conflict or if someone should have issued a conflict.

00:14:12.960 --> 00:14:18.040
 But if it's just kind of the ordinary course of we receive the conflicts affidavit, I don't

00:14:18.040 --> 00:14:23.600
 believe there's any involvement of the ethics board.

00:14:23.600 --> 00:14:28.680
 I have experienced the ethics board having a different thought concerning that and have

00:14:28.680 --> 00:14:34.320
 had even council members come directly to them for direction before they went anywhere.

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 And we're all officers according to the ethics board.

00:14:38.560 --> 00:14:42.480
 I just ask that because it's just a preparation.

00:14:42.480 --> 00:14:45.040
 Yeah, so that would be the ethics opinion process.

00:14:45.040 --> 00:14:51.680
 So I believe that the council members came to the ethics board to ask for an opinion.

00:14:51.680 --> 00:14:56.580
 But if there's just the ordinary course of submitting an affidavit, that doesn't prompt

00:14:56.580 --> 00:14:58.480
 ethics board action.

00:14:58.480 --> 00:14:59.480
 Thank you.

00:14:59.480 --> 00:15:02.240
 Excuse me, Madame Chair.

00:15:02.240 --> 00:15:09.440
 So I think this refers to an item that, as usual, I'm guilty of.

00:15:09.440 --> 00:15:14.720
 I abstain on a vote which I probably just should have voted nay because I abstain because

00:15:14.720 --> 00:15:17.800
 I didn't think there was enough information they should have brought up towards the board

00:15:17.800 --> 00:15:20.080
 without a description.

00:15:20.080 --> 00:15:22.680
 So my apologies, I'll just vote no next time.

00:15:22.680 --> 00:15:25.320
 I feel that way.

00:15:25.320 --> 00:15:28.160
 I had no conflict of interest in the matter.

00:15:28.160 --> 00:15:29.160
 No problem.

00:15:29.160 --> 00:15:30.160
 All right.

00:15:30.160 --> 00:15:33.920
 Well, I was just addressing and I'm pardon me, Mr. Chairman.

00:15:33.920 --> 00:15:39.960
 I was addressing just for conflict of in versus just should I voted yes or no, because it's

00:15:39.960 --> 00:15:50.560
 a very sensitive issue with that board.

00:15:50.560 --> 00:15:54.000
 Would it be helpful for us to provide some additional information on the ethics board

00:15:54.000 --> 00:15:55.940
 process?

00:15:55.940 --> 00:15:58.720
 I won't need it because I just got off the board.

00:15:58.720 --> 00:15:59.720
 Okay.

00:15:59.720 --> 00:16:01.480
 Thank you, Marcel.

00:16:01.480 --> 00:16:03.840
 Do you have any personnel expenses?

00:16:03.840 --> 00:16:04.840
 Yes.

00:16:04.840 --> 00:16:08.920
 So the next item, there was a question at the last meeting regarding personal expenses in

00:16:08.920 --> 00:16:10.980
 the forecast that we've shown you.

00:16:10.980 --> 00:16:15.200
 We did go back and looked at those numbers a little bit closer.

00:16:15.200 --> 00:16:21.160
 We did make a correction when simply when we pulled the report, we just captured some

00:16:21.160 --> 00:16:24.360
 accounting entries that shouldn't have been included so I've given you a table that shows

00:16:24.360 --> 00:16:25.840
 you what the correct number should be.

00:16:25.840 --> 00:16:29.920
 I think overall the variance is really about $1.2 million.

00:16:29.920 --> 00:16:32.460
 It's about a 5% increase.

00:16:32.460 --> 00:16:37.380
 Just so the board understands, certainly that number includes our annual budget that we

00:16:37.380 --> 00:16:41.320
 include for salary increases, about a 3% average.

00:16:41.320 --> 00:16:45.240
 Also there's additional personnel that go into those numbers.

00:16:45.240 --> 00:16:50.040
 So my hope is that the memo gives you a response to the question that you had.

00:16:50.040 --> 00:16:53.240
 Certainly if there's more detail or if you have other questions, I'd be happy to answer

00:16:53.240 --> 00:16:54.240
 that.

00:16:54.240 --> 00:16:57.520
 Certainly finances here as well if you have any other questions on that.

00:16:57.520 --> 00:16:59.840
 Keep going.

00:16:59.840 --> 00:17:00.840
 Okay.

00:17:00.840 --> 00:17:04.760
 So the next item is just future agenda items.

00:17:04.760 --> 00:17:08.560
 I know we've been talking about this, you know, budget, budget, budget, right?

00:17:08.560 --> 00:17:10.600
 So you have your dates on there.

00:17:10.600 --> 00:17:13.720
 If you're not going to be available during that time, if you could just let us know.

00:17:13.720 --> 00:17:18.120
 But certainly we want to give you plenty of heads up so you know when those dates are

00:17:18.120 --> 00:17:19.780
 coming.

00:17:19.780 --> 00:17:25.960
 And then new action items, the items that we had that we've worked through already is

00:17:25.960 --> 00:17:28.440
 the cost allocation analysis that's been completed.

00:17:28.440 --> 00:17:34.880
 Obviously we've provided you a response to DME personnel items and we have the EV item.

00:17:34.880 --> 00:17:39.520
 There is one additional new business item that I did want to inform the board.

00:17:39.520 --> 00:17:46.320
 And so at the last meeting the board took action on the electric rate ordinance.

00:17:46.320 --> 00:17:51.720
 If you recall, there was a section on delegation to the board.

00:17:51.720 --> 00:17:55.780
 When we took that to the council, the council opted to make a change to that.

00:17:55.780 --> 00:18:00.440
 You know, the charter, any type of rate increase expenditure associated with the utilities has

00:18:00.440 --> 00:18:02.100
 to come to the board.

00:18:02.100 --> 00:18:08.080
 So changes to the ECA, TCRF will still come to the board for your recommendation, but

00:18:08.080 --> 00:18:12.240
 the council still wanted that item to go to them formally on their agenda.

00:18:12.240 --> 00:18:15.600
 They asked that we placed that on their consent agenda.

00:18:15.600 --> 00:18:23.400
 And so based on council's direction last week, we did modify that ordinance slightly so that

00:18:23.400 --> 00:18:28.880
 the PUB doesn't have sole authority to make changes to the ECA and the TCRF.

00:18:28.880 --> 00:18:33.080
 So we wanted to just inform you of the council's action, but again, under the charter, we still

00:18:33.080 --> 00:18:34.480
 have to come to the board.

00:18:34.480 --> 00:18:39.640
 There has to still be a recommendation from the board to the council on any changes to

00:18:39.640 --> 00:18:46.040
 really anything in the electric rate ordinance and any rate ordinance for any of the utilities.

00:18:46.040 --> 00:18:50.080
 So with that, I'm happy to answer any questions that you may have.

00:18:50.080 --> 00:18:56.560
 Will that slow down the timing of bringing the ECA through or are you working that through

00:18:56.560 --> 00:19:00.680
 how it would come here and then go to the council?

00:19:00.680 --> 00:19:05.560
 There might be a slight delay, and we certainly conveyed that to the council and they understood

00:19:05.560 --> 00:19:06.560
 that.

00:19:06.560 --> 00:19:10.600
 And that was really the reason for them asking for us to put it on their consent agenda to

00:19:10.600 --> 00:19:16.020
 try to speed that process versus doing a work session or an individual item for consideration.

00:19:16.020 --> 00:19:20.320
 On the consent agenda, there could still be questions that could still be pulled for individual

00:19:20.320 --> 00:19:21.320
 consideration.

00:19:21.320 --> 00:19:22.320
 We'll be prepared.

00:19:22.320 --> 00:19:25.640
 But we don't anticipate that there'll be a big delay other than just simply kind of skin

00:19:25.640 --> 00:19:26.640
 desk scheduled.

00:19:26.640 --> 00:19:27.640
 Okay.

00:19:27.640 --> 00:19:28.640
 Thank you.

00:19:28.640 --> 00:19:29.640
 Other questions?

00:19:29.640 --> 00:19:30.640
 Oh, Rob, go ahead.

00:19:30.640 --> 00:19:35.440
 Could we consider, once we do our due diligence, we'd be one and done and the council wouldn't

00:19:35.440 --> 00:19:38.280
 have to bring anything back to us for reviewing?

00:19:38.280 --> 00:19:39.280
 Yeah.

00:19:39.280 --> 00:19:46.080
 So certainly with the ECA, if you recall, there is a plus or minus $5 million test that

00:19:46.080 --> 00:19:47.080
 goes into that.

00:19:47.080 --> 00:19:52.520
 So if the ECA balance doesn't fluctuate beyond, within that confines, there really is not

00:19:52.520 --> 00:19:54.280
 going to be any change.

00:19:54.280 --> 00:20:00.600
 Our hope is that we can set a rate that'll be good for at least six months, if not nine

00:20:00.600 --> 00:20:01.600
 or 12 months.

00:20:01.600 --> 00:20:06.520
 But again, depends on what's happening in the market, what types of issues we may have

00:20:06.520 --> 00:20:07.520
 with energy.

00:20:07.520 --> 00:20:11.160
 We probably won't see a whole lot of changes on the transmission side, because those are

00:20:11.160 --> 00:20:15.840
 really set annually, other than there's a slight change kind of at the beginning of

00:20:15.840 --> 00:20:18.040
 the year after we've set the budget.

00:20:18.040 --> 00:20:27.080
 But other than that, my hope is that we don't see a lot of variation, but it is an unknown

00:20:27.080 --> 00:20:28.080
 market.

00:20:28.080 --> 00:20:31.640
 And so I can't make that promise, but that's our hope.

00:20:31.640 --> 00:20:33.320
 Thank you, Madam Chair.

00:20:33.320 --> 00:20:34.320
 Welcome.

00:20:34.320 --> 00:20:35.320
 Other questions?

00:20:35.320 --> 00:20:36.320
 No?

00:20:36.320 --> 00:20:37.320
 All right.

00:20:37.320 --> 00:20:38.560
 We'll move on to concluding items.

00:20:38.560 --> 00:20:42.760
 Does any board member wish to say something to the public or have something put on a future

00:20:42.760 --> 00:20:45.400
 agenda?

00:20:45.400 --> 00:20:46.400
 I don't see any.

00:20:46.400 --> 00:20:47.400
 All right.

00:20:47.400 --> 00:20:48.400
 Move the adjournment.

00:20:48.400 --> 00:20:49.400
 Thank you, Devin.

00:20:49.400 --> 00:20:50.400
 We are adjourned.

00:20:50.400 --> 00:20:50.400
 Thank you.