1 00:00:00,000 --> 00:00:05,680 Good morning, and welcome to the regularly scheduled meeting of the Denton Public Utilities 2 00:00:05,680 --> 00:00:06,680 Board. 3 00:00:06,680 --> 00:00:11,100 Today is April 13th, and it is 9 a.m. 4 00:00:11,100 --> 00:00:15,400 Our first item of business this morning is presentations from members of the public. 5 00:00:15,400 --> 00:00:17,600 Do we have any presentations? 6 00:00:17,600 --> 00:00:18,600 We don't. 7 00:00:18,600 --> 00:00:23,600 Okay, and now we'll move on to the consent agenda. 8 00:00:23,600 --> 00:00:27,440 Does anybody have any items they wish to pull for discussion? 9 00:00:27,440 --> 00:00:30,280 Item D, please. 10 00:00:30,280 --> 00:00:36,640 Item D. All right. 11 00:00:36,640 --> 00:00:40,540 And -- Item G. 12 00:00:40,540 --> 00:00:41,880 Item G. Okay. 13 00:00:41,880 --> 00:00:42,880 Thank you. 14 00:00:42,880 --> 00:00:43,880 All right. 15 00:00:43,880 --> 00:00:48,200 With that, I'll consider a motion for the remaining items. 16 00:00:48,200 --> 00:00:49,200 So moved. 17 00:00:49,200 --> 00:00:52,560 We have a motion and a second, Mr. Rybeck. 18 00:00:52,560 --> 00:00:54,040 All in favor, say aye. 19 00:00:54,040 --> 00:00:55,040 Aye. 20 00:00:55,040 --> 00:00:56,040 Any opposed? 21 00:00:56,040 --> 00:00:58,040 The motion carries unanimously. 22 00:00:58,040 --> 00:01:05,760 I guess we'll do item D first, if that one resolves. 23 00:01:05,760 --> 00:01:16,520 Good morning, my name is Cain McDaniel with Dent Municipal Electric. 24 00:01:16,520 --> 00:01:17,520 Excuse me. 25 00:01:17,520 --> 00:01:20,240 Good morning, my name is Cain McDaniel with Dent Municipal Electric. 26 00:01:20,240 --> 00:01:21,240 Good morning. 27 00:01:21,240 --> 00:01:22,240 Good morning. 28 00:01:22,240 --> 00:01:24,800 I'm the person who asked for the item to be pulled. 29 00:01:24,800 --> 00:01:26,320 I was a little confused. 30 00:01:26,320 --> 00:01:33,000 Obviously, you have two well-qualified companies to work with, but I wasn't clear how you're 31 00:01:33,000 --> 00:01:38,200 going to divide up the work with them since they had both been on the entire package. 32 00:01:38,200 --> 00:01:41,200 So I was hoping you could give us just a little clarification on that. 33 00:01:41,200 --> 00:01:42,200 Yes, sir. 34 00:01:42,200 --> 00:01:49,720 So since the RFQ is basically a pre-qualifier for both of those -- both those companies 35 00:01:49,720 --> 00:01:56,680 performed the same work, for every project that we do, we have an outage schedule which 36 00:01:56,680 --> 00:02:02,080 is coordinated and approved by ERCOT, and we need to ensure availability for each of 37 00:02:02,080 --> 00:02:07,920 those projects, depending on those window outages that ERCOT approves. 38 00:02:07,920 --> 00:02:09,720 Okay. 39 00:02:09,720 --> 00:02:15,280 So basically both are qualified to perform the services, so you're going to divide the 40 00:02:15,280 --> 00:02:17,960 work up between them? 41 00:02:17,960 --> 00:02:24,080 We will choose one company based on purchasing and -- excuse me -- based on processing and 42 00:02:24,080 --> 00:02:25,080 scheduling. 43 00:02:25,080 --> 00:02:26,080 Okay. 44 00:02:26,080 --> 00:02:33,680 So this is just approving the selection narrowed down of multiple companies down to two? 45 00:02:33,680 --> 00:02:34,680 Correct. 46 00:02:34,680 --> 00:02:37,160 So basically you think about they're pre-qualified. 47 00:02:37,160 --> 00:02:41,760 As a job becomes available, we'll ask them for pricing, we'll evaluate the pricing for 48 00:02:41,760 --> 00:02:44,380 that job, and it will divvy up the work that way. 49 00:02:44,380 --> 00:02:49,000 So neither vendor is guaranteed any amount of work, but that's the process. 50 00:02:49,000 --> 00:02:50,000 Okay. 51 00:02:50,000 --> 00:02:51,000 My apologies. 52 00:02:51,000 --> 00:02:53,240 I didn't understand that from the information sheet. 53 00:02:53,240 --> 00:02:59,920 So I just saw we've got these companies, they're qualified, here's a scoring process, and there's 54 00:02:59,920 --> 00:03:04,120 this much money that we tend to spend, and I just was like, okay, so I can divvy this 55 00:03:04,120 --> 00:03:05,120 up. 56 00:03:05,120 --> 00:03:11,440 But I didn't understand this was just the pre-qual to make them available for future 57 00:03:11,440 --> 00:03:12,440 purchasing. 58 00:03:12,440 --> 00:03:16,640 So it just speeds up the process instead of having to do individual bids for every single 59 00:03:16,640 --> 00:03:17,640 job. 60 00:03:17,640 --> 00:03:21,080 So we do that kind of internally in conjunction with the procurement office. 61 00:03:21,080 --> 00:03:22,080 All right. 62 00:03:22,080 --> 00:03:23,080 Well, I'm satisfied. 63 00:03:23,080 --> 00:03:24,080 Anybody else? 64 00:03:24,080 --> 00:03:25,080 Thank you. 65 00:03:25,080 --> 00:03:26,080 Yes, sir. 66 00:03:26,080 --> 00:03:32,160 So once the decision's been made, you'll come back and tell us which of these two will be 67 00:03:32,160 --> 00:03:35,880 the primary contractor? 68 00:03:35,880 --> 00:03:44,440 Hi, Lori, Hill Purchasing Manager. 69 00:03:44,440 --> 00:03:48,040 So yeah, we are pre-qualifying these, and then each project will be a bid. 70 00:03:48,040 --> 00:03:51,400 But you're already approving for us to use both vendors with a spend. 71 00:03:51,400 --> 00:03:54,240 So they will not come back per project. 72 00:03:54,240 --> 00:03:57,600 And it's all based on this number, the 4.8 million? 73 00:03:57,600 --> 00:03:58,600 Yes, correct. 74 00:03:58,600 --> 00:03:59,600 Thank you. 75 00:03:59,600 --> 00:04:00,600 Any further questions? 76 00:04:00,600 --> 00:04:10,200 No, sir, I move to approve the item. 77 00:04:10,200 --> 00:04:11,200 We have a motion. 78 00:04:11,200 --> 00:04:12,200 Second. 79 00:04:12,200 --> 00:04:13,200 And a second. 80 00:04:13,200 --> 00:04:15,320 All in favor of approving item D? 81 00:04:15,320 --> 00:04:16,320 Aye. 82 00:04:16,320 --> 00:04:17,640 Any opposed? 83 00:04:17,640 --> 00:04:18,960 Thank you. 84 00:04:18,960 --> 00:04:19,960 Thank you. 85 00:04:19,960 --> 00:04:20,960 None. 86 00:04:20,960 --> 00:04:23,040 D carries unanimously. 87 00:04:23,040 --> 00:04:29,960 And now for item G. Item G includes public power utilities competitive matters. 88 00:04:29,960 --> 00:04:35,960 So the Public Utilities Board will now, at 9.05 a.m., convene into a closed meeting 89 00:04:35,960 --> 00:04:42,240 to deliberate the closed item -- closed meeting item set forth in the agenda, which includes 90 00:04:42,240 --> 00:04:45,920 deliberations regarding certain public power utilities competitive matters under Texas 91 00:04:45,920 --> 00:04:54,000 Government Code 551.086 and consultation with attorneys under Texas Government Code Section 92 00:04:54,000 --> 00:04:57,280 551.071. 93 00:04:57,280 --> 00:05:04,960 We prepare the room. 94 00:05:04,960 --> 00:05:10,420 The Public Utilities Board has now, at 9.26 a.m., reconvened from closed session and no 95 00:05:10,420 --> 00:05:13,600 official action was taken. 96 00:05:13,600 --> 00:05:19,480 At this time, we have one item remaining on our consent agenda, item G. Chair would entertain 97 00:05:19,480 --> 00:05:20,480 a motion? 98 00:05:20,480 --> 00:05:22,280 I move approval. 99 00:05:22,280 --> 00:05:23,640 We have a motion. 100 00:05:23,640 --> 00:05:24,640 And a second. 101 00:05:24,640 --> 00:05:25,640 All in favor say aye. 102 00:05:25,640 --> 00:05:26,640 Aye. 103 00:05:26,640 --> 00:05:27,640 Any opposed? 104 00:05:27,640 --> 00:05:28,640 Signed same. 105 00:05:28,640 --> 00:05:31,400 The motion carries unanimously. 106 00:05:31,400 --> 00:05:34,640 Now we'll move on to items for individual consideration. 107 00:05:34,640 --> 00:05:40,480 The first item is consider approval of the March 23rd minutes. 108 00:05:40,480 --> 00:05:42,940 We have a motion. 109 00:05:42,940 --> 00:05:43,940 And a second. 110 00:05:43,940 --> 00:05:45,520 All in favor say aye. 111 00:05:45,520 --> 00:05:46,520 Aye. 112 00:05:46,520 --> 00:05:49,360 The motion carries unanimously. 113 00:05:49,360 --> 00:05:57,240 Item B, consider recommending adoption of an ordinance to execute a contract with Badger 114 00:05:57,240 --> 00:06:05,560 Meter for AMI implementation for our water metering department for five years with five 115 00:06:05,560 --> 00:06:31,920 additional one-year extensions totaling $26 million. 116 00:06:31,920 --> 00:06:33,440 Good morning. 117 00:06:33,440 --> 00:06:39,720 My name is Tiffany Schrein, I am the water utilities asset management supervisor. 118 00:06:39,720 --> 00:06:45,560 I will be presenting on behalf of Stephen Gay today for the Water Advanced Metering Infrastructure 119 00:06:45,560 --> 00:06:51,320 Implementation Program. 120 00:06:51,320 --> 00:06:57,360 Advanced Metering Infrastructure, also referred to in short as AMI, is a two-way communication 121 00:06:57,360 --> 00:07:05,480 system to collect detailed metering information throughout a utilities service industry. 122 00:07:05,480 --> 00:07:12,280 This infrastructure is an integrated system of smart meters, a meter and endpoint, a collection 123 00:07:12,280 --> 00:07:19,080 system, management systems, which will include your meter data management system, a head 124 00:07:19,080 --> 00:07:22,680 end system, and a customer portal. 125 00:07:22,680 --> 00:07:26,720 This water AMI system will allow for the city to have so many benefits. 126 00:07:26,720 --> 00:07:31,520 It will enable the utility to more accurately measure water usage, detect leaks throughout 127 00:07:31,520 --> 00:07:37,440 the system, improve customer service, and ensure that we are meeting our compliance 128 00:07:37,440 --> 00:07:41,240 obligations. 129 00:07:41,240 --> 00:07:46,480 Customers can also take advantage of usage alerts and reports that help them understand 130 00:07:46,480 --> 00:07:57,000 their water use and potential savings opportunities. 131 00:07:57,000 --> 00:08:03,320 The implementation of the citywide water AMI program is estimated to span 24 months and 132 00:08:03,320 --> 00:08:11,120 will consist of acquisition and installation of meters, smart meters, and boxes, connection 133 00:08:11,120 --> 00:08:16,480 to a cellular network, software integrations necessary for operations and management of 134 00:08:16,480 --> 00:08:19,400 the system. 135 00:08:19,400 --> 00:08:24,760 We will be implementing this as a staged approach, beginning with a proof of concept, then system 136 00:08:24,760 --> 00:08:34,240 acceptance testing, and lastly, a mass meter change out or a full AMI deployment. 137 00:08:34,240 --> 00:08:41,480 This timeline and approach will allow for the evaluation of supplied products, procedures 138 00:08:41,480 --> 00:08:47,840 implemented, allotment of time for pre-construction planning and integrations that are needed to 139 00:08:47,840 --> 00:08:50,680 be done. 140 00:08:50,680 --> 00:08:54,920 A project communications plan will be carried out in accordance with the approach and timeline 141 00:08:54,920 --> 00:09:00,040 along the way. 142 00:09:00,040 --> 00:09:05,880 The initial RFP for this program yielded six proposals that our evaluation committee reviewed 143 00:09:05,880 --> 00:09:10,720 and scored, badger meter ranked to be the best of value and the best in breed that would 144 00:09:10,720 --> 00:09:15,240 meet the needs of the city's identified objectives. 145 00:09:15,240 --> 00:09:21,520 This contractful value is $26 million, and as noted, majority of the cost will be incurred 146 00:09:21,520 --> 00:09:24,320 within the first few years. 147 00:09:24,320 --> 00:09:28,320 Proceeding that 24-month deployment, funding will span out over the remaining contract 148 00:09:28,320 --> 00:09:37,260 years and absolve into software and cellular support. 149 00:09:37,260 --> 00:09:40,760 In conclusion, staff would like to ask for the recommendation that badger meter receives 150 00:09:40,760 --> 00:09:42,360 the contract award. 151 00:09:42,360 --> 00:09:47,040 This contract is scheduled for the April 21st city council meeting. 152 00:09:47,040 --> 00:09:50,440 Once we receive approvals, one of our next steps would be to continue working with marketing 153 00:09:50,440 --> 00:09:55,560 and communications to initiate communication to our residents and begin implementing this 154 00:09:55,560 --> 00:10:03,480 program for water AMI meters within the city of Denton. 155 00:10:03,480 --> 00:10:04,480 Thank you. 156 00:10:04,480 --> 00:10:05,480 Any questions? 157 00:10:05,480 --> 00:10:07,480 Do we have any questions? 158 00:10:07,480 --> 00:10:09,560 Mr. Rainer? 159 00:10:09,560 --> 00:10:15,320 Your mic is... 160 00:10:15,320 --> 00:10:17,320 Now I need to be on. 161 00:10:17,320 --> 00:10:23,200 I'm sorry, I don't remember which slide it was, but it was talking about the city-wide 162 00:10:23,200 --> 00:10:25,280 implementation. 163 00:10:25,280 --> 00:10:26,280 Is this... 164 00:10:26,280 --> 00:10:27,280 Are we looking at just commercial? 165 00:10:27,280 --> 00:10:28,280 Are we talking about residential? 166 00:10:28,280 --> 00:10:29,840 Are we talking about everybody? 167 00:10:29,840 --> 00:10:32,840 Sure, absolutely. 168 00:10:32,840 --> 00:10:36,500 Plan is, we're planning out to include both. 169 00:10:36,500 --> 00:10:46,280 We will start with residential, and then at the utilities discretion, replace commercial. 170 00:10:46,280 --> 00:10:47,280 City-wide? 171 00:10:47,280 --> 00:10:49,200 Yes, sir. 172 00:10:49,200 --> 00:10:50,720 All the residential. 173 00:10:50,720 --> 00:10:53,880 New construction, I could understand. 174 00:10:53,880 --> 00:10:56,960 And your plan's on having that done in two years? 175 00:10:56,960 --> 00:10:59,560 Yes, sir. 176 00:10:59,560 --> 00:11:03,600 I would be suspect, but so be the case. 177 00:11:03,600 --> 00:11:10,960 Now if it does take longer than two years, then what is the cost to us? 178 00:11:10,960 --> 00:11:13,320 There shouldn't be any additional costs. 179 00:11:13,320 --> 00:11:14,600 We should be locked in with this amount. 180 00:11:14,600 --> 00:11:15,880 Oh, because it's a 10-year thing, isn't it? 181 00:11:15,880 --> 00:11:16,880 Yes. 182 00:11:16,880 --> 00:11:17,880 Yes, I apologize. 183 00:11:17,880 --> 00:11:18,880 That's okay. 184 00:11:18,880 --> 00:11:19,880 Thank you. 185 00:11:19,880 --> 00:11:20,880 Sure. 186 00:11:20,880 --> 00:11:25,040 Go ahead. 187 00:11:25,040 --> 00:11:26,360 I have a question as well. 188 00:11:26,360 --> 00:11:27,360 Sure. 189 00:11:27,360 --> 00:11:28,680 Well, actually two questions. 190 00:11:28,680 --> 00:11:34,160 I noticed looking at the pricing evaluation, the pricing of the various entities was kind 191 00:11:34,160 --> 00:11:35,160 of all over the board. 192 00:11:35,160 --> 00:11:36,160 Yes. 193 00:11:36,160 --> 00:11:43,040 When you had a high end, it was almost double the mean or median average of these. 194 00:11:43,040 --> 00:11:53,520 And then, you know, one of the providers was quite low compared to the other group. 195 00:11:53,520 --> 00:12:01,320 Just wondering if this proof of concept doesn't work out, does this mean we're going to fall 196 00:12:01,320 --> 00:12:04,800 back to a different vendor, or will this whole process start over? 197 00:12:04,800 --> 00:12:05,800 How will that work? 198 00:12:05,800 --> 00:12:06,800 Yeah. 199 00:12:06,800 --> 00:12:11,200 Great question. 200 00:12:11,200 --> 00:12:21,160 We don't have the expectation that the proof of concept won't work out. 201 00:12:21,160 --> 00:12:25,860 The proof of concept is almost more of like a soft opening for the full department. 202 00:12:25,860 --> 00:12:26,860 Almost more of what? 203 00:12:26,860 --> 00:12:27,860 I'm sorry? 204 00:12:27,860 --> 00:12:28,860 Like a soft opening. 205 00:12:28,860 --> 00:12:34,240 It's going to be a small set of meters that will allow us to work through any hiccups 206 00:12:34,240 --> 00:12:36,240 or bugs before we do. 207 00:12:36,240 --> 00:12:37,240 Okay, so it's a soft start. 208 00:12:37,240 --> 00:12:38,240 It's not really a proof of concept. 209 00:12:38,240 --> 00:12:41,000 It's proof of concept made to either work or it doesn't. 210 00:12:41,000 --> 00:12:42,000 It does. 211 00:12:42,000 --> 00:12:43,000 Right. 212 00:12:43,000 --> 00:12:44,000 And we'll prove the technology. 213 00:12:44,000 --> 00:12:49,440 So my second question is the actual way you're doing this using cellular communications. 214 00:12:49,440 --> 00:12:53,160 So how will those communications be protected? 215 00:12:53,160 --> 00:12:54,880 Sure. 216 00:12:54,880 --> 00:13:04,000 So Badger Meter, they leverage existing secure commercial cellular networks that are out 217 00:13:04,000 --> 00:13:09,680 there on top of their proprietary Badger softwares and systems. 218 00:13:09,680 --> 00:13:17,000 So anything that is transmitted to and from the connection system is transmitted securely 219 00:13:17,000 --> 00:13:18,720 on a private network. 220 00:13:18,720 --> 00:13:20,720 Is it encrypted? 221 00:13:20,720 --> 00:13:22,080 I believe so. 222 00:13:22,080 --> 00:13:28,600 And it is done to the standards of ISO 27001 and SOC 2. 223 00:13:28,600 --> 00:13:29,600 This says cellular communications. 224 00:13:29,600 --> 00:13:30,600 Cellular, yes. 225 00:13:30,600 --> 00:13:31,600 I'm sorry. 226 00:13:31,600 --> 00:13:37,520 If they're broadcasting over cellular, then it's over the air. 227 00:13:37,520 --> 00:13:40,360 So I'm just asking, is that being encrypted? 228 00:13:40,360 --> 00:13:42,120 Is it encoded? 229 00:13:42,120 --> 00:13:46,240 I'm not entirely sure how cellular your system works. 230 00:13:46,240 --> 00:13:47,240 Yep. 231 00:13:47,240 --> 00:13:51,000 So this is very similar to the AMI system that DME has. 232 00:13:51,000 --> 00:13:52,000 And that is encrypted. 233 00:13:52,000 --> 00:13:53,000 Okay. 234 00:13:53,000 --> 00:13:54,000 Well, thank you. 235 00:13:54,000 --> 00:13:55,000 That was easy. 236 00:13:55,000 --> 00:13:56,000 Thank you. 237 00:13:56,000 --> 00:13:57,000 I was just curious. 238 00:13:57,000 --> 00:13:58,000 You said cellular communications. 239 00:13:58,000 --> 00:13:59,000 You got all this data going out. 240 00:13:59,000 --> 00:14:01,600 And I was just curious how it was being protected. 241 00:14:01,600 --> 00:14:03,240 But if it's encrypted, then it's good. 242 00:14:03,240 --> 00:14:05,240 So those are my questions. 243 00:14:05,240 --> 00:14:06,240 Please proceed. 244 00:14:06,240 --> 00:14:07,240 Thank you. 245 00:14:07,240 --> 00:14:08,240 Thank you. 246 00:14:08,240 --> 00:14:09,240 None of this is new. 247 00:14:09,240 --> 00:14:11,840 So who else has used Badger? 248 00:14:11,840 --> 00:14:18,400 They provided an extensive list of resources with their proposal in the evaluation process. 249 00:14:18,400 --> 00:14:26,480 So we did review and discuss or get conversations with those utilities, and they all came back 250 00:14:26,480 --> 00:14:27,480 very positive. 251 00:14:27,480 --> 00:14:28,480 Okay. 252 00:14:28,480 --> 00:14:29,480 And that their systems did work. 253 00:14:29,480 --> 00:14:32,240 And I believe we do have that information. 254 00:14:32,240 --> 00:14:33,240 Okay. 255 00:14:33,240 --> 00:14:39,160 So I'm assuming that Milwaukee is one of them. 256 00:14:39,160 --> 00:14:43,520 I don't know off the top of my head, but if you would like the list, we do have it. 257 00:14:43,520 --> 00:14:44,520 Okay. 258 00:14:44,520 --> 00:14:45,520 Thank you. 259 00:14:45,520 --> 00:14:46,520 Go ahead. 260 00:14:46,520 --> 00:14:49,520 No, I'll let you go first. 261 00:14:49,520 --> 00:14:50,520 Another thought. 262 00:14:50,520 --> 00:14:51,520 Sure. 263 00:14:51,520 --> 00:14:57,240 So these meters are going to be on the city side between the water meter and the street. 264 00:14:57,240 --> 00:14:58,640 Yes. 265 00:14:58,640 --> 00:14:59,720 Yes. 266 00:14:59,720 --> 00:15:05,700 So when they are put in, if there's going to be, I can imagine on several neighborhoods, 267 00:15:05,700 --> 00:15:07,580 the meters are rather close to the street. 268 00:15:07,580 --> 00:15:09,520 So there's going to be curb work. 269 00:15:09,520 --> 00:15:13,480 There may be even some street damage that will have to be repaired. 270 00:15:13,480 --> 00:15:15,680 Who's paying for that? 271 00:15:15,680 --> 00:15:22,480 So it's in part of if there is any construction needed within the meter replacement and meter 272 00:15:22,480 --> 00:15:30,960 box replacement, that is part and within the contract funding, and that will be determined 273 00:15:30,960 --> 00:15:35,800 with a pre-survey before the full deployment. 274 00:15:35,800 --> 00:15:38,320 What will be pre-determined? 275 00:15:38,320 --> 00:15:42,680 The locations where that may warrant being done. 276 00:15:42,680 --> 00:15:43,680 Oh, I see. 277 00:15:43,680 --> 00:15:44,680 Yes. 278 00:15:44,680 --> 00:15:45,680 Thank you. 279 00:15:45,680 --> 00:15:46,680 You're welcome. 280 00:15:46,680 --> 00:15:54,240 So before I was on PUB, it was my understanding that when we did AMI electric meters, when 281 00:15:54,240 --> 00:16:01,560 Denton did AMI electric meters, we attempted to do water meter AMI system, to implement 282 00:16:01,560 --> 00:16:05,200 an AMI system for the water meters, and I remember it was kind of announced that it 283 00:16:05,200 --> 00:16:12,680 was rolling out soon, like 2006 or 2005 or somewhere 20 years ago. 284 00:16:12,680 --> 00:16:19,120 But the challenge is water meters are in a hole in the ground and radio waves don't 285 00:16:19,120 --> 00:16:21,240 do well in that environment. 286 00:16:21,240 --> 00:16:27,440 Also water meters are often underwater whenever we get rain or leaks or whatever. 287 00:16:27,440 --> 00:16:33,680 Have we seen tests or example cities where those problems have been overcome? 288 00:16:33,680 --> 00:16:40,360 We have, and we do have currently some of those areas in town where we may have a water 289 00:16:40,360 --> 00:16:43,000 meter underwater. 290 00:16:43,000 --> 00:16:49,560 Currently we do not have the proper lids for an AMI system, which is why we are doing boxes 291 00:16:49,560 --> 00:16:56,400 and smart meters together so that it can transmit through the, it's like a PVC type material. 292 00:16:56,400 --> 00:17:02,440 So basically the old metal pipe with cast iron lid, that's... 293 00:17:02,440 --> 00:17:04,520 It won't transmit through there without an extender. 294 00:17:04,520 --> 00:17:10,200 Okay, and it looks like these are Zigbee, Badger uses Zigbee, and so it's a pretty similar 295 00:17:10,200 --> 00:17:15,240 technology to most of the electric meters. 296 00:17:15,240 --> 00:17:19,320 Is it not compatible with using our existing backhaul network? 297 00:17:19,320 --> 00:17:25,120 Because we have AMI electric meters everywhere, and so we have those endpoints and collectors 298 00:17:25,120 --> 00:17:28,360 and fiber backhaul. 299 00:17:28,360 --> 00:17:34,400 I think based on the number of meters that are deploying, that back end system just isn't 300 00:17:34,400 --> 00:17:37,880 robust enough to support that, right? 301 00:17:37,880 --> 00:17:42,440 And there is some compatibility issues, certainly Badger's kind of best in class for the water 302 00:17:42,440 --> 00:17:43,560 department. 303 00:17:43,560 --> 00:17:48,520 We have a Nitron system that's best in class for the electric meters, and so that's why 304 00:17:48,520 --> 00:17:53,440 you're seeing two different systems being deployed. 305 00:17:53,440 --> 00:18:01,000 And as far as the water issue in filling up those boxes, the reality is that it doesn't 306 00:18:01,000 --> 00:18:02,480 just rain in Denton, right? 307 00:18:02,480 --> 00:18:07,240 It rains in Austin, it rains in Colorado, it rains everywhere else, and they're deploying 308 00:18:07,240 --> 00:18:09,080 these systems just fine, right? 309 00:18:09,080 --> 00:18:15,400 The idea that what we have today in having an individual person going out there and reading 310 00:18:15,400 --> 00:18:20,800 that doesn't have -- listen, these guys get a whole lot of reread requests, right? 311 00:18:20,800 --> 00:18:24,560 And we would anticipate, just like we did with the electric side, that those rereads 312 00:18:24,560 --> 00:18:27,620 will drastically reduce, right? 313 00:18:27,620 --> 00:18:28,620 Because all this is automated. 314 00:18:28,620 --> 00:18:29,620 It's another benefit. 315 00:18:29,620 --> 00:18:34,800 But again, it's not -- we're not going to face anything that other cities haven't faced 316 00:18:34,800 --> 00:18:35,800 and haven't overcome. 317 00:18:35,800 --> 00:18:40,040 We just need to see -- you know, learn from those lessons and duplicate that here. 318 00:18:40,040 --> 00:18:46,400 And will the system enable -- like on the electric side, there's an interval reading 319 00:18:46,400 --> 00:18:48,920 where you can kind of see your power usage kind of per hour. 320 00:18:48,920 --> 00:18:52,800 Do we have like hourly or daily water use available? 321 00:18:52,800 --> 00:18:53,800 There will be, yes. 322 00:18:53,800 --> 00:18:59,240 And we can set the amount of the interval time that the meter will call back and show 323 00:18:59,240 --> 00:19:04,480 usage on the portal, and then as a customer, you can log in and see just about in real 324 00:19:04,480 --> 00:19:09,120 time what you're using and if you -- what your usage is, sorry, and if you have a toilet 325 00:19:09,120 --> 00:19:14,720 running or somewhere that you can -- and find potential savings. 326 00:19:14,720 --> 00:19:20,080 And I guess, unlike an electric meter, these have to have a battery or something. 327 00:19:20,080 --> 00:19:23,040 So there will be some ongoing maintenance on the -- 328 00:19:23,040 --> 00:19:24,880 They do have a battery. 329 00:19:24,880 --> 00:19:33,260 Lifespan is expected and communicated to us that it will last the -- just about 20 years 330 00:19:33,260 --> 00:19:34,920 that Badger has stated. 331 00:19:34,920 --> 00:19:35,920 Okay. 332 00:19:35,920 --> 00:19:38,320 So that's a pretty good life on a battery. 333 00:19:38,320 --> 00:19:39,320 Okay. 334 00:19:39,320 --> 00:19:42,480 You'd be replacing the meter again by that point, so. 335 00:19:42,480 --> 00:19:43,480 Yeah. 336 00:19:43,480 --> 00:19:44,480 Yeah. 337 00:19:44,480 --> 00:19:45,480 Likely. 338 00:19:45,480 --> 00:19:48,880 And I assume there will be cost savings once these are rolled out? 339 00:19:48,880 --> 00:19:49,880 Yes. 340 00:19:49,880 --> 00:19:50,880 We are expecting that. 341 00:19:50,880 --> 00:19:56,920 Do you have any idea how much? 342 00:19:56,920 --> 00:20:09,000 Off the top of my head, no, it does just depend on how -- not off the top of my head, I guess. 343 00:20:09,000 --> 00:20:13,760 So I guess basically much of the cost savings would be replacing meter reading staff with 344 00:20:13,760 --> 00:20:19,840 meter maintenance staff and doing maintenance once every few years as opposed to once a 345 00:20:19,840 --> 00:20:20,840 month. 346 00:20:20,840 --> 00:20:24,320 We actually did a study a number of years ago with freezing nickels. 347 00:20:24,320 --> 00:20:28,440 We're happy to, you know, look for that and then provide that to the board if you'd like. 348 00:20:28,440 --> 00:20:29,440 Okay. 349 00:20:29,440 --> 00:20:30,440 Thank you. 350 00:20:30,440 --> 00:20:31,440 Thank you. 351 00:20:31,440 --> 00:20:32,440 Any further questions? 352 00:20:32,440 --> 00:20:33,440 Chair, would entertain a motion? 353 00:20:33,440 --> 00:20:34,440 Move to approve the item. 354 00:20:34,440 --> 00:20:35,440 We have a motion. 355 00:20:35,440 --> 00:20:36,440 Second. 356 00:20:36,440 --> 00:20:37,440 And we have a second. 357 00:20:37,440 --> 00:20:38,440 All in favor, say aye. 358 00:20:38,440 --> 00:20:39,440 Aye. 359 00:20:39,440 --> 00:20:40,440 Aye. 360 00:20:40,440 --> 00:20:41,440 Any opposed, sign same. 361 00:20:41,440 --> 00:20:42,440 Motion carries unanimously. 362 00:20:42,440 --> 00:20:43,440 Thank you. 363 00:20:43,440 --> 00:20:44,440 Yeah, thank you. 364 00:20:44,440 --> 00:20:45,440 And we'll move on to the next item. 365 00:20:45,440 --> 00:21:06,720 Item C. Recommending adoption of an ordinance with xylem view for water utility monitoring 366 00:21:06,720 --> 00:21:14,800 and analytics project for the water utilities department for a total of $6,496,090 over 367 00:21:14,800 --> 00:21:17,200 a five-year period. 368 00:21:17,200 --> 00:21:19,640 Good morning. 369 00:21:19,640 --> 00:21:23,640 My name is David Brown, water utilities project manager, and I'm presenting to you today the 370 00:21:23,640 --> 00:21:27,440 water utility monitoring and data analytics project. 371 00:21:27,440 --> 00:21:32,160 This project represents a major step forward in how we manage our water and wastewater 372 00:21:32,160 --> 00:21:33,160 infrastructure. 373 00:21:33,160 --> 00:21:38,380 And I like to say that in many ways, it's like gauges on a dashboard in a car. 374 00:21:38,380 --> 00:21:45,180 It's going to tell us in real time indicators so we can make smarter, faster decisions that 375 00:21:45,180 --> 00:21:49,240 prevent small issues turn into bigger ones. 376 00:21:49,240 --> 00:21:54,760 With this system, our team gains the visibility and data-driven insights needed to keep services 377 00:21:54,760 --> 00:21:59,480 safe, reliable, and also fiscally responsible. 378 00:21:59,480 --> 00:22:05,040 A core component of this project is a wastewater system monitoring. 379 00:22:05,040 --> 00:22:08,480 First it helps us to identify inflow and infiltration. 380 00:22:08,480 --> 00:22:14,960 We call it I&I, which is groundwater or other sources of water getting into the sewer system. 381 00:22:14,960 --> 00:22:19,880 And when that water gets into our wastewater collection system, it reduces capacity of 382 00:22:19,880 --> 00:22:24,440 our system and also creates overloading at the plants. 383 00:22:24,440 --> 00:22:30,640 Second, this is going to give us early detection of surges in the flow, which can trigger an 384 00:22:30,640 --> 00:22:36,120 automated response to emergency personnel so we can make sure we don't have sanitary 385 00:22:36,120 --> 00:22:37,660 sewer overflows. 386 00:22:37,660 --> 00:22:44,160 Thirdly, it highlights our underperforming and our over and pipelines that have over 387 00:22:44,160 --> 00:22:45,840 capacity issues. 388 00:22:45,840 --> 00:22:47,720 And that way we could use it for planning. 389 00:22:47,720 --> 00:22:52,240 I like to say it's a lot like baseball analytics. 390 00:22:52,240 --> 00:22:56,560 We're going to use this to help our team make data-driven decisions. 391 00:22:56,560 --> 00:23:04,200 It gives us objective performance data to guide rehabilitation, upsizing, or even replacement. 392 00:23:04,200 --> 00:23:08,720 We like to look at it as we get to see the health of our system. 393 00:23:08,720 --> 00:23:15,360 Real-time data, it gives us real-time data during any kind of rainy system, dry season, 394 00:23:15,360 --> 00:23:16,740 or whatever may happen. 395 00:23:16,740 --> 00:23:22,520 We're able to interact with a map real-time to see what's going on in the system, what 396 00:23:22,520 --> 00:23:28,000 our wastewater collection system looks like, what our water distribution system looks like, 397 00:23:28,000 --> 00:23:30,280 and with precise sensor locations. 398 00:23:30,280 --> 00:23:36,240 You can see here's a map that shows a system in use and the data that we can get from it. 399 00:23:36,240 --> 00:23:42,080 It has live visualization of current flow in the wastewater collection through sensor 400 00:23:42,080 --> 00:23:46,120 data, through rain gauges, what the rain's doing. 401 00:23:46,120 --> 00:23:48,640 So we can know if we do have I and I also. 402 00:23:48,640 --> 00:23:54,880 Just like Tiffany presented AMI/AMR, this system integrates with AMI and AMR to review 403 00:23:54,880 --> 00:23:58,480 the data that's coming from the meters. 404 00:23:58,480 --> 00:24:04,680 So we're able to use that, the electronic information to make better decisions real-time 405 00:24:04,680 --> 00:24:06,820 to look at those, make sure we're good. 406 00:24:06,820 --> 00:24:10,280 It supports a rapid response, like I talked about. 407 00:24:10,280 --> 00:24:15,160 We're going to have prioritization of alarms, which will eventually include just being able 408 00:24:15,160 --> 00:24:21,600 to send out automated notification to people in the field services of critical events that 409 00:24:21,600 --> 00:24:24,720 could happen so we could get there on time and early. 410 00:24:24,720 --> 00:24:31,320 It allows us to monitor for leaks and pressure variances within water distribution. 411 00:24:31,320 --> 00:24:36,960 It allows us to give those early warnings for main breaks and possible meter leaks, 412 00:24:36,960 --> 00:24:45,000 which proactively reduces water loss. 413 00:24:45,000 --> 00:24:47,160 Another component is planning data. 414 00:24:47,160 --> 00:24:53,920 Beyond just the daily operations, this project will play an important role in long-term planning. 415 00:24:53,920 --> 00:25:00,820 Real-time flow and pressure data allows us to collaborate and also calibrate a hydraulic 416 00:25:00,820 --> 00:25:04,240 water model, also our wastewater model. 417 00:25:04,240 --> 00:25:06,900 It ensures that our models are accurate. 418 00:25:06,900 --> 00:25:13,400 It really helps us to build that model that reflects the true condition of our systems. 419 00:25:13,400 --> 00:25:18,000 Previous monitoring reveals bottlenecks and peak flow conditions that inform where upgrades 420 00:25:18,000 --> 00:25:19,000 are needed. 421 00:25:19,000 --> 00:25:22,120 Again, it's lots like in sports analytics. 422 00:25:22,120 --> 00:25:28,520 It helps us to really see our system performance and adjust, not just on assumptions. 423 00:25:28,520 --> 00:25:29,520 It's real-time. 424 00:25:29,520 --> 00:25:32,840 It helps us to guide in planning decisions. 425 00:25:32,840 --> 00:25:36,360 Another key item is post-project monitoring. 426 00:25:36,360 --> 00:25:43,160 It confirms that our projects are successful, or if we need to alter them a bit or amend 427 00:25:43,160 --> 00:25:52,480 them in some ways, we can maximize every area of an improvement. 428 00:25:52,480 --> 00:25:57,080 With this, the staff recommends a five-year contract with Zion View using the Cooperative 429 00:25:57,080 --> 00:26:04,960 Purchasing Service Agreement, not to see the amount of $6,496,090. 430 00:26:04,960 --> 00:26:07,120 I will stand for any questions. 431 00:26:07,120 --> 00:26:08,120 Greg? 432 00:26:08,120 --> 00:26:13,200 Yes, I have a question. 433 00:26:13,200 --> 00:26:18,240 I can understand how the water utility can adjust what it's doing, because it's putting 434 00:26:18,240 --> 00:26:26,040 out the water, but I'm a little unsure how it is the wastewater utility can modify its 435 00:26:26,040 --> 00:26:28,160 operations, because that's all coming in. 436 00:26:28,160 --> 00:26:34,560 Do they have operating valves where they can control that, or put up sluice gates? 437 00:26:34,560 --> 00:26:36,240 Yes, sir. 438 00:26:36,240 --> 00:26:41,360 We do have, actually, on Hickory Creek Basin, we have storage there, so we do have some 439 00:26:41,360 --> 00:26:49,200 storage in rain events to where the system is overloaded with ionized, that we can move 440 00:26:49,200 --> 00:26:55,400 that water that needs to be traded over there to the basin over there on Hickory Creek, 441 00:26:55,400 --> 00:27:01,800 and we're able to identify with Pecan Creek, with any wastewater plant, there's diurnals 442 00:27:01,800 --> 00:27:07,080 to where there's times we can treat more, or we can wait and kind of push it back to 443 00:27:07,080 --> 00:27:08,560 treat it at a different time. 444 00:27:08,560 --> 00:27:16,280 Okay, so the utility does have some capacity and capability to move, shunt, and redirect 445 00:27:16,280 --> 00:27:18,760 flows to some extent, where this would be helpful. 446 00:27:18,760 --> 00:27:19,760 Yes, sir. 447 00:27:19,760 --> 00:27:23,240 I'm like, "Well, it's great to get the data, but if you can't control..." 448 00:27:23,240 --> 00:27:30,140 Yes, and I would just say, on the wastewater side, like you asked about, one of the main 449 00:27:30,140 --> 00:27:36,040 things is to be able to canvass our system and see where ionized present, the inflow 450 00:27:36,040 --> 00:27:38,280 and infiltration. 451 00:27:38,280 --> 00:27:43,760 This also creates a digital twin with our lift station to see the pump run times to 452 00:27:43,760 --> 00:27:51,120 see where that ionized is coming in, and then we can proactively begin projects to reduce 453 00:27:51,120 --> 00:27:58,520 that ionized, which we gain capacity at the plants by reducing them, and often those projects 454 00:27:58,520 --> 00:28:04,120 are minimal in cost, it's just the cost involved is actually tracking those areas 455 00:28:04,120 --> 00:28:05,120 down. 456 00:28:05,120 --> 00:28:06,120 Thank you. 457 00:28:06,120 --> 00:28:07,120 Yes, sir. 458 00:28:07,120 --> 00:28:16,680 Like you said, I think this is the data-driven decision-making that this can feed will be 459 00:28:16,680 --> 00:28:21,000 really useful, knowing whether or not the infrastructure is actually overloaded, knowing 460 00:28:21,000 --> 00:28:27,220 where ionized is occurring, where kind of the leaks into the system will make it much 461 00:28:27,220 --> 00:28:34,320 easier to track them down and manage them, so it seems like it makes a lot of sense. 462 00:28:34,320 --> 00:28:35,320 Absolutely. 463 00:28:35,320 --> 00:28:42,320 I don't see any further questions, so would anybody care to make a motion? 464 00:28:42,320 --> 00:28:43,320 So moved. 465 00:28:43,320 --> 00:28:44,320 We have a motion. 466 00:28:44,320 --> 00:28:45,320 Second. 467 00:28:45,320 --> 00:28:46,320 And a second. 468 00:28:46,320 --> 00:28:47,800 All in favor, say aye. 469 00:28:47,800 --> 00:28:48,800 Aye. 470 00:28:48,800 --> 00:28:49,800 Any opposed? 471 00:28:49,800 --> 00:28:50,800 No. 472 00:28:50,800 --> 00:28:51,800 Motion carries unanimously. 473 00:28:51,800 --> 00:28:57,440 Now, our next item of business is management reports. 474 00:28:57,440 --> 00:29:02,560 So, Mr. Chair, members of the POB, we have a few items for you. 475 00:29:02,560 --> 00:29:09,120 The first one is a memo from DME we've received now for the fourth consecutive year. 476 00:29:09,120 --> 00:29:15,920 The Tree Line USA recognition from Arbor Day Foundation really just recognizes the vegetation 477 00:29:15,920 --> 00:29:19,040 management that DME does throughout the community. 478 00:29:19,040 --> 00:29:24,500 There are certain standards that have to be met, certain outreach issues as well that 479 00:29:24,500 --> 00:29:29,480 we have to engage in, so again, it's good news, it's something that we're very proud 480 00:29:29,480 --> 00:29:30,480 of. 481 00:29:30,480 --> 00:29:36,080 We have stickers on our truck saying that we recognize that Tree Line USA utility kind 482 00:29:36,080 --> 00:29:40,520 of matches up with kind of the efforts that the rest of the city does in parks and throughout 483 00:29:40,520 --> 00:29:44,800 the community, recognizing the importance of trees, so happy to answer any questions 484 00:29:44,800 --> 00:29:49,280 if you have any questions on that particular memo. 485 00:29:49,280 --> 00:29:50,280 Okay. 486 00:29:50,280 --> 00:29:51,280 Thank you. 487 00:29:51,280 --> 00:29:52,280 Just want to say good work. 488 00:29:52,280 --> 00:29:53,280 Thank you. 489 00:29:53,280 --> 00:29:54,280 Thank you. 490 00:29:54,280 --> 00:29:55,280 Thank you. 491 00:29:55,280 --> 00:29:56,280 Appreciate that. 492 00:29:56,280 --> 00:30:01,960 Lanny Amix in our maintenance operation oversees that area, and they do a really good job. 493 00:30:01,960 --> 00:30:07,320 And then the next item, you had requested just a comparison update on electric rates. 494 00:30:07,320 --> 00:30:08,960 We've provided that to you. 495 00:30:08,960 --> 00:30:14,920 John Lockwood, our analyst, helped put that together, gave you a memo with some comparative 496 00:30:14,920 --> 00:30:15,920 information. 497 00:30:15,920 --> 00:30:17,680 Happy to answer any questions for you. 498 00:30:17,680 --> 00:30:22,840 Certainly as we go through the budget, we'll be looking at rates again, and as you know, 499 00:30:22,840 --> 00:30:28,320 we're also looking at our ECAT tariff on a quarterly basis with you. 500 00:30:28,320 --> 00:30:33,560 One thing that I'll kind of put out there is that since those large increases that we 501 00:30:33,560 --> 00:30:39,720 had back in 2024, we've actually decreased rates by a little bit over 1.2 percent on 502 00:30:39,720 --> 00:30:45,120 the ECAT tariff side, and I think that's been well received, but I think as we continue 503 00:30:45,120 --> 00:30:50,560 to go through the budget and we're hearing other utilities are also increasing rates, 504 00:30:50,560 --> 00:30:54,680 I think we'll continue to show far more competitiveness there. 505 00:30:54,680 --> 00:30:59,360 Certainly when you look at the IOU world with the retail electric providers, we're very 506 00:30:59,360 --> 00:31:04,800 competitive in that particular sphere, but happy to answer any questions or happy to 507 00:31:04,800 --> 00:31:07,400 pull John up here if needed. 508 00:31:07,400 --> 00:31:09,600 I did have one comment. 509 00:31:09,600 --> 00:31:18,480 I know this might be a challenge to compare our muni rate to IOUs on the commercial side, 510 00:31:18,480 --> 00:31:24,320 but the commercial evaluation didn't really have any kind of IOU comparison. 511 00:31:24,320 --> 00:31:31,520 Those aren't generally public, right, and so unless a particular company shares information 512 00:31:31,520 --> 00:31:33,920 with us, we generally don't know. 513 00:31:33,920 --> 00:31:42,480 I was wondering if it's possible to compare only the T&D side, like Encore tariffs of 514 00:31:42,480 --> 00:31:47,000 course are public, but that only covers the transmission distribution aspect. 515 00:31:47,000 --> 00:31:55,920 I don't know if it would be possible to compare commercial, just transmission distribution 516 00:31:55,920 --> 00:31:59,000 related charges, demand charges basically. 517 00:31:59,000 --> 00:32:00,000 We can certainly look at that. 518 00:32:00,000 --> 00:32:08,760 We'll have to go through all the tariffs in the PUCT, but we can take a look at that. 519 00:32:08,760 --> 00:32:10,800 Thank you. 520 00:32:10,800 --> 00:32:13,760 The next item is just future agenda items. 521 00:32:13,760 --> 00:32:19,320 Again, every meeting I keep saying budget, budget, budget, and so please be aware of 522 00:32:19,320 --> 00:32:24,120 those dates in June that will be coming to you. 523 00:32:24,120 --> 00:32:30,360 And then for new business section items, obviously we provided you the rate information. 524 00:32:30,360 --> 00:32:36,760 We'll add this other issue on the T&D side for hopefully for the next meeting. 525 00:32:36,760 --> 00:32:41,360 And then for the water department, Stephen did want me to let you know that they had 526 00:32:41,360 --> 00:32:45,560 an oversight and so they'll plan to bring that quarterly update on the water waste water 527 00:32:45,560 --> 00:32:48,160 side at the next meeting. 528 00:32:48,160 --> 00:32:50,760 And we'll hold his feet to the fire on that one. 529 00:32:50,760 --> 00:32:55,560 But happy to answer any questions, if there's anything else you'd like to add. 530 00:32:55,560 --> 00:33:00,440 I think we're good, thank you. 531 00:33:00,440 --> 00:33:09,920 And so now we can conclude our regular meeting and move on to our work session. 532 00:33:09,920 --> 00:33:18,260 Leave a report, hold a discussion and give staff direction on the city's financial policies. 533 00:33:18,260 --> 00:33:32,880 Okay, good morning, chair, members of the board, Matt Hamilton, chief financial officer. 534 00:33:32,880 --> 00:33:39,880 Here this morning to discuss financial policies and in particular the development of a comprehensive 535 00:33:39,880 --> 00:33:42,560 financial policy. 536 00:33:42,560 --> 00:33:48,460 So currently the city has a number of standalone or independent financial policies within the 537 00:33:48,460 --> 00:33:50,280 finance department. 538 00:33:50,280 --> 00:33:54,840 And what we're looking to do is to establish a comprehensive financial policy that would 539 00:33:54,840 --> 00:33:58,640 outline strategies in some specific areas. 540 00:33:58,640 --> 00:34:05,160 So first it would establish a long-term financial plan and provide the guidelines around that. 541 00:34:05,160 --> 00:34:12,720 It would document any reserve fund targets, capital and reinvestment targets, cost of 542 00:34:12,720 --> 00:34:18,560 service based rates, linking specific revenues to expenditures. 543 00:34:18,560 --> 00:34:24,360 It would describe in detail how we would implement incremental rate adjustments to avoid any 544 00:34:24,360 --> 00:34:30,020 spikes and also language around competitive rate benchmarking. 545 00:34:30,020 --> 00:34:36,120 So the goal of this would just be to enhance compliance with federal and state laws, accounting 546 00:34:36,120 --> 00:34:42,680 and financial standards, ensure alignment with the Government Finance Officers Association, 547 00:34:42,680 --> 00:34:49,880 GFOA, American Water Works Association, AWWA, and the American Public Power Association, 548 00:34:49,880 --> 00:34:52,520 APPA, best practices. 549 00:34:52,520 --> 00:34:58,200 It would also enhance the financial position of the city and support our high credit ratings 550 00:34:58,200 --> 00:35:03,120 and also, and critically, provide a centralized framework for financial policies within the 551 00:35:03,120 --> 00:35:06,600 city. 552 00:35:06,600 --> 00:35:11,520 So touching on the long-term financial plan, we'd like to establish a longer-term financial 553 00:35:11,520 --> 00:35:14,720 forecast up to 10 years. 554 00:35:14,720 --> 00:35:19,440 Currently five-year financial forecasts are developed with really just a focus on that 555 00:35:19,440 --> 00:35:21,920 next fiscal year. 556 00:35:21,920 --> 00:35:28,440 GFOA recommends a financial plan greater than five years for all governments that utilize 557 00:35:28,440 --> 00:35:34,040 either debt financing and/or utility rate setting, both of which the City of Denton 558 00:35:34,040 --> 00:35:36,580 does. 559 00:35:36,580 --> 00:35:42,440 So within this, it would define specific forecast assumptions supported by available data including 560 00:35:42,440 --> 00:35:47,960 population and customer growth, volume and demand growth, inflation, service levels, 561 00:35:47,960 --> 00:35:56,200 staffing levels, rate changes, capital projects, reserve balances, and although we do many 562 00:35:56,200 --> 00:36:01,360 of these things in the budgeting process and we look at these things on an annual basis, 563 00:36:01,360 --> 00:36:07,480 what we don't have is we don't have it documented in a comprehensive financial policy. 564 00:36:07,480 --> 00:36:12,480 So the goal of this would just be to identify structural imbalances early and develop strategies 565 00:36:12,480 --> 00:36:17,460 to address them proactively. 566 00:36:17,460 --> 00:36:21,000 Looking at the reserve fund policy, the city does have a reserve fund policy. 567 00:36:21,000 --> 00:36:22,000 It's 402.05. 568 00:36:22,000 --> 00:36:27,600 GFOA recommends that governments establish a formal policy on the level of unrestricted 569 00:36:27,600 --> 00:36:33,880 fund balance that should be maintained in the general fund for gap and budgetary purposes. 570 00:36:33,880 --> 00:36:38,800 The reserve should provide financial stability and protect against revenue volatility to 571 00:36:38,800 --> 00:36:44,280 ensure continuity of services during economic downturns or emergencies. 572 00:36:44,280 --> 00:36:49,600 And we do have, again, this policy in place, but what we'd like to do is to review the 573 00:36:49,600 --> 00:36:55,120 reserve fund levels for all the major funds, the general fund, electric, water, wastewater, 574 00:36:55,120 --> 00:37:01,000 and solid waste, to ensure that the operating reserves and the policy is sufficient to meet 575 00:37:01,000 --> 00:37:04,820 operating needs and industry standards. 576 00:37:04,820 --> 00:37:09,960 Within the policy, we'd also like to better delineate the role and use of working capital 577 00:37:09,960 --> 00:37:16,360 reserves and operating reserves, so working capital being that it provides short-term 578 00:37:16,360 --> 00:37:22,080 support for fluctuations in day-to-day operations, and the operating reserve to provide long-term 579 00:37:22,080 --> 00:37:25,960 support for rate stabilization and emergencies. 580 00:37:25,960 --> 00:37:31,160 Additionally, we would establish fund targets for the internal service funds, as well as 581 00:37:31,160 --> 00:37:38,760 the airport, which currently do not have a set target fund balance. 582 00:37:38,760 --> 00:37:43,180 Renewal and reinvestment policies, GFOA recommends a written policy addressing capital asset 583 00:37:43,180 --> 00:37:45,760 reserves for renewal and replacement. 584 00:37:45,760 --> 00:37:53,240 The city does not currently have an adopted policy, however, we do do these things on 585 00:37:53,240 --> 00:37:57,240 an annual basis, and certainly when we look to issue debt, we're looking at whether or 586 00:37:57,240 --> 00:38:02,680 not we should debt fund or cash fund projects to the extent that we can. 587 00:38:02,680 --> 00:38:07,760 But what this would do is it would establish a strategy around that based on the type of 588 00:38:07,760 --> 00:38:13,700 asset and life cycle, so cash funding preferred for existing recurring replacements and short-lived 589 00:38:13,700 --> 00:38:21,320 assets and debt funding reserved really just for new capacity or long-lived assets. 590 00:38:21,320 --> 00:38:25,660 Something else we would do is establish depreciation-based funding, so this would be cash funding for 591 00:38:25,660 --> 00:38:30,720 asset replacement that's aligned with the annual depreciation of the asset, and this 592 00:38:30,720 --> 00:38:36,720 would ensure a reserve is available to replace assets at the end of their useful life. 593 00:38:36,720 --> 00:38:43,920 Proceeds from the sale of assets would be earmarked for the replacement of similar assets, 594 00:38:43,920 --> 00:38:52,720 and we would adjust this by an inflationary measure to assume a true cost of replacement 595 00:38:52,720 --> 00:38:56,360 will exceed the original cost of the asset. 596 00:38:56,360 --> 00:39:00,920 Third, we would establish an integration with the long-term financial planning strategy 597 00:39:00,920 --> 00:39:08,600 to track our annual capital spending and our depreciation expense to see if we're keeping 598 00:39:08,600 --> 00:39:15,000 up with replacing assets, and then periodically evaluating our deferred maintenance costs 599 00:39:15,000 --> 00:39:24,680 versus proactive reinvestment just to look at the cost benefit associated with that. 600 00:39:24,680 --> 00:39:29,240 So taking a look at our revenue and expense policies, GFOA recommends adopting strong 601 00:39:29,240 --> 00:39:32,440 policies to maintain a structurally balanced budget. 602 00:39:32,440 --> 00:39:37,920 Again, the city does have policies in place around this, but what we'd like to do is just 603 00:39:37,920 --> 00:39:40,560 to add some more detailed language. 604 00:39:40,560 --> 00:39:45,080 It would outline and document specific links between revenues and expenses and financial 605 00:39:45,080 --> 00:39:51,080 forecasting in particular, so really tying the revenue with the specific expense in our 606 00:39:51,080 --> 00:39:57,900 forecast so that it's more transparent how the revenue and expenses are working together. 607 00:39:57,900 --> 00:40:04,000 So just as some examples, impact fee revenue being used to offset the debt service for 608 00:40:04,000 --> 00:40:12,380 impact fee eligible projects, vehicle replacement fund used to replace fleet vehicles, the ECA 609 00:40:12,380 --> 00:40:19,480 to recover net power costs, the TCRF to recover transmission costs, and we do do that now, 610 00:40:19,480 --> 00:40:26,600 but making it visible in our financial forecast and our budget presentations and things moving 611 00:40:26,600 --> 00:40:28,880 forward. 612 00:40:28,880 --> 00:40:33,240 Identifying which revenues are restricted, committed, or designated for specific expenses, 613 00:40:33,240 --> 00:40:38,680 how surplus and deficits will be managed, how compliance will be monitored and reported, 614 00:40:38,680 --> 00:40:45,320 including language on excess funds, so how we use the surplus, just as an example, the 615 00:40:45,320 --> 00:40:51,680 ECA collections and how they'll be applied, so in that example for rate stabilization, 616 00:40:51,680 --> 00:40:56,800 and again to establish an integration with the long-term financial planning strategy 617 00:40:56,800 --> 00:41:06,120 to track alignment with state law, bond covenants, utility standards, and GASB accounting standards. 618 00:41:06,120 --> 00:41:08,080 So incremental rate adjustments. 619 00:41:08,080 --> 00:41:12,780 Rate adjustments should be based on multi-year financial forecasts, and this is really kind 620 00:41:12,780 --> 00:41:17,840 of going back to that longer-term financial forecast that would incorporate both operating 621 00:41:17,840 --> 00:41:24,520 and capital needs, reserve targets, debt service obligations, and inflation and growth assumptions. 622 00:41:24,520 --> 00:41:30,880 This topic in particular is very important as it relates to the rating agencies and ensuring 623 00:41:30,880 --> 00:41:35,720 that we maintain high credit ratings. 624 00:41:35,720 --> 00:41:41,040 So as an outcome of this, what we would look at are gradual adjustments to the rates tied 625 00:41:41,040 --> 00:41:48,040 to long-term planning to provide predictable annual increases rather than infrequent large 626 00:41:48,040 --> 00:41:53,440 spikes, to review the fee adjustments annually to ensure alignment with actual cost of service, 627 00:41:53,440 --> 00:41:59,120 which we do do now, and then target adjustments that maintain compliance with cost of service 628 00:41:59,120 --> 00:42:07,200 principles, debt coverage ratios, and reserve policies. 629 00:42:07,200 --> 00:42:12,920 Taking a look at benchmarking, what we'd like to do is to document and identify comparable 630 00:42:12,920 --> 00:42:15,520 utilities based on service type. 631 00:42:15,520 --> 00:42:20,800 So whether it's electric, water, wastewater, or solid waste, the size, which would include 632 00:42:20,800 --> 00:42:27,840 the customer base, how much infrastructure they have, and also the size of their staffing, 633 00:42:27,840 --> 00:42:34,320 whether it's a regional or a state provider, and then also the ownership type, whether 634 00:42:34,320 --> 00:42:38,740 it's a municipal or investor-owned utility. 635 00:42:38,740 --> 00:42:45,460 And really, the intent of this is just to provide consistency each year as we forecast 636 00:42:45,460 --> 00:42:53,280 and have a consistent pool of entities that we benchmark ourselves with. 637 00:42:53,280 --> 00:42:57,680 We would identify and document comparable metrics based on average residential, commercial, 638 00:42:57,680 --> 00:43:05,200 and industrial rates, total bill comparisons for typical usage levels, and then rate structure 639 00:43:05,200 --> 00:43:11,020 differences, whether they're fixed or variable, and provide affordability indicators such 640 00:43:11,020 --> 00:43:14,000 as median household income. 641 00:43:14,000 --> 00:43:18,600 So we would utilize a number of different data sources, the industry associations that 642 00:43:18,600 --> 00:43:24,680 I had previously mentioned, including AWWA and APPA, state regulatory filings, consultant 643 00:43:24,680 --> 00:43:30,740 studies, and other publicly available rate schedules. 644 00:43:30,740 --> 00:43:35,560 So just taking a look at how this would be implemented, we've broken it down into four 645 00:43:35,560 --> 00:43:36,560 phases. 646 00:43:36,560 --> 00:43:40,280 So the initial phase, which we anticipate would take three months, would develop the 647 00:43:40,280 --> 00:43:47,280 framework and we would receive direction from PUB and the council to establish a comprehensive 648 00:43:47,280 --> 00:43:48,800 financial policy. 649 00:43:48,800 --> 00:43:54,080 In this, we would finalize the definitions for reserves, capital replacement, revenue 650 00:43:54,080 --> 00:43:58,720 and expense policies and benchmarking, and begin the development of the long-term 10-year 651 00:43:58,720 --> 00:44:00,400 forecast. 652 00:44:00,400 --> 00:44:07,540 Then in phase two, we would build and validate those forecasts through the budget process, 653 00:44:07,540 --> 00:44:12,120 develop the reserve targets for all the major funds, develop depreciation-based reinvestment 654 00:44:12,120 --> 00:44:21,320 strategies, document the revenue and expense linkages and restrictions, and also compile 655 00:44:21,320 --> 00:44:25,880 the benchmarking data sets. 656 00:44:25,880 --> 00:44:34,360 We would then compile the various policy -- new policies and policy changes into the comprehensive 657 00:44:34,360 --> 00:44:41,040 financial policy and present the drafts to PUB and council, incorporating any feedback 658 00:44:41,040 --> 00:44:43,120 that you or council would have. 659 00:44:43,120 --> 00:44:48,880 We would integrate the adopted policies into the 27-28 budget development and establish 660 00:44:48,880 --> 00:44:54,080 compliance and monitoring dashboards moving forward. 661 00:44:54,080 --> 00:45:02,320 Then finally, ongoing monitoring would include the implementation of incremental rate adjustment 662 00:45:02,320 --> 00:45:08,600 strategy, performing our annual reserve adequacy review, evaluating reinvestment ratios and 663 00:45:08,600 --> 00:45:14,280 deferred maintenance, and conducting annual benchmarking as part of the budget process. 664 00:45:14,280 --> 00:45:19,880 So updates on the progress of this financial policy initiative will be provided to PUB 665 00:45:19,880 --> 00:45:26,800 and council at key development milestones for feedback. 666 00:45:26,800 --> 00:45:32,080 So next steps, what we're asking for today is a recommendation on the establishment of 667 00:45:32,080 --> 00:45:35,440 a comprehensive financial policy for the city of Denton. 668 00:45:35,440 --> 00:45:40,360 And then on April 21st, we also intend to ask city council for their direction on the 669 00:45:40,360 --> 00:45:46,380 establishment of the comprehensive financial policy. 670 00:45:46,380 --> 00:45:52,760 And with that, I'll stand for any questions. 671 00:45:52,760 --> 00:45:56,380 >> Just curious, wonderful presentation. 672 00:45:56,380 --> 00:46:02,160 What would you say percentage-wise we're already doing, if you were just doing some tweaking, 673 00:46:02,160 --> 00:46:06,520 I'm thinking that you're going to be looking at the asset reserve, the renewal replacement, 674 00:46:06,520 --> 00:46:11,560 which we don't have adopted yet, but what would you say with your presentation we're 675 00:46:11,560 --> 00:46:12,560 already doing? 676 00:46:12,560 --> 00:46:20,220 >> Yeah, I think, you know, I think we're probably doing 80% of all these items. 677 00:46:20,220 --> 00:46:26,000 I would say that what we don't have documented specifically are some of the just the best 678 00:46:26,000 --> 00:46:27,000 practices. 679 00:46:27,000 --> 00:46:34,820 I mean, we're doing the best practices in our work, but we don't have anything that, 680 00:46:34,820 --> 00:46:39,120 you know, details it, I guess, in the policy. 681 00:46:39,120 --> 00:46:42,260 I mean, the policies are very black and white. 682 00:46:42,260 --> 00:46:47,200 They just explain, you know, here's the limit of what you can do. 683 00:46:47,200 --> 00:46:53,000 Here's how much, you know, debt you can issue, or here's eligible projects to, you know, 684 00:46:53,000 --> 00:46:54,840 that could be revenue funded. 685 00:46:54,840 --> 00:46:58,380 What it doesn't do is it doesn't give you kind of the why. 686 00:46:58,380 --> 00:47:06,240 You know, why should we revenue projects, or why should we, you know, use debt versus 687 00:47:06,240 --> 00:47:11,120 something else, or why should we, you know, reinvest in, you know, in our capital assets 688 00:47:11,120 --> 00:47:12,680 based on a depreciation schedule. 689 00:47:12,680 --> 00:47:19,720 So that's kind of the piece that's missing that we just feel would be very important 690 00:47:19,720 --> 00:47:24,320 in, you know, enhancing the city's financial policies. 691 00:47:24,320 --> 00:47:28,820 Additionally, at the beginning, I kind of mentioned we have a number of standalone policies. 692 00:47:28,820 --> 00:47:29,820 We have a debt policy. 693 00:47:29,820 --> 00:47:31,840 We have an investment policy. 694 00:47:31,840 --> 00:47:37,480 We have various utility policies, but we don't have an overarching policy that really kind 695 00:47:37,480 --> 00:47:44,400 of ties all of them together in a way that we would be able to use that in our financial 696 00:47:44,400 --> 00:47:45,400 forecasting. 697 00:47:45,400 --> 00:47:51,060 So it's all of this is really for the benefit of enhancing our financial planning. 698 00:47:51,060 --> 00:47:56,360 We'll come and go, and I'm glad to see that we have a benchmark that a new person can 699 00:47:56,360 --> 00:47:59,220 come in and pick up the ball and keep running. 700 00:47:59,220 --> 00:48:00,220 Thank you. 701 00:48:00,220 --> 00:48:03,720 Nice framework that they have to work from. 702 00:48:03,720 --> 00:48:08,940 So you're going to implement it not this budget cycle, next budget cycle, but you'll probably 703 00:48:08,940 --> 00:48:11,640 start doing the 10-year planning this year? 704 00:48:11,640 --> 00:48:14,600 That's correct, yes. 705 00:48:14,600 --> 00:48:20,120 So some of the things that we're already doing that we could integrate into the current budget 706 00:48:20,120 --> 00:48:22,520 process, we certainly will. 707 00:48:22,520 --> 00:48:27,960 Some of this in the documentation of any new policies and certainly the comprehensive policy, 708 00:48:27,960 --> 00:48:33,480 we anticipate that it will take longer than the budget process in the current year. 709 00:48:33,480 --> 00:48:41,360 So we would target fiscal year '27-'28 for really that full implementation. 710 00:48:41,360 --> 00:48:46,360 So are you going to -- will this replace the debt -- the individual policies? 711 00:48:46,360 --> 00:48:51,000 No, it's just going to be something over the top. 712 00:48:51,000 --> 00:48:53,680 That's correct, and it will tie them together, yes. 713 00:48:53,680 --> 00:48:56,680 That's our intention. 714 00:48:56,680 --> 00:48:57,680 I have a question. 715 00:48:57,680 --> 00:49:05,600 One of the items in your phase 2 or 1 line item was generating reserve targets for reinvestment 716 00:49:05,600 --> 00:49:07,600 in capital funding. 717 00:49:07,600 --> 00:49:08,880 Yes. 718 00:49:08,880 --> 00:49:13,360 Developed appreciation-based reinvestment in capital funding. 719 00:49:13,360 --> 00:49:20,000 How are you going to pull numbers to help generate that, because my concern about it 720 00:49:20,000 --> 00:49:25,660 is once that becomes part of this framework, then those numbers, if you will, are kind 721 00:49:25,660 --> 00:49:30,880 of locked in for the coming year, two years, five years, depending on how far out you're 722 00:49:30,880 --> 00:49:31,880 going. 723 00:49:31,880 --> 00:49:39,880 So how do you intend to go about actually developing those particular investment and 724 00:49:39,880 --> 00:49:42,160 reinvestment in capital funding items? 725 00:49:42,160 --> 00:49:48,080 Yeah, so currently we have the depreciation schedules of the assets in the -- you know, 726 00:49:48,080 --> 00:49:49,080 within the city. 727 00:49:49,080 --> 00:49:56,240 And so what we will be doing is we'll be pulling those schedules, and it may be initially -- and 728 00:49:56,240 --> 00:50:02,720 I would anticipate it to be so -- that it's going to be a very large dollar amount that 729 00:50:02,720 --> 00:50:10,440 is being depreciated each year, and we will not be able to, in year one, fully, you know, 730 00:50:10,440 --> 00:50:15,240 cash-fund based on that depreciation schedule of every asset within the city. 731 00:50:15,240 --> 00:50:16,240 That this -- 732 00:50:16,240 --> 00:50:20,520 Well, we're adding very large new assets to our water and wastewater. 733 00:50:20,520 --> 00:50:21,520 And that's very true as well. 734 00:50:21,520 --> 00:50:23,960 You show these as a -- for instance. 735 00:50:23,960 --> 00:50:24,960 Yes. 736 00:50:24,960 --> 00:50:31,560 The goal of this is really to provide a starting place that we can begin to implement these 737 00:50:31,560 --> 00:50:39,600 funding strategies where it doesn't leave us in a place where an asset needs to be replaced. 738 00:50:39,600 --> 00:50:46,960 We had not either planned for it and/or haven't saved the funding for it. 739 00:50:46,960 --> 00:50:53,520 And then all of a sudden the replacement of that results in a spike in utility rates because 740 00:50:53,520 --> 00:51:00,440 now all of a sudden we have to build this new, you know, infrastructure to replace it. 741 00:51:00,440 --> 00:51:06,140 So that really ties back into some of the rate stabilization goals. 742 00:51:06,140 --> 00:51:11,460 But to answer your question, this would begin with the existing data that we have within 743 00:51:11,460 --> 00:51:18,960 our accounting system, and we'll do an evaluation of what that looks like and how to then fund 744 00:51:18,960 --> 00:51:19,960 it. 745 00:51:19,960 --> 00:51:25,000 But you'll be continuing to revisit this each year in your budgeting or planning process? 746 00:51:25,000 --> 00:51:26,000 Yes. 747 00:51:26,000 --> 00:51:27,000 Okay. 748 00:51:27,000 --> 00:51:28,000 Yep. 749 00:51:28,000 --> 00:51:31,720 Because my fear was you'd get locked into this number and then five years from now these 750 00:51:31,720 --> 00:51:38,440 big new assets come online and then that wouldn't be part of that depreciation-based strategy. 751 00:51:38,440 --> 00:51:39,440 So just a concern. 752 00:51:39,440 --> 00:51:40,440 Thank you. 753 00:51:40,440 --> 00:51:41,440 Yeah. 754 00:51:41,440 --> 00:51:44,520 Well, I'm excited to see it. 755 00:51:44,520 --> 00:51:50,120 Yeah, I think this is a really good direction to move with an overarching, you know, set 756 00:51:50,120 --> 00:51:52,840 of policies that kind of puts everything under the same umbrella. 757 00:51:52,840 --> 00:51:57,480 And like you said, 80% of this or more is already being done. 758 00:51:57,480 --> 00:52:05,200 And I do feel like the depreciation-based reinvestment and some of that when we revenue 759 00:52:05,200 --> 00:52:13,000 fund versus capital fund, I feel like I have the least understanding of that. 760 00:52:13,000 --> 00:52:20,360 So I don't know if this will at least clarify that, if not maybe give the, maybe slowly 761 00:52:20,360 --> 00:52:28,000 over time shift the, you know, the spending to more align with that. 762 00:52:28,000 --> 00:52:33,440 And I think, yeah, having benchmarks and five to 10-year plans instead of kind of one to 763 00:52:33,440 --> 00:52:42,840 five-year plans, all this sounds like a really, really great direction. 764 00:52:42,840 --> 00:52:43,840 So we like it? 765 00:52:43,840 --> 00:52:44,840 Yeah. 766 00:52:44,840 --> 00:52:47,880 So with that, what we would ask is, is it just a recommendation? 767 00:52:47,880 --> 00:52:52,200 If you -- Not in work sessions. 768 00:52:52,200 --> 00:52:56,280 Yeah, I think he's just looking for just direction from the board. 769 00:52:56,280 --> 00:53:01,160 Yes, I -- I think it looks good and we proceed with what you've got here. 770 00:53:01,160 --> 00:53:04,800 Yeah, yeah, I think everybody is supportive of the direction you've got, so. 771 00:53:04,800 --> 00:53:05,800 Good luck. 772 00:53:05,800 --> 00:53:08,800 Thank you. 773 00:53:08,800 --> 00:53:12,400 All right. 774 00:53:12,400 --> 00:53:17,680 With that, we have no further business and we are adjourned. 775 00:53:17,680 --> 00:53:19,100 - Thank you for coming.