WEBVTT 00:00:00.000 --> 00:00:05.680 Good morning, and welcome to the regularly scheduled meeting of the Denton Public Utilities 00:00:05.680 --> 00:00:06.680 Board. 00:00:06.680 --> 00:00:11.100 Today is April 13th, and it is 9 a.m. 00:00:11.100 --> 00:00:15.400 Our first item of business this morning is presentations from members of the public. 00:00:15.400 --> 00:00:17.600 Do we have any presentations? 00:00:17.600 --> 00:00:18.600 We don't. 00:00:18.600 --> 00:00:23.600 Okay, and now we'll move on to the consent agenda. 00:00:23.600 --> 00:00:27.440 Does anybody have any items they wish to pull for discussion? 00:00:27.440 --> 00:00:30.280 Item D, please. 00:00:30.280 --> 00:00:36.640 Item D. All right. 00:00:36.640 --> 00:00:40.540 And -- Item G. 00:00:40.540 --> 00:00:41.880 Item G. Okay. 00:00:41.880 --> 00:00:42.880 Thank you. 00:00:42.880 --> 00:00:43.880 All right. 00:00:43.880 --> 00:00:48.200 With that, I'll consider a motion for the remaining items. 00:00:48.200 --> 00:00:49.200 So moved. 00:00:49.200 --> 00:00:52.560 We have a motion and a second, Mr. Rybeck. 00:00:52.560 --> 00:00:54.040 All in favor, say aye. 00:00:54.040 --> 00:00:55.040 Aye. 00:00:55.040 --> 00:00:56.040 Any opposed? 00:00:56.040 --> 00:00:58.040 The motion carries unanimously. 00:00:58.040 --> 00:01:05.760 I guess we'll do item D first, if that one resolves. 00:01:05.760 --> 00:01:16.520 Good morning, my name is Cain McDaniel with Dent Municipal Electric. 00:01:16.520 --> 00:01:17.520 Excuse me. 00:01:17.520 --> 00:01:20.240 Good morning, my name is Cain McDaniel with Dent Municipal Electric. 00:01:20.240 --> 00:01:21.240 Good morning. 00:01:21.240 --> 00:01:22.240 Good morning. 00:01:22.240 --> 00:01:24.800 I'm the person who asked for the item to be pulled. 00:01:24.800 --> 00:01:26.320 I was a little confused. 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 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. 00:01:38.200 --> 00:01:41.200 So I was hoping you could give us just a little clarification on that. 00:01:41.200 --> 00:01:42.200 Yes, sir. 00:01:42.200 --> 00:01:49.720 So since the RFQ is basically a pre-qualifier for both of those -- both those companies 00:01:49.720 --> 00:01:56.680 performed the same work, for every project that we do, we have an outage schedule which 00:01:56.680 --> 00:02:02.080 is coordinated and approved by ERCOT, and we need to ensure availability for each of 00:02:02.080 --> 00:02:07.920 those projects, depending on those window outages that ERCOT approves. 00:02:07.920 --> 00:02:09.720 Okay. 00:02:09.720 --> 00:02:15.280 So basically both are qualified to perform the services, so you're going to divide the 00:02:15.280 --> 00:02:17.960 work up between them? 00:02:17.960 --> 00:02:24.080 We will choose one company based on purchasing and -- excuse me -- based on processing and 00:02:24.080 --> 00:02:25.080 scheduling. 00:02:25.080 --> 00:02:26.080 Okay. 00:02:26.080 --> 00:02:33.680 So this is just approving the selection narrowed down of multiple companies down to two? 00:02:33.680 --> 00:02:34.680 Correct. 00:02:34.680 --> 00:02:37.160 So basically you think about they're pre-qualified. 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 00:02:41.760 --> 00:02:44.380 that job, and it will divvy up the work that way. 00:02:44.380 --> 00:02:49.000 So neither vendor is guaranteed any amount of work, but that's the process. 00:02:49.000 --> 00:02:50.000 Okay. 00:02:50.000 --> 00:02:51.000 My apologies. 00:02:51.000 --> 00:02:53.240 I didn't understand that from the information sheet. 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 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 00:03:04.120 --> 00:03:05.120 up. 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 00:03:11.440 --> 00:03:12.440 purchasing. 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 00:03:16.640 --> 00:03:17.640 job. 00:03:17.640 --> 00:03:21.080 So we do that kind of internally in conjunction with the procurement office. 00:03:21.080 --> 00:03:22.080 All right. 00:03:22.080 --> 00:03:23.080 Well, I'm satisfied. 00:03:23.080 --> 00:03:24.080 Anybody else? 00:03:24.080 --> 00:03:25.080 Thank you. 00:03:25.080 --> 00:03:26.080 Yes, sir. 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 00:03:32.160 --> 00:03:35.880 the primary contractor? 00:03:35.880 --> 00:03:44.440 Hi, Lori, Hill Purchasing Manager. 00:03:44.440 --> 00:03:48.040 So yeah, we are pre-qualifying these, and then each project will be a bid. 00:03:48.040 --> 00:03:51.400 But you're already approving for us to use both vendors with a spend. 00:03:51.400 --> 00:03:54.240 So they will not come back per project. 00:03:54.240 --> 00:03:57.600 And it's all based on this number, the 4.8 million? 00:03:57.600 --> 00:03:58.600 Yes, correct. 00:03:58.600 --> 00:03:59.600 Thank you. 00:03:59.600 --> 00:04:00.600 Any further questions? 00:04:00.600 --> 00:04:10.200 No, sir, I move to approve the item. 00:04:10.200 --> 00:04:11.200 We have a motion. 00:04:11.200 --> 00:04:12.200 Second. 00:04:12.200 --> 00:04:13.200 And a second. 00:04:13.200 --> 00:04:15.320 All in favor of approving item D? 00:04:15.320 --> 00:04:16.320 Aye. 00:04:16.320 --> 00:04:17.640 Any opposed? 00:04:17.640 --> 00:04:18.960 Thank you. 00:04:18.960 --> 00:04:19.960 Thank you. 00:04:19.960 --> 00:04:20.960 None. 00:04:20.960 --> 00:04:23.040 D carries unanimously. 00:04:23.040 --> 00:04:29.960 And now for item G. Item G includes public power utilities competitive matters. 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 00:04:35.960 --> 00:04:42.240 to deliberate the closed item -- closed meeting item set forth in the agenda, which includes 00:04:42.240 --> 00:04:45.920 deliberations regarding certain public power utilities competitive matters under Texas 00:04:45.920 --> 00:04:54.000 Government Code 551.086 and consultation with attorneys under Texas Government Code Section 00:04:54.000 --> 00:04:57.280 551.071. 00:04:57.280 --> 00:05:04.960 We prepare the room. 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 00:05:10.420 --> 00:05:13.600 official action was taken. 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 00:05:19.480 --> 00:05:20.480 a motion? 00:05:20.480 --> 00:05:22.280 I move approval. 00:05:22.280 --> 00:05:23.640 We have a motion. 00:05:23.640 --> 00:05:24.640 And a second. 00:05:24.640 --> 00:05:25.640 All in favor say aye. 00:05:25.640 --> 00:05:26.640 Aye. 00:05:26.640 --> 00:05:27.640 Any opposed? 00:05:27.640 --> 00:05:28.640 Signed same. 00:05:28.640 --> 00:05:31.400 The motion carries unanimously. 00:05:31.400 --> 00:05:34.640 Now we'll move on to items for individual consideration. 00:05:34.640 --> 00:05:40.480 The first item is consider approval of the March 23rd minutes. 00:05:40.480 --> 00:05:42.940 We have a motion. 00:05:42.940 --> 00:05:43.940 And a second. 00:05:43.940 --> 00:05:45.520 All in favor say aye. 00:05:45.520 --> 00:05:46.520 Aye. 00:05:46.520 --> 00:05:49.360 The motion carries unanimously. 00:05:49.360 --> 00:05:57.240 Item B, consider recommending adoption of an ordinance to execute a contract with Badger 00:05:57.240 --> 00:06:05.560 Meter for AMI implementation for our water metering department for five years with five 00:06:05.560 --> 00:06:31.920 additional one-year extensions totaling $26 million. 00:06:31.920 --> 00:06:33.440 Good morning. 00:06:33.440 --> 00:06:39.720 My name is Tiffany Schrein, I am the water utilities asset management supervisor. 00:06:39.720 --> 00:06:45.560 I will be presenting on behalf of Stephen Gay today for the Water Advanced Metering Infrastructure 00:06:45.560 --> 00:06:51.320 Implementation Program. 00:06:51.320 --> 00:06:57.360 Advanced Metering Infrastructure, also referred to in short as AMI, is a two-way communication 00:06:57.360 --> 00:07:05.480 system to collect detailed metering information throughout a utilities service industry. 00:07:05.480 --> 00:07:12.280 This infrastructure is an integrated system of smart meters, a meter and endpoint, a collection 00:07:12.280 --> 00:07:19.080 system, management systems, which will include your meter data management system, a head 00:07:19.080 --> 00:07:22.680 end system, and a customer portal. 00:07:22.680 --> 00:07:26.720 This water AMI system will allow for the city to have so many benefits. 00:07:26.720 --> 00:07:31.520 It will enable the utility to more accurately measure water usage, detect leaks throughout 00:07:31.520 --> 00:07:37.440 the system, improve customer service, and ensure that we are meeting our compliance 00:07:37.440 --> 00:07:41.240 obligations. 00:07:41.240 --> 00:07:46.480 Customers can also take advantage of usage alerts and reports that help them understand 00:07:46.480 --> 00:07:57.000 their water use and potential savings opportunities. 00:07:57.000 --> 00:08:03.320 The implementation of the citywide water AMI program is estimated to span 24 months and 00:08:03.320 --> 00:08:11.120 will consist of acquisition and installation of meters, smart meters, and boxes, connection 00:08:11.120 --> 00:08:16.480 to a cellular network, software integrations necessary for operations and management of 00:08:16.480 --> 00:08:19.400 the system. 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 00:08:24.760 --> 00:08:34.240 acceptance testing, and lastly, a mass meter change out or a full AMI deployment. 00:08:34.240 --> 00:08:41.480 This timeline and approach will allow for the evaluation of supplied products, procedures 00:08:41.480 --> 00:08:47.840 implemented, allotment of time for pre-construction planning and integrations that are needed to 00:08:47.840 --> 00:08:50.680 be done. 00:08:50.680 --> 00:08:54.920 A project communications plan will be carried out in accordance with the approach and timeline 00:08:54.920 --> 00:09:00.040 along the way. 00:09:00.040 --> 00:09:05.880 The initial RFP for this program yielded six proposals that our evaluation committee reviewed 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 00:09:10.720 --> 00:09:15.240 meet the needs of the city's identified objectives. 00:09:15.240 --> 00:09:21.520 This contractful value is $26 million, and as noted, majority of the cost will be incurred 00:09:21.520 --> 00:09:24.320 within the first few years. 00:09:24.320 --> 00:09:28.320 Proceeding that 24-month deployment, funding will span out over the remaining contract 00:09:28.320 --> 00:09:37.260 years and absolve into software and cellular support. 00:09:37.260 --> 00:09:40.760 In conclusion, staff would like to ask for the recommendation that badger meter receives 00:09:40.760 --> 00:09:42.360 the contract award. 00:09:42.360 --> 00:09:47.040 This contract is scheduled for the April 21st city council meeting. 00:09:47.040 --> 00:09:50.440 Once we receive approvals, one of our next steps would be to continue working with marketing 00:09:50.440 --> 00:09:55.560 and communications to initiate communication to our residents and begin implementing this 00:09:55.560 --> 00:10:03.480 program for water AMI meters within the city of Denton. 00:10:03.480 --> 00:10:04.480 Thank you. 00:10:04.480 --> 00:10:05.480 Any questions? 00:10:05.480 --> 00:10:07.480 Do we have any questions? 00:10:07.480 --> 00:10:09.560 Mr. Rainer? 00:10:09.560 --> 00:10:15.320 Your mic is... 00:10:15.320 --> 00:10:17.320 Now I need to be on. 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 00:10:23.200 --> 00:10:25.280 implementation. 00:10:25.280 --> 00:10:26.280 Is this... 00:10:26.280 --> 00:10:27.280 Are we looking at just commercial? 00:10:27.280 --> 00:10:28.280 Are we talking about residential? 00:10:28.280 --> 00:10:29.840 Are we talking about everybody? 00:10:29.840 --> 00:10:32.840 Sure, absolutely. 00:10:32.840 --> 00:10:36.500 Plan is, we're planning out to include both. 00:10:36.500 --> 00:10:46.280 We will start with residential, and then at the utilities discretion, replace commercial. 00:10:46.280 --> 00:10:47.280 City-wide? 00:10:47.280 --> 00:10:49.200 Yes, sir. 00:10:49.200 --> 00:10:50.720 All the residential. 00:10:50.720 --> 00:10:53.880 New construction, I could understand. 00:10:53.880 --> 00:10:56.960 And your plan's on having that done in two years? 00:10:56.960 --> 00:10:59.560 Yes, sir. 00:10:59.560 --> 00:11:03.600 I would be suspect, but so be the case. 00:11:03.600 --> 00:11:10.960 Now if it does take longer than two years, then what is the cost to us? 00:11:10.960 --> 00:11:13.320 There shouldn't be any additional costs. 00:11:13.320 --> 00:11:14.600 We should be locked in with this amount. 00:11:14.600 --> 00:11:15.880 Oh, because it's a 10-year thing, isn't it? 00:11:15.880 --> 00:11:16.880 Yes. 00:11:16.880 --> 00:11:17.880 Yes, I apologize. 00:11:17.880 --> 00:11:18.880 That's okay. 00:11:18.880 --> 00:11:19.880 Thank you. 00:11:19.880 --> 00:11:20.880 Sure. 00:11:20.880 --> 00:11:25.040 Go ahead. 00:11:25.040 --> 00:11:26.360 I have a question as well. 00:11:26.360 --> 00:11:27.360 Sure. 00:11:27.360 --> 00:11:28.680 Well, actually two questions. 00:11:28.680 --> 00:11:34.160 I noticed looking at the pricing evaluation, the pricing of the various entities was kind 00:11:34.160 --> 00:11:35.160 of all over the board. 00:11:35.160 --> 00:11:36.160 Yes. 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. 00:11:43.040 --> 00:11:53.520 And then, you know, one of the providers was quite low compared to the other group. 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 00:12:01.320 --> 00:12:04.800 back to a different vendor, or will this whole process start over? 00:12:04.800 --> 00:12:05.800 How will that work? 00:12:05.800 --> 00:12:06.800 Yeah. 00:12:06.800 --> 00:12:11.200 Great question. 00:12:11.200 --> 00:12:21.160 We don't have the expectation that the proof of concept won't work out. 00:12:21.160 --> 00:12:25.860 The proof of concept is almost more of like a soft opening for the full department. 00:12:25.860 --> 00:12:26.860 Almost more of what? 00:12:26.860 --> 00:12:27.860 I'm sorry? 00:12:27.860 --> 00:12:28.860 Like a soft opening. 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 00:12:34.240 --> 00:12:36.240 or bugs before we do. 00:12:36.240 --> 00:12:37.240 Okay, so it's a soft start. 00:12:37.240 --> 00:12:38.240 It's not really a proof of concept. 00:12:38.240 --> 00:12:41.000 It's proof of concept made to either work or it doesn't. 00:12:41.000 --> 00:12:42.000 It does. 00:12:42.000 --> 00:12:43.000 Right. 00:12:43.000 --> 00:12:44.000 And we'll prove the technology. 00:12:44.000 --> 00:12:49.440 So my second question is the actual way you're doing this using cellular communications. 00:12:49.440 --> 00:12:53.160 So how will those communications be protected? 00:12:53.160 --> 00:12:54.880 Sure. 00:12:54.880 --> 00:13:04.000 So Badger Meter, they leverage existing secure commercial cellular networks that are out 00:13:04.000 --> 00:13:09.680 there on top of their proprietary Badger softwares and systems. 00:13:09.680 --> 00:13:17.000 So anything that is transmitted to and from the connection system is transmitted securely 00:13:17.000 --> 00:13:18.720 on a private network. 00:13:18.720 --> 00:13:20.720 Is it encrypted? 00:13:20.720 --> 00:13:22.080 I believe so. 00:13:22.080 --> 00:13:28.600 And it is done to the standards of ISO 27001 and SOC 2. 00:13:28.600 --> 00:13:29.600 This says cellular communications. 00:13:29.600 --> 00:13:30.600 Cellular, yes. 00:13:30.600 --> 00:13:31.600 I'm sorry. 00:13:31.600 --> 00:13:37.520 If they're broadcasting over cellular, then it's over the air. 00:13:37.520 --> 00:13:40.360 So I'm just asking, is that being encrypted? 00:13:40.360 --> 00:13:42.120 Is it encoded? 00:13:42.120 --> 00:13:46.240 I'm not entirely sure how cellular your system works. 00:13:46.240 --> 00:13:47.240 Yep. 00:13:47.240 --> 00:13:51.000 So this is very similar to the AMI system that DME has. 00:13:51.000 --> 00:13:52.000 And that is encrypted. 00:13:52.000 --> 00:13:53.000 Okay. 00:13:53.000 --> 00:13:54.000 Well, thank you. 00:13:54.000 --> 00:13:55.000 That was easy. 00:13:55.000 --> 00:13:56.000 Thank you. 00:13:56.000 --> 00:13:57.000 I was just curious. 00:13:57.000 --> 00:13:58.000 You said cellular communications. 00:13:58.000 --> 00:13:59.000 You got all this data going out. 00:13:59.000 --> 00:14:01.600 And I was just curious how it was being protected. 00:14:01.600 --> 00:14:03.240 But if it's encrypted, then it's good. 00:14:03.240 --> 00:14:05.240 So those are my questions. 00:14:05.240 --> 00:14:06.240 Please proceed. 00:14:06.240 --> 00:14:07.240 Thank you. 00:14:07.240 --> 00:14:08.240 Thank you. 00:14:08.240 --> 00:14:09.240 None of this is new. 00:14:09.240 --> 00:14:11.840 So who else has used Badger? 00:14:11.840 --> 00:14:18.400 They provided an extensive list of resources with their proposal in the evaluation process. 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 00:14:26.480 --> 00:14:27.480 very positive. 00:14:27.480 --> 00:14:28.480 Okay. 00:14:28.480 --> 00:14:29.480 And that their systems did work. 00:14:29.480 --> 00:14:32.240 And I believe we do have that information. 00:14:32.240 --> 00:14:33.240 Okay. 00:14:33.240 --> 00:14:39.160 So I'm assuming that Milwaukee is one of them. 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. 00:14:43.520 --> 00:14:44.520 Okay. 00:14:44.520 --> 00:14:45.520 Thank you. 00:14:45.520 --> 00:14:46.520 Go ahead. 00:14:46.520 --> 00:14:49.520 No, I'll let you go first. 00:14:49.520 --> 00:14:50.520 Another thought. 00:14:50.520 --> 00:14:51.520 Sure. 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. 00:14:57.240 --> 00:14:58.640 Yes. 00:14:58.640 --> 00:14:59.720 Yes. 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, 00:15:05.700 --> 00:15:07.580 the meters are rather close to the street. 00:15:07.580 --> 00:15:09.520 So there's going to be curb work. 00:15:09.520 --> 00:15:13.480 There may be even some street damage that will have to be repaired. 00:15:13.480 --> 00:15:15.680 Who's paying for that? 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 00:15:22.480 --> 00:15:30.960 box replacement, that is part and within the contract funding, and that will be determined 00:15:30.960 --> 00:15:35.800 with a pre-survey before the full deployment. 00:15:35.800 --> 00:15:38.320 What will be pre-determined? 00:15:38.320 --> 00:15:42.680 The locations where that may warrant being done. 00:15:42.680 --> 00:15:43.680 Oh, I see. 00:15:43.680 --> 00:15:44.680 Yes. 00:15:44.680 --> 00:15:45.680 Thank you. 00:15:45.680 --> 00:15:46.680 You're welcome. 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 00:15:54.240 --> 00:16:01.560 Denton did AMI electric meters, we attempted to do water meter AMI system, to implement 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 00:16:05.200 --> 00:16:12.680 was rolling out soon, like 2006 or 2005 or somewhere 20 years ago. 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 00:16:19.120 --> 00:16:21.240 do well in that environment. 00:16:21.240 --> 00:16:27.440 Also water meters are often underwater whenever we get rain or leaks or whatever. 00:16:27.440 --> 00:16:33.680 Have we seen tests or example cities where those problems have been overcome? 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 00:16:40.360 --> 00:16:43.000 meter underwater. 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 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. 00:16:56.400 --> 00:17:02.440 So basically the old metal pipe with cast iron lid, that's... 00:17:02.440 --> 00:17:04.520 It won't transmit through there without an extender. 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 00:17:10.200 --> 00:17:15.240 technology to most of the electric meters. 00:17:15.240 --> 00:17:19.320 Is it not compatible with using our existing backhaul network? 00:17:19.320 --> 00:17:25.120 Because we have AMI electric meters everywhere, and so we have those endpoints and collectors 00:17:25.120 --> 00:17:28.360 and fiber backhaul. 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 00:17:34.400 --> 00:17:37.880 robust enough to support that, right? 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 00:17:42.440 --> 00:17:43.560 department. 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 00:17:48.520 --> 00:17:53.440 you're seeing two different systems being deployed. 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 00:18:01.000 --> 00:18:02.480 just rain in Denton, right? 00:18:02.480 --> 00:18:07.240 It rains in Austin, it rains in Colorado, it rains everywhere else, and they're deploying 00:18:07.240 --> 00:18:09.080 these systems just fine, right? 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 00:18:15.400 --> 00:18:20.800 that doesn't have -- listen, these guys get a whole lot of reread requests, right? 00:18:20.800 --> 00:18:24.560 And we would anticipate, just like we did with the electric side, that those rereads 00:18:24.560 --> 00:18:27.620 will drastically reduce, right? 00:18:27.620 --> 00:18:28.620 Because all this is automated. 00:18:28.620 --> 00:18:29.620 It's another benefit. 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 00:18:34.800 --> 00:18:35.800 and haven't overcome. 00:18:35.800 --> 00:18:40.040 We just need to see -- you know, learn from those lessons and duplicate that here. 00:18:40.040 --> 00:18:46.400 And will the system enable -- like on the electric side, there's an interval reading 00:18:46.400 --> 00:18:48.920 where you can kind of see your power usage kind of per hour. 00:18:48.920 --> 00:18:52.800 Do we have like hourly or daily water use available? 00:18:52.800 --> 00:18:53.800 There will be, yes. 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 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 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 00:19:09.120 --> 00:19:14.720 running or somewhere that you can -- and find potential savings. 00:19:14.720 --> 00:19:20.080 And I guess, unlike an electric meter, these have to have a battery or something. 00:19:20.080 --> 00:19:23.040 So there will be some ongoing maintenance on the -- 00:19:23.040 --> 00:19:24.880 They do have a battery. 00:19:24.880 --> 00:19:33.260 Lifespan is expected and communicated to us that it will last the -- just about 20 years 00:19:33.260 --> 00:19:34.920 that Badger has stated. 00:19:34.920 --> 00:19:35.920 Okay. 00:19:35.920 --> 00:19:38.320 So that's a pretty good life on a battery. 00:19:38.320 --> 00:19:39.320 Okay. 00:19:39.320 --> 00:19:42.480 You'd be replacing the meter again by that point, so. 00:19:42.480 --> 00:19:43.480 Yeah. 00:19:43.480 --> 00:19:44.480 Yeah. 00:19:44.480 --> 00:19:45.480 Likely. 00:19:45.480 --> 00:19:48.880 And I assume there will be cost savings once these are rolled out? 00:19:48.880 --> 00:19:49.880 Yes. 00:19:49.880 --> 00:19:50.880 We are expecting that. 00:19:50.880 --> 00:19:56.920 Do you have any idea how much? 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. 00:20:09.000 --> 00:20:13.760 So I guess basically much of the cost savings would be replacing meter reading staff with 00:20:13.760 --> 00:20:19.840 meter maintenance staff and doing maintenance once every few years as opposed to once a 00:20:19.840 --> 00:20:20.840 month. 00:20:20.840 --> 00:20:24.320 We actually did a study a number of years ago with freezing nickels. 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. 00:20:28.440 --> 00:20:29.440 Okay. 00:20:29.440 --> 00:20:30.440 Thank you. 00:20:30.440 --> 00:20:31.440 Thank you. 00:20:31.440 --> 00:20:32.440 Any further questions? 00:20:32.440 --> 00:20:33.440 Chair, would entertain a motion? 00:20:33.440 --> 00:20:34.440 Move to approve the item. 00:20:34.440 --> 00:20:35.440 We have a motion. 00:20:35.440 --> 00:20:36.440 Second. 00:20:36.440 --> 00:20:37.440 And we have a second. 00:20:37.440 --> 00:20:38.440 All in favor, say aye. 00:20:38.440 --> 00:20:39.440 Aye. 00:20:39.440 --> 00:20:40.440 Aye. 00:20:40.440 --> 00:20:41.440 Any opposed, sign same. 00:20:41.440 --> 00:20:42.440 Motion carries unanimously. 00:20:42.440 --> 00:20:43.440 Thank you. 00:20:43.440 --> 00:20:44.440 Yeah, thank you. 00:20:44.440 --> 00:20:45.440 And we'll move on to the next item. 00:20:45.440 --> 00:21:06.720 Item C. Recommending adoption of an ordinance with xylem view for water utility monitoring 00:21:06.720 --> 00:21:14.800 and analytics project for the water utilities department for a total of $6,496,090 over 00:21:14.800 --> 00:21:17.200 a five-year period. 00:21:17.200 --> 00:21:19.640 Good morning. 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 00:21:23.640 --> 00:21:27.440 water utility monitoring and data analytics project. 00:21:27.440 --> 00:21:32.160 This project represents a major step forward in how we manage our water and wastewater 00:21:32.160 --> 00:21:33.160 infrastructure. 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. 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 00:21:45.180 --> 00:21:49.240 prevent small issues turn into bigger ones. 00:21:49.240 --> 00:21:54.760 With this system, our team gains the visibility and data-driven insights needed to keep services 00:21:54.760 --> 00:21:59.480 safe, reliable, and also fiscally responsible. 00:21:59.480 --> 00:22:05.040 A core component of this project is a wastewater system monitoring. 00:22:05.040 --> 00:22:08.480 First it helps us to identify inflow and infiltration. 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. 00:22:14.960 --> 00:22:19.880 And when that water gets into our wastewater collection system, it reduces capacity of 00:22:19.880 --> 00:22:24.440 our system and also creates overloading at the plants. 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 00:22:30.640 --> 00:22:36.120 automated response to emergency personnel so we can make sure we don't have sanitary 00:22:36.120 --> 00:22:37.660 sewer overflows. 00:22:37.660 --> 00:22:44.160 Thirdly, it highlights our underperforming and our over and pipelines that have over 00:22:44.160 --> 00:22:45.840 capacity issues. 00:22:45.840 --> 00:22:47.720 And that way we could use it for planning. 00:22:47.720 --> 00:22:52.240 I like to say it's a lot like baseball analytics. 00:22:52.240 --> 00:22:56.560 We're going to use this to help our team make data-driven decisions. 00:22:56.560 --> 00:23:04.200 It gives us objective performance data to guide rehabilitation, upsizing, or even replacement. 00:23:04.200 --> 00:23:08.720 We like to look at it as we get to see the health of our system. 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, 00:23:15.360 --> 00:23:16.740 or whatever may happen. 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 00:23:22.520 --> 00:23:28.000 our wastewater collection system looks like, what our water distribution system looks like, 00:23:28.000 --> 00:23:30.280 and with precise sensor locations. 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. 00:23:36.240 --> 00:23:42.080 It has live visualization of current flow in the wastewater collection through sensor 00:23:42.080 --> 00:23:46.120 data, through rain gauges, what the rain's doing. 00:23:46.120 --> 00:23:48.640 So we can know if we do have I and I also. 00:23:48.640 --> 00:23:54.880 Just like Tiffany presented AMI/AMR, this system integrates with AMI and AMR to review 00:23:54.880 --> 00:23:58.480 the data that's coming from the meters. 00:23:58.480 --> 00:24:04.680 So we're able to use that, the electronic information to make better decisions real-time 00:24:04.680 --> 00:24:06.820 to look at those, make sure we're good. 00:24:06.820 --> 00:24:10.280 It supports a rapid response, like I talked about. 00:24:10.280 --> 00:24:15.160 We're going to have prioritization of alarms, which will eventually include just being able 00:24:15.160 --> 00:24:21.600 to send out automated notification to people in the field services of critical events that 00:24:21.600 --> 00:24:24.720 could happen so we could get there on time and early. 00:24:24.720 --> 00:24:31.320 It allows us to monitor for leaks and pressure variances within water distribution. 00:24:31.320 --> 00:24:36.960 It allows us to give those early warnings for main breaks and possible meter leaks, 00:24:36.960 --> 00:24:45.000 which proactively reduces water loss. 00:24:45.000 --> 00:24:47.160 Another component is planning data. 00:24:47.160 --> 00:24:53.920 Beyond just the daily operations, this project will play an important role in long-term planning. 00:24:53.920 --> 00:25:00.820 Real-time flow and pressure data allows us to collaborate and also calibrate a hydraulic 00:25:00.820 --> 00:25:04.240 water model, also our wastewater model. 00:25:04.240 --> 00:25:06.900 It ensures that our models are accurate. 00:25:06.900 --> 00:25:13.400 It really helps us to build that model that reflects the true condition of our systems. 00:25:13.400 --> 00:25:18.000 Previous monitoring reveals bottlenecks and peak flow conditions that inform where upgrades 00:25:18.000 --> 00:25:19.000 are needed. 00:25:19.000 --> 00:25:22.120 Again, it's lots like in sports analytics. 00:25:22.120 --> 00:25:28.520 It helps us to really see our system performance and adjust, not just on assumptions. 00:25:28.520 --> 00:25:29.520 It's real-time. 00:25:29.520 --> 00:25:32.840 It helps us to guide in planning decisions. 00:25:32.840 --> 00:25:36.360 Another key item is post-project monitoring. 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 00:25:43.160 --> 00:25:52.480 them in some ways, we can maximize every area of an improvement. 00:25:52.480 --> 00:25:57.080 With this, the staff recommends a five-year contract with Zion View using the Cooperative 00:25:57.080 --> 00:26:04.960 Purchasing Service Agreement, not to see the amount of $6,496,090. 00:26:04.960 --> 00:26:07.120 I will stand for any questions. 00:26:07.120 --> 00:26:08.120 Greg? 00:26:08.120 --> 00:26:13.200 Yes, I have a question. 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 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 00:26:26.040 --> 00:26:28.160 operations, because that's all coming in. 00:26:28.160 --> 00:26:34.560 Do they have operating valves where they can control that, or put up sluice gates? 00:26:34.560 --> 00:26:36.240 Yes, sir. 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 00:26:41.360 --> 00:26:49.200 storage in rain events to where the system is overloaded with ionized, that we can move 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, 00:26:55.400 --> 00:27:01.800 and we're able to identify with Pecan Creek, with any wastewater plant, there's diurnals 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 00:27:07.080 --> 00:27:08.560 treat it at a different time. 00:27:08.560 --> 00:27:16.280 Okay, so the utility does have some capacity and capability to move, shunt, and redirect 00:27:16.280 --> 00:27:18.760 flows to some extent, where this would be helpful. 00:27:18.760 --> 00:27:19.760 Yes, sir. 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..." 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 00:27:30.140 --> 00:27:36.040 things is to be able to canvass our system and see where ionized present, the inflow 00:27:36.040 --> 00:27:38.280 and infiltration. 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 00:27:43.760 --> 00:27:51.120 see where that ionized is coming in, and then we can proactively begin projects to reduce 00:27:51.120 --> 00:27:58.520 that ionized, which we gain capacity at the plants by reducing them, and often those projects 00:27:58.520 --> 00:28:04.120 are minimal in cost, it's just the cost involved is actually tracking those areas 00:28:04.120 --> 00:28:05.120 down. 00:28:05.120 --> 00:28:06.120 Thank you. 00:28:06.120 --> 00:28:07.120 Yes, sir. 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 00:28:16.680 --> 00:28:21.000 really useful, knowing whether or not the infrastructure is actually overloaded, knowing 00:28:21.000 --> 00:28:27.220 where ionized is occurring, where kind of the leaks into the system will make it much 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. 00:28:34.320 --> 00:28:35.320 Absolutely. 00:28:35.320 --> 00:28:42.320 I don't see any further questions, so would anybody care to make a motion? 00:28:42.320 --> 00:28:43.320 So moved. 00:28:43.320 --> 00:28:44.320 We have a motion. 00:28:44.320 --> 00:28:45.320 Second. 00:28:45.320 --> 00:28:46.320 And a second. 00:28:46.320 --> 00:28:47.800 All in favor, say aye. 00:28:47.800 --> 00:28:48.800 Aye. 00:28:48.800 --> 00:28:49.800 Any opposed? 00:28:49.800 --> 00:28:50.800 No. 00:28:50.800 --> 00:28:51.800 Motion carries unanimously. 00:28:51.800 --> 00:28:57.440 Now, our next item of business is management reports. 00:28:57.440 --> 00:29:02.560 So, Mr. Chair, members of the POB, we have a few items for you. 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. 00:29:09.120 --> 00:29:15.920 The Tree Line USA recognition from Arbor Day Foundation really just recognizes the vegetation 00:29:15.920 --> 00:29:19.040 management that DME does throughout the community. 00:29:19.040 --> 00:29:24.500 There are certain standards that have to be met, certain outreach issues as well that 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 00:29:29.480 --> 00:29:30.480 of. 00:29:30.480 --> 00:29:36.080 We have stickers on our truck saying that we recognize that Tree Line USA utility kind 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 00:29:40.520 --> 00:29:44.800 the community, recognizing the importance of trees, so happy to answer any questions 00:29:44.800 --> 00:29:49.280 if you have any questions on that particular memo. 00:29:49.280 --> 00:29:50.280 Okay. 00:29:50.280 --> 00:29:51.280 Thank you. 00:29:51.280 --> 00:29:52.280 Just want to say good work. 00:29:52.280 --> 00:29:53.280 Thank you. 00:29:53.280 --> 00:29:54.280 Thank you. 00:29:54.280 --> 00:29:55.280 Thank you. 00:29:55.280 --> 00:29:56.280 Appreciate that. 00:29:56.280 --> 00:30:01.960 Lanny Amix in our maintenance operation oversees that area, and they do a really good job. 00:30:01.960 --> 00:30:07.320 And then the next item, you had requested just a comparison update on electric rates. 00:30:07.320 --> 00:30:08.960 We've provided that to you. 00:30:08.960 --> 00:30:14.920 John Lockwood, our analyst, helped put that together, gave you a memo with some comparative 00:30:14.920 --> 00:30:15.920 information. 00:30:15.920 --> 00:30:17.680 Happy to answer any questions for you. 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, 00:30:22.840 --> 00:30:28.320 we're also looking at our ECAT tariff on a quarterly basis with you. 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 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 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 00:30:45.120 --> 00:30:50.560 to go through the budget and we're hearing other utilities are also increasing rates, 00:30:50.560 --> 00:30:54.680 I think we'll continue to show far more competitiveness there. 00:30:54.680 --> 00:30:59.360 Certainly when you look at the IOU world with the retail electric providers, we're very 00:30:59.360 --> 00:31:04.800 competitive in that particular sphere, but happy to answer any questions or happy to 00:31:04.800 --> 00:31:07.400 pull John up here if needed. 00:31:07.400 --> 00:31:09.600 I did have one comment. 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, 00:31:18.480 --> 00:31:24.320 but the commercial evaluation didn't really have any kind of IOU comparison. 00:31:24.320 --> 00:31:31.520 Those aren't generally public, right, and so unless a particular company shares information 00:31:31.520 --> 00:31:33.920 with us, we generally don't know. 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 00:31:42.480 --> 00:31:47.000 course are public, but that only covers the transmission distribution aspect. 00:31:47.000 --> 00:31:55.920 I don't know if it would be possible to compare commercial, just transmission distribution 00:31:55.920 --> 00:31:59.000 related charges, demand charges basically. 00:31:59.000 --> 00:32:00.000 We can certainly look at that. 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. 00:32:08.760 --> 00:32:10.800 Thank you. 00:32:10.800 --> 00:32:13.760 The next item is just future agenda items. 00:32:13.760 --> 00:32:19.320 Again, every meeting I keep saying budget, budget, budget, and so please be aware of 00:32:19.320 --> 00:32:24.120 those dates in June that will be coming to you. 00:32:24.120 --> 00:32:30.360 And then for new business section items, obviously we provided you the rate information. 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. 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 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 00:32:45.560 --> 00:32:48.160 side at the next meeting. 00:32:48.160 --> 00:32:50.760 And we'll hold his feet to the fire on that one. 00:32:50.760 --> 00:32:55.560 But happy to answer any questions, if there's anything else you'd like to add. 00:32:55.560 --> 00:33:00.440 I think we're good, thank you. 00:33:00.440 --> 00:33:09.920 And so now we can conclude our regular meeting and move on to our work session. 00:33:09.920 --> 00:33:18.260 Leave a report, hold a discussion and give staff direction on the city's financial policies. 00:33:18.260 --> 00:33:32.880 Okay, good morning, chair, members of the board, Matt Hamilton, chief financial officer. 00:33:32.880 --> 00:33:39.880 Here this morning to discuss financial policies and in particular the development of a comprehensive 00:33:39.880 --> 00:33:42.560 financial policy. 00:33:42.560 --> 00:33:48.460 So currently the city has a number of standalone or independent financial policies within the 00:33:48.460 --> 00:33:50.280 finance department. 00:33:50.280 --> 00:33:54.840 And what we're looking to do is to establish a comprehensive financial policy that would 00:33:54.840 --> 00:33:58.640 outline strategies in some specific areas. 00:33:58.640 --> 00:34:05.160 So first it would establish a long-term financial plan and provide the guidelines around that. 00:34:05.160 --> 00:34:12.720 It would document any reserve fund targets, capital and reinvestment targets, cost of 00:34:12.720 --> 00:34:18.560 service based rates, linking specific revenues to expenditures. 00:34:18.560 --> 00:34:24.360 It would describe in detail how we would implement incremental rate adjustments to avoid any 00:34:24.360 --> 00:34:30.020 spikes and also language around competitive rate benchmarking. 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 00:34:36.120 --> 00:34:42.680 and financial standards, ensure alignment with the Government Finance Officers Association, 00:34:42.680 --> 00:34:49.880 GFOA, American Water Works Association, AWWA, and the American Public Power Association, 00:34:49.880 --> 00:34:52.520 APPA, best practices. 00:34:52.520 --> 00:34:58.200 It would also enhance the financial position of the city and support our high credit ratings 00:34:58.200 --> 00:35:03.120 and also, and critically, provide a centralized framework for financial policies within the 00:35:03.120 --> 00:35:06.600 city. 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 00:35:11.520 --> 00:35:14.720 forecast up to 10 years. 00:35:14.720 --> 00:35:19.440 Currently five-year financial forecasts are developed with really just a focus on that 00:35:19.440 --> 00:35:21.920 next fiscal year. 00:35:21.920 --> 00:35:28.440 GFOA recommends a financial plan greater than five years for all governments that utilize 00:35:28.440 --> 00:35:34.040 either debt financing and/or utility rate setting, both of which the City of Denton 00:35:34.040 --> 00:35:36.580 does. 00:35:36.580 --> 00:35:42.440 So within this, it would define specific forecast assumptions supported by available data including 00:35:42.440 --> 00:35:47.960 population and customer growth, volume and demand growth, inflation, service levels, 00:35:47.960 --> 00:35:56.200 staffing levels, rate changes, capital projects, reserve balances, and although we do many 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, 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. 00:36:07.480 --> 00:36:12.480 So the goal of this would just be to identify structural imbalances early and develop strategies 00:36:12.480 --> 00:36:17.460 to address them proactively. 00:36:17.460 --> 00:36:21.000 Looking at the reserve fund policy, the city does have a reserve fund policy. 00:36:21.000 --> 00:36:22.000 It's 402.05. 00:36:22.000 --> 00:36:27.600 GFOA recommends that governments establish a formal policy on the level of unrestricted 00:36:27.600 --> 00:36:33.880 fund balance that should be maintained in the general fund for gap and budgetary purposes. 00:36:33.880 --> 00:36:38.800 The reserve should provide financial stability and protect against revenue volatility to 00:36:38.800 --> 00:36:44.280 ensure continuity of services during economic downturns or emergencies. 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 00:36:49.600 --> 00:36:55.120 reserve fund levels for all the major funds, the general fund, electric, water, wastewater, 00:36:55.120 --> 00:37:01.000 and solid waste, to ensure that the operating reserves and the policy is sufficient to meet 00:37:01.000 --> 00:37:04.820 operating needs and industry standards. 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 00:37:09.960 --> 00:37:16.360 reserves and operating reserves, so working capital being that it provides short-term 00:37:16.360 --> 00:37:22.080 support for fluctuations in day-to-day operations, and the operating reserve to provide long-term 00:37:22.080 --> 00:37:25.960 support for rate stabilization and emergencies. 00:37:25.960 --> 00:37:31.160 Additionally, we would establish fund targets for the internal service funds, as well as 00:37:31.160 --> 00:37:38.760 the airport, which currently do not have a set target fund balance. 00:37:38.760 --> 00:37:43.180 Renewal and reinvestment policies, GFOA recommends a written policy addressing capital asset 00:37:43.180 --> 00:37:45.760 reserves for renewal and replacement. 00:37:45.760 --> 00:37:53.240 The city does not currently have an adopted policy, however, we do do these things on 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 00:37:57.240 --> 00:38:02.680 not we should debt fund or cash fund projects to the extent that we can. 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 00:38:07.760 --> 00:38:13.700 asset and life cycle, so cash funding preferred for existing recurring replacements and short-lived 00:38:13.700 --> 00:38:21.320 assets and debt funding reserved really just for new capacity or long-lived assets. 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 00:38:25.660 --> 00:38:30.720 asset replacement that's aligned with the annual depreciation of the asset, and this 00:38:30.720 --> 00:38:36.720 would ensure a reserve is available to replace assets at the end of their useful life. 00:38:36.720 --> 00:38:43.920 Proceeds from the sale of assets would be earmarked for the replacement of similar assets, 00:38:43.920 --> 00:38:52.720 and we would adjust this by an inflationary measure to assume a true cost of replacement 00:38:52.720 --> 00:38:56.360 will exceed the original cost of the asset. 00:38:56.360 --> 00:39:00.920 Third, we would establish an integration with the long-term financial planning strategy 00:39:00.920 --> 00:39:08.600 to track our annual capital spending and our depreciation expense to see if we're keeping 00:39:08.600 --> 00:39:15.000 up with replacing assets, and then periodically evaluating our deferred maintenance costs 00:39:15.000 --> 00:39:24.680 versus proactive reinvestment just to look at the cost benefit associated with that. 00:39:24.680 --> 00:39:29.240 So taking a look at our revenue and expense policies, GFOA recommends adopting strong 00:39:29.240 --> 00:39:32.440 policies to maintain a structurally balanced budget. 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 00:39:37.920 --> 00:39:40.560 to add some more detailed language. 00:39:40.560 --> 00:39:45.080 It would outline and document specific links between revenues and expenses and financial 00:39:45.080 --> 00:39:51.080 forecasting in particular, so really tying the revenue with the specific expense in our 00:39:51.080 --> 00:39:57.900 forecast so that it's more transparent how the revenue and expenses are working together. 00:39:57.900 --> 00:40:04.000 So just as some examples, impact fee revenue being used to offset the debt service for 00:40:04.000 --> 00:40:12.380 impact fee eligible projects, vehicle replacement fund used to replace fleet vehicles, the ECA 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, 00:40:19.480 --> 00:40:26.600 but making it visible in our financial forecast and our budget presentations and things moving 00:40:26.600 --> 00:40:28.880 forward. 00:40:28.880 --> 00:40:33.240 Identifying which revenues are restricted, committed, or designated for specific expenses, 00:40:33.240 --> 00:40:38.680 how surplus and deficits will be managed, how compliance will be monitored and reported, 00:40:38.680 --> 00:40:45.320 including language on excess funds, so how we use the surplus, just as an example, the 00:40:45.320 --> 00:40:51.680 ECA collections and how they'll be applied, so in that example for rate stabilization, 00:40:51.680 --> 00:40:56.800 and again to establish an integration with the long-term financial planning strategy 00:40:56.800 --> 00:41:06.120 to track alignment with state law, bond covenants, utility standards, and GASB accounting standards. 00:41:06.120 --> 00:41:08.080 So incremental rate adjustments. 00:41:08.080 --> 00:41:12.780 Rate adjustments should be based on multi-year financial forecasts, and this is really kind 00:41:12.780 --> 00:41:17.840 of going back to that longer-term financial forecast that would incorporate both operating 00:41:17.840 --> 00:41:24.520 and capital needs, reserve targets, debt service obligations, and inflation and growth assumptions. 00:41:24.520 --> 00:41:30.880 This topic in particular is very important as it relates to the rating agencies and ensuring 00:41:30.880 --> 00:41:35.720 that we maintain high credit ratings. 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 00:41:41.040 --> 00:41:48.040 to long-term planning to provide predictable annual increases rather than infrequent large 00:41:48.040 --> 00:41:53.440 spikes, to review the fee adjustments annually to ensure alignment with actual cost of service, 00:41:53.440 --> 00:41:59.120 which we do do now, and then target adjustments that maintain compliance with cost of service 00:41:59.120 --> 00:42:07.200 principles, debt coverage ratios, and reserve policies. 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 00:42:12.920 --> 00:42:15.520 utilities based on service type. 00:42:15.520 --> 00:42:20.800 So whether it's electric, water, wastewater, or solid waste, the size, which would include 00:42:20.800 --> 00:42:27.840 the customer base, how much infrastructure they have, and also the size of their staffing, 00:42:27.840 --> 00:42:34.320 whether it's a regional or a state provider, and then also the ownership type, whether 00:42:34.320 --> 00:42:38.740 it's a municipal or investor-owned utility. 00:42:38.740 --> 00:42:45.460 And really, the intent of this is just to provide consistency each year as we forecast 00:42:45.460 --> 00:42:53.280 and have a consistent pool of entities that we benchmark ourselves with. 00:42:53.280 --> 00:42:57.680 We would identify and document comparable metrics based on average residential, commercial, 00:42:57.680 --> 00:43:05.200 and industrial rates, total bill comparisons for typical usage levels, and then rate structure 00:43:05.200 --> 00:43:11.020 differences, whether they're fixed or variable, and provide affordability indicators such 00:43:11.020 --> 00:43:14.000 as median household income. 00:43:14.000 --> 00:43:18.600 So we would utilize a number of different data sources, the industry associations that 00:43:18.600 --> 00:43:24.680 I had previously mentioned, including AWWA and APPA, state regulatory filings, consultant 00:43:24.680 --> 00:43:30.740 studies, and other publicly available rate schedules. 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 00:43:35.560 --> 00:43:36.560 phases. 00:43:36.560 --> 00:43:40.280 So the initial phase, which we anticipate would take three months, would develop the 00:43:40.280 --> 00:43:47.280 framework and we would receive direction from PUB and the council to establish a comprehensive 00:43:47.280 --> 00:43:48.800 financial policy. 00:43:48.800 --> 00:43:54.080 In this, we would finalize the definitions for reserves, capital replacement, revenue 00:43:54.080 --> 00:43:58.720 and expense policies and benchmarking, and begin the development of the long-term 10-year 00:43:58.720 --> 00:44:00.400 forecast. 00:44:00.400 --> 00:44:07.540 Then in phase two, we would build and validate those forecasts through the budget process, 00:44:07.540 --> 00:44:12.120 develop the reserve targets for all the major funds, develop depreciation-based reinvestment 00:44:12.120 --> 00:44:21.320 strategies, document the revenue and expense linkages and restrictions, and also compile 00:44:21.320 --> 00:44:25.880 the benchmarking data sets. 00:44:25.880 --> 00:44:34.360 We would then compile the various policy -- new policies and policy changes into the comprehensive 00:44:34.360 --> 00:44:41.040 financial policy and present the drafts to PUB and council, incorporating any feedback 00:44:41.040 --> 00:44:43.120 that you or council would have. 00:44:43.120 --> 00:44:48.880 We would integrate the adopted policies into the 27-28 budget development and establish 00:44:48.880 --> 00:44:54.080 compliance and monitoring dashboards moving forward. 00:44:54.080 --> 00:45:02.320 Then finally, ongoing monitoring would include the implementation of incremental rate adjustment 00:45:02.320 --> 00:45:08.600 strategy, performing our annual reserve adequacy review, evaluating reinvestment ratios and 00:45:08.600 --> 00:45:14.280 deferred maintenance, and conducting annual benchmarking as part of the budget process. 00:45:14.280 --> 00:45:19.880 So updates on the progress of this financial policy initiative will be provided to PUB 00:45:19.880 --> 00:45:26.800 and council at key development milestones for feedback. 00:45:26.800 --> 00:45:32.080 So next steps, what we're asking for today is a recommendation on the establishment of 00:45:32.080 --> 00:45:35.440 a comprehensive financial policy for the city of Denton. 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 00:45:40.360 --> 00:45:46.380 establishment of the comprehensive financial policy. 00:45:46.380 --> 00:45:52.760 And with that, I'll stand for any questions. 00:45:52.760 --> 00:45:56.380 >> Just curious, wonderful presentation. 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, 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, 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 00:46:11.560 --> 00:46:12.560 already doing? 00:46:12.560 --> 00:46:20.220 >> Yeah, I think, you know, I think we're probably doing 80% of all these items. 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 00:46:26.000 --> 00:46:27.000 practices. 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, 00:46:34.820 --> 00:46:39.120 you know, details it, I guess, in the policy. 00:46:39.120 --> 00:46:42.260 I mean, the policies are very black and white. 00:46:42.260 --> 00:46:47.200 They just explain, you know, here's the limit of what you can do. 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, 00:46:53.000 --> 00:46:54.840 that could be revenue funded. 00:46:54.840 --> 00:46:58.380 What it doesn't do is it doesn't give you kind of the why. 00:46:58.380 --> 00:47:06.240 You know, why should we revenue projects, or why should we, you know, use debt versus 00:47:06.240 --> 00:47:11.120 something else, or why should we, you know, reinvest in, you know, in our capital assets 00:47:11.120 --> 00:47:12.680 based on a depreciation schedule. 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 00:47:19.720 --> 00:47:24.320 in, you know, enhancing the city's financial policies. 00:47:24.320 --> 00:47:28.820 Additionally, at the beginning, I kind of mentioned we have a number of standalone policies. 00:47:28.820 --> 00:47:29.820 We have a debt policy. 00:47:29.820 --> 00:47:31.840 We have an investment policy. 00:47:31.840 --> 00:47:37.480 We have various utility policies, but we don't have an overarching policy that really kind 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 00:47:44.400 --> 00:47:45.400 forecasting. 00:47:45.400 --> 00:47:51.060 So it's all of this is really for the benefit of enhancing our financial planning. 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 00:47:56.360 --> 00:47:59.220 come in and pick up the ball and keep running. 00:47:59.220 --> 00:48:00.220 Thank you. 00:48:00.220 --> 00:48:03.720 Nice framework that they have to work from. 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 00:48:08.940 --> 00:48:11.640 start doing the 10-year planning this year? 00:48:11.640 --> 00:48:14.600 That's correct, yes. 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 00:48:20.120 --> 00:48:22.520 process, we certainly will. 00:48:22.520 --> 00:48:27.960 Some of this in the documentation of any new policies and certainly the comprehensive policy, 00:48:27.960 --> 00:48:33.480 we anticipate that it will take longer than the budget process in the current year. 00:48:33.480 --> 00:48:41.360 So we would target fiscal year '27-'28 for really that full implementation. 00:48:41.360 --> 00:48:46.360 So are you going to -- will this replace the debt -- the individual policies? 00:48:46.360 --> 00:48:51.000 No, it's just going to be something over the top. 00:48:51.000 --> 00:48:53.680 That's correct, and it will tie them together, yes. 00:48:53.680 --> 00:48:56.680 That's our intention. 00:48:56.680 --> 00:48:57.680 I have a question. 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 00:49:05.600 --> 00:49:07.600 in capital funding. 00:49:07.600 --> 00:49:08.880 Yes. 00:49:08.880 --> 00:49:13.360 Developed appreciation-based reinvestment in capital funding. 00:49:13.360 --> 00:49:20.000 How are you going to pull numbers to help generate that, because my concern about it 00:49:20.000 --> 00:49:25.660 is once that becomes part of this framework, then those numbers, if you will, are kind 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 00:49:30.880 --> 00:49:31.880 going. 00:49:31.880 --> 00:49:39.880 So how do you intend to go about actually developing those particular investment and 00:49:39.880 --> 00:49:42.160 reinvestment in capital funding items? 00:49:42.160 --> 00:49:48.080 Yeah, so currently we have the depreciation schedules of the assets in the -- you know, 00:49:48.080 --> 00:49:49.080 within the city. 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 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 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, 00:50:10.440 --> 00:50:15.240 cash-fund based on that depreciation schedule of every asset within the city. 00:50:15.240 --> 00:50:16.240 That this -- 00:50:16.240 --> 00:50:20.520 Well, we're adding very large new assets to our water and wastewater. 00:50:20.520 --> 00:50:21.520 And that's very true as well. 00:50:21.520 --> 00:50:23.960 You show these as a -- for instance. 00:50:23.960 --> 00:50:24.960 Yes. 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 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. 00:50:39.600 --> 00:50:46.960 We had not either planned for it and/or haven't saved the funding for it. 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 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. 00:51:00.440 --> 00:51:06.140 So that really ties back into some of the rate stabilization goals. 00:51:06.140 --> 00:51:11.460 But to answer your question, this would begin with the existing data that we have within 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 00:51:18.960 --> 00:51:19.960 it. 00:51:19.960 --> 00:51:25.000 But you'll be continuing to revisit this each year in your budgeting or planning process? 00:51:25.000 --> 00:51:26.000 Yes. 00:51:26.000 --> 00:51:27.000 Okay. 00:51:27.000 --> 00:51:28.000 Yep. 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 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. 00:51:38.440 --> 00:51:39.440 So just a concern. 00:51:39.440 --> 00:51:40.440 Thank you. 00:51:40.440 --> 00:51:41.440 Yeah. 00:51:41.440 --> 00:51:44.520 Well, I'm excited to see it. 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 00:51:50.120 --> 00:51:52.840 of policies that kind of puts everything under the same umbrella. 00:51:52.840 --> 00:51:57.480 And like you said, 80% of this or more is already being done. 00:51:57.480 --> 00:52:05.200 And I do feel like the depreciation-based reinvestment and some of that when we revenue 00:52:05.200 --> 00:52:13.000 fund versus capital fund, I feel like I have the least understanding of that. 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 00:52:20.360 --> 00:52:28.000 over time shift the, you know, the spending to more align with that. 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 00:52:33.440 --> 00:52:42.840 five-year plans, all this sounds like a really, really great direction. 00:52:42.840 --> 00:52:43.840 So we like it? 00:52:43.840 --> 00:52:44.840 Yeah. 00:52:44.840 --> 00:52:47.880 So with that, what we would ask is, is it just a recommendation? 00:52:47.880 --> 00:52:52.200 If you -- Not in work sessions. 00:52:52.200 --> 00:52:56.280 Yeah, I think he's just looking for just direction from the board. 00:52:56.280 --> 00:53:01.160 Yes, I -- I think it looks good and we proceed with what you've got here. 00:53:01.160 --> 00:53:04.800 Yeah, yeah, I think everybody is supportive of the direction you've got, so. 00:53:04.800 --> 00:53:05.800 Good luck. 00:53:05.800 --> 00:53:08.800 Thank you. 00:53:08.800 --> 00:53:12.400 All right. 00:53:12.400 --> 00:53:17.680 With that, we have no further business and we are adjourned. 00:53:17.680 --> 00:53:19.100 - Thank you for coming.