November 2020 Regular Board Meeting Minutes

Date

Time

Minutes

Regular Board Meeting – November 18, 2020

Minutes

Board approved at its January 13, 2021, Regular Board Meeting.

The virtual regular session of the Springfield Utility Board was called to order by Chair DeWenter at 6:02 p.m., and led everyone in the Pledge of Allegiance.

Attendance

Board: John DeWenter, Chair; Mike Eyster, Vice-Chair; David Willis; Pat Riggs-Henson; Robert Scherer.

Staff: Jeff Nelson; Bob Fondren; Sanjeev King; Greg Miller; Janis Brew; Tracy Richardson; Cindy Flaherty; Joe Leahy and Matt Dahlstrom, Attorneys for the Board.

Others: Mark Molina, Molina Leadership; Stephen Parac, XS Media; Jennifer Joly, OMEU.

Business from the Audience

None.

Consent Agenda – Action Items

Minutes:

  • September 9, 2020, Special Work Session

Accounts Paid – October 2020

Award/Approval of Bids/Proposals:

  • ESC BID No. 15.20 – Glenwood Substation Earthwork & Foundation Work. Electric Division staff requested to remove this bid from tonight’s Consent Agenda.
  • WSC BID No. 2020-19 – South Hills 4th Level Reservoir. Water Division staff recommended award of bid to Pacific Excavation Inc. for a total of $1,929,800.00 (Exhibit A).

* Pat Riggs-Henson motioned, and Mike Eyster seconded, to approve the Consent Agenda, as modified with item 3.A ESC Bid No. 15-20 removed from the Consent Agenda. This motion carried unanimously.

Business from the Board

Presentation on SUB’s Proposed 2021 Budget

Jeff Nelson referred to his overheads (Exhibit B) and explained that this presentation is similar to the one he presented last year, and the Board may ask any additional questions it may have.

Mr. Nelson shared a brief summary of SUB’s Budget process and dates of significant events for the Budget Committee and public engagement. The Board is holding a public hearing at tonight’s meeting on the proposed 2021 water rate increase and will hold a second public hearing in December.

He shared that there is a 5 percent increase in water rates in February 2021 (effective for service after January 1, 2021) and a 2 percent increase in electric rates in May 2021 proposed for the 2021 Budget. He also shared information to clarify what the targets are, associated with the Board’s methodology approved for minimum reserve targets.

Mr. Nelson reviewed the 2020 Year Plan Assumed Electric Rate Increases done in 2019, and that through the conversation with the Budget Committee, the Board direction at that time was to assume a 1.25 percent increase. He then shared information on the Updated Electric Rate Increases in the 2021 Budget, showing a 2 percent increase in electric rates, reflecting the impacts of the pandemic, as well as updated information from Bonneville on projected rate increases.

Mr. Nelson shared statistical charts on Ending Working Capital and Long Term Investments showing the comparison between a 1.25 percent increase and a 2 percent increase for the Electric Utility. Essentially, these are assets that SUB would have available for SUB’s use within a one-year period and for future years through 2029. He also shared information on the Water Utility and the 10 Year Plan in Assumed Water Rate Increases, and briefly discussed the impacts of the pandemic on the Water Utility.

At this time, SUB is not proposing an increase in Dark Fiber rates for 2021.

Vice-Chair Eyster shared concern of the current proposed Dark Fiber rates, which shows a drastic change every year, but instead to consider a more smooth transition of rate increases over time.

Robert Scherer shared that there may be further need to increase funding for Project Share.

Jeff Nelson explained that if it is something that the Board conceptually supports, additional funding may be added in the Budget, but not necessarily be required to spend that money. He noted that the proposed 2021 Budget mirrors what the Board opted to do this year, by reducing its travel budget $20,000 and putting that $20,000 to the Project Share funds.

First Public Hearing on SUB’s Proposed 2021 Utility Budget

Chair DeWenter opened the public hearing at 6:17 p.m. and asked if anyone would like to make public comment regarding the proposed 2021 budget.

As there were no public comments, Chair DeWenter closed the public hearing at 6:18 p.m.

Presentation on Proposed Water Rate Increase

General Manager Nelson shared that the process is the same as for the proposed 2021 Utility Budget. No decision is planned during tonight’s meeting, but the Board is asked to consider adoption of a rate change at the December 9 regular Board meeting. Referring to his overheads (Exhibit C), he reviewed the Board’s minimum reserve target (3 months of operating expenses), Budget Committee feedback (staff is recommending a 5 percent water rate increase in 2021, as discussed in his Budget presentation earlier.

Mr. Nelson shared charts detailing a 50/50 percent scenario and a 100 percent scenario for proposed Water Use Rates and Water Base Charge Rates – based on their water meter size, as well as Other Water Rates – such as upper level services.

He shared graphs detailing Rate Changes by Year for each Customer Class, SUB’s Total Bill by Year for the Average Residential Customer, and SUB’s Monthly Electric and Water Bill compared to other Local and Regional Cities.

SUB staff would like Board direction on potential changes prior to the second public hearing on December 9.

Public Hearing on Proposed Water Rate Increase

Chair DeWenter opened the public hearing at 6:30 p.m. and asked if anyone would like to make public comment regarding the proposed water rate increase for 2021.

As there were no public comments, Chair DeWenter closed the public hearing at 6:31 p.m.

Potential Board Action Following Executive Session

None.

Business From the General Manager

Update on XS Media Redwood Net Neighborhood

Mr. Nelson briefly reviewed his memo provided to the Board on Net Neighborhood Cash Flow (Exhibit D) because of some questions about cash flow and the assumptions, at this point, in terms of Net Neighborhood cost recovery under the current mechanism. He noted that any net neighborhood is subject to the Board also accepting the parameters of the rate of return on this type of infrastructure investment.

The Board shared discussion on the pros and cons of fiber infrastructure.

Jeff Nelson then shared his presentation on Redwood Net Neighborhood Application (Exhibit E). The Redwood neighborhood would be north of Jasper Road, between South 32nd Street and Filbert Lane. He reviewed the project timeline, project budget, items that would be included in Exhibits A, B, and C of the contract – all detailed in his presentation. It is recommended that the Board authorize the General Manager to move forward to execute an agreement for Redwood with XS Media in an amount, not to exceed $600,000.

The Board then made the following motion.

Motion:

* Mike Eyster motioned, and David Willis seconded, to authorize the General Manager to execute an Agreement for the Redwood Net Neighborhood with XS Media in an amount not to exceed $600,000, as presented, and Exhibits and Agreement may change, but are subject to review by SUB legal counsel prior to execution.

Motion Tabled:

Following discussion of Board concerns as related to payback timelines, there was no objection from the Board to briefly table the motion, and then reconsider the motion following comment from Stephen Parac with XS Media.

Discussion

Stephen Parac thanked the Board for allowing him time to add a couple points of clarity with regard to net neighborhoods. Mr. Parac explained that operational costs are born by the provider, not by SUB. It is written into the Agreement that the providers, whoever submits Net Neighborhood Applications are responsible for all of the operational costs, and that includes locates, repairs, etc. Also, with respect to the Ambleside Net Neighborhood, XS Media is currently leasing five miles of SUB Dark Fiber, on the main backbone to reach the Ambleside neighborhood. Mr. Parac noted that for the Redwood Net Neighborhood, XS Media would be leasing eight miles of SUB Dark Fiber, on main backbone to reach the Redwood neighborhood. This particular project was selected in part because of two particular circumstances. One, that there is already significant amount of conduit already in the ground, because SUB has already made the investment over a decade ago to put conduit infrastructure in the ground for fiber, and it has been sitting vacant. Although there are gaps between the conduits, XS Media’s proposal is to make those connections, as well as add additional conduit from the sidewalk to the home. Once all the connections are made, they would pull fiber in, put in all the necessary cabinets, and those types of things. That infrastructure is owned entirely by SUB, and XS Media would essentially be a contractor who installs SUB owned infrastructure. Once completed and constructed, then XS Media would lease the infrastructure from SUB and provide services. Initially, several years ago, when the net neighborhood concept came up, the idea was to provide affordable access to Springfield residents and high quality access and bridge the digital divide.

Mr. Parac noted that the Ambleside neighborhood had a large percentage of conduit in the ground, and with the Redwood neighborhood, they wanted to take a different approach and align more closely with SUB’s priorities and connect to homes that were under the median value, as well as under the median income. He added that they have put together budget forecasts and those are based on structure that is in place for Ambleside. To be completely honest, he said that if they were to go to a 10-year payback, their take-rate would have to be nearly 50 percent, which in a competitive environment with Comcast, Century Link, and other internet service providers, it’s probably not possible.

In response to the Board’s concern if fiber is going to be relevant in ten years, he said the answer is; the world is powered by fiber. There is now a lot of research saying fiber lasts 25-50 years. It is a future proof technology and that is why there is such a movement to do it. It is the fastest technology available because it is moving at the speed of light.

Vote on Motion:

* Following brief discussion and without objection, the Board reconsidered the motion and took a vote by a show of hands to approve the motion on the floor. This motion carried unanimously.

LE-8 Fiber Lateral Extension Request

Mr. Nelson shared a brief update on the Fiber Lateral Extension product (LE-8), which is the last mile extension. This is a product that the Board approved, which allows for an applicant to demonstrate to either the General Manager or to the Board, depending on how much is requested for the service, and to have a payback period calculated over eight years with a minimum contract for a lateral extension to be used for three years. This spreads the cost over time for the lateral extension for the last mile.

Mr. Nelson reviewed the financial details and payback timelines, both under the default path, and under the LE-8 product.

The request is for $102,000 of an estimated cost for a lateral extension. Under the default path, the lateral cost is born 100 percent up front paid to SUB. Under LE-8 that would be spread over eight years, again with an interest rate imbedded in that cost recovery mechanism. The purpose of the request for the LE-8 is for a company who plans to move a data center with approximately 200+ employees from Eugene to Springfield. This would require significant bandwidth beyond what is commonly available. This company’s headquarters is currently using EWEB’s fiber, but they believe in the value of publicly owned fiber and are interested in using SUB’s public fiber network in the future.

The General Manager is looking for direction from the Board if it wishes to have additional information and potentially take action in December, or if it feels it has enough information to consider this request at this time.

Following brief discussion, the Board made the following motion.

* Mike Eyster motioned, and David Willis seconded, to authorize the General Manager to move forward with an Agreement with the requestor for a total amount of $102,000 for an estimated cost for a lateral extension under LE-8, as presented. Vote taken by a show of hands. This motion carried unanimously.

Update on Performance Appraisals

Chair DeWenter noted that prior to tonight’s meeting, the Board reviewed Janis Brew’s memo on Status of Performance Appraisals – Revised November 16, 2020 (Exhibit F). The Board had no further questions or comments on the information received in the memo.

Telecommunications Update

No further update.

TEAM Springfield Update

None at this time.

Business from the Board

Review Consolidated Set of Board Policies and Adopt Revised Policy Chapter 1 - Board

Chair DeWenter shared that the Board has reviewed and made revisions to update SUB Board Policies related to Board members, specifically, Chapter 1 – Board.

Following discussion, the Board made the following motion.

* Mike Eyster motioned, and David Willis seconded, to adopt Ordinance 0-20-1 (General), Repealing Existing Chapter 1 – Board of the Springfield Utility Board Policies and Adopting a Revised Chapter 1 – Board of the Springfield Utility Board Policies, as presented. This motion carried unanimously.

Review Proposed Revision to Board Policies: Utility Policy Structure and Charter Authority

Chair DeWenter explained that the Board had previously approved the policies, Utility Policy Structure and Charter Authority (Exhibit H), in concept only, but had not given final approval. Legal counsel advised next steps to be for legal counsel time for review to offer recommendation on these policies, prior to Board action.

Following brief discussion, the Board consensus was to defer action to allow further policy review by legal counsel.

Review of Board Goals for 2021

Chair DeWenter stated that the intent is to take action on these goals at the December meeting. Based on comments from the last Board meeting, he reviewed the changes made to the Draft 2021 Board Goals (Exhibit I).

Chair DeWenter reviewed two proposals that the Board discussed at the last retreat. 1) Whether individual Board members want to pick particular subjects to focus on. 2) If Board members want to pick particular goals to focus on.

Diversion, Equity and Inclusion Statement and Strategies

Chair DeWenter noted that the Board reviewed the Diversion, Equity and Inclusion Statement and Strategies (Exhibit J) and had the opportunity to suggest revisions to wording, based on input from the Staff DEI Advisory Committee. Legal counsel also had the opportunity to review the document to offer guidance and make any necessary revisions.

Following brief discussion, Chair DeWenter noted he would entertain a motion to adopt the Diversion, Equity and Inclusion Statement and Strategies.

Motion:

* Pat Riggs-Henson motioned, and Mike Eyster seconded, to adopt the Diversion, Equity and Inclusion Statement and Strategies, as presented. Discussion of Motion The Board discussed concerns of the wording on page 1, line 4 of item 1, [different gender identities]; the Board recommended to revise wording to [any gender identity].

Motion to Table:

Following further discussion Mike Eyster moved to table the motion until the Board’s next meeting in December.

Vote on Motion to Table:

* Without objection, the Board took a vote by a show of hands to approve to table the motion on the floor until the December Board meeting. This motion carried unanimously.

 Board Member Updates

Chair DeWenter asked for Board member updates: Chair DeWenter congratulated Greg Miller and Jeff Nelson on the Water Division being recognized by the American Water Works Association as Best Tasting Water, for the second year in a row.

Chair DeWenter shared that the Board will hold nominations for Chair and Vice Chair for 2021.

Chair DeWenter thanked Sanjeev King for his memo, Response to Board Question about Hybrid/EV Considerations for Vehicle Purchases (Exhibit K).

Mike Eyster shared that the Springfield Chamber of Commerce Board appointed SUB General Manager Jeff Nelson to the Springfield Chamber Board, for the second time.

Mike Eyster attended the Public Power Forward Summit conference, and at the conference, Raintree Electric reported that they have four hybrid/EV bucket trucks.

Robert Scherer reported that on November 5th he attended the virtual Public Power Council Annual Members Meeting. He said many of those members are doing fiber and have a lot of fiber in their communities, and even expanding their fiber. The interim BPA Administrator mentioned the 1 percent power rate increase and the 8-10 percent transmission rate increase. He wondered how much of the funds SUB pays BPA is for power and how much is for transmission.

Jeff Nelson responded that SUB’s current contract is through 2027, and can provide an accurate breakdown to the Board, but he believes on an annual basis, that transmission represents about 20 percent of our total Bonneville bill.

Boardmember Scherer also shared that he has attended some of the Springfield City Council meetings, and they discussed a proposal to extend sewer and storm water into areas for new development. The City plans to have developers pre-fund some of the cost. He expressed concern that this may effect SUB’s capital down the road in order to provide power and water services to those areas.

Jeff Nelson responded to Scherer’s concern, and explained that he spoke with the City about the pre-funded sewer infrastructure, and noted that some of the areas the City is focused on are areas served by EPUD. He said SUB will have further discussion regarding this, and SUB may need to have more coordinated conversation with the City.

Future Board Agendas

None.

Adjournment

The meeting was adjourned by consensus at 8:06 p.m.

Mike Eyster, Board Chair

Jeff Nelson, Board Secretary