Finance Committee Meeting Minutes Wednesday, September 18, 2019
For your consideration, please read the minutes from the Finance Committee Meeting held on Wednesday, September 18, 2019 at 1:00 p.m. in the Commission Meeting Room.
Finance Committee Minutes 9-18-19 with Attachments
To read the minutes, please open or download the pdf from the link above, or you may see more below.
Brunswick-Glynn County Joint Water & Sewer Commission
1703 Gloucester Street, Brunswick, GA 31520
Commission Meeting Room
Wednesday, September 18, 2019 at 1:00 PM
FINANCE COMMITTEE MINUTES
MEMBERS PRESENT:
Steve Copeland, Committee Chairman
Tripp Stephens, Commissioner
Donald Elliott, Commissioner
Andrew Burroughs, Interim Executive Director
ALSO PRESENT:
Ben Turnipseed, Commission Chairman
John Donaghy, Chief Financial Officer
LaDonnah Roberts, Senior Financial Analyst
Janice Meridith, Executive Commission Admin.
MEDIA PRESENT:
Taylor Cooper, The Brunswick News
Pamela Permar-Shierling, The Islander
Chairman Copeland called the meeting to order at 1:00 PM.
PUBLIC COMMENT PERIOD
There being no citizens that wished to address the committee, Committee Chairman Copeland closed the Public Comment Period.
PRESENTATION
Jeff Jones – Edward Jones Financial/Investment Advisor
Mr. Jeff Jones introduced himself as a Financial Advisor for 18 years with at Edward Jones. He is a regional leader for the firm with an office nearby in downtown Brunswick, and headquarters in St. Louis. For a high level presentation he came to share with the Finance Committee the process used at Edward Jones for financial advisement. Mr. Jones began by stating that he adheres to a firm implemented five-step process in money management that includes establishing goals and understanding what is most important to the client in investments. He provided that the five-step process includes a risk analysis of the funds the Commission would be looking at investing and the necessary time horizons. Edward Jones has the capacity to work with governmental agencies and manage money for different types of foundations and endowments. Mr. Jones stated that as a first step the firm would need to know the limitations JWSC has on investments to ensure that their firm can provide assistance to JWSC within the parameters needed for money management. Mr. Jones advised that Edward Jones is a Fortune 400 firm with 18,000 financial advisors around the U.S. and Canada, and is a full service brokerage. He also advised that Edward Jones would need a more formal RFP to determine how to best offer the services JWSC requires for investments. Mr. Jones further described how the firm manages investments and provided discussions in responding to questions and comments from the Committee.
APPROVAL
- Minutes from August 21, 2019 Finance Committee Meeting
Commissioner Elliott made a motion seconded by Commissioner Stephens to approve the minutes from the August 21, 2019 Finance Committee Meeting. Motion carried 3-0-0.
- Demere Tower Lease Termination Agreement – A. Burroughs
Andrew Burroughs presented that currently JWSC has a management agreement with Suez which is a telecommunications company that bought Utility Service Communications Company. Suez manages the leases of cellular telephone companies’ antenna placements on JWSC’s elevated water towers. Verizon has an antenna on the Demere water tank and has previously been reluctant to be a part of that agreement, however now has done some upgrades to that antenna and are willing to become part of that management agreement. Mr. Burroughs explained that this transaction would involve JWSC refunding the balance of the rental payment to Verizon, who will then send that payment to Suez, who will then add Verizon to the management agreement. He provided that there is basically a zero balance transfer of funds and this transaction is basically just a paperwork issue at this point, and he added that this will terminate the original lease agreement with Verizon and it will be added to the management agreement with Suez. Chairman Turnipseed asked what benefit Suez is providing to JWSC, and Mr. Burroughs explained that by their managing the leasing it lessens the administrative burden on JWSC and Suez does have an actual tank maintenance inspection, and for example reviews changes that the communications companies may make to their antennas.
Commissioner Elliott made a motion seconded by Commissioner Stephens to move that the Finance Committee recommend approval of the termination of the Lease Agreement with Verizon Wireless to the JWSC Commission. Motion carried 3-0-0.
- GEFA Loan Approval – A. Burroughs
Mr. Burroughs recalled for the Committee that at the previous Finance Committee the GEFA Loan approval letter had been received and discussed. He referenced the checklist of items that must be completed prior to the loan execution by GEFA. Mr. Burroughs also reminded the Committee that there is a requirement of executing the loan within 6 months to avoid a continuation fee being charged. He provided the Committee with the necessary loan documents for review and recalled that it is a $15M loan with a 2.38% interest rate which is only charged to the amount of funds at the time they are drawn down, funds are only drawn as needed, and no interest is charged on funds that have not been drawn down yet. JWSC’s attorney does need to review the loan documents and sign off that he understands all details and aspects of the loan. Mr. Burroughs referenced Exhibit “F” which is the Resolution that is required to be approved by the governing body and explained that essentially what he is requesting at this meeting is approval of the Resolution which basically states that the governing body has determined to borrow and not exceed $15M to finance a portion of the construction costs for environmental facilities that is agreed upon in Exhibit “A” which states that the environmental facilities are the wastewater treatment facility at Academy Creek and Dunbar Creek and the sewer collection system. He noted that these funds cannot be used for any other purpose unless requested to and approved by GEFA. Another item required will be a letter from JWSC’s financial auditor.
Chairman Turnipseed asked when the construction had to be completed, and Mr. Burroughs responded that construction has to be completed by February 1, 2022.
Commissioner Copeland asked about the approval of the County and the City. Mr. Burroughs explained that after the requested approval today, there will be additional requirements of the City and County to execute what is known as an Environmental Facilities Agreement which essentially states that the City and County are aware that this loan is happening and that these facilities do serve their residences and in the event that JWSC is unable to repay the loan, they have the taxation authority to pay the loan back. Once the City and County have reviewed and approved everything, all the documents will be officially signed and returned to GEFA. Upon review by GEFA, GEFA will officially execute the loan and will send one copy of all the documentation back to JWSC which will then advise JWSC when funds can start being drawn down, which is when the “six month clock” starts on the timing to draw down on funds. Mr. Burroughs stated that it could be sometime in November or December before receiving back the official execution of the loan, so it could be sometime in next summer before having to start drawing down the funds. He noted that if that is the case and it is into the summer before doing that, it is very likely that we would be out for bid for construction of the wastewater plant by that point. Commissioner Elliott asked if February 2022 a realistic date, and Mr. Burroughs replied yes.
Commissioner Stephens made a motion seconded by Commissioner Elliott to recommend to the full Commission that the Chairman and Vice-Chairman be authorized to execute the appropriate loan documents to execute GEFA Loan CW2019008. Motion carried 3-0-0.
Commissioner Stephens made a motion seconded by Commissioner Elliott to recommend to the full Commission that the Chairman, Interim Executive Director, Director of Finance, and Senior Financial analyst be authorized to sign for draws on GEFA Loan CW2019008.
Commissioner Copeland requested that the word “Interim” be removed.
Motion carried 3-0-0.
- Supplementary Transfer of Funds to R&R Reserve – J. Donaghy
Mr. Donaghy advised the Committee that JWSC ended the June 30, 2019 Fiscal Year with approximately $2.5M of revenues over expenditures due in part to revenues being over projected and expenditures being less than projected. He noted that on June 30 there was approximately $2.5M in operating cash with approximately $1.3M of accounts payable outstanding against that cash reserve which leaves about $1.1M in operating funds. He provided that so far this year JWSC is running ahead of budget in the variable water and sewer charges, and even though it is early in the year, are running under budget, so there is cash available to meet the current obligations of payables, payroll and associated taxes. Mr. Donaghy said that staff feels comfortable in recommending an additional $1M from the 2019 Fiscal Year end to be allocated to an additional deposit to the Repair and Replacement Reserve.
Commissioner Elliott made a motion seconded by Commissioner Stephens that the Finance Committee recommend to the full Commission that one million dollars ($1,000,000) from the operating funds generated in Fiscal Year ended June 30, 2019 to the Repair and Replacement Reserve.
Commissioner Copeland asked if he is correct in that this $1M is an example or a testament that the Commission was able to manage their revenues and expenses last year to the point that we are able to return a million dollars over to the R&R for future needs. Mr. Donaghy replied, essentially yes.
Motion carried 3-0-0.
DISCUSSION
- FEMA/GEMA Transfer Switch Application RSA – A. Burroughs
Mr. Burroughs recalled for the Committee that there are two applications in to FEMA for Hazard Mitigation assistance. One is to purchase manual transfer switches for all of the lift stations that will allow staff to quickly convert power over to a portable generator if the need arises. The second is to purchase some permanent generators for some stations. GEMA approval has been received on both, but the FEMA approval has come down for only 22 of those transfer switches of which JWSC is responsible for only 15% of that cost. 75% of the cost will come from the federal government and 10% would come from the state. Mr. Burroughs provided that the total approved cost is $58,762.00 and JWSC’s portion would come out to be $8,814.50 for the 22 transfer switches. Commissioner Copeland asked if this is for equipment cost only or if includes installation. Mr. Burroughs provided that it does include installation. He also noted that although this award does not provide any of the funds for portable generators, there may be an opportunity for JWSC to get a few portable generators outside of the other request. Staff is investigating to determine if that is available and if that happens, that would be directly from FEMA and GEMA would not reimburse their 10%, so the cost to JWSC would 25%. Commissioner Copeland asked how quickly the switches could be installed, and Mr. Burroughs briefly noted the process advising that it would then be bid out in November or December so we would be looking at the beginning of the year to get started, but it should only be 60 days after that before it is completed.
- Banking RFP Update – L. Roberts
Mrs. Roberts advised the Committee that the Banking RFP draft is still a work in progress and staff is still working on the scope of services. She provided that an internal Request For Proposals Committee had been comprised from four departments. Three separate services, Banking Services, Merchant Services, and Investment Services were included in the drafted packet of which they could be bid separately or up to all three together by the proposers. Mrs. Roberts clarified that the Banking Services could include anything required to maintain what is essentially now as three accounts, the Utility Revenue Account which is where all the deposits initially go and transfers are made out of those accounts into the other Zero Balance Accounts, and lastly the Corporate Purchasing cards. She then noted that Merchant Services relates to activities that we currently process (debit and credit cards) for our customers’ payments, and added that Investment Services are those accounts where unrestricted funds are to be invested within JWSC policy. Commissioner Elliott asked does this RFP include the restrictions that we currently have on investing funds, and Mrs. Roberts advised yes. When asked about the Financial Policy being included, Mrs. Roberts provided that the Investment Policy is referenced in Exhibit ‘B’ and Mr. Burroughs added that the Financial Policy will be included with the RFP when advertised. Commissioner Stephens asked if there was anything included in the RFP that is proprietary, and Mrs. Roberts responded there was not, staff tried to keep it as open as possible. Mr. Burroughs noted that the selected bank would need to have an office or branch in Glynn County, not necessarily their home office, but a branch. There was a brief discussion about the schedule for the RFP, responses due, selection and transition in connection with the fiscal year timeline.
- Financial Statements Month Ending August 31, 2019 – J. Donaghy
Mr. Donaghy presented the financial statement for month ending August 31, 2019 to the Committee. He reviewed highlights from the various reports to include the Balance Sheet, Supplemental Schedule of Cash Balances, Combined Revenue Statement, Project Report and Detail Revenue and Expense Report.
- FY 2020 Strategic Plan – Step 1: High Level Goals – A. Burroughs
Mr. Burroughs recalled that at the previous Finance Committee Meeting the application of the Strategic Plan to the FY 2020 Budget process was discussed. Discussing it now will allow goals to be in place in January when staff officially gets started with the new budget. Mr. Burroughs presented five overall goals that are each numerically measurable:
- Prioritize Rate Stabilization
Measure: Maintain cost increases at or below water and sewage maintenance CPI.
- Improve Operational Reliability
Measures: Exercise 20% of water valves annually; Inspect 100% of fire hydrants annually; Clean 20% of sewer gravity main annually; and CCTV 10% of sewer gravity main annually.
- Increase Investment in and Planning for Capital Projects
Measure: Increase CIP average R&R rate of water mains and gravity sewers by 20%.
- Streamline Administrative Processes
Measure: Increase the number of Customer Accounts per Employee.
- Focus on Employee Safety Practices
Measure: Reduce total incidents by 50%.
Mr. Burroughs stated that the first goal of rate stabilization was greatly supported by the other four goals. Mr. Burroughs and the Committee discussed these suggested these goals in great detail. All agree that it is very important for the customers to have a reliable operational water and sewer system, reduced outages, less boil water advisories and low rates. Mr. Burroughs discussed many ways in which the goals can be met and savings incurred via rehabbing the system, asset management, planning better for capital projects, streamlining customer contacts and necessary communications, working with the development community in a more efficient manner, reducing overhead, providing staff with necessary training and tools to work in a safe manner, and focusing efforts on performing planned maintenance. The Committee members all agreed that cost, scheduling planned maintenance, providing quality product, practicing safety, and working more efficiently for the organization, customers and community are important.
Commissioner Copeland commented that this was a good first step and start. Commissioner Elliott indicated that he would like to see the goal of getting to the practice of planned maintenance on all equipment rather than focusing efforts on repairing equipment when there are problems. Commissioner Copeland indicated he would like to see an iterative process with these goals presented thus far, with the Commissioners reviewing and providing direction for the staff to respond to with the budgeting process.
Mr. Burroughs announced that JWSC is officially hauling our own sludge now and have been for the past one and a half weeks. Great cost savings should be incurred with this implementation.
There being no further business, Chairman Copeland adjourned the meeting at 2:40 p.m.