Finance Advisory and Audit Committee

City of Columbia, Missouri Meeting Minutes Finance Advisory and Audit Committee Thursday, September 7, 2017 Conference Room 1C Regular Columbia City Hall 9:00 AM 701 E. Broadway I. CALL TO ORDER Present: 5- Kristian Bloom, John Clark, Maria Oropallo, Lisa Evans and Diane Suhler Non-Voting: 1- Michele Nix II. INTRODUCTIONS III, APPROVAL OF MINUTES Mr. Bloom moved to approve the minutes as presented; seconded by Ms. Suhler with unanimous voice vote of approval. IV. OLD BUSINESS None City of Columbia, Missouri Page 1 Printed on 10/5/2017 Finance Advisory and Audit Meeting Minutes September 7, 2017 Committee V. NEW BUSINESS Ms. Oropallo began the utility rate increase discussion. She said City Council addressed some issues during their meeting Monday evening. Then on Tuesday, the Water & Light Advisory Board voted 3-2 in favor of the proposed rate increase. Relevant documents on the matter were provided in the agenda for review to discuss during the meeting today. Ms. Oropallo stated her goal today was for the committee to determine whether or not they’d like to give a recommendation to Council regarding the utility rate increase. She referenced the analysis Mr. Clark had put and asked if he wanted to present his thoughts. Mr. Clark referenced the memos prepared by Water and Light on amending utility rates when he gave his overall opinion/analysis. Ms. Peters entered the meeting at 9:07 a.m. Mr. Clark continued to deliver thoughts contained in his analysis. In addition, he expressed his confusion that it was hard to follow whether Mr. Windsor was talking individually about water, electric, or a combination of both during the Council budget hearing. There were plenty of questions asked by Council during that meeting for clarification. Mr. Parker entered the meeting at 9:13 a.m. Mr. Clark asked Ms. Nix about general budget guidelines and whether or not utility rates are generated by the Water and Light Department. Ms. Nix stated yes. If the group would like insight on their process, she recommended they directly ask the utility department. Ms. Cannon added explanation about the utility component and some of the items that the department takes into consideration when creating the budget and possible rate increases. For Mr. Parker’s benefit, Ms. Oropallo explained that they were discussing the proposed utility increases and the 3-2 vote by the Water & Light Advisory Board to accept the proposed increase. Mr. Parker stated the vote was 2-3 and explained the Boards’ reasons for voting down the proposal. Ms. Nix shared that she received an email from Water & Light Board member John Conway stating the vote was 3-2 to accept the proposed increase. Mr. Parker sent an email to Ms. Suhler on September 8th stating he was incorrect with the information he gave during the committee meeting on the 7th. The vote was 3-2. This correction was shared with the rest of the committee City of Columbia, Missouri Page 2 Printed on 10/5/2017 Finance Advisory and Audit Meeting Minutes September 7, 2017 Committee on September 18th via the records custodian. Mr. Clark asked to touch on a few more points outlined in his analysis; and he did. He understands that utilities need to project where the money will come from; he feels it may be created as a source of incentive based budgeting. Ms. Nix interjected and clarified that Water & Light does not participate in incentive based budgeting. Ms. Oropallo shared that she and other committee members had attended some Water & Light Advisory Board meetings. She mentioned Mr. Windsor explained that the need for the rate increase was that the unrestricted cash balance is below the target. Ms. Oropallo asked Ms. Nix where these numbers come from. Both she and Ms. Cannon explained it was a calculation approved by Council when they approved the cash reserve target. Ms. Oropallo asked staff about information contained in the memos prepared by staff in the Water and Light department, however, no answers were given. The group was directed to approach the Utility Department or the Water & Light Advisory board for any clarification surrounding these memos. Ms. Nix located Council Bill PR-256-13 outlining a resolution to establish a Water & Light Cash Reserve Policy. From an accounting and budgeting standpoint, Ms. Cannon explained the minimum cash position and the line items contained in the chart contained in the Council Bill. She was very precise so the group would understood the financial terms, process, and flow of funds. Ms. Cannon also gave example scenarios. Ms. Oropallo inquired about what was included in the miscellaneous expenses. There is quite a large jump from past years to current. Ms. Nix stated she would inquire with the Controller for the answer. To further break down how billing is done and dispersed to each utility, the information is on each individual’s utility bill each month. The group feels it’s a bit confusing as there is a lot of information being provided. Mr. Parker explained the Water & Light Advisory Board voted as to how it was disseminated to the public. Ms. Oropallo commented that there is surely a better way. Ms. Nix stated this was something that the group would need to address with Water & Light if they were interested in pursuing it. Mr. Parker exited the meeting at 10:06 a.m. Ms. Oropallo feels there has been enough discussion about the utility rates, the City of Columbia, Missouri Page 3 Printed on 10/5/2017 Finance Advisory and Audit Meeting Minutes September 7, 2017 Committee numbers contained therein, and how information is presented to customers. She asked the group if they felt the Committee had a recommendation for Council. Mr. Bloom suggests Water & Light has a couple of targets and one is being met and the other is not. He would like to see a plan on how to close the gap and an appropriate timeframe in which to do so. He feels a target of 20-25% is fair, but feels there needs to be a plan to close the growing gap between actual projected cash and the target. Mr. Bloom commented that he does understand having the reserves and how it relates to the City’s bond rating. Mr. Clark added that maybe Council should ask Water and Light staff for options. Mr. Bloom was agreeable to using that term. Ms. Cannon commented that the City needs to keep a high bond rating because the next time they issue debt, it’s going to be more expensive if the rate decreases. Ms. Oropallo asked the group if they all agree that from the Committees’ standpoint, they want the City to continue having a high rating. To recommend to Council that they reach out to Water and Light staff and ask for options to close the gap between the projected target cash needs and actual target results. Jose Caldera and Nicole Volkert from the City’s Law Department entered the meeting at 10:23 a.m. To reiterate what the recommendation Mr. Bloom put forth, it is to request from Utilities they calculate what it would take to close the gap between the target cash position and projected cash position over a reasonable period of time they feel appropriate and to request multiple planning options. This request is for all utilities that have a gap. Mr. Bloom made the motion on this recommendation, seconded by Ms. Suhler with a unanimous voice vote of approval. Mr. Caldera and Ms. Volkert introduced themselves to the group. Mr. Caldera said he understood that Ms. Volkert had already visited with the group and educated them on Sunshine Law. However, he was instructed by the City Counselor to follow up on the presentation she gave. During the discussion, committee members asked questions and both Mr. Caldera and Ms. Volkert answered giving clarification on Sunshine Law scenarios. City of Columbia, Missouri Page 4 Printed on 10/5/2017 Finance Advisory and Audit Meeting Minutes September 7, 2017 Committee Mr. Caldera and Ms. Volkert exited the meeting at 10:51 a.m. The Committee has no recommendation to Council on the subject of utility rate increases. To add to the approved motion on the recommendation on closing the gap, Mr. Clark moved to have Ms. Oropallo draft the recommendation and work with Mr. Bloom to get it worded the way the Committee previously voted. Once this is done, Ms. Oropallo will email the recommendation to Council copying Ms. Sapp; this was seconded by Ms. Suhler with a unanimous voice vote of approval. VI. NEXT MEETING DATE VII. ADJOURNMENT Mr. Bloom moved to adjourn the meeting; seconded by Ms. Evans with unanimous voice vote of approval City of Columbia, Missouri Page 5 Printed on 10/5/2017