Utility and Infrastructure Board (June 2017 - Present)

CITY OF FREMONT UTILITY AND INFRASTRUCTURE BOARD January 14, 2025 - 4:00 P.M. A meeting of the Utility and Infrastructure Board was held on January 14, 2025, at 4:00 p.m. in the Fremont Municipal Building, City Council Chambers at 400 East Military, Fremont, Nebraska. The meeting was preceded by publicized notice in the Fremont Tribune and the agenda displayed in the Municipal Building. The meeting was open to the public. A continually current copy of the agenda was available for public inspection at the office of the City Administrator, 400 East Military. The agenda was distributed to the Utility and Infrastructure Board on January 10, 2025, and posted, along with the supporting documents, on the City’s website. A copy of the open meeting law is posted continually for public inspection. ROLL CALL Roll call showed Board Members Bolton, Lipsys, Hansen, Wiese present. Wilson absent. 4 members present, 1 absent. Others in attendance included Angie Olson, Exec. Asst.; Jeff Shanahan, Utility Gen. Mgr.; Troy Schaben, Asst. Utility Gen. Mgr.; Jenn Nabb, Dir. of Finance; Patty Hernandez, Grant Asst; Keith Kontor, Water/Wastewater Supt.; Gary Ogden, Gas System Supt.; Dean Kavan, Stores Supervisor; and Lottie Mitchell, Cust. Svc. Dir. CONSENT AGENDA Moved by Member Bolton and seconded by Member Hansen to approve items 3 and 4 (Minutes from December 10, 2024 meeting and Ratify payments made from December 11, 2024 through December 31, 2024 and Approve Accounts Payable January 1, 2025 through January 14, 2025). Ayes: Lipsys, Hansen, Wiese, Bolton. Motion carried 4-0. REGULAR AGENDA: Consider Renewal of Annual Banner Permit Application with the Nebraska Department of Transportation (NDOT). Schaben gave overview and answered questions. Moved by Member Bolton and Seconded by Member Lipsys to recommend to City Council to approve the annual banner permit application renewal with NDOT. Ayes: Hansen, Wiese, Bolton, Lipsys. Motion carried 4-0. Consider Levying a Special Tax and Assessment to Pay the Costs in Street Improvement Paving for District No. 553. Schaben gave overview and answered questions. Moved by Member Lipsys and Seconded by Member Bolton to recommend to City Council to approve levying assessments for the street improvement paving district No. 553 in the amount of $202,256.93. Ayes: Wiese, Bolton, Lipsys, Hansen. Motion carried 4-0. Consider Renewal of Three-Year Agreement with Velocity EHS for Safety Data Sheets (SDS) Management Program. Kavan gave overview and answered questions. Moved by Member Hansen and Seconded by Member Lipsys to recommend to City Council to approve renewal of three-year agreement with Velocity EHS for SDS management program.in the amount of $13,870.68 Contract Budget. Ayes: Bolton, Lipsys, Hansen, Wiese. Motion carried 4-0. Consider Ordinance 5704 Repealing and Replacing Electric Rate Ordinance 5670. Shanahan gave overview. Moved by Member Bolton and Seconded by Member Lipsys to recommend to City Council to approve First Reading of Ordinance 5704 repealing and replacing Ordinance No. 5670. Ayes: Lipsys, Hansen, Wiese, Bolton. Motion carried 4-0. Consider Ordinance 5705 Amending Fremont Municipal Code Chapter 3, Article 3, Sec. 3-318. Shanahan gave overview and answered questions. Moved by Member Hansen and Seconded by Member Lipsys to recommend to City Council to Hold First Reading of Ordinance 5705 Amending Fremont Municipal Code Chapter 3, Article 3, Sec. 3-318 Ayes: Hansen, Wiese, Bolton, Lipsys. Motion carried 4-0. Consider Placement of ‘35 MPH’ signs to be placed on Business Park Drive from US-30 Business to West Military Ave. Schaben gave overview. Moved by Member Bolton and Seconded by Member Hansen to recommend to City Council to authorize the placement of a series of ’35 MPH’ signs to be placed on Business Park Drive from US-30 Business to W Military Ave. Ayes: Wiese, Bolton, Lipsys, 1 Hansen. Motion carried 4-0. Consider Placement of ‘No Parking’ signs to be placed on South Howard Court. Schaben gave overview and answered questions. Moved by Member Hansen and Seconded by Member Lipsys to recommend to City Council to authorize the placement of a series of ‘No Parking’ signs to be placed on South Howard Court. Ayes: Bolton, Lipsys, Hansen, Wiese. Motion carried 4-0. Consider Revising Exhibit B and C to Western Area Power Authority (WAPA) Contract No. 12- UGPR-1035. Shanahan gave overview. Moved by Member Bolton and Seconded by Member Hansen to recommend to City Council to approve resolution 2025-003 Revising Exhibit B and C to Western Area Power Authority (WAPA) Contract No. 12-UGPR-1035. Ayes: Lipsys, Hansen, Wiese, Bolton. Motion carried 4-0. Consider Purchase of a Locate Management Software from KorTerra. Ogden gave overview. Moved by Member Hansen and Seconded by Member Bolton to recommend to City Council to approve resolution 2025-008 authorizing Staff to sign contract and issue a PO to KorTerra for Locate Management Software. With a total recurring fees of $8,740/YR for 3 years and Total one-time fee: $2,580 These fees are within budget. Ayes: Wiese, Bolton, Lipsys, Hansen. Motion carried 4-0. Consider Purchase of a 2025 International CV515 4WD Truck with Crane and Service Body from Cornhusker International. Palmer gave overview and answered questions. Moved by Member Hansen and Seconded by Member Lipsys to recommend to City Council to approve purchase of a 2025 International CV515 4wd Truck with crane and service body in the amount of $183,455.00 Plus Taxes. Ayes: Hansen, Wiese, Bolton, Lipsys. Motion carried 4-0. Consider Purchase of a CAT M315 Wheeled Excavator with Attachments from NMC CAT. Palmer gave overview and answered questions. Moved by Member Lipsys and Seconded by Member Hansen to recommend to City Council to approve purchase of a Cat M315 Wheeled Excavator with Attachments with source well pricing in the amount of $368,320.00. Ayes: Wiese, Bolton, Lipsys, Hansen. Motion carried 4-0. General Manager Updates. Moved by Member Lipsys and Seconded by Member Hansen to receive Preliminary Department of Utilities Financial Report from Jenn Nabb. Ayes: Bolton, Lipsys, Hansen, Wiese. Motion Carried 4-0 ADJOURNMENT Moved by Member Hansen and Seconded by Member Lipsys to adjourn the meeting at 4:30pm. Ayes: Bolton, Lipsys, Hansen, Wiese. Motion carried 4-0. 2  STAFF REPORT TO: Utility and Infrastructure Board FROM: Jennifer Nabb, Director of Finance DATE: January 14, 2025 SUBJECT: Financial Report Preliminary FY24 vs FY23 - DU Recommendation: Review FY 2024 Financial Reporting Insights - DU Department of Utilities Preliminary Fiscal Year Report and insights FY24 vs. FY23 – Unaudited The financial information presented in this report reflects the preliminary results of operations and is subject to change as part of the year-end closing process. As a municipal and publicly-owned utility, we are in the process of unitizing capital projects, closing work orders, and finalizing the allocation of costs between expenses and assets and between funds/units. Depreciation calculations are also underway and will be updated as required. The final audited financial statements, which will include all necessary adjustments and reclassifications, are scheduled to be completed following the annual audit presented in April. As is standard practice, the year-end closing process ensures compliance with accounting standards and provides the most accurate representation of our financial position. We appreciate your understanding as these numbers may shift during this process. Overview This report summarizes the performance of the electric, gas, water, and wastewater/sewer departments in Fremont, NE. The fiscal year runs from October 1 to September 30. Key performance indicators include year-over-year (YOY) billing comparisons, operational trends, and cash reserve positions. Electric Billing Trends: • FY24 vs. FY23: Electric billings dropped by 2.5%, reflecting a reduction in residential consumption of 3.7% offset with increased large volume consumption of 4.7%. January 14 2025 Page 2 Financial Report Preliminary FY24 vs FY23 – DU Coal Supply and Expenses: • We received one additional train of coal to prepare for winter by Nov 2024 compared to Nov 2023, resulting in a 6.7% increase in total coal tons to 124,316 tons. • Fuel Expenditures increased ~3% YOY up to $13.6m. • Operational expenses rose by ~1.6% YOY, largely attributed to inflationary pressures and scheduled maintenance activities. Reserves and Debt Service: • Electric reserves are at 11 months of operating expenses, exceeding the 8-month requirement. • Annual debt service for the electric fund totals $4.5 million, with a bond coverage ratio of 3.27x . 3 • However, with planned capital expenditures (capex) outlook for projects like ELG, Generator Rewind and OPPD/NPPD Transformer Replacement which may run $10M in the next 12 months outlook, we will reduce our $41.3M of Cash/investments very close to the $30.9m reserve requirement to maintain 8 months of operational reserves for this fund. Additional planned projects may require us to bond in the next 12 to 18 months. Gas Billing Trends: • FY24 vs. FY23: Billings dropped by 37% as natural gas prices dropped vs FY23 (FY24 $2.9012 per mmbtu vs FY23 $4.5249 per mmbtu) as well as a drop in consumption. Usage: • Natural gas usage decreased by 5.8% YOY, driven by lower heating demand. Reserves and Debt Service: • Gas reserves currently cover 9 months of operating expenses, meeting policy requirements. • The gas fund has no outstanding debt and, therefore, no bond service obligations. January 14 2025 Page 3 Financial Report Preliminary FY24 vs FY23 – DU Water Billing Trends: • FY24 vs. FY23: Total Billings decreased by 1.2% in line with a decline in usage of 1.9%. Rainfall Impact and Rate Adjustment: • Rainfall was unique this year with Fremont experiencing significantly more rainfall in FY24 (36in) than in FY23 (23in), however Q4 FY24 had little to no rain. Overall this lead to lower water usage full year of 1.9% and a ~5% drop in operating expenses. Reserves and Debt Service: • Water reserves are at 36 months of operating expenses, currently over the policy threshold (outlook dropping to under 8). • Annual debt service for the water fund totals $0.4 million, with a bond coverage ratio of 6.29x. • The planned horizontal well ($20M) and lead pipe rule replacement program ($10M) which may run $11.3M in the next 12 months outlook will erode our $10.2m of Cash/investments and will require government loans and perhaps bonds to maintain an 8 month of operational reserves for this fund. Wastewater and Sewer Billing Trends: • FY24 vs. FY23: Billings increased by 23.9% largely due to the rate increase while consumption increased by 0.5%. Corporate Loads and Rebates: • Corporate wastewater loads fell below projections, leading to reduced revenue from industrial customers. 4 • Rebates to industrial users were lower than expected, helping to mitigate revenue shortfalls. Rate Adjustment and Reserves: • A rate increase implemented mid-FY24 has started to address the fund’s reserve deficit. Wastewater reserves are now at 3 months, working toward the 8-month target. Debt Service: • Annual debt service for the wastewater fund totals $4.1 million, with a bond coverage ratio of 0.35x. January 14 2025 Page 4 Financial Report Preliminary FY24 vs FY23 – DU Cash Reserves and Bond Coverage Summary Each fund is required to maintain a minimum of 8 months of operating expenses in reserves. Current reserve levels are: DU Overall: 11 Months (after est CIP $21m Capex spend: 8 months) • Electric: 11 months (after $10M capex spend: 8 months (ELG, Generator Rewind, OPPD/NPPD Transformer Replacement) • Gas: 9 months • Water: 36 months (after $11M capex spend: none (well and lead pipe rule) • Wastewater: 3 months Annual Debt Service and Bond Coverage: DU Overall: $96.7M | Bond coverage: 2.54x (1.2x minimum, higher is better) • Electric: $42.4M | Bond coverage: 3.27x • Gas : No debt • Water : $1.4 M | Bond coverage: 6.29x • Wastewater : $52.9 M | Bond coverage: 0.35x Overall, the utilities department remains committed to maintaining financial health, ensuring uninterrupted service delivery, and meeting reserve and debt obligations. Strategic rate adjustments and operational efficiencies have been instrumental in mitigating inflation and maintenance challenges to keep utility rates as low as possible in the long run. 5