Finance Committee

REPORT OF THE FINANCE COMMITTEE MAY 19, 2010 A meeting of the Finance Committee was held on Wednesday, May 19, 2010 at 7:03 p.m. in the Aldermanic Chamber. Mayor Donnalee Lozeau presided. Members of the Committee present: Alderman-at-Large David W. Deane, Vice Chair Alderman-at-Large Ben Clemons Alderman-at-Large Barbara Pressly Alderman Kathy Vitale Alderman Arthur T. Craffey, Jr. Alderman Paul M. Chasse, Jr. Members not in Attendance: Also in Attendance: Michael Gilbar, Chief Fin~ncial Officer/Comptroller John Barker, Division Director, IT Division COMMUNICATIONS From: Robert Gabriel, Purchasing Manager Re: Contract Award for Transit Center Rehabilitation Construction Phase Requested by Transit Department (Value: $116,091) Account: 374-01319-7222-7200 - Construction Rehab Account Balance Remaining After Purchase: $27,000 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO LAPLANTE BUILDERS IN THE AMOUNT OF $116,091. SOURCE OF FUNDING IS ACCT. #374-01319- 7222-7200 ON THE QUESTION Alderman Pressly Thank you Madam Mayor. Is this the only one on tonight's agenda that is part of the federal money? Mayor Lozeau No. There are two. Well there are two components to this one. Alderman Pressly I noticed that. I· would like to know more about that. If you would explain it to me. Mayor Lozeau Sure. This project is a project that the Federal Transit Association had asked us to look at. They fund our transit operation and our transportation system. One of the things that they do is look at the lifespan of buildings. This building has hit more than its ten year mark, and so they have requested that we take a look at it and renovate it. We started the process some times ago. We hired an architectural company that did the design work. When that work was completed we put it out to bid to revamp the building. That is the first item on the agenda tonight is that work. The second one is the architectural company then overseeing the project's completion. Finance - 05/19/10 Page 2 Alderman Pressly Okay. Mayor Lozeau It is 100%> federal funding, ARRA funding. It requires no local match. The project is anticipated to start some time this month, in the next week or so depending on what we do. It is anticipated to be done by August. It is primarily all interior work with a little bit of exterior. You won't really notice that the building has changed. The majority of it will be inside with the exception of gutter, some handicap accessibility on the sidewalk, and things like that. Alderman Pressly Did I understand you correctly that they approached you so the Federal Transit Administration checks up on these buildings to make sure that they are up... Mayor Lozeau Yes. Alderman Pressly That is wonderful. That is good to hear. I think that is great and I think we should acknowledge that when that does happen that the feds do something very well. Mayor Lozeau The public transportation I think is particularly important to them. As Mr. Sousa said during the budget process when you asked about bus shelters and things like that, they pay a lot of attention to public transportation because they want to make sure that it is successful and it is running, and they understand that requires some operational things. When I came in as Mayor, that building wasn't used. After the bus company closed shop, we didn't use that station, we sold bus tickets here in the City Clerk's Office and over on Riverside. When I got here, one of the first things I asked was to get that building open. It has been very successful being open and being run by the City. Alderman Pressly Then you had the two contractors involved, the one that is doing the work and the one that oversees it? Mayor Lozeau Correct. Alderman Pressly And it is all according to the standards that they asked for? Mayor Lozeau Exactly. All of the compliance issues, all of those things. Finance - 05/19/10 Page 3 Alderman Pressly Thank you very much. Mayor Lozeau You are very welcome. Is there further discussion on this item? MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Contract Award for Transit Center Construction Oversight (Value: $17,000) Account: 374-01319-7222-7200 Construction Rehab Account Balance Remaining After Purchase: $9,744 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO CMA ENGINEERS IN AN AMOUNT NOT-TO-EXCEED $17,000. FUNDS ARE AVAILABLE IN ACCT. #374-01319-7222-7200 ON THE QUESTION Alderman Deane This seems to be a small amount of work being done that requires paying someone $17,000 to go and take a look at it. It is a requirement of the ... Mayor Lozeau It is a requirement that the project is overseen and that itmeetis the compliance requirements. Alderman Deane If they are overseeing a bid of over $100,000 are they required to sign a certification regarding the lobbying like the contractor was? Mayor Lozeau I know that on the first one the contractor did because of the size of the project. My guess is that this firm has already signed that with the last one that we approved when they did the architectural work. Alderman Deane But the total of the bid award has to be $100,000 or over. If it is under $100,000 ... Mayor Lozeau Well then apparently you knew the answer to that. Alderman Deane I didn't know the answer to that. My question was if the value 'of the project is over $100,000 not a $100,000 that they were getting for their services, would they be required to sign the same document because they are overseeing a project that is over $1 OO,OOO? Finance - 05/19/10 Page 4 Mayor Lozeau We can take a look at that document that is included with the first one. One the certificate, it says "To be submitted with each bid or offer exceeding $100,000." Alderman Deane I was wondering since they were overseeing it whether there was a lobbying document that they had to sign or is it just the total cash value of the project that triggers this to be signed by the contractor? Mayor Lozeau My understanding would be it is whichever contractor is bidding on something where the offer exceeds that $100,000. CMA did not do that. Between this one and the' other one even together they don't equal more than $100,000. Alderman Pressly I also gather one of the recommendations is that they keep the same firm, which makes sense to me so you don't have to go through the bid so the same company that started the project is going to see it through. Mayor Lozeau Right. We did the bid process to pick this company to begin with. Alderman Pressly That is what I figured. Mayor Lozeau Yes. Alderman Vitale Because the funding is 100°!c> federal, there is no city funding required, who oversees or who gives the final okay that we are approving the work? Mayor Lozeau CMA. The project manager will oversee it and make sure that the work is completed and in compliance of report documents. Alderman Vitale Technically nobody from the city does that? Mayor Lozeau Correct I mean other than Mr. Sousa I am sure will be working with them hand in hand. They are working at his direction. Alderman Vitale Thank you. Finance - 05/19/10 Page 5 Mayor Lozeau You are welcome. Alderman Chasse Who sets the hourly rates for these individuals from CMA? Mayor Lozeau The federal government requires that we pay them at the Davis Bacon rates. CMA their rates may already comply with that. Alderman Chasse So you are telling me the federal government says you have to pay somebody that is in a clerical position $60 an hour? Mayor Lozeau The federal government sets the rates on all of the projects where we receive their money. Alderman Chasse Wow. A clerical job at $60 an hour. Is that what they call a prevailing wage? Mayor Lozeau We are in what they consider the Davis Bacon region so yes. Alderman Chasse That is the prevailing wage. Mayor Lozeau Yes. Alderman Chasse Okay. I want that job. Mayor Lozeau There are some things in our control and some things not. Is there further discussion on this item? MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Contract Award for City Hall Replacement Windows (Value: $282,656) Account: 617-01 CIP - Building Maintenance and General Repairs Account Balance Remaining After Purchase: $636,742 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO DL KING IN THE AMOUNT OF $282,656. SOURCE OF FUNDING IS ACCT. #617-01 ON THE QUESTION Finance - 05/19/10 Page 6 Alderman Craffey What is the timeframe to have the windows completed? Mayor Lozeau We are shooting for mid to late September. About six weeks to have the windows manufactured and about six weeks to have them installed barring no problems. Alderman Pressly Is this the application that has a second and third bid to it? Mayor Lozeau This one had an alternative bid; 1 and 2. Alderman Pressly Yes. What page is that one? Mayor Lozeau The page right before the windows. Alderman Pressly I found it. I was curious. They have a base bid and then aJte~nate bid. What is the difference between that? Mayor Lozeau They come in and they bid and then during the bid meeting, in this instance in particular, there was a representative from Pella Windows who told all the bidders that their windows met the specifications in the bid document and so they were allowed to change their bid and lower their bid based on that window. Then they discovered that window in fact did not meet the qualifications. In this instance DL King came in as the low bidder to begin with, they got lower with the Pella windows and then we negotiated with them for a different window, and they were chosen in the final analysis. We went from the triple pane to the double pane because it still met the requirements that we had for the energy. Alderman Pressly And they will look exactly like what is there now? Mayor Lozeau They will. Alderman Pressly I would like to note that it is a Nashua company. Finance - 05/19/10 Page 7 Mayor Lozeau It is. Alderman Pressly That is always nice. Mayor Lozeau Yes. It is a pretty big job. These are the original windows in the building - 1938. Historically it is sad, but energy it is great. Alderman Pressly And they will look the same. Will they function the same too? Mayor Lozeau The two upper panels right now those open. They won't open. The bottom one opens in right now, the new windows will open out. We will actually be able to put a screen on the lower window too. Alderman Pressly And how about washing them? Will they be easier to maintain and wash this way? Mayor Lozeau Well they are not easy to wash and maintain now whether they open or not. Alderman Pressly So we don't have screens now so the windows could be open and fresh air coming in with the new ones. Mayor Lozeau Right. We open them now, but then we do have, depending on the season, various insects enjoy coming in. Alderman Deane I am looking at the revised detail. Is this the one that we are going to be using? It is right across from the alternate I and alternate II on the bid. Mayor Lozeau So it is prior to that page before the pictures. Okay I am here. What was the question? Alderman Deane This is the detail we are using? Mayor Lozeau Yes. Finance - 05/19/10 Page 8 Alderman Deane So the steel frame is going to stay, existing steel window frame and anchors ... Mayor Lozeau It is a fiberglass window that is going to be put in. We are trying not to get into between the bricks because we know that we will run into asbestos likely. Alderman Deane Yes because those frames are recessed into the masonry. Mayor Lozeau Exactly; Weare waiting for the testing to come back, but we do think there may be asbestos glaze on those windows now. Alderman Deane I thought Jordon had done the testing a long time ago. Mayor Lozeau No. Testing had been done on the windows pre-May to determine that there was asbestos in the recessed pieces, but there was never any testing done on the glass. We did put a contingency in here for that, and that is in the$282,000 price. There is a $20,000 worst-case scenario contingency. We are hopeful not to use it, but we don't have the results back. The assumptions are that that is there. Alderman Deane I notice there is a possibility of another free trip to our solid waste department that was written up in here. Has that been settled? How are we going to dispose of all of this stuff? Mayor Lozeau We are going to wait until the testing is done and then we will make some decisions, but I would hate to pay someone to pay us to dispose of our windows at the landfill. Alderman Deane It says it may be waived if coordinated with the City of Nashua in advance. So once we approve this this evening ... Mayor Lozeau We will let the process complete to find out exactly what we are dealing with with the windows and then we will put it on the Board of Public Work's agenda for the next meeting. Alderman Deane So there is a possibility there might be amendments to this contract later on down the road. Finance - 05/19/10 Page 10 Mayor Lozeau You are welcome. Alderman Pressly There are so many advantages financially for private owners for doing this. Is there any financial advantage to a municipality when they do energy efficient improvements like this to their buildings? Mayor Lozeau We will have an energy savings that we anticipate between $4,000 and $5,000 per year. Alderman Pressly For the whole project or per window? Mayor Lozeau Based on just the windows being changed. The incentives that are out there for some of these projects for some businesses are things like tax credits and things like that. We have received direct energy dollars, $834,000 worth, which you may recall. We have a contract out to do our building assessments and things like that and we will be using some of those energy dollars to replace the roof. That is how that will be done. Alderman Pressly So it uses a match so to speak? Mayor Lozeau No it is not a match. It will cover the costs of the roof. We have that money available to us. We can use it for things like this. So the incentive for government for doing things to our building is that there is grant money available to get. We don't get tax credits for things like this. Alderman Pressly Okay. So there is a financial advantage. Mayor Lozeau Absolutely. Alderman Pressly Good. Alderman Vitale Do we get leakage on any of our current windows at all? Mayor Lozeau It is terrible. Finance - 05/19/10 Page 11 Alderman Vitale Are they doing water proofing around the edges associated with those? Mayor Lozeau Oh you mean water leakage. I am thinking about the wind. We don't have too many windows where we have leakage. There are a couple in a few areas where they will do some extra work, but as a general rule it is pretty solid. The problem is it is a single pane, it sounds like outside is inside, and often times the wind comes right through whether they are closed or not. That kind of leakage we get more of. Alderman Vitale Okay. Mayor Lozeau Is there further discussion on this item? MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Contract Award for Financial (ERP) System Software, Licensing & Maintenance (Value: $687,084) Account: 722-64040 Computer Software - City-Wide ERP System Account Balance Remaining After Purchase: $6,213,892 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO LAWSON SOFTWARE AMERICAS IN THE AMOUNT OF $687,084. FUNDS ARE AVAILABLE IN ACCT. #722-64040 ON THE QUESTION Mayor Lozeau Tonight I invited Mr. Barker and Mr. Gilbar. For the new Alderman we were going to have an opportunity to have a bid of a discussion about the ERP. Based on the budget and other things that I have been a little preoccupied with I haven't been able to set that up, but I thought it would be valuable tonight for just at least this project in a nutshell so you have some understanding of where we are, where we are headed, why this is before you tonight, and why the date is important. They are going to pass out a little handout that they will walk you through. Alderman Pressly While they are doing that may I ask a question? I noticed that last year they approved to do this. Have they actually issued the bond? How does that work when you are already spending something on a bond that we haven't gotten a hold of yet? Mayor Lozeau Because we actually have money in our account. You don't want to let the bond any sooner than you have to. Sometimes it is almost like people think about money being in these different buckets and you would go in this one for this one and ... Finance - 05/19/10 Page 12 Alderman Pressly It is all in one pot ha? Mayor Lozeau General good accounting principles have you have your dollars and they are allocated as needed and moved when necessary. Alderman Pressly So when you ... Mayor Lozeau Especially when you are bonding. Alderman Pressly So when you do draw down the bond - is that the right word draw down? Michael Gilbar Basically sell the bond. We are selling them in increments so we basically sell them as we need them. So the first phase of the project we will sell a bond to get us through that first phase and then we will sell the second phase and third phase. Alderman Pressly So when that happens you replenish this money that you are using? Mayor Lozeau Yes. Alderman Pressly Thank you. Alderman Deane I think a number of years ago when the city had some huge financial issues, they used to have a process called a band, which is a bond anticipation note. That was borrowing money, but you paid the premium on the monies 'until the bond was floated. Michael Gilbar Correct. Alderman Deane Since we don't have to do that any longer and it gives the administration time to shop around and look at rates and things of that nature, the project can get started and then the replenishment comes when the bond gets sold. Finance - 05/19/10 Page 13 Alderman Pressly Okay. Alderman Deane Somebody had brought up a BAN. We don't use a ban and we don't have a reason to. Some communities do have a reason to, but Nashua does not. Alderman Pressly I remember I believe it was county government that at one time they sold the bond at a low rate and they were able to hold it until they needed it and they drew interest on it and did quite well. Alderman Deane You can't do that here. Alderman Pressly California did the opposite. A couple of cities in California did that and the reverse happened, they sold the bond at a rate that cost them a great deal. I think they went bankrupt doing it. The thinking today is you don't issue the bond or sell the bond. Mayor Lozeau Mr. Gilbar would love to participate in this conversation. Michael Gilbar There is actually, the I.R.S. doesn't allow you to do that now. You can do it, but you pay a penalty. That is called arbitrage, investing in a higher interest rate than the rate that you are receiving. Governments used to do that. When I started it was common practice, but because they were making so much money and not paying any taxes on it, the I.R.S. clamped down on that, which is the reason that BANs were more important because if you issued the bond too soon the I. R.S. has regulations about the window of time that you have to spend down the bond. Alderman Pressly Okay. Michael Gilbar So BANs were issued to get you through to that point and then you would issue the bond. We have enough cash up front so we don't need to do that. Alderman Pressly What is a BAN? Michael Gilbar Bond Anticipation Note. Finance - 05/19/10 Page 14 Alderman Pressly So you don't issue the whole amount you just issue what you need as you go along? Michael Gilbar Correct. Alderman Pressly So you watch the rates every day or how often do you watch them? Michael Gilbar Well we don't need to watch them every day, but whenever we need to do a bond sale we keep an eye on them. We really don't want to sell the bond before we actually know that we are going to make those cash payments or at least some time within a reasonable period of time or we will run into the problem with the I.R.S. Mayor Lozeau Plus depending on what we are doing and how many we are looking at, it makes sense to consolidate them and try to do them as a packet. Alderman Pressly So do you pack up and go to New York and do all of this or when the time comes ... Mayor Lozeau They actually come to us. Alderman Pressly They come to you? Michael Gilbar It is just a phone call. We call from the rating agency, from our financial advisors, and Treasurer Fredette will make the arrangements. I do the cash flow analysis and get it to him and then he ships it off to them, and then we are off and running. Alderman Pressly Okay. So you never leave City Hall? .Michael Gilbar No, never leave our... Alderman Pressly They used to go to New York and do it in person. Finance - 05/19/10 Page 15 Michael Gilbar That was probably the bond rating. That was a common thing back years ago. Mayor Lozeau Okay, let's ... Alderman Pressly Sorry to digress. Mayor Lozeau That is okay. I do think it is worthwhile for everybody to understand that especially going into the next year or so. Mr. Barker you want to walk us through this? John Barker Sure, and thank you very much Mayor for suggesting this. This project NGiN is big, it has a lot of components and different timelines for the components so I think the Mayor was wise in suggesting that we take a moment for me to explain what this piece is that is in front of you tonight and how it fits into the whole. Mayor Lozeau Before you go forward John I should just point out, you are seeing NGiN on here and you are thinking how come it is NGiN because I thought you said it was ERP. It is because we tried to give it more of a creative name to kind of build some marketing around it, get staff on board ... Alderman Pressly So what does that stand for? Mayor Lozeau NGiN stands for Nashua Government Innovation ... John Barker Driving Nashua forward. Mayor Lozeau Exactly. Alderman Pressly What is it? John Barker NGiN is a program. It is just an acronym ... Finance - 05/19/10 Page 16 Alderman Deane It is an acronym for we are spending a ton of money, we hope everybody adopts this. Mayor Lozeau N - Nashua, G - Government, IN - Innovation. John Barker NGiN is actually ERP is the largest portion of NGIN, but NGiN has three pieces to it. It is important to realize that the system we have called ADMINS does all of our financial management, but it does a lot of other things too, a lot of other components. When it dies, and it will die, all of those things have to be somehow accommodated and replaced so NGiN is a project that reaches out into more areas than just in terms of money and finance. Where we are now, ERP is really a financial management application. When we talk about ERP we are talking about those financial management components, but there is also what we call the licensing, permitting, and code enforcement, which will be used by building and development and public health and the fire marshal, etc., and then lastly there is a document management component as well that will handle electronic document and content management hopefully so we can stop wasting paper, we can access information more quickly, both the citizens and ourselves, and not have to reproduce things over and over again. There are those three large components to it, and they all tie into the same goal, which is to streamline things to improve innovate and make more efficient. Back in 2009, this whole NGiN program was brought in front of the board, a business case was developed and put in front of us, and we were approved for the bonding of $7.5 million for that. That $7.5 million is the whole thing. ERP accounts for approximately $5.5 million estimated of that, and obviously our goal is to use less. Alderman Pressly During the budget process, we asked a lot of the other departments if they were on board and if I recall there were some that were not. Was that education and police? Which ones are not going to be included or will this include everything. Mayor Lozeau Everybody is included in this project in some way or another. Alderman Deane You are thinking about the CitiStat I believe. Alderman Pressly Was that it? Alderman Deane Yes. That was the program that is starting to reach out. Mayor Lozeau That could be it or it could have been the licensing piece because we talked about whether Community Development's licensing piece would be in this original part, and there are some different departments that Finance - 05/19/10 Page 17 have components that might not be immediately in the system, but for the financial component, all departments, all divisions, everybody in the city is on board with that piece. Alderman Pressly And I gather each department has to go at their own pace sort of in getting on board with this. John Barker No we're going to go together in lock step. Mayor Lozeau Have to. Alderman Deane It is all in on this one. John Barker If you go to the second page there, there is a little diagram that we have used in the past that just sort of shows that that big picture has those three components in it; the financials, licensing and permitting, and the document management. It is important to realize the financials is probably 70% of the entire project and it includes all of the things, the budgeting, general ledger, accounts receivable, payroll, HR and benefits, reporting, contracts, all of the really big things that literally everybody does use as you said. Those are all in that ERP financials. The licensing and permitting is the property management; building permits, inspections, DPW permits all of those things are in that. The document management has things that may be less visible. First off it is the last thing that gets implemented in NGiN; it is the last part of it. Sort of layers off on the top of the others. Alderman Pressly How is the 30% divided with licensing and ... John Barker I would say that you are probably 5% of this whole thing is the document management. It is a small final component. It has all of the searching, e-documents and the forms on line and workflow that moves things around and all of our archiving for Right to Know and things like that. Those pieces are all finally tied up in that component. In that slide down below it there that is printed, you will see all of those three coming together and some estimated cost in that $7.5 number so you will see that ERP is $5.5 million. Licensing and permitting $1.2 million and the document management approximately $670,000. Again, it is our goal to drive that as low as we can get it. CFO Gilbar is going to talk a little bit to the next sheet with some numbers here. Michael Gilbar I will just read you those totals. They are a little bit small. I apologize. I didn't really think of that. I am used to doing small print for everything. The way we have this, this was essentially from some of the original documentation that we provided when we prepared the documents for the bond authorization. We're basically showing a snapshot of just the ERP portion of that. This is the first phase. You will notice the $5.5 Finance - 05/19/10 Page 18 million is a little bit different total from what you saw in the frame before, and the reason was there was I believe about $115,000 that we saved in some costs - basically almost before we even got started. I don't recall what that $115,000 was, but that is what the difference is between that grand total there and on the other page. Basically this just outlines all of the components. We had hardware and that grand total was $558,014. Microsoft upgrade we had $77,000. And then the core financials in H.R. Payroll pieces there are a couple of components to that; one is the software and implementation and that total comes to $3,151,794. Keep in mind that all of these totals that we have right here are estimates that we got from the consultants at the beginning of this project. We're in the process, now that we are beginning the process and put out an RFP, we're beginning to get more realistic numbers. We have a project manager on board and they are refining a budget now. These are all of the up front capital costs that would be bonded. The professional services include the independent project oversight, which is the BDMP oversight. We estimated $505,461 for the total. Project management for the vendor, which would be for the vendor that is implementing the software that you are looking at to approve tonight, that is $215,144. Then the other implementation, the $224,400, is money that was estimated to do backfill if that was necessary or provide other temporary while we are in the middle of the process. Now these ERP numbers, this total includes what we're looking at for software here. What it doesn't include is time in attendance and property taxes so those will be done as separate bids. Alderman Pressly Taxes are not included in this? Michael Gilbar Property taxes no that is a separate piece of software. Alderman Pressly But is it part of the whole process? Michael Gilbar Yes it is. I'm sorry, it is included in these numbers, but it is not included in the software that you are looking at to approve tonight. Then the other piece,which will be a separate RFP is the utility billing that you see on the bottom and that is $556,199 for software and implementation and then we had estimated $89,199 for the independent project oversight and then $37,967 for the vendor implementation project management, and then for the other implementation costs that was estimated at $39,600 so the total comes to the $5.5 million. Mayor Lozeau Again, those are our best estimates. Alderman Pressly I guess what worries me, and bear in mind I am not the generation that dealt with all this so it is new. I am struggling and I am trying to join this generation, but the thing that has struck me in struggling to do this is that software and things like that become obsolete in a very short time. Just your own home computer, you buy something and within 2-3 years they say whoops that one isn't good anymore you have to have something else or you have to upgrade it. Finance - 05/19/10 Page 19 Mayor Lozeau We will have to be upgrading and doing maintenance on a regular basis. There will be a line item in the budget going forward after this project that will ... Alderman Pressly Okay. I just want to make sure that what we are buying has that capability of expanding on it or altering it, and not having to start from scratch like we are now. This is something that should last how many years with its upgrades? John Barker Twenty years at least -we hope. Alderman Pressly At least 20 years? John Barker Yes. Alderman Pressly Thank you. Alderman Chasse Under core financials and HR/payroll, is that you·telling us that you are upgrading your payroll software? Michael Gilbar That is replacing the payroll software. We've got payroll, GL, accounts receivable, accounts payable, purchasing, and everything that comes along with that. John Barker The next slide down shows you the components that are in there. What is in blue is not part of that financial application we are looking at tonight. Those are the other pieces that we have to fill in, but you will notice the vast majority of the financial applications are covered in this component. Alderman Chasse On the payroll, are you still going to be staying with ADP? Mayor Lozeau We don't have ADP anymore. Alderman Chasse What do you have now? Finance - 05/19/10 Page 20 Mayor Lozeau We do it in-house. You remember ADP because we talked about looking at ADP instead of doing it in- house, but we do it in-house now. Alderman Chasse We are still going to do an in-house payroll? Mayor Lozeau That is the plan right now. We are looking at a time keeping system though, which is very different than what we have now. Alderman Chasse And what kind of time keeping, which one? Kronos, E-Time? John Barker Kronos is one of the ones we are looking at yes. Michael Gilbar It would be the time keeping and scheduling components. Mayor Lozeau As you can imagine because of your experience with payroll, we have a lot of hands touching payroll through the whole process. Alderman Chasse That is why I am saying right now would be the perfect time to go to something like the ADP eZLaborManager where everything is done on a computer and you just pull the numbers in. I know you showed me what they do for your payroll and how many people touch a timecard. That is kind of ludicrous. Michael Gilbar . With the time and attendance package and the scheduling, that is not going to happen. One of the issues that we ran into, we had a site visit with the City of Springfield, MA and they basically had similar problems to what we have experienced. One of the issues they had, they were using ADP, but because of the complexities of the union contracts, when they tried to implement the time keeping system they ran into some problems. They are doing it differently now. But, our intention is to automate the time keeping process completely right from scheduling through, including building in union contract rules, so that there is no room for error in the translation from the pen to the paper to the payroll system. Mayor Lozeau So the ADP piece, the way you are talking, would go computerized under this system we are talking about. In-house really what is left is cutting the check from what the computer tells you needs to happen. Alderman Deane I had a hardware question. We have been presented with a $300,000 add to your department for this program. Finance - 05/19/10 Page 21 Mayor Lozeau We discussed this last night John about the $300,000 that is in your budget for the person, the software, those things. If you could explain where that fits into this picture. John Barker The maintenance and warranty costs, the annual operational costs are what you see in my budget, they are non-bondable. You asked Alderman Pressly is this going to stay fresh and up to date. It is those dollars that allow us to do that. Every piece of hardware we buy every piece of software we buy has a component of an annual recurring licensing and maintenance cost. That $300,000, I am not sure if the payroll item is in there or not. .. Mayor Lozeau It included your database administrator, $97,000 in software maintenance and one other piece. John Barker So that is where that comes in. That is not part of the numbers you see here because this is all about the capital purchases under the bond. Alderman Pressly Okay. John Barker But they are related. Alderman Deane So the $315,000 is just part of licensing and maintenance? Mayor Lozeau And staff, which is included in there. John Barker We needed an additional individual as a database administrator/system administrator, and that staff member is in there as well, and obviously that is an FTE, a headcount item. Mayor Lozeau You see that as a new position Alderman Deane. Alderman Deane That is part of the 74035 line - other equipment repairs and maintenance? Mayor Lozeau No, there is a... Finance - 05/19/10 Page 22 Alderman Deane I am down in the equipment part Mayor. Mayor Lozeau You are in the budget book. Alderman Deane Right with the software. What I am trying to do is correlate the $558,000 that is here plus the $315,000 and how it relates to the ERP. Mayor Lozeau What we are saying is that $315,000 is separate from this document here. It is a new position, which is in the budget, database administrator you can see in the 11 line ($80,000) and then there is the ERP software and hardware licensing costs. Alderman Deane I am down into other equipment repairs and maintenance. Mayor Lozeau That is I want to say $97,000 off the top of my head, and then what is the math between that and the $315,000? John Barker I am concerned he might be adding in some of those non-IT costs we have aggregated. Mayor Lozeau No ERP was $315,000 out of that pile. John Barker I am sorry I didn't bring my budget book so I don't recall. Alderman Deane We were told there was between $96,000 and $97,000 that was reduced in other areas within the operating budgets. John Barker That is correct. Alderman Deane And that the plan was to move everything over into I.T. so that the stuff wouldn't be floating all over the place. Finance - 05/19/10 Page 23 Mayor Lozeau Right, but it doesn't relate to ERP so print management went into the LT. budget but that is not part of ERP. Software maintenance and licensing from other departments and divisions went into I. T. and that is not part of the ERP piece. The remainder is the ERP components and it is made up of a new employee, some additional software maintenance as it relates to ERP, not the other things that we currently have in-house, and there was one other item that I just can't ... John Barker And there is always the continuing maintenance costs on the hardware and software we already have that is non-ERP, and that is in one of those line items as well. Alderman Deane Can you just e-mail me a breakdown of that 74035 line? John Barker I believe CFO Gilbar has that and can send that to you. Mayor Lozeau I will take care of that. Alderman Pressly You might not have the answer to this yet, but I presume once all of this is established/put in place, there will be other expenses in maintaining it than what we know about today. Is that a fair assumption to make? Michael Gilbar Those are the items we were just talking about, the software and hardware maintenance. Alderman Pressly So you think the numbers in the budget today will be what they are when everything is finished? Michael Gilbar No because it will take another couple of years before we get everything finished and those costs won't come into play until then. Alderman Pressly I understand that, but once everything is in, each year I would think it would escalate. Michael Gilbar I am sorry yes. Mayor Lozeau Each year yes. Finance - 05/19/10 Page 24 Alderman Deane One hundred and thirty nine thousand three hundred dollars. Mayor Lozeau I thought it would be beneficial tonight for an overview of the project so we have done some components already, put a piece in the budget, Finance has already approved the project management and some other components. The purpose of inviting them here tonight was to walk you through what the rest of the picture is. Alderman Pressly Thank you. Mayor Lozeau So you will see an amount in the budget as we started to discuss tonight, the $315,000 that we talked about again last night. I laid out the breakdown last night I just can't remember it off the top of my head. Alderman Pressly Okay. Mayor Lozeau And then next year in the budget there will be a different piece that is related to ERP that is outside of this, and then the next year again, and it will go on for the next 20 years a different amount each year. Alderman Pressly That is sort of what I was asking. I hope you understand for those of us that this is new; it takes a while to put your arms around it. Mayor Lozeau I won't tell you how long it took me. Michael Gilbar Just to make it real simple, for every piece of software you buy there are annual licensing and maintenance costs related to that and generally they are somewhere in the vicinity of 20% of the cost of the software. John Barker That is truly how they make their money. Alderman Pressly After it is installed. John Barker In some cases, the software is almost a lost leader. You may for it, but they make their money on the maintenance. Finance - 05/19/10 Page 25 Mayor Lozeau Please continue Mr. Barker. John Barker So that next slide down just shows you - putting aside the other NGiN pieces, the licensing, permitting, code enforcement, document management, we go to this big component we call ERP financials, and there are obviously a large number of pieces in here too, but what we want you to understand is what is in front of you tonight, the Lawson software application, is all of those things here except those that you see in blue. The ones you see in blue, which is the property tax component, the time keeping scheduling that you had asked about, and the utility billing, those components are the main ones that are not in the Lawson software and have yet to be, in some cases, bid out through RFP or selected and sourced. Those are yet to come, but the largest part of that whole ERP financials is in the Lawson software, which is in front of you tonight. Mayor Lozeau That last slide is probably the best way to see these pieces put together Alderman Pressly. John Barker On the back of the page you will see there really are, for this to go into place, four major parts to it. We have to buy the software, all of the software, which is obviously more than just the Lawson, we need all of the project management services that it takes to get it done, we need all the hardware, software, and systems and some software around that that makes that happen, and we need all of the implementation services it takes to put it in, train our staff, and make sure it is working. So far, to date, what we have purchased, what we have really brought on site is the consulting, the project management, which is necessary to get the whole thing started, has been put in. We have put aside approximately $500,000 for project management for the length of the project so that has been approved already by Finance, although obviously we pay as we go. It wasn't an upfront payment. That is done and that was contracted this past February. This software is where we are now, getting the software in. The Lawson financials application is $687,000. We will talk about that as we get into the details of the requestin front of you. The parts that you see up here in black, the smaller print, is the timekeeping, the tax, the utility payments, those things. Those are yet to come, but they are smaller components. We haven't bought much of the hardware and systems necessary to run it yet, but that will be next. Lastly, we are in the process now of negotiating with the vendor, Velocity is their name, to implement the software. We hope within 30 days to be able to come in front of Finance and put forward a request to contract to implement the software and that implementation would start immediately upon signing the contract. Mayor Lozeau When Finance dealt with that big piece that Mr. Barker just mentioned, the project management that was when you said to me it would be nice to know more about this. Because we were coming in with a piece that was just as much and I hadn't had a chance to have more of a discussion surrounding ERP with some of you, that is why I asked him to come in tonight because I figured we could at least give you that snapshot of where we are now. John Barker And there is a small note on the slide here that just says annual software/hardware licensing and maintenance isn't included in these bondable procurements. Those are ongoing operational costs that ; Finance - 05/19/10 Page 26 show up in the budget. The budget will continue to reflect year after year increases, whatever it might be around those licensing and maintenance costs. Alderman Pressly What do we pay now in that type of service? John Barker Well Admins, since it is 30 years old and we wrote the contract with them 30 years ago, we don't pay a whole lot. I think we pay somewhere around $60,000 for licensing and maintenance on Admins, but frankly we pay them $60,000 and we use nothing. There are no upgrades that come out. .. Mayor Lozeau Our staff does all the work. They write the programs for changes ... Alderman Pressly I am just trying to think what in the future - is it going to be a million dollars a year do you think in the future once this is all up and running or... . Michael Gilbar I think when we did the initial budget estimate I think it was somewhere around $600,000 or $700,000 as the high estimate. Alderman Pressly So that is going to be a permanent expense in the annual budget once this is over. Michael Gilbar Assuming the software is that expensive and at that level. John Barker Since you are paying a percentage of the cost of the purchase for the maintenance, the better you can negotiate the price of the software the cheaper it will be for you long term. We negotiate, and we did in this case, aggressively not only on the purchase of the software, we negotiate aggressively on trying to lock in maintenance and licensing costs going forward to control thos,e costs to keep them from rising without our being able to plan and adapt for it. Mayor Lozeau Our team negotiated a price better than any municipality that we could find including those we visited and those we didn't. One of the other benefits is, as Mr. Barker might talk a little bit more about, the company wants to book this in this year's sales so we had an additional advantage in our negotiations. Alderman Pressly So you can today say what it is going to be once it is all up and running because you have already negotiated that. Finance - 05/19/10 Page 27 Mayor Lozeau No we cannot say. We just know that it will be less than it could have been. John Barker We can tell you what this maintenance will cost on this software for the next 5 years with absolute certainly, but we haven't bought all the rest of it. Mayor Lozeau That is? John Barker The price on the first year is $139,300 and we have locked in an ongoing discount. We are precluded from frankly discussing the discounts .... Mayor Lozeau Just tell them what the price is. You don't have to get into the things you are concerned about. John Barker To tell you how much it increases, I would have to run the numbers. Mayor Lozeau But it is going to increase more than the $140,000. John Barker Yes. Mayor Lozeau So we get $140,000 the first year and the next year it is going to be higher? John Barker It is going to be higher. Mayor Lozeau Significantly higher? John Barker I think it will increase by 4%). Michael Gilbar Yes that sounds right. Finance - 05/19/10 Page 28 John Barker Four percent and each year it can increase no more than 4% for the next 5 years. Mayor Lozeau That is the answer. Thank you. Alderman Pressly Thank you. Now I really have a silly question. One thing I noticed during the budget process is that the city all has one budget system and the school department has another. It was sort of interesting the other night when we were talking with them, they were working totally different pages and numbers, and I noticed last night that a lot of the school board members went up to pick up the City Hall budgets. Something as simple as that, will that unify the budgeting systems of all the departments? Michael Gilbar There will be a common budget management system that is fed in from H.R., payroll, the benefits management piece, from the general ledger, and all of the other components that we have. That is why it was important with the core financials to have something that all linked and interfaced properly so that we could make certain that we are all working off the same page. Alderman Pressly So in the future the school board will have the same budgeting system that we have? Michael Gilbar Correct. Mayor Lozeau Yes. But it is also worth noting that the police often do their budget different than we do it. The library sometimes does. The fire department sometimes does. ,Sometimes it is easier for them to use a system that - you might remember the Risk Manager was in here saying I am not working from your budget. Sometimes it is because they put together something that they are comfortable working from to be able to answer questions because they do it in a manner that says oh yeah I know this is where I put my this and this and this. So when you say what is in miscellaneous, they can tell you some of those answers. Alderman Pressly Okay. I just found it very interesting that we were talking apples and oranges the other night where they had no idea what we were talking about and they were looking at pages that we didn't have. Mayor Lozeau I know. I was just saying I think the police and fire both dropped you off a different budget than was in your budget book. That is one of those things that may still happen, but under this system; everybody can use the same much easier than they can now. Alderman Pressly Thank you. .r. Finance - 05/19/10 Page 29 Alderman Deane Police and fire dropped off a budget that showed more detail. The school department on the other hand had line items for $300,000 or $400,000 that said Director. The rest of everybody else had well broken down accounts that could actually explain what was in their different line items. The police department does a good job of that as well. I share your frustration. Alderman Pressly It would be awfully nice to unify that. Mayor Lozeau For all of us. Alderman Deane That is going to happen. Mayor Lozeau Are there further questions on the presentation? Are there questions on the pending motion? Further discussion on this item? MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Contract Award for 2010 Drainage Improvements Requested By DPW Engineering (Value: $183,555) Account: 792-53181-3794 Stormwater Abatement Account Balance Remaining After Purchase: $40,085 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO DBU CONSTRUCTION IN THE AMOUNT OF $183,555. SOURCE OF FUNDING IS ACCT. #792-53181- 3794 ON THE QUESTION Mayor Lozeau Alderman Deane I am sure you are happy to see Tomolonis on this after so many years of waiting to see something get done here. Alderman Deane Madam Mayor the folks on Tomolonis Drive are going to be ecstatic when the 8" iced speed bump is gone from in front of their driveways. Alderman Pressly I notice there is $40,000 left. I presume that is for the end of the budgeting year. Mayor Lozeau Yes. Finance - 05/19/10 Page 30 Alderman Pressly Is that enough to do anything more or are they going to carry that over to the next. .. Mayor Lozeau They can do more. This is an ongoing account. We have more drainage issues than we could ever fund in a budget cycle. We just keep plugging along 2 or 3 streets at a time. Alderman Pressly Okay. I was just wondering if we should be looking for another one of these soon. Mayor Lozeau Every time we can, we do. Alderman Pressly Thank you. Mayor Lozeau You are welcome. Alderman Deane It was interesting Mayor that you mentioned Tomolonis. I got a call from a resident over there the day that the posting went in the paper and the resident said well you seem to have forgotten about us and I said no look on page 23 in the Telegraph on the right hand column all the way down - that is requesting a bid for repairs on Tomolonis. Now, if this is approved this evening, I will give them a call tomorrow and let them know. Mayor Lozeau And as you know Alderman Deane the Board of Public Works already approved it as well. Alderman Chasse This Tomolonis is that one of those streets that was paved incorrectly? We had a list of them that had like a crown to them that caused flooding. Is this one of those particular streets? Mayor Lozeau No. Alderman Deane I can explain the problem to you. There was a sub-division put in on the next street up and the person on the end of Tomolonis took a 4" piece of ADS drain tile because of the massive amount of water because of the hill and the ADS drain tile pushes all of the water out into the street, and it runs continually. I just keeps moving out into the roadway, moving out and moving out and building up and building up, and that whole side of the road I would say probably 500-600 feet of it is totally spider cracked. It has to do with drainage issues from properties, one property in particular. Finance - 05/19/10 Page 31 Alderman Chasse So it is a drainage issue because of a sub-division that was built. Mayor Lozeau A drainage issue, but not because of a paving problem. Alderman Chasse Not of the paving, but sub-division. Thank you. Mayor Lozeau Is there further discussion on this item? MOTION CARRIED UNFINISHED BUSINESS - None NEW BUSINESS - None DISCUSSION Alderman Pressly I am looking at something received from Mr. Gilbar, and it has to do with the uncompleted projects. I want to know what I should do with this. Mayor Lozeau There is an ordinance that requires that report be presented to you. It is meant to be able to update you on projects that are in the community that you may be interested in and know the status of, what is left to be done, and what the spending has done. Alderman Deane I put that ordinance in place, and the reason why was because there was so much money out there and the lack of updating on the progress of the project itself, the amount of money that was spent. We had projects that had been completed for years that still had accounts with fund balances in them. Meanwhile we didn't have enough money to pave roads and things of that nature. What that does is it runs right through the entire project once it is funded until its end. Any monies left over and if there is a transfer that is going to be done to utilize the funds for another capital project or whatever might be allowable to do, this board has the information to do that or if the Mayor brings forward some sort of plan to utilize remaining funds from some of these projects to say pave an additional couple of roadways. We approve most all of this work through the appropriations and contracts here, and it is nice to be able to follow the progress of all of the different projects. Alderman Pressly It looks like it is mostly public works projects. Alderman Deane That is where most of the work is. Finance - 05/19/10 Page 32 Mayor Lozeau That is pretty much where most of our work is. Alderman Pressly Thank you. WARRANT MOTION BY ALDERMAN CLEMONS TO APPROVE WARRANT #21 IN THE TOTAL AMOUNT OF $9,729,726.22 OF WHICH $2,437,071.01 ARE ACCOUNTS PAYABLE, $5,056,869.94 ARE PAYROLL AMOUNTS, $78,820.08 ARE PREPAY AMOUNTS AND $2,156,965.19 ARE WIRE TRANSFERS MOTION CARRIED ADJOURNMENT MOTION BY ALDERMAN CHASSE TO ADJOURN MOTION CARRIED The Finance Committee meeting was adjourned at 8:07 p.m. Alderman-at-Large Ben Clemons Committee Clerk ~T m City of Nashua INFORMATION TECHNOLOGY DIVISION I Pro) ct .. ERPProcurern.ent 1  WHAT'S INCLUDED IN NGIN? The Three Components 2  CITY OF NASIllTA ERr SYSTEM<J MODERNIZATION PROJECT A 10% contingency is jtctored into the costs FYlO Frll FY11 FYI3 Total ERP: Hardware 558,014 558,014 Microsoft Upgrade 77,000 77,000 Core Fjnancials and HRfPayroll Software and Implementation 2,054,219 1.097,575 3,151,794 Pro fessi ooal Services: Independent Project 09ersight 235,386 270,075 505,461 Proj eel Managemenl - Vendor 97572 117,572 2l5,144 lmplementation - Olber 74,800 149,600 224,400 Utility Billing Software and Implementation 214,501 307,528 34,170 556,199 Pro fessi aoal Services: Independent Project 09(~rsight Project Management - Vendor lmplementation - Olher l f TolalERP 3  PROCUREMENT STATUS .. Timekeeping .. PC Oper Sys .. Tax .. MS Office 2007 .. Utility Pymts .. Reporting Tools .. Training Tools .. Hardware .. Software onsulting: $500K .. Networking ~ .. Utilities roject Mgmt .. Business Cont roj Coordindation .. Training * Contracted in Feb. 2010 i Velocity Note: Annual SW/HW licensing & maintenance is NOT included in these Implementation bondable procurements Services 4