Town of Liberty Grove, Door County, Wisconsin : Utilities Negotiating Committee : Utility Neg Minutes

This is the fifth meeting of the negotiating committee. Attending this meeting from the Village: Ken Church, Pat Duffy, Administrator Bob Kufrin, and Plant Supervisor Steve Jacobson; from the Town: Frank Forkert, Peter Sauer, and Clerk/Administrator Bud Kalms. ( Note: In these minutes, Sister Bay will be referred to as V, Liberty Grove as T, and Sanitary District as SD. In later years when SD becomes Utility District, that shall be UD).

Frank Forkert called the meeting to order at 7:02 AM. Church moved, Sauer second to approve the agenda. Carried 4-0. Minor corrections were made to the Village minutes. Forkert moved, Duffy second to approve the minutes of 6/9, Village and Town, as corrected.

Report on numbers and percentage analysis. Forkert said Sauer and Kufrin have met to work on cost allocations. Kufrin said Attachment #1 should be the correct numbers; in Attachment #2, the cumulative depreciation number is now 22, not 21, reflecting 1 more year of depreciation.

Sauer moved, Church second to approve the corrected form of the spreadsheets. Discussion: Kalms asked if the colored portion is the reference. Kufrin suggested hiding the 2 top tables and just show the colored part to avoid confusion. Motion carried 4-0. Sauer said how ownership was developed cannot be determined, no clues surface for that.

Town goals & objectives. Negotiation points from the T perspective were presented to the V committee members, and are attached to these minutes. Forkert noted that the committee has agreed on equal representation. Church noted that a tie vote could happen and also felt one T representative should be from the UD. Kufrin said it is up to each to determine who serves and how they are selected. Sauer felt the T should have at least one elected member. Kufrin wondered about the V changing their code to have a 3 and 3 structure now. Sauer said the T does not have an ordinance and would not want to open/modify the agreement at this time. Forkert agreed on waiting until we are further along. Duffy was concerned about an impasse with a tie vote. Kufrin said one of the members would have to recognize the need for the good of the group and vote accordingly. Jacobson noted the utilities committee remains advisory to the V Board and would stay so even if the ratio is 3 to 3. Sauer reminded that the T is looking for a partnership arrangement and would not want to turn ownership over to a committee that is advisory to the V. Board; should the T partner with the V. a different arrangement would have to be set up. Church wondered what happens to the UD. With a 3 to 3 setup; would the committee be all encompassing. Sauer said a commission would run the plant for the T & UD as well as the V, the UD is part of the T. Church said that we are by ourselves but joined together. Sauer noted the present committee is responsible for the pipes in the ground. Jacobson said there is a separate report for the UD with hauled in waste reported in monthly reports; he is concerned about commission decisions affecting the UD if the UD is not represented; would you have separate meetings for the plant and collection system. Kalms reminded that the UD is different from the former SD.

Kufrin wondered if it would more efficient to transfer UD administrative functions to the V as they are managed very similarly; the UD committee only meets 3 or 4 times a year whereas the Utility Committee meets monthly; contracting with the Village to do it all should work, and reports could all be done at the same time. Sauer felt there could be a legal problem; with the current well testing program in the T, that could indicate something needs to be done in Ellison Bay, resulting in a district being set up similar to the UD. Kufrin said the V is very efficient in operating the plant and UD billings/services—rather than finding someone with the expertise to run a number of small districts, use the V skills instead of one person in the T to manage these districts. Sauer said this looks like a commission to run the plant and pipes. Kufrin did not mean piping, but just physically checking on things—meter reading e.g. Sauer said it is the T suggestion to move into an area that is seamless between the V & T. Church is concerned about the extra work when things get split up—put all in the same basket. Forkert said we are approaching what is efficient and works administratively; his thinking is that a commission runs the plant with contracts with the T & V to manage and operate the in-ground systems; a committee or commission could work. Sauer said he doesn’t have a feel for what this would be like in the future, but hopes to find something workable. Kufrin said it looks more like the T is looking for problems the commission could solve as opposed to a strong problem we are trying to fix; what are existing problems a commission would fix; e.g. if a problem in Ellison Bay is a big concern, is there something that can be done with the existing committee, or are there legal impediments with the existing committee to solving that problem. Sauer said the T problem is the big investment in the plant; how is that resolved; with modification of the agreement, can the T say o.k., move forward and forget the investment; can we change the agreement so it allows the T to back off and say “our investment is covered, we can move ahead”. Kufrin asked if the spreadsheet addresses that if one uses more capacity the others are compensated for that usage. Sauer said the T wants the concept of you own so much and we own so much to go away; T wants to be billed on the basis of usage—pay for what we use. Kufrin said the problem is that you build for growth, so capacity is not exceeded before the plant is worn out; T demand as engineered for did not happen; the UD uses more than projected; who pays for growth capacity. Sauer said the T would pay for capacity determined on past usage; go back to average peak usage for 3-5 years, that would be what the T share would be compared to the V share for the past 3-5 years.

Kufrin posed a scenario if 1100 units are needed instead of 1000 and the V needs 60 and the T 40 with a cost of $600,000 and $400,000, does this mean the T would not pay $400,000. Sauer said the T would not have 40% of the anticipated flow, may only have 10% with V 80% and UD 10%; T would base on what are doing now/history rather than some nebulous figure over next 20 years. Jacobson said you can’t build a plant that way. Sauer said we are talking how to allocate cost, not engineering the plant. Jacobson said if the V only needs 30 units out of 1,000 and the T plans for more growth in Ellison Bay & Gills Rock in 10 years, do you pay for that on rates or taxes. Forkert said the commission would work on this and tell the T what it has to do.

Jacobson said right now the UD is at or over capacity, the V is near capacity, the T does not want to sell its capacity; down the line, review if have to expand, then what are the needs for 20 years—part of the calculation may be the T hasn’t used capacity as planned for; if the V needs 10,000 more flow and purchase is needed, when is that addressed—we are nearing that now. Sauer felt this is a question for the present utility committee—we now have the mechanism to determine that; the T has 20 years of growth experience, which suggests the T will grow slowly in the next 20 years; many have upgraded their systems in Ellison Bay and in the T; they are allowed to not connect to a sewer system. Jacobson said if you have grant money for the project you must hook up plus sewer and water will lead to development.

Kufrin said it would be interesting to see, based on how numbers are provided historically, how differently you would do based on all the information rather than how things are currently operating in relation to item #3 of the T’s points to consider. Sauer noted that 20 years ago we felt there would be more expansion in the T; with the well testing the picture may change substantially with possibly a governmental body to handle that; a commission is more flexible to handle those changes. Kufrin said if this group here today is the commission, and you look at #3, show how we would do differently than what has been done; if things are based on the average peak month for the last 5 years how would it look differently. Sauer said that is talking 2 different things: 1. Peak capacity of the plant—estimate the future with the V peak and T peak and come up with a figure; 2. Usage—pay based on rates or taxes; use peaks to determine how much to increase capacity; a commission studies and determines what is needed for peaks; the difference is you pay for capacity and continue to pay for usage as you go along; capacity is not owned; V pays for more usage, the T pays for what it uses. Kufrin said T forecasts did not turn out, due to external forces; if the capacity had been done differently, how would this look differently today. Jacobson said if the T forecast had been less, we would be planning now for plant expansion; all are paying for what they use now; need a mechanism to estimate what is needed for the future; 2 items—pay for plant (capital cost), pay for actual usage. Kufrin noted the annual rate, which changes yearly, pays for operating costs and depreciation; the initial capital costs are fixed, some of which may be in the rates. Forkert said the T has paid for capacity, so if expansion is needed, the T wants its prepaid capacity to come into effect so the T does not participate in another capital expenditure—have overpaid so far. Church wondered if the plant is expanded and the T needs 50% and the T has 40% already, does the T pay for 10% of the expansion. How would this change with a commission. Sauer said under the commission the T would not own capacity, the charges are all usage; with expansion, decide what is needed. Jacobson said the T & UD will determine their expected growth. Kufrin said population projections were the most divisive portion of the CUPAC study; projections were deemed to be too high, but pipes would not go if the growth did not happen. Church said expansion would follow sewer & water. Jacobson wondered if amending the agreement by each determining their expansion needs for the next 20 years would solve the problem. Sauer said the T paid 45% of the 2003 expansion based on 1988 estimates; looking at past usage would have determined what they actually needed; as of now the T has 45% of expansion “hung” on it. Kufrin wondered what the actual percentage the T would need instead of the 40.7%. Sauer guessed about 8%, but deferred to Jacobson, who said there are operating problems when haulers bring in septic waste all at once—on that day capacity is blown right out of the water; 2 loads of septage equal one day of V waste for BOD loadings. Sauer noted this would be one month usage; when planning for future capacity, you talk peak usage; once you plan and build the plant and pay for it, that is done; the committee or commission runs the plant. Jacobson said if one community grows faster and if there is no mechanism to purchase back or pay for the capital cost of the other partner, it becomes an issue again. Forkert said this is the reason to get rid of ownership of capacity. Jacobson asked about paying for capacity and others using it. Sauer said if the T pays for expansion and the others use, that is our mistake, go ahead and use it; at the next expansion we estimate again and go ahead with that.

Kufrin felt it important to forecast the future with computers and have numbers on paper vs. hypothetical things; if this group does not figure this out, how will the next one do it. Sauer said the next group has to figure it out; they will decide if the T is under or over, and if the V is under or over; each pays for expansion then pays for usage; if they make a mistake, they make a mistake; the T does not want to keep paying 45% as is presently done. Duffy said they are willing to change the 45% part. Forkert feels the committee has experience and should be on the commission. Sauer said if the committee asked the T for estimates, they would have no authority to question the T numbers; a commission would have the authority to determine the numbers for the T. Church would like to see one engineer for the V & T and split the cost. Jacobson said the advantage of each having their own engineer is that each engineer has their employer’s interests at heart.

Sauer noted that members of a commission would have equal powers; with the committee, it is under the V Board. Duffy said with the commission the T Board still authorizes expenses; can the commission force the Board to pay a bill—if no, the commission is equal to the committee. Sauer said if the T puts responsibility into the commission, the commission recommends to the Board, there is more power and effect for the T Board to accept the commission directives. Duffy wondered why you give the commission more powers than the committee. Sauer said because we are not equal partners in the committee, the committee is a committee of the V Board. Church said the T will be equal with 3 & 3 membership. Sauer said you are just looking at representation, we’re looking at the responsibility of the commission or committee; the committee does not have the same responsibility for the T like it does for the V. Kufrin asked if the T would give the committee that authority. Sauer said the agreement would have to be re-written to allow that—the committee would not be a committee or entity of the V Board.

The next meeting will be July 21 at 7 AM at the south station. Agenda to be the same except for the spreadsheet numbers.

Church/Duffy to adjourn. Carried 4-0. 8:31 AM

Points the Town would like to consider in the continuing discussion of a Commission at the July 7 2011 negotiating meeting at the town hall.

Equal representation, 3 from Town, 3 from Village

--appointed or elected—to be determined

--minimum of one Board member from each

--independent of the Village and Town Board

Village and Town dump their interests in the plant into the Commission

--plant to include lines leading in, outfall, sludge disposal land

--financial accounts, replacement funding (physical ownership of the land and

plant, including plant related vehicles, equipment and contents)

--change from owned capacity to actual use

--capital improvements not done based on investment

Expansion of plant capacity to be based on needs as they unfold.

--base on peak monthly usage

–average of past 3 or 5 years’ peak months

–capital expenditures: Town & Village approve

–of the 4 parameters, if one is over, change that portion of the plant

–flow is the main factor

--replacement is revenue supported

Coordinated planning for Village and Town

–currently committee plans just for Village

–protect area for well #3

–Commission would have authority for planning

–recommendations of ordinances to Town & Village would be coordinated

–Commission has own counsel and engineers independent from Town & Village

–eliminates Town and Village having to iron out discrepancies

–eliminate Village acting and then Town later acting on the same issue

–would then act at or about the same time (present issue to each close together)

Coordinated independent financing—out of Town & Village hands

6. Consolidate administrative tasks

–administration separate from Town & Village

–one central operation

–coordinate administration with utility district

7. Expansion would occur into additional areas beyond areas now served

–commission not concerned with borders

–extension of utility district then presented to the Commission

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