EUGENE WATER & ELECTRIC BOARD

REGULAR BOARD MEETING

EWEB BOARD ROOM

MAY 17, 2005

7:30 P.M.

Board Members Present: Ron Farmer, Sandra Bishop, Mel Menegat, John Simpson, and Patrick Lanning.

Others present: Randy Berggren, Debra Smith, Dick Helgeson, Marty Douglass, Deborah Brewer, Dick Varner, Jim Wiley, Lance Robertson, Tom Buckhouse, Jim Origliosso, Roseanna McArthur, Mel Damewood, Steve Newcomb, Mike Logan, Tom Williams, Mark Freeman, Krista Hince of the EWEB staff; Eric Gunderson, Mark Young, WBGS Architects & Planning, PC; Ruth Atcherson, minutes recorder for the City of Eugene.

President Farmer convened the Regular Board Meeting of the Eugene Water & Electric Board (EWEB).

AGENDA CHECK

General Manager Randy Berggren noted that Agenda Item (4) Items from Board Members and a portion of Agenda Item (5) Correspondence had been covered during the EWEB Work Session.

PUBLIC INPUT

Robert Grafton brought good news from Leaburg Lake. He reported that the lake raise had been choreographed very well and the area neighbors were happy to have it behind them. He shared that neighbors were pleased that the lake had been raised by less than 18 inches. He thanked staff for including neighborhood representatives in the monitoring project. In closing, he underscored the willingness of area neighbors to do whatever they could to work with EWEB and interface with the community.

APPROVAL OF CONSENT CALENDAR

Minutes

1. Minutes of the March 1, 2005, Executive Session and Regular Board Meeting.

Business Service Agreements

2. Bring Recycling Center – Donation for New Recycling Center – General Manager’s Division - $10,000

3. SelecTemp – Temporary Services – Information Services – Corporate Services Division - $54,800

4. Kanner & Associates – Support for FERC Licensing of Hydropower project – Public Affairs – Corporate Services - $36,090.72

5. Caprine Restoration Services – Vegetation and Brush Control/Goat Treatment – Electric Division - $18,700 per year for five years (or $93,500)

6. Sensus Metering Systems – Sensus Water Meters – Water Construction – Water Division - $650,930

7. Groundwater Solutions, Inc. – Technical & Engineering Services in support of Water Rights for the Confluence Well Field – Water Engineering – Water Division - $35,000

8. USDA Forest Service – Willamette Forest – Collection Agreement – Bull Trout Population – Environmental Management – Corporate Services - $28,500

Priest Rapids/Wanapum Power Purchase Contracts

9. Amendment No. 2 to the Priest Rapids Project Product Sales Contract and Termination of Additional Product Sales Agreement

Board Policies (ongoing)

10. Continued Policy approval for Board Governance Policy Review

a. GP8 – Meetings and Executive Sessions

b. BL1 – Global Board-General Manager Linkage

c. BL6 – Board-Staff Working Relationship

d. SD3 – Customer Service Policy

e. SD7 – Purchasing Policies

f. SD10 – Power Cost Recovery Policies

g. EL3 – Public Requests for Board Expenditures

Commissioner Menegat, seconded by Vice President Bishop, moved to approve the Consent Calendar. The motion passed unanimously, 5:0.

CORRESPONDENCE (continued from the Work Session)

Mr. Berggren continued his report, as follows:

Laurie Muggy and Jennifer Joules included an update on the medical savings project plan in Board packets. This was slated to be an agenda topic at an upcoming meeting.

· Senior Rates/Financial Analyst John Yanov sent the Board the study results from the December 2005, Water System Development Charge (WSDC). This was scheduled to come before the Board on August 16 for an initial discussion and a public hearing. Mr. Yanov met with the Home Builders Association to address their concerns.

· Public Affairs Manager Marty Douglass reported that the next series of monthly community meetings upriver were scheduled to begin on May 26 at the Vida Community Center.

· Electric Division Director Jim Wiley sent a memorandum describing the Leaburg Lake raise. Mr. Berggren asked him to report on it for the Board.

Mr. Wiley reported that the lake raise had gone as planned. He said the Army Corps of Engineers (ACOE) had agreed to allow a flow of 300 cubic feet per second (CFS). He felt Mr. Grafton’s testimony demonstrated the working relationship the utility had formed with the people in the area and how much better received the process had been given the transparency with which the utility had conducted the work. He stated that the increase in flow had increased the generation of Mega Watt Hours (MWH). Staff planned to send a letter to area residents to let them know the results and to ask for feedback as to what they witnessed when the water level was allowed to rise. He noted that several representatives of the Friends of Leaburg Lake were present for the test. He added that staff would decide what it would do next after analysis of the results.

Commissioner Simpson recalled that Mr. Wiley and staff had projected that the amount of energy generated would climb and then drop. Mr. Wiley responded that this had not proven to be true. He said the amount of energy increased on a linear basis and had leveled out.

Commissioner Lanning thanked Mr. Wiley, Mr. Douglass, and staff for working on this and helping area residents feel more comfortable with the process.

BOARD AGENDAS

Mr. Berggren provided an overview of the Eugene Water & Electric Board: Board Agenda Report; May 17, 2005. He noted that he and President Farmer had discussed the first item on future agenda items (Temporary Employment Agencies) and had scheduled it for the June 7 Board meeting. He felt it would be of use given the Board conversation that indicated it was a priority.

Mr. Berggren observed that three Board members planned to attend the American Public Power Association conference June 21. Because of this there would be no quorum for the second meeting in June.

MASTER PLAN UPDATE AND WBGS CONTRACT AMENDMENT

Mr. Berggren indicated that staff intended to highlight its response to the Board-requested scope revision on the 30 percent design strategy. He noted that the added scope would require a time extension of six to eight weeks. He wished to add context to it in that he wanted to remind the Board that the schedule delay would not coordinate with the agreement made with McKenzie-Willamette/Triad Medical Center (MW/T). He pointed out that this would also prevent the utility from going to the November 5 ballot, though he acknowledged that a clear decision had not been made to pursue a bond at this point. He stated that as it stood, the Board, should it choose to place a bond on a ballot, would have to wait until the March 2006 election. He added that an election would cost between $90,000 and $100,000.

Mr. Berggren reiterated that the agreement with MW/T provided EWEB until March 1, 2006, to complete necessary assurances of any planned sale and subsequent move of all or part of the facilities that were going to be financed. He said, as originally conceived, this would have included, hopefully, an affirmative vote by the Board and some determination of financing costs including interest and fees. He stated that the potential schedule extension that would result from the revised scope would make it impossible to complete all of the financial assurances by March 1 and the utility would not be able to get to the ballot prior to the deadline. He surmised, based on continued discussions with MW/T, that the delay would challenge the hospital’s ability to wait longer. The City would also likely release consulting resources that had been on standby as a result of the delay. He noted that the consultants were on standby to do some initial design work on the Patterson Street underpass. He indicated that he would communicate to both MW/T and the City of Eugene based on the Board’s determination of the best course of action. He underscored that the issue of MW/T was a separate decision in the face of the decisions the Board would be making regarding the possibility of a move. However, he suggested offering an extension to MW/T as opposed to terminating the agreement.

Commissioner Menegat observed that Mr. Berggren had discussed moving all or part of the utility in reference to the agreement with MW/T. He understood the agreement with MW/T to be seeking to purchase the entire EWEB property. Mr. Berggren responded that MW/T had, at least informally, made it known that they would consider leaving the headquarters building, though the formal agreement only referenced purchasing the entire site.

Commissioner Simpson understood the agreement did not include the steam plant. Mr. Berggren replied that it had not been included in the appraisal, but was included in the first right of refusal.

President Farmer asked if the entire EWEB acreage was encumbered. Mr. Origliosso said the building was not pledged as collateral.

President Farmer surmised that if the utility split the operations arm from the administrative arm nothing would push the utility to refinance the headquarters building.

In response to a question from President Farmer, Mr. Berggren stated that according to the agreement all of the issues had to be resolved and agreements reached prior to the end of the financing feasibility period.

Master Plan Projects Manager Mel Damewood stated that Principal-in-Charge, Eric Gunderson, and Project Manager Mark Young, were present representing WBGS Architect & Planning PC. He referred to two memoranda provided to the Board in their Board packets entitled 30% Conceptual Design Scope Change and Proposed HQ 30% Design Progress Report. He noted that the five-day workshop that had been planned for the next week had been delayed due to the change in scope. He provided an overview of the progress to date with the aid of a power point presentation.

Mr. Damewood commented that the utility’s sustainability goals sought to minimize or eliminate negative impacts to the environment. He believed that everyone wanted a “living building” in concept, but such a building was very expensive. He acknowledged the utility’s desire to build for some level of Leadership in Energy & Environmental Design (LEED) certification.

Mr. Damewood reported that the detailed programming had been completed and everyone in every section of the utility was interviewed; full time equivalent (FTE) counts and space need counts were taken. He said a preliminary discussion had occurred regarding what type of building materials should be used and what type of security systems should be considered.

Mr. Damewood stated that a preliminary draft of how operations would be split from the administrative end of the utility had been compiled. He noted that the customer service issue would have to be worked out and would likely take some Board involvement.

Mr. Damewood listed the significant findings:

· Most sections of the utility indicated that a split would have a minimal impact on them. Under the current configuration, operations did not mix with administration.

· Regarding Customer Service, there was some question as to whether there would be a customer service counter at both sites, should there be a split.

· A combined move would require moving the Fiber Control Center, the electric and water Supervisory Control and Data Acquisition (SCADA) systems, and all of the computer systems. This would be very expensive to move. This was projected to cost “millions of dollars.”

· The Engineering Section wanted adjacency in either a split or a combined move.

· There were a lot of potential operational efficiencies and improvements to be gained from a better and modernized facility.

Mr. Gunderson summarized the added steps for the scope of work process for a split move. He explained that no work plan had been developed for such a split and no assessment of the existing building had been made. He noted that the Board had voted to defer maintenance given its assumption that the utility would not be using the facility in the long-term.

Regarding programming, Mr. Gunderson pointed out that there would have to be some redundancies with a split scenario, such as information services, data centers, and phone systems.

Mr. Gunderson stated that a portion of the scope of work would lie in creating two different design proposals for the Roosevelt Boulevard site, one with administration and one without.

President Farmer asked, in considering a split operation, if some thought had been given to the possibility that the administrative functions of the utility could move to the new site in 10 to 20 years. Mr. Gunderson affirmed that this was a consideration.

Mr. Damewood reviewed the proposed schedule, copies of which were included in Board packets. He emphasized that it would not be possible to accelerate the two scoping scenarios concurrently.

President Farmer asked if there was a financial advantage to having a split or combined move. Mr. Origliosso said he did not think so. He assumed, though, that a split move would require less financing. He said timing would be crucial given that interest rates were rising with time.

Commissioner Menegat expressed concern, given that the utility had a conceptual agreement with MW/T for the sale of the entire property and was now interjecting a split design scenario. He was also concerned that the utility “does this right.” He felt that MW/T would let the utility know, should an extension not work for them. He did not want to rush anything because the end result could be that the utility would get less and it would cost more. He was anxious to see the initial “ball park number” in July and to see whether any buyers would still be interested at that point.

Commissioner Simpson concurred. He encouraged staff to communicate clearly with MW/T about the delays and find out their response.

Commissioner Lanning agreed with Commissioners Menegat and Simpson.

President Farmer said he would likely suggest the Board follow Mr. Berggren’s advice. He was more comfortable with the idea of having all of the options on the table instead of only one. Ultimately, he felt no factual information that had been presented that would change his mind.

Commissioner Menegat, seconded by Commissioner Simpson, moved to approve the amendment as set forth on the request for the additional funds in the amount of $288,643 and that an extension of time was provided to prepare the complete reports.

Vice President Bishop called it a “wise decision.” She felt the Board would get quality work and quality work took time. She said the utility needed to be realistic and respectful and should let MW/T know that the utility would not be able to meet the terms of the first negotiating agreement. She did not support entering into an extension of that agreement, however.

Commissioner Simpson asked if this meant the Board was choosing the “off ramp” option and terminating the agreement with MW/T. Mr. Berggren responded that termination should be a separate discussion from the scope of work discussion.

Commissioner Lanning underscored that the decision to meet EWEB’s higher plan was not connected to the plans of MW/T. He stressed that EWEB’s need to find the site that met its requirements was a different issue.

The motion passed unanimously, 5:0.

President Farmer averred the Board owed it to themselves and to MW/T to hold a discussion on whether to terminate the agreement or to request an extension.

Commissioner Menegat stated that EWEB had been negotiating in good faith for a long time. He indicated he would support approaching MW/T with the opportunity to reasonably extend the agreement.

Commissioner Simpson fully concurred with Commissioner Menegat. He opined that now was not the time to “bail out” and exercise the off ramp option.

Commissioner Lanning agreed.

President Farmer recommended expressing that EWEB would work hard, once it had the numbers in October, to address the other issues with MW/T.

Vice President Bishop was uncomfortable with the discussion. She thought it deserved wider public participation and the present discussion represented the Board “backing into a decision.” She averred it should be an agenda item on an agenda and not an afterthought to another motion.

Commissioner Lanning thought it behooved the Board to provide the General Manager and staff clear direction on whether to jump to the off ramp option or to negotiate an extension, given the action it had just taken.

Vice President Bishop averred that the Board’s action reneged on the agreement. She did not feel it was the utility’s obligation to make a further decision at this point.

President Farmer said the only reason this discussion had arisen was because the Board had decided to take more time. Therefore, it was logical to extend the Board’s willingness to talk to MW/T.

Commissioner Menegat did not want the Board’s action at the present meeting to be construed as an action by the Board to exercise an off ramp. He was willing to wait until it was an agenda item if necessary.

Commissioner Simpson thought it very important to get the 30 percent numbers in front of the Board and the numbers could “very well be the off ramp.” He preferred to exercise that option on a financial basis over a technical basis.

In response to a question from Commissioner Lanning, Mr. Berggren said the Board could be at risk of misinterpretation by MW/T without an official motion. He encouraged the Board, if commissioners were worried about leaving a void, to indicate a willingness to keep participating in negotiations. He thought it would be a complementary and appropriate decision to offer an extension given the action the Board took.

Commissioner Simpson, seconded by Commissioner Menegat, moved that the Eugene Water & Electric Board empower Randy Berggren, General Manager, to negotiate with McKenzie-Willamette/Triad Medical Center to extend the agreement in principle to June 1, 2006.

Vice President Bishop opposed the motion. She did not believe it was feasible that the hospital deal would come to fruition and wanted to make the current EWEB property available for sale. She averred that the EWEB Board needed to “end the drama in the community” regarding the hospital’s offer to purchase the EWEB site.

Commissioner Lanning indicated his support for the motion.

The motion passed, 4:1; Vice President Bishop voting in opposition.

BOARD GOVERNANCE

· Board Bylaws Amendment

Assistant to the General Manager Debra Smith explained that the draft Eugene Water & Electric Board Bylaws dated May 4, 2005, had been the result of two months of work. She said the draft had been publicized on the Web and in the local newspaper and the utility had not received any comments. She thought the bulk of the changes were of the clarifying and housekeeping variety. She noted that this was the first comprehensive review of these Bylaws since 1990.

PUBLIC HEARING ON BOARD BYLAWS CHANGES

President Farmer opened the public hearing. Seeing no one who wished to speak, he closed the public hearing.

Board Bylaws

Commissioner Simpson, seconded by Vice President Bishop, moved to approve the draft May 4, 2005, version of the Bylaws as they stood. The motion passed unanimously, 5:0.

ITEMS REMOVED FROM CONSENT CALENDAR

There were no items removed from the Consent Calendar.

President Farmer adjourned the meeting at 8:50 p.m.

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