Pre-Meeting Q & A from the Board - October 2, 2018

The following questions have been posed by Commissioners prior to the scheduled Board Meeting on October 2, 2018.  Staff responses are included below, and are sorted by Agenda topic.  

EWEB Development Policy (DAMEWOOD/GONZALEZ)

The memo on EWEB development policy briefly discusses potential "re-institution" of the SDC waiver/offset for qualifying low income housing projects. When the SDC was put in place by the board in the mid-1990's a resolution with related policies and detailed procedures were adopted to accomplish this purpose. The memo suggests that this practice was discontinued at some point. If so, when and why did this happen? Was the original resolution rescinded by the board at some point, or was this done at the staff level, and if the later, on whose authority?  The policy providing SDC grants for low income housing has always been in effect according to the policy.  In 2012 there was a hold on granting St. Vincent de Paul on a low income housing project (Stellar Apartments) due to the financial situation of the water utility at the time.  According to the policy, EWEB was to allow up to $100,000 per year of excess revenue for SDC grants, and in 2011-2013, EWEB water did not have enough "excess revenue" to fund SDC grants.  The commitment that EWEB made to St. Vincent de Paul at the time was that when EWEB was in a better financial position, we would reimburse the $55,836 SDC grant to SVdP when available.  The reimbursement occurred in early 2015 (see Board memo from 1/6/2015 Board meeting).

Since that time, EWEB has not received any qualified low income housing applications for an SDC grant.  We believe that this is due to the strong economy and building such complexes during a strong economy is not viable for low income housing strategies.  EWEB has received SDC grant proposals from other community driven projects like emergency shelters, and other crisis based housing.  There is no provision for these type of SDC grant requests via the Low Income Housing Policy, and EWEB currently has no policy to accommodate such requests.  EWEB staff is currently seeking ways to re-institute broader and easier methods to provide SDC grants to community driven projects, including low income housing projects, and stay within the spirit of the June 11, 1998 judgment of Koehn vs. City of Eugene that limits the way EWEB funds SDC grants. 

Regarding the proposal to simplify and reduce development costs downtown; are you suggesting a downtown accounts rate whereby all accounts benefiting from the increased reliability there help pay to connect new development?  Or are you suggesting that all EWEB electric accounts - downtown, South Hills, Bethel, upriver, etc - subsidize this activity?  If the former, I'm okay with it. If the latter, then I want to know how this squares with our 'fairness' principle.  We are leaning on it pretty heavy right now to justify collapsing the tiers and transferring some fixed costs from high to low consumers.  Also, how many development projects do we anticipate this affecting in the next 5 - 10 years?  Through our capital budget, EWEB looks for opportunities to improve resiliency in our system when doing a development project anywhere in the system, except the downtown area.  The proposal will align this principal to the downtown network.   Additionally, since all new load moving into this small geographic (downtown network) area will pay its proportional share of increased capacity, EWEB's upfront investment in network redundancy can be recouped over time as redevelopment occurs. Therefore, no "outside-the-network" subsidization will occur.  In terms of how many development projects to anticipate - that's hard to say.  We are aware of four potential projects presently.  An economic downturn could change that to number to one or two.

2019 Draft Electric & Water Budgets and Long-Term Financial Plans (LTFP) Update (FAHEY)

In the Summary of Electric LTFP Revenue Requirement Assumptions and Outcomes: What does the "Average impact resulting from change in revenue requirement" metric indicate?  This is the average price (rate) change across all customer classes required to support the assumptions in the LTFP.

Consent Calendar

RESOLUTIONS

Resolution No. 1824, Investment Policy Update (FAHEY)

Under Delegation of Authority, grants authority to the Treasurer: Who serves as the Treasurer at EWEB?  EWEB's bylaws require that the general manager-secretary designate an assistant secretary,treasurer and assistant treasurer. Sue Fahey, Chief Financial Officer, serves as Treasurer and Susan Eicher serves as Assistant Treasurer. The Treasurer/Assistant Treasurer titles are typically used in financial documents such as bond transactions.

Why was 7.1.iv cut from the Investment Policy dealing with stricter policy being imposed by the Investment Officer?  Staff are proposing that language giving the Investment Officer authority to establish policy not be included, leaving authority to establish policy to the Board. Staff also are proposing that the procedural details of-the due diligence process not be included in the Board level policy.

Why was "However, the Investment Officer is encouraged to document quotations on comparable securities" cut from the Investment Policy?  This line is specific to original issue securities where all dealers are offering the same price and is repetitive to the more general sentence in a prior paragraph: "Competitive bids or offers should be obtained,when possible, from at least three separate brokers/financial institutions or through the use of a nationally recognized trading platform." Staff is proposing to remove the documentation language since that is procedural in nature.

Why was 9.3 on Repurchase Agreements removed?  A repurchase agreement is a form of short term borrowing for dealers in government securities. Securities are sold with a promise to purchase them at a future date, with interest. Proposed removal of this section is due to EWEB having sufficient other means to make short term investments. As a primary alternative,the Local Government Investment Pool provides excellent short term liquidity and strong market rates. In practice, repurchase agreements are not part of EWEB's portfolio.

What is the rationale on why staff changed the percentage allocations on 10.1 Credit Risk? It states that therein a Max allowed per ORS 294.810, which suggests that we do not have flexibility to adjust those percentages.  The "Max allowed per ORS 294.810" is specific to the Oregon Short Term Fund (LGIP) line. Each year the max amount is adjusted for inflation, currently it is $49.5 million. For corporate/commercial paper, ORS294.035 states that an entity can't have more than 35% of the portfolio in corporate indebtedness. Staff is proposing using the statute limitation to allow greater flexibility than the sample policy.

Why was section 14.2 on regular Performance Standards/Evaluation removed?  Return performance standards were added to Section 3.3 which states "the investment portfolio shall be designed with the objective of exceeding the one year Constant Maturity Treasury rate as published by the Federal Reserve Board". The 14.1 Compliance requirements include analysis based on qualitative information of EWEB's portfolio in addition to quantitative. Section 14.2 is quantitative analysis and much of it is procedural in nature.