Minutes

These minutes are the official minutes of the MSC's August 2008 meeting held August 12, 2008 as approved at the Commission's September 17, 2008 meeting.

Minutes of the monthly meeting of the Municipal Services Commission held August 12, 2008 at the office of the Commission, 216 Chestnut Street.

The meeting was called to order at 9:30 A.M. with Robert S. Appleby, President, Commissioner, presiding.

Attendance Report:

Present:

Robert S. Appleby, President, Commissioner H. Hickman Rowland, Commissioner

Daniel F. Knox, Commissioner
Francis L. Patterson, IV, Secretary

Special Guest: Councilman Donald A Reese, Comptroller Pam Patone, Mr. Greg Sarnecki and Ms. Michelle Cross, Belfint, Lyons & Schuman

MINUTES

With the concurrence of all the Commissioners the minutes of the July 22, 2008 regular monthly meeting were approved without alterations.

GREG SARNECKI AND MICHELLE CROSS, BELFINT, LYONS & SCHUMAN

Mr. Sarnecki and Ms. Cross presented the 2008 audit performed by the firm of Belfint, Lyons & Schuman. Mr. Sarnecki said Ms. Cross was the manager on the job and he deferred to her in making the presentation. Ms. Cross went through the financial statement and explained changes and any restatements from the previous years report.

The Commissioners, Secretary, Comptroller and Auditors discussed the steps the MSC has taken to address deficiencies in accounting procedures. Commissioner Appleby questioned the auditors on certain items he felt they missed in last years report. Comptroller Patone in preparing for this years audit said she was able to call on former Office Manager Margret Case who was very helpful in providing a historical perspective to past procedures and helped to clarify accounts so she could become comfortable in presenting the Commission’ s financial picture to the auditor’s

Ms. Cross concluded by saying there are two letters for the Commissioners. The first she said is a summary of what the auditors found. The first letter addresses representations of the estimate of the allowance for doubtful accounts and the environmental remediation settlement and potential for future liability. She said the letter states the auditors had no significant difficulties in performing the audit and the audit reflects some corrected and uncorrected misstatements. She said the uncorrected misstatements were not deemed to be material to the financial statement but are attached to the letter. The second letter is the management letter which points out control issues which Comptroller Patone is addressing.

The Commissioners thanked Ms. Cross and Mr. Sarnecki for their presentation and they left the meeting  

REVIEW OF FINANCIAL REPORT

Commissioner Appleby asked Comptroller Patone to stay and present the financial reports. The Commissioners first questioned her regarding the audit process and her opinion of the work that was done and any problems she encountered. Comptroller Patone expressed her opinion and said she will draft an RFP for next years auditing services.

The Comptroller presented a report which listed the changes in the unaudited financial statements for the four months ending July 31, 2008. She prefaced her comments by saying what she has done with the balance sheet, or statement of net assets, is compare it to the June 30, 2008 statement. She said what she is reporting is what has happened over the last 30 days with the MSC’s assets and liabilities. When it comes to the Profit and Loss statement, she said, she took last years audit and prorated it as a comparison to this year. She then went through the report explaining the difference from the previous month and describing an accounts receivables analysis she attached to the report. The Commissioners questioned her about the accounts receivable and her efforts to collect outstanding balances and what may be uncollectable which may need to be written off as bad debt.

Commissioner Knox asked if the uncollected accounts are apart of the Accountants Receivables shown on the Balance Sheet. Comptroller Patone said they are.

The Comptroller continued her review and Commissioner Knox pointed out a correction on the accrued appropriation which did not take in account the increase the Commissioners had approved to the for the city

Comptroller Patone said she wanted to address two items the Commissioners questioned in the draft audit. The first was the Professional Fees which she found on further investigation included the Carolina Transformer settlement and a number of engineering fees which were really operating expenses which are typically capitalized but were put in professional fees. She said the adjusted number was $47,000 after the corrections. The second was the portion of cash which was not insured. She said she is not prepared to make a recommendation to diversify until she develops a cash flow report. She said in the next 30 days she will develop a cash flow report.

Commissioners accepted the financial report for the month of June and approved the payment of the June bills attached hereto. Comptroller Patone noted that one check that was marked for payment had previously been reported paid when it had actually been held.

SECRETARY'S REPORT

Secretary Patterson reported at the July 22, 2008 DEMEC meeting President McCullar presented a report that showed DEMEC’s cost of energy had increased 30% over the previous month’s cost. He told the Board he anticipates July and Augusts’ invoice should run in the $110 to $112/mWh range. The President said he would now expect that for the remainder of the year the price of electric should be around $102/mWh. The Board was told that DEMEC spent its 2 million dollar reserve for the June energy purchase. He attributed the increases to congestion, the cost of fuel and capacity.  Commissioner Appleby pointed out in President McCullar’s “Preliminary Report on Power Supply’ report the portion of DEMEC’s energy purchase is exposed to market prices.

The Commissioners, Councilman Reese and the Secretary discussed DEMEC’s power purchase philosophy and the Board’s reaction to the increase. They also discussed operation of the generator as a hedge and its limited ability to operate at peak price times to avoid purchasing from the PJM pool.

The Secretary Patterson told the Commissioners there is a meeting at 1:00 P.M. with Civil Engineering Associates the firm Mr. Capano now employs to design the water distribution for Riverbend in Old New Castle. The Secretary said he received from Mr. Ronald Sutton, P.E. who is the principal of Civil Engineering Associates a submission for his water design for review. The Secretary said Kevin Pampuch of URS will be there to represent the Commission. The Secretary said Commissioner Appleby accompanied Supervisors Guyer, Spicer, Jaeger and him on a site visit to look at what has been built and the areas where there is not sufficient room to place the MSC’s water and electric. Commissioner Appleby asked Councilman Reese about the state Plus Review and URS who did a review for the city prior to the project being approved and whether any of their recommendations were adopted. Commissioner Appleby said it appears the problem is the drainage swales which limit the room that would normally be available for utilities and he compared the design to something similar to what would be found at the beach. The Secretary said Mr. Capano is continuously threatening to sue which seems to be one of his bully tactics in any discussion.

The Secretary said City Solicitor Roger Akins has made the changes Paul McConnell requested for the easement at Centerpoint Business Park and it has been delivered to Shona Grace Mr. McConnell’s assistant for execution. Commissioner Appleby asked what the next step is. The Secretary said the MSC has already delivered the proposed easement survey to Civil Engineering Associates and it is their responsibility to secure the railroad crossing for the Commission and to design the water and electric interconnections. The Commissioners agreed that water service for Riverbend should not be turned on until the whole system is built from Dobbinsville to Centerpoint.

The Commissioners discussed what easements Mr. Capano would have to get to build water and electric to the subdivision and then up the entrance road to accommodate water and electric. The Secretary said the site inspection shows there is only four and a half to five feet of room between the back of curb and the property line and then the slope of the shoulder becomes unsuitable for placement of utilities.

The Secretary reported electric has been installed for Pencader Charter School and the only thing that remains is submission of the “as built” drawing. In water the system has been activated and has passed the bacteria testing. The Secretary said final inspection will be done when the site around the vault is graded and the lid is delivered.

Councilman Reese asked about a street light for William Penn Court. Secretary Patterson said he would need to look at the logistics for placing a street light. Councilman Reese left the meeting at this point.

Secretary Patterson reported for Supervisor Spicer in the electric department there was only one outage on Buttonwood Ave. during the storm Sunday August 10, 2008. Supervisor Spicer, Comptroller Patone and Secretary Patterson met with Pat McCullar, Norm Baron and Jim Havrilla to work out the contract changes to the engineering contract for the two substations. The Secretary said he has executed the MSC’s portion. The electric crew has been working on circuit 340 intermittently as well as working in the West End to clean up service. There is no further information on the Deemer’s Landing second phase.

The Secretary reported for Supervisor Guyer in the water department while establishing water service for the William’s townhouses on West 9^th Street by School Street several street valves failed. The Secretary said as the problem escalated Supervisor Guyer asked that he be allowed to bring in Worthy Brothers to make repairs. The Secretary said he gave him permission after investigating the scope of the work. The Secretary said Supervisor Guyer has done all the prep work for the precast concrete building for Frenchtown Road well and is now just waiting for delivery. On Gray Street is still working on the final design for the building for the altitude valve. Commissioner Appleby asked if he updated the expense numbers against the budget. Secretary Patterson said he had not. Commissioner Appleby said Comptroller Patone will need those numbers for her cash flow report. The Secretary said they will get the numbers together. The Secretary said Supervisor Guyer is trying to get up with Chuck Hauser to finalize design on School Lane treatment plant. The Secretary said the Commissioners can read the rest of Supervisor Guyer’s report at their pleasure.

OLD BUSINESS

The Commissioners addressed the DEMEC July invoice which was billed to members at $115.20/mWh. The Secretary said the bill is 37% higher than Mays invoice of $83.95 and he was recommending recapturing at least 20% of that 37% increase. The Commissioners debated what the appropriate amount to recapture is. Commissioner Appleby said the Wall Street Journal reports that natural gas prices are falling and the spike may be of a shorter duration than first anticipated. The Secretary said President McCullar was estimating July and Augusts’ bills would be $110 to $112/mWh and hopefully prices would fall back in the range of $102/mWh. Commissioner Rowland said he is inclined to do what the Commission did on the August 1, 2008 bill and recapture 50% of the increase the MSC has been billed through the PPA. After a thorough debate the Commissioners upon motion made and unanimous approval voted to recapture $.0156 per kilowatt hour through the PPA.

NEW BUSINESS

Commissioner Appleby said Sally Monigle contacted him on behalf of the Bellanca Museum requesting the MSC install a freeze proof yard hydrant for water at the Bellanca site. Secretary Patterson said the estimated cost would be $1,000. The Commissioners authorized installation at the MSC’s expense.

AUGUST MEETING

The Commissioners set the date of the next monthly meeting to be September 17, 2008 at the office of the Commission, 216 Chestnut Street.

ADJOURNMENT

By motion made and unanimous approval, the Commissioners voted to adjourn.

 

 

 

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