EUGENE WATER & ELECTRIC BOARD
SPECIAL BOARD MEETING
EWEB BOARD ROOM
NOVEMBER 24, 2004
11:30 A.M.

Board Members present: Patrick Lanning, Dorothy Anderson, Mel Menegat, and Ron Farmer. Vice President Sandra Bishop was excused.

Others present: Randy Berggren, Jim Origliosso, Dick Varner, Tom Buckhouse, Jim Wiley, Dick Helgeson, and Krista Hince of the EWEB Board; Joe Sams, City of Eugene Minutes Recorder; and John Simpson, Commissioner-elect.

AGENDA CHECK

Commissioner Lanning convened the Special Board Meeting at 11:30 am.

General Manager Randy Berggren noted that there was a revised capital budget amendment under Item 8 on the agenda.

PUBLIC INPUT

There were no members of the public wishing to speak.

APPROVAL OF CONSENT CALENDAR

Commissioner Menegat, seconded by Commissioner Anderson, moved to approve the Minutes of September 21, 2004. The motion passed unanimously.

ITEMS FROM BOARD MEMBERS

Commissioner Menegat said Western Generation Agency (WGA) was working on budgets and resolving questions of bond indenture and the agreement with Georgia Pacific. He said there would be a meeting with the bond council on the following Monday. He said he would provide a full report at the next meeting.

Commissioner Lanning noted that Roberts Rules of Order were placed in the meeting packet.

CORRESPONDENCE

Mr. Berggren noted that he had distributed the Roberts Rules of Order because of Commissioner Bishop's change of vote on November 16. He outlined the procedures for a vote to reconsider a motion. He said he would reschedule the motion for the December 7, meeting. He stressed the importance of the rest of the Board's understanding Robert's Rules of Order relative to that topic.

Mr. Berggren said EWEB had received recognition for Environmental Stewardship for its activities in wind power.

Mr. Berggren said a final contract with Weyerhaeuser would be closed as quickly as possible. He noted that tentative agreement had been reached in all areas of the contract.

In response to a question from Commissioner Farmer regarding the timeline for final approval of the contract, Mr. Helgeson said the intent was to move as quickly as possible. He said consideration and approval of the contract was scheduled for the January 4, 2005 meeting. He stressed that the contract was desired to take effect at the beginning of the year.

Mr. Berggren said the intended discussion dates for the IERP project team's draft action plan were for December 7, 16 and 21, 2004 meetings.

BOARD AGENDAS

Mr. Berggren said the only change was that there was a future agenda item with a pending request to revisit the vote about McKenzie Willamette at the December 7, meeting.

WATER MASTER PLAN FUNDING STRATEGY

Mel Damewood, Water Engineering Manager, Brad Taylor, Water Resource and Systems Planner, and John Yanov, Senior Rate/Financial Analyst, provided a presentation on Water Master Plan funding impacts. He outlined the information that had been provided to the Board to date.

Mr. Damewood said his goal of the presentation was to review and examine financial impacts to the Master Plan in the next ten years on rates and system development charges. He said there were no critical issues foreseen.

Regarding funding issues, Mr. Damewood said there were three funding sources; Rates, SDCs, and Contribution in Aid, (Billable Work). He noted that billable work was not included in the capital plan. He said 63.5 million would be needed over the next ten years. He added that 7.9 million would be in 30 year bonds.

In response to a question from Commissioner Farmer regarding repayment of bonds, Mr. Damewood said that funding came out of SDC reimbursements.

Brad Taylor outlined the list of projects that received their funding from SDCs. He said the SDC funding was a result of capacity adding projects that were needed because of increased demand. He cited raw water transmission pipelines, Hayden Bridge projects, Water Source Facilities, and Distribution and Transmission renewals and replacements as examples of projects in the master plan.

Showing a graph overview of rates and bonding, Mr. Taylor noted that the next five years would see rate bonded projects in ground water sources.

Mr. Damewood said there would be a SDC methodology review in 2005. He said no rate actions would be needed for 2005 but noted that Water was scheduled for a rate increase in 2006 to cover capital needs. He added that there would be another rate increase to fund water capital infrastructure needs in 2009. Mr. Taylor noted that the 2009 date might be pushed back.

Mr. Yanov noted that the Board had approved a tiered rate water structure. He said SDCs could be charged a various rates and noted that costs could go up or down. He noted that level two and three SDCs amounted to less than the cost of service. He showed the differing costs of service at different levels.

Mr. Damewood noted that it cost 3.5 times as much to provide service on level three than on the base level.

In response to a question from Commissioner Farmer regarding how SDCs were paid, Mr. Damewood said they were paid by whoever ordered a new water meter.

Mr. Berggren noted that all of the numbers were attributed to capital charges. He noted that when all other costs were considered SDC costs might be higher.

Mr. Damewood said staff were asking for direction from the Board to see if there was an interest in tiered SDC rates.

Comissioner Lanning said it would be helpful to know how many potential new home sites were available on the differing levels.

Mr. Berggren said a tiered SDC methodology might influence people's thinking about where development in the city would occur.

Commissioner Damewood said he supported different rates for different elevations. He said one thing to consider was that the economic impact would not be that great since houses at higher elevations would be for more expensive lots and homes.

Commissioner Farmer said he was in favor of collecting full costs.

Commissioner Anderson said she leaned toward a cost of service model.

Mr. Damewood noted that EWEB had grants available for low cost housing being built in the City.

Commissioner Lanning reiterated that he needed a better sense of the underlying numbers that lead to the options being presented.

Mr. Damewood said staff would lean toward a tiered rate at the current time with the knowledge that the Board had not made a final decision.

There was general discussion of the reasoning behind collecting SDCs at cost of service levels. Commissioner Farmer noted that contracted services for building housing had profit margins and opined that SDCs could possibly be collected with a margin for profit.

Commissioner Farmer asked for additional information on overall debt levels and how much that would increase over the same amount of time.

Dick Varner said 60 percent debt would not be unusual for a water utility.

BUDGET AMENDMENTS

• No.5 - Debt Management - Electric - Bond Refunding in 1996 and 1998 A

• No.6 - Western Generating Agency - Miscellaneous Revenues
• No.7 - Leaburg/Walterville Relicensing, Carmen Smith Capital Additions, Residential Additions, Underground Cable Replacement
• No.8 - Water Capital Projects - Treatment Plant Additions & Water Main Improvements

Jim Origliosso provided a presentation on the proposed budget amendments.

Commissioner Menegat, seconded by Commissioner Anderson, moved to approve the proposed budget amendments. The motion passed unanimously, 4-0.

ITEMS REMOVED FROM THE CONSENT CALENDAR

There were no items removed from the Consent Calendar.

The meeting adjourned at 1:00 p.m.

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Assistant Secretary President