You are on page 1of 4

MINUTES

Ways and Means


Monday, December 14, 2009 – 1:30 p.m.
10th Floor, Conference Room
City Hall

CALL TO ORDER

The meeting called to order at 1:29 p.m.

ROLL CALL

Councilmember Carol Wood, Chair


Councilmember Tim Kaltenbach, Vice Chair – absence
Councilmember Derrick Quinney, Member – absence

OTHERS PRESENT

Diana Bitely, Council Staff


Arnie Yerxa, Internal Audit
Calvin Jones, BWL
Peter Lark, BWL
Brigham Smith, Law
Angela Bennett, Finance
Susan Devon, BWL
Gennie Eva, BWL
Shaun Krick, Plante & Moran
Jean Young, Plante & Moran
Carl Calille, Citizen

APPROVAL OF MINUTES

None.

1
PUBLIC COMMENT

None.

ACTION/DISCUSSION

BWL Financial Report

Mr. Lark introduced Shaun Krick and Jean Young from Plante & Moran.

Mr. Krick reviewed the financial report. He reported that the General Motors bankruptcy had a
direct impact on the Board of Water and Light’s finances, which resulted in lower revenues and
operating costs. He further reported that there was an increase in purchased energy due to the
Green Initiative with Granger, and the energy purchased from Belle River cost less.

Councilmember Wood questioned how much of the bond debt reflects the CSO work.

Mr. Lark stated that although they issue a water bond, he only knows that forty million was used
for water. This water bond includes both CSO work and lead pipe replacement.

Mr. Krick stated that the Board of Water and Light would pay off approximately 35% of its total
debt within the next five years.

Councilmember Wood questioned the debt incurred from the General Motors bankruptcy.

Mr. Lark responded that General Motors, under the agreement, were supposed to pay Board of
Water and Light approximately $12.8 million dollars. That amount was included in the old
General Motors and therefore, with the bankruptcy. It is expected that the Board of Water and
Light would receive a portion of that amount, but nothing near the actual debt.

Councilmember Wood questioned if part of their payment could include possession of the land
surrounding the old General Motors.

Mr. Lark indicated that they did look into it; however, at this point there is no way to do this with
the bankruptcy filing. General Motors may not be averse to selling some of the property at a
very reasonable price, as they do not appear to have a need for using the land.

Councilmember Wood questioned the effect on the Board of Water and Light with the new
General Motors since they are using fewer resources than have been contracted.

Mr. Lark stated that every time General Motors does not work for a month it costs BWL $1.5
million in lost revenue. In conversations with the plant manager, on May 1, 2009, they plan to

2
work their way up to three shifts at the Delta Township plant. We are seeing those numbers
coming back a little bit, but it is not possible to predict their future success.

Councilmember Wood stated that Council is concerned about payment on equity and the impact
that General Motors’ closing down has had on the City’s budget.

Mr. Lark stated that for FY10, he guesses that the revenues to the City for the PILOT will be
right up near as largest they have given the city. $10.7 in 2008, $10.3 in 09, we expect $10.7 for
FY10. We could pay more if their revenues increase through GM adding a shift, but based on
their current projections, they expect $10.7 million.

Councilmember Wood questioned the rate hearings and proposed increases.

Mr. Lark stated that the date set is January 21, 2010. Management will present material to the
Board of Water and Light Commissioners and they will make those decisions. We are looking at
an increase to cover mandatorily created endeavors, such as a renewable energy program, which
we are required to invest and collect certain costs. The only increase is in electric to be used for
renewable energy. Water would increase by $1.19 per month, due to a slight increase in
commodity itself.

Councilmember Wood questioned how the furlough days affect their bottom line.

Mr. Lark indicated that they were projecting a “net income”. After the first quarter, they
projected a net loss of $13 million. We are now projecting a net loss of $10 million in October,
and they hope that this number decreases. We hope to cut costs through the furlough program so
we have cut the overtime by approximately half. For the last pay period we had cut it 70%,
however, these numbers are based on the last couple of weeks, but it is very dependent upon the
needs, such as water main breaks, etc that will factor in. We wanted $1 each from bargaining
and non-bargaining units. There will be eight furlough days beginning on 23 December. We
reduced the pension for both as well to $500 from $1,000. If they have the money at the end of
the fiscal year in the designated account, they would replace the $500 which was taken away to
help with the deficit. We have tried to get everyone involved in helping to cut costs and
suggestions are welcomed from BWL employees. It has brought the BWL employees closer
together.

Councilmember Wood questioned how the next year’s CSO would be affected. Three areas will
not be done this coming year.

Mr. Lark indicated that it is very positive for their revenue. We have fallen somewhat behind in
capital expenditures, so to the extent that they plan to spend a little less in the next year, that
allows us to take that out of the capital expenditure and improve their financial bottom line.

Councilmember Wood questioned where they are with lead pipe replacement.

Mr. Lark indicated that they are ahead of schedule, but they are not rushing to do so as it costs
money and they will definitely meet the schedule and if they end up ahead, then so be it.

3
Councilmember Wood extended her appreciation for today’s report and question and answer
period.

ADJOURN
The meeting adjourned at 2:08 p.m.
Submitted by,
Diana Bitely
Administrative Secretary
Lansing City Council
Approved by the Committee on __________________.

Appropriate documents attached to original set of minutes.