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HomeMy WebLinkAbout2013 Minutes BWL AFPROVEDBYTHE BOARD OF COMMISSIONERS ON PW IANUARY Z8,2014 JC�..fir MINUTES OF THE BOARD OF COMMISSIONERS' MEETING > N LANSING BOARD OF WATER AND LIGHT = .November 19, 2013 CD ii The Board of Commissioners met at the BWL Headquarters-REO Town Depot located an20'1--�' S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, November 19, 2013. !`` Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioner Tony Mullen The Corporate Secretary declared a quorum present. Commissioner Ward led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Price, seconded by Commissioner Ward to approve the Regular Board Meeting minutes of September 24, 2013. Action: Carried Unanimously PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There was no Public Comment ------------------ COMMUNICATIONS a. E-mail from customer, F. Stephens, regarding electric bill itemization REFEFFED TO MANAGEMENT AND RECEIVED AND PLACED ON FILE COMMITTEE REPORTS COMMITTEE OF THE WHOLE October 8, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the BWL Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, October 8, 2013. Regular Board Mtg. November 19,2013 Page 2 of 21 Committee of the Whole Chair Dennis M. Louney called the meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioners Anthony McCloud and David Price Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Thomas, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of September 10, 2013. Action: Motion Carried Facilities Updat General Manager Lark introduced Scott Scott Hamelink, Manager of Water Productions. Mr. Hamelink , provided background and upgrade information on the Board of Water and Light's (BWL) water production facilities, both Dye Water and the Wise Road Conditioning Plants. ■ Dye Water Conditioning Plant The Dye Water Conditioning Plant located on Cedar St. has been in production since 1939. This facility is capable of producing 40 Million gallons of drinking water a day. He reviewed a list of Capital/Construction Projects. Some of the projects include: o Major renovations to the exterior of the plant and landscaping o Refurbishment of raw water manhole o Installation of a new 10 million gallon distribution pump o Installation of an Elevator o LED Lights ■ Wise Road Conditioning Plant The Wise Road Conditioning Plant located on Wise Rd. has been in production since 1966 and it is capable of pumping about 10 million gallons of drinking water a day. In 2011 there was an incident that destroyed much of the plant's equipment and wiring. The water plant has been under renovation since the incident and it is expected to be complete early next year. The reconstructed facility will be a State of the Art plant when finished and will be set for the next 50 years. Regular Board Mtg. November 19,2013 Page 3 of 21 ■ Other Water Facilities/Information The Hewitt Rd. Reservoir has been newly painted and in the process of having the BWL logo put on it. Mr. Hamelink thanked his staff for all of their work. ■ Erickson Power Plant/Station General Manager Lark introduced Debbie Allen, Manager of the Erickson Power Plant. Ms. Allen provided a facilities update on the Board of Water and Light's (BWL) Erickson Power Plant located on Canal Rd. She stated that the Erickson Power Plant has been in service since 1973 and is a one unit, one turbine, one boiler generator that produces 165 megawatts of electricity and is the largest single unit for the BWL. Ms. Allen stated that the Erickson Plant has gone 337 days without a lost time injury and the Plant has been on line for 184 consecutive days, which is a credit to Doug Wood, Executive Director of Electrical Operations, who implemented a Work Management System, that has proven to be instrumental in keeping their facility on line for long durations of time. Capital Projects at Erickson include: o Installation of a new Fire Pump o Removal of Fly Ash and Bottom Ash from Erickson's ground o Creation of Hydrobins to collect the Ash Ms. Allen thanked her staff for their work and the Administration for their support. ■ REO Town Cogeneration Plant General Manager Lark introduced Roberto Hodge, Manager of the REO Town Cogeneration Plant. Mr. Hodge stated that the REO Cogeneration Plant went live on July 1, 2013 and has the capability of 100 megawatts of power; it has two combustion turbine engines that are capable of producing about 340,000 pounds of steam. Mr. Hodge stated that the Plant is up and running but is going through the tuning phase of a new facility. ■ Chilled Water Plant Mr. Hodge briefly spoke about the Chilled Water Plant located at the corner of Allegan and Pine St. This Plant has 4 electric chillers that are capable of producing 8,000 tons of chilled water. This facility has 100% availability and has had no down time at all. Capital Projects at Roy E. Peffley Chilled Water Plant include: o Upgrade Hardware at customer sites o Upgrade Software for main computers Regular Board Mtg. November 19,2013 Page 4 of 21 General Manager Lark stated that the BWL's entire chilled water steam customer base is serviced out of this facility, as a result of the steam units at the Ottawa station being taken out of service. Mr. Hodge thanked the Administration, his staff and the Union Workers for all of their work and support. ■ Eckert Plant General Manager Lark introduced Tom Dickinson, Manager of the Eckert Plant. Mr. Dickinson, stated that the Eckert Power Station was built in the 1950's and is the oldest operating plant at the BWL. He said currently Units 4, 5 and 6 are off line and that Moores Park's 4 steam boilers have already been closed. Mr. Dickinson said if the BWL did not run Units 1, 2, 3 and Moores Park it would save 350,000 tons of coal being burned each year. Mr. Dickinson provided information about SAFE, a new implementation at the Eckert Station which stands for System Audit Facility Evaluation. This system goes through all of the trip and safety mechanisms of the boilers, turbines and generators to make sure the system is safe and reliable. Capital Projects at Eckert Plant include: o Turbine Generator Oil Containment o Cooling Tower Header Replacement ■ Substations General Manager Lark introduced George Stojic, Executive Director of Strategic Planning & Development Mr. Stojic discussed the role that substations play to the Board's electric system. He noted that they both transform power from high voltage, used in transmission, to low voltage, used by customers and play and important role in maintaining electric reliability. According to Mr. Stojic, the Board has 13 substations but two, Enterprise and Davis, are particularly important because they are the interconnection points between the Board's electric system and the interstate transmission grid. These substations allow the Board to buy and sell electric energy and capacity in the Midwest markets, import its Belle River power entitlements, and contribute to maintaining electric reliability. Since the 2003 blackout, the Federal government has adopted mandatory reliability standards which, among other things, impact the Board's role as a transmission owner and operator. The standards require the Board to plan for two major sequential contingencies, which include the loss of both interconnections. To meet its reliability requirements under those conditions, the Board needs to maintain Eckert units 4,5, and 6 in an operational state. Mr. Stojic noted, however, that environmental compliance requirements, including the mercury and air toxics rule, the cross state pollution rule, and the anticipated greenhouse gas rules for existing generation units may require the Board to make significant investments in the Eckert units to comply. If Eckert 4, 5, and 6 are removed from service, the Board could no longer comply with mandatory reliability standards. To meet the reliability standards, staff is Regular Board Mtg. November 19,2013 Page 5 of 21 planning for a third interconnection. The process of securing a new interconnection can be time consuming, with Mr. Stojic predicting that it could take three years to complete. The staff has already spent over a year studying two possible routes; neither of which worked out. The staff is now working with ITC, Consumers Energy, and MISO on adding another interconnection at either Enterprise or Davis substations. Mr. Stojic acknowledged and thanked staff who have been working on the project. ® Renewable Energy Plan George Stojic, Executive Director of Strategic Planning and Development, gave the Commissioners an overview of the Board's renewable energy program. He began by noting the Board adopted a strategic plan 5 or 6 years ago that set a goal of meeting all electric demand growth with renewable energy and energy efficiency programs. Mr. Stojic described the Board's plan as a more comprehensive clean energy plan, of which renewable energy was only one component. He noted that the Board received numerous form letters advocating a community energy planning process to ensure that the Board could meet its 2015 renewable energy compliance deadline. He noted, however, that because the Board was the first Michigan utility to adopt a renewable energy requirement, it was already compliant through 2016. According to Mr. Stojic, renewable technology is changing rapidly and the cost of renewable options is falling, so there is an advantage to timing renewable acquisition to take advantage of these changes. Mr. Stojic noted that the Board has a well diversified renewable energy program. The program consists of the Cedar Street solar array, initially Michigan's largest and soon to be expanded, two highly reliable landfill gas contracts, providing both capacity and energy directly to the BWL system, a refurbished BWL hydro unit at Moorse Park, a purchase power agreement (PPA) with a second hydro in northern Michigan, and a recently signed PPA with a wind energy farm in Gratiot County. Mr. Stojic noted, however, that the Board's commitment to renewable energy goes well beyond those projects. The BWL has a net metering program that allows customers to install their own renewable options to offset utility bills. This year, the BWL offered incentives to businesses installing their own solar projects and these incentives could be combined with the net metering program. This combination will be offered to residential customers next year. Our goal is to encourage more solar installations in the Lansing area. BWL staff is also studying community based solar projects for possible adoption next year. Mr. Stojic also noted that the Board had a number of firsts to its credit. It was one of the first utilities in the country to test torrified biomass as a replacement to coal. The BWL's test, at its Erickson station, was believed to be the nation's largest at the time. The BWL was the State's first to implement a community based plug-in hybrid vehicle program, which served as a template for other utilities. The BWL is undertaking a distribution automation program called voltvar control under the auspices of Wayne Lynn, Manager of Electric Systems Integrity. This is designed to reduce the load on congested circuits to make our distribution system much more efficient and reliable. The BWL has installed a regenerative hydrogen fuel cell as a pilot program to control demand by drawing power at night, when our loads are low, and returns it to us in the afternoon when we need it the most. The BWL was the first Michigan utility to adopt a comprehensive energy efficiency program. So the BWL has a number of undertakings to improve the efficiency, productivity and the reliability of its transmission and distribution system and in the process manage system demand and reduce Regular Board Mtg. November 19,2013 Page 6 of 21 energy needs. Mr. Stojic noted that the BWL is one of the State's largest water distribution utilities and has been working to improve the energy efficiency of that water distribution system. Mr. Stojic also discussed the BWL's new REO Town investment. The new plant eliminates the need for 350,000 tons of coal and helps the BWL reduce its greenhouse gas emissions by 20%. He noted that the President suggested the U.S. reduce its greenhouse gas emissions 17% by 2020 and that the BWL has already exceeded the President's goal. According to Mr. Stojic, the BWL's diversified program helps meet three planning goals: environmental Stewardship, affordability and reliability. For example, if the BWL attempted to replace Eckert, Units 4, 5, and 6, consisting of just over 210 megawatts, with wind energy it could not do so with 200 megawatts of wind energy. A PPA for 200 megawatts of wind energy would result in most energy production in the late winter and spring months, when the BWL's electric demand is comparatively lighter. This would cause the BWL to sell much of it in the market at a loss or require transmission to Lansing. Mr. Stojic indicated that transmission costs can be very expensive. On the other hand, when electric demand is the highest in summer, MISO credits wind energy with only a 13% capacity value, so that 200 megawatts of wind energy would only be counted as 26 megawatts of generating capacity for reliability purposes. The difference, 174 megawatts would need to come from elsewhere. Eckert units 4, 5, and 6 meet that 174 megawatt requirement, so they would still be needed if BWL tried to replace them with an equivalent amount of wind energy capacity. The result is costs for both 200 megawatts of new wind energy and the cost of retaining the Eckert units in operational status or replacing the units additional generating capacity. Doing so would result in an unbalanced strategy of giving up either reliability or affordability unnecessarily. For this reason, the route the BWL has taken has been deliberate balancing of all three goals in implementing its renewable energy plan balance. Mr. Stojic concluded with a quote from President Obama "it is all of the above" when meeting the nation's energy needs. ® Hazel St. Water Laboratory General Manager Lark said that here at the BWL we operate our own water lab and we are very proud of that because most water facilities farm their water out for testing. With that being said, General Manager Lark introduced Mark Matus, Manager of Environmental Services and Jennifer Hamel, Environmental Services Lab Supervisor. Mr. Matus stated that the water lab is located on Hazel St. and is equipped with state of art sophisticated equipment that is used by 4 top notch chemists. The chemist tests the BWL's water about 16,000 times a year, 365 days a year without fail. Mr. Matus stated that the BWL was recently audited by the State of Michigan and passed the audit with flying colors and received certification. General Manager Lark thanked all of the Managers and their staff who presented information at tonight's meeting and for doing a great job. Neighborhood Environmental Award (DEQ)/ Energy Savings Awards (BWL) General Manager Lark informed the Commissioners that the BWL received the Neighborhood Environmental Award from the Department of Environmental Quality. Mr. Lark stated that he is proud of the BWL for receiving this award as it reflects the work that was done in 2012, particularly the "Adopt A River" and the "Pollution Prevention" programs. Regular Board Mtg. November 19,2013 Page 7 of 21 General Manager Lark stated that the Energy Savings Award is recognition by the BWL of certain customers who have undertaken outstanding energy saving efforts by using our energy efficiency programs. The Lansing School District, Ashley Rider and General Motors are recipients of this award for their efforts resulting in saving over 1 million kilowatts hours of usage. Clean Water Action Mary Brady, Campaign Organizer for Clean Water Action, said there are two reasons that they wanted to make a presentation to the Board. The primary reason is to open up the lines of communication between the environmental community, the general community, the BWL, the Board of Commissioners and the BWL employees. The second primary reason for meeting is to share some background on what they are working on and how they would like to see the BWL look in the future with respect to energy, the environment, and the quality of air and water. Brad van Gilder, Organizing Representative for the Sierra Club, presented a PowerPoint presentation titled "Lansing's Energy Future in a changing utility market". In his presentation Mr. van Gilder offered information on: • History of Coal usage at the BWL ■ Regulatory & Policy Changes/Market Pressure to Change ■ Health Cost — Asthma in Ingham Co./Rates of Hospitalization due to Asthma by ZIP code in Ingham County, Michigan, 2008 to 2010 ■ Stationary Pollution Sources impacting Ingham County Residents Mary Brady, spoke about the Michigan Public Service Commission's 2013 Draft Report on Renewable Energy. She stated that she felt some of the important findings from this report were: • Michigan could easily meet increased renewable energy targets of 30% or even higher by 2035 with the resources we have here today. • Renewable energy is cheaper than almost all other generation options • Advances in technology have cut the cost of wind generation in half over the five years RPS has been in place ■ Michigan could substantially increase its RPS with no impact on reliability Brad van Gilder, stated that the Sierra Club submitted a number of comments regarding the BWL's Renewable Energy Plan and one of the things that was advocated was a public planning process. He stated the importance of public participation and noted that BWL has been more responsive and interactive than other utilities. He also noted that Ingham County recently adopted a Property Assessed Clean Energy Program and participating in the program would create an opportunity for commercial businesses to interface with the BWL with the goal of implementing some larger solar projects. He also stated that more regulations would likely be coming in the future and questioned how far into the future the Erickson Plant remain cost effect generation, especially as the cost of renewables continues to decline. Regular Board Mtg. November 19,2013 Page 8 of 21 Other Chair Zerkle announced that the BWL is inviting the community to participate in celebrating Public Power Week tomorrow, Wednesday, October 9 from 3-7 p.m. in the REO Town Depot and Cogeneration Plant. This will give the public a chance to check out our new facilities. General Manager Lark announced that on October 10, 2013 City Hall on the Road will be held at the REO Town Depot. Excused Absence Motion by Commissioner Thomas, Seconded by Commissioner Bossenbery to excuse Commissioners McCloud and Price from tonight's meeting. Action: Motion Carried Adjourn On Motion by Commissioner Ward, Seconded by Commissioner Bossenbery, the meeting adjourned at 6:49 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole MINUTES BOARD OF WATER AND LIGHT PENSION FUND TRUSTEES' ANNUAL MEETING Tuesday, October 8, 2013 Present: Trustees Margaret Bossenbery, Dennis M. Louney, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Trustees Anthony McCloud and David Price Staff Present: General Manager J. Peter Lark, Susan Devon, Assistant General Manager and Chief Financial Officer, Phil Perkins, Director of Internal Audit, Bill Aldrich, Manager of Finance and Planning, Marilyn Montgomery, Senior Treasury Analyst, Scott Taylor, CPA, CTP, Supervisor, Treasury & Budgeting, Danielle Miller, Executive Office Administrative Assistant and M. Denise Griffin, Corporate Secretary Consultants Present: Merrill Lynch: Marie Vanerian, First Vice President, Institutional Consultant ♦ ICMA-RC: Sandra Rouse-Thames, Retirement Plans Specialist The Secretary declared a quorum. Chairperson Zerkle called the meeting to order at 6:58 p.m. On Motion by Trustee Bossenery and Seconded by Trustee Thomas to approve the minutes of the September 11, 2012 Pension Fund Trustees' Annual Meeting Minutes. Action: Motion Carried Regular Board Mtg. November 19,2013 Page 9 of 21 Public Comments There were no public comments. FY2013 Financial Information General Manager J. Peter Lark introduced Susan Devon, Assistant General Manager and Chief Financial Officer. Ms. Devon provided an overview of the different Pension Plans. The packet is broken down by the Defined Benefit Plan, the Defined Contribution Plan and the Post Retirement Benefit Plan (VEBA). Each of the sections in the packet includes general information consisting of the Audited Financial Statements, the Actuarial Study Report and the Investment Policy Statement for each Plan and the Performance of the Plans over the past year. Defined Benefit Plan The Defined Benefit (DB) Plan was closed to new employees hired after December 31, 1996, There are currently 449 retirees and beneficiaries, 10 terminated employees with vested benefits and 30 current employees in this plan for a total of 489 Plan participants, a decrease of about 18 from last year. Ms. Devon stated that right now, we have $76 million in our plan assets and our liability is about $69 million so we are over funded by$8 million. But if our discount rate goes down by 1% as may be required by GASB Pension Accounting Standards the liabilities go up by$7 million. That is something we are taking a closer look at. The DB Plan investment earnings reflected a 14% return on invest for FY 13. Defined Contribution Plan The Defined Contribution (DC) Plan was established in 1997 and took the place of the Defined Benefit Plan. At that time, there were 602 active employees that switched to the DC Plan and at that time, we transferred $75 million from the old DB Plan to the DC Plan. Investment income improved in FY 2013. DC investment income was $16 million in 2013 compared to $.5 million in FY 2012. For FY 2013, $16 million actually represents a 12.4% return on assets. The Plan Assets for the DC Plan right now are $147 million. This plan is a little different from the DB Plans in that we do not actually invest the money; we pick out a lineup of funds that are available for the employees to make their own selections. We do believe that we have a very diverse lineup available for our employee and we do have a very robust education program that is available to them. Use of the web site was up 40%, which is attributable to the education program and amounted to about 22,000 hits. Post-Retirement Plan-VEBA As of Feb 2013 we have 1380 participants in the Post-Retirement Benefit Plan. This is a decrease of about 16 from last year. Investment Advisors for this Plan is Merrill Lynch and consistent with other plans our investment income improved over 2012. The Post Retirement plan had $15.7 million in investment income compared to a $.4 million loss last year. We made $4.5 million worth of contribution into the plan and the assets in the plan Regular Board Mtg. November 19,2013 Page 10 of 21 increased from $110 million last year to $129 million this year for an increase of$19 million. Our funding ratio for the Post Retirement Plan was 45% in 2012 and is now 59%, so we are almost 60%funded for this plan. Ms. Devon stated that there is another Accounting Standard that she believes will be issued in the near future and will have the same impact on us as the changes for the Pension Plan, forcing us to reduce our discount rates, which increases liability and may require us to make additional contribution into the plan. Also, there is Act 347 of 2012, that is a Public Act that amends Act 314 of 1965, which governs our pension's investment activities. This new Act lays out the duties and responsibilities of the Trustees. One of the things that we have to do, which is a new requirement for us, is to make sure that we provide the Trustees a new annual report. Basically, it is all of the information that was presented to you tonight. Ms. Devon said the Board is also required to work on developing a policy that clearly defines accountability and reporting requirements for the Trustees and perhaps provide some educational training/seminars for the Trustees. Staff will be working with Merrill Lynch on a proposed policy to present to the Trustees after flushing out exactly what the requirements are. Ms. Devon stated that there is an organization called the Michigan Association of Public Employees Retirement Systems that has a very good seminar series for Trustees of pension plans that might be something to take into consideration in the future. Sandra Rouse-Thames, ICMA-RC Retirement Plans Specialist provided the Trustees with information on Retirement Educational meetings that have been presented to the BWL employees. She said the numbers are slightly up from last year. She said that ICMA-RC spends a lot of time with employees going over their entire financial plan. She stated that their web site has a video library that includes many webinars that provide financial and retirement information. Chair Zerkle stated that she would like to have some discussion regarding stipulations on borrowing money from the pension. General Manager Lark respectfully asked that the Board Trustees approve the resolution for the acceptance of the 2013 Financial Statements that will allow these documents to be filed with the Corporate Secretary and placed on file. Moved by Trustee Bossenbery, Seconded by Trustee Thomas, to approve the following resolution: RESOLUTION ACCEPTANCE OF 2013 AUDITED FINANCIAL STATEMENTS FOR DEFINED BENEFIT PENSION PLAN, DEFINED CONTRIBUTION PENSION PLAN, AND RETIREE BENEFIT PLAN(VEBA) Resolved, that the Corporate Secretary receive and place on file the Defined Benefit, Defined Contribution, and Retiree Benefit Pension reports presented during the Pension Trustee Meeting. -------------------------- Staff comments: All three Plans received clean audit reports. -------------------- Action: Motion Carried Regular Board Mtg. November 19,2013 Page 11 of 21 Excused Absence Motion by Commissioner Ward, Seconded by Commissioner Thomas to excuse Commissioners McCloud and Price from tonight's meeting. Action: Motion Carried On Motion by Trustee Thomas and Seconded by Trustee Bossenbery with no further business, the Pension Fund Trustees meeting adjourned at 7:27 p.m. Action: Motion Carried Submitted by: M. Denise Griffin Corporate Secretary HUMAN RESOURCE COMMITTEE November 12, 2013 The Human Resource Committee of the Lansing Board of Water and Light met at the BWL Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:15 p.m. on Tuesday, November 12, 2013. Acting Human Resource Committee Chairperson Cynthia Ward called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners, Anthony McCloud, Cynthia Ward and Sandra Zerkle. Also, present Commissioners Margaret Bossenbery, Dennis M. Louney and Tony Mullen. Absent: Commissioner Tracy Thomas Public Comments Ron Byrnes, Business Manager Local Union 352, spoke about the Health Retirement Accounts (HRA) agenda item. Mr. Byrnes stated that he has not been informed as to what the Administration is asking the Board to consider this evening but has concerns about retirement accounts. In 1997, the BWL implemented a Defined Contribution Pension Plan and because of the volatility of the market in recent years, it has stopped several employees from being able to retire and as a result of that, he has concerns that implementing a HRA would prohibit employees from being able to retire as well and prohibit them from securing a retirement. Mr. Byrnes said that he has concerns about the future of BWL's workforce as far as recruiting and obtaining the next generation such as engineers, electricians, line workers, IT personnel, and highly skilled individuals because of the possibility of reducing retirement benefits to an HRA. The BWL was proactive about 15 years ago and established a VEBA Trust Fund for Retiree healthcare cost and that is very well funded and because the BWL was proactive he does not see any reason why the BWL should go in another direction and create a HRA fund for employees. Mr. Byrnes stated that he does not believe that HRA's are prevalent in the utility industry and that there are many questions surrounding this proposed health retirement account. He asked the Commissioners to consider this as a major decision for the utility and that before any decision is made, to make sure all the questions are answered. Approval of Minutes Regular Board Mtg. November 19,2013 Page 12 of 21 Motion by Commissioner McCloud, seconded by Commissioner Zerkle to approve the Human Resource Committee meeting minutes of July 16, 2013. Action: Carried unanimously. Health Retirement Accounts General Manager Lark presented the Human Resource Committee with information and a Resolution on Health Retirements Accounts (HRA). General Manager Lark presented the following information in his PowerPoint presentation: ® Why Consider a HRA General Manager Lark stated that there are rising costs of healthcare for retirees such as changes in accounting guidelines and healthcare reform guidelines as well. One of the effects under the new Affordable Care Act is if we don't do something to bring the cost of the healthcare more in line with the Affordable Healthcare Act there is going to be a 40% excise tax to be paid by either the employee or the BWL itself. * Current Retiree Health Plans o Current retirees and employees hired before January 1, 2009 when retire Pay no deductible o Pay no premium sharing o Pay $5 co-pay office visits o Pay$2/$12 Rx co-pays o Employees hired after January 1, 2009 have copays, deductibles and premium sharing that will equal active employees copays, deductibles and premium sharing when they retire • Proposed Retiree Health Care Plan - Health Retirement Accounts for New Employees Hired after April 1, 2014 General Manager Lark stated what we are looking at is more of a Defined Contribution Plan style than a Defined Benefit. Employees hired after a certain date would: o Move to a defined contribution style of benefit for future health care plan costs for retirees instead of the current defined benefit style o New employees hired under the HRA Plan will participate in BWL's health care plan while they are active employees. o These employees will receive a contribution into a Health Retirement Account during their years of active employment. o The money that has accumulated in the Health Retirement Account would be used to purchase health insurance upon retirement. o New employees hired after April 1, 2014 would not participate in the BWL's retiree health care plan when they retire. • Benefits of Health Retirement Accounts General Manager Lark stated that he does feel this is a good plan and the Board should look at it. This is a way that the BWL can be responsible going forward 30 years from now, because the plan that we are talking about is only for new hires. Listed below are some of the benefits of the proposed plan as indicated in the PowerPoint: o Predictability of employer expenses o Reduction of employer cost Regular Board Mtg. November 19,2013 Page 13 of 21 o Retiree health care expenditures are visible and clear to employer and retirees fostering a greater understanding of the costs o Eliminate "Cadillac Plan" excise tax exposure for that population of retirees o Eliminate future liabilities for obligations under Governmental Accounting Standards Board (GASB), Statement 45 for that population of retirees m National Survey of Employer-Sponsored Health Plans 2012 General Manager Lark said this is not an unusual concept and presented the following statistics: 0 54% of Governments offer medical plan to pre-Medicare eligible retirees 0 38% of Governments offer medical plan to Medicare eligible retirees o Of Governments that do offer medical plan 37% do not expect to offer plans within 5 years General Manager Lark said this is about employees, it is about the BWL and it is about our owners, the residents of City. He said that he is putting something before the Board to think about and if you, the Board, tell me not to go forward, we will not. The proposed resolution asks the Board to allow the management to work with a 3rd party administrator to create a plan to present to one of the Committees and forward to the full Board for consideration. After a lengthy conversation regarding the necessity of a resolution for this matter Acting Chair Ward said to General Manager Lark, "If you are trying to get a sense from the Board whether we want you to move forward to continue to explore the idea of the Board looking in to an HRA, I have heard no opposition from the Board, certainly not from the Human Resources voting members." The Resolution was not acted on. Directive: "You can go forward and continue to explore and return back with the additional information that you are seeking." Other None Excused Absence Motion by Commissioner McCloud, Seconded by Commissioner Zerkle to excuse Commissioners Thomas from tonight's meeting. Adjourn There being no further business, the Human Resource Committee meeting adjourned at 6:04 p.m. Respectfully submitted, Cynthia Ward, Acting Chair Human Resource Committee FINANCE COMMITTEE November 12, 2013 Regular Board Mtg. November 19,2013 Page 14 of 21 The Finance Committee of the Board of Water and Light met at the BWL Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 6:09 p.m. on Tuesday, November 12, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Tony Mullen, Dennis M. Louney and Alternate Committee Member Cynthia Ward. Also present were Board Members Anthony McCloud and Sandra Zerkle. Absent: Commissioner Price Public Comments There was no Public Comment. Approval of Minutes Motion by Commissioner Mullen, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of October 10, 2013. Action: Carried Unanimously Internal Audit Update Internal Auditor Phil Perkins presented a brief overview of • FY 2014 Audit Plan Progress Report • Plan for Remainder of FY 2014 FY 2014 Audit Plan Progress Report Engagements Completed or in Progress: 1. Records Retention Management In progress; about 60% completed. Anticipate completion by January 2014. 2. Fuel Procurement In progress; about 65% completed. Anticipate completion by December 2013 3. Accounts Payable Audit—just started, anticipate completion in Feb-Mar 2014. 4. Time Reporting Review#1—completed August 2013. 5. Surprise Cash Count #1—completed September 2013. Plan for Remainder of FY2014 Engagements Planned: 1. Close the Books Processes & Controls—planned start in January 2014. 2. Software Licensing Compliance—planned start in March 2014 3. IT Preliminary Risk Assessment—in progress throughout FY 2014 4. Time Reporting Review#2—to be completed between Jan-Jun 2014. 5. Surprise Cash Count#2—to be completed between Jan-Jun 2014. 6. Risk Assessment/Planning for FY2015 (Mar-Jun 2014) Regular Board Mtg. November 19,2013 Page 15 of 21 Quarterly Financial Update General Manager Lark stated that all Commissioners should have received an electronic Quarterly Litigation Update earlier today. General Manager Lark provided a quarterly financial update that included information relative to Fiscal Year to date of September 30, 2013 for Electric, Water, Steam and Chilled Water services. General Manager Lark reviewed the 15Y Quarter Financial Report. Actual v. Budgeted Variance in Combined Utility Net Income Fiscal Year to Date September 30, 2013 Compared to FY 2014 Budget ($000) Budgeted Net Income 5,779 Changes in Operating Income: Revenue Changes(net of fuel) Retail Electric (1,785) Wholesale Electric 186 Water Sales 71 Steam Sales 409 Chilled Water Sales (16) Operating Expense Channes Depreciation 1,253 Labor,Material,and Other 5,672 Other (373) Subtotal Changes in Operating Income 5,416 Changes in Other Income: Interest Earnings 491 Other Income 793 PILOT (952) All Other-Non-Operating Variances 368 Subtotal Changes in Other Income 700 Actual Net Income 11,895 Revised Combined Utility Net Income Projection Fiscal Year 2014 Based on 1st Quarter Operating Results Net Income Projection -FY2014 (00os) Net Income-Original Budget-Annual $ 2,665 FYTD Favorable Income Variance ($11,895 actual minus$5,779 budget) $ 6,116 Temporary O&M Expense Timing Differences $ (5,672) Temporary Non-Operating Income Timing Differences $ (1,652) Effect of Changes in Rate Proposals $ 1,256 Effect of PILOT Increase from 5%to 6.1% $ (2,757) Projected Net Income $ (44) Regular Board Mtg. November 19,2013 Page 16 of 21 General Manager Lark stated that currently his Administration is in the middle of budget meetings and is hopeful that some of the money that is on the timing difference line of almost of$6 million may not be spent this year, but cannot say right now, as we have to wait until Budget meetings are complete. Mr. Lark said that in all likelihood net income will not going to be high, however, we did not expect it to be as you can see that the net income that we expected for the whole year was $2.6 million. Revenue Requirements General Manager Lark presented the Commissioners with a packet of information regarding the rate recommendations. The following resolution was presented to the Board of Commissioners for consideration: General Manager Lark stated that we have gone through a couple of PILOT increases from 4%to 5% and from 5%to 6.1%which was were not reflected in our budget totaling almost $11 million. This resolution would make up for some of that and get us a closer to the $32 million net income that proposes a 6.1% Return on Equity that the Board has indicated by resolution that we should earn. The resolution asks the Board for authority to set a public hearing date. General Manager Lark stated that the BWL is currently an AA- Rated Utility and reviewed the importance of maintaining that status. General Manager Lark reviewed the O&M expenses from FY 2009 through FY 2014 stating that we have held O&M spending flat over the last five years. Proposed Resolution Public Hearing for 2014 Rate Adjustments WHEREAS, the Corporate Financial Targets for each of the Lansing Board of Water and Light's strategic business units is a 6.18% return on net fixed assets and materials and supplies that would require $19.3 million of Electric net income, $9.2 million of water net income, $2.4 million of steam net income, and $1.2 million of chilled water net income; and WHEREAS, the Fiscal Year 2014 budget filed with the City of Lansing included proposed rate increases for the electric, water, steam, and chilled water utilities that would bring rates more in line with each utilities cost of service; and WHEREAS: subsequent to the budget filing with the City, the PILOT payment to the City of Lansing was increased to 6.1%; and WHEREAS, the Fiscal Year 2014 budget would result in an electric net income of $3.4 million or a 0.70% return, a water net income of $977,000 or a 0.47%, a steam net loss of $1.7 million or a negative 3.13%, and a chilled water net income of $333,000 or a 1.22% returns before consideration of the increased PILOT payment; and WHEREAS, the increased PILOT payment will result in a net loss for the Fiscal Year; and WHEREAS, BWL management proposes to increase annual electric, water, steam, and chilled water billings by$14 million, $3.2 million, $1.0 million, and $.2 million respectively; and Regular Board Mtg. November 19,2013 Page 17 of 21 WHEREAS, BWL management proposes to add an Economic Development Rider for large commercial and industrial customers; and WHEREAS, BWL management proposes to decrease the electric renewable energy surcharge for all rate classes and add an adjustment mechanisms for the Energy Optimization and the Renewable Energy Plan surcharges; and WHERAS, BWL management proposes to change the application charge for new electric and water customers from $7.00 to $10.00: and WHEREAS, the proposed rate adjustments will not take effect until March 1, 2014, RESOLVED, the proposed rate adjustments will be subject to further consideration after a public hearing is held. FURTHER RESOLVED, that the Finance Committee hereby sets the date of January 23, 2014 at 5:30 p.m. for a public hearing to solicit public input on the proposed rate adjustments. The hearing will be held in the Board of Water and Light office Depot, 1201 S. Washington Avenue. The Corporate Secretary is directed to file with the City Clerk no later than December 2, 2013 information regarding proposed rate adjustments with an effective date of March 1, 2014. Motion by Commissioner Mullen, seconded by Commissioner Louney to forward the proposed resolution to set a Public Hearing to consider input on proposed rate adjustment. Action: Motion Carried Excused Absence Motion by Commissioner Louney, Seconded by Commissioner Mullen to excuse Commissioners Price from tonight's meeting. Other General Manager Lark announced that there will be a news conference on November 215t at the Granger Wood Road Generating Station at 10:00 a.m. celebrating the 5th Anniversary of Granger providing Renewable Energy to the BWL. General Manager Lark also announced that the BWL won the ENR Award, for the Midwest Best Project of the year in the category of Industrial Energy. Chair Zerkle will go to Chicago and represent the BWL and receive the award. Adiourn On Motion by Commissioner Mullen, seconded by Commissioner Louney, the meeting adjourned at 6:54 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee Regular Board Mtg. November 19,2013 Page 18 of 21 MANAGER'S RECOMMENDATIONS General Manager Lark respectfully asked that the following Resolutions be considered for approval. RESOLUTION #2013-11-01 1. ACCEPTANCE OF 2013 AUDITED FINANCIAL STATEMENTS FOR THE DEFINED BENEFIT PENSION PLAN, DEFINED CONTRIBUTION PENSION PLAN, AND RETIREE BENEFIT PLAN (VEBA) Resolved, that the Corporate Secretary received and placed on file the Defined Benefit, Defined Contribution and Retiree Benefit Pension reports presented during the Pension Trustee Meeting. ---------------------------------- Staff comments:All three Plans received clean audit reports. Motion by Commissioner Boysenbery, seconded by Commissioner Price, to Received and Placed on File the FY 13 Audited Financial Statements for all three pension plans. Action: Carried Unanimously General Manager Lark stated that the particulars of this Resolution involve setting a Public Hearing to consider proposed rate changes to increase revenue available to operate and maintain the Electric, Water, Steam and Chilled Water systems. Also the proposed in this Resolution is a new electric development rider for larger commercial and industrial customers and a substantial reduction in the Renewable Energy Plan surcharge for residential customers as well as an increase in the new customer application charge. General Manager Lark asked that the Resolution setting a Public Hearing for January 23, 2014 be considered. RESOLUTION #2013-11-02 Public Hearing for 2014 Rate Adjustments WHEREAS, the Corporate Financial Targets for each of the Lansing Board of Water and Light's strategic business units is a 6.18% return on net fixed assets and materials and supplies that would require $19.3 million of Electric net income, $9.2 million of water net income, $2.4 million of steam net income, and $1.2 million of chilled water net income; and WHEREAS, the Fiscal Year 2014 budget filed with the City of Lansing included proposed rate increases for the electric, water, steam, and chilled water utilities that would bring rates more in line with each utilities cost of service; and WHEREAS: subsequent to the budget filing with the City, the PILOT payment to the City of Lansing was increased to 6.1%; and WHEREAS, the Fiscal Year 2014 budget would result in an electric net income of $3.4 million or a 0.70% return, a water net income of $977,000 or a 0.47%, a steam net loss of $1.7 million or a negative 3.13%, and a chilled water net income of $333,000 or a 1.22% returns before consideration of the increased PILOT payment; and Regular Board Mtg. November 19,2013 Page 19 of 21 WHEREAS, the increased PILOT payment will result in a net loss for the Fiscal Year; and WHEREAS, BWL management proposes to increase annual electric, water, steam, and chilled water billings by $14 million, $3.2 million, $1.0 million, and $.2 million respectively; and WHEREAS, BWL management proposes to add an Economic Development Rider for large commercial and industrial customers; and WHEREAS, BWL management proposes to decrease the electric renewable energy surcharge for all rate classes and add an adjustment mechanisms for the Energy Optimization and the Renewable Energy Plan surcharges; and WHERAS, BWL management proposes to change the application charge for new electric and water customers from $7.00 to $10.00: and WHEREAS, the proposed rate adjustments will not take effect until March 1, 2014, RESOLVED, the proposed rate adjustments will be subject to further consideration after a public hearing is held. FURTHER RESOLVED, that the Finance Committee hereby sets the date of January 23, 2014 at 5:30 p.m. for a public hearing to solicit public input on the proposed rate adjustments. The hearing will be held in the Board of Water and Light office Depot, 1201 S. Washington Avenue. The Corporate Secretary is directed to file with the City Clerk no later than December 2, 2013 information regarding proposed rate adjustments with an effective date of March 1, 2014. Motion by Commissioner Price, seconded by Commissioner McCloud, to approve the resolution setting a Public Hearing for January 23, 2014 to solicit input on proposed 2014 Rate Changes. Action: Carried Unanimously UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS RESOLUTION #2013-11-03 BOARD MEETING SCHEDULE In accordance with the Board of Water & Light's Rules of Administrative Procedure, a schedule of dates, places, and times for each regular meeting of the Board of Commissioners for the calendar year shall be adopted in November. Regular Board Mtg. November 19,2013 Page 20 of 21 RESOLVED, That regular meetings of the Board of Water & Light's Board of Commissioners are hereby set for calendar year 2014 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings: 2014 Board of Water and Light Commissioners Regular Board Meeting Schedule Tuesday January 28 Tuesday March 25 Tuesday May 27 Tuesday July 22 Tuesday September 23 Tuesday November 18 Meetings will be held in Board of Water and Light's REO Town Depot, located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing City Pulse the week of January 1, 2014. ----------------- Motion by Commissioner Price, seconded by Commissioner Ward, to approve the Resolution setting the 2014 Regular Board Meeting Dates. Action: Carried Unanimously MANAGER'S REMARKS General Manager Lark provided the following information: General Manager Lark announced and provided the following information: "Silver Bell in the City" is this Friday, November 22"d The Toy Mill event will take place on Friday the 22"d at Noon at the corner of Washington Square and Ottawa. ® There are only 82 remaining customers without power due to the recent power outage. All customers are expected to have power no later than tomorrow afternoon. Granger will be celebrating the Five-Year Anniversary of providing Renewable Energy to the BWL. The celebration is Tuesday, November 215t at 10:00 a.m. at the Granger Wood Rd. Generating Station; donation of this celebration will go to the Pennies for Power" program. The Engineering News Record (ENR) has named the BWL REO Town project the Midwest Best Project of the year in the category of Industrial Energy. Chair Zerkle will go to Chicago, represent the BWL, and receive the award. General Manager Lark responded to questions presented to him from a BWL Commissioner. Regular Board Mtg. November 19,2013 Page 21 of 21 Question #1- Does the BWL know how much money will be saved with the new LED Lights installed on Michigan Avenue? "The cost of the new LED Lights cannot be compared directly with existing lights since they required additional features requested by the City. Features such as speakers, cameras for law enforcement and panic buttons for emergencies. The lights will cost more for the additional features, however there are offsetting savings. These lights have been provided to the City on a full cost of service basis." Question #2- Was light pollution considered with the installation of the new LED Streetlights? The City requested these lights, as they are usually not carried in our inventory for the additional features that they provide. COMMISSIONERS' REMARKS Commissioner Ward stated that she wanted to add her personal thanks to the Board's Staff and Crew who have worked long hard hours over the past few days to respond to various outages in our service area. She said given her encounters with customers over the last few days she just wanted to share that not all of their hard work has gone unnoticed and that she is very appreciative as are all of the people that she has spoken with. EXCUSED ABSENCE Excused Absence Motion by Commissioner Thomas, Seconded by Commissioner Ward to excuse Commissioners Mullen from tonight's meeting. PUBLIC COMMENTS Brad van Gilder, Organizing Representative for the Sierra Club spoke an article in a local newspaper regarding the discontinuation of certain steam units. He asked for confirmation regarding phase out dates of three existing turbines at the Eckert Plant. General Manager Lark stated that the Sierra Club has meet with George Stojic, Executive Director of Strategic Planning and Development, numerous times in which this was the topic of discussion. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Ward the meeting adjourned at 6:03 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:December 2,2013 Official Minutes(Electronic)filed with Lansing City Clerk:January 30,2014 011molly Approved 6y Ile Board of Commissioners on 112-13 4` MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT November 13, 2012 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, David Price,Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None The Corporate Secretary declared a quorum present. Commissioner Price led the Pledge of Allegiance. CAPITAL AREA COMMUNITY SERVICES (CACS) CHECK PRESENTATIONS General Manager Lark and Board of Commissioners' Chair Sandra Zerkle presented Eric Schertzing, Chairman of the Capital Area community Services Board (CACS) with checks totaling the sum of$11,085.97. These proceeds were derived from: • The "Pennies for Power" 5K Run, $5,907.00, spearheaded by Bob Perialas, Manager of Customer Service. • Board of Water & Light's Golf Outing, $4,178.97, spearheaded by Tony Green, Supervisor of Maintenance and Construction. • Donation from the Delta Theta Phi Fraternity, $1,000.00, spearheaded by Katlin Hojnacki, Bulk Power Compliance. Mr. Schertzing, thanked the Board of Water& Light and General Manager Lark on behalf of the CACS for its donations that help so many. APPROVAL OF MINUTES Motion by Commissioner Thomas, seconded by Commissioner Price to approve the Regular Board Meeting minutes of September 11, 2012. Action: Carried Unanimously ------------------ PUBLIC COMMENTS C D -, E' �, Regular Board Mtg. November 13,2012 Page 2 of 8 MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There was no Public Comment. ------------------ COMMUNICATIONS a. Thank you card from Chair Sandra Zerkle Received and Place on File b. E-mail regarding Board of Water & Light Retiree Breakfast Received and Place on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE November 13, 2012 The Committee of the Whole of the Lansing Board of Water and Light met at the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan at 4:38 p.m. on Tuesday, November 13, 2012. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud )arrived 4:42p.m.), David Price,Tracy Thomas carried 4:50 p.m.), Cynthia Ward and Sandra Zerkle. Absent: None Public Comments Jan Simpson, 3380 Wheatfield Dr., St.Johns, MI, President of the Board of Water & Light's Retirees Association requested a hard copy of the approved Committee of the Whole meeting minutes of September 11, 2012. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of September 11, 2012. Action: Motion Carried 2013 Regular Board Meeting Dates-Resolution Regular Board Mtg. November 13,2012 Page 3 of 8 BOARD MEETING SCHEDULE In accordance with the Board of Water& Light's Rules of Administrative Procedure, a schedule of dates, places, and times for each regular meeting of the Board of Commissioners for the calendar year shall be adopted in November. RESOLVED, That regular meetings of the Board of Water& Light's Board of Commissioners are hereby set for calendar year 2013 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings: 2013 Board of Water and Light Commissioners Regular Board Meeting Schedule Tuesday January 22 Tuesday March 26 Tuesday May 28 Tuesday July 23 Tuesday September 24 Tuesday November 19 Meetings will be held in the Board Room located in the Board of Water and Light's Customer Service Center, 1232 Haco Drive, Lansing, MI, at 5:30 p.m. RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing City Pulse the week of January 1, 2013. ----------------- Motion by Commissioner Price, Seconded by Commissioner Zerkle to forward proposed resolution for the 2013 Meeting Dates to the full Board for consideration. Action: Motion Carried E-Services and Integrated Voice Response System General Manager Lark stated that we are very enthusiastic and excited about the e- Services and Integrated Response System which is commonly known as the IVR System. These two new systems are somewhat integrated and could be viewed as one or separately as two. These two new systems have gone live.as of November 1, 2012 and it will do a number of things for the Board of Water & Light amongst those things, it is going to help us with the speed of answers for our customers who seek information. This endeavor took a great team effort that included Susan Devon, Assistant General Manager and Chief Financial Officer, Bill Aldrich, Finance and Planning, Gennie Eva, from Accounting, Nick Burwell, from IT and Bob Perialas in Customer Service. General Manager Lark introduced Scott Taylor, Board of Water & Light's Supervisor of Treasury and Budgeting, who spearheaded this program from the ground. The E-Service part of this program involves Electronic Billing and payment, which is going to be exciting for our customers. The IVR part involves 24/7 access by Board of Water & Light customers to their accounts. Regular Board Mtg. November 13,2012 Page 4 of 8 Mr. Taylor spoke about the enthusiasm of the implementation of the eServices programs and highlighted some of the successes that have been experienced over the first two weeks of its execution. eServices provides new and improved means of making payment and receiving payment billing information for customers. He stated this project is a big win for the Board of Water& Light and its customers. Vice Chair Looney thanked the Board of Water& Light and the support staff for this great initiative that took a lot of work. REO Town Update General Manager Lark stated Northern Boiler is one of the selected contractors for the REO Town Plant facility and they are currently working on installing 19,000 ft. of pipe. Swan Electric is working on cabling 7,000 ft. of cable trays, 425,000 ft. of wire. Consumer's Energy pipeline work is continuing and is expected to be complete in mid- January. Gas compressor equipment is scheduled to be delivered this month. Davenport masonry is completing work on the switchyard screen wall. We have Operators necessary to run the facility in place and they are already training. General Manager Lark suggested a tour of the new facility in the near future. Peter Kramer, Owner Representative, provided a PowerPoint update on the new Co- Generation Plant and the Depot facility. The PowerPoint showed the latest pictures of the facility. General Manager Lark stated that he is very proud of this complex project. He acknowledged Susan Devon and Dick Peffley for their outstanding work on the project. Other None Excused Absence None Adiourn On Motion by Commissioner Bossenbery, Seconded by Commissioner Price, the meeting adjourned at 5:08 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE November 13, 2012 The Finance Committee of the Board of Water and Light met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan on Tuesday, November 13, 2012 at 5:12 p.m. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Regular Board Mtg. November 13,2012 Page 5 of 8 Commissioners Margaret Bossenbery, Dennis M. Louney, David Price and Sandra Zerkle. Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present was Board Member Anthony McCloud. Absent: None Public Comments Jan Simpson, 3380 Wheatfield Dr., St.Johns, MI, President of the Board of Water & Light's Retirees Association requested a hard copy of the approved Finance Committee meeting minutes of September 11, 2012. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Zerkle to approve the Finance Committee meeting minutes of September 11, 2012. Action: Carried Unanimously Quarterly Financial Update General Manager Lark reviewed the 15t Quarter Financial Report. Actual v. Budgeted Variance in Combined Utility Net Income Fiscal Year to Date September 30, 2012 Compared to FY 2013 Budget ($coo) Budgeted Net Income 7.750 Changes in Operating Income: Revenue Chances (net of fuel) Retail Electric 1,047 Wholesale Electric 539 Water Sales 497 Steam Sales 214 Chilled Water Sales (21) Operatine E. Inse Changes Depreciation 719 Labor, Material, and Other 6.054 Other (279) Subtotal Changes in Operating Income 8.770 Changes in Other Income: Interest Earnings 584 Other Income 342 Increased PILOT (413) All Other-Nan-Operating Variances 372 Subtotal Changes in Other Income 884 Actual Net Income 17,413 General Manager Lark stated we do have good 15t Quarter numbers due to a hot July, August and September but at the same time we do not want to get overly confident that we are going to maintain the net income of about$17 Million. However, we are projecting the end of the year numbers to be close to what was budgeted. (See graph below) Regular Board Mtg. November 13,2012 Page 6 of 8 Revised Combined Utility Net Income Projection Fiscal Year 2013 Based on Vt Quarter Operating Results (0005) Netlncome-Original Budget-Annual $ 13,997 FYl•D Favorable Income Variance ($17,413 actual minus$7,760 budget) $ 9,654 Temporary O&M Expense Timing Differences $ (6,054) Temporary Non-Operating Income Timing Differences $ (1,297) Eliminate March 2013 Rate Increases Assumed in Budget $ (2,524) Projected Net Income $ 13,776 Internal Auditor Status Update Internal Auditor Phil Perkins presented a brief overview of • FY 2013 Audit Plan Progress Report • Plan/Forecast for Remainder of Year FY 2013 Audit Plan Progress Report Audits Completed or in Progress: 1. Reo Town Contracting and Payments Review • Complete; report issued. 2. Cash Receipts & Collections • About 85%complete; estimate completion in Dec 2012 3. Company Insurance & Claims • About 50% complete; estimate completion in Jan 2013 Other Engagements: 1. Time Reporting Review#1—complete. 2. Surprise Cash Count#1—complete. 3. IT Preliminary Risk Assessment—in progress throughout FY 2013 Plan for Remainder of FY 2013 Planned Audits: 1. Energy Risk Management (planned start in Jan 2013) 2. Management of Material Issues to and Returns from Projects (planned start in Jan-Feb 2013) Planned Other Engagements: 1. Surprise Cash Count#2 2. Time Reporting Review#2 3. IT Preliminary Risk Assessment (ongoing) Commissioner Bossenbery stated that the Commissioners should have received Vt Quarter Expense Reports for the Internal Auditor and Commissioner's. Regular Board Mtg. November 13,2012 Page 7 of 8 Excused Absence None Other Finance Chair Bossenbery discussed computer options available to the Commissioners. Adiourn On Motion by Commissioner Price, seconded by Commissioner Zerkle, the meeting adjourned at 5:26 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS There was no Unfinished Business UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS RESOLUTION#2012-11-01 BOARD MEETING SCHEDULE In accordance with the Board of Water& Light's Rules of Administrative Procedure, a schedule of dates, places, and times for each regular meeting of the Board of Commissioners for the calendar year shall be adopted in November. RESOLVED,That regular meetings of the Board of Water& Light's Board of Commissioners are hereby set for calendar year 2013 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings: 2013 Board of Water and Light Commissioners Regular Board Meeting Schedule Tuesday January 22 Tuesday March 26 Tuesday May 28 Tuesday July 23 Tuesday September 24 Tuesday November 19 Regular Board Mtg. November 13,2012 Page 8 of 8 Meetings will be held in the Board Room located in the Board of Water and Light's Customer Service Center, 1232 Haco Drive, Lansing, MI, at 5:30 p.m. RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing City Pulse the week of January 1, 2013. Motion by Commissioner Bossenbery seconded by Commissioner Ward, to approve the schedule for the 2013 Regular Board Meeting Dates. Action: Carried unanimously MANAGER'S REMARKS General Manager Lark announced that the Chamber of Commerce awarded the Board of Water& Light the 2012 Regional Growth 215t Century Award. General Manager Lark thanked everyone who contributed to the successful two part story that was in the Lansing State Journal regarding the REO Town Project. General.Manager Lark reminded everyone about the Silver Bells in the City event to take place, Friday November 16, 2012. COMMISSIONERS' REMARKS Chair Sandra Zerkle stated that the article in the Lansing State Journal was positive and presented very good time lines. Commissioner David Price thanked everyone at the Board of Water& Light for a successful tour of Eckert Station Power Plant that was presented to his MSU Japanese foreign exchange students. He also reminded everyone that his band will be performing at the Silver Bells event this upcoming weekend. PUBLIC COMMENTS There was Public Comments. EXCUSED ABSENCE None. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Thomas the meeting adjourned at 5:49 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:November 26,2012 Final Approved Minutes filed(electronically)with Lansing City Clerk on January 23,2013 APPROVED BY THE BOARD OF COMMISSIONERS _ ON NOVEMBER 79,2013 '41 MINUTES OF THE BOARD OF COMMISSIONERS'.MEETING LANSING BOARD OF WATER AND LIGHT September 24, 2013 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None The Corporate Secretary declared a quorum present. r Commissioner Price led the Pledge of Allegiance. CD APPROVAL OF MINUTES Motion by Commissioner Thomas, seconded by Commissioner Bossenbery to approG6 the �'l Regular Board Meeting minutes of July 23, 2013. r, C rn Action: Carried Unanimously Motion by Commissioner Price, seconded by Commissioner Bossebery to approve the Corrected Regular Board Meeting minutes of May 28, 2013. Action: Carried Unanimously PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA, SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There was no Public Comment ------------------ SPECIAL PRESENTAITON A. Presentation from Representative Andy Shor Representative Shor stated that he wanted to honor the BWL for the Grand Trunk Redevelopment and for the Co-Generation Plant. He stated that he is a customer and loves what the BWL is doing. Representative Shor presented the BWL with a commemorative resolution of appreciation on behalf of himself, Representative Teresa Abbott of Eaton County, Representative Tom Cochran of Ingham County and Representative Sam Sign of E. Regular Board Mtg. September 24,2013 Page 2 of 14 Lansing/Meridian as well as Senator Gretchen Whitmer and Governor Snyder. Representative Shor also presented a tribute to Local IBEW 352 for all of their hard work on the Grand Trunk Redevelopment and the Co-Generation Plant. B. BWL Chili Cook-Off Check Presentation General Manager Lark and Chair Zerkle presented cheks to: Shela Dubenion-Smith, Development Director, Sparrow Foundation, $5,000 2013 BWL Chili Cook-Off Brad Patterson, Executive Director, Lansing Promise/Hope Scholars, $5,000 2013 BWL Chili Cook-Off Erik Larson, Executive Director, Impression 5 Science Center, $5,000 2013 BWL Chili Cook-Off C. BWL REO Town Brick Promotion and Pennies for Power Dancing with the Starz Check Presentation General Manager Lark and Board Chair Zerkle presented Eric Schertzing, Chairman of the Capital Area Community Services Board (CACS) with a $6.000 check in which the proceeds were derived from the REO Town Brick Promotion and the Dancing with the Starz event. Chair Zerkle congratulated everyone who was involved in helping to raise money for these various organizations and stated that these donations were a result of General Manager Lark and his staffs hard work, effort and time. ------------------ COMMUNICATIONS a. Internship Appreciation Communications from: 1. Stephen Lindeman — Received and Placed on File 2. Yakov Kochubievsky— Received and Placed on File 3. John Brady- Received and Placed on File b. Emails to Commissioners re: 1. Protecting Trees- Referred to Management/Received and Placed on File 2. Meeting request from Mary Brady of Clean Water Action — Referred to Commissioners-Received and Placed on File 3. Deposit Payments from Rachael Cruz-Referred to Management-Received and Placed on File 4. Tree Maintenance Schedule from Lansing Resident-Referred to Management/Received and Placed on File General Manager Lark stated regarding items b. 1 & 4, no tree work will be required. Item 2, this group intends to present at the next Committee of the Whole. Item b. 3, this matter has been taken care of with respect to deposit payments. Regular Board Mtg. September 24,2013 Page 3 of 14 COMMITTEE REPORTS COMMITTEE OF THE WHOLE August 13, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, August 13, 2013. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioner Tony Mullen Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of June 11, 2013. Action: Motion Carried Natural Gas Purchase Overvie George Stojic, Executive Director of Strategic Planning and Development and Dave Bolan, Manager of Bulk Power, provided the Committee with a Natural Gas Purchase Overview. Mr. Stojic began the presentation with a description of the U.S. natural gas market. According to Mr. Stojic, the U.S. has several major natural gas producing regions, an extensive natural gas transportation pipeline system, and well developed, transparent, and liquid markets in which to buy and sell natural gas. He noted that gas production has surged to historical levels since the onset of natural gas hydraulic fracturing, which has produced lower and more stable prices. Mr. Stojic stated that Michigan is served by five major interstate pipelines with natural gas entering the state from several regions in the U.S. and Canada. Mr. Bolan stated that the REO Town plant is expected to consume approximately 4 Billion cubic feet (Bcf) of natural gas annually. He explained that the BWL will utilize Fellon McCord as a procurement agent for the purchase of REO Town's natural gas. As a procurement agent, Fellon-McCord can purchase natural gas from several suppliers, rather than relying solely on Consumers Energy to supply gas at its price. However, the BWL will be a transportation customer of Consumers Energy, using the Consumers pipeline system to move natural gas purchased for the BWL by Fellon-McCord. As the BWL's agent, Fellon-McCord solicits bids to supply gas from counterparties, assists legal staff with developing industry contracts, assists BWL with purchasing strategy, provides information on market conditions, performs daily natural gas balancing and nomination on the Consumer's system for the BWL and reviews Consumers Energy invoices for accuracy. The BWL has an industry standard energy risk management policy that covers natural gas purchases and has saved BWL customers $706,000 at today's gas prices. Regular Board Mtg. September 24,2013 Page 4 of 14 Wind Energy Proiect Overview George Stojic, Executive Director of Strategic Planning and Development provided the Board of Commissioners with information on the BWL's recent Wind Energy Project. Mr. Stojic stated that the BWL has a Purchase Power Agreement with Beebe Renewable Energy LLC that includes 8 Nordex Wind Turbine Generators or windmills that are going to be built up north in Gratiot County. This acquisition helps diversify the BWL's Renewable Energy portfolio and is part of the 10% Renewable Energy Credits (REC's) to be in effect by 2015. Mr. Stojic stated that the BWL is expected to get about 60,000 megawatt hours each year off of the windmills and that is about 25% of our Renewable Energy Portfolio Requirements. Implementation of SAP Budget Module Scott Taylor, Supervisor of Treasury and Budgeting, provided information on the BWL's new SAP Budget Module that has been implemented. Mr. Taylor stated that the new budget system is intended to improve the budget process. Mr. Taylor said this new budget system helps in moving our company forward towards having a more fully integrated information management system. With this new process our budget system is now under the SAP umbrella and provides a better tool for planning our budget and a better tool for analyzing differences between our planned budget and our actual results. Mark Dykema, Senior Consulting IT Analyst and Project Manager, provided details on the work that went into the successful implementation of the new SAP System software. Mr. Dykema thanked all of the employees who took part in making this project a success. Easement Swap (Resolution) General Manager Lark stated that Two Men and a Truck would like to build something over one of the BWL's easements. The location of this particular easement is not necessary and with the Board's permission an Easement Swap would take care of the situation. With the Easement Swap the BLW would swap or give them the right to build over that particular easement and they would give us another easement. General Manager Lark respectfully asked that the Committee forward the Resolution for the Easement Swap to the full Board for consideration. Motion by Commissioner Price, Seconded by Commissioner McCloud to forward the Resolution to the full Board for consideration. Action: Motion Carried Other General Manager Lark said that the next Regular Board meeting will take place at the new Depot facility and there is a 50/50 chance that the Committee of the Whole and Finance Committee meetings for September will also take place at the Depot. Chair Zerkle stated that she attended the Intern Luncheon today and it was phenomenal. She said it is amazing how the BWL staff integrates people who have been here for only a short period of time. Regular Board Mtg. September 24,2013 Page 5 of 14 Commissioner Thomas thanked everyone involved in setting up his tour of the new BWL Headquarters and Dick Peffley for providing a great tour of a beautiful facility. He also thanked Nick Burwell for assisting him on another matter. Excused Absence Motion by Commissioner Thomas seconded by Commissioner Ward to excuse Commissioner Mullen from tonight's meeting. Adjourn On Motion by Commissioner Price, Seconded by Commissioner McCloud, the meeting adjourned at 6:49 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE August 13, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 6:51 p.m. on Tuesday, August 13, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, David Price and Alternate Committee Members Cynthia Ward and Tracy Thomas. Also present was Board Members Sandra Zerkle. Absent: Commissioner Tony Mullen Public Comments There was no Public Comment. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of June 11, 2013. Action: Carried Unanimously FY 2013 Preliminary Year End Update General Manager Lark presented the monthly Financial Report for FY 2013. Mr. Lark stated that this is an Unaudited Financial Report and that External Auditors, Plante & Moran will be presenting the official Audited Financial Report next month. General Manager Lark reviewed the following. Return on Net Fixed Assets Regular Board Mtg. September 24,2013 Page 6 of 14 FINANCIAL PERFORMANCE BY UTILITY Fiscal Year-to-Date June 30, 2013 Return on Net Fixed Assets 5-00°i --- -- ---- - -------- -- ... - ---- 4.3% 4-00% - -- 6°E - ------ -- __281�-. 2.00% 1.00% 0.00% - � .0.1* -0.1° -2.00% ----- --- - - _1.4% -3.0090 2.9% -4.00% --------...--- ----- - ----------._._.. -- - - --- l m_ g cn C0 m .. co 3 0 a oActual ®Budget CONSOLIDATED INCOME STATEMENT ACTUAL to BUDGET: Fiscal Year-to-Date June 30,2013 ($Millions) Actual Budget Change$ Change% Revenues 331.8 327.3 4.5 1% Operating Expenses: Labor&Benefits 84.6 87.9 (3.3) 4% Materials 12.2 13.1 (0.9) -7% Fuel&Chemicals 65.3 53-7 11.6 22% Purchased Power 66.1 72.3 (6.2) -9% Outside Services&Other 35.8 43-0 (72) -17% Expenses Capitalized (7.1) (8.0) 0.9 -11% Depreciation 30.4 32-9 (2.5) -8% Total Operating Expenses 287.3 294-8 (7-5) -3% Operating Income 44.4 32.4 12.0 37% Payment in Lieu of Taxes (16.1) (162) 0.1 -1% Non-Operating Revenues less Expenses (9.6) (2.3) (7.3) 317% Net Income 18.7 14.0 4.7 Unit Sales: Water-Retail&Wholesale CCF 9,477,073 9,453,611 0% Electric Retail-MbvH 2,178,067 2.240,179 -3% Electric Wholesale-MWH 304,520 280,352 9% Ste am-RetaAHLB 710,454 698,275 2% Chilled Water-Thousand Ton Hours 8-888 10,036 =1 1% Actual Normal Cooling Degree Days 859 558 54% Healing Degree Days 6,564 7,098 -8% Precipitation Inches 41-7 30.8 35% Regular Board Mtg. September 24,2013 Page 7 of 14 Excused Absence Motion by Commissioner Price seconded by Commissioner Louney to excuse Commissioner Mullen from tonight's meeting. Other Commissioner Thomas acknowledged Susan Devon, Assistant General and Chief Financial Officer for approving all of the work at the Depot. Adjourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 7:14 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee COMMITTEE OF THE WHOLE September 100 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the BWL Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, September 10, 2013. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony Mullen, David Price, Cynthia Ward and Sandra Zerkle. Absent: Commissioner Tracy Thomas Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of August 13, 2013. Action: Motion Carried MPPA Second Alternat General Manager Lark stated that George Stojic, Executive Director of Strategic Planning and Development is serving as the Commissioner to the Michigan Public Power Agency (MPPA )on behalf of the BWL along with Dave Bolan and Susan Flores as alternates. Ms. Flores has retired and there needs to be a replacement for her in this capacity. This Resolution names Lori Pung as the BWL's Second Alternate Commissioner for the MPPA. General Manager Lark Regular Board Mtg. September 24,2013 Page 8 of 14 respectfully requested that the Resolution for the MPPA replacement be forwarded to the full Board for consideration. Motion by Commissioner Bossenbery, Seconded by Commissioner Zerkle to forward the Resolution to the full Board for consideration. Action: Motion Carried JNL Update and Development Agreement General Manager Lark and George Stojic, Executive Director of Strategic Planning and Development provided the Committee of the Whole with information on the Development Agreements between the City of Lansing, BWL and Jackson National Life Insurance Company (JNL). A Resolution was presented which allows the General Manager and Corporate Secretary to execute the newly proposed development agreement with JNL and the City of Lansing to provide electric and water service to Jackson National Life's new Headquarter Facility expansion. General Manager Lark respectfully requested that the proposed Resolution be forwarded to the full Board for consideration. Motion by Commissioner Price, Seconded by Commissioner McCloud to forward the Resolution to the full Board for consideration. Action: Motion Carried Other At the request of Commissioner Louney, General Manager Lark provided the Committee with information pertaining to cost saving initiatives that the BWL has implemented. Some of the initiatives include: •Bond Refunding •Health Care Changes • Reduction in Labor Force • Reduction in rail set -Improved Fleet Scheduling General Manager Lark announced that after the meetings there will be a tour conducted of the new facility if anyone was interested. General Manager Lark said that he was asked by a Commissioner about an incident that took place at the BWL in August. Mr. Lark stated that he believes that the question was pertaining to Unit#4 which is part of the Eckert Complex. Mr. Lark said there was a series of events that took place with Unit #4 and all of the facts are not clear, but it is believed that an electrician shut the power off to the Unit and the backup pump that maintains the hydrogen seals failed and as a result there was a fire and an explosion. The fire was extinguished by BWL employees and they did a very commendable job. The extent of damage is not known at this time. Excused Absence Motion by Commissioner Ward, Seconded by Commissioner Price to excuse Commissioner Thomas from tonight's meeting. Action: Motion Carried Adiourn Regular Board Mtg. September 24,2013 Page 9 of 14 On Motion by Commissioner Price, Seconded by Commissioner Ward, the meeting adjourned at 5:53 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE September 10, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at BWL Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 6:00 p.m. on Tuesday, September 10, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Tony Mullen, Dennis M. Louney, David Price and Alternate Committee Member Cynthia Ward. Also present were Board Members Anthony McCloud and Sandra Zerkle. Absent: None Public Comments There was no Public Comment. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of August 13, 2013. Action: Carried Unanimously Plant Moran Presentation of Audited Financial Statements FY 2013 General Manager J. Peter Lark introduced Douglas Rober, Managing Partner with Plante & Moran (P&M). General Manager Lark thanked all of BWL's employees who worked on the audit process. Mr. Rober, CPA Partner, introduced Sean Tanner a Manager with Plante & Moran who reviewed the following Financial Information: Operating Revenue- Four Year Comparison Operating Expenses— Four Year comparison Operating Income (Loss) Sales Source of Kilowatt Hours Generated Kilowatt Hours Generated Versus Purchased Regular Board Mtg. September 24,2013 Page 10 of 14 Significant Power Cost Bond Debt Service Requirements Revenues, Expense and Net Income by Utility (Electric, Water, Steam & Chilled Water) Mr. Rober, reviewed the "AU 260 Report to Commissioners" document as well as Plante & Moran's responsibilities that are required under the U.S. Generally Accepted Auditing Standards. Mr. Rober stated that everyone was cooperative during the audit engagement. Mr. Rober reviewed the audit process of the Financial Statements and the Opinions for fiscal year ending June 30, 2013. The Opinions include the Enterprise Fund and the Fiduciary Pension Trust Funds. The 3 separate Financial Statements represent the Trust Funds, which are the Defined Contribution, Defined Benefit Plan and the Retiree Benefit Plan and Trust (VEBA Plan). Motion Commissioner Zerkle, Seconded by Commissioner Price, to forward the resolution for the acceptance of the FY 2013 Audited Financial Statements to the full Board for consideration. Action: Motion Carried Purchase Policy Report General Manager Lark presented the Committee with the Annual Procurement Report that included: A. Sole source contracts in an amount equal to or greater than $5,000. B. Emergency contracts in an amount equal to or greater than $5,000. C. Contracts with a term exceeding thirty-six consecutive months. D. Litigation pertaining to any particular contract covered by the Purchasing Policy. Motion Commissioner Price, Seconded by Commissioner Louney, to receive the FY 2013 Procurement Policy Report. Action: Motion Carried Annual Procurement Report on File in the Office of the Corporate Secretary Excused Absence None Other None Adiourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 6:29 p.m. Respectfully submitted Margaret Bossenbery, Chair Regular Board Mtg. September 24,2013 Page 11 of 14 Finance Committee MANAGER'S RECOMMENDATIONS General Manager Lark respectfully asked that the following Resolutions be considered for approval. RESOLUTION #2013-09-01 EASEMENT EXCHANGE WITH TWO MEN AND A TRUCK RESOLVED, that the Board of Commissioners hereby authorizes the General Manager to release its Existing Easement(Attachment A) with Two Men and a Truck, in exchange for a new easement (Attachment B) granted by Two Men and a Truck; which shall be located on the same parcel. -------------------- Staff Comments: The Lansing Board of Water & Light (BWL) has an easement ([Liber 51 of Plats, Page 34 [BWL# 3305-02-2003]) for its utility operations, hereinafter referred to as "Existing Easement." The fee owner and successor grantor is Two Men and a Truck, hereinafter referred to as "Grantor". Currently, the BWL does not utilize the Existing Easement and would like to abandon its facilities to another location on Grantor's property. Additionally, the Grantor would like to construct its own building within the Existing Easement area. The BWL and the Grantor would like to resolve their needs by exchanging easement interest. Therefore, it is requested that the Board of Commissioners authorize the release of its Existing Easement in exchange for a new easement on the same property that will meet its operational needs. The release would only occur after full execution and recording of the new easement document. -------------------- Motion by Commissioner Ward, seconded by Commissioner Price, to approve the resolution for the Easement Exchange with Two Men and A Truck. Action: Carried Unanimously Attachments are available in the Office of the Corporate Secretary and the BWL Resolution Library RESOLUTION #2013-09-02 AMENDING APPOINTMENTS TO MICHIGAN PUBLIC POWER AGENCY WHEREAS, George Stojic is the Michigan Public Power Agency (MPPA) Commissioner on behalf of the Lansing Board of Water & Light (BWL), along with David Bolan and Susan Flores, who serve as First and Second Alternate Commissioners, respectively; and WHEREAS, the Second Alternate, Ms. Flores is no longer employed with the BWL and does not serve in any capacity with MPPA on behalf of the BWL; and WHEREAS, it is appropriate and in the best interest of the BWL to name a replacement for the Second Alternate MPPA Commissioner position. Regular Board Mtg. September 24,2013 Page 12 of 14 NOW, BE IT RESOLVED, that George Stojic will remain as the MPPA Commissioner on behalf of the BWL, along with David Bolan as the First Alternate Commissioner. FURTHER RESOLVED, that Lori Pung is named as the BWL's Second Alternate MPPA Commissioner. Motion by Commissioner Ward, seconded by Commissioner McCloud, to approve the resolution naming Lori Pung as the BWL's Second Alternate MPPA Commissioner. Action: Carried Unanimously RESOLUTION#2013-09-03 JACKSON NATIONAL LIFE DEVELOPMENT AGREEMENT WHEREAS, Development Agreements between the City of Lansing, the Lansing Board of Water and Light, and Jackson National Life Insurance Company (Jackson National) have been negotiated and adopted on September 14, 1998 and July 22, 2008; and WHEREAS, the City of Lansing, the Lansing Board of Water & Light, and Jackson National have negotiated a third Development Agreement (2013 Agreement); and WHEREAS, the 2013 Agreement sets forth the terms, conditions, and agreements of the parties relative to expansion of Jackson National's world headquarters, business operations, and related facilities located on property within the City of Lansing, pursuant to the 1998 and 2008 PA 425 Agreements between Alaiedon Township and Lansing, and on property located in Alaiedon Township adjacent to the current world headquarters (Additional 2013 Property); and WHEREAS, the Alaiedon Township Additional 2013 Property site is the subject of a proposed agreement between the City and the Township conditionally transferring the site to the City of Lansing pursuant to 1984 Public Act 425 (the2013 PA 425 Agreement); and WHEREAS, the Development Agreement calls for the signatories to attach a Corporate Resolution certifying the persons executing the Development Agreement are duly authorized to do so; and WHEREAS, the Contract Signature Authority (Res. 2004-01-08) and Line Extensions and Service Territory Expansions (Res. 2000-3-2) authorize the General Manager to execute agreements of this nature; and WHEREAS, the Development Agreement is subject to the approval and execution of the 2013 PA 425 Agreement by the City and Alaiedon Township. NOW, THEREFORE, BE IT RESOLVED, the General Manager and Corporate Secretary are authorized to execute the 2013 Development Agreement with Jackson National Life Insurance Company and the City of Lansing on behalf of the Lansing Board of Water and Light. Regular Board Mtg. September 24,2013 Page 13 of 14 Motion by Commissioner McCloud, seconded by Commissioner Bossenbery, to approve the Resolution authorizing the General Manager and the Corporate Secretary to execute the Development Agreement with JNL and the City of Lansing on behalf of the BWL. Action: Carried Unanimously RESOLUTION#2013-09-04 Fiscal Year 2013 Audited Financial Statements RESOLVED, that the fiscal year 2013 Audited Financial Statements for the Board of Water& Light have been reviewed and are hereby accepted as presented. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2013 Audited Financial Statements of the Board of Water& Light and the report on auditing procedures with the State Treasurer as required by the Uniform Budgeting and Accounting Act (Public Act 2 of 1068, as amended) not later than December 31, 2013. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2013 Audited Financial Statement of the Board of Water& Light with the City of Lansing. Motion by Commissioner Bossenbery, seconded by Commissioner McCloud, to approve the Resolution approving the FY 2013 Audited Financial Statements. Action: Carried Unanimously UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS There was no Resolution under this section of the Agenda MANAGER'S REMARKS General Manager Lark provided the following information: ® October 8th there may be a Committee of the Whole, Finance Committee Meeting as well as a Trustees Meeting and perhaps a Human Resource Committee Meeting. ® On October 9th during Public Power Week at the suggestion of Chair Zerkle the BWL will be hosting a meeting at the Depot for the community. This will be an informational meeting for the public that includes material on Energy Efficiencies, Renewable Energy and a program talking about how valuable the BWL is to the community as well as the type of things that can done to help customers. Everyone is invited. • October 10th City Hall on the Road is scheduled to take place at the Depot. Regular Board Mtg. September 24,2013 Page 14 of 14 COMMISSIONERS' REMARKS Chair Zerkle welcomed everyone to the first meeting at this beautiful building and invited everyone to have refreshments after the meeting. She thanked those who put together the recent picnic that took place. Commissioner Thomas thanked the IT Department for all of their hard work. EXCUSED ABSENCE None PUBLIC COMMENTS Ron Byrnes, Business Manager of IBEW Local 352, spoke about the explosions at Unit#4 at the Eckert Station. He asks that the Commissioners take interest in the end result of the investigation. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Ward the meeting adjourned at 6:03 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:October 3,2013 Official Minutes filed(electronically)with Lansing City Clerk:November 20,2013 Lansing Entertainment & Public Facilities Authority OFFICIAL NOTICE `= r LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY BOAR® OF COMMISSIONERS The next regular meeting has been called for: Tuesday, November 26, 2013 8:00 a.m. Lansing Center— Governor's Room 333 East Michigan Avenue Lansing, Michigan 48933 483-7400 Accompanying this notice is the agenda and other items, which will be either reviewed or discussed at the meeting. Please bring these with you to the meeting. Thank you. Charlotte Sinadinos Chairwoman LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY BOARD OF COMMISSIONERS REGULAR MEETING AGENDA TUESDAY, NOVEMBER 26, 2013 8:00 A.M. +-n I. CALL TO ORDER II. ROLL CALL c r- III. ESTABLISHMENT OF AGENDA IV. PUBLIC COMMENT V. APPROVAL OF THE MINUTES OF OCTOBER 22, 2013 VI. REPORTS A. Chairwoman — Charlotte Sinadinos B. Finance Committee — Tim Kaltenbach 1. September Financials C. President & Chief Executive Officer- Scott Keith D. Personnel Committee — Cindy Bowen E. Strategic Planning Committee — Tim Barron VII. COMMISSIONERS' AND STAFF COMMENT Vill. OLD BUSINESS IX. NEW BUSINESS X. ADJOURNMENT - Date, Time, Location of Next Meeting: December 17, 2013 8:00 a.m. Lansing Center — Governor's Room LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY BOARD OF COMMISSIONERS MEETING SEPTEMBER 24, 2013 MINUTES At 8:05 a.m., Chairwoman Charlotte Sinadinos, called the meeting to order in the Governor's Room- Lansing Center, 333 E. Michigan Avenue, Lansing, Michigan 48933. COMMISSIONERS PRESENT: Tim Barron, Angela Bennett (Ex-Officio), Cindy Bowen, James W. Butler, III, Jim DeLine (Ex-Officio), Glenn Hills, Charles Janssen, Tim Kaltenbach, Charles Mickens, Linda Sims-Wright and Charlotte Sinadinos. COMMISSIONERS EXCUSED: Bob Johnson (Ex-Officio). OTHERS PRESENT: Scott Keith, Greg Soleau, Heidi Brown, Gus Pine, Paul Ntoko, Heather Hymes, Tristyn Wright Meyer, —Lansing Entertainment & Public Facilities Authority, Jody Washington Lansing City Council,Nan Jasinowski— Sweet Seasons Orchard, Dirk Spillemaeckers— AMTA, Jason Kildea—Gillespie Group and Jack Alexander. III. ESTABLISHMENT OF THE AGENDA: No changes. I'V. PUBLIC COMMENT: No comments. Scott introduced Jason Kildea, of Gillespie Group, stating Jason is here to provide a report on the Marketplace project. Jason Kildea reported the following: -Drawings were reviewed briefly showing the project rendering -The project work should take 12— 15 months depending on weather conditions -Trenches for utilities were dug last week, in 2—3 weeks, footings and the foundation will be worked on -A review of the residential building was given; including number of units and types of materials used -It was noted there is no plan to scale back; each building will be done in phases—they want the project done right and want it to look nice -Commissioner Barron asked how colors are kept so vibrant; Jason explained the process -Commissioner Sims-Wright asked how much interest has been shown in the buildings. Jason stated there is decent interest with 95% - 96% occupancy planned. Young professionals, Cooley Law School, MSU and LCC being the majority of interested. -Nan Jasinowski asked if the grade level exits to the City Market. Jason stated there will be a walk-out to the City Market lot (15 feet away). All other floors have to exit from the front of the building. -Jack Alexander asked if materials have been purchased locally and if the million dollar clean-up grant has been used. Jason stated some of the materials are not made in Michigan, but whenever possible local materials are used and all 6 contractors are local (within a 25 mile radius of Lansing). Jason stated the grant money has been used and the DEQ is satisfied with the clean -up. LEPFA Board of Commissioners Meeting Page 2 September 24, 2013 Scott thanked Jason for coming to the meeting this morning to provide the update and answer questions from our Board members. It was noted that Gillespie is paying the City $1,000 per month in lost parking revenues since the City gave the City Market parking spaces for City Market shoppers. Jason stated he is willing to provide regular updates as the project progresses. V. APPROVAL OF THE MINUTES FOR AUGUST 20, 2013: A motion was made to accept the minutes as published. MOTION: Commissioner Janssen. SECOND: Commissioner Butler. Motion unanimously carried. VI. REPORTS: A. CHAIRWOMAN'S REPORT: Chairwoman Sinadinos reported the following: 1. The Finance Committee met yesterday and it was noted the Lansing Center is off to a good start for the fiscal year; August numbers look good. 2. The Executive Committee met last week with Scott and discussions regarding the CVB agreement and funding were held, along with updates regarding Board, staff and all three properties. 3. Chairwoman Sinadinos welcomed Jim DeLine to the LEPFA Board. Jim is the Internal Auditor for the City of Lansing. Jim reviewed his work history with the City, as well as holding a treasurer position for Plymouth Congregational Church. Jim stated he is pleased to be here and thanked everyone. B. SECRETARY/TREASURER'S REPORT: 1. Monthly Financial Statements for the months ending July and August 2013: Greg Soleau, Vice-President of Finance, stated financial statements are reviewed on a year-to-date basis and for this meeting's purpose, August monthly statements will be reviewed. Greg reported the following: a. Lansing City Market: Total Operating Revenue year-to-date is $23,284 compared to the prior year's amount of$22,679. Total Expenses year-to-date are $34,148 compared to the prior year's amount of$33,292. Excess Revenues over Expenses year-to-date are a loss of($7,115) compared to the prior year's loss amount of ($7,619). Balance Sheet: Accounts Receivable is $12,223 compared to the prior year's amount of$13,275. Accounts Payable is $50,621 compared to the prior year's amount of$22,238. Unreserved Equity is $68,537 compared to the prior year's amount of$101,867. Budget vs. Actual: Total Operating Revenue is ahead of budget by $984. Total Operating Expenses are behind budget by ($1,293). Excess Revenues over Expenses year-to-date are behind budget by ($309). LEPFA Board of Commissioners Meeting Page 3 September 24, 2013 b. Cooley Stadium: Greg reported there were no events during the months of July or August; last year Consumers Energy picnic was held in August. Total Operating Revenue year-to-date is $500 compared to the prior year's amount of $1,496. Total Expenses year-to-date are $65,944 compared to the prior year's amount of$59,800. Excess Revenues over Expenses year-to-date are a loss amount of($37,197) compared to the prior year's loss amount of($30,094). Balance Sheet: Total cash year-to-date is $101,210 compared to last year's amount of$91,580. The Net Event Development Fund is $79,775 compared to last year's amount of$82,842. Total Liabilities & Equity is $252,542 compared to last year's amount of$210,816. Accounts Payable are $134,321 compared to last year's amount of$90,443. Unreserved Equity year-to-date is $103,949 compared to last year's amount of$106,109. Budget vs. Actual: The Miscellaneous line shows a$10,000 charge which is for the Downtown Lansing Inc. assessment. Total Operating Revenue year-to-date is $2,229 ahead of budget. Total Expenses are behind budget by ($10,242). Excess Revenue over Expenses are behind budget by($12,471). c. Lansing Center: Total Operating Revenue year-to-date is $425,479 compared to the prior year's amount of$352,570. Total Expenses year-to-date are $810,015 compared to the prior year's amount of$830,869. Excess Revenues over Expenses are ($270,085) compared to the prior year's amount of($383,659). Balance Sheet: Total Cash is $75,788 compared to last year's amount of$35,276. Accounts Receivable is $494,999 compared to the prior year's amount of$250,273. Accounts Payable is $199,240 compared to the prior year's amount of$124,962. Unreserved Equity year-to-date is $130,887 compared to the prior year's amount of ($41,308). Budget vs. Actual: Total Operating Revenue is ahead of budget by $34,388. Total Expenses are ahead of budget by $59,594. Commissioner Bowen asked if there were going to be any write-offs at the City Market. Scott stated not at this time. Commissioner Bowen complimented Paul on the control of F&B expenses. Commissioner Janssen asked why Commissioner Bowen would ask about write- offs for the City Market; are we expecting something? Scott stated we are waiting for the auditor's report; noting the auditor may advise us to do so on unpaid rents. Secretary/Treasurer Tim Kaltenbach moved that the monthly financials for the Lansing City Market, Cooley Law School Stadium and the Lansing Center for the LEPFA Board of Commissioners Meeting Page 4 September 24, 2013 period ending July 31, 2013 and August 31, 2013 be received as published and further that the monthly expenses for each entity be accepted. SUPPORT: Commissioner Butler. Motion unanimously carried. C. PRESIDENT & CEO'S REPORT: President/CEO Scott Keith reported the following: 1. Lansing Center Highlights: Scott reported on the mix of events held at the Lansing Center; noting the mix of events created a nice pro-forma relating to revenues and expenses. Scott reviewed events held in August and upcoming events for the month of October. 2. CVB Agreement: Scott has been meeting with Jack Schripsema to discuss finer points of the agreement. There are two outstanding issues that need to be finalized; the first is the CVB and LEPFA's fiscal year dates are not aligned and this complicates the termination clause and the second is Board appointee language. Scott and Jack are also working on By-Laws language for the agreement. 3. City Market: Scott reported recruiting continues for new vendors for the City Market. This Friday, a viewing of"A Place at the Table"will take place at the City Market. The viewing will be followed by a roundtable discussion. Scott noted there is an article about the Waterfront Bar & Grill in Women's Lifestyle magazine. 4. Cooley Law School Stadium: Scott reported on the draft audit; noting that overall, the stadium is in good condition. There are areas of improvement noted for the roof and concrete. Scott reported there is a list of new changes and updated items that would take the stadium to a state of the art structure. Scott stated the audit should be completed in late October and then a development plan can begin. Commissioner Barron stated that once the audit is made available to the public a copy should be given to Mr. Alexander—Scott agreed. Scott stated we will narrow down figures and look for funding mechanisms for the improvements. Jack Alexander asked if there were any surprises noted in the audit. Scott stated there weren't any surprises and it was a positive look from a third party perspective. Scott stated the items noted were items we are already aware of and noted the lighting as one example. Commissioner Sims-Wright asked if the audit will be shared with LEPFA Board of Commissioners Meeting Page 5 September 24, 2013 Administration, City Council and the Board. Scott stated it would be shared. 5. Employee Evaluations: Scott reported evaluations are underway and will be completed by the end of the month. 6. Common Ground Recap: Scott reported he and Kevin Meyer have been meeting to work on 2013 financial information; noting that we may have broken even this year. Scott stated we are looking at dates for July; noting we are working on dates based on artists availability. Scott reported in addition to dates, there is a possibility of going to two weekend festivals instead and somehow incorporate the July 4"' event into the festival. 7. Absence: Scott stated Shelly is not in attendance today due to a death in her family. 8. Holiday Rec o : Scott reported the LEPFA Board Holiday Reception is tentatively slated for December If"; noting further information will be provided as it develops. D. PERSONNEL COMMITTEE: Commissioner Bowen reported the Personnel Committee has been meeting to complete Scott's evaluation; noting they will finish after today's Board meeting. Commissioner Butler reported the Committee met recently to discuss two policies; updates were made to the Social Media policy and a Workplace Violence policy was introduced. The Committee also discussed the Affordable Care Act that will be active October 1st and the PHP reimbursements. A discussion was held regarding the two policies and motions were made to approve the policies. A motion to approve the updates to the Social Media policy was made by Conunissioner Barron and supported by Commissioner Mickens. Motion unanimously carried. A motion was made by Commissioner Barron to approve the Workplace Crisis & Intimidation policy and supported by Commissioner Butler. Motion unanimously carried. E. STRATEGIC PLANNING COMMITTEE: Commissioner Barron reported the Committee formerly known as Long Range Planning has a new name— Strategic Planning Committee, The Committee met and discussions were held regarding the Marketplace project, the future of the CVB and LEPFA's working relationship, the casino project and downtown parking. VII. COMMISSIONER& STAFF COMMENTS: LEPFA Board of Commissioners Meeting Page 6 September 24, 2013 A. Commissioner Kaltenbach: Commissioner Kaltenbach congratulated Gus and staff on the Pace report for first quarter being 90% of budget. Scott stated we are finally seeing the fruits of our efforts through our agreement with the CVB. B. Commissioner Janssen: Commissioner Janssen spoke about Strategic Planning noting there must be a master plan regarding land use; possibly looking at Adado Park as a permanent facility. A discussion regarding the way-finder signage and how to improve the signage was held. Scott stated he is part of a newly formed informal CEO group, consisting of LEPFA, LEAP, the Chamber and CVB, and the group is working on projects such as funding through regional sources; allowing the funds to cover the costs of some of these items that need to be improved upon. Commissioner Janssen reported he visited the RE Olds Museum (having never been before) and noted that the museum could be used as an event venue. A discussion regarding clean-up of the area around the Knight Cap (behind) and the museum area surrounding it was held. Commissioner Barron reviewed clean-up history of the area. C. Commissioner Hills: Commissioner Hills reported an opinion that the Market is "in shambles;"noting there are many vendors' leases that are set to expire and they may not renew. This may cause problems as some of these vendors are a major draw to the Market. The vendors would like a rental adjustment. Commissioner Hills reported 2016 will mark the 100t" anniversary of the Market and he would like to see the Market be successful. Commissioner Hills stated there is little draw to the Market and would like to see a special committee formed to determine what kind of market we want to have; noting the Waterfront Bar & Grill is absorbing"the entire market." Scott commented on the expiration dates of the vendor's leases; noting a few expire in December. Heather stated there is one lease that has a 6 month expiration and that vendor is not sure what they will do yet. Heather stated that rumors don't help support the Market. Commissioner Hills stated the vendors call him and tell a different side of the story. Commissioner Hills reported he has asked each vendor(anonymously) to provide him with three topics of concern; but has not received responses from any of the vendors yet (but insists there is interest) and that was three weeks ago. Commissioner Hills reported on the purported success of the vendors in the Flint market and noted that when he started at the Lansing City Market years ago, the Market was very dear to him. Commissioner Hills stated that the turnover of vendors will hurt the Market and wondered if the City is willing to pay that price. Chairwoman Sinadinos thanked Commissioner Hills for his comments and concerns and will put this matter up for consideration. Commissioner Janssen asked Commissioner Hills to put these concerns in writing; noting that hearing the Market is "in shambles" gives no clue as to what the concerns are. Commissioner Sims-Wright noted much of the concern she has received has been about the parking situation and she has also asked for concerns to be put in writing and has not received anything. D. Commissioner Barron: Commissioner Barron congratulated Heather Hymes for doing a great, fantastic job at the City Market. Commissioner Barron also congratulated Kevin Meyer and LEPFA Board of Commissioners Meeting Page 7 September 24, 2013 Scott on the possibility of breaking even for this year's Common Ground and recognizing the shift in demographics; noting Meridian having more control over their festival makes a difference. Commissioner Barron reported on his visit to Artprize in Grand Rapids and stated that if you have an opportunity to visit, please do so. VIII. OLD BUSINESS: None. IX. NEW BUSINESS: None. X. ADJOURNMENT: At 9:37 a.m. a motion was made to adjourn the meeting. MOTION: Commissioner Barron. SUPPORT: Commissioner Kaltenbach. Motion unanimously carried. THE NEXT MONTHLY MEETING IS SCHEDULED FOR TUESDAY, OCTOBER 22, 2013 AT 8:00 A.M. —BANQUET ROOM 5 - LANSING CENTER- 333 E. MICHIGAN AVENUE, LANSING, MI 48933. Respectfully Submitted, Shelly Busse - Recording Secretary MINUTES APPROVED BY THE BOARD OF COMMISSIONERS ON SEPTEMBER 24,2013 W I' MINUTES OF THE BOARD OF COMMISSIONERS'MEETING LANSING BOARD OF WATER AND LIGHT July 23, 2013 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioner David Price c— D _o The Corporate Secretary declared a quorum present. f M Commissioner McCloud led the Pledge of Allegiance. n tv n f'r7 APPROVAL OF MINUTES '< m Motion by Commissioner Bossenery, seconded by Commissioner Thomas to appr a p%e Regular Board Meeting minutes of May 28, 2013. Action: Carried Unanimously ------------------ SPECIAL PRESENTAITON Pennies for Power Check Presentation from Michigan Building & Construction Trades Council. Patrick Devlin, Secretary&Treasurer of the Michigan Building and Constructions Trades Council presented a check in the amount of$14,118.88 to Board of Water& Light's Pennies for Power campaign. This money was obtained as part of the Project Labor Agreement acknowledging use of union labor for the construction of the Reo Town Plant project. Trade unions agreed to pay 5C per trade work hour to the BWL Pennies for Power initiative during the construction of the plant. Mr. Devlin thanked the BWL for choosing their members to build the state of the art $182 million REO Town Co-Generation Plant and Headquarters. General Manager Lark thanked the Michigan Building and Constructions Trades & Council on behalf of everyone at the BWL and the Board of Commissioners. Chair Zerkle stated that she couldn't be prouder of the Michigan Building and Constructions Trades & Council and that the project was on time and on budget which could not have been accomplished without the Trade Council. ------------------ Regular Board Mtg. July 23,2013 Page 2 of 17 PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. Ron Byrnes, Business Manager of IBEW Local 352, stated concerns about the proposed increase in the employees premium sharing percentage that is being considered on today's agenda and asked that the Board of Commissioners take into consideration the employees small wage increase over the past years and the increased health care cost that is reducing employees' wages. COMMUNICATIONS a. Letter from State Representative Andy Shor congratulating the BWL on the new REO Town Headquarters & Plant Received and Place on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE June 11, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, June 11, 2013. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of May 14, 2013. Action: Motion Carried Update on REO Town General Manager Lark stated that the REO Town project is on time and on budget. The plant will go commercial on July Vt and a member of the Board of Commissioner's or the Mayor will bring the facility on line on July 1. General Manager Lark stated that on July Vt tours of Regular Board Mtg. July 23,2013 Page 3 of 17 the facility will be provided and the power plant is expected to be fully operational at that time. Communications Director Stephen Serkaian provided the Commissioners with an invitation to the Board of Water & Light's "Going Commercial" ceremony to take place on July 1, 2013. He reviewed the events that will take place on that day beginning with the opening ceremony in the Depot, followed by the new cogeneration plant being switched on with guided tours to follow. Also as part of the day's events, the Lansing Chamber of Commerce will host their Economic Club luncheon at the Board of Water & Light's new facility site. There will also be another chance for the public to view the new facility between 1:30 p.m. and 3:00 p.m. Mr. Serkaian informed the committee that on the Sunday before the new facility opening, the Lansing State Journal is planning a special insert in their newspaper that will focus on the new plant and tell the comprehensive story about the REO Town project. Also, the Wednesday before the new Cogeneration plant goes live the City Pulse will feature a story regarding the REO facility. Health and Wellness Plan Brankie Ekren, General Counsel and Director of Employment Affairs, stated that a few years ago the Board of Water & Light kicked off a robust health and wellness program called "Be Well for Life" "BWL", and since that kick off there have been some changes and improvements to the program. Ms. Ekren introduced Michael Flowers, Director of Personal Policy Development and Organizational Training Development who provided an update on the program's changes. Mr. Flowers stated that BWL's Health and Wellness program began in 2011 with a company out of Denver, Colorado but have since discontinued that partnership and are now partnering with Sparrow Health System. Mr. Flowers reviewed the status of the BWL Health and Wellness Program, the Program Objectives, the Action Plan and the Be Well at Work Health Management system. He stated the employees are pleased with the improvements including the fact that partnering with Sparrow provides a presence closer to home. City Fire Hydrants and Street Lights (With Resolution) General Manager Lark introduced a Resolution for the Board's consideration that would increase the Board of Water & Light's annual contribution to the City of Lansing's payment in lieu of taxes (PILOT) to 6.1%. General Manager Lark shared with the Commissioners a letter he received from Mayor Bernero requesting that fire hydrant charges be passed onto individual customers, a task that is commonly performed by the BWL for surrounding municipalities. Mr. Lark stated that he would request Ms. Susan Devon, Assistant General Manager and Chief Financial Officer, to implement charges pursuant to that letter to individual customers. Mr. Lark stated that rates have not been finalized as of yet and this process does not require action from the Board of Commissioners', it is implemented by the City. Regular Board Mtg. May 28,2013 Page 3 of 21 Oil Spill Update General Manager Lark introduced Mark Williams, Director of Electric Production, Mark Matus, Manager of Environmental Services and Doug Wood, Executive Director of Electric Operations, who were the key employees who dealt with the recent oil spill. Mr. Lark stated these employees will address three questions regarding the spill. The questions are: 1. What happened? 2. What did we do to take care of the river? 3. How are we making sure this cannot happen again? ❖ What happened? Mark Williams, Director of Electric Production, explained that there was a malfunction at Eckert Unit#4 with the Generator Hydrogen Seal Oil System. Mr. Williams stated that on Easter at approximately 10:30 in the evening, the turbine operator received an alarm on Unit#4. The turbine operator went to acknowledge and respond and during his investigation he noticed that there was oil leaking from a piece of equipment. The turbine operator notified the pump room operator who immediately came to the area of concern and investigated. It was determined that there was a mechanical failure within the pipe coupling system to this particular piece of equipment. Unfortunately, the containment for this piece of equipment was exceeded and the oil escaped through a floor drain into the river. The root cause of the investigation has determined that the mechanical failure was caused by a defective gasket installed in 2004. Commissioners and Staff then undertook in a question and answer period. ❖ What did we do to take care of the river? Mark Matus, Manager of Environmental Services, stated once his technicians arrived at the scene, they quickly deployed absorbent booms into the river to collect oil. Where oil collected and pooled, vacuum trucks were used to skim the oil off the river surface. Commissioners and Staff undertook in a question and answer period. ❖ How are we making sure this cannot happen again? Doug Wood, Executive Director of Electric Operations stated that steps have been taken to prevent something like this oil spill from happening again. Some of the steps taken include: • Rerouting all of the hoses that drain water back to the river • Plugging all the floor drains in the plant • Hiring an environmental consultant to do a targeted environmental assessment of any potential passages to the river • Evaluating and testing other plant containment integrity Regular Board Mtg. May 28,2013 Page 4 of 21 Mr. Wood stated that this incident has heightened awareness and believes this issue has been resolved and is looking beyond this incident for possible solutions in other areas. Facilities Update General Manager Lark stated that it has been his goal to remove materials from the floodplain. Mr. Lark stated that once we get REO Town up and running, we will move personnel from this building (1232 Haco), and then begin to refurbish it. Once refurbished, we will bring people from across the street (Pennsylvania and Hazel) whose offices are presently in the floodplain over to Haco. Also an important item in the floodplain across the street is the Water Lab which we plan to move over here as well. Mr. Lark said the plan is to accomplish the renovations over the next two years. REO Town is the lynch pin and when we get that facility going, we will follow with Haco renovations. Ultimately, we will relocate our operations at Pennsylvania to a new site out of the floodplain. Other Commissioner Dennis M. Louney inquired about updating one of the BWL's hydro- electric facilities. General Manager Lark stated that there has been a contract undertaken to bring the Hydro Electric Plant at Moores Park Dam into working order. General Manager Lark provided an update on a request for him to testify before the City Council on the street light and fire hydrant fees. We have about 30,000 street lights in the city and about 3000 plus fire hydrants in the city and we, under the Mayor's proposed budget, would bill individual Lansing residents, rather than the City of Lansing, for those services. The City Council wanted some thoughts on what and how that could be done. Mr. Lark presented the Committee with the two scenarios that he discussed with to the City Council on how customers would pay for lights and hydrants. The scenarios included a percentage fee and the other a flat fee. There was a conversation regarding the fee details of the methodology of the billing process. Commissioner Louney said that he and Peter met with people from the Chamber of Commerce Economic Club and they are looking at doing an economic club meeting during the day of the BWL's REO Town grand opening on July 15t and he would pass along more information regarding the event as he receives it. General Manager Lark said July Vt we are going to "go commercial" with the new plant and there will be a ribbon cutting ceremony. The Economic Club of the Chambers of Commerce would like to be a part of this event with a luncheon celebration meeting. The BWL's opening ceremony would take place in the morning with the Chambers of Commerce event to follow. Excused Absence None Regular Board Mtg. May 28,2013 Page 5 of 21 Adiourn On Motion by Commissioner Price, Seconded by Commissioner Thomas, the meeting adjourned at 7:35 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE April 9, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 7:45 p.m. on Tuesday, April 8, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present were Board Members Anthony McCloud and Sandra Zerkle. Absent: None Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of February 12, 2013. Action: Carried Unanimously 457 Roth IRA Option Finance Chair Bossenbery, said there were some questions regarding which Committee this particular issue or matter should be discussed in, either Human Resource (HR) or Finance. With that in mind she stated that she would like to hear the proposal and adopt the Resolution because the business is on the Finance Committee meeting agenda and if any of the Commissioners feel that this business should be discussed at an HR Committee meeting, it can be discussed there as well. Bill Aldrich, Manager of Finance & Planning, said before you tonight is the proposed amendment to the BWL's current 457 Retirement plan and trust. A 457 Plan is a deferred compensation retirement plan that allows employees to defer a portion of their salary and reduce their taxable income in the current year. The proposed IRA Roth option plan would allow employees to make after tax contributions, so any contribution made under the proposed IRA Roth Provision plan would be taxable in current year. The benefit of participating in the new plan is ultimately when you retire and want to pull money from the 457 Roth IRA, taxes will have already been paid. This is an additional Regular Board Mtg. May 28,2013 Page 6 of 21 option that the BWL can provide to employees at no additional cost and it will be useful in tax planning. General Manager Lark asked that the Committee approve the Resolution to be forwarded to the full board for consideration. Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Internal Audit Update Internal Auditor Phil Perkins provided the Finance Committee with an Internal Audit Status Update. The following was reviewed: Internal Auditor Status Update • FY 2013 Audit Plan Progress Report • Plan/Forecast for Remainder of Year • Other Upcoming Items FY 2013 Audit Plan Progress Report Audits Completed or in Progress: 1. Reo Town Contracting and Payments Review • Complete; report issued. 2. Cash Receipts & Collections • Complete; report issued. 3. Company Insurance & Claims • Complete; report issued. 4. Energy Risk Management • In-progress; about 60% Complete. 5. Materials Issues and Returns • In-progress; about 60% Complete. Other Engagements: 1. Time Reporting Reviews#1 & 2-complete. 2. Surprise Cash Counts#1 & 2-complete. 3. IT Preliminary Risk Assessment—in progress throughout FY 2013 Plan for Remainder of FY 2013: 1. Complete remaining audits 2. FY2013-14 Audit Planning & Risk Assessment • Audit Universe—Risk Assessment Update • Refine Listing of Rotational Audits • Identify at least 10-12 potential audits with the objective of narrowing down to top 5 for the annual plan. • Align with management on list of recommended audits for presentation to Finance Committee in May or June 2013 3. IT Preliminary Risk Assessment (ongoing) Other Upcoming Items 1. Renewal of contract for augmented internal auditing services for next fiscal year. 2. Annual Review of Internal Audit Charter. Regular Board Mtg. May 28,2013 Page 7 of 21 Excused Absence None Other General Manager Lark presented information regarding the savings of the recent Utility System Revenue Refunding Bonds that Chair Zerkle officially signed off on earlier today. Adiourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 7:58 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee EXECUTIVE COMMITTEE April 16, 2013 The Executive Committee of the Board of Water and Light met at the Board of Water & Light's Board Room, 1232 Haco Dr., Executive Conference Room, Lansing, MI, at 5:00 p.m. on Tuesday, April 16, 2013. Executive Committee Chair Sandra Zerkle called the meeting to order. The following committee members were present: Commissioners Sandra Zerkle, Dennis Louney, Margaret Bossenbery and Tracy Thomas. Also present were Board Members Anthony McCloud, Tony Mullen, David Price and Cynthia Ward. Absent: None. Public Comments None. Approval of Minutes Motion by Commissioner Thomas, seconded by Commissioner Bossenbery to approve the minutes of the November 15, 2011 Executive Committee meeting. Action: Carried unanimously. Instituting a BWL Commissioner Monthly Per Diem Chair Zerkle stated that there is approximately $50.00 per Commissioner per month allotted in the budget if chosen to be used. She said some Commissioners have had conversations with her about receiving the money monthly as opposed to it being set aside in the budget. After a lengthy conversation regarding the consideration of a monthly allowance for the Board of Commissioners the Committee determined that they would not support the Board receiving any type of stipend. Regular Board Mtg. May 28,2013 Page 8 of 21 Chair Zerkle said that this matter can be closed with no action taken. Chair Zerkle requested that order of business be changed on the agenda. Establishing Guideline of Recognition for Departing Commissioners Chair Zerkle stated that since she has been on the Board ways of recognition for departing Commissioners has been varied. She said that she would like the Committee to establish guidelines as to how departing Commissioners should be acknowledged. There was a lengthy discussion regarding establishing guidelines to acknowledge outgoing Board members in order to set some consistency; either a standard gift or a finite dollar amount. The Committee requested the Corporate Secretary research how other Boards and Organizations acknowledge their outgoing members and forward that information to the Executive Committee. Chair Zerkle said that she would report back after information is gathered. Reestablishment of Employee Evaluation Procedures for Appointed Employees: • General Manager • Internal Auditor • Corporate Secretary Human Resource Chair Tracy Thomas said the process that the BWL currently has in place for the three appointed employees is a good one, but the HR Committee wanted to have the process handled exclusively by Board Commissioners to ensure strict confidentiality. HR Chair Thomas presented the following evaluation process: Evaluation Process: • Human Resource Committee Chair begins the Evaluation Process by requesting the Appointed Employees (Peter, Phil and Denise) to fill out evaluation forms for 2012- 2013 period to be completed by a date specified. • Appointed Employees will return their completed evaluation forms (electronically) to Human Resource Committee Chair or his designee on the HR Committee. • HR Committee Chair or his designee on the HR Committee compiles the completed evaluations and forwards the completed evaluations and commissioners' evaluation forms for each Appointed Employee to the full Board of Commissioners. A timeline for the evaluation process will be provided. • Commissioners will individually complete evaluation forms for each Appointed Employee and return forms to HR Committee Chair or his designee on the HR Committee by a date specified. • HR Committee Chair or Designated HR Committee member compiles Confidential Evaluation Packets. The confidential evaluation packets will include all Appointees evaluations, and a compilation of Commissioners' evaluations including written remarks for each Appointed Employee. • Compiled Confidential Evaluation Packets will be distributed to Commissioners, and Appointed Employee will receive his or her own packet. Regular Board Mtg. May 28,2013 Page 9 of 21 • Human Resource Committee meeting packet will be prepared for the Human Resource meeting consistent with normal protocol. The meeting agenda, past minutes for approval, and any Resolutions (without specific dates) will be prepared by Corporate Secretary and distributed to the full Board, consistent with normal protocol. • The compiled Confidential Evaluation Packets will be distributed electronically, separate from the meeting packet, to Commissioners by the HR Chair or his designee on the HR Committee. HR Chair Thomas also presented the Committee with timelines for handling the Appointees evaluation process. Commissioner Ward stated that the process is essentially the same but, it is just that now the process is being handled entirely by the Board of Commissioners or more specifically the HR Committee,to remove the possibility of evaluations' not being handled in the strictest of confidentiality. Ms. Ward stated that neither she nor Commissioner Thomas have received any information that this process has not been handled confidentially but felt as a collective body this should be something that is handle exclusively within the Board of Commissioner's body. There was a lengthy conversation regarding the evaluation process and the identification of the evaluators. HR Chair Thomas stated that the evaluation process would be handled the same way that it was last year and the only change this year would be the handling process. Review Process of Contract Negotiations for Appointed Employees After a lengthy conversation regarding the negotiating process for the three Board Appointee Employees the following process was conveyed: • Current contract/summary of changes for past three years sent to all Commissioners • Comments/suggestions/specific changes submitted to HR Chair Thomas • HR Chair Thomas will compile a list • HR Chair Thomas and Board Chair Zerkle negotiate from parameters submitted • The negotiated redlined contracts sent out to Board members • Tentatively meet to decide if the Board approves contract Other HR Chair Thomas proposed the idea of bonuses for the Board's three appointed employees reflective of work that has been done in the 2012-2013 year. After a lengthy discussion regarding the proposal it was determined that there was not support to move forward with the proposed bonuses. Commissioner Louney spoke about meeting with the Lansing City Council and revisited the subject of draft minutes availability. Mr. Louney stated that there was another Regular Board Mtg. May 28,2013 Page 10 of 21 organization questioning the timing of the BWL's "Dancing with the Starz" event because it conflicted with their scheduled dancing event. Excused Absence None Adiourn On Motion by Commissioner Bossenbery, Seconded by Commissioner Thomas, the meeting adjourned at 7:15 p.m. Respectfully submitted, Sandra Zerkle, Chair Executive Committee COMMITTEE OF THE WHOLE May 14, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, May 14, 2013. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioner Anthony McCloud Public Comments Ron Byrnes Sr., Horsehead Lake, MI, Board of Water & Light Retiree and Chair of the Committee for the BWL Retirees and Pension, spoke about changes to the retirees' healthcare benefits. He stated that he would like to meet with the Board Chairperson to discuss some of the changes to the healthcare coverage as well as the newly implemented paperwork process. Chair Sandra Zerkle stated that she and a representative appointed by General Manager Lark would be happy to meet with Mr. Byrnes to discuss any concerns or issues. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of April 9, 2013. Action: Motion Carried pproval of Rules and Regulation Regular Board Mtg. May 28,2013 Page 11 of 21 Ray Moore, Manager of Customer Projects and Development, reviewed the FY 2014 proposed changes to Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services. The proposed changes include: RULES AND REGULATIONS UPDATE Fiscal Year 2014 Electric,Water. Steam and Chilled Water • Updated fees and charges for current actual or estimated cost and industry standards. • Revision of Rule 4, Use of Service, Discontinuation of Service o Clarification of Customer's responsibility to ensure service is disconnected and non-assumption of Board responsibility for resulting property damage. • Revision of Rule 7.A, Responsibility for Payment of Bills,Account Security Deposits o Clarified language which describes what constitutes unacceptable credit history. Electric • Revision of Rule 10.1.C, Distribution System Extension, Nonrefundable Contribution for Underground Extensions o Added language indicating that trench footage required exclusively for establishing or maintaining the Board's standard of a highly reliable looped underground system may be excluded from the contribution calculation. • Revision of Rule 11.4 Services, Residential, Commercial and Industrial Overhead Services o Added language indicating a requirement that a drip loop shall be formed on individual conductors of not less than 36" exiting the weather head. • Revision of Rule 13.4, Use of Board Equipment, Temporary Transfer Fee o Added language specifying that third party attachers shall be charged $75 per pole when the Board must transfer attachments due to an emergency pole replacement. Water • Removal of Rule 11.8, Lead Service Pull Ahead Program o This process is no longer needed as we have fewer than 2300 lead services remaining to be changed out, and can easily accommodate that in our scheduling. Steam and Chilled Water • There were no substantive changes to these documents. Motion by Commissioner Price, seconded by Commissioner Zerkle to forward the resolution for proposed changes to the FY 2014 Rules and Regulations to full Board for consideration. Action: Motion Carried Energy Optimization & Renewable Energy Plan & Report General Manager Lark stated that the State of Michigan Public Service Commission (MPSC) under PA 295 requires the Board of Water & Light to provide the Governing Board an annual update on their Renewable Energy Plans. PA 295 also requires the Board of Water & Light to report to customers annually. Regular Board Mtg. May 28,2013 Page 12 of 21 Sue Warren, Manager of Energy and Eco Strategies, presented a PowerPoint presentation that reviewed the "Hometown Energy Savers" portfolio program that BWL offers to customers. She also reviewed Energy Optimization, Renewable Energy 2011 Results and the Current Renewable Energy Portfolio. Ms. Warren stated that the Board of Water & Light is meeting goals for Renewable Energy and Energy Optimization as well as staying under budget. Ms. Warren stated that the BWL continues to look for and to evaluate Renewable Energy options such as Wind, Solar, Renewable Energy Credits and Biomass. Ms. Warren stated that customers will receive their annual update in the Board of Water & Light's July edition of Connections. Commissioner Ward stated that she is always impressed with the marketing material that she receives from the BWL's Hometown Energy Savers program. The material is new and fresh. Update on New Fueling System Dan MacLennan, Manager of Purchasing-Warehousing and Fleet, stated that the BWL has operated its own fueling station for almost 50 years, which is located at the Pennsylvania and Hazel St. complex. The underground tank system that the BWL has was installed in 1965(diesel) and 1975(unleaded). The system's equipment is aged and expensive to keep operational. Also very important, the fueling system is located in the 10 Year Flood Plain and presented a significant environmental liability to the BWL. Mr. MacLennan provided an overview of the new process that was implemented at the beginning of the year for obtaining unleaded and diesel fuel. He said with all of the problems previously mentioned we sought to identify alternatives to maintain our own fuel system and found that the best option for the BWL was to partner with a 3rd party commercial fuel provider. The company that met all of our needs is a local company called Lansing Ice & Fuel, a franchisee of Pacific Pride Commercial Fueling. Some of the features of the Lansing Ice & Fuel Pacific Pride system is 24/7 accessibility nationwide and built in internal controls. By implementing this new process we are reducing the environmental liability to the BWL. We have a capital project request in the FY 14 budget that would remove the equipment at the Penn-Hazel St. location and also mitigate environmental issues. The new process is more efficient and a reliable source for fuel. We are avoiding cost, due to no longer having to maintain our own system, reducing maintenance expenses and reducing property insurance cost. John Baumer of Lansing Ice & Fuel introduced himself and said that his company appreciates the opportunity to work with the BWL. Update on Smart Grid General Manager Lark stated that this subject was placed on the agenda because some Commissioners will be attending the APPA National Conference and the topic of Smart Grid may be presented. Smart grid is the application of information technology, tools and techniques that can make the grid (electric power infrastructure) run more Regular Board Mtg. July 23,2013 Page 4 of 17 The Committee considered two resolutions, one provided in their electronic packet, and the other presented at the meeting. The resolution presented at the meeting contained language which spoke generally to the "sense of the Board of Commissioners". Both resolutions increased the PILOT to 6.1%. Motion by Commissioner Zerkle , Seconded by Commissioner Price to move the Resolution forward that includes the language of the "sense of the Board of Commissioners" to the full Board for consideration. Following the Motion, there was lengthy discussion which concluded with Commissioner Zerkle, withdrawing her motion for the Board to consider the resolution that included the "sense of the Board" language. Motion by Commissioner Zerkle, Seconded by Commissioner Price, to forward to the full Board the resolution that was presented in the electronic packet which did not contain the language that spoke to the "sense of the Board" for consideration and would increase the PILOT payment to 6.1%. Action: Motion Carried (7 to 1 vote) Commissioner Price suggested that a cover letter be sent after the Board's consideration and full passage of the Resolution expressing the "sense of the Board of Commissioners"that this agreement should not be invaded during the pendency of its agreed term time. Other Chair Zerkle informed the Committee that she participated in a meeting along with Administration, BWL's insurance companies and BWL Retirees to address some of the issues that retirees say they are experiencing with new insurance procedures. Chair Zerkle stated that there was good discussion at the meeting and believes that all issues will be addressed. Dennis M. Louney stated that it was another successful Chili Cook-Off and commends everyone who worked on that. General Manager Lark said that Calvin Jones really brought home the numbers for the Chili Cook-Off this year, it was the was most successful one ever. Tracy Thomas said that the First Step Program reception was well done and congratulated the Board of Water & Light for showcasing Lansing area kids. Excused Absence None Adiourn On Motion by Commissioner Price, Seconded by Commissioner Ward, the meeting adjourned at 6:38 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole Regular Board Mtg. July 23,2013 Page 5 of 17 FINANCE COMMITTEE June 11, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 6:44 p.m. on Tuesday, June 11, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Member Cynthia Ward. Also present was Board Members Anthony McCloud and Sandra Zerkle. Absent: None Public Comments There was no Public Comment. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of May 14, 2013. Action: Carried Unanimously External Audit Communication to the Board— Presented by Plante & Moran General Manager Lark introduced external auditor Doug Rober, Partner with Plante Moran (P&M) and Brett Oumedian, Manager with P&M, who reviewed and presented the Auditing Process. Mr. Rober said this is the beginning of the audit process and part of that process is to meet and present governance with a projected audit process summary. Mr. Oumedian of Plante Moran, stated that the scope of the Audit that will be performed is to express an opinion of the financial statements of the Board as well as each of the pension plans. He stated there will also be a management letter or significant deficiency letter if required at the end of the engagement, ultimately issuing an AU260 communication letter. Mr. Oumedian reviewed Management's responsibility in the Audit process as well as the following: • Audit Process ■ Auditor Responsibility ■ Management Responsibility ■ Testing Phases ■ Required Discussion Points ■ Significant Risk Misstatement ■ Responses to Significant Risk Misstatement ■ Additional Required Discussion Points ■ Communication to those Charged with Governance Regular Board Mtg. July 23,2013 Page 6 of 17 Finance Chair Bossenbery was indicated as the appropriate contact person for questions or concerns. Mr. Rober asked the Board of Commissioners if there were any areas of concern that warrant attention or additional procedures. In response to Mr. Rober's question the Board of Commissioners stated no areas of concern. Internal Audit Proposed Plan for FY 2014 Internal Auditor Phil Perkins, presened an overview of Internal Auditor Status Update • FY 2013 Audit Plan Progress Report • Plan/Forecast for Remainder of Year • Other Upcoming Items FY 2013 Audit Plan Progress Report Audits Completed or in Progress: 1. Reo Town Contracting and Payments Review • Complete; report issued. 2. Cash Receipts & Collections • Complete; report issued. 3. Company Insurance & Claims • Complete; report issued. 4. Energy Risk Management • Financial Report to be issued shortly; about complete. 5. Materials Issues and Returns • Draft Report to be issued shortly; audit 95% complete. Other Engagements: 1. Time Reporting Reviews#1 & 2-complete. 2. Surprise Cash Counts #1 & 2-complete. 3. IT Preliminary Risk Assessment—in progress throughout FY 2013 Required Periodic Review Items: 1. Internal Audit Charter—no recommended changes to the charter as written. 2. Quality Assurance Improvement Program —Internal Audit procedures were reviewed and updated as needed. Draft FY 2014 Audit Plan Basis for plan: 1. Risk assessments and scores for each of 100-plus auditable activities at BWL. 2. Consideration of rotational audits, audit areas with risk/scoping assessments, first-time audits, etc. 3. Review and input by management. 4. Selection of the top audit candidates based on (1) through (3) above. Planned Audits: Estimated Hours Regular Board Mtg. July 23,2013 Page 7 of 17 Software Licensing Compliance 400 Accounts Payable 400 Records Retention Management 400 Fuel Procurement 400 Close the Books Processes and 400 Controls Other Engagements: Surprise Cash Counts (2) 40 Time Reporting Reviews (2) 160 IT Preliminary Risk Assessment 200 (continued from FY2013) Potential Consulting or Other 100 Engagement Total Estimated Hours 21-M Phil Perkins Director of Internal Audit 1,500 Charles Moore &Associates Augmented IA services 1,000 Total Hours 2= Motion by Commissioner Louney, seconded by Commissioner Price, to maintain the Internal Audit Charter as currently written. Action: Carried Unanimously Internal Auditor Perkins informed the Committee that he recently made some changes to the Internal Auditing procedures and would provide the Commissioners with an electronic list of the changes. Excused Absence None Other None Adiourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 7:14 p.m. Respectfully submitted Regular Board Mtg. July 23,2013 Page 8 of 17 Margaret Bossenbery, Chair Finance Committee NOMINATING COMMITTEE MINUTES June 26, 2013 The Nominating Committee of the Lansing Board of Water and Light met at the Executive Offices, Conference Room, located at 1232 Haco Dr., Lansing, MI at 5:00 p.m. on Tuesday, June 26, 2013. Nominating Committee Chair Tony Mullen called the meeting to order and asked the Corporate Secretary to call the roll. The following committee members were present: Commissioners Marge Bossenbery, Anthony McCloud, Tony Mullen and Tracy Thomas. Absent: None Approval of Minutes Motion by Commissioner Thomas, seconded by Commissioner McCloud to approve the Nominating Committee meeting minutes of June 26, 2012. Action: Motion Carried Public Comment There were no public comments. Nominate Board Officer Candidates for FY 2013-2014 The Nominating Committee met to review the Commissioner Survey responses for consideration of board officer nominations for the Board of Water & Light Board of Commissioner's Chair and Vice Chair for fiscal year 2013-2014. Nominating Committee Chair Mullen opened the floor for nominations. After a lengthy discussion the following motion was made: Motion by Commissioner Bossenbery, seconded by Commissioner McCloud, that the Nominating Committee forward a slate of officers to the full Board for consideration which consist of the interested candidates for the Chair position, Sandra Zerkle and Cynthia Ward and interested candidates for Vice Chair position, Dennis M. Louney and David Price. Action: Carried Unanimously There was discussion regarding the method of voting. There being no further business, the meeting adjourned at 6:20 p.m. Respectfully submitted, Tony Mullen, Chair Nominating Committee Regular Board Mtg. July 23,2013 Page 9 of 17 HUMAN RESOURCE COMMITTEE July 16, 2013 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:30 p.m. on Tuesday, July 16, 2013. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Anthony McCloud (arrived @4:35), Cynthia Ward and Sandra Zerkle. Also present: Commissioners Bossenbery, Dennis M. Louney (Alternate) and Tony Mullen. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Zerkle to approve the Human Resource Committee meeting minutes of May 21, 2013. Action: Carried unanimously. Impact of Patient Protection and Affordable Care Act General Manager Lark stated that the Patient Protection and Affordable Act (PPACA) plan is the House and Senate plan that was signed into law by the President Obama, this plan is called the Healthcare Act. General Manager Lark said the Healthcare Act is something that we at the Board of Water & Light (BWL) comply with. He stated by the year 2018 there are some new provisions that must be complied with regarding our health care. Mr. Lark generally discussed various aspects of the Affordable Health Care Act and noted that there is a penalty assessed under the Act if we exceed certain caps. General Manager Lark stated that he is bringing this matter to the Board's attention because there will have to be some decisions made in the next 4 years as to how we are going to meet and maintain compliance with the Act. No decisions need to be made this calendar year; this is just to let the Board know what is happening and that we will continue to be on track. General Manager Lark reviewed the following: • Requirements Already Implemented by the BWL in 2011/2012 • Upcoming Requirements • New Fees • Excise Tax Projections • Excise Tax Alternatives • Plan Design Changes Needed • Buy Up Approach • Pass Along Excise Tax Regular Board Mtg. July 23,2013 Page 10 of 17 • Excise Tax Projected Exposure PA 152 (Premium Sharing Percentagel-Resolution This is an update of what was presented to the Board of Commissioners last year regarding PA 152, which caps the amount a public employer, including municipal utility companies, may pay for employee health care insurance. General Manager Lark stated that if the BWL chooses to do nothing about PA 152 requirements, then we have a hard cap automatically applicable. Last year the Board voted on one of the 3 available options and that was to exempt us entirely from the Act and implement a 10% premium sharing cost, which was an increase from a 5% premium sharing that was in effect at the time. General Manager Lark reviewed the details and cost (with various percentages) for the following available options: • Limit expenditures on health care cost based on a schedule of dollars provided in the Act (the Hard Cap) • Limit expenditures to an 80/20 percentage split with a majority vote (or) • Exempt itself entirely from the Act through a 2/3 majority vote. With a 2/3 majority vote, the Board could then implement premium sharing in an amount desired. After a lengthy discussion regarding PA 152 requirements and the effect on employees the following motion was made: Motion by Commissioner Ward, seconded by Commissioner McCloud, to forward the resolution for the implementation of a 15% premium sharing for all active employees for medical benefits to the full Board for consideration. Action: Motion Carried Retirement Health Savings Plan General Manager Lark presented the committee with information on Health Care Retirement Savings Accounts (HRA), a new hire retiree structuring alternative. He said alternative retiree health care plans are being considered due to the rising cost of health care for retirees. There are many ways to do HRA's, and again this plan is only being considered for new hires. Instead of paying health care cost the way that it is currently being done, a certain amount of money would be put into each new hire's retirement saving account every year and as that amount is invested over the years the money in the account would grow. So instead of a Defined Benefit plan where we guarantee the benefits that a retiree would receive, we would participate in a Defined Contribution plan that would be managed by the employee. To sum it up; new employees would receive contributions into a HRA during employment that would be used, along with earnings on those funds, to purchase health care at retirement. Regular Board Mtg. July 23,2013 Page 11 of 17 General Manager Lark stated that he is presenting this information to get a sense of how the Board feels about this alternative plan. He said that his staff is continuing to evaluate an HRA and other options to mediate future rising health care cost. Commissioner Louney stated that based on the Affordable Care Act, moving forward there are some structures in place that were not in place a few years ago and it bodes well for us to look at examining this alternative; it is something that needs to be pursued. Human Resource Chair Thomas thanked Mr. Lark for presenting this information and stated that the issue will be revisited in the future. Other General Manager Lark provided an update on an incident that took place last Friday afternoon involving a Board of Water & Light employee who was injured. General Manager Lark stated that it is extremely warm out and all Units are operating well. Adjourn There being no further business, the Human Resource Committee meeting adjourned at 6:00 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS General Manager Lark respectfully asked that the following Resolutions be considered for approval. RESOLUTION #2013-07-01 To Amend the Return on Equity Agreement Between the City of Lansing and the Board of Water and Light WHEREAS,the City of Lansing(the City provides to the Lansing Board of Water and Light (the Board) use of its streets, alleys, bridges, and other public places without compensation and the Board, as an agency of the City, is exempt from property taxation, and; WHEREAS,since 1972 the Board has contributed to the City an annual amount as a return on equity as payment in lieu of taxes (PILOT) and; WHEREAS,The Board and the City entered into an agreement (Attachment A) on June 30, 1992 for annual payment of a return on equity for ten years commencing on July Regular Board Mtg. July 23,2013 Page 12 of 17 1, 1992 in the amount of 4%of net billed retail sales from electric, water, and steam, and; WHEREAS, on December 17th, 2001, the Board and the City modified the agreement by Amendment No.1(Attachment B)to extend the terms and other provisions of the agreement for ten more years commencing on July 1, 2002 in the amount of 4%of its revenues from retail and wholesale sales of chilled water, electric, steam, and water utilities, and; WHEREAS, upon the expiration of Amendment No.1on June 30, 2012,the Board and the City modified the agreement by Amendment No. 2 (Attachment C) to extend the terms and other provisions of the agreement for five more years commencing on July 1, 2012 in the amount of 5%of its revenues from retail and wholesale sales of chilled water, electric, steam, and water utilities, and; WHEREAS,the Board and the City desire to extend the current agreement by an additional year and increase the PILOT to 6.1%for the remaining agreement term with Amendment No.3, RESOLVE that the Board extend its agreement with the City by an additional year for a five year period commencing on July 1, 2013 and expiring June 30, 2018 with Amendment No. 3, FURTHER RESOLVED with Amendment No.3 the amount of the PILOT for the remaining term of the agreement shall be 6.1%of its revenues from retail and wholesale sales of electric, water, steam, and chilled water utilities. Motion by Commissioner Ward, seconded by Commissioner Louney, to approve the resolution extending the PILOT agreement with the City of Lansing until 2018 with a 6.1% return on equity. Action: Motion Carried (6/1 Vote) RESOLUTION#2013-07-02 To Amend Employer Contribution to Medical Benefit Plans WHEREAS, Governor Rick Snyder, on September 27, 2011, signed legislation known as the "Public Funded Health Insurance Contribution Act", Public Act 152 of 2011 limiting the amount public employers may pay for government employee medical benefits, and; WHEREAS, Public Act 152 of 2011 took effect January 1, 2012 and applies to all public employers including the Lansing Board of Water& Light, and; Regular Board Mtg. July 23,2013 Page 13 of 17 WHEREAS, Public Act 152 of 2011 created a "hard cap" for medical benefit plan coverage year beginning January 1, 2012, so that a public employer may not pay more of the annual costs for medical benefit plans than a total equal to $5,692.50 for single person coverage, $11,385 for individual and spouse coverage, and $15,525 for family coverage adjusted October 1, 2013. These caps are to be adjusted by October 1 each year to apply to the following calendar year, based on the change in the medical care component of the United States consumer price index (CPI), and; WHEREAS, by a majority vote of its governing body, a public employer may opt-out of the hard cap and into an 80% cap option where the public employer may not pay more than 80% of the total annual costs of all the medical benefit plans for its employees, and; Whereas, by a 2/3 vote of its governing body each year, a local unit of government may exempt itself from the requirements of Public Act 152 of 2011 for the next year, and; WHEREAS, the Board of Commissioners met on July 24th 2012 and passed a resolution (#2012-07-01) to exempt itself from the requirements of Public Act 152 of 2011 and implemented a 10% premium sharing, and; RESOLVE that the Board by at least 2/3 vote desires to exempt itself from the requirements of Public Act of 2011 for the upcoming benefit plan year, effective September 1, 2013. FURTHER RESOVE that the Board desires to implement a 12% premium sharing for all active employees for medical benefits effective September 1, 2013 Motion by Commissioner Ward, Seconded by Commissioner Thomas to exempt the Board of Water & Light from the PA152 requirements by voting with a 2/3 decision. Action: Carried Unanimously (7/0 Vote) Motion by Commissioner Thomas, Seconded by Commissioner Louney, to amend the proposed Resolution to implement a 12% premium sharing percentage instead of 15% and to adopt the Resolution with the amendment. Action: Motion Carried UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS Nominating Chair Mullen stated consistent with the committee report, the Nominating Committee voted unanimously to forward a slate of officers, which consist of all the interested candidates for the position of Chair and Vice Chair to the full Board for consideration. Since the meeting of the Nominating Committee, voluntary withdrawals for candidate consideration have been received. As a result the proposed slate of officer candidates for Fiscal Year 13-14 will be: Sandra Zerkle serving as Chair Regular Board Mtg. July 23,2013 Page 14 of 17 And Dennis M. Louney serving as Vice Chair As procedure Nominating Committee Chair Mullen asked if there were any nominations from the floor for the positions of Chair or Vice Chair. There were no nominations from the floor and Nominations were closed. Moved by Commissioner Ward and supported by Commissioner McCloud to approve the proposed slate of officers as such, Sandra Zerkle as Chair and Dennis M. Louney as Vice Chair. Chair Zerkle stated that the Executive Committee consists of the Chair, Vice Chair and Past Chair as well as another member of the Board. At this point there is no Past Chair presently serving on the Board leaving two positions open that need to be filled in order to make the Executive Committee complete. Motion by Commissioner Thomas and seconded by Commissioner Louney to nominate Tony Mullen and Cynthia Ward as the two members of the Executive Committee. Action: Motion Carried Chair Zerkle thanked everyone for their support and stated that this is a great Board to be serving on. Commissioner Bossenbery stated that she would like to look into forming committee to examine the nominating process and establish some guidance for those serving on the committee. Chair Zerkle stated that she would take that suggestion in to consideration. RESOLUTIONS ea�a< ,. . RESOLUTION #2013-07-03 NEW BOARD MEETING LOCATION RESOLVED, That regular meetings of the Lansing Board of Water & Light's (BWL) Board of Commissioners are hereby set for the remainder of the calendar year 2013 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings: 2013 BWL Board Commissioners 2013 Remaining Regular Board Meeting Schedule Tuesday September 24 Tuesday November 19 Regular Board Mtg. July 23,2013 Page 15 of 17 Meetings will be held in the Board Room located in the Board of Water& Light's REO Town Depot located 1201 S. Washington, Lansing, MI, at 5:30 p.m. RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing City Pulse the week of August 18, 2013. Motion by Commissioner Ward, Seconded by Commissioner Thomas, to approve the Resolution for the BWL Board of Commissioners 2013 remaining Regular Board meeting dates to be held at the new REO Town Depot facility located at 1201 S. Washington, Lansing, M 148910. Action: Motion Carried RESOLUTION#2013-07-04 Appointment of the Charter Position of Director and General Manager The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, respectively at its first regular meeting following July 1"of each year or as soon thereafter as may be appropriate. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Director and General Manager for fiscal year 2013-2014, or, until a successor is appointed, whichever last occurs: J. Peter Lark, Director and General Manager ---------------- Motion by Commissioner Thomas, Seconded by Commissioner McCloud to reappoint J. Peter Lark to the Charter position of Director and General Manager for fiscal year 2013-2014. Action: Motion Carried RESOLUTION #2013-07-05 Appointment of the Charter Position of Internal Auditor The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, respectively at its first regular meeting following July 15Y of each year or as soon thereafter as may be appropriate. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Internal Auditor for fiscal year 2013-2014, or, until a successor is appointed, whichever last occurs: Philip Perkins, Internal Auditor ---------------- Motion by Commissioner Bossenbery, Seconded by Commissioner Thomas to reappoint Philip Perkins to the Charter position of Internal Auditor for fiscal year 2013-2014. Action: Carried unanimously Regular Board Mtg. July 23,2013 Page 16 of 17 RESOLUTION #2013-07-06 Appointment of the Charter Position of Corporate Secretary The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, respectively at its first regular meeting following July 15t of each year or as soon thereafter as may be appropriate. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Corporate Secretary for fiscal year 2013-2014, or, until a successor is appointed, whichever last occurs: M. Denise Griffin, Corporate Secretary ---------------- Motion by Commissioner Mullen, Seconded by Commissioner Ward, to reappoint M. Denise Griffin to the Charter position of Corporate Secretary for fiscal year 2012-2013 Action: Motion Carried Chair Zerkle presented Corporate Secretary Griffin with a Certificate of Appreciation in recognition of completing 5 years of service to the Board of Water & Light. MANAGER'S REMARKS General Manager Lark congratulated Chair Zerkle and Dennis M. Louney on their reappointments. He also congratulated Ms. Griffin on her 5 year certificate. Mr. Lark thanked the Board of Commissioners for all of their support regarding the REO Town project, He stated this was a very fine project and it was done on time and on budget. COMMISSIONERS' REMARKS Chair Sandra Zerkle stated that Mr. Lark should be very proud of him-self with regards to the REO Town project. She said this was a group effort but it was Mr. Lark's vision. This will be a great landmark for the City of Lansing. She thanked Commissioner Thomas and his committee for of the work on the employee's evaluation process. Commissioner Ward congratulated Sandra Zerkle and Dennis M. Louney on continuing in their positions as Chair and Vice Chair. She also thanked Chair Zerkle for her vote of confidence in appointing her to the Executive Committee. Commissioner Thomas, apologized for not attending the REO Town opening as he had obligations out of State. Commissioner Thomas said for the record that he agrees with Commissioner Bossenbery's suggestion regarding guidance for the nominating committee process. He also congratulated Sandra Zerkle, Dennis M. Louney, Cynthia Ward and Tony Mullen on their appointments. Commissioner Thomas congratulated Legal Counsel Brandie Regular Board Mtg. July 23,2013 Page 17 of 17 Ekren for a job well done, especially over the last 3 months with assisting the Human Resource Committee; she is fair, firm and instructional. Dennis M. Louney said that he is honored to be reappointed as Vice Chair and it is an honor to serve on this Board. He congratulated all appointees. He also congratulated General Manager Lark and said that leadership makes a difference and it shows, and the co- generation plant was a perfect example of making history in our state and it is an honor to be a part of that. EXCUSED ABSENCE On motion by Commissioner Ward, seconded by Commissioner Thomas to excuse Commissioner Price from tonight's meeting. PUBLIC COMMENTS Audrey Kingdon, Haslett Mi, property manager of apartments located at 1127 N. Hagadorn, E. Lansing, Ml, spoke about resident's concerns in regard to the increased cost of their electric utility service. General Manager Lark referred Ms. Kingdon to Bob Perialas, Manager of Customer Service. David Walton, Lansing, MI, said that he was here representing the Kappa Alpha Psi Lansing Alumni Chapter and was seeking partnership with the Board of Water & Light for a one day job shadowing opportunity and other sponsorship opportunities. General Manager Lark referred Mr. Walton to Calvin Jones, Director of Public Relations and Diversity. Mary Bradey, representing the "Clean Water Action in Lansing Can Do Better Coalition", congratulated the Board of Water & Light on the co-generation plant and moving the city away from the use dirty fossil fuels. She said that she would like to encourage public participation in the community energy process. Ron Byrnes, Business Manager of IBEW Local 352, thanked the Board of Commissioners for taking action regarding PA152. Mr. Byrnes spoke about an employee who was injured and asked that we keep him in our prayers. ADJOURNMENT On motion by Commissioner Ward, seconded by Commissioner Bossenbery the meeting adjourned at 6:16 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:August 2,2013 Official Minutes filed(electronically)with Lansing City Clerk:October 2,2013 MINUTES APPROVED BY THE BOARD OF COMMISSIONERS ON 7-23-13 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT May 28, 2013 CORRECTED The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioner Anthony McCloud �., The Corporate Secretary declared a quorum present. �- Commissioner Price led the Pledge of Allegiance. Aa APPROVAL OF MINUTES �� ►�7 Motion by Commissioner Thomas, seconded by Commissioner Ward to appro thlt Regular Board Meeting minutes of March 26, 2013. Action: Carried Unanimously ------------------ PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There was no Public Comments ------------------ COMMUNICATIONS a. Letter from L.W. Morrow of Lansing, MI regarding alternative fuel. Received and Place on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE April 9, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, April 9, 2013. Regular Board Mtg. May 28,2013 Page 2 of 21 Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery (arrived at5:35), Anthony McCloud, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no public comment. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of March 12, 2013. Action: Motion Carried General Manager Lark respectfully requested that the agenda items be taken out of order. Personal Protective Safety Equipment Fashion Sho General Manager J. Peter Lark introduced Administrative Assistant Jean Gannon who organized the safety equipment fashion show. Ms. Gannon stated that it had been a few years since the fashion show was presented to the Board of Commissioners and was pleased to have the opportunity to do it again and to share some new equipment as well as entertain. David Douglas, Human Resource Advisor, was the Master of Ceremony. Larry Shields, Safety & Process Trainer, was the moderator. Rebecca Rostar, Customer Service, was the Sound Technician. The models for the Fashion Show included the following BWL employees: Gennie Eva, Jeff Burnham, Roger Zverina, Anne Peffers, Wayne Lynn, Rob Hodge, George Podany and Bob Perialas. Ingham County Animal Control Presentation General Manager Lark introduced Jim Dravenstatt-Moceri, BWL Field Service Leader. Mr. Dravenstatt-Moceri thanked Vice Chair Louney for allowing this matter to be put on the Agenda. He stated that as a result of the City Council reviewing their Dog Ordinance and the issue of vicious dog bites this subject has been an important topic of discussion and with the BWL employees having to deal with stray dogs, he felt that it was important to talk about this issue. Ingham County Animal Control Deputies, Klauka and Delatorre presented the Committee with information on animal welfare, dog bite prevention and emergency tips. Regular Board Mtg. May 28,2013 Page 3 of 21 Oil Spill Update General Manager Lark introduced Mark Williams, Director of Electric Production, Mark Matus, Manager of Environmental Services and Doug Wood, Executive Director of Electric Operations, who were the key employees who dealt with the recent oil spill. Mr. Lark stated these employees will address three questions regarding the spill. The questions are: 1. What happened? 2. What did we do to take care of the river? 3. How are we making sure this cannot happen again? ❖ What happened? Mark Williams, Director of Electric Production, explained that there was a malfunction at Eckert Unit#4 with the Generator Hydrogen Seal Oil System. Mr. Williams stated that on Easter at approximately 10:30 in the evening, the turbine operator received an alarm on Unit#4. The turbine operator went to acknowledge and respond and during his investigation he noticed that there was oil leaking from a piece of equipment. The turbine operator notified the pump room operator who immediately came to the area of concern and investigated. It was determined that there was a mechanical failure within the pipe coupling system to this particular piece of equipment. Unfortunately, the containment for this piece of equipment was exceeded and the oil escaped through a floor drain into the river. The root cause of the investigation has determined that the mechanical failure was caused by a defective gasket installed in 2004. Commissioners and Staff then undertook in a question and answer period. ❖ What did we do to take care of the river? Mark Matus, Manager of Environmental Services, stated once his technicians arrived at the scene, they quickly deployed absorbent booms into the river to collect oil. Where oil collected and pooled, vacuum trucks were used to skim the oil off the river surface. Commissioners and Staff undertook in a question and answer period. ❖ How are we making sure this cannot happen again? Doug Wood, Executive Director of Electric Operations stated that steps have been taken to prevent something like this oil spill from happening again. Some of the steps taken include: • Rerouting all of the hoses that drain water back to the river • Plugging all the floor drains in the plant • Hiring an environmental consultant to do a targeted environmental assessment of any potential passages to the river • Evaluating and testing other plant containment integrity Regular Board Mtg. May 28,2013 Page 4 of 21 Mr. Wood stated that this incident has heightened awareness and believes this issue has been resolved and is looking beyond this incident for possible solutions in other areas. Facilities Update General Manager Lark stated that it has been his goal to remove materials from the floodplain. Mr. Lark stated that once we get REO Town up and running, we will move personnel from this building (1232 Haco), and then begin to refurbish it. Once refurbished, we will bring people from across the street (Pennsylvania and Hazel) whose offices are presently in the floodplain over to Haco. Also an important item in the floodplain across the street is the Water Lab which we plan to move over here as well. Mr. Lark said the plan is to accomplish the renovations over the next two years. REO Town is the lynch pin and when we get that facility going, we will follow with Haco renovations. Ultimately, we will relocate our operations at Pennsylvania to a new site out of the floodplain. Other Commissioner Dennis M. Louney inquired about updating one of the BWL's hydro- electric facilities. General Manager Lark stated that there has been a contract undertaken to bring the Hydro Electric Plant at Moores Park Dam into working order. General Manager Lark provided an update on a request for him to testify before the City Council on the street light and fire hydrant fees. We have about 30,000 street lights in the city and about 3000 plus fire hydrants in the city and we, under the Mayor's proposed budget, would bill individual Lansing residents, rather than the City of Lansing, for those services. The City Council wanted some thoughts on what and how that could be done. Mr. Lark presented the Committee with the two scenarios that he discussed with to the City Council on how customers would pay for lights and hydrants. The scenarios included a percentage fee and the other a flat fee. There was a conversation regarding the fee details of the methodology of the billing process. Commissioner Louney said that he and Peter met with people from the Chamber of Commerce Economic Club and they are looking at doing an economic club meeting during the day of the BWL's REO Town grand opening on July 1st and he would pass along more information regarding the event as he receives it. General Manager Lark said July 1st we are going to "go commercial" with the new plant and there will be a ribbon cutting ceremony. The Economic Club of the Chambers of Commerce would like to be a part of this event with a luncheon celebration meeting. The BWL's opening ceremony would take place in the morning with the Chambers of Commerce event to follow. Excused Absence None Regular Board Mtg. May 28,2013 Page 5 of 21 Adjourn On Motion by Commissioner Price, Seconded by Commissioner Thomas, the meeting adjourned at 7:35 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE April 9, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 7:45 p.m. on Tuesday, April 8, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present were Board Members Anthony McCloud and Sandra Zerkle. Absent: None Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of February 12, 2013. Action: Carried Unanimously 457 Roth IRA Option Finance Chair Bossenbery, said there were some questions regarding which Committee this particular issue or matter should be discussed in, either Human Resource (HR) or Finance. With that in mind she stated that she would like to hear the proposal and adopt the Resolution because the business is on the Finance Committee meeting agenda and if any of the Commissioners feel that this business should be discussed at an HR Committee meeting, it can be discussed there as well. Bill Aldrich, Manager of Finance & Planning, said before you tonight is the proposed amendment to the BWL's current 457 Retirement plan and trust. A 457 Plan is a deferred compensation retirement plan that allows employees to defer a portion of their salary and reduce their taxable income in the current year. The proposed IRA Roth option plan would allow employees to make after tax contributions, so any contribution made under the proposed IRA Roth Provision plan would be taxable in current year. The benefit of participating in the new plan is ultimately when you retire and want to pull money from the 457 Roth IRA, taxes will have already been paid. This is an additional Regular Board Mtg. May 28,2013 Page 6 of 21 option that the BWL can provide to employees at no additional cost and it will be useful in tax planning. General Manager Lark asked that the Committee approve the Resolution to be forwarded to the full board for consideration. Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Internal Audit Update Internal Auditor Phil Perkins provided the Finance Committee with an Internal Audit Status Update. The following was reviewed: Internal Auditor Status Update • FY 2013 Audit Plan Progress Report • Plan/Forecast for Remainder of Year • Other Upcoming Items FY 2013 Audit Plan Progress Report Audits Completed or in Progress: 1. Reo Town Contracting and Payments Review • Complete; report issued. 2. Cash Receipts & Collections • Complete; report issued. 3. Company Insurance & Claims • Complete; report issued. 4. Energy Risk Management • In-progress; about 60% Complete. 5. Materials Issues and Returns • In-progress; about 60% Complete. Other Engagements: 1. Time Reporting Reviews#1 & 2-complete. 2. Surprise Cash Counts#1 & 2-complete. 3. IT Preliminary Risk Assessment—in progress throughout FY 2013 Plan for Remainder of FY 2013: 1. Complete remaining audits 2. FY2013-14 Audit Planning & Risk Assessment • Audit Universe—Risk Assessment Update • Refine Listing of Rotational Audits • Identify at least 10-12 potential audits with the objective of narrowing down to top 5 for the annual plan. • Align with management on list of recommended audits for presentation to Finance Committee in May or June 2013 3. IT Preliminary Risk Assessment (ongoing) Other Upcoming Items 1. Renewal of contract for augmented internal auditing services for next fiscal year. 2. Annual Review of Internal Audit Charter. Regular Board Mtg. May 28,2013 Page 7 of 21 Excused Absence None Other General Manager Lark presented information regarding the savings of the recent Utility System Revenue Refunding Bonds that Chair Zerkle officially signed off on earlier today. Adiourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 7:58 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee EXECUTIVE COMMITTEE April 16, 2013 The Executive Committee of the Board of Water and Light met at the Board of Water & Light's Board Room, 1232 Haco Dr., Executive Conference Room, Lansing, MI, at 5:00 p.m. on Tuesday, April 16, 2013. Executive Committee Chair Sandra Zerkle called the meeting to order. The following committee members were present: Commissioners Sandra Zerkle, Dennis Louney, Margaret Bossenbery and Tracy Thomas. Also present were Board Members Anthony McCloud, Tony Mullen, David Price and Cynthia Ward. Absent: None. Public Comments None. Approval of Minutes Motion by Commissioner Thomas, seconded by Commissioner Bossenbery to approve the minutes of the November 15, 2011 Executive Committee meeting. Action: Carried unanimously. Instituting a BWL Commissioner Monthly Per Diem Chair Zerkle stated that there is approximately$50.00 per Commissioner per month allotted in the budget if chosen to be used. She said some Commissioners have had conversations with her about receiving the money monthly as opposed to it being set aside in the budget. After a lengthy conversation regarding the consideration of a monthly allowance for the Board of Commissioners the Committee determined that they would not support the Board receiving any type of stipend. Regular Board Mtg. May 28,2013 Page 8 of 21 Chair Zerkle said that this matter can be closed with no action taken. Chair Zerkle requested that order of business be changed on the agenda. Establishing Guideline of Recognition for Departing Commissioners Chair Zerkle stated that since she has been on the Board ways of recognition for departing Commissioners has been varied. She said that she would like the Committee to establish guidelines as to how departing Commissioners should be acknowledged. There was a lengthy discussion regarding establishing guidelines to acknowledge outgoing Board members in order to set some consistency; either a standard gift or a finite dollar amount. The Committee requested the Corporate Secretary research how other Boards and Organizations acknowledge their outgoing members and forward that information to the Executive Committee. Chair Zerkle said that she would report back after information is gathered. Reestablishment of Employee Evaluation Procedures for Appointed Employees: • General Manager • Internal Auditor • Corporate Secretary Human Resource Chair Tracy Thomas said the process that the BWL currently has in place for the three appointed employees is a good one, but the HR Committee wanted to have the process handled exclusively by Board Commissioners to ensure strict confidentiality. HR Chair Thomas presented the following evaluation process: Evaluation Process: • Human Resource Committee Chair begins the Evaluation Process by requesting the Appointed Employees (Peter, Phil and Denise) to fill out evaluation forms for 2012 - 2013 period to be completed by a date specified. • Appointed Employees will return their completed evaluation forms (electronically) to Human Resource Committee Chair or his designee on the HR Committee. • HR Committee Chair or his designee on the HR Committee compiles the completed evaluations and forwards the completed evaluations and commissioners' evaluation forms for each Appointed Employee to the full Board of Commissioners. A timeline for the evaluation process will be provided. • Commissioners will individually complete evaluation forms for each Appointed Employee and return forms to HR Committee Chair or his designee on the HR Committee by a date specified. • HR Committee Chair or Designated HR Committee member compiles Confidential Evaluation Packets. The confidential evaluation packets will include all Appointees evaluations, and a compilation of Commissioners' evaluations including written remarks for each Appointed Employee. • Compiled Confidential Evaluation Packets will be distributed to Commissioners, and Appointed Employee will receive his or her own packet. Regular Board Mtg. May 28,2013 Page 9 of 21 • Human Resource Committee meeting packet will be prepared for the Human Resource meeting consistent with normal protocol. The meeting agenda, past minutes for approval, and any Resolutions (without specific dates) will be prepared by Corporate Secretary and distributed to the full Board, consistent with normal protocol. • The compiled Confidential Evaluation Packets will be distributed electronically, separate from the meeting packet, to Commissioners by the HR Chair or his designee on the HR Committee. HR Chair Thomas also presented the Committee with timelines for handling the Appointees evaluation process. Commissioner Ward stated that the process is essentially the same but, it is just that now the process is being handled entirely by the Board of Commissioners or more specifically the HR Committee, to remove the possibility of evaluations' not being handled in the strictest of confidentiality. Ms. Ward stated that neither she nor Commissioner Thomas have received any information that this process has not been handled confidentially but felt as a collective body this should be something that is handle exclusively within the Board of Commissioner's body. There was a lengthy conversation regarding the evaluation process and the identification of the evaluators. HR Chair Thomas stated that the evaluation process would be handled the same way that it was last year and the only change this year would be the handling process. Review Process of Contract Negotiations for Appointed Employees After a lengthy conversation regarding the negotiating process for the three Board Appointee Employees the following process was conveyed: • Current contract/summary of changes for past three years sent to all Commissioners • Comments/suggestions/specific changes submitted to HR Chair Thomas • HR Chair Thomas will compile a list • HR Chair Thomas and Board Chair Zerkle negotiate from parameters submitted • The negotiated redlined contracts sent out to Board members • Tentatively meet to decide if the Board approves contract Other HR Chair Thomas proposed the idea of bonuses for the Board's three appointed employees reflective of work that has been done in the 2012-2013 year. After a lengthy discussion regarding the proposal it was determined that there was not support to move forward with the proposed bonuses. Commissioner Louney spoke about meeting with the Lansing City Council and revisited the subject of draft minutes availability. Mr. Louney stated that there was another Regular Board Mtg. May 28,2013 Page 10 of 21 organization questioning the timing of the BWL's "Dancing with the Starz" event because it conflicted with their scheduled dancing event. Excused Absence None Adiourn On Motion by Commissioner Bossenbery, Seconded by Commissioner Thomas, the meeting adjourned at 7:15 p.m. Respectfully submitted, Sandra Zerkle, Chair Executive Committee COMMITTEE OF THE WHOLE May 14, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, May 14, 2013. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioner Anthony McCloud Public Comments Ron Byrnes Sr., Horsehead Lake, MI, Board of Water & Light Retiree and Chair of the Committee for the BWL Retirees and Pension, spoke about changes to the retirees' healthcare benefits. He stated that he would like to meet with the Board Chairperson to discuss some of the changes to the healthcare coverage as well as the newly implemented paperwork process. Chair Sandra Zerkle stated that she and a representative appointed by General Manager Lark would be happy to meet with Mr. Byrnes to discuss any concerns or issues. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of April 9, 2013. Action: Motion Carried pproval of Rules and Regulation Regular Board Mtg. May 28,2013 Page 11 of 21 Ray Moore, Manager of Customer Projects and Development, reviewed the FY 2014 proposed changes to Rules and Regulations for Electric, Water,Steam and Chilled Water Utility Services. The proposed changes include: RULES AND REGULATIONS UPDATE Fiscal Year 2014 Electric,Water, Steam and Chilled Water • Updated fees and charges for current actual or estimated cost and industry standards. • Revision of Rule 4, Use of Service, Discontinuation of Service o Clarification of Customer's responsibility to ensure service is disconnected and non-assumption of Board responsibility for resulting property damage. • Revision of Rule 7.A, Responsibility for Payment of Bills,Account Security Deposits o Clarified language which describes what constitutes unacceptable credit history. Electric • Revision of Rule 10.1.C, Distribution System Extension, Nonrefundable Contribution for Underground Extensions o Added language indicating that trench footage required exclusively for establishing or maintaining the Board's standard of a highly reliable looped underground system may be excluded from the contribution calculation. • Revision of Rule 11.4 Services, Residential, Commercial and Industrial Overhead Services o Added language indicating a requirement that a drip loop shall be formed on individual conductors of not less than 36" exiting the weather head. • Revision of Rule 13.4, Use of Board Equipment, Temporary Transfer Fee o Added language specifying that third party attachers shall be charged $75 per pole when the Board must transfer attachments due to an emergency pole replacement. Water • Removal of Rule 11.8, Lead Service Pull Ahead Program o This process is no longer needed as we have fewer than 2300 lead services remaining to be changed out, and can easily accommodate that in our scheduling. Steam and Chilled Water • There were no substantive changes to these documents. Motion by Commissioner Price, seconded by Commissioner Zerkle to forward the resolution for proposed changes to the FY 2014 Rules and Regulations to full Board for consideration. Action: Motion Carried Energy Optimization & Renewable Energy Plan & Report General Manager Lark stated that the State of Michigan Public Service Commission (MPSC) under PA 295 requires the Board of Water & Light to provide the Governing Board an annual update on their Renewable Energy Plans. PA 295 also requires the Board of Water & Light to report to customers annually. Regular Board Mtg. May 28,2013 Page 12 of 21 Sue Warren, Manager of Energy and Eco Strategies, presented a PowerPoint presentation that reviewed the "Hometown Energy Savers" portfolio program that BWL offers to customers. She also reviewed Energy Optimization, Renewable Energy 2011 Results and the Current Renewable Energy Portfolio. Ms. Warren stated that the Board of Water & Light is meeting goals for Renewable Energy and Energy Optimization as well as staying under budget. Ms. Warren stated that the BWL continues to look for and to evaluate Renewable Energy options such as Wind, Solar, Renewable Energy Credits and Biomass. Ms. Warren stated that customers will receive their annual update in the Board of Water & Light's July edition of Connections. Commissioner Ward stated that she is always impressed with the marketing material that she receives from the BWL's Hometown Energy Savers program. The material is new and fresh. Update on New Fueling System Dan MacLennan, Manager of Purchasing-Warehousing and Fleet, stated that the BWL has operated its own fueling station for almost 50 years, which is located at the Pennsylvania and Hazel St. complex. The underground tank system that the BWL has was installed in 1965(diesel) and 1975(unleaded). The system's equipment is aged and expensive to keep operational. Also very important, the fueling system is located in the 10 Year Flood Plain and presented a significant environmental liability to the BWL. Mr. MacLennan provided an overview of the new process that was implemented at the beginning of the year for obtaining unleaded and diesel fuel. He said with all of the problems previously mentioned we sought to identify alternatives to maintain our own fuel system and found that the best option for the BWL was to partner with a 3rd party commercial fuel provider. The company that met all of our needs is a local company called Lansing Ice & Fuel, a franchisee of Pacific Pride Commercial Fueling. Some of the features of the Lansing Ice & Fuel Pacific Pride system is 24/7 accessibility nationwide and built in internal controls. By implementing this new process we are reducing the environmental liability to the BWL. We have a capital project request in the FY 14 budget that would remove the equipment at the Penn-Hazel St. location and also mitigate environmental issues. The new process is more efficient and a reliable source for fuel. We are avoiding cost, due to no longer having to maintain our own system, reducing maintenance expenses and reducing property insurance cost. John Baumer of Lansing Ice & Fuel introduced himself and said that his company appreciates the opportunity to work with the BWL. Update on Smart Grid General Manager Lark stated that this subject was placed on the agenda because some Commissioners will be attending the APPA National Conference and the topic of Smart Grid may be presented. Smart grid is the application of information technology, tools and techniques that can make the grid (electric power infrastructure) run more Regular Board Mtg. May 28,2013 Page 13 of 21 efficiently. Smart Grids, to many people means smart meters. The BWL has tried to concentrate on the distribution system as opposed to the actual swapping out for smart meters. Mr. Lark stated that we plan to get meters but want to see standardization from other utilities first. There have been some questions surrounding smart metering posing health risk as well as other problems and the Public Service Commission (PSC) is currently examining those issues. Wayne Lynn, Manager of Electric System Integrity Group, said as far as Smart Grid technology, right now we are attempting to optimize and make our distribution system more efficient. There are several things that we are presently doing to improve the reliability of our system by way of keeping the lights on and addressing outages very quickly. He stated that currently devices are being installed on lines to help crews identify and locate outages faster. Once devices have been installed and communication links are in place there will be self-healing lines with the ability to re- energize appropriately. The BWL is currently working with consultants to build a business case and to make sure that we get the right benefit for the dollars that it is taking us to invest in this system. We want to make sure that the technology that we deploy has been proven and ready to go when put it on our system. Other Oil Spill Update George Stojic, Executive Director of Strategic Planning & Development, said early in the oil spill incident there was a visit from the Environmental Protection Agency (EPA) and Department of Environmental Quality (DEQ) to inspect the cleanup and they were satisfied with what was being done. There was one recommendation from the EPA and that was to wait until the first good rain to pull the booms. A week later after a good rain, the booms were pulled and there was no detectable oil. The DEQ praised the BWL's rapid actions on this matter. Mr. Stojic we did a good job in responding and we had great crews out there working the booms. Excused Absence Motion by Commissioner Price seconded by Commissioner Ward to excuse Commissioner McCloud from tonight's meeting. Adiourn On Motion by Commissioner Price, Seconded by Commissioner Thomas, the meeting adjourned at 6:18 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE May 14, 2013 Regular Board Mtg. May 28,2013 Page 14 of 21 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 6:30 p.m. on Tuesday, May 14, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Members Tracy Thomas and Cynthia Ward. Also present was Board Member Sandra Zerkle. Absent: None Public Comments There was no Public Comment. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of April 9, 2013. Action: Carried Unanimously Quarterly Financial Update (Third Quarter FY 2013) General Manager Lark provided a quarterly financial update that included information relative to Fiscal Year to date of March 31, 2013 for Electric, Water, Steam and Chilled Water services. Mr. Lark stated that our Actual Net Income is positive due mainly to the Labor, Material and Other line, which amounts to a reduction of operating expense of almost $14 million. That makes up the bulk of the difference between the Budgeted Net Income and the end of 3rd quarter which is $14 million and the Actual Net which is $28 million. The savings came from two areas in Labor and Materials, one is healthcare, in which we have done very well with and have saved about $4.5 million and the other is due to Susan Devon, Assistant General Manager and Chief Financial Officer, insisting every quarter that the managers operate lean and save money in their budgets. Actual v.Budgeted Variance in Combined Utility Net Income Fiscal Year to Date March 31,2013 Compared to FY 2013 Budget ($000) Budgeted Net Income 14,435 Changes in Operating Income: Re\,enue Changes (net of fuel) Retail Electric (2,601) Wholesale Electric (37) Water Sales 636 Steam Sales (136) Chilled Water Sales (122) Operating Expense Changes Depreciation 2,082 Labor, Material, and Other 13,759 Other (1,232) Subtotal Changes in Operating Income 12,349 Changes in Other Income: Interest Earnings 357 Other Income 1,115 Increased PILOT (198) All Other- Non-Operating Variances 596 Subtotal Changes in Other Income 1,870 Actual Net Income 28,654 Regular Board Mtg. May 28,2013 Page 15 of 21 Mr. Lark said we are not going to finish with the $28 million because there are expenses that come in at the end of the year which need to be accounted for. We will probably be closer to a little above budget at the end of the year. (Combined utility Financial Report is included in the Finance Committee packet of 5-14-2013 and is available for viewing in the Office of the Corporate Secretary.) Revised Combined Utility Net Income Projection Fiscal Year 2013 Based on 3rd Quarter Operating Results Net Income Projection - FY2013 (00os) Net Income-Original Budget-Annual $ 13,997 FYTD Favorable Income Variance ($28,654 actual minus$14,435 budget) $ 14,219 Temporary O&M Expense Timing Differences $ (6,473) Temporary Non-Operating Income Timing Differences $ (2,068) Write-off of Moores Park Steam Plant $ (1,082) Eliminate March 2013 Rate Increases Assumed in Budget $ (1,862) Projected Net Income $ 16,731 Fiscal Year 2014 O&M and Capital Budget Presentation General Manager J. Peter Lark provided an overview of the proposed financial plan for fiscal year (FY) 2014 for the Lansing Board of Water and Light (BWL). The total proposed 0&M budget for FY 2014 is $268.9 million , with a capital budget of $84.0 million for Fiscal Year 2014. $55.3 million of the Fiscal Year 2014 capital budget is to provide for on-going services to our utility customers and to sustain our plant facilities for future operations. The remaining $28.7 million will complete construction of the Reo Town Plant. Sales Forecast % '14 Forecast Utility FY14 Forecast FY13 Budget to'13 Budget E3 ectr i c-Retai 1 2,171,061 2,240,180 -3.1% 0 ectr i c-W hd esal a 639,394 280,352 128.1% Dectric(mwh) 2,810,455 2,520,532 11.5% Water (ccf) 9,367,743 9,458,641 -1.0% Steam(mlb) 687,979 698,275 -1.5% Chilled Water tnhrs 10,276,000 1 10,038,000 1 2.4% Electric: • Retail sales volumes by customer class are expected to decrease compared to FY 2013. • Wholesale sales volumes are expected to increase as a result of more favorable market conditions in FY 2014. Water: • Retail sales volumes are expected to decline slightly in FY 2014. Steam: Regular Board Mtg. May 28,2013 Page 16 of 21 • Steam sales volumes are expected to decline slightly in FY 2014. Chilled Water: • Chilled water sales volume increases are attributed to recent and expected customer additions. There was discussion regarding the process and the time line by which the Budget is received by the Commissioners. General Manager Lark stated that FY 14 is going to be one of our leaner years because we did not raise rates last year and the depreciation and interest expense on the REO Town loans will come into play in FY 14. Mr. Lark respectfully requested that the Committee forward the proposed Resolution to the full Board for consideration. Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution for the FY 2014 Operating and Capital Budget to the Board for consideration. Excused Absence None Other None Adjourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 6:52 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee HUMAN RESOURCE COMMITTEE REPORT PRESENTED BY COMMISSIONER WARD HUMAN RESOURCE COMMITTEE May 21, 2013 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:45 p.m. on Tuesday, May 21, 2013. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Anthony McCloud (arrived @4:50), Cynthia Ward and Sandra Zerkle. Also present Alternate Committee member Dennis M. Louney. Absent: None Public Comments Regular Board Mtg. May 28,2013 Page 17 of 21 There were no public comments. Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Zerkle to approve the Human Resource Committee meeting minutes of May 15, 2012. Action: Carried unanimously. FY 2013 Board Appointee Performance/Reappointment Resolution a. Corporate Secretary Corporate Secretary M. Denise Griffin, requested a closed session for the purpose of receiving her contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner Zerkle to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went in to closed session at 4:48 p.m. Motion by Commissioner Ward, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 5:12 p.m. Upon conclusion of the closed sessions, the Human Resource Committee took the following action: Motion by Commissioner McCloud and seconded by Commissioner Zerkle to forward the resolution for the reappointment of Ms. Griffin to the Charter position of Corporate Secretary for fiscal year 2013-2014 to the full Board for consideration. Action: Carried Unanimously b. Internal Auditor Internal Auditor Phil Perkins requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 5:15 p.m. Regular Board Mtg. May 28,2013 Page 18 of 21 Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 5:35 p.m. Upon conclusion of the closed sessions, the Human Resource Committee took the following action: Motion by Commissioner McCloud and seconded by Commissioner Zerkle to forward the resolution for the reappointment of Mr. Perkins to the Charter position of Internal Auditor for fiscal year 2013-2014 to the full Board for consideration. c. General Manager General Manager J. Peter Lark requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner McCloud, seconded by Commissioner Ward to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 5:40 p.m. Motion by Commissioner McCloud, seconded by Commissioner Ward that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 5:00 p.m. Upon conclusion of the closed sessions, the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner McCloud to forward the resolution for the reappointment of Mr. Lark to the Charter position of General Manager for fiscal year 2013-2014 to the full Board for consideration. Action: Motion Carried Human Resource Committee Chair Tracy Thomas thanked the Commissioners who responded so promptly in getting information to Commissioner Ward so that she could do the work that she did. Mr. Thomas thanked Commissioner Ward for all of her effort and work on this evaluation method. Motion by Commissioner Zerkle seconded by Commissioner McCloud to authorize the Human Resources Committee Chair and Board Chair to finalize the details of the Appointed Employees' contracts for the Board Chair's execution. Regular Board Mtg. May 28,2013 Page 19 of 21 Action: Carried Unanimously Human Resource Committee Chair Thomas stated that tentatively there could be a HR meeting in June. The Resolution for the reappointments will be presented at the July Regular Board meeting and the contracts will be prepared for an effective date of July 1, 2013. Members of the Human Resources Committee were acclamatory of the procedure that was followed during this evaluation process. Adjourn There being no further business, the Human Resource Committee meeting adjourned at 6:45 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS General Manager Lark respectfully asked that the following Resolutions be considered for approval. RESOLUTION#2013-05-01 WHEREAS, the Lansing Board of Water& Light sponsors a 457 Governmental Deferred Compensation Plan and Trust ("457 Plan") for the benefit of its employees; WHEREAS, the Lansing Board of Water & Light desires to continue to maintain the 457 Plan in a form that provides a reasonable and attractive retirement security for its employees; WHEREAS, in the spirit of increasing the attractiveness of the 457 Plan, the Lansing Board of Water & Light desires to make available to plan participants certain Roth options as permitted by the Internal Revenue Code; and BE IT RESOLVED that the Lansing Board of Water& Light hereby amends the 457 Plan and Trust to include the associated Roth amendment. Motion by Commissioner Bossenbery, seconded by Commissioner Price, to approve the resolution for the amendment to 457 Plan and Trust to include the associated Roth amendment. Action: Carried Unanimously RESOLUTION#2013-05-02 Rules and Regulations for Electric, Water. Steam and Chilled Water Utility Services Regular Board Mtg. May 28,2013 Page 20 of 21 RESOLVED, THAT THE AMENDMENTS TO THE Rules and Regulations for Electric, Water, Steam and Chilled Water Services be approved as presented, to be effective July 1, 2013. Motion by Commissioner Louney, seconded by Commissioner Price, to approve the resolution for the Rules & Regulations for electric, water, steam and chilled water utility services for FY 2014. Action: Carried Unanimously Due to Tornado Warning the meeting recessed at 5:41 p.m. The meeting reconvened at 5:46 p.m. RESOLUTION#2013-05-03 Fiscal Year 2014 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2014 is hereby approved as presented; and RESOLVED, that the Fiscal Year 2014 Capital Budget is hereby approved as presented; and RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2014-2019 is hereby accepted as presented; and RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings with the Lansing City Clerk's office and the Mayor's office in accordance with the Lansing City Charter regarding the above actions. Motion by Commissioner Price, seconded by Commissioner Bossenbery Price, to approve the resolution for the FY 2014 0& M and Capital Budget. Action: Carried Unanimously UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS There was no Resolution under this section of the Agenda. MANAGER'S REMARKS There were no Manager's Remarks COMMISSIONERS' REMARKS Regular Board Mtg. May 28,2013 Page 21 of 21 EXCUSED ABSENCE On motion by Commissioner Price, seconded by Commissioner Ward to excuse Commissioner McCloud from tonight's meeting. PUBLIC COMMENTS Ron Byrnes, Board of Water & Light Retiree, stated concerns regarding retiree's health care and some of the changes that have taken place. He stated that the retirees are concerned and confused about changes. Mr. Byrnes stated that there has been a meeting scheduled and hopefully some issues to bear will change what is happening. Chair Zerkle stated that Mr. Byrnes General Manager Lark has asked Susan Devon, Assistant General Manager and Chief Financial Officer to put together a meeting, which she will attend, to discuss concerns. Liz Hassler, DeWitt, MI, spoke about issues and concerns with Cofinity Insurance. She said retirees are financially vulnerable and many are physically challenged and some lack the mental stamina needed to deal with the issue that have been presented due to the insurance coverage change. She said the coverage is not the same as what they are used to getting. Jan Simpson, St. Johns, MI, President of the Board of Water & Light Retirees Association, stated that retirees sincerely appreciate the healthcare that they have received through the generosity of the BWL and is confident that the tradition will continue because of the many years of dedicated service that has been collectively given to the BWL, making it the impressive company it is today. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Ward the meeting adjourned at 6:11 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:June 13,2013 Official Minutes(Electronic)filed with Lansing City Clerk:July 24,2013 MINUTES APPROVED BY THE BOARD OF COMMISSIONERS ON SEPTEMBER 24,2073 MINUTES OF THE BOARD OF COMMISSIONERS` MEETING LANSING BOARD OF WATER AND LIGHT July 23, 2013 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, Tracy Thomas, Cynthia Ward and Sandra Zerkle. r � Absent: Commissioner David Price �- 4,3 The Corporate Secretary declared a quorum present. '"i C-) rn Commissioner McCloud led the Pledge of Allegiance. ""4,C -> s APPROVAL OF MINUTES — r Motion by Commissioner Bossenery, seconded by Commissioner Thomas to'approvtthe Regular Board Meeting minutes of May 28, 2013. Action: Carried Unanimously ------------------ SPECIAL PRESENTAITON Pennies for Power Check Presentation from Michigan Building & Construction Trades Council. Patrick Devlin, Secretary&Treasurer of the Michigan Building and Constructions Trades Council presented a check in the amount of$14,118.88 to Board of Water& Light's Pennies for Power campaign. This money was obtained as part of the Project Labor Agreement acknowledging use of union labor for the construction of the Reo Town Plant project. Trade unions agreed to pay 5C per trade work hour to the BWL Pennies for Power initiative during the construction of the plant. Mr. Devlin thanked the BWL for choosing their members to build the state of the art $182 million REO Town Co-Generation Plant and Headquarters. General Manager Lark thanked the Michigan Building and Constructions Trades & Council on behalf of everyone at the BWL and the Board of Commissioners. Chair Zerkle stated that she couldn't be prouder of the Michigan Building and Constructions Trades & Council and that the project was on time and on budget which could not have been accomplished without the Trade Council. ------------------ Regular Board Mtg. July 23,2013 Page 2 of 17 PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. Ron Byrnes, Business Manager of IBEW Local 352, stated concerns about the proposed increase in the employees premium sharing percentage that is being considered on today's agenda and asked that the Board of Commissioners take into consideration the employees small wage increase over the past years and the increased health care cost that is reducing employees' wages. COMMUNICATIONS a. Letter from State Representative Andy Shor congratulating the BWL on the new REO Town Headquarters & Plant Received and Place on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE June 11, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday,June 11, 2013. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of May 14, 2013. Action: Motion Carried Update on REO Town General Manager Lark stated that the REO Town project is on time and on budget. The plant will go commercial on July 1" and a member of the Board of Commissioner's or the Mayor will bring the facility on line on July 1. General Manager Lark stated that on July 15t tours of Regular Board Mtg. July 23,2013 Page 3 of 17 the facility will be provided and the power plant is expected to be fully operational at that time. Communications Director Stephen Serkaian provided the Commissioners with an invitation to the Board of Water & Light's "Going Commercial" ceremony to take place on July 1, 2013. He reviewed the events that will take place on that day beginning with the opening ceremony in the Depot, followed by the new cogeneration plant being switched on with guided tours to follow. Also as part of the day's events, the Lansing Chamber of Commerce will host their Economic Club luncheon at the Board of Water & Light's new facility site. There will also be another chance for the public to view the new facility between 1:30 p.m. and 3:00 p.m. Mr. Serkaian informed the committee that on the Sunday before the new facility opening, the Lansing State Journal is planning a special insert in their newspaper that will focus on the new plant and tell the comprehensive story about the REO Town project. Also, the Wednesday before the new Cogeneration plant goes live the City Pulse will feature a story regarding the REO facility. Health and Wellness Plan Brankie Ekren, General Counsel and Director of Employment Affairs, stated that a few years ago the Board of Water& Light kicked off a robust health and wellness program called "Be Well for Life" "BWL", and since that kick off there have been some changes and improvements to the program. Ms. Ekren introduced Michael Flowers, Director of Personal Policy Development and Organizational Training Development who provided an update on the program's changes. Mr. Flowers stated that BWL's Health and Wellness program began in 2011 with a company out of Denver, Colorado but have since discontinued that partnership and are now partnering with Sparrow Health System. Mr. Flowers reviewed the status of the BWL Health and Wellness Program, the Program Objectives, the Action Plan and the Be Well at Work Health Management system. He stated the employees are pleased with the improvements including the fact that partnering with Sparrow provides a presence closer to home. City Fire Hydrants and Street Lishts (With Resolution) General Manager Lark introduced a Resolution for the Board's consideration that would increase the Board of Water & Light's annual contribution to the City of Lansing's payment in lieu of taxes (PILOT) to 6.1%. General Manager Lark shared with the Commissioners a letter he received from Mayor Bernero requesting that fire hydrant charges be passed onto individual customers, a task that is commonly performed by the BWL for surrounding municipalities. Mr. Lark stated that he would request Ms. Susan Devon, Assistant General Manager and Chief Financial Officer, to implement charges pursuant to that letter to individual customers. Mr. Lark stated that rates have not been finalized as of yet and this process does not require action from the Board of Commissioners', it is implemented by the City. Regular Board Mtg. July 23,2013 Page 4 of 17 The Committee considered two resolutions, one provided in their electronic packet, and the other presented at the meeting. The resolution presented at the meeting contained language which spoke generally to the "sense of the Board of Commissioners". Both resolutions increased the PILOT to 6.1%. Motion by Commissioner Zerkle , Seconded by Commissioner Price to move the Resolution forward that includes the language of the "sense of the Board of Commissioners" to the full Board for consideration. Following the Motion, there was lengthy discussion which concluded with Commissioner Zerkle, withdrawing her motion for the Board to consider the resolution that included the "sense of the Board" language. Motion by Commissioner Zerkle, Seconded by Commissioner Price, to forward to the full Board the resolution that was presented in the electronic packet which did not contain the language that spoke to the "sense of the Board" for consideration and would increase the PILOT payment to 6.1%. Action: Motion Carried (7 to 1 vote) Commissioner Price suggested that a cover letter be sent after the Board's consideration and full passage of the Resolution expressing the "sense of the Board of Commissioners"that this agreement should not be invaded during the pendency of its agreed term time. Other Chair Zerkle informed the Committee that she participated in a meeting along with Administration, BWL's insurance companies and BWL Retirees to address some of the issues that retirees say they are experiencing with new insurance procedures. Chair Zerkle stated that there was good discussion at the meeting and believes that all issues will be addressed. Dennis M. Louney stated that it was another successful Chili Cook-Off and commends everyone who worked on that. General Manager Lark said that Calvin Jones really brought home the numbers for the Chili Cook-Off this year, it was the was most successful one ever. Tracy Thomas said that the First Step Program reception was well done and congratulated the Board of Water & Light for showcasing Lansing area kids. Excused Absence None Adiourn On Motion by Commissioner Price, Seconded by Commissioner Ward, the meeting adjourned at 6:38 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole Regular Board Mtg. July 23,2013 Page 5 of 17 FINANCE COMMITTEE June 11, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 6:44 p.m. on Tuesday, June 11, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Member Cynthia Ward. Also present was Board Members Anthony McCloud and Sandra Zerkle. Absent: None Public Comments There was no Public Comment. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of May 14, 2013. Action: Carried Unanimously External Audit Communication to the Board— Presented by Plante & Moran General Manager Lark introduced external auditor Doug Rober, Partner with Plante Moran (P&M) and Brett Oumedian, Manager with P&M, who reviewed and presented the Auditing Process. Mr. Rober said this is the beginning of the audit process and part of that process is to meet and present governance with a projected audit process summary. Mr. Oumedian of Plante Moran, stated that the scope of the Audit that will be performed is to express an opinion of the financial statements of the Board as well as each of the pension plans. He stated there will also be a management letter or significant deficiency letter if required at the end of the engagement, ultimately issuing an AU260 communication letter. Mr. Oumedian reviewed Management's responsibility in the Audit process as well as the following: ■ Audit Process ■ Auditor Responsibility ■ Management Responsibility ■ Testing Phases ■ Required Discussion Points ■ Significant Risk Misstatement ■ Responses to Significant Risk Misstatement ■ Additional Required Discussion Points ■ Communication to those Charged with Governance Regular Board Mtg. July 23,2013 Page 6 of 17 Finance Chair Bossenbery was indicated as the appropriate contact person for questions or concerns. Mr. Rober asked the Board of Commissioners if there were any areas of concern that warrant attention or additional procedures. In response to Mr. Rober's question the Board of Commissioners stated no areas of concern. Internal Audit Proposed Plan for FY 2014 Internal Auditor Phil Perkins, presened an overview of Internal Auditor Status Update • FY 2013 Audit Plan Progress Report • Plan/Forecast for Remainder of Year • Other Upcoming Items FY 2013 Audit Plan Progress Report Audits Completed or in Progress: 1. Reo Town Contracting and Payments Review • Complete; report issued. 2. Cash Receipts & Collections • Complete; report issued. 3. Company Insurance & Claims • Complete; report issued. 4. Energy Risk Management • Financial Report to be issued shortly; about complete. 5. Materials Issues and Returns • Draft Report to be issued shortly; audit 95% complete. Other Engagements: 1. Time Reporting Reviews#1 & 2-complete. 2. Surprise Cash Counts#1 & 2-complete. 3. IT Preliminary Risk Assessment—in progress throughout FY 2013 Required Periodic Review Items: 1. Internal Audit Charter—no recommended changes to the charter as written. 2. Quality Assurance Improvement Program —Internal Audit procedures were reviewed and updated as needed. Draft FY 2014 Audit Plan Basis for plan: 1. Risk assessments and scores for each of 100-plus auditable activities at BWL. 2. Consideration of rotational audits, audit areas with risk/scoping assessments, first-time audits, etc. 3. Review and input by management. 4. Selection of the top audit candidates based on (1) through (3) above. Planned Audits: Estimated Hours Regular Board Mtg. July 23,2013 Page 7 of 17 Software Licensing Compliance 400 Accounts Payable 400 Records Retention Management 400 Fuel Procurement 400 Close the Books Processes and 400 Controls Other Engagements: Surprise Cash Counts (2) 40 Time Reporting Reviews (2) 160 IT Preliminary Risk Assessment 200 (continued from FY2013) Potential Consulting or Other 100 Engagement Total Estimated Hours Phil Perkins Director of Internal Audit 1,500 Charles Moore &Associates Augmented IA services 1,000 Total Hours Motion by Commissioner Louney, seconded by Commissioner Price, to maintain the Internal Audit Charter as currently written. Action: Carried Unanimously Internal Auditor Perkins informed the Committee that he recently made some changes to the Internal Auditing procedures and would provide the Commissioners with an electronic list of the changes. Excused Absence None Other None Adjourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 7:14 p.m. Respectfully submitted Regular Board Mtg. July 23,2013 Page 8 of 17 Margaret Bossenbery, Chair Finance Committee NOMINATING COMMITTEE MINUTES June 26, 2013 The Nominating Committee of the Lansing Board of Water and Light met at the Executive Offices, Conference Room, located at 1232 Haco Dr., Lansing, MI at 5:00 p.m. on Tuesday, June 26, 2013. Nominating Committee Chair Tony Mullen called the meeting to order and asked the Corporate Secretary to call the roll. The following committee members were present: Commissioners Marge Bossenbery, Anthony McCloud, Tony Mullen and Tracy Thomas. Absent: None Approval of Minutes Motion by Commissioner Thomas, seconded by Commissioner McCloud to approve the Nominating Committee meeting minutes of June 26, 2012. Action: Motion Carried Public Comment There were no public comments. Nominate Board Officer Candidates for FY 2013-2014 The Nominating Committee met to review the Commissioner Survey responses for consideration of board officer nominations for the Board of Water & Light Board of Commissioner's Chair and Vice Chair for fiscal year 2013-2014. Nominating Committee Chair Mullen opened the floor for nominations. After a lengthy discussion the following motion was made: Motion by Commissioner Bossenbery, seconded by Commissioner McCloud, that the Nominating Committee forward a slate of officers to the full Board for consideration which consist of the interested candidates for the Chair position, Sandra Zerkle and Cynthia Ward and interested candidates for Vice Chair position, Dennis M. Louney and David Price. Action: Carried Unanimously There was discussion regarding the method of voting. There being no further business,the meeting adjourned at 6:20 p.m. Respectfully submitted, Tony Mullen, Chair Nominating Committee Regular Board Mtg. July 23,2013 Page 9 of 17 HUMAN RESOURCE COMMITTEE July 16, 2013 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:30 p.m. on Tuesday,July 16, 2013. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Anthony McCloud (arrived @4:35), Cynthia Ward and Sandra Zerkle. Also present: Commissioners Bossenbery, Dennis M. Louney (Alternate) and Tony Mullen. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Zerkle to approve the Human Resource Committee meeting minutes of May 21, 2013. Action: Carried unanimously. Impact of Patient Protection and Affordable Care Act General Manager Lark stated that the Patient Protection and Affordable Act (PPACA) plan is the House and Senate plan that was signed into law by the President Obama, this plan is called the Healthcare Act. General Manager Lark said the Healthcare Act is something that we at the Board of Water & Light (BWL) comply with. He stated by the year 2018 there are some new provisions that must be complied with regarding our health care. Mr. Lark generally discussed various aspects of the Affordable Health Care Act and noted that there is a penalty assessed under the Act if we exceed certain caps. General Manager Lark stated that he is bringing this matter to the Board's attention because there will have to be some decisions made in the next 4 years as to how we are going to meet and maintain compliance with the Act. No decisions need to be made this calendar year; this is just to let the Board know what is happening and that we will continue to be on track. General Manager Lark reviewed the following: • Requirements Already Implemented by the BWL in 2011/2012 • Upcoming Requirements • New Fees • Excise Tax Projections • Excise Tax Alternatives • Plan Design Changes Needed • Buy Up Approach • Pass Along Excise Tax Regular Board Mtg. July 23,2013 Page 10 of 17 • Excise Tax Projected Exposure PA 152 (Premium Sharing Percentage)-Resolution This is an update of what was presented to the Board of Commissioners last year regarding PA 152, which caps the amount a public employer, including municipal utility companies, may pay for employee health care insurance. General Manager Lark stated that if the BWL chooses to do nothing about PA 152 requirements, then we have a hard cap automatically applicable. Last year the Board voted on one of the 3 available options and that was to exempt us entirely from the Act and implement a 10% premium sharing cost, which was an increase from a 5% premium sharing that was in effect at the time. General Manager Lark reviewed the details and cost (with various percentages) for the following available options: • Limit expenditures on health care cost based on a schedule of dollars provided in the Act (the Hard Cap) • Limit expenditures to an 80/20 percentage split with a majority vote (or) • Exempt itself entirely from the Act through a 2/3 majority vote. With a 2/3 majority vote, the Board could then implement premium sharing in an amount desired. After a lengthy discussion regarding PA 152 requirements and the effect on employees the following motion was made: Motion by Commissioner Ward, seconded by Commissioner McCloud, to forward the resolution for the implementation of a 15% premium sharing for all active employees for medical benefits to the full Board for consideration. Action: Motion Carried Retirement Health Savings Plan General Manager Lark presented the committee with information on Health Care Retirement Savings Accounts (HRA), a new hire retiree structuring alternative. He said alternative retiree health care plans are being considered due to the rising cost of health care for retirees. There are many ways to do HRA's, and again this plan is only being considered for new hires. Instead of paying health care cost the way that it is currently being done, a certain amount of money would be put into each new hire's retirement saving account every year and as that amount is invested over the years the money in the account would grow. So instead of a Defined Benefit plan where we guarantee the benefits that a retiree would receive, we would participate in a Defined Contribution plan that would be managed by the employee. To sum it up; new employees would receive contributions into a HRA during employment that would be used, along with earnings on those funds, to purchase health care at retirement. Regular Board Mtg. July 23,2013 Page 11 of 17 General Manager Lark stated that he is presenting this information to get a sense of how the Board feels about this alternative plan. He said that his staff is continuing to evaluate an HRA and other options to mediate future rising health care cost. Commissioner Louney stated that based on the Affordable Care Act, moving forward there are some structures in place that were not in place a few years ago and it bodes well for us to look at examining this alternative; it is something that needs to be pursued. Human Resource Chair Thomas thanked Mr. Lark for presenting this information and stated that the issue will be revisited in the future. Other General Manager Lark provided an update on an incident that took place last Friday afternoon involving a Board of Water& Light employee who was injured. General Manager Lark stated that it is extremely warm out and all Units are operating well. Adjourn There being no further business, the Human Resource Committee meeting adjourned at 6:00 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS General Manager Lark respectfully asked that the following Resolutions be considered for approval. RESOLUTION #2013-07-01 To Amend the Return on Equity Agreement Between the City of Lansing and the Board of Water and Light WHEREAS,the City of Lansing(the City provides to the Lansing Board of Water and Light (the Board) use of its streets, alleys, bridges, and other public places without compensation and the Board, as an agency of the City, is exempt from property taxation, and; WHEREAS,since 1972 the Board has contributed to the City an annual amount as a return on equity as payment in lieu of taxes (PILOT) and; WHEREAS,The Board and the City entered into an agreement (Attachment A) on June 30, 1992 for annual payment of a return on equity for ten years commencing on July Regular Board Mtg. July 23,2013 Page 12 of 17 1, 1992 in the amount of 4% of net billed retail sales from electric, water, and steam, and; WHEREAS,on December 17th, 2001, the Board and the City modified the agreement by Amendment No.1(Attachment B)to extend the terms and other provisions of the agreement for ten more years commencing on July 1, 2002 in the amount of 4%of its revenues from retail and wholesale sales of chilled water, electric, steam, and water utilities, and; WHEREAS,upon the expiration of Amendment No.1on June 30, 2012,the Board and the City modified the agreement by Amendment No. 2 (Attachment C) to extend the terms and other provisions of the agreement for five more years commencing on July 1, 2012 in the amount of 5%of its revenues from retail and wholesale sales of chilled water, electric, steam, and water utilities, and; WHEREAS,the Board and the City desire to extend the current agreement by an additional year and increase the PILOTto 6.1%for the remaining agreement term with Amendment No.3, RESOLVE that the Board extend its agreement with the City by an additional year for a five year period commencing on July 1, 2013 and expiring June 30, 2018 with Amendment No. 3, FURTHER RESOLVED with Amendment No.3 the amount of the PILOT for the remaining term of the agreement shall be 6.1%of its revenues from retail and wholesale sales of electric, water, steam, and chilled water utilities. Motion by Commissioner Ward, seconded by Commissioner Louney, to approve the resolution extending the PILOT agreement with the City of Lansing until 2018 with a 6.1% return on equity. Action: Motion Carried (6/1 Vote) RESOLUTION#2013-07-02 To Amend Employer Contribution to Medical Benefit Plans WHEREAS, Governor Rick Snyder, on September 27, 2011, signed legislation known as the "Public Funded Health Insurance Contribution Act", Public Act 152 of 2011 limiting the amount public employers may pay for government employee medical benefits, and; WHEREAS, Public Act 152 of 2011 took effect January 1, 2012 and applies to all public employers including the Lansing Board of Water& Light, and; Regular Board Mtg. July 23,2013 Page 13 of 17 WHEREAS, Public Act 152 of 2011 created a "hard cap" for medical benefit plan coverage year beginning January 1, 2012, so that a public employer may not pay more of the annual costs for medical benefit plans than a total equal to $5,692.50 for single person coverage, $11,385 for individual and spouse coverage, and $15,525 for family coverage adjusted October 1, 2013. These caps are to be adjusted by October 1 each year to apply to the following calendar year, based on the change in the medical care component of the United States consumer price index (CPI), and; WHEREAS, by a majority vote of its governing body, a public employer may opt-out of the hard cap and into an 80% cap option where the public employer may not pay more than 80% of the total annual costs of all the medical benefit plans for its employees, and; Whereas, by a 2/3 vote of its governing body each year, a local unit of government may exempt itself from the requirements of Public Act 152 of 2011 for the next year, and; WHEREAS, the Board of Commissioners met on July 24th 2012 and passed a resolution (#2012-07-01) to exempt itself from the requirements of Public Act 152 of 2011 and implemented a 10% premium sharing, and; RESOLVE that the Board by at least 2/3 vote desires to exempt itself from the requirements of Public Act of 2011 for the upcoming benefit plan year, effective September 1, 2013. FURTHER RESOVE that the Board desires to implement a 12% premium sharing for all active employees for medical benefits effective September 1, 2013 Motion by Commissioner Ward, Seconded by Commissioner Thomas to exempt the Board of Water & Light from the PA152 requirements by voting with a 2/3 decision. Action: Carried Unanimously (7/0 Vote) Motion by Commissioner Thomas, Seconded by Commissioner Louney, to amend the proposed Resolution to implement a 12% premium sharing percentage instead of 15% and to adopt the Resolution with the amendment. Action: Motion Carried UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS Nominating Chair Mullen stated consistent with the committee report, the Nominating Committee voted unanimously to forward a slate of officers, which consist of all the interested candidates for the position of Chair and Vice Chair to the full Board for consideration. Since the meeting of the Nominating Committee, voluntary withdrawals for candidate consideration have been received. As a result the proposed slate of officer candidates for Fiscal Year 13-14 will be: Sandra Zerkle serving as Chair Regular Board Mtg. July 23,2013 Page 14 of 17 And Dennis M. Louney serving as Vice Chair As procedure Nominating Committee Chair Mullen asked if there were any nominations from the floor for the positions of Chair or Vice Chair. There were no nominations from the floor and Nominations were closed. Moved by Commissioner Ward and supported by Commissioner McCloud to approve the proposed slate of officers as such, Sandra Zerkle as Chair and Dennis M. Louney as Vice Chair. Chair Zerkle stated that the Executive Committee consists of the Chair, Vice Chair and Past Chair as well as another member of the Board. At this point there is no Past Chair presently serving on the Board leaving two positions open that need to be filled in order to make the Executive Committee complete. Motion by Commissioner Thomas and seconded by Commissioner Louney to nominate Tony Mullen and Cynthia Ward as the two members of the Executive Committee. Action: Motion Carried Chair Zerkle thanked everyone for their support and stated that this is a great Board to be serving on. Commissioner Bossenbery stated that she would like to look into forming committee to examine the nominating process and establish some guidance for those serving on the committee. Chair Zerkle stated that she would take that suggestion in to consideration. RESOLUTIONS RESOLUTION #2013-07-03 NEW BOARD MEETING LOCATION RESOLVED, That regular meetings of the Lansing Board of Water & Light's (BWL) Board of Commissioners are hereby set for the remainder of the calendar year 2013 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings: 2013 BWL Board Commissioners 2013 Remaining Regular Board Meeting Schedule Tuesday September 24 Tuesday November 19 Regular Board Mtg. July 23,2013 Page 15 of 17 Meetings will be held in the Board Room located in the Board of Water & Light's REO Town Depot located 1201 S. Washington, Lansing, MI, at 5:30 p.m. RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing City Pulse the week of August 18, 2013. Motion by Commissioner Ward, Seconded by Commissioner Thomas, to approve the Resolution for the BWL Board of Commissioners 2013 remaining Regular Board meeting dates to be held at the new REO Town Depot facility located at 1201 S. Washington, Lansing, M 1 48910. Action: Motion Carried RESOLUTION#2013-07-04 Appointment of the Charter Position of Director and General Manager The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, respectively at its first regular meeting following July 1St of each year or as soon thereafter as may be appropriate. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Director and General Manager for fiscal year 2013-2014, or, until a successor is appointed, whichever last occurs: J. Peter Lark, Director and General Manager ---------------- Motion by Commissioner Thomas, Seconded by Commissioner McCloud to reappoint J. Peter Lark to the Charter position of Director and General Manager for fiscal year 2013-2014. Action: Motion Carried RESOLUTION #2013-07-05 Appointment of the Charter Position of Internal Auditor The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, respectively at its first regular meeting following July 15t of each year or as soon thereafter as may be appropriate. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Internal Auditor for fiscal year 2013-2014, or, until a successor is appointed, whichever last occurs: Philip Perkins, Internal Auditor ---------------- Motion by Commissioner Bossenbery, Seconded by Commissioner Thomas to reappoint Philip Perkins to the Charter position of Internal Auditor for fiscal year 2013-2014. Action: Carried unanimously Regular Board Mtg. July 23,2013 Page 16 of 17 RESOLUTION #2013-07-06 Appointment of the Charter Position of Corporate Secretary The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, respectively at its first regular meeting following July 1St of each year or as soon thereafter as may be appropriate. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Corporate Secretary for fiscal year 2013-2014, or, until a successor is appointed, whichever last occurs: M. Denise Griffin, Corporate Secretary ---------------- Motion by Commissioner Mullen, Seconded by Commissioner Ward, to reappoint M. Denise Griffin to the Charter position of Corporate Secretary for fiscal year 2012-2013 Action: Motion Carried Chair Zerkle presented Corporate Secretary Griffin with a Certificate of Appreciation in recognition of completing 5 years of service to the Board of Water & Light. MANAGER'S REMARKS General Manager Lark congratulated Chair Zerkle and Dennis M. Louney on their reappointments. He also congratulated Ms. Griffin on her 5 year certificate. Mr. Lark thanked the Board of Commissioners for all of their support regarding the REO Town project, He stated this was a very fine project and it was done on time and on budget. COMMISSIONERS' REMARKS Chair Sandra Zerkle stated that Mr. Lark should be very proud of him-self with regards to the REO Town project. She said this was a group effort but it was Mr. Lark's vision. This will be a great landmark for the City of Lansing. She thanked Commissioner Thomas and his committee for of the work on the employee's evaluation process. Commissioner Ward congratulated Sandra Zerkle and Dennis M. Louney on continuing in their positions as Chair and Vice Chair. She also thanked Chair Zerkle for her vote of confidence in appointing her to the Executive Committee. Commissioner Thomas, apologized for not attending the REO Town opening as he had obligations out of State. Commissioner Thomas said for the record that he agrees with Commissioner Bossenbery's suggestion regarding guidance for the nominating committee process. He also congratulated Sandra Zerkle, Dennis M. Louney, Cynthia Ward and Tony Mullen on their appointments. Commissioner Thomas congratulated Legal Counsel Brandie Regular Board Mtg. July 23,2013 Page 17 of 17 Ekren for a job well done, especially over the last 3 months with assisting the Human Resource Committee; she is fair, firm and instructional. Dennis M. Louney said that he is honored to be reappointed as Vice Chair and it is an honor to serve on this Board. He congratulated all appointees. He also congratulated General Manager Lark and said that leadership makes a difference and it shows, and the co- generation plant was a perfect example of making history in our state and it is an honor to be a part of that. EXCUSED ABSENCE On motion by Commissioner Ward, seconded by Commissioner Thomas to excuse Commissioner Price from tonight's meeting. PUBLIC COMMENTS Audrey Kingdon, Haslett Mi, property manager of apartments located at 1127 N. Hagadorn, E. Lansing, MI, spoke about resident's concerns in regard to the increased cost of their electric utility service. General Manager Lark referred Ms. Kingdon to Bob Perialas, Manager of Customer Service. David Walton, Lansing, MI, said that he was here representing the Kappa Alpha Psi Lansing Alumni Chapter and was seeking partnership with the Board of Water & Light for a one day job shadowing opportunity and other sponsorship opportunities. General Manager Lark referred Mr. Walton to Calvin Jones, Director of Public Relations and Diversity. Mary Bradley, representing the "Clean Water Action in Lansing Can Do Better Coalition", congratulated the Board of Water & Light on the co-generation plant and moving the city away from the use dirty fossil fuels. She said that she would like to encourage public participation in the community energy process. Ron Byrnes, Business Manager of IBEW Local 352, thanked the Board of Commissioners for taking action regarding PA152. Mr. Byrnes spoke about an employee who was injured and asked that we keep him in our prayers. ADJOURNMENT On motion by Commissioner Ward, seconded by Commissioner Bossenbery the meeting adjourned at 6:16 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:August 2,2013 Official Minutes filed(electronically)with Lansing City Clerk:October 2,2013 MINUTES APPROVED BY THE BOARD OF COMMISSIONERS ON 7-23-13 Mpnvwm'4ioyN..Nemeto..pn.e.. MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT May 28, 2013 CORRECTED The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioner Anthony McCloud r® N The Corporate Secretary declared a quorum present. == w a Commissioner Price led the Pledge of Allegiance. a C) APPROVAL OF MINUTES Motion by Commissioner Thomas, seconded by Commissioner Ward to approve the r— Regular Board Meeting minutes of March 26, 2013. rn � csa Action: Carried Unanimously ------------------ PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There was no Public Comments ------------------ COMMUNICATIONS a. Letter from L.W. Morrow of Lansing, MI regarding alternative fuel. Received and Place on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE April 9, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, April 9, 2013. Regular Board Mtg. May 28,2013 Page 2 of 21 Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery (arrivedat5:35), Anthony McCloud,Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no public comment. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of March 12, 2013. Action: Motion Carried General Manager Lark respectfully requested that the agenda items be taken out of order. Personal Protective Safety Equipment Fashion Sho General Manager J. Peter Lark introduced Administrative Assistant Jean Gannon who organized the safety equipment fashion show. Ms. Gannon stated that it had been a few years since the fashion show was presented to the Board of Commissioners and was pleased to have the opportunity to do it again and to share some new equipment as well as entertain. David Douglas, Human Resource Advisor, was the Master of Ceremony. Larry Shields, Safety & Process Trainer, was the moderator. Rebecca Rostar, Customer Service, was the Sound Technician. The models for the Fashion Show included the following BWL employees: Gennie Eva, Jeff Burnham, Roger Zverina, Anne Peffers, Wayne Lynn, Rob Hodge, George Podany and Bob Perialas. Ingham County Animal Control Presentation General Manager Lark introduced Jim D raven statt-Moceri, BWL Field Service Leader. Mr. D raven statt-Moceri thanked Vice Chair Louney for allowing this matter to be put on the Agenda. He stated that as a result of the City Council reviewing their Dog Ordinance and the issue of vicious dog bites this subject has been an important topic of discussion and with the BWL employees having to deal with stray dogs, he felt that it was important to talk about this issue. Ingham County Animal Control Deputies, Klauka and Delatorre presented the Committee with information on animal welfare, dog bite prevention and emergency tips. Regular Board Mtg. May 28,2013 Page 13 of 21 efficiently. Smart Grids, to many people means smart meters. The BWL has tried to concentrate on the distribution system as opposed to the actual swapping out for smart meters. Mr. Lark stated that we plan to get meters but want to see standardization from other utilities first. There have been some questions surrounding smart metering posing health risk as well as other problems and the Public Service Commission (PSC) is currently examining those issues. Wayne Lynn, Manager of Electric System Integrity Group, said as far as Smart Grid technology, right now we are attempting to optimize and make our distribution system more efficient. There are several things that we are presently doing to improve the reliability of our system by way of keeping the lights on and addressing outages very quickly. He stated that currently devices are being installed on lines to help crews identify and locate outages faster. Once devices have been installed and communication links are in place there will be self-healing lines with the ability to re- energize appropriately. The BWL is currently working with consultants to build a business case and to make sure that we get the right benefit for the dollars that it is taking us to invest in this system. We want to make sure that the technology that we deploy has been proven and ready to go when put it on our system. Other Oil Spill Update George Stojic, Executive Director of Strategic Planning & Development, said early in the oil spill incident there was a visit from the Environmental Protection Agency (EPA) and Department of Environmental Quality (DEQ) to inspect the cleanup and they were satisfied with what was being done. There was one recommendation from the EPA and that was to wait until the first good rain to pull the booms. A week later after a good rain, the booms were pulled and there was no detectable oil. The DEQ praised the BWL's rapid actions on this matter. Mr. Stojic we did a good job in responding and we had great crews out there working the booms. Excused Absence Motion by Commissioner Price seconded by Commissioner Ward to excuse Commissioner McCloud from tonight's meeting. Adiourn On Motion by Commissioner Price, Seconded by Commissioner Thomas, the meeting adjourned at 6:18 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE May 14, 2013 Regular Board Mtg. May 28,2013 Page 14 of 21 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 6:30 p.m. on Tuesday, May 14, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Members Tracy Thomas and Cynthia Ward. Also present was Board Member Sandra Zerkle. Absent: None Public Comments There was no Public Comment. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of April 9, 2013. Action: Carried Unanimously Quarterly Financial Update (Third Quarter FY 2013) General Manager Lark provided a quarterly financial update that included information relative to Fiscal Year to date of March 31, 2013 for Electric, Water, Steam and Chilled Water services. Mr. Lark stated that our Actual Net Income is positive due mainly to the Labor, Material and Other line, which amounts to a reduction of operating expense of almost $14 million. That makes up the bulk of the difference between the Budgeted Net Income and the end of 3rd quarter which is $14 million and the Actual Net which is $28 million. The savings came from two areas in Labor and Materials, one is healthcare, in which we have done very well with and have saved about $4.5 million and the other is due to Susan Devon, Assistant General Manager and Chief Financial Officer, insisting every quarter that the managers operate lean and save money in their budgets. Actual v. Budgeted Variance in Combined Utility Net Income Fiscal Year to Date March 31,2013 Compared to FY 2013 Budget ($000) Budgeted Net Income 14,435 Changes in Operating Income: Rey--nue Changes (net of fuel) Retail Electric (2,601) Wholesale Electric (37) Water Sales 636 Steam Sales (136) Chilled Water Sales (122) Operating Expense Changes Depreciation 2,082 Labor, Material, and Other 13,759 Other (1,232) Subtotal Changes in Operating Income 12,349 Changes in Other Income: Interest Earnings 357 Other Income 1.115 Increased PILOT (198) All Other- Non-Operating Variances 596 Subtotal Changes in Other Income 1,870 Actual Net Income 28,654 Regular Board Mtg. May 28,2013 Page 15 of 21 Mr. Lark said we are not going to finish with the $28 million because there are expenses that come in at the end of the year which need to be accounted for. We will probably be closer to a little above budget at the end of the year. (Combined utility Financial Report is included in the Finance Committee packet of 5-14-2013 and is available for viewing in the Office of the Corporate Secretary.) Revised Combined Utility Net Income Projection Fiscal Year 2013 Based on 3rd Quarter Operating Results Net Income Projection - FY2013 (000s) Net Income-Original Budget-Annual $ 13,997 FYTD Favorable Income Variance ($29,654 actual minus$14,435 budget) $ 14,219 Temporary O&M Expense Timing Differences $ (6,473) Temporary Non-Operating Income Timing Differences $ (2,068) Write-off of Moores Park Steam Plant $ (1,082) Eliminate March 2013 Rate Increases Assumed in Budget $ (1,862) Projected Net Income $ 16,731 Fiscal Year 2014 O&M and Capital Budget Presentation General Manager J. Peter Lark provided an overview of the proposed financial plan for fiscal year (FY) 2014 for the Lansing Board of Water and Light (BWL). The total proposed 0&M budget for FY 2014 is $268.9 million , with a capital budget of $84.0 million for Fiscal Year 2014. $55.3 million of the Fiscal Year 2014 capital budget is to provide for on-going services to our utility customers and to sustain our plant facilities for future operations. The remaining $28.7 million will complete construction of the Reo Town Plant. Sales Forecast % '14 Forecast utility FY14 Forecast FY13 Budget to'13 Budget B ectr i c-Retai 1 2,171,061 2,240,180 -3.1% 0 ectr i c-W hd esal a 639394 280,,E 128.1% 0 ectr i c(mwh) 2,810,455 2,520,532 11.5% Water (ccf) 9,367,743 9,458,641 -1.0% Steam(ml b) 687,979 698,276 -1.5% Chilled Water tnhrs 10,276,000 1 10,038,000 1 2.4% Electric: • Retail sales volumes by customer class are expected to decrease compared to FY 2013. • Wholesale sales volumes are expected to increase as a result of more favorable market conditions in FY 2014. Water: • Retail sales volumes are expected to decline slightly in FY 2014. Steam: Regular Board Mtg. May 28,2013 Page 16 of 21 • Steam sales volumes are expected to decline slightly in FY 2014. Chilled Water: • Chilled water sales volume increases are attributed to recent and expected customer additions. There was discussion regarding the process and the time line by which the Budget is received by the Commissioners. General Manager Lark stated that FY 14 is going to be one of our leaner years because we did not raise rates last year and the depreciation and interest expense on the REO Town loans will come into play in FY 14. Mr. Lark respectfully requested that the Committee forward the proposed Resolution to the full Board for consideration. Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution for the FY 2014 Operating and Capital Budget to the Board for consideration. Excused Absence None Other None Adjourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 6:52 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee HUMAN RESOURCE COMMITTEE REPORT PRESENTED BY COMMISSIONER WARD HUMAN RESOURCE COMMITTEE May 21, 2013 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:45 p.m. on Tuesday, May 21, 2013. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Anthony McCloud (arrived @4:50), Cynthia Ward and Sandra Zerkle. Also present Alternate Committee member Dennis M. Louney. Absent: None Public Comments Regular Board Mtg. May 28,2013 Page 17 of 21 There were no public comments. Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Zerkle to approve the Human Resource Committee meeting minutes of May 15, 2012. Action: Carried unanimously. FY 2013 Board Appointee Performance/Reappointment Resolution a. Corporate Secretary Corporate Secretary M. Denise Griffin, requested a closed session for the purpose of receiving her contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner Zerkle to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went in to closed session at 4:48 p.m. Motion by Commissioner Ward, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 5:12 p.m. Upon conclusion of the closed sessions, the Human Resource Committee took the following action: Motion by Commissioner McCloud and seconded by Commissioner Zerkle to forward the resolution for the reappointment of Ms. Griffin to the Charter position of Corporate Secretary for fiscal year 2013-2014 to the full Board for consideration. Action: Carried Unanimously b. Internal Auditor Internal Auditor Phil Perkins requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 5:15 p.m. Regular Board Mtg. May 28,2013 Page 18 of 21 Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 5:35 p.m. Upon conclusion of the closed sessions, the Human Resource Committee took the following action: Motion by Commissioner McCloud and seconded by Commissioner Zerkle to forward the resolution for the reappointment of Mr. Perkins to the Charter position of Internal Auditor for fiscal year 2013-2014 to the full Board for consideration. c. General Manager General Manager J. Peter Lark requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner McCloud, seconded by Commissioner Ward to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 5:40 p.m. Motion by Commissioner McCloud, seconded by Commissioner Ward that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:00 p.m. Upon conclusion of the closed sessions, the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner McCloud to forward the resolution for the reappointment of Mr. Lark to the Charter position of General Manager for fiscal year 2013-2014 to the full Board for consideration. Action: Motion Carried Human Resource Committee Chair Tracy Thomas thanked the Commissioners who responded so promptly in getting information to Commissioner Ward so that she could do the work that she did. Mr. Thomas thanked Commissioner Ward for all of her effort and work on this evaluation method. Motion by Commissioner Zerkle seconded by Commissioner McCloud to authorize the Human Resources Committee Chair and Board Chair to finalize the details of the Appointed Employees' contracts for the Board Chair's execution. Regular Board Mtg. May 28,2013 Page 19 of 21 Action: Carried Unanimously Human Resource Committee Chair Thomas stated that tentatively there could be a HR meeting in June. The Resolution for the reappointments will be presented at the July Regular Board meeting and the contracts will be prepared for an effective date of July 1, 2013. Members of the Human Resources Committee were acclamatory of the procedure that was followed during this evaluation process. Adiourn There being no further business, the Human Resource Committee meeting adjourned at 6:45 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS General Manager Lark respectfully asked that the following Resolutions be considered for approval. RESOLUTION#2013-05-01 WHEREAS, the Lansing Board of Water& Light sponsors a 457 Governmental Deferred Compensation Plan and Trust ("457 Plan") for the benefit of its employees; WHEREAS, the Lansing Board of Water& Light desires to continue to maintain the 457 Plan in a form that provides a reasonable and attractive retirement security for its employees; WHEREAS, in the spirit of increasing the attractiveness of the 457 Plan, the Lansing Board of Water & Light desires to make available to plan participants certain Roth options as permitted by the Internal Revenue Code; and BE IT RESOLVED that the Lansing Board of Water& Light hereby amends the 457 Plan and Trust to include the associated Roth amendment. Motion by Commissioner Bossenbery, seconded by Commissioner Price, to approve the resolution for the amendment to 457 Plan and Trust to include the associated Roth amendment. Action: Carried Unanimously RESOLUTION#2013-05-02 Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services Regular Board Mtg. May 28,2013 Page 20 of 21 RESOLVED, THAT THE AMENDMENTS TO THE Rules and Regulations for Electric, Water, Steam and Chilled Water Services be approved as presented, to be effective July 1, 2013. Motion by Commissioner Louney, seconded by Commissioner Price, to approve the resolution for the Rules & Regulations for electric, water, steam and chilled water utility services for FY 2014. Action: Carried Unanimously Due to Tornado Warning the meeting recessed at 5:41 p.m. The meeting reconvened at 5:46 p.m. RESOLUTION #2013-05-03 Fiscal Year 2014 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2014 is hereby approved as presented; and RESOLVED, that the Fiscal Year 2014 Capital Budget is hereby approved as presented; and RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2014-2019 is hereby accepted as presented; and RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings with the Lansing City Clerk's office and the Mayor's office in accordance with the Lansing City Charter regarding the above actions. Motion by Commissioner Price, seconded by Commissioner Bossenbery Price, to approve the resolution for the FY 2014 0& M and Capital Budget. Action: Carried Unanimously UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS There was no Resolution under this section of the Agenda. MANAGER'S REMARKS There were no Manager's Remarks COMMISSIONERS' REMARKS Regular Board Mtg. May 28,2013 Page 21 of 21 EXCUSED ABSENCE On motion by Commissioner Price, seconded by Commissioner Ward to excuse Commissioner McCloud from tonight's meeting. PUBLIC COMMENTS Ron Byrnes, Board of Water & Light Retiree, stated concerns regarding retiree's health care and some of the changes that have taken place. He stated that the retirees are concerned and confused about changes. Mr. Byrnes stated that there has been a meeting scheduled and hopefully some issues to bear will change what is happening. Chair Zerkle stated that Mr. Byrnes General Manager Lark has asked Susan Devon, Assistant General Manager and Chief Financial Officer to put together a meeting, which she will attend, to discuss concerns. Liz Hassler, DeWitt, MI, spoke about issues and concerns with Cofinity Insurance. She said retirees are financially vulnerable and many are physically challenged and some lack the mental stamina needed to deal with the issue that have been presented due to the insurance coverage change. She said the coverage is not the same as what they are used to getting. Jan Simpson, St.Johns, MI, President of the Board of Water & Light Retirees Association, stated that retirees sincerely appreciate the healthcare that they have received through the generosity of the BWL and is confident that the tradition will continue because of the many years of dedicated service that has been collectively given to the BWL, making it the impressive company it is today. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Ward the meeting adjourned at 6:11 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:June 13,2013 Official Minutes(Electronic)filed with Lansing City Clerk:July 24,2013 Zuchowski, Monica From: Denise Griffin <mdg@LBWL.COM> Sent: Wednesday, March 27, 2013 10:49 AM ' To; Clerk, City; Swope, Chris Subject: BWL Regular Board Meeting Approved Minutes of January 22, 2013 Attachments: Board Mtg. 01-22-13-1.pdf Please acknowledge electronic receipt of the Final Approved Board of Water & Light's Regular Board Meeting Minutes of January 22, 2013 adopted at the March 26, 2013 Regular Board meeting. The Preliminary Minutes of the March 26, 2013 Regular Board meeting will be electronically sent within the timeline established by the Board of Water & Light's Rules of Procedure. Please place the attached Approved Minutes on the Lansing City Council Agenda. Thank you, M. Denise Griffin BWL Corporate Secretary M. Denise Griffin Corporate Secretary Lansing Board of Water& Light 1232 Haco Dr. P.O. Box 13007 Lansing, MI 48901 Office: 517-702-6033 Personal Cell: 517-763-8474 Fax: 517-702-6855 E-Mail: ni (-Wbw .corm i MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT January 22, 2013 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle. Absent: Commissioner Cynthia Ward The Corporate Secretary declared a quorum present. Chair Zerkle welcomed Commissioner Mullen Commissioner Mullen led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Thomas, seconded by Commissioner Bossenbery to approve the Regular Board Meeting minutes of November 13, 2012. Action: Carried Unanimously ------------------ PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There was no Public Comment. ------------------ COMMUNICATIONS There were no Communications COMMITTEE REPORTS. COMMITTEE OF THE WHOLE January 8, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, January 8, 2013. Regular Board Mtg. January 22,2013 Page 2 of 20 Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no public comment. Committee of the Whole Chair Louney welcomed new Commissioner Tony (Anthony) Mullen to the Board. Approval of Minutes Motion by Commissioner Bossenbery, Seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of November 13, 2012. Action: Motion Carried Library System General Manager Lark stated that we are moving to a new building and have been working on paperless initiatives. We are fortunate to have started on a paperless electronic document management system and we are really quite far along on it. This project is being spearheaded by Kellee Christensen, Manager of Real Property and Library Systems Planning and her staff. Two people from her staff who have worked very hard on this project are Jennifer Todd and Michael Dwyer, Library Systems Content Analysts. Ms. Todd and Mr. Dwyer presented a Board of Water & Light Library Systems Prezi. Jennifer Todd, reviewed the new Library System that was formed to focus on the reduction of the amount of paper that the Board of Water & Light managed, used and archived. Enterprise Content Management is the technologies, tools, and methods used to capture, manage, store, preserve and deliver content across the company. Goals for the Library System Team: • Develop an electronic library • Transfer existing corporate documents to new electronic library • Provide a centralized repository for documents • Approve accessibility to documents and information • Adhere to the records retention schedule • Create work flow by identifying process improvements between the departments • Develop and provide education and training to employees • Purging and scanning efforts to eliminate and reduce paper The OnBase Tool is designed to increase business efficiencies. This program captures both paper and electronic documents and organizes them by document groups. It uses key words for searching and provides the ability to create work flows. It handles security Regular Board Mtg. January 22,2013 Page 3 of 20 and it also manages record retention policies. On Base has already made an impact at the Board of Water & Light. In 2009 it was implemented into Customer Accounts and Meter Reading and in 2010 the corporate contracts were migrated into OnBase, and is currently being used by our Corporate Secretary. The Adept Tool is designed to manage the complexities of engineering documents. Adept houses live or active drawings. Adept serves as the central point for document access, automatically ensuring users access to the latest versions of drawings, and maintain an audit trail for each document. Adept also uses a library card system to allow documents to be signed in and out as they are worked on. Ms. Todd stated looking to the future we will continue the expansion and integration of the new libraries. Most importantly, we want to ensure that our corporate documents are secure and easily accessible, retained and disposed of according to our records retention policy. Commissioner Ward questioned what happens to paper documents once they have been scanned. Ms. Todd responded that the records retention policy is followed and that some documents are required to be kept in the paper form, otherwise documents are shredded and certificates of destruction are issued. Commissioner Louney asked about the initial start-up cost of implementing this program. In response to Commissioner Louney's question Kellee Christensen reviewed some of the numbers and stated that savings are,already present. Renewables Update George Stojic, Executive Director of Strategic Planning and Development provided an update of the Board's Renewable Energy program. Mr. Stojic stated that the program has changed its focus somewhat over.the past year. The renewable energy goal remains 10% of the Board's retail sales by 2015, and this requirement must be met by the use of Renewable Energy Credits (REC's). About 40% to 45% of the REC's will come from Granger Landfill Gas contracts. However, instead of biomass based production, the LBWL is now looking at wind energy for about 25 to 30% of its required 2015 standard. With the extension of the Production Tax Credit for wind energy, project developers are offering wind energy at historically low prices. The staff is also exploring the purchase of REC's from firms in northern Michigan for much of the remaining 2015 REC requirement. These are private companies that use biomass instead of coal or coal based grid energy to produce their own power. Since they cannot use the REC's as private firms, the REC's are available at attractive prices. The staff also expects to bring Moores Park hydro back into service for additional REC's and will continue securing REC's from two hydro projects in northern lower Michigan. The total REC's available frorn the hydro projects are not substantial. Mr. Stojic also stated the staff will continue looking a development of additional solar projects in the Lansing area. General Manager Lark provided information regarding the announcements that the City of Holland and Consumers Energy are both planning on building a natural gas power plant. Other Regular Board Mtg. January 22, 2013 Page 4 of 20 General Manager Lark introduced and congratulated Susan Warren, Board of Water & Light's Manager of Energy & Econ-Strategies on a news article that appeared in the January 2013 Edition of the Capital Area Women's Lifestyle Magazine that featured her. Ms. Warren stated that the article features the Energy Savings program and all of the wonderful things that we do here at the Board of Water & Light. General Manager Lark stated that Mayor Bernero has announced that the 2013 State of the City presentation will take place at the Board of Water & Light's new REO Town Depot facility on January 28, 2013 at 7:00 p.m. Vice Chair Dennis M. Louney announced on behalf of Board Chair Zerkle that Commissioner Mullen would be assigned and serve as a member of the Finance Committee. Excused Absence None Adiourn On Motion by Commissioner Bossenbery, Seconded by Commissioner McCloud, the meeting adjourned at 6:10 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE January 8, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 6:15 p.m. on Tuesday, January 8, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present was Board Member Anthony McCloud. Absent: None Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of November 13, 2012. Action: Carried Unanimously 2003A Bond Re-Financing Regular Board Mtg. January 22,2013 Page 5 of 20 General Manager Lark stated that the Board of Water & Light has Series A Bonds that is callable July 1, 2013 and that the Board is familiar with the process of Bond Refinancing as we took similar action last year. General Manager Lark further stated that this refunding will save approximately $4.2million on a net present value basis. General Manager Lark respectfully asked that the Committee of the Whole forward the Resolution to the full Board for consideration. Commissioner Ward asked for clarification of some of the language in the authority section of the resolution. Mr. Danhoff of Miller Canfield responded to Commissioner Ward's question and stated that the language.in the Resolution was standard language. Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Excused Absence None Other Finance Chair Bossenbery stated that everyone should have received the audit from Phil Perkins. Also everyone should have received the Financials from General Manager Lark. Adiourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 6:20 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Lark stated that this 2003 A Bond is callable on July 1, 2013 and this Resolution will essentially refinance that Bond, in other words this will allow for the issuance of a new Bond and pay off of the old Bond by July 1, 2013. This will present the Board of Water & Light with a net present value savings of approximately $4.2 million. General Manager Lark respectfully asked the Board for approval of the Resolution. RESOLUTION #2013-01-01 Lansing Board of Water and Light THIRTEENTH SUPPLEMENTAL REVENUE BOND RESOLUTION A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding the Series 2003A Bonds through issuance of up to $28,000,000 of Refunding Bonds; • Chief Financial Officer to sell Refunding Bonds without further resolution; Regular Board Mtg. January 22,2013 Page 6 of 20 Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system (the "System") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, under the terms of the Eighth Supplemental Revenue Bond Resolution adopted August 12, 2003, the Board issued the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A (the "Series 2003A Bonds"); and WHEREAS, the Board's Financial Advisor, Robert W. Baird & Co. Incorporated (the "Financial Advisor"), has advised the Board that it may be able to accomplish a net savings of debt service costs by refunding all or a portion of the outstanding Series 2003A Bonds through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $28,000,000 (the "Refunding Bonds"); and WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Series 2003A Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated sale without further resolution of the Board; and WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, and the Refunding Bonds which are issued pursuant to Section 18(a) of Regular Board Mtg. January 22, 2013 Page 7 of 20 the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989, and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, the Eleventh Supplemental Revenue Bond Resolution adopted on May 10, 2011, the Twelfth Supplemental Revenue Bond Resolution adopted on January 24, 2012, this Thirteenth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, the Refunding Bonds, and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer" means the Board's Assistant General Manager and Chief Financial Officer. (e) "Refunding Bonds" means the refunding bonds issued pursuant to this Thirteenth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 2013A" or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (f) "Reserve Requirement" means the Reserve Requirement established by Section 11 of the Tenth Supplemental Revenue Bond Resolution and described in Section 8 herein. (g) "Series 2003A Escrow Agreement" means the Series 2003A Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Series 2003A Bonds being refunded. (h) "Series 2003A Escrow Fund" means the Series 2003A Escrow Fund established pursuant to the Series 2003A Escrow Agreement to hold the cash and investments necessary provide for payment of principal of and interest on the Series 2003A Bonds being refunded. (i) "Series 2002-2005 Bonds" means: the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A. Regular Board Mtg. January 22, 2013 Page 8 of 20 (j) "Series 2008A Bonds" means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A. (k) "Series 2011A Bonds" rneans the Utility System Revenue Bonds, Series 2011A. (k) "Series 2012A Bonds" means the Utility System Revenue Bonds, Series 2012A. (1) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b) of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Series 2003A Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each Future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Series 2003A Bonds; Refunding Bonds Authorized; Applicable Law. If refunding all or a portion of the Series 2003A Bonds will accomplish a net savings of debt service costs, then in order to pay costs of refunding all or a portion of the Series 2003A Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds, the City, acting by and through the Board, shall borrow the sum of not-to-exceed Twenty-Eight Million Dollars ($28,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor. The Refunding Bonds shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. The remaining period of usefulness of the facilities refinanced with proceeds of the Series 2003A Bonds is estimated to be not less than 14 years. Section 4. Refunding Bond Details. The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2013A" or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds. The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of $5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Refunding Bonds but not-to-exceed 14 annual maturities. The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the tirne of sale of the Regular Board Mtg. January 22,2013 Page 9 of 20 Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2013, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1st and July 1st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Executed blank bonds for registration and issuance to transferees shall be delivered to the Transfer Agent for safekeeping from time to time as necessary. Notwithstanding the foregoing provisions, if the Refunding Bonds are sold through private placement, then the Refunding Bonds may, at the request of the bond purchaser, be issued as a single fully registered, nonconvertible bond of the denomination of the full principal amount thereof payable in principal installments as shown in the bond, and authentication by the Transfer Agent shall not be required for any bond signed by the manual signature of either the Chairperson or the Corporate Secretary of the Board. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds. The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry-only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon Regular Board Mtg. January 22,2013 Page 10 of 20 surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. . Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the Board shall deposit into the Bond Reserve Account any amount necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. The Board may meet the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated AAA by Moody's Investors Service and Standard and Poor's Corporation or any successor to either, and the Chief Financial Officer is hereby authorized to execute an agreement with the provider or issuer of the letter of credit, surety bond, or insurance policy. Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Series 2003A Escrow Fund in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Series 2003A Escrow Fund from the proceeds of sale of the Refunding Bonds cash and investments in Government Obligations or Municipal Obligations not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Series 2003A Escrow Agreement. The Escrow Agent shall hold the Series 2003A Escrow Fund in trust pursuant to the Series 2003A Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Series 2003A Bonds being refunded for redemption as specified in the Series 2003A Escrow Agreement. Either the Chief Financial Officer or the Manager of Finance and Planning is hereby authorized to execute and deliver the Series 2003A Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund, or other fund or account of the Board, to the Series 2003A Escrow Fund, and to purchase, or cause to be purchased, escrow securities consisting of Government Obligations, including, but not limited to, United States Treasury Obligations —State and Local Government Series (SLGS), or Municipal Obligations, for deposit in the Series 2003A Escrow Fund. The Chief Financial Officer is directed to deposit to the Series 2003A Escrow Fund, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be Regular Board Mtg. January 22,2013 Page 11 of 20 sufficient, without reinvestment, to pay the principal of and interest on the Series 2003A Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Series 2003A Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Series 2003A Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Series 2003A Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8. Reserve Requirement. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the Reserve Requirement as defined in Section 1 (ff) of the Bond Resolution as amended and restated on October 24, 1989, which is the lesser of (a) the maximum Aggregate Debt Service Requirement for the then current and any subsequent operating year and (b) ten percent of the aggregate proceeds of all Outstanding Bonds. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, "Reserve Requirement" shall mean the following as established by Section 11 of the Tenth Supplemental Revenue Bond Resolution: the lesser of (i) the maximum annual debt service requirements on the Outstanding Bonds, (ii) 125% of the average annual debt service requirements on the Outstanding Bonds, or (iii) the total of 10% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg. Section 1.148 2(f)(2) or any successor provision thereto as applicable to the Bonds. Section 9. Rate Covenant. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board will comply with the Section 9 of the Bond Resolution, as previously amended by Section 5 of the Second Supplemental Revenue Bond Resolution, and the Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 150% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 12 of the Tenth Supplemental Revenue Bond Resolution. The Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 125% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. Section 10. Additional Bonds Test. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the additional bonds test imposed by Section 6 of the Second Supplemental Revenue Bond Resolution adopted January 11, 1994. After payment or defeasance in full of the Outstanding Regular Board Mtg. January 22, 2013 Page 12 of 20 Series 2002-2005 Bonds, the following provision shall apply as provided in Section 13 of the Tenth Supplemental Revenue Bond Resolution. The right is reserved, in accordance with the provisions of Act 94, to issue additional bonds payable from the Net Revenues of the System which shall be of equal standing and priority of lien on the Net Revenues of the System with the Bonds, but only for the following purposes and under the following terms and conditions: (a) For repairs, extensions, enlargements and improvements to the System or for the purpose of refunding a part of any Outstanding Bonds (unless such partial refunding is done in compliance with (b) below) and paying costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account. Bonds for such purposes shall not be issued pursuant to this subparagraph (a) unless the actual or augmented Net Revenues of the System for the fiscal year of the System ending not more than 15 months prior to the sale of Additional Bonds shall be equal to at least one hundred twenty-five (125%) percent of the maximum Aggregate Debt Service Requirement in any current or future fiscal year on the Outstanding Bonds and on the Additional Bonds then being issued. If the Additional Bonds are to be issued in whole or in part for refunding Outstanding Bonds, the maximum Aggregate Debt Service shall be determined by deducting from the principal and interest requirements for each operating year the annual Aggregate Debt Service Requirement of any Bonds to be refunded from the proceeds of the Additional Bonds. Net Revenues may be augmented as follows for the purposes of this subsection (a): (1) If the System rates, fees or charges shall be increased at or prior to the time of authorizing the Additional Bonds, the Net Revenues may be augmented by an amount which in the opinion of the Board's financial advisor will reflect the effect of the increase had the System's billings during such time been at the increased rates. (2) The actual Net Revenues may be augmented by the estimated increase in Net Revenues which in the opinion of the Board's financial advisor will accrue as a result of new customers which have not been serviced during the fiscal year described in paragraph (a) above or as a result of the acquisition of the repairs, extensions, enlargements and improvements to the System which have been made during or subsequent to the fiscal year described in paragraph (a) above or which will be acquired in whole or in part from the proceeds of the Additional Bonds to be issued. No Additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in subparagraphs (a) or (c) if the Board shall then be in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Additional Bonds may be issued as provided in Section 18 subparagraphs (b) or (c) of the Bond Resolution. Section 11. Covenants. The Board covenants and agrees as follows with the holders of the Refunding Bonds as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest: (a) The Board covenants and agrees with the Registered Owners of the Refunding Bonds that as long as any of the Refunding Bonds remain Regular Board Mtg. January 22, 2013 Page 13 of 20 outstanding and unpaid as to either principal or interest, the Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds pursuant to the Internal Revenue Code in such a manner as to cause the Refunding Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exemption of interest on the Refunding Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Tax Compliance Certificate to be delivered by the Board with the Refunding Bonds. (b) The Board will not issue additional bonds of prior standing to the Refunding Bonds. Section 12. Bond Form. The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND No. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2013A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede & Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City"), acting through the governing body of the Lansing Board of Water and Light (the "Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date] and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of [transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. The Net Regular Board Mtg. January 22,2013 Page 14 of 20 Revenues of the System are irrevocably pledged for the prompt payment of principal and interest on this bond. The "System" is defined as the water supply and electric utility systems including the steam heat and chilled water distribution systems. The "Net Revenues" are the revenues received by the Board from the operations of the System after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System. A statutory lien on the Net Revenues of the System has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, [Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A,] Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A, Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A, Utility System Revenue Bonds, Series 2011A, and Utility System Revenue Bonds, Series 2012A. The pledge of Net Revenues and the statutory lien are senior in priority of lien to the Water Supply, Steam, Chilled Water and Electric Utility System Subordinate Lien Revenue Refunding Bond, Series 2009A (Federally Taxable) and any additional junior lien bonds issued pursuant to the Bond Resolution (defined below). This bond is one of a series of bonds of even Date of Original Issue aggregating the principal sum of $[principal amount]. This bond is issued for the purpose of refunding certain outstanding bonds pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Thirteenth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] (collectively, the "Bond Resolution"). This bond is issued under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"). For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] Regular Board Mtg. January 22,2013 Page 15 of 20 This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity.shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or (ii) to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law. This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By Sandra Zerkle Chairperson (City Seal) Regular Board Mtg. January 22,2013 Page 16 of 20 Countersigned: By M. Denise Griffin Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] Section 13. Financial Advisor. The Board hereby requests that Robert W. Baird & Co. Incorporated continue to serve the Board as Financial Advisor for the Refunding Bonds. Section 14. Bond Counsel. The Board hereby requests that Miller, Canfield, Paddock and Stone, P.L.C. continue to serve the Board as bond counsel for the Refunding Bonds. The Board recognizes that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds, and approves them notwithstanding the potential concurrent representation of any other participant in the bond financing process in any unrelated matters. Section 15. Negotiated Sale of Bonds. Due to the volatile nature of the bond market, it is hereby determined to be in the best interest of the Board to sell the Refunding Bonds by negotiated sale in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and to take advantage of the most favorable market for purchase of securities to be escrowed for payment of the Series 2003A Bonds to be refunded. The Chief Financial Officer is hereby authorized, upon the advice of the Financial Advisor, to select a senior managing underwriter for the Refunding Bonds, or, in the alternative, to retain a placement agent to assist the Board in arranging the sale of the Refunding Bonds to a financial institution or other experienced investor. If the Refunding Bonds are sold to an underwriter, the Board reserves the right to name additional co-managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor. By adoption of this resolution the Board assumes no obligations or liability to the underwriter or placement agent for any loss or damage that may result to the underwriter or placement agent from the adoption of this resolution, and all costs and expenses incurred by the underwriter or placement agent in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. Section 16. Bond Ratings and Bond Insurance. The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating Regular Board Mtg. January 22,2013 Page 17 of 20 to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. Section 17. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement or private placement memorandum describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement or private placement memorandum. Section 18. Continuing Disclosure. The Chief Financial Officer is hereby authorized to execute and deliver, prior to delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 19. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor, to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as .term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement or private placement memorandum. The maximum interest rate on the Refunding Bonds shall not exceed 5.00%. The first maturity of principal on the Refunding Bonds shall occur no earlier than 2013, and the final date of maturity shall occur no later than 2026. The purchase price for the Refunding Bonds, exclusive of any original issue discount, shall not be less than 98.00% of the principal amount of the Refunding Bonds. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. Section 20. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Series 2003A Bonds being refunded as they become due or upon call for redemption. Section 21. Other Actions. In the event that the Chief Financial Officer is not available at the time that it becomes necessary to take actions directed or authorized under this resolution, then the Manager of Finance and Planning, the General Manager, or a person designated by the Chief Financial Officer or the General Manager is authorized to take the actions delegated to the Chief Financial Officer by this resolution. The officers, administrators, agents and attorneys of the Board are authorized and Regular Board Mtg. January 22,2013 Page 18 of 20 directed to take all other actions necessary and convenient to facilitate issuance, sale and delivery of the Refunding Bonds, and to execute and deliver all other agreements, documents and certificates and to take all other actions necessary or convenient in accordance with this resolution, and to pay costs of issuance including but not limited to rating agency fees, bond insurance prerniums, transfer agent fees, escrow agent fees, verification agent fees, financial advisor fees, placement agent fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. Section 22. Applicability of the Outstanding Bond Resolutions. Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 23. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 24. Severability and Paragraph Headings. If any section, paragraph, clause or provision of this resolution shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this resolution. The paragraph headings in this resolution are furnished for convenience of reference only and shall not be considered to be part of this resolution. Section 25. Publication and Recordation. In accordance with the provisions of Section 6 of Act 94, this resolution shall be published once in full in either the City Pulse or the Lansing State Journal, either of which is a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and shall be recorded in the minutes of the Board and such recording authenticated by the signatures of the Chairperson and Corporate Secretary of the Board. Section 26. Effective Date. This resolution is hereby determined to be immediately necessary for the preservation of the public peace, property, health and safety of the City and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on January 22, 2013, at 5:30 p.m., prevailing Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267. We further certify that the following Commissioners were present at said meeting: Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle and that the following Commissioners were absent: Cynthia Ward. We further certify that Commissioner Price moved adoption of said resolution, and that said motion was supported by Commissioner McCloud. We further certify that the following Commissioners voted for adoption of said resolution: Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle and that the following Commissioners voted against adoption of said resolution: None. Regular Board Mtg. January 22,2013 Page 19 of 20 We further certify that said resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary. Sandra Zerkle M. Denise Griffin Chairperson Corporate Secretary UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS Resolution #2013-01-01 Adopted under Manager's Recommendation Agenda Section MANAGER'S REMARKS General Manager Lark: Reminded the Board of Commissioners that Mayor Bernero's State of the City presentation will be delivered next Monday, January 28, 2013 at 7:00 p.m. and will be held at the Board of Water & Light's new REO Town DePot. ® Acknowledge and congratulated Calvin Jones, Board of Water & Light's Director of Public Relations and Diversity on being named the Chairperson of the Board of Directors of the Lansing Economic Development Corporation, the Lansing Brownfield Redevelopment Authority, and the Lansing Tax Increment Finance Authority. Announced that the plans are in the works for the "Pennies for Power" "Dancing with the Starz" fundraising event. This year's event will be held April 18, 2013, from 5:00 p.m. to 9:00 p.m. at the Radisson Hotel downtown Lansing. ® Announced that as part of the Board of Water & Light's paperless initiative the company had its first paperless payroll, meaning that there was no use of any paper and everything was done through direct deposit or pay cards similar to how Social Security operates its payroll. COMMISSIONERS' REMARKS Chair Zerkle congratulated Calvin Jones on his appointment as the Chair to three different Economic Development Organizations. Chair Zerkle also acknowledge General Manager Lark and his Administration for the last Finance Report. Commissioner Tracy Thomas wished everyone a Happy New Year. He congratulated Calvin Jones on his appointment to the different Boards/Organizations, Steve Serkaian for keeping the Commissioners well informed and General Manager Lark for being a member of the Martin Luther King Jr. Commission Committee and representing the Board of Water & Light positively. Regular Board Mtg. January 22,2013 Page 20 of 20 Vice Chair Louney acknowledged Calvin Jones on his appointments to the different Boards/Organizations. PUBLIC COMMENTS There was Public Comments. EXCUSED ABSENCE On motion by Commissioner Thomas, seconded by Commissioner Bossenbery to excuse Commissioner Ward from tonight's meeting. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Thomas the meeting adjourned at 5:43 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:January 31,2013 Final Approved Minutes(Electronic)filed with the Lansing City Clerk:March 27,2013 MINUTES OF THE BOARD OF COMMISSIONERS' MEETI RP, LANSING BOARD OF WATER AND LIGHT January 22, 2013 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle. Absent: Commissioner Cynthia Ward The Corporate Secretary declared a quorum present. Chair Zerkle welcomed Commissioner Mullen Commissioner Mullen led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Thomas, seconded by Commissioner Bossenbery to approve the Regular Board Meeting minutes of November 13, 2012. Action: Carried Unanimously ------------------ PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There was no Public Comment. ------------------ COMMUNICATIONS There were no Communications COMMITTEE REPORTS COMMITTEE OF THE WHOLE January 8, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, January 8, 2013. Regular Board Mtg. January 22,2013 Page 2 of 20 Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no public comment. Committee of the Whole Chair Louney welcomed new Commissioner Tony (Anthony) Mullen to the Board. Approval of Minutes Motion by Commissioner Bossenbery, Seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of November 13, 2012. Action: Motion Carried Library Svstem General Manager Lark stated that we are moving to a new building and have been working on paperless initiatives. We are fortunate to have started on a paperless electronic document management system and we are really quite far along on it. This project is being spearheaded by Kellee Christensen, Manager of Real Property and Library Systems Planning and her staff. Two people from her staff who have worked very hard on this project are Jennifer Todd and Michael Dwyer, Library Systems Content Analysts. Ms. Todd and Mr. Dwyer presented a Board of Water & Light Library Systems Prezi. Jennifer Todd, reviewed the new Library System that was formed to focus on the reduction of the amount of paper that the Board of Water & Light managed, used and archived. Enterprise Content Management is the technologies, tools, and methods used to capture, manage, store, preserve and deliver content across the company. Goals for the Library System Team: • Develop an electronic library • Transfer existing corporate documents to new electronic library • Provide a centralized repository for documents • Approve accessibility to documents and information • Adhere to the records retention schedule • Create work flow by identifying process improvements between the departments • Develop and provide education and training to employees • Purging and scanning efforts to eliminate and reduce paper The OnBase Tool is designed to increase business efficiencies. This program captures both paper and electronic documents and organizes them by document groups. It uses key words for searching and provides the ability to create work flows. It handles security Regular Board Mtg. January 22, 2013 Page 3 of 20 and it also manages record retention policies. OnBase has already made an impact at the Board of Water & Light. In 2009 it was implemented into Customer Accounts and Meter Reading and in 2010 the corporate contracts were migrated into OnBase, and is currently being used by our Corporate Secretary. The Adept Tool is designed to manage the complexities of engineering documents. Adept houses live or active drawings. Adept serves as the central point for document access, automatically ensuring users access to the latest versions of drawings, and maintain an audit trail for each document. Adept also uses a library card system to allow documents to be signed in and out as they are worked on. Ms. Todd stated looking to the future we will continue the expansion and integration of the new libraries. Most importantly, we want to ensure that our corporate documents are secure and easily accessible, retained and disposed of according to our records retention policy. Commissioner Ward questioned what happens to paper documents once they have been scanned. Ms. Todd responded that the records retention policy is followed and that some documents are required to be kept in the paper form, otherwise documents are shredded and certificates of destruction are issued. Commissioner Louney asked about the initial start-up cost of implementing this program. In response to Commissioner Louney's question Kellee Christensen reviewed some of the numbers and stated that savings are already present. Renewables Update George Stojic, Executive Director of Strategic Planning and Development provided an update of the Board's Renewable Energy program. Mr. Stojic stated that the program has changed its focus somewhat over the past year. The renewable energy goal remains 10% of the Board's retail sales by 2015, and this requirement must be met by the use of Renewable Energy Credits (REC's). About 40% to 45% of the REC's will come from Granger Landfill Gas contracts. However, instead of biomass based production, the LBWL is now looking at wind energy for about 25 to 30% of its required 2015 standard. With the extension of the Production Tax Credit for wind energy, project developers are offering wind energy at historically low prices. The staff is also exploring the purchase of REC's from firms in northern Michigan for much of the remaining 2015 REC requirement. These are private companies that use biomass instead of coal or coal based grid energy to produce their own power. Since they cannot use the REC's as private firms, the REC's are available at attractive prices. The staff also expects to bring Moores Park hydro back into service for additional REC's and will continue securing REC's from two hydro projects in northern lower Michigan. The total REC's available from the hydro projects are not substantial. Mr. Stojic also stated the staff will continue looking a development of additional solar projects in the Lansing area. General Manager Lark provided information regarding the announcements that the City of Holland and Consumers Energy are both planning on building a natural gas power plant. Other Regular Board Mtg. January 22,2013 Page 4 of 20 General Manager Lark introduced and congratulated Susan Warren, Board of Water & Light's Manager of Energy & Econ-Strategies on a news article that appeared in the January 2013 Edition of the Capital Area Women's Lifestyle Magazine that featured her. Ms. Warren stated that the article features the Energy Savings program and all of the wonderful things that we do here at the Board of Water & Light. General Manager Lark stated that Mayor Bernero has announced that the 2013 State of the City presentation will take place at the Board of Water & Light's new REO Town Depot facility on January 28, 2013 at 7:00 p.m. Vice Chair Dennis M. Louney announced on behalf of Board Chair Zerkle that Commissioner Mullen would be assigned and serve as a member of the Finance Committee. Excused Absence None Adiourn On Motion by Commissioner Bossenbery, Seconded by Commissioner McCloud, the meeting adjourned at 6:10 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE January 8, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 6:15 p.m. on Tuesday, January 8, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present was Board Member Anthony McCloud. Absent: None Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of November 13, 2012. Action: Carried Unanimously 2003A Bond Re-Financing Regular Board Mtg. January 22, 2013 Page 5 of 20 General Manager Lark stated that the Board of Water & Light has Series A Bonds that is callable July 1, 2013 and that the Board is familiar with the process of Bond Refinancing as we took similar action last year. General Manager Lark further stated that this refunding will save approximately $4.2million on a net present value basis. General Manager Lark respectfully asked that the Committee of the Whole forward the Resolution to the full Board for consideration. Commissioner Ward asked for clarification of some of the language in the authority section of the resolution. Mr. Danhoff of Miller Canfield responded to Commissioner Ward's question and stated that the language in the Resolution was standard language. Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Excused Absence None Other Finance Chair Bossenbery stated that everyone should have received the audit from Phil Perkins. Also everyone should have received the Financials from General Manager Lark. Adiourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 6:20 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Lark stated that this 2003 A Bond is callable on July 1, 2013 and this Resolution will essentially refinance that Bond, in other words this will allow for the issuance of a new Bond and pay off of the old Bond by July 1, 2013. This will present the Board of Water & Light with a net present value savings of approximately $4.2 million. General Manager Lark respectfully asked the Board for approval of the Resolution. RESOLUTION #2013-01-01 Lansing Board of Water and Light THIRTEENTH SUPPLEMENTAL REVENUE BOND RESOLUTION A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding the Series 2003A Bonds through issuance of up to $28,000,000 of Refunding Bonds; • Chief Financial Officer to sell Refunding Bonds without further resolution; Regular Board Mtg. January 22,2013 Page 6 of 20 6 Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility systern (the "Systern") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, under the terms of the Eighth Supplemental Revenue Bond Resolution adopted August 12, 2003, the Board issued the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A (the "Series 2003A Bonds"); and WHEREAS, the Board's Financial Advisor, Robert W. Baird & Co. Incorporated (the "Financial Advisor"), has advised the Board that it may be able to accomplish a net savings of debt service costs by refunding all or a portion of the outstanding Series 2003A Bonds through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $28,000,000 (the "Refunding Bonds"); and WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Series 2003A Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated sale without further resolution of the Board; and WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, and the Refunding Bonds which are issued pursuant to Section 18(a) of Regular Board Mtg. January 22,2013 Page 7 of 20 the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989, and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, the Eleventh Supplemental Revenue Bond Resolution adopted on May 10, 2011, the Twelfth Supplemental Revenue Bond Resolution adopted on January 24, 2012, this Thirteenth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, the Refunding Bonds, and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer" means the Board's Assistant General Manager and Chief Financial Officer. (e) "Refunding Bonds" means the refunding bonds issued pursuant to this Thirteenth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 2013A" or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (f) "Reserve Requirement" means the Reserve Requirement established by Section 11 of the Tenth Supplemental Revenue Bond Resolution and described in Section 8 herein. (g) "Series 2003A Escrow Agreement" means the Series 2003A Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Series 2003A Bonds being refunded. (h) "Series 2003A Escrow Fund" means the Series 2003A Escrow Fund established pursuant to the Series 2003A Escrow Agreement to hold the cash and investments necessary provide for payment of principal of and interest on the Series 2003A Bonds being refunded. (i) "Series 2002-2005 Bonds" means: the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 20028, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A. Regular Board Mtg. January 22,2013 Page 8 of 20 (j) "Series 2008A Bonds" means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds,.Series 2008A. (k) "Series 2011A Bonds" means the Utility System Revenue Bonds, Series 2011A. (k) "Series 2012A Bonds" means the Utility System Revenue Bonds, Series 2012A. (1) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b) of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Series 2003A Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Series 2003A Bonds; Refunding Bonds Authorized; Applicable Law. If refunding all or a portion of the Series 2003A Bonds will accomplish a net savings of debt service costs, then in order to pay costs of refunding all or a portion of the Series 2003A Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds, the City, acting by and through the Board, shall borrow the sum of not-to-exceed Twenty-Eight Million Dollars ($28,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor. The Refunding Bonds shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. The remaining period of usefulness of the facilities refinanced with proceeds of the Series 2003A Bonds is estimated to be not less than 14 years. Section 4. Refunding Bond Details. The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2013A" or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds. The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of $5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Refunding Bonds but not-to-exceed 14 annual maturities. The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Regular Board Mtg. January 22,2013 Page 9 of 20 Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2013, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1st and July 1st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Executed blank bonds for registration and issuance to transferees shall be delivered to the Transfer Agent for safekeeping from time to time as necessary. Notwithstanding the foregoing provisions, if the Refunding Bonds are sold through private placement, then the Refunding Bonds may, at the request of the bond purchaser, be issued as a single fully registered, nonconvertible bond of the denomination of the full principal amount thereof payable in principal installments as shown in the bond, and authentication by the Transfer Agent shall not be required for any bond signed by the manual signature of either the Chairperson or the Corporate Secretary of the Board. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds. The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry-only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon Regular Board Mtg. January 22,2013 Page 10 of 20 surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the.Board shall deposit into the Bond Reserve Account any amount necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. The Board may meet the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated AAA by Moody's Investors Service and Standard and Poor's Corporation or any successor to either, and the Chief Financial Officer is hereby authorized to execute an agreement with the provider or issuer of the letter of credit, surety bond, or insurance policy. Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Series 2003A Escrow Fund in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Series 2003A Escrow Fund from the proceeds of sale of the Refunding Bonds cash and investments in Government Obligations or Municipal Obligations not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Series 2003A Escrow Agreement. The Escrow Agent shall hold the Series 2003A Escrow Fund in trust pursuant to the Series 2003A Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Series 2003A Bonds being refunded for redemption as specified in the Series 2003A Escrow Agreement. Either the Chief Financial Officer or the Manager of Finance and Planning is hereby authorized to execute and deliver the Series 2003A .Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund, or other fund or account of the Board, to the Series 2003A Escrow Fund, and to purchase, or cause to be purchased, escrow securities consisting of Government Obligations, including, but not limited to, United States Treasury Obligations —State and Local Government Series (SLGS), or Municipal Obligations, for deposit in the Series 2003A Escrow Fund. The Chief Financial Officer is directed to deposit to the Series 2003A Escrow Fund, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be Regular Board Mtg. January 22, 2013 Page 11 of 20 sufficient, without reinvestment, to pay the principal of and interest on the Series 2003A Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Series 2003A Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Series 2003A Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Series 2003A Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8. Reserve Requirement. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the Reserve Requirement as defined in Section 1 (ff) of the Bond Resolution as amended and restated on October 24, 1989, which is the lesser of (a) the maximum Aggregate Debt Service Requirement for the then current and any subsequent operating year and (b) ten percent of the aggregate proceeds of all Outstanding Bonds. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, "Reserve Requirement" shall mean the following as established by Section 11 of the Tenth Supplemental Revenue Bond Resolution: the lesser of (i) the maximum annual debt service requirements on the Outstanding Bonds, (ii) 125% of the average annual debt service requirements on the Outstanding Bonds, or (iii) the total of 10% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg. Section 1.148 2(f)(2) or any successor provision thereto as applicable to the Bonds. Section 9. Rate Covenant. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board will comply with the Section 9 of the Bond Resolution, as previously amended by Section 5 of the Second Supplemental Revenue Bond Resolution, and the Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 150% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 12 of the Tenth Supplemental Revenue Bond Resolution. The Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 125% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. Section 10. Additional Bonds Test. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the additional bonds test imposed by Section 6 of the Second Supplemental Revenue Bond Resolution adopted January 11, 1994. After payment or defeasance in full of the Outstanding Regular Board Mtg. January 22,2013 Page 12 of 20 Series 2002-2005 Bonds, the following provision shall apply as provided in Section 13 of the Tenth Supplemental Revenue Bond Resolution. The right is reserved, in accordance with the provisions of Act 94, to issue additional bonds payable from the Net Revenues of the System which shall be of equal standing and priority of lien on the Net Revenues of the System with the Bonds, but only for the following purposes and under the following terms and conditions: (a) For repairs, extensions, enlargements and improvements to the System or for the purpose of refunding a part of any Outstanding Bonds (unless such partial refunding is done in compliance with (b) below) and paying costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account. Bonds for such purposes shall not be issued pursuant to this subparagraph (a) unless the actual or augmented Net Revenues of the System for the fiscal year of the System ending not more than 15 months prior to the sale of Additional Bonds shall be equal to at least one hundred twenty-five (125%) percent of the maximum Aggregate Debt Service Requirement in any current or future fiscal year on the Outstanding Bonds and on the Additional Bonds then being issued. If the Additional Bonds are to be issued in whole or in part for refunding Outstanding Bonds, the maximum Aggregate Debt Service shall be determined by deducting from the principal and interest requirements for each operating year the annual Aggregate Debt Service Requirement of any Bonds to be refunded from the proceeds of the Additional Bonds. Net Revenues may be augmented as follows for the purposes of this subsection (a): (1) If the System rates, fees or charges shall be increased at or prior to the time of authorizing the Additional Bonds, the Net Revenues may be augmented by an amount which in the opinion of the Board's financial advisor will reflect the effect of the increase had the System's billings during such time been at the increased rates. (2) The actual Net Revenues may be augmented by the estimated increase in Net Revenues which in the opinion of the Board's financial advisor will accrue as a result of new customers which have not been serviced during the fiscal year described in paragraph (a) above or as a result of the acquisition of the repairs, extensions, enlargements and improvements to the System which have been made during or subsequent to the fiscal year described in paragraph (a) above or which will be acquired in whole or in part from the proceeds of the Additional Bonds to be issued. No Additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in subparagraphs (a) or (c) if the Board shall then be in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Additional Bonds may be issued as provided in Section 18 subparagraphs (b) or (c) of the Bond Resolution. Section 11. Covenants. The Board covenants and agrees as follows with the holders of the Refunding Bonds as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest: (a) The Board covenants and agrees with the Registered Owners of the Refunding Bonds that as long as any of the Refunding Bonds remain Regular Board Mtg. January 22,2013 Page 13 of 20 outstanding and unpaid as to either principal or interest, the Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds pursuant to the Internal Revenue Code in such a manner as to cause the Refunding Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exemption of interest on the Refunding Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Tax Compliance Certificate to be delivered by the Board with the Refunding Bonds. (b) The Board will not issue additional bonds of prior standing to the Refunding Bonds. Section 12. Bond Form. The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND No. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2013A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede & Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City"), acting through the governing body of the Lansing Board of Water and Light (the "Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date] and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of [transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. The Net Regular Board Mtg. January 22, 2013 Page 14 of 20 Revenues of the System are irrevocably pledged for the prompt payment of principal and interest on this bond. The "System" is defined as the water supply and electric utility systems including the steam heat and chilled water distribution systems. The "Net Revenues" are the revenues received by the Board from the operations of the System after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System. A statutory lien on the Net Revenues of the System has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, [Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A,] Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A, Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A, Utility System Revenue Bonds, Series 2011A, and Utility System Revenue Bonds, Series 2012A. The pledge of Net Revenues and the statutory lien are senior in priority of lien to the Water Supply, Steam, Chilled Water and Electric Utility System Subordinate Lien Revenue Refunding Bond, Series 2009A (Federally Taxable) and any additional junior lien bonds issued pursuant to the Bond Resolution (defined below). This bond is one of a series of bonds of even Date of Original Issue aggregating the principal sum of $[principal amount]. This bond is issued for the purpose of refunding certain outstanding bonds pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Thirteenth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] (collectively, the "Bond Resolution"). This bond is issued under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"). For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] Regular Board Mtg. January 22,2013 Page 15 of 20 This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing,.or (ii) to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law. This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By Sandra Zerkle Chairperson (City Seal) Regular Board Mtg. January 22,2013 Page 16 of 20 Countersigned: By M. Denise Griffin Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] Section 13. Financial Advisor. The Board hereby requests that Robert W. Baird & Co. Incorporated continue to serve the Board as Financial Advisor for the Refunding Bonds. Section 14. Bond Counsel. The Board hereby requests that Miller, Canfield, Paddock and Stone, P.L.C. continue to serve the Board as bond counsel for the Refunding Bonds. The Board recognizes that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds, and approves them notwithstanding the potential concurrent representation of any other participant in the bond financing process in any unrelated matters. Section 15. Negotiated Sale of Bonds. Due to the volatile nature of the bond market, it is hereby determined to be in the best interest of the Board to sell the Refunding Bonds by negotiated sale in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and to take advantage of the most favorable market for purchase of securities to be escrowed for payment of the Series 2003A Bonds to be refunded. The Chief Financial Officer is hereby authorized, upon the advice of the Financial Advisor, to select a senior managing underwriter for the Refunding Bonds, or, in the alternative, to retain a placement agent to assist the Board in arranging the sale of the Refunding Bonds to a financial institution or other experienced investor. If the Refunding Bonds are sold to an underwriter, the Board reserves the right to name additional co-managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor. By adoption of this resolution the Board assumes no obligations or liability to the underwriter or placement agent for any loss or damage that may result to the underwriter or placement agent from the adoption of this resolution, and all costs and expenses incurred by the underwriter or placement agent in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. Section 16. Bond Ratings and Bond Insurance, The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating Regular Board Mtg. January 22, 2013 Page 17 of 20 to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. Section 17. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement or private placement memorandum describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement or private placement memorandum. Section 18. Continuing Disclosure. The Chief Financial Officer is hereby authorized to execute and deliver, prior to`delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 19. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor, to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement or private placement memorandum. The maximum interest rate on the Refunding Bonds shall not exceed 5.00%. The first maturity of principal on the Refunding Bonds shall occur no earlier than 2013, and the final date of maturity shall occur no later than 2026. The purchase price for the Refunding Bonds, exclusive of any original issue discount, shall not be less than 98.00% of the principal amount of the Refunding Bonds. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. Section 20. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Series 2003A Bonds being refunded as they become due or upon call for redemption. Section 21. Other Actions. In the event that the Chief Financial Officer is not available at the time that it becomes necessary to take actions directed or authorized under this resolution, then the Manager of Finance and Planning, the General Manager, or a person designated by the Chief Financial Officer or the General Manager is authorized to take the actions delegated to the Chief Financial Officer by this resolution. The officers, administrators, agents and attorneys of the Board are authorized and Regular Board Mtg. January 22,2013 Page 18 of 20 directed to take all other actions necessary and convenient to facilitate issuance, sale and delivery of the Refunding Bonds, and to execute and deliver all other agreements, documents and certificates and to take all other actions necessary or convenient in accordance with this resolution, and to pay costs of issuance including but not limited to rating agency fees, bond insurance premiums, transfer agent fees, escrow agent fees, verification agent fees, financial advisor fees, placement agent fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. Section 22. Applicability of the Outstanding Bond Resolutions. Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 23. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 24. Severability and Paragraph Headings. If any section, paragraph, clause or provision of this resolution shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this resolution. The paragraph headings in this resolution are furnished for convenience of reference only and shall not be considered to be part of this resolution. Section 25. Publication and Recordation. In accordance with the provisions of Section 6 of Act 94, this resolution shall be published once in full in either the City Pulse or the Lansing State Journal, either of which is a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and shall be recorded in the minutes of the Board and such recording authenticated by the signatures of the Chairperson and Corporate Secretary of the Board. Section 26. Effective Date. This resolution is hereby determined to be immediately necessary for the preservation of the public peace, property, health and safety of the City and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on January 22, 2013, at 5:30 p.m., prevailing Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267. We further certify that the following Commissioners were present at said meeting: Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle and that the following Commissioners were absent: Cynthia Ward. We further certify that Commissioner Price moved adoption of said resolution, and that said motion was supported by Commissioner McCloud. We further certify that the following Commissioners voted for adoption of said resolution: Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle and that the following Commissioners voted against adoption of said resolution: None. Regular Board Mtg. January 22,2013 Page 19 of 20 We further certify that said resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary. Sandra Zerkle M. Denise Griffin Chairperson Corporate Secretary UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS Resolution #2013-01-01 Adopted under Manager's Recommendation Agenda Section MANAGER'S REMARKS General Manager Lark: 4 Reminded the Board of Commissioners that Mayor Bernero's State of the City presentation will be delivered next Monday, January 28, 2013 at 7:00 p.m. and will be held at the Board of Water & Light's new REO Town DePot. 9F Acknowledge and congratulated Calvin Jones, Board of Water & Light's Director of Public Relations and Diversity on being named the Chairperson of the Board of Directors of the Lansing Economic Development Corporation, the Lansing Brownfield Redevelopment Authority, and the Lansing Tax Increment Finance Authority. Announced that the plans are in the works for the "Pennies for Power" "Dancing with the Starz" fundraising event. This year's event will be held April 18, 2013, from 5:00 p.m. to 9:00 p.m. at the Radisson Hotel downtown Lansing. Announced that as part of the Board of Water & Light's paperless initiative the company had its first paperless payroll, meaning that there was no use of any paper and everything was done through direct deposit or pay cards similar to how Social Security operates its payroll. COMMISSIONERS' REMARKS Chair Zerkle congratulated Calvin Jones on his appointment as the Chair to three different Economic Development Organizations. Chair Zerkle also acknowledge General Manager Lark and his Administration for the last Finance Report. Commissioner Tracy Thomas wished everyone a Happy New Year. He congratulated Calvin Jones on his appointment to the different Boards/Organizations, Steve Serkaian for keeping the Commissioners well informed and General Manager Lark for being a mernber of the Martin Luther King Jr. Commission Committee and representing the Board of Water & Light positively. Regular Board Mtg. January 22, 2013 Page 20 of 20 Vice Chair Louney acknowledged Calvin Jones on his appointments to the different Boards/Organizations. PUBLIC COMMENTS There was Public Comments. EXCUSED ABSENCE On motion by Commissioner Thomas, seconded by Commissioner Bossenbery to excuse Commissioner Ward from tonight's meeting. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Thomas the meeting adjourned at 5:43 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:January 31,2013 Final Approved Minutes(Electronic)filed with the Lansing City Clerk:March 27,2013 UNOFFICIAL MINUTES To be approved by the Board of Commissioners on 3-26-73 r- MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT L' ^ rail r, you January 22,2013 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle. Absent: Commissioner Cynthia Ward The Corporate Secretary declared a quorum present. Chair Zerkle welcomed Commissioner Mullen Commissioner Mullen led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Thomas, seconded by Commissioner Bossenbery to approve the Regular Board Meeting minutes of November 13, 2012. Action: Carried Unanimously ------------------ PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There was no Public Comment. ------------------ COMMUNICATIONS There were no Communications COMMITTEE REPORTS COMMITTEE OF THE WHOLE January 8, 2013 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 5:30 p.m. on Tuesday, January 8, 2013. Regular Board Mtg. January 22,2013 Page 2 of 20 Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony Mullen, David Price,Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no public comment. Committee of the Whole Chair Louney welcomed new Commissioner Tony(Anthony) Mullen to the Board. Approval of Minutes Motion by Commissioner Bossenbery, Seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of November 13, 2012. Action: Motion Carried Library System General Manager Lark stated that we are moving to a new building and have been working on paperless initiatives. We are fortunate to have started on a paperless electronic document management system and we are really quite far along on it. This project is being spearheaded by Kellee Christensen, Manager of Real Property and Library Systems Planning and her staff. Two people from her staff who have worked very hard on this project are Jennifer Todd and Michael Dwyer, Library Systems Content Analysts. Ms. Todd and Mr. Dwyer presented a Board of Water & Light Library Systems Prezi. Jennifer Todd, reviewed the new Library System that was formed to focus on the reduction of the amount of paper that the Board of Water& Light managed, used and archived. Enterprise Content Management is the technologies,tools, and methods used to capture, manage, store, preserve and deliver content across the company. Goals for the Library System Team: • Develop an electronic library • Transfer existing corporate documents to new electronic library • Provide a centralized repository for documents • Approve accessibility to documents and information • Adhere to the records retention schedule • Create work flow by identifying process improvements between the departments • Develop and provide education and training to employees • Purging and scanning efforts to eliminate and reduce paper The OnBase Tool is designed to increase business efficiencies. This program captures both paper and electronic documents and organizes them by document groups. It uses Regular Board Mtg. January 22,2013 Page 3 of 20 key words for searching and provides the ability to create work flows. It handles security and it also manages record retention policies. OnBase has already made an impact at the Board of Water& Light. In 2009 it was implemented into Customer Accounts and Meter Reading and in 2010 the corporate contracts were migrated into OnBase, and is currently being used by our Corporate Secretary. The Adept Tool is designed to manage the complexities of engineering documents. Adept houses live or active drawings. Adept serves as the central point for document access, automatically ensuring users access to the latest versions of drawings, and maintain an audit trail for each document. Adept also uses a library card system to allow documents to be signed in and out as they are worked on. Ms.Todd stated looking to the future we will continue the expansion and integration of the new libraries. Most importantly, we want to ensure that our corporate documents are secure and easily accessible, retained and disposed of according to our records retention policy. Commissioner Ward questioned what happens to paper documents once they have been scanned. Ms. Todd responded that the records retention policy is followed and that some documents are required to be kept in the paper form, otherwise documents are shredded and certificates of destruction are issued. Commissioner Louney asked about the initial start-up cost of implementing this program. In response to Commissioner Louney's question Kellee Christensen reviewed some of the numbers and stated that savings are already present. Renewables Update George Stojic, Executive Director of Strategic Planning and Development provided an update of the Board's Renewable Energy program. Mr. Stojic stated that the program has changed its focus somewhat over the past year. The renewable energy goal remains 10% of the Board's retail sales by 2015, and this requirement must be met by the use of Renewable Energy Credits (REC's). About 40% to 45%of the REC's will come from Granger Landfill Gas contracts. However, instead of biomass based production, the LBWL is now looking at wind energy for about 25 to 30% of its required 2015 standard. With the extension of the Production Tax Credit for wind energy, project developers are offering wind energy at historically low prices. The staff is also exploring the purchase of REC's from firms in northern Michigan for much of the remaining 2015 REC requirement. These are private companies that use biomass instead of coal or coal based grid energy to produce their own power. Since they cannot use the REC's as private firms, the REC's are available at attractive prices. The staff also expects to bring Moores Park hydro back into service for additional REC's and will continue securing REC's from two hydro projects in northern lower Michigan. The total REC's available from the hydro projects are not substantial. Mr. Stojic also stated the staff will continue looking a development of additional solar projects in the Lansing area. General Manager Lark provided information regarding the announcements that the City of Holland and Consumers Energy are both planning on building a natural gas power plant. Regular Board Mtg. January 22,2013 Page 4 of 20 Other General Manager Lark introduced and congratulated Susan Warren, Board of Water & Light's Manager of Energy & Econ-Strategies on a news article that appeared in the January 2013 Edition of the Capital Area Women's Lifestyle Magazine that featured her. Ms. Warren stated that the article features the Energy Savings program and all of the wonderful things that we do here at the Board of Water& Light. General Manager Lark stated that Mayor Bernero has announced that the 2013 State of the City presentation will take place at the Board of Water & Light's new REO Town Depot facility on January 28, 2013 at 7:00 p.m. Vice Chair Dennis M. Louney announced on behalf of Board Chair Zerkle that Commissioner Mullen would be assigned and serve as a member of the Finance Committee. Excused Absence None Adiourn On Motion by Commissioner Bossenbery, Seconded by Commissioner McCloud, the meeting adjourned at 6:10 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE January 8, 2013 The Finance Committee of the Board of Water and Light met in the Executive Offices located at 1232 Haco Dr., Lansing, MI, at 6:15 p.m. on Tuesday,January 8, 2013. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Tony Mullen, David Price and Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present was Board Member Anthony McCloud. Absent: None Public Comments There was no Public Comment Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of November 13, 2012. Action: Carried Unanimously Regular Board Mtg. January 22,2013 Page 5 of 20 2003A Bond Re-Financing General Manager Lark stated that the Board of Water& Light has Series A Bonds that is callable July 1, 2013 and that the Board is familiar with the process of Bond Refinancing as we took similar action last year. General Manager Lark further stated that this refunding will save approximately $4.2million on a net present value basis. General Manager Lark respectfully asked that the Committee of the Whole forward the Resolution to the full Board for consideration. Commissioner Ward asked for clarification of some of the language in the authority section of the resolution. Mr. Danhoff of Miller Canfield responded to Commissioner Ward's question and stated that the language in the Resolution was standard language. Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Excused Absence None Other Finance Chair Bossenbery stated that everyone should have received the audit from Phil Perkins. Also everyone should have received the Financials from General Manager Lark. Adjourn On Motion by Commissioner Price, seconded by Commissioner Louney, the meeting adjourned at 6:20 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Lark stated that this 2003 A Bond is callable on July 1, 2013 and this Resolution will essentially refinance that Bond, in other words this will allow for the issuance of a new Bond and pay off of the old Bond by July 1, 2013. This will present the Board of Water & Light with a net present value savings of approximately $4.2 million. General Manager Lark respectfully asked the Board for approval of the Resolution. RESOLUTION #2013-01-01 Lansing Board of Water and Light THIRTEENTH SUPPLEMENTAL REVENUE BOND RESOLUTION A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding the Series 2003A Bonds through issuance of up to $28,000,000 of Refunding Bonds; Regular Board Mtg. January 22,2013 Page 6 of 20 • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system (the "System") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, under the terms of the Eighth Supplemental Revenue Bond Resolution adopted August 12, 2003, the Board issued the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A (the "Series 2003A Bonds"); and WHEREAS, the Board's Financial Advisor, Robert W. Baird & Co. Incorporated (the "Financial Advisor"), has advised the Board that it may be able to accomplish a net savings of debt service costs by refunding all or a portion of the outstanding Series 2003A Bonds through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $28,000,000 (the "Refunding Bonds"); and WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Series 2003A Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated sale without further resolution of the Board; and WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW,THEREFORE, BE IT RESOLVED THAT: Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Series 2008A Bonds, the Series 2011A Bonds,the Series 2012A Bonds, Regular Board Mtg. January 22,2013 Page 7 of 20 and the Refunding Bonds which are issued pursuant to Section 18(a) of the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989, and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, the Eleventh Supplemental Revenue Bond Resolution adopted on May 10, 2011, the Twelfth Supplemental Revenue Bond Resolution adopted on January 24, 2012, this Thirteenth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, the Refunding Bonds, and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer" means the Board's Assistant General Manager and Chief Financial Officer. (e) "Refunding Bonds" means the refunding bonds issued pursuant to this Thirteenth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 2013A" or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (f) "Reserve Requirement" means the Reserve Requirement established by Section 11 of the Tenth Supplemental Revenue Bond Resolution and described in Section 8 herein. (g) "Series 2003A Escrow Agreement" means the Series 2003A Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Series 2003A Bonds being refunded. (h) "Series 2003A Escrow Fund" means the Series 2003A Escrow Fund established pursuant to the Series 2003A Escrow Agreement to hold the cash and investments necessary provide for payment of principal of and interest on the Series 2003A Bonds being refunded. (i) "Series 2002-2005 Bonds" means: the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A. Regular Board Mtg. January 22,2013 Page 8 of 20 (j) "Series 2008A Bonds" means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A. (k) "Series 2011A Bonds" means the Utility System Revenue Bonds, Series 2011A. (k) "Series 2012A Bonds" means the Utility System Revenue Bonds, Series 2012A. (1) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b) of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Series 2003A Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Series 2003A Bonds; Refunding Bonds Authorized; Applicable Law. If refunding all or a portion of the Series 2003A Bonds will accomplish a net savings of debt service costs, then in order to pay costs of refunding all or a portion of the Series 2003A Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds, the City, acting by and through the Board, shall borrow the sum of not-to-exceed Twenty-Eight Million Dollars ($28,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor. The Refunding Bonds shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. The remaining period of usefulness of the facilities refinanced with proceeds of the Series 2003A Bonds is estimated to be not less than 14 years. Section 4. Refunding Bond Details. The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2013A" or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds. The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of$5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Refunding Bonds but not-to-exceed 14 annual maturities. The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Regular Board Mtg. January 22,2013 Page 9 of 20 Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2013, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1st and July 1st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Executed blank bonds for registration and issuance to transferees shall be delivered to the Transfer Agent for safekeeping from time to time as necessary. Notwithstanding the foregoing provisions, if the Refunding Bonds are sold through private placement, then the Refunding Bonds may, at the request of the bond purchaser, be issued as a single fully registered, nonconvertible bond of the denomination of the full principal amount thereof payable in principal installments as shown in the bond, and authentication by the Transfer Agent shall not be required for any bond signed by the manual signature of either the Chairperson or the Corporate Secretary of the Board. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds. The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry-only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon Regular Board Mtg. January 22,2013 Page 10 of 20 surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the Board shall deposit into the Bond Reserve Account any amount necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. The Board may meet the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated AAA by Moody's Investors Service and Standard and Poor's Corporation or any successor to either, and the Chief Financial Officer is hereby authorized to execute an agreement with the provider or issuer of the letter of credit, surety bond, or insurance policy. Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Series 2003A Escrow Fund in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Series 2003A Escrow Fund from the proceeds of sale of the Refunding Bonds cash and investments in Government Obligations or Municipal Obligations not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Series 2003A Escrow Agreement. The Escrow Agent shall hold the Series 2003A Escrow Fund in trust pursuant to the Series 2003A Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Series 2003A Bonds being refunded for redemption as specified in the Series 2003A Escrow Agreement. Either the Chief Financial Officer or the Manager of Finance and Planning is hereby authorized to execute and deliver the Series 2003A Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund, or other fund or account of the Board, to the Series 2003A Escrow Fund, and to purchase, or cause to be purchased, escrow securities consisting of Government Obligations, including, but not limited to, United States Treasury Obligations—State and Local Government Series (SLGS), or Municipal Obligations, for deposit in the Series 2003A Escrow Fund. The Chief Financial Officer is directed to deposit to the Series 2003A Escrow Fund, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be Regular Board Mtg. January 22,2013 Page 11 of 20 sufficient, without reinvestment, to pay the principal of and interest on the Series 2003A Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Series 2003A Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Series 2003A Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Series 2003A Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8. Reserve Requirement. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the Reserve Requirement as defined in Section 1 (ff) of the Bond Resolution as amended and restated on October 24, 1989, which is the lesser of (a) the maximum Aggregate Debt Service Requirement for the then current and any subsequent operating year and (b) ten percent of the aggregate proceeds of all Outstanding Bonds. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, "Reserve Requirement" shall mean the following as established by Section 11 of the Tenth Supplemental Revenue Bond Resolution: the lesser of (i) the maximum annual debt service requirements on the Outstanding Bonds, (ii) 125% of the average annual debt service requirements on the Outstanding Bonds, or (iii) the total of 10% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg. Section 1.148 2(f)(2) or any successor provision thereto as applicable to the Bonds. Section 9. Rate Covenant. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board will comply with the Section 9 of the Bond Resolution, as previously amended by Section 5 of the Second Supplemental Revenue Bond Resolution, and the Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 150% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 12 of the Tenth Supplemental Revenue Bond Resolution. The Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 125% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. Section 10. Additional Bonds Test. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the additional bonds test imposed by Section 6 of the Second Supplemental Revenue Bond Resolution adopted January 11, 1994. After payment or defeasance in full of the Outstanding Regular Board Mtg. January 22,2013 Page 12 of 20 Series 2002-2005 Bonds, the following provision shall apply as provided in Section 13 of the Tenth Supplemental Revenue Bond Resolution. The right is reserved, in accordance with the provisions of Act 94, to issue additional bonds payable from the Net Revenues of the System which shall be of equal standing and priority of lien on the Net Revenues of the System with the Bonds, but only for the following purposes and under the following terms and conditions: (a) For repairs, extensions, enlargements and improvements to the System or for the purpose of refunding a part of any Outstanding Bonds (unless such partial refunding is done in compliance with (b) below) and paying costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account. Bonds for such purposes shall not be issued pursuant to this subparagraph (a) unless the actual or augmented Net Revenues of the System for the fiscal year of the System ending not more than 15 months prior to the sale of Additional Bonds shall be equal to at least one hundred twenty-five (125%) percent of the maximum Aggregate Debt Service Requirement in any current or future fiscal year on the Outstanding Bonds and on the Additional Bonds then being issued. If the Additional Bonds are to be issued in whole or in part for refunding Outstanding Bonds, the maximum Aggregate Debt Service shall be determined by deducting from the principal and interest requirements for each operating year the annual Aggregate Debt Service Requirement of any Bonds to be refunded from the proceeds of the Additional Bonds. Net Revenues may be augmented as follows for the purposes of this subsection (a): (1) If the System rates, fees or charges shall be increased at or prior to the time of authorizing the Additional Bonds, the Net Revenues may be augmented by an amount which in the opinion of the Board's financial advisor will reflect the effect of the increase had the System's billings during such time been at the increased rates. (2) The actual Net Revenues may be augmented by the estimated increase in Net Revenues which in the opinion of the Board's financial advisor will accrue as a result of new customers which have not been serviced during the fiscal year described in paragraph (a) above or as a result of the acquisition of the repairs, extensions, enlargements and improvements to the System which have been made during or subsequent to the fiscal year described in paragraph (a) above or which will be acquired in whole or in part from the proceeds of the Additional Bonds to be issued. No Additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in subparagraphs (a) or (c) if the Board shall then be in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Additional Bonds may be issued as provided in Section 18 subparagraphs (b) or (c) of the Bond Resolution. Section 11. Covenants. The Board covenants and agrees as follows with the holders of the Refunding Bonds as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest: (a) The Board covenants and agrees with the Registered Owners of the Refunding Bonds that as long as any of the Refunding Bonds remain Regular Board Mtg. January 22,2013 Page 13 of 20 outstanding and unpaid as to either principal or interest, the Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds pursuant to the Internal Revenue Code in such a manner as to cause the Refunding Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exemption of interest on the Refunding Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Tax Compliance Certificate to be delivered by the Board with the Refunding Bonds. (b) The Board will not issue additional bonds of prior standing to the Refunding Bonds. Section 12. Bond Form. The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND No. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2013A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede & Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City"), acting through the governing body of the Lansing Board of Water and Light (the "Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date] and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of [transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. The Net Regular Board Mtg. January 22,2013 Page 14 of 20 Revenues of the System are irrevocably pledged for the prompt payment of principal and interest on this bond. The "System" is defined as the water supply and electric utility systems including the steam heat and chilled water distribution systems. The "Net Revenues" are the revenues received by the Board from the operations of the System after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System. A statutory lien on the Net Revenues of the System has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, [Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A,] Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A, Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A, Utility System Revenue Bonds, Series 2011A, and Utility System Revenue Bonds, Series 2012A. The pledge of Net Revenues and the statutory lien are senior in priority of lien to the Water Supply, Steam, Chilled Water and Electric Utility System Subordinate Lien Revenue Refunding Bond, Series 2009A (Federally Taxable) and any additional junior lien bonds issued pursuant to the Bond Resolution (defined below). This bond is one of a series of bonds of even Date of Original Issue aggregating the principal sum of $[principal amount]. This bond is issued for the purpose of refunding certain outstanding bonds pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Thirteenth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] (collectively, the "Bond Resolution"). This bond is issued under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"). For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] Regular Board Mtg. January 22,2013 Page 15 of 20 This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or (ii) to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law. This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By Sandra Zerkle Chairperson (City Seal) Regular Board Mtg. January 22,2013 Page 16 of 20 Countersigned: By M. Denise Griffin Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] Section 13. Financial Advisor. The Board hereby requests that Robert W. Baird & Co. Incorporated continue to serve the Board as Financial Advisor for the Refunding Bonds. Section 14. Bond Counsel. The Board hereby requests that Miller, Canfield, Paddock and Stone, P.L.C. continue to serve the Board as bond counsel for the Refunding Bonds. The Board recognizes that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds, and approves them notwithstanding the potential concurrent representation of any other participant in the bond financing process in any unrelated matters. Section 15. Negotiated Sale of Bonds. Due to the volatile nature of the bond market, it is hereby determined to be in the best interest of the Board to sell the Refunding Bonds by negotiated sale in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and to take advantage of the most favorable market for purchase of securities to be escrowed for payment of the Series 2003A Bonds to be refunded. The Chief Financial Officer is hereby authorized, upon the advice of the Financial Advisor, to select a senior managing underwriter for the Refunding Bonds, or, in the alternative, to retain a placement agent to assist the Board in arranging the sale of the Refunding Bonds to a financial institution or other experienced investor. If the Refunding Bonds are sold to an underwriter, the Board reserves the right to name additional co-managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor. By adoption of this resolution the Board assumes no obligations or liability to the underwriter or placement agent for any loss or damage that may result to the underwriter or placement agent from the adoption of this resolution, and all costs and expenses incurred by the underwriter or placement agent in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. Section 16. Bond Ratings and Bond Insurance. The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating Regular Board Mtg. January 22,2013 Page 17 of 20 to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. Section 17. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement or private placement memorandum describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement or private placement memorandum. Section 18. Continuing Disclosure. The Chief Financial Officer is hereby authorized to execute and deliver, prior to delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 19. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor, to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement or private placement memorandum. The maximum interest rate on the Refunding Bonds shall not exceed 5.00%. The first maturity of principal on the Refunding Bonds shall occur no earlier than 2013, and the final date of maturity shall occur no later than 2026. The purchase price for the Refunding Bonds, exclusive of any original issue discount, shall not be less than 98.00% of the principal amount of the Refunding Bonds. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. Section 20. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Series 2003A Bonds being refunded as they become due or upon call for redemption. Section 21. Other Actions. In the event that the Chief Financial Officer is not available at the time that it becomes necessary to take actions directed or authorized under this resolution, then the Manager of Finance and Planning, the General Manager, or a person designated by the Chief Financial Officer or the General Manager is authorized to take the actions delegated to the Chief Financial Officer by this resolution. The officers, administrators, agents and attorneys of the Board are authorized and Regular Board Mtg. January 22,2013 Page 18 of 20 directed to take all other actions necessary and convenient to facilitate issuance, sale and delivery of the Refunding Bonds, and to execute and deliver all other agreements, documents and certificates and to take all other actions necessary or convenient in accordance with this resolution, and to pay costs of issuance including but not limited to rating agency fees, bond insurance premiums, transfer agent fees, escrow agent fees, verification agent fees, financial advisor fees, placement agent fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. Section 22. Applicability of the Outstanding Bond Resolutions. Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 23. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 24. Severability and Paragraph Headings. If any section, paragraph, clause or provision of this resolution shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this resolution. The paragraph headings in this resolution are furnished for convenience of reference only and shall not be considered to be part of this resolution. Section 25. Publication and Recordation. In accordance with the provisions of Section 6 of Act 94, this resolution shall be published once in full in either the City Pulse or the Lansing State Journal, either of which is a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and shall be recorded in the minutes of the Board and such recording authenticated by the signatures of the Chairperson and Corporate Secretary of the Board. Section 26. Effective Date. This resolution is hereby determined to be immediately necessary for the preservation of the public peace, property, health and safety of the City and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on January 22, 2013, at 5:30 p.m., prevailing Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267. We further certify that the following Commissioners were present at said meeting: Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle and that the following Commissioners were absent: Cynthia Ward. We further certify that Commissioner Price moved adoption of said resolution, and that said motion was supported by Commissioner McCloud. We further certify that the following Commissioners voted for adoption of said resolution: Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle and that the following Commissioners voted against adoption of said resolution: None. Regular Board Mtg. January 22,2013 Page 19 of 20 We further certify that said resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary. Sandra Zerkle M. Denise Griffin Chairperson Corporate Secretary UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS Resolution #2013-01-01 Adopted under Manager's Recommendation Agenda Section MANAGER'S REMARKS General Manager Lark: a Reminded the Board of Commissioners that Mayor Bernero's State of the City presentation will be delivered next Monday,January 28, 2013 at 7:00 p.m. and will be held at the Board of Water& Light's new REO Town DePot. a Acknowledge and congratulated Calvin Jones, Board of Water& Light's Director of Public Relations and Diversity on being named the Chairperson of the Board of Directors of the Lansing Economic Development Corporation, the Lansing Brownfield Redevelopment Authority, and the Lansing Tax Increment Finance Authority. a Announced that the plans are in the works for the "Pennies for Power" "Dancing with the Starz" fundraising event. This year's event will be held April 18, 2013, from 5:00 p.m. to 9:00 p.m. at the Radisson Hotel downtown Lansing. a Announced that as part of the Board of Water& Light's paperless initiative the company had its first paperless payroll, meaning that there was no use of any paper and everything was done through direct deposit or pay cards similar to how Social Security operates its payroll. COMMISSIONERS' REMARKS Chair Zerkle congratulated Calvin Jones on his appointment as the Chair to three different Economic Development Organizations. Chair Zerkle also acknowledge General Manager Lark and his Administration for the last Finance Report. Commissioner Tracy Thomas wished everyone a Happy New Year. He congratulated Calvin Jones on his appointment to the different Boards/Organizations, Steve Serkaian for keeping the Commissioners well informed and General Manager Lark for being a member of the Martin Luther King Jr. Commission Committee and representing the Board of Water & Light positively. Regular Board Mtg. January 22,2013 Page 20 of 20 Vice Chair Louney acknowledged Calvin Jones on his appointments to the different Boards/Organizations. PUBLIC COMMENTS There was Public Comments. EXCUSED ABSENCE On motion by Commissioner Thomas, seconded by Commissioner Bossenbery to excuse Commissioner Ward from tonight's meeting. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Thomas the meeting adjourned at 5:43 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:January 31,2013