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12-19-2018 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, December 19, 2018 Call to order — 3:00 p.m. President Monty Morrow called the meeting to order. Members present: President Monty Morrow; Vice President Anthony Hanson; Secretary Robert Wendorff; Commissioner Don Martinez; Commissioner Matt Cheney; GM Jeremy Carter; Attorney Marc Sebora: Conflict of Interest Commissioner Martinez declared conflict of interest in voting on agenda item 2b Ratify Payment of Bills; CenBank is on this month's payment of bills. Don will be abstaining. 2. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills Motion by Commissioner Wendorff, second by Commissioner Cheney to approve the Consent Agenda. Motion carried unanimously. 3. Approve Financial Statements Jared Martig presented the financial statements. Mr. Martig noted with the early meeting that there were a few estimates used on large dollar items and no estimates were recorded on smaller items. GM Carter discussed Net Income per Revenue; utilities are trying to reach a greater return of 7%. HUC as a whole organization is right there at 7.1 %. GM Carter added the Power Cost Adjustment was lower than last year. December rates will tick up with winter usage. Overall, everything is looking as expected. Motion by Commissioner Hanson, second by Commissioner Martinez to approve the financial statements. Motion carried unanimously. 4. Open Forum 5. Communication a. City Administrator — Matthew Jaunich — Absent b. Divisions i. Dan Lang, Engineering Services Manager — Absent ii. Dave Hunstad, Electric Transmission/Distribution Manager — Nothing to report iii. Randy Blake, Production Manager - 1. Fagen is working on the North side of the plant along Hwy 7; they will be working all weekend. Fagen will not be at the plant over the holiday weekend and will be returning January 2. iv. John Webster, Natural Gas Division Manager- Nothing to report v. Jared Martig, Financial Manager- Nothing to report c. Human Resources - Brenda Ewing — Nothing to Report d. Legal — Marc Sebora — i. At the last city council meeting, it was approved to reappoint Don Martinez to the Hutchinson Utilities Commission to December 2023. e. General Manager — Jeremy Carter i. Wrapping up year-end tasks. ii. Continuing to work on General Liability with Jared. iii. Working on Workers Comp. iv. Legislative session convenes January 8. v. Next month need to look at reorganization and elect new officers. 6. Policies - a. Review Policies i. Financial Reserve Policy ii. Identity Theft- Red Flag Program iii. Surplus Property Policy iv. Deferred Compensation v. Personal Use of Utility Facilities and Equipment vi. Recognition Policy vii. Required Clothing- Nonexempt Only viii. Small Hand Tools- Nonexempt Only ix. Health & Safety x. Unsafe Conditions or Practices A. Employee Right -to -know xii. Appendix A xiii. Appendix B xiv. Appendix C xv. Appendix D No changes recommended at this time. b. Approve Changes i. Payments of HUC Payables —As noted. Policy HUC updates every year to revise the date. ii. Safety Glasses -Nonexempt Only — As noted, cleaning up language. iii. Accidents & Injuries — Noted generic League as carrier. Motion by Commissioner Hanson, second by Commissioner Cheney to approve the policy changes as recommended. Motion carried unanimously. 7. Unfinished Business 8. New Business a. Approve 2019 Budgets & 5 Year CIP 2 GM Carter presented the 2019 Budgets & 5 Year CIP. The 5 Year CIP is the best -projected plan, and may change. This plan is reviewed annually and adjustments may be made to departments as different needs occur in the community. For the 2019 Budget, the final numbers are the same as to what was reviewed during the workshop. Overall HUC's budget is in good shape. Natural Gas Division is very stable, with prepaid contracts in place. Budget is trending like 2018, no concern for 2019. Commissioners agreed the budget was very well prepared. After discussion, a motion by Commissioner Martinez, second by Commissioner Cheney to Approve 2019 Budgets & 5 Year CIP. Motion carried unanimously. b. Approve Moving 2019 Pay Grid GM Carter spoke about moving the 2019 Pay Grid. Every year Staff looks at the consideration or recommendation on whether the grid that was adopted years ago should be moved to keep up with inflation and pay ranges. Some of the benchmarks that are considered are CPI, Cost of Living, Unemployment rates, Employee turnover, Area wage survey, Legislative growth factor constraints and the Current bargaining unit contract. For 2019, HUC will be going through the bargaining unit process as well. Staff tries to keep those things in parameter as recommendations and considerations are discussed. GM Carter noted that just because the grid moves it does not mean that it relates to a performance increase. It is just moving the minimum, mid -point and maximum ranges of those different classifications or job titles and grades moving forward. Based on the information that was put together, along with reviewing the information with Ms. Brenda Ewing, Human Resources Director, Staff is recommending that the Commission consider moving the 2019 Pay Grid 2% based on the 2018 Pay Grid. The Commission Board has the discretion to move the grid in any direction or not move the grid at all. Based on what Staff has researched, 2% is right in the ballpark. Commissioner Martinez inquired about the factors that are listed here, are there ways to gauge the industry as far as similar positions and where HUC fits in. GM Carter stated it was not listed here but a couple of months ago, APPA's and other industry information was emailed out that gives a general gauge to how things are moving from year to year. Talking with peers, on what they are anticipating, it looks like HUC would be in line with moving the pay grid with those utilities that have grids in place. GM Carter recognized Brenda Ewing, Human Resources Director, and inquired if she had additional input to offer. Ms. Ewing noted any issues with market comparisons to other utilities will be addressed when the next compensation study is completed and any required adjustments can be made at that time. It has been recommended that studies be completed on a 5-year rotation. A motion by Commissioner Hanson, second by Commissioner Wendorff to Approve Moving the 2019 Pay Grid. Motion carried unanimously. 3 c. Approve Charge -Offs Mr. Martig presented the Charge -Offs. HUC is requesting to approve charge - offs of $3,998.55. Mr. Martig noted that there are no large amounts, the largest single amount this time is less than $700. The amounts add up quickly. Commissioner Martinez inquired about the representation of dates. Mr. Martig informed the Commissioners it is the date of last contact. A motion by Commissioner, Wendorff second by Commissioner Martinez to Approve Charge -Offs. Motion carried unanimously. d. Approve Fagen Change Order GM Carter presented the Fagen Change Order. Staff just received a revised change order from the original change order that was in this month's packet. Fagen Inc. pulled out a VFD of $9,564.00. The electrical contractor is to supply the VFD for the HVAC system. The new change order is for $37,212.89 not $47,415.52. The cost of the change order covers the cost of labor, materials, additional subcontract work, document redesign, and equipment to modify the piers and change locations of some of the piers. GM Carter noted back when the plant was built not everything was documented; Staff did not have GIS. Today, Staff does not know where piping is located until digging starts. Thus creating redesigns, which also takes more time and materials. Mr. Blake added with a project of this magnitude, when one change is made multiple changes have to be made. After discussion, a motion by Commissioner, Cheney second by Commissioner Martinez to Approve Fagen Change Order. Motion carried unanimously. e. Conduct the Performance Review of Hutchinson Utilities Commission General Manager Pursuant to Minnesota Statute 13D.05 Subd. 3(a) President Morrow introduced the agenda item, the General Manager's annual performance review. President Morrow advised GM Carter that he has the option to have the performance review conducted as either an open session or a closed session of the Utility Commission. GM Carter indicated his decision to have the review as part of a closed session. President Morrow entertained a motion to go into closed session to conduct the twelve-month (annual) performance review as permitted under Minnesota Statute 13D.05, Subdivision 3(a). Motion by Commissioner Hanson, second by Commissioner Wendorff to go into closed session to conduct the General Manager's performance review. The motion passed unanimously. The Commission then proceeded into a closed session at 3:35 p.m. 4 Hutchinson Utilities Commission Summary of Closed Meeting Proceedings General Manager Performance Appraisal Wednesday, December 19, 2018 On December 19, 2018, the Hutchinson Utilities Commission conducted a closed meeting for the annual performance appraisal for General Manager, Jeremy Carter. Individuals present included General Manager Jeremy Carter, Commission Members Monty Morrow, Anthony Hanson, Bob Wendorff, Don Martinez and Matt Cheney, City Attorney Marc Sebora, and City of Hutchinson Human Resources Director Brenda Ewing. Mr. Carter exercised his right to close the proceedings to the public as permitted under Minnesota Statute 13D.05, Subdivision 3(a). Motion by Hanson, second by Wendorff to go into closed session to conduct the General Manager's performance review. The motion passed unanimously. The Commission then proceeded into a closed session at 3:35 p.m. The Commission reviewed Mr. Carter's performance for the current calendar year. The review is required per the terms of the employment contract in place between the Hutchinson Utilities Commission and General Manager Carter. Mr. Carter's performance was evaluated in the following areas: Organizational Management, Fiscal/Business Management, Program Development, Relationship & Communication with the Commission, Long -Range Planning, and Relationships with Public & Outside Organizations. The consensus of the Commission is that Mr. Carter's cumulative performance for the review period was found to be 4.31 on the rating scale of 0 — 5, and, per the Hutchinson Utilities Commission, is exceeding job requirements on the ratings scale. The employment contract between Hutchinson Utilities and Mr. Carter indicates that salary increases for the General Manager are subject to the provisions of the Compensation Plan section of the Hutchinson Utilities Commission Exempt Employee Handbook. Motion by Martinez, second by Cheney to close the closed session. The motion passed unanimously. The Commission proceeded into open session at 4:45 p.m. Per the General Manager's review, and per the HUC compensation plan, an aggregate score of 4.31 correlates to a 6% increase, motion by Hanson, second by Wendorff to increase General Manager Jeremy Carter's annual salary 6%. The motion carried unanimously. Motion to adjourn by Hanson, second by Martinez. The motion carried unanimously, and the meeting adjourned at 4:47 p.m. G�� Sal Robert Wendorff, Sec*l� 5 ATTEST:. Monty Mo ow, President