HomeMy Public PortalAbout12-06-1993 PROCEEDINGS OF THE COMMON COUNCIL OF THE
CITY OF RICHMOND;INDIANA.SERVING AS A BOARD
IN CHARGE OF THE OPERATION OF THE RICHMOND POWER&LIGHT PLANT
MONDAY.DECEMBER 6.1993
•
•
•
1 The Common Council of the City of Richmond, Indiana, serving as a Board in Charge of the operations of the
2 Richmond Power & Light Plant met in regular session at 7 p.m. Monday, December 6, 1993, in the Council
3 chambers in said City. Chairperson Brookbank presided with the following Councilmembers in attendance:
4 Elstro, Lundy, Donat, McBride,Parker, Allen, Dickman and Hutton. The following business was had to-wi:
5
6 APPROVAL OF MINUTES OF.NOVEMBER 15,1993
7
8 Councilmenther McBride moved to approve the minutes of the previous meeting as prepared, seconded by
9 Councilmember Allen and on unanimous voice vote the motion was carried.
10
11 APPROVAL OF BILLS. INVESTMENTS AND TRANSFERS
12
13 Upon recommendation of the Finance Committee,Councilmember Allen moved to approve the following bills for
14 payment,seconded by Councilmember Dickman and by unanimous voice vote the motion carried.
15
16 •'$ills Already Paid _ •
17 ,Payroll and Deductions 218,044.72
18
19 .
20 Investments Purchased From:
21 Cash Operating Fund 3,125,000.00
22 Bond Sinking Fund
23 Utifity Bond Reserve Fund
24 Depreciation Reserve Fund 232,790.89 •
25 Insurance Reserve Fund 188,178.12
26 Consumer Deposit Fund .
27 Cash Reserve Fund 137,500.00
28 Group Insurance Fund
29
30 Total Investments 3,683,469.01 •
31
32
33 Transfer to City in Lieu of Taxes;
34
35 Transfer from Cash Operating Fund to: .
36 Payroll Deduction Fund
37
38
39 Transfers from Depreciation Reserve to:
40 • Cash Operating Fund
41
42 Transfers from Consumer Deposit to:
43 Cash Operating Rind
44 •
45 Transfers from Utility Bond Reserve Fund toy
46 Bond Sinking Fund
47
48 Transfers from Cash Operating ;
49 Interest and Bond Principal
50 Bond Sinking Fund
51 Cash Reserve Fund- 137,500.00
52 Utility Bond Sinking Fund
53 Depreciation Reserve Fund 91,000.00
54 Insurance Reserve Fund
55 Consumer Deposit Fund
56
57 • Interest and Bond Principal
58
59 End of Month Petty Cash
60 Revenue Bonds
61 Interest Coupons Redeemed
62 Bond Coupons
63 Miscellaneous Bills Already Paid 1,061,633.34
64 Total prepaid invoices 5,191,647.07
65 Total Bills Not Paid 1,358,951.29
Grand Total 6,550,598.36
•
•
RP&L Minutes Cont'd • • • •
December 6, 1993 • - • . •
-
Page 2 . . .. .
•
•
•
•
•
1 REMARKS BY CHAIRPERSON .
2
3 None were made
4
5 UNFINISHED BUSINESS
6 •
7 Chairperson Brookbank read a letter from George Sowers, attorney for Bill Clarke, assistant manager of RP & L
8 who was fired by Irving Huffman, general manager of RP & L, in which he noted that Clarke and RP & L had
9 mutually and satisfactorily resolved all differences.
10
11 Chairperson Brookbank said the Board has three resolutions that need to be addressed. The first is Resolution
12 No. 5 - 1993 -A RESOLUTION OF THE RICHMOND POWER & LIGHT BOARD OF DIRECTORS FIXING THE
13 NUMBER AND COMPENSATION OF EMPLOYEES
14
15 Huffman said RP& L had asked City Attorney Thomas Milligan to draft a salary ordinance which is the same that
16 has been used for several years. He noted that the original was drafted by Paul Hersch and a lot of thought had
17 been put into the making of the ordinance. He said one of the items was that the general manager should be
18 given the right to make merit raises throughout the year if warranted. He said apparently the City Attorney feels
19 that an ordinance is not needed but it can be done by a resolution. He said none was passed last year but RP& L
20 has been following the procedure of giving merit raises, and usually two or three a year are given. He said he
21 feels there are important things in the ordinance, adding that he was not aware of the change until today.
22
23 Huffman said he was also made aware of the IMPA ordinance. He said he had asked for an ordinance so IMPA
24 could make payments to RP & L for its portion of compensation for the two transmission lines to the facility. He
25 said Jim McClarnon has been the attorney for IMPA from the beginning and IMPA cannot live with the changes
26 that Milligan has made. Huffman also said there has been a resolution brought up about the transfer of funds and
27 he learned about this at the last minute so he brought Herschel Philpot, RP & L's financial manager,so he could
28 go over some of the information and allegations that have been made and put the issue in the proper perspective.
29
30 Milligan said Resolution No. 5 - 1993.formalizes what was done by RP & L from March 1, 1992 through
31 September 30, 1993 by way of compensating its employees and formalizes a fact that has occurred in the past.
32 He said he presented these at the November 30 meeting to Jim Daugherty.who wrote Milligan a letter stating that
33 Huffman asked that the resolutions be returned with a request that changes be made so the general manager will
34 have the same stated authority in regard to raises and hiring as stated in the prior salary ordinance.
35
36 Milligan said Huffman had obviously known about this for the past six days, adding that it is in regard to two salary
37 resolutions-No.5 and No.6-which need to be acted upon tonight because it will formalize what the Board put in
38 place on October 1 without any formal action and it will govern the salaries paid at RP & L from October 1, 1993
39 to September 30, 1994. Milligan added that the statute under which the Board operates is clearly set forth, noting
40 that he had given copies to each councilmember as well as Daugherty. He said he assumed Daugherty had
41 briefed Huffman. Milligan said the statute is not permissive, but mandatory, and is the way RP & L operates. It
42 states, he said, that the Board shall fix the number and compensation of employees, adding that this has been
43 discussed in each of the budget hearings on operating expenditures for 1994. He said he raised the issue a
44 month ago and Daugherty has cooperated in furnishing copies of all the schedules.
45
46 Milligan advised Huffman that if he wished to make any adjustments to any salaries within the year he simply has
47 to recommend to the Board and they can do it through a resolution. He added that this Board is also the Common
48 Council and the members are aware of the manner in which they set the salaries of other City employees and it
49 doesn't apply to RP & L salaries. He said in the case of the 1994 salary ordinance which they have already
50 adopted they are not permitted by law to change that during the year. However, in the case of RP & L, governed
51 by the Public Utility Law under municipally owned and operated public utitilities, it can be changed during the year.
52 He added that the Board is mandated by statute to fix the number and compensation of employees.
53
54 Huffman responded that Hersch drafted the ordinance and he felt it was done properly and the Board agreed,
55 adding that there have been several City Attorneys since that time and it has'never been questioned. He said they
56 have been following what was thought to be good legal advice but he is now concerned and would like to have the
57 resolution held so it can be reviewed keeping in mind the different interpretation that is being presented.
58
59 Councilmember Brookbank said she had been on the Board for 10 years and this is the first time she has had any
60 information about Board powers and duties. Huffman said they have always been in the statutes and readily
61 available for review.
62 .
63 Councilmember Hutton moved to table action on all three of the resolutions, second by Councilmember Elstro.
64 Chairperson Brookbank announced that the resolutions would be acted upon one at a time. The Board cast a
65 unanimous voice vote to table Resolution No. 5. Councilmerriber Dickman asked if any of these resolutions have
to be acted upon tonight and Milligan said Resolution No.7.has to be done before the end of the year, adding that
Resolutions No.5 and No. 6 are already past due. .
•
•
RP&L Minutes Cont'd •
December 6, 1993
Page 3 . -
•
•
•
•
•
111
1 Milligan said the Board should ad on Resolution No. 6 because it fixes Huffman's salary for the 93-94 year
2 because the Board did not adjust his salary until May and it was made retroactive from May 1993 to October 1,
3 1992. He added that all the resolutions should be in place before the end of the year so the annual audit by the
4 State Board of Accounts will not write it up. He said he would be happy to meet with McClarnon and explain to
5 him how it applies to this particular utility. Milligan said RP & L is the only utility that he is aware of where the
6 nine-member Council of a second class city acts as the Board of directors, noting that Richmond is unique.
7
8 Milligan said if Huffman has a problem with the statute he needs to talk to the state representative or the state
9 senator because it has been the law since it was restated in 1983, approximately the time Hersch died and there
10 has been no change since that time. •
11 - • .
12 Milligan said the Board should resolve Resolution No. 7 on December 20 because that is the way they as
13 members implement the will of the Board in making a payment of$2,066,677 available to the City. He added that
14 that resolution is sensitive because the Board has a long standing practice since 1987 of funding the cash reserve
15 account at a level to produce $1,650,000 payment to the City on January 1 after the June 30 balance. Milligan
16 said that Huffman apparently had instructed his staff to omit the May 1993 and June 1993 payments, otherwise
17 there would be enough to fund the $2,066,677 payment that has been decided upon by this Board for next year.
18 That breach, Milligan said,.is what has made it necessary to act before the end of the year in order to accomplish
19 the will of this Board. Huffman responded that that is not true and Philpotwill address that when it is proper to do
20 so.
21 •
22 Chairperson Brookbank asked City Controller Dennis Grimes to address Resolution No. 7. Grimes said he had
23 received a call today about signing the resolution concerning the transfer that is necessary to fund the cash
24 reserve.account. He said the call came from the State Tax Board, adding that he had attended the hearing
25 November 23 and was told that one of the things required to approve the budget was a resolution from this Board
26 to substantiate the $2,066,677 transfer which, as Common Council, they did approve. Grimes said it is mainly
27 because of another form that is in the budget process that says there is sufficient funding in that cash reserve
28 account so the transfer may take place. He said it is one of the two things missing from the budget packet and
29 one was addressed at a previous Council meeting and the other is this resolution which is needed to actually
30 finish filing the certification of the budget.
•
31 .
32 Chairperson Brookbank said there is a motion and second to table Resolution No. 6 until the last meeting in
33 December.The motion was adopted on a unanimous voice vote. Philpot read a letter he had written to the Board,
34 stating that he got a copy of Resolution No. 7 Monday morning which seemed to indicate the transfers to the cash
35 reserve fund were omitted, resulting in less money being transferred that the Board had previously approved. He
36 noted that during the 12-month period beginning July 1, 1992, and ending June 30, 1993, a total of $1,650,000
37 was transferred from the cash operating fund to the cash reserve fund of RP & L. He further stated that that is the
38 amount included in the 1992 and 1993 RP& L budget approved by this Board for transfer to the City of Richmond
39 from the utility. It is his opinion as an accountant, he said, that the expense and transfer were recorded properly
40 and the accurate balance as of June 30, 1993 was $1,881,860.34. He concluded by stating he will not alter the
41 financial record.
42
43 Huffman said $137,500 was transferred in July, August and September and no transfer was made in October
44 1992, noting that these things have happened in the past, adding that $412,500 had been transferred in
45 November 1992 followed by $275,000 in December. He said in January, February and March the $137,500 was
46 transferred and RP& L came under quite a bit of criticism for overfunding something and that account had already
47 been funded as instructed. He added that those figures tally $1,650,000. Councilmember Dickman asked a
48 question about the date Council voted to change the amount. Huffman responded that that figure is not set for
49 1994. Milligan said Council approved the transfer of$2,066,677 at its September 20 meeting. He called Councils.
50 attention to Huffman's letter in which he admitted the money was not transferred in May and June. Philpot said he
51 decided not to transfer the money because enough money had already been transferred to completely fund the
52 account for the 12-month period ending June 30, 1993.
53
54 Milligan said that only on one ground could that be done and that would be if RP & L did not have sufficient
55, earnings to do it and that could not be decided over the vote of the Board. He said this Board can move that
56 money into the account retroactively and accomplish the will of the Board as stated on September 20.
57 Councilmember Donat said she had talked with attorney Charles Braddock by telephone and he indicated that
58 Philpot is correct in that he cannot indicate there is money in a fund that was not there. She said the fund was fully
59 funded and the statute said money in there by June 30, 1993 determines how much can be given in that year and
60 that did not change until September 20 and those figures cannot be changed.
61
62 Councilmember Donat said Braddock added that it could cause problems with the State Board of Accounts and
63 they should be called now and advised about the issue. Milligan said he assumed that Huffman did not turn down
64 his pay check when this Board retroactively adjusted his pay in May to October of the preceding year, adding that
65 this Board has the authority to make the proper adjustment. He noted that Councilmember Allen is the first person
to insist that this adjustment be made and that was early in the fall after the $2,066,677 payment to the City had
been agreed upon by a 5 to 4 vote.
•
•
•
•
RP&L Minutes Conn .
December 6, 1993 ' - . •
Page 4'
•
•
1 Councilmember Elstro said he thinks Philpot Should check with the State Board of Accounts and get back to the
2 Board at its next meeting. Milligan pointed out that Grimes is the fiscal officer of RP& L and he has checked with
3 the State Tax Board, noting that is required and it is important to do by the end of the year or it puts the decision
4 as a Common Council concerning the 1994 operating budget of the City in jeopardy.
5
6 In answer to a question by Councilmember Hutton, Milligan said that what was dealt with on September 20 was
7 done as a Common Council, dealing with income items to the general fund, setting up an income item from the
8 utility in the general fund budget of $2,066,677. He added that as a practical matter it should have been done
9 earlier this fall and Councilmember Allen had attempted to get it done. Councilmember Allen moved to pass
10 Resolution No. 7 but was reminded there is a motion on the floor. In answer to a question by Councilmember
11 Lundy, Milligan explained item No. 3 in Resolution No. 7, stating that it will enable the Board in future years to
12 follow the same funding level because if it chooses to fund at that level it has to have that kind of money in there.
13 He added that this in no way binds this body as a Council appropriating money from the utility in future years but
14 give the flexibility to adopt a$2,070,000 level of funding.
15
16 Philpot restated that he knew of no way to alter the books to indicate the utility had more in there than it had as of
17 June 30, 1993. Councilmember Elstro asked for a vote on Resolution No. 7. Philpot said he wrote a letter to
18 Milligan on September 8, 1993 asking his legal opinion on the amount to be transferred but received no reply. He
19 added that the way he understood the statute was that you could transfer the amount to the City that was in the
20 cash reserve fund as of June 30, 1993. Councilmember Allen stated that she had attended the meeting of the
21 State Tax Board with Grimes and asked him if that Board seemed to think it would be a problem to change that
22 figure. Grimes answered that that Board's only concern was that they have documentation that Council approved
23 the budget for$2,066,677 since there was $1,881,634 in the cash reserve fund as of June 30, 1993. He said that
24 Board wanted documentation in the form of a resolution that this body had approved the additional amount to go
25 into the cash reserve fund. He added that is always a case for adjusting entries.
26 •
27 Councilmember Donat said Grimes had met with the State Tax Board and the indication she received from
28 Braddock was that the State Board of Accounts would look at this and question it. She said she believed
29 Councilmember Hutton's motion was in order to table the resolutions to give the Board time to consult with an
30 attorney who will be able to explain it to them. She said they should contact the State Board of Accounts to make
31 sure that what the Board is doing is proper so there won't be a problem in the spring auditing.
32
33 Grimes said the budget documents and minutes indicate that this Board as a Council had approved an amount
34 greater than was in the cash reserve fund. He added that what the State Tax Board wants is a reconciliation
35 document in terms of a resolution to bring into balance the difference between the cash reserve fund and the
36 miscellaneous revenue page in the budget. Philpot said he can adjust, but cannot change the figure.
37
38 Huffman said there is a provision in the statute that an emergency can be declared and the Board can appropriate
39 the money that has been collected since June 30, 1993, prior to the end of the year and transfer what additional
40 money it wants to transfer. He said that action would rob what would be transferred the next year. He said
41 Councilmember Lundy was correct when she said the appropriation for 1994 was a one shot deal and nobody has
42 ever told RP&.L anything different.The motion to table action on the resolutions was adopted on the following call
43 of the roll:
44
45 Ayes:Elstro, Lundy, Donat, McBride, Parker and Hutton.
46 Nays:Brookbank,Allen and Dickman.
47
48 Councilmember Lundy asked if, in the--meantime, can paperwork be done to get this straight. Milligan said
49 Resolution No. 7 accomplishes what the Board wants to accomplish and it is the correct way to do it. He
50 explained that had those payments not been omitted in May and June the Board would have gone with the other
51 procedure of the emergency. He noted that the operating statement shows that they were charged as expenses
52 but the money was not transerred in the cash reserve fund. Huffman said they could have put $5 million in the
53 account and it could have been transferred but they didn't elect to put $5 million in. He said the Board gave the
54 indication the amount would be$1,650,000, adding that RP& L did not violate anything in May and June.
55
56 STREET LIGHT COMMITTEE REPORT
57 •
58 No report was presented: However,'Councilmember Donat had two petitions,one for the Hunter's-Pointe area and
59 the other for the Gravel Pit Road area;which she gave to Councilmember McBride. •
61 MISCELLANEOUS_BUSINESS. •
-
62 . .
63 Scott Haas,who coaches-in the Richmond Youth League,'gave background on the league which was'established
64 more than 30 years ago starting near Filby Road. He said 14 years ago they moved to Springwood but they are
65 outgrowing the area. He said they need a larger facility and possibly a playgroundfor young children. He said they
need a promise of'a long-term facility. He said they practice some on the RP & L field and are looking for an area
in the City where the league can grow. He said they currently have 200 participants ranging in ages from 6 to 14.
Councilmember Parker asked Haas if he had talked with-the Park Board and Haas said they were never able to
get more than a year's notice. Hutton suggested Haas call and get on the Park Board agenda in January.
•
RP&L Minutes Cont'd
December 6, 1993
Page 5
1 REPORT BY GENERAL MANAGER
•
3 Huffman said RP&L receives compensation from IMPA for the use of its facilities and the agreement was for 41
4 percent and they will pay 41 percent of the ongoing maintenance of that line. He added that there are certain
5 accepted methods to get this approved by IMPA and he intends to get with Jim McClarnon so he could have.
6 conversation with Milligan to get some of this resolved. He noted that IMPA has a history of doing things the way
7 they have and this is the first time they have come under questioning. He added that it has been a procedure that
8 all•City Attorneys have done and there has never been an objection until this year. He said until this gets done,
9 IMPA is going to have the money in its pocket and he would like the money in RP&L's pocket so it can draw
10 interest and get some money to cover the operating expense of it.
11 -
12 Milligan distributed to councilmembers copies of the letter he sent to Huffman. He said the IMPA purchase -
13 agreement dated early in November came to his office Friday morning. He said he faxed it to Huffman Friday -
14 afternoon,noting there was no problem with the proposed IMPA agreement which sets out a number of provisions
15 with regard to bonded bond service which does not apply to RP&L since it does not have any bonds. He said in
16 talking about-the RP&L Board,the designation on page 9 of the agreement is who signs the agreement. Milligan
17 said the IMPA attorney proposes that Mayor Roger Cornett sign it and Milligan said he is proposing the Board
18 authorize by Resolution No.8 to have the general manager sign it. He added that he would be happy to talk with
19 anybody in,Indianapolis including McClarnon.about how RP&L is organized.
20
21 Milligan said the cover letter indicates that this Board's predecessors in 1935 elected to organize this electric utility
22 and quoted the second paragraph as saying it is under the power of the authority of the Common Council of the
23 City of Richmond. He said the Mayor has nothing to do with RP&L and this resolution simply carries out that
24 consistent theme that the Mayor does not sign a contract on behalf of RP&L. He said the superintendent or the
25 general manager signs it under the statute. He added that as a Board they simply sign a resolution for Huffman to
26 enter into this agreement which carries out the will of the organization of the goverance of this utility. He said the
27 Mayor has nothing to do with RP&L but the nine councilmembers do and there is no reason to hold up any flow
28 of funds from IMPA.
29
30 Huffman said that on the fourth page of the agreement it states that it is to be signed by two parties-one is the
31 City of Richmond (on behalf of)and the other is IMPA. He added that IMPA is going to have to be satisfied and it
32 will have to be worked out between Milligan and McClarnon. Milligan stated that IMPA does not govern RP&L
33 but the statutes of Indiana do. He said he would be glad to talk with IMPA.Councilmember Hutton moved to table
34 Resolution No.8,second by Councilmember Donat and it was adopted on a unanimous voice vote.
35
36 Huffman asked if it was the Board's intent to accomplish everything at the December 20 meeting for the remainder
37 of the year, noting that if plans are to have an additional meeting he needs to know so he can make arrangments.
38 Councilmember Dickman suggested that possibly the RP& L meeting could be started earlier.Councilmember
39 Hutton suggested that all sides get together and get it worked out if there are problems beforehand.
40
41 ADJOURNMENT
42
43 There being no further business,on a motion duly made,seconded and passed the meeting was
44 adjourned.
45
46
47
48
49
50 Jane R. Brookbank,Chairperson
51 .
52
53
54
55
56 ATTEST:
57 Norma Games,City Clerk
58
59 .
60
61
62
63
64
65