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HomeMy WebLinkAbout2004-04-28 Water Board MinutesMINUTES SPECIAL MEETING OF THE WATER BOARD COUNTY OF HAWAPI April 28, 2004 Hilo Operations Center Conference Room MEMBERS PRESENT: Mr. Earl T. Nakashima, Chairman Mr. Ivan Mochida, Vice - Chairman Mr. Thomas Goya Mr. Loren Heck Ms. Sandra Scarr Mr. Milton D. Pavao, Manager (ex- officio member) ABSENT: Ms. Pamela Hons, Water Board Member Mr. Leonard Tanaka, Water Board Member Mr. George Wilkins, Water Board Member Mr. Bruce McClure, Director, Department of Public Works (ex- officio member) Mr. Christopher Yuen, Director, Planning Department (ex- officio member) OTHERS PRESENT: Ms. Katherine Garson, Deputy Corporation Counsel Mr. Dave Jochim, R. W. Beck, Inc. Mr. Tom Cutting, R. W. Beck, Inc. Mr. Stephen Shropshire (10:20 a.m. to 11:00 a.m.) Department of Water Supply Staff: Mr. Quirino Antonio, Deputy Manager Mr. Richard Tsunoda, Waterworks Controller CALL TO ORDER: - Chairman Nakashima called the meeting to order at 10:05 a.m. STATEMENTS FROM THE PUBLIC None APPROVAL OF ADDENDUM AND /OR SUPPLEMENTAL AGENDA None MISCELLANEOUS: Page 1 of 12 Minutes April 28 2004 Special Meeting.doc A. STRATEGIC PLAN UPDATE AND REQUEST FOR INPUT: 1. Mr. Dave Jochim of R. W. Beck, Inc. (Beck), provided the Board with a status update on working sessions held with DWS staff subsequent to the March 23, 2004, Water Board meeting. These working sessions were held with staff on March 24, April 6, and April 20. 2. Mr. Jochim presented the Draft "2004 Strategic Plan 2009" to the Board and would be taking input and adjusting the plan. A draft business plan will be prepared and covered with the Board at its May 25, 2004, meeting. They plan to have the documents adopted by the Board at its June 22, 2004, meeting. Topics covered follow: • Board Strategic Direction - confirmation of long range goals provided by the Board during the March 23 meeting (seven goals were reviewed). • DWS Draft Issues, Goals and Strategies - presentation of DWS issues and goals associated with the Board's Strategic Direction and presentation of draft strategies to accomplish stated goals. The strategic Vision developed by staff during its three working sessions is, "The Department of Water Supply will be a recognized industry leader, an employer of choice, and will supply all water needs of the County of Hawai`i." Mr. Jochim explained that the word "choice" means that people will want to come and work for DWS. Ms. Scarr applauded the Department for this vision statement. To be a recognized industry leader, you have to have your act together on all fronts -- engineering, financial, customer relations, management, and training. Key Performance Indicators (KPI's) - discussion of how DWS will measure its performance in carrying strategies forward. The KPI's were developed by staff. Two KPI's were identified for each issue. Core Values - discussion of proposed DWS organizational values. From the Board's discussion on March 23, staff went through a gap analysis. Mr. Jochim walked through the five strategies associated with those issues: ➢ Issue I -Staff and management should better understand and operate within their roles and responsibilities. (The goal is to achieve a responsible environment that brings employee empowerment, satisfaction, accountability, and efficiency.) Ms. Scarr thought that training would have played a bigger role in one of the strategies. Her thought was to bring in trainers or send staff on month -long training. KPI #1 - when we can say we have achieved 80% or better job performance rating beginning in 2006. Ms. Scarr asked what the current state of that rating. The Manager replied it has not been compiled yet, but will be in order to establish a base line. KPI #2 - starting next year, develop an employee survey and hope to see a 10% increase in employee satisfaction on an annual basis, after establishing a base line. Ms. Scarr mentioned the County's survey of its departments showed this Department had the highest level of employee satisfaction (low turnover). Mr. Heck suggested starting our own base line by starting year by year. There is very little cost in an annual survey. Ms. Scarr suggested you could have a different KPI that says staff and management will achieve certain qualifications or certifications. It would be an additional way to document performance. The Manager clarified that those that Page 2 of 12 Minutes April 28 2004 Special Meeting.doc are required to be certified in certain areas are already certified. You would not want to require more than what is necessary by job description. ➢ Issue 2 - Department needs to become more operationally efficient. (The goal is to have system and employee efficiencies that achieve customer satisfaction and "best in class" status) Ms. Scarr noted that the Department does not send its key engineering staff to the national conferences. She learns a lot by attending them, but then, she is not the one who has to implement them. They cover new technologies such as membrane technology, customer relations, all very important for managing a modern utility. She felt the Department would budget for sending key personnel. The Manager explained that staff is sent to special seminars throughout the year, through the AWWA, but not annual conferences. The national conference is especially hard to send many staff to because of cost. KPI #1 - beginning in 2006, start tracking and reduce customer complaints by 10% a year. KPI #2 - beginning in 2006, reduce backlog by 10% annually. Mr. Heck asked when it comes to measuring efficiency, if there were any way to reduce the C.I.P. length of time, number of jobs (reducing backlog). The Manager stated that a lot of the delays are due to legislative, federal, and procurement requirements. Example, a few years ago, we could process a contract in 30 to 45 days. It now takes two to three months because of additional requirements - -all resulting from the fact that people do not trust people in government. ➢ Issue 3 - Department must responsibly optimize revenue generating and cost minimizing opportunities. (The goal is to provide water to customers at the lowest possible rate.) KPI #1 - the general fund annual expenditures will be within 2% of the Board approved budget, starting in 2006. KPI #2 - focus on the energy program and energy costs per unit of water delivered will be reduced by 5% annually, beginning 2005. Ms. Scarr mentioned the Department's energy plan, which was very impressive. She asked if that is being implemented. The Manager explained that the Department is trying to do the easy things first; also looking to recruit an energy manager but having a hard time finding someone. He added that during staff s discussion, many felt that 5% was too much; but the personnel in Operations who have a good handle on it say it is possible. Discussion followed on Ms. Scarr's suggestion that by placing a small turbine generator in every one of the lines running downhill in Kona, could probably achieve that goal by feeding energy back to HELCO and saving expenditures. She mentioned credit at a retail rate. After Mr. Goya provided some information from HELCO's perspective, Ms. Scarr mentioned there is a federal law that says HELCO has to accept energy generated onto its transmission lines and asked about PUC regulations on the rate at which it has to pay. The Manager stated it is 6¢ and the Department pays 17¢ to use it. Ms. Scarr also mentioned that the Department's energy plan should be part of this plan as well. Page 3 of 12 Minutes April 28 2004 Special Meeting.doc ➢ Issue 4 - Department needs common direction with buy -in from all stakeholders. (The goal is that the strategic and the business plan will be fully understood, supported, and endorsed by all stakeholders) KPI #1 - reduce the agricultural usage of potable water by 20% by the year 2010. Ms. Scarr asked if that meant by providing non - potable sources. She did not want the farmers to look at that and think they are being cut off from the ag use. Mr. Jochim stated that this would presume that other sources would be found, and there are tactics to address that. The backup is the vision statement, "... all water needs of the County..." KPI #2 - beginning 2006, staff and the Board will, at an annual work session, concur that 80% of the items identified in the business plan are actually completed or have been satisfactorily addressed. Mr. Jochim noted that this made a few people a little nervous. Mr. Heck noted that "satisfactorily addressed" does give some leeway. Mr. Jochim stated that it would be more than just "we tried and did not get there." There need to be compelling reasons why things were not accomplished. ➢ Issue 5 - Water system and facilities must be improved to meet standards and regulations and provide for future needs. (The goal is that the Department will be in compliance with all applicable systems and standards, and the Water Master Plan will support the County's General Plan.) KPI #1 - reduce the unaccounted water loss so that it is equal or less than the national average, which is 10 %, by the year 2010. In response to Ms. Scarr's question of what the current rate is, the Manager replied it is as high as 30% in some older systems; some are about 10 %. Ms. Scarr also asked don't we have to figure out how much capital we have to invest in order to reduce that water loss and what the pay off is in reducing the water loss. Example, if you were going to replace an entire small plantation system that serves 50 homes and spend $5 million doing it, you may reduce water loss, but is it a wise investment. The Manager explained that if you reduce unaccounted water loss, you delay capacity improvements necessary; and that saves cost because you have that water that you did not have before. KPI #2 - the C.I.P. accomplishment rate will be no less than 80% of the annual C.I.P.- approved budget, beginning in 2006. 3. Solicit input from the Board regarding the above topics and seek endorsement of progress and made to date: Mr. Heck commented that the goals are measurable; and if they turn out unrealistic, they may be adjusted. Mr. Cutting mentioned that during the first planning session with staff, they were asked if they had any time on their hands. Nobody said yes. Everybody is busy doing the core business functions. This business plan represents additional work for them. Page 4 of 12 Minutes April 28 2004 Special Meeting.doc Ms. Scarr did not totally agree with that. It means more of doing their jobs efficiently. Mr. Cutting stated that what the Board has not seen, but will see at its May meeting, are the tactics. The number of tactics per strategy is between 5 and 7; do the math, and it comes out to a lot (75 tactics). The Department may have had more than the five issues it articulated, but the five were identified as top ranking. Ms. Scarr went back to see the ones that were dropped out of the ranking. She noted the G.I.S. system was not addressed, which is unusable - -not enough data. Also not addressed was the Financial Management System, which is not working very well. Mr. Cutting clarified that they will be addressed in the tactics. The point is that there is a lot on the table. What he is suggesting is that the Board and staff need to be very patient during the first year or two during this plan because what is needed is to throttle ourselves to understand how much we can take on. Ms. Scarr stated that it is a matter of helping people doing things better to a large extent, and adding some things on. Mr. Cutting gave the example here of designing the business processes. It is time consuming but critical because of what is happening in the industry. Mr. Heck mentioned the hiring of people, which had been discussed before by the Board as being at the top of its concerns. Mr. Goya suggested including a test year so there would be a better idea of what the benchmarks are (looking back and looking forward). That test year could be used to see where we are at and adjust the values. These are very lofty goals, very ambitious, and staff's efforts in this should be appreciated because it does take time. He has done a number of these processes in his 30 years with HELCO. This is actually overtime work because their daily job is dealing with customers and employees. There will always be problems that have to be dealt with first, which would push back these types of planning. The Manager has said his desk is full after spending two days with the Board. Now his nights are going to be full signing his name to projects after he reviews them, and that is a manager's responsibility. He has to squeeze in time to make sure that not only are these goals set, but that the focus is kept on a routing basis so everybody is reminded of them. Ms. Scarr mentioned that is one of the reasons you have the Division Heads. The Manager is at the top of the hierarchy, and each Division Head has to communicate to their respective divisions what is going on, where things are going, get on board. Mr. Goya asked if that meant "more with less," but Ms. Scarr saw it as more of providing staff with a focus rather than adding to their workload. It means providing direction, goals to which everyone is working toward, and team - building. Page 5 of 12 Minutes April 28 2004 Special Meeting.doc Mr. Cutting suggested that so many agencies believe they are done when the planning sessions are completed; but the difference between those processes and the one we are doing here is the companion document - -the business plan. When the Board gets to look at that at the May meeting, for each of the strategies, there will be five tactics. Each tactic will have budgets, schedule of start and finish, who is responsible, how they will be measured for accountability and soforth. This means behavioral change, and he started seeing staff s lighten up a bit at the last meeting when they started talking about tactics and what is involved in actually getting the stuff done. People started realizing the impact to them personally, and it is large. The Deputy Manager also commented that he can appreciate the work that staff has been going through. Ms. Scarr commented that this process can be very empowering, in that employees can have the mindset that this Department can be a leading utility and achieve customer satisfaction, and be a place where everybody wants to work Mr. Jochim stated that after each workshop with staff, the team leaders go back and get input from their sections within the Department. As the Deputy Manager had mentioned, there is excitement about the process; however, there is also that feeling of seeing this before - -now there is a "show me" attitude. Mr. Mochida mentioned that it can have an opposite outcome as well because Mr. Goya had discussed with him the fact that HELCO had gone through a process to become more profitable. The employees are now experiencing low self - esteem because they are being overloaded with work and being watched more and evaluated. In this sense, if you put more evaluation on a person instead of trying to help them do their work better, you will lose sight of motivation. Ms. Scarr agreed, but mentioned there are two important things- -one is to give them the tools to work with, and the other is to set up a reward system for top performance. Mr. Cutting mentioned a book, "Who Moved My Cheese ?" that was read by the Department's key people and will eventually be read by all staff. This book deals a lot with behavioral change, and that is what it will take to accomplish this strategic plan. He added that the change will not only be for the staff, but also for the Board. Mr. Cutting directed the Board to its rules or guidelines, or what is expected of each Board Member. Ms. Scarr stated that the County Charter outlines that the Board manages the Department of Water Supply. Mr. Cutting asked how the Board is going to manage this, or what is the Board's expectations as we go forward with this process. Ms. Scarr referred to Mr. David Tarnas' notes from the November 13 and 14, 2003, planning session to see how the items match today. There were nine issues that the Board voted on at that meeting: Page 6 of 12 Minutes April 28 2004 Special Meeting.doc 1. "What is the Department of Water Supply and Board of Directors' role in developing water systems for those people not within the existing water areas..." That has been addressed by the Mission Statement. 2. "What is the best rate structure and sufficient revenue to improve existing aging systems and to develop new systems." 3. "Servicing critical customers." She noted that this one has not been addressed, such as hospitals, major businesses, etc. 4. "Improving the infrastructure, agricultural water, master metered subdivisions..." Addressed 5. Others that were lower on the list, "non- paying customers," "servicing resort areas," "unfunded mandates," "restrictions from Civil Service and Procurement Code." Of the list of things on the list, "servicing critical customers" is the only one she does not see in there. The Manager stated that it goes back to operational efficiencies- -back ups, reliability of the system. Ms. Scarr suggested in one of staff's tactical sessions, it might address that issue. Starting with Page 1, Mr. Cutting went through the draft and invited the Board's input (he asked for their reaction on a scale of 1 to 10). Mr. Heck, Ms. Scarr, and Chairman Nakashima gave a 9. Messrs. Goya and Mochida rated it 8. Page 5 - Ms. Scarr stated we have not addressed staffing problems and inefficiencies created by Civil Service and union rules. Mr. Jochim stated that the strategy that they recognized was that they cannot change Civil Service, but some of the tactics that address that get into what the Department has control over, what it does not, and how to address things it has control over - -if cross - training is possible without getting in trouble with Civil Service rules. Page 5, Column 1, second row, "inefficient ability to use, invest, and financially manage money - Ms. Scarr noted there is no explanatory comment. She mentioned the memo from the County of Hawai'i with regard to how much control the Department has over investing its money. She wondered if it were worth pursuing at all, in terms of the law. Ms. Garson did not see how else you could pursue it; however, she suggested having Mr. Hee look at it and ask for his opinion. Mr. Tsunoda stated that he had spoken with the County Treasurer, and he has an interest in looking at the investment policies of the County. Currently, he is restricted to investing only within the State. However, Council has the final authority, so he will be researching that. He mentioned the County of Maui's ability to solicit RFP's and contract with investment bankers. This information was provided to our County Treasurer for his information. Page 7 of 12 Minutes April 28 2004 Special Meeting.doc Ms. Scarr asked to see a copy of that (Mr. Tsunoda will provide). Mr. Heck was surprised that the agricultural goal was still on the board and was confused as to how much control this Board has, other than potable water. It is the State Department of Agriculture who is responsible to provide water to the farmers. The Deputy Manager stated that it is more of a matter of working with them. (Ms. Scarr had mentioned that the vision statement covers this issue.) Page 6 - shows seven directives from the Board. Mr. Cutting stated that every year, the Board has the opportunity to adjust these strategic directions. Page 7 - Mr. Cutting noted that the word "mission" was substituted with "vision" for clarity. He explained how staff came up with the vision statement. Once adopted, this will become a public document. He asked if the sentiments in the vision statement are shared by the Board. (The Board responded in the affirmative.) Discussion followed regarding the Board's role in the communities. Ms. Garson clarified that each Board Member needs to make clear, when approached by the public, that they are not speaking for the Board. It is more of a gathering of information. Although each Board Member is from a different district of the island, they do not really represent that district, but they represent the water needs of the County as a whole. In that way, it differs from the County Council. Ms. Scarr stated that it is beneficial having someone in each area that can hear the concerns and bring them back to the Board. The Manager offered the Board Members the option of inviting a member of the Department if they wish to have representation there. Going back to the vision statement, Mr. Cutting stated that if the Department's staff will be able to go forward and be ready to answer questions about its day -to -day activities, what would the Board's answer be to the same question. Mr. Heck and Ms. Scarr mentioned the goal of increasing what the Department does to move forward in the direction of serving the needs of this County, and the C.I.P. list will need to reflect that. Page 11 - the five issues that staff and R. W. Beck, Inc., have "tweaked" are shown. Ms. Scarr asked how staff's performance is currently evaluated. The Manager explained that a yearly job performance report (JPR) is conducted by each employee's respective section or division head on a form that is unique to this Department. Mr. Jochim added that an objective is to have training on these JPR's in an effort to have uniformity in completing the forms. Page 12 - R. W. Beck, Inc., will fix the graphics by including a check box in front of each item. The Board's suggestions on the issues are as follows: Page 8 of 12 Minutes April 28 2004 Special Meeting.doc Servicing critical customers • Address as a tactic. Sherman Hee to review memorandum from County of Hawai'i on investments. Maui policy to be sent to the Board. Fix classifications Issue 2 • Check off "Stay ahead of EPA/DOH regulations" suggested by Ms. Scarr. The reason is that the Department knows what they are years in advance because they are in a "pipeline" of public hearings and approval processes. Should have someone on staff watching for these in order to get ready for them - -they should not be a surprise. Issue 3 Under Strategy 2, Ms. Scarr added "explore alternative internal and external funding sources for expansions." • The goal, suggested by Ms. Scarr, is not fully in line with the vision statement because it says "...Department be able to provide water to its customers..." It is actually to the "County." Issue 4 • Ms. Scarr mentioned that other water utilities have hired a customer or public relations person to handle press releases, communicates with the public, and helps communities in their efforts in developing water. Mr. Cutting mentioned a position has been added to the Table of Organization that serves two functions: public relations and maintaining the strategic plan. Issue 5 Add check mark to the second strategic direction (develop and /or enhance financial skills and knowledge), suggested by Mr. Goya. On Strategy #3, place a check mark. Page 18 - KPI's for the five issues. Ms. Scarr asked how the measurements are going to work. Example, "reduce customer complaints by 10% per year." She questioned what gets classified as a customer complaint. Mr. Jochim replied that one of the tactics will be to set up that baseline, such as what is tracked, how it will be tracked, how long it takes to respond to complaints, etc. Mr. Goya stated that is why he had asked for a test year. By the time we are through with this initial process, it would be nice to be able to go forward for the next five -year plan. Mr. Heck asked about the first issue and how number one relates to it - -the first KPI. There is no common direction on agricultural water. Mr. Cutting replied that during his first meeting with the Board, what he heard about a lot was the need to address agricultural water. The idea here is by thinking long -term, what is it the Board is trying to do - -that that is to wean the use of potable water for agricultural use. Page 9 of 12 Minutes April 28 2004 Special Meeting.doc Ms. Scarr added that the idea is to replace potable sources with non - potable. She mentioned earlier statistics provided by Mr. Tsunoda on the agricultural use by district. It is about 6% and is primarily in North and South Kona and Puna districts. In that case, why have this as a KPI. Mr. Cutting stated that it is more of a Board issue. Staff members asked themselves if there were anything that can be done about it. The reason it was included is because any Board issue becomes a Department issue. This indicates that staff is listening to the Board. Ms. Scarr mentioned that it will come up as part of the water rates again. The Manager stated that another reason it is there is because the Board or the Department sees itself as kind of venturing in, not only to potable water, but to other areas because of the statement, "all water needs." We all realize the Department needs to be a bit more proactive to total water needs of the County. This, by no means, says that the Department will stop serving the agricultural community; but will look for alternate sources. Ms. Scarr suggested rephrasing it to that effect. Mr. Heck also stated that somebody reading this document could interpret it as meaning we are trying to cut back on water for agricultural use. Mr. Cutting will rephrase it, "identify alternative water options so that potable water is reduced." Last page - new positions will be added because of the strategic planning process. The Manager stated two are shown on the revised Table of Organization - -the public relations /strategic plan position and the contracts technician. 4. Identify Next Steps in the Strategic Planning process: Beck will be seeking the Board's adoption of the final plan at its June 22, 2004, Water Board Meeting. Mr. Cutting asked for the Board's endorsement of this document, with these suggestions, so that staff may comfortably go forward. ACTION: Mr. Heck moved to endorse this draft strategic plan; seconded by Ms. Scarr and carried unanimously by voice vote. Ms. Scarr asked how the Board will collaborate with the Department on the C.I.P. plan. She suggested having a session where staff and the Board discuss how to spend its money. Mr. Jochim stated that one of the tactics in the master plan will be as the C.I.P. projects are developed, they will be developing a template that will be used to create a business case for each project. Example, if there is a pipeline project, there will be description of the project, cost, etc., and perhaps a map. It will identify criteria that will be used to evaluate all C.I.P. projects, addressing regulations, growth, etc. Then projects will be rated according to each of Page 10 of 12 Minutes April 28 2004 Special Meeting.doc those criteria. What it allows us to do is then put it into a database where you could go back if you needed to update it or change it on the priority list. A lot of utilities are now using that approach and call it their asset management system. Ms. Scarr's concern was that there will be projects that could be done but would not be on the list because they are not a pressing need in the current water systems. That way, the Board would never get to choose between, example, putting a well in at Opihihale at $1.5 million to $2 million, versus a million other things that might be worthwhile projects. But the impact of doing that, which would be serving new customers, could have much greater consequences for the master plan development in the future; but we will never get to it because nobody will suggest it. The Manager mentioned the review of the $31 million identified that needs to be cut back because there is only $11 million to spend. We have more projects than we can handle, currently, on what we plan to do next year. Upon request, he will provide what they have now ($31 million in projects) by mail for the Board to review. Ms. Scarr was not completely satisfied that the Board knows how much money it has to spend. Mr. Cutting summarized that Ms. Scarr is looking for a benefit cost analysis. Ms. Scarr stated that she has argued in the past about repairing old systems that serve very few people at a very high cost. Yes, they are existing customers; but the payoff spending the money somewhere else could be much greater. The Manager reminded about the fact that in some cases, it is EPA mandated; and the Department does not have a choice. He added it would be more appropriate to assist with funding rather than put the Department's money up front. Mr. Mochida asked if the State Department of Transportation Director could be invited to attend the Water Board's June 22, 2004, meeting in Hilo. The Manager replied that he will send a letter, but to keep in mind that he has no control over the outcome. Mr. Goya asked what information came out as a result of one of the people who testified at yesterday's Water Board Meeting in Ocean View about Hawaiian Home Lands in search of buildable lots. He asked for an update from them and how it would impact water hookup. Mr. Cutting suggested that at the May 25, 2004, Water Board Meeting, the Board devote one hour to discussing how the Board might move forward to embrace and promote this plan in particular. Have discussion on Board level strategies and perhaps policies it may want to endorse to support this plan. He added that the total time he requested was two and a half hours. Page 11 of 12 Minutes April 28 2004 Special Meeting.doc MANAGER'S REPORT None CHAIRMAN'S REPORT: None ANNOUNCEMENTS: Next Meeting: The next meeting of the Water Board will be held on May 25, 2004, 10:00 a.m., in the Royal Kona Resort, Discovery Room. STATEMENTS FROM THE PUBLIC: None ADJOURNMENT ACTION: Mr. Mochida moved to adjourn the meeting; seconded by Ms. Scarr and carried unanimously. Meeting ended 12:22 p.m. Secretary Page 12 of 12 Minutes April 28 2004 Special Meeting.doc