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LANCC Minutes

LANC CONGRESS
October 6, 2007
L. A. DWP Building
111 N. Hope Street, Los Angeles

MINUTES

1.. The Meeting was CALLED TO ORDER by the President, Leonard Shaffer

2. MINUTES of the last meeting were Approved

3. PUBLIC COMMENT

a. Stan Moore – announced the Highland Park Christmas Parade and invited people to apply as entries (individuals, equestrian units, bands, groups, etc.) on the parade route

•  Charlotte Laws – announced the Density Building Conference, sponsored by an Ad Hoc Committee of the Greater Valley Glen NC

•  Daniel Wiseman – reminded those present of the Mayor's Budget Day (Saturday, Oct. 13, 8am to noon) at Room #340, City Hall. He mentioned a possible “shortfall” in this year's $ 6.8 billion Budget of $ 400 - $500 million or more associated with the possible losses of

- the DWP Water Transfer ($ 33 million),
- the DWP Power Transfer ($ 185 million),
- “King TUT” (the Telephone User's Tax, $ 270 million) and
- decreases in income from the decreases in real estate values.

•  DeDe Audet – told us about money given by a developer to the City (since 2000) into a Trust Fund and said there has been no accounting of this Trust Fund.

•  Cindy Cleghorn – asked for support to maintain Verdugo Hills (private) Golf Course (at Tujunga Cyn & La Tuna Sts., between Tujunga & Glendale) ) and to oppose a development of 200+ homes to replace it.

•  (Item #9) - Brady W. – proposing a group of ECONOMIC DEVELOPMENT COMMITTE to address problems and how to solve them. Jack Humphreville would like to include teens and young adults. Workforce population are not well trained or willing. Many businesses find L.A. “unfriendly” (High taxes, difficult ordinance, home values high). DW said this is one of the prime roles (FACETS) OF NCs AND NON-CITY, INDEPENDENT GROUPS OF NCs SUCH AS LANCC. Brady: so far, only individuals are involved. Charlotte Laws would like to see business leaders invited to address and discuss issues. DeDe Audet was concerned that there are so many appointed commissions who are given authority (by the Mayor) and need monitoring by NCs. Coordination of City, County & Private entities to address citywide issues would benefit from NC input. Concept MSP: Brady Chair, opened to all interested parties (several volunteered today).

•  COMMITTEE REPORTS - ANIMAL RELATIONS COMMITTEE - Charlotte Laws told us to expect a report at the next meeting.

•  HOME DEPOT in SUNLAND-TUJUNGA - Cindy Cleghorn reported that the City Council had declared the Home Depot Construction proposal a “project” and that holds progress on the this development. Home Depot is apparently looking for a buyer for their (currently unusable) property. Other possible tenants include Target.

•  SAN PEDRO PONTE VISTA DEVELOPMENT - no further activity reported.

•  DWP RATE INCREASE

ARGUMENTS “FOR THE INCREASE” – by the DWP

a. Greg Bartz & Jeff Peltola have given these arguments in many locations, recently, representing the DWP.

Greg Bartz is the DWP liaison to the NCs. His efforts & efforts of the DWP are substantial. He pointed to the many informative notices that may be found on the website but suggested that some DWP outreach efforts may have actually confused NCs because DWP finances are complicated and complex.

Jeff Peltola is Budget Director of the DWP.

They commented:

- The DWP RATE INCREASES are proposed to be 3.1% per year every year for the next 3 years (a total of 9.3%) and 2.9% per year every year for the next 2 – 3 years (a total of 9.0%).

- The DWP's INFRASTRUCTURE (telephone poles and their electric (power) cables, underground cables, transformers, water mains & water lines) is 40-70 years old and in great need for repair, replacement and redesign… to be done in the next 5 years at something over $1 BILLION. This is sometimes referred to
as “DEFERRED MAINTENANCE.”

- The Power Reliability Program (PRP) is the DWP's plan to invest $ 646 million in FY2007-2008 (and more in each year thereafter) to replace its old, deteriorating and outdated (electrical power) infrastructure. (?funded by bonds?)

- The POWER (Electricity) RATE INCREASE reported by DWP may increase the COST of Electric Power of the “average” residential customer (using 500 khw/month) by about
= $ 1.75 per month in FY2007-2008,
= $ 3.50 per month n FY2008-2009 and
= $ 4.25 per month in FY2009-2010.

- The WATER RATE INCREASE will increase the Cost to Residential Customers by about
= $ 1.00 per month in FY2007-2008 and
= $ 2.00 in FY2008-20009.

- The WATER RATE INCREASES will raise the costs to small businesses would increase by about $ 1.20 and $ 2.50 a month and to large businesses by an average of $ 218 and $ 461 a month, respectively.

- The Energy Cost Adjustment Factor (ECAF) is a “pass-thru” to adjust for the short-term changes in the cost of energy. It was “unfrozen” last year to allow the DWP to recover its expenses for the variable, but recently sharply increasing, costs of natural gas (used to “power” the generators that produce some of our) electrical energy plants). Increases in the ECAF are limited (“capped”) at 0.1 cents/kwh every 3 months.

- DWP's use of Coal-fueled electricity generation plants keeps our rates below SC Edison, PG&E and other California providers but the use of coal and that technology must be decreased and replaced to be more environmentally acceptable and (soon) “legal.”

- Even in the face of these challenges, the DWP is working to mitigate sudden rate and billing increases.

(1) This is the last Base Rate Increase since 1993 even though other incomes have increased.

(2) Old DWP (yellow) trucks are now painted white because white paint is cheaper.

•  DWP's programs providing low-energy fluorescent light bulbs and replacement refrigerators may decrease customer's energy use and energy bills.

•  Installations of solar energy systems and sewer (water) monitoring meters (at private/customer's expense) may lower customer's bills, too.

ARGUMENTS “AGAINST the RATE INCREASE ” – given in the NP-DWP OVERSIGHT COMMITTEE's RESOLUTION (September 2007) were reported by Jack Humphreville, Daniel Wiseman, Heath Kline and others…all of whom had participated in the NC-DWP OVERSIGHT COMMITTEE (OSC)

- DWP's RESERVE FUNDS (as of 07/01/07) were $ 729,773,982 in the POWER RESERVE FUND and $ 419,338,389 in the WATER RESERVE FUND which is MORE THAN ENOUGH TO ABSORB the expected increases of $ 75,000 in the POWER RATE INCREASE and $ 30,000,000 in the WATER RATE INCREASE .

- Recent Power Outages have caused concern

- DWP did not and has not provided enough information to adequately understand DWP's income structure and expenses or to properly

describe the degree of efficiency with which the DWP manages its funds.

- There are Structural Issues of DWP Methods that cause the OSC to reject to oppose the DWP's Rate Increases

•  DWP has acted as if or seemed to be “immune” to the recommendations or influence of the L.A. City Council, Mayor and General Public.

•  Employee salaries are higher at DWP than comparable CITY or PRIVATE UTILITY salaries.

- The statistics presented by the DWP are internally inconsistent and are presented in misleading ways. The following eight arguments strongly suggest that additional rate increases will follow these DWP RATE

INCREASES:

(1) While the POWER and WATER BASE RATE INCREASES may have been spoken of (by the DWP) as 3%, they are 3% per year per year for 2 – 3 years and, therefore, total 6 – 9%.

(2) Raises in any DWP POWER rates also raises the L.A. City's 10% Power Utility Taxes and so even the 3% raises, mentioned above, raise the cost to the customer to a total of 6.6% and 9.9%.

(3) The Pass-throughs (ECAF, Utilities Taxes, etc.) are not include the discussions and they result in much greater increases in the billed rates applied to all customers. Recent raises in the natural gas prices is expected to require another RATE INCREASE in the ECAF, soon.

(4) The existence and the possible effects of the legal challenges to the WATER TRANSFER ($ 30 – 35 million) each year to the L.A. City General Fund was not accurately presented.

(5) The possible impact of the court's decision on the WATER TRANSFER on the POWER TRANSFER ($ 180 - $ 185 million) was not accurately presented.

(6) The possible impact of the BARAKAT vs. DWP court decision (6/10/07, in appeal) which would require DWP to “refund” $ 223 million to six major California governmental entities for misrepresenting the WATER TRANSFER as a “cost” is not resolved and was not accurately presented. Nor was the possibility that future court action might be brought to obtain refunds for other customers (the General Public).

(7) DEFERRED MAINTENANCE is always a failure of wise management. DWP is now speaking of Capital Improvements and funding of the above mentioned DEFERRED MAINTENANCE costs by raising bonds totaling $ 4.4 to 5.7 Billion. These will raise customer rates still further, for many years, until these bonds are paid off.

(8) All of these expenses exceed by 100s of millions of dollars the $ 75 – 110 million which the proposed RATE INCREASE would raise. We know where the rest of the money must come from (from the DWP customers … us).

- Proposals for Rate Restructuring have been promised but they will take years to implement and will require :

(1) the accurate collection and analysis of the data on the variations in the demands produced by variations in regional temperatures (for instance, the San Fernando Valley is “hotter” than the Central City),

(2) proper definitions and data on the effects of “tiering” and “peak hour usage” are not available and

(3) the universal installation of automatic metering (which would provide the detailed data necessary for these calculations and which would eliminate the need and expense of scores of “meter readers”) is just a future dream without specific plans for implementation.

- Any proposed Rate Increases must be “revenue” neutral and not cause increased costs for one class of customers to pay for other customers .

- Many recommendations of the Barrington-Wellesley Group (now called the Huron Group) and the City Controller have been elicited and proposed for 6 – 7 years but, so far, they have apparently been ignored , not discussed by the DWP Board of Commissioners and not implemented.

- This year's Huron Group report was not available to NC-MOU OSC until 3 days before the last available (Aug 18) meeting of the OSC.

- The OSC would like to see established a “Rate-payer's Advocate” (Inspector General) independent of City to monitor and report on these issues.

- The OSC would like to see these and any future proposals for RATE CHANGES to cover only ONE YEAR at a time and to require adequate time for the NCs to review the proposals according to the terms of the NC-DWP MOU agreement.

- Over 60 NCs drafted resolutions in support of the OSC Resolution (only two are willing to the rate increases)

- They recognized the dilemma of getting accurate information to the NCs at their “level of understanding” but some see the recent experience as a DWP experiment in politically-expedience if not frank deception. This makes for a “lose-lose” situation.

- We recognize the dilemma of getting accurate information to the NCs at their “level of understanding.” This makes for a “lose-lose” situation.

•  NCRC REPORT

The Neighborhood Council Review Commission (NCRC) has completed 15 months of deliberations and issued a report containing 73 recommendations. The LANCC participants commented on the following recommendations:

a. Comment related to Recommendation #73 – “The City shall, within 7 years, appoint (another) commission to examine the progress of the NC system.…”

This is a good idea.

•  Comments related to Recommendation #7A - “…City Departments should provide DONE with a list of contact people…and keep it updated” …and…

#10A – “… NC are encouraged to submit Community Impact Statements…” …and…

#16 – “City Council offices shall be encouraged to respond…on matter submitted to them by NCs…”

Communications are a two-way street – City agencies which have received NC input should respond. NCs have a responsibility to respond to Agencies requests. …and… We should emphasize the importance of NCRC Recommendations and process to get them implemented. NCs need to review, realize and respond with their perceptions and advice.

•  Comment related to Recommendation #38 – “…a new Sunshine Law that incorporates the Brown Act and the California Public Records Act …” ...and…

#44 – “The NC election process shall be simplified and standardized…” …and…

#45 – “The City Clerk shall organize and run NC elections.” …and…

#54 – “The City shall provide assistance in outreach and voter mobilization.”

It was an underlying principle throughout the deliberations of the NCRC to make it easier for NCs to do THEIR job and to remove unnecessary detail, process, ordinances (Brown) & impediments (Brown).

•  Comment related to Recommendation #42 – “…stakeholder status in NCs shall be open to those who live, work or own property in the NC and also to those who declare a stake in the neighborhood and affirm the factual basis for it.” …and…

#35 – “The members (NCs) shall reflect the diverse geographic areas of the City…” …and…

#65A – “NCs shall attempt to reflect the diverse geographic area…and diversity of community interests…”

More important than the “stakeholder definition” is involvement of more people who will more fully represent their communities. We should emphasize how NCs interact with their communities, resolve problems, reduce/resolve grievances & complaints.

The “final” results of the NCRC's work can not be predicted. Those Recommendations which the City Council will discuss, modify and/or approve must remain unknown. NCRC Commissioners and their Executive Director have pledged and NC representatives (STAKEHOLDERS) should join them to continue to get these NCRC Recommendations through the City Council legislative process.

Respectfully submitted by

Daniel Wiseman