Quarterly Report: 2014, January - March (Q3), Hooper Bay

Community:
Hooper Bay 
Staff:
Fred Broerman  
DCRA Regional Office:
Bethel regional office 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
Yes 
Agreement Date:
3/28/2006 
Entity:
City of Hooper Bay 
Population:
1134 2013 Department of Labor Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
10/6/2011 
Exp Date:
3/28/2008 
Last Updated:
4/7/2014 
Community Sanitation Overview:
According to Census 2010, the City of Hooper Bay has a population of 1,149. Since 1994, approximately 50 million dollars of federal and state funds have been invested in building Hooper Bay's water and wastewater system. The water treatment plant/washeteria building was completed in 2007, and a satellite utility building was completed in 2009. The community's clinic, clinic housing, school, Head Start building, and teacher housing were the first to be connected to the community's new water treatment/washeteria facility completed in 2007. Since then, above ground arctic pipe service lines have been built and about 30 households and most of the community's commercial establishments have been connected to piped water. About 150 more homes are scheduled to be hooked up to the piped system in 2014. At the time of this writing, residents living in 216 dwellings haul water from watering points for cooking, cleaning, and washing needs. Residents also self-haul their garbage and honeybuckets to a solid waste site and wastewater lagoon respectively. The new water treatment/washeteria facility also provides 18 washers, 12 dryers, 16 showers and two saunas that residents can use for a nominal charge. The watering point at the old town site is also connected to the new water treatment plant. The city is pursuing a solid waste management grant to build a new wastewater lagoon. 
RUBA Status & Activities This Qtr:
On March 4, 2014, Hooper Bay's city council approved turning over the management and operation of the municipality’s water and wastewater system to Sea Lion Corporation (SLC). Then on March 20, 2014, SLC’s board of directors, likewise, approved taking over the responsibilities of managing the utility starting on April 1, 2014. Therefore, comments below regarding RUBA compliance are based on the City of Hooper Bay’s management of the utility. Updates to this report after April 4, 2014 will reflect SLC’s management of the utility. Bethel RUBA staff visited Hooper Bay's city office from February 10-13, 2014 to meet the new administrator and review the city's FY14 budget/multi-month financial report spreadsheet. City council had amended its FY14 budget on July 15, 2013. However, the new budgeted amounts were not entered in the FY14 spreadsheet. Therefore, it could not be used with any degree of certainty in comparing year-to-date amounts to line item budget allocations. Bethel staff fixed numerous formatting errors in the spreadsheet. The spreadsheet was then compared with monthly profit and loss by class reports to catch QuickBooks entries that were incorrectly classified or categorized. Bethel RUBA staff also assisted the city administrator with contacting IRS to resolve delinquent federal payroll taxes from September 2013. The city administrator was concerned about a cash shortfall of around $166,000 and was looking into a tobacco excise tax to generate revenue for the city. On February 21, 2014, the city council approved motions to pursue raising city sales taxes from 4% to 5% and draft a tobacco products excise tax similar to those in place in the City of Bethel and Matanuska-Susitna Borough. Raising the sales tax requires a ballot measure, the tobacco excise tax can be implemented by city council passing an ordinance. 
RUBA Activities for the Coming Qtr:
Bethel staff will be working with Sea Lion Corporation on RUBA compliance for the utility's essential and sustainable indicators.
Scores:
 
Essential Indicators:
21 of 27
Sustainable Indicators:
18 of 27
Total Score:
39 of 54

Finances

Essential Indicators
Answer Question
Yes All revenues and expenses for the utility are listed in the utility budget.
No The utility has adopted a balanced realistic budget.
Yes Monthly financial reports are prepared and submitted to the policy making board.
No The utility is current in paying all water/wastewater electric bills.
Yes The utility has on hand a year's adequate fuel supply or it has a financial plan to purchase an adequate supply.
No The utility is receiving revenues (user fees or other sources) sufficient to cover operating expenses.
Sustainable Indicators
Answer Question
No The utility is receiving revenues (user fees or other sources sufficient to cover operating expenses and Repair & Replacement (R) costs.
No YTD revenues are at a level equal to or above those budgeted.
No YTD expenditures are at a level equal to or below those budgeted.
Yes A monthly manager's report is prepared.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
The city's water and wastewater utility is subsidized through gaming revenues. Therefore, the RUBA assessment reviews the entire city budget for compliance. A copy of the City of Hooper Bay's FY14 budget and accompanying ordinance adopted on July 15, 2013 is on file at the Bethel regional office. However, after eight months into the fiscal year it does not appear realistic. According to the city's February 2014 multi-month financial report, year-to-date revenues for the gaming department and the washeteria are significantly below those forcasted in the FY14 budget. The public safety department expenditures are already $50,000 over those allocated in the budget. Year-to-date expenditures are $88,882 more than what was budgeted for FY14. Therefore, the second and sixth essential indicators of this section and the second and third sustainable indicators are marked "No". The city has submitted minutes for council meetings held on December 18, 2013, January 6, and February 21, 2014 minutes that mention the review and approval of the previous month's financial reports. A March 12, 2014 report from Alaska Village Electric Cooperative (AVEC) indicated that the city is not current on its electric accounts, with significant amounts 30 and 60 days past due. On December 17, 2013, the city's administrative assistant indicated that the city had received its fuel delivery for the winter of 2013/2014. The city purchased 35,000 gallons of heating fuel from NorthStar Gas delivered by Vitus Marine. Page fifteen of the city's Water and Sewer System Business Plan Update states that 'the total amount that should be set aside annually for major equipment Repair and Replacement (R and R) is $43,733'. A $2,500 line item R and R expense was included for the water treatment plant in the city's FY14 budget. RUBA indicators require that manager's reports (in this case from the city administrator) be given verbally or as written reports at city council meetings. Manager reports explain the utility's financial report and point out any utility problems or trends that need addressed. Manager's reports meeting RUBA standards were consistantly found in the meeting minutes.

Accounting Systems

Essential Indicators
Answer Question
No The utility has adopted a collection policy and actively follows it.
Yes The utility bills customers on a regular basis.
Yes An accounts receivable system is in place which tracks customers and reports past due accounts and amounts.
No An accounts payable system is in place.
Yes The payroll system correctly calculates payroll and keeps records.
Yes A cash receipt system is in place that records incoming money and how it was spent.
Yes The utility has a cash disbursement system that records how money was spent.
Sustainable Indicators
Answer Question
Yes A chart of accounts is used that identifies categories in a reasonable, usable manner.
Yes Monthly bank reconciliations have been completed for all utility accounts.
No The utility has a purchasing system that requires approval prior to purchase, and the approval process compares proposed purchases to budgeted amounts.
Accounting Systems Comments
Hooper Bay Water and Sewer Ordinance #09-06, adopted October 12, 2009, is on file at the Bethel regional office. Sections 12-17 of the ordinance set parameters and outline the city's collection policy. In May 2011, the city started billing the first 40 residential customers connected to piped water and wastewater services. The city charges a flat rate of $85 monthly to residential customers on the city's piped water and wastewater system. The city also charges residents a monthly $25 sanitation and road user fee. The city uses QuickBooks Pro 2013 for its financial accounting, tracking wages, and payroll taxes. Water and wastewater billings are sent out the twentieth of each month. A January 31, 2014 accounts receivable aging report was provided this quarter. The report shows significant 30, 60 and 90 day past due balances for residential and commercial customers. This indicates the city's collection policy is not being enforced. Therefore, the first indicator of this section is marked 'No'. The City of Hooper Bay Water and Sewer System Business Plan Update (adopted by city council on July 20, 2011) states "in order to bring the collection rates in-line with best practices of at least 85%, the City needs to address its bookkeeping practices and utility policies as well as continue to collect past due amounts". The Business Plan Update also indicates that residential and commercial rates, for piped water services, will need to be increased upon completion of all the service connections and components of the piped water/sewer system. For example, the plan calls for residential piped services to be raised from $85 to $100 a month. The city's QuickBooks' chart of accounts were reviewed by RUBA and the RUBA QuickBooks contractor during an April 29-May 2, 2013 visit to the community. An accounts payable system showing all vendors that money is owed to is not set up in the city's QuickBooks software. Therefore, the fourth essential indicator of this section is marked 'No'. The city provided bank statements and accompanying reconciliation summaries for its checking accounts for December 2013 and January 2014.

Tax Problems

Essential Indicators
Answer Question
Yes The utility has a system to accurately calculate, track, and report payroll tax liabilities.
Yes The utility is current on filing tax reports.
Yes The utility is current on making tax deposits.
Yes If there are any past due tax liabilities or recorded tax liens, a lien release has been issued or a repayment agreement has been signed and repayments are current.
Tax Problems Comments
The utility uses QuickBooks Pro 2013 for its payroll accounting. A March 18, 2014 fax correspondence from the IRS indicates that the city is has a outstanding payroll tax balance for the third quarter of 2013, but has negotiated a repayment agreement. Otherwise the city is in compliance with its federal tax requirements. A March 21, 2014 email correspondence with the Alaska Department of Labor in Anchorage indicated the city is current on its State ESC reporting and filing requirements through December 31, 2013. The city is not listed on the January-February 2014 LIEN WATCH: A Review of Small Community Liens.

Personnel System

Essential Indicators
Answer Question
Yes The utility has a posted workers compensation insurance policy in effect.
Sustainable Indicators
Answer Question
Yes The utility has adopted and uses a Personnel Policy, which has been reviewed by an attorney, AML or Commerce for topics and language.
Yes The utility has adequate written job descriptions for all positions.
No The utility has adopted and follows a written personnel evaluation process that ties the job description to the evaluation.
Yes The utility has an adequate written hiring process.
No The utility has personnel folders on every employee that contain at least: I-9, Job Application and Letter of Acceptance.
Yes The utility has a probationary period for new hires that includes orientation, job training/oversight, and evaluations.
Yes The utility provides training opportunities to staff as needed and available.
Personnel System Comments
A July 18, 2013 phone call to the State of Alaska Division of Workers Compensation in Juneau indicated that the city renewed its policy with Alaska Public Entity on July 1, 2013. A 'Personnel Policy for the City of Hooper Bay' adopted June 8, 2004 is electronically filed in the Bethel regional office. Position descriptions and/or job announcements were provided for the bookkeeper, city clerk, city administrator, substitute city clerk and the water treatment operator, which are on file at the Bethel regional office. In July 2011, several of the city's personnel files were reviewed. None of the files reviewed had all three documents (federal I-9 form, job application and letter of acceptance) required for compliance of this indicator. In subsequent visits to the city office RUBA staff has not been provided with personnel folders that show compliance with this indicator. The city's lead water treatment operator is adequately trained and opportunities for training are provided for administrative and utility staff.

Organizational Management

Essential Indicators
Answer Question
Yes The entity that owns the utility is known; the entity that will operate the utility is set.
Yes The policy making body is active in policy making of the utility.
No The policy making body enforces utility policy.
Yes The utility has an adequately trained manager.
Yes The utility has an adequately trained bookkeeper.
Yes The utility has an adequately trained operator or operators.
Yes The utility has adopted the necessary ordinances (or rules and regulations) necessary to give it the authority to operate.
Sustainable Indicators
Answer Question
Yes The utility has adopted an organizational chart that reflects the current structure.
Yes The policy making body meets as required.
Yes The utility complies with the open meeting act for all meetings.
Organizational Management Comments
Section 5 of the city's Water and Sewer Ordinance #09-06 adopted October 12, 2009 states: 'The Hooper Bay Water and Sewer Utility has been created by ordinance and charged with the operation of the city's water and sewer infrastructure as an enterprise of the city'. On July 20, 2011, the city council approved the city's Water and Sewer System Business Plan Update which indicates city council (the policy making body) is active in the policy making of the utility. A January 31, 2014 accounts receivable aging report was provided this quarter. The report shows significant 30, 60 and 90 day past due balances for residential and commercial customers. This indicates the city's collection policy is not being enforced. Therefore, the third indicator of this section is marked 'No'. The city's bookkeeper has held her current position for 22 years and is skilled in QuickBooks operations and summarizing city financial data in Excel spreadsheets. The city has a Class 2 Water Distribution System and the city's lead water treatment operator is certified to the level required to operate the plant. His Water Treatment 2 certificate expires on December 31, 2014 and his Water Distribution 2 certificate expires on December 31, 2016. However, according to a March 21, 2014 query of the Alaska Certified Water/Wastewater Operator Database, the city's assistant operator is not certified. Page six of the city's Water and Sewer System Business Plan Update approved by council on July 20, 2011, contains an organizational chart that reflects the city's current structure. The city council attempts to meet monthly pursuant to Alaska Title 29. Public notification of meetings and the manner in which they are conducted are in accordance with Alaska's Open Meeting Act.

Operation of Utility

Essential Indicators
Answer Question
Yes The utility operator(s) are actively working towards necessary certification.
Yes The utility has a preventative maintenance plan developed for the existing sanitation facilities.
Sustainable Indicators
Answer Question
No The manager receives a monthly O&M report from the utility operator and routinely "spot checks" the facilities to see that the maintenance items are being completed.
No The utility has a safety manual and holds safety meetings.
Yes Utility facilities have not suffered any major problems/outages due to management issues that are unresolved.
Yes The utility is operating at the level of service that was proposed.
Yes The operator provides status reports to the manager on a routine basis.
No The utility has completed and distributed its "Consumer Confidence Report".
Yes The utility is not on the "Significant Non-Complier" (SNC) list.
Yes The utility maintains an inventory control list.
Yes The utility maintains a critical spare parts list.
Operation of Utility Comments
The city has a Class 2 Water Distribution System and the city's lead water treatment operator is certified to the level required to operate the plant. His Water Treatment 2 certificate expires on December 31, 2014 and Water Distribution 2 certificate expires on December 31, 2016. However, according to a March 21, 2014 query of the Alaska Certified Water/Wastewater Operator Database, the city's assistant operator is not certified. Documentation that safety meetings are held was not provided. The utility has not suffered any major problems or outages due to management issues that are still unresolved. Although not all Hooper Bay residents have been connected to the city's water and wastewater facilities, the utility is in good working order and operating at a level of service proposed. CE2 Engineers presented the city with copies of the Water Treatment Plant Operation and Maintenance (O and M) Manual on April 20, 2012. A preventive maintenance plan, along with a health and safety plan, an inventory control list and a critical spare parts list are all included in the O and M Manual. A copy of the city's 2012 Consumer Confidence Report (CCR) is electronically filed at the Bethel RUBA office. However, a certification form signed by a city official indicating the report was distributed and posted in the community has not been provided. The city is not on the January 2014 Significant Non-Complier (SNC) list.