Quarterly Report: 2014, April - June (Q4), 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 DCCED Certified Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
10/6/2011 
Exp Date:
3/28/2008 
Last Updated:
7/6/2014 
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 Energy Services (SLES). Then on March 20, 2014, SLES’s board of directors, likewise, approved taking over the responsibilities of managing the utility starting on April 1, 2014. From April 28-May 1, 2014 Bethel RUBA staff visited SLES offices in Hooper Bay to assist their operations director and administrative supervisor in getting financial systems set up for compliance with RUBA indicators. This included drafting a realistic and balanced budget for the utility, separating washeteria and water treatment facilities into their own QuickBooks classes so each will be treated as an enterprise, and then projecting annual income and expenses for each line item category. To assist with these tasks RUBA staff created a FY14 budget/monthly financial report spreadsheet for the utility, then worked with SLES staff to ensure classes and categories in the utility's QuickBooks file were nearly identical to those of the spreadsheet which will make it easy to update and cross-check both each month. Bethel staff also drafted an organization chart for the new water utility and gave it to the operations director along with an IRS form 8821 for SLES’s chairman to sign. Having form 8821 on file with the IRS will allow RUBA staff to check the utility’s compliance with federal tax filing and reporting requirements. The administrative supervisor was also provided a RUBA compliance guide. 
RUBA Activities for the Coming Qtr:
Bethel staff will continue to work with SLES in an effort to get the new utility compliant with all RUBA essential and sustainable indicators as soon as possible.
Scores:
 
Essential Indicators:
24 of 27
Sustainable Indicators:
15 of 26
Total Score:
39 of 53

Finances

Essential Indicators
Answer Question
Yes All revenues and expenses for the utility are listed in the utility budget.
Yes The utility has adopted a balanced realistic budget.
Yes Monthly financial reports are prepared and submitted to the policy making board.
Yes 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.
Yes 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.
Yes YTD revenues are at a level equal to or above those budgeted.
Yes YTD expenditures are at a level equal to or below those budgeted.
Yes A monthly manager's report is prepared.
N/A Budget amendments are completed and adopted as necessary.
Finances Comments
SLES's FY14 (calendar year) budget was adopted by resolution on July 25, 2013 is on file at the Bethel regional office. SLES has submitted minutes for its board meetings held on April 2, June 25, 2014. The April 2 minutes mention April and May 2014 monthly financial statements for the utility being reviewed. The April and May monthly financial report indicates that the utility is receiving sufficient to cover operating expenses. A July 2, 2014 report from Alaska Village Electric Cooperative (AVEC) indicated that SLES is current on its electric accounts. The City of Hooper Bay will be assigning eighty percent (about $119,000) of its Community Revenue Sharing payment to SLES to cover fuel costs. However, during the winter of 2013/2014, CE2 Engineers, Inc. installed a heat recovery system to Hooper Bay’s Alaska Village Electric Cooperative power plant. The heat recovery system is now supplying waste heat from the power plant to the water treatment building and is already providing a significant reduction (40-55 gallons per day) to the water treatment plant’s consumption of heating fuel. Page fifteen of Hooper Bay'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 SLES FY14 budget. RUBA indicators require that manager's reports (in this case from SLES's operations director ) 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 found in the April 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
SLES is currently drafting a collections policy which is schedule for review by its governing board in July or August. SLES charges a flat rate of $85 monthly to residential customers on the piped water and wastewater system. SLES uses QuickBooks Accountant 2012 for its financial accounting, tracking wages, and payroll taxes. Water and wastewater billings are sent out on the first day of each month. A June 27, 2014 accounts receivable aging report was provided this quarter. The report shows significant 30 and 60 day past due balances for residential and commercial customers. A copy of SLES's QuickBooks file sent to the Bethel regional office on June 27, 2014 could not be opened. Therefore, it could not be determined if the utility has an accounts payable system in place showing all vendors that money is owed to and when balances are due. The city's QuickBooks' chart of accounts was set up by RUBA and SLES staff on April 29, 2014 and is nearly identical with regards to it classes and categories as the utility's monthly financial report. SLES provided bank statements and accompanying reconciliation summaries for its checking account for April and May 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 Accountant 2012 for its payroll tax accounting. A June 23, 2014 fax correspondence from the IRS indicates that the new utility does not have any outstanding payroll tax balances nor is it delinquent in filing federal tax reports. A July 2, 2014 email correspondence from the Anchoragae office of Alaska Department of Labor indicated SLES does not have any delinquent Employment Security Contribution (ESC) reports or payments due.

Personnel System

Essential Indicators
Answer Question
Yes The utility has a posted workers compensation insurance policy in effect.
Sustainable Indicators
Answer Question
No The utility has adopted and uses a Personnel Policy, which has been reviewed by an attorney, AML or Commerce for topics and language.
No 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.
No 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.
No 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
SLES provided the Bethel regional office a Certificate of Liability Insurance dated July 2, 2014 that included workers compensation insurance coverage for January 1, 2014 to January 1, 2015. SLES is currently drafting a personnel policy for the new utility that is scheduled to be approved by its board of directors in July or August. Position descriptions and/or job announcements have not been developed for the utility. The 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". However, on April 1, 2014 the City of Hooper Bay and Sea Lion Energy Services (SLES) entered into an Memorandum of Agreement (MOA) in which SLES took over the management and operation of the city's water and wastewater facilities. The MOA is electronically filed at the Bethel regional office. Because a collections policy and personnel policy are not yet in place the third essential indicator of this section is marked "NO". SLES's operartions director has over 15 years of corporate accounting and managerial experience. The city has a Class 2 Water Distribution System and SLES'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 July 2, 2014 query of the Alaska Certified Water/Wastewater Operator Database, the SLES's assistant operator is not certified at any level. SLES has provided an organizational chart adopted by resolution on June 25, 2014 that reflects current personnel structure and is electronically filed in the Bethel regional office. The SLES board of directors attempts to meet quarterly and because it is an LLC it governing board is not required to comply 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
Hooper Bay's water and wastwater system is 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 July 2, 2014 query of the Alaska Certified Water/Wastewater Operator Database, the city's assistant operator is not certified at any level. Documentation that safety meetings are held has not been 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. SLES will be using this operations manual in managing the utility. 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 utility's 2012 Consumer Confidence Report (CCR) is electronically filed at the Bethel RUBA office. However, a certification form signed by a city or SLES official indicating the report was distributed and posted in the community has not been provided. The utility is not on the April 2014 Significant Non-Complier (SNC) list.