Quarterly Report: 2013, October - December (Q2), Hooper Bay

Community:
Hooper Bay 
Staff:
Fred Broerman  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Hooper Bay 
Population:
1149  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
2/8/2013 
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 2013 or 2014. About 12.5 million in additional funding is currently available to continue the project; 2.5 million of this is EPA funding which requires RUBA compliance. 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:
During the first two weeks of October 2012, Bethel regional office staff received calls and exchanged emails with two DEC Village Safe Water (VSW) engineers concerning RUBA compliance for the City of Hooper Bay and the sustainability of the water utility after construction. A RUBA assessment was completed for the City of Hooper Bay on October 6, 2011, at which time the city was compliant with RUBA essential indicators. However, the city fell out of compliance during the last quarter of 2011. A similar pattern of compliance occurred in 2010. Specific VSW concerns were the collection rates for residential customers now connected to the new piped system, as well as user fees being lower than recommended in the 'City of Hooper Bay Water and Sewer Business Plan Update' adopted by the city on July 20, 2011. As a result of these concerns, the Bethel RUBA regional office hosted a meeting on November 20, 2012 to review the City of Hooper Bay's accounting system, to review non- compliant RUBA indicators, and evaluate the municipality's capacity to operate the community's newly constructed water and wastewater facilities. In attendance were the City of Hooper Bay's administrator and bookkeeper, Turnagain Press (RUBA contracted QuickBooks support) staff, Village Safe Water's (VSW) program manager, VSW's designated engineer for the project, Alaska Native Tribal Health Consortium's (ANTHC) energy projects manager, Yukon-Kuskokwim's Health Corporation's (YKHC) remote maintenance worker supervisor and Bethel RUBA staff assigned to Hooper Bay. Findings at the meeting were: 1) That the utility was operating with a significant deficit; 2) Due to residential customers refusing to pay for piped water service, the city shut off service to 17 of the 30 households that were connected to the new piped water system in 2011 and 2012. This was after the customers signed an agreement to pay for water service for a minimum of three years if connected to the system; 3) The city's water and sewer fund account was not up to date and had not been reconciled since July 31, 2011; 4) The city's water/sewer accounts receivable payments had not been entered into QuickBooks. The QuickBooks file indicated that over $275,000 is owed on customer accounts; 5) Heat recovery from the AVEC power plant has by far the most potential of significantly reducing the fuel oil consumed by the water treatment plant; 6) the city is eligible to receive a RUBA sponsored QuickBooks install by Turnagain Press that would set-up the software so it could be used to its full capacity to manage the water and wastewater utility and other city business. From December 10-14, 2012, the bookkeeper, who has a 22 year tenure with the city, attended a RUBA sponsored Financial Management training in Anchorage. Her post-test score earned her a most improved attendee award from the class.  
RUBA Activities for the Coming Qtr:
Bethel RUBA staff is available to travel to Hooper Bay and assist city staff with any deficient indicators upon request of the city council.
Scores:
 
Essential Indicators:
20 of 26
Sustainable Indicators:
13 of 26
Total Score:
33 of 52

Finances

Essential Indicators
Answer Question
No All revenues and expenses for the utility are listed in the utility budget.
No The utility has adopted a balanced realistic budget.
No 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.
No A monthly manager's report is prepared.
N/A Budget amendments are completed and adopted as necessary.
Finances Comments
The city's FY13 budget ordinance, adopted on July 12, 2012, is electronically filed at the Bethel regional office. RUBA compliance requires that all revenue and expenses for the utility be clearly listed in the budget. The utility is heavily subsidized through other city revenues. Therefore, the RUBA assessment reviews the entire city budget for compliance. The city's FY13 budget submitted to the State of Alaska for annual Community Revenue Sharing does not meet RUBA compliance because it does not list all revenue and expenses for each department, project or grant. The State of Alaska City Budget Manual provides a detailed line item format for listing revenues and expenditures by department, grants and project. When properly completed, it complies with RUBA standards. Categories in the FY13 budget should match those listed in the monthly financial reports. Because the FY13 budget lacks details, three of the 'Finances' essential indicators are marked 'No'. The City of Hooper Bay has not provided the Bethel RUBA office with minutes from city council meetings since August 2012 and monthly financial reports have not been submitted for October or November. The spirit of compliance for the RUBA 'monthly financial reports' essential indicator is that council members have the opportunity to review financial reports during each of their monthly meetings. The monthly financial reports that were provided last quarter for June through September 2012 need to be revised so council members can more easily compare expenditures to locally generated income for the utility. Until monthly financial reports are properly prepared and reviewed by city council for three to six months in a row, the 'Finances' essential indicator that states 'Monthly financial reports are prepared and submitted to the policy making board' will be marked 'No'. Without separating the finances of the water and wastewater and washeteria enterprises, it will be impossible to determine if rates charged to customers on piped water are adequate to cover the operating costs of the newly built water and wastewater facilities. A January 2, 2013, phone conversation with Alaska Village Electric Cooperative (AVEC) indicated that the city has significant balances 30 and 60 days overdue on its electric accounts. From October 1-18, 2012, fuel distributer Delta Western attempted to make a late fall delivery of 45,000 gallons of fuel to the City of Hooper Bay. The fuel was purchased by the city to heat its buildings and its water and wastewater facilities during the winter of 2012/2013. However, icy waters and strong north winds kept Delta Western's fuel barge from reaching the community's fuel port. After the failed delivery attempts, Delta Western worked out an agreement with Crowley, which has a tank farm in Hooper Bay, to purchase fuel to cover the city's winter needs. 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'. However, an R and R line item was not included in the city's FY 2013 water and wastewater budget. RUBA compliance requires that manager's reports (in this case from the city administrator) be given to city council either verbally or as written reports. A complete manager's report will explain the monthly financial report of the utility and point out any utility problems or trends that need to be addressed. Highlights of verbal manager reports should be included in meeting minutes or a copy of written reports be submitted to the Bethel regional office quarterly. City council meeting minutes were not provided to the Bethel regional office this quarter. Therefore, the fourth sustainable indicator of this section is marked 'No'.

Accounting Systems

Essential Indicators
Answer Question
Yes The utility has adopted a collection policy and actively follows it.
Yes The utility bills customers on a regular basis.
No An accounts receivable system is in place which tracks customers and reports past due accounts and amounts.
Yes 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.
No 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 outlines the city's collection policy. In May 2011, the city started billing the first forty residential customers connected to piped water and wastewater services. The city charges a flat rate of $85.00 monthly to residential customers on the city's piped water and wastewater system. Due to residential customers refusing to pay for piped water service, the city shut off service to 17 of the 30 households that were connected to the new piped water system in 2011 and 2012. This is after the customers signed an agreement to pay for water service for a minimum period of three years if connected to the system. The city uses QuickBooks Pro for its financial accounting, tracking wages and payroll taxes. Water and wastewater billings are sent out the twentieth of each month. On November 13, 2012, Turnagain Press (RUBA contracted QuickBooks support) staff was provided a copy of the city's QuickBooks file to review. On November 20, Turnagain Press gave an analysis of the file. Significant concerns included: 1) The city's water and sewer fund account was not up to date and had not been reconciled since July 31, 2011; 2) The city's petty cash needed to be counted, it had never been reconciled; 3) The city's water/sewer accounts receivable payments had not been entered. The file indicated that over $275,000 was owed on customer accounts. A RUBA quarterly information request was emailed to city staff on December 18, 2012 requesting an accounts receivable aging report for the city's piped customers and city bank statements with accompanying QuickBooks reconciliation reports. At the time of this writing, these documents have not been provided to Bethel regional office staff.

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.
N/A 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 for its payroll accounting. A December 27, 2012 fax correspondence from the IRS Taxpayer Advocate Service indicates the city is current with required federal tax deposits and informational returns. A December 14, 2012 email correspondence from Alaska Department of Labor in Anchorage indicated the city is current on their filings and deposits for Employment Security Taxes. The city is not listed on the September-October 2012 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
No 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.
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
A December 31, 2012 query of the State of Alaska Employers' Workers' Compensation Insurance Coverage Verification database indicated that the city has workers' compensation insurance for its employees with Alaska Public Entity Insurance. An adopted personnel policy has not been provided to the Bethel RUBA regional office. On October 12, 2011, position descriptions and/or job announcements were provided for the bookkeepers, city clerk, city administrator, substitute city clerk and the water treatment operator, which are on file at the Bethel regional office. On July 19, 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. 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.
Yes 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, 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. The city provided the Bethel RUBA office with an accounts receivable aging report for September 2012 showing 13 of their 27 residential customers 'CUTOFF' from service. This indicates that the city council is enforcing its utility policy. The city administrator has many years of local government experience. He worked for the city on several occasions in the 1970s and 1980s and has held leadership positions for Hooper Bay's Traditional Council. He was hired as administrator on June 7, 2010 and has handled the duties of the position well. 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, 2013. However, according to a December 31, 2012 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 usually meets at least 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 or otherwise stated in local ordinances.

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.
Yes 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, 2013. However, according to a December 31, 2012 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+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+M Manual. A copy of the city's 2011 Consumer Confidence Report (CCR) is electronically filed at the Bethel RUBA office along with a certification form signed by the water operator on June 28, 2012 indicating the CCR was distributed and posted in the community. The city is not on the October 2012 Significant Non-Complier (SNC) list.