Quarterly Report: 2013, April - June (Q4), 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:
7/24/2013 
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. 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:
Bethel RUBA staff made two visits to Hooper Bay during the quarter, April 22-26 and April 29-May 1. For the earlier visit, Bethel staff was accompanied by Dillingham RUBA staff to work on codifying the city's ordinances, which had not been done before. Ordinances spanning over thirty years were used to draft a code that was 85% complete after four days. The April 29-May 1 trip was the final of three of the visits made with Turnagain Press (RUBA contracted QuickBooks specialists) staff as part of a RUBA QuickBooks install and on-site training agreement awarded to the city. Work during the three visits consisted updating QuickBooks software, reviewing the city's accounting system, drafting a detailed FY13 budget for the city council to adopt, bringing QuickBooks accounts receivable up to date (monthly payments for piped water customers $85 and sanitation user fees $25 were not being entered into QuickBooks, but were being recorded manually), improving the accounting for the city's gaming department and developing a monthly financial report for city council. Washeteria revenues and expenses were also separated from those of the water and wastewater facilities so the finances of each enterprise could be reviewed independently. On June 12, 2013, Alaska Department of Environmental Conservation, Village Safe Water's (VSW) facility programs manager wrote a letter to Hooper Bay's city council warning them about city's lack of progress in meeting Rural Utility Business Advisor (RUBA) compliance. The letter indicated that VSW had reduced the original scope of the summer's construction efforts and was reconsidering dispersing the funds needed to complete the community's piped water project. About 12.5 million dollars in construction funding is at stake. The letter gave the city a list of five tasks (that would partially fulfill RUBA essential indicators) to be completed by July 15. If the five tasks were completed VSW would allow limited construction efforts during the summer of 2013 and, as long as the city stayed compliant with RUBA essentials indicators throught out FY14, would consider future funding to connect remaining homes into the piped water and wastewater system. From June 20-July 17, 2013, Bethel RUBA staff received and reviewed budget ordinances, monthly financial reports, and meeting minutes the city submitted for compliance with RUBA essential indicators. Also during this time Bethel staff was contacted by VSW's Program Manager and the assigned project engineer regarding the city's efforts to complete the five tasks.  
RUBA Activities for the Coming Qtr:
Bethel RUBA staff will continue to work with city staff with any deficient indicators as requested.
Scores:
 
Essential Indicators:
21 of 26
Sustainable Indicators:
19 of 27
Total Score:
40 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.
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.
Yes YTD expenditures are at a level equal to or below those budgeted.
No 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 and appears to be balanced and realistic. The city has submitted minutes for council meetings held on April 12, May 9, 22, June 19 and July 10, 2013. February and March monthly financial reports were reviewed by council members during the April 12 meeting. April's monthly financial report was reviewed by council members during the May 9 meeting, and May and June monthly financial reports were reviewed during the July 10 council meeting. The spirit of the monthly financial report RUBA indicator is that council members have the opportunity to review a single monthly financial report (normally from the previous month)at their regular meetings. Unfortunately, this did not happen in March and June of 2013. Compliance on this essential indicator in the future will be evaluated on the city council's efforts to hold meetings each month. A monthly financial report needs to be reviewed and accepted by council members, and this action documented in the minutes of each meeting. A July 18, 2013 email correspondence with Alaska Village Electric Cooperative (AVEC) indicated that the city is current on its water and wastewater accounts. However, the city is 30 days past due on several other electric accounts. The city purchased enough fuel to heat its buildings and water plant facilities from Delta Western in the fall of 2012. After 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. After being updated through June 2013, the city's FY13 multi-month financial report indicates the city's year-to-date expenditures exceed year-to-date revenues by $205,707. Therefore, the essential indicator that states 'The utility is receiving revenues (user fees or other sources) sufficient to cover operating expenses' is marked 'No'. 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. However, with the substantial overall budget shortfall for FY13 the first sustainable indicator is marked 'No'. 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 not consistantly found in the meeting minutes. Therefore, the second to the last sustainable indicator of this section was marked 'No'.

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.
No 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. The city needs to enter customer payments into the QuickBooks accounts receivable set up for commerial and residential piped user fees and sanitation and roads user fees. When payments are entered promptly and properly, an accounts receiveable aging report showing the status of each customer's account is easily generated in QuickBooks. Because the city's accounts receivables are not kept current and accurate accounts receivable aging reports have not been submitted to the Bethel regional office, the first and third essential indicators of this section are 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. 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 has provided June 2013 bank statements and accompanying reconciliations for its four checking accounts.

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 2013 for its payroll accounting. A July 24, 2013 phone conversation with the IRS office in Fairbanks indicated that the city is in full compliance with its federal tax requirements. A July 19, 2013 phone conversation with the Alaska Department of Labor in Anchorage indicated the city is current on its reporting and filing requirements through March 31, 2013. The city is not listed on the March-April 2013 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. 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. An accounts receivable aging report from May 2013 shows the city's residential piped water customers have significant outstanding balances past due. A similar pattern of past due amounts is seen on the accounts receivable aging report for payments for sanitation and road user fees. These reports indicate the city is either having problems enforcing its collection policy, or it has a collection policy lacking effective protocol for dealing with delinquent customers. 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 June 2010. 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 administrative assistant has 9 years of office and accounting experience. She has worked for government organizations in Hooper Bay and for an engineering firm, a regional corporation and Coastal Villages Regional Fund in Anchorage. 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 May 17, 2013 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.
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 May 17, 2013 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 2011 Consumer Confidence Report was filed timely. The city is not on the April 2013 Significant Non-Complier (SNC) list.