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

Community:
Thorne Bay 
Staff:
Lynn Kenealy  
DCRA Regional Office:
Juneau regional office 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Thorne Bay 
Population:
518 2013 Department of Labor Estimate 
Assessment Status:
Assessment Pending 
Assessment Date:
10/8/2013 
Exp Date:
 
Last Updated:
4/7/2014 
Community Sanitation Overview:
Thorne Bay is a second class city of 508 people on the eastern coast of Prince of Wales Island, 47 miles from Ketchikan. The community, which began as a company-owned logging town and incorporated as a municipality in 1982, is connected to other communities on the island by a road system developed from old logging roads. The city now operates a class two water treatment system, a class one water distribution system, a class one wastewater treatment system, and a class one wastewater collection system. Other city also provides landfill and garbage haul services, a harbor and dock, public safety services, and health and community-related facilities. The community is geographically divided into two sections, Thorne Bay and South Thorne by, by the bay, but both sections accessible by road. The city’s landfill is near South Thorne Bay. The main portion of Thorne Bay is hooked up to water and wastewater utilities with 143 active hook-ups in total; however, South Thorne Bay, which consists of approximately 40 percent of the population, utilizes rain catchment systems and a watering hole. The water treatment plant also sells water by self-haul when needed. The treatment system has struggled to meet DEC regulations because the surface water it utilizes is difficult to treat. The city may seek financial and engineering assistance to modify the system so that it can properly treat this water source, perhaps by including a settling tank with sand filters, or a hydro-analysis to identify potable well water, as is being utilized in South Thorne Bay. Because distribution lines were originally intended to be temporary, they are in need of upgrades. A renovated distribution system with a more logical layout and without dead-ends would increase system efficiency. 
RUBA Status & Activities This Qtr:
RUBA staff visited the City of Thorne Bay this quarter to provide advice and assistance regarding conversions of financial information into a new QuickBooks company, in order to better account for utility revenues and expenditures, and begin producing meaningful financial reports to utility management. Also during this visit RUBA staff met with council members and community members regarding ongoing planning and zoning issues, and provided advice and assistance regarding ongoing updates to the city's municipal code, including the utility title. Also this quarter RUBA staff answered several questions and provided advice and assistance in areas including credit card surcharges for utility payments, personnel issues, recall procedures, executive sessions, special meetings, meeting recordings and minutes, and public comment requirements. Finally this quarter RUBA staff attended a Sanitation Deficiency Systems provider's meeting in which Thorne Bay's water and wastewater systems were discussed. Specifically, SDS providers are focused on assisting the community on better disinfecting it's wastewater which is non-compliant at this time; and better treating it's drinking water, who's source causes several treatment complications. 
RUBA Activities for the Coming Qtr:
In the coming quarter RUBA staff anticipates the city will complete conversion of FY14 financials to a new QuickBooks company. Upon this completion, RUBA staff will encourage city staff to produce profit and loss budget versus actual reports for utility management, and will assist throughout the process.
Scores:
 
Essential Indicators:
25 of 26
Sustainable Indicators:
24 of 27
Total Score:
49 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.
No 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
Yes 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.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
An FY14 budget was adopted by the city council, the policy-making body for the water utility, on June 18, 2013. The budget includes a written narrative summary from the city administrator and is organized by department or function, such as administration and finance, city council, EMS, fire, law enforcement, library, parks and recreation, streets and roads, RV park, water, wastewater, solid waste, and harbors and ports. The water/wastewater section of the budget are comprehensive and include all necessary revenues and expenses, including the cost of equipment maintenance and repair. The budget is balanced and realistic, as demonstrated by actual revenues and expenditures from FY13, and anticipated changes in finances for the coming year, as outlined in the city administrator’s written report. The utility budgets to collect more revenue in FY14 than it did in FY13. As of December, 2013, these higher rates of income have not been realized, though the utility has also not incurred as many expenses as it originally planned. Accordingly, budget amendments have been proposed to lower the amount of anticipated revenue and expenses, ensuring that the budget remains appropriately balanced. Each month the city administrator, who serves as the utility manager, provides a written report to the city council regarding water/wastewater finances and any other issues. The city clerk/treasurer also provides monthly profit and loss reports for each fund or account of the city, including the water/wastewater fund. Those reports compare budgeted amounts to actual income and expenses. The city is currently converting the FY14 financials to a new QuickBooks company, and therefore the reports being created are not accurate at this time. It is hoped this will be completed and meaningful reports will begin being produced again within the next month. Residential customers are charged a base rate of $49.50 for wastewater and $48.00 for the first 3,000 gallons of water used; commercial customers are charged $80.00 for the first 5,000 gallons used. Every thousand gallons used over these amounts are charged an excess fee of $12.00. FY14 user fees are expected to cover 80 percent of the cost of water/wastewater operations. The remaining 20 percent totaling $58,869.31 will be met by outside revenue sources such as the Community Revenue Sharing and Payment in Lieu of Taxes programs. User rates were last raised about three years ago. However, the cost of the water/wastewater system is remaining steady. This is despite inflation and additional costs incurred through improvements made to the system to address water leaks. Consideration is being given to increasing water/wastewater utility rates to fully cover associated expenses without subsidy. The city’s budget appropriately covers the cost of all necessary fuel and anticipates increases in fuel prices. Fuel is provided to the community by Petro Marine, who fills fuel tanks throughout the community under a keep-full agreement. The city receives its electricity from Alaska Power and Telephone (APT) and pays this bill on time each month. The electricity use for each facility is identified separately on the APT bills and the appropriate city department is charged for that cost.

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.
Yes 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.
Yes Monthly bank reconciliations have been completed for all utility accounts.
Yes 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
The city’s utility ordinances are set out in Tile 13 of the Thorne Bay Municipal Code. The title explicitly lays out utility bill collection and delinquency policies, which according to city staff’s description of the actual process, is being actively followed every month. On the first day of each month the utility’s accounts clerk sends out a bill for the current month to all water/wastewater customers, with a due-date of the 20th of the same month. If payment is not received by this date, a 0.875 percent finance charge begins accruing. If payment is not made by the first of the following month, when the next month’s bills are sent out, a yellow slip is included with the bill warning that the city will begin disconnection procedures on the 10th of the month if payment is still not made. On the 11th of the month a disconnection notice is sent out and if payment is not received by the 20th, water service is disconnected. This timeline does not follow the exact dates specified in the municipal code; nonetheless, the collection policy and practices are successfully achieving an 86 percent collection rate, as of October 9, 2013. The utility uses QuickBooks to track accounts receivable and accounts payable, as well as to conduct payroll. The QuickBooks file is networked so that both the accounts clerk and the clerk/treasurer can access the same file. Both have experience and knowledge with the QuickBooks system, and utilize the RUBA Program’s contracted QuickBooks hotline when additional assistance is necessary. The utility’s QuickBooks file identifies each department into a chart of accounts, including account types and descriptions. RUBA staff has verified that the clerk/treasurer reconciles bank accounts monthly basis. The duties of the accounts clerk and the clerk/treasurer are appropriately segregated and the positions are effectively supervised by the city administrator and the city council. Cash is rarely received, but when it is, a receipt is given, and the money is applied to the till and counted at the end of the day. When the amount in the till reaches more than $100, the excess is delivered to the bank. Cash is distributed using a similar process that includes a signed receipt. Utility employees request a purchase order when a purchase is needed. The accounts clerk then compares the requested expenditure with the budget, and then generates a check, which is must be approved and signed by the city administrator. The accounts clerk then allocates the expenditure to the appropriate account and department, which is later reconciled by the clerk/treasurer after payment. This detailed process follows the general guidelines provided by Thorne Bay Municipal Code Chapter 3.12 addressing purchases.

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 utilizes the QuickBooks program to track tax liabilities and the EFTPS program to make payments and file reports. On March 4, 2014, the State of Alaska Department of Labor and Workforce Development confirmed that the city is compliant on all state employment tax requirements. On March 3, 2014, the IRS’s taxpayer advocate office confirmed that the city is compliant on all federal tax filings and payments as well. The city has no liens or past liabilities.

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.
Yes 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.
Yes 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
RUBA staff has verified that the City of Thorne Bay has a valid workers’ compensation insurance policy through the Alaska Municipal League Joint Insurance Association (AMLJIA). Proof of coverage is posted in all buildings where employees regularly work, such as the city office, the water treatment plant, and the wastewater plant. The city utilizes an employee handbook reviewed by the municipal attorney. The current handbook was last revised July 2009. In April 2013, the city administrator attended the 32-hour RUBA Personnel Management training and is currently drafting updates and revisions to the handbook. Proposed revisions will be reviewed by AMLJIA and RUBA staff and must be approved by the city council before taking effect. The revisions aim to correct certain wording, update the organizational chart, add a cell phone policy, and overhaul to the city’s drug use policy. Until these changes are made, the current employee handbook does sufficiently cover several personnel-related items. In addition to the handbook, some personnel issues, such as hiring, are also addressed in Chapter 2.24 of the Thorne Bay Municipal Code Chapter 2.24.The city administrator is working on updates to all job descriptions. However, the job descriptions currently in place are sufficient to meet the relevant indicator. The job descriptions appropriately define the position, its supervisor, and duties. The city administrator utilizes a separate personnel performance evaluation form for different classes of positions in the city. For instance, a technical personnel evaluation is used for water operators, while an office/clerical personnel evaluation form is used for office staff. Evaluations are completed at the end of an employee’s six-month probationary and training period, and annually thereafter. Staff are encouraged and financially supported in the annual budget to attend trainings and to achieve necessary certifications. The city administrator participated in RUBA Program trainings and various conferences, and the city clerk/treasurer attends the Alaska Municipal League conference each year. The clerk/treasurer maintains all personnel files and ensures each file has an I-9, job application, and hire sheet detailing information such as an employee’s date of hire, their pay rate, and PERS eligibility.

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
Title 13 of the Thorne Bay Municipal Code provides for municipal ownership of the community’s water and wastewater utilities. The policy-making body for the utility is the Thorne Bay City Council. Title 13 establishes all policies and procedures related to the utility, and city staff follow the code closely. Changes are regularly made to the code to ensure it is kept current and relevant. Amendments are adopted through the appropriate procedures. The city clerk/treasurer then codifies adopted ordinances and e-mails the updated code to all council members and staff, with the date of codification noted. Alaska statute requires councils to meet for a minimum of one regular meeting per month. Thorne Bay Municipal Code Section 2.04.130(a) provides for two regular meetings per month. City staff provided six months of meeting minutes as evidence of meeting this requirement. City staff also provided notices and agendas as posted in the community. Notices and agendas are posted with reasonable notice in six regular places in the community, exceeding the minimum requirements of the Open Meetings Act. The utility manager has worked in this position for three years, frequently attends conferences, and has participated in the RUBA Program’s Personnel Management for Rural Utilities course. Bookkeeping is completed by both the accounts clerk and the clerk/treasurer. The clerk/treasurer has worked for the city for almost nine years and attends conferences and trainings when available, including the RUBA Utility Clerk Management training. The accounts clerk has worked in the city for six and a half years and has also attended the RUBA Utility Clerk Management training. The primary water operator is certified in Level 2 water treatment, Level 1 water distribution, Level 1 wastewater treatment, and Level 2 wastewater collection and has met all current continued education unit (CEU) requirements. The back-up water operator holds Level 1 certification in water treatment, water distribution, wastewater treatment, and wastewater collection and has also met current CEU requirements. The city has an up-to-date organizational chart that clearly indicates a chain of command beginning with the public and then running through the city council, the mayor, and the city administrator. The chart then indicates all city departments, including the utility department, as first responsible to the city administrator.

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
Yes 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.
Yes 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".
No The utility is not on the "Significant Non-Complier" (SNC) list.
No The utility maintains an inventory control list.
No The utility maintains a critical spare parts list.
Operation of Utility Comments
Thorne Bay’s sanitation utility primary and back-up operator actively work toward their necessary certification, as demonstrated by the current certifications levels held and CEUs met. A detailed description of these certifications is provided in the Organizational Management section of this report. There is also a ‘roving’ employee who assists the primary and back-up operator with water operators when necessary. The utility’s manager is the city administrator. The administrator visits the utility facilities regularly and also provides reports to the city council at its regular meetings. Utility staff attend Monday morning meetings twice each month, and at least one safety topic is discussed at each of these meetings. The utility is operating at the level of service proposed and has not suffered any major problems or outages. A preventative maintenance plan has recently been updated, approved by the state, and adopted. The utility produces 25,000-30,000 gallons of water per day, though it only uses 18,000-20,000. The system is designed to create far more water than is needed in the community, so some of the water produced is dumped. Several leaks throughout the distribution system have been patched over the past few years. This and other improvements have helped the system to operate more economically; however, there are still some inefficiencies the utility would like to improve, such as several dead ends and the fact that the distribution system was not intended for long-term use. The utility is on the January 2014 Significant Non-Complier (SNC) list due to the difficulty of treating the water being used. The utility would like to either install a pre-treatment filtration system such as a settling tank and sand filtration or explore other water source options to address the problems. The system has completed its 2012 Consumer Confidence Report (CCR). Inventory control and critical spare parts lists are not currently maintained, though the water operator was able to list for RUBA staff what critical spare parts are on hand. The utility also relies on other water utilities on Prince of Wales Island, such as those in Klawock in Craig, for assistance obtaining critical spare parts as needed.