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HomeMy WebLinkAboutRES2024-021 Matanuska Electric Association AgreementSponsored by: Sorensen I CITY OF SEWARD, ALASKA RESOLUTION 2024-021 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A MANAGEMENT AGREEMENT WITH MATANUSKA ELECTRIC ASSOCIATION (MEA) AND APPROPRIATING FUNDS WHEREAS, The voters of the City of Seward chose not to sell the Seward Electric System; and WHEREAS, The City cannot compete with the private utility industry when it comes to wages for management positions; and WHEREAS, Matanuska Electric Association (MEA) has done management contracts before with small utilities; and WHEREAS, MEA was not one of the Utilities that was interested in purchasing the Seward Electric System (SES); and WHEREAS, The SES has significant infrastructure projects that need to be finished, and I WHEREAS, the City desires to contract with MEA for this purpose. NOW, THEREEORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City Manager is authorized to enter into a Management Agreement with Matanuska Electric Association (MEA). Section 2. Funding in the amount of $850,000 is appropriated from Electric Enterprise Fund Unassigned Account number 15000-0000-3400 to Contracted Services Account Number 15000-3000- 7009. Section 3. This resolution is effective upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 11th day of March, 2024. THE CITY OF SEWARD, ALASKA I Sue McClure, Mayor CITY OF SEWARD, ALASKA RESOLUTION 2024-021 Page 2 of 2 I Osenga, Calhoon, Barnwell, Wells, McClure Finch Crites None AYES; NOES: ABSENT: ABSTAIN: ATTEST: Kris Peck City Clerk (City Seal) •( SE^ }• I I City Council Agenda Statement Meeting Date: March 11, 2024 To: City Council Through: Kat Sorensen, City Manager Subject: Resolution 2024-021: Authorizing The City Manager To Enter Into A Management Agreement With Matanuska Electric Association (MEA) And Appropriating Funds Background and justification: As the vote to sell the utility failed in 2023, the city needs to move forward creating a sustainable utility and finishing infrastructure projects on top of the daily operations of the utility. We have had both the Utility Manager and Utility Operations Supervisor posted for a significant period of time with no qualified candidates. This is due to the fact that the city cannot compete with the private utility market with wages, since the city of Seward can only offer about half of the average salary for either of those positions. MEA was chosen as they were not one of the two utilities that were interested in purchasing the SES. They have done similar management contracts before with smaller municipal utilities. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: 3.7.1.3 Continue to improve the quality and efficiency of governmental services. 3.7.1.4 Continue to upgrade and expand utilities to meet existing needs and encourage future development Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: $ 0 This legislation (): Creates revenue in the amount of: $  Creates expenditure in amount of: $ 850,000.00 Creates a savings in the amount of: $ Has no fiscal impact Funds are (): Budgeted Line item(s):  Not budgeted Not applicable Fund Balance Information Affected Fund ():15000-3000-7009 General SMIC  Electric Wastewater Boat Harbor Parking Water Healthcare Motor Pool Other Note: amounts are unaudited Fund Balance/Net position – unrestricted/unassigned $ 7,742,222.00 Finance Director Signature: Attorney Review  Yes Attorney Signature: /s Kody George Not applicable Comments: Administration Recommendation  Adopt Resolution Other: CONFIDENTIAL Management Services Agreement between MATANUSKA ELECTRIC ASSOCIATION, INC. and CITY OF SEWARD THIS MANAGEMENT SERVICES AGREEMENT (“Agreement”) is entered into by and between the City of Seward (“COS”), a city located in the Kenai Peninsula Borough with main offices in the City Hall Building at 410 Adam Street, Seward, Alaska, and Matanuska Electric Association, Inc. (“MEA”), an Alaska electric cooperative association with headquarters at 163 East Industrial Way, Palmer, Alaska. WHEREAS: COS is engaged in the business of production, transmission, and distribution of electricity in Alaska; COS desires to obtain the services of MEA to assist it in the oversight of COS’ utility operations; MEA is able to provide services to COS for such purpose; and, Whereas COS and MEA have met, discussed, and agreed on the broad details of the mechanisms by which a management agreement will be executed. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein set forth, the Parties hereto agree that MEA will provide management services for the benefit of Seward as follows: PURPOSE: This Agreement constitutes the management services Agreement between COS and MEA whereby MEA will provide management to oversee electric utility operations for COS. SCOPE OF SERVICES MEA will provide management to oversee electric utility operations at COS as needed to allow the essential functions of the electric utility to be carried out. These services will only be for the management of the COS utility operations, line, and engineering staff for continuing operational requirements and work associated with the capital program underway. COS will contract directly for any additional contract services necessary for prudent utility operations. MEA management may oversee applicable contracts for COS. MEA, if approved by the COS, may represent the interests of COS on boards, committees, or in activities where MEA and COS are both voting members. MEA will not represent the COS in these areas where a conflict of interest has been identified by MEA. MEA will not represent the COS in the areas of labor contract disputes or labor negotiations. Any Management Services Agreement between Matanuska Electric Association, Inc. and City of Seward March 1, 2024 Page 2 employee hiring or disciplinary matters outside of the two positions MEA is supplying will be the responsibility of the City of Seward. MANAGEMENT OVERSIGHT: a) Though MEA will supply employees (MEA staff) to carry out the Purpose of the Agreement, it is understood that changes in employment of MEA personnel may affect the performance of MEA under this Agreement. b) MEA will dedicate one employee to perform the functions of the Utility Manager on a part-time basis and will dedicate one employee to perform the functions of the Operations Supervisor on a full-time basis. The Operations Supervisor will report to the Utility Manager. The Utility Manager will provide COS with recommendations and assistance in areas such as planning, power supply, or finance. All decisions with respect to the future status or financial obligations related to the provision of electrical service by COS will be made by COS, not MEA personnel. All administrative support for the Utility Manager and Operations will be provided by COS. c) MEA will post a job listing to fill the Operations Supervisor position once the Agreement is finalized. The full-time Operations Supervisor will be based in Seward. The Utility Manager will not be based in Seward but will travel to Seward as necessary to fulfill their duties, including meeting with COS management or the Seward City Council. d) MEA will provide part-time operational support until the Operations Supervisor position is filled. The part-time Operations Supervisor will travel to Seward as necessary. e) MEA may provide other employees as it deems necessary to support specific activities of COS’ electric utility operations as needed with written notification of COS. TERM This Agreement is effective upon the date approved by the Parties. Because of the anticipated nature and duration of the proposed Scope of Services, the Agreement is expected to terminate no later than January 1, 2026. COS or MEA may terminate this Agreement without cause and for any reason at any time. The terminating party will provide four weeks written notice unless termination is for cause. BENEFIT This Agreement is for the benefit of COS. COST a) MEA will invoice COS monthly for MEA’s actual costs in connection with the terms of the Management Services Agreement and include an additional 3% to cover incidental support costs. Total annual costs shall not exceed $850,000 prorated to represent the actual period of this Agreement during any single year. Management Services Agreement between Matanuska Electric Association, Inc. and City of Seward March 1, 2024 Page 3 b) All costs for the services provided by MEA, including but not limited to labor, benefits, housing, transportation, and insurance, which may include professional liability insurance, shall be considered part of the actual costs and the responsibility of COS. The costs of services provided by MEA will not include any other contract services necessary for COS operations. COS will contract directly for any additional contract services. A non-exhaustive list of examples includes legal, regulatory, studies, engineering, construction, and other operational support and planning related services. GENERAL PROVISIONS a) COS Management The City Manager for COS will provide feedback to the work and progress of MEA management’s performance. MEA shall provide the direct oversight of COS electric utility employees as noted under Scope. COS retains the employer-employee relationship with COS electric utility employees. b) Reporting MEA shall provide services to the COS consistent with the Scope of Services, as may be revised and updated. No less than monthly, MEA staff will report on all work within the Scope of Services to the City Manager for COS. In addition, MEA staff may provide updates, reports, and analyses requested to the COS at regularly scheduled City Council meetings. c) COS Interests Under the Scope of Services, MEA staff shall represent the needs of COS’ electric utility. Where areas of conflict between the interests of MEA and COS are identified by MEA, MEA staff will recuse themselves from representing COS. MEA staff shall use their best efforts to inform and communicate with the City Manager of items where MEA determines there is a conflict of interest. d) Hold Harmless The COS shall defend, indemnify, and hold harmless MEA against any and all loss, liability, damages or expenses arising from any claim by any person with respect to, or in any way related to, the performance of services contemplated by this Agreement resulting from any act or omission, other than for claims which shall be proven (as determined by a final, non- appealable determination of a court of competent jurisdiction) to be the direct result of gross negligence, bad faith, or willful misconduct by MEA. COS shall list MEA as an additional insured on its casualty insurance policies, to include general and excess liability insurance policies, and automobile liability insurance if MEA employees will be utilizing COS vehicles. MEA shall defend, indemnify, and hold harmless COS against any and all loss, liability, damages or expenses arising from any claim by any person with respect to, or in any way related to, the release, unauthorized use or disclosure of COS’ confidential information by MEA or one of its employees, agents, or representatives. All confidential information shall be marked by the provider of the information as such. Management Services Agreement between Matanuska Electric Association, Inc. and City of Seward March 1, 2024 Page 4 MISCELLANEOUS a) Assignment This Agreement may not be assigned by either Party without the prior written consent of the other Party. b) Governing Law This Agreement shall be interpreted and construed under the laws of the State of Alaska. c) Amendment Any modification, amendment, or change in this Agreement shall be approved and authorized in writing by the Parties. Non-Competition d) During the term of this Agreement and during any extension thereof, unless authorized by COS, MEA shall not enter into or participate in any business competitive to the business carried on by COS. e) Information During the term of this Agreement, MEA will not use for its own advantage or disclose to any unauthorized confidential information relating to the business operations or properties of COS or its utility operations. IN WITNESS THEREOF, the Parties below have executed this Agreement. CITY OF SEWARD By: ___________________________________ Kat Sorensen City Manager Date: _________________________________ MATANUSKA ELECTRIC ASSOCIATION, INC. By: ___________________________________ Anthony M. Izzo Chief Executive Officer Date: ________________________________