OCTOBER 11, 2012


THE SPECIAL CITY COUNCIL MEETING of the City of Port Orange was called to order by Mayor Allen Green at 6:00 p.m.


Pledge of Allegiance


Silent Invocation


Roll Call:††††††††††††††††††† Present:†††††††††††††††††††† Councilman Bob Ford

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Councilman Donald Burnette

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Vice Mayor Bob Pohlmann

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Mayor Allen Green


Absent:††††††††††††††††††††† Councilman Dennis Kennedy


††††††††††††††††††††††††††††††††††† Also Present:††††††††††† Kenneth W. Parker, City Manager

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Margaret T. Roberts, City Attorney

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Robin Fenwick, Deputy City Clerk




4.    Utility Billing and Meters


Mayor Green asked all present to address questions to him, not to Staff. Staff has met to begin fixing the problems at hand. City Council is here now to resolve the complex issues. He reminded the public that the City Manager works for the City Council.


Mr. Parker provided background details of the issues in the Customer Service division of Finance. An employee found discrepancies in the data table. He provided the basic organizational chart for Finance, as well as the old method of making rate changes. The "old method" is the current internal control policy. The new process was discussed. Accounting will provide data entry of the new rates with Customer Service verifying and testing, then accounting will verify the testing. When all is correct, the Finance Director will approve and IT will lock in the rate and go live. Customer Service and accounting will need to certify in writing that the rate table is correct and operating correctly before it goes to the Finance Director.

Councilman Ford asked if the old process was followed. Mr. Parker said the investigation is still ongoing. Councilman Ford asked if the Comptroller should have been overseeing the process. Mr. Parker said by the job description, yes, but that changed some years ago. Councilman Ford doesn't understand how the testing failed. Mr. Parker said the investigation on that is also still ongoing. Councilman Ford asked if the audits caught any of these problems. Mr. Parker recalls a comment on one of the audits that the rate table needed to be checked. Councilman Ford asked if the audit reports can be ignored. Mr. Parker said no, it will continue to show up in audits in the years to come if it is not corrected. Councilman Ford is concerned with the response to the broken meters, not the fact that the meters were broken.

Mayor Green said he wants people to ask questions so answers can be provided.

Mr. Parker said there are 640 elements of the rate table that have all been verified and tested. The bills went out late and due dates were adjusted. There are twenty (20) accounts being looked at for errors in the way they were set up. Vice Mayor Pohlmann asked if new people are looking at the rate table now. Mr. Parker said yes, three employees in accounting verify the table now, plus Customer Service.

Stella Gurnee, Comptroller, provided information on how customers are billed.

Councilman Burnette asked how many water customers are in the City. Ms. Gurnee said 26,000 with 700 issues so far. Councilman Burnette said his faith in Staff is shaken; his faith in the audit process is shaken. Staff needs to repair faith with City Council and the citizens.

Corey Berman asked about hiring someone to check and enter manually instead of relying on a computer. Ms. Gurnee said Staff is doing it manually. She has downloaded and verified accounts manually.

Ted Noftall asked if there would be discussion about the failure in the internal controls. Mayor Green said yes. Mr. Parker said there is a process in the Civil Service System and he has to go through those items. These processes talked about tonight need to be put in written form. Mr. Noftall said the audit said the internal controls were wrong. He wants to make sure the security levels are being corrected. Mayor Green said the audits and investigations are still ongoing and changes will be made as needed.

Mark Schaefer asked if the 700 issues were all or if there may be more. Ms. Gurnee said 700 accounts have had an energy fee problem. The 700 is not the end number. Mr. Schaefer asked what the percentage is of errors. Mayor Green said he doesnít want anyone guessing on numbers. The report will come out with the details. Mr. Schaefer thanked Staff and City Council for moving fast to make corrections and inform the citizens. He asked if there was movement to get an independent auditor. Mr. Parker said yes, that is the feeling from Council but Council has to hire the auditor. Mr. Schaefer asked if they would entertain a citizen committee working with the external auditor. Mayor Green said they have to be careful because of the Sunshine Law. He would want the citizens to have an accounting background. He said the documents are all public and the citizens can review the documents and provide their thoughts and recommendations. Margaret Roberts, City Attorney, explained the law. She said it is possible, but is more cumbersome.

Councilman Burnette asked who is best suited for operations audits vs. financial audits. Mr. Parker said it will overlap with the auditors, and both will be used.


Mr. Parker explained that Council approved a meter replacement program for this upcoming year in the CIP. An exemption report is provided to the meter readers every week and it is voluminous. Meter Readers would check the non-transmittal reads. The policy reads that all zeros and certain parameters are to be revisited. That is not being done. The process was there, the volume was overwhelming. Councilman Ford asked if anyone was alerted of the problem in volume. Mr. Parker said the right questions were not being asked. Councilman Ford doesn't hold the City Manager responsible. The problems are there and talked about but not making it up in the organization. Councilman Ford asked if Customer Service has experience with meters. Mr. Parker said no, they can read them but not perform maintenance. They are not technicians.


Vice Mayor Pohlmann asked if installation could have caused the problem. Mr. Parker said he doesn't think so but it's possible. Vice Mayor Pohlmann asked if the meters are made in America. Mr. Parker said Staff required Sensus to provide American meters.


Councilman Ford asked why we stayed with Sensus for so long if there have been so many problems. Mr. Parker said because they were a sole source for a while. They are no longer a sole source item though.


Barbara Schaefer asked if the City is going to hold the company accountable. Mr. Parker said yes, Sensus is providing new meters to replace the meters that are under warranty.


Eileen Escalante, 6109 Oxbow Bend Lane, asked who is making up for the loss in revenues because of the under billing. Mayor Green said the investigation is still going on.


Mr. Berman asked about software liability. Mayor Green said it's not software issues. Mr. Berman asked if employees are being terminated because of it. Mayor Green said it is part of the investigation. Mr. Berman asked if the FDLE or the FBI is being called. Mayor Green said not yet. Mr. Berman asked if the other city is being charged for the under-billing. Mayor Green said Council must decide.


Stan Hetrick asked if he could get a breakdown of old meters, new meters, and the replacement of them. Mr. Parker said yes.


Councilman Burnette asked if meter replacement has been suspended. Mr. Parker said no, not totally. Neptune meters are being installed.


Public Comments:


Ted Noftall didn't understand the answer to Councilman Ford's question: at what level in the organization is the responsibility. Mayor Green said itís part of the investigation. Mr. Noftall asked how far up the organization did the problems rise. Mr. Parker said transmission and battery issues have gone through Council, but other failures are being investigated now. Mr. Noftall asked if internal control issues are going to be addressed tonight. Mayor Green said yes. The investigation will be done and a full report provided.


John Junco is concerned with Sensus. He asked if Sensus could/would honor their warranty through another company with reliable meters. Mr. Parker said Sensus stands by their meters even though they have some failures.


Mr. Schaefer thinks more investigating needs to be done asking: Was there a maintenance schedule? Was it followed? Is it a meter problem or a human problem? Mr. Parker said it's all part of the investigation.


Newton White said the failure is a people problem. He asked why voluminous reports and zero reads were not addressed years ago. Mayor Green said itís part of the investigation. Mr. White wants people accountable to be held accountable.


Councilman Burnette wants to see the flow chart for meter readers like the Customer Service side. Mr. Parker will bring it back on Tuesday, October 23. He will need more help and will bring a report with options and a recommendation. Mayor Green said every week Staff will provide a report on the status.


Mr. Parker thanked Shannon Lewis, Assistant City Attorney, for her work on the issue, as well as Stella Gurnee and the accounting staff. More training is needed in Customer Service.


Councilman Ford said Staff is embarrassed and very sorry it happened. Staff wants it fixed. Ms. Lewis has been wonderful. Ms. Gurnee and IT Staff have been working hard. He appreciates the water department for continuing to push when not in balance.


Carol Lasky suggests a better training program to include written procedures.


Mr. Noftall doesn't want this to take forever. He asked for a date for the next report and the auditorís reports. Mayor Green said they are working on a schedule. Mr. Noftall asked who is in charge of the design, implementation, and testing of the internal controls at the City. Mr. Parker said the Finance Department as it relates to finance matters. Mr. Noftall said not finance, but every department. Mr. Parker said the CEO. Mr. Noftall wants to know when the report will be provided. Mayor Green said 4-6 weeks for some items. Mr. Parker said Civil Service rules must be followed.


Deborah Lanni asked if the auditors should have caught the issues. Mayor Green said there were some remarks made by the auditors.


Mr. Berman asked if there's a way to bring in business people to write the policies. Mayor Green asked Council if they would be willing to meet in a forum to go through the new procedures with Staff and the public. Council was all in favor. Mr. Berman asked who is suspended. Mr. Parker said the Finance Director and Customer Service Manager.


Drew Bastian asked how this can be allowed to go on for 43 months when the meters are read every month. Mayor Green said that is part of the investigation.


Mr. Noftall advised all that the auditors reported the problems each year. He asked why wasnít anything done about it. Mayor Green said some of the items were addressed. Councilman Ford disagrees that some items were addressed. He thanked Mr. Noftall for ďholding their feet to the fireĒ. He is not happy with the lack of internal controls.


Mr. Schaefer asked if there is a dollar figure on the damages yet. Mayor Green said not yet, they have to identify all of it and figure out what's recoverable. Mr. Schaefer asked who is doing the investigation. Mayor Green said Council will gather information for an RFP.


Councilman Ford said they need to pass a resolution calling for development of an RFP and Council will hire an independent auditor.


Mr. Noftall asked if the Mayor has received a report from the City Manager as requested on July 17, 2012 relating to a list of problems with the internal controls in regards to the Public Works issues. Mayor Green said no, he did not.


Vice Mayor Pohlmann wants Mr. Parker to ensure billings are correct. He asked if Daytona Beach Shores billings have been corrected. Mr. Parker said yes. Vice Mayor Pohlmann asked if the Shores is able to pay the new fees. Mr. Parker said they can change their budget. Vice Mayor Pohlmann said they need to pursue repayment from the Shores. A payment schedule could be set up. He wants independent auditing services. He wants written reports of the changes being implemented from the employees making the changes.


Mayor Green asked if they get an audit or a review. Mr. Parker advised it is an audit, not a review. Brent Milliken advised that there are 123 years of audit experience on the team. Their rules say they cannot make changes to the systems, only write it up as a comment. If they do more than write it up, they are no longer independent and would not be able to perform the audit.


Councilman Ford asked why they do audits. He asked if the problems were found, did Staff lie or did they just happen to not find the problems year after year. Mr. Milliken said itís all in the reports. Alex Kish said it's in the report; he advised of the process of the audit. Councilman Ford asked if Staff chose not to address their comment in the audit report.


Councilman Ford asked how to protect citizens and prevent this. Mr. Milliken said changes to the internal controls are needed. Mayor Green asked how much a forensic audit would cost. Mr. Kish said it could be 6-8 times more than their annual audit fees.


Mr. Noftall said Council should appoint a citizen panel who understands what they are doing. He doesnít believe Council understands what the auditorís job really is.


Mr. Berman asked for a motion to direct the City Manager and City Attorney to put out an RFP for audit services. Mayor Green believes they need a meeting to discuss the specifications for the RFP.


Mr. Parker said Wednesday is a Shade Meeting on labor negotiation at 6:00pm, and a Special Meeting regarding the RFP specifications can be at 6:30pm. Council agreed.


Councilman Burnette wants a City-wide audit, not just of finance. He asked how much money will be paid back to Volusia County and others. Mr. Parker said he will provide that information as soon as it is all gathered. Councilman Burnette wants to discuss the suggestion of an internal audit team being full-time rather than contract employees.


Councilman Ford wants a forensic audit along with clear policies and procedures and training. He asked about hiring additional help. Mr. Parker will bring back budget recommendations.


Mayor Green suggested consolidating the number of rates.


ADJOURNMENT: †† 8:31p.m.


††††††††††††††††††††††††††††††††††† ††††††††††††††††††††††††††††††††††††††††††††††† †††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Mayor Allen Green





Kenneth W. Parker, City Manager