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Re: “Another look at Utilities governance…

*… (Governance White Paper)

*…, (Governance White Paper, Jan 19, 2011 Board meeting - begins on page 76)

*…, (UPAC recommendations, Feb 15, 2012 Board meeting - begins on page 83)

*(From Governance White paper page 25)
Appendix A: Recommendations from Consultants and Citizen
Associated Utility Consultants report 1993
Place a Board of Utilities Commissioners between the City Council and CSU. (High priority)
In contemplating a revised organizational arrangement for CSU, we reviewed a number of
municipally-operated utilities with characteristics similar to CSU. In addition, research, studies
and data collected by utility associations and others relative to the most optimal organizational
configuration and working relationship for CSU and its policy body were reviewed.
Alternatives identified include a direct reporting relationship of CSU to the City Council (status
quo), an Advisory Board, a Management Board, privatization of the gas and electric utilities, or
privatization of all four utilities, with capital recovery of a significant magnitude to the City.
Review and analyses were also conducted of the work of the City of Colorado Springs Charter
Review Commissions over the years, and of the most recent deliberations of the 1992 Charter
Review Commission. Throughout this research and analysis, a business versus political
perspective was employed.
Research of 13 municipally owned and operated utilities with similar characteristics to Colorado
Springs (e.g., population, form of government, customers, multiple utilities, complex operations,
etc.) indicated that a majority utilized a utilities board between the City Council and the utility.
The average life of such boards was 56 years, and about half required an initial charter
amendment to put them in place. The vast majority of these boards are appointed by the City
Council, with the qualifications of individual members being evenly split between those with
business experience and those who represent the diverse interests of the community. Residence
was required in some instances as well.
On average, board members served four-year terms of office, with some limitations to two terms.
In almost all cases, the board chair was elected by board members, and board members received
compensation for their service ranging from none to $9,000 annually, with $2,800 annually being
the average. The number of board members ranged from 3 to 11, with 5 being the average.
In a majority of cases, the Utility Director or General Manager was selected and appointed by the
board. The General Manager most frequently served at the pleasure of the board, but a
contractual arrangement was used in some cases.
Advantages of a board are as follows:
* Relieve Council from extensive time commitment and obligation to acquire high level of
technical knowledge
* Assist the utilities with strategic direction by having the time and expertise to develop a
unique and specialized understanding of issues
Governance Alternatives
* Offer an additional process for public input
* Provide a buffer to Council on sensitive issues
* Act as a forum for public education regarding utility issues
* Provide Council with an additional perspective on utilities
Disadvantages include:
* Removal of direct control of utilities from the overall policy-making body of the City
* Possibly elongate the decision process on rate and debt issues.
The above research results are consistent with our secondary research from various utility
associations and like organizations. We also found from our analysis that the present Financial
Advisory Committee to CSU does not provide all of the advantages described above.

*Charter Review Committee 2005
6-10. Utilities Governance This section was removed entirely and four new subsections 6-10.(a) thru
6-10.(d) were added. RATIONALE: In an effort to reduce Council members' workload and yet maintain
accountability of Colorado Springs Utilities (CSU) to the citizens, we propose that Council appoints a
separate Utilities Board but that Council will still have the final say over CSU budget and rates.
(a) Organization of the Utilities Board. "City Council shall appoint a separate Utilities Board consisting
of not more than fifteen (15) members who shall be appointed to staggered terms. The initial board shall
have its members appointed for varying terms to achieve the staggered succession of members. The
board shall serve at the pleasure of City Council. The board shall adopt its own by-laws subject to the
approval of City Council." RATIONALE: In response to presentations from CSU and various surveys
that we reviewed, we determined the Board should be comprised of approximately 9 members. The
Board should contain representatives from the following professional sectors: financial, local business,
accounting, engineering and a local attorney with utility experience. In order to promote diversity, the
Board should also have citizen ratepayer members. However, we also decided that these specifications
should not be written into the Charter. Council should determine the number of Board members, their
make-up, length of service and whether they should receive a stipend. Committee Vote: 19 in favor; 2
(b) Duties of the Utilities Board. "Subject to the general supervision and control of City Council, and to
the extent provided by law, the supervision and management of Utilities shall be vested in the Utilities
Board. The Board's powers and duties shall include but not be limited to the appointment of the Utilities
Director who shall serve at the pleasure of the Utilities Board, and the authority to recommend rates,
charges and regulations for services provided by Utilities through rate cases and recommend approval of
the budget to City Council. The Utilities Board shall be empowered to do all things not in conflict with
the City Charter, City Code or other applicable laws, for the operation, maintenance and development of
27 Governance Alternatives
utilities." RATIONALE: The new Board will have all the powers and duties of the previous Board (City
Council) except that it will RECOMMEND rates, charges, regulations for services, and approval of the
budget - for City Council's ultimate approval. The new board will appoint the CSU Director.
(c) Duties of City Council. "City Council shall retain jurisdiction for Utilities for all other legislative
matters, including the authority to pass ordinances, issue revenue bonds, institute eminent domain
proceedings, set rates, charges and regulations for services provided by Utilities, appropriate funds and
adopt annual budgets, approve intergovernmental agreements or as otherwise required by the Colorado
Constitution, the City Charter or other controlling law." COMMENT: We recommend that City Council
retain jurisdiction for all legislative matters and intergovernmental agreements of CSU. Committee Vote
for (b) and (c): 17 in favor; 1 opposed;
1 abstention
(d). Duties and Powers of Utilities Director. "Except as otherwise set forth in this Charter, the Utilities
Director shall appoint, suspend or remove any City employee subject to the Utilities Directors direction
and supervision. The Utilities Director may authorize any administrative officer who is subject to the
Utilities Director's direction and supervision to exercise these powers with respect to subordinates in that
officer's department, office or agency. Employees of Utilities shall remain City employees."
COMMENT: The duties and powers of the Utilities Director are to remain unchanged. Committee Vote:
19 in favor; 2 opposed
6-20. Definitions. The word "Utility" is changed to the word "Utilities". RATIONALE: This is a cleanup
item. Committee Vote: 21 in favor; 0 opposed
6-40. (a) Utilities - Accounting - Reserves. The requirement to place revenues and deduct expenses of
each Utility System into the Utilities Gross Income Fund remains unchanged; as does the requirement that
Utilities funds should be kept separate from other funds of the City. RATIONALE: The substance of this
clause was not changed but the language was cleaned up to suit other changes in the article. Committee
Vote: 14 in favor; 6 opposed

*Utilities Policy Advisory Committee Governance assignment 2007
Elected City Council officials also serve as members of the Utilities Board, governing Colorado
Springs Utilities, a municipally-owned enterprise. In the mid-1990s, City Council developed
interest in exploring a change in the form of Utilities governance due to:
* increasing challenge of guiding a larger and more complex organization;
* perceived difficulty in managing the many City Council responsibilities and priorities;
* competitive pressures demanding a more focused and responsive Board;
* legal and physical constraints in developing water resources;
* energy restructuring; and
* City Council term limitations.
Today these same pressures exist with the added uncertainty of market conditions for natural gas,
coal and electric purchases due to volatility in prices, an aging infrastructure, retention of
Governance Alternatives
qualified employees and an extensive capital project program to meet the demands of our
rapidly-growing community. For example: total assets have increased from $1.26 billion in 1993
to $2.85 in 2006, and employee count has grown from 1,610 in 1993 to 2,054 in 2006. Springs
Utilities customer base has grown during that same period from 434,859 meters served to
644,583; a 33 percent increase.
At the Board's direction, UPAC has reviewed Utilities current governance model based on
Policy Governance (Carver), studied other governance practices, reviewed APPA's 2001 and
2005 governance survey results, attended a presentation on Memorial Hospital's governance,
reviewed the City Charter, City Code, Utilities Board bylaws, and the 2007-2011 Strategic
Business Plan. Based on the above information and discussions, UPAC unanimously favors
modifications to current Utilities governance and RECOMMENDS:
Long-Term (five years):
* Appoint independent expert Board
o Appointees based on knowledge, experience, and time availability
* Independent Board regularly reports to City Council
* City Council maintains regulatory and rate setting authority
Near-Term (within one year):
* Modify existing governance model
* Facilitate engagement between Utilities Board and CEO to create mutual ownership on:
o Board-CEO Linkage
o Governance Process
o Executive Limitations
* Provide core curriculum education for all Board members
* Utilities Board elects Chair

*Sustainable Funding Committee 2009
Governance Model Consideration
The City Assets and Enterprises subcommittee unanimously endorses a recommendation to the
full Sustainable Funding Committee that the City Council Take the steps necessary to adopt a
change in governance of Colorado Springs Utilities to include replacement of the current
Utilities Board with the concurrent appointment of independent individuals with management
expertise in the several services fields (electric, natural gas, water and wastewater) and that such
transition be made as soon as practical, consistent with the general welfare of Colorado Springs
Utilities' organization, its employees and its customers.
The subcommittee's recommendation considers:
29 Governance Alternatives
+ The general welfare of the community and Colorado Springs Utilities' customer base
+The charge to the Sustainable Funding Committee to ensure, as much as practical, a
sustainable source of funds to the City entities consistent with the cost of providing
quality services
+The increasing size of the organization, its service area and customer base, as well as the
complexity of the regulatory and technical environment in which it operates
The subcommittee noted the following factors:
1. A four-service utility governed by elected public officials may place short term goals and
reaction to local economic conditions above the long term interest of the entity.
2. For the majority of municipal utilities similar in size to Colorado Springs Utilities,
governance is provided by independent boards, either appointed by their city council or
independently elected. The establishment of an independent board governing Colorado
Springs Utilities may provide the flexibility to optimize revenues consistent with the
philosophy of an independently owned utility. City Charter states the City Council by
ordinance or resolution establishes the rates.
3. Total assets of Colorado Springs Utilities have increased from $1.26 billion in 1993 to
$3.0 billion in 2008; Colorado Springs Utilities forecasts an additional $1.7 billion in
construction, including SDS in the next five years. Colorado Springs Utilities' customer
base has rapidly risen in that same period from 435,000 meters served in 1993 to 540,000
in 2008.
The subcommittee further notes that this proposal is the third such recommendation made to City
Council, which is consistent with, and follows, similar recent study groups recommendations:
2004 Charter Review Committee and 2007 Utilities Policy Advisory Committee. The
subcommittee also noted that a recent APPA survey indicates that CSU's governance model is an
anomaly as only 1 of 4 municipally-owned utilities with greater than 50,000 customers are
governed by a city council.

1 like, 6 dislikes
Posted by lisaczelatdko on 10/23/2014 at 11:11 PM

Re: “UPDATE: City agrees to pay PERA $190 million

No one should be surprised at this decision. Shame it took over 2 million dollars to figure it out. That wasted money could have paid salaries for the legislative body of the second largest Colorado City.

12 likes, 0 dislikes
Posted by lisaczelatdko on 09/27/2014 at 10:08 AM

Re: “UPDATE: City agrees to pay PERA $190 million

Lisa Czelatdko
October 22, 2012 ยท
Council still talking about the campaign finance ordinance revisions. Wish my colleagues took this much time going over the memorial health foundation bylaws. #coscitycouncil #danieljchacon #memorialhealthfoundation

13 likes, 0 dislikes
Posted by lisaczelatdko on 09/27/2014 at 10:06 AM
Posted by lisaczelatdko on 09/12/2014 at 9:08 AM

Re: “Balloon Classic to leave Springs

The LART 2015 application deadline was June 30th. When did the LART committee add economic impact to application? The organizer must have known for months now that they wouldnt be seeking City of Cos financial assistance. The Classic was either told 2015 City funding most likely would not be awarded or another City is offering better financial commitment. LART funds are distributed from an appointed committee.

7 likes, 2 dislikes
Posted by lisaczelatdko on 08/16/2014 at 2:28 AM

Re: “County to consider new term limits for sheriff, DA

There are no limits in the private sector and people are constantly talking about the importance of experience in leadership. So.... why have term limits when people have the power to exercise their vote? Have a capable, respectable representative doing a good job. Why should they lose their position because of term limits? Elected officials who don't appreciate their responsibility and abuse the trust of their position should and can be voted out. Only concerning factor could be the increasing numbers of people not voting and the ever increasing apathy towards all levels of government.

3 likes, 2 dislikes
Posted by lisaczelatdko on 06/30/2014 at 8:13 PM

Re: “City on losing end of rulings in PERA case

PERA will fight, in court, years insisting City of COS pay. The City settles millions of dollars per year on various law suits to keep inevitable payouts to a minimum. I'm curious to know the legal arguments substantiating no payout as the large amount of interest accrues. It would be wonderful for Indy readers to read an interview with former City Attorney, Patricia Kelly, on her incredible knowledge of PERA law and what this means for the City. Should be encouraging to those wanting to see a boost in local business to know that local law firm has been paid million(s) by the current City executive branch for various legal consultations and representation. If only all struggling local COS businesses had such luck.

8 likes, 0 dislikes
Posted by lisaczelatdko on 06/23/2014 at 5:00 PM

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