HomeMy WebLinkAbout08/02/1988, C-5 - RECORGANIZATION OF UTILITIES DIVISION INTO A SEPARATE DEPARTMENT. 111„�IyIIII��Illllll II MEETING DATE:
city or �Uisan s oBispo August z 1988
filveaftm 1, COUNCIL AGENDA REPORT ATE U_E
FROM: John Dunn, City Administrative Officer ( <�—
SUBJECT: Reorganization of Utilities Division into a separate department.
CAO RECOMMENDATION:
Adopt resolution approving the establishment of a Utilities Department.
BACKGROUND:
BACKGROUND:
The City has been considering the creation of a separate department of Utilities as a more
.efficient and effective means of successfully accomplishing its water and waste water goals
and objectives since the early 1980's. In fact, a formal evaluation was listed as an
objective in the 1987-89 Financial Plan. Historically, this division has operated more as
an independent division within the department and City organization than have other division
level work units. Organizational structure should, ideally, enhance both performance and -
productivity. Clearly, no one organizational structure is best nor is a structural change a
panacea for all current and future organizational problems. However, in our current
organization, I believe a separate utilities department will best meet the City's needs for
the reasons cited below.
1. Sizes scope and functional independence of operations.
The utilities operations, both water and sewer, have reached a size which would justify
an independent department. With respect to water, the City is responsible for water
supply, conservation, water treatment, water distribution, customer services and related
administrative and engineering functions. On the sewer or waste water side, we perform
a variety of services including collection, transmission, treatment and various
inspection and regulatory services.
Currently, there are 38 permanent employees within the Utilities Division, 22 within the
water operation and 16 employees in the waste water treatment plant and sewerline
maintenance operations. The annual operating budget of the utilities function is $5.4
million and the capital budget for this year is $4.0 million. Prospective capital
improvements for the sewer plant, sewer collection system, correction of the inflow and
infiltration problem, and water plant and waterline improvements total in excess of $30
million over the next five years, which is a far more aggressive and ambitious capital
program than for any other operation of the City, including the Public Works Department
(without utilities). Based on number of employees and size of operations budgets, this
new department would be the fourth largest in the City, after Police, Fire and Public
Works.
These various functions are closely related internally, but only loosely related to
other public works functions such as streets, parks and engineering. While shared
professional and clerical staffs made sense when the required work force and work load
were less, the need for support staffing dedicated solely to water related functions has
been a reality for some time.
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COUNCIL AGENDA REPORT
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2. City-wideoo licy implications of water gad waste water operations.
Water and waste water issues have become a dominant policy area for the community. The
central issue currently being addressed in the General Plan revision process is
community growth and development, which includes decisions on appropriate boundaries and
annexation policy. Resource management and resource constraints, including water supply
and waste water collection and treatment capacity, are major portions of that dominant
issue.
Major decisions in regard to water supply and waste water collection and treatment will
have to be made in the months and years ahead. These decisions will carry with them
major financial and rate implications. It is important that these issues be centralized
in one department, so that department will have the highest degree of accountability for
what is taking place. In this important realm, a less certain or more defused
accountability could produce negative consequences. Utilities in an enterprise
(self-supporting) fund. It calls for continuing cost analysis and greater communication
with an accountability to the Council and public about prospective rate increases.
3. Responsive. focused. manageable operation.
Certain substantial management issues can be better addressed if the utilities function
is converted into a separate department. At the present time, the Utilities Division is
operated by a division head, who reports to the Director of Public Works, who reports to
the City Administrative Officer, who reports to the City Council, which in turn is
accountable to the community and the citizens. Certain positive changes can be
facilitated by shortening the "chain of command" and restructuring functional areas of
responsibilities. Perhaps the single greatest potential benefit is "unity of direction"
through a department head reporting directly to the CAO, rather than a
sometime-perceived duality of direction under a Department Head and Division Head. A
substantial management benefit of reorganizing the utilities function into a separate
departmental operation is that there will be one department head in charge with the
division managers reporting directly to him, giving him an opportunity to establish
clarity of purpose and direction, and priorities, and giving them the ability to manage
all related functional areas.
There will be an improved opportunity for utility priorities to be established on their
own merits, rather than competing (or perceived to be) with other high-priority Public
Works operations. The current organization requires the department head to have an
extensive "span of control" over multiple and diverse operations. Several priorities of
the other operations, such as the adequacy of a proper circulation system and
well-maintained streets and storm drainage, and the adequacy and maintenance of our
parks system are major community priorities in themselves. Eliminating utilities from
the Public Works Department presents opportunity for increased attention to other
matters that are of paramount consequence to the community.
As stated, this is not a new consideration, but was discussed by Paul Lanspery with the then
members of the City Council. Because the City, at that time, was concerned with other
matters, this issue did not then have the importance that it has assumed today, and was not
pursued at that time.
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COUNCIL AGENDA REPORT Page 3
We did survey the existing organizational arrangements in a sample of other California
municipalities. Most other cities do not manage or provide the full water and waste water
services that we do. The more utility functions done by a City the more likely it was to
have a utility department and the larger the City the more likely it was to have a utility
department. In the LA and Bay area many cities are provided either water or sanitation
services through mega-district operations.
In discussions with staff, we agree that a planning and phasing period is an integral and
necessary part of the reorganization effort. The department will be better structured if an
assessment of current and ongoing needs, priorities, goals and resources is accomplished and
a departmental structure is developed that best meets this goal. This requires both a
significant commitment of time and the active involvement of our key utility mid-managers if
it is going to be successful. It will be a challenge to the creative, analytical and
planning skills and abilities of the participants. We feel that such an effort and
commitment should only be undertaken once the Council has approved the creation of the
department.
This reorganization is not intended to require any additional supervisory and managerial
personnel due to the change from a division to a departmental status nor will it increase
the number of positions on the management team. A reorganization of the mid-management
structure and position responsibilities and minor salary changes are anticipated. However,
this would be recommended in any event to provide a more integrated, accountable and more
responsive utilities organization. Additionally, due to the projected workload, some
additional technical and professional positions may be identified as necessary to complete
the workload requirements. Again, these would be requested in any event. Costs directly
attributable to reorganization will be limited and minor compared to expenses associated
with expanding utilities operations and capital programs or with the costs of failing to
address current organizational issues.
The interim reorganization efforts will enhance our ability to address long term needs in a
systematic fashion. We are leaning towards a departmental structure that closely ties all
water related services and all waste water related services within two divisions. This type
of functional organization can best identify and correct problems of mutual concern that may
otherwise appear to fall between work units. Follows is an outline of the proposed
timetable for implementing the organizational change.
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WhGo COUNCIL AGENDA REPORT Page 4
TENTATIVE ACTION TIME SCHEDULE
ACTION WHO DATE
Approve creation of department and transfer of Council 8/88
water and waste water functions to new dept. (by
resolution)
Appoint Utilities Manager as Utilities Director CAO 8/88
Create interim water and waste water divisions Util. Dir./CAO 8/88
and appoint treatment plant supervisors
as interim division heads during 8/88-1/89
transition phase
Develop organizational change skills and abilities Util. Dir. & 9/88
Div. Mgrs.
Identify critical organizational needs, goals, key Utility Team 11/88
functions, and existing and desired resources Div. Mgrs.
Develop one year implementation plan for 1989 and Utility Team 12/88
present to CAO and Council for review
Adopt resolution approving changes in personnel Council 12/88
(classifications, pay ranges, etc.)
FISCAL IMPACT:
The establishment of a Utilities Department does not require additional funds or positions.
SUMMARY RECOMMENDATION:
The current organizational structure is no longer the most useful in providing Utilities in
an efficient and effective manner and the demands on the system are anticipated to
increase. I recommend Utilities be made a Department and that key departmental personnel be
given the training and opportunity to design and implement an organizational structure that
provides a responsive, accountable, manageable and efficient operation.
Council will be kept informed of the progress and requested to take action as needed.
RESOLUTION NO. (1988 SERIES)
A RESOLUTION APPROVING THE ESTABLISHMENT
OF A UTILITIES DEPARTMENT
WHEREAS, the City's organizational structure is periodically
reviewed and changed to most effectively and efficiently address the
issues and priorites of the city; and
WHEREAS, the City Administative Officer has determined that a
separate Utilities Department would better serve the current needs of the
City; and
WHEREAS, he has requested that the City Council approve the
creation of a Utilities Department and transfer all water and waste water
functions and personnel currently assigned to the Utilities Division; and
WHEREAS, the City council concurs that separate departments of
Public Works and Utilities will provide a more responsive and efficient
organization;
NOW, THEREFORE BE IT RESOLVED as follows:
1. The Utilities Division of the Public works Department is
hereby established as a Utilities Department.
2 . The Utilties Manager is hereby changed to Utilities
Director and shall report to the City Administrative Officer.
3 . The newly created Utilities Department key staff, working
closely with the City Administrative Officer, shall by January 1, 1989,
submit a formal report of departmental organizational recommended
actions.
C_ s s
Resolution No. (1988 Series)
On motion of , seconded by ,
and on the following roll call vote:
AYES: -
NOS:
ABSENT:
the foregoing Resolution was passed and adopted the day of 1988.
Mayor
ATTEST:
City Clerk
APPROVED:
City Administrative Officer
City torney
Personnel Director