Resolution No. 2013-099RESOLUTION NO. 2013-99
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND ADOPTING THE VERNON LIGHT &
POWER DEPARTMENT RESOURCE ADEQUACY PLAN FOR 2014,
WHICH INCLUDES THE PEAK DEMAND FORECAST, THE
PLANNING RESERVE MARGIN, THE QUALIFYING CAPACITY
CRITERIA AND THE QUALIFYING CAPACITY FROM SUCH
RESOURCES, CITY'S RESOURCE ADEQUACY AND SUPPLY
DATA AND APPROVES THE RESOURCES USED TO SATISFY
THE CALIFORNIA INDEPENDENT SYSTEM OPERATOR'S
TARIFF REQUIREMENTS
WHEREAS, the City of Vernon (the "City") is a chartered
municipal corporation of the State of California that owns and operates
a system for the generation, purchase, transmission, distribution and
sale of electric capacity and energy; and
WHEREAS, the City has executed a Metered Subsystem Agreement
("MSS Agreement") with the California Independent System Operator
("CAISO"); and
WHEREAS, the City is considered a Load Serving Entity ("LSE")
under certain terms of the CAISO's Tariff ("Tariff"); and
WHEREAS, the Tariff requires each LSE to establish and submit
to CAISO an annual Resource Adequacy Plan, which includes a peak Demand
Forecast, a Reserve Margin, Qualifying Capacity Criteria, and a Supply
Plan; and
WHEREAS, the Tariff requires each LSE to submit monthly
Resource Adequacy Plans and Supply Plans; and
WHEREAS, the City has reviewed the historical and expected
demand for and supplies of electricity within its distribution system,
including the likely peak demand for electricity within the City's
distribution system throughout 2014, the available generation and other
capacity to serve that demand, and constraints which might impact the
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availability of capacity to serve the City's projected peak demand; and
WHEREAS, based upon that review, the City finds that the peak
demand for electricity within the City's distribution system throughout
2014 is likely to experience load growth of approximately 1.0% as
compared to the same months of the prior year; and
WHEREAS, based upon that review, the City finds that the
default 15% Reserve Margin set forth in the Resource Adequacy
provisions of the MRTU Tariff is sufficient for planning purposes; and
WHEREAS, based upon that review, the City finds that the
Qualifying Capacity Criteria specified in the City of Vernon Demand
Forecast for 2014, Planning Reserve Margin, Qualifying Capacity
Criteria and Annual Resource Adequacy and Supply Plan are sufficient
and appropriate to be used in determining the amount of Qualifying
Capacity needed to meet the City's projected peak monthly demand and
15% Reserve Margin.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the above recitals are true and correct.
SECTION 2: The City Council of the City of Vernon finds
that this action is exempt under the California Environmental Quality
Act (CEQA), in accordance with Section 15061(b)(3), the general rule
that CEQA only applies to projects that may have an effect on the
environment.
SECTION 3: The City Council of the City of Vernon hereby
approves and adopts the Light & Power Department Resource Adequacy Plan
for Calendar Year 2014 (the "Annual Resource Adequacy Plan"), which
includes the peak Demand Forecast, the Planning Reserve Margin, the
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Qualifying Capacity Criteria and the Qualifying Capacity from such
resources, the annual Resource Adequacy and Supply data, and the Resource
Adequacy resources that will be used to satisfy the City's Local.Capacity
Requirement for 2014, which is attached hereto as Exhibit A.
SECTION 4: The Interim City Clerk, or Deputy City Clerk, of
the City of Vernon shall certify to the passage, approval and adoption
of this resolution, and the Interim City Clerk, or Deputy City Clerk,
of the City of Vernon shall cause this resolution and the Interim City
Clerk's, or Deputy City Clerk's, certification to be entered in the
File of Resolutions of the Council of this City.
APPROVED AND ADOPTED this 19th day of November, 2013.
'7 W. Michael McCormick
Name:
Title: Mayor / Maya- ^ -��
`bana Reed
Interim City Clerk / Beptl+-Eij
APPROVED AS TO FORM:
Scott E. Porter, Depu+Ly City Attorney
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I Dana Reed Interim City Clerk / of
the City of Vernon, do hereby certify that the foregoing Resolution,
being Resolution No. 2013-99, was duly passed, approved and adopted by
the City Council of the City of Vernon at a regular meeting of the City
Council duly held on Tuesday, November 19, 2013, and thereafter was
duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this 40- day of November, 2013, at Vernon, California.
(SEAL)
Interim City Clerk / >
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EXHIBIT A
City of Vernon
Light & Power Department
Resource Adequacy Plan
Calendar Year 2014
Background:
The Resource Adequacy provisions of the CAISO's Tariff require the Scheduling
Coordinator ("SC") of a Load Serving Entity ("LSE") such as the City of Vernon to establish
and submit the following information upon approval from its Local Regulatory Authority.
(1) a Coincident Peak Demand Forecast for its load, (2) a Reserve Margin used for planning
purposes, (3) the Qualifying Capacity Criteria that will be used for determining qualifying
resource types and the Qualifying Capacity from such resources, (4) an annual and monthly
Resource Adequacy and Supply data, and (5) a list of the Resource Adequacy Resources that
will be counted on to satisfy the LSE's Local Capacity Requirement.
Staff has prepared this "City of Vernon Light & Power Department's Resource Adequacy
Plan for Calendar Year 2014" consistent with the CAISO Tariff requirements. The following
is a discussion of each of the CAISO Tariff requirements and how the City will meet each
requirement.
Coincident Peak Demand Forecast:
Vernon's municipal load resides within the CAISO control area. The CAISO, as the
balancing authority, has the responsibility for meeting reliability criteria established by the
Western Electricity Coordinating Council ("WECC"). As such the CAISO has entered into
agreements with various market participants including, but not limited to, Generators,
Scheduling Coordinators, Participating Transmission Owners, Utility Distribution
Companies, and Metered Subsystems ("MSS"), which impose certain responsibilities on
parties to establish a reliable system. One of those responsibilities is to have operating
reserves that meet the WECC minimum requirements.
The CAISO's goal in considering reserve requirements is to balance available capacity with
demand across the entire CAISO control area and, therefore, CAISO's primary concern is
with the time and amount of peak demand on the CAISO-controlled transmission system (the
"system peak"). In order to reduce demand during the period of the system peak (and,
therefore, to lower the peak demand on the transmission system), utilities generally offer
2
retail rate structures designed to encourage load shifting away from the on -peak period. Such
efforts are intended to achieve on -peak demand reduction and lower the need to build new
generation to meet peak demand. Vernon has adopted such a rate structure and has
succeeded in shifting the peak demand period for Vernon's system to a time that is generally
earlier than the time of the CAISO system peak.
Vernon's share of needed capacity to meet CAISO control area capacity requirements may
be established by determining the amount of Vernon's load that contributes to the CAISO
system peak. Vernon's load that contributes to the CAISO system peak is the City of Vernon
Coincident peak Demand. The process to establish Vernon's monthly coincident peak
Demand Forecast consists of the following three steps:
1. Establish Monthly Vernon System Peak Demand Forecast for 2014
To establish Vernon's System peak demand forecast, Staff performs an analysis on the
year to year change in the City's energy demand peaks during a five year period. Based
on the results of the analysis, staff forecasts a load growth rate for the coming calendar
year (Exhibit 1). This year's analysis shows that for the period between 2009 and 2013,
the City of Vernon system peak demand has decreased less than half a percent. Closer
review of Exhibit 1 reveals that the decreases in system peak demands have slowed year
to year with an increase from 2012 to 2013 of 1.27%. Based on current load increase
information projections available to the Department, including the fact that no significant
new development in the city is likely to be finalized in 2014 that will lead to a significant
increase in load, and in consideration of the recent history of years of stagnation but
recent increases to load, Staff concluded a 1% load growth forecast is appropriate for
calendar year 2014. Exhibit 2 shows the determination of the projected system peak
demand for 2014 that incorporates a 1% load growth. The projected system peak demand
for the City of Vernon is also shown below in Table 1.
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Table 1
Projected
Load
2014
MW
January
179.26
February
177.07
March
178.77
April
180.73
May
187.10
June
187.19
July
195.95
August
193.03
September
195.08
October
188.83
November
185.08
December
176.99
2. Establish Coincidental Peak Factor
The coincidental peak factor is the percentage of the City of Vernon's energy demand at
the time of the CAISO system peak demand. As set forth in Section 40 of the CAISO
Tariff, the coincidental peak factor for each month has been calculated and provided to
the City annually by the California Energy Commission (CEC). "The monthly coincidental
peak factor is shown in column E of Exhibit 3.
3. Calculate Monthly Coincident Peak Demand Forecast
The City of Vernon's Coincident Peak Demand forecast is calculated as the mathematical
product of the City of Vernon's forecasted System peak demand and the coincidental
peak factor. This reflects the City of Vernon's projected demand at the time of the
CAISO system peak demand for each month. The monthly coincident peak Demand
Forecast is calculated and shown in Exhibit 3 for the period of January through December
2014. It is also shown below in Table 2.
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Table 2
Demand
Forecast
2014
MW
January
136.2
February
136.3
March
150.2
April
1151.8
May
159.0
June
159.1
July
169.7
August
168.1
September
163.9
October
158.6
November
149.9
December
145.1
Reserve Marvin for Planning Purposes
The Reserve Margin is the amount of Resource Adequacy Capacity that an LSE must
maintain above its coincident peak Demand Forecast. Historically, the City of Vernon has
established its Reserve Margin at 15%. Staff has recommended that the City Council
maintain the Reserve Margin at 15% for planning purposes. The 15% Reserve Margin was
used to establish the monthly Resource Adequacy obligation for the City of Vernon. The
monthly Resource Adequacy obligation is listed in Exhibit 3.
Oualifying Capacity:
A Load Serving Entity must provide the CAISO with a description of the criteria that will be
used to determine the type of resources that can be used to meet its capacity obligation and
the amount of capacity (Qualifying Capacity) from such resources. Historically Vernon has
used the following criterion to determine whether a resource qualifies: it qualifies if Vernon
has a contractual right to the power or has an interruptible service agreement with a
customer. The five following resources are among those that meet this criterion and provide
5
Qualifying Capacity. The calculation for the amount of Qualifying Capacity the five eligible
resource types follows:
1. Palo Verde. Vernon Purchase Power Contract with SCPPA for 4.9% of SCPPA's
share of Palo Verde Nuclear Generating Station (Palo Verde) shall be eligible as
Qualifying Capacity. The power is scheduled as an import generally at Westwing
Substation through the CAISO's entitlement of transmission from Westwing to SP-
15.
2. Boulder Canyon. Contract NO DE-MS65-86WP39587 between United States
Department of Energy Western Area Power Administration Boulder Canyon Project
and City of Vernon, California for Electric Service shall be eligible to count as
Qualifying Capacity. The power is scheduled as an import at Mead Substation
generally through the CAISO's entitlement of transmission from Mead Substation to
SP-15. The amount of Qualifying Capacity will be based on the most current
schedule for the available capacity from the Boulder Canyon Project at the time of
submittal of the Resource Adequacy Plan.
3. Vernon Units. Generating units and .system units (but excluding Vernon diesel
generating units) within Vernon's MSS including the Malburg Generating Station and
the City owned H. Gonzalez units, as reflected in Schedule 14 of Vernon's MSS
Agreement with CAISO shall be eligible to count as Qualifying Capacity. The
amount of Qualifying Capacity of such units will be based on the projected
dependable gross output capacity on a day when the ambient air temperature is 90
degrees Fahrenheit.
4. Other Units. All other capacity from a Participating Generator, a System Unit, or a
System Resource, as defined in the CAISO Tariff, shall be eligible as Qualifying
Capacity. System Resources, however, must have a firm transmission path from
source to the CAISO control area. Such criteria for firm transmission facilities over
the CAISO control area can be satisfied with the possession of a firm transmission
ri
right from the CAISO on the path associated with the System Resource. Firm
transmission rights provide physical priority right to schedule over congested paths.
5. Interruptible Service Agreements. Interruptible Service Agreements with the City's
Electrical customers. Currently Vernon has an Interruptible Service Agreement
where the customer agrees to interrupt 12.65 MW of load within a 30 minute
notification. A period of interruption can occur upon notification from the
Independent System Operator (ISO) requiring the City to shed load or upon the
unscheduled outage of the Malburg Generating Station ("MGS") or any other
generating unit internal to the City's system.
Vernon will use the following scheduled outage criteria for determining the level of
Qualifying Capacity ("QC") of any resource.
Scheduled Outages
Time Period
Description of How Qualifying Capacity of Resources Is Counted
Summer
Any month where days of scheduled outages exceed 25% of days in the
May
month, the resource cannot be counted as Qualifying Capacity. If
through
scheduled outages are less than or equal to 25% of the days in the
September
month, the resource is counted as Qualifying Capacity.
For scheduled outages of less than 1 week, the resource is counted as
Qualifying Capacity.
Non -Summer
For scheduled outages of 1 week to 2 weeks, the Qualifying Capacity of
Months
the resource is prorated using the formula:
[ 1 - (days of scheduled outage/days in month) - 0.25] * MW = QC
October
The formula will allow resources to be counted at between 50% and
through
25% of what would otherwise be their Qualifying Capacity.
April
For scheduled outages over 2 weeks, the resource cannot be counted as
Qualifying Capacity.
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Annual and Monthly Resource Adequacy and Supply data:
The CAISO Tariff requires that the scheduling coordinator of a load serving entity provide an
annual and a monthly Resource Adequacy Plan (Section 40.2.2.4) using the required
templates and submitted on the set schedules. Furthermore, the scheduling coordinator of a
resource providing resource adequacy must submit both an annual and monthly Supply Plan
(Section 40.4.7.1) using the required templates and submitted on the set schedules.
Therefore, the City of Vernon as a load serving entity and a scheduling coordinator for
resource adequacy resources must submit a Resource Adequacy and Supply Plan on the set
schedules. Staff has prepared the Annual Resource Adequacy (Exhibit 4) and Supply data
(Exhibit 5) for calendar year 2014. Staff will submit the monthly Resource Adequacy and
Supply data to the CAISO as they become due. The data to be submitted on the monthly
plans will be consistent with the Annual Resource Adequacy and Supply Plan and may be
adjusted for seasonal variations as well as load and resource changes. The monthly plan is
due to the CAISO 45 days prior to the beginning of the month.
Local Capacity Area Resources:
In accordance with Section 40.3 of the CAISO Tariff, CAISO annually publishes a Local
Capacity Technical Study that determines the amount capacity resources needed in the Los
Angeles Basin area that must be available to the CAISO.. Based on the Local Capacity
Technical Study, the CAISO allocates responsibility for Local Capacity Area Resources to
the Scheduling Coordinators of the LSEs. The Scheduling Coordinator must then identify the
resources it will count on to satisfy its local capacity requirement using the Local Capacity
Area Resource template. Staff has prepared the Local Capacity Area Resource template
(Exhibit 6) which lists the Resource Adequacy Resources including the Malburg Generating
Station and the City owned H. Gonzalez units that will be counted on to satisfy the Local
Area Capacity requirement for the City of Vernon.
K
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM,
DATE: November 25, 2013
TO: Carlos Fandino, Director of Light & Power
FROM: Deborah Juarez, Records Management Assistant
RE: Resolution No. 2013-99 — A Resolution of the City Council of the City of Vernon
Approving and Adopting the Vernon Light & Power Department Resource Adequacy Plan
for 2014, Which Includes the Peak Demand Forecast, the Planning Reserve Margin, the
Qualifying Capacity Criteria and the Qualifying Capacity from Such Resources, City's
Resource Adequacy and Supply Data and Approves the Resources Used to Satisfy the
California Independent System Operator's Tariff Requirements
Transmitted herewith is a copy of Resolution No. 2013-99 referenced above, which was approved by
City Council on November 19, 2013.
Thank you.
Attachment
c: Efrain Sandoval
Resolution No. 2013-99
NC 13 Oi3
Crf`I �� rZK'� OFFICE
STAFF REPORT
LIGHT & POWER DEPARTMENT
DATE: November 19, 2013
TO: Honorable Mayor and City Council {
FROM: Carlos Fandino, Director of Light & Power 0
ECE.WED
NOV 13 2013
CITY ADMINISTRATION
RE: Establishment of the City of Vernon Light & Power Department's Resource
Adequacy Plan for 2014
Recommendation
It is recommended that the City Council:
1. Find that the approval of the City of Vernon Light & Power Department Resource
Adequacy Plan for 2014 referenced in this document is exempt under the California
Environmental Quality Act (CEQA) in accordance with Section 15061(b)(3), the
general rule that CEQA only applies to projects that may have an effect on the
environment; and
2. Approve the Resolution approving the City of Vernon Light & Power Department
Resource Adequacy Plan for 2014, which plan does the following:
a. Approves the coincident peak Demand Forecast for 2014;
b. Maintains 15% as the Reserve Margin for planning purposes;
c. Approves the Qualifying Capacity Criteria that is used to determine qualifying
resource types and the Qualifying Capacity from such resources;
d. Approves the City's annual Resource Adequacy and Supply data;
e. Approves the Resource Adequacy resources that will be used to satisfy the
City's Local Capacity Requirement for 2014.
3. Authorize staff to submit the "City of Vernon Light & Power Department's Resource
Adequacy Plan, Calendar Year 2014" and the Monthly Resource Adequacy and
Supply data to the CAISO as they become due.
Background
The California Independent System Operator (CAISO), as the electric grid operator, is
responsible for maintaining a reliable electric grid. One of the keys to maintaining a reliable grid
is ensuring that the electric system has adequate resources to meet its electric demand. To do
this, the CAISO's Tariff requires Load Serving Entities (LSE), such as the City of Vernon, to
secure sufficient resources to meet their customers' energy demands. Pursuant to Section 40 of
the CAISO Tariff, LSEs must annually provide to the CAISO, a Resource Adequacy
demonstration or plan.
The Resource Adequacy demonstration must include (1) a coincident peak Demand Forecast,
(2) Reserve Margin, (3) Qualifying Capacity Criteria, (4) annual and monthly Resource
Adequacy and Supply data, and (5) a list of Resource Adequacy Resources used to satisfy its
Local Capacity Requirement.
Analysis
Staff recommends that the City Council approve the Resource Adequacy Plan for Calendar Year
2014, because it includes all five required elements. The following analysis summarizes the
central contents of the Resource Adequacy Plan.
(1) Coincident peak Demand Forecast: The Coincident Peak Demand Forecast is defined
as the amount of the City of Vernon's Load that contributes to the CAISO system peak.
This is calculated by first establishing a monthly peak demand for the upcoming year.
A monthly peak demand is established by taking the latest highest metered energy
demand for the month and applying the projected load growth rate. Staff projects load
growth for 2014 at 1% for two reasons. First, as more fully described in Exhibit 3, over
the last 4 years peak demand had the following shrinkage/growth rates:-1.037%,
-.06994%,-.0818%, and +1.273%. Stated differently, in only the last year has peak
demand grown, and then, only at a 1.273% rate. In short, the data from the last four years
suggests that a positive growth rate has not been typical, and expectations of continued
growth at higher rates should be dampened. Second, staff is not aware of any new
significant development in the city that would create new customers to add to the load,
unlike in prior years. All new expected load increases are currently expected to be from
existing customers. Based upon these factors, when establishing the monthly energy
demand for 2014, staff assumed a 1% load growth over the most recent 12 month highest
monthly energy demand.
Once the peak demand forecast is established, each monthly peak demand is multiplied
by a coincident peak factor to establish the monthly coincident peak demand forecast.
The coincident peak factor is calculated and provided to the City of Vernon annually by
the California Energy Commission. It is the percentage of the City of Vernon's energy
demand at the time of the CAISO system's peak demand.
In sum, mathematically, the Coincident Peak Demand Forecast for 2014, is equal to the
most recent 12 month highest monthly energy demand, increased by the projected 1%
load growth, multiplied by the coincident peak demand factor established by the
California Energy Commission.
(2) Reserve Margin: Reserve Margin is defined as the amount of Resource Adequacy
Capacity that an LSE must maintain above its coincident peak Demand Forecast. If
Vernon does not establish a Reserve Margin, then CAISO Tariff Section 40.2.3.1 requires
the Reserve Margin to be no less than 15%. Historically, the City of Vernon has
established its Reserve Margin at 15%. As proposed, the Resource Adequacy Plan keeps
the Reserve Margin at 15%.
(3) Qualifying Capacity Criteria: CAISO Tariff Section 40.2.3.2 requires Load Serving
Entities such as Vernon to provide the CAISO with a description of the criteria that it will
use to determine the type of resources that can be used to meet its capacity obligation and
the amount of capacity (Qualifying Capacity) from such resources. Historically Vernon
has used the following criterion to determine whether a resource qualifies: it qualifies if
Vernon has a contractual right to the power or has an interruptible service agreement
with a customer. The City of Vernon has historically also elected to use the following
resources to meet its capacity needs and the qualifying capacity from each of them. The
Resource Adequacy Plan continues this tradition, by including the 5 following resources
among those that meet this criterion:
a) Palo Verde. Vernon Purchase Power Contract with SCPPA for SCPPA's share of the
Palo Verde Generating Station. The qualified capacity shall be 4.9% of SCPPA's
share of the Palo Verde Generating Station.
b) Boulder Canyon. The contract between the United States Department of Energy
Western Area Power Administration Boulder Canyon Project and the City of Vernon.
The Qualifying Capacity will be based on the most current schedule for the available
capacity from the Boulder Canyon Project.
c) Vernon Units. The generating units and system units within the City of Vernon's
electric system including the Malburg Generating Station and the City owned H.
Gonzalez units ("Vernon Units"). The amount of qualifying capacity of such units
will be based on the projected dependable gross output capacity on a day when the
ambient air temperature is 90 degrees Fahrenheit.
d) Other units. Capacity from a Participating Generator, System Unit or a System
Resource as defined in the CAISO Tariff.
e) Interruptible Service. Agreements. Interruptible Service agreements between the City
of Vernon and its Electrical customers. The qualifying capacity will be based on the
contracted amount the electrical customer has agreed to interrupt either by a request
from CAISO or upon an unscheduled outage of the Malburg Generating Station or
any other generating unit internal to the City's electric system.
(4) Annual and Monthly Resource Adequacy and Supply data: The annual and monthly
Resource Adequacy and Supply data must be submitted to the CAISO on the established
templates and on the set schedule dates. Staff has prepared the Annual Resource
Adequacy report (Exhibit 4) and Supply Data report (Exhibit 5). Staff will submit the
monthly resource adequacy and supply data reports no later than 45 days before the
month to which they correspond. The Resource Adequacy data templates shall identify
all of the qualified resources committed to meet the City's resource adequacy obligations
and the adopted Reserve Margin. The.Supply data templates list only those resources
that the City owns or is responsible for scheduling with the CAISO. Monthly Resource
Adequacy and Supply data templates will be consistent with the data submitted in the
Annual Resource Adequacy and Supply data templates and may be adjusted for seasonal
variations in the City's load or changes in its contracted/owned resource.
(5) Local Capacity Requirement: The CAISO annually publishes a technical study
establishing the capacity resources needed in the Los Angeles Basin area that must be
available to the CAISO. Based on this study, the CAISO allocates the amount of local
capacity Vernon must make available each month. Vernon must then include in its
Resource Adequacy Plan, the list of local resources that will meet its Local Capacity
Requirement. These resources must be listed and submitted to the CAISO in the
approved Local Capacity Area Resource Template. The City of Vernon Local Capacity
Requirement includes the Vernon Units, the generating units and system units within the
City of Vernon's electric system.
Consistent with the CAISO Tariff requirements, Staff has prepared the City of Vernon Light &
Power Department's Resource Adequacy Plan for 2014 for City Council approval.
Fiscal Impact
There is no known fiscal impact.
Attachments