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CFPUA 05 9 2012 Regular Meeting CAPE FEAR PUBLIC UTILITY AUTHORITY MAY 9, 2012 REGULAR MEETING Authority Members Present: James Quinn, Chairman Pat Kusek, Vice-Chair Gene Renzaglia, Secretary Mike Brown, Treasurer Neal Anderson, Councilman Jim Brumit Rick Catlin, Commissioner Charlie Rivenbark, Councilman Cindee Wolf Authority Members Absent: Larry Sneeden Jason Thompson, Commissioner Staff Present: Matt Jordan, CEO Jim Flechtner, COO Cheryl Spivey, CFO Karen Durso, Assistant to CEO Beth Eckert, Environment and Safety Director Carey Disney Ricks, CCO Nancy Johnson, Customer Service Director Tom Morgan, H.R. Director Frank Styers, Engineering Director Cord Ellison, I.T. Manager Julie McLawhon, Finance and Accounting Manager Melinda Hoggard, Accounting Manager Julia Vosnock, Procurement Manager Mike Richardson, Water Treatment Superintendent Ken Vogt, Wastewater Treatment Superintendent Jim Craig, Utility Services Superintendent Christene Mitchell, Engineering Manager Kent Harrell, Engineering Manager Gary McSmith, Engineering Manager Jamison Fair, Project Manager CFPUA 5.9.2012 MINUTES Page 1 Tige Brubaker, Project Manager Steve Mongeau, Program Manager Kipp Glazier, Community Compliance Assistant Superintendent Attorney Present: Linda A. Miles, the Miles Firm, PLLC Guests Present: Steve Vosnock Tyler Newman, Business Alliance for a Sound Economy Tony Boahn, McKim & Creed Eric Williams, HDR Jim Iannucci, New Hanover County Chris Coudriet, New Hanover County Kate Queram, Wilmington Star News Call to Order, Determination of a Quorum, and Opening Comments: Mr. Quinn called the meeting to order at 9:00 a.m. and declared a quorum present. He welcomed everyone to the monthly Authority meeting. Adoption of the Agenda: Mr. Jordan reported that a replacement copy of Item 1 from the Consent Agenda had been distributed to Board members. Mr. Rivenbark moved to adopt the Agenda, as amended by the revision to Item 1. Ms. Kusek seconded the motion, and it passed unanimously. Oath of Office for James G. (Jim) Brumit: Ms. Pope administered the oath as an Authority member for Mr. Brumit. The Authority welcomed Mr. Brumit, who is a New Hanover County appointee, completing the term vacated by J.C. Hearne and serving through June 2013. Approval of April Minutes: Mr. Renzaglia presented the minutes of the April 11, 2012, Authority meeting. There were no corrections. Mr. Renzaglia moved to approve the minutes. Mr. Brown seconded the motion, and it passed unanimously. CFPUA 5.9.2012 MINUTES Page 2 Public Comments: Mr. Newman, a representative from the Business Alliance for a Sound Economy, spoke in favor Mr. Newman also thanked staff for placing the full monthly Board meeting agenda on the Authority website. Mr. Vosnock, a resident of the Castle Hayne area of the County, spoke in opposition to the proposed agreement with New Hanover County. Consent Agenda: Mr. Jordan presented the Consent Agenda, as follows: 1.Authorization for the CEO to execute a change order with State Utility Contractors to roject, at a budget impact of $91,250.70, provided in the CIP. 2.Authorization for the CEO to execute a contract change order with Dun-Right Services, Inc., for manhole rehabilitation, at a budget impact of $114,346.00, provided in the CIP. 3.Modifications of the Utility Ordinance and Regulations, Appendix A, Cross Connection and Backflow Prevention. 4.Authorization for the CEO to execute the FY2013 dental insurance policy agreement with Ameritas, creating a budgetary savings of $2,429.00. Mr. Rivenbark asked to pull Items 1 and 2 from the Consent Agenda for discussion. Mr. Catlin requested clarification on the ordinance modification. Mr. Rivenbark moved to approve the Consent Agenda, Items 3 6. Mr. Renzaglia seconded the motion, and it passed unanimously. Items 1 and 2 were moved to the Finance Committee report. New Business, Administrative Reports: Operations Report. Mr. Flechtner reported on a Sanitary Sewer Overflow discovered in April between South College Road and Kerr Avenue. The overflow was a relatively small flow taking place over a six month period, with several issues contributing to its cause. Last fall, the Authority began a project to rebuild a gravity line in the area. There were no as-built drawings CFPUA 5.9.2012 MINUTES Page 3 for a nearby shopping center noting film the lines. A connecting pipe was missed, and the map created from the resulting data was incorrect. The project contractor found the line, did not see any flow in it, and did not reconnect it, believing to be an old abandoned line. On April 12, discharge was discovered in a nearby storm water pond. The line was quickly fixed and service restored. Using water usage data of the deli and bakery served by the line, staff estimated that up to 386,000 gallons may have been discharged. The estimate is conservative and may be higher than the actual discharge, as the businesses using the line are food service providers using water in the process of their work, and some of the water would not be discharged into the sewer. Mr. Flechtner reported that the incident had been reviewed and analyzed, with staff briefing and retraining emphasized. Staff is investigating additional methods for line analysis where as-built plans do not exist, including dye testing. Mr. Flechtner reported that the overflow was caused by human error and that Authority staff take their responsibilities seriously and personally and are determined to learn from the accident. Public Relations Report. Ms. Ricks thanked Karen Durso and Jude Eden for their work in website. She noted that this initiative was completed at no additional cost to the Authority. Ms. Earth Day activities and the Greenfield Lake Fest. She thanked Maggie Butler and Billy Roy for their work at those events. Ms. Ricks reported on press releases, May 16 budget hearing. Ms. Miles reported that an easement acquisition discussed in closed session at a previous Board meeting had been completed and the easement recorded in the County Registry. She reported that the negotiation for the easement was settled with the Authority paying $5,000. Mr. Jordan reported that, in addition to having placed the Agenda online, staff has the ability to submit Agenda information electronically to Board members should they wish to consider using electronic devices to receive the Agenda at a future date. An initial investment in technology should eventually reduce printing and paper costs. Mr. Jordan presented the Environmental and Safety Management Report for March, a copy of th which was in the Agenda packet. A sewer overflow at 14 and Grace Streets discharged CFPUA 5.9.2012 MINUTES Page 4 approximately 460 gallons due to paper clogging the line, and approximately 300 gallons discharged on Princess Place Drive because of a grease blockage. The ISO14001 third party audit for the Authority noted outstanding record keeping, compliance audits, good employee communication, and good management in the Environmental Management department. There were five safety incidents in March. They included two vehicle accidents, one incident when an employee got glue in his eye, one incident with dust and debris in an employ and an insect bite. There were three safety incidents in April. They included a dog bite, a fall ehicle. All incidents were thoroughly reviewed and corrective actions taken. Mr. Jordan has met with all employees to discuss the importance of safety. Committee Reports: Executive Committee. Mr. Quinn requested that Authority members advise the Nominating Committee of their interest in serving as officers for the fiscal year beginning in July. Additionally, he requested members to indicate their interest on serving on the various standing Committees of the Board. New Hanover County Legislative Goals. Mr. Catlin stated that he wanted input from Authority counsel and wanted regarding N.C.G.S. 162A, the statute governing Water and Sewer Authorities. Mr. Quinn read the Commiss Amend Rates and charges; contract for water or sewer; deposits; delinquent charges, G.S. 162A- 9 add a subsection (d): Notwithstanding the above standards, requirements, limitations, and procedures applicable to rates, fees, and other charges, an Authority may reduce or forgive delinquent account balances and waive fees, costs, and charges imposed on delinquent accounts, to address public health and safety and the needs of indigent/low income water and/or sewer customers. Mr. Quinn stated that the change to the statute would enable the Authority to receive donations that could be used to help people with problems paying their bills but that doing so would require staff time to administer the program, including additional staff and training to determine and apply eligibility standards for the program, which could contribute to rate increases. CFPUA 5.9.2012 MINUTES Page 5 Mr. Catlin said he did not disagree but that it had become apparent that, under G.S.162A, the Authority could not help senior citizens or disabled veterans and the proposed legislative action would give the Authority the power to do so. He stated that he would not pursue the legislative goal if Authority members were not comfortable with it. Board members discussed the ways in which the City of Wilmington and New Hanover County had been able to use funds to assist customers with utility payments. Mr. Catlin stated three powers he believed the Authority did not possess: The ability to use resources to help struggling customers; The ability to deal with environmental problems, such as saltwater intrusion and septic failure; and The ability to fund economic development. Mr. Anderson stated that he applauded the County Commissioners for trying to address customer issues. Mr. Catlin stated that the proposed change would give the Authority the ability to collect funds but the Board would decide whether or not to actually do so. Mr. Catlin said he had removed that portion of the amendment. Ms. Ricks and Ms. Miles explained the CFPUA Assists program administered by the United Way and the legal limitations faced by staff in promoting the program. Messrs. Rivenbark and Anderson supported changing the statute to assist customers. forts to assist customers. She clarified donations. Ms. Wolf supported the promotion of charitable organizations to assist customers but did not support the Authority raising funds itself. Board members expressed concern about the ability to administer funds, with some Board members stating that properly trained social workers would be the appropriate people to determine eligibility and disburse funds. Mr. Catlin restated that the biggest thing was to amend the statute to allow authorities to participate in fundraising and that the Board would decide how the Authority would become involved. He stated that not doing anything at all was bad from a public relations point of view. CFPUA 5.9.2012 MINUTES Page 6 Mr. Quinn suggested that City Council should be involved in the discussion along with the County. Mr. Brown suggested that Ms. Miles revise the legislative goal and bring a recommendation to the Board later in the meeting. The Board agreed by consensus. Long Range Planning Committee .Ms. Wolf thanked staff and Committee members for their work during her leave of absence. Mr. Styers reported that the Committee met on April 26 and received reports on several items, as follows: Chair Road agreement status update; the Southern area Master Plan; and information on low-interest loans for infrastructure to replace failing septic systems, which has been shared with County staff. Ms. Wolf added that the handouts from the Committee meeting were included with the Long Range Planning minutes in the back of the Agenda. Strategic Plan Update. Mr. Flechtner reported that the Strategic Plan was first adopted in 2010 Long Range Planning Committee has reviewed and refined the Plan since October 2011 andthe final plan was presented in the Agenda for review and a vote by the board. Ms. Wolf moved to adopt the revised Strategic Plan. Mr. Rivenbark seconded the motion, and it passed unanimously. The Authority recessed at 10:05 a.m. and reconvened at 10:20 a.m. Finance Committee. The Board reviewed Items 1 and 2 from the Consent Agenda, as follows: 1.Authorization for the CEO to purchase up to 1,000 Sensus brand water meters, at a budget impact of $95,790.00, provided in the operating budget. 2.Authorization for the CEO to execute a construction agreement with the North Carolina Department of Transportation for the replacement of 22 water valve boxes along Market Street within a DOT project area. The agreement has a budget impact of $22,545.00, provided in the CIP. Mr. Rivenbark stated that the had spoken with Mr. Flechtner during the recess and had received answers to his questions. Mrs. Rivenbark moved to approve Items 1 and 2 from the Consent Agenda. Ms. Wolf seconded the motion, and it passed unanimously. Fiscal Year 2013 Budget Presentation. Ms. Spivey reported that the Finance Committee had reviewed the Budget at its April 4 meeting. The public hearing and the board workshop on the budget will be held at 6:00 p.m. on May 16. The hearing is in compliance with state law and has CFPUA 5.9.2012 MINUTES Page 7 been properly advertised. Staff will present the budget for approval at the June 13 meeting. Mr. Brown encouraged Board member to meet with Ms. Spivey individually to answer any questions they might have regarding the budget. Budget materials were in the Agenda and a full budget would be presented to the Board prior to the May 16 workshop and hearing. The recommended budget is $71,225,795. Excluding debt service, the operating budget is $36.7 million, some Debt service is $28,255,312, and debt Coverage of 1.24 is allowed in the recommended budget. Salary adjustments are recommended and include reclassifications as recommended by the and Compensation Study, tenure-based market adjustments, and merit increases. If approved, the salary adjustments would be the first since the Authority assumed operations in July 2008. There is no increase to health insurance costs or premiums and there is a savings of $1,385 on dental insurance. Board members requested clarification on the breakdown of recommended salary increases. Mr. Morgan reported that the reclassification recommended by the compensation study was 1 percent, the market adjustments recommended by the study, are up to 2 percent based on tenure, and a merit increase of up to 2 percent, recommended by staff. The market adjustment would be from ½ percent to 2 percent, depending on the date of hire. Mr. Catlin asked what the cost would be to make job classifications competitive with the market. Mr. Jordan reported that could be addressed by the 1 percent reclassification and the 2 percent market adjustment. Mr. Catlin said that he understood the need to be competitive but was concerned with the economy. He urged local business owners to attend the public hearing and let the Board know what they had been able to do for their employees. Mr. Quinn asked Board members to let Mr. Jordan know how much detail they needed for the budget workshop and hearing. Mr. Catlin requested further clarification on the class and compensation study reclassification amounts, the tenure-based market adjustments, and the recommended merit increases, including the costs of each. Two staff positions are recommended in the Budget, an Internal Auditor who would report directly to the Board and a part time contract and procurement specialist, a position that is expected to pay for itself through consultant fee savings. Other additional items requested are a customer service interactive voice response system, fuel and IT licensing fee increases, needs assessment for billing system and financial software, and property and liability insurance increases. CFPUA 5.9.2012 MINUTES Page 8 The recommended budget reflects savings and reductions in the following areas: capital outlay, supplies and materials, electricity, repairs, maintenance, service contracts, lease rentals, and postage and print services. Mr. Renzaglia observed that expenditures have been below budget for the four years the Authority has been in operation and he credited Authority staff with achieving that measure of success. The recommended budget includes $800,000 in contingency funds. Water capital funds are budgeted at $8,000,000 and wastewater funds at $14,900,000. Staff anticipates issuing $18,000,000 in bonds. Revenues of $69,989,835 need to be generated in FY2013. No growth in sales is budgeted. The Board discussed consumption patterns. Ms. Spivey and Mr. Jordan answered clarification questions and received feedback from Board members regarding additional information forthe budget workshop and hearing. Subtract Meters for Irrigation . At the direction of the Finance Committee, staff had investigated and analyzed the use of subtract meters for domestic irrigation where two services could be read separately and the billing software could make the appropriate calculations to deduct the water flowing through that meter, enabling a customer to use the subtract meter for irrigation without reducing flow to his or her neighbor. The customer would pay the irrigation rate for the water flowing through the subtract meter and would not pay sewer use fees on that water. The customer would be charged a meter set fee (currently $230). The Board was pleased with the economical solution presented by the use of subtract meters and directed staff to clearly communicate the option to customers who had requested irrigation meters but had been unable to use them due to cost or the setup of their meters. The Board suggested publicity efforts to let customers know of the availability of the subtract meters. Mr. Rivenbark moved to proceed with the use of subtract meters for irrigation use. Ms. Kusek seconded the motion, and it passed unanimously. Monthly Financial Report. With 83 percent of the fiscal year lapsed, revenues are at 83.9 percent of budget, System Development Charge revenues at 140 percent of budget, and expenditures at 67.4 percent. Ms. Spivey reported that she anticipated ending the year with expenditures at 90 percent of budget. The April financial statements were published in the Agenda booklet. CFPUA 5.9.2012 MINUTES Page 9 New Hanover County Legislative Goals, continued. Ms. Miles presented two proposed revisions for the County legislative goal of amending N.C.G.S. 162A, as follows: 1.A water sewer authority may elect to participate in a program which allows it to collect from its customer donations to assist customers in need in the payment of their water and sewer accounts. Such funds shall be transferred to a non-profit or governmental agency for administration. The Authority staff shall also have authority to promote said programs; or 2.A water sewer authority may elect to promote programs which allow it to address assistance to customers in need in the payment of their water and sewer accounts. Mr. Catlin moved to approve Option 2, and Mr. Renzaglia seconded the motion. Board members discussed the had penned Option 2 and did not want the Authority to administer an assistance program. Mr. Catlin believed there should be flexibility to promote and/or administer assistance. Mr. Renzaglia added that the legislative change needed to be addressed to open the door for assistance and the interpretation of the word Catlin stated that the legislative change could possibly be presented as a local bill. Ms. Miles stated that the change would affect all water sewer authorities in the state. Mr. Quinn stated that the County and the city should be in agreement with the wording on the legislative goal. Mr. Catlin amended his motion to approve Option 2 and send the legislative goal to New Hanover County. Mr. Renzaglia seconded the amended motion. Ms. Wolf, Ms. Kusek, and Messrs. Renzaglia, Rivenbark, Catlin, and Brumit voted in favor of the motion. Messrs. Quinn and Anderson were opposed. Mr. Brown was absent during the vote but counted as an affirmative vote. Motion carried, seven to two. New Business, Miscellaneous Board Member Item. Mr. Anderson asked about cooperation between the Authority and Screen Gems studio during the Burnt Mill Creek sewer line replacement. He reported that the film currently in production is a special effects film which could be affected by noise and vibration. Ms. Mitchell and Mr. Jordan reported that staff has a good working relationship with studio representatives, have talked extensively with them, and both Authority staff and Screen Gems representatives understand the needs of the other. The Authority has an ongoing commitment to work with Screen Gems. CFPUA 5.9.2012 MINUTES Page 10 Old Business: New Hanover County Partnership for Economic Growth, Kirkland Pump Station and Force Main Project: Mr. Catlin reported that the Commissioners unanimously supported participation with the Authority in expanding the Kirkland service area through the construction of a sewer force main. According to the County Land Use Plan, 500 600 homes could be served in the Kirkland sewer basin after the upgrades from the project. Mr. Catlin stated that construction projects were ready to start but could not do so without sewer capacity. County officials viewed the partnership as a means to facilitate economic development, increase the tax , and provide sewer capacity for future Authority customers. The cost of the project is $650,000. The agreement between the County and the Authority provides that the County will be reimbursed annually through a sewer capacity fee for new development and through the System Development Charges collected by the Authority. County officials anticipated full payback within three years. the County. He had no problem with the developer capacity fee. Mr. Catlin responded that it could take 20 years to pay the County back through the developer capacity fee, and the County wanted to expedite payback. Mr. Catlin reported that the County would not support a longer payback period. Keefe presented a summary of the proposal. Mr. Coudriet reported that the money for the project Mr. Renzaglia asked if the same model could be used to expand into other areas in need of water and sewer services. Mr. Catlin stated that each project should be evaluated by both boards on a case by case basis and that some projects would be too risky. Mr. Quinn supported the partnership with the County. He stated that he had shared the concept with the City Manager and Mayor, and they were interested in using the same method to fund Pump Station 10. Mr. Renzaglia asked staff if there were pitfalls, as the proposal was moving rapidly. Mr. Jordan reported that staff has asked a lot of questions and had contacted the Local Government Commission and Authority bond counsel, who advised that the County would be subordinate to CFPUA 5.9.2012 MINUTES Page 11 very supportive of economic development incentives. Ms. Miles reported that the School of Government is also supportive. Ms. Miles and Mr. Jordan clarified that the additional capacity fee should only apply to developers and not individual lots. The agreement as written did not contain that restriction. Mr. Catlin agreed. Mr. Renzaglia asked if it was imperative to vote on the agreement today. Mr. Catlin believed it was, stating that someone might go out of business if they could not proceed with a project. There were no further questions, and Mr. Rivenbark moved to approve the partnership with New Hanover County for Kirkland sewer improvements, subject to a revision in language from Ms. Miles regarding pre-existing lots. Mr. Catlin seconded the motion. Ms. Wolf, Ms. Kusek, and Messrs. Quinn, Catlin, Thompson, Anderson, Rivenbark, and Brumit voted in favor of the motion. Mr. Renzaglia was opposed. Motion carried, nine to one. Mr. Quinn thanked Mr. Catlin for his work on the agreement. Mr. Renzaglia reiterated that his opposition was based on the lack of time to read and understand the agreement and that he also appreciated efforts to move forward with expansion. Questions and Comments : There were no questions or further comments from Authority members. There being no further business to come before the Board, Mr. Rivenbark moved to adjourn. Mr. Renzaglia seconded the motion, and it passed unanimously. The Authority adjourned at 12:40 p.m. The next regular meeting of the Authority will be Wednesday, June 13, 2012, at 9:00 a.m. in the Lucie Harrell Conference Room, New Hanover County building, 230 Government Center Drive, Wilmington, North Carolina. Respectfully submitted, Donna S. Pope Clerk to the Authority CFPUA 5.9.2012 MINUTES Page 12