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CFPUA 07 11 2012 CAPE FEAR PUBLIC UTILITY AUTHORITY JULY 11, 2012 REGULAR MEETING Authority Members Present: Jim Quinn, Chairman Mike Brown, Treasurer Gene Renzaglia, Outgoing Secretary Jim Brumit, Incoming Secretary Cindee Wolf Larry Sneeden Neil Anderson, Councilman Rick Catlin, Commissioner Charlie Rivenbark, Councilman Jason Thompson, Commissioner Authority Member Absent: Pat Kusek, Vice-Chair Staff Present: Matt Jordan, Chief Executive Officer Jim Flechtner, Chief Operations Officer Karen Durso, Assistant to Mr. Jordan Beth Eckert, Environment and Safety Director Carey Disney Ricks, Chief Communications Officer Frank Styers, Engineering Director Tom Morgan, Human Resources Director Nancy Johnson, Customer Service Director Julie McLawhon, Budget and Finance Manager Julia Vosnock, Procurement Manager Mike Richardson, Water Resources Manager Ken Vogt, Wastewater Treatment Superintendent Jim Craig, Utility Services Superintendent Christene Mitchell, Engineering Manager Kent Harrell, Engineering Manager Gary McSmith, Engineering Manager Sherry Anderson, Community Compliance Officer Maggie Butler, Environmental Compliance Officer Brock Ridout, Environmental Compliance Officer CFPUA 7.11.2012 Page 1 Billy Roy, Senior Environmental Compliance Officer Donna S. Pope, Clerk Attorney Present: Linda A. Miles, the Miles Firm, PLLC Guests Present: Christopher Nelson, United Way Diane Williams, Public Water Supply Tyler Newman Ray Cox Eric Williams Tony Boahn Jim Iannucci Kate Querem Carter Hubbard Donald and Nancy Caison Suyapa Urbina Larry Hunt Harry Bennett Gary Blazer Opening Comments and Determination of a Quorum. The Cape Fear Public Utility Authority held its regular meeting on Wednesday, July 11, 2012, in the Lucie Harrell Conference Room, New Hanover Bruce Shell Administrative Building, located at 230 Government Center Drive. Mr. Quinn called the meeting to order at 9:00 a.m. and declared a quorum present. Mr. Quinn welcomed those in attendance and formally excused Ms. Kusek from the meeting. Mr. Anderson arrived at 9:07 a.m., and Mr. Catlin arrived at 9:12 a.m. Adoption of the Agenda. unanimously. Approval of Minutes. Mr. Renzaglia moved to approve the Minutes of the June 13, 2012, Authority meeting. Mr. Brown seconded the motion, and it passed unanimously. CFPUA 7.11.2012 Page 2 Public Comments. Mr. Hunt spoke regarding a recent notice he received from the Authority regarding unbilled amounts from August 2009 through December 2011 in the amount of $775.75. He reported that he lost tenants in rental properties two years ago because of water and sewer charges from 2008 billing issues. He considered the back billing to be unfair and asked if any customers had been notified that they had overpaid. Mr. Bennett spoke regarding his connection to the City system after annexation, the fee he paid at that time, and back billing in the amount of $1,328.98. The church connected to the sewer system in 2003. Rev. Blazer reported that he had allowed City and Authority staff to access lines by going across the church property but would consider t in the future. time. She believed the back billing to be unfair and asked if she would receive a bill in 2013 telling her she had not paid enough in 2012. at the August meeting. Consent Agenda. Staff presented the Consent Agenda, as follows: 1.Key Position Resolution. 2.Authority for the CEO to execute an amendment to the lease for 235 Government Center years, lowering the escalation rate for years six through ten, and beginning a new ten- year term. The amendment would save $887,838.88 over the ten-year term of the lease. 3.Ordinance Revision reflecting FY2013 fee changes. 4.Authority for the CEO to enter into a financial advisor services contract with Robert W. Baird & Co., for a three-year term, at a cost of $88,000 for three years without refunding or $102,000 for three years with refunding. CFPUA 7.11.2012 Page 3 5.Authority for the CEO to execute a contract amendment with McKim & Creed, PA for additional design services for the Southside (Maffitt) Wastewater Treatment Plant expansion, at a cost of $198,900. 6.Authority for the CEO to execute a change order with Southeast Pipe Survey, Inc. for additional cameral and cleaning work as part of the Sanitary Sewer Pipe Inflow and Infiltration, Camera and Cleaning Gravity Outfall contract, at a cost of $188,187. 7.Authority for the CEO to execute a contract with CDM Smith for professional services as part of the Gravity Sewer Condition Assessment Project, at a cost of $267,950. 8.Authority for the CEO to execute an amendment to the existing cost-sharing agreement with Bill Clark Homes to allow the Authority to construct a 16-inch water line as part of the Kerr Avenue Greater Loop project, at a cost of $82,103. 9.Resolution to accept Clean Water State Revolving Fund loan and the associated budget amendment in the amount of $390,000 for the Between the Creeks and Pump Station 28 refurbishment project. 10.Dock Meter Policy, with an annual revenue loss of $1,108.21. 11.System Development Charge Refund Policy, estimated budget impact minimal. Mr. Thompson moved to approve the Consent Agenda. Mr. Rivenbark asked to be recused from the vote on Item 2 because of a financial interest. Mr. Thompson amended his motion to approve the Consent Agenda except for Item 2. Mr. Catlin requested that Item 11 be removed from Consent for discussion. Mr. Thompson amended his motion to approve the Consent Agenda except for Items 2 and 11. Mr. Renzaglia seconded the motion. The Consent Agenda, excepting Items 2 and 11 was adopted unanimously. Mr. Sneeden requested clarification for CIP items, stating that the project numbers on the Agenda did not match the project numbers in the CIP workbooks distributed to Board members. Item 2 from Consent Agenda - Amendment to 235 Government Center Drive Lease. Mr. Thompson moved to recuse Mr. Rivenbark because of a financial interest. Mr. Brown seconded the motion, and it passed unanimously. Mr. Thompson moved to approve the lease amendment. Mr. Brown seconded the motion. Mr. Jordan answered clarification questions from Board members r Mr. Thompson called for a vote, and the lease amendment was approved unanimously. Item 11 from Consent Agenda System Development Charge Refund Policy. Ms. Johnson explained that the Authority has no provision in its Ordinance for the refund of a System Development Charge in hardship situations. Staff recommended refunds when the following criteria had been met: A refund be made only to the current property owner. CFPUA 7.11.2012 Page 4 A request for refund be made in writing within 120 days of payment of the SDC. No refund for anyone required to pay under Mandatory Connection. No refund for anyone required to pay SDC or impact fee under New Hanover County or City of Wilmington mandate. Refunds could be made in situations where the owner was unable to build and install utilities. Only one such refund request has been made in four years. Following clarification questions, Mr. Catlin moved to adopt the System Development Charge Refund Policy as recommended by staff. Mr. Rivenbark seconded the motion, and it passed unanimously. Environmental and Safety Management Report. Fats, Oils, and Grease Video and Commercial Presentations. Ms. Eckert introduced the Authority compliance officers and praised Environmental staff members for their work in producing a training video to be used by restaurants in training employees in the proper disposition of fats, oils, and grease and the purpose and use of commercial grease traps. The department had also prepared a public service announcement that will be broadcast on the government television channels regarding proper disposal of grease for home cooks. A local video company produced the films for the Authority. The Board, staff, and guests viewed the training video and the public service commercial and praised the production. Mr. Thompson suggested that the proper use of garbage disposals be addressed in a future video. Ms. Eckert reviewed the May safety reports. There were three accidents in May 2012, and staff continues accident review and appropriate training. Mr. Sneeden expressed concern about rising accident rates. Public Relations Report. Ms. Ricks introduced Mr. Nelson, the President of the United Way of the Cape Fear Area. Mr. Nelson thanked the Authority, employees, the City and County for their support of the CFPUA Assist program. Resolution Relative to the Disposition of Claims and Judgments. Ms. Miles reminded Board members that they had adopted a Resolution on September 14, 2011, to indemnify Authority members and employees for claims incurred while acting on behalf of the Authority, with the exception of fraudulent or criminal action. Ms. Miles recommended that the Resolution be CFPUA 7.11.2012 Page 5 amended to include former Authority (Board) members and former employees, as claims could be made after an Authority member had left the Board or an employee had left his or her employment with the Authority. Mr. Thompson moved to adopt the amended Resolution, as recommended by legal counsel. Mr. Rivenbark seconded the motion, and it passed unanimously. Mr. Jordan announced that Ms. Ricks was leaving the Authority to accept a position as Public Affairs Manager for New Hanover County. He thanked Ms. Ricks for her dedication and efforts on behalf of the Authority and stated that it had been an honor to work with her. Mr. Quinn joined Mr. Jordan in expressing appreciation for Ms. Ricks. Executive Committee Report. Mr. Quinn reported that the Executive Committee met on July 4, finalized the July agenda, and received a report from the Nominating Committee. Nominating Committee. Mr. Quinn reported that the Nominating Committee, comprised of himself, Councilman. Rivenbark and Commissioner Catlin, proposed the following slate of corporate officers for Fiscal Year 2013: P-Chair Mr. Sneeden moved to approve the Officers for FY2013, as recommended by the Nominating Committee. Mr. Thompson seconded the motion, and it passed unanimously. Additional CEO Report Item. Mr. Jordan reminded the Board that the position of Internal Auditor was included in the FY2013 Budget and that the Board Human Resources Committee would work with Mr. Morgan to recruit for the position. The Internal Auditor will report to the Board. CFPUA 7.11.2012 Page 6 Long Range Planning Committee Report. Ms. Wolf asked Mr. Styers to update the Board on the June 28 Committee meeting. Mr. Styers reported that the Committee reviewed the following items: Wrightsville Beach Water: New Hanover County Commissioners and Wrightsville Beach Aldermen have been discussing groundwater quality at the beach. The Committee discussed opportunities to work with Wrightsville Beach, including bulk sales to the town and off-season sales to be used for aquifer storage and recovery. Town officials are researching and considering United States Geological Service Report and Aquifer Withdrawals: Ms. McSwain of the USGS provided a status report to the Committee regarding the USGS Hydrogeologic Evaluation of the surficial, Castle Hayne, and PeeDee aquifers in the county. Property owners have allowed the USGS to test their wells, and the largest concentration of domestic wells tested are in the Bald Eagle Lane area, with unusually high chloride levels. The USGS report will be published by September 2013. The Authority has contracted with Groundwater Management Associates to assist in optimizing the well fields of the nano-filtration plant. The first phase of the GMA project is complete, and the second phase will be conducted this winter. Phase 2 will include well pumping tests and the monitoring of resting response for the Castle Hayne and surficial aquifers with no CFPUA withdrawals from the Castle Hayne aquifer. Country Haven Ponds: The ponds in the Country Haven subdivision are good locations for long-term monitoring of the Castle Hayne and surficial aquifers. Staff is working with Mr. Donald Caison to determine well locations. Mr. Catlin offered to assist in providing well sites to gather more data for the study. Southside Wastewater Treatment Plant Update: Working with McKim & Creed, consulting project engineers, staff has determined that the Southside expansion project can be completed in phases. Portions of the plant are approximately 40 years old and will need to be replaced. Plant planned for 2015. Design plans for the 24 MGD plant are 90 percent complete. The phased expansion plan will be finalized and presented to the Board within a few months. Bulk Water Sales: Staff reported that negotiations continue with Figure 8 Utility Company and the Figure 8 Homeowners Association for bulk sales. Staff is working on a modeling report for bulk sales to Carolina Beach. CFPUA 7.11.2012 Page 7 New Hanover County Potential Provision of Sewer to Areas with Failing Septic Systems: County staff is considering making application to the State for low-interest loans and investigating other avenues to provide sewer service to areas with failing septic. Specific areas under consideration are the Marquis Hills and Heritage Park subdivisions. Figure 8 Water Sales discussion, continued: Mr. Catlin questioned why the Authority would charge a System Development Charge to Figure 8. Mr. Jordan reported that the SDC is the to everyone. He reported that Figure 8 would receive one-sixth of the capacity of the nano plant. Mr. Catlin asked if the Town of Wrightsville Beach would be charged a System Development Charge in the event the town buys water from the Authority. Ms. Miles advised that the Authority could develop a policy for a governmental unit such as Wrightsville Beach. She reminded the Board that Figure 8 Utility and the Figure 8 HOA are private entities. Any contract with a private entity requires to maintain the b-exempt status. Mr. Catlin stated his opposition to charging a System Development Charge to bulk water customers. Mr. Jordan explained how SDCs are determined, and Board members discussed the financial implications to the Authority if a System Development Charge is not collected. Mr. Brown reported that the Finance Committee will receive staff reports and discuss bulk rates at length at its August 1 meeting. Ms. Wolf reported that the July Long Range Planning Committee will be held on Wednesday, July 25 at 2:00 p.m. in the Authority offices. The Authority recessed at 10:40 a.m. and reconvened at 11:00 a.m. Finance Committee Report. Mr. Brown reported that Ms. Spivey was on jury duty and asked Ms. Johnson to present the Committee report. Recommendation for Revenue Recovery Contract with Utility Revenue Management Company, Inc.: Ms. Johnson presented a staff and Committee recommendation for a revenue recovery contract. The in-house data scrub of customer accounts has realized revenues of more than $380,000 in eight months. Staff believes that additional unbilled services can be identified by contracting with a consulting firm that specializes in revenue recovery. Under the recommended contract, Utility Revenue Management would receive 9 CFPUA 7.11.2012 Page 8 revenue received as a result of its work. All revenues is subsequent years would be retained by the Authority. Mr. Catlin questioned the fairness of paying a consultant 90 percent of monies collected, in light of the Authori wished to change the collections policy regarding unbilled services and refund monies already collected through back-billing. Ms. Miles advised that she could not recommend changing the policy at this point. Board members discussed the risk being assumed by the revenue consultant and asked if the consultant would receive 90 percent of revenues from failed meters its employees discovered. Mr. Quinn asked for a motion and a second before debate continued. Mr. Thompson moved not to enter into the contract with Utility Revenue Management Company, Inc. and to direct staff to continue to review accounts and search for unbilled services. Mr. Catlin seconded the motion. Mr. Jordan, Ms. Johnson, and Ms. Miles answered clarification questions from Board members regarding the data scrub and the statute of limitations regarding collections. The Board continued to discuss the appropriateness of a revenue recovery contract. Mr. Brumit offered a substitute motion to continue the discussion of the revenue recovery issue and contract to the August Authority meeting. Mr. Brown seconded the substitute motion. Following additional clarification questions to staff, Mr. Quinn asked for a vote on the substitute motion. Messrs. Brown, Anderson, Quinn, Brumit, and Sneeden voted in favor of the motion. Ms. Wolf and Messrs. Rivenbark, Thompson, Catlin, and Renzaglia were opposed. The vote was tied, and the motion failed. Mr. Thompson restated his original motion to revenue recovery contract and to direct staff to continue the unbilled services review internally. Ms. Wolf and Messrs. Brown, Renzaglia, Anderson, Rivenbark, Catlin, Sneeden, and Thompson voted for the motion. Messrs. Brumit and Quinn were opposed. Motion carried, eight to two. June Financial Report: Ms. Johnson reported that, with 100 percent of FY2012 completed, operating revenues were at 99.51 percent of budget. Water revenues were 97.93 percent of budget, or $30.6 million, and wastewater revenues were 100.07 percent of budget, or $31.3 million. System Development Charges were at 105.38 percent of budget, or $3.8 million. Operating expenditures were at 82.45 percent of budget. Ms. Johnson reported that additional accounting adjustments will be made for the year end, as revenues continue to accrue for FY2012 water and sewer services. CFPUA 7.11.2012 Page 9 Ms. Johnson reported that staff will continue to monitor water consumption trends. Full customer service and financial reports were provided in the Agenda notebook and will be posted Old Business. Mr. Brown asked if performance reviews for the positions reporting directly to the Board would be brought to the Board. Mr. Quinn advised that the Human Resources Committee would report to the Board on the reviews. Mr. Rivenbark thanked Ms. Ricks for her work on behalf of the Authority and said she would be missed. Closed Session. Mr. Catlin moved to enter into closed session to discuss a potential legal claim and receive advice from counsel. Mr. Brown seconded the motion, and it passed unanimously. The Board entered into closed session at 11:40 a.m. Ms. Miles, Ms. Pope, and Mr. Jordan remained in the meeting. The Board received a report from Ms. Miles. Open Session and Adjournment. Mr. Catlin moved to return to open session. Mr. Rivenbark seconded the motion, and it passed unanimously. The Authority returned to open session at 11:49 a.m. Mr. Rivenbark moved to adjourn. Mr. Renzaglia seconded the motion, and it passed unanimously. The Authority adjourned at 11:50 a.m. The next regular meeting of the Cape Fear Public Utility Authority will be on Wednesday, August 8, 2012. The meeting will begin at 9:00 a.m. and will be held in the Lucie Harrell Conference Room, 230 Government Center Drive, Wilmington, North Carolina. Respectfully submitted, Donna S. Pope Clerk to the Board CFPUA 7.11.2012 Page 10