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2017-06-22 Special Meeting Minutes CAPE FEAR PUBLIC UTILITY AUTHORITY SPECIAL MEETING JUNE 22, 2017 Authority Members Present: Mike Brown, Chair Jennifer Adams, Vice-Chair Larry Sneeden, Secretary Bill Norris, Treasurer Patricia Kusek Skip Watkins Charlie Rivenbark Cindee Wolf Wes Corder Authority Member Excused: Chuck Davis Staff Present: Jim Flechtner, Executive Director Frank Styers, Chief Operating Officer John McLean, Chief Financial Officer Beth Eckert, Environmental Management Director Kristi Irick, Customer Service Director Denise Matroni, Human Resources Director Eric Hatcher, Security and Emergency Manager Lindsey Hallock, Executive Administrator Gary McSmith, Engineering Manager Donna S. Pope, Clerk to the Board Attorneys Present: Linda A. Miles, the Miles Firm, PLLC George House, Brooks, Pierce Firm Guests: Robin Smith, Robin Smith Law Office Ruth Ravitz Smith, New Hanover County Richard King, City of Wilmington Phillip Tarte, NHC Health Department Kemp Burdette June Ann Doll Ken Wurzardo, WWAY Kirstan Guiterrez, WWAY Tim Buckland, Star-News Adam Wegnor, Star-News Ken Blevins, Star-News Kendra D., Spectrum News Mike McGill, Water PIO Ben Schachtman, PCD Jen Janisch, CBS Natalie English, Chamber of Commerce Anna Wilson Tess Bargebuhr Matt Gillis Eckel & Vaughn representatives The Cape Fear Public Utility Authority met on Thursday, June 22, 2017, in its offices. Mr. Brown called the meeting to order at 1:00 PM and declared a quorum present. Mr. Carder moved to excuse Mr. Davis. Mr. Norris seconded the motion, and it passed unanimously. Mr. Brown thanked Ms. Adams and Ms. Smith for conducting the review of CFPUA involvement in the discovery of GenX in the Cape Fear River and for compiling the timeline related to GenX issues. Ms. Adams introduced herself, stating that she has been a chemical engineer for over 20 years and on the Board for just over a year. She explained the methodology used for the review. She and Ms. Smith conducted interviews and reviewed CFPUA emails, reports, and data. She thanked staff for being forthcoming during the review process. The scope of the review was to assess the timeline of what the information. The review did not investigate Chemours or potential health effects of the GenX compound. Ms. Adams provided background on the development and use of GenX as a replacement for perfluorinated compounds such as PFOA and PFOS. GenX is a newer fluorinated compound known as a perfluoroalkyl ether carbosylic acid (PFECA) which was phased into use within the last five to ten years. In 2015, CFPUA staff worked with Dr. Detlef Knappe of NCSU to analyze concentrations of the newer fluorinated compounds between the Chemours Fayetteville Works along the Bladen-Cumberland County border and the Sweeney plant. The study used raw water samples as well as samples of treated water from Sweeney. Comparison samples were taken from water treatment plants on the Haw River and near Jordan Lake, The Sweeney samples showed very low levels of the legacy compounds. Sweeney samples detected an average concentration of 631 parts per trillion of GenX. Six other compounds were detected but not quantified. environmental fate and suggested more study and monitoring. The paper was published in November 2016. two CFPUA staff members who were co- dissemination of information to the Board and through media. A copy of the review and timeline documents are attached hereto and incorporated herein by reference. In conclusion, Ms. Adams reported that she and Ms. Smith had concluded that staff acted in an appropriate, professional, timely, and scientific manner. They further concluded that staff moved the Ms. Smith introduced herself and explained her background as an environmental attorney in North Carolina, both in the public and private sector. She provided a summary of available EPA information and guidelines regarding PFOAs and GenX, which is not yet regulated by EPA, and therefore has no standards for the State of North Carolina to use. Ms. Adams and Ms. Smith answered Board questions regarding the Knappe report, the CFPUA timeline, State and Federal regulations, and levels of compounds in the water. point should such emerging issues go to the Board of Directors. information. She said there had been a void of information and expressed concern that the Board could not get ahead of the information. Mr. Watkins observed that the emerging contaminant issues are not only of importance in the Cape Fear River but across the country He believed there were issues that could affect economic development and commerce. Mr. Brown stated that CFPUA staff and Board play a role in transparency and accuracy. He suggested that Board members review the report by Ms. Adams and Ms. Smith and give thought to methods through which communications could be improved. Mr. Flechtner thanked Ms. Adams and Ms. Smith for bringing clarity to the chronology. He stated that staff shares customer concerns and is committed The Board scheduled another Special Meeting for Monday, June 26, 2017, at 11:00 AM in the CFPUA offices. The purpose of the meeting would be to review and make recommendations for emerging issues and communications. The Board discussed the FY2018 Budget, which was adopted at the June 14 Regular meeting. Mr. Watkins commended staff and previous Boards for the work that had been accomplished since 2009. He stated that the Finance Committee did not have the information about GenX when its members recommended the budget to the full Board. He stated that he would not have voted to recommend the budget had he known about the GenX issues. He asked that the budget be reconsidered to show goals could be reconsidered along with the reconsideration of the increase. Ms. Kusek stated that she had been with CFPUA for a long time. She believed that the rate increase was coming at a bad time and sent the wrong message. Messrs. Brown and Corder agreed. Mr. Norris stated that the Board had spent five to six months discussing financial philosophy and strategy. He asked Messrs. McLean and Flechtner to discuss potential budget alternatives and their long-term impact on customers. Mr. McLean reported that the FY2018 rate in debt through bond issuance by using cash reserves for pay-go capital. The financial policies adopted by the Board within the past year supported the formulation of a rate structure from FY18-23 that would build the cash available for pay-go to $18 million by FY2023. He reported that the supporting rate increase could be moved out one year and cover the FY19-24 time frame, or the FY18-23 time frame could be maintained with greater increases over those four years. The elimination of the FY2018 rate increase would equal a reduction of $1,474,206 in the FY2018 budget, lessening the transfers to capital fund by the same amount. Ms. Kusek stated that she supported the pay-go financial policy but did not feel that revising the FY2018 budget to eliminate the rate increase would alter the policy or long term plans. Board members discussed pay- reminded the Board that the Southside Wastewater Treatment Plant rehabilitation was the biggest capital project on the horizon. He that CFPUA had managed rates in a way that supported system maintenance and had effected repairs that had been delayed or overlooked for decades. He urged the Board to stay the course with the budget and rates. Mr. Sneeden stated that CFPUA had been able to make decisions that had insulated it from politics. He believed that continued debt funding for projects would cost ratepayers more in the future. Mr. Rivenbark asked Mr. McLean to summarize the rate increase in the FY2018 budget. Mr. McLean reported that, for the average customer using 8,000 gallons every two months, the increase would be $1.63 bimonthly, or $15.48 for one year. The percentage of the increase was 2.05 percent. Mr. Corder moved to reconsider the budget by deleting the rate increases. Ms. Kusek seconded the motion. Ms. Kusek and Messrs. Watkins, Brown, and Corder voted in favor of the motion. Ms. Wolf, The Board recessed at 2:45 PM and reconvened at 3:15 PM in a closed session for the purpose of giving instruction to legal counsel. The Board received a report from Mr. House and provided direction. Ms. Wolf moved to return to open session, and Mr. Watkins seconded the motion. The motion passed unanimously, and the Board returned to open session at 4:23 PM. Mr. Norris moved to adjourn, and Ms. Wolf seconded the motion. The motion passed unanimously, and the Board adjourned at 4:25 PM. Respectfully submitted, Donna S. Pope Clerk to the Board