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HomeMy WebLinkAboutCFPUA 3 13 2013 CAPE FEAR PUBLIC UTILITY AUTHORITY REGULAR MEETING AND RATE HEARING MARCH 13,2013 Authority Members Present: Jim Quinn, Chairman Pat Kusek, Vice-Chair Jim Brumit, Secretaiv Mike Brown,Treasurer Cindee Wolf Keith Betts Lariv Sneeden Woody White, County Commissioner Tom Wolfe, County Commissioner Charlie Rivenbark, City Councilman Neil Anderson, City Councilman Staff Present: Matt Jordan, CEO Jim Flechtner, COO Chem 1 Spivey, CFO Frank Styers, Engineering Director Nancy Johnson, Customer Service Director Tom Morgan,H.R. Director Mike McGill, CCO Christene Mitchell, Engineering Manager Gary McSmith, Engineering Manager Karen Durso, Assistant to the CEO Jim Craig, Utility Services Superintendent Ken Vogt,Wastewater Treatment Superintendent Julie McLawhon, Budget&Finance Manager Julia Vosnock,Procurement Manager Donna S. Pope, Clerk Guests Present: Chris Coudriet,NHC Manager Tim Burgess,NHC Assistant Manager David E. Rice,NHC Health Department Director Dianne Harwell,NHC Environmental Health Services Manager Jim Ianucci,NHC Engineering Director Tyler Newman, City of Wilmington Kevin F. Harrington Cathy Shipton CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 1 James L. Beck Chad O'Shields Michael Witherspoon Walter Coontz Rvan McAlister Eric Williams Carter Hubard Gene Renzaglia Press and Media Representatives Call to Order,Determination of a Quorum, and Opening Comments: Mr. Quinn called the meeting to order at 6:00 p.m. and welcomed those present. Mr. Quinn announced that the night's meeting would include a rate hearing to seek feedback from customers regarding proposed rates. Adoption of the Agenda: Ms. lusek moved to adopt the Agenda. Mr. Brumit seconded the motion, and the Agenda was unanimously adopted. Approval of Minutes: Mr. Brumit moved to approve the minutes of the Februaiy 13, 2013, Regular Meeting, as presented in the Agenda. Ms. lusek seconded the motion,and the minutes were unanimously approved. Mr. Brumit moved to approve the minutes of the February 26, 2013, Board Workshop, as presented in the Agenda. Ms. lusek seconded the motion,and the minutes were unanimously approved. Public Comment: Mr. Quinn opened the floor for public comment for the regular meeting. Mr. Harrington spoke regarding difficulties in obtaining water and sewer line extensions to property he owned in New Hanover Countv. Ms. Shipton spoke regarding base fees, bimonthly billing, and the loss of discounts for senior citizens, disabled persons, and other customers in need. Rate Presentation: Mr. Jordan reported that increased operating costs require increased revenues of four percent. Staff and the Finance Committee reviewed usage patterns and the rate model. CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 2 Ms. Spivey explained the function of the rate model. Revenues must cover operating expenses,principal and interest on bond obligations, and an additional 20 percent to meet bond covenants. Under the Authority's rate model, the fixed charge for water covers principal and interest on water bonds, and the fixed charge for seNver covers principal and interest for sever bonds. Ms. Spivey presented three rate scenarios reviewed by the Finance Committee. A. A two-tier structure,'kvith residential water usage up to 6,000 gallons billed at$2.90/1,000 gallons and usage of 6,001 and more at$3.67. Non-residential usage would be billed in the second tier. The scenario would increase the cost for the first tier by 26 cents/1,000 gallons and reduce the cost for the second tier by 29 cents/1,000 gallons. The increase to a customer using 10,000 gallons bimonthly would be $9.80 every two months, or$58.80 annually. B. A uniform rate with all water usage being billed at $3.42/1,000 gallons. The uniform rate of $3.42 would represent the cost to produce 1,000 gallons of water. There would be no tiers, and water would increase by 78 cents/1,000 gallons. The increase to a customer using 10,000 gallons bimonthly would be $11.92 every two months, or$71.52 annually. C. Four tiers for residential users, as follows: 1-6,000 gallons billed at$2.44/1,000 gallons; 6,001-12,000 gallons billed at$3.25/1,000 gallons; 12,001 —24,000 gallons billed at$4.07/1,000 gallons; 24,001 gallons or more billed at$4.88/1,000 gallons; Irrigation billed at$3.42/1,000 gallons. A customer using 10,000 gallons bimonthly would see an increase of$536 eveiy two months, or $32.16 annually. Under each scenario, the fixed charge for water would remain the same as the current rate model. The fixed charge for seNver would increase by 9.1 percent, reflecting the principal and interest payments for seNver infrastructure bonds. After review and discussion over several weeks, the Finance Committee had endorsed Scenario A, which would provide essential water at a lower rate and encourage conservation while moving towards an equalization of rates with production costs. Mr. Brown reported that several Committee members also lilted Scenario B. Committee members and Ms. Spivey answered clarification questions from Authority members. Public Hearing on Rates: Mr. Quinn opened the public hearing and welcomed comments on the proposed rates. Mr. Beck stated that he considered irrigation to be a luxury and that treated water should not be provided for irrigation. CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 3 Mr. O'Shields spoke in favor of a uniform rate and provided a powerpoint presentation in support of his comments. Mr. Witherspoon had registered to speak but chose not to do so. The Clerk asked if there syere other speakers who had not registered to speak on rates who would like to do so. Mr. Coontz stated that he had a suggestion regarding the Authority and would like to speak to staff directly. There syere no further comments on rates, and Mr. Brumit moved to close the hearing. Ms. Wolf seconded the motion, and it passed unanimously. The public hearing closed, and the Authority addressed its regular business. Consent Agenda: Staff presented the Consent Agenda, as follosys: 1. Authorization for procurement staff to advertise and sell items on GovDeals and to donate unsold items to local non profits; 2. Authorization for the CEO to execute a contract amendment with C'DM,Smith, Inc.,for additional design and construction phase services for the Burnt Mill Creek, Phase 2 ,Sewer Improvements project, at a cost of 558,150.00; 3. Authorization for the CEO to execute an upcoming change order with ,State Utility Contractors, Inc.,for the Burnt Mill Creek Phase 2 Sewer Improvements project, not to exceed 5380,000.00; and I. Authorization for the CEO to execute Amendment I to the Aquifer,Sustainability and Monitoring contractwith Groundwater Management Associates, Inc., ata costofS62,010.00. Ms. lusek moved to approve the Consent Agenda as presented. Ms. Wolf seconded the motion, and it passed unanimously. Engineering Report: Ms. Mitchell requested approval of one item: Authorization for the CEO to execute a contract amendment for professional engineering design phase services with Kimley Horn Associates Inc.,for additional work related to the NEI Phase IB Project, not to exceed 535,000.00. Ms. Mitchell explained that the amendment would allow the Authority to coordinate with the City in road construction along Cardinal Drive, Clear Run Drive, and Lennon Avenue. CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 4 Mr. Rivenbark moved to approve the contract amendment with Iimley Horn Associates as recommended by staff. Mr. Betts seconded the motion, and it passed unanimously. Attorney's Report: Ms. Miles reported that the Authority had been served with two lawsuits for under $5,000 each, concerning customer accounts. She further reported that she-,was working on the Consent Order with the Environmental Protection Agency. CEO Report: Mr. Jordan referred the Board to the Januaiv Environmental and Safety reports. There was one sanitaiv sewer overflow at the Southside plant. The water and other wastewater treatment plants operated with no violations. There was one vehicular accident and one personal accident in Januaiv. Executive Committee: Mr. Quinn stated that the Committee met on March 6 to review the Agenda and had no further report. Long Range Planning Committee: Ms. Wolf reported that the Committee met on Februaiv 28. She was unable to attend, and Mr. Sneeden chaired the meeting on her behalf Mr. Styers reported that the Committee had received staff reports and discussed several items,including the following: 1. An amendment to the Authority's agreement with the Newland developer is being drafted and will come for the Committee to review. 2. Representatives of MacCumber Terrace addressed the Committee to request that the Authority consider accepting the subdivision's gravity sewer system. Staff is working with the homeowners association to conduct inspections of the system for conformity to the Authority's requirements. 3. Mr. Vogt reported to the Committee on potential uses of excess digester gas from the wastewater treatment plants. Additional discussion items swere included in the Committee report and minutes. Marquis Hills and Heritage Park-,Sewer Extensions. Mr. Styers reported that the Committee received staff reports and information from County staff regarding failing septic systems in the Marquis Hills and Heritage Park communities. Marquis Hills server swas estimated at $11.2 million and Heritage Park server at $5.7 million. Authority staff included $1,364,000 in the FY2014 CIP budget, for engineering services for the project designs, as well as a CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 5 contribution of $2,500 per parcel, as requested by the County. After much discussion, the Committee recognized the deadlines associated with keeping the low-interest loan for which the County had been approved and recommended that the Authority fund the engineering design costs, not to exceed $1,378,300. Design Nvould include seNver for Marquis Hills and Nvater and seNver for Heritage Park. On March 12, Mr. Jordan received a letter from County Manager, Chris Coudriet, formally requesting that the Authority consider funding the engineering costs for both projects at the March 13 Authority meeting and consider funding the full project costs at the April 10 Authority meeting. A copy of Mr. Coudriet's letter is incorporated herein by reference. The state revolving loan is not transferrable from the County to the Authority, but the Authority could pay the debt service should the Board approve funding the full project. Staff reported that,if the County and Authority participated together as previously discussed, the Authority Nvould realize a positive cash flow in 2017. If the Authority funded the full costs,it would realize a positive cash flow in 2036. Mr. Quinn recessed the meeting at 7:40 p.m. The Authority reconvened at 7:55 p.m. and continued the Marquis Hills and Heritage Park discussion. Mr. Coudriet addressed the Board. He reported that the County's request for the Authority to approve the engineering design costs at the March meeting Nvould allow the project to stay on track for loan acceptance purposes. Debt service on the $17,000,000 loan Nvould be $950,000 annually. Mr. Coudriet reported that the County is pursuing grants that could be transferred to the Authority to offset costs. Mr. White stated that the 2007 Wastewater Master Plan identified Marquis Hills as the area with the highest incidence of failing septic and Heritage Park as the second highest. County staff had compiled additional data. In the past five years, there Nvere 18 reports from Marquis Hills and two from Heritage Park. Current information is inconsistent Nvith the 2007 data in the Wastewater Master Plan, but research used for the 2007 study Nvas more comprehensive, including the age of the systems, lot size, and soil types analysis, and may have included door to door surveys. Reporting of failing septic to the Health Department is voluntaiv, and there may be other failures that have not been reported by ovmers. Mr. White stated that there Nvas a policy decision for the Authority to make. He believed the data-,vas still murky but recognized that failing septic is a category- of concern that could not languish forever. The Health Department had also received reports of failing septic on Figure 8 Island, Porters Neck Road, and the Port of Pines mobile home community. Mr. Wolfe added that the 2007 study identified nine projects that needed septic replacement, which he believed Nvould cost approximately $72,000,000 in present day costs. Mr. Rice and Ms. Harvell answered questions from Board members regarding the number of reports of failing septic systems received by the Health Department and the difficulties and costs associated with septic repair and replacement. Ms. Wolf and Mr. Sneeden explained the changes in restrictions and standards since the 1980s regarding septic tanks. CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 6 Mr. Blown expressed a belief that it was not logical to pay for the engineering costs if the Authority does not intend to fund the full project. Staff reported that the design could be used and updated in the future if the project was not funded this year. The Board discussed the effect on rates that would arise from funding the projects. Staff answered questions about SDCs and connection costs for property ossmers. Mr. Quinn reminded the Board that it is still developing a grossth policy and the definition of who pays for grossth, when to grow, and under what circumstances the Authoritv would act upon a request from another governmental entity. After discussion, Ms. Wolf moved to authorize the CEO to enter into an engineering contract for design for Marquis Hills server and Heritage Park water and sewer not to exceed $1,378,300,with a termination clause included in the contract language. Mr. Brumit seconded the motion. Mr. Blown offered a substitute motion to authorize the CEO to enter into an engineering contract for design for Marquis Hills server and Heritage Park water and server not to exceed $1,378,000, with a termination clause and a timeline for the full project to come to back to the Board for approval within 60 days. Ms. Wolf and Mr. Brumit accepted the substitute motion. Ms. Wolf and Messrs. Brumit, Sneeden, Betts, Blown, Rivenbark, Anderson, Quinn, Wolfe, and White voted to approve the substitute motion. Ms. Iusek was opposed. Motion carried,ten to one. Staff presented a Supplemental Revenues and Appropriations Ordinance for$1,378,300, to transfer funds for the Marquis Hills server and Heritage Park water and server design. Ms. Wolf and Messrs. Brumit, Sneeden, Betts, Blown, Rivenbark, Anderson, Quinn, Wolfe, and White voted to approve the motion. Ms. Iusek was opposed. Motion carried,ten to one. Capitallmprovements Projects for FY2014. Mr. Styers presented the CIP Budget for FY2014, as recommended for approval by the Long Range Planning Committee. Water projects total $5,248,000, and svastesvater projects total $20,093,000, equaling $25341,000 for the fiscal year beginning July 1, 2013. Because of debt retirement, the Authoritv can fund $12,000,000 in projects in FY2014 without affecting rates. Each additional $7,000,000 would equal one percent added to rates. The FY2014 CIP represents 1.9 percent, which would be applied to fixed charges for FY2015. Following clarification questions, Mr. Rivenbark moved to approve the FY2014 CIP. Mr. Sneeden seconded the motion,and it passed unanimously. Mr. Styers provided data in answer to a question from the February grossth workshop regarding dry-sewer installations in the Countv. Human Resources Committee: Ms. Iusek and Mr. Morgan reported that the H.R. Committee met on March 4 and discussed three items, as follows: CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 7 I. Employee insurance for FY2014. Little or no increase is expected in health care costs and no change in the benefit level is anticipated by staff. 2. FY2014 compensation. The Committee reviewed options for employee compensation in the coming fiscal year. The committee endorsed staff's recommendation of a one percent salary adjustment and a two percent merit pool for consideration in budget preparations. The market and merit adjustments would complete the compensation recommendations from the 2012 pay AWN-. 3. Miles Firm, PLLC. Ms. Iusek requested a closed session during the Board meeting to the discuss the legal services contract and the Committee's recommendation. Mr. Rivenbark moved to include the recommended compensation of one percent salary adjustment and a two percent merit pool for consideration in budget preparations. Mr. Betts seconded the motion, and it passed unanimously. Finance Committee: Mr. Brown reported that the Committee had met twice since the FebruaiN- Board meeting and referred Board members to the financial data, reports, and minutes in the Agenda packet. Ms. Spivey reported that revenues have stabilized and that expenditure reductions should offset any reduction in revenues for FY2013. Ms. Johnson reported that staff anticipates the new electronic billing option to be available in April. Mr. McGill is working with Customer Service staff to get information to customers. Ms. Johnson will email an example of the electronic bill to Board members. Old Business: There was no old business. Closed Session: Ms. Wolf moved to enter closed session to discuss the Authority's contract with the Miles Firm PLLC. Mr. Betts seconded the motion, and it passed unanimously. The Board entered closed session at 9:20 p.m.,with Ms. Pope and Messrs. Jordan and Morgan remaining in the meeting. Open Session: Mr. Rivenbark moved to return to open session. Mr. Betts seconded the motion, and it passed unanimously. The Board returned to open session at 9:35 p.m. Mr. Brown moved to approve a renewal of the Miles Firm PLLC contract, with revisions recommended by the H.R. Committee. Mr. Rivenbark seconded the motion, and it passed unanimously. Mr. Betts moved to adjourn. Mr. Anderson seconded the motion, and it passed unanimously. The Authority adjourned at 9:40 p.m. CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 8 The next regular meeting of the Cape Fear Public Utility Authority will be held on Wednesday, April 10, 2013. The Authority will convene at 9:00 a.m. in the Lucie Harrell Conference Room, New Hanover County's Bruce Shell Administration Building, 230 Government Center Drive, Wilmington, North Carolina. Respectfully submitted, Donna S. Pope Cleric to the Authoritv CFPUA March 13, 2013, Regular Meeting and Rate Hearing Page 9