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HomeMy WebLinkAboutAugust 10 2016 Meeting Minutes CAPE FEAR PUBLIC UTILITY AUTHORITY AUTHORITY BOARD MINUTES AUGUST 10, 2016 Lucie Harrell Conference Room Regular Meeting 9:00 AM 230 GOVERNMENT CENTER DRIVE WILMINGTON, NC 28403 I. CALL TO ORDER II. DETERMINATION OF A QUORUM Mr. Brown called the meeting to order at 9:00 AM and declared a quorum present. Ms. Kusek moved to excuse Mr. Zapple. Mr. Norris seconded the motion, and it passed unanimously. Attendee Name Organization Title Status Arrived Mike Brown Cape Fear Public Utility Chair Present Authority Patricia Kusek Cape Fear Public Utility Vice-Chair Present Authority Larry Sneeden Cape Fear Public Utility Secretary Present Authority William Norris Cape Fear Public Utility Treasurer Present Authority Cindee Wolf Cape Fear Public Utility Present Authority Jennifer Adams Cape Fear Public Utility Present Authority Chuck Davis Cape Fear Public Utility Present Authority Charlie Rivenbark Cape Fear Public Utility Present Authority Kevin O'Grady Cape Fear Public Utility Present Authority Woody White Cape Fear Public Utility Present Authority Rob Zapple Cape Fear Public Utility Excused Authority Jim Flechtner Cape Fear Public Utility Executive Director Present Authority Frank Styers Cape Fear Public Utility Chief Operations Officer Present Authority John McLean Cape Fear Public Utility Chief Financial Officer Present Authority Carel Vandermeyden Cape Fear Public Utility Director of Engineering Present Authority Kristine Irick Cape Fear Public Utility Customer Service Director Present Authority Beth Eckert Cape Fear Public Utility Director of EMD Present Authority Cape Fear Public Utility Authority Page 1 Minutes Authority Board August 10, 2016 Tom Morgan Cape Fear Public Utility HR Director Present Authority Mike McGill Cape Fear Public Utility Chief Communications Officer Present Authority Leslie Ogilvie Cape Fear Public Utility Assistant to the Executive Present Authority Director Melinda Hoggard Cape Fear Public Utility Financial Systems Analyst Present Authority Viktoriya Cape Fear Public Utility IT Help Desk Technician Present Rumyantseva Authority Julia Vosnock Cape Fear Public Utility Procurement Manager Present Authority Karen Durso Cape Fear Public Utility Property Acquisition Specialist Present Authority Matthew Tribett Cape Fear Public Utility Project Manager Present Authority Donna Pope Cape Fear Public Utility Clerk/Executive Secretary to the Present Authority Board Linda Miles Mles Firm PLLC CFPUA Consulting Attorney Present Heidi Cox State of NC Present Tony Boahn McKim & Creed Present Jim Iannucci New Hanover County Present Dave Mayes City of Wilmington Present Cliff Robinson NHC Fire & Rescue Present Thomas Halecki Present III. ADOPTION OF AGENDA Mr. Flechtner requested two changes to the agenda, the removal of Item 11 from the Consent Agenda, and the addition of an item to the Executive Director's report. Ms. Kusek moved to adopt the revised agenda. Ms. Wolf seconded the motion, and the agenda was adopted unanimously. IV. APPROVAL OF MINUTES 1. Authority Board - Regular Meeting - Jul 13, 2016 9:00 AM RESULT: ACCEPTED \[UNANIMOUS\] MOVER: Larry Sneeden, Secretary SECONDER: William Norris, Treasurer AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple V. PUBLIC COMMENTS - 4 MINUTE LIMIT PER SPEAKER Mr. Thomas Halecki spoke regarding sewer charges and his concern about being charged for water that did not go into the sewer system. Mr. Brown thanked him for his comments and requested that staff meet with Mr. Halecki. Mr. White commented that rates had been carefully considered by the Board since CFPUA's formation. VI. CONSENT AGENDA Cape Fear Public Utility Authority Page 2 Minutes Authority Board August 10, 2016 Mr. O'Grady requested clarification on Items 6 and 7. 1. Ordinance Revision for Annexation Area Fees RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 2. Ordinance Revision for Connection Over 500 Feet Away RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 3. Ordinance Revision Regarding Easements and Conveyance RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 4. Surplus Real Property Policy RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 5. Easement / Right-of-Way Termination - 2651 Carolina Beach Road RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 6. Authorize the Executive Director to execute a $33,100 contract amendment with McKim & Creed, Inc. for Pump Station 89 capacity upgrades. Mr. Vandermeyden explained that the initial contract was for the Preliminary Engineering Report on the project. The amendment added design, permitting, and Cape Fear Public Utility Authority Page 3 Minutes Authority Board August 10, 2016 bidding services. Mr. Flechtner added that design services are not bid by price but are qualification based. Mr. Sneeden suggested including budgetary information in the agenda item description for such projects. RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 7. Authorization for the Executive Director to Execute a $7,600 Contract Amendment with McKim & Creed, Inc. for the PS 9/11 Improvements and Water Street Infrastructure Project Mr. Vandermeyden reported that the project is a cooperative effort with the City of Wilmington for infrastructure improvements on Water Street. The project has multiple phases, and CFPUA must adjust infrastructure alignment to fit the streetscape as designed and built by the City. The bids are done on a block-by-block basis to accommodate the project. RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 8. Authorization for the Executive Director to Execute a $40,000 Contract Amendment with Hazen and Sawyer for Design and Bidding Services for Replacing the Roof Coatings for Digester 4 and 5 at the Northside WWTP. RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 9. Authorize the Executive Director to Approve a $55,000 Contract Amendment for Hazen and Sawyer for Water System Integration Cape Fear Public Utility Authority Page 4 Minutes Authority Board August 10, 2016 RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 10. Authorize the Executive Director to Execute a $300,000 Contract with Black and Veatch for the Collection System Infiltration and Inflow Monitoring Project RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Treasurer SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple 11. Revenue Recovery Audit RESULT: WITHDRAWN 12. Authorization Sole Source Purchase Smith and Loveless Pumps and Assemblies RESULT: APPROVED \[UNANIMOUS\] MOVER: Cindee Wolf SECONDER: Patricia Kusek, Vice-Chair AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple VII. NEW BUSINESS A. Administrative Reports i. Attorney's Report Ms. Miles had no report and did not require a closed session. ii. Executive Director's Report Mr. Styers presented a walk-in item requesting authorization for a sole source purchase. A 300-horsepower pump at Pump Station 34 failed on July 19. The pump is one of three located within a critical pump station. Staff requested authorization for a sole source purchase because the replacement pump can be readily installed on the existing base without modifications. Board members recognized the importance of Pump Station 34, and Mr. Styers answered clarification questions regarding the site and what types of pumps could be kept on hand for repairs. Following discussion, Mr. O'Grady moved to approve the sole source purchase. Mr. White seconded the motion, and it passed unanimously. Cape Fear Public Utility Authority Page 5 Minutes Authority Board August 10, 2016 1. Environmental Report The Environmental report was in the agenda packet for review. There were no questions. RESULT: REVIEWED 2. Safety Performance Report The Safety Performance report was in the agenda packet for review. There were no questions. RESULT: REVIEWED 3. Key Indicators Report Mr. Flechtner introduced two new reports. The Key Indicators and Performance Measures report will be a monthly report for the agenda packet. The monthly metrics indicate trends, including water and watewater flows and revenues over expenditures. RESULT: REVIEWED 4. Quarterly Capital Improvement Program Status Report The Capital Improvements Project Status Report will be provided in the agenda packet quarterly. RESULT: REVIEWED B. Committee Reports i. Executive Committee 1. 8.3.16 Executive Committee Meeting Minutes The Committee met on August 3, and the minutes were in the agenda packet for review. Board members have been advised of their new committee appointments. There were no questions for the committee. RESULT: REVIEWED ii. Long Range Planning Committee 1. Long Range Planning Committee - Regular - Jul 28, 2016 3:00 PM The Committee met on July 28, and the minutes were in the agenda packet for review. Cape Fear Public Utility Authority Page 6 Minutes Authority Board August 10, 2016 RESULT: NO ACTION REQUIRED 2. Temporary Fire Station Mr. Styers presented the item and answered clarification questions from Authority members. The County fire station in the Ogden area will be rebuilt on its current site. CFPUA has property at the Nano Water Treatment Plant that can be used for a temporary station. The NHC Fire and Rescue will be responsible for installing a gravel driveway, parking, the temporary building, and the installation of all utilities. All improvements will be removed after the permanent station is occupied, and the improvements will be removed by NHC Fire and Rescue unless needed by CFPUA. Mr. Sneeden moved to approve the agreement. Mr. Norris seconded the motion, and it passed unanimously. Ms. Wolf noted that the project represented continued cooperation with other area governmental agencies. RESULT: APPROVED \[UNANIMOUS\] MOVER: Larry Sneeden, Secretary SECONDER: William Norris, Treasurer AYES: Brown, Kusek, Sneeden, Norris, Wolf, Adams, Davis, Rivenbark, O'Grady, White EXCUSED: Zapple iii. Finance Committee 1. Finance Committee - Regular Meeting - Aug 3, 2016 9:00 AM The Committee met on August 3, and the minutes were in the agenda packet for review. RESULT: NO ACTION REQUIRED 2. August Finance Report and Customer Service Update Mr. McLean presented the financial data through the end of July. Water consumption and SDCs are higher than budgeted, and expenditures are below budget. The full financial and Customer Reports were in the agenda packet for review. RESULT: NO ACTION REQUIRED 3. Clean Water State Revolving Fund Loan Application Update Mr. Vandermeyden updated the Board on the status of ConnectNC loans. CFPUA submitted six loan applications for funding, and all six were approved. The Air Relief Valve and Greenfield Lake projects are time sensitive and ready for bids. Staff recommended removing the two projects from the state loan pool Cape Fear Public Utility Authority Page 7 Minutes Authority Board August 10, 2016 and accelerating the work. Messrs. Flechtner and McLean answered questions about CFPUA funding sources for the projects. RESULT: NO ACTION REQUIRED 4. Appropriate Level of Reserves Mr. Norris introduced Mr. McLean and Ms. Hoggard to provide staff's analysis regarding appropriate levels of cash reserves. The report was part of a continuing discussion of CFPUA financial policies, which will be the topic of the next Board retreat. Mr. McLean reported that CFPUA is in good financial shape and that Standard & Poor's and Moody's recognized its exceptional liquidity and its debt coverage but noted that CFPUA carries a higher debt burden than many of its peers. The rating agencies recommended that formalized, written financial policies be established and adopted by the Board to provide guidance when making financial decisions in the future. Using best practices provided by the Government Finance Officers Association, staff developed a risk-based approach to sizing optimal cash reserves. Three risk categories were identified as specific concerns for CFPUA, as follows: Cyclical fluctuations in operating revenues and expenditures. Accelerated pay-go funded capital spending. Unanticipated and catastrophic events. Ms. Hoggard explained the methodology used to analyze each type of risk and its impact and provided examples of each risk type. Cyclical fluctuations in revenues and expenditures could be caused by the timing of debt payments, the timing of property insurance payments, and the two months per year with an additional pay period. Analyzing cash inflow and outflow over the past 24 months, staff recommended a reserve equaling three months of budgeted expenditures. Capital cash inflow and outflow was analyzed for the past 24 months, identifying an average capital cash outflow of $2.8 million. Staff recommended a reserve equaling three months of pay-go funding. Unanticipated or catastrophic events were identified as revenue volatility due to changes in customer demand, drought conditions requiring mandatory conservation, or the displacement of customers due to a natural disaster. CFPUA experienced decreased customer demand of almost 11 percent between FY2012 and FY2014. A survey completed by the Water Research Foundation indicates that indoor residential use may decline by 20 percent over the next ten years. Mandatory conservation during a drought could reduce commercial and Cape Fear Public Utility Authority Page 8 Minutes Authority Board August 10, 2016 industrial irrigation by up to 50 percent. Using hurricane surge model data, up to 6,000 customers could be impacted or displaced by a tidal storm surge. Approximately $31.8 million would be needed to immediately address failed infrastructure events, and $3.2 million is estimated for additional personnel costs during a major event. Additional data used in staff's analysis of reserves included Local Government Commission requirements, Environmental Finance Center recommendations, and Standard & Poor's recommendations for cash reserves for its highly-rated utilities. Using the current budget, the recommended reserves for each category are: Operating Reserve $18,900,000 Capital Reserve 8,400,000 Unanticipated Event Reserve 39,600,000 The total recommended reserves equal $66,900,000. The amount of $51,718,143 could be used for pay-go capital projects. Ms. Hoggard and Mr. McLean recommended adopted policies that would allow for evaluation and determination of optimal reserves every three to five years, the continuous monitoring and forecasting of reserves, and the definition of permissible courses of action in the event reserves are projected to become deficient. The Board briefly discussed pay-go capital, rates, and the issuance of debt. Board members thanked staff for their work in developing the reserve recommendations. RESULT: REVIEWED VIII. OLD BUSINESS Mr. Flechtner reminded the Board that the FY2017 budget books had been distributed to them. Mr. Brown asked Authority members to contact Mr. Flechtner if they have additional topics of interest to discuss at the fall retreat. IX. AUTHORITY Q&A / CLOSING COMMENTS There were no questions or closing comments. X. CLOSED SESSION There was no closed session. XI. ADJOURNMENT Cape Fear Public Utility Authority Page 9 Minutes Authority Board August 10, 2016 There was no further business to come before the Board, and Ms. Kusek moved to adjourn. Mr. Norris seconded the motion, and it passed unanimously. The meeting adjourned at 10:20 AM. The next regular CFPUA meeting will be Wednesday, September 14, 2016. The Board will convene at 9:00 AM in the Lucie Harrell Conference Room, 230 Government Center Drive, Wilmington, North Carolina. A Communications Committee meeting will follow the regular Board meeting. Respectfully submitted, Donna S. Pope Clerk to the Board Cape Fear Public Utility Authority Page 10