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CFPUA 02-09-2011 CAPE FEAR PUBLIC UTILITY AUTHORITY REGULAR MEETING FEBRUARY 9, 2011 Members Present: Gene Renzaglia, Chairman J.C. Hearne, II, Vice-Chairman Michael Brown, Secretary Burrows Smith, Treasurer Ronald Sparks, Councilman Charlie Rivenbark, Councilman Cynthia Wolf James Quinn Members Absent: Richard Catlin, Commissioner Brian Berger, Commissioner Staff Present: Matt Jordan, CEO Nancy Gallinaro, COO Cheryl Spivey, CFO Karen Durso, Assistant to CEO Martha Zeigler, Customer Service Director Carey Disney Ricks, PIO/Public Relations Frank Styers, Director of Engineering Beth Eckert, Safety & Environment Director Tom Morgan, H.R. Director Christene Mitchell, Engineering Manager Jim Flechtner, Engineering Manager Graham Fripp, Property Acquisition Specialist Mike Richardson, Water Treatment Superintendent Ken Vogt, Wastewater Treatment Superintendent Julia Vosnock, Procurement Manager Chris Bowling, Project Manager (Engineering) Chris Johnson, Laboratory Supervisor Donna S. Pope, Clerk Attorney Present: Linda A. Miles, the Miles Firm, PLLC, Consulting Attorney CFPUA 2.9.2011 Page 1 Guests Present: Brian Geschickter Tyler Newman Jim Iannucci Kevin Mauer J.D. Solomon Tony Boahn Call to Order, Determination of a Quorum, and Opening Comments: Mr. Renzaglia called the meeting to order at 9:02 a.m. and declared a quorum present. Adoption of Agenda: Mr. Renzaglia presented the Agenda, with one revision. Staff recommended deleting Item 4 from the Consent Agenda, that being authorization to enter into a contract for a spectrometer. Mr. Smith moved to adopt the Agenda with the recommended revision. Mr. Rivenbark seconded the motion, and it passed unanimously. Approval of Minutes: Mr. Brown presented the minutes from the January 12, 2011, for comment. Mr. Smith noted a correction on Page 4 and one on Page 5. Mr. Brown moved to approve the minutes, as revised. Mr. Rivenbark seconded the motion, and it passed unanimously. Public Comment: Mr. Geschickter, an attorney, spoke on behalf of property owners in the Kirkland Estates subdivision who had received mandatory connection notices, with a deadline of February 21, 2011. Ms. Miles and Mr. Jordan had advised Mr. Geschickter that the Authority was considering changes to its mandatory connection ordinance. Mr. Geschickter requested a deferral from the February 21 deadline, and Ms. Miles and Mr. Jordan recommended the deferral. Mr. Smith moved to defer enforcement of the mandatory connection for the Kirkland Estates property owners until such time as the mandatory connection ordinance had been reviewed and finalized. Mr. Hearne seconded the motion, and it passed unanimously. CFPUA 2.9.2011 Page 2 Mr. Newman spoke in favor of the recommended revision to the ordinance language for collection of System Development Charges for transition buildings, to be presented in the Engineering report. League of Municipalities and the UNC Environmental Finance Center entitled Water and Wastewater Rates and Rate Structures in North Carolina. Authority He supported a uniform block rate. A copy of be in attendance at the February 23 rates workshop. Consent Agenda: Mr. Renzaglia presented the Consent Agenda, as follows: 1.Resolutions to approve pursuit of the Clean Water State Revolving Fund Monies for three th projects: 30 Street Sewer Line Replacement, Greenfield Lake Outfall Rehabilitation, 2.Authorization for the CEO to execute Contract Amendment #5 with Black & Veatch for professional services associated with closeout of the Environment & Safety Management Building project; 3.Authorization for the CEO to execute a professional services with HDR Engineering, Inc., of the Carolinas for design of the Country Haven pump station force main; and 4.Authorization for the CEO to amend the Water Treatment Chemicals Contract with Brenntag Southeast, Inc. Mr. Sparks moved to approve the Consent Agenda, and Mr. Rivenbark seconded the motion. Following clarification questions, the Consent Agenda was unanimously approved. New Business Administrative Reports: Engineering: Mr. Styers presented a recommended revision to System Development Charges, Article 4, Section 4.2 (b), Charges Related to New Utility Service, of the General Provisions of the Authority Ordinance, as follows: CFPUA 2.9.2011 Page 3 iv.System Development Charge a fee to recover the past or future capital cost of Authority capital facilities that have a system wide benefit the amount of which shall be based on meter size. System Development Charge shall be paid at the time of application for new utility service. Persons who pay System Development Charges are any Person undertaking any Development or Home Construction to be connected to the Authority Utility Facilities. If a meter size on which the fee is based is not described in the Rates and Fee Schedule or if there is no meter, the amount of the System Development Charge shall be determined by the Chief Executive Officer based upon the anticipated water use and sewage generation rates for sizes in question. Where an existing meter is being upgraded, the Authority shall give a credit against the System Development Charge due in an amount equal to the System Development Charge that would have been due for the meter being replaced. Additional considerations related to System Development Charge include the following: (1)Upon approval by the Chief Executive Officer, any person obligated to pay any of the System Development Charges set forth in this article shall receive a credit against the amounts due or to become due for public improvements installed and paid for by such person, if such public improvements are in addition to the public improvements required. (2)It shall be unlawful for any person to occupy or use any real property for any purpose for which a water and sewer System Development Charge is due and payable prior to having paid such fee. Each day of such occupancy or use shall be a separate offense. (3)All fees collected pursuant to this section shall be deposited in a Capital Improvement fund and shall be used for the projects identified or subsequently approved by the Authority governing board. (4)Developments, where development plans were approved prior to June 30, 2008, and water or sewer service was previously provided by the New Hanover County Water & Sewer District and is presently provided by the Authority, including shell building upfits, shall pay the applicable System Development Charge to the Authority. System Development Charges shall be based on the Authority rate structure (based upon water meter size), or the rate structure in effect at New Hanover County on June 30, 2008, whichever the owner elects. This option shall only be offered to Developments as described in this paragraph, and shell buildings that either have not begun any interior upfits or have been partially upfitted, Regarding shell buildings, once all interior units have been upfitted, or for any shell building with a building permit issued o Ordinance and Fee Schedule shall be used to calculate System Development Charges. The election, once made, is irrevocable and binding upon any successive owners. CFPUA 2.9.2011 Page 4 In the event an owner who has elected to have System Development Charges calculated using the water and sewer impact fee rates in effect at the County on June 30, 2008, desires to change the size of the installed meter prior to the building being completely upfitted, the owner shall pay or receive a refund, as applicable, for the difference between the then-current System Development Charges for such size meters. The revision was recommended to clarify language approved by the Authority in December 2010. Mr. Smith moved to adopt the recommended Ordinance revision, and Mr. Rivenbark seconded the motion. The Ordinance revision was unanimously adopted. Environment & Safety Management: Ms. Eckert reported that there had been two Sanitary Sewer Overflows. Each released a low volume of discharge and was quickly contained with a fast response from Operations staff. Letters and brochures have been distributed in an area with a grease-related overflow. There were no employee accidents in December. Ms. Miles recommended that the Authority proceed with condemnation on four properties to acquire easements for the Northeast Interceptor bypass line. Once condemnation is authorized, Ms. Miles will send a 30-day notice letter, and she and Mr. Fripp can continue to negotiate with owners. Following initial clarification questions regarding the location of the properties in question, Mr. Brown moved to enter into closed session to discuss the negotiations with property owners. Ms. Wolf seconded the motion, and it passed unanimously. The Authority entered closed session at 9:55 a.m. Messrs. Jordan, Fripp, Styers, and Bowling, Ms. Miles, and Ms. Pope remained in the closed session with Authority members. Mr. Fripp reported on negotiations with the four property owners, and Ms. Miles answered questions regarding legal issues. Mr. Rivenbark moved to return to open session, and Mr. Smith seconded the motion. The motion passed unanimously, and the Authority returned to open session at 10:15 a.m. Mr. Renzaglia read the requests for authorization to proceed with condemnation, as follows: CFPUA 2.9.2011 Page 5 1.Resolution to institute proceedings to condemn a portion of the property of Centro Heritage New Centre, LLC, in connection with the Northeast Interceptor Northside Force Main Project, Parcels R04900-001-019-000 and R04900-001-027-000. Mr. Smith moved to authorize the condemnation proceeding. Mr. Rivenbark seconded the motion, and it passed unanimously. 2.Resolution to institute proceedings to condemn a portion of the property of Harold Powers Laing, in connection with the Northeast Interceptor Northside Force Main Project, Parcel R049-6-001-004-000. Mr. Smith moved to authorize the condemnation proceeding. Ms. Wolf seconded the motion, and it passed unanimously. 3.Resolution to institute proceedings to condemn a portion of the property of State Street Companies, LLC, and 5016 Hunters Trail, LLC, in connection with the Northeast Interceptor Northside Force Main Project, Parcel R04900-001-003-000. Mr. Smith moved to authorize the condemnation proceeding. Mr. Rivenbark seconded the motion, and it passed unanimously. 4.Resolution to institute proceedings to condemn a portion of the property of Wilmington IHOP, LLC, in connection with the Northside Interceptor Northside Force Main Project, parcel R04912-002-027-000. Mr. Brown asked to be recused from the vote on Resolution 4. The company that employs him is connected with the Property Owners Association for the Costco complex, and the IHOP is also a member of that Association. Mr. Sparks moved to recuse Mr. Brown. Mr. Rivenbark seconded the motion, and it passed unanimously. Mr. Rivenbark moved to authorize the condemnation proceeding, with the specification that staff assist the owner in securing parking for restaurant use during the construction. Mr. Smith seconded the motion, and it passed unanimously. previously authorized by the Board. Ms. Spivey added that a budget amendment would be needed before the end of this fiscal year to maintain the amount of money the Authority is required to keep in reserve for workers compensation. CFPUA 2.9.2011 Page 6 Ms. Miles and Ms. Pope are securing ethics training for the Board through the UNC School of Government. Mr. Jordan reminded the Board that the public workshop on rates is scheduled for February 23, and the rate hearing is scheduled for March 9. Mr. Jordan has received a request from the Town of Cary for written consent to an Interbasin Transfer wherein the Town would release water back into the Cape Fear River. Messrs. Jordan onsensus that Mr. Jordan should respond affirmatively to the Town of Cary. Mr. Jordan further reminded the Board that there would be a Capital Improvement Projects workshop beginning at 2:00 p.m. after the meeting. Authority members had received an updated CIP workbook with their agendas, which reflected the latest discussions by the Board regarding capital projects. Committee Reports: Human Resources: Mr. Hearne reported that the Committee met on February 2. He and Mr. Morgan presented the Committee Suggestion Rewards Program HR016, to encourage innovative Suggestions and Ideas from Mr. Smith moved to adopt Section 5 of the Employee Suggestion Rewards Program by Resolution. Mr. Sparks seconded the motion. Ms. Miles advised that issues regarding patent rights would be resolved before the program is implemented. Mr. Renzaglia called the question, and the Resolution passed unanimously. The H.R. Committee also reviewed a staff recommendation to revise the inclement weather policy and eliminate administrative closure pay. The Committee decided to table further discussion and a decision on the recommendation until the next Committee meeting. CFPUA 2.9.2011 Page 7 Public Relations: Mr. Brown reported that the Committee met on January 26. Authority members and staff will update City Council on February 15 at 6:30 p.m. and the County Commissioners on February21 at 6:00 p.m. The Committee discussed fire hydrant maintenance. Ms. Ricks is negotiating with the City and Fairway Advertising for free public service announcements on digital billboards. Mr. Renzaglia encouraged Authority members to contribute to Ms. Ricks reported that all procedures are in place with the United Way for the assistance program, information is on the Authority website regarding the program and how to contribute, and collections totaling $10,000 are anticipated by April. Long Range Planning: Mr. Quinn reported that the Committee met on February 2. The focus of the Committee was briefly discussed, and the discussion will be continued at the March meeting when the two new Committee members, Ms. Wolf and Mr. Berger, are present. The Committee also reviewed fire hydrant ordinances, hydrant maintenance, and capacity issues. At 10:45 a.m., Mr. Renzaglia called a recess. The Authority reconvened at 10:55 a.m. Finance Committee: Mr. Smith reported that the Committee met on February 2. Future Finance Committee meetings will begin at 12:30 p.m., and Committee members are encouraged to eat lunch before attending the meeting. On February 2, the Committee received an update from Daryll Parker of Utility Advisors appears to be on the leading edge in utilities with inclining block rates. The consultant will analyze all rate options. A copy with their Agendas. Mr. Parker received input from the Finance Committee and will bring further information and analysis to the February 23 workshop. requested that the rate analysis include loss of revenues if mandatory connection is removed CFPUA 2.9.2011 Page 8 from the Ordinance and reminded the Board of the environmental impact of failing septic systems and saltwater intrusion. The Committee received an update from Ryan Maher, of Robert W. Baird & Company, the two small bond sales, as the Local Government Commission approves bonds based on projects being bid and permits being in place. Mr. Smith commented that time is of the essence, as rates are below their ten-year average but will be rising. The Committee received an update on bulk sales with Figure 8 Island and negotiations with Figure 8 Harbour for easements. The Committee discussed engineering services contracts and the Mini-Brooks Act. January Financial Report: Ms. Spivey reviewed the financial statements through January 31, 2011, which had been provided to Board members in their Agendas . Current assets are at $68 million, with $40.7 million in unrestricted cash. That figure is $6.7 million lower than December 31, 2010, due largely to a debt service payment in January. The Authority has a receivable balance of approximately $502,000 owed by customers under payment plan agreements. With 58 percent of the year lapsed, revenues are at 60.88 percent of budget and expenditures at 43.45 percent of budget. At the December meeting, Mr. Berger requested information regarding the cost to the Authority for different types of payments. Ms. Spivey reviewed the data provided in the Finance material which explained the costs associated with payment types. Ms. Spivey reviewed the revised Budget calendar for Fiscal Year 2012. Old Business: There was no old business. CFPUA 2.9.2011 Page 9 Closing Comments: Mr. Quinn mentioned that the Lower Cape Fear Water & Sewer Authority was meeting on February 14, and a representative from the Jordan Lake Consortium would be present. Mr. Richardson will represent the Authority at that meeting. There was no further business to come before the Authority. Mr. Rivenbark moved to adjourn, and Mr. Smith seconded the motion. The motion passed unanimously, and the Authority adjourned at 11:40 a.m. The next regular meeting of the Cape Fear Public Utility Authority will be Wednesday, March 9, 2011, in the Lucie Harrell Conference Room of the New Hanover County Administration Building, commencing at 9:00 a.m. Respectfully submitted, Donna S. Pope Clerk to the Board CFPUA 2.9.2011 Page 10