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CFPUA 2 13 2013 Regular Meeting CAPE FEAR PUBLIC UTILITY AUTHORITY REGULAR MEETING FEBRUARY 13,2013 Members Present: Jim Quinn, Chairman Pat Kusek, Vice-Chair Jim Brumit, Secretaiv Cindee Wolf Lariv Sneeden Keith Betts Charlie Rivenbark, Councilman Neil Anderson, Councilman Woody White, Commissioner Tom Wolfe, Commissioner Member Absent: Mike Brown,Treasurer Staff Present: Matt Jordan, CEO Jim Flechtner, COO Chem 1 Spivey, CFO Karen Durso, Assistant to CEO Julie McLawhon, Budget&Finance Manager Melinda Hoggard, Accounting Manager Julia Vosnock,Procurement Manager Beth Eckert, Environment&Safety Director Mike McGill, CCO Frank Styers, Engineering Director Tom Morgan,Human Resources Director Nancy Johnson, Customer Service Director Cord Ellison, I.T. Manager Mike Richardson,Water Resources Manager Ken Vogt,WasteNvater Treatment Superintendent Christene Mitchell, Engineering Manager Gary McSmith, Engineering Manager Kent Harrell, Engineering Manager Kipp Glazier, Community Compliance Assistant Superintendent Donna S. Pope, Clerk Attorney Present: Linda A. Miles,the Miles Firm,PLLC CFPUA 2.13.2013 Page 1 Guests Present: Ryan McAlister, BASE Tony Boahn, McKim&Creed Carter Hubert,W.K. Dickson Randy Plummer,HDR Jim Ianucci,New Hanover County Engineering Department Ashley Withers, Wilmington,Star News Call to Order,Determination of a Quorum, and Opening Comments: Mr. Quinn called the meeting to order at 9:00 a.m. and declared a quorum present. Mr. Rivenbark moved to excuse Mr. Bros-,-n. Ms. Kusek seconded the motion, and it passed unanimously. Adoption of the Agenda: Ms. Kusek moved to adopt the day's Agenda. Mr. Brumit seconded the motion, and it passed unanimously. Approval of Minutes: Mr. Brumit moved to approve the Minutes of the January 9, 2013, Regular Meeting, as presented. Mr. Rivenbark seconded the motion, and it passed unanimously. Distinguished Budget Presentation: Mr. Quinn and members of the Finance Committee presented the Government Finance Officers Association Distinguished Budget Presentation Award for the Fiscal Year Beginning July 1, 2012. Ms. Spivey accepted the award and thanked Ms. McLawhon, Ms. Hoggard, and Ms. Durso for their endeavors in preparing the FY2013 Budget and expressed appreciation to Board members for their support. Mr. Quinn thanked Finance Committee members for their time spent in reviewing financial matters brought to the Board. Public Comments: There were no public speakers. Consent Agenda: Mr. Quinn presented the Consent Agenda, which had been reviewed and recommended by the Finance and Executive Committees, as follows: 1. Approval of the FY 13-1-1 Budget Calendar; CFPUA 2.13.2013 Page 2 2. Approval of a Budget Ordinance making supplemental revenues and appropriations to the Operating Fund and Capital Projects Funds for the Fiscal Year ending June 30, 2013, with an increase in the Operating Fund of 518,-16-1,398.00 and an increase in the Capital Projects Fund o f 5297,011.00; 3. Appointment of Julia Vosnock as Deputy Finance Officer for the purpose of pre-auditing purchase orders under 51,000, in accordance with N.CGS. 159-28; I. Award of a contract to Infranet Technologies Group, Inc., for the replacement of legacy equipment, at a cost of 5299,937.50; 5. Approval of the February 26, 2013, Board Workshop Agenda: Paying for Expansion and Growth; 6 Award of a sole source contract with Duke's Root Control for Calendar year 2013, not to exceed 575,000.00; 7. Approval of a construction contract with CaJenn Construction &Rehabilitation,Services, Inc.for the Walnut Hills Sanitary Sewer Rehabilitation Construction project, at a cost of 5355,0-1-1.00; and 8. Approval of a fee structure modification for the 1995 and 1998 Annexation Areas. The proposed language read, "System Development Charges shall not be charged to any existing parcels where habitable structures existed on the effective dates of annexation, and the connection charge of 51,295 for water and 5900 for sewer shall be charged to residential customers existing proper to the annexations who connect to the Authority system within 180 days of being notified that set-vice is available,pursuant to the prior policy of the City for those habitable structures existing before the annexation dates of January 31, 1999, for the 1995 Annexation and,September 30, 200,for the 1998 Annexation where taps are installed by the City, County, or CFPUA." Mr. Rivenbark requested that Item 8, the fee modification for the annexation areas, be removed from the Consent Agenda for discussion. Mr. Anderson requested that Item 7, the construction contract with CaJenn be removed for discussion. Ms. Iusek moved to approve the Consent Agenda, Items 1 through 6. Mr. Brumit seconded the motion, and it passed unanimously. Mr. Anderson requested clarification on the award of the alternate bid to CaJenn. Following staff clarification, Mr. Anderson moved to approve Item 7. Mr. Rivenbark seconded the motion, and it passed unanimously. Mr. Rivenbark asked for clarification on the annexation area system development charges and the notification process for property-owners. Following staff clarification, Mr. Rivenbark moved to approve Item 8. Mr. Betts seconded the motion, and it passed unanimously. Operations Report: Mr. Vogt updated the Authority on toxicity test results at the Southside Wastewater Treatment Plant. In January, staff conducted a "split test" wherein effluent from one sample was tested by two separate labs. One sample passed, and the other failed. The State regulators informed staff that this will be considered a CFPUA 2.13.2013 Page 3 passing sample. The Authority will retain a consultant to assist in its future investigation of the toxicity issue. Mr. Vogt answered clarification questions regarding the test. Engineering Report: Mr. Styers updated the Authority- on capacity in the Mayfaire area sewer gravity line. Staff will identify additional capacity and strategies to utilize capacity to its best advantage. $530,000 will be recommended for the FY2014 CIP to address capacity in the sesyer shed. Ms. Mitchell updated the Authority on Phase 2 of the Burnt Mill Creels rehabilitation. The project began in July 2012 and is expected to be completed at the end of March 2013. Rehabilitation includes the replacement of 2,000 linear feet of 48-inch sesyer line and manholes along Burnt Mill Creels and 2,000 linear feet of 24-inch line and manholes along Smith Creek. A related replacement of Pump Station 10 is planned. Staff requested the approval of a manhole relocation and junction box realignment and relocation to accommodate the recommended pump station site. The recommended change order syould add approximately 30 days to the project timeline and is estimated to cost $39,100. Staff requested that the change to the project be approved not to exceed $50,000. Ms. Mitchell answered clarification questions from Board members. Mr. Anderson congratulated staff members on their cooperation in Nvorking with the IRON MAN film production in 2012. Ms. Wolf moved to approve the recommended manhole and junction box relocation and realignment, not to exceed $50,000. Ms. Iusek seconded the motion,and it passed unanimously. Attorney Report: Ms. Miles reported that she is Nvorking closely with Congressman Catlin, who will sponsor two bills affecting the Authority. The first is in support of permanent license plates for vehicles belonging to water and sesyer authorities. The second bill will address Authority vactor trucks and request exemption from citations for their being over the syeight limit allosyed on certain roads. Staff distributed an encroachment agreement betsyeen Piedmont Natural Gas,the LoNver Cape Fear Water & Sesyer Authority, and the Cape Fear Public Utility Authority, and Ms. Miles recommended that the Board authorize the Chairman to execute the agreement. Mr. Sneeden moved to authorize the Mr. Quinn to execute the encroachment agreement as Chair. Ms. Iusek seconded the motion, and it passed unanimously. Ms. Miles had no more items for open session. She requested a closed session at the end of the meeting to receive legal counsel and to discuss the Tommy Dcrvis lasysuit. CEO Report: Mr. Jordan referred the Board to Exhibit 9 in the Agenda packet, the Environmental Performance Report. There were tsyo Sanitaiy Server Overflows in December 2012. A spill on Barksdale Drive released 700 CFPUA 2.13.2013 Page 4 gallons due to paper and grease, and a spill on North Harnett Street released 2,400 due to a pipe failure. The water treatment facilities operated with no violations, as did the Northside and Walnut Hills Wastewater treatment facilities. The Southside facility failed the toxicity test reported on by Mr. Vogt. Mr. Morgan answered questions on the December 2012 Safety Report. There were two personal accidents, one vehicular accident and two safe light violations in December. Committee Reports: Executive Committee. Ms. Iusek moved to appoint Mr. Wolfe to the Finance and Human Resources Committees and Mr. White to the Long Range Planning Committee. Mr. Brumit seconded the motion, and it passed unanimously. Long Range Planning Committee. Ms. Wolf and Mr. Styers reported on the January 24 Long Range Planning Committee. The Committee conducted the following business: • Received an update on Invista water and sewer infrastructure from Mr. Flechtner. • Received a mandator-connection update for the 1995 annexation area from Mr. Harrell. • Received a report on sekver capacity and rescission from Mr. Harrell. A further report will be provided to the Committee at its February meeting. • Reviewed and recommended the Agenda for the February 26 growth Nvorkshop. • Reviewed projects proposed by staff for the FY2014 Capital Improvements Program. • Approved a Committee meeting schedule for calendar year 2013. The next Committee meeting will be Thursday, February 28, 2013,at 3:00 p.m. in the Authority offices. Mr. Styers reported that staff and legal counsel are Nvorking with Nevv Hanover County to develop an interlocal agreement to provide sewer in the Heritage Park and Marquis Hills communities. The full cost of the project has been estimated at $18,000,000, and the Authority's participation would be $4,264,000, which includes $2,500 per lot and design fees, which are estimated at $744,000. Marquis Hills has the highest number of septic failures in the county, and Heritage Park the second highest number. The proposal will go to the Commissioners for consideration on February 18. If approved, it will be presented to the Authority on March 13. Mr. White reported that Commissioner Vice-Charwoman Dawson had attended the public meeting in the Heritage Park. He requested feedback from staff regarding residents' responses to the proposals. Mr. Styers reported that many homeowners and residents reported their difficulties with their septic systems. Response was mixed because some owners were concerned about their costs of connecting to the sekver system. Mr. Styers reported that the current System Development Charge is $2,500 and the application fee $55 and that owners will be responsible for their own plumbing costs to connect to the Authority line. The SDC may be financed with the Authority. A property owner with a properly-working septic system may receive a three-year deferral from mandator- connection, which can be extended for another three- year period. Owners receiving a deferral would still pay the SDC and bimonthly fixed charges. CFPUA 2.13.2013 Page 5 Mr. Quinn praised the cooperative spirit between the Authority and County and stated that the project Nvould preserve the County tax base,bring nekv customers to the Authority, and protect the environment. Mr. Rivenbark requested further financial data before the agreement is brought to a vote, stating that the costs Nvould affect City taxpayers, as they pay County taxes in addition to City taxes. The Board briefly discussed capacity issues, which are being revieNved by the Long Range Planning Committee. The Authoritv recessed at 10:07 a.m. and reconvened at 10:25 a.m. Finance Committee. Ms. Spivey reported that the Finance Committee met on FebruaiN- 6 and conducted a preliminaiv review of rate scenarios. The Committee provided feedback to staff and will meet on February 20 for further Nvork on rates. Ms. Spivey presented an overview of how the rate model functions. The Nvater and sewer fixed charges cover debt service for Nvater and sewer respectively, and the volumetric charges cover the operating expenses. Consumption data for calendar 2012 Nvill be used for determining use in FY2014. Ms. Spivey and Mr. Jordan answered questions from Board members regarding the usage tiers and rates. Ms. Spivey reported that the Authority is in the third year of its second contract Nvith Sungard. The data scrub Nvas completed in 2012, and a needs assessment for financial and H.R. sofrivare will be conducted this fiscal year. Should a vendor other than Sungard be chosen, all functions will be run parallel Nvith Sungard and the new vendor to ensure accuracy in data conversion and billing. Ms. Spivey requested that Board members provide her or Mr. Ellison, the project manager, Nvith items they might Nvant to be considered as part of the needs assessment. The assessment will begin soon and be completed by June 30 2013. Ms. Spivey referred the Board to the Januaiv financial data in the Agenda packet. With 58 percent of the fiscal year lapsed, operating revenues are at 59.67 percent and operating expenditures at 47.12 percent. Staff answered clarification questions from Board members on financial items and change orders. Mr. White moved to reschedule the March 13 Regular Board Meeting and the Public Hearing on Rates to 6:00 p.m. Mr. Betts seconded the motion, and it passed unanimously. Ms. Johnson reported that staff has developed an electronic billing option Nvith the current bill print vendor, PCL The customer Nvould choose to receive either a print or electronic bill. The e-bill format is customer friendly and provides a link to the Authority's existing online bill paying feature, "EzBilling." The process complies Nvith all Authority confidentiality- and privacy protocols, and an account name and password are required to access electronic billing. CFPUA 2.13.2013 Page 6 Ms. Johnson reported that year to date SDCs were $1,794,711,which is 5336 percent of budget. Ms. Wolf suggested that monthly billing could be considered in the needs assessment for the financial software vendor. Mr. Jordan suggested that the Long Range Planning Committee could review monthly billing again. General Topics by Authority Members: Mr. Brumit thanked Mr. Jordan for his recently presentation to the Senior Men's Club. Closed Session: Mr. Rivenbark moved to enter closed session to discuss the Tommy Davis lawsuit and to receive advice from legal counsel on a second item. Ms. Iusek seconded the motion, and it passed unanimously. Mr. Rivenbark moved to excuse Mr. White, who had to leave due to an emergency. Mr. Anderson seconded the motion, and it passed unanimously. A quorum remained. The Authority entered closed session at 11:20 a.m. Ms. Miles, Ms. Pope, and Messrs. Jordan, Flechtner, Styers, and McGill remained in the meeting. Open Session: By consensus, the Authority returned to open session at 11:45 a.m. Ms. Iusek moved to authorize the Chairman to sign a confidentiality agreement with Invista. Mr. Rivenbark seconded the motion, and it passed unanimously. Old Business: There was no old business. Mr. Rivenbark moved to adjourn. Mr. Betts seconded the motion, and it passed unanimously. The Authority adjourned at 11:46 a.m. The next Regular Meeting of the Cape Fear Public Utility Authority will be held at 6:00 p.m. on Wednesday, March 13, 2013, in the Lucie Harrell Conference Room (Room 601), Nesv Hanover County Administration Building, 230 Government Center Drive,Wilmington,North Carolina. Respectfully submitted, Donna S. Pope, Clerk CFPUA 2.13.2013 Page 7