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CFPUA 4 10 2013 Regular Meeting CAPE FEAR PUBLIC UTILITY AUTHORITY APRIL 10,2013 REGULAR MEETING Members Present: Jim Quinn, Chairman Pat Kusek, Vice-Chair Jim Brumit, Secretaiv Mike Brown,Treasurer Cindee Wolf Keith Betts Lariv Sneeden Thomas Wolfe, Commissioner Woody White, Commissioner Neil Anderson, Councilman Charlie Rivenbark, Councilman Staff Present: Matt Jordan, Chief Executive Officer Jim Flechtner, Chief Operations Officer Cheryl Spivey, Chief Financial Officer Frank Styers, Engineering Director Beth Eckert, Environment&Safety DirectoR Tom Morgan,H.R. Director Mike McGill, Chief Communications Officer Karen Durso, Assistant to the CEO Nancy Johnson, Customer Service Director Mike Richardson,Water Resources Manager Ken Vogt,WasteNvater Treatment Superintendent Julie McLawhon, Budget&Finance Manager Christene Pane Mitchell, Engineering Manager Kent Harrell, Engineering Manager Cord Ellison, I.T. Manager Donna S. Pope, Clerk to the Board Attorney Present: Linda A. Miles,the Miles Firm,PLLC Guests Present: Debbie Boone Jim Beck Chad O'Shields Tonv Boahn Steve Thomas CFPUA April 10, 2013, Regular Meeting Page 1 Guests,Cont.: Eric Williams Rvan McAllister Jim Iannucci Media Representatives Call to Order,Determination of a Quorum, and Opening Comments: The Cape Fear Public Utility Authority held its regular monthly meeting on Wednesday, April 10, 2013, in the Lucie Harrell Conference Room, 230 Government Center Drive, Wilmington,North Carolina. Mr. Quinn called the meeting to order at 9:00 a.m. He thanked all for their attendance and noted that all Authority members were present. Adoption of the Agenda: Mr. Rivenbark moved to adopt the Agenda, as presented by staff. Mr. Anderson seconded the motion, and the day's Agenda was adopted unanimously. Approval of Minutes: Mr. Brumit moved to approve the Minutes of the March 13, 2013, Authority meeting and rate hearing. Mr. Anderson seconded the motion, and the Minutes were approved unanimously. Public Comments: Mr. Beck spoke in support of conservation. Ms. Boone spoke about late fees and was referred to Ms. Johnson for assistance. Mr. O'Shields spoke in favor of a uniform rate for water usage. Consent Agenda: Mr. Jordan presented the Consent Agenda, as follows: 1. Adoption of a Resolution designating signature authority to the Assistant to the CEO in the absence of the Clerk(no budget impact); 2. Authorization to adopt an Ordinance and approve Budget Amendment 13-014 in the amount of S165,000 transferring Operating Contingency fiends to Operating Expenditures for water treatmentpower costs; 3. Adoption of a Resolution increasing the Clean Water ,State Revolving Loan amount for the Between the Creeks Pump ,Station Rehabilitation and approval of the associated Budget Amendment in the amount of S39,000; and CFPUA April 10, 2013, Regular Meeting Page 2 4. Authorization for the CFO to grant a tentative construction award of Clean Water ,State Revolving Fund Loan projects (no budget impact). Mr. Anderson moved to approve the Consent Agenda as recommended by staff. Ms. lusek seconded the motion, and it passed unanimously. New Business,Administrative and Committee Reports: Attorney's Report. Ms. Miles reported that she was working with Representative Catlin on an aquifer storage bill. She requested a closed session during the Board meeting to discuss the EPA enforcement action and a lawsuit, CB Windswept, LLC, Sellar's Cove, LLC, Telfair Summit, LLC, and CB Snow's Cut Landing, LLC, v. CFP UA and New Hanover County. CEO's Report. Mr. Jordan reported on three items. The Authority is in the first stage of a software needs assessment. The assessment will include a review of the Sungard program currently used for billing, payroll, and other functions and an analysis of other available software. Mr. Jordan requested input from Board members,and Mr. Ellison answered clarification questions. Mr. Jordan summarized the Environment and Safety reports for February 2013. There were two sanitaiv server overflows in Februaiv. An overflow at Cypress Drive spilled approximately 800 gallons and was caused by roots and debris blocking a line. An overflosw at Harnett Street -,was caused by grease and debris blockage and spilled approximately 500 gallons. The -,eater and -,waste-,water treatment plants operated -,without violation. The Southside Wastewater plant continued to -,work with a consultant on sporadic toxicity issues. There were two personal accidents in February and a safe light violation. The OSHA recordable rate was below industry average, and the DART rate was above. DART stands for "Days Away, Restricted Activity, and Transfer." Messrs. Morgan and Jordan answered clarification questions from Board members. Mr. Brumit expressed concern about an upward trend in the rates. Executive Committee Report. The Executive Committee had no items to report. Long Range Planning Committee. Ms. Wolf reported that the Committee met on March 28 and asked Mr. Styers to update the Board on the meeting. Mr. Styers reported that the Committee revie-,ved a draft of the proposed growth policy, received a report on a development located in Ne-,w Hanover and Pender Counties, and received an update on the mandatoiv connection procedure for the 1995 Annexation areas. Both the Long Range Planning and Finance Committees discussed the potential Marquis Hills and Heritage Park septic to sewer projects. Mr. Wolfe reported that the Finance Committee asked him to CFPUA April 10, 2013, Regular Meeting Page 3 investigate a further partnership with the County for the projects. He hoped to have a meeting with Countv staff within the next week. Ms. Wolf asked if the projects could be discussed in the growth work session after the Board meeting. Ms. Miles advised that the topic could be discussed but not voted upon in a work session. Several Board members expressed concerns about the uncertainty of a public health emergency and the costs of continuing with design and engineering if funding to complete the projects was not available. Ms. Wolf stated that the design, engineering plans, and some of the permits had a good shelf life and could be used in the future when funding was available. She reminded the Board that the projects had always been identified in the Authority's long range CIP. Board members discussed the potential cost- savings to be recognized through the Clean Water loan and potential grants. Board members discussed the costs to homeowners in the target communities. Mr. Iannucci of Nevv Hanover County reported that a survey was under way in the Marquis Hills and Heritage Park communities. The survey was conducted by a third-party and assured anonymity to residents. Health Department staff will bring the results to the May Authority-meeting. Staff reported that the engineering consultants are ready to begin work at the end of April and that further delay could cause concerns for meeting the Clean Water funding deadlines. After much discussion, Ms. Iusek moved to suspend funding and work on the engineering and design until the May 8 Authority meeting, at which time the Board would have an evaluation from the Nevv Hanover County Health Department, information on costs to residents, and feedback from the County regarding a partnership in the projects. Mr. Brown seconded the motion. Ms. Iusek and Messrs. Brown, Betts, Rivenbark, Wolf, White, Brumit, and Quinn voted in favor of the motion. Ms. Wolf and Messrs. Anderson and Sneeden were opposed. Motion carried, eight to three. Mr. Styers reported that the final item reviewed by the Long Range Planning Committee was customer service training for the Engineering Department staff. Ms. Iusek suggested that staff from other departments attend the training if room was available in the classes for which the Authority had already paid. Mr. Quinn recessed the meeting at 10:35 a.m., and the Authority reconvened at 10:50 a.m. Finance Committee. Rate Presentation, Discussion, and Vote. Ms. Spivey presented the rate scenarios reviewed by the Committee. The Committee recommended Scenario A, which provided a conservation rate of$2.90 per 1,000 gallons for the first 6,000 gallons of water and a uniform rate of$3.67 above 6,000 gallons. Under Scenario A, the conservation rate increased by 26 cents and represented 85 percent of the cost of water production. Usage of 6,001 to 12,000 gallons would increase by $1.03 per 1,000 gallons, and usage above 12,000 gallons would see a decrease in the usage rate in comparison to the current model. Non- residential use would be billed at$3.67,which represented a decrease of 29 cents per 1,000 gallons. The CFPUA April 10, 2013, Regular Meeting Page 4 irrigation rate would be $3.67, an increase of 31 cents per 1,000 gallons. There would be no change in the water fixed charge, and the sewer fixed charge would be $29.10, an increase of$2.42 per bimonthly. The sewer volumetric rate would be $4.21, an increase of 17 cents per 1,000 gallons. A customer using 10,000 gallons eveiv two months would have an increase of$9.80 in his bimonthly statement. Scenario B utilized a uniform rate of$3.42 for all water usage,representing the cost to produce the water. Residential use under 12,000 gallons would receive a 78 cent, or 29.5 percent, increase. Usage above 12,000 gallons would see a decrease in the rate per 1,000 gallons. The water fixed charge would remain the same, and the sewer fixed charge would be $29.10, with a sewer volume charge of$4.21 per 1,000 gallons. A customer using 10,000 gallons every two months would have an increase of $11.92 in his bimonthly statement. Mr. Rivenbark moved to adopt Scenario B, the uniform rate, for bills produced on or after May 1, 2013. Ms. Wolf seconded the motion. Mr. Anderson requested that staff increase awareness of the CFPUA Assist program, and Mr. Wolfe suggested that the County could publicize the program on its television station. Ms. Miles advised that there were statutory limitations regarding the use of Authority employee time for the program. Mr. Jordan reminded the Board that the CFPUA Assist program allowed for a customer to receive assistance once annuallv. Mr. Brumit stated that Scenario A, as recommended by the Finance Committee, would result in a 9.8 percent increase to customers in the conservation tier. The uniform rate in Scenario B would result in a 29.5 percent increase to all customers for their first 6,000 gallons of usage. Mr. Quinn restated the motion and asked for a vote. Ms. Wolf and Messrs. Anderson, Brown, Betts, Rivenbark, Sneeden, Wolfe, and White voted in favor of Scenario B, the uniform rate. Ms. lusek and Messrs. Quinn and Brumit were opposed. Motion carried, eight to three. Overview of FY2014 Recommended Budget. Ms. Spivey presented the proposed FY2014 Budget. The total proposed budget is $66,730,000,which includes $29,400,000 in debt service. The operating budget was prepared based on actual expenditures for FY2012 and FY2013 and includes a$800,000 contingency fund, a recommended market adjustment of one percent, a two percent merit adjustment, three new staff positions, and a mandator-increase in the employer contribution to the local government retirement fund of 4.9 percent. The operating budget of$37,330,000 is approximately $750,000 more than the FY2013 Budget but remains lower than the FY2009, FY2010 and FY2011 Budgets. Ms. Spivey and Mr. Jordan answered clarification questions from Authority members. A budget workshop and the Authority's FY2014 budget hearing will be held at 9:00 a.m. on May 15, 2013,in the Authority-offices. March 2013 Financial Reports. Ms. Spivey referred the Board to the financial data and Customer Service reports in the Agenda packet. There were no questions on the monthly financials or Customer Service. CFPUA April 10, 2013, Regular Meeting Page 5 Old Business: There was no old business. Closed Session: Mr. Rivenbark moved to enter into closed session to discuss the lawsuit entitled, CB Windswept, LLC, Sellar's Cove, LLC, Telfair Summit, LLC, and CB Snow's Cut Landing, LLC, v. CFPUA and New Hanover County, and to discuss the EPA enforcement action. Mr. Betts seconded the motion, and it passed unanimously. The Authority entered closed session at 11:25 a.m., with Ms. Miles, Ms. Spivey, Ms. Pope, Ms. Durso, and Messrs. Jordan, McGill,Flechtner,and Styers present. The Board received staff and legal reports. Return to Open Session and Adjournment: There was no further business to come before the Authority, and the meeting returned to open session and adjourned by consensus at 12:30 p.m. The next regular meeting of the Cape Fear Public Utility Authority will be Wednesday, May 8, 2013, at 9:00 a.m. The meeting will be held in the Lucie Harrell Conference Room located in the NHC Bruce Shell Administrative Complex, 230 Government Center Drive,Wilmington,North Carolina. Respectfully submitted, Donna S. Pope Clerk to the Board CFPUA April 10, 2013, Regular Meeting Page 6