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2019-02-26 CFPUA Board Retreat Minutes CFPUA BOARD RETREAT FEBRUARY 26, 2019 Board Members Present: Bill Norris, Chair Wes Corder, Vice-Chair Jennifer Adams, Secretary Mike Brown, Treasurer Pat Kusek Rob Zapple Charlie Rivenbark Deans Hackney Larry Sneeden Staff Present: Jim Flechtner, Executive Director Frank Styers, Chief Operating Officer John McLean, Chief Financial Officer Beth Eckert, Environmental Management Director Lindsey Hallock, Public and Environmental Policy Director Denise Matroni, Human Resources Director Kristi Irick, Customer Services Director Carel Vandermeyden, Director of Engineering Vaughn Hagerty, Public Information Officer Erin Tremblay, Public and Environmental Management Specialist Sarah Eure, Environmental Data Analyst Michael Rich, Information Technology Specialist Donna S. Pope, Clerk to the Board Attorney Present: Linda A. Miles, the Miles Firm, PLLC George House and Joseph Ponzi, Brooks, Pierce law firm Guest: Jessica Cannon, City appointee to Board The Cape Fear Public Utility Authority held a retreat on Tuesday, February 26, 2019, at Halyburton Park in Wilmington, North Carolina. Mr. Norris called the meeting to order at 9:00 AM with all Board members present. Mr. Norris welcomed Dr. Cannon to the meeting. Dr. Cannon will take her oath at the March 13 CFPUA meeting. closed session at approximately 11:00 AM. Several items were presented for discussion, as follows: SURPLUS REAL PROPERTY DISPOSAL Mr. Styers presented the item. CFPUA owns many properties, some of which was formerly part of the City or County utilities. As well sites and pump stations have been integrated into have gone out of service. Much of the property is retained for potential future use, but some property may not be needed and may be declared surplus by the Board. CFPUA has a policy for surplus real property, approved by the Board in 2016. There are several options for the sale of surplus property. With a shortage of affordable housing in the area, New Hanover County has implemented a policy to develop workforce housing in conjunction with non-profit organizations. Staff recommended that the Board allow the no-cost sale or transfer to the County to facilitate the creation of affordable housing. Ms. Miles and Messrs. Flechtner and Styers answered questions from Board members regarding the amount of property which might be declared surplus and the general statutes properties be shared with the Board. HURRICANE FLORENCE REPORT Mr. Hatcher presented the item. Following the hurricane, staff reviewed and evaluated and areas that could be improved. Mr. Hatcher explained the National Incident Management System (NIMS), which is used nationwide and provides a proven standard format and hierarchy for emergency management response and communication. Only three customers lost water service due to the storm when a water main broke in the Middle Sound Area. Utility functions were maintained throughout the storm and in its aftermath. Mr. Hatcher reviewed the fuel supply concerns that arose following the hurricane. CFPUA had a contract in place for emergency fuel for its generators. The supplier was unable to transport the fuel to CFPUA. A fuel source was identified in the Triangle area, but DOT closed roads and shut down travel to the Wilmington area. Staff issued a press release to alert customers of the potential of losing water service. Working with local partners and with regional and state agencies, CFPUA was able to obtain the fuel needed to keep generators working, and water service was not interrupted. - Staff has developed a plan and contracts to ensure that emergency fuel supplies will be in place prior to a future storm. Other items identified for improvement were generator exhaust fumes, customer notification, and provisions for essential employees. Plans are being developed to address the concerns brought forth by the Hurricane Florence emergency. Messrs. Flechtner and Hatcher answered clarification questions from the Board. FINANCIAL POLICY UPDATE Mr. McLean presented the item. Beginning in 2016, CFPUA reviewed its financial policies. The Board approved revisions to ensure continued service and provide pay-go funding of capital projects so -go funding was set at $18 million annually. Revenues are projected to meet that goal without an FY2020 rate increase to cover additional pay-go funding. are at or near the recommended $50 million. transmission expansion in partnership with Lower Cape Fear Water & Sewer Authority and Brunswick County. The rate increase associated with bonds for the Sweeney project is estimated at one percent annually, or $4.91/monthly for the average residential account. Monies received from any settlement with Chemours would be placed in trust to pay the debt service until the bonds can be called in ten years. INVESTMENT MANAGEMENT PROGRAM Mr. McLean provided an overview of investment performance. He recommended no changes rent investment strategies. Messrs. McLean and Vandermeyden answered clarification questions from the Board regarding capital funding. RATE AFFORDABILITY increasing concern across the country because of aging infrastructure. The 2017 median income for the New Hanover County/Wilmington area was $51,457. The EPA benchmark for rate affordability is less than 4.5 percent of the median household income. Standard benchmark for CFPUA is to remain below 1.8 percent of the median household income. Our current rates are at 1.46 percent of the median household income, and CFPUA rates are lower than the North Carolina median. Ms. Hallock answered Board questions regarding rate affordability. Between 20-25 percent of customers fall below the median household income. Ms. Hallock reported that CFPUA Assist is working to obtain 501(c)(3) status as a non-profit agency. Being a non-profit would open additional funding sources for CFPUA Assist. CFPUA offers flexible payment plans to help customers avoid utility shut-off. Ms. Hallock answered Board member questions regarding CFPUA Assist and payment plans. In 2018, 240 payment plans were provided to customers. The new enterprise software should offer the ability to provide monthly billing, bill round-up, and bill leveling as a tool to help customers budget accurately for utilities. Ms. Irick reported that the enterprise software should be in operation by January 2020. SWEENEY WATER TREATMENT PLANT ENHANCEMENTS Mr. Flechtner introduced the item. Following approval of a Resolution to fund the project, the bond process should begin in June, with sale of bonds in fall 2019. Mr. Vandermeyden t term and long-term plans to address PFAS treatment. The interim strategy includes a two-phase replacement of the 14 granular activated carbon filters already in use at the Sweeney plant. The existing filters are shallow with a limited capacity to remove PFAS. Half of the filters have been replaced, and the other half will be replaced by April. The long-term strategy for PFAS treatment and reduction is for enhanced treatment at the Sweeney surface water plant. The project should be designed and permitted by the end of FY2019 in -out capacity of 44 million gallons per day. It will house eight GAC filters with 12.5-feet-deep GAC media in each, approximately 3,000,000 pounds of granular activated carbon filter media. The estimated cost is $46 million, including engineering and construction costs, with estimated operating costs of $2.9 million annually. If the Board approves construction under the current schedule, the plant should be fully functional by March 2022. Construction costs are in the recommended capital budget for the fiscal year beginning July 1, 2019. Funding would be from revenue bonds and some use of capital reserves. CFPUA has applied for grant funding from the State of North Carolina, with a decision pending in March. The action in U.S. District Court against Chemours and DuPont is ongoing. Messrs. Vandermeyden and Flechtner answered questions from Board members regarding granular activated carbon filter use, PFAS concentrations, and desorption. Mr. Vandermeyden reported on states that have enacted the most rigorous standards for PFAS levels and reduction. CLOSED SESSION b/ 59v ǝ͵ /ŷĻƒƚǒƩƭ. Mr. Rivenbark seconded the motion, and it passed unanimously. The Board entered closed session at 11:00 AM with Ms. Miles, Messrs. Flechtner, House, and Ponzi and Ms. Pope present. The Board received a report from legal counsel. Mr. Norris was excused at 11:45 AM, and Mr. Corder presided for the rest of the meeting. Ms. Kusek was excused at 12 noon. Following the legal report and discussion, Ms. Adams moved to return to open session. Mr. Rivenbark seconded the motion, and it passed unanimously. The Board returned to open session at 12:15 PM. Mr. Flechtner recommended that the remaining two items on the Retreat Agenda be brought to the Board through the Finance Committee. Board members agreed. Ms. Adams moved to adjourn. Mr. Sneeden seconded the motion, and it passed unanimously. The meeting adjourned at 12:16 PM. Respectfully submitted, Donna S. Pope Clerk to the Board