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2022-04-13 Regular Meeting Minutes CAPE FEAR PUBLIC UTILITY AUTHORITY AUTHORITY BOARD MINUTES APRIL 13, 2022 Lucie Harrell Conference Room Regular Meeting 9:00 AM 230 GOVERNMENT CENTER DRIVE WILMINGTON, NC 28403 I. CALL TO ORDER Mr. Corder called the meeting to order at 9:00 AM with a quorum present. Mr. Rivenbark moved to excuse Messrs. Barfield, Briggs, Sneeden, and Waddell. Mr. Norris seconded the motion, and it passed unanimously. II. DETERMINATION OF A QUORUM Attendee Name Organization Title Status Arrived Wesley Corder Cape Fear Public Utility Chair Present Authority William Norris Cape Fear Public Utility Vice-Chair Present Authority Deans Hackney Cape Fear Public Utility Secretary Present Authority Jennifer Adams Cape Fear Public Utility Treasurer Present Authority Jessica Cannon Cape Fear Public Utility Present Authority Hollis Briggs Cape Fear Public Utility Excused Authority Larry Sneeden Cape Fear Public Utility Excused Authority Jonathan Barfield Cape Fear Public Utility Excused Authority Charlie Rivenbark Cape Fear Public Utility Present Authority Luke Waddell Cape Fear Public Utility Excused Authority Rob Zapple Cape Fear Public Utility Present Authority Kenneth Waldroup Cape Fear Public Utility Executive Director Present Authority Linda Miles Miles Firm, PLLC CFPUA Consulting Attorney Present Frank Styers Cape Fear Public Utility Deputy Executive Director Present Cape Fear Public Utility Authority Page 1 MinutesAuthority BoardApril 13, 2022 Authority Carel Cape Fear Public Utility Deputy Executive Director Present Vandermeyden Authority John McLean Cape Fear Public Utility Chief Financial Officer Present Authority Beth Eckert Cape Fear Public Utility Director of EMD Present Authority Kristine Irick Cape Fear Public Utility Customer Service Director Present Authority Lori McKoy Cape Fear Public Utility Human Resources Director Present Authority Vaughn Hagerty Cape Fear Public Utility Public Information Officer Present Authority Cord Ellison Cape Fear Public Utility Chief Information Officer Present Authority Elizabeth Severt Cape Fear Public Utility Strategy & Performance Manager Present Authority Cammie Bellamy Cape Fear Public Utility Assistant PIO Present Authority Kathryn Pohlman Cape Fear Public Utility Assistant Director of EMD and Present Authority Sustainability Sara Eskew Cape Fear Public Utility Administrative Support Specialist Present Authority Judy Lawton Cape Fear Public Utility Executive Assistant Present Authority Donna S. Pope Cape Fear Public Utility Clerk/Executive Secretary to the Present Authority Board III. ADOPTION OF AGENDA Mr. Waldroup reported that there were two walk-in items, a resolution required by the state accepting the $30 million in special appropriations for work in the northern area of the county and a resolution recognizing Water WEek. Mr. Zapple moved to adopt the agenda as revised. Mr. Norris seconded the motion, and it passed unanimously. IV. APPROVAL OF MINUTES 1. Authority Board - Regular Meeting - Mar 9, 2022 9:00 AM RESULT: ACCEPTED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Jennifer Adams, Treasurer AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell V. PUBLIC COMMENTS - 4 MINUTE LIMIT PER SPEAKER Cape Fear Public Utility Authority Page 2 MinutesAuthority BoardApril 13, 2022 There were no public speakers. VI. PUBLIC HEARING AND ADOPTION OF FY23 SDCS 1. Proposed FY23 System Development Charges Mr. Corder opened the public hearing. Mr. McLean presented the recommended FY2023 System Development Charges of $2,230 for water and $2,160 for sewer. The hearing was properly advertised, and the rate calculation was posted on the website for 45 days, as required by statute. There were no public speakers regarding SDCs, and Mr. Norris moved to close the hearing. Mr. Rivenbark seconded the motion, and it passed unanimously. Mr. Rivenbark moved to adopt the FY2023 System Development Charges, as developed and recommended by staff. Ms. Adams seconded the motion, and it passed unanimously. RESULT: REVIEWED VII. CONSENT AGENDA 1. Contract Renewal with Hazen and Sawyer for On-Call Hydraulic Modeling and Water Quality Professional Services RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 2. Engineering Services Amendment #3 for Rehabilitation and Replacement of Gravity Sanitary Sewer in Downtown Area RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 3. Elkmont Well Rehabilitation Project Cape Fear Public Utility Authority Page 3 MinutesAuthority BoardApril 13, 2022 RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 4. Resolutions Authorizing Grant and Loan Applications for Various Water and Wastewater Projects RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 5. Inter-Local Agreement with the City of Wilmington for the College Acres Drive and Clear Run Branch Drainage Improvements and Stream Restoration Phase 1 Project RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 6. Resolution - Sale of 2015 Kenworth T440 Vactor Truck RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 7. $817,675 Engineering Contract Award to McKim and Creed for the Northern New Hanover County Pump Stations and Force Mains Project, Part A RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 8. $1,535,750 Engineering Contract Award to Carollo for the Northern New Hanover County Regional Pump Stations and Force Mains Project, Part B Cape Fear Public Utility Authority Page 4 MinutesAuthority BoardApril 13, 2022 RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 9. $48,750 Contract Amendment #15 with McKim & Creed Inc for Walnut Street Pump Station Project RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 10. $772,633 Carolina Civilworks, Inc. Change Order #1 for Emergency Construction Services RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 11. $1,322,012 Evoqua Water Technologies, LLC Amendment # 4 for Odor & Corrosion Control RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 12. Resolution in support of a North Carolina General Assembly special appropriation for the Lower Cape Fear Water and Sewer Authority RESULT: APPROVED \[UNANIMOUS\] MOVER: William Norris, Vice-Chair SECONDER: Charlie Rivenbark, CFPUA Board Member AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell VIII. NEW BUSINESS Cape Fear Public Utility Authority Page 5 MinutesAuthority BoardApril 13, 2022 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. Vandermeyden presented a Resolution accepting $30 million in special appropriations from the North Carolina General Assembly. Mr. Norris moved to adopt the Resolution. Mr. Hackney seconded the motion, and it passed unanimously. Mr. Waldroup a Resolution recognizing May 1 - May 7 as 2022 Water Week. Mr. Rivenbark moved to adopt the Resolution. Mr. Norris seconded the motion, and it passed unanimously. 1. Key Indicators Report Mr. Waldroup answered questions regarding employee turnover in the water treatment division. RESULT: REVIEWED 2. Environmental Report RESULT: REVIEWED 3. Safety Report RESULT: REVIEWED 4. Quarterly CIP Report RESULT: REVIEWED B. Committee Reports i. Executive Committee 1. Executive Committee - Regular - Apr 6, 2022 10:00 AM Dr. Cannon reminded the Board that it approved a Resolution in June 2021 to work on expanding affordability options for customers. She asked how Board and staff can facilitate that process. Mr. Waldroup reported that he would like to bring a portfolio of options through the Executive and Sustainability Cape Fear Public Utility Authority Page 6 MinutesAuthority BoardApril 13, 2022 Committees following the adoption of the FY23 budget. Mr. Corder added that the Executive Committee advocated reaching out to other utilities to see what their affordability goals and initiatives may be. Dr. Cannon agreed with that position. Mr. Waldroup reported that there is support for permanent funding of LIWHAP (Low Income Water Housing Assistance Program). He will be visiting Washington, D.C. with other utility representatives in support of LIWHAP funding and will work with our area's Federal delegation to identify and address water and sewer utility needs. He will work with the Board to develop action plans on the state legislative level. Board members discussed NCGS 162(A) and its direction that water-sewer utilities be run as enterprise funds. They discussed the funding options available to cities and counties that are not available to authorities such as CFPUA. Mr. Waldroup reported that the City of Wilmington and New Hanover County have each agreed to increase their WaterWay contributions from $10,000 annually to $50,000 annually. Those funds are administered through DHHS. Mr. Zapple added that he had expected the County's $500,000 contribution from ARPA funds to continue to assist CFPUA customers, but that the City and County had ended the $1,000,000 funding for customer assistance. RESULT: NO ACTION REQUIRED ii. Finance Committee 1. Finance Committee - Regular Meeting - Apr 6, 2022 9:00 AM RESULT: NO ACTION REQUIRED 2. Monthly Financials Mr. McLean presented the monthly financial data. March 31 marked 75 percent of the fiscal year complete, and revenues were at 79 percent of budget. February 28 marked 67 percent of the fiscal year complete, and expenditures were at 68.5 percent of budget. The unrestricted fund balance is $70 million. Staff anticipates that the balance of the pay-go capital reserve will be spent by the end of the fiscal year. Cape Fear Public Utility Authority Page 7 MinutesAuthority BoardApril 13, 2022 RESULT: REVIEWED 3. Ordinance Appropriating Funds for a Consolidation Study, a Rate Study and an Economic Impact Study Mr. Waldroup presented the item and recapped the methodologies used to develop a consolidation and unique characteristics of the potential consolidation. Mr. Zapple stated that CFPUA's existing customers should be protected from any rate increase related to a consolidation with Wrightsville Beach. Mr. Waldroup answered questions about the cost of providing bulk water to the town. Following discussion, Ms. Adams moved the item. Mr. Hackney seconded the motion, and it passed unanimously. RESULT: APPROVED \[UNANIMOUS\] MOVER: Jennifer Adams, Treasurer SECONDER: Deans Hackney, Secretary AYES: Corder, Norris, Hackney, Adams, Cannon, Rivenbark, Zapple EXCUSED: Briggs, Sneeden, Barfield, Waddell 4. FY 23 Preliminary Operating Budget Mr. McLean presented an overview of the recommended budget for the fiscal year beginning July 1, 2022. The budget is $103,214,759, an increase of $11.1 over the current budget. With the Sweeney improvements going into use, optimal removal of PFAS to a level of under 10 parts per trillion will add $3.7 million to the budget. The recommended budget includes 13.5 percent increases in salaries and benefits. There are step and range adjustments, and four new positions are included in the budget. A Diversity, Equity, and Inclusion Officer is recommended, to be funded at a future date. The budget includes cost-of-living adjustments of 10, 8, and 5 percent, tiered so that 216 employees in positions with the lowest salaries will receive 10 percent, 50, employees with receive 8 percent, and 68 employees will receive 5 percent. The COLA increases are tired so that divisions with the highest turnover related to salaries will receive a higher percentage of compensation. No merit increases are included in the FY23 budget. Cape Fear Public Utility Authority Page 8 MinutesAuthority BoardApril 13, 2022 CFPUA has not raised rates since 2019. Mr. McLean presented three options for rate adjustments that would cover the recommended budget, including optimal PFAS removal. They were: 1. A "just in time" increase for FY23 of 13 percent. This option would capture all increases in FY23; 2. A two-year "smoothing" with 8 percent increases in FY23 and FY24. This option would include using $4.2 million in fund balance and borrowing $2.5 million to maintain the an unrestricted fund balance of $50 million; and 3. A three-year "smoothing" with 7 percent increases in FY23, FY24, and FY25. This option would include the use of $7.2 million in fund balance and borrowing $2.5 million. Mr. McLean spoke to the advantages and disadvantages of each option. He reported that staff recommends the second option of two-year rate smoothing at 8 percent for FY23 and FY24. The average bill would increase approximately $5.00 per month for FY23. CFPUA still compares favorably to its regional peers, using peer data for FY22. Staff does not have projected rate increases for peer utilities for FY23, but staff anticipates CFPUA will continue to compare favorably to other utilities in the area and state. Mr. McLean reported that CFPUA must maintain a debt coverage of 1.6. Rating agencies Standard & Poors and Moody's review CFPUA's finances prior to any issuance of bonds. Mr. McLean speaks with rating agency representatives annually. CFPUA carries an AAA rating. Mr. McLean answered questions from Board members regarding rate scenarios. The Board discussed implementing moderate, incremental rate increase annually instead of "as-needed" increases. Staff answered questions regarding, projected growth in the system, recommended COLA increases for employees and the unfunded Diversity, Equity, and Inclusion position. Mr. McLean reviewed the budget calendar. He requested that Board members provided him and Mr. Waldroup with budget notes and questions by April 20. The final recommended budget will go to the Finance Committee at its May 4 meeting. The FY23 Capital Improvement Plan will be presented for adoption at Cape Fear Public Utility Authority Page 9 MinutesAuthority BoardApril 13, 2022 the May 11 meeting. Staff will schedule a the budget hearing for the May 11 meeting, and the Board can adopt the budget in May or June. RESULT: NO ACTION REQUIRED Next: 5/11/2022 9:00 AM iii. Sustainability Committee 1. Sustainability Committee - Regular - Mar 31, 2022 12:30 PM Dr. Cannon reported that the Committee met on March 31 and met Ms. Pohlman, who provided an update on sustainability and resiliency initiatives at CFPUA. RESULT: NO ACTION REQUIRED 2. Sustainability Overview RESULT: REVIEWED iv. Human Resources Committee 1. Human Resources Committee - Regular - Mar 14, 2022 2:00 PM Mr. Hackney reported that the Committee met on March 14 and reviewed and approved the compensation recommendations that were included in the FY23 budget. RESULT: NO ACTION REQUIRED 2. Compensation recommendations for FY2023 RESULT: NO ACTION REQUIRED IX. OLD BUSINESS There was no old business. X. AUTHORITY Q & A/CLOSING COMMENTS Mr. Rivenbark complimented staff on the television spots highlighting the Sweeney treatment enhancements. XI. ADJOURNMENT Cape Fear Public Utility Authority Page 10 MinutesAuthority BoardApril 13, 2022 There was no further business to come before the Authority, and Mr. Norris moved to adjourn. Mr. Hackney seconded the motion, and it passed unanimously. The meeting adjourned at 10:40 AM. The next regular CFPUA meeting will be Wednesday, May 11, 2022. The Board will meet in the Lucie Harrell Conference Room, New Hanover County Administration Building, 230 Government Center Drive, Wilmington, North Carolina. Respectfully submitted, Donna S. Pope Clerk to the Board Cape Fear Public Utility Authority Page 11