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HomeMy WebLinkAbout2006-05-16 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT (APACHE JUNCTION WATER COMPANY) CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING MAY 16, 2006 The regular meeting of the District Board of the Water Utilities Community Facilities District (Apache Junction Water Company), City of Apache Junction, Arizona, was held on May 16, 2006, at the Apache Junction City Council Chambers pursuant to the notice required by law. CALL TO ORDER Chairperson Coleman called the meeting to order at 6:00 p.m. ROLL CALL Board Members Present:Chairperson Douglas Coleman Vice Chairperson R. E. Eck, Jr. Mr. Rick Dietz Mr. John Insalaco Mr. Joseph Severs Mr. Kris Sippel Mr. Dave Waldron Staff Present:George Hoffman, District Manager Kathleen Connelly, District Clerk Brian Hall, District Operations Manager John White, District Finance Manager Doug Dobson, District Utility Director Others Present:Assistant City Manager.Bryant Powell APPROVAL OF MINUTES OF MARCH 21, 2006 AND APRIL 4, 2006 ) Mr. Dietz MOVED THAT THE MINUTES OF .MARCH 21; 2006 AND APRIL 4, 2006, BE APPROVED. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 1 of 16 Mr. Waldron SECONDED THE MOTION. VOTE:Unanimous. The motion carried. AWARD OF BID FOR PURCHASE OF BULK CHEMICALS )District Operations Manager Brian Hall briefed the board on the item.He stated they have generally used chlorine in the past to treat the wells.The district is moving into the business of treating for arsenic with a more sophisticated treatment facility and there are 4 or 5 different chemicals in considerably larger quantities needed over a year's time.As required by law the district advertised for bids for chemicals.Two or three bidders contacted him but only one submitted a bid.The district had originally been purchasing the chemicals from Hill Brothers, the sole bidder.They are still working out the process and are not sure how much of each chemical will be needed to balance the process, but it will be substantial.He recommended the contract be through December 31, 2006, and that it be renewable mid -year so that they can get an idea ahead of time what the next year's prices will be as it is renewed each year. Mr. Dietz asked what the cost is. District Operations Manager Brian Hall stated it is a cost per gallon as they are not certain of the quantities.They gave Hill Brothers an estimated quantity on each chemical.By doing so, they were giving potential bidders an idea on the opportunity for selling those chemicals on an annual basis.They were hoping to get a better price. Chairperson Coleman closed the discussion with no further comments and called for a motion. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 2 of 16 Mr. Waldron MOVED THAT THE AWARD OF BID FOR WD 2006-01, BULK CHEMICALS, BE AWARDED TO HILL BROTHERS CHEMICAL CO. FOR THE CHEMICALS AND ESTIMATED QUANTITIES AS SPECIFIED IN THEIR BID PROPOSAL OPENED AND RECEIVED ON APRIL 19, 2006 AND THAT AUTHORIZATION BE GIVEN FOR THE BOARD CHAIRMAN TO SIGN THE AGREEMENT. Mr. Sippel SECONDED THE MOTION. VOTE:Unanimous. The motion carried. APPROVAL AND RATIFICATION OF THE TRANSFER OF FUNDS FROM THE CAPITAL FACILITIES FEES AND CAPITAL REPLACEMENT ACCOUNTS TO COVER COSTS RELATED TO WELL #5 AND REPLACEMENT OF THE WATER SUPPLY )District Finance Manager John White briefed the board on the item.He stated the district had in excess of $2 million in the bank at the beginning of the year.It has been segregated out into different pools.They had about $1.9 million in Capital Facilities Fees, which is basically for infrastructure expansion.There was another $300,000 for Capital Replacement. The district has $500,000 to $600,000 in unrestricted, undesignated funds.The costs of replacing the water from Well #6, principally through the use of the treatment plant at the Central Arizona Project canal, have not amounted to more than $1 million.Money must be taken from somewhere to cover it.He requested the board authorize the use of a transfer of $400,000 from the Capital Facilities Fees to the unrestricted monies to cover this emergency.It would be replenished over time. Mr. Sippel asked how much longer they would be using the water from the treatment plant. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 3 of 16 District Finance Manager John White stated the operations manager will attempt to address that during his report. Vice Chairperson Eck asked when the arsenic treatment plant was approved for the Central Arizona Project water. District Finance Manager John White stated it was started in January. Mr. Dietz asked if that is when the district went down at the beginning of the year. District Finance Manager John White stated it was approved in December according to Brian Hall. Mr. Dietz commented that was because the district could not get water from Arizona Water and from Mesa. District Finance Manager John White stated that is correct. Mr. Dietz commented that was because they were shutting down to do something for that particular period. District Finance Manager John White stated that is correct.They have been able to purchase regional water from Arizona Water.Since Well #5 has collapsed, they have purchased about $327,000 from Arizona Water in addition to the monies paid for the treatment plant.The aggregate amount is about $1 million through April and he is projecting probably another $120,000 through the end of May. Mr. Dietz asked what they were paying Arizona Water. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 4 of 16 District Finance Manager John White stated it has ranged from $25,000 in the most recent months to as high as $70,000. Mr. Dietz asked what the cost was per 1,000 gallons. District Operations Manager Brian Hall stated they have a graduated rate.The more you use, the more expensive per thousand it is.The district paid the full retail price; the worst bill he saw figured out to $3.44 per thousand; it is extremely cheap compared to what they are paying through the temporary treatment plant. Mr. Dietz asked if that would compare to being hooked up with Mesa and getting pure, potable, ready -to -drink water. District Operations Manager Brian Hall stated part of the problem was Mesa's treatment plant was scheduled to be down for January and February.It was still down in March and some of April. Mr. Dietz commented he was just trying to get through the cost comparison and where we are with the permanent tie-in. District Operations Manager Brian Hall stated the permanent tie-in with Mesa will have operating costs considerably more reasonable than even the three-way wheeling costs that they have now.There will be capital expenses, though.He does not have the contract with him; it is a set amount.The contract was completed recently and has a set amount per month to cover overhead.It is figured at 600 gallons a minute for about $9,800 a month whether the water is taken or not.It is figured at $250 per million gallons. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 5 of 16 Mr. Dietz asked if the contract had been located.At the March meeting they were still looking for it. District Operations Manager Brian Hall stated the contract is final and he got a copy of it. Mr. Dietz asked if they would be doing this.It appeared they would be using the Capital Facilities Plan for this at a cost for the hook-up of about $1.5 million. District Operations Manager Brian Hall stated it would be $1.7 million. Mr. Dietz commented they are now asking them to dip into the Capital Facilities funds for this and he does not like it.The money was set aside for future projects to help them get the secured water that they need for south of the city, which is now starting to move.If they are dipping $400,000 into that, it will drop them even further.He asked where they would get the money to get the Mesa Interconnect to get the cheaper water. District Operations Manager Brian Hall stated the $1.7 million figure was two years old.He believes it is probably more like $2.7 million now.He understands from Doug Dobson that there is a meeting being set up with the district manager to discuss the issues. Mr. Dietz commented this has been in the works for 5 years and we have gotten nowhere.They keep having meetings and they are not getting anywhere.It is irritating. Vice Chairperson Eck commented they had approved $660,000 or $670,000 for that interconnect 5 years ago. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 6 of 16 District Operations Manager Brian Hall stated that was before he was here. Vice Chairperson Eck commented it has nothing to do with Brian.It is an ongoing issue. District Operations Manager Brian Hall stated he feels their frustration because he is there, too.Part of it was waiting a couple of extra years to work out an agreement with the hope of using it for an assured water supply.They still do not have the assurance from Arizona Department of Water Resources.The new council decided to move ahead with the contract whether or not it would be counted as an assured water supply. Mr. Dietz commented the , district needs it regardless. District Operations Manager Brian Hall stated sooner or later they would need the water. Even with an attorney that was hard after it, it took another eight months.He does not know what the answer is. Chairperson Coleman closed the discussion with no further comments and called for a motion. Mr. Waldron MOVED THAT APPROVAL AND RATIFICATION BE GIVEN FOR THE TRANSFER OF FUNDS FROM THE CAPITAL FACILITIES FEES AND CAPITAL REPLACEMENT ACCOUNTS IN THE AMOUNT OF $400,000 TO COVER COSTS RELATED TO WELL #5 AND REPLACEMENT OF WATER SUPPLY. Mr. Dietz SECONDED THE MOTION. The vote was interrupted by Mr. Dietz.He asked where they would get the funds to take care of this if it was not approved. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 7 of 16 District Finance Manager John White stated he did not know. Mr. Sippel stated that was not a sufficient answer.They should know and have a Plan B. He came in here assuming this would happen. District Manager George Hoffman commented they could raise rates. There was general discussion about pulling the motion. District Finance Manager John White stated they would probably have to renege on the contract with Central Arizona Project for water recharge.That would probably be the most immediate effect. District Manager George Hoffman stated this amounts to eating our seed corn and it is not a good plan.He asked if they would like for them to go back and come up with a Plan B.He shares the assessment of the district finance manager, and he has no idea what that might be. Chairperson Coleman stated he hit it right on the head.He asked what are the options other than to raise rates.The revenue has to come from somewhere. District Manager George Hoffman commented they have resisted that for some time but it is tough when they have to buy water for more than they can sell it.They have certainly been doing that with the temporary Central Arizona Project facility.He asked if they are also doing that with Arizona Water. District Operations Manager Brian Hall stated the temporary Central Arizona Project facility has worked out to about $7 per thousand to operate.The situation there was a number of unforeseen events.They knew they had to replace Well #5, which was scheduled for after the Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 8 of 16 arsenic treatment plant was completed and Well #5 collapsed at the end of September Mesa was going to shut down their Central for 2 months. January and February. Well #8 was on line. .At the same time, Arizona Project plant Mr. Dietz commented that was District Operations Manager Brian Hall stated it was scheduled for January and February. Mr. Dietz commented we are now in May. District Operations Manager Brian Hall commented they came back on line in April.The problem with all of it coming together is that even if the district could turn to Arizona Water and ask to buy some more of the retail water at $3.44 per thousand gallons, which is a wash by the time it is repumped, all of their Central Arizona Project water goes through the Mesa plant for this area.They did not have any extra water to deliver to the district.That is when staff started scrambling and recommended to the board that we put together quickly a temporary treatment plant so the customers would have water at the tap.That was supposed to last only two months until a well was back on line.He will explain everything else that has happened when he gets to his report. District Manager George Hoffman asked him to do that now. Vice Chairperson Eck asked how much they are paying for a thousand gallons of water. District Clerk Kathleen Connelly reminded them they have a motion and a second on the floor. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 9 of 16 District Manager George Hoffman asked if it would be appropriate to withdraw the motion and second, and if it would be alright to come back in 2 weeks if they do not need the money during that time. District Finance Manager John White stated they have a Central Arizona Project payment of $235,000 that is due at the end ofthis week.They also have a payment for the rental of the temporary treatment plant that is due at the end of the month. Mr. Insalaco asked what they would do next month. Mr. Sippel commented -they knew this was happening and time lines have been extended.He has a feeling that they went under the .assumption that they would just bring -it to them-, it -would:be approved and they. would move on.He believes that was the thought process.They now have bills -that -have to be paid and'it might not get approved,- and thereA.s.no Plan B. District Operations -Manager Brian Hall stated the option was not to have water for their customers. Mr. Sippel stated he understood that, District Operations Manager Brian Hall stated that is what they were looking at.They had reached .a point where the taps would run dry. Mr. Sippel asked when they knew this -could happen.If they had imown a month ago, they would have had Another month to bring this to -the board:for. discussion. District Operations Manager Brian Hall asked if he was- talking about the transfer -of funds. Water Utilities Community Facilities District Meeting Minutes of May 16, .2006 Page 10 of 16 Mr. Sippel stated he was.He asked why it is being brought to them now when a payment has to be made in 2 weeks. :Mr. Dietz asked what is going to happen next month, and if they are going to come back next month to ask for another $400,000 and deplete the remainder of the Capital Facilities fund.He asked where the funds would be coming:from-next month. Vice Chairperson Eck commented his frustration stems from feeling that they have to be able to run their own water company.They are getting farther and farther away from that and they have not accomplished that.He does not know why they have not pursued that tie-in because he looks at that as the district's savior for the amount of water they need. Mr. Dietz commented it is; that was the whole purpose of the tie-in. Vice Chairperson -Eck- commented -it _is just not happening.He does not feel like they are pushing hard enough to make: that happen.However, if they are not:going to have money from -anywhere else, he will rescind his vote to make this pass so they can pay this-.He is very frustrated as they have got to be able to run their:own:water - company. Mr. Dietz commented he did not like -it . at -all. Vice Chairperson Eck commented the first questionrthemayor of Mesa: asked himiwhen he pointecLdown south was how they :are going, to provide water to all the area.:He had stated they are Mt. Dietz commented the_ district cannot do anything.They -do not have half:the -funds tO hook up -with Mesa now. Water Utilities Community Facilities District Meeting Minutes c.f.May 16, 2006 Page 11.of 16. He asked again where the money is going to come from, as they have to have that.He asked if they were going to drill another dry well down by Guadalupe or Elliott.The interconnect is our future and they have to have the infrastructure, the water and the sewer for their success.The district is not getting there; it is not anywhere near there and they are pushing hard in all the other areas with staff to make the south part of this city grow, but the district is really lacking there big time.He commented he would vote yes, but he will not do so again. Vice Chairperson Eck stated he would rescind his vote and vote yes. VOTE:5-2 (Mr. Insalaco and Mr. Sippel voted in opposition.) The motion carried. DISTRICT OPERATIONS MANAGER REPORT District Operations Manager Brian Hall stated the arsenic treatment facility is going through another pilot process.The media that was tested originally did not work in the full scale process.They, are still in a good position with Arizona Department of Environmental Quality with where they are at. They are under the new standard of 50 so they are not required to report until either the end of the calendar year or the average of four quarterly samples in 2007.They have time to work through this. Mr. Dietz asked where they are right now. District Operations Manager Brian Hall stated they are piloting a new media with a different supplier. Mr. Dietz commented he wanted to know what their arsenic level is right now. District Operations Manager Brian Hall stated it is around 30. The new media worked well for 50 hours and then it took a jump. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 12 of 16 They have adjusted the pH to an extremely low level which the original media would not allow them to do.The pH is taken down to about 5.6, the arsenic is taken out, and then they have to readjust the pH back up so that they do not strip the pipes.It appears to be working.They are taking samples daily to send to the lab.Under the contract, the general contractor would like some proof over a period of time that it will work before they spend $90,000 to change the media out.Under the current regulations, they can still use the water coming out of the well.He stated Well #5 has been put back together and they have applied to Arizona Department of Environmental Quality for source water for that well.They have not heard from them to date.In the meantime, a new set of bowls and impellers ate themselves.They were adjusted incorrectly by the pump company and so the well has now been put back together again at the expense of the pump company.As of yesterday it was running fine but it quit again for some unknown reason this morning.It is now running again.Last Thursday he spoke with Joan Card, the water quality division director of Arizona Department of Environmental Quality, and expressed to her his concern financially with running that temporary treatment plant while they are waiting for them to approve this well.He did not tell her the well had been down.He called her office again this morning to remind her she had told him she would look into getting approval for that Monday morning.He will call her every day until she calls him back.The construction of Well #8 is fairly insignificant.The conduit is in that was required by Salt River Project to bring power to the well.Next week they should be able to put a meter in.It also needs source water approval but they will not start that at Arizona Department of Environmental Quality.He hopes the catastrophes are behind the district by the time that well comes on line.They were hoping that as soon as Well #5 was on line and working they could send the temporary treatment plant away.As soon as they have Arizona Department of Environmental Quality approval and if the well stays up and running, they will send it away.The well will replace the water they are taking from the temporary treatment plant. Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 13 of 16 Mr. Severs commented the pump company fixed it at their expense and it is down again. District Operations Manager Brian Hall stated they fixed it at their expense and it went down again this morning.They worked on it and restarted it and they cannot find the reason it went down.It could have been a spike in a Salt River Project power line or something else.He knows their frustration and it is not all financial, but he feels a financial part, too.There have been a bunch of unusual circumstances.There was no money budgeted for the temporary treatment plant, but at the time they set it up there was no other water available. Mr. Severs asked if there were any chances of recouping some more money from the pump company from the time that the well was down and we had to purchase water somewhere else or that we had to get it from the temporary plant. District Operations Manager Brian Hall stated he will take it up with district counsel but he guessed it would be pretty minimal. They did not have a long written contract.It was a purchase order to come in and put the pump in the hole.They could also use the excuse that it could not have been run anyway without Arizona Department of Environmental Quality approval. DISTRICT MANAGER REPORT None. DISTRICT TREASURER REPORT District Finance Manager John White stated he had distributed the district treasurer report for April, along with the detailed costs for the replacement water on Well #5 and a detail on the capital costs year-to-date. Mr. Insalaco remarked that this will hopefully be over with after this or next month.He asked where the money would come from if this goes on into July or August.They have to think of Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 14 of 16 the worst case scenario.He asked what they would do once the money is depleted and there is no pocket to pick from. Mr. Severs asked if they need to consider raising the rates. Chairperson Coleman stated that is not on the agenda. DISTRICT COUNSEL REPORT None. ADJOURNMENT )Chairperson Coleman adjourned the meeting at 6:34 p.m. ACCEPTED THIS 6TH DAY OF JUNE , 2006, BY THE CHAIRPERSON AND DISTRICT BOARD OF THE WATER UTILITIES COMMUNITY FACILITIES DISTRICT (APACHE JUNCTION WATER COMPANY), CITY OF APACHE JUNCTION, ARIZONA. SIGNED AND ATTESTED TO THIS 6TH 2006. ATTEST: Kathleen Connelly District Clerk DAY OF JUNE ( 7141 /44414 4 /1^et / Douglas oleman Chairperson Water.Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 15 of 16 WATER UTILITIES COMMUNITY FACILITIES DISTRICT MINUTES CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular meeting of the Water Utilities Community Facilities District of the City of Apache Junction, Arizona, held on the 16th day of May, 2006.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 19th day of May, 2006. Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of May 16, 2006 Page 16 of 16