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HomeMy WebLinkAbout2006-09-05 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT (APACHE JUNCTION WATER COMPANY) CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING SEPTEMBER 5, 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 September 5, 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 5:30 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 (arrived 5:35 p.m.) Mr. Kris Sippel (arrived 5:45 p.m.) Mr. Dave Waldron Staff Present:George Hoffman, District Manager Kathleen Connelly, District Clerk Giao Pham, District Engineer John White, District Finance Manager Doug Dobson, Utility Director Kay Bigelow, District Counsel Others Present:Assistant to the City Mgr. Ruth Giese Trisha Cook (Stantech) MOTION FOR EXECUTIVE SESSION )Mr. Dietz MOVED THAT AN EXECUTIVE SESSION BE HELD AT 5:30 P.M. ON TUESDAY, SEPTEMBER 5, 2006, IN THE CITY COUNCIL CONFERENCE ROOM FOR THE PURPOSE OF CONSULTATION FOR LEGAL ADVICE WITH THE DISTRICT'S ATTORNEY IN Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 1 of 14 ACCORDANCE WITH A.R.S. § 38-431.03(A)(3),(4), AND (7) AS FURTHER OUTLINED ON THIS AGENDA. Vice Chairperson Eck SECONDED THE MOTION. VOTE:Unanimous. The motion carried. The board temporarily adjourned to the City Council Conference Room for the executive session. Chairperson Coleman reconvened the meeting. APPROVAL OF MINUTES OF AUGUST 15, 2006 ) Mr. Dietz MOVED THAT THE MINUTES OF AUGUST 15, 2006, BE APPROVED. Mr. Sippel SECONDED THE MOTION. VOTE:Unanimous. The motion carried. ADDITIONAL PAYMENT TO US FILTER FOR CLAIMED ADDITIONAL WORK OUTSIDE ORIGINAL SCOPE OF WORK FOR RENTAL AND OPERATION OF TEMPORARY CENTRAL ARIZONA PROJECT WATER TREATMENT PLANT )District Counsel Kay Bigelow briefed the board on the item.She stated they have reached a settlement with US Filter for $45,000 for the additional work and it can be paid in 6 equal monthly payments of $7,500. Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 2 of 14 Chairperson Coleman opened the item to board discussion.There being no discussion, he called for a motion. Mr. Waldron MOVED THAT AN ADDITIONAL PAYMENT OF $45,000 TO US FILTER FOR CLAIMED ADDITIONAL WORK OUTSIDE THE ORIGINAL SCOPE OF WORK FOR RENTAL AND OPERATION OF THE TEMPORARY CENTRAL ARIZONA PROJECT WATER TREATMENT PLANT, TO BE PAID IN 6 EQUAL MONTHLY PAYMENTS OF $7,500 EACH OVER THE NEXT SIX MONTHS, BE APPROVED. MOTION. VOTE:Unanimous. The motion carried. Mr. Dietz SECONDED THE ALTERNATIVE OPTIONS GENERATED BY RECENT RATE STUDY )Utility Director Doug Dobson briefed the board on the item.He stated they had Stantec in to do a rate study for the district and they presented several options.Trisha Cook from Stantec is here tonight; staff has narrowed it down to 3 options and she will give a brief presentation on them. Ms. Trisha Cook, Stantec Consulting, stated she is a civil engineer with an MBA and has been working with the Apache Junction Water Company on a number of projects for the last 4 years.She stated she wanted to focus on the options worked out with staff meeting the goals that staff would like to see.They would like to generate approximately an additional $200,000 in revenue per year.The money can go towards future expenses and capital; it would build some money in the bank for the water company.They would also like to implement a graduated rate system that would promote conservation of water with the users.As the water use exceeds a certain level, the rate per gallon increases.It will promote the users to use less water as they know they will be paying more if they use extra water.The final goal is to minimize the impact to the small users; those with 5/8", 3/4" and 1" meters. These are the majority of the users, the residential users, that Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 3 of 14 make up the community.They are typically single family and mobile home users.They looked at various rate studies and all generated revenue.It varied from $150,000 to $250,000 in revenue.There were ten options and they narrowed it down to three that best met the goals of staff that will be presented to the board.Each option is done a little differently.There are a number of different ways they can achieve the revenue that comes into the water company through the rates; part of it is the base rate and part of it is the usage fees.Either can be adjusted.Option 6, her preferred option and the one she recommends to staff, provides an increase of 99 to the 5/8" meter, which is probably 75% of their users.There would be no change in the user rate.The larger meters would be a little bit higher than that and as one gets larger than 2", the rate increase gets a little bit more.The usage rate would also increase when it gets above 8,000 gallons.They selected 8,000 gallons as the cutoff because the average rate for most of the 1" and smaller meters is about 6,500 gallons to 7,500 gallons; 70% of the users in that range are below 8,000 gallons.It minimizes the impact to the smaller users and promotes conservation and keeps them in that lower range.It would provide increased revenue of about $210,000 per year.The smaller meters would see the 99 increase, 3/4" meters would see an increase of $1.72, and 1" meters would see an increase of $2.17.It is not a large increase per month.Another option, option 10, looks at a flat increase of about $2.00 a month for the smaller meters and .a slightly higher increase at the larger meter size.It also implements the user rate.Right now the district charges $3.88 per 1,000 gallons used per month; above 8,000 gallons they are suggesting an increased rate to $4.50. It is not a large increase but it is an increase to promote the conservation of water.They looked at the same increase with all of the options.The last one does not change the usage rate at all, staying at $3.88 per 1,000 gallons across the board, but it is a graduated increase throughout the different meter sizes. It is option 3 and it has $1.99 for the 5/8" meter, $3.43 for the 3/4" meter, and $4.33 for the 1" meter.It increases similarly throughout the sizes.The increase is slightly lower because they did not pick up the increase in the usage rate with the increase above 8,000 gallons.Option 3 brings in about $140,000 and Option 10 is at about $205,000 in increased revenue. Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 4 of 14 Vice Chairperson Eck commented he believed their last meeting was the most heated in 9 years that he can recall.Last time he, and he believes the others also, understood they were looking at a nearly 23% increase in rates needed in order to satisfy a $1.2 million shortfall annually.Obviously, it is not near that amount.The suggested increase is not near that.If he had understood that they could go with only 70% of the customers seeing an increase by a dollar, it would have probably gone a lot better at the last meeting.He did not understand.He thought they had been talking about 22%, and the different ways of coming up with 22%. He likes this much better. is much better. Mr. Dietz commented option 6 Mr. Sippel agreed. Mr. Dietz commented it works great across the board and encourages conservation, which is really important right now. Chairperson Coleman closed the item with no further comments and moved on to the next item. DIRECTION TO STAFF REGARDING BUDGET AND/OR RATE ADJUSTMENT TO BE INCLUDED IN FINAL BUDGET ADOPTION ON SEPTEMBER 19, 2006 )Utility Director Doug Dobson briefed the board on the item.He stated as part of the last meeting they talked about looking at different budget cuts and the rate study.This item is for direction to staff on the budget cuts he is presenting to the board and a direction on which rate adjustment they would like him to pursue in order to bring back a balanced budget on September 19.After going through the budget, the first thing he removed was the $250,000 for the purchase of land for the well site.Until they know what is there, it would be better off to lease it.They can tie it up with a lease, drill the well, and if it ends up being a dry well then they are not stuck with some land that they have already purchased.He looked at the recharge credits, and the net reduction by removing the recharge credits is $115,320. Water. Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 5 of 14 They can do a transfer of credits for the Central Arizona Groundwater Replenishment District obligation which added $89,600 back into the budget.This gives the district a total of $454,920 that can go back in.They have worked a long time to get the credits from the sewer district.They have the billing for it now in the amount of $65,825.He recommends they put that money back into the budget since it took so long to get that and purchase the credits from the sewer district.That gives them a net reduction of $389,095.If they still wish to go ahead with the purchase of the recharge credits at $115,000, it would still leave $273,775 to be used to provide a balanced budget.Any money left over would be put into a contingency fund for the budget this year. Mr. Severs asked what would happen if they do not buy the recharge credits this year. Utility Director Doug Dobson stated nothing would happen if they did not buy them this year. They would still be there.The district has been purchasing them every year when they are available.If they are available next year and we budget for them, we will go ahead and purchase them.The district will not die if it does not purchase the recharge credits this year. Mr. Severs commented he understands that they have enough credits to last them approximately 18 years.He asked if that was correct. Utility Director Doug Dobson stated that is correct at today's rate. Mr. Severs asked what the possibility would be of going on a bi-annual purchase, purchasing them every other year. Mr. Dietz asked if they would be available every year and for how much longer they are going to be available for them to take advantage of. Utility Director Doug Dobson stated he did not know.They could be available this year but not next year.If they are available they can buy them, if not, Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 6 of 14 they cannot buy them.They actually did not think there would be any recharge credits for this year. Mr. Severs asked how many recharge credits they would get for the $115,000. Utility Director Doug Dobson stated it is $61.00 per acre foot, so the total amount of credits would be 28,833 for $175,000.Take about a third of that off for the $115,000. Mr. Severs asked what that would equate to in years or usage. Utility Director Doug Dobson stated it would probably be a couple of years. Mr. Sippel stated that would be at today's rate. Utility Director Doug Dobson stated that is correct. Vice Chairperson Eck commented they are still getting credits now that we are starting the sewer district returns. Utility Director Doug Dobson stated that is correct. Vice Chairperson Eck commented that would make up a portion of what they are not purchasing through New Magma. Utility Director Doug Dobson stated that is correct. Vice Chairperson Eck commented if they ever did start using the water treatment process instead of just pumping groundwater, the demand for those credits would not be near as high. Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 7 of 14 Mr. Sippel asked if that is the maximum amount they can purchase from the sewer district. District Manager George Hoffman stated it is under the current agreement. Mr. Dietz commented it is 9096 of their amount available. Mr. Waldron commented if they have the option to purchase those they should do so.Eighteen years sounds great, but with what they are doing downtown, and what they hope to do down south, eighteen years will go by very quickly.If they have the option to do it this year, they should because they may not have the option next year and they are a long way from treating our water.This puts more into the bank as they continue to grow and with everything developing, they may need it. Mr. Dietz asked if the Colorado River goes down, do the allocations per water supplier also go down, so the 2,900 acre feet of water that we get would be less, such as having 4 or 5 years of drought or the water level going down.They could then change the allotment due to the amount of water coming through the Colorado River dropping. District Counsel Kay Bigelow stated Arizona does not have the highest priority on the Central Arizona Project water.There are other states with higher priority. Vice Chairperson Eck commented that is true except for this last year.They finally finished a 20 year legal issue. District Counsel Kay Bigelow stated some of the upper Colorado states have higher priority. There is always the chance they could get a different allotment. Mr. Dietz commented their allotment could drop which means they would have to rely on the groundwater and the recharge credits which we may need down Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 8 of 14 south depending on what happens in the future and how far they go. Chairperson Coleman commented he thinks they should buy it.He does not see the price of water going down. Mr. Sippel commented the $273,375 is putting the recharge back in and the $210,000 is new so they would have about $500,000. Utility Director Doug Dobson stated he would check with the finance manager. District Finance Manager John White stated it would make a difference but it would probably be a little bit less because this year they will also be making a rate increase but it would only be for a partial year. Mr. Sippel asked if this would allow us to put something in the rainy day fund and how much. District Finance Manager John White stated there could be something in there. Vice Chairperson Eck asked if they know if what they get from the sewer district compares with what they get from New Magma as far as storage credits.He asked if they are getting the same credits from the storage credits as they are purchasing from New Magma. District Finance Manager John White stated they are. Vice Chairperson Eck asked if he knew what they are currently getting from the sewer district. District Finance Manager John White stated he could do the math quickly. Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 9 of 14 Vice Chairperson Eck commented he thought it would make up the difference for what they are doing with New Magma. District Finance Manager John White stated it would not. Mr. Dietz asked if there was a problem with the sewer district recharge credits as far as getting everything to settle.He thought there was also another problem. District Counsel Kay Bigelow stated there was a percolation problem. Mr. Dietz agreed. Utility Director Doug Dobson stated they need more retention ponds. District Manager George Hoffman stated they have done that.These are for the 2005 credits.These or whatever agency says that we have the credits, they now have them. District Finance Manager John White stated this is through calendar year 2005.The Arizona Department of Water Resources recently gave the blessing on it. They have also received figures from the sewer district with respects to the amounts that have accrued since July 2006.If he read the email correctly, it does not sound like the Department of Water Resources has given the okay to release those at this time. District Counsel Kay Bigelow stated the terms of the contract require them to convert them to• actual recharge credits before they are purchased.They must have one for one usability when they come to the city and they are paid for. Chairperson Coleman asked if there was any more discussion. Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 10 of 14 Utility Director Doug Dobson stated he only needs direction from them on those two items. Chairperson Coleman asked if the revised motion reflects the changes and the purchase of the recharge credits. District Manager George Hoffman stated the board needs to decide if they want to remove the incentive recharge for Central Arizona Project in the amount of $115,000.Staff drafted a menu of policy alternatives and they need to choose what they want.The draft budget includes the Central Arizona Project recharge; this provides you a motion to remove it if they choose. Chairperson Coleman stated if they want to buy them, they would take that part out. District Manager George Hoffman stated they would not reference that line; they should just skip it. District Clerk Kathleen Connelly asked what the effective date would be if there are to be changes to any rates. District Finance Manager John White answered November 1, 2006. District Clerk Kathleen Connelly stated she may need that for the advertisement. Vice Chairperson Eck commented he thought they would be retroactive. Mr. Dietz asked if they needed to state in the motion that the rate increase would be effective November 1, 2006. District Clerk Kathleen Connelly stated it would be helpful if they did that. Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 11 of 14 Vice Chairperson Eck commented he would like to find out what they are going to get from the sewer district in the future. District Manager George Hoffman asked if he meant the number of acre feet. Vice Chairperson Eck stated that is correct. District Manager George Hoffman stated he thinks it is 627 acre feet for 2005. Mr. Dietz asked what the New Magma recharge credits were that they were getting. District Finance Manager John White stated that was the 2,883 acre feet. Mr. Dietz commented that is how many credits they are getting from New Magma. District Finance Manager John White stated it would actually be 95% of the 2,883 as there is what they call a cut to the aquafir.It is basically a portion that they take off.Historically it is 95% that they get whenever they purchase credits. Chairperson Coleman closed the discussion with no further comments and called for a motion. Mr. Waldron MOVED THAT THE FOLLOWING ADJUSTMENTS BE MADE TO THE PROPOSED BUDGET FOR FISCAL YEAR 2006-2007:THAT WE REMOVE THE PURCHASE OF LAND FOR THE WELL SITE IN THE AMOUNT OF $250,000; AND TRANSFER STORAGE CREDITS TO PARTIALLY OFFSET THE CENTRAL ARIZONA GROUNDWATER REPLENISHMENT DISTRICT OBLIGATION IN THE AMOUNT OF $89,600; AND APPROPRIATE $65,825 FOR THE PURCHASE OF RECHARGE CREDITS FROM SUPERSTITION MOUNTAINS COMMUNITY FACILITIES DISTRICT; AND Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 12 of 14 THAT A CONTINGENCY LINE ITEM BE CREATED WHICH REFLECTS NET REVENUES OVER EXPENDITURES. I FURTHER MOVE THAT STAFF BE DIRECTED TO IMPLEMENT OPTION NUMBER 6 REGARDING ADJUSTMENTS TO BASE RATE AND/OR CONSUMPTION RATES FOR FISCAL YEAR 2006-2007. Mr. Dietz amended the rate adjustment to add TO BE EFFECTIVE NOVEMBER 1, 2006. Mr. Waldron accepted the amendment. Mr. Insalaco SECONDED THE MOTION. VOTE:Unanimous. The motion carried. Vice Chairperson Eck commented during the vote that he believes they need to look at next year to see if they do need to purchase those recharge credits or not. DISTRICT OPERATIONS MANAGER REPORT Utility Director Doug Dobson introduced the new District Engineer/City Engineer Giao Pham.He comes to the city from Pinal County. DISTRICT MANAGER REPORT None. DISTRICT TREASURER REPORT District Finance Manager John White stated they will be having final budget adoption within the next couple of weeks.He would like to put together a complete package and requested they return their books to him so that they could be updated. DISTRICT COUNSEL REPORT Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 13 of 14 None. ADJOURNMENT )Chairperson Coleman adjourned the meeting at 6:20 p.m. ACCEPTED THIS 19TH DAY OF SEPTEMBER , 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 19TH 2006. ATTEST: Kathleen Connelly District Clerk DAY OF SEPTEMBER Douglas pleman Chairperson 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 5th day of September, 2006.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 11th day of September, 2006. Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of September 5, 2006 Page 14 of 14