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HomeMy WebLinkAbout2010-01-09 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT (APACHE JUNCTION WATER COMPANY) CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING JANUARY 19, 2010 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 January 19, 2010, at the Apache Junction City Council Chambers pursuant to the notice required by law. CALL TO ORDER Chairperson Insalaco called the meeting to order at 6:02 p.m. ROLL CALL Board Members Present:Chairperson Insalaco Vice Chairperson R.E. Eck Mrs. Robin Barker Mr. Rick Dietz Mr. Jeff Serdy Mr. Chip Wilson Staff Present: (Mr. Douglas Coleman was absent.) George Hoffman, District Manager Kathleen Connelly, District Clerk Frank Blanco, District Director Donna Meinerts, District Finance Dir. John White, District Finance Manager Kay Bigelow, District Legal Counsel David Fern, Utility Director Giao Pham, District Engineer Others Present:Bryant Powell, Assistant City Manager Hazel Randall, Administrative Assistant APPROVAL OF MINUTES OF DECEMBER 15, 2009 Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 1 of 10 )Mr. Dietz MOVED THAT THE MINUTES OF DECEMBER 15, 2009, BE APPROVED. Mrs. Barker SECONDED THE MOTION. VOTE:Unanimous. The motion carried. Chairperson Insalaco commented he will be moving Item No. 4, the Executive Session, to the end of the meeting. WATER DISTRICT MASTER PLAN AND FIVE YEAR CAPITAL IMPROVEMENT PLAN BY NARASIMHAN CONSULTING SERVICES, INC. )District Director Frank Blanco briefed the board on the item.He stated all cities are required to submit a five year capital improvement plan with their application for assured water supply.It is also used to project growth.A moderate approach was taken by the consultant.The master plan includes water distribution improvements and the impact on rates with the cost of the plan. He commented the existing system has 3 wells with Well No. 8 being out of service.A visual inspection to determine what is needed to put it back in service will be done later this year. The surface water at Baseline and Signal Butte is currently moving water but we are awaiting approval to begin construction on the pump station.Booster Station No. 1 at San Marcos and Southern has the capacity of 2 million gallons of storage and is the emergency connection with Arizona Water.Booster Station No. 2 has 1 million gallons of storage.He then introduced the consultant, Ramesh Narasimhan, and the project specialist, Pernam Joshi. Mr. Ramesh Narasimhan, president of Narasimhan Consulting Services, Inc., addressed the board.He commented growth is an issue facing a lot of water systems.Many capital improvement plans have had to be redone due to the economic challenges and population projections not Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 2 of 10 panning out.Portalis will be considered separately as far as the distribution network, even though it will share water with the existing customers.He commented on the accumulated recharge credits, water usage strategy #1 - the current condition, water usage strategy #2 - more aggressive usage of surface water, and water usage strategy #3 - a 50/50 split of groundwater and surface water and slowly migrating to more surface water use.He gave a powerpoint presentation delineating different aspects under the three different water strategies, including water recharge credits, the annualized costs, present work costs, and water treatment plant costs. Mrs. Barker asked if he could define the term present value. Mr. Ramesh Narasimhan stated all the analyses forecast the expenditures for 20 years.They did that for each of these options.After that, they have operation and maintenance costs that go on for generally 20 years.They then compare the options.The Mesa option has low capital but has high operation and maintenance costs.They bring the costs forward using an engineering analysis. Generally, they bring it back by about 6%, which is the cost of the money.It allows for comparison of the costs on a present worth basis to those 10 years from now. Mrs. Barker commented she was wondering why there was such a difference between the Apache Junction option and the Mesa.Now she can see it. Mr. Ramesh Narasimhan stated it is that the capital is much less but they need to look at the overall period as to what they and what the rate payers would pay. Vice Chairperson Eck commented they should be saving on the one end as they are considering paying for potable water.The water they would be getting from Mesa has already been treated so it would be more expensive.He has been confused on whether they should build their own plant now that Mesa is building a huge plant at Signal Butte.He has known other cities to go in when a plant is Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 3 of 10 built.He asked if it is worth their while to have a small portion of that plant. Mr. Ramesh Narasimhan commented that is a good question.If they have time, he will elaborate on that later. Vice Chairperson Eck commented they could save millions or they break even. Mr. Ramesh Narasimhan stated right now, the way their agreement is set up, they are paying $1.10 per thousand gallons.They do not have an equity stake in the plant so they are essentially a customer.That includes amortization of the costs they have already incurred, operating costs, maintenance and some mark up.That is why that cost is higher than building your own plant.The third option is to go in jointly to see if the costs will be lower than building your own. Vice Chairperson Eck commented they have not used those figures to determine that. Mr. Ramesh Narasimhan stated they are just starting that.They will have to work to resolve those costs. Vice Chairperson Eck commented if it makes economic sense he would in some ways like to have their own plant.In other ways, he wants to do whatever is best and get the water the cheapest along with a better quality of water.The Central Arizona Project is much better than the quality of the well water out here. Mr. Ramesh Narasimhan stated part of it is when you have it.As a minority owner they would not have control over how the day to day operations are run. Vice Chairperson Eck stated some times you want it and some times you do not. Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 4 of 10 Mr. Ramesh Narasimhan stated from a water resource perspective, it would provide the demand and flexibility of meeting the demand. Vice Chairperson Eck commented the city could say it could service all this area here.It is a good thing to be able to show. Mr. Ramesh Narasimhan stated there will be cost factors and non -cost factors to be considered.If they are neck and neck, it will come down to some of the non -cost factors on the daily operation side and the future side, or it will not make sense to do it.Another thing, they always look at the cost now to do it, but once the debt is retired, then they will have an additional cost savings.It does not make a lot of sense to buy it wholesale long term just as a commodity.If they have a long term agreement, whether it is a joint plant or your own plant, once the debt it retired the costs go down and that is a benefit. District Legal Counsel Kay Bigelow commented they could calculate some kind of replacement cost for their own plant that needs to be plugged in. Mr. Ramesh Narasimhan stated there is a percentage of equipment replacement in the operations and maintenance costs. Vice Chairperson Eck commented he made a comment that Portalis will be very strong on groundwater.They are building up all the surface water. Mr. Ramesh Narasimhan stated initially the concept is to get it going.The current issue is getting enough surface water rights for the long term.They will be coming up with that number.They need it to initially get the development moving and get the 100 year certificate with Arizona Department of Water Resources.The only way to get that off the ground is to punch a well to get that permit initiated to get some development there.It is a phased strategy.They are looking at the most cost effective options to secure those rights. Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 5 of 10 Vice Chairperson Eck commented he has been told to go as far south as possible.He believes they go to the Motocross track, which is an additional 4 miles.He asked if that is beyond the city limits. City Clerk Kathleen Connelly stated it is not. Vice Chairperson Eck asked if they can look for water that far south since they do service water that far.He would like to look over here where there seems to be an aquafir, whereas there is no aquafir in other locations they have tried. Mr. Ramesh Narasimhan stated absolutely.They can secure those rights anywhere you can find them. Vice Chairperson Eck commented they could move the water in the system to Portalis. Mr. Ramesh Narasimhan stated the Portalis developer has provided them with the infrastructure and model there.They are developing feedback on that so that there is a good transition and hub network so the water can be moved interchangeably between their network and your network. They want everything to be integrated in case they are having problems with a well and water needs to be sent there.He continued with his briefing.The other component of this is the pipes and pumps, whereupon he turned that over to Pernam Joshi. Mr. Pernam Joshi commented on the distribution system improvements and how they reached those conclusions, based on a water distribution model that has been calibrated.Key components of the water distribution model are the growth projection, demand projection, pipe sizing, flow capacity, additional pumps needed at the booster stations, an additional storage tank at booster station #2, clear water well for the surface water, and firefighting capacity.He stated the total costs for improvements on this 5 year capital improvement plan is approximately $11 million, however $1.9 million is already funded through Water Infrastructure Finance Authority Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 6 of 10 loans and an existing rate increase.They will still need approximately $9.1 million for the future growth in 5 years. This will be carried to, in some cases, 2025.He then turned it over to Mr. Ramesh Narasimhan for the funding discussion. Mr. Ramesh Narasimhan stated they talked about a 5 year capital improvement plan that would take them to 10 to 15 years out, where they will then move ahead with another capital improvement plan.They are projecting a 3% to 4% rate increase per year for 5 years to pay for all of this for 10 years.They feel the best rate would be a 30 year debt service Water Infrastructure Finance Authority loan, similar to what they currently have.It could be further reduced with connection fees. District Legal Counsel Kay Bigelow stated part of the total is for planned upgrades versus growth.Growth will be funded by developers, not by the district. Mr. Ramesh Narasimhan stated almost all this is because the projection for the next five years assume minimal.This is virtually all to build the plant, get the lowest surface water cost in, and to replace the infrastructure that needs to be replaced. Vice Chairperson Eck commented it has nothing to do with growth. Mr. Ramesh Narasimhan stated the $9.1 million has nothing to do with growth.The model is only .5% for the next 5 years. District Legal Counsel Kay Bigelow stated the rate increase is assuming they do not get any new customers. Mr. Ramesh Narasimhan stated that is correct.The next step is to finalize the capital facilities plan, get it approved and move forward to finalize the master plan.They can then start proposing and implementing the staged rate cases.Once that is done, they will have the Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 7 of 10 ability to pay back any grants and loans that may be out there state and federal -wise.They are looking at a 5 year window of 2010 to 2014 to complete these.They will meet everything they need for 5 to 10 years afterwards. Vice Chairperson Eck commented it is a lot to consume. Chairperson Insalaco agreed. He then closed the item.He asked the district director if he wanted to go to Item No. 6. There was general discussion on what the board wished to do with the remainder of the agenda due to the lateness of the meeting.It was determined they would continue Item No. 6 to the next meeting. EXECUTIVE SESSION ) )Mrs. Barker MOVED THAT ITEM NO. 6 BE CONTINUED AND THAT WE MOVE TO AN EXECUTIVE SESSION. Mr. Dietz SECONDED THE MOTION. VOTE:Unanimous. During the vote, Vice Chairperson Eck asked if they would be doing Item Nos. 7-10 later. District Legal Counsel stated they can finish later anything they might want to go through, but she suspects there is not much remaining on the items. The motion carried. Chairperson Insalaco adjourned to meeting to executive session at 6:53 p.m. Chairperson Insalaco reconvened the meeting at 7:18 p.m. Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 8 of 10 Mr. Dietz MOVED THAT WE MOVE ITEMS 7, 8, 9, AND 10 TO THE NEXT WATER BOARD MEETING. Mrs. Barker SECONDED THE MOTION. VOTE:Unanimous. The motion carried. ADJOURNMENT ) Chairperson Insalaco adjourned the meeting at 7:19 p.m. ACCEPTED THIS 2ND DAY OF FEBRUARY , 2010, 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 2ND 2010. ATTEST: Kathleen Connelly District Clerk DAY OF FEBRUARY , (Zn S. Insalaco irperson 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 19th day of January, 2010.I Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 9 of 10 further certify that the meeting was duly called and held and that a quorum was present. Dated this 26th day of January, 2010. Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of January 19, 2010 Page 10 of 10