Loading...
HomeMy WebLinkAbout2010-02-02 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT (APACHE JUNCTION WATER COMPANY) CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING FEBRUARY 2, 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 February 2, 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 6:00 p.m. ROLL CALL Board Members Present:Chairperson Insalaco Vice Chairperson R.E. Eck Mrs. Robin Barker Mr. Douglas Coleman Mr. Rick Dietz Mr. Jeff Serdy Mr. Chip Wilson Staff Present:George Hoffman, District Manager Kathleen Connelly, District Clerk Frank Blanco, District Director John White, District Finance Manager Kay Bigelow, District Legal Counsel David Fern, Utility Director Others Present:Bryant Powell, Assistant City Manager Hazel Randall, Administrative Assistant APPROVAL OF MINUTES OF JANUARY 19 2010 )Mr. Dietz MOVED THAT THE MINUTES OF DECEMBER 15, 2009, BE APPROVED. Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 1 of 14 Mrs. Barker SECONDED THE MOTION. VOTE:Unanimous. The motion carried. EXECUTIVE SESSION )Chairperson Insalaco commented he will be moving Item No. 4, the Executive Session, to the end of the meeting, but he requested the motion to be made at this time instead of later. Mrs. Barker MOVED THAT AN EXECUTIVE SESSION BE HELD AT 6:00 P.M. ON TUESDAY, FEBRUARY 2, 2010, IN THE CITY COUNCIL CONFERENCE ROOM FOR THE PURPOSE OF CONSULTATION FOR LEGAL ADVICE WITH THE DISTRICT'S ATTORNEY IN ACCORDANCE WITH A.R.S. § 38-431.03(A)(3) AND (4) AS FURTHER OUTLINED ON THIS AGENDA, TO BE HELD FOLLOWING ITEM NO. 11. Mr. Coleman SECONDED THE MOTION. VOTE:Unanimous. The motion carried. 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.This is a continuation from the last meeting.It will be summarized from what was given at the last meeting.They have grayed out some of the options and have highlighted the recommendations. Mrs. Barker commented her understanding from the last meeting is they would go with the 50/50 plan and move towards the 75/25 plan. District Director Frank Blanco stated that is correct. Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 2 of 14 Mr. Perman Joshi stated they are proposing 50% surface water and 50% groundwater supply. They will be using their own surface water treatment plant that will need a treatment capacity of 1.1 million gallons per day. Present cost would be $5.145 million with an annualized cost of $449,000.If using Mesa's plant, it would be an annualized cost of $495,000.Groundwater used should be 96% replenished or recharged.They are proposing upgrades to Booster Stations 1 and 2 involving new tanks and rehabilitation, plus the replacement of certain pipelines.The line to the landfill may not have to be done if it is closing soon. District Director Frank Blanco stated the upgrade cost to the water mains, shown as $157,000, is essentially around Barleen's.The old Davis system requires system upgrades and that has been included. Vice Chairperson Eck asked if this covers the area coming down Goldfield to the freeway.They have been trying to get out there.It appears there is still no coverage in that area.They had planned on that being commercial property. District Director Frank Blanco stated the pipelines are not included as part of this. The thought is they would enter into development agreements as development occurred.They would be included in participation costs for the upgrades. Vice Chairperson Eck asked what the problem was with the line for the one that is $157,000. District Director Frank Blanco stated they are looping the system around to help with flows and fire protection. District Manager George Hoffman commented they are saying the treatment plant is a $5.1 million cost for the 50% plan.The Mesa agreement would be a $5.6 million cost.They would then have to do a storage tank upgrade and say they need to spend $750,000 for the concrete clear well for the surface water treatment plant.He asked if Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 3 of 14 that option is only needed if they go with the surface water treatment plant. Mr. Pernam Joshi stated that is correct. District Manager George Hoffman asked if that adds $750,000 to the $5.1 million, making it $5.8 million which exceeds the Mesa alternative. Mr. Pernam Joshi stated that cost is in terms of today's values.It would be added to it, but it would not be an exact amount.When doing the present value calculation, there would be some change in that number because they are adding to the cost of the treatment plant. District Manager George Hoffman commented he presumes both could be bonded so the present value calculation would be the same. Mr. Pernam Joshi commented within the 2 options, yes, but the $750,000 is just the construction costs for now.If they incur it 2 years in the future, that plus the inflation costs would make it a slightly different number, but it would be added to $5.1 million.It is not an exact dollar amount, but it would be added to it. District Director Frank Blance stated the $5.145 million should really have $750,000 added to it.The Mesa agreement number is if they would continue to take water through the interconnect at the current rate we are paying Mesa. Mr. Dietz commented that would be having them process our Central Arizona Project allotment right now and providing that water. District Director Frank Blanco stated that is correct.It would be as if they are treating the water for us as they are now. Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 4 of 14 District Manager George Hoffman commented they do not have the analysis, as it is still preliminary and tentative, on Apache Junction participating in the Signal Butte treatment plant.That is a third alternate with data yet to be developed. District Director Frank Blanco stated that is correct.It was not included in this plan because there is nothing concrete to analyze.He commented the $675,000 cost for upgrading the line to the landfill may not have to be spent.In summary, they have water supply and distribution upgrade costs, the recommended surface water treatment costs including contingencies and engineering costs, the distribution upgrades for the booster stations, storage tank upgrades and pipeline upgrades for a subtotal of $5.2 million with a 20% contingency, engineering costs of 15% which includes construction management included, bringing the final total to $7.178 million.The five year capital improvement plan would allow growth up until 2025. Mr. Dietz asked if this includes the 8,000 acres south of the city in Portalis. District Director Frank Blanco stated the 2025 number is dependent on when growth begins and progresses.The 2025 is not total build out for Portalis; it will take us through the initial 1,100 acres as originally planned. Vice Chairperson Eck commented this is just in today's dollars.If they bonded it now and did the work in 3 or 4 years, they could actually be looking at 7 or 8 million dollars to complete the project. District Director Frank Blanco stated the costs would be more as they would be paying on the debt plus interest. Vice Chairperson Eck commented he was just talking about the cost of material and labor going up. Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 5 of 14 District Director Frank Blanco stated they tried to show them an annualized cost so they could get a concept of what it means on an annual basis for each project. Mrs. Barker commented if growth does not occur as they are looking at it and they go through with building a water treatment plant, she was concerned about how they would pay for it. District Director Frank Blanco stated the total amount recommended for the capital improvement plan is $10.988 million, with $1.9 million already funded under the Water Infrastructure Finance Authority.That is for the new storage on Baseline Road.Additional funding of about $9 million, with a 3% to 4% rate adjustment per year over the next 5 years, would pay for the capital improvements that have been shown here, based on the analysis of the consultants. Vice Chairperson Eck asked if the analysis states there are a couple of hundred connections each year. Mr. Pernam Joshi stated they assumed very little to no growth in the first three years, putting it at .5%.It is at 2.5%, or very modest growth, the other 2 years.It is essentially similar to the existing infrastructure with only 3% growth for the next few years.They did not consider new connections for calculation purposes of cost.They only considered the same number of connections and then divided it.They were on the conservative side.If there are more connections, it will be a lower rate adjustment that will be needed. District Director Frank Blanco stated they basically assumed growth would begin after 2014. Mrs. Barker commented they are looking at a 15% to 20% rage increase over a 5 year period of time to take care of this stuff. Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 6 of 14 District Director Frank Blanco stated versus 45% another big city has proposed. Vice Chairperson Eck commented another private company just went after 20 odd -some percent for this year. Mrs. Barker stated they did. Our board has been very specific about doing a small increase annually rather than a huge one. District Director Frank Blanco stated they had said they wanted it incremental. Mr. Dietz commented he likes the position this puts us in.They are taking the steps and building the treatment plant now. District Manager George Hoffman stated Frank's discussion here is 3% to 4% to cover bonded indebtedness.This does not cover operating costs such as the water, the chemicals, the electricity and everything else that has pushed rates up in the past. District Director Frank Blanco stated that is correct. District Manager George Hoffman stated it would also not include the staff costs and maintenance costs and all the other things that are part of the operation that incur a cost load. Mr. Pernam Joshi stated operational costs have been included in this because they have to consider the operational costs of the water treatment plant as well as Mesa. District Manager George Hoffman stated operational costs of these augmented capacities, not of the existing system.Nor of the employees, if they ever get pay increases again. Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 7 of 14 Mr. Pernam Joshi stated that is correct. District Manager George Hoffman commented he just wants to caution them not to go away thinking it would be the aggregate total of the rate increases the board might be asked to consider.The total costs will be the operating costs plus these costs. Mrs. Barker commented that was where she was going.She does not want to see the board get into a position where they are forced with an outlandish increase again.They need to be cognizant of it throughout this process. Mr. Dietz commented they had been down that road once before. Mrs. Barker commented she was aware of that, and she does not want to see them go down it again.They need to take all the costs into consideration so that they know what they are facing.If they take into consideration that there will probably be very little growth, if any at all, over the next couple of years, with perhaps a slow movement towards growth, they do not want to get the company caught up in a pickle it cannot get out of. District Manager George Hoffman stated they really need to find out what is going on with Portalis. Mrs. Barker agreed.It makes a difference in how we look at this and everything else that has to do with this particular entity. Mr. Dietz agreed. Chairperson Insalaco commented it is time to either do it or not. Vice Chairperson Eck commented if they were in the situation we are in now and we had Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 8 of 14 the growth we had over the last year for the next 4 or 5 years, and we overbuilt the system, the current users would have to pick up the increase in rates.That would be terrifying. District Legal Counsel Kay Bigelow stated even if Portalis is a go for planning and we have Rhodes Homes still involved, you can look at the market.The market is what it is.There is no new land being opened up for development.The federal income tax incentive for homebuyers has sparked some entry level and midlevel building.But those are on finished lots, with the streets and utilities already in. Those lots are being picked up for a song.The market and the growth are what will have Portalis contributing to those capital improvements, not just their continued participation in purchasing the land.They somewhat know how bad the market is, and their market is no different than anyone else opening up new land on the outskirts of Phoenix. Mrs. Barker commented even if they put forth a plan tomorrow, it would still be 5 years before they begin to do what they need to do.She does not feel they can pin their hopes on growth to the south at this point.As they are looking at a plan like this, they need to look at it with an eye toward our eventual growth.But they do not need to burden the current user with the total price of that growth. District Manager George Hoffman stated some of this, such as the storage tanks and others, for firefighting emergencies, peak emergency scenario and load demands, probably need to go in today.That is not a future demand issue. District Director Frank Blanco stated that is correct. Mr. Dietz commented the $1.9 million that we already have the loan for is for the additional one million gallon tank and the repairs to the other tank. District Director Frank Blanco stated that is correct.Those are required for fire flows. Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 9 of 14 Mr. Ramesh Narasimhan stated this is not a growth -oriented capital improvement plan.The users will pay more without these improvements.They would be saving on the capital costs, but the overall costs are going to be more than what was projected here.They have projected the lowest cost to the users. Vice Chairperson Eck commented he is missing his point. Mrs. Barker agreed.He seems to be contradicting what has been said. Mr. Ramesh Narasimhan stated there are capital improvements that have a budget.If those improvements are made, particularly with the interconnect options and costs, the overall costs to the user will be more to meet the water resource goals without the capital improvements. Mrs. Barker commented they have already gotten the loan for the capital improvements.She asked if that is what he is talking about. Mr. Ramesh Narasimhan stated the interconnect they have, but the district has certain water resource goals and that is what they focused on.It is a status quo from a growth perspective as far as the capital improvement plan.The funding from growth sources would be minimal.To the current users of the system, the capital improvement plan actually offsets long term costs so the cost of water will be less.It is just how they will be paying it.Should they have them paying more on a monthly basis or pay less to have them fund the capital improvement plan.The capital improvement plan is designed to get the lowest overall cost to the user and not burden the users for growth -oriented improvements to the system. Vice Chairperson Eck commented it sounds good; he just wishes he understood all of it. Mr. Ramesh Narasimhan stated that is why the annualized costs are so important.Per year, Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 10 of 14 they will actually pay more, and then the rate increases will be higher.While they could be saving by not funding the capital improvement plan or getting a loan, the net result to the user would be more significant without the improvements.They would be paying now to get the improvements to save the user rates in the long run. District Manager George Hoffman commented this is an important planning document.He was encouraged that they do not have their backs to the wall on time.If it would be useful to take some time and have some one on one time with Frank to go through every single doubt, question, curiosity, hypothetical scenario with Frank, he would encourage that to happen. Chairperson Insalaco commented he appreciated that as it is awful hard to try to watch the clock and get the questions asked.He has questions and he is sure the others have some to ask.They still have an executive session and a few more items.We need to do this when we are not rushed. District Manager George Hoffman stated the consultants and Frank are trying to position the district for the long term with regard with water sustainability and the lay of the land with the Arizona Department of Water Resources.There is a certain degree of complexity, and he is seeing more knitted brows than he is typically comfortable with. Mr. Dietz asked if he is talking about doing this before they adopt the 5 year capital improvement plan.He asked if that would put them back in their assured water designation or have any impact on the assured water supply. District Director Frank Blanco stated they are still waiting on Arizona Department of Water Resources.Our backs are not against the wall where we have to do this tonight.He would be glad to meet with any of them one on one. Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 11 of 14 Vice Chairperson Eck commented if someone were to ask him, he would like to be able to explain why he voted for it. District Director Frank Blanco stated this is the first capital improvement plan they have brought to the board. Chairperson Insalaco commented they could take this one item and he could work with two or three people at a time.It would be all they would have to worry about and talk about at that time instead of trying to get everything done in one night. District Director Frank Blanco commented as the city progresses, they may see other capital improvement plans from other departments such as public works.He believes they are walking on new territory.It is important for them to understand the requirements and coordinate it with the rest of the city so that streets are not torn up after they are paved. The consensus of the board was they needed the additional time. District Director Frank Blanco stated they would continue this. RESOLUTION NO. 2010-001, ADOPTING A CAPITAL IMPROVEMENT PLAN )Mr. Dietz MOVED THAT WE POSTPONE ITEM NO. 6 TO MARCH 2, 2010. Mrs. Barker SECONDED THE MOTION. VOTE:Unanimous. The motion carried. DISTRICT MANAGER REPORT Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 12 of 14 None. DISTRICT DIRECTOR REPORT None. DISTRICT TREASURER REPORT None. DISTRICT LEGAL COUNSEL REPORT None. Mrs. Barker commented she wanted to thank Frank and the other gentlemen for trying to pound into her forehead what they have learned over twenty years of experience. ADJOURNMENT ) Chairperson Insalaco adjourned the meeting at 6:31 p.m. ACCEPTED THIS 2ND DAY OF MARCH , 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 DAY OF MARCH 2010. S. Insalaco airperson ATTEST: Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 13 of 14 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 2nd day of February, 2010.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 5th day of February, 2010. Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of February 2, 2010 Page 14 of 14