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HomeMy WebLinkAbout2011-09-20 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT (APACHE JUNCTION WATER COMPANY) CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING SEPTEMBER 20, 2011 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 20, 2011, 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 6:06 p.m. ROLL CALL Board Members Present:Chairperson Insalaco Vice Chairperson Dietz Mr. Douglas Coleman Mr. Jeff Serdy Mr. Clark Smithson Mr. Chip Wilson Staff Present: (Mrs. Barker was absent.) George Hoffman, District Manager Frank Blanco, District Director John White, District Finance Manager Giao Pham, District Engineer Kay Bigelow, District Legal Counsel Donna Meinerts, District Finance Director Others Present:Bryant Powell, Assistant City Manager Jan Mason, Deputy City Clerk APPROVAL OF MINUTES OF AUGUST 2, 2011 Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 1 of 14 )Vice Chairperson Dietz MOVED THAT THE MINUTES OF AUGUST 2, 2011, BE APPROVED. Mr. Coleman SECONDED THE MOTION. VOTE:Unanimous. The motion carried. DISCUSSION OF TERMS AND CONDITIONS OF OFFICE LEASE WITH CITY OF APACHE JUNCTION ) District Legal Counsel Kay Bigelow briefed the board on the item.She stated the district has moved into city hall and this lease gives the district the ability and a mechanism to pay the Arizona Department of Water Municipal Fee that was instituted in July.It is basically zeroing it out so that the city does not have it on its tab when it does not have a water service.The water district is doing it. Vice Chairperson Dietz asked if it is fifty dollars a year. District Legal Counsel Kay Bigelow stated it is $50,000 this year.They do it based on the population within the city.They could not do it to Arizona Water so the district gets to pay for the customers in the Arizona Water service area. Mr. Smithson stated he got an email stating whereas they can bill them, they do not have to pay.He asked if they have considered billing them anyway and mentioning in the press that they were not willing to pay their fair share. District Legal Counsel Kay Bigelow stated before they want to do that, part of the reason they cannot make them pay is that Arizona Water has to have its rates approved by the corporation commission.It cannot pass through that rate charge to its customers unless they go through Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 2 of 14 and have a rate hearing.There is a reason why Arizona Water would not want to pay it other than just not wanting to pay it. It is the way they set their rates and have to get their rates approved to be able to pass it through.That is why none of the private water companies are going to end up paying it. Vice Chairperson Dietz commented the water district would not fall under that. District Legal Counsel Kay Bigelow stated that is correct. Vice Chairperson Dietz commented they do not regulate our rates. District Legal Counsel Kay Bigelow stated it is a small price to pay to not have them regulate our rates.We do not have to go through those rate hearings.All the private companies have to.It is a mechanism to make sure that citizens have someone they can go complain to. Vice Chairperson Dietz stated Arizona Water is regulated. District Legal Counsel Kay Bigelow stated it is regulated and they would have to get the corporation commission to approve them adding that to their rate.The water district could approve adding it to the rate next year and passing it on to the customers, if they want to do that. Vice Chairperson Dietz commented they actually assess it to the City of Apache Junction which does not have a municipal water department. District Legal Counsel Kay Bigelow stated that is correct.It comes under the heading of push as much as you can down and then claim to the citizens that they are money -wary and that they have taken care of their pocketbooks, hoping the citizens do not see that they are getting it at the local level.It is what they have been doing for the last 3 or 4 years. Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 3 of 14 Mr. Wilson asked if it would still be advisable to send a letter to Arizona Water and ask them to include this in their next rate increase and to reimburse the city. District Legal Counsel Kay Bigelow stated she thinks that is fine to do.She does not think there is anything to lose by telling Arizona Water that it is fine to pay for what the district does, but she does not believe it will get done in these economic times. Vice Chairperson Dietz commented they could always deny it, but at least they had put it out there. District Legal Counsel Kay Bigelow stated Arizona Water recently went through a large rate increase hearing a few years ago when they did the arsenic treatments and they routinely do not go through rate hearings very often because they have to open up their books and show everything.That having been said, it does not hurt to write the letter.They may be surprised. Mr. Smithson stated there may be other savings they could make in order to do it, or it might not be a very significant part of their budget. District Legal Counsel Kay Bigelow stated she is sure it is not. Mr. Smithson stated sending them a request for payment would be a reasonable thing to do. District Legal Counsel Kay Bigelow stated they would get that done.They have before them a form of the lease.She added she would be happy to explain any other questions. Chairperson Insalaco closed the discussion with no further comments and moved on to the next item. Water Utilities Community Facilities District. Meeting Minutes of September 20, 2011 Page 4 of 14 RESOLUTION NO. 2011-007, AUTHORIZING THE EXECUTION OF THE LEASE AGREEMENT BETWEEN THE CITY OF APACHE JUNCTION AND THE DISTRICT ) )Chairperson Insalaco called for a motion. Mr. Smithson MOVED THAT RESOLUTION NO. 2011-007, A RESOLUTION OF THE BOARD OF DIRECTORS OF THE WATER UTILITIES COMMUNITY FACILITIES DISTRICT (CITY OF APACHE JUNCTION, ARIZONA) APPROVING THE TERMS AND CONDITIONS OF THE LEASE WITH THE CITY OF APACHE JUNCTION AND AUTHORIZING EXECUTION OF THE LEASE, BE APPROVED. Mr. Coleman SECONDED THE MOTION. VOTE:Unanimous. The motion carried. DISTRICT MANAGER REPORT None. DISTRICT DIRECTOR REPORT District Director Frank Blanco stated the Wells 5 and 6 are the predominant wells and are currently in operation.Well 8 is getting equipment replaced on behalf of Webber Pump.They are getting some sonar jetting of the well casing to clean it out. The next step is to do a video of the well and take some water samples to see if there is any type of constituent or bacteria that may be causing the clogging of the perforations.They will also be brushing it out and cleaning.Once the new equipment is in place, they will look at doing an aquafir storage and recovery well.Because Well 8 is not a mission -critical facility, we are also looking into relocating the emergency generator that is at that site to the Baseline booster station which does not have an emergency generator.They would be able to provide an energy backup in case of a power loss at Baseline. The other facility at 16th Avenue and Buena Vista has an Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 5 of 14 emergency generator.Signal Butte and Baseline and Well 5 also have one.All the critical systems will have emergency generators once this is done.They believe they can do that and it would function. Vice Chairperson Dietz asked if they are recouping some of the funds on Well 8 from the vendor.He believed there was some vendor error in the well not working. District Director Frank Blanco stated Webber Pump was the company that pulled the equipment.They are basically buying us a new pump to replace the old one that they pulled and were not able to get back to us. District Legal Counsel Kay Bigelow stated they lost it. District Director Frank Blanco stated Kay wrote them a nice letter.She got their attention. Mr. Smithson stated they will be putting in an emergency generator to handle the water from Mesa.He asked if they are fully operational with emergency generators to make sure that when we suck the water out it can be delivered to us. District Director Frank Blanco stated most of their sites do have that type of redundancy.When you are looking at a water treatment plant that might be producing 80,000,000 gallons of water a day, there will be some limitation on that.Some of that water would be coming from storage.If they have an extended power outage, it will be a challenge for everyone.The district has groundwater going for it as well as the surface water from Mesa.We would have a source of water from Well 5 to be able to help us out during that situation. Vice Chairperson Dietz asked if we could still mix with Wells 5 and 6. District Director Frank Blanco stated that is correct.Well 6 is in need of an emergency standby generator.We have one at Well 5.Between Well 5 and the Mesa interconnect, those two would be able to supply the water, assuming Mesa can provide the water they are supposed to.We do pay for reserve capacity to Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 6 of 14 the City of Mesa which is based on the availability of water. You can only reserve what is operable.Even though we have that in place, if the plant is down, there is no water for Mesa or Apache Junction. Vice Chairperson Dietz commented that is all the more urgency to get this other storage tank done. Mr. Serdy asked if they would still be having some emergency preparedness discussions at the regular council meetings.Frank could come to that and repeat a lot of this and expound on it so that it would be recorded on the city website.The people would like to know about it, too. District Manager George Hoffman stated they would also like to invite Arizona Water for the water segment of the discussion. They have a significant portion of the community. Mr. Serdy asked what the ratio is inside the city limits for Arizona Water. District Director Frank Blanco stated they basically serve two- thirds of the city.All current reservoirs are operational and have no problems.Booster stations are also operating normally. The pumps and motors were replaced at the booster station on Baseline.They were looking at possibly auctioning the old pumps and motors but when the equipment was removed it was found to be in not that bad condition.They might be able to rebuild the old pumps and the motors are still good.They will look at the feasibility of doing that instead of disposing of them. They might be able to get better use out of them.There are two components that go into the costs of water: fixed costs and variable costs.Fixed costs, comprised of Central Arizona Project municipal and industrial costs, amounting to $13.75 per acre foot and the reserve capacity cost paid to the City of Mesa to buy the capacity for them to treat our Central Arizona Project water, amounting to $60.38 per acre foot.The variable components are the distribution costs amounting to $20.22 and the production costs, which is the most expensive cost.The fixed costs are the allocation of Central Arizona Project water, which is 2,919 acre feet per year, and the reserve capacity to the City of Mesa.The district cannot save any money on the Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 7 of 14 fixed costs.The variable costs can be optimized by the way we move and treat water.Those costs are comprised of water, electrical and chemical.The cost of water is the Central Arizona Project subcontract charge paid annually whether the water is used or not.There is a replenishment tax to the Central Arizona Groundwater Replenishment District which is meant to replenish the amount of water that we would be pumping out of the ground to serve our customers.We offset the cost by using the Central Arizona Project water and by our recovering long term storage credits.Four years ago that was upwards of $250,000 annually.It has been reduced down to around $30,000. Finance Manager John White stated it was $1,000 last year. District Director Frank Blanco stated it has been brought way down by using more surface water and recovering long term storage credits.The long term storage credits are being bought from the sewer district annually.We balance it out so that the district is not taking out more credits than we are putting in. Vice Chairperson Dietz asked if we had previously sold water to Magma for credits.We sold it really cheap to build up our credit allotment. District Director Frank Blanco stated that was New Magma and also Roosevelt Water Conservation District. Vice Chairperson Dietz stated we do not do that anymore. District Director Frank Blanco stated we are not doing that currently.It was excess Central Arizona Project water that was being recharged.It is not as readily available as it was in the past and New Magma is partnering with Resolution Copper Mine.They are pretty much maxing out the New Magma facility. In the future we may be able to do that again.One option is to recharge at the Superstition Mountain Recharge Facility south of Baseline at Queen Creek Wash.The other costs for water are groundwater withdrawal fees which is $2.50 per acre foot based on the amount of groundwater pumped out of the ground, and the biggest cost is for Mesa to treat our water.Other variable costs are electrical for transmitting the water from Signal Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 8 of 14 Butte and Baseline to our storage facilities and those electrical costs associated with pumping water from the ground. Mr. Smithson asked at what point it would be worthwhile doing our own water treatment. District Director Frank Blanco stated it is something they are exploring.It will be a policy decision.There are other options in terms of building our own or partnering with another water provider.It will be brought to water board for consideration when they have more information for them to make a decision. Vice Chairperson Dietz commented they do have the property set up for it. District Director Frank Blanco stated they want to avoid building it and hoping they come.They cannot afford to do that.Chemicals are the other cost associated with the variable costs.The last time they reported on this, they were around $457 per acre foot to produce the water.The sales per acre foot for that water were $1,556.78.The gross profit was more or less $1,000 back in April 10, 2010 to February 11, 2011. Current costs for water production are $413 per acre foot.The sales are $1,562 per acre foot, for a gross profit of $1,149.27 per acre foot.The sales have pretty much stayed the same. Mr. Smithson asked if profit also includes the staffing and operation, or is that what the profit goes for. District Director Frank Blanco stated this is gross profit and is not taking into account the man hours or salaries. Mr. Smithson stated that could be misleading.Someone might think they are making a lot of money. District Director Frank Blanco stated it is only based on the costs to produce the water.The Bureau of Reclamation is still in the process of doing an environmental assessment on the Gila River Indian Community lease.There has been some internal reviews. Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 9 of 14 District Legal Counsel Kay Bigelow stated it looks like it has moved from the Bureau of Reclamation to the Bureau of Indian Affairs.We do not have it, but it is moving among the federal agencies.Any movement is good movement. District Director Frank Blanco asked if that was on the legal aspect. District Legal Counsel Kay Bigelow stated that is correct.She bothers them every two to three days to find out what is going on. District Director Frank Blanco stated the environmental piece is still under review. Vice Chairperson Dietz asked if the three-year period starts after this has been completed. District Legal Counsel Kay Bigelow stated the tribe has agreed that they will give us an extra 9 months starting from sometime this summer.At least they gave us an extra 9 months.They were a little surprised that the Bureau of Reclamation was going to have as full of a review as possible, but their thoughts are that they would give us the 9 months but no more because we are basically in a holding pattern.There is really nothing we can do unless they want to opt out at this point. Vice Chairperson Dietz commented he thought they had discussed it earlier and he thought the three year starting point was going to be extended. District Legal Counsel Kay Bigelow stated it was but not as much as they thought it would be.She and Frank went to them and asked if it could start when all the federal stuff was done and they were not willing to do that. Vice Chairperson Dietz commented that it is at least 9 months. District Director Frank Blanco stated the environmental assessment is moving forward.They are getting comments back and forth between the city and the Bureau of Reclamation.They are hoping to have this out in a couple of weeks.Once the Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 10 of 14 assessment is complete, regardless of the legal matter on the amendment to the agreement, there will be a 15 day public notice.At that time, barring any type of problems, the assessment will be done and the Bureau of Reclamation will give their approval to enter into the agreement as long as the legal piece is completed. District Legal Counsel Kay Bigelow stated any changes to the legal agreement will be brought back to the board for their information and approval.There should be nothing substantial, but there will likely be some changes for them to approve. Vice Chairperson Dietz commented it makes sense that the three years would start from the time the agreement is done. District Director Frank Blanco stated the SCADA project and design had a kickoff meeting on supervisory control and data acquisition.It is the remote operation capability they are looking at getting.The one million gallon tank design is at 60% on the plans.The district and the city engineering group are reviewing those plans before returning them to the consultant.The bid opening is scheduled for the first part of next year with construction beginning in the spring and the tank in place by the fall of 2012. Vice Chairperson Dietz asked if the repair of the other tank would be going on at the same time. District Director Frank Blanco stated the other tank would be dry inspected after we can take it offline. Vice Chairperson Dietz commented after this one is done and full we will take care of the other one. District Director Frank Blanco stated that is correct.We received the remainder of the Salt River Project Energy Conservation Grant for installing the two pumps at Baseline at the storage tanks.It is close to $900.It is not enough to buy new pumps, but it was enough to go after.It was not that cumbersome.They are working with engineering to come up with a plan for which water lines they need to upgrade as part of the 5 Year Capital Improvement Plan.The one at the forefront is a Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 11 of 14 loop to Barleen's and south to Baseline.The other is the northwest portion of our district in the Davis system. Vice Chairperson Dietz commented the loop has been highly needed for a long time. District Director Frank Blanco stated it is one they need to get after.There are some side benefits they could derive from that besides water. Assistant City Manager Bryant Powell stated in addition to making sure the infrastructure is there, it is a great place to invest for economic development. Vice Chairperson Dietz stated plus they have the pressure and everything.It will complete the system. DISTRICT TREASURER REPORT None. DISTRICT LEGAL COUNSEL None. ADJOURNMENT ) Chairperson Insalaco adjourned the meeting at 6:32 p.m. ACCEPTED THIS 18TH DAY OF OCTOBER ,2011, 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 18TH DAY OF OCTOBER 2011. 1-'1140 "0 S. Insalaco airperson Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 12 of 14 ATTEST: Kathleen Connelly District Clerk 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 20th day of September, 2011.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 22nd day of September, 2011. Z i 9iM;a1,1- 4 -7‘12 9 Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of September 20, 2011 Page 13 of 14