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HomeMy WebLinkAbout2012-10-16 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING October 16, 2012 The regular meeting of the District Board of the Water Utilities Community Facilities District, City of Apache Junction, Arizona, was held on October 16, 2012, 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 Dietz Mrs. Barker Mrs. Evans Mr. Serdy Mr. Waldron Mr. Wilson Staff Present:George Hoffman, District Manager Kathleen Connelly, District Clerk Frank Blanco, District Director John White, District Finance Manager Joel Stern, District Legal Counsel Giao Pham, District Engineer Brad Huza, Water System Superintendent Donna Meinerts,District Finance Director Others Present:Bryant Powell, Assistant City Manager Hazel Randall, Administrative Assistant APPROVAL OF MINUTES OF SEPTEMBER 18, 2012 Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 1 of 13 ) Vice Chairperson Dietz MOVED THAT THE MINUTES OF SEPTEMBER 18, 2012, BE APPROVED. MOTION. VOTE:Unanimous. The motion carried. DISCUSSION AND CONSIDERATION OF LEASE AGREEMENT BETWEEN CITY OF APACHE JUNCTION AND WATER UTILITIES COMMUNITY FACILITIES DISTRICT OF APACHE JUNCTION Blanco stated this is regarding space located at City Hall that per square foot for up to 2,000 Mrs. Evans SECONDED THE ) District Director, Frank the agreement for the office they are leasing at $15 dollars square feet. Mrs. Barker MOVED THAT THE LEASE AGREEMENT BETWEEN THE CITY OF APACHE JUNCTION AND WATER UTILITIES COMMUNITY FACILITIES DISTRICT OF APACHE JUNCTION BE APPROVED. Vice Chairperson, Dietz SECONDED THE MOTION. VOTE:Unanimous. The motion carried. DISCUSSION AND CONSIDERATION OF INTERGOVERMENTAL AGREEMENT BETWEEN SUPERSTITION MOUNTAIN COMMUNITY FACILITIES DISTRICT AND WATER UTILITIES COMMUNITY FACILTIES DISTRICT FOR SALE OF LONG TERM STORAGE CREDITS ) District Director, Frank Blanco discussed the differences between the existing agreement and the proposed agreement.He stated they were not requesting Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 2 of 13 the proposed agreement be approved right then.The agreement allows for the sewer district to sell and transfer long term storage credits. These credits are the result of recharging effluent that the sewer has treated.This agreement allows for the water district to purchase long term storage credits and to purchase additional access long term storage credits from the sewer district. In the old agreement the credits could only be used to offset Central Arizona Project groundwater replenishment costs.Under the new agreement the water district would also be able to use those credits to sell or exchange them to another governmental entity within Arizona like Salt River Project, other cities and Indian tribes.The new agreement gives the water district more flexibility on the use of the credits. Vice Chairperson Dietz asked what would be the benefit to sell to other governmental agencies. District Director Frank Blanco stated it allows them to be able to have more flexibility in terms of an ability to exchange credits for some other service water from Roosevelt Water Conservation District, Salt River Project or other entities of that nature. Under the old agreement if the water district was unable to pay for credits due to financial hardship then the sewer district would hold the credits for one year and bill the water district the following year.Under the new agreement if the water district is unable to pay for the credits the sewer district will hold the credits for a year but then the water district would be billed when they request the credits. That way the water district is not automatically billed because if they have a financial hardship they may or may not recover in a year. Mrs. Barker asked if they are obligated to buy the credits if there is no financial hardship on an annual basis. District Director Frank Blanco stated under the old agreement they were required to buy the lesser of 2,120 acre feet or 90% of what is available during the year. District Finance Manager John White stated a couple of years ago the sewer district produced few credits so their 90% allotment was about 875 acre feet. In this past year it increased and had Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 3 of 13 an average of about a 1,000 or 1,100 acre feet per year in recent years except for the one time drop. Vice Chairperson Dietz asked if they were purchasing everything that they produce. District Finance Manager John White stated they are obligated to purchase 90% of what they produce. In prior years, they would actually produce what is called excess because Roadhaven purchases 10% and theirs is capped at 70 acre feet so anything over 70% is called excess credits.The water district has purchased those. It has not been a major purchase in the area of 4,000 or 5,000 dollars but they have purchased above the 90% allotment when available. Vice Chairperson Dietz asked if they were banking the credits now. District Director Frank Blanco stated they were banking some credits and recovering some credits. Vice Chairperson Dietz asked if the district would be charged if they did not have the credits to put back in. District Director Frank Blanco stated they would be charged by Central Arizona Groundwater Replenishment District. This is how they offset the amount they would owe them.Under the new agreement the water district would buy 90% of the first 2,000 acres which would allow them the flexibility to recharge Central Arizona Project water.It does not hold them to having to buy more credits than they need.They can then have a more expanded portfolio by having more long term storage credits that are effluent by the sewer district and also Central Arizona Project water that we recharge at a different facility.Under the old agreement the water district pays the invoice for excess credits within 20 days of the invoice.Under the new agreement they asked for 30 days. Under the old agreement the Central Arizona Project rates are established in June and the amount of money they are required to pay the sewer district for credits is based on the Central Arizona Project rates.They become effective the following calendar year.Under the current agreement they are established in June of the current year and then they become Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 4 of 13 effective in July. Under the new agreement they are asking that the rates that are established in June for the following calendar year become effective in January of the following year instead of six months earlier.The old agreement was a 10 year agreement and expires in December 31, 2015.The new agreement is a 40 year agreement and would expire December 31, 2052. Like most agreements there is a clause for either party to opt out of the agreement. The approval request is scheduled for the December 18, 2012 meeting. The reason for an early renewal is because the agreement does not expire until 2015.With the new rates effective in January of the following year instead of six months earlier they believe they will save an estimate of over $19,800 over a three year period. They will also be able to confirm their long term storage credits for future water, extending it from 2015 to 2052. Assistant City Manager Bryant Powell asked if the credits were annually invoiced from the sewer district to the water district and how much it was costing the water district annually. He also asked how other cities would get involved and interact in this interchange. District Finance Manager John White stated they are invoiced by calendar year after the Department of Water Resources reviews the submission by the sewer district of its annual water recovery reports. They are usually invoiced this time of year. They believe they will be invoiced approximately $125,000 within the next month.It is approximately a million dollars in ten years from the water district to the sewer district.A few years ago they were assessed a groundwater recovery tax of about $175,000 as well. This will allow them to offset that. The past couple years they have been relying on more surface water and have credits to apply because of this. The ground water recovery tax has been either negligible or less than $10,000. District Director Frank Blanco stated since other cities have one department responsible for water and sewer they are not charged storage credits. DISTRICT MANAGER REPORT None. Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 5 of 13 DISTRICT DIRECTOR REPORT District Director Frank Blanco stated well #5 is producing 22% of the total demand, well #6 does 16% and through the interconnect they are flowing 62% of their total demands, an average of 1.5 million gallons per day.This is the average from January to August of this year. They use more surface water than groundwater. The goal is to increase the amount of surface water even more. Vice Chairperson Dietz asked for an update on well #8. District Water System Superintendent Brad Huza stated they videotaped well #8 and they are evaluating it.The cleaning done back in 2010 appears to have done some good and they will have to go back and do some more video cleaning for it. They are going to do some testing on it to see if it is suitable for recharge. Vice Chairperson Dietz asked if they were going to use well #8 to recharge groundwater through it themselves. District Water System Superintendent Brad Huza stated they would only do that if well #8 has the geological formation to do it. Vice Chairperson Dietz asked how they will get the water to well #8. District Director Frank Blanco stated there is a transmission main that connects to well #8. Well #8 actually pumps into the same transmission main that delivers water to the storage on 16th Avenue and Buena Vista and the plan is to try to recharge the Central Arizona Project water. They are trying to evaluate if it is feasible. Vice Chairperson Dietz asked what the plan was if they cannot use well #8 to recharge the Central Arizona Project water. District Director Frank Blanco stated they could redevelop it as a production well. It was a production well at one time. Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 6 of 13 Vice Chairperson Dietz wanted to know if they could test deeper to see if they can get a higher production out of Well #8. District Water Superintendent Brad Huza stated if they deepened it now with the casing in place it would be extremely difficult. It can be done but would be very costly.The well is about 1,200 feet deep.It can be redeveloped and they can get 250 gallons a minute out of it which is what the original production was.The goal is to turn it into a recharge facility. District Director Frank Blanco stated they had a communication issue with their pump station at Signal Butte and Baseline.The pump station communicates with a cellular modem and if there is an alarm or problem at the pump station it calls first the cell phone,then it calls the supervisor's phone,then it calls his phone and continues rotating until it gets someone and the alarm is responded to. From Friday October 12, through Monday, October 15, the cellular modem was changed to a 4G from a 3G.It was an upgrade which is good but for the water board situation it did not work. The modem quit communicating and quit giving them an alarm. The problem was corrected and should not happen again. At the distribution system they have repairs going on at Denali and that has to do with the connection to their water system between the meter on the water district side and the distribution main. There is good progress on the storage tank at Baseline. Central Arizona Project water storage permitting process allows them to begin storing some of their Central Arizona Project water at the recharge facility located at Ocotillo and the Central Arizona Project canal.The process began with a pre -application meeting and written consent to store water from Central Arizona Project in November 2011.In February 2012 the Arizona Department of Water Resources application was submitted and in May 2012 the Arizona Department of Water Resources did a public notice for public comment to see if there was any opposition for the district to store water at the facility.In July 2012 they received a permit to store water at the facility from Arizona Department of Water Resources. Vice Chairperson Dietz asked if they were going to store Central Arizona Project water and where they were going to store it. He also asked if they were using well #8 to recharge Central Arizona Project water. Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 7 of 13 District Director Frank Blanco stated the storage is located at the facility on Ocotillo next to the Central Arizona Canal.The aquifer storage and recovery is a different permit. They have not gone through this process yet. There is a different process for the well and a different process for the aquifer.This is for recharging at a recharging facility. Vice Chairperson Dietz asked if the Central Arizona Project water they are storing is actually going back into the ground. District Director Frank Blanco stated it is.There are some recharge basins that store water that is pumped out of the Central Arizona Project canal into them and then that water infiltrates back into the aquifer. Vice Chairperson Dietz stated they are putting water back into the ground here and back in well #8. District Director Frank Blanco stated that is correct. This means there are two different locations where the water will be. Vice Chairperson Dietz asked if they still needed the other location if well #8 is successful. District Director Frank Blanco stated they are looking at a volume of about 200 gallons per minute. This is about 1/4 of a million gallons per day.They have the ability at the other facility to store the entire 2,919 acre feet of Central Arizona Project water. This gives them a greater volume of water that they can store for long term storage credits. The reason for acquiring the storage permit is to give us the flexibility to store Central Arizona Project water. If they get into a situation towards the end of the year where Central Arizona Project water is not used, then they have to pay for that water if they do not use it.If they have a storage permit and they have a large volume of water of more than 200 gallons per minute then they could store it at the storage facility.This gives them the option of ordering additional water and if they need it they can use it.If they do not need it then they can recharge it.This is the reason for the larger storage permit versus just storing at the well that allows only a very small amount of Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 8 of 13 water to be stored. They are working on an agreement to store water at the Superstition Mountains recharge project.The agreement would be between the Central Arizona Water Conservation District and the Apache Junction Water District. The Superstition Mountain recharge project has a capacity of 25,000 acre feet.The Arizona Department of Water Resource permit allows the water district to store 2,919 feet annually. They will probably not store that much but it gives them the flexibility of being able to store that entire amount. They would like to move forward with a lease agreement to lease Central Arizona Project water from Gila River Indian Community. Some of the municipal and industrial water they have left over they would store. They use the Indian lease water as first priority. This allows for operational flexibility as well.They can store it but they cannot sell or transfer it to another entity.The term of this agreement is ten years unless both parties agree to extend it.It is an agreement with the federal government. District Legal Counsel Joel Stern stated they have less than 1'1. chance of changing it. District Director Frank Blanco stated in the agreement the water storage rate for storing water is an annual recharge rate is established by Central Arizona Water Conservation District.The charge to recharge the water is 8 dollars an acre foot for the year 2013. The total cost for water storage includes storing Central Arizona Project water, the annual recharge rate of $8.00, $69.00 for operations, maintenance and recovery, a capital charge of $15.00 per acre foot and a pumping energy charge of $53.00 per acre foot.The total is about $145.00 per acre foot to store the Central Arizona Project water.The Central Arizona Project water belongs to the water district. The long term storage credits can be marketed, sold, exchanged or used to offset their Central Arizona Groundwater Replenishment District.Benefits of storing at Superstition Mountain Recharge Station are that it develops credits to be used as needed, it increases the use of Central Arizona Project allocation or existing allocation, and it provides operational flexibility to control their take or pay situation.If they order too much water they can store some of that water and do not have to pay for it. The location of the Superstition Mountain Recharge Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 9 of 13 Station is such that studies have shown it would impact positively their groundwater situation in terms of possibly recharging some of the water they are using.Some of the challenges are that the cost is slightly higher than the Superstition Mountain Sewer District; the location is shared with others so they have to put in their order and make good planning decisions on that and there is a limited capacity of 25,000 gallons per acre feet due to the permit. This is a lot of water but it is the limit that the recharge facility can charge. It is limited to Central Arizona Project water.There is also a potential for others to use the recharge facility to recharge effluent, but the water district can only recharge Central Arizona Project water at the facility.The water district does not own effluent. The water district would like to come back for approval of the agreement for storage water at Superstition Mountain Recharge Project on December 18, 2012.The lease agreement with the Gila River Indian Community for Central Arizona Project water was finalized in September of 2010.They received an extension in December of 2010 from Gila River Indian Community to be able to work the process through the Bureau of Reclamation. In April of 2011 the Bureau of Reclamation required an environmental study and in November of 2011 the bureau had a finding of no significant impact. In January of 2012 the Bureau of Reclamation revisions went to the water board and were reviewed by the water district attorney in July of 2012. The Bureau of Reclamation reviewed it again in August of 2012. The last contact with them was in October 2012. Water district is asking for a sentence regarding the lessee's usage of the water. This language was originally included in the Gila River Indian Community and city lease but was deleted by Bureau of Reclamation revisions.The water attorney recommends it be back on the lease.The Bureau of Reclamation is looking at these changes positively.The water district wants to add a clause to address the situation.If Water Utilities Community Facilities District is replaced or merged with the city, then they want to ensure that this water goes to the successor.Currently, the way the agreement is written, it is not in the agreement. It is very important to add this clause. District Legal Counsel Joel Stern stated it was going to be a long term agreement. If the City of Apache Junction decided to Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 10 of 13 take over the water district, that is where the worry is. It is why the language needed to be changed. District Director Frank Blanco stated they wanted to add a new section to the agreement that addresses the Arizona assured water supply rule regarding Indian lease water. This allows renegotiations before the lease expires. It is a 100 year lease. The Bureau of Reclamation is amiable to proposed changes. The Bureau of Reclamation wants to add a provision to the assured water supply section which is not going to affect the water district negatively. The date of termination was 100 years from the lease effective date.They want to change it to the lease effective date not the option effective date. The option effective date has already passed. The way the lease was written was that it was going to expire 100 years from the option effective date. They want to change it to the lease effective which has not happened yet.The Bureau of Reclamation is going to send changes to the water attorney for review so there is a little bit of progress on it.It is going to take a while to finally get the changes from them. If this lease agreement does not take effect then there is another plan. Salt River Project has a partnership with the Gila River Indian Community to market 30,000 acre feet of water. This is additional water they have decided to lease to the public.There is now a non -Indian agricultural water reallocation process and there is a pool of 51,962 acre feet that has been identified for municipal and industrial use.The problem with non -Indian agriculture water is that it is the first to be reduced if there is a reduction on the Central Arizona Canal system. It is not reliable water but is additional water that can be used. District Manager George Hoffman stated a couple of years ago Lake Mead was above 7 feet from the trigger point for cutbacks with the Central Arizona Project system.He asked what the status of Lake Mead is. District Director Frank Blanco stated it is recovering but is not back up to 7596 of capacity. It is not as critical as it was back then. If it did go back to the elevation it was at before then they would cut back on Central Arizona Project allocation. That is where the non -Indian agricultural water would be cut. Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 11 of 13 District Manager George Hoffman stated climate change has a real impact on water supply.The work the water district is doing to put water into the ground and store it for future use is real critical. DISTRICT TREASURER REPORT None. ADJOURNMENT ) Chairperson Insalaco adjourned the meeting at 6:42 p.m. ACCEPTED THIS 18TH DAY OF DECEMBER 2012, BY THE CHAIRPERSON AND DISTRICT BOARD OF THE WATER UTILITIES COMMUNITY FACILITIES DISTRICT,(CITY OF APACHE JUNCTION, ARIZONA). SIGNED AND ATTESTED TO THIS 12TH 2012. DAY OF DECEMBER ohn S. Insalaco Chairperson ATTEST: Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 12 of 13 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 24th day of October, 2012.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 24th day of October, 2012. Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of October 16, 2012 Page 13 of 13