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HomeMy WebLinkAbout2013-05-07 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING May 7, 2013 The regular meeting of the District Board of the Water Utilities Community Facilities District, City of Apache Junction, Arizona, was held on May 7, 2013, 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 Joel Stern, District Legal Counsel Brad Huza, Water System Superintendent Giao Pham, Utility Director Donna Meinerts, District Finance Director Others Present:Bryant Powell, Assistant City Manager Hazel Randall, Administrative Assistant APPROVAL OF MINUTES OF MARCH 19, 2013 ) Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 1 of 14 ) Vice Chairperson Dietz MOVED THAT THE MINUTES OF MARCH 19, 2013, BE APPROVED. Mrs. Barker SECONDED THE MOTION. VOTE:Unanimous. The motion carried. RESOLUTION NO. 2013-002, A RESOLUTION OF THE BOARD OF DIRECTORS OF THE WATER UTILITIES FACILITIES DISTRICT (CITY OF APACHE JUNCTION, ARIZONA), AUTHORIZING THE COMPLETION OF THE NON -INDIAN AGRICULTURAL REALLOCATION APPLICATION FOR WATER UTILITIES COMMUNITY FACILITIES DISTRICT ) District Director Frank Blanco stated non -Indian agricultural priority water was originally identified as non -Indian agricultural use water.It is a pool of water that was declined by the recipients of growers and farmers. These recipients did not want to pay for the allocation of this Central Arizona Project water.This pool of water is now being reallocated.This water is low priority water and may only be available 70% of the time.At times when there is enough water in the canal and there are not any cutbacks in deliveries, then it is available 100% of the time. The estimated time is about 70% of the time over a period of 100 years.They must have additional sources available to augment it if they were to become recipients of some of the non -Indian agricultural water reallocation process.This would mean they would be able to augment that supply with either their other Central Arizona Project water allocation or groundwater.This non -Indian water may be used for recharge or direct delivery. It is very similar to their municipal and industrial allocation but it has a lower priority.It is the last bucket of Central Arizona Project water.After this allocation there will be no more allocations of Central Arizona Project water for any municipality and any other Central Arizona Project water user. The last step is for Arizona Department of Water Resources and Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 2 of 14 Bureau of Water Reclamation to allocate this non -Indian agricultural water.There are 96,295 acre feet total of non- Indian agricultural water that will be reallocated.Of that water, 78,962 acre feet will be available for municipal and industrial use and 51,962 acre feet of that will be available for the 2012 reallocation.There will be another amount of water reallocated but it is still the non -Indian agricultural water.This process is planned to begin in 2014.The 2014 process includes 51,962 acre feet as of the notice that was received October of 2012.There will be a lot of competition for this water. The application process started in October 2012. This is when Arizona Department of Water Resources and Central Arizona Project began their meetings for the non -Indian agricultural water application process.Public comments were submitted in November 2012.The water district also submitted some comments on it.Pricing was approved in February 2013. The price announced is $1,288 per acre foot.This is a onetime payment for the non -Indian agricultural water if they are to be allocated some of the water.This price pays for some back debt for some capital the farmers or original recipients of the water did not pay for.There would be an annual charge they would pay to keep this allocation in place.The pre -application meetings are ongoing and they need to schedule one if they are approved in order to move forward on this application process.The applications are due June 14, 2013.The application itself identifies acquisition costs and the intention to meet the financial requirements.They have been told Water Infrastructure Finance Authority is looking positively at financing this non -Indian agricultural water using Water Infrastructure Finance Authority funds.This is different than what they normally have funded which is infrastructure, pipes, canals and water treatment plants.The application must outline the plan for using the water by 2020.Part of the plan has to identify shortages and alternate sources they need to address. If they become recipients of the water they would have to address the shortages in terms of being able to supply their customers just in case there was a reduction of water supply due to the non -Indian agricultural water low priority.The application must show the manner and ability to directly use the water, recharge the water, recover it or use it to replenish the groundwater supply.They are requesting approval of Resolution 2013-002 that would authorize staff to submit an application for Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 3 of 14 non -Indian agricultural water.Submittal of the application does not guarantee they would be offered the water nor does it guarantee they would move forward on acquiring it without the board's approval. Vice Chairperson Dietz asked how many acre feet they were looking for. District Director Frank Blanco stated he and Brad Huza have done an analysis on it. They show they could use between 1,000 to 1,300 acre feet by 2020 by using the water master plan and information from the Arizona State Land Department and their current service area. It is all dependent on growth as well. Mr. Wilson asked if this water could be used for anything. Mrs. Barker asked if there was a required use. District Director Frank Blanco stated it can be used for direct delivery to their current and future customers.They can recharge the water for future use to develop long term storage credits.It is considered Central Arizona Project water.Anything they are able to do with Central Arizona Project water they are able to do with non -Indian agricultural water.They would primarily use it for recharge for direct delivery to their customers. Mr. Wilson asked if it would slow down their pumping process and if this could be used as their primary source of water supply. District Director Frank Blanco stated that is correct and they could also use it to reduce their groundwater pumping.There is a limit to how much they can reduce in groundwater pumping and it is directly related to operation of their wells.They have to operate the wells on a regular basis.They historically have used about 500 acre feet of groundwater over the past two years.They would Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 4 of 14 still use some groundwater but they can reduce groundwater pumping and keep it at a minimum. Mrs. Barker asked how this would benefit them in the future; use for customer service, recharge, or whatever. District Director Frank Blanco stated it expands their water portfolio by having additional water available for economic development.It helps them avoid groundwater pumping.Primarily it expands the water resources they have available to the water district. Mrs. Barker asked if this was just until 2020. District Director Frank Blanco stated once a municipality receives an allocation for non -Indian agricultural water then it becomes that municipality's water as long as the subcontract is in place. They have to have a plan on how they are going to use the water by 2020 and begin using it by then. Mrs. Barker stated she thought they have to use the water by 2020.She misunderstood. City Manager George Hoffman stated one of things in the future they would like to have is another water treatment plant, Gila River Indian Community water and the expenditures.All three are pretty sizable potential expenditures.They have some money in the bank.He asked District Director Frank Blanco to explain what he envisioned their debt capacity to be. District Director Frank Blanco stated he believed the debt capacity ratio was 1.72, the last time they checked.Part of the financing strategy Central Arizona Project has put together is they will finance this water over a five year period.This is important for non -Indian agricultural water.One thing they are working on is an exchange agreement.One part of the agreement would help them fund non -Indian agricultural water if they were to become Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 5 of 14 recipients of it.They are looking at a 10 year exchange agreement.What the water district is proposing is a third party pay for 10 years of water over a period of 5 years.Using this, possibly Water Infrastructure Finance Authority would finance the non -Indian agricultural water.The Gila River Indian Community project is still something they need to work on.They are working on a water resource acquisition study which is dependent on development.There are things they seriously need to work on and address before they ask the board to make a decision on the final Gila River Indian Community lease.They will come back with a financial plan for that as well.They have received interest regarding a water treatment plant from other cities such as Queen Creek.Arizona Water and Salt River Project are proponents of this.They may be able to work as a team and have a regional water treatment plant versus having their own facility or partnering with Mesa. Vice Chairperson Dietz MOVED THAT RESOLUTION NO. 2013-002, A RESOLUTION OF THE BOARD OF DIRECTORS OF THE WATER UTILITIES COMMUNITY FACILITIES DISTRICT (CITY OF APACHE JUNCTION, ARIZONA) AUTHORIZING STAFF TO SUBMIT A NON:INDIAN AGRICULTURAL PRIORITY CENTRAL ARIZONA PROJECT WATER REALLOCATION APPLICATION TO THE ARIZONA DEPARTMENT OF WATER RESOURCES BE APPROVED. Mrs. Barker SECONDED THE MOTION. VOTE: Unanimous. The motion carried. DISCUSSION AND CONSIDERATION OF PROFESSIONAL SERVICE AGREEMENT WITH EIC ENGINEERS, L.L.C. FOR PROGRAMMING AND CONSTRUCTION MANAGEMENT OF SUPERVISORY CONTROL AND DATA ACQUISITION SYSTEM ) District Director Frank Blanco stated the water board approved and awarded a supervisory control and data acquisition system contract.This is a contract to actually construct a supervisory control and data Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 6 of 14 acquisition system which was awarded on March 19, 2013.This was awarded to Keller Electric Industries.It was for an amount not to exceed $176,228.30 with a 15% contingency for unforeseen change orders.Supervisory control and data acquisition is used for monitoring and controlling field devices and to remotely collect data and control equipment.It is a communication network and is used to relay commands to equipment to start, stop and things of that nature, and to return process data.It is a graphic representation of the process with a screen that shows fields, sites and shows pipes running with a certain color and shows levels of water in tanks, etc.It is also a data base that defines and stores information which generates reports and provides trending.They have the ability to go back in time and see what went wrong based on tank levels or pressures in the system, or pumps going on and off.It also provides an alarm management system for on -call and emergency responders.They are requesting a professional services agreement for programing of the supervisory control and data acquisition system.At the time they requested a contract be awarded for the construction of this system they also needed an additional professional services agreement to do programing and to do construction management for the supervisory control and data acquisition system.It is one of the most important steps in the process because it is the foundation for the system.If the programing is not accurate, then they will not be able to depend on anything to work properly.They are asking that they enter into the professional service agreement that will provide programing for supervisory control and data acquisition that will enable communication between the operator and the work station.The field devices and the programming will also enable remote monitoring and controls of the field control system.It also provides for construction management services which will include equipment submittal review and approval, trouble shooting and implementation and operator training.It is a specialized trade.It is not something the water district employees have expertise in and most civil engineering firms are not familiar with the programing.Construction management and services are required for a supervisory control and data acquisition system. The cost of the service for the professional service agreement programing is $41,716.This includes an $8,000 allowance. Construction management services are $29,198 which includes a $400 allowance.The agreement is set up for a 10% maximum Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 7 of 14 contingency allowance above that for any unforeseen change orders that would cover that amount. Mrs. Barker asked if future troubleshooting was included in the bid or if it is over and above that amount. District Director Frank Blanco stated there is a warranty that comes with it.It includes the programing and is typically a one year warranty. The engineers that are requesting to have this agreement approved are also their on -call engineers which are familiar with their water system. Mrs. Barker asked if there is a break on providing the upgrade for the software in the next year or two.They upgrade pretty quickly on these. District Director Frank Blanco stated is comes with a one year warranty.After one year they will have to pay for a service agreement to cover maintenance. Mrs. Barker asked if they would be coming back in a year for approval of another service agreement to maintain, troubleshoot, the licensing agreement, etc. District Director Frank Blanco stated they would have to come back in a year for approval of another service agreement.The total amount of the professional service agreement they are requesting is $78,005.40. Mr. Waldron stated there is quite a difference in cost between each item.He wondered if there is more programing involved in certain items.Item #6 was a lot higher than #5 and #8. District Director Frank Blanco stated Well #6 also includes an arsenic treatment facility.It is the only site where they have arsenic Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 8 of 14 treatment.It includes replacement of the existing automation that is involved in the treatment process for removing the arsenic at well #6.It is the most difficult site that requires the most number of hours.That is why it is significantly higher than well #5.Well #8 has -very little work that will be done on it. Mr. Waldron MOVED THAT THE PROFESSIONAL SERVICES AGREEMENT BETWEEN APACHE JUNCTION WATER UTILITIES COMMUNITY FACILITIES DISTRICT AND EIC ENGINEERS, L.L.C. FOR PROGRAMMING AND CONSTRUCTION MANAGEMENT OF SUPERVISORY CONTROL AND DATA ACQUISITION SYSTEM IN THE AMOUNT OF $70,914.00 PLUS 10% CONTINGENCY OF $7,091.40 FOR A TOTAL OF $78,005.40 BE APPROVED. Vice Chairperson Dietz SECONDED THE MOTION. VOTE: Unanimous. The motion carried. DISTRICT MANAGER REPORT None. DISTRICT DIRECTOR REPORT District Director Frank Blanco asked Water Systems Superintendent Brad Huza to explain the water system update on Arizona Department of Environmental Quality sampling. Water System Superintendent Brad Huza stated they thought it would be applicable to explain it since the new consumer confidents report had just come out.He hoped all of the board had received a copy of it.They sample for inorganics such as arsenic because we have an arseniC treatment facility at well #6.They do volatile seasonal and volatile organic compounds. These are typically associated with petroleum products such as benzene, toluene and vinyl chlorides.Synthetics are usually coming from pesticides.They were in compliance.In all their samplings they did'not detect anything.All the systems are within compliance.Wells are operational and in compliance with Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 9 of 14 Arizona Department of Environmental Quality.They went through their sanitary survey and received a clean bill of health before any kind of letter was written.Arizona Department of Environmental Quality was very complimentary on how they maintain the facilities.They could not find anything wrong with them.They are in the process of completing the one million gallon storage tank at Baseline Road.It will bring them to two million at the Baseline facility and two million at booster one.It will be extremely important with summer coming because they will be able to start utilizing time of use which will in turn save their power bills and cut operational cost. The supervisory control and data acquisition system project is up and running.Keller has made numerous submissions and just recently finished their radio path study to ensure the radios will talk to all the facilities on the new supervisory control and data acquisition system.Computers and software have been ordered.It is an Allen and Bradley base.It should be within the next month -and -a -half.Now that they have passed the consultants they can go on to the programing phase and start developing screens.It is an exciting time for operations because operations will be able to interface very closely with the consultant to get all the issues resolved with respect to operation.They will be able to get all their input into it and it will all be built into the screens for them. District Director Frank Blanco discussed the progress of the Red Mountain Water exchange fee.He stated the exchanges were for 500 acre feet of Apache Junction Water District/Central Arizona Project water which is exchanged to the Red Mountain Ranch for 500 acre feet of type 2 groundwater.The water district pumps Central Arizona Project water which is exchanged from the Red Mountain Ranch.The agreement is a ten year term.They recently received some of the key points for the agreement from Bill Anger, their water attorney.The way the agreement works is the water district withdraws 500 acre feet of Central Arizona Project water from its existing wells.Red Mountain receives 500 acre feet of groundwater from the Central Arizona Project canal.These are the amounts annually for a period of 10 years. Mrs. Barker asked what the advantages were to the agreement. Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 10 of 14 District Director Frank Blanco stated the advantages are they are pumping Central Arizona Project water from their wells without recovering long-term storage credits they had purchased either from the sewer district or accumulated earlier from Central Arizona Project water.Instead of recovering their long-term storage credits, they were able to keep them in the bank, so to speak.They are still pumping Central Arizona Project water from the wells even though in reality it is groundwater but because of the exchange Arizona Department of Water Resources considers it Central Arizona Project water. They are exchanging Central Arizona Project water for groundwater Red Mountain Ranch takes out of the canal.Arizona Department of Water Resources counts the water that comes out of the canal Red Mountain Ranch takes as groundwater.They count water the water district pumps out of their wells as Central Arizona Project water. Vice Chairperson Dietz asked if they can afford to do this for 10 years. District Director Frank Blanco stated they could.The reason why is because they show in the cost of Central Arizona Project water, but the way they are trying to get the agreement moving forward is that Red Mountain Ranch would pay for 1,000 acre feet of Central Arizona Project water for the first 5 years even though they would only take 500 acre feet of Central Arizona Project water for the first 5 years. Vice Chairperson Dietz asked why Red Mountain Ranch would do this. District Director Frank Blanco stated they would do it because they need the water.There is no more Central Arizona Project water.Before this Red Mountain Ranch was taking what Central Arizona Project was terming as excess Central Arizona Project water.As of 2015, there will be no more excess to Central Arizona Project water for Red Mountain Ranch to use.The water district could afford to give up 500 acres to help Red Mountain Ranch because they already pump this amount of groundwater on an annual basis.This agreement offsets the amount they would have to replenish because they are no longer pumping groundwater. They are pumping Central Arizona Project water. Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 11 of 14 Assistant City Manager Bryant Powell asked what they would do if the golf industry were one where Red Mountain Ranch has to raise their prices and are unable to compete and unable to meet their agreement. District Director Frank Blanco stated neither party had the ability within the first five years of the agreement to cancel it.After five years either party can cancel the agreement.It would not be beneficial for the water district to cancel the agreement, but if Red Mountain Ranch wanted to cancel the agreement then there is a clause in the agreement in which the water district would have to pay them back some of the money they basically fronted the water district. District Legal Counsel Joel Stern stated they are still working on some details with Bill Anger and Red Mountain Ranch.They do not have it in good order for counsel to look at it yet on paper. District Director Frank Blanco stated the water district and Red Mountain Ranch share the cost of Central Arizona Project water essentially.Red Mountain Ranch pays all of the cost up front during the first five years.Red Mountain Ranch pays for the cost to deliver Central Arizona Project water to the canal turn out to their point of use.Red Mountain Ranch has been using the Central Arizona Project canal to water their golf course for 10 years or so.This is their only source of water for the golf course unless they were to connect with the City of Mesa for potable water, which would be very expensive.Red Mountain Ranch pays for the cost to deliver from the turn out.Red Mountain Ranch cannot reassign the water.They cannot sell it to anyone else after they purchase it from the water district and make a profit.This agreement is contingent upon Arizona Department of Water Resources' approval.Red Mountain Ranch has to pay Arizona Department of Water Resources an application fee. All costs incurred for moving the application forward are paid to Arizona Department of Water Resources by Red Mountain Ranch. They will have more details regarding the agreement as they become available. District Legal Counsel Joel Stern stated he received an e-mail that redefines some of the terms of the agreement.He and Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 12 of 14 District Director Frank Blanco had a meeting with Brad Huza and also Bill Anger.They talked about some of the main points.He hopes they will have something more to put in the boards packets that will have the agreement make more sense. District Director Frank Blanco wanted to bring the board up to date on operational costs.These are the costs they incur to produce water and deliver water.This includes the cost for Central Arizona Project water, chemicals to treat the water and electricity.When they compare fiscal year 2011-2012 it is about $577,866.Projected to the end of 2012-2013 is about $578,000.This is very close to what they spent last year. They did receive something from Salt River Project telling them they are reducing their electrical rates.They should see some improvement there. DISTRICT TREASURER REPORT None. ADJOURNMENT ) Chairperson Insalaco adjourned the meeting at 6:45 p.m. ACCEPTED THIS 18TH DAY OF JUNE , 2013, BY THE CHAIRPERSON AND DISTRICT BOARD OF THE WATER UTILITIES COMMUNITY FACILITIES DISTRICT,(CITY OF APACHE JUNCTION, ARIZONA). SIGNED AND ATTESTED TO THIS 18TH , 2013. DAY OF JUNE hn S. rfisalaco Chairperson Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 13 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 7th day of May, 2013.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 14th day of May, 2013. Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of May 7, 2013 Page 14 of 14