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HomeMy WebLinkAbout2013-12-17 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING DECEMBER 17, 2013 The regular meeting of the District Board of the Water Utilities Community Facilities District, City of Apache Junction, Arizona, was held on December 17, 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 Barker Mrs. Evans Mr. Serdy Mr. Waldron Mr. Wilson Staff Present: (Mrs. Rizzi was absent.) George Hoffman, District Manager Kathleen Connelly, District Clerk Frank Blanco, District Director Joel Stern, District Legal Counsel Giao Pham, Utility Director Donna Meinerts, District Treasurer John White, District Finance Manager Michael Loggins, District Superintendent Others Present:Bryant Powell, Assistant City Manager APPROVAL OF MINUTES OF NOVEMBER 19,) Water Utilities Community Facilities District Meeting Minutes of December 17, 2013 Page 1 of 7 2013 ) Vice Chairperson Barker MOVED THAT THE MINUTES OF NOVEMBER 19, 2013, BE APPROVED. Mr. Waldron SECONDED THE MOTION. VOTE:Unanimous. The motion carried. PRESENTATION AND DISCUSSION ON CENTRAL ARIZONA PROJECT FUTURE WATER TREATMENT PLANT ) District Director Frank Blanco stated the water district completed a water system master plan in 2010.The five year Central Arizona Project master plan was approved by the water board.Water supply facilities that were recommended in the plan were a surface water treatment plant.This would supply 75 percent of the water supply and help the water district be less reliant on groundwater.They also have made distribution system upgrades which include pipeline upgrades on Broadway Avenue close to Central Arizona College and construction of a one million gallon water storage tank at Baseline.Booster station upgrades are in the plan but have not been completed.The current water district's vision and goals are to provide a reliable long term water supply and a water rich community.This includes 75 percent use of surface water and using groundwater for peaking and drought reserve.To meet this vision a 1.5 million gallons per day Central Arizona Project water treatment plant is planned.The water treatment plant would require a booster station to move the water from the plant into the transmission lines and a 100 year lease of 1,000 acres of Gila River Indian Central Arizona Project water. Mr. Ramesh Nirahsiman of Nirahsiman Consulting Services stated three options were looked at in the master plan.Over the last couple of years they have been refined and adjusted based on what is happening at other municipalities and the water resource situation.One option studied in the master plan is a separate Apache Junction water treatment facility owned and operated by the water district. Water Utilities Community Facilities District Meeting Minutes of December 17, 2013 Page 2 of 7 The second option is joint ownership of a water treatment facility with the City of Mesa.This would be a new plant built by the City of Mesa jointly owned by the City of Apache Junction.The last option is to continue the current path of buying water as a wholesale customer from the City of Mesa. There was a lot of discussion with the City of Mesa engineering and operations staff during the 2011-2012 time period.The City of Mesa was going to do this project but at this time it appears not to be feasible.The project has been suspended indefinitely past the year 2020.The water district is left with either continuing as a wholesale customer of the City of Mesa or Apache Junction building a separate facility.There are factors that need to be considered such as public perception, operational and political factors.These factors change over time so they need to have a strategy that is flexible over time.Facility controls are important as the community grows to manage water resources.Asset acquisition and bond rating is a very important long term factor to consider.The most important factor is water quality and compliance providing safe drinking water to the customers and having staff control it.Another factor is reliability.The water district has a commitment to provide additional surface water in the event of an unforeseen emergency.Another factor is the flexibility with respect to water supply and expansion.Determining which option works best if future development will have the Apache Junction water district in the prime position.Cost factors are favoring building the separate water treatment plant.There are long term cost considerations projected for twenty years under the two alternatives.One is the wholesale purchase from Mesa.The cost over a twenty year period would be $571,000 per year. This is probably on the lower end of the number.They have had a 2% increase and it has been more than that in some cases.A separate plant would be $261,000 per year to staff, operate and run.There is a big difference in reoccurring annual costs between the two alternatives.Right now there is $170,000 a year used to purchase long term effluent credits.Under the proposal of increasing Central Arizona Project water supply and running it at 1.5 million gallons per day, that cost would go towards Central Arizona Project resource allocation.It is proposed under this plan to not pay those costs to acquire the effluent recharge water, rather use the Central Arizona Project water they would be acquiring and recharging.There are two Water Utilities Community Facilities District Meeting Minutes of December 17, 2013 Page 3 of 7 components of the bill.There is a capital charge and an operations and maintenance cost. District Finance Manager John White stated the first cost is the monthly variable cost. It is for the treatment of water that passes through the Mesa system.The cost fluctuates based on the amount of water running through the system.If they were not to pass any water through the Mesa system the cost would be zero.A typical monthly cost is approximately $8,000 to run water through the Mesa system.If the water district takes no deliveries through Mesa they are still obligated for $15,633 in fixed costs.That is an increase from the prior year because of the volume that is going through the Mesa plant.This cost will fluctuate as years go by.Average cost will probably be 3%.Last year the reserve capacity charge increased 11% over what they were charged the year before.Part of that was inflation but also they were receiving more from the Mesa plant.In terms of long-term cost consideration, the $571,000 they would anticipate paying Mesa under this agreement versus the $261,000 we would pay without the agreement provides a difference of $310,000, not to mention another $170,000 savings from no longer having to pay the sewer district.This would be additional money the water district could apply to the long term capital cost for a treatment plant. There are a couple of costs with having a treatment plant.The Mesa wholesale treatment plant cost of $3,000,000 represents the additional acre feet leased from the Indian community.An amount of $8,200,000 consists of the $3,000,000 plus $5,200,000 in capital.As of November 30, 2013 they have $2,100,000 in capital replacement cost.This is something they would not anticipate applying to capital facility fees.They have alternative resources to take care of their ongoing replacement capital needs of their existing and aging system.Capital facilities fees are $1,100,000 and are connection fees that apply to new infrastructure.Land sales are $3,400,000.The land sales are from the sale of the old treatment plant site the water district inherited from its predecessor.The district's goal has been for these funds to be applied for long term water treatment and water supply charges.The water district economic agreement stems from the sale of the same land with a three way agreement with the developer, city and district.Currently, there is $400,000 in the account.The account accrues about Water Utilities Community Facilities District Meeting Minutes of December 17, 2013 Page 4 of 7 $140,000 every year.The water district has a total of $7,100,000 in the bank.Their strategy is to propose using about $4,000,000 from the land sale proceeds and the economic development intergovernmental agreement and a portion of the capital fees to leverage the cost.Through Water Infrastructure Funding Authority they can obtain favorable borrowing terms for the remaining portion of the capital cost of the borrowing cost and the Indian community water they would be using in the water treatment plant.Preliminary figures show debt service would range from $137,000 to $226,000 annually.That would be in addition to their existing debt which is a little bit more than $1,000,000.This strategy is in line with their incremental rates.They do not anticipate increasing rates.The goal has always been for growth to pay for itself.They would be able to leverage these monies.When growth comes they would be able to service the debt and replenish the monies with development fees and additional revenues. Mr. Ramesh Nirahsiman stated this is not a growth oriented initiative.It is to use the reductions and cost to offset the new debt.He thinks this is an important part of this whole program.He explained how the plant would be designed and function.It is intended to use a package treatment module in this range.This is good for the Colorado River water so if they needed to bring another half million gallons to the development it would just be added right on in a modular fashion with remote operation and administration facilities.The district's new supervisory control and data acquisition system would tie in as part of that.It would include some lined raw water storage.It is always good to have a few days of storage in the raw water in case the canal gets a high turbidity event other than the existing plant so they have their own storage to meet their customers' needs with modular treatment technology.There is a 5.8 acre parcel about a mile south of Baseline right on the Central Arizona Project canal. This is sufficient for the initial and future expansions up to 4 million gallons a day planned out in the master plan.The water would be pumped from this parcel to the 1 million gallon twin tanks on Baseline Road. District Director Frank Blanco stated their goal tonight was to introduce the concept of Water Utilities Community Facilities District Meeting Minutes of December 17, 2013 Page 5 of 7 an Apache Junction Water District water treatment plant versus the other options available to them.Staff's recommendation is to proceed with planning and design of the future construction of a district -owned surface water treatment plant.They would like to have the plans and design in place and be shovel ready to move forward with the plant.Once they come back and request approval from the water board, they will apply for a Water Infrastructure Funding Authority loan to help finance the plant. This alternative represents the lowest cost for water.It provides long term reliability, operational flexibility and autonomy.The staff will bring additional information to the water board.They will evaluate alternative funding strategies and develop an optimum method on how to move forward on financing both the facility and the infrastructure required to treat and deliver the water as well as the 1,000 acre feet of Central Arizona Project Gila River Indian Community leased water.They will come back to the water board in early 2014 and request action on this matter. Vice Chairperson Robin Barker asked how long it will take to go through the Water Infrastructure Funding Authority loan process. District Director Frank Blanco stated they met with their financial advisor and are working toward June 2014 as their target date.The intent is to get on the priority list. Chairperson John Insalaco stated he felt it was time to build it. DISTRICT MANAGER REPORT None. DISTRICT DIRECTOR REPORT None. DISTRICT TREASURER REPORT None. Water Utilities Community Facilities District Meeting Minutes of December 17, 2013 Page 6 of 7 ADJOURNMENT ) Chairperson Insalaco adjourned the meeting at 6:23 p.m. ACCEPTED THIS 21ST DAY OF JANUARY , 2014, BY THE CHAIRPERSON AND DISTRICT BOARD OF THE WATER UTILITIES COMMUNITY FACILITIES DISTRICT,(CITY OF APACHE JUNCTION, ARIZONA). SIGNED AND ATTESTED TO THIS 21ST DAY OF JANUARY 2014. n S. Insalaco hairperson 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 17th day of December, 2013.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 14th day of January, 2014. Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of December 17, 2013 Page 7 of 7