Loading...
HomeMy WebLinkAbout2014-01-21 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING JANUARY 21, 2014 The regular meeting of the District Board of the Water Utilities Community Facilities District, City of Apache Junction, Arizona, was held on January 21, 2014, 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 Mrs. Rizzi 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 Giao Pham, Utility Director John White, District Finance Manager Michael Loggins, District Superintendent Others Present:Bryant Powell, Assistant City Manager APPROVAL OF MINUTES OF DECEMBER 17,) Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 1 of 12 2013 ) Vice Chairperson Barker MOVED THAT THE MINUTES OF DECEMBER 17, 2013, BE APPROVED AND ITEM #5 BE MOVED TO FOLLOW ITEM #1. Mr. Wilson SECONDED THE MOTION. VOTE:Unanimous. The motion carried. CENTRAL ARIZONA WATER TREATMENT PLANT AND GILA RIVER INDIAN COMMUNITY WATER LEASE FUNDING STRATEGIES ) District Director Frank Blanco reviewed what the water district's current water supply vision and goals are.The vision is to provide a reliable long term water supply and a water rich community.This means the district would provide at least 75 percent of the surface water and use groundwater for peaking and ground reserve.To meet this vision the current projects are planned:a 1.5 million gallon water treatment plant and booster station and a 100 year lease for 1,000 acre feet of Gila River Indian Community Central Arizona Project water.They recently received notification that the Arizona Department of Water Resources approved 817 acre feet of non -Indian agricultural Central Arizona Project water to be reallocated or allocated to the water district.The lease is a 100 -year term lease.However, the non -Indian agricultural water is water the water district would own.It is part of the allocation so there is no term on that particular category of water.The only part that is non- beneficial is this water would not be available 100 percent of the time.If there is a shortage at the Central Arizona Project canal then agricultural water is the first to be cut.However, by having 1,000 acre feet of Gila River Indian Community water and groundwater available, with their current allocation they are able to mitigate any issues of a shortage on the canal.Options for implementation that are available to the water district are a separate Apache Junction water treatment facility or joint ownership with the City of Mesa.Staff was strongly given direction to move forward with a separate water treatment plant. Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 2 of 12 For a separate water treatment plant the price would be the maximum price they would have to spend acquiring particular elements of the project.The price could go up to $9.125 million.This price would include all the project elements and the water rights.The treatment plant piece is 5.2 million dollars.The Gila River Indian Community 100 -year lease is $2.875 million and the non -Indian agricultural water is $1.05 million.The maximum price they would be requesting for approval through Resolution No. 2014-001 would be $11,000,000 so they can apply for funds through the Water Infrastructure Finance Authority.In order to apply for funds from the Water Infrastructure Finance Authority they need to have a dollar amount.Water Infrastructure Finance Authority's recommendation is to have a conservative amount higher than what they expect to borrow versus one that is lower and then have to come back and ask for an increase on what they need to borrow.The Water Infrastructure Finance Authority can decrease the amount they want to borrow but they cannot increase the amount once they have a contract in place. District Finance Manager John White explained capital cost considerations.He talked about the current fund balances the water district has in their investment accounts.They have the capital replacement fees which are roughly $2.2 million and a major component of their portfolio.They do not want to use these funds for initiatives such as this project.It is important to be aware of these funds as far as their investment portfolio is concerned.It is an accumulation of their depreciation expense set aside every month.The board in 2009 authorized a rate increase sufficient to cover the district depreciation expense set aside for capital facilities replacement.This would be for old water lines that go out and well replacement.Capital facilities fees are for new infrastructure and connection fees.Land sale proceeds are proceeds from the.sale of land set aside for a water treatment plant.There is revenue from an economic development agreement with the city in the amount of $406,835.Staff has treated it as an extension of the land sale proceeds to use as leverage in the water treatment plant cost.Total amount of non -operating monies in the bank are $7,188,647. Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 3 of 12 Chairperson Insalaco asked if this meant there was roughly $4 million dollars to use for the water treatment plant. District Finance Manager John White stated that is correct.One of their options is $3.4 million from the land sale, $.4 million from the other governmental agreement, rounding it out with $200,000 coming from capital facilities fees, to arrive at $4 million.The remaining balance they are proposing to leverage the cost with funding from the Water Infrastructure Finance Authority.They could conceivably put $5.2 million dollars towards the plant, $2.875 million towards the Gila River Indian Community lease and $1.05 million for non -Indian agricultural water.Another option is to refund some of the water district's debt of $11 million as brought up as part of the resolution amount.It is an option that could be used as a maximum.It is a very conservative estimate assuming the policy decision is to leave the $4 million intact and fund everything through long term debt.The savings in annual cost if they were to borrow $11 million would be $740,000 per year.Most likely the water district would leverage it with existing funds.It would probably not exceed more than $600,000 annually.This would cover the surface water treatment plant, Indian community lease and the non -Indian agricultural water.The goal is to offset the debt service through savings such as through Mesa since the water district's purchases would be surface water rather than groundwater.They would have a lower need for replenishment credits.They would be able to save some money on not continuing with the sewer district agreement.They also have a large portfolio of long term storage credits.Debt authorization does not constitute new debt; it is almost like a credit line.The $11 million authorization is based upon $5.2 million dollars for treatment plant, $2.875 million for the Gila River Indian Community lease, and $1.365 million for non -Indian agricultural water in which only $1.05 million would be needed.If the water district was to retire the 2004 debt that would be $1.56 million.There is three years left on the debt.The debt savings in interest would be $41,700 if they were to retire it when eligible.The city did the same thing with their Municipal Property Corporation .debt with a saving of $46,000.This would be a greater savings.The requested authorization allows for greatest flexibility on how they finance the process.They will Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 4 of 12 continue to evaluate and present alternative funding strategies. The mix is between how much they want to spend from their investment portfolio versus how much do they want to borrow of the whole thing as mentioned in the debt authorization. Vice Chairperson Barker asked if this resolution was to give the water district permission to ask for an application from the Water Infrastructure Finance Authority. District Finance Manager John White stated that is correct.The water district will present the signed resolution to the Water Infrastructure Finance Authority.They will take it to their board and come back to the water district with a proposal and approval for the $11 million or a part of it.Then the water district would continue to go through the debt process.They would be bringing more documents forward as well.There were approximately 50 documents to sign when the water district went through this process in 2008. Vice Chairperson Barker asked when the water district expects to hear from the Water Infrastructure Finance Authority. District Finance Manager John White stated once the resolution is passed, it would be placed on the Water Infrastructure Finance Authority's agenda which is approximately February 18, 2014. District Legal Counsel Joel Stern stated the resolution asks for permission for them to file an application.It does not ask the Water Infrastructure Finance Authority to provide an application form.It is similar to the process the city has to go through when they file an application for a community development block grant.They have to get permission from the city council to file an application for funding. District Director Frank Blanco stated they had an intermediate step when the water district applied to get on a priority list.The Water Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 5 of 12 Infrastructure Finance Authority.They are on the list and the next step is to get the resolution approved and then apply for funding. RESOLUTION NO. 2014-001, AUTHORIZING SUBMISSION OF AN APPLICATION TO THE WATER INFRASTRUCTURE FINANCE AUTHORITY OF ARIZONA FOR DRINKING WATER STATE REVOLVING GRANT FUNDING) ) Mr. Waldron MOVED THAT RESOLUTION NO. 2014-001, A RESOLUTION OF THE BOARD OF DIRECTORS OF THE WATER UTILITIES COMMUNITY FACILITIES DISTRICT AUTHORIZING SUBMISSION OF AN APPLICATION TO THE WATER INFRASTRUCTURE FINANCE AUTHORITY OF ARIZONA FOR DRINKING WATER STATE REVOLVING GRANT FUND BE APPROVED. Mrs. Rizzi SECONDED THE MOTION. VOTE:Unanimous. The motion carried. CONSTRUCTION AGREEMENT WITH ARIZONA COATING APPLICATORS, INC. FOR COATING THE INTERIOR AND EXTERIOR OF A ONE MILLION GALLON STORAGE TANK IN AN AMOUNT NOT TO EXCEED $182,850. ) District Director Frank Blanco stated this is for approval of the contract to do the interior and exterior coating on the steel tank at Baseline, an existing tank next to the public works department.This will finalize the completion of this site.They built the concrete storage tank and the chlorination system on site.They did some improvements to well #6 to connect it to supervisory control and data acquisition system.The last improvement is to rehabilitate the tank which is what they are doing now. District Legal Counsel Joel Stern sent the board notification of a protest that occurred Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 6 of 12 during the bid process.There were five companies that bid to do the coating.The prices the companies provided ranged from $416,000 to $182,000 which included the 10% normally added in case there are cost overruns.They had a protest hearing.The protester did not show up and advised the city they would not be showing up. Assistant City Manager Bryant Powell stated the protester did not inform the city they would not be at the hearing until approximately a half hour before the hearing. District Legal Counsel Joel Stern stated they proceeded with the hearing because the protester technically did not pull their protest.Staff testified and the decision was made to deny the protest.The way the code reads, that is the last step for a governmental agency, in this case, the water district, has to do.The next step would be for the protestors to file in court if they so desire.They have 35 days from the date they were notified. They would have roughly mid -March to go to superior court and ask for the process not to occur.The water board can either decide to wait for the appeal period to be over or take the risk.Even if the protester files something it does not mean they would win.Based on the substance of their protest the district has a very good shot of prevailing on any lawsuit.The protest was taped and the tape recording came out.If they filed a lawsuit it would have to go before a superior court judge.They would have to file their filing fee which is about $300 and then the judge would have to decide based on the tape recording whether Mr. Powell was arbitrary or capricious in his decision making.This would be based on the evidence that was heard at the hearing.The judge could do a number of things such as stating they cannot have this process but the judge would also be reminded that they have already awarded the contract.At this point it would be a moot point.Under the law it means it would be dismissed.They could file a damage lawsuit against the city which would be a totally separate action. Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 7 of 12 Vice Chairperson Barker stated since they did not bother to show up for the hearing she seriously doubted they would do anything else. District Legal Counsel Joel Stern stated they mentioned in their last statement they would not be at the hearing but they would continue to bid on district projects. Assistant City Manager Bryant Powell stated they also mentioned they trust the attorney's office final outcome. Vice Chairperson Barker asked why 10% was mentioned as the norm for the contingency but this agreement reads 15%. District Director Frank Blanco stated Page 1, Section B 2 of this agreement does state a 15% contingency which is 15% of the total amount.Part of the reason for this is because there was such a wide spread in the price range from the bids.One was around $400,000 and another at $159,000.The water district felt perhaps a higher contingency would be warranted under this contract. Mr. Wilson asked if the tank was currently coated and if they would be removing it. District Director Frank Blanco stated they would be sand blasting the interior and exterior of the tank and doing any patchwork that is required on the floors and walls if necessary.They will be prepping and coating the interior and exterior of the tank. Mr. Wilson asked if it is possible they could find damage to the tank they may not know about.They sent divers down to take video and do an inspection with the silt still intact.They really could not see the floor so they drained the water and actually walked inside the tank. They felt the tank would be able to be repaired and not have to be replaced. Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 8 of 12 Vice Chairperson Barker MOVED THAT THE AGREEMENT BETWEEN THE APACHE JUNCTION WATER UTILITIES COMMUNITY FACILITIES DISTRICT AND ARIZONA COATING APPLICATORS, INC. FOR COATING THE INTERIOR AND EXTERIOR OF A ONE MILLION GALLON STORAGE TANK IN AN AMOUNT NOT TO EXCEED $182,850, BE APPROVED. Mrs. Evans SECONDED THE MOTION. VOTE:Unanimous. The motion carried. RATIFICATION OF EMERGENCY PURCHASE CONTRACT WITH SOUTHWEST WATERWORKS CONTRACTORS, INC. FOR PUMPING EQUIPMENT REPLACEMENT AT WELL #5 IN AN AMOUNT NOT TO EXCEED $85,320.) ) District Superintendent Michael Loggins stated in December the district noticed well #5 production was dropping off.About mid -December they completely lost the well and were out of water at the site. They knew the well was going down because the SCADA system showed a loss of production in the months before.They obtained five bid proposals in from contractors.As soon as the well went down they wanted to get the well back up and serviced. They moved forward by bringing the contractor over.They were initially going to have them pull it out and assess it but when it went out of service they did an analysis and the pump was worn out, the column pipe was split, and the tube and shaft were corroded.It required replacement at that time.They wanted to move forward so they could get it back in service for the community.The water district asked the board for ratification after the fact on this contract. Mr. Waldron MOVED THAT THE EMERGENCY PURCHASE AGREEMENT BETWEEN THE APACHE JUNCTION WATER UTILITIES COMMUNITY FACILITIES DISTRICT AND SOUTHWEST WATERWORKS CONTRACTORS, INC. FOR PUMPING EQUIPMENT REPLACEMENT AT WELL #5 IN AN AMOUNT NOT TO EXCEED $85,320, BE RATIFIED. Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 9 of 12 Mrs. Rizzi SECONDED THE MOTION. VOTE:Unanimous. The motion carried. DISTRICT MANAGER REPORT None. DISTRICT DIRECTOR REPORT None. DISTRICT TREASURER REPORT District Treasurer John White presented a copy of the December financial report to the board.There were a few key items he wanted to go over with them.The residential sales were $1,558,000 compared with $1,473,000 last year at this time.It is hard to define one particular source.It seems to be all across the board.Their consumption sales are up both in single family residential in all categories, including mobile homes, master meter homes and apartments.Service charges are up which are the monthly base fee in all categories with the minor exception of the master meter communities.The master meter communities have the same number of connections for the most part but there is a higher volume which would mean there is likely a higher transient/snowbird population which boosted the residential sales.The single family residential sales are up this year as well.The system operations are up over $50,000 over last year.They have some additional new personnel such as a professional level superintendent and an additional maintenance worker.With these vacancies being filled, their system operations expenses are up.There was an $8,500 expenditure for transmission replacement in one of the backhoes under the operating expenses versus revenues.In the last year they have had a negative amounts.The key reason is $857,000 in capital allotted last year for the water tank.This brought their net expenditures to be in excess of their revenues.This was a planned expenditure but does affect the bottom line.They Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 10 of 12 were in the red in the amount of $394,000 last year because of the tank construction.This year they are in the black about $98,000.The cash balances include the funded appreciation capital fees, economic development agreement and land sale proceeds.Their general investments were in the red last year because they had the capital expenditures.It was not until the next month they received reimbursement from the Water Infrastructure Finance Authority to cover that.They advanced some expenditures and then they recovered them later. ADJOURNMENT ) Chairperson Insalaco adjourned the meeting at 6:33 p.m. ACCEPTED THIS //4#2.714/DAY OF , 2014, BY THE CHAIRPERSON AND DISTRICT BOARD OF THE WATER UTILITIES COMMUNITY FACILITIES DISTRICT,(CITY OF APACHE JUNCTION, ARIZONA). SIGNED AND ATTESTED TO THIS 2014. ATTEST: Kathleen Connelly District Clerk a -74 LIZ DAY OF n S. Insalaco ' hairperson Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 11 of 12 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 21st day of January, 2014.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 3rd day of February, 2014. Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of January 21, 2013 Page 12 of 12