Loading...
HomeMy WebLinkAbout2015-05-05 WUCFD MINUTESWATER UTILITIES COMMUNITY FACILITIES DISTRICT CITY OF APACHE JUNCTION, ARIZONA REGULAR MEETING MAY 5, 2015 The regular meeting of the District Board of the Water Utilities Community Facilities District, City of Apache Junction, Arizona, was held on May 5, 2015 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 Mr. Serdy Mr. Wilson Mr. Waldron Mrs. Rizzi (arrived 6:03 Mrs. Evans (arrived 6:30 Staff Present: Others Present: ID • m • ) P • m • ) Frank Blanco, District Director Joel Stern, District Legal Counsel John White, District Controller Kathleen Connelly, District Clerk Bryant Powell, Assistant District Manager Donna Meinerts, District Treasurer Giao Pham, Utility Director Mike Loggins, District Superintendent Evie McKinney, Water Accounts Supervisor Andria Samuels, Senior Administrative Assistant Jeff Bell, Parks and Recreation Director Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 1 of 12 Larry Kirch, Development Services Director APPROVAL OF MINUTES OF APRIL 21, 2015 ) Vice Chairperson Barker MOVED THAT THE MINUTES OF APRIL 21, 2015, BE APPROVED. Mr. Waldron SECONDED THE MOTION. VOTE:Unanimous. The motion carried. DISCUSSION ON PROPOSED DISTRICT BUDGET FOR FISCAL YEAR 2015-2016 )District Director Frank Blanco talked about the district's proposed budget with some highlights and goals in line with their vision of the acquisition of additional water supplies, long-term water treatment options, upgrading and maintaining the water system and insuring goals are met in a financially responsible and adequate manner.Some highlights from FY 2014-2015 are the closing of the Water Infrastructure Finance Authority loan, paying the 2004A series bond, restructuring the 2006 and 2008 bonds and exercising their Central Arizona Project water lease option.The Apache Junction Central Arizona Project water treatment plant master plan and design was completed and the bid on the project was awarded to Garney Construction.The water district will begin plant construction towards the end of this fiscal year.The Ironwood water line replacement project is still on schedule as well.The 2015-2016 goals are to have a substantial completion of the water treatment plant including the start of treating water, reducing dependence on Mesa Central Arizona Project water, negotiating some new intergovernmental agreements with the City of Mesa that expire in 2016 and the sewer district agreement which expires in 2015.The other goals are to recharge Central Arizona Project water into the Roosevelt Water Conservation District groundwater savings facility as well as recharging some Central Arizona Project water into the Salt River Project groundwater savings facility.They will be focusing on primarily getting the water treatment plant Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 2 of 12 completed and started up.The budget is ambitious but he feels it is financially responsible.It includes the construction of the plant, updated financing strategies for the plant and some rate adjustments.The proposed rate adjustments do not include an increase to consumption rates however the water district is proposing a base rate increase of 5% and adjustments to the consumption rate tiers.Prior to 2008, the water district had a uniform rate structure which means consumption cost was the same for water regardless of the monthly amount of water that was used.Tier rates were introduced in 2008 as a water conservation incentive.Consumption rate increases as consumption increases.Regionally, Los Angeles and Phoenix have tier rates.Nationally Boston, Milwaukee and Philadelphia use decreasing block rates which means the water becomes cheaper as more water is used.The water district is trying to conserve water.On the other hand, Boston, Milwaukee and Philadelphia are not.They have industries like Samuel Adams and Miller that use a lot of water.On a water district water bill there is a monthly base service charge, a water consumption charge and sales tax.The monthly base service charge pays for operations, system maintenance, machinery and equipment, staff and administrative costs.The water consumption charge pays for energy, chemicals and raw water.The monthly base service charge is a fixed amount and the water consumption is variable depending on how much each costs for chemicals and raw water. District Controller John White discussed the district three tier structure and how the district is proposing to modify them.He stated the district has a three tier consumption rate.Historically, the district has had a lifeline rate of $3.88 per thousand gallons for the first 5 thousand gallons.The $3.88 was the rate the district inherited when they took the system over from Consolidated. When the district first introduced the tier rates, there were concerns about the effect the increase would have on their financially -challenged fixed income consumers.They developed the lifeline rate and kept it at $3.88 per thousand gallons for the first five thousand gallons. Vice Chairperson Barker asked why they dropped it. Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 3 of 12 District Controller John White stated they are dropping it to pick up additional revenue. Assistant City Manager Bryant Powell stated it is the proposed rate.This is an idea for this year.It does not mean they are tied to it.It is just a rate proposal. District Director Frank Blanco stated they did some analysis on how many people this rate change would affect in terms of the lower income.It was a minimal amount percentage -wise.It was not significant in that lowering from 5,000 to 4,000 did not have a significant impact on their customer base. Mr. Wilson asked what the average use is per month. District Superintendent Mike Loggins stated through the analysis they found about 200 customers or about 5% of their customer base would be affected by the proposed rate change.It is a really low amount of customers affected by changing things around, but they gain a slight amount of revenue without raising the rate that would affect everybody. Vice Chairperson Barker commented if this is going to gain revenue than obviously the folks that were on this lifeline rate, who are financially- disadvantaged, use more than 4,000 gallons because the district is expecting to make some money off of this rate change.This means the customers will pay more for the additional 1,000 gallons. District Superintendent Mike Loggins stated they would pay more but they had a customer in • this income bracket whose average bill is under 2,500 gallons per month so their average bill is still lower than the 4,000 gallons a month the water district wants to move the rate to. He does not feel it will affect that many customers, only about 180.They are trying to promote water conservation with their water rather than using more water for everybody, not just a few customers. Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 4 of 12 District Controller John White asked how the 3,000 gallons and 5,000 gallons figured against some other purveyors. District Superintendent Mike Loggins stated they picked out 15 different water companies in the valley that were similar in size and compared how they charged on their tier rates.This is how the district came up with the 4,000 gallon rate.The other companies were at this 4,000 gallon tier rate.Mesa was the only one still left at 5,000.Queen Creek, Gilbert and Cave Creek were all at the 4,000 gallon limit for their lowest tier.This is something the district did research on so they could go along with what other cities were doing. District Controller John White brought up an example of a customer that uses about 4,340 gallons a month who is between the 4,000 and 5,000 gallons amount so they were out of the lifeline tier.He mentioned the first 4,000 gallons are still at $3.88.It is only on the additional 1,000 gallons increment between the 4,000 and 5,000 gallons where there is the marginal difference.The second tier lower end would drop from 5,000 to 4,000 because it would pick up the additional 1,000 that had previously been at the lifeline rate.They are proposing dropping it from 12,000 to 10,000 gallons.It is presently at $5.48 per 1,000 gallons.At the third tier that would drop from 12,000 to 10,000 at $6.05 per 1,000 gallons.Even though the brackets shift a little bit, the consumption rates themselves are not proposed to have any type of a change.On rate comparisons, an example of 4,304 gallons per month at the existing rate would be a base rate of $19.35 a month and a consumption rate of $16.84.What the district is proposing is an increase base rate from $19.35 to $20.02 or .97 cents which is close to a dollar increase.This is on the base rate alone.The consumption rate marginal effect is .54 cents just because of the different bracketing on the consumption and with the taxes it comes out to about a $1.66.The bill comes up to $41.54 versus $39.88.A high tier customer who uses over 5,440 gallons per month in the sample they took had a base rate of $28.96 and would be increased to $30.41, a $1.45 increase. The consumption rate has a much more significant increase due to the high volume.Even though they are not changing the rate there is still an incentive to conserve with the brackets and Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 5 of 12 the overall subtotal comes to a $4.00 increase, $4.61 after tax. This is the top 10% of the residential customers and they are high users.It is still an increase of less than $5.00 a month which is roughly about 4%.The reason for the higher consumption fees versus the lower consumption fees relative to the other purveyors is a high percentage of the district's rate that are higher than other purveyors is drawn from the consumption rates versus the fixed rates.The district actually dropped a little bit this year just because of the lower consumption.Increasing the base rates will have the effect of moving toward a more stabilized rate structure.System connection fees serve as an impact fee for development to help growth pay for itself.A study was done years ago and these fees were set and recommended by Tischler Bise.Since then they have been using the construction price index.This year it is 2.5%.These fees coincidentally round up to $100 each.It is an increase from $4,050 on a single family structure up to $4,150 on a multifamily unit.It increases from $3,900 to $4,000 and on a manufactured home or RV space from $3,820 to $3,920.The adoption dates for the budget parallels the city calendar.The schedule adoption of the district treasurer's proposed budget which is the technical name for the tentative budget is on May 19, 2015.The statutory date is July 15, 2015 and the final adoption is scheduled for June 16, 2015.They have a very late legal adoption date which is no later than September 30, 2015. Vice Chairperson Barker commented the district cannot say without all honesty there is not a rate increase because there is.It is simply hidden in the increases of base fees and the three tier system.The district has hidden a fee increase. Assistant City Manager Bryant Powell stated it needs to be said. Vice Chairperson_ Barker commented it was talked about three or four years ago .about increasing in a sequential manner over the years rather than doing any huge jumps.She feels it is really important to be honest and transparent to thefact they are making a 5% increase to top users of the water.There is a rate increase and they will be seeing it on their bill. Water:Utilities Community Facilities District. Meeting Minutes of May 5, 2015 Page 6 of 12 Assistant City Manager Bryant Powell stated they will be seeing an increase for all the different tiers, a base change which is the fixed cost and they are doing a 2.5% increase on the system's connection fees.They will be very clear and open. Mr. Wilson commented they are encouraging further water conservation but there also is an increase in cost. Vice Chairperson Barker commented they cannot say that it is only a $20.00 or $25.00 water bill.To some people a $2.00 increase can make a difference of whether they are going to buy a can of soup or pay their water bill today. District Superintendent Mike Loggins stated this is a little different than what they have done in the past.In the past, they raised everything at 4.5% which was the base rate and the commodity rate.They did not want to keep raising the commodity rate which is one of the highest in the valley. Vice Chairperson Barker asked where they stood overall on their rates. District Superintendent Mike Loggins stated they are one of the highest on rates overall. Assistant City Manager Bryant Powell stated their base was relatively small.He is sensitive to the economic development and they want to create the base so that when they _grow the incremental cost to the system is less as there are more rate payers.The idea is encouraging them. This week, for example, there was an article about Avondale encouraging a reduction.Back in August of last year the council reduced residential impact fees by 40% and commercial impact fees by 58% in an effort to encourage development to increase the base for this community.As we do that, he thinks it will help them with that issue. Vice Chairperson Barker commented so we do see in the future it coming down a bit.We Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 7 of 12 are looking at the fact that the more consumers they get then they can start evening things out a little bit. District Superintendent Mike Loggins stated their commodity is the highest but their base line rate was the lowest in the valley.They are trying to bring it up to where everyone else is so they are not raising the commodity rates.They are trying to bring balance back to the district with their rates, base and commodity rather than keep raising things up at the same time. District Director Frank Blanco stated they will be sending a letter to their customers before the rates go up explaining what exactly they are doing. DISTRICT MANAGER REPORT None. DISTRICT DIRECTOR REPORT District Director Frank Blanco briefed the board on the Central Arizona Project water treatment plant update and the 2014 Consumer Confidence report which they are still working on.The 2014 report is done in 2015 to recap how they did in 2014 on their water quality.He also gave a brief thank you on the water festival participation.When he talked about the water treatment plant, he was also talking about Central Arizona Project water.The elevation is currently at 1079.76.This is the Lake Mead elevation above sea level.The level that triggers a shortage is 1074 and is the level the Bureau of Reclamation can declare a shortage.This means that agricultural deliveries in Arizona would be reduced, however, the district is municipal and industrial.Gila River Indian Community lease water will still remain available as far as the Central Arizona Project portion.It would also be available for the water district to use.The record low is the result of a 15 -year drought so they are going to need a lot of snow pack to start recovering.He wanted everyone to be aware of this and it does not mean the water district municipal and industrial water allocations would be curtailed nor would the Gila River Indian Community water.It would still be available to the water district.It would affect more of the agricultural users and Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 8 of 12 would also affect us if and when the non -Indian agricultural water became available. District Superintendent Mike Loggins gave an update on the Central Arizona Project plant. They had a preconstruction meeting with the contractor today and all the utilities in the area to have a kick off and get all the contacts in place.They are starting the project and he will be contacting some of the board members after the board meeting to come up with a date for a ground breaking ceremony for the first week in June.He is also working with Carollo Engineers, the engineer on this project.They are going to be doing a presentation at the Arizona Water Association conference about the Central Arizona Project water treatment plant: how they went through the bidding process; what they are looking at and how the water district has diversified its water portfolio.It will be explained to almost everybody in the Arizona water industry whether it be water or sewer.Next year they are planning to give them an update and put in for small utilities system of the year for the Central Arizona Project water treatment plant. They are building up to this for next year.It will be good to get out there.In June they are going to start construction of the plant and you can actually see dirt being moved out there. He showed the board members the first page of the presentation leveraging the use of Central Arizona Project Water Diversified Apache Junction Water Resources portfolio.He showed a slide show on the Central Arizona Project water, the groundwater they have, long-term storage credits through Gila River Indian Community water and non -Indian agricultural water.It shows that the district is looking towards the future and they have bigger plans out there.They are getting a lot of this paid for water so they will have a lot of this future wet water they will need for the city.He gave a recap on the project.They bid the project in March.They are giving the contractor notice on May 15, 2015 to proceed and final completion will be on July 15, 2016.They will be very busy in the next few months.He stated the board members are welcome to visit the plant. Senior Administrative Assistant Andria Samuels stated they are doing the 2014 Consumer Confidence Report.It is now in preparation and is something that is required under the 1966 Safe Drinking Act amendments. They have to deliver it to their customers by July 1, 2015 and Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 9 of 12 Arizona Department of Environmental Quality.It has to contain information on their water system such as their water source, how much water they are taking and using, where it is coming from and all of their monitoring data such as all of the sampling data they take for all of the compounds.They are planning to deliver the 2014 Consumer Confidence Report May 2015.It is going to go out before its due date.They are looking into doing something with what they launched in 2013 which is allowing them to electronically deliver it to the customers.There would still be a paper version available but this gives them more access to more information so they are going to try and push ahead and make sure everything is okay with Arizona Department of Environmental Quality.If they do they will have more information for the board members next meeting.The reason why they are doing the 2014 Consumer Confidence Report in 2015 is because it is like taxes. Everything they report on this year is over data that was collected last year.She recapped the fourth water festival and said it was a success.The district had three schools participate and 11 classes show up.This means over 300 fourth graders were at Prospector Park on April 23, 2015.They had over 50 volunteers.This year they had more people from more departments in the city than ever before come out to support and help them.It really made the day an overwhelming success. Chairperson Insalaco, Vice Chairperson Barker, board member Wilson, board member Waldron and board member Evans were all present and they really appreciate their support and presence. She showed a picture of the volunteers and a picture of Chairperson Insalaco.They had participation from the fire district by showing the children the water and the children learned that the water that goes into the ground becomes groundwater and stays in the water system.This is a trademark feature of the Apache Junction Water Festival.It is something that does not really happen at any other water festival in the state because we have a very special community and we have very special representation from all of our community members. DISTRICT TREASURER REPORT None. ADJOURNMENT Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 10 of 12 ) Chairperson Insalaco adjourned the meeting at 6:32 p.m. ACCEPTED THIS /6)-74L DAY OF /144v/, 2015, BY THE CHAIRPERSON AND DISTRICT BOARD OF THE 'WATER UTILITIES COMMUNITY FACILITIES DISTRICT,(CITY OF APACHE JUNCTION, ARIZONA). SIGNED AND ATTESTED TO THIS /'rd-DAY OF /VAX 2015. O2--1 1 1. o S. Ins11aco 7 airperson ATTEST: Kathleen Connelly District Clerk Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 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 5th day of May, 2015.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 11th day of May, 2015. athleen Connelly 00District Clerk Water Utilities Community Facilities District Meeting Minutes of May 5, 2015 Page 12 of 12