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HomeMy WebLinkAboutMinutes - Water Utility Commission - 3/12/2007 f ' MINUTES Ohv VALLEY WATER UTILITY CONIMISaiON RE GULAR SE SSI ON MARCH 12,2007 411111HOPI CONFERENCE ROOM st 0DDn ! 11,000 N.LA CANADA DRIVE � C '1oI) CALL TO ORDER-AT OR AFTER 6:00 P.M. ROLL CALL -6:00 P.M. MEMBERS PRESENT: Dave Powell,Chair Winston Tustison,Vice Chair Brent Egbert,Commissioner Elizabeth Shapiro,Commissioner Harold Vaubel,Commissioner STAFF PRESENT: Philip C.Saletta,Water Utility Director Shirley Seng,Utility Administrator David Ruiz,Engineering Division Administrator Robert Jacklitch,Project Manager Jim Peterson,Water Utility Regional Coordinator MEMBERS ABSENT: George Calabro,Commissioner John P.Hoffman,Commissioner OTHERS PRESENT: Mayor,Paul Loomis Council Member,K.C. Carter Dick Maes,Developer ITEM #1 APPROVAL OF FEBRUARY 12, 2007 MINUTES - Chair Powell entertained a motion for approval of the February 12,2007 minutes. MOTION: Commissioner Shapiro MOVED to approve the February 12, 2007 minutes. Vice Chair Tustison SECONDED the motion.MOTION PASSED:Unanimously. ITEM #2 UPDATE WATER DEVELOPMENT IMPACT FEES - Mr. Saletta mentioned that the presentation was shared with various stakeholder groups.He reported on the following: - Recent Stakeholders Meetings -Comments from Stakeholders -Water Use and Sources of Supply -Requirements under Arizona Revised Statutes --Basis of the Potable Water System Fee and the Alternative Water Resources Fee -Potable Water System Development Impact Fee (PWSDIF) -Alternative Water Resources Development Impact Fee (AWRDIF) -Alternative Water Resources Supply($139,600,000 Capital and Financing Cost) -Alternative Water Resources (Development Impact Fee (AWRDIF) and its Relationship to the Groundwater Preservation Fee -Proposed Potable Water System Development Impact Fee (PWSDIF) -Options for Implementation AWRDIF Only -Proposed Notice of Intent -Process and Schedule Questions and answers occurred on the following: -Chair Powell indicated he heard a City of Tucson Council member mention on the radio there would be a $7,000 per home Impact Fee increase from the current figure and was concerned that misinformation was being circulated.Mr.Saletta clarified that the current fee for a 5/8 inch meter was $2,074 but the fees would increase to$7,500.He assured the Commission that he _ would provide City of Tucson with the correct information. -Commissioner Egbert asked: If there is a fee $2,074 for a new single family home does the cost increase proportionately for multi-family and commercial industrial customers? Mr. Saletta indicated that it was the lowest fee for the smallest meter size and the fee increases for larger meter sizes.A breakdown in the report outlines the fees according to meter size. 3-12-07 MINUTES, 0] VALLEY WATER UTILITY COMMI )N -Commissioner Vaubel asked: If the 17,000 af is allocated and built out is estimated by year 2025 where would it be in year 2030?Mr.Saletta said,if the Town's population increases in the year 2030 the original allocation would meet existing customer .eels,but more resources would be needed in the future if growth continued. Mr. Saletta ended his report. Ms. Seng reported various highlights on the Alternative Water Resources Development Impact Fee and Potable Water System Development Impact Fee. Several copies of the reports were available for the attendees. POTABLE WATER SYSTEM DEVELOPMENT IMPACT FEE REPORT The following sections of the report were reviewed: -Executive Summary -Table ES-1 (Comparison of Existing and Proposed PWSDIF's) -Table 2-3 Potable Water System Development Impact Fee (Demand Adjustment Factors and AWWA Meter Capacity Ratios) Ms.Seng explained that the AWWA WA Meter Capacity Ratio represented the volume of water that flows through a particular size meter. Reviewed Demand Factor on the Customer Classes: -Multifamily Residential -Commercial and Industrial -Irrigation(non-turf) -Table 4-1 Potable Water System Development Impact Fee Schedule -Table 4-2 Proposed Supplemental Fire Development Fees (No changes will take place) Ms.Seng explained that fire flow fee components apply only to commercial meters and multi-family meters. -Attachment B: Potable Water System - Expansion Related Projects and Costs (Applied from the Potable System Master Plan) Projection$15,402,000 for growth related improvements over next 10 years. -Attachment C: Potable Water System Development Impact Fee Fund - Projection of Cash Flow and Debt Service Coverage -Attachment D:Water System Development Impact Fees for Comparable Communities in Arizona ALTERNATIVE WATER RESOURCES DEVELOPMENT IMPACT FEE REPORT 'he following sections of the report were reviewed: -Executive Summary -Table ES-1 (Comparison of _2:xisting and Proposed AWRDIFs) -Single Family Residential(per meter size) -Multifamily -Commercial and Industrial -Irrigation (non-turf) -Turf Uses -Table 2-2(Allocation of Costs Between Existing and Future Customers (Existing Customers AWR required =4,500 af (Future Customers =7,000 af) Total 11,500 af -Table 2-4 Alternative Water Resources Development Impact Fee (Demand Adjustment Factors and AWWA Meter Capacity Ratios) Demand Adjustment Factor uniform with the Potable Water Demand with regard to Customer size and Meter Size -Section 2.11 GroundwaterPreservation Fee (Customer rate $0.25 per 1,000 gal. -Reclaimed Customers rate $0.21 per 1,000 gal.) Rates will increase in order to cover capital costs of$54,700,000 debt for existing customer allocation. Attachment C: Alternative Water Resources Projects and Costs (Reclaimed Water = $19,500,000 CAP Water = $63,100,000 Finance Costs =$57,180,000 Attachment D: Alternative Water Resources Development Impact Fee Fund - Projection of Cash Flow and Debt Service Coverage -Project of Cash Flow and Debt Service Coverage Attachment E:Water Resources Development Impact Fees for Comparable Communities in Arizona There were no questions Ms.Seng ended her review. Mr. Saletta indicated that the Water Utility has had several meetings with Southern Arizona Homebuilders Association (SAI-IBA). They emphasized that they did not want the impact fees to go into effect at one time. Option 1 if approved by Council would make the fee effective as of September 2007. SAHBA, residential and commercial developers together with Metropolitan Pima Alliance preferred that a three-increment approach be considered. If the Utility implements this approach Staff could ask Council to set the impact fee at $4,982 phased in 2007, 2008 and 2009. SAHBA has also suggested the possibility of creating a special district and having an assessment on the land or on the house. Staff is currentlyinvestigating g g this option from a legal,administrative and financial perspective. ,s requested by Chair Powell Mr. Saletta gave a brief explanation about land assessment and its affect to the collection of AWRD impact fees. Chair Powell did not agree with the concept of a special district because it violated the Utility's basic principal existence and that the Utility does not lend money. Commissioner,Shapiro was concerned about having an 2 3-12-07 MINUTES, 0 VALLEY WATER UTILITY COMMI JN assessment against the land when purchased. Mr. Saletta clarified that Staff was willing to sit and discuss this option with SADA but currently Staff was conceptually supporting Option 2 to the three increment phase-in scenario. kn explanation of the Financial differences between Option 1 versus Option 2 was presentated. -New customers also pay the GPF -Phasing of Impact Fees (three increments) -Notice of Intent -Process and Schedule Mr.Saletta reminded the Commission about the Council Study Session March 14,2007 at 5:30 p.m. No action was required on this item. ITEM#3 WATER RATES REVIEW AND ANALYSIS-Ms.Seng gave a Power Point presentation on the following: -Overview: Oro Valley Water Utility comprised of three funds: Enterprise Fund, AWRD Impact Fee Fund, and Development Impact Fee Fund. Ms.Seng explained that the Impact Fee Fund could not be used for operating costs. -Financial Considerations: A brief explanation was given on Debt service,Existing Cash Reserves,Minimize Rate Shock AWWA Methodology -Basic Assumptions -Financial Scenarios Evaluated -Baseline Scenario -Scenario A(Summary of funds -Scenario C(Summary of All Funds) -Consultant Review -Scenario A(Impact to Customers in FY 07-08) -Scenario C (Impact to Customers in FY 07-08) -Consultant Review -Schedule Ms.Seng gave an explanation on the following: -Scenario A- 4-Tiered Rate Design Scenario C-3 Tiered Rate Design -Groundwater Preservation Fee Increases-Potable&Reclaimed GPF -Table for Monthly Charges &Percent Increase Comparison Scenario A&C VIs.Seng mentioned that the Finance Director and Staff were working on bond refunding for some older debt incurred by the Jt' 'ty. The bond refunding of these debts would help the Utility obtain a lower interest rate. She mentioned that two additional scenarios would be prepared applying the lower interest rates to Scenario A and Scenario C. These scenarios would be presented to the Commission in April and the Council would also have the scenarios available to them at the March 14, 2007 Study Session.Ms.Seng ended her report. Chair,Powell requested consensus from the Commissioners regarding Proposed Scenarios A&C. -Vice Chair Tustison selected Scenario A - 4 Tier Rate Design because it did a better job of encoura in conservation gencouraging although a larger increase occurred in the 1st year the total for the five years was less. -Commissioner, Shapiro selected Scenario A- 4 Tier Rate Design because everyone benefits the 1st year,it also encourages conservation. -Commissioner,Egbert selected Scenario A-4 Tier Rate Design encourages conservation. Chair,Powell agreed that Scenario A was the best scenario but emphasized that the public should be notified and educated so they have a better understanding of the rate structures. Mr. Saletta indicated that on May 21, customer notifications would be mailed and staff would include some information regarding the 3 and 4 tiered water rate structure. There were no further questions.No action required on this item. ITEM #4 - UPDATE ANNUAL REPORT 2007 - Ms. Seng reported that staff was still working on the Annual Report but a hard copy or email copy would be provided by the end of the month to the Commission in preparation for their kpril 9th meeting. fhere were no further questions. 3 3-12-07 MINUTEZO VALLEY WATER UTILITY CON SSION ITEM #5 - GROUNDWATER SUSTAINABILITY TECHNICAL MEMORANDUM - Mr. Saletta gave some background information: -Provided Final Draft Technical Memorandum Report: This report includes the groundwater production sustainability evaluation in Oro Valley's aquifer over a 30- year pumping period. The sustainability threshold level was defined as 100 feet above the production geologic contact zone in the aquifer. Mr.Jacklitch presented a cross-section of the geological formations of Oro Valley's aquifer. The following breakdown of Oro Valley's aquifer was given: -Elevations -Contact Zone-Upper Tinaja Beds (Dewatered section) -Expected Groundwater Elevation in 30 years (Based on 5500 af sustainable groundwater-CAP water&Reclaimed Water) -Sustainable Threshold Level(5500 af) -Description of wells.Mr.Jacklitch ended his report. Questions and answers occurred on the following: -Vice Chair Tustison asked: By the year 2037,the Aquifer level would have fallen and there would be less productive wells,is more water going to have to be produced out of each of them? Mr.Jacklitch indicated that at 5500 af per year of sustainable groundwater production,about thirteen wells would not be able to produce water,however nine could. Mr. Ruiz mentioned that the method in which the existing wells were constructed the Utility would lose these wells,however they would be re-drilled deeper to make up for lost capacity. -Commissioner Shapiro asked: Oro Valley was interested in obtaining the land north of Pima County border,if this happens would it affect Oro Valley's aquifer in the future? Mr.Jacklitch explained that Brown and Caldwell was investigating north of the Town state land and the aquifer.He explained that in the Assured Water Supply Report there wasn't any mention of much pumpage north of Pinal Countythat could impact the Town. -Commissioner Egbert asked: Is this scenario based on us doing nothing or just natural recharge of the aquifer as it is now? Mr.Jacklitch explained the scenario was based on bringing in alternative water resources. He emphasized that in year 2006 the Utility pumped 9,000 af of groundwater. Based on the analysis by Brown & Caldwell only 5500 af should only have been pumped,therefore we had overstressed the aquifer.Mr.Jacklitch ended his report. SUBCOMMITTEE REPORTS- Finance Subcommittee - Vice Chair Tustison had no report but complimented Ms. Seng on all the work and Rate Setting Scenarios. Conservation and Public Education Subcommittee- Commissioner Egbert indicated that the Subcommittee met to discuss the Annual Report and made several minor changes.The conservation portion is close to completion. STAFF REPORTS: Capital Projects:Mr.Jacklitch reported the following: -Pusch Ridge Reservoir:Location:Honeywell area Reservoir: (500,000 gal concrete in ground) 99%complete.The rest of the facility with booster pump and controls will be completed by end of April 2007. -Pusch View Lane Well G9: Design 8E Drawings:Complete Out to Bid: March 2007 Construction schedule: May 07. Completion:October 2007 -New Projects: Oro Valley Country Club (O.V. Drive - Installation 8 inch Grone water main, fire hydrants and relocation of 20 water meters) Completion: May 07. Public Works will resurface streets. They expect completion 30-40 days. Contractor.Tricon Stone Canyon Water Plant 15 Project: Grading bladding and plant salvage taking place.Installation: 500,000 gal. steel reservoir. Contractor.Ashton Company All permits and approvals are in place. Mr.Jacklitch ended his report. Potable Water System and Reclaimed Water System Status: Mr.Ruiz reported the following: Well Production Report -February 2007: Potable system is working well and consumption is down because of reclaimed water.Maintenance on several wells taking place. (D-5 is currently under maintenance.This well has been continuously pumping for the past 10 years.) Peak Daily Demand Operations Report-February 2007-Not much precipitation activity 4 3-12-07 MINUTES,0 VALLEY WATER UTILITY COMMI DN Potable Operations Report-2007- Increase in total demand end of month due to warmer weather. Reclaimed Water System February 2007:Usage = 22,649,000 MG Zeclaimed Water System Phase II -Consists of two La Canada golf courses. - en Design Schedule:Activelybeing worked gg on. -Bid Process: Is pending until the Utility receives the 404 permit expected in June 2007. Golf Courses expected to receive reclaimed water by June 2008 -Recovery well reclassification- Allows the utility to pump water by using credits therefore reducing CAGRD financial liability. The Utility received a response from ADWR that six of the fourteen wells would not be considered forermittin P g because the decline had exceeded the allowable 4-5 feet per year. In the future, if precipitation increases and the declines subside the Utility can go back and apply for reclassification. Mr.Ruiz ended his report. TOWN COUNCIL MEETINGS/COMMUNICATIONS - Council member K.C. asked about the Reclaimed Water status and rates. Mr. Saletta explained that the GPF could increase by$.04 per thousand gallons ($0.21 to$0.25) for Reclaimed Water.This depends on the final preferred scenario and Council approval. DIRECTOR'S REPORT: Mr.Saletta reported the following: -Upcoming Meetings: Town Council Study Session:March 14,2007 Time: 5:30 .m. Town Council Meeting: March P g 21,2007 Topic:Notice of Intent Impact Fees -Northern Pima County Chamber Government Affairs: April 5, 2007 Topic:Impact Fees -2007 Bond Refunding- Town Council Session:March 21,2007 Topic:Approval of Bond Refunding -NW Water Providers Update- Cost Estimate Study moving forward and the providers are reviewing project financing. Costs Estimates and financing will probably be ready late summer. Federal Budgeting and Appropriation of Funds -Council member Gillaspie was in Washington meetingArizona . . Congressional Representatives for support of the Bureau of Reclamation 2008 funding request for the N.W. Reliability Reservoir. Water Infrastructure Financing Authority(WIFA) - WIFA approved the $6,000,000 request for financing of Reclaimed Water 'base II February 21,2007. Interest Rates estimates 3.6% - 3.8%with no closing costs. Mr.Saletta ended his report. FUTURE AGENDA ITEMS 1. Approval March 12,2007 Minutes 2. USGS Presentation NEXT MEETING:- April 9,2007 Location:Hopi Conference Room Chair Powell entertained a motion to adjourn the meeting. MOTION: Vice Chair Tustison MOVED to adjourn the meeting. Commissioner Shapiro SECONDED the motion.MOTION PASSED:Unanimously. ADJOURNMENT: 8:15:P.M. Prepared by, Iris L.Chaparro Office Specialist 5