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HomeMy WebLinkAboutMinutes - Water Utility Commission - 11/8/2010 I .. -Li 131.2.401- jn MINUTES ORO VALLEY WATER UTILITY COMMISSION ��-�... .�.. _. ... REGULAR SESSION rfr Monday, November 8, 2010 ..�.....,....,...o.-... ..y HOPI CONFERENCE ROOM 11000 N. LA CANADA DRIVE CALL TO ORDER - AT OR AFTER 6:00 P.M. ROLL CALL PRESENT: Richard Davis, Vice Chair John Hoffmann, Commissioner Richard Reynolds, Commissioner Elizabeth Shapiro, Commissioner Winston Tustison, Commissioner EXCUSED: Dave Powell, Chair Robert Milkey, Commissioner STAFF PRESENT: Philip C. Saletta, Director Shirley Seng, Utility Administrator David Ruiz, Engineering Division Manager Robert Jacklitch, Project Manager CALL TO AUDIENCE - At this time, any member of the public is allowed to address the Water Utility Commission on any issue not listed on today's agenda. Pursuant to the Arizona Open Meeting Law, individual Commissioners may ask Town Staff to review the matter, ask that the matter be placed on a future agenda, or respond to criticism made by speakers. However, the Water Utility Commission may not discuss or take legal action on matters raised during "Call to Audience." In order to speak during "Call to Audience" please specify what you wish to discuss when completing the blue speaker card. Ms. Erica Wiese Oro Valley resident thanked the Town of Oro Valley for the excellent Water Summit. Ms. Weise discussed issues regarding privatization and the search for water revenue. She felt strongly that privatization of water was a very difficult option to consider. Mr. Art Weise Oro Valley resident felt that it was important to promote conservation and information about swimming pool covers. He indicated that an average pool would evaporate about 16,000 gallons of water per year or about 45 gallons per day. Mr. Weise suggested inserting information with the customer's bill. Mr. Bill Adler Oro Valley resident mentioned he attended the Water Summit and expressed disappointment on several items that were not discussed. -There were no plans or future investigation to find supplemental sources to make up for the Colorado River shortages which could be possibly happen by year 2012. cr rlef, riqi 1 , . ,itilmim;kz,:i. , i. 11/08/201 L,tdi tiVibleillE3i, 0 VALLEY WATER UTILITY COMMISSION He mentioned that the Commission and Staff could have discussed these issues and indicated that the Colorado River shortages were more important at this time than rate shock. Mr. Adler explained there was scientific proof that Lake Mead and Lake Powell were declining. He suggested that the Commission and Staff consider discussing these types of issues at the next meeting with Council. 1. APPROVAL OCTOBER 11 2010 MINUTES Discussion and/or possible action. There were no corrections to the October 11, 2010 minutes. MOTION: A Motion was made by Commissioner Tustison and Seconded by Commissioner Shapiro to approve the October 11, 2010 minutes. MOTION carried, 5-0. 2. UPDATE ON PROPOSED WATER RATES INCREASES (P. Saletta and S. Seng) Discussion and/or possible action regarding the Water Rates Analysis and the proposed increase in water rates. Discussion may include updates regarding responses to Council from the recent Studer Session and Council Meeting, recent responses to customer comments and the proposed schedule. Click here for Item #2 Click here for Item #2a Mr. Saletta began with some background information. 9122: A Study Session was held regarding the Water Rates -Packet information: Water Rates Analysis Report Response to Mayor & Council Questions. This report was also sent via email. He presented two slides on Interim Wheeling Delivery through Tucson Water. Mr. Saletta explained that the timeline for recharge and recovery is 2015 and for surface water treatment it is 2016. -CAP Direct Treatment & Delivery: Financing must be in place July 2012. Delivery expected on or about 2016. -Cost estimates: Recharge and recovery $65 million Phase I, $75 million Phase II. Mr. Saletta mentioned the potential to partner with the NW Water Providers particularly with Metro Water with respect to recharge and recovery. If we decide to do treatment and delivery we would most likely have to proceed independently. Mr. Saletta reviewed several components in the Water Rates Analysis report. Relationship of CAP time line to the Groundwater Preservation Fee (GPF). If Oro Valley decides to move up CAP treatment and delivery to 2014 it will need to increase its groundwater preservation fee faster to meet this schedule. Mr. Saletta explained that the revenue received from impact fees are based on growth projections. To move forward with these projects we must have adequate cash reserve balances. This will enable the Utility to receive a lower interest rate and provides a cushion for future revenue fluctuations. 2 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Financing is the only viable option for this project and is expected to be in 2012. Annual debt service is estimated to be $3,700,000 to $4,700,000. For CAP reliability the CAP canal requires a 30-day planned maintenance outage annually. To compensate for this outage, we can use recharged and recovered water stored in the Tucson Active Management Area. Oro Valley also reserved its option for direct treatment and delivery of CAP water from the canal. We can use the stored water from the canal because the other NW Water Partners will use recharge and recovery. This means we will not require a large surface water reservoir. Central Arizona Water Conservation District (CAWCD), Tucson Water and the NW Water Providers have developed an agreement regarding reliability. If Oro Valley decides to consider direct treatment and delivery staff will work with CAP staff for the use of stored water in the canal. The CAWCD Board was briefed in October and November and will be considering approval of the agreement in December. Staff will be bringing this agreement back to the Commission and Council for approval in January. Mr. Saletta ended his report. Ms. Seng reported on the recent response to questions from Councilmember Hornat regarding the (GPF) and the affect to the Utility without a rate increase. -Fiscal year 2010-11 with no increase to GPF: The Utility still meets its debt service coverage ratio this year. However the cash balance will be approximately $310,000 lower than projected. -Fiscal year 2011-12 GPF increase: The Utility will need to increase the GPF to stay on track with recharge and recovery and direct CAP delivery, and be able to meet debt service coverage. -GPF increase and impact to golf course water users: The golf courses will see an increase of approximately $11,000 to $14,000 per year in their water bill. -Why increase the GPF for water users not using or benefiting from the future CAP system: Ms. Seng explained that the Utility does not practice the "user pays" principle for its projects. All of these renewable water resource projects benefit the entire community. The GPF revenue is designed so that all customers pay a prorata share, existing customers pay through the GPF, and others pay the GPF and impact fees. Water sales revenue from the golf courses would not be sufficient to cover the Reclaimed System costs for approximately about $2,058,000 in O&M and debt service costs for the reclaimed water system. Ms. Seng discussed customer comments regarding the water rate increases. -11/8 WUC Meeting: 1 audience supporter of water rate increase and also suggested additional tiers to encourage conservation. 3 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Phone calls = 9 (1-Supporting GPF increase, 3-Against, 1-Understanding the need) General inquiries: 2 by HOAs (potential rate increases for their general budgeting purposes) 1- Residential call (reasons for increases in the GPF, sewer user fees) 1- Residential call (base rate differences unfair based on meter size) Emails: 4 received (2-Against GPF 2-General inquiries regarding the GPF) -Received numerous emails from SAHBA and Metropolitan Pima Alliance opposing the proposed increase in meter installation fees and new service establishment fees. Staff gave a presentation at SAHBA in October explaining the fees and has also responded to several emails since that meeting. The public hearing notice was sent out in the customer bills October 29th and November 5th therefore we may receive more comments from this latest mailing. Staff responds to all customer inquiries and provides this information to the Council prior to the public hearing. The Public Hearing is scheduled for November 17, 2010. Council will consider the proposed water rate increases. If adopted, the new rates will become effective December 18. There were no further questions, Ms. Seng ended her report. No action was required or taken on this item. CALL TO AUDIENCE: Mr. Doug Mckee Oro Valley resident made several comments regarding the Water Rate Increases. He was concerned about the status of the Colorado River shortages and suggested that the Water Utility do a follow-up. He indicated that the CAP water and reclaimed water has primarily benefited the developers and expansion. Impact fees were not established early on to pay for alternative water benefiting primarily developers. The GPF is unfair penalizes earlier residents who moved to town prior to the groundwater level declines. Mr. Mckee felt that the Utility should consider and take a look at establishing a differential rate in the GPF and investigate if projections are in the ball park or not. Determine whether the GPF rates will continue to increase, decrease or simply level off. Mr. McKee felt that the GPF had increased significantly over the years and now had become a very significant cost to the golf courses. Mr. McKee indicated we need to give the public and Council a better understanding where the GPF rate is going in the future and that these questions must be answered before the Council approves this rate increase. There were no further discussion or questions. No action was required or taken on this item. 3. UPDATE ON NORTHWEST WATER PROVIDERS CENTRAL ARIZONA PROJECT WATER TREATMENT AND DELIVERY SYSTEM (P. Saletta) Discussion and/or possible action regarding the activities of the Northwest Water Providers regarding development of Central Arizona Project water. Discussion may include studies conducted or in progress, recharge and recovery, reliability and an update from the recent CAP Meeting. 4 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Mr. Saletta reported the following: At the October and November Central Arizona Water Conservation District (CAWCD) meeting the CAP staff reviewed the concepts of an agreement for reliability off the CAP Canal. Possible recharge & reliability sites such as Lower Santa Cruz, Pima Mine Road, Central Avra and Southern Avra Valley Recharge Projects are included in the agreement. Oro Valley's preference is the Lower Santa Cruz facility. In the event that Oro Valley chooses to go with direct treatment and delivery off the CAP canal, there is a provision that if Oro Valley builds the treatment plant within 20 years then CAP would be responsible to provide reliability. A draft intergovernmental agreement is being prepared. Staff will attend a meeting November 9th to review and discuss this item. It will be presented to the CAWCD Board in December. If approved, it will be presented to the Commission and Council for review and approval. Staff continues to evaluate alternatives for the delivery of CAP water through CH2MHiIl and Westland Resources consultants. In addition, Carollo Engineers is working on additional alternatives such as various locations for CAP storage, recovery and pipeline routes. There being no further questions, Mr. Saletta ended his report. No action was required or taken on this item. 4. UPDATE ON INTERIM DELIVERY OF ORO VALLEY CAP WATER THROUGH THE TUCSON WATER SYSTEM (P. Saletta and D. Ruiz) Discussion and/or possible action regarding the recent Cost of Service Study with Tucson Water and Metro Water regarding Tucson Water delivery (wheeling) of Oro Valley's Central Arizona Project Water. Discussion will also include the alternatives for interim delivery and associated distribution system improvements. Click here for Item #4 Mr. Saletta explained the concept of wheeling and that it would be the interim delivery of our CAP water through the Tucson Water system. The plan is to use Oro Valle "'s CAP water and deliver it to Tucson Water facilities and back to Oro Valley's facility near Naranja and Shannon. Preliminary results of the Cost of Service study with Tucson Water and Metro Water District indicate that Tucson Water could charge Oro Valley $547 to $571 per acre foot. This does not include Oro Valley's cost for purchase of the CAP water for delivery to its distribution system at Naranja and Shannon. Oro Valley believes costs are too high and is still under negotiations. The concerns are capital costs, depreciation, return on investments and general fees paid to the City of Tucson for water services. Staff will continue to discuss these items with Tucson Water. Mr. Ruiz discussed several of Oro Valley's options under review at this time and provided a Power Point presentation on the options and preliminary costs for the interim delivery of CAP Water to Oro Valley through the Tucson Water system. 5 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION There are three options for interim delivery (wheeling) of 1000, 1500 and 3000 AF/YR. Infrastructure capital costs for the 1000 AF/YR option is estimated at $50,000, 1500 AF/YR is estimated at $515,000, and the 3000 AF/YR option is approximately $6,619,000. In answer to Commissioner Hoffmann question, Mr. Saletta explained that all costs, including the purchase of the CAP water, were included in the per acre-foot cost estimates. In answer to Vice Chair Davis question regarding the 1000 AF/YR estimate, Mr. Ruiz explained that the design plans will probably be done by Tucson Water and not by a consultant. This would be determined later. Sunk costs were reviewed and include distribution system infrastructure costs if Oro Valley does not fully utilize Tucson Water's Naranja Reservoir site and Booster station. Oro Valley could use the Tucson Water facilities site but will need to build a new pump station and 24 inch pipeline. Mr. Ruiz explained the advantages and disadvantages for the 1000, 1500 and 3000 AF/YR options: 1000 AF/YR: Simple connection -Limited blending -Minimal sunk costs $50,000 1500 AF/YR: More infrastructure required -Limited blending -Higher sunk cost $515,000 3000 AF/YR: More infrastructure required -11,000 feet of 24-inch pipe -New Booster Station required to increase blending -Highest sunk cost $1,615,102 Interim CAP wheeling could take place if Council approves the IGA as early as March 2011. Public education could also start at that point. The design plans could start in April, with construction and delivery by 2012. Mr. Ruiz ended his report. Discussion and answer session occurred. -Commissioner Hoffmann thought that CAP Wheeling for the 3000 AF capacity was going to require very little infrastructure upgrades and wondered why costs were so high $6.0 -$7.0 million. Mr. Ruiz explained that the proximity of the Naranja reservoir for the 1000 and 1500 AF delivery were not a problem, however the 3000 AF water flow and blending raises the pressure on the system. We have to mitigate the high pressures therefore additional pipeline improvements must be made. Mr. Saletta also explained that the other lower delivery options per AF cost and improvement requirements were less costly. As we move more water through the system, higher pressures and blending increase the costs. -Commissioner Tustison asked if we take the amount of water used in Oro Valley and subtract the amount of reclaim and recharge of 5500 AF how much is left? Mr. Saletta indicated there would be about 2200 AF reclaim, 8000 AF of groundwater with an approximate deficit of 2500 - 3000 AF. He explained that the 1000 AF/YR and 1500 AF/YR options would get Oro Valley closer to fill that gap and would put us in a good position if we could secure a short term interim agreement with Tucson Water. Commissioner Tustison asked, Councilmember Gillaspie if Council understood the concept of balancing water supply without depleting the aquifer and if they support it? Councilmember 6 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Gillaspie indicated that Council attended the Water Summit and he was certain they gained a better understanding of our water supply and were very supportive. However, in terms of costs, Council is wondering whether the philosophy or incremental increases every year is the right approach or is it time to reassess this method and review these projects. Councilmember Gillaspie also mentioned there are continuous engineering studies being performed and we still do not have answers. We need to redefine costs and also move our timelines. He felt confident Council had legitimate questions and concerns. Councilmember Gillaspie mentioned we must look closely at the Arroyo Grande (new growth) and will have sufficient water supply if it happens. Commissioner Tustison mentioned do we want to spend the money on something that benefits our community by increasing water capacity and balancing our aquifer. A brief discussion occurred regarding sunk costs, infrastructure improvements and the burden to the water rate customers. Mr. Saletta explained that the 3000 AF/YR system could be built whether we go with treatment and delivery or recharge and recovery. He also indicated that $5.0 million of the $6.6 million capital cost would be used for the future CAP system. In answer to Commissioner Hoffmann question Mr. Ruiz indicated that according to CH2MHill if we expand our interim delivery amount to 5000 AF/YR costs will increase to approximately $12.0 million. Councilmember Gillaspie said the following: -How do we address the benefits of expanding our system with less water usage and growth and burden to our present water rate customers, and how critical is it to our long term full delivery. If we find the benefits or good argument than we have the answer. Mr. Saletta said, we looked at growth projections and even out the increases in the groundwater preservation fee over the 5 year financial planning period. Councilmember Gillaspie stated, if we can recover the overdraft consumption with full pipeline built out, and perhaps growth and the economy is better why should we pay for future residents now. Commissioner Reynolds, will there be an acre feet dollar to dollar offset for CAGRD costs? Mr. Saletta explained that there is an offset, but it was not necessarily on a one to one basis, since we still have CAGRD obligations under our agreement with CAGRD. He gave several examples of CAGRD savings. He also explained that by using Tucson Water's pumping head it could save Oro Valley $80 -$100 per AF of pumping costs. Oro Valley could use option 1000 AF/YR or 1500 AF/YR however the cost estimates are very high since we used the consulting engineers costs estimates because we didn't feel comfortable changing their estimates. Vice Chair Davis said, it would be very helpful to see the offset cost and the current customer's cost per AF. Mr. Saletta indicated that we will provide that information. 7 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Commissioner Shapiro commented on the costs to residential users and benefit to future users, increases in the impact fees, and the significant debt that will need to be paid off. Mr. Saletta indicated that growth was included and that the Impact fees were also factored into the analysis. The acre foot cost for Tucson Water's wheeling was also taken into consideration. These are financially feasible and reasonable approaches to get our ground water consumption down. Commissioner Hoffmann asked does the Utility have a preferred option. Mr. Saletta mentioned we still need to look at this closely and that we should probably start with 1000 AF/YR or 1500 AF/YR delivery. We are still under discussions with Tucson Water about cost. We believe the $560 AF average is too high. Tucson Water also believes they need to be compensated fairly for the water coming through their system. In answer to Commissioner Shapiro's question, Mr. Ruiz explained if we deliver water at 1500 AF/YR a specific sized pipeline will be required. We also look at pressure and velocity. Mr. Saletta ended his report. There were no further questions or comments. No action was required or taken on this item. 5. COMPREHENSIVE WATER RESOURCE PLAN (P. Saletta) Discussion and/or possible action regarding the recent request from the Commission to prepare a Comprehensive Water Resource Plan. Discussion may include elements that should be considered in the plan and timing of the proposed plan for joint presentation to Council and Commission. Mr. Saletta discussed the Comprehensive Water Resource Planning process requested by Commissioner Tustison at the previous Water Utility Commission meeting. He also mentioned Councilmember Hornat's request for a Joint Study Session possibly in February. Mr. Saletta requested the Commission's feedback on the Comprehensive Plan. Mr. Saletta proceeded to review a list of items that could be included. A discussion occurred and the Commissioners submitted their suggestions. -Commissioner Hoffmann: -Describe Conservation program -Under Protecting and Preserving our aquifer (subheading: protecting preserving and monitoring our aquifer) -Public Communication. Commissioner Reynolds: Expansion of the Renewable Water Reclaim system -Under Reliability of CAP deliveries (describe source of CAP and CAP availability) Commissioner Tustison: Outline each alternative plan next to each other and list a breakdown. -Tucson Water wheeling -(describe advantages and disadvantages) -Clarify financial information preliminary estimates S 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Commissioner Shapiro: Growth Projections (specify build out and timing) Vice Chair Davis: (Projections: 75 additional meters and impact on water supply) Commissioner Reynolds: Energy Conservation and Utility O&M cost control Mr. Saletta will combine all the suggestions and present them at the next scheduled meeting. This information will be available to Council and Commission at the Joint Study Session in February. Any additional comments can be emailed. 6. TOWN COUNCIL MEETINGS/COMMUNICATIONS (Councilmember Liaison) Councilmember Gillaspie indicated issues such as impact fees and growth policy must be reevaluated in the General Plan update and Policies. 7. SUBCOMMITTEE/COMMISSIONER REPORTS a. Finance Subcommittee (Commissioner Tustison) Commissioner Tustison had no report. b. Conservation Subcommittee (Commissioner Davis) Commissioner Davis had no report. c. Renewable Water Resources Subcommittee (Commissioner Hoffmann) Commissioner Hoffmann had no report. 8. STAFF REPORTS a. Customer Service Report (S. Seng) Click here for Item "a" Ms. Seng reported the following: Meter Installation as of October 31, 2010 -Total Metered Connections - 18,466 -Projected New Meter Installations for FY 10-11: 75 -Actual New Meter Installations as of October 31: 25 -Projected EDUs for FY 10-11: 94 -Actual EDUs as of October 31: 50 -New metered installation summary: Residential: 17 Commercial: 5 Irrigation: 3 Turf: 0 Ms. Seng ended her report. b. Capital Projects Report (B. Jacklitch) Mr. Jacklitch reported the following: Well replacement E-1 B: Notice to Proceed issued September 2010 -Location: Tangelo & First Ave. Contractor completed installation of underground pipes and is currently excavating for the security wall. All equipment has been ordered. 9 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Lambert Lane Water Improvements: Location- La Canada and the Highlands -Design for new 16-inch main is 100% complete. Public Works department will be widening Lambert Lane. All water improvements will be combined with the road work. This project is scheduled to advertise no later than end of the calendar year. Campo Bello Water Main Replacement: -Location: Campo Bello south of Calle Concordia -Notice to proceed for design services issued this month. This project will replace undersized mains. Sheraton Booster Station: The design plan is complete and we are finalizing the contract document. Staff expects to advertise this project no later than the end of this calendar year. The project will be scheduled for construction next year. N. La Canada 3.0MG Concrete buried Reservoir: -Location: King Air Drive, north of Moore Road East of La Canada. -Notice to Proceed was issued. -Plant salvage is complete and contractor has cleared the site and proceeded with excavation. Schedule to pour concrete floor by the first week of December. Mr. Jacklitch ended his report. c. Potable and Reclaimed Water System Report (D. Ruiz) Click here for Item "C" Potable Water Report October 2010 Click here for Item "C" Reclaimed Water System Report October 2010 Mr. Ruiz reported the following: Potable Water System - October 2010 -O.V. Total Daily Demand: 7.6 down to 3.0 million gallons per day -Countryside Daily Demand: Under 1.0 million gallons per day -Precipitation: 3 rain events -Potable Reservoir Storage: Maintaining around 6.5 million gallons Reclaim Water System - October 2010 -Total for 6 end users: 79.0 million gallons for the month of October -Golf courses have been overseeding -All five golf courses have full capacity of the reclaim water system -Year to Date Total: 572.0 million gallons Mr. Ruiz ended his report. 9. DIRECTOR'S REPORT (P. Saletta) a. Upcoming Meetings Mr. Saletta reported the following: -11/17: Town Council meeting -12/1: Town Council meeting -12/9: O.V. Volunteer celebration -12/13: WUC meeting -12/13: Plan a Commission field trip to Lower Santa Cruz and Twin Peak Pumping stations. Depart: Approximately 2:15 p.m. from O.V. Water Utility or meet at Twin Peaks no later than 10 11/08/2010 MINUTES, ORO VALLEY WATER UTILITY COMMISSION 3:00 p.m. -Email invite will be sent to the Commission 10. FUTURE AGENDA ITEMS Commissioner Hoffmann suggested inviting a representative from CAP in the next few months to summarize the science behind the Colorado River. Mr. Saletta indicated that he would contact CAP staff or the Bureau of Reclamation (BOR) and make arrangements. He will try to schedule a meeting for December or January. Commissioner Hoffmann volunteered to assist staff in contacting some guest speakers. Commissioner Tustison suggested having the guest speakers come in January. CALL TO AUDIENCE - At this time, any member of the public is allowed to address the Water Utility Commission on any issue not listed on today's agenda. Pursuant to the Arizona Open Meeting Law, individual Commissioners may ask Town Staff to review the matter, ask that the matter be placed on a future agenda, or respond to criticism made by speakers. However, the Water Utility Commission may not discuss or take legal action on matters raised during "Call to Audience." In order to speak during "Call to Audience" please specify what you wish to discuss when completing the blue speaker card. Mr. Weise Oro Valley resident asked if there were any available contingency plans relating to water withdrawal levels. Mr. Saletta indicated that the Utility had a Drought Preparedness Plan. ADJOURNMENT MOTION: A Motion was made by Commissioner Hoffmann and Seconded by Commissioner Reynolds MOTION carried, 5-0. Prepared by, Iris L. Chaparro Senior Office Specialist 11