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HomeMy WebLinkAboutMinutes - Water Utility Commission - 4/11/2011 0 ppRovEl MINUTES A ) ORO VALLEY WATER UTILITY COMMISSION REGULAR SESSION Sc2) - Monday, April 11, 2011 HOPI CONFERENCE ROOM N 11000 N. LA CANADA DRIVE CALL TO ORDER - AT OR AFTER 6:00 P.M. ROLL CALL PRESENT: Rick Davis, Vice Chair John P. Hoffmann, Commissioner Robert Milkey, Commissioner Richard Reynolds, Commissioner Elizabeth Shapiro, Commissioner Winston Tustison, Commissioner EXCUSED: Dave Powell, Chair STAFF PRESENT: Philip C. Saletta, Director David Ruiz, Engineering Division Manager Robert Jacklitch, Project Manager Jim Peterson, Water Utility Regional Coordinator 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. Residential Irrigation Control Boxes: Mr. Art Weise Oro Valley resident was very concerned about resident not knowing how to operate or turning off their irrigation boxes. particularly turning them off. He felt that by turning the irrigation off even for a week or during rainy season it could save lots of water. Mr. Weise requested the Commission address this matter perhaps in a public education forum. 1. APPROVAL MARCH 14, 2011 MINUTES Discussion and/or possible action. Click here for Item #1 There were no changes or comments to the minutes. 4/11/2011 MINUTES, ORO VALLEY WATER UTILITY COMMISSION MOTION: A Motion was made by Commissioner Shapiro and Seconded by Commissioner Reynolds to approve the March 14, 2011 Water Utility Commission minutes. MOTION carried, 6-0. 2. UPDATE ON DISCUSSIONS WITH TUCSON WATER REGARDING INTERIM DELIVERY OF CENTRAL ARIZONA PROJECT WATER (P. Saletta) Discussion and/or possible action regarding the discussions and negotiations with Tucson Water to develop and Intergovernmental Agreement for the delivery (wheeling) of Oro Valley's Central Arizona Project Water through the Tucson Water system Mr. Saletta reported about the Joint Study with Tucson Water and Metro Water. The costs are still under review but are estimated to be about $428 per AF. This is significantly less than was factored in the Water Utility's study which was about $562 per AF. Since Tucson Water is looking at revenue requirements and rate increases the $428 per AF could be escalated over the 5 year term Intergovernmental Agreement (IGA). If Oro Valley decides to do a one time set rate increase for the 5 year period term, the costs could be set at $500 per AF for the 5 year term. Another option could be to review the revenue requirements over a 5 year period and increase those annually. There are other options but all are still significantly less than the $562 stated in the financial analysis. Rate components: Operations & Maintenance (O&M), power costs are an additional $40 per AF cost for pumping because of Oro Valley's elevation, a capital charge for Tucson Water's investment to facilities and debt service requirements and an ADWR recovery well fee. Staff is still reviewing the report with the consultants and has a phone conference scheduled for tomorrow 4/12/2011. Mr. Saletta reported that he sent an outline to Tucson Water describing Oro Valley's elements for the IGA. Once the basic elements are developed staff can meet with the attorneys and draft an IGA. The IGA could be ready for Council's approval July 6th meeting. Council will not be meeting July 20th and has also cancelled their August meetings. If the IGA is not ready it will have to be presented in September or October. Questions and answer session occurred. -If the agreement is approved late September when will we anticipate actual delivery of the water? (Commissioner Milkey). Mr. Ruiz explained there would be some design requirements and Staff is meeting with Tucson Water this week to review the details. Tucson Water will review plans inside the Naranja reservoir site and Oro Valley will take care of the pipeline outside of the facility into Oro Valley's water system. Mr. Ruiz felt that the design could be ready in three months. The pipeline construction should only take 3 to 6 months. He also felt that the Utility would have to contract an engineer to work on the pipeline connection which is approximately 900 feet. -Is the go ahead synonymous with the approval of the IGA? (Commissioner Milkey). Mr. Saletta stated yes and also mentioned that if the IGA was not approved in July the project would probably start in September. 2 4/11/2011 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Mr. Ruiz felt that Tucson Water's design would be more entailed because it will involve pumps and electrical controls. Mr. Saletta indicated that Council's approval in July could still lead to water deliveries in January 2011. Mr. Saletta emphasized not expending any funds until the Commission's review and Council approval. IGA Basic elements: -Agreement Term - Look into a 5 year with a 5 year renewal -Rates based on study with escalator (concerns are mostly for power cost increases) -Monthly service charge -Agreement will include up to 3,000 AF at request of Oro Valley (Phase 1 is 1500 AF) -Any increase over the 1500 AF will be based at Water Utility's request -Tucson Water will pump to Oro Valley's E-zone from Tucson Water's C-zone reservoir about 400 feet higher than Metro Water -Tucson Water will operate and maintain the system to meet deliveries and meet Arizona Department of Environmental Quality water quality standards -New infrastructure will be at Oro Valley Water Utility expense (pumps motors, control panels and pipes). -Design criteria will meet Tucson Water's standard -Daily operations will be determined by Tucson Water and the Oro Valley Water Utility Question and answer session occurred. -Has there been any thought into trying to optimize the delivery of the 1500 AF when demand is highest? (Commissioner Hoffmann). Mr. Saletta said we would like the option to turn on or off the system to control the system and help meet peak demands. He also explained that Tucson Water's system would be base loaded throughout the entire year to reach the 1500 acre feet. Mr. Ruiz also indicated that Oro Valley could manage well production by turning off some of its wells during the time of year when demand is low. In answer to Commissioner Shapiro question, Mr. Saletta explained that the $428 per AF will consists of O&M, capital charges with an ADWR charge. The set amount would be about a 17% increase for the 5 year term that would set the price at $500 for the 5-year period -Is Tucson Water's capital cost and debt service based on the incremental work that will be needed for delivery? (Commissioner Milkey). Mr. Saletta explained that the costs would be based on their existing system at Naranja C-Zone Reservoir and their recharge and recovery well facilities. and pipelines that would deliver our CAP water. Commissioner Milkey said, we should look at this very carefully and make sure we are paying a fair amount since we may not have to pay for something that has been already built. 3 4/11/2011 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Mr. Saletta mentioned that for any capital system improvements for example the Central Arizona Project we share the capital costs for water deliveries. He also mentioned that Tucson's capital charge is solely based on the portion of water that is delivered through their system and will be a reduced rate because this is a short-term agreement. Staff will be meeting with Tucson Water and Metro Water staff to discuss the IGA elements on 4/14/2011. -If there are incremental increases each year what is the source of this increase? (Commissioner Tustison). Mr. Saletta explained that it was based on their 5 year forecast and rate projections. The incremental increases could range from 8% and 4% to 6% over the first 5 year period, revenue requirements and power increases. -Will the contract be written on projections based on the whole 5 years or will it be based on actual operating results? (Commissioner Tustison). Mr. Saletta mentioned it could be based on the set price over the 5 year term based upon revenue requirements or by annual projections or what is approved by their Council. Based on the studies we feel very comfortable with the 17% for the 5 year term. Mr. Saletta mentioned, if we renew the agreement we will have to re-calculate the increase for another next 5 year term. We must achieve reasonableness and equity in the IGA so they are compensated fairly for their costs. One of the biggest costs was power at about $144. Commissioner Tustison stated, looking economically at the future for this country the chances are very high for a lot more inflation and I feel we should have a contract that includes a set rate. Mr. Saletta indicated that it was it important to recognize that the value of this water even with their proposed rate increases will be extremely cost effective for Oro Valley, and the 17% increase over the 5 year term seemed reasonable. Commissioner Milkey mentioned that certainty was a real advantage if Tucson Water is willing to agree to a set rate schedule over the next 5 years. In answer to Commissioner Shapiro's question, Mr. Saletta indicated that if Tucson Electric Power experiences increase power costs than Tucson Water will have to review their energy costs. Vice Chair Davis felt that their Council would also try to minimize rate shock to their customers. There were no further questions. Mr. Saletta ended is report. No action was required on this item. 3. DISCUSSION REGARDING CENTRAL ARIZONA GROUNDWATER REPLENISHMENT DISTRICT ANNUAL MEMBERSHIP DUES (P. Saletta) Discussion regarding the recent policy discussions at the CAGRD Committee and the CAWCD Board meeting for establishing annual membership dues for CAGRD. 4 4/11/2011 MINUTES, ORO VALLEY WATER UTILITY COMMISSION Mr. Saletta reported that Oro Valley has made significant payments to Central Arizona Groundwater Replenish District over the years. The 2010 Legislation for CAWCD allows CAWCD to bond for future infrastructure and recharge water to various active management areas. CAWCD is concerned that there are many members of CAGRD that do not use CAGRD however they have an obligation to have water available to them through CAGRD. CAGRD does not receive any revenues from these members. Oro Valley is an active participant and also recently we have relied less on CAGRD specifically because of our recovery wells. There are also active CAGRD entities that have helped to build up CAGRD reserves for capital but there are non-active entities that have not paid their proportionate share into the reserves. CAGRD intends to charge annual membership fees to those who are not using CAGRD. This fee will be based on or about 5% of the amount of groundwater the entity has in their Assured Water Supply. Oro Valley's portion of Assured Water Supply is 13,384 AF 5% of this portion would be about 670 AF. Oro Valley's membership due could be about $6,700 to $10,000 per year. CAGRD charge per AF is $11.00 - $12.00. Since all the entities will be contributing to these dues, the rates will stabilize and help reduce the per acre foot CAGRD rates. Mr. Saletta was very supportive of this concept since Oro Valley was paying its proportionate share. Staff continues to discuss the possibility of a credit with CAGRD. However, they are still reviewing their base rates and commodity component. A question and answer session occurred. -In answer to Commissioner Shapiro's question, Mr. Saletta clarified that there are some entities that have 100% recovery wells so although they are CAGRD members they don't request CAGRD to replace groundwater for them. -How are the other water purveyors viewing this concept and have we gotten any feedback? (Commissioner Hoffmann). Mr. Saletta felt that all the purveyors were fine with the proposed $10.00 to $15.00 per acre foot CAGRD dues however, should it increase to $20.00 or more per AF they might be concerned. They also realize that CAGRD is an insurance policy should they have future water recharge and replacement requirements. If CAGRD builds facilities within the AMA's they will need a secured revenue stream. -In answer to Vice Chair Davis question, Mr. Saletta said, we anticipate the existing CAGRD acre foot rates increasing significantly. Much of the rate involves the water rights and infrastructure component which the membership dues will help fund and also could help to level off in the future. The Central Arizona Water Conservation District Board is looking at their policy and has instructed staff to move forward. This issue will actually get resolved with CAP's rate 5 4/11/2011 MINUTES, ORO VALLEY WATER UTILITY COMMISSION setting process for both CAGRD and the other CAP rates. Mr. Saletta ended his report. No action was required on this item. 4. DISCUSSION REGARDING THE POTABLE AND RECLAIMED WATER SYSTEMS REPORTS (D. Ruiz) Click here for Potable and Reclaimed Water Reports - March 2011 Reclaimed Water System - March 2011 Daily Demand: 3.5 million gallons Potable Water System - March 2011 Daily Demand: 4.0 - 6.0 million gallons Precipitation: 1 rain event Mr. Ruiz provided several other graphs requested at a previous Commission meeting. 2005 thru March 2011 Annual Well Pumpace Report This report provides the annual well pumpage relative to the 5,500 AF sustainable rate per calendar year. 2011 Well Pumpage Monthly Report This report provides a visual concept of the actual monthly usage, sustainable rate and monthly accrued pumpage. Mr. Ruiz informed the Commissioners that Staff will present these reports on screen instead of providing handouts. Staff can also provide the file in PDF format. The Commission agreed to accept the reports electronically on screen and also via PDF format. The reports will be available on the website. In answer to Vice Chair Davis question, regarding effluent water, Mr. Ruiz clarified that the water discharge down the Santa Cruz River was not reclaimed water but actual waste water effluent. Mr. Saletta indicated that Oro Valley uses all of its waste water effluent. He explained that Tucson Water recharges at Sweetwater and credits Oro Valley for its usage. In addition, Oro Valley uses its full allocation and only purchases it when necessary. If any waste water effluent is left over, Oro Valley still gets a 50% credit. Mr. Ruiz also mentioned that Oro Valley accounts for every drop of water that goes through the plant whether it goes to reclaimed or the Lower Santa Cruz Managed In- Channel Recharge. Commissioner Hoffmann requested that the Annual Well Pumpage graph plot the accumulative deficit relative to the existing aquifer. He also suggested having another graph showing water levels at specific wells. Mr. Saletta indicated the monitoring well information was included in the Annual Report. Oro Valley has a few monitoring wells, and Staff could look at the possibility of 6 • 4/11/2011 MINUTES, ORO VALLEY WATER UTILITY COMMISSION having another graph. Mr. Saletta mentioned that Oro Valley has experienced about a 30 feet aquifer decline over the long term. Commissioner Tustison was in favor of the Annual Well Pumpage report and felt that the graph described all the advantages in detail for the past six years. Mr. Ruiz ended his report. No Action was required on this item. **5. DISCUSSION REGARDING GRANT APPLICATIONS (P. Saletta) Discussion and/or possible action regarding an applying for a grant from the Arizona Water Infrastructure Authority for the design and planning for the installation of Automated Meter Reading (AMR) equipment in the Countryside Water Service Area and applying for a grant from the Water Smart Program with the Northwest Water Providers for a study at the Lower Santa Cruz Recharge Facility. Mr. Saletta reported on two grant applications. Water Infrastructure Finance Authority — This grant is related to the Countryside automated meter reading program. Mr. Saletta indicated that WIFA allows grants for design and infrastructure projects. The Utility plans to move forward with the Countryside project even if the grant is not approved. If we are eligible, the Water Utility will apply on or before April 29th. The maximum amount for this grant could be $35,000 or less. This project could classify as a green project and could have a better chance for approval. Water Smart Grant - This grant will be through the Bureau of Reclamation, Northwest Water Providers and the University of Arizona. The study will focus on water quality near the Lower Santa Cruz Recharge Project. Staff will apply for this grant by the end of April. Mr. Saletta ended his report. No Action was required on this item. 6. TOWN COUNCIL MEETINGS/COMMUNICATIONS (Councilmember Gillaspie) Councilmember Hornat reported that Council was still working on the Town's annual budget. Several items are still under discussion such as the 2% Utility Tax. Councilmember Hornat ended his report. 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 7 4/11/2011 MINUTES, ORO VALLEY WATER UTILITY COMMISSION a. Customer Service Report (C. Schneider) Click here for Item A Ms. Schneider Customer Service Supervisor reported the following: -Total Meter Connections as of March 3/31/11: 18,489 -Projected New Meter Installation for FY 10-11: 75 -New Meter Installations for March: 9 -Meter Installations FY 10-11: 48 -EDUs as of 3/31/11: 77 Current month: 12 -Meter Replacement Program March: 11 CY 2011: 263 -Total last 3 CY 2009 - 2011: 1,359 Ms. Schneider ended her report. b. Capital Projects (R. Jacklitch) Mr. Jacklitch reported the following: Construction Projects -Well El B: This well is on line and is now complete. This project is scheduled to close in May. -N. La Canada 3.0 MG Concrete Buried Reservoir: Location: King Air Drive. This reservoir is complete however there is still pipeline working being done. The initial fill of this reservoir will take place next month. Once it is tested and inspected for leaks it should be on line the end of May. -N. La Canada 24" Pipeline: This water main is complete and is tied in. Design Projects -Lambert Lane Water Main: This water main project is tied to Public Work's roadway widening project. The Town is still working on financing. The Water Utility will plan to advertise this project at the start of next fiscal year. -Sheraton El Conquistador Booster Station: This project will be advertised in two weeks. A Notice to Proceed is schedule in June. Mr. Jacklitch ended his report. 9. DIRECTOR'S REPORT (P. Saletta) a. Colorado River Snowpack Click here for Colorado River Snowpack Report Click here for Arizona Stream Flow Report Colorado River snowpack is still above average up to 130% normal for the upper basin. The Arizona, southwestern Colorado and northwestern New Mexico areas do not contribute much to the Colorado River Basin. 8 4/11/2011 MINUTES, ORO VALLEY WATER UTILITY COMMISSION b. Community Academy The Commissioners will receive valuable training credits if they decide to attend. Staff will present on Water Policies and overall System Overview (D. Ruiz). On April 19th Staff will also present on Conservation (K. Boyce) and Future Water Supply. c. Upcoming Meetings Mr. Saletta reported that Council approved the Annual Report. Also approved was the settlement with Vestar on Big Wash Reservoir at Oro Valley Market Place. On March 16 Council also approved moving forward with negotiations with Tucson Water on CAP Wheeling. -4/20 and 5/4: Town Council Regular Meeting -5/09: Water Utility Commission Meeting Mr. Saletta ended his report. 10. FUTURE AGENDA ITEMS There were no suggested future agenda items. 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. There were no other speakers. 11. NEXT MEETING: MAY 9, 2011 LOCATION: HOPI CONFERENCE ROOM ADJOURNMENT MOTION: A Motion was made by Commissioner Shapiro and Seconded by Commissioner Reynolds to adjourn the meeting. MOTION carried, 6-0. Prepared by, „tioi l Iris L. Chaparro Senior Office Specialist 9