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HomeMy WebLinkAboutMinutes - Water Utility Commission - 9/12/2011 MINUTES ORO VALLEY WATER UTILITY COMMISSION REGULAR SESSION MONDAY, SEPTEMBER 12, 2011 HOPI CONFERENCE ROOM 11000 N. LA CANADA DRIVE CALL TO ORDER -AT OR AFTER 6:00 P.M. ROLL CALL PRESENT: Dave Powell, Chair Richard Davis, Vice Chair Robert Milkey, Commissioner Richard Reynolds, Commissioner Elizabeth Shapiro, Commissioner EXCUSED: John Hoffmann, Commissioner Winston Tustison, Commissioner STAFF PRESENT: Shirley Seng, Utility Administrator 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. There were no speakers at this time. 1. APPROVAL JULY 11, 2011 MINUTES (Chair Powell) Discussion and/or possible action. Chair Powell requested approval of the minutes. MOTION: A Motion was made by Commissioner Shapiro and Seconded by Commissioner Milkey to approve the July 11, 2011 minutes. MOTION carried, 5-0. 2. UPDATE ON COUNTRYSIDE ADVANCED METERING INFRASTRUCTURE PROJECT (S. Seng) Update and status regarding the Advanced Metering Infrastructure Project in the Countryside Water Service Area. Ms. Seng reported that when the antenna and the bay station are installed on the mast and all the IT equipment and servers are installed at the town they will begin installing the meters. It will take the contractor approximately 30 days to install 2,000 meters starting in mid-October. All Countryside Service area customers were mailed a pamphlet with frequently asked questions about the project in their bills. Once the old meter is replaced a second pamphlet will be hung at the customer's door. The customer portal will be the last item to be completed. This will allow the customer to view their water consumption on the website. The Utility's target date to read the meters is still expected to be in January. There were no further questions. No Action was required on this item. 3. UPDATE ON THE INTERIM DELIVERY OF CENTRAL ARIZONA PROJECT WATER (D. Ruiz & S. Seng) Update on the Intergovernmental Agreement between the Town of Oro Valley and the City of Tucson for the interim delivery of Oro Valley's Central Arizona Project Water through the Tucson Water system. The update will include the various activities and tasks related to this project. Ms. Seng indicated that staff was currently working on a frequently asked questions (FAQ's) guide for the CAP Water project. This information will be posted on the Water Utility's website. During the month of October the residents will also receive this information as inserts in their bills. Our goal is to provide consistent answers to common questions. An Open House for the CAP water project will be scheduled for November 14, 2011 to discuss the project. This is the same evening as the Commission meeting which will give the Commissioners an opportunity to participate in the open house. -Time: 5:30 to 7:00. The regular Water Utility Commission meeting will take place about 7:00 p.m. Ms. Seng requested some feedback from the Commission. The Commission agreed having their meeting right after the Open House at 7:00 p.m. Mr. Jacklitch gave an update regarding the design and construction phase of the project. Oro Valley has completed its design work however there are some outstanding administrative issues to be resolved. Mr. Jacklitch explained that Tucson Water was still working on telemetry, SCADA and management issues. The CAP water from the Tucson Water System will be continuously pumped on a 24/7 basis into the Oro Valley Water System. CAP delivery is still on schedule for delivery starting in January 2012. There were no further questions. No Action was required on this item. 4. WATER RATES ANALYSIS (S. Seng) The status and proposed schedule for the Water Rates Analysis will be discussed. Ms. Seng reviewed some of the water rates preliminary major assumptions. All the revenue was projected on water use patterns last fiscal year 2010/11. The average water use increased from 8,000 to 8,400 gallons after 4-5 years of continuous decline. As of June 30 there are 246 outstanding vacant accounts and approximately 100 are irrigation accounts 09/12/2011 Water Utility Commission Minutes 2 which probably will not be back on line. We assume the remaining residential accounts will come back on line at 5% per year. Growth estimates: 35 meters connections are estimated every year over the next five year period which equates to 44 EDU's (Equivalent Dwelling Units). The interest rate is 0.5% percent for all five years. We are proposing to cash fund all capital improvements with the exception of those in FY 2015/16. During this period a WIFA loan will be assumed $2.9 million at 4.25% percent for 20 years. The Utility would elect to finance the projects so that the cash balance doesn't drop below $2.0 million. Potable Water Development Impact Fee Fund: includes completion of the La Canada Reservoir and Main project. There are no other projected projects. This fund is simply paying off debt. Alternative Water Impact Fee Fund: Capital = $515,000 for CAP project. We anticipate $430,000 for the expansion of the reclaim water main, Location: east of La Canada on Naranja to the Naranja Town park. -Do we anticipate development at the Town site? (Commissioner Davis). Ms. Seng mentioned she did not have any details about the site. Personnel Costs: No additional staff throughout the 5 years, No merit increases. Ms. Seng mentioned there was a 2% overall cost increase each year stemming from health insurance and other benefits. Operations & Maintenance Cost: Additional 2.2% inflationary increase for each year. In year 12/13 the Reclaimed Water IGA will have to be renewed affecting a significant increase in reclaimed water costs. The cost per acre foot for reclaimed water could increase to as much as $500 per AF. Current rate $270 - $300 per AF. Mr. Saletta will update the Commission as he negotiates the agreement. In FY 2011/12 we assume 5,000 AF of recharge however next year's projection could be as much as 6,000 AF. Ms. Seng explained that the Utility must continue to maintain its long term storage credits for its recovery wells. This helps reduce our financial obligation to the Central Arizona Groundwater Replenishment District (CAGRD). By using recovery wells and transferring long term storage credits to offset the cost of CAGRD we reduce our projected payment from approximately $800,000 to $260,000. -Tucson Water Wheeling Costs: Comprises of O&M, Administrative and Capital expenses. The capital component is $71.18 per AF reflected in the Alternative Water Resources Development Impact Fee Fund (AWRDIF). The remaining $428.71 AF for O&M and Administrative costs will be paid for out of the Enterprise Fund. Power Cost Savings: Decrease pumping costs by $113/AF for CAP water delivered. The Utility's CAGRD obligation will also decrease because of CAP water deliveries. Ms. Seng mentioned that the initial scenario indicates that a rate increase for FY 2011-12 is not needed based upon the 5-year projection period for the water rates analysis... She will 09/12/2011 Water Utility Commission Minutes 3 be rechecking all the formulas and will be meeting with the operation superintendents to check if they have projected all extraordinary operating costs. Ms. Seng explained that under this scenario the Utility meets its debt service coverage requirements and cash reserve requirements but we still need to proceed cautiously. Staff will be meeting with the Finance Subcommittee in September to review the final scenarios before a formal recommendation is made to the Commission in October. She also mentioned that even if we have no rate increase this year, we still have to complete a Water Rates Analysis Report. Staff would like to present the report to Council November 2nd. A question and answer session occurred. -If there is an increase in the cost of reclaimed water will it require an increase in the reclaimed rate? (Commissioner Milkey). Ms. Seng explained that the Utility already charges its reclaimed users the Tier 1 rate which is approximately $700 per AF. -With personnel costs and no merit increases, is this a town wide policy? (Chair Powell). Ms. Seng stated that it was consistent with the Finance Director's projections for the general fund. -What are the plans for the cost of CAP delivery long term after the 5 years of the CAP wheeling is completed? (Commissioner Shapiro). Ms. Seng explained that Staff has discussed this issue before and given the existing IGA with Tucson Water, we will probably be wheeling CAP water through Tucson Water for up to 10 years. We may increase our deliveries from 1,500 AF to 3,000 AF at an unconfirmed cost of $6.0 - $8.0 million. This project can be funded through the alternative water impact fee fund which in year 5 could have close to $7.0 million. However, it is possible that we may finance about $2.5 million through WIFA. We should receive a lower interest rate because renewable water projects are considered green projects. -Are we not looking to recharge in AVRA Valley at this time? (Commissioner Shapiro). Ms. Seng mentioned there is still a study being performed at Red Rock but we must ask ourselves how financially viable is it in the next 10 years. Do we want to begin construction on something like this? We have an opportunity now to have Tucson Water wheel our CAP water for the next 5 to 10 years at a modest amount of money compared to a $60.0 - $80.0 million CAP Project. -Commissioner Shapiro questioned the studies with Northwest Providers and doing the project jointly. Ms. Seng mentioned that Metro Water had already purchased their recharge facilities and they are moving forward with their own recharge and recovery project. Ms. Seng explained that wheeling CAP water through Tucson Water was much more cost efficient. We must evaluate the ultimate CAP project and how will it be financed and be aware that it is a very expensive option. Tucson Water has been a great regional partner. We do not foresee any problems wheeling CAP water through Tucson's system until the Town decides what the next step is. 09/12/2011 Water Utility Commission Minutes 4 Commissioner Milkey agreed there was no need to go with the more expensive option until the need arises. If growth resumes or the Arroyo Grande project is annexed and developed than we can reconsider this alternative. At the present rate of growth it might be wise to move up to 3,000 AF in a reasonably expedient time just to preserve our groundwater. -Commissioner Milkey asked is there any prospect of using more than 10,000 AF of recharge allocation? Ms. Seng commented that recharge was very expensive. We are currently accumulating credits for all our recharged water. Until we actually begin to accept delivery of our CAP water we are not actually using "wet water". It probably will not be economically feasible to recharge the entire 10,000 AF of our allotment. In addition the cost of recharge will continue to increase. In answer to Commissioner Shapiro's questioned, Ms. Seng explained that the agreement with Tucson Water would secure Oro Valley's water rights and capacity in their system. Any other water provider would be subordinate to us. She also felt that Tucson Water would not over commit their capacity. Ms. Seng will report the status on the rates at the next Commission meeting. There were no further questions. No action was required on this item. 5. TOWN COUNCIL MEETINGS/COMMUNICATIONS (Councilmember Hornat) Councilmember Hornat asked about the rate increase effective in October. Ms. Seng mentioned that the GPF (Groundwater Preservation Fee) will be effective in October. Councilmember Hornat mentioned that at a meeting he attended, it was mentioned that WIFA did not have any monies to loan. Ms. Seng explained that to the best of her knowledge WIFA had money to lend. They issue bonds and offer those bonds to municipalities at discounted rates, especially on green projects. Councilmember Hornat mentioned that CAP was also concerned about their power plant and land leased in the Indian reservation. Their lease will expire in seven years. Ms. Seng felt there could be some potential increase in operating costs for CAP water as it relates to power. Councilmember Hornat ended his report. 6. SUBCOMMITTEE/COMMISSIONER REPORTS a. Finance Subcommittee (Commissioner Tustison) Finance Subcommittee will schedule a meeting in October to discuss the Water Rates Analysis. b. Conservation Subcommittee (Vice Chair Davis) Commissioner Davis had no report. c. Renewable Water Resources Subcommittee (Commissioner Hoffmann) Chair Powell had no report. 09/12/2011 Water Utility Commission Minutes 5 7. STAFF REPORTS a. Customer Service Report (S. Seng) Ms Seng reported the following:-Fitch Bond Rating Company - Completed their process of doing a three year surveillance with regard to the Water Utility's original $31.0 million 2003 Senior Lien Bond Issue. These bonds are backed solely by water revenues. They have issued a press release affirming the Town's AA- rating with a stable outlook. -Customer Service Report Total Metered Connections as of 8/31/11: 8 Projected Meter Installations for FY 11-12: 35 Actual New Meter Installations as of 8/31/11: 23 Projected EDU's for FY 11-12: 44 Actual EDU's as of 8/31/11: 30 Current Month Meter Replacements: 58 as of 8/31/11 Total Meter Replacements since inception: 1,589 Ms. Seng ended her report. b. Capital Projects (B. Jacklitch) Mr. Jacklitch reported the following:-Lambert Lane 16-inch Water Main: This is a roadway improvement project between La Canada, Lambert Lane and Pusch View Bridge. -A 16-inch water main will be installed -General construction began the week of 9/5/2011 -Contractor: Eagle Rock -Water main completion date: FY 2012 -EL Conquistador Booster Station: A Notice to Proceed was issued in July. Contractor: Smyth Steel. A temporary booster station will be built after the existing facility is demolished. -North La Canada 3.0 MG Concrete Buried Reservoir: This potable water project is 90% complete. -Location: La Canada -The project will require the building of a masonry wall and landscaping. The reservoir has been filled and over 90% of our regulatory requirements have been met. The reservoir will be scheduled to go on line by the end of this week. Councilmember Hornat asked about the Lambert Lane 16-inch main installation. Mr. Jacklitch mentioned that the main could be utilized for CAP water deliveries in the future. Mr. Jacklitch also mentioned that the (E-zone) La Canada reservoir will serve customers between Tangerine and Naranja to La Cholla and Oro Valley Hospital. This reservoir could be used for storage and future CAP blending. c. Potable and Reclaimed Water System Report (D. Ruiz) Mr. Jacklitch reported for Mr. Ruiz. 2011 Pumpage Monthly Report - August 2011 Sustainable rate: 5,500 AFY 09/12/2011 Water Utility Commission Minutes 6 2011 Annual Well Pumpage Report - August 2011 Sustainable Rate: 5,500 AFY Reclaimed Water System - August 2011 Total pumpage was down. There were also several rain events Daily Demand Total: 534.7 million gallons Potable Water System Demand and Precipitation - August 2011 Daily Storage: 6.5 million gallons End of month demand increase: 8.5 mgd -Precipitation: Several rain events -Daily Demand: 8.5 million gallons Water Watch Stream flow for Arizona and Colorado -August 2011 -Stream flow percentile classes were displayed Mr. J ackl itch ended his report. d. Upcoming Meetings (S. Seng) Ms. Seng reported the following: -9/12 & 10/5: Town Council Meetings -10/6: State of the Town -All Commissioners are invited and must RSVP by 9/22/2011. Location: El Conquistador Time: 11:30 a.m. - 1:30 p.m. Commissioners will receive an email reminder from staff -10/10: WUC meeting Ms. Seng ended her report. 8. FUTURE AGENDA ITEMS There were no agenda item suggestions at this time. 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 speakers. 9. NEXT MEETING: OCTOBER 10, 2011 LOCATION: HOPI CONFERENCE ROOM ADJOURNMENT: 6:45 MOTION: A Motion was made by Commissioner Shapiro and Seconded by Commissioner Reynolds to adjourn. MOTION carried, 5-0. 09/12/2011 Water Utility Commission Minutes 7 Prepared by: 1:64-2 0( atfq,e.i.n. Iris L. Chaparro Senior Office Specialist I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the Water Utility Commission of Oro Valley, Arizona held on the 12th day of September 2011. I further certify that the meeting was duly called and held and that a quorum was present. Dated this /D day of 0 c��Zigt, , 2011. 09/12/2011 Water Utility Commission Minutes 8