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HomeMy WebLinkAboutMinutes - Water Utility Commission - 11/13/2012 MINUTES ORO VALLEY WATER UTILITY COMMISSION REGULAR SESSION TUESDAY, NOVEMBER 13, 2012 HOPI CONFERENCE ROOM 11000 N. LA CANADA DRIVE CALL TO ORDER - AT OR AFTER 6:00 P.M. ROLL CALL: 6:01 PRESENT: Robert Milkey, Chair Winston Tustison, Vice Chair Richard Davis, Commissioner John Hoffmann, Commissioner Richard Reynolds, Commissioner Elizabeth Shapiro, Commissioner Richard Verlaque, Commissioner STAFF PRESENT: Philip C. Saletta, Water Utility Director Shirley Seng, Utility Administrator Robert Jacklitch, Project Manager Mr. Saletta introduced Danielle Tanner, Parks and Recreation Senior Office Specialist substituting for Iris Chaparro the Commission's secretary who was unable to attend the meeting. 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. 1. APPROVAL OCTOBER 8, 2012 MINUTES MOTION: A Motion was made by Vice Chair Tustison and Seconded by Commissioner Shapiro to approve the October 8, 2012 minutes. MOTION carried, 7-0. 11/13/2012 Water Utility Commission Minutes 1 2. DISCUSSION AND UPDATE REGARDING CENTRAL ARIZONA PROJECT NON-INDIAN AGRICULTURAL WATER AVAILABILITY (Commissioner Hoffmann and P. Saletta) Commissioner Hoffmann explained that the subcommittee met November 5th to discuss the Non-Indian Agricultural water availability and its implications to the water utility. Mr. Saletta mentioned that most importantly was whether or not we wanted to acquire additional water and if this is the way to do it even though there are some pros and cons with acquiring this particular supply. We must keep in mind the resources, cost and future uses of this water. Chair Milkey pointed out that in some ways it was less important where the water came from rather than the fact there was some water availability and that it was important to consider cost, planning and how to use this water appropriately and effectively for Oro Valley. Mr. Saletta provided an overview of the following: -Central Arizona Project NIA water is available to municipal and industrial users and to entities outside the CAP area, Maricopa and Pinal counties. -Amount of CAP NIA Water reallocation is 96,295 AF per year -51,962 AF available to municipalities. Key agencies involved: AZ Department of Water Resources -Central Arizona Water Conservation District and U.S. Bureau of Reclamation Mr. Saletta mentioned that CAP NIA water was lower priority and there was a total of 364,000 af/yr and a portion of the 96,295 af/yr may be reallocated. He also mentioned that other water rights must be satisfied first and that other CAP water must also be satisfied as municipal & industrial subcontracts and Indian water. -Total CAP NIA 364,000 af/yr approximately. —Colorado River water supply is subject to shortages Mr. Saletta also presented graphs relating to 2012 NIA Reallocation Water Supply Analysis. -Graph 96,295 Acre Feet (Scenario A & B): Total Available for Reallocation. -A discussion occurred about purchasing CAP NIA water in 5 year intervals Chair Milkey mentioned that you pay up front to have the rights for this water and then as delivery occurs, you pay for a delivery charge on what you receive but you are at risk if there is a shortage on any given year. Ms. Seng mentioned you buy the allocation once and you take delivery each year and pay the O&M cost on the delivery. Mr. Saletta mentioned that in order to make this water valuable to us we would want to use our full allocation of the 10,305 a/f first and store it in the ground, and also get the CAP NIA water that is available. There is a CAP sub-contract to pay for the capital cost up front and ongoing capital charges. If they can't fulfill the order, we do not pay the for the delivery costs. 11/13/2012 Water Utility Commission Minutes 2 Mr. Saletta presented a graph showing later year shortages where the 365,000 a/f CAP NIA Water may not be available. The Colorado River will still have water but it will be providing less water. He also showed an early year shortage graph. These graphs are good comparisons because there is escalating O&M costs and in the early years the cost per acre foot is not as high. Chair Milkey said if you order this water, you should be able to take the full allocation and use the entire amount within the year. Mr. Saletta mentioned if you do not take it, in the future the cost will be higher and is best to take the delivery and store it in the ground. Mr. Saletta presented a graph which illustrated the reallocation of 96,295 a/f NIA priority water. He also indicated that CAGRD was very interested in this water and will also be applying for an allocation. Mr. Saletta discussed the following: -As a qualified applicant Oro Valley will be able to minimize its use of CAGRD in the future which will be more expensive in the future. ADWR selection criteria applies to all applicants and include those with the ability to pay. Section Criteria Municipal Users - 51,962 a/f -Many water users have a groundwater allowance account and Oro Valley had 75,000 a/f of that supply. We have used most of it and now have about 5,000 a/f left. -Providers with designations later than 2021 will be required to relinquish Groundwater Allowance Credits. Vice Chair Tustison asked have they decided how much of the Groundwater Allowance Credits will be relinquished? Mr. Saletta mentioned that the amount was undetermined and that all entities from Phoenix to Tucson did not agree with this condition. The Groundwater Allowance account was granted to us as part of the Arizona Groundwater Code in the assured water supply. They are now asking for the water back if we receive additional CAP NIA water. Staff and the Water Resources subcommittee agree that we do not want to relinquish any of our groundwater savings account credits. In answer to Commissioner Verlaque question, Ms. Seng stated if no one wants this water the water stays in the river. Mr. Saletta also mentioned that agriculture could use it. -NIA Pricing Components ($/acre-foot) -Supply Availability $1,000 per a/f. The majority of the water users do not agree with this figure. This preliminary estimate is subject to change. -Bureau of Reclamation is part of the approval process and the Secretary of the Interior makes the final reallocation decision. 11/13/2012 Water Utility Commission Minutes 3 Next Steps Include final reallocation policy by December 17, 2012. The deadline for application is February 18, 2013. The department will need to submit the recommendation to the Secretary by January 2, 2014. Mr. Saletta discussed the Preliminary Analysis for 100 year period. -Availability -Capital costs -Annual O&M delivery costs -Full utilization of our current CAP-10,305 a/f/yr. -Compared 1000 a/f/yr. delivery -Total $ amount - $/AF amount -Net Present value $ amount - NPV $/AF. Mr. Saletta reviewed the Cost Analysis 1000 a/f/yr. 100 Year Period -Capital and O&M Early shortage -Later shortage and Current CAP conditions. Mr. Saletta reviewed the pros and cons: Pros: -Available CAP water 67% -O&M cost is the same price as current CAP M&I per acre foot -Long term supply -Storage for the future -It can be used as wet or paper water. Cons: -Higher capital cost -Subject to more shortage than CAP M&I -We must store this water to make it economically viable and must use our full allocation of 10,305 a/f. In answer to Chair Milkey's question, Mr. Saletta indicated that we have the capability of storing the 10,305 a/f plus the 1,000 a/f of water in the Santa Cruz recharge facility. Mr. Saletta discussed the following: Comments that were submitted to ADWR: -Deadline -Selection criteria -Groundwater Allowance Account relinquishment -Cost -Additional $1,000 per a/f not needed. -Vice Chair Tustison asked what happens if they do not discount the $1,000 per a/f from the $2,288? Mr. Saletta responded that we needed to rework the numbers and would cost an additional $1,000,000. Next Steps & Proposed Schedule: -Analyze benefits and costs -Develop a plan for use -Determine amount to request -Review with Water Resources Subcommittee -Schedule Finance Subcommittee meeting in December -Review with Commission Commissioner Verlaque asked what happens if you decide not to participate and take the water right away? Mr. Saletta mentioned if you wait for delivery for a certain amount of years the financial analysis will be different and you risk a lesser amount of delivery. He also mentioned there was a water management criteria and what makes sense as a user is to purchase the water now and store it for the future. 11/13/2012 Water Utility Commission Minutes 4 Commissioner Davis asked is there opportunity to purchase water by 2020? Mr. Saletta mentioned there would be opportunities with ADD Water (rights to the Colorado River) but with risk of shortage ADD Water would be expensive, complex and also three times the cost of this water. Mr. Saletta also indicated that Tucson Water had expressed a strong interest but has not indicated how much they need and Marana is very interested in this water. Vice Chair Tustison mentioned if we take the 10,305 a/f and the 5,500 a/f and Oro Valley is maxed out as far as residential growth, how much water will Oro Valley be using? Mr. Saletta explained based on the analysis we would use a total of 17,000 a/f. If we take 5,500 a/f and 2,500 a/f for reclaimed, we would need our full 10,000 a/f allocation. If we are pumping groundwater and storing it, we will not have to pay CAGRD for additional groundwater usage. Mr. Saletta stated that we have depleted our accounts dramatically and this will help us to rebuild them even further. For an entity as Oro Valley to have 30,000 - 40,000 a/f of storage for the future and if we use 10,000 a/f - 15,000 a/f per year this is a good thing, but it comes with a cost which is what we need to discuss. This is very complicated however we will continue to analyze this and look at the financial part of it. Chair Milkey would be interested to see the impact in moving forward with regards to the water rates analysis. Mr. Saletta stated within a short period of time all our wells will be recovery wells and then within a year or two we will want to put 8,000 a/f in ground water. Mr. Saletta reviewed WUC questions and discussion items: -Capital costs - $1.3 million (?) -Amount requested - 1,000 a/f (?) -Source of funds -AWRDIF Fund -Finance Subcommittee Meeting -Other options: -Purchase more GW Extinguishment credits -Schedule -TBD based upon ADWR Commissioner Davis asked how many acre feet do we get if we annex Arroyo Grande? Mr. Saletta stated that State Lands has an allocation of 14,000 in Pima County and the Town would want a portion of that amount. Mr. Saletta mentioned we must also look what is our largest demand in Oro Valley which is irrigation of golf courses and if there are any future golf courses in Arroyo Grande. The policy states that all golf courses must be on reclaimed water. There may not be enough of reclaimed water and Arroyo Grande may need to bring in another source of supply. Mr. Saletta asked if a December Finance subcommittee would be possible. The Commissioners agreed that the first four days of December would work. Mr. Saletta also mentioned that ADWR would not have the formal policies available until December 17th. Mr. Saletta said this water is costly and has a lot of strings attached, but it is CAP water and has value in the future. Commissioner Verlaque said the argument is not justifying how to do this, but justify and explain what the eventual cost could be if we not do it. 11/13/2012 Water Utility Commission Minutes 5 Chair Milkey said in the southwest we should latch on to all the water we can get. This is a very complicated issue we must be able to explain it to Council and find simplifications to explain it to the public. Mr. Saletta ended his report. No action was required on this item. 3. DISCUSSION AND UPDATE ON CAPITAL PROJECTS (R. Jacklitch) Mr. Jacklitch reported on capital projects and presented several slides: -El Concordia Booster station- Completed May 2012 and online. -Campo Bello Water Main Improvements- A total of 17,000 feet of 16-inch pipe was installed on this project. This project is now complete and online. -Lambert Lane 16-inch water main improvement- This project is complete. A total of over 7,000 feet of pipe was installed. This project was online in the summer. -Chlorine Storage facility on Rancho Vistoso — Mr. Jacklitch explained the chlorination process. This facility will be used early December. Mr. Jacklitch ended his report. 4. DISCUSSION AND UPDATE ON WATER RATES ANALYSIS REPORT (Chair Milkey) Chair Milkey mentioned that Town Council accepted the Water Rates Analysis November 7th and agreed to no a rate increase. Several questions were asked regarding: The cost for CAGRD versus CAP water cost -Upcoming TEP rate increases and long term cost. Councilmember Hornat and staff also explained to Council that TEP's rate increases were included as part of the rate projections in the Financial Analysis. Ms. Seng mentioned that Council also wanted to discuss CAP water and if deliveries could be increased. Chair Milkey ended his report. No action was required on this item. Mr. Saletta mentioned we do the five year projections every year, and we can make changes as needed this was also explained to Council. We also have opportunities to look at those costs and add or delete additional projects. Ms. Seng mentioned that the Cost of Service Study will play a big role in next year's rate analysis. Chair Milkey ended his report. No action was required on this item. Chair Milkey requested the Commission's approval to move Item 6 before Item 5. 6. TOWN COUNCIL MEETINGS/COMMUNICATIONS (Councilmember Hornat) Councilmember Hornat reported the following: -Town Council was pleased with the no rate increase and satisfied with the next 5 year projections. 11/13/2012 Water Utility Commission Minutes 6 -Discussed the cost of service study and that it was a good idea to keep in mind rates for individual users and determine costs. -Staff's chart was well received and they were pleased to see the progress being made in the pumping of less groundwater. -Arroyo Grande: This project has been scheduled as a future project. We can expect some activity by State lands perhaps during the next four or five years unless something dramatic happens at the state level. The town would like to consider going past the Pinal line over to 79. We must also consider geography its potential and how we will use the land. Our Arroyo Grande plan does not take into consideration physical delivery, the cost of delivering infrastructure, roadway improvements by the developer and land costs. Councilmember Hornat indicated that Staff gave a good presentation and it was well received. Councilmember Hornat ended his report. 5. DISCUSSION AND POSSIBLE ACTION REGARDING CANCELLING THE DECEMBER WATER UTILITY COMMISSION MEETING (Chair Milkey) Chair Milkey commented that he is not aware of any pressing issues warranting a December meeting however, staff will schedule a Finance Subcommittee meeting sometime in December. The Commission unanimously agreed to cancel December's meeting. Chair Milkey mentioned that it was Commissioner Hoffmann's last meeting as a Commission member. Commissioner Hoffmann indicated that he had enjoyed his 6 years of service with the Commission. 7. SUBCOMMITTEE/COMMISSIONER REPORTS a. Finance Subcommittee (Commissioner Tustison) No report b. Conservation Subcommittee (Commissioner Davis) No report. c. Water Resources Subcommittee (Commissioner Hoffmann) No report. 8. STAFF REPORTS a. Customer Service Report (S. Seng) Ms. Seng reported the following on the Customer Service Report October 2012: -Total Metered Connections of 18,680 -Actual New Meter Installations for October = 23. -Total Actual New Meter Installations for FY 12-13 = 81 11/13/2012 Water Utility Commission Minutes 7 I -Current Month EDU's = 30 -Actual EDU's for FY 12-13 = 107 -Meter Replacements FY 12-13 =141 -Water Audits FY 12-13 =47 Ms. Seng ended her report. b. Potable and Reclaimed Water System Report (R. Jacklitch) Mr. Jacklitch reported on the following October 2012 reports: -Total Water Production -2011-12 Monthly Water Production Report -Daily Demand Operations/Precipitation Report -Reclaimed Water Deliveries -Reclaimed Water System 6 End Users Mr. Jacklitch ended his report. 9. DIRECTOR'S REPORT (P. Saletta) a. Colorado River Update Mr. Saletta reviewed the following: -Arizona and the Colorado Water Watch reports October 2012 monthly stream flows reports -CAP Total System Contents -Lake Mead at 51% capacity -Lake Powell at 57% capacity b. Upcoming Meetings -12/05: Town Council Meeting -12/04: Finance Subcommittee on or before 12/04/12 -12/13: Town Volunteer Appreciation Dinner Mr. Saletta ended his reports. FUTURE AGENDA ITEMS -Update on the Mexico Treaty (Commissioner Davis). Mr. Saletta mentioned he could get a guest speaker from CAP or ADWR to discuss this topic. 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. ADJOURNMENT: 8:00 p.m. 11/13/2012 Water Utility Commission Minutes 8 MOTION: A Motion was made by Commissioner Davis and Seconded by Commissioner Reynolds to Adjourn. MOTION carried, 7-0. Prepared by: /4/4 clttem Iris L. Chaparro y 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 L-1 day of , 2013. I further certify that the meeting was duly called and held and that a quorum present. Dated this 11 day of )0,fi _ , 2013. 11/13/2012 Water Utility Commission Minutes 9