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2022 06 15 BAWA MinutesMINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY June 15, 2022 The Board of Directors of the Baytown Area Water Authority (BAWA) met in a Regular Meeting on Wednesday, June 15, 2022, at 4:32 P.M., in the Council Chamber of the Baytown City Hall, 2401 Market Street, Baytown, Texas with the following in attendance: Brenda Bradley Smith President Mike Wilson Vice President Jimmy Smith Director Brandon Benoit Director Rick Davis General Manager Trevor Fanning General Counsel Raquel Martinez Deputy Assistant Secretary President Brenda Bradley Smith convened the June 15, 2022, BAWA Board Regular Meeting with a quorum present at 4:32 P.M., all members were present with the exception of Secretary Frank McKay III, who was absent. 1. MINUTES a. Consider approving the minutes of the Baytown Area Water Authority Regular Meeting held on April 20, 2022. A motion was made by Vice President Mike Wilson, and seconded by Director Brandon Benoit to approve the minutes of the BAWA Regular Meeting held on April 20, 2022, as submitted. The vote was as follows: Ayes: Vice President Mike Wilson, Director Jimmy Smith, Director Brandon Benoit Nays: None Other: President Brenda Bradley Smith (Abstain), Secretary Frank McKay III (Absent) Approved 2. BAYTOWN AREA WATER AUTHORITY FY 2022-23 PROPOSED BUDGET a. Receive and discuss the Baytown Area Water Authority's Fiscal Year 2022-23 Proposed Budget. BAWA Board Regular Meeting Minutes June 15, 2022 Page 2 of 4 Finance Director Victor Brownlees presented the draft of the Baytown Area Water Authority's Fiscal Year 2022-23 Proposed Budget and thanked staff for their work on this item. He reminded the Directors of flux and transition over the last year due to the COVID Pandemic in terms of water consumption, and the new plant that came into operation. As such assumptions were made last year to the best of staff s ability, due to the degree of uncertainty, and numbers presented today are a better reflection of the reality of the current positions of the revenues and expenditures. Mr. Brownlees further provided the following overview of the proposed budget and offered any questions from the Board: Revenues: Revenues are due to go up a little over $15 million, which is largely due to a 6% increase in rates that are going into effect in the next fiscal year, which these numbers are included in the budget as presented. Expenditures: Expenditures are seeing an upward turn, which is due to increased inflation rate pressures. Also, some of those cost increases include, Raw Water Supply Costs from the City of Houston, and Debt Services for a program of investment that is in place for Capital Projects. He noted that equates to a little under $1 million in cash going into the Capital Improvement Pro j ect Fund ("CIPF") for next year to increase the debt payments to a little under a million to pay for bonds, which will be issued for the Raw Water Rehabilitation and East Surface Water Plant Phase 2 Expansion Projects. Working Capital: The budget, as presented, will result in Working Capital of all other things being equal of up to 51 days of operating expenditures at year end, and as a conservator, it is a little low, but reasonable as we are in the business of providing services and not to hoard money. However, Mr. Brownlees noted he would not like it to go below the current amount, and as such staff will be watching for any need to increase water rates for the following fiscal year of 2023-24. Vice President Mike Wilson questioned the differences in the numbers for the budget presented in their packet, compared to the attachment that was before the Board at the dais and Mr. Brownlees responded that the budget had been amended since the posting. President Brenda Bradley Smith noted the City of Houston untreated water rates for the last entry on the table is for April 2021, and asked if they had increased for April 2022. Mr. Brownlees noted on page 4 of the Expenditures under Raw Water Supply Cost, it was highlighted that the cost went up from $0.7573 to $0.90 on April 1 ", 2022. Further President Bradley Smith questioned the proposed expansion of the BAWA East Surface Water Plant Phase 2 Expansion and the relatively low amount of $5.4 million to design and construct such a project. Assistant Director of Utilities Sterling Beaver answered that this was misstated in the description of the budget and clarified that this item is not for the construction, but only for the Engineering of the project. Furthermore, General Manager Rick Davis clarified that it is expected that an expansion for BAWA East might cost similar to the new construction, and that Carollo Engineers, Inc., is currently conducting an analysis on this project to determine potential use of technologies that could be included in the expansion project, and that this information is needed in order to move BAWA Board Regular Meeting Minutes June 15, 2022 Page 3 of 4 further with financial figures. Mr. Brownlees further stated that once this assessment is complete, staff would bring that information before the Board with how to fund the final expense, as this amount is just to get them started. Director Brandon Benoit questioned the transfer of $1 million from the Working Capital to the Capital Improvement Project Fund ("CIPF"), which is down from previous years, and asked for clarification for the reason for this transfer. Mr. Brownlees responded that on page 5 of the proposed budget it outlines the Capital Programs that will funded, which are the Backwash and Decant Pump Replacement Project, as well as the Administration Building Project, and that his earlier statement for Working Capital was to watch it and ensure that it does not get lower. General Manager Rick Davis further clarified that it was not a what -if number, but what they will actually do. b. Consider a resolution calling for a public hearing regarding the Baytown Area Water Authority Fiscal Year 2022-23 Proposed Budget. A motion was made by Director Jimmy Smith, and seconded by Vice President Mike Wilson to approve Resolution No. 2022 -08, related to Item 2.b. The vote was as follows: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, Director Jimmy Smith, Director Brandon Benoit Nays: None Other: Secretary Frank McKay III (Absent) Approved RESOLUTION NO.2022-08 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY ESTABLISHING THE DATE, TIME AND PLACE FOR A PUBLIC HEARING ON THE FISCAL YEAR 2022-2023 PROPOSED BUDGET; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 3. REPORTS a. Receive the Baytown Area Water Authority Quarterly Financial and Investment Reports for the Quarter Ending March 31, 2022. Finance Director Victor Brownlees presented the Baytown Area Water Authority Quarterly Financial and Investment Reports for the Quarter Ending March 31, 2022, and stated that they are slightly behind on Revenues for the half way point, as reflected earlier. Expenditures match dollar for dollar, and slightly behind on personnel and supplies. However, overall tracking was within expected areas. On the Capital Improvement side, the spending is being invested in infrastructure BAWA Board Regular Meeting Minutes June 15, 2022 Page 4 of 4 and the slightly lower Revenue figures are reflected in the estimates that were just presented, along with next year's budget as well. 4. MANAGER'S REPORT a. The next Baytown Area Water Authority meeting is scheduled for Wednesday, July 20, 2022, at 4:30 p.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas 77520. General Manager Rick Davis stated that this year, they entering into a different environment and that things will get tighter with inflation; labor markets with pools of fewer qualified applicants; and pressing needs to further the City's infrastructure. As such, there will be weighted decisions that the Board and staff will have to make in the future. Likely, to consider an expansion to the BAWA East Treatment Plant. Also, another headwind will possibly be for rate increases, as the City of Houston had a rate increase of 14%, and the demand for water for a continually growing community expands. Furthermore, Mr. Davis stated that he was optimistic as the Revenues have not come in yet for the next fiscal year, therefore, a lot was left to be seen. Lastly, Mr. David announced the next meeting was scheduled for July 20"', and thanked the Board for their service. 5. ADJOURN With there being no further business to discuss, President Brenda Bradley Smith adjourned the June 15, 2022, BAWA Board Regular Meeting at 4:51 P.M. City of Baytown