2001 03 21 BAWA Minutes•
MINUTES OF THE REGULAR MEETING
OF THE BOARD OF DIRECTORS
OF THE BAYTOWN AREA WATER AUTHORITY
March 21, 2001
The Board of Directors of the Baytown Area Water Authority, Harris County, Texas, met in
regular session on Wednesday, March 21, 2001, at 7425 Thompson Road, in the BAWA
Conference Room, with the following in attendance:
Robert L. Gillette, President
Dan Mundinger, Vice President
Peter R. Buenz, Secretary
Knox Beavers, Board Member
Sam T. Schulze, Board Member
The meeting opened with a quorum present, and the following business was conducted.
Consider approval of the minutes for the meeting held on February 7, 2001
Board Member Mundinger moved to approve the minutes for the meeting held on February 7,
2001. Board Member Beavers seconded the motion. The vote follows:
Ayes: Board Members Beavers, Buenz,
Gillette, Schulze and Mundinger
Nays: None
Consider the rate analysis study by Camp, Dresser McKee.
General Manager Mercer reported that the study indicates that it is feasible to take additional
customers. There will be a need to implement the capital buy -in fees. The fees suggested by the
study were determined by a full cost implementation. The two questions posed are: 1) "Should
capital buy -in fees be adopted?" and 2) "Should BAWA pursue new customers?". The San
Jacinto River Authority has expressed a desire to not serve the area that includes the potential
new customers, but they desire to be informed of developments. The Subsidence District is
seeking alternatives to the disincentive fees for use of ground water.
Rodney Chapin, Camp, Dresser McKee, began the presentation of the report by describing the
new customers, Country Terrace, Harris County Municipal Utility District 50, and Crosby. To
anticipate the new customers, the water demand projections required revision; capital projects
will be required to meet the demand; and a rate model was prepared, with new customers and
without new customers.
The current demand is 21 million gallons per day (mgd). In 2020, the demand is projected to be
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Minutes of the Regular Meeting — March 21, 2001
30 mgd. The current expansion will provide a capacity of 19.5 mgd. The next phase will bring
capacity to 26 mgd. Servicing only the existing customers, the demand will exceed the capacity
in ten years. With the new customers, the demand will exceed the capacity in five years.
The next expansion will increase capacity by 6 mgd, cost $5,000,000 and will occur in 2004
through 2005. The regulatory improvements will occur in 2008 through 2009 and will cost
approximately $3,500,000.
Diane Kemp, with Camp Dresser McKee, reported that the capital buy -in fee would be paid by
any new customer to compensate BAWA for the capital costs of that portion of the
improvements used to serve the customer. The fee is suggested to be $0.8068 per gallon. It is
estimated that the cost for the potential customer to construct the facilities to treat the water will
be $1.50.
The capital buy -in fee is recommended to be used to reduce the amount of funds borrowed for
capital projects, not to pay the principal and interest on borrowed funds. The buy -in fees could
be used to reduce borrowed funds for the next phase of improvements by $1,000,000 and the
regulatory improvements by $1,300,000. There will be additional buy -in fees in later years.
With the new customers, rate increases are projected for 2008 and 2009. Without new
customers, rate increases are projected for 2005 and thereafter at significantly higher amounts.
The report concludes as follows:
1) capacity must be increased, with or without new customers,
2) a reasonable capital buy -in fee would be $0.8068;
3) with new customers, rates will increase beginning in 2008; and
4) without new customers, rates will increase beginning in 2005 and the increases will be
significantly higher.
In response to concerns expressed by President Gillette about protection of the raw water supply,
Manager Mercer related that the Subsidence District has offered to assist BAWA in obtaining an
adjustment in the raw water supply contract.
In response to an inquiry from Board Member Schulze, General Counsel Ignacio Ramirez, Jr.
reported that the contract for raw water guarantees the same rate that is charged to other
customers.
Board Member Buenz suggested that communications be maintained with Newport and the San
Jacinto River Authority to assure knowledge of water supply in the area.
General Manager Mercer stated that at the next meeting the Board would consider approval of
the capital buy -in fee, the rate structure, and negotiations on the raw water supply contract with
the City of Houston.
Board Member Schulze moved approval of the report. Board Member Buenz seconded the
motion. The vote follows:
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Minutes of the Regular Meeting — March 21, 2001
Ayes: Board Members Beavers, Buenz,
Gillette, Schulze and Mundinger
Nays: None
The motion carried.
Manager's Report.
Tony Brown reported that the work on the interior renovations had started. The expansion
project was on schedule. The expansion project should be completed to allow the processing of
water in September, 2001.
Adjourn
As there was no further business to be transacted, the meeting adjourned at 8:48 a.m.
Peter R. Buenz, Secre ary
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