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1997 08 20 BAWA Minutes• MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY August 20, 1997 The Board of Directors of the Baytown Area Water Authority, Harris County, Texas, met in regular session on Wednesday, August 20, 1997, 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 Roy L. Fuller, Board Member The meeting opened with a quorum present, and the following business was conducted. Consider Approval of Minutes for the Regular Meeting Held on July 16, 1997 Board Member Buenz moved for approval of the minutes for the regular meeting held on July 16, 1997. Board Member Beavers seconded the motion. The vote follows: Ayes: Nays: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger None Receive Financial Statements and Supplemental Information for Nine Months Ending June 30, 1997 and the Fiscal Year Ending September 30, 1996. Monte Mercer, Assistant City Manager/Director of Finance, recognized Donna Sams, Controller, and Sherry Majors, Administrative Assistant, for their work on the financial statements. He noted that BAWA continues to maintain a strong cash position as far as working capital is concerned with seventy days of working capital projected for the end of the year. Last year we had $640,000 in Cash and Cash Equivalents; however, for the current year Debt Service is down to $260,000, but this is due to a timing variance. We made the debt payment on April 1 which included principal so that will build up to around $640,000 by the end of the year. 970820-2 • • Minutes of the BAWA Meeting — August 20, 1997 On Page 2 of the report, the sale of treated water to Baytown, represents about 89% of the revenues and the purchase of raw water represents one-third of the expenditures. Total operating expenses were at 73% last year; this year, 74%. As far as the income statement, BAWA is tracking last year. Net income for last year was $900,000; this year it's $600,000. This is on an income statement basis and does not include straight cash flow basis. On a straight cash flow basis, because we had a wet spring this year our water sales have declined. The actual column on Page 9 shows Net Income at $600,000 shown on the bottom of the page is reconciled back to cash which is $145,000 to the negative. BAWA is currently on pace to be $100,000- $150,000 under for the year as far as cash flow is concerned. From a budgeting basis the debt service, new water purchases and personnel, equal three -fourths of the budget; then add in chemicals, maintenance and utilities, that brings the percentage to ninety-five which leaves very little discretionary funds. Everything is driven by what it costs to produce the water. BAWA is averaging 10 '/Z mgd for the year, while the budget was based on 11 mgd. Page 7 shows Bond reserve requirements as previously discussed. Having the operating reserves is prudent because when BAWA experiences a wet year, those reserves can be utilized which is viewed favorably by the rating agencies. Board Member Buenz moved to accept the Financial Statements and Supplemental Information for the nine months ending June 30, 1997 and the Fiscal Year ending September 30, 1996. Board Member Mundinger seconded the motion. The vote follows: Ayes: Nays: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger None Consider Approval of the Proposed 1997-98 BAWA Budget Fred Pack, Director of Utilities, reviewed the proposed 1997-98 BAWA Budget. Board Member Buenz moved to adopt the proposed 1997-98 BAWA Budget as submitted. Board Member Mundinger seconded the motion. The vote follows: Ayes: Nays: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger None For a copy of the budget, see Attachment "A." 970820-3 Minutes of the BAWA Meeting — August 20, 1997 Herb Thomas, Plant Manager, recognized the efforts of the BAWA staff in continuing to produce an excellent quality product with changes in regulations and only two rate increases in sixteen years. Manager's Report In May, 1996, Congress passed amendments to the Safe Water Drinking Act which provided an implementation deadline of November, 1998. One of the changes that the EPA has implemented involves the disinfection level. Previously, there was no maximum level, only a recommendation to stay at about five parts per million. Now, the requirement is at or below 4 milligrams per liter. Another change is to lower the turbidity of the water. Previously, it was 0.5 NTU's which has been lowered to 0.3 NTU's on combined filter effluent for 95% of monthly readings. NTU's are the units of measurement for the amount of solids in the water which cannot be detected by the human eye. Presently, BAWA is making .065 NTU. EPA is going to require the monitoring of each filter in the future rather than taking a composite reading from all six filters. This will require turbidimeters at each filter. BAWA will need to report to TNRCC any time any filter goes above 1.0 NTU or if it goes above 0.5 NTU after four hours of service, such as back washing. To stay ahead of all these changes, plans are to rehab all the filters and install the turbidimeters on each filter. Adjourn There being no further business to be transacted, the meeting was adjourned. Peter R. Buenz, Secretary • Exhibit "A" • BA YTO WN AREA WATER AUTHORITY Baytown Area Water Authority, "BAWA", is a water authority created by Texas Legislature to purchase and distribute surface and/or underground supplies for the City and surrounding communities. The City accounts for approximately 90% of BAWA's annual sales. BAWA is considered a component unit of the City of Baytown. • 14-1 • • 14-2 • BAYTOWN AREA WATER AUTHORITY (BAWA) ORGAAZZATION CHART Board of Directors General Manager Plant Manager Director of Utilities Baytown Area Water Authority • • • MAJOR BUDGET ISSUES Fiscal Year 1997-98 BAYTOWN AREA WATER AUTHORITY This fund accounts for the Baytown Area Water Authority ("the BAWA"). BAWA is a water authority created by the Texas Legislative to supply water for the City of Baytown (City) and surrounding communities. The City accounts for approximately 90% of BAWA's annual sales and is considered a component unit of the City. Total proposed expenditures for the 1998 budget are $4,778,908, a decrease of $6,535. I. REVENUES A. Water Volume The 1998 budget projects sales of $4,749,800 or 11 million gallons per day (mgd) based upon average rainfall years. Fluctuations to average rainfall can significantly impact actual sales. There is no proposed increase in BAWA rates. H. EXPENDITURES A. Raw Water Supply Cost BAWA purchases raw water from the City of Houston. The raw water supply contract with the City of Houston is in effect through the year 2020 and sets the maximum amount of raw water to be delivered to the BAWA plant at 11.9 mgd without penalties. BAWA anticipates no rate increase from the City of Houston for next year; therefore, there will be no pass through increase to the cost of raw water for the 1998 fiscal year. B. Capital Projects Program BAWA has reviewed their capital needs through the year 2010. These capital needs arc based on current capacity with no capital projects identified for plant expansion. Based on this review BAWA is planning on issuing approximately $1.3 million in the fall of 1997 and $3.8 million in the fall of 2002. C. Debt Service The debt service payment for fiscal year 1998 is $1.58 million. The average debt service is approximately $1.42 million with a peak of $1.64 million in the year 2000 and final payoff of existing debt in fiscal year 2003. Due to the short duration of the existing debt, plans are to use reserves established for debt service to supplement current funding of approximately $1.5 million. In addition, BAWA will pay interest only on the proposed $1.3 million bond issuance until the existing debt is paid off. This is being recommended due to the short duration of the existing debt and the moderate size of the debt to be issued. Funding for debt service will be provided from current revenues (approximately $5.1 million) and reserves established for debt service. III. WORKING CAPITAL A. In order to maintain fiscal stability governmental entities maintain a working capital balance to meet daily liquidity needs. Appropriate levels of working capital vary from entity to entity based on the relative impact of particular circumstances or financial conditions. The goal for working capital is 45 to 60 days operating capital. Working capital is defined as currcnt assets (e.g. cash, investments, accounts receivable) less currcnt liabilities (e.g. accounts payable). Projected working capital is estimated to be 70 days as of September 1997. 14-4 CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY FUND 510 BUDGET SUMMARY BY FUND Revenue 1996 1997 1997 1998 Actual Budget Estimated Proposed Revenues 4600 Sale of Water - Baytown 4600 Sale of Water - Other 4900 Total Miscellaneous Total Revenues 4,880,965 4,785,498 4,748,472 4,778,908 $4,345,761 517,499 17,705 $ 4,260,269 $ 4,242,395 $ 4,261,777 489,569 485,815 488,023 35,660 20,262 29,108 Expenditures by Classification 7100 Personnel Services 507,348 567,435 569,069 583,096 7200 Supplies 2,144,551 2,038,930 2,029,380 2,049,800 7300 Maintenance 173,261 131,400 132,400 164,000 7400 Services 402,847 430,060 428,060 435,440 7500 Sundry - - - - Total Operating 3,228,007 3,167,825 3,158,909 3,232,336 8000 Capital Outlay 25,918 16,014 13,314 9000 Transfers -Out 1,528,680 1,547,618 1,549,618 1,500,518 9900 Contingency - 53,986 46,054 Excess (Deficit) Revenues Over Expenditures Working Capital - Beginning Total 4,782,605 4,785,443 4,721,841 4,778,908 98,360 55 26,631 813,007 911,367 911,367 937,998 Working Capital - Ending $ 911,367 $ 911,422 $ 937,998 $ 937,998 • 14-5 • • CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY FUND 510 OPERATING RESULTS Revenue 1996 1997 1997 1998 Actual Budget Estimated Proposed Operating Revenues Sale of Water - Baytown $4,345,761 $4,260,269 $4,242,395 $4,261,777 Sale of Water - Other 517,499 489,569 485,815 488,023 Total Revenues 4,863,260 4,749,838 4,728,210 4,749,800 Operating Expenses Personnel Services 507,348 567,435 569,069 583,096 Raw Water Purchases 1,685,884 1,540,000 1,540,000 1,550,000 Other Operating Expenses 1,034,775 1,114,376 1,049,840 1,145,294 Depreciation 416,262 400,000 417,400 418,539 Total Operating 3,644,269 3,621,811 3,576,309 3,696,929 Total Revenues Over Expenses 1,218,991 1,128,027 1,151,901 1,052,871 Non -operating Expenses Interest Income Interest Expense Total Non -operating Expcnscs Net Income (Loss) 17,705 (553,680) (535,975) 683,016 35,660 (497,618) (461,958) 666,069 20,262 (499,618) (479,356) 672,545 29,108 (350,518) (321,410) 731,461 Reconciliation of Net Income (Loss) to Revenues Over (Under) Expenses: Net Income (Loss) $ 683,016 $ 666,069 $ 672,545 $ 731,461 Principal Debt Retirement (975,000) (1,050,000) (1,050,000) (1,150,000) Capital Outlay (25,918) (16,014) (13,314) Depreciation 416,262 400,000 417,400 418,539 Revenues Over (Under) Expcnscs $ 98,360 $ 55 $ 26,631 $ 14-6 CITY OF BAYTOWN PROGRAM SUMMARY • 5101 BAYTOWN AREA WATER AUTHORITY • Program Description Operate and maintain a 13.5 MGD design capacity surface water treatment facility with a projected flow of 11.0 MGD in fiscal year 1997-98 and a certified bacteriological laboratory. Following and complying with the TNRCC Rules and Regulations for Public Water Supplies adopted 1992, National Primary Drinking Water Regulations, Safe Drinking Water Act, Surface Water Treatment Rule, and the Criteria for Certified Bacteriological Laboratories. Providing BAWA's customers with high quality, safe drinking water and a consistent source of fire protection. Major Goals • Maintain water quality necessary to be classified as "Meeting Optimum Corrosion Control" by TNRCC. • Operate the bacteriological laboratory in a manner that exceeds the requirements as set fourth by Texas Department of Health. • Develop and maintain a staff of highly trained water professionals to better serve our customers. Major Objectives • Produce 11.0 MGD of water. • Maintain a finished water turbidity consistently less than 0.5 NTU. • Provide QA/QC, and mathematical training for personnel. • Meet the lead/copper rule for the sixth year of monitoring. • Increase public relations by working with the educational system in the area to provide more tours of the facility. 1996 1997 1997 1998 Workload Measures Actual Budget Estimated Projected 1. Customers Served 7 7 7 7 2. Number of customer connections 21,358 21,500 21,400 21,500 3. Bacteriological Samples received 1,160 1,164 1,160 1,165 4. Customer water quality calls 746 50 50 50 5. Average MGD of water produced 11 11 11 11 6. PR's & PO's processed 639 700 700 700 Performance Measures 1. Days without interruption of service 366 365 365 365 2. Days finished water <0.5 366 365 365 365 3. Bacteriological samples analyzed 1,160 1,164 1,160 1,165 4. Customer water quality calls investigated 746 50 50 50 5. Days above 11 MGD 195 200 185 200 6. PR's & PO's completed 639 700 700 700 14-7 • • CITY OF BAYTOWN SERVICE LEVEL BUDGET 5101 BAYTOWN AREA WATER AUTHORITY Acct# Acct Description 1996 1997 1997 1998 Actual Budget Estimated Proposed 7100 Personal Services 71031 Contract Personnel Bawa Total Personal Services 7200 Supplies 72001 Office 72002 Postage 72007 Wearing Apparel 72016 Motor Vehicle 72021 Minor Tools 72026 Cleaning And Janitorial 72031 Chemical 72032 Medical 72041 Educational 599 72045 Computer Software Supplies 72051 Untreated Water 1,685,884 72052 Treated Water 72061 Miscellaneous 18,668 $ 507,348 $ 567,435 $ 569,069 $ 583,096 507,348 567,435 569,069 583,096 2,380 562 3,632 3,342 767 1,784 426,933 2,300 700 5,500 3,200 1,000 1,500 450,000 400 830 1,500 1,540,000 32,000 2,300 500 5,500 3,200 1,000 1,950 440,000 600 830 1,500 1,540,000 32,000 2,300 700 6,000 3,200 2,000 2,000 450,000 600 1,000 1,550,000 32,000 Total Supplies 2,144,551 2,038,930 2,029,380 7300 Maintenance 73011 Buildings 79 3,000 3,000 73021 Filtration Plants 110 - 73025 Strts Sidewalks & Curbs 500 500 73027 Heating And Cooling Sys 829 1,000 1,000 73028 Electrial Maintenance 50,000 40,000 73041 Office Furn & Equip - 73042 Machinery And Equipment 121,322 70,000 80,000 73043 Motor Vehicles 11,725 4,400 6,000 73045 Radio & Testing Equipment 94 1,000 400 73061 Miscellaneous 39,102 1,500 1,500 Total Maintenance 173,261 131,400 2,049,800 3,000 24,000 500 3,000 50,000 1,500 75,000 6,000 1,000 132,400 164,000 7400 Services 74001 Communication 8,866 8,500 8,500 9,240 74002 Electric Service 316,492 330,000 320,000 320,000 74011 Hirc Of Equipment 12,129 6,000 14,000 12,000 74012 Insurance 14,844 25,000 25,000 56,000 74021 Special Services 25,953 35,000 35,000 12,000 74022 Audits 8,553 8,260 8,260 8,500 74036 Advertising 742 600 600 600 74041 Travel And Rcimbursables 3,380 4,000 4,000 4,000 74042 Education And Training 6,953 7,800 7,800 7,800 74051 Rents 4,358 4,100 4,100 4,450 74071 Association Dues 452 800 800 850 74087 Miscellaneous 125 Total Services 402,847 430,060 428,060 435,440 14-8 • • CITY OF BAYTOWN SERVICE LEVEL BUDGET 5101 BAYTOWN AREA WATER AUTHORITY Acct# Acct Description 1996 1997 1997 1998 Actual Budget Estimated Proposed Total Operating 8000 Capital Outlay 83023 Water Distribution Sys 84041 Office Furn & Equip 84042 Machinery And Equipment Total Capital Outlay 9000 Other Financing Uses 91511 To Bawa Debt Service Total Other Financing Uses 9900 Contingencies 99001 Contingencies Total Contingencies 3,228,007 3,167,825 3,158,909 3,232,336 11,856 2,000 12,062 2,700 13,314 13,314 25,918 16,014 13,314 1,528,680 1,528,680 1,547,618 1,547,618 53,986 1,549,618 1,549,618 1,500,518 1,500,518 46,054 53,986 46,054 TOTAL DEPARTMENT $ 4,782,605 $ 4,785,443 $ 4,721,841 $ 4,778,908 14-9 • CITY OF BAYTOWN BAYTOWN WATER AUTHORITY REVENUE BONDS LONG TERM DEBT AMORTIZATION SCHEDULES Revenue Bonds Amount of Issue Amount Outstanding October, 1997 Requirements Fiscal Year 1997-98 Principal Interest Total Amount Outstanding Sept., 1998 Series, 1978 Series, 1979 Series, 1984 Fiscal Year 1998 1999 2000 2001 2002 2003 11,200,000 $ 2,500,000 815,000 3,750,000 $ 2,500,000 815,000 1,150,000 $ 223,850 $ 159,376 48,492 1,373,850 $ 159,376 48,492 2,600,000 2,500,000 815,000 $ 7,065,000 $ 1,150,000 $ 431,718 $ 1,581,718 $ 5,915,000 Combined BAWA Debt, All Series Debt Requirements to Maturity Principal 5/01 $ 1,150,000 1,250,000 1,350,000 1,250,000 1,250,000 815,000 Interest 5/01 $ 215,859 181,934 144,434 103,934 64,087 24,246 Interest 11/01 $ 215,859 181,934 144,434 103,934 64,086 Total Interest $ 431,718 363,868 288,868 207,868 128,173 24,246 Total Requirement $ 1,581,718 1,613,868 1,638,868 1,457,868 1,378,173 839,246 $ 7,065,000 $ 734,494 $ 710,247 $ 1,444,741 $ 8,509,741 0 1.800 1.600 1.400 1.200 1.000 '5 0.800 0.600 0.400 0.200 0.000 Combined BAWA Debt, All Series Debt Requirement to Maturity 1998 1999 2000 2001 Fiscal Year 2002 2003 0 Interest 0 Principal 14-10 • • CITY OF BAYTOWN BAYTOWN WATER AUTHORITY REVENUE BONDS DETAIL DEBT AMORTIZATION SCHEDULES Fiscal Interest Principal Interest Interest Annual Principal Year Rate Duc 5/01 Duc 5/01 Due 11/01 Requirement Outstanding Revenue Bond, Series 1978 Date of Issue - September 1, 1991 Term - 22 Years 1995 1996 1997 5.75% $ 975,000 $ 170,406 $ 170,406 $ 142,375 5.80% 1,050,000 142,375 1,315,812 1,334,750 5,775,000 4,800,000 3,750,000 1998 5.90% 1,150,000 111,925 111,925 1,373,850 2,600,000 1999 2000 6.00% 6.00% 1,250,000 1,350,000 78,000 40,500 78,000 40,500 1,406,000 1,431,000 $ 5,775,000 $ 543,206 $ 543,206 $ 6,861,412 1,350,000 Revenue Bond, Series 1979 Date of Issue - September 1, 1979 Term - 23 Years 1995 1996 1997 6.38% $ 7.30% 79,688 $ 79,688 79,688 $ 79,688 159,376 159,376 2,500,000 2,500,000 2,500,000 1998 7.30% 79,688 79,688 159,376 2,500,000 1999 2000 2001 2002 7.30% 7.30% 7.30% 1,250,000 7.30% 1,250,000 79,688 79,688 79,688 39,841 79,688 79,688 79,688 39,840 159,376 159,376 1,409,376 1,329,681 $ 2,500,000 $ 517,969 $ 517,968 $ 3,535,937 2,500,000 2,500,000 1,250,000 Revenue Bond, Series 1994 Date of Issue - November 1, 1994 Term - 9 Years 1994 1995 1996 1997 5.95% $ 5.95% 5.95% $ 24,247 $ 24,247 24,246 24,247 $ 24,247 24,246 48,494 48,494 48,492 $ 815,000 815,000 815,000 815,000 1998 5.95% 24,246 24,246 48,492 815,000 1999 2000 2001 2002 2003 5.95% 5.95% 5.95% 5.95% 5.95% 815,000 24,246 24,246 24,246 24,246 24,246 24,246 24,246 24,246 24,246 48,492 48,492 48,492 48,492 839,246 $ 815,000 $ 218,216 $ 193,970 $ 1,227,186 815,000 815,000 815,000 815,000 14-11 • 14-12 MINUTES OF THE REGULAR MEETING • OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY August 20, 1997 The Board of Directors of the Baytown Area Water Authority, Harris County, Texas, met in regular session on Wednesday, August 20, 1997, 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 Roy L. Fuller, Board Member The meeting opened with a quorum present, and the following business was conducted. Consider Approval of Minutes for the Regular Meeting Held on July 16, 1997 Board Member Buenz moved for approval of the minutes for the regular meeting held on July 16, 1997. Board Member Beavers seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger Nays: None Receive Financial Statements and Supplemental Information for Nine Months Ending June 30, 1997 and the Fiscal Year Ending September 30, 1996. Monte Mercer, Assistant City Manager/Director of Finance, recognized Donna Sams, Controller, and Sherry Majors, Administrative Assistant, for their work on the financial statements. He noted that BAWA continues to maintain a strong cash position as far as working capital is concerned with seventy days of working capital projected for the end of the year. Last year we had $640,000 in Cash and Cash Equivalents; however, for the current year Debt Service is down to $260,000, but this is due to a timing variance. We • made the debt payment on April 1 which included principal so that will build up to around $640,000 by the end of the year. 970820-2 Minutes of the BAWA Meeting—August 20, 1997 • On Page 2 of the report, the sale of treated water to Baytown, represents about 89% of the revenues and the purchase of raw water represents one-third of the expenditures. Total operating expenses were at 73% last year; this year, 74%. As far as the income statement, BAWA is tracking last year. Net income for last year was $900,000; this year it's $600,000. This is on an income statement basis and does not include straight cash flow basis. On a straight cash flow basis, because we had a wet spring this year our water sales have declined. The actual column on Page 9 shows Net Income at $600,000 shown on the bottom of the page is reconciled back to cash which is $145,000 to the negative. BAWA is currently on pace to be $100,000- $150,000 under for the year as far as cash flow is concerned. From a budgeting basis the debt service, new water purchases and personnel, equal three-fourths of the budget; then add in chemicals, maintenance and utilities, that brings the percentage to ninety-five which leaves very little discretionary funds. Everything is driven by what it costs to produce the water. BAWA is averaging 10 '/2 mgd for the year, while the budget was based on 11 mgd. Page 7 shows Bond reserve requirements as previously discussed. Having the operating reserves is prudent because when BAWA experiences a wet year, those reserves can be utilized which is viewed favorably by the rating agencies. Board Member Buenz moved to accept the Financial Statements and Supplemental Information for the nine months ending June 30, 1997 and the Fiscal Year ending September 30, 1996. Board Member Mundinger seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger Nays: None Consider Approval of the Proposed 1997-98 BAWA Budget Fred Pack, Director of Utilities, reviewed the proposed 1997-98 BAWA Budget. Board Member Buenz moved to adopt the proposed 1997-98 BAWA Budget as submitted. Board Member Mundinger seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger • Nays: None For a copy of the budget, see Attachment "A." 970820-3 Minutes of the BAWA Meeting—August 20, 1997 • Herb Thomas, Plant Manager, recognized the efforts of the BAWA staff in continuing to produce an excellent quality product with changes in regulations and only two rate increases in sixteen years. Manager's Report In May, 1996, Congress passed amendments to the Safe Water Drinking Act which provided an implementation deadline of November, 1998. One of the changes that the EPA has implemented involves the disinfection level. Previously, there was no maximum level, only a recommendation to stay at about five parts per million. Now, the requirement is at or below 4 milligrams per liter. Another change is to lower the turbidity of the water. Previously, it was 0.5 NTU's which has been lowered to 0.3 NTU's on combined filter effluent for 95% of monthly readings. NTU's are the units of measurement for the amount of solids in the water which cannot be detected by the human eye. Presently, BAWA is making .065 NTU. EPA is going to require the monitoring of each filter in the future rather than taking a composite reading from all six filters. This will require turbidimeters at each filter. BAWA will need to report to TNRCC any time any filter goes above 1.0 NTU or if it goes above 0.5 NTU after four hours of service, such as back washing. To stay ahead of all these changes, plans are to rehab all the filters and install the turbidimeters on each filter. Adjourn There being no further business to be transacted, the meeting was adjourned. Peter R. Buenz, Secretary • • Exhibit "A" • BAYTOWN AREA WATER AUTHORITY Baytown Area Water Authority, "BAWA", is a water authority created by Texas Legislature to purchase and distribute surface and/or underground supplies for the City and surrounding communities. The City accounts for approximately 90% of BAWA's annual sales. BAWA is considered a component unit of the City of Baytown. E-': 44te, % . • 2 xc • 14-1 Z-t'I • '..-1 -. ...:;,. :::... .....:.......:-,,,:,..4, .. ?.. (Ii.. ..... .....zior Vi.105) Aruu 866 I - . .., -, ,:i.:-_ _ 8 V 6 I _ 1•.F L yr `R '''. \119:4, q>1 4/1 o L.I -/•--* • BAYTOWN AREA WATER AUTHORITY (BAWA) ORGANIZATION CHART Board of Directors General Manager Plant Manager Director of Utilities Baytown Area Water Authority ID 14-3 • MAJOR BUDGET ISSUES Fiscal Year 1997-98 • BAYTOWN AREA WATER AUTHORITY This fund accounts for the Baytown Area Water Authority("the BAWA"). BAWA is a water authority created by the Texas Legislative to supply water for the City of Baytown (City) and surrounding communities. The City accounts for approximately 90%of BAWA's annual sales and is considered a component unit of the City. Total proposed expenditures for the 1998 budget are$4,778,908, a decrease of$6,535. I. REVENUES A. Water Volume The 1998 budget projects sales of$4,749,800 or 11 million gallons per day (mgd) based upon average rainfall years. Fluctuations to average rainfall can significantly impact actual sales. There is no proposed increase in BAWA rates. II. EXPENDITURES A. Raw Water Supply Cost BAWA purchases raw water from the City of Houston. The raw water supply contract with the City of Houston is in effect through the year 2020 and sets the maximum amount of raw water to be delivered to the BAWA plant at 11.9 mgd without penalties. BAWA anticipates no rate increase from the City of Houston for next year; therefore, there will be no pass through increase to the cost of raw water for the 1998 fiscal year. B. Capital Projects Program BAWA has reviewed their capital needs through the year 2010. These capital needs arc based on current capacity with no capital projects identified for plant expansion. Based on this review BAWA is planning on issuing approximately$1.3 million in the fall of 1997 and$3.8 million in the fall of 2002. C. Debt Service The debt service payment for fiscal year 1998 is $1.58 million. The average debt service is approximately $1.42 million with a peak of$1.64 million in the year 2000 and final payoff of existing debt in fiscal year 2003. Due to the short duration of the existing debt, plans arc to use reserves established for debt service to supplement current funding of approximately $1.5 million. In addition, BAWA will pay interest only on the proposed $1.3 million bond issuance until the existing debt is paid off. This is being recommended due to the short duration of the existing debt and the moderate size of the debt to be issued. Funding for debt service will be provided from current revenues(approximately$5.1 million)and reserves established for debt service. III.WORKING CAPITAL A. In order to maintain fiscal stability governmental entities maintain a working capital balance to meet daily liquidity needs. Appropriate levels of working capital vary from entity to entity based on the relative impact of particular circumstances or financial conditions. The goal for working capital is 45 to 60 days operating capital. Working capital is defined as current assets (e.g. cash, investments, accounts receivable) less current liabilities (e.g. accounts payable). Projected working capital is estimated to be 70 days as of September 1997. • 14-4 CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY FUND 510 • BUDGET SUMMARY BY FUND 1996 1997 1997 1998 Revenue Actual Budget Estimated Proposed Revenues 4600 Sale of Water-Baytown $4,345,761 $4,260,269 $4,242,395 $4,261,777 4600 Sale of Water-Other 517,499 489,569 485,815 488,023 4900 Total Miscellaneous 17,705 35,660 20,262 29,108 Total Revenues 4,880,965 4,785,498 4,748,472 4,778,908 Expenditures by Classification 7100 Personnel Services 507,348 567,435 569,069 583,096 7200 Supplies 2,144,551 2,038,930 2,029,380 2,049,800 7300 Maintenance 173,261 131,400 132,400 164,000 7400 Services 402,847 430,060 428,060 435,440 7500 Sundry - - - - Total Operating 3,228,007 3,167,825 3,158,909 3,232,336 8000 Capital Outlay 25,918 16,014 13,314 - 9000 Transfers-Out 1,528,680 1,547,618 1,549,618 1,500,518 9900 Contingency - 53,986 - 46,054 Total 4,782,605 4,785,443 4,721,841 4,778,908 Excess (Deficit) Revenues Over Expenditures 98,360 55 26,631 - Working Capital - Beginning 813,007 911,367 911,367 937,998 Working Capital -Ending $ 911,367 $ 911,422 $ 937,998 $ 937,998 • 14-5 • CITY OF BAYTOWN BAYTOWN AREA WATER AUTHORITY FUND 510 OPERATING RESULTS 1996 1997 1997 1998 Revenue Actual Budget Estimated Proposed Operating Revenues Sale of Water-Baytown $4,345,761 $4,260,269 $4,242,395 $4,261,777 Sale of Water-Other 517,499 489,569 485,815 488,023 Total Revenues 4,863,260 4,749,838 4,728,210 4,749,800 Operating Expenses Personnel Services 507,348 567,435 569,069 583,096 Raw Water Purchases 1,685,884 1,540,000 1,540,000 1,550,000 Other Operating Expenses 1,034,775 1,114,376 1,049,840 1,145,294 Depreciation 416,262 400,000 417,400 418,539 Total Operating 3,644,269 3,621,811 3,576,309 3,696,929 Total Revenues Over Expenses 1,218,991 1,128,027 1,151,901 1,052,871 Non-operating Expenses Interest Income 17,705 35,660 20,262 29,108 Interest Expense (553,680) (497,618) (499,618) (350,518) Total Non-operating Expenses (535,975) (461,958) (479,356) (321,410) Net Income(Loss) 683,016 666,069 672,545 731,461 Reconciliation of Net Income(Loss) to Revenues Over(Under)Expenses: Net Income (Loss) $ 683,016 $ 666,069 $ 672,545 $ 731,461 Principal Debt Retirement (975,000) (1,050,000) (1,050,000) (1,150,000) Capital Outlay (25,918) (16,014) (13,314) - Depreciation 416,262 400,000 417,400 418,539 Revenues Over(Under) Expenses $ 98,360 $ 55 $ 26,631 $ - • 14-6 CITY OF BAYTOWN PROGRAM SUMMARY • 5101 BAYTOWN AREA WATER AUTHORITY Program Description • Operate the bacteriological laboratory in a manner Operate and maintain a 13.5 MGD design capacity that exceeds the requirements as set fourth by Texas surface water treatment facility with a projected flow of Department of Health. 11.0 MGD in fiscal year 1997-98 and a certified • Develop and maintain a staff of highly trained water 1 bacteriological laboratory. Following and complying professionals to better serve our customers. with the TNRCC Rules and Regulations for Public Water Supplies adopted 1992, National Primary Drinking Major Objectives Water Regulations, Safe Drinking Water Act, Surface • Produce 11.0 MGD of water. Water Treatment Rule, and the Criteria for Certified • Maintain a finished water turbidity consistently less Bacteriological Laboratories. Providing BAWA's than 0.5 NTU. customers with high quality, safe drinking water and a • Provide QA/QC, and mathematical training for consistent source of fire protection. personnel. • Meet the lead/copper rule for the sixth year of Major Goals monitoring. • Maintain water quality necessary to be classified as • Increase public relations by working with the "Meeting Optimum Corrosion Control"by TNRCC. educational system in the area to provide more tours of the facility. 1996 1997 1997 1998 Workload Measures Actual Budget Estimated Projected 1. Customers Served 7 7 7 7 2. Number of customer connections 21,358 21,500 21,400 21,500 3. Bacteriological Samples received 1,160 1,164 1,160 1,165 4. Customer water quality calls 746 50 50 50 5. Average MGD of water produced 11 11 11 11 6. PR's&PO's processed 639 700 700 700 Performance Measures 1. Days without interruption of service 366 365 365 365 2. Days finished water<0.5 366 365 365 365 3. Bacteriological samples analyzed 1,160 1,164 1,160 1,165 4. Customer water quality calls investigated 746 50 50 50 5. Days above 11 MGD 195 200 185 200 6. PR's&PO's completed 639 700 700 700 • 14-7 1 CITY OF BAYTOWN SERVICE LEVEL BUDGET II 5101 BAYTOWN AREA WATER AUTHORITY 1996 1997 1997 1998 Acct# Acct Description Actual Budget Estimated Proposed 7100 Personal Services 71031 Contract Personnel Bawa $ 507,348 $ 567,435 $ 569,069 $ 583,096 Total Personal Services 507,348 567,435 569,069 583,096 7200 Supplies 72001 Office 2,380 2,300 2,300 2,300 72002 Postage 562 700 500 700 72007 Wearing Apparel 3,632 5,500 5,500 6,000 72016 Motor Vehicle 3,342 3,200 3,200 3,200 72021 Minor Tools 767 1,000 1,000 2,000 72026 Cleaning And Janitorial 1,784 1,500 1,950 2,000 72031 Chemical 426,933 450,000 440,000 450,000 72032 Medical - 400 600 600 72041 Educational 599 830 830 1,000 1 72045 Computer Software Supplies - 1,500 1,500 - 72051 Untreated Water 1,685,884 1,540,000 1,540,000 1,550,000 72052 Treated Water - 32,000 32,000 32,000 72061 Miscellaneous 18,668 - - - Total Supplies 2,144,551 2,038,930 2,029,380 2,049,800 7300 Maintenance 73011 Buildings 79 3,000 3,000 3,000 73021 Filtration Plants 110 - - 24,000 73025 Strts Sidewalks&Curbs - 500 500 500 73027 Heating And Cooling Sys 829 1,000 1,000 3,000 73028 Electrial Maintenance - 50,000 40,000 50,000 73041 Office Furn&Equip - - - 1,500 73042 Machinery And Equipment 121,322 70,000 80,000 75,000 73043 Motor Vehicles 11,725 4,400 6,000 6,000 73045 Radio&Testing Equipment 94 1,000 400 1,000 73061 Miscellaneous 39,102 1,500 1,500 - Total Maintenance 173,261 131,400 132,400 164,000 7400 Services 74001 Communication 8,866 8,500 8,500 9,240 74002 Electric Service 316,492 330,000 320,000 320,000 74011 Hire Of Equipment 12,129 6,000 14,000 12,000 74012 Insurance 14,844 25,000 25,000 56,000 74021 Special Services 25,953 35,000 35,000 12,000 74022 Audits 8,553 8,260 8,260 8,500 74036 Advertising 742 600 600 600 74041 Travel And Reimbursables 3,380 4,000 4,000 4,000 74042 Education And Training 6,953 7,800 7,800 7,800 74051 Rents 4,358 4,100 4,100 4,450 74071 Association Dues 452 800 800 850 S 74087 Miscellaneous 125 - - - Total Services 402,847 430,060 428,060 435,440 14-8 CITY OF BAYTOWN I SERVICE LEVEL BUDGET • 5101 BAYTOWN AREA WATER AUTHORITY 1996 1997 1997 1998 Acct# Acct Description Actual Budget Estimated Proposed Total Operating 3,228,007 3,167,825 3,158,909 3,232,336 8000 Capital Outlay 83023 Water Distribution Sys 11,856 - - - 84041 Office Fum&Equip 2,000 2,700 - - 84042 Machinery And Equipment 12,062 13,314 13,314 - Total Capital Outlay 25,918 16,014 13,314 - 9000 Other Financing Uses 91511 To Bawa Debt Service 1,528,680 1,547,618 1,549,618 1,500,518 Total Other Financing Uses 1,528,680 1,547,618 1,549,618 1,500,518 9900 Contingencies 99001 Contingencies - 53,986 - 46,054 Total Contingencies - 53,986 - 46,054 TOTAL DEPARTMENT $ 4,782,605 $ 4,785,443 $ 4,721,841 $ 4,778,908 1 14-9 CITY OF BAYTOWN BAYTOWN WATER AUTHORITY REVENUE BONDS • LONG TERM DEBT AMORTIZATION SCHEDULES Amount Requirements Amount Revenue Amount of Outstanding Fiscal Year 1997-98 Outstanding Bonds Issue October, 1997 Principal Interest Total Sept., 1998 Series, 1978 11,200,000 $ 3,750,000 $ 1,150,000 $ 223,850 $ 1,373,850 $ 2,600,000 Series, 1979 2,500,000 2,500,000 - 159,376 159,376 2,500,000 Series, 1984 815,000 815,000 - 48,492 48,492 815,000 $ 7,065,000 $ 1,150,000 $ 431,718 $ 1,581,718 $ 5,915,000 Combined BAWA Debt, All Series Debt Requirements to Maturity Fiscal Principal Interest Interest Total Total Year 5/01 5/01 11/01 Interest Requirement 1998 $ 1,150,000 $ 215,859 $ 215,859 $ 431,718 $ 1,581,718 1999 1,250,000 181,934 181,934 363,868 1,613,868 2000 1,350,000 144,434 144,434 288,868 1,638,868 2001 1,250,000 103,934 103,934 207,868 1,457,868 2002 1,250,000 64,087 64,086 128,173 1,378,173 2003 815,000 24,246 - 24,246 839,246 $ 7,065,000 $ 734,494 $ 710,247 $ 1,444,741 $ 8,509,741 Combined BAWA Debt,All Series Debt Requirement to Maturity 1.800 — 1.600 — 1.400 — 1.200 — s 1.000 — ❑Interest '5 0.800 - ❑Principal . O 0.600 — a5 0.400 — 0.200 — 0.000 - f f i i F i 1998 1999 2000 2001 2002 2003 Fiscal Year • 14-10 CITY OF BAYTOWN BAYTOWN WATER AUTHORITY REVENUE BONDS • DETAIL DEBT AMORTIZATION SCHEDULES Fiscal Interest Principal Interest Interest Annual Principal Year Rate Due 5/01 Due 5/01 Due 11/01 Requirement Outstanding Revenue Bond,Series 1978 Date of Issue-September 1, 1991 Term -22 Years 1995 $ 5,775,000 1996 5.75% $ 975,000 $ 170,406 $ 170,406 $ 1,315,812 4,800,000 1997 5.80% 1,050,000 142,375 142,375 1,334,750 3,750,000 1998 5.90% 1,150,000 111,925 111,925 1,373,850 2,600,000 1999 6.00% 1,250,000 78,000 78,000 1,406,000 1,350,000 2000 6.00% 1,350,000 40,500 40,500 1,431,000 - $ 5,775,000 $ 543,206 $ 543,206 $ 6,861,412 Revenue Bond,Series 1979 Date of Issue-September 1, 1979 Term -23 Years 1995 $ 2,500,000 1996 6.38% $ - $ 79,688 $ 79,688 $ 159,376 2,500,000 1997 7.30% - 79,688 79,688 159,376 2,500,000 1998 7.30% - 79,688 79,688 159,376 2,500,000 1999 7.30% - 79,688 79,688 159,376 2,500,000 2000 7.30% - 79,688 79,688 159,376 2,500,000 2001 7.30% 1,250,000 79,688 79,688 1,409,376 1,250,000 2002 7.30% 1,250,000 39,841 39,840 1,329,681 - $ 2,500,000 $ 517,969 $ 517,968 $ 3,535,937 Revenue Bond,Series 1994 Date of Issue- November 1, 1994 Term -9 Years 1994 $ 815,000 1995 5.95% $ - $ 24,247 $ 24,247 $ 48,494 815,000 1996 5.95% - 24,247 24,247 48,494 815,000 1997 5.95% - 24,246 24,246 48,492 815,000 1998 5.95% - 24,246 24,246 48,492 815,000 1999 5.95% - 24,246 24,246 48,492 815,000 2000 5.95% - 24,246 24,246 48,492 815,000 2001 5.95% - 24,246 24,246 48,492 815,000 2002 5.95% - 24,246 24,246 48,492 815,000 2003 5.95% 815,000 24,246 - 839,246 - $ 815,000 $ 218,216 $ 193,970 $ 1,227,186 • 14-11 i T 0 rp. tkeAt. kk I948 1998 (5Otu2Arwiver ar ....1 • • 4, *G0 0 St C • 14-12