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2023 06 21 BAWA MinutesMINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY June 21, 2023 The Board of Directors of the Baytown Area Water Authority (BAWA) met in a Regular Meeting on June 21, 2023, at 4:30 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 Frank McKay III Secretary Jimmy Smith Director Alyssa Linares Director Jason Reynolds General Manager Scott Lemond General Counsel Angela Jackson Assistant Secretary President Brenda Bradley Smith convened the June 21, 2023, BAWA Board Regular Meeting with a quorum present at 4:31 P.M., all members were present with the exception of Vice President Mike Wilson who was absent. 1. MINUTES a. Consider approving the minutes of the Baytown Area Water Authority Regular Meeting held on May 17, 2023. A motion was made by Director Jimmy Smith, and seconded by Director Alyssa Linares to approve the minutes of the Baytown Area Water Authority Regular Meeting held on May 17, 2023, as submitted. The vote was as follows: Ayes: President Brenda Bradley Smith, Secretary Frank McKay III, Director Jimmy Smith, Director Alyssa Linares Nays: None Other: Vice President Mike Wilson (Absent) Approved 2. BAYTOWN AREA WATER AUTHORITY FY 2023-24 PROPOSED BUDGET a. Receive and discuss the Baytown Area Water Authority's Fiscal Year 2023-24 Proposed Budget. General Manager Jason Reynolds presented the Baytown Area Water Authority's Fiscal Year 2023-24 Proposed Budget related to agenda Item 2.a. He stated BAWA was structurally balanced with a total Revenue of approximately $16.5 million, which was an increase of $15.3 BAWA Board Regular Meeting Minutes June 21, 2023 Page 2 of 5 million from the previous fiscal year. Expenditures had gone down budget -wise from $16.5 million in the 2022-23 fiscal year to $16 million in the 2023-24 proposed fiscal year budget. This was with an ending Working Capital (gross) from $1.441.5 million up to $4.2 million at the end of the year for the proposed 2023-24 budget. The Days of Operation Expenditures were noted to be at 156 days in the Reserves. Overall, it was in a really good spot and the growth and revenue was great to see as they would see expenditures coming up. President Bradley Smith questioned if there was anything unusual that needed to be brought to the Board's attention. Mr. Reynolds answered no, but that their Public Works Team had done a good job of keeping expenditures flat as there would be a lot of Capital Expenditures ahead of them. Operating Expenditures, as it related to Personnel and Services, had decreased from $10.3 million in 2023 to $9.9 million in the proposed 2023-24 budget. Capital Expenditures had also decreased from $16.48 million to $16 million. With that, Mr. Reynolds relayed they had been seeing a "flatness" in expenditures overall which was contributing to a healthier fund balance. This was also why they had 156 Days of Operation Expenditures in the Reserves at that point. Secretary McKay III asked for additional information on page eighteen of the proposed budget (BAWA Major Budget Issues). Mr. Reynolds responded that the page outlined all the pieces that the Capital Improvement Program (CIP) would address. President Bradley -Smith interjected to clarify to the Board that all four of the items listed on the page were ongoing projects. Assistant Director for Public Works/Utilities Sterling Beaver presented an overview of the following Capital Improvements Project: • BAWA Backwash and Decant Pump Replacement - Project was ongoing and would replace the existing (7.5HP) decant, backwash pumps, and motors to increase reliability and control of surface water sludge. • BAWA Administration Building - Project was ongoing and would perform a minor remodel of office space, update the finishes, replace the HVAC system, replace the room, plumbing upgrades, and electrical upgrades. • BAWA Raw Water Rehabilitation - Project was ongoing and replaced the existing BAWA Forebay liner, raw water pumps, and motors with variable frequency drive (VFD) pumps/motors at the Fritz Lanham Surface Water Plant. • BAWA East Surface Water Plant Phase 2 Expansion — Project was ongoing and covered the engineering services of the expansion and the existing surface water treatment plant south of Interstate Highway (IH) 10 and west of SH 99 along the Coastal Water Authority (CWA) Berbers Hill Canal. Mr. Reynolds noted that all of the CIP items were funded through debt services and that there was a debt service plan in place to address the debt in the next five years. Secretary McKay III recalled the freeze of 2021 where they were going to make improvements to the plants but that they wanted to apply for grants. He wished to be given an update on that as he had not heard anything about that. Mr. Beaver responded that, due to BAWA being a wholesaler, they did not qualify for grant funds as they previously hoped. Furthermore, Mr. BAWA Board Regular Meeting Minutes June 21, 2023 Page 3 of 5 Beaver noted that the main items that needed to be addressed from the freeze were the valves on the ground storage tanks. The work had been completed for two of the three tanks. As more questions arose, Mr. Beaver further detailed what they did in response to the freeze. Lastly, Mr. Beaver provided an overview of the 6% rate increase that was previously presented to the Board at their September 20, 2020 meeting. Carollo Engineers, Inc., recommended their rate increase to cover the debt services and the pending BAWA East Surface Water Plant Expansion Project. It was noted that the rate increase was included in the proposed 2023-24 budget that was before the Board. In conclusion, he offered any questions from the Board and noted that Staff s recommendation was that 6% rate increase as presented. Director Smith asked a question over the prior year's rates. Mr. Beaver responded that, prior to 2020, the City of Baytown had not raised the rates for several years. Their initial 3% increase was initiated in 2020 and their first year of a 6% increase was initiated last year. Staff recommendation was a 6% increase as was in their packet. President Bradley -Smith questioned if the 6% rate increase would increase the revenues as currently proposed in the budget. Mr. Reynolds confirmed it would increase the Revenues from what was currently before the Board. Any additional Revenues they received could be added to the Transfer Out amount for either Debt Services to help cover the debt ceiling, or to Capital Improvements for future projects. Mr. Reynolds also stressed the importance of keeping up with their capital infrastructure needs as the consultants recommended. Otherwise, they would be playing catch-up to keep up with the demand. A model showed that they would be .217 away from running out of capacity by 2029. In relation to the 6% rate increase proposed, President Bradly-Smith asked what their next actions would be as a Board. Mr. Reynolds responded that they would set a Public Hearing for the budget in the next item. They would then have that Public Hearing and consider the adoption of the budget including the rate increase. Those numbers would be reflected in the hearing. b. Consider a resolution calling for a public hearing regarding the Baytown Area Water Authority Fiscal Year 2023-24 Proposed Budget. A motion was made by Secretary Frank McKay III, and seconded by Director Alyssa Linares to approve Resolution No. 2023-11, related to Item 2.b. The vote was as follows: Ayes: President Brenda Bradley Smith, Secretary Frank McKay III, Director Jimmy Smith, Director Alyssa Linares Nays: None Other: Vice President Mike Wilson (Absent) Approved BAWA Board Regular Meeting Minutes June 21, 2023 Page 4 of 5 RESOLUTION NO. 2023-11 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 2023-2024 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 December 31, 2022. Chief Financial Officer Teresa McKenzie presented the Baytown Area Water Authority Quarterly Financial and Investment Reports for the Quarter Ending December 31, 2022, and stated that the Revenues are at $4.177 million, Expenditures at $2.7 million, a good working Capital Balance of $4.2 million. The Capital Improvement Program has only brought in approximately $2,500 and the CIP Projects are $3.5 million, leaving a good working Capital Balance of $4.6 million. Budget Receipts thus far are at 27%, and we've spent approximately 16% of the budget. Book value for investments is $4.4 million and we're brought in $37,800 in Investments Earnings, and offered any questions from the Board. 4. MANAGER'S REPORT a. The next Baytown Area Water Authority meeting is scheduled for Wednesday, July 19, 2023, at 4:30 p.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas 77520. General Manager Jason Reynolds reminded the Board Members of their next Baytown Area Water Authority meeting, which is scheduled for Wednesday, July 19, 2023, at 4:30 P.M., in the Council Chamber at City Hall. 5. ADJOURN With there being no further business to discuss, a motion was made by Director Alyssa Linares and seconded by Director Jimmy Smith to adjourn the June 21, 2023, BAWA Board Regular Meeting at 5:03 P.M. The vote was as follows: Ayes: President Brenda Bradley Smith, Secretary Frank McKay III, Director Jimmy Smith, and Director Alyssa Linares Nays: None Other: Vice President Mike Wilson (Absent) Approved BAWA Board Regular Meeting Minutes June 21,2023 Page 5 of 5 City of Baytown