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2002 12 18 BAWA Minutes • MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY December 18, 2002 The Board of Directors of the Baytown Area Water Authority, Harris County, Texas, met in regular session on Wednesday, December 18, 2002, in the Conference Room, 7425 Thompson Road,Baytown, Texas,with the following in attendance: Robert L. Gillette,President Dan Mundinger,Vice President Peter R. Buenz, Secretary Knox Beavers,Board Member Dan Conejo, 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 September 18, 2002. Board Member Buenz moved approval of the minutes of the meeting held on September 18, 2002. Board Member Beavers seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Conejo, and Mundinger President Gillette Nays: None The motion carried. Announcement and discussion of the City of Houston's approval the Country Terrace Water Company Water Supply Contract. General Counsel, Ignacio Ramirez, Sr. announced that the City of Houston had approved the contract with Country Terrace Water Company. The Board had previously approved the contract contingent upon approval by the City of Houston. Houston's approval was delayed by the difficulty in obtaining a satisfactory map of the area to be served by Country Terrace. Consider request of Country Terrace Water Co., Inc. to finance capital buy-in fee for a one-year period. Plant Manager, Fred Pack, reminded the Board that a grant from the Harris-Galveston Subsidence District had been granted to pay the majority of the capital buy-in fee for Country Terrace Water Company. Country Terrace had requested that the balance of the capital buy-in • fee be financed over a one-year period. Chief Financial Officer, Donna Sams reviewed the agreement for financing the balance of the fee. It is the same format as has been used in the past and is for a one-year term. Page 2 of 3 Minutes of the Regular Meeting—December 18, 2002 • Board Member Buenz moved approval of the proposed financing of the balance of the capital buy-in fee for Country Terrace Water Company. Board Member Mundinger seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Conejo, and Mundinger President Gillette Nays: None The motion carried. Receive financial statements for fiscal year ending September 30, 2002. Chief Financial Officer Sams reviewed the Financial Statement for the Authority for the fiscal year ending September 30, 2002. The operating statement reflects a decrease of $178,000 in operating revenues due to rainfall. The expenses were reduced accordingly. Due to the requirement of maintenance of the sludge lagoons every other year, a higher maintenance cost is reflected. A higher charge for personnel services is reflected in the statement, also. The operating expenses for chemicals and electricity are noted. Interest income is reduced, due to less bond funds being invested to earn interest. The bond funds have been spent on the projects that have been in progress. Rents and Royalties were lower in 2002 than in 2001. $313,000 was received as oil and gas royalties, compared to $508,878 in 2001. A total of$1,127,000 has been received as oil and gas royalties. Because the income from this source fluctuates, the funds have been set aside for capital projects and will be used to offset the debt on the next project. Although the revenues are down, the budget summary reflects that the year was finished favorably. This resulted from the lower expenditures. The trends reflected on page 21 of the statement show the high revenues of$5.6 million in 2000, declining to $5.5 million in 2001 and $5.3 million in 2002. Mark Tiller, Tiller & Associates, stated that the opinion letter was clean. The footnotes on page 7 show the new additions from the projects and deletions of the fully depreciated assets. Board Member Buenz moved acceptance of the financial statement for the fiscal year ending September 30, 2002. Board Member Conejo seconded the motion. The vote follows: Ayes: Board Members Beavers,Buenz, Conejo, and Mundinger President Gillette Nays: None 1110 The motion carried. Page 3 of 3 Minutes of the Regular Meeting—December 18, 2002 Manager's Report. Mr. Pack reported on Phase I improvements. The basin is being used for producing potable water. Communications with the contractor are continuing, but it is nearing an impasse. The disagreement is over the completion of items. Tony Brown reported the progress on Phase III improvements. The west tank is virtually complete. It is back in service after the inside has been blasted and coated. The outside needs minor completions of the painting. The other tanks have been blasted on the outside and a primer coat has been applied. Another tank is in the process of interior work. The line by- passing the forebay is being buried. This line will allow the plant to take water directly from the canal and allow the forebay to be maintained. General Manager, Gary Jackson, complimented the staff on all the work it has done at BAWA. All were wished the best of the holiday season. Adjourn As there was no further business to be transacted, the meeting adjourned at 8:15 a.m. Gat ' vv W. Smith, Assistant Secretary •