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1994 09 21 BAWA Minutes • MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY September 21, 1994 The Board of Directors of the Baytown Area Water Authority, Harris County, Texas, met in regular session on Wednesday, September 21 , 1994, at 7425 Thompson Road, BAWA Conference Room, with the following attendance: Robert L. Gillette, President Dan Mundinger, Vice-President Peter R. Buenz, Secretary Knox Beavers, Board Member Roy L. Fuller, Board Member The meeting was called to order with a quorum present, after which the following business was transacted: Consider Approval of the Minutes for the Meeting Held on August 17, 1994 Board Member Beavers moved for approval of the minutes for the regular session held on August 17, 1994. Board member Mundinger seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger Nays: None Consider Selection of Financial Advisor The City of Baytown has worked with Masterson Moreland for years. They are very familiar with the City of Baytown and are well known and respected among the rating agencies in New York. The fee schedule and contract are identical to the City of Baytown's. Therefore, the administration recommended Masterson Moreland Sauer Whisman, Inc. as financial advisors. 940921-2 Minutes of the BAWA Meeting - September 21 , 1994 • Board Member Buenz moved to retain Masterson Moreland Sauer Whisman, Inc. as financial advisors for the Baytown Area Water Authority. Board Member Fuller seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger Nays: None Consider Selection of Bond Counsel The City of Baytown also has used Vinson Elkins for years as bond counsel. Clifford Youngblood is the one who proposed the amendment to the contract between the City of Baytown and BAWA. This firm is also well known and respected in the bond process. The administration recommended Vinson Elkins as bond counsel. Board Member Buenz moved to retain Vinson Elkins as bond counsel. Board Member Beavers seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger Nays: None Consider Approval of Preliminary Statement and Notice of Sale For$750,000 Revenue Bonds, Series 1994 Drew Masterson with Masterson Moreland was present and explained that the preliminary statement discloses information about the bond issue, the City's water system and the authority to potential bidders. This document informs the prospective bidders on when the bonds mature and when interest is paid. Ratings will be obtained from Standard and Poors and Moody's. He did not feel that these bonds would be insured, but noted that since BAWA last issued bonds in the 1970's, bond insurance has become prevalent. The bidder decides if the cost of an insurance premium will allow him to reduce the overall cost of his bid significantly. Since this issue is relatively small, $815,000 and the issue has a relatively short maturity, the feeling is that bond insurance will not be used. Therefore, the bids will be marketed on the Authority's credit and the ratings received by the two rating agencies. • 940921-3 Minutes of t s t h o BAWA Meeting September 21 , 1994 • The primary thing considered there is BAWA's contracts and the health of the Baytown water and sewer system. The maturity on the bonds is 2003 which is unusual to have a single maturity on a bond issue. There is no amortization of the principle in any other years, because outstanding debt service on existing bonds is paid off in 2002 which costs about $1 ,400,000 annually. The document describes the various contracts of BAWA, its facilities and financial condition. What is required today is review of the preliminary official statement and for the board to deem the preliminary statement final. However, Mr. Masterson indicated there would be a few changes necessary and requested that the motion include authorization for the General Manager to authorize technical changes that may be necessary. Board Member Buenz moved to approve the Preliminary Official Statement, subject to any changes and to authorize the General Manager to deem the Official Statement final at the time of printing. Board Member Mundinger seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger Nays: None Consider Amendment to Article I, "Definitions," of the 1977 Water Supply Contract Between Baytown Area Water Authority and the City of Baytown Clifford Youngblood, Bond Counsel, recommended the proposed amendment to the contract entitled, "Water Supply Contract-Treated Water," between BAWA and the City of Baytown dated January 31 , 1977, adding language to include any similar contract. Board Member Buenz moved to approve the amendment to the Water Supply Contract-Treated Water. Board Member Mundinger seconded the motion. The vote follows: Ayes: Board Members Beavers, Buenz, Fuller, Gillette and Mundinger Nays: None The resolution approving amendment to the Water Supply Contract-Treated Water is attached to the minutes as Attachment "A." 940921-4 Minutes of the BAWA Meeting - September 21 , 1994 • General Manager's Report Fred Pack, Superintendent - Herb Thomas, Plant Manager, introduced Fred Pack, Plant Superintendent. Fred was previously employed with U.S. Steel as Manager of Utilities in Baytown. He is very familiar with water quality issues and maintenance of utilities. He is from Pennsylvania. He is a graduate of Youngstown State. BAWA Budget - The BAWA budget for 1993-94 fiscal year was based on the average sale of 11 mgd. With the heavy rains in August, people did not water lawns as usual. This had a huge impact on BAWA, which means this year BAWA will not meet its projections. The shortfall in revenue for this fiscal year will be about $120,000. However, the new contract with Houston is favorable to BAWA in an amount equal to the $120,000; therefore, BAWA will begin the new fiscal year on a break-even basis. Plant Activities - The plant had an emergency failure last week. One of the basins had a mechanical breakdown. The staff did a good job in effecting repairs. All three basins are up now and the plant is running as it should. Cryptosporidum - This is a cyst which is found in the feces of many animals. Therefore, it could be found any place. The control for cryptosporidum is conventional treatment plant with filtration which is what BAWA has. The only way to kill the cyst is ozone, but there aren't many ozone generators in the U.S. because they are a very expensive method of disinfectant. It is common in Europe, not in the U.S. Once ingested, the cyst causes havoc and can cause death. At BAWA the disinfectant is chlorine which will not kill cryptosporidum. However, the filters are effective in filtering out the cyst. If there is a problem with the filters and those are not working properly, the cysts enter the distribution system. Therefore, it is essential to keep the plant running properly. The filters need to always be in top notch condition. There are no known cases of cryptosporidum in Texas from surface water plants. The test for cryptosporidum is lengthy, expensive and non-conclusive. Because of BAWA's filtering system, there is no cause for alarm in Baytown. 940921-5 Minutes of the BAWA Meeting - September 21 , 1994 • Adjourn There being no further business to be transacted, the meeting was adjourned. /P Peter R. Buenz Secretary