1981 01 21 BAWA Minutes 10121-1
MINUTES OF THE REGULAR MEETING
OF THE BOARD OF DIRECTORS
OF THE BAYTOWN AREA WATER AUTHORITY
January 21 , 1981
The Board of Directors of the Baytown Area Water Author-
ity , Harris County, Texas, met in regular session on Wednesday,
January 21 , 1981 in the Administration Building at 7425 Thompson
Road with the following members in attendance :
Robert L. Gillette, President
I . J. Butrick, Vice President
Peter R. Buenz, Secretary
• Harry F. Hartman, Board Member
Dr. Robert E. Hill , Board Member
The meeting was called to order and the following business
was transacted:
Minutes
Board member Butrick moved for the approval of the minutes
for the meeting held January 6, 1981 ; Board member Hill
seconded the motion. The vote follows :
Ayes : Board members Gillette, Butrick, Buenz, Hartman
and Hill
Nays : None
Receive Audit Report
Dave Start , with the firm of Gerace, Hullum, Start and
Company, was present to review the audit report for 1979-80
with the Board. Mr. Start indicated that there was nothing
unusual about the audit . The balance sheet reflects that as
of September 30, 1980, approximately $15, 600, 000 was invested
in the plant . The construction fund had approximately
$2, 800, 000 in assets with corresponding liabilities of
$1 , 700, 000 which results in approximately $1 , 000, 000 in equity
and $567, 000 encumbrance which applies to the three primary
contracts . The Income Statement and Statement of Revenue
and Expenditures merely shows the $500, 000 in the debt
service fund received from the City of Baytown, interest
income earned, and the funds expended on capital improvements ,
interest and principal . The debt service fund shows that BAWA
spent approximately $9, 500, 000 more this year than what was
taken in. Fortunately, there was a surplus . There are no
unusual items in the footnotes to the financial statements .
Footnote No. 4 dealing with commitments merely indicates the
amount of the construction contracts and what has been expended
to date. Exhibit I shows the makeup of the capital outlay
which is merely a recap of the $15, 600, 000. Exhibit II shows
the debt service requirements . The finance department of the
• City of Baytown prepares financial statements on a full accrual
basis while the auditors have accrued certain items that have
been incurred but not paid for as of September 30, 1980. Those
items will not be reflected on the statements that will be
prepared by the finance department . That is primarily the
$1 ,400, 000 contract retainage.
Board member Buenz moved for acceptance of the audit
report ; Board member Butrick seconded the motion . The vote
follows :
Ayes : Board members Gillette, Butrick, Buenz, Hartman
and Hill
Nays : None
10121-2
Minutes of the BAWA Board - January 21 , 1981
Hear Report from Lockwood, Andrews and Newnam
Bob Parker with the firm of Lockwood, Andrews and Newnam
was present to review the progress of the water transmission
line. Mr . Parker reported that the engineers had attempted
on four occasions to pressure up the line to the working pres-
sure required by the contract document . On the first pressure
test , four leaks appeared in the line. Since that time, on
three other occasions, a separate leak in a different location
appeared. Last Saturday, the contractor pressured the line,
and a leak had developed in the casing under Thompson Road at
Lynchburg Cedar Bayou Road. To repair that leak, that section
of line is going to have to be dewatered and pumped down to
allow someone to go into the pipe to locate which of the
joints is leaking. The heavy rains have hindered progress . •
In response to a question from the Board, Mr. Parker
stated that since the leak occurred in the casing, the con-
tractor will have to do the welding from inside the pipe line
rather than from outside. He also mentioned that the contract
specifications call for the pipe to be pressure tested to 160
pounds and held for two hours without any leaks . The operating
pressure is to be 95 to 100 pounds .
In response to a question from the Board regarding
liability, Mr. Lanham, General Manager, stated that the Board
might consider writing another letter regarding liability.
Mr. Lanham felt that the contract has a clear understanding
that the liabilities began on January 1 , 1981 .
Randy Strong, City Attorney, explained that liquidated
damages are $1 , 000 per day but it would be very easy for BAWA
to show that the actual damages exceed that amount . The
liquidated damage clause was figured basically on the cost
of buying raw water from the City of Houston; however, when
the overhead costs are added, BAWA can prove greater damages.
The Administration will also inquire whether BAWA can include
in those damages principal or interest on the bonds .
In response to a question from Board member Hill , Mr.
Parker explained that there are methods of testing lines with
air. However, this primarily occurs when testing steel lines .
The normal test for concrete lines is to go ahead and pressure
test hydraulically. One of the reasons for doing this is that
the line inside is made of concrete and needs to soak and absorb
water so that it can be tested for leak allowance.
Mr . Lanham inquired if there is any reasons why the con-
tractor cannot go ahead and attempt to try to get the pressure
up and find all of the leaks at one time rather than doing it
on separate occasions. Mr. Parker explained that what has
happened in these past cases is that the magnitude of the leak
was such that the pressure would not hold. In other words ,
the pressure testing equipment is set up with a small displacement
pump which is intended to dishold the pressure in the lines .
If there is a bad leak, it will not hold enough pressure to IIIpressure up the rest of the line at 150 pounds .
Board member Buenz moved to direct the Administration
to write a follow-up letter to the contractor outlining the
Board' s concerns, reiterating the liability; Board member
Hill seconded the motion. The vote follows :
Ayes : Board members Gillette, Butrick, Buenz, Hartman
and Hill
Nays : None
10121-3
Minutes of the BAWA Board - January 21 , 1981
Consider Reduction of Retainage on Chisholm Trail Construction
Company
Richard Llewelyn briefed the Board on the problems that
are occurring with the check valves and the minor problems
that need to be completed. He recommended that the retainage
on the contract with Chisholm Trail Construction Company be
reduced from 10% to 4% or from $1 , 000, 000 retainage to
$400, 000 which is more representative of the work remaining.
The punch list items are in the range of $85, 000; therefore,
he felt that the 4% would be ample retainage .
Mr. Lanham explained that the contractor had asked that
• BAWA pay all but 1%, but the Administration felt that 4%
would be more realistic until the plant is in full operation.
Board member Hill moved that the Board reduce the
retainage to 4%; Board member Butrick seconded the motion.
The vote follows :
Ayes : Board members Gillette, Butrick, Buenz, Hartman
and Hill
Nays : None
Adjourn
With no further business to be transacted, the meeting
was adjourned.
Peter R. Buen , Secretary
•