2015 07 15 BAWA MinutesMINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY July 15, 2015 The Board of Directors of the Baytown Area Water Authority (BAWA) met in a Regular Meeting on Wednesday, July 15, 2015, at 9:04 A.M., in the Council Chamber of the Baytown City Hall, 2401 Market Street, Baytown, Texas with the following in attendance: Brenda Bradley Smith President Mike Wilson Vice President Frank McKay Director Rick Davis General Manager Ron Bottoms Deputy General Manager Karen Homer General Counsel Leticia Brysch Assistant Secretary President Bradley Smith convened the July 15, 2015, Baytown Area Water Authority (BAWA) Board Regular Meeting with a quorum present at 9:04 A.M., all members were present with the exception of Directors Baldwin and Benoit who were both absent. 1. MINUTES a. Consider approving the minutes of the Baytown Area Water Authority Regular Meeting held on June 17, 2015. A motion was made by Vice President Mike Wilson and seconded by Director Frank McKay III approving the June 17, 2015, BAWA Board Regular Meeting minutes. The vote was as follows: Ayes: President Brenda Bradley Smith, Director Frank McKay III, Vice President Mike Wilson Nays: None Other: Secretary Wayne Baldwin (Absent), Director Brandon Benoit (Absent) Approved 2. BUSINESS ITEMS a. Receive and discuss the Baytown Area Water Authority's FY 2015 -16 Proposed Budget. BAWA Board Regular Meeting Minutes July 15, 2015 Page 2 of 5 Deputy General Manager Bottoms presented the agenda item to receive and discuss the Baytown Area Water Authority's FY 2015 -16 Proposed Budget. He stated that the proposed budget is similar to last years and that he would highlight some of the changes requested. He stated that the revenues include a 5% increase in rates per the 2012 rate study. He stated that there were two positions in personnel that included a chief lab technician and a qualified individual to operate the SCADA program in which BAWA would fund 50% of the salary and the other 50% would be funded through the water and sewer fund. He stated that the special services fund decreased by $40,000 due to improvements that were already made and are no longer needed. In regards to capital, he stated that there's $12,000 for security cameras and surveillance, $71,000 to refurbish valves on the filters, $11,000 to purchase lawn equipment, and $53,600 to replace two (2) vehicles. He further stated that the debt service increased from $2.9 to $3.2 with $750,000 being for a $15 million bond issue which they plan on issuing at the beginning of the year to pay for the initial phase of construction for the new plant. During further discussion, Deputy General Manager Bottoms stated that in regards to the Capital Improvement Program Fund (CIP), over $4 million will be transferred to the CIP for projects. He stated that the largest project this year will be the replacement of the high service pumps which estimates to be $5.5 million. In further discussion of the $5.5 million replacement of the high service pumps, Mr. Mark LeBlanc stated that the current pumps are the originals from over 35 years old and need to be replaced. He stated that they didn't expect the replacement of the pumps to be as expensive, but it was determined that a new header has to be built which also includes new valves. He further stated that they had planned on reusing the existing fiber, but there were issues with the fiber connections resulting in having to all be replaced also. Additionally, Mr. LeBlanc stated that the motor control center will be moved from the outside where it is currently and into the new electrical building. Director McKay inquired if the new pumps would be the same type pumps being put in the new facility. In response to Director McKay's inquiry of the pumps, Mr. LeBlanc stated that the pumps would be the same. In closing discussion of the proposed budget changes, Deputy General Manager Bottoms stated that the project initiatives which is a fund somewhat like the contingency fund, was increased to $1.5 million. President Bradley Smith inquired if the high service pump project was being done in house or through an outside consultant and who determined which process would be selected. In response to President Bradley Smith's inquiry, Deputy General Manager Bottoms stated that the project would be done by an outside consultant who was included in the existing contract that BAWA had with Arcadis, but since was canceled by the City. During further discussion, Deputy General Manager Bottoms presented an overview of future capital projections. He stated that the expenses will decrease over the next several years, but that there will some additional programmed expenses. He stated in regards to debt services that to pay for the new plant BAWA is fortunate to be able to pay off some debt in the year 2020 and 2023, which will allow for low debt payments to made initially and increased towards the latter years. In regards to the multi -year forecast spreadsheet presented, President Bradley Smith inquired if the increase in the sale of water as it relates to revenues was due to population growth. Deputy General Manager Bottoms stated that the majority of the increase was due to population growth and some due to possible rate increase when the new plant comes on board. BAWA Board Regular Meeting Minutes July 15, 2015 Page 3 of 5 3. PROPOSED RESOLUTIONS a. Consider a resolution calling for a public hearing regarding the Baytown Area Water Authority Fiscal Year 2015 -16 Proposed Budget. Assistant Secretary Leticia Brysch presented the agenda item and stated that Resolution No. 2015 -08 calls a public hearing regarding the Baytown Area Water Authority Fiscal Year 2015 -16 Proposed Budget for August 19, 2015, during the regularly scheduled BAWA meeting, commencing at 9:00 A.M. Additionally, she stated that notice of the public hearing will be published in The Baytown Sun and posted on the City's notice boards and website no later than 10 days prior to the date of the hearing. A motion was made by Vice President Mike Wilson and seconded by Director Frank McKay III approving Resolution No. 2015 -08. The vote was as follows: Ayes: President Brenda Bradley Smith, Director Frank McKay III, Vice President Mike Wilson Nays: None Other: Secretary Wayne Baldwin (Absent), Director Brandon Benoit (Absent) Approved RESOLUTION NO. 2015 -08 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 2015 -16 PROPOSED BUDGET; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. b. Consider a resolution adopting the Baytown Area Water Authority's Investment Policy and Strategy Statement in accordance with the Public Funds Investment Act. Finance Director, Louise Richman presented the agenda item and stated that Resolution No. 2015 -09 adopts the Baytown Area Water Authority (BAWA) Investment Policy and Strategy Statement in accordance with the Public Funds Investment Act, Section 2256.005 (e). She stated that proposed changes to the Investment Policy include: 1) adding the training requirement to 10 hours per year for the investment officers instead of every other year; 2) adding Carl Currie as an investment officer; and 3) adding Credit Suisse as authorized broker /dealers. Director Wilson inquired of the reason for adding Credit Suisse. Ms. Richman stated that they look for entities that want to be on the list as a broker /dealer and if the entity meets certain requirements they are added to the broker /dealer list. She further stated that BAWA investments are based on how soon the money is needed. BAWA Board Regular Meeting Minutes July 15, 2015 Page 4 of 5 Director McKay inquired of the process for getting bonds and if the entities were chosen from the same list of broker /dealers. Ms. Richman stated that with regards to debt issuance, the City and BAWA have a financial advisor, currently is First Southwest that assists the City and BAWA to prepare with the offering statement which afterwards goes out for bid depending on the type of bond. A motion was made by Director Frank McKay III and seconded by Vice President Mike Wilson approving Resolution No. 2015 -09. The vote was as follows: Ayes: President Brenda Bradley Smith, Director Frank McKay III, Vice President Mike Wilson Nays: None Other: Secretary Wayne Baldwin (Absent), Director Brandon Benoit (Absent) Approved RESOLUTION NO. 2015 -09 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY ADOPTING THE BAYTOWN AREA WATER AUTHORITY'S INVESTMENT POLICY AND STRATEGY; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 4. REPORTS a. Receive an update regarding the Baytown Area Water Authority (BAWA) East Plant Project. Mr. Zachary Lillie presented the agenda item and stated that they are still at 90% of the design on the plant, as well as, still waiting on the Corp of Engineers approval to do the wetland mitigation in order to move forward with submitting the 90% design to TCEQ. Legal Counsel, Karen Horner stated that they are waiting to hear back from the City of Houston as they continue to work together to get the agreement completed. b. Receive the Baytown Area Water Authority's Revenues and Expenditures Report for the Quarter Ending June 30, 2015. Ms. Richman presented the Baytown Area Water Authority's Revenues and Expenditures Report for the Quarter Ending June 30, 2015. She stated that therevenues were at 71% and the expenditures are on target. She stated that the sale of water from the City of Houston accounts for 83% of the $3.9 million budget item and that other larger purchases will come in July, August, and September. She stated that to date most of the permit fees have been paid for the BAWA Board Regular Meeting Minutes July 15, 2015 Page 5 of 5 year and in regards to capital that the pumps and a truck were purchased. Additionally, she stated that the debt payment is on target and the next major payment will go out August I st. C. Receive the Baytown Area Water Authority's Quarterly Investment Report for the Quarter Ending June 30, 2015. Ms. Richman presented the agenda item and stated that there is $14.6 million in BAWA's portfolio in which approximately $5 million is coming from the general operating and $8 million is from the CIP. She further stated that the interest rate was .0897 %. 5. MANAGER'S REPORT a. Reminder that the next Baytown Area Water Authority meeting is scheduled for Wednesday, August 19, 2015, at 9:00 A.M. in the City Council Chamber, 2401 Market Street, Baytown, Texas 77520. General Manager Davis presented the agenda item and stated that the next Baytown Area Water Authority meeting is scheduled for Wednesday, August 19, 2015, at 9:00 A.M. in the City Council Chamber, 2401 Market Street, Baytown, Texas 77520. 6. ADJOURN With there being no further business to discuss, President Bradley Smith adjourned the July 15, 2015, Baytown Area Water Authority (BAWA) Board Regular Meeting at 9:38 A.M. "Brysch., ecretar y City of Baytown �tuuntq WATER =0 D —I