2016 07 27 BAWA Minutes, SpecialMINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS
OF THE BAYTOWN AREA WATER AUTHORITY
July 27, 2016
The Board of Directors of the Baytown Area Water Authority (BAWA) met in a Special Meeting
on Wednesday, July 27, 2016, 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
Mike Wilson
Frank McKay
Kevin Troller
Deanie King
Leticia Brysch
President
Vice President
Director
Assistant General Manager
General Counsel
Assistant Secretary
President Bradley Smith convened the July 27, 2016, Baytown Area Water Authority (BAWA)
Board Special Meeting with a quorum present at 9:04 A.M., all members were present with the
exception of Directors Brandon Benoit and Wayne Baldwin who were both absent.
1. BUSINESS ITEMS
a. Receive and discuss the Baytown Area Water Authority's Fiscal Year 2016 -17
Proposed Budget.
Director of Finance, Wade Nickerson presented the agenda item to discuss the BAWA Board
Fiscal Year 2016 -17 proposed budget. He stated that the total revenues are $12.9 million with
$12.8 million of that amount being in water sales. He noted that there was no rate increases to the
BAWA customers because the projected revenues cover the operational costs for the next year.
Director McKay inquired of the justification of not having an increase in revenue when the water
received from the City of Houston is adjusted for inflation. In response to Director McKay's
inquiry, Mr. Nickerson stated that the water rate for the City of Houston did increase to 1.4 %,
but because of some reductions in the operational costs the expenditures are lower this year
than they were in the previous year; therefore, staff felt that it wasn't necessary to increase the
rates. Additionally, Mr. Nickerson noted that the expenditures were down approximately
$200,000, and that two (2) plant operators were added to the budget for the anticipation of the
BAWA East Plant staffing.
In summary, Mr. Nickerson stated that the revenues are $12.9 million and the total expenditures
are $13.85 million with an ending fund balance of approximately $3.1 million of 187 operating
days. He stated that the expenses includes: about $6.1 million in operating expenses; small
capital outlay; transfers for debt service; transfer to the capital improvement fund, transfer of
$350,000 for administration services, and $75,000 for contingency. He noted that the transfer to
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July 27, 2016
Page 2 of 5
the debt services decreased approximately $700,000, and the transfer to capital improvement
fund helps to cash pay for projects rather than add additional debt.
During further discussion, Director McKay inquired of the method used in determining the
average water sales volume. Mr. Nickerson stated that the average is based on past usage, as well
as, additional residency and that this budget speaks to approximately 12 1/2 million gallons per
day whereas, the sales revenue is based on that gallon. Assistant General Manager Troller further
noted that the average can be based on a three (3) year history along with the anticipated growth.
Director Mike Wilson noted that the City of Baytown was listed as the largest usage customer of
BAWA, and inquired of the other largest customers. BAWA Superintendent, Zachary Lillie
stated that Highlands is the second highest usage customer with the City of Baytown using
approximately 90% of the water. Director Wilson further inquired of the reasoning for the rate
difference from the City of Baytown and other customers. Assistant General Manager Troller
stated that the reason for the rate difference is to differentiate between City customers and others.
Director Wilson also inquired if the increase in personnel services for the two (2) staff persons
included other benefits. Mr. Nickerson stated that the salaries did include benefits and other
allowances. Additionally and as it relates to 187 days of operating expenditures availability,
Director Wilson inquired as to what would cause the need to use the money to get through the
187 days of operation. In response to Director Wilson's inquiry regarding 187 days of operation,
Mr. Nickerson stated that the funds would be used for unforeseen situations. President Bradley
Smith inquired as to what would be considered to be the minimum number of days as a cushion.
In response to President Bradley Smith's inquiry, Mr. Nickerson stated that 60 days is considered
to be the minimum number of days.
During further discussion, Mr. Lillie presented updates on the BAWA plant operations as it
pertains to the budget. He reiterated that staff personnel increased to accommodate the
preparations for operating the East Plant. Additionally, he stated that the large increase of
$80,000, added to special services is for a sludge lagoon clean-out which is done every two
(2) years and required by TCEQ for a land application permit. Mr. Lillie stated that the list of
CIP projects includes: the continued development of the East Plant, replacing the chain and flight
for basin #3, adding a Liquid Ammonia Feed (LAF) System which replaces the gas ammonia
that helps stabilize the chlorine, adding a lime feed system for PH control, site paving, working
on a post filtration chemical system which is the fluoride system feed to help prevent decaying,
and working on zinc feed to help with corrosion control. Additionally, Mr. Lillie stated that this
budget allows staff to maintain a superior water quality rate and function daily to help meet their
goal of exceeding TCEQ's recommendations.
President Bradley Smith requested a summary of what's foreseen as the larger projects as it
relates to the general CIP and if it would include some of the work along Thompson Road.
Assistant Director of Utilities, Mark LeBlanc stated as it relates to Thompson Road, the
engineering department looked at various options of rehabbing that line and because taking that
particular line out of service would be detrimental to the City of Baytown for any length of time,
the only other option is to acquire additional right -of -way and add a parallel line in that area.
President Bradley Smith further inquired if the $1.048 million budgeted for new capital projects
were budgeted for specifics projects or for projects in general. In response to the inquiry
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July 27, 2016
Page 3 of 5
regarding the funds budgeted for new capital projects, Mr. Nickerson stated that the budgeted
line item amount is for unforeseen projects that have not yet been identified, but in any case that
something comes up it will be brought before the BAWA Board for approval.
Director McKay stated that his understanding was that new SCADA equipment was going to be
put in the old plant in order to integrate with the system at the new plant and inquired if this was
done as planned being that there's $893,000 left over from the SCADA. Mr. Lillie stated that the
particular project regarding the SCADA has been carried over and the $893,000 will be used to
award the contract for the current BAWA plant in which during that process, staff is going to
work with the consultant and contractors to corporate it into the new plant. Mr. Lillie also noted
that Mr. Pastrana, Director of Engineering, would discuss the details of the SCADA project.
2. PROPOSED RESOLUTIONS
a. Consider a resolution calling for a public hearing regarding the Baytown Area
Water Authority Fiscal Year 2016 -17 Proposed Budget.
Mr. Nickerson presented the agenda item and stated that Resolution No. 2016 -11 calls a public
hearing regarding the Baytown Area Water Authority Fiscal Year 2016 -17 Proposed Budget for
August 17, 2016, during the regularly scheduled BAWA meeting.
A motion was made by Vice President Mike Wilson and seconded by Director Frank McKay III
approving Resolution No. 2016 -11. 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
b. Consider a resolution awarding a construction contract to BL Technology, Inc., for
the Baytown Area Water Authority SCADA Improvement Project.
Mr. Pastrana presented the agenda item and stated that bids were open for the construction of the
SCADA system for the BAWA plant, which is a complete replacement of the current SCADA
system that's over 20 years old and unusable. He stated that the lowest bidder was BL
Technology, Inc., in the amount of $852,480. He noted that if the BAWA Board approves this
resolution, it's required that before BAWA may enter into a contract, the City Council must
approve the same; therefore, this item is on the July 28, 2016, Council agenda for consideration
and if approved will be awarded to BL Technology, Inc.
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July 27, 2016
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Assistant General Manager Troller stated for clarity that three (3) people were in attendance at
the pre -bid, but only one (1) bid was received; in which staff has no concerns of there being one
(1) bidder. Mr. Pastrana added that there are only so many companies that do SCADA projects
and because there's lots of work going on in the environment, if it's not very profitable the
companies pass on the job. Assistant General Manager Troller further noted for clarity that this
job could be considered too large for a small company and too small for a large company;
therefore, there are various factors that could possibly be considered as reasons for selecting a
bid.
Director Wilson inquired of Mr. Pastrana, if the bid amount proposed appeared unreasonable in
his professional opinion. In response to Director Wilson inquiry of whether the proposed bid
amount appeared unreasonable, Mr. Pastrana stated that the original estimate was $1 million.
A motion was made by Vice President Mike Wilson and seconded by Director Frank McKay III
approving Resolution No. 2016 -12. 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
3. REPORTS
a. Receive an update regarding the Baytown Area Water Authority (BAWA) East
Plant Project.
Mr. Lillie presented the agenda item to present an update regarding the Baytown Area Water
Authority (BAWA) East Plant Project. He stated that the contractor is done with the clearing and
grubbing on the site and once the area is visibly looked at the contract will be closed out. With
regards to the raw water intake, he stated that on July 22, 2016, staff and TCEQ walked the site
for approval and the investigator gave verbal approval to city staff and the consultant, in which
she's in the process of typing up a report. He stated that a preliminary report was submitted to
TCEQ, in which two (2) variances were requested. He stated that the consultant, Jones and
Carter addressed both variances and submitted them to TCEQ, which is the last stage of the
process before going out to bid with plans. Additionally, he noted that it generally takes
approximately 90 days for TCEQ to review plans. President Bradley Smith requested more
details in summary on the two (2) variances. In response to President Bradley Smith's inquiry
regarding the two (2) variances, Mr. Lillie stated that one variance was for the use of a
superpulsator clarifier which is a different technology being used in place of one of the current
clarifiers that takes the mud out of the water and the other variance was for the chlorine dioxide
feed system which is basically an alternative disinfectant to chlorine.
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July 27, 2016
Page 5 of 5
President Bradley Smith stated that agenda items 3.b.and 3.c. would be considered together.
b. Receive the Baytown Area Water Authority's Revenues and Expenditures Report
for the Quarter Ending June 30, 2016.
C. Receive the Baytown Area Water Authority's Quarterly Investment Report for the
Quarter Ending June 30, 2016.
Mr. Nickerson stated that the revenues and expenditures are expected to be at 75% during
this time of the year, but came in right at 77% with the revenues and 69% with expenditures. He
stated that as it relates to expenditures, the supplies line item was just under 60% which
contributes to staff being conservative with that regard. He stated that the maintenance
expenditures line item was at 80% which seems to be a trend being that it was also higher this
time last year and further noted that because this category came in under budget last year staff
expects to do the same this year. Mr. Nickerson further stated that although the capital outlay line
item was at about 86 %, the majority of the budgeted capital items have been purchased and
with the current remaining balance of $18,000 approximately $12,000 may possibly be spent.
Additionally, Mr. Nickerson stated that approximately $24.6 million is in the portfolio with an
earning interest of .45% giving revenue of $22,682.
4. MANAGER'S REPORT
a. Reminder that the next Baytown Area Water Authority meeting is scheduled for
Wednesday, August 17, 2016, at 9:00 A.M. in the City Council Chamber, 2401 Market
Street, Baytown, Texas 77520.
Assistant General Manager Troller presented the agenda item and stated that the next Baytown
Area Water Authority meeting is scheduled for Wednesday, August 17, 2016, at 9:00 A.M. in the
City Council Chamber, 2401 Market Street, Baytown, Texas 77520.
5. ADJOURN
With there being no further business to discuss, President Bradley Smith adjourned the July 27,
2016, Baytown Area Water Authority (BAWA) Board Special Meeting at 9:37 A.M.
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