2017 01 18 BAWA MinutesMINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS
OF THE BAYTOWN AREA WATER AUTHORITY
January 18 2017
The Board of Directors of the Baytown Area Water Authority (BAWA) met in a Regular
Meeting on Wednesday January 18 2017 at 9.03 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
Wayne Baldwin
Brandon Benoit
Frank McKay
Ron Bottoms
Karen Horner
Leticia Brysch
President
Vice President
Secretary
Director
Director
Deputy General Manager
General Counsel
Assistant Secretary
President Bradley Smith convened the January 18 2017, Baytown Area Water Authority
(BAWA) Board Regular Meeting with a quorum present at 9,03 A.M. all members were present
MINUTES
a Consider approving the minutes of the Baytown Area Water Authority Regular
Board Meeting held on October 19, 2016
A motion was made by Vice President Mike Wilson and seconded by Director Brandon Benoit
approving the October 19 2016 BAWA Board Regular Meeting minutes The vote was as
follows
Ayes Secretary Wayne Baldwin, Director Brandon Benoit, President Brenda
Bradley Smith Director Frank McKay III, Vice President Mike Wilson
Nays None
Approved
a Consider a resolution authorizingthe Hirst Amendment to the Water Supply
Contract — Treated Water with Harris County Water Control and Improvement District
No 1 to increase contract quantity
BAWA Board Regular Meeting Minutes
January 18 2017
Page 2 of 8
b Consider a resolution authorizing the Second Amendment to the Water Supply
Contract Treated Water with Country Terrace Water Co, Inc., to increase the contract
quantity
c Consider a resolution authorizing a Contract Amendment to the Amended and
Restated Water Supply Contract with the City of Baytown to increase the contract
quantity
d Consider a resolution authorizing the First Amendment to the Water Supply
Contract -- Treated Water with Harris County Fresh Water Supply District No 27 to
increase the contract quantity
Deputy General Manager Bottoms recommended that agenda items 2.a through 2.d be
considered together as they are all related and also requested that Mark LeBlanc present the
details of the items
Mr LeBlanc stated that the entities all have been requesting additional water for years but the
city postponed providing it until the BAWA East Plant came online He stated that they went
ahead and did a re rating of BAWA and has it up to a 26 MGD for production to be able to
amend the contracts so that all entities arc in compliance with TCEQ on their production
Additionally he stated that the recommendation is to increase the following
Hams County Water Control and Improvement District No 1 from 0 750 Million Gallons per
Day (MGD) to 0.850 MGD,
Country Terrace Water Co. Inc from 0.125 Million Gallons per Day (MGD) to 0 150 MGD.
City of Baytown from 16 Million Gallons per Day (MGD) to 21 MGD, and
Hams County Fresh Water Supply District #27 from 0.2384 Million Gallons per Day (MGD)
to 0.5384 MGD
Deputy General Manager Bottoms stated that staff is comfortable with the increases and the
increase for Baytown who is the primary customer of BAWA gives the City room for growth,
but additionally noted that the BAWA East Plant will still need to come online at some point
Director McKay inquired if the purpose of the increases is to supply more water in those areas
Deputy General Manager Bottoms confirmed Director McKay's inquiry by responding yes and
noted that these enh6es are all BAWA customers
Director Wilson inquired if the contracts with the entities were already executed Mrs Horner
stated that all of the agreements were executed
A motion was made by Director Frank McKay III and seconded by Secretary Wayne Baldwin
approving agenda items 2.a (Resolution No 2017 01) 2.b (Resolution No 2017 02) 2.c
(Resolution No 2017 03), and 2.d (Resolution No 2017 04) The vote was as follows
BAWA Board Regular Meeting Minutes
January 18 2017
Page 3 of 8
Ayes Secretary Wayne Baldwin Director Brandon Benoit President Brenda
Bradley Smith, Director Frank McKay III, Vice President Mike Wilson
Nays None
Approved
RESOLUTION NO 2017 01
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN
AREA WATER AUTHORITY AUTHORIZING THE FIRST AMENDMENT
TO THE WATER SUPPLY CONTRACT TREATED WATER WITH
HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT
NO 1 TO INCREASE CONTRACT QUANTITY MAKING OTHER
PROVISIONS RELATED THERETO, AND PROVIDING FOR THE
EFFECTIVE DATE THEREOF
RESOLUTION NO 2017 02
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN
AREA WATER AUTHORITY AUTHORIZING THE SECOND AMENDMENT
TO THE WATER SUPPLY CONTRACT TREATED WATER WITH
COUNTRY TERRACE WATER CO, INC., TO INCREASE THE CONTRACT
QUANTITY MAKING OTHER PROVISIONS RELATED THERETO, AND
PROVIDING FOR THE EFFECTIVE DATE THEREOF
RESOLUTION NO 2017 03
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN
AREA WATER AUTHORITY AUTHORIZING A CONTRACT
AMENDMENT TO THE AMENDED AND RESTATED WATER SUPPLY
CONTRACT WITH THE CITY OF BAYTOWN TO INCREASE CONTRACT
QUANTITY MAKING OTHER PROVISIONS RELATED THERETO AND
PROVIDING FOR THE EFFECTIVE DATE THEREOF
RESOLUTION NO 2017 04
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN
AREA WATER AUTHORITY AUTHORIZING THE FIRST AMENDMENT
TO THE WATER SUPPLY CONTRACT TREATED WATER WITH
HARRIS COUNTY FRESH WATER SUPPLY DISTRICT NO 27 TO
INCREASE CONTRACT QUANTITY MAKING OTHER PROVISIONS
BAWA Board Regular Meeting Minutes
January 18, 2017
Page 4 of 8
RELATED THERETO AND PROVIDING FOR THE EFFECTIVE DATE
THEREOF
e Consider a resolution awarding the Annual Zinc Polyphosphate Contract to
Shannon Chemical Corporation
I Consider a resolution awarding the Annual Liquid Ferric Chloride Contract to PVS
Technologies Inc
Consider a resolution awarding the Annual Liquid Chlorine Contract to DXL Inc
h Consider a resolution awarding the Annual Sodium Hydroxide Contract to
Brenntag Southwest Inc
Deputy General Manager Bottoms stated that agenda items 2.e. 21 2.g. and 2.h were all
renewal contracts for chemicals and recommended that they be considered together
Additionally he requested that Mr Sterling Beaver to present the details of such
Mr Beaver stated that the four agenda items went out for bid whereas the lowest bidder was
selected He stated that Shannon Chemical Corporation who was selected for the Zinc
Polyphosphate Contract last year was awarded the contract again flus year and submitted a lower
bid than last year He stated that PVS Technologies Inc was selected for the Liquid Ferric
Chloride Contract who was also awarded the contract last year and provided a lower rate this
year He stated that the liquid chlorine and sodium hydroxide bids increased as they
changed vendors and stated that Brenntag Southwest Inc., was selected for the Sodium
Hydroxide Contract Additionally he noted that there was a bid lower than Brenntag, but the
lowest bidder was unable to supply on an annual basis therefore they had to withdraw their bid
Director Benoit inquired if there were any issues with the current or old vendors Mr Beaver
stated that there were no issues with the current or old vendors and that they've used the new
vendors before
Deputy General Manager Bottoms inquired of Mr Beaver as to what the chemicals were for Mr
Beaver stated that the zinc polyphosphate is a corrosion inhibitor that helps protect he pipes from
corrosion in the distribution system the liquid ferric chloride is a coagulant used in the treatment
process which helps to formulate the particles together to filter more efficiently, the liquid
chlorine is the disinfectant which is mandated by the state and the sodium hydroxide is for PH
control
A motion was made by Director Brandon Benoit and seconded by Director Frank McKay III
approving agenda items 2.e (Resolution No 2017 05) agenda item 2.f (Resolution No 2017
06), agenda item 2.g (Resolution No 2017 07) and agenda item 2.h (Resolution No 2017 08)
The vote was as follows
Ayes Secretary Wayne Baldwin, Director Brandon Benoit President Brenda
Bradley Smith Director Frank McKay 111, Vice President Mike Wilson
Nays None
Approved
RESOLUTION NO 2017 05
BAWA Board Regular Meeting Minutes
January 18 2017
Page 5 of 8
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN
AREA WATER AUTHORITY ACCEPTING THE BID OF SHANNON
CHEMICAL CORPORATION FOR THE ANNUAL ZINC POLYPHOSPHATE
CONTRACT AND AUTHORIZING PAYMENT BY THE BAYTOWN AREA
WATER AUTHORITY IN THE AMOUNT OF FORTY THREE THOUSAND
SEVEN HUNDRED AND NO/100 DOLLARS ($43 700.00) MAKING OTHER
PROVISIONS RELATED THERETO AND PROVIDING FOR THE
EFFECTIVE DATE THEREOF
RESOLUTION NO 2017-06
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN
AREA WATER AUTHORITY ACCEPTING THE BID OF PVS
TECHNOLOGIES INC. FOR THE ANNUAL LIQUID FERRIC CHLORIDE
CONTRACT AND AUTHORIZING PAYMENT BY THE BAYTOWN AREA
WATER AUTHORITY, IN THE AMOUNT OF ONE HUNDRED NINETEEN
THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($119,500.00),
MAKING OTHER PROVISIONS RELATED THERETO, AND PROVIDING
FOR THE EFFECTIVE DATE THEREOF
RESOLUTION NO 2017 07
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN
AREA WATER AUTHORITY ACCEPTING THE BID OF DXI INC. FOR
THE ANNUAL LIQUID CHLORINE CONTRACT AND AUTHORIZING
PAYMENT BY THE BAYTOWN AREA WATER AUTHORITY, IN THE
AMOUNT OF SEVENTY EIGHT THOUSAND TWO HUNDRED FOUR AND
NO/100 DOLLARS ($78,204.00) MAKING OTHER PROVISIONS RELATED
THERETO AND PROVIDING FOR THE EFFECTIVE DATE THEREOF
RESOLUTION NO 2017 08
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN
AREA WATER AUTHORITY ACCEPTING THE BID OF BRENNTAG
SOUTHWEST INC. FOR THE ANNUAL SODIUM HYDROXIDE
CONTRACT AND AUTHORIZING PAYMENT BY THE BAYTOWN AREA
WATER AUTHORITY, IN THE AMOUNT OF ONE HUNDRED SEVENTY
EIGHT THOUSAND FIVE HUNDRED FIFTY SEVEN AND NO/100
BAWA Board Regular Meeting Minutes
January 18 2017
Page 6 of 8
DOLLARS ($178,55700) MAKING OTHER PROVISIONS RELATED
THERETO AND PROVIDING FOR THE EFFECTIVE DATE THEREOF
k)•:Iplajzlj
a Receive the Baytown Area Water Authority's Annual Financial Report for the fiscal
year ended September 30, 2016
President Bradley Smith stated that agenda Items 3.a and 3.b would be considered together
Ms Stephanie Hams, of Belt, Hams and Pechacek presented the Baytown Area Water
Authonty's Annual Financial Report for the fiscal year ended September 30, 2016 She stated
that they Issued an unmodified opinion on BAWA s financial statements, which Is the highest
level of assurance they can provide as the independent auditor that the financial statements are
materially correct and that all disclosures required by generally accepting accounting principles
have been Included She stated that the year ended with $60.3 million In total assets compared to
$55.6 In the prior year She stated with regards to liabilities that the year ended with $15 million
which was just under the prior year of $15.6 million She further stated that BAWA was over
on net position with an increase of approximately $5 million and ended the year with $45.3
million Additionally, she stated that there's $2.8 million restricted for debt service and $14.9
million available to spend as needed In the coming year
With regards to the income statement Ms Hams stated that the authority recognized $13 million
in operating revenues compared to $12 1 million the prior year She stated that the operating
expenses were Just over the prior year at $7 4 million compared to $7 3 She stated that after
some of the non operating expenses which pnmanly account for Interest paid on debt, there was
a positive increase in the net position of $5.3 million which was an Increase In comparison to the
prior year of $4.3 million
During further discussion regarding the statement of cash flows, Ms Hams stated that the net
cash provided by BAWA's operating activities was $8 1 million compared to $5.5 million the
prior year She stated that after some net cash from miscellaneous revenue there was an Increase
of $68,000 She stated that regarding capital related activities BAWA spent $4.5 million and
spent $4.4 million in Investment activities Additionally, she stated that the net change In cash
was a decrease of $700,000
Director Wilson Inquired of the difference in the teen unmodified compared to unqualified Ms
Hams stated that the new terminology was adopted several years ago and the new term is
supposed to be more representative or Intuitive than unqualified
b Receive the Bay Area Water Authority's Quarterly Financial and Investment
Reports for the Quarter Ending December 31 2016
Mr Jeff Miller presented the Baytown Area Water Authority's Financial Report for the Quarter
Ending December 31, 2016 He stated that the report is operated in three (3) parts operations
debt service and capital He stated that the revenues were at 26.5% which is above the
BAWA Board Regular Meeting Minutes
January 18 2017
Page 7 of 8
benchmark of 25% as anticipated and that the expenditures were 22 1% Mr Miller stated that
the revenues over expenditures generated a net income of approximately $357 000 He stated
with regards to debt service that transfers or funds from operations were right at 25% He farther
stated that there was one (1) interest payment on November 1 st for debt series in 2006, 2008, and
2012 and that there will be a large payment on May 1 st which will include the principal payment
of $2.02 million He noted with regards to capital that there was an item purchased in the amount
of $73,878
Additionally Mr Miller stated that the current values of BAWA's securities were $18.2
million with generated earnings of $26 169 at 63%
c Receive an update regarding the Baytown Area Water Authority (BAWA) East
Plant Project
Director of Engineering, Jose Pastrana presented the update regarding the Baytown Area Water
Authority (BAWA) East Plant Project and stated that the consultant is constantly working with
TCEQ to negotiate on related issues associated with this project He stated that recently TCEQ
required that there be a model of a small version of the key component of the plant which is the
super pulsator unit despite that fact that they have already approved models in the state of
Texas He stated that TCEQ is requiring a demonstration of the effectiveness of the unit before
they'll approve it which will take several months and approximately $25,000 Additionally, he
stated that everything else is going as anticipated Deputy General Manager Bottoms noted that
they will try and have a discussion with TCEQ regarding this request before moving forward
with the demonstration process
Director Baldwin inquired as to what environmental concerns TCEQ had Mr Pastrana stated
that he was not sure as to what TCEQ's concerns are Deputy General Manager Bottoms noted
that he believes that the concern is with the super pulsator technology itself as it is not common.
During further discussion Mr Pastrana stated that if the demonstration is required to be
complete staff will have to setup a site at the plant with a pad and connect power and electncity
to it
Director Wilson inquired if it would help if the BAWA Board submitted a recommendation
to have this request of the demonstration withdrawn General Counsel Karen Homer stated that
something could be put on a future agenda to address such Deputy General Manager Bottoms
recommended allowing for the initial approach of having a discussion with TCEQ before the
board proceeds with Director Wilson's recommendation
President Bradley Smith inquired for clarity that since there was no discussion regarding the
CORP if those issues were resolved Mr Pastrana responded and stated that the issues are
in process but have not been resolved
BAWA Board Regular Meering Minutes
January 18 2017
Page 8 of 8
4. MANAGER'S REPORT
a Reminder that the next Baytown Area Water Authority meeting is scheduled for
Wednesday, February 15, 2017, at 9 00 A.M in the City Council Chamber 2401 Market
Street, Baytown, Texas 77520
Deputy General Manager Bottoms presented the agenda dem and stated that the next Baytown
Area Water Authority meeting is scheduled for Wednesday February 15 2017 at 9,00 A.M in
the City Council Chamber, 2401 Market Street, Baytown, Texas 77520
ADJOURN
With there being no further business to discuss President Bradley Smith adjourned the January
18 2017 Baytown Area Water Authority (BAWA) Board Regular Meeting at 9.03 A.M
lLi.1.Y
Leticia Brysch, Assistant SWretary
City of Baytown