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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