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2017 08 02 BAWA Minutes, SpecialMINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY August 02 2017 The Board of Directors of the Baytown Area Water Authority (BAWA) met in a Special Meeting on Wednesday, August 02, 2017, at 9:02 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 Wayne Baldwin Secretary Frank McKay Director Rick Davis General Manager Ignacio Ramirez, Sr General Counsel Leticia Brysch Assistant Secretary President Bradley Smith convened the August 02 2017 Baytown Area Water Authority (BAWA) Board Special Meeting with a quorum present at 9'02 A.M. all members were present with the exception of Director Benoit who was absent MINUTES a Consider approving the minutes of the Baytown Area Water Authority Regular Meeting held on June 21, 2017 A motion was made by Director Frank McKay III and seconded by Secretary Wayne Baldwin approving the June 21, 2017, BAWA Board Regular Meeting minutes The vote was m follows Ayes Secretary Wayne Baldwin President Brenda Bradley Smith, Director Frank McKay III Vice President Mike Wilson Nays None Other- Director Brandon Benoit (Absent) Approved DISCUSSION a Receive and discuss the Baytown Area Water Authority's Fiscal Year 2017 18 Proposed Budget General Manager Davis presented the agenda item and went over a couple of highlights about the Baytown Area Water Authority (the Authority") FY2018 budget before extending time to BAWA Board Special Meeting Minutes August 02 2017 Page 2 of 6 Finance Director, Wade Nickerson to further discuss the budget numbers He stated that the one major source of revenue is the sale of water supply to the City of Baytown (the "City") and surrounding communities He further stated that in terms of highlights for the Authority the water sale revenues were being budgeted with no increases to the current year projections, the estimated sales were an average of $13 5 billion gallons of water per year the supplies budget line item increased about $600,000 due to an increase of raw water supply cost from the City of Houston the capital outlay is budgeted at $11.2 million in order to continue with many existing projects of which the major items include $1 6 million for the BAWA East Water Treatment Plant, $47 million for the High Service Pumps and $15 million for the Ground Storage Building Improvements General Manager Davis noted that the budget estimates $2 million dollars for debt service payments for the construction of the East BAWA Plant and that on August 16 2017 the Board will hold a public hearing and take action regarding the proposed budget being presented today Mr Nickerson stated that while the budget increased by 3.4% in water cost the water operating costs actually decreased from last year's budget mums the water cost increase from the City of Houston He noted that overall the operating budget only increased about $578,591 With regards to the capital side he stated that in addition to the large projects previously mentioned, there s money in the budget to add an additional chain and flight for Basin 4 in the amount of $122,000 $400,000 for improvements to the Sludge Room, $100,000 for the improvements to the Filter Gallery' and $150,000 for improvements to the administration binding to include flooring painting and update the restroom facilities Mr Nickerson stated that at the end of the budget process staff looks at what will be budgeted in the ending working capital, in which for this budget would be about $5 to $6 million dollars of approximately 360 operating days He noted that the ending working capital is important because should anything catastrophic occur the Authority would be able to run its operations for at least 360 days without any additional revenue sources Mr Nickerson stated that there s a two part debt issuance for the BAWA East Plant and that the amount in this year's proposed budget will include the issuance cost and some debt payment for the first issuance only In response to a question from Director Wilson Mr Nickerson clarified that the number of working capital days is actually 309 days and is based on the assumption that no other revenue source is coming in during that time period He stated that although the chances of that happening are slim staff would rather be safe in case there's a project that comes up Additionally he stated for informational purposes that the Authority earns interest on its working capital Director McKay inquired of staffs assumptions on the Authority's increase in revenues Mr Nickerson stated that it s based on projections of new commercial and residential constructions which adds to the service area, but focuses more on the residential side rather than commercial Mr Nickerson stated that staffs predictions have been pretty accurate in the past and tend to err on the side of being conservative with revenue projectionswhich are put together based on the information received from the Planning and Development Services Department regarding projected development in and around the city BAWA Board Special Meeting Minutes August 02 2017 Page 3 of 6 Director McKay further inquired as to what was the projected growth of the city for the upcoming year Mr Nickerson stated that he did not have that information on hand but could provide it to the Board at a future meeting General Manager Davis noted that the City's Utility Billing Division logs about 300 new water service requests per month with some of its movement being within the city itself while a lot of it being from the new migration to the city PROPOSED RESOLUTIONS a Consider a resolution calling for a public hearing regarding the Baytown Area Water Authority Fiscal Year 2017 18 Proposed Budget Mr Nickerson presented the agenda item and stated that Resolution No 2017 14 sets the public hearing regarding the Baytown Area Water Authority ("BAWA") Fiscal Year 2017 18 Proposed Budget for August 16 2017 at 9*00 A.M A motion was made by Vice President Mike Wilson and seconded by Director Frank McKay III approving Resolution No 2017 14 regarding agenda item 3.a The vote was as follows Ayes Secretary Wayne Baldwin President Brenda Bradley Smith Director Frank McKay III, Vice President Mike Wilson Nays None Other Director Brandon Benod (Absent) Approved RESOLUTION NO 2017 14 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 2017 18 PROPOSED BUDGET, AND PROVIDING FOR THE EFFECTIVE DATE THEREOF b Consider a resolution authorizing the closeout, acceptance, and release of retainage for the Baytown Area Water Authority Plant Water Pump Station Project City Engineer, Jose Pastrana presented the agenda item and stated that Resolution No 2017 15 authorizes the closeout, acceptance, and release of retainage for the Baytown Area Water Authority Plant Water Pump Station Project to R&B Group, Inc in the amount of $32,681 07 He stated that the original contract was for $650,000.00, with only one (1) change order being executed in the amount of $3 621 37 thus bringing the final contract amount to $653,62137 Additionally, he stated that all funds for this project were expended the work was performed satisfactorily, and that staff recommended the approval of this item BAWA Board Special Meeting Minutes August 02 2017 Page 4 of 6 A motion was made by Secretary Wayne Baldwin and seconded by Vice President Mike Wilson approving Resolution No 2017 15, regarding agenda item 3.b The vote was as follows Ayes Secretary Wayne Baldwin President Brenda Bradley Smith, Director Frank McKay III Vice President Mike Wilson Nays None Other Director Brandon Benoit (Absent) Approved RESOLUTION NO 2017 15 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY ACCEPTING THE BAYTOWN AREA WATER AUTHORITY PLANT WATER PUMP STATION PROJECT, AUTHORIZING FINAL PAYMENT OF THE SUM OF THIRTY TWO THOUSAND SIX HUNDRED EIGHTY ONE AND 07/100 DOLLARS ($32,681.07) TO R&B GROUP, INC., FOR SAID PROJECT AND PROVIDING FOR THE EFFECTIVE DATE THEREOF c Consider a resolution authorizing the easement for the Raw Water Service Comamtkin from Coastal Water Authority to Baytown Area Water Authority for the 6 MGD Surface Water Treatment Plant Project Mr Pastrana presented the agenda item and stated that Resolution No 2017 16 authonzes an easement for the Raw Water Service Connection from Coastal Water Authority (CWA) to Baytown Area Water Authority (BAWA) for the 6 MGD Surface Water Treatment Plant Project He stated that the easement being conveyed from CWA to BAWA is for the installation of the intake structure which allows BAWA to receive water from the CWA canal Additionally, he stated that this easement is on CWA's property which is immediately adjacent to the Authonty's property and staff recommended its approval A motion was made by Director Frank McKay III and seconded by Vice President Mike Wilson approving Resolution No 2017 16 regarding agenda item 3.c The vote was as follows Ayes Secretary Wayne Baldwin President Brenda Bradley Smith Director Frank McKay 111, Vice President Mike Wilson Nays None Other- Director Brandon Benoit (Absent) Approved RESOLUTION NO 2017 16 BAWA Board Special Meeting Minutes August 02 2017 Page 5 of 6 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY ACCEPTING AN EASEMENT FOR A RAW WATER SERVICE CONNECTION FROM COASTAL WATER AUTHORITY FOR THE 6 MGD SURFACE WATER TREATMENT PLANT PROJECT AND PROVIDING FOR THE EFFECTIVE DATE THEREOF REPORTS a Receive an update regarding the Baytown Area Water Authority (BAWA) East Plant Project Mr Pastrana presented the agenda item and stated that the BAWA East Plant Project (the "Project ) is out for bid which will be open on August 27th He stated that a pre-bid conference was held with enough interest contractors that almost completely filled the council chamber which is a good sign He stated that one of the major issues that came up from interested contractors was that there was no proposed time frame for the project's completion He stated that the contractors stated that the timeline is not sufficient in today's market due to the many ongoing projects in this area, i.e Exxon and Chevron therefore there may be a shortage of equipment, supplies and resources, which may drive the prices up and extend the time frame needed to complete the project Mr Pastrana stated that in order to bring the project in at a reasonable price staff is looking at extending the completion time from 600 days to 1,000 days or about three (3) years General Manager Davis stated that because the Authority and staff have been so proactive in its planning of the additional water plant, the time frame is not as sensitive an issue as it could ve been Additionally, General Manager Davis stated that luckily there's additional time to make sure that flus project is done well and to the full benefit of the Authority and those it serves It Receive the Baytown Area Water Authority's Quarterly Financial and Investment Reports for the Quarter Ending June 30, 2017 Mr Nickerson presented the agenda item and stated the revenues as well as the expenditures were right where staff expected them to be at this point in the budget year with an estimated 75% of the projected revenue already collected As it relates to the expenditures, he noted that the capital outlay line item is only at a little over 21 %, which is normal because equipment has yet to be purchased He stated that in looking at the bottom line the projections are at 72% of the budget, which shows financials coming in under budget year to date With regards to the CIPF Revenue fund, he noted that there s a transfer from BAWA Operations and that there's $9 million dollars of project expenditures for the BAWA East Plant for the SCADA system chemical feed system etc., as well as encumbered amounts for items such as the high service pumps With regards to the investment report Mr Nickerson stated that the interest rate of 8023% was just over 1%, which is an increase from the last quarterly report He stated that the revenues for the quarter as it relates to the interest earnings are $44,957 02 He noted that staff is actively looking at ways to invest momes in ways that will yield higher returns, while maintaining the BAWA Board Special Meeting Minutes August 02 2017 Page 6 of 6 safety and security of the investment When asked what types of investments were being considered, Mr Nickerson noted that the last page of the report showed a breakout of all of BAWA's investments, which included, TexPool, Mumcipal Bonds and Commercial Paper MANAGER S REPORT a Reminder that the next Baytown Area Water Authority meeting is scheduled for Wednesday, August 16, 2017, 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 Board will hold its public hearing and take action on its proposed budget at its next BAWA meeting scheduled for Wednesday August 16 2017 at 9'00 A.M in the City Council Chamber ADJOURN With there being no further business to discuss President Bradley Smith adjourned the August 02 2017 Baytown Area Water Authority (BAWA) Board Special Meeting at 9:25 A.M _\`��pP�WATEq 4 Rb k � Leticia Brysch, Assistant Sc&Zkry` Y a City of Baytown 3m 8