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2018 07 12 WS MinutesMINUTES OF THE REGULAR WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN JULY 12, 2018 The City Council of the City of Baytown, Texas met in a Regular Work Session on Thursday, July 12, 2018, at 5:30 P.M., in the Hullum Conference Room of the Baytown City Hall, 2401 Market Street, Baytown, Texas with the following in attendance: Laura Alvarado Council Member Robert Hoskins Council Member Charles Johnson Mayor Pro Tem David Himsel Council Member Chris Presley Council Member Heather Betancourth Council Member Stephen DonCarlos Mayor Rick Davis City Manager Ignacio Ramirez City Attorney Leticia Brysch City Clerk Mayor DonCarlos convened the July 12, 2018, City Council Regular Work Session with a quorum present at 5:30 P.M., all members were present with the exception of Council Member Alvarado who arrived at 5:35 P.M. and Council Member Johnson who arrived at 5:48 P.M. 1. DISCUSSIONS a. Receive an update regarding the Central District Wastewater Treatment Plant Project. City Engineer Jose Pastrana presented the item and stated that many years ago the City began a project to renovate and make some improvements to the City's Central District Wastewater Treatment Plant (the "Plant"). He noted that after many changes and reductions, the project is 99% complete. Mr. Pastrana introduced Mr. Trent Slovak, Engineer and Senior Vice President of KIT Professionals, Inc. (KIT). Mr. Slovak thanked the Council for their time and stated that he would be giving the Council an overview of this project with before and after pictures of the facility to show the remarkable transformation. Mr. Slovak stated that the project is a wastewater treatment plant located near SH 146 and West Main, along East Creek. He noted that in 2008, this project was envisioned to be an improvement project to replace some pumps, increase the reliability of processes, and other items of this sort. At the time when the project was finally scoped, Hurricane Ike hit Baytown, which caused a completed re -set of the project. The new project would be designed to mitigate flooding, provide some improvements City Council Regular Work Session Minutes July 12, 2018 Page 2 of 6 and also extend the life span of the plant. So after Ike, the City received some monies from the insurance and from FEMA, in order to get the plant back in to service, but because of the scope of the new project and some delays in funding, the project was split into two parts: the lift station portion and the treatment plant. This was a prudent thing to do because the City had money to get the lift station out of harm's way, while at the same time prepare for the next phase. Mr. Slovak noted that the project was bided in 2015, which came in over budget and lead to some value engineering. KIT worked with the City and its contractor to get the price down, and still get the needed improvements. He noted that the original bid was about $20 million with a value engineering of 4.2 million, which resulted in an adjusted contract of $16.5 million. When construction commenced, this was an estimated 760 -day project, but when the storm hit on September 13`h that changed everything. Mr. Slovak noted that Ike's storm surge was probably, a 12 foot to 12 -and -a -half -foot elevation storm surge, which resulted in portions of the plant being submerged. Fortunately, the plant's major unit processes were not submerged, but they did have significant damage. The lift station gets down to an elevation of 5.5, which is like two levels down, so, everything; the pumps, motors, electrical equipment, everything was ruined. The City, within a day or so after the storm, immediately got portable pumps out there in order to maintain service. Mr. Slovak showed before and after pictures of the lab building and noted that building has been elevated and brought up to code and some improvements in the sledge sticker area to allow for easier and safer access to valves and other mechanisms. Other improvements included the addition of handrails all the way around the process area the elevation of electrical pumps, pumps and cycling were replaced along with steps and hand rails to go over the entry pass. Mr. Slovak noted that the chlorination area was particularly hit hard by the storm, and noted that this building has also been elevated along with the sulfur dioxide and flooring cylinders. A non - potable water system was added, which is a great investment as this is used for wash down water, for spray water and it saves a lot of valuable treated water. Mr. Slovak stated that the project mitigates future flooding, enhances the performance reliability of the system, and extends the life of the plant, which is good asset management. The City does not have to build a new plant, but have instead upgraded this one. Mr. Slovak noted that KIT worked really well with the City; particularly Engineering and Public Works, and with the Contractor. He noted that they were able to accomplish the mission of this project and save some money in the process. He further noted that during the construction, the recycling facility located at the same facility was kept operational; the contractor said they had 85,000 hours without a lost time accident, and most importantly there were no citizen complaints. Mr. Slovak closed his presentation by noting that the City had done a great job in investing and being stewards of this valuable infrastructure. Mayor DonCarlos asked if the tanks could be painted green or red to match the facility. City Manager Davis stated that staff would look into some more aesthetically pleasing alternatives for the tanks and fence at the plant. City Council Regular Work Session Minutes July 12, 2018 Page 3 of 6 b. Receive an update regarding the implementation of automatic side -loaders for the City of Baytown. Public Works Director Frank Simoneaux presented the item and stated that last year, the City entered into a new agreement with Waste Management. He noted that as part of the negotiations, the City agreed to a provision that would allow Waste Management to collect recycle materials with automatic side -loading trucks. Waste Management has now elected to start using the automatic side levers in Baytown and Ms. Shanna Lopez, Municipal Solutions Manager for Waste Management, is going to explain that process. Mr. Simoneaux clarified that this change does not impact trash collection in any way, only the recycling materials at this time. Ms. Lopez stated that Waste Management has new recycling trucks that are going to be hitting the ground in Baytown, an example of which is parked out in front of City Hall, if anyone is interested in seeing it. She noted that they are aiming to go live with this new service by mid- August and again noted that this will be for recycling carts, and will not touch the garbage services. Ms. Lopez stated that they wanted to make sure the residents do not get alarmed and think that they are getting more carts delivered or anything like that and notes that they will be moving forward with this service using the existing recycling carts that are out there now. Ms. Lopez also stated that she is working with the City's public affairs team to get some facts and information out to residents through the water bill, postcard, and social media with information that will focus on the types of materials that can be recycled and the placement of the carts on the curb in order to allow for the side -loader to access them. In response to a question regarding boxes that don't fit in the cart, Mr. Lopez stated that residents can cut boxes down to get them within the cart so they can be recycled, but reminded Council that the drop-off center is always available to take large amounts of materials and/or they can call Waste Management for a special pickup. Ms. Lopez also stated that some residents still have the old 18 -gallon bins and noted that they have addressed about 100 of those as the idea is to switch as many of those out to carts, in order to keep the driver within the truck. Ms. Lopez stated that for safety reasons, they do not want the drivers exiting the truck, so the use of the bins and placement of said bins is very important. He further noted that Waste Management has identified some areas around the City that the side - loading truck will not fit, so those areas will still be handled with regular truck and staff. She also noted that if there are special circumstances; such as elderly, disabled, etc., Waste Management will address these on a work one-on-one basis. Ms. Lopez clarified that most of the bins will work with the side -loader with the exception of the small blue bins that were originally handed out to residents for recycling purposes. Ms. Lopez thanked the Council for their attention and welcomed them to take a look at the new side -loader truck at their convenience. City Council Regular Work Session Minutes July 12, 2018 Page 4 of 6 C. Receive and discuss a presentation regarding funding options, fees and issuance of bonds for water and wastewater capital projects. City Manager Rick Davis presented the item and stated that some weeks ago, staff presented Council with some information regarding the status of the City's wastewater fund, and promised to return with a plan of how to make that fund sustainable and provide the resources for future capital associated with some of the City's SSOI projects and annexation projects. Finance Director Wade Nickerson stated that as Mr. Davis said, the Council received a presentation from the Public Works Director Frank Simoneaux regarding the need for the capital improvements. He noted that over the next five (5) years, the City has about 44 million dollars in sewer wastewater projects alone that do not include water projects. He noted that these projects are related to the SSOI Program, services related to the recent annexations, and some new development pieces. Mr. Nickerson stated that in looking at the approach to try and fund these projects, part of what staff looked for was the idea that somehow the City has some new revenue strings in other funds, like the general fund that may be tapped into; therefore, one of the first things staff did was reduced the transfer from the water and sewer fund to the general fund by a million dollars. So essentially, staff cut the amount in half, in order to free up a million dollars in the water and sewer fund in order to help fund some of these capital projects. Mr. Nickerson noted that the City also continues to do our pay as we go through projects. The City has a lot of projects that have been done every year and those have been stopped for now, in order to use these funds for these big outstanding new projects that need to be completed within a designated timeframe. He noted that the City will still undertake small repairs and other miscellaneous things. Mr. Nickerson noted that the third thing that staff looked at was the fund balance working capital, which staff usually aims to maintain somewhere around the 60 to 90 -day fund balance working capital. Staff has decided to budget that closer to the 50 days, which frees up some additional funding and frees -up approximately three-quarters of a million dollars that can go towards funding these projects. Mr. Nickerson also stated that staff is proposing a 4% water and sewer fund increase for FY19, which will give the City a new revenue stream to maintain the operations and also allow the City the ability to issue some debt to begin dealing with these big projects. This recommended increase will give result in an estimated $20 million dollars that can be used towards these special projects in the first two years that being 2019 and 2020. Mr. Nickerson noted that in order to complete $44 million worth of projects, the City may need to undertake additional bonding in the near future; potential in 2020 or 2021 and the hope is that this first bond issuance will be enough to get through a couple years of these construction projects. Mr. Nickerson noted that a lot of what dictates future rate increases for water and sewer City Council Regular Work Session Minutes July 12, 2018 Page 5 of 6 rates will be costs from Houston, who provides water to BAWA, and then of course those costs get passed on to the water and sewer fund and capital outlay. Mr. Nickerson noted that there is always interest in what the average customer will pay on an average utility bill. Staff looked at this item and the increase to the water and sewer fund will be basically for a 5,000 gallon per month home, which is basically our average. The City is about 4.86 thousand gallons per month that staff rounded up to 5,000 gallons per month to get an average water bill. If the recommended increase is approved, the average bill will see a $2.66 increase per month. This proposed new rate was compared to surrounding cities and Baytown is at the top with the highest rate. However, these cities do not really compare to Baytown as it relates to its complexity and uniqueness. When comparing Baytown to the cities that Burton and Associates used in its rate analysis, all had more similarities at it relates to its infrastructure, systems, population, size, and number of clientele. So when looking at these cities, Baytown is a little closer in the middle of the group; it is still a little bit on the higher end, but there are quite a few that have higher rates. Mr. Nickerson noted that as it relates to the elderly and people on fixed incomes their bills are going to go up basically an estimated dollar and 10 cents. However, of course if 10,000 or 12,000 gallons are used, the cost will be higher. City Manager, Rick Davis noted that the increases being recommended are driven by the need to address projects in three main categories: (1) Sewer System Overflow Improvements (SSOI), which mandated TCEQ projects, (2) extension of water and sewer lines to the newly annexed areas and (3) which is not necessarily a project, but does impact them, is the City's ability to maintain its enterprises funds sustainability, separate from the City's general fund. Mr. Davis noted that he does not like moving money over from the general fund to subsidized or pad the water enterprise fund because at one point in the future, that will go away, and Council will be left with an unsustainable enterprise, which would result in extremely high rate increases. Therefore, staff has brought Council a blended action plan that can help get the City where it needs to be in order to achieve a sustainable enterprise while completing these very expensive mandated projects. Mr. Davis reminded the Council that the water projects are mandated by TCEQ within a certain time frame and failure to follow through could result in very costly fines. Additionally, he noted that state law gives cities four years from the date of annexation to extend the necessary services to newly annexed areas, or the residents can, if they so choose to, request de -annexation. The Council briefly discussed the different projects, funding options and noted that the City's water and sewer rates were already higher than surrounding cities and were sensitive to that issue. The Council asked if there were other cities that Baytown could better compare to than the surrounding cities, which have a much smaller water and wastewater system. Public Work Director Frank Simoneaux stated that it is difficult to compare the City of Baytown to other cities as there are a number of factors unique to Baytown that make its system so different. Mr. Simoneaux noted that because the topography in this area is so flat, more lift stations are required to move the water throughout the city; an example being College Station that is closer to Baytown in size and population, but unlike Baytown has very few lift stations because of its topography and having gravity on its side. Baytown, on the other hand has 400 lift City Council Regular Work Session Minutes July 12, 2018 Page 6 of 6 stations around the city to help move the water throughout its flat and spread out jurisdiction. He also noted that College Station gets its water exclusively from ground water wells that are not treated, while Baytown uses surface water that has to be treated, and is thus more expensive. Mr. Davis noted that unfortunately, the current Council has inherited a large, aging and complex infrastructure that has not been upgraded in decades and it falls on the current Council and Administration to fix these very expensive issues. He further noted that the blended plan presented looks at multiple funding sources in order to not have significantly rate increase to the City's water and sewer rates. Mr. Davis also reminded the Council that the rate increase is not to deal with operational costs, but large projects related to the City's infrastructure that are very costly; such as lift stations. Mr. Davis stated that staff has tentatively programmed the blended plan into the budget, which will be delivered to the Council at their next meeting. d. Discuss any or all of the agenda items on the City Council Regular Meeting Agenda for July 12, 2018, which is attached below. This item was not taken. 2. ADJOURN With there being no further business to discuss, Mayor DonCarlos adjourned the July 12, 2018, City Council Regular Work Session at 6:29 P.M. Q AiK !! m � P Leticia Brysch, City Clerk s j City of Baytown cps'•. m.• 4`