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2019 01 16 BAWA MinutesMINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY January 16, 2019 The Board of Directors of the Baytown Area Water Authority (BAWA) met in a Regular Meeting on Wednesday, January 16, 2019, 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 Mike Wilson Frank McKay III Brandon Benoit Rick Davis Ignacio Ramirez, Sr. Alisha Segovia President Vice President Secretary Director General Manager General Counsel Deputy Assistant Secretary President Bradley Smith convened the January 16, 2019, BAWA Board Regular Meeting with a quorum present at 9:02 A.M., all members were present with the exception of Director Harland Forrest Jr. who was absent. 1. MINUTES a. Consider approving the minutes of the Baytown Area Water Authority Special Meeting held on December 5, 2018. A motion was made by Director Brandon Benoit, and seconded by Vice President Mike Wilson approving the December 5, 2018, BAWA Board Special Meeting minutes. The vote was as follow: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, Secretary Frank McKay III, Director Brandon Benoit Nays: None Other: Director Harland Forrest, Jr. (Absent) Approved 2. PROPOSED RESOLUTIONS a. Consider a resolution authorizing the Second Amendment to the Professional Service Agreement with Hatch Associates Consultants, Inc., f/k/a Shrader Engineering Inc., for the BAWA SCADA Upgrade Project. BAWA Board Regular Meeting Minutes January 16, 2019 Page 2 of 9 City Engineering Jose Pastrana presented agenda item 2.a. and stated that Resolution No. 2019- 01 authorizes the Second Amendment to the Professional Service Agreement with Hatch Associates Consultants, Inc., f/k/a Shrader Engineering Inc., for the BAWA SCADA Upgrade Project, in the amount of $42,380. He further stated that a few years ago SCADA was installed throughout the City for the water and waste water systems and that the BAWA Plant is mostly online with the exception of a few items, which will be addressed through this item. He further stated that this item will go before Council for their consideration at their January 24th meeting. A motion was made by Vice President Mike Wilson, and seconded by Director Brandon Benoit approving Resolution No. 2019-01, regarding agenda item 2.a. The vote was as follows: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, Secretary Frank McKay III, Director Brandon Benoit Nays: None Other: Director Harland Forrest, Jr. (Absent) Approved RESOLUTION NO. 2019-01 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY AUTHORIZING THE GENERAL MANAGER TO EXECUTE THE SECOND AMENDMENT TO THE PROFESSIONAL SERVICE AGREEMENT WITH HATCH ASSOCIATES CONSULTANTS, INC., F/K/A SHRADER ENGINEERING INC., FOR THE BAWA SCADA UPGRADE PROJECT; AUTHORIZING PAYMENT IN AN AMOUNT NOT TO EXCEED FORTY-TWO THOUSAND THREE HUNDRED EIGHTY AND NO/100 DOLLARS ($42,380.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. b. 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. City Engineer Jose Pastrana presented agenda item 2.b. and stated that Resolution No. 2019-02 authorizes a Contract Amendment to the Amended and Restated Water Supply Contract with the City of Baytown to increase the contract quantity from 21 Million Gallons per Day (MGD) to 22.7 MGD and that this increase is needed as Texas Commission on Environmental Quality ("TCEQ") requires that peak demand is allocated to the City. He further stated that demand for water within the City of Baytown continues to grow and this increase provides for continued growth, as well as allowing for current peak demand. Additionally, Mr. Pastrana stated that there is no fiscal impact associated with this item unless the water is used. BAWA Board Regular Meeting Minutes January 16, 2019 Page 3 of 9 A motion was made by Vice President Mike Wilson, and seconded by Secretary Frank McKay III approving Resolution No. 2019-02, regarding agenda item 2.b. The vote was as follows Ayes- President Brenda Bradley Smith, Vice President Mike Wilson, Secretary Frank McKay III, Director Brandon Benoit Nays: None Other: Director Harland Forrest, Jr. (Absent) Approved RESOLUTION NO. 2019-02 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. C. Consider a resolution awarding the Annual Zinc Polyphosphate Contract to Shannon Chemical Corporation. BAWA Superintendent Sterling Beaver presented agenda item 2.c. and stated that Resolution No. 2019-03 awards the Annual Zinc Polyphosphate Contract to Shannon Chemical Corporation, in the amount of $49,300.00 (100,000 pounds @ $0.4930 per pound). He further stated that that this product is used for corrosion control at the BAWA Surface Water Treatment Plant and that bids for this item were opened Monday, January 7th, 2019, at 9:30 a.m., with Shannon Chemical Corporation having the lowest bid. A motion was made by Vice President Mike Wilson, and seconded by Secretary Frank McKay III approving Resolution No. 2019-03, regarding agenda item 2.c. The vote was as follows Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, Secretary Frank McKay III, Director Brandon Benoit Nays: None Other: Director Harland Forrest, Jr. (Absent) Approved BAWA Board Regular Meeting Minutes January 16, 2019 Page 4 of 9 RESOLUTION NO 2019-03 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-NINE THOUSAND THREE HUNDRED AND N0100 DOLLARS ($49,300.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. e. Consider a resolution awarding the Annual Liquid Chlorine Contract to DXI Industries, Inc. BAWA Superintendent Sterling Beaver presented agenda item 2.e. and stated that Resolution No. 2019-04 awards the Annual Liquid Chlorine Contract to DXI Industries, Inc., in the amount of $84,987.00. (133 tons/per year @ $639.00 per ton). He further stated that this product is used in the disinfection process at the BAWA Surface Water Treatment Plant and that bids for this item were opened Monday, January 7th, 2019, at 9:30 a.m., with DXI Industries, Inc. having the lowest bid. A motion was made by Secretary Frank McKay III, and seconded by Director Brandon Benoit approving Resolution No. 2019-04, regarding agenda item 2.e. The vote was as follows Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, Secretary Frank McKay III, Director Brandon Benoit Nays: None Other: Director Harland Forrest, Jr. (Absent) Approved RESOLUTION NO. 2019-04 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY ACCEPTING THE BID OF DXI INDUSTRIES, INC., FOR THE ANNUAL LIQUID CHLORINE CONTRACT AND AUTHORIZING PAYMENT BY THE BAYTOWN AREA WATER AUTHORITY, IN THE AMOUNT OF EIGHTY-FOUR THOUSAND NINE HUNDRED EIGHTY-SEVEN AND NO/100 DOLLARS ($84,987.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. BAWA Board Regular Meeting Minutes January 16, 2019 Page 5 of 9 f- Consider a resolution awarding the Annual Liquid Ferric Chloride Contract to PVS Technologies, Inc. BAWA Superintendent Sterling Beaver presented agenda item 2.f and stated that Resolution No. 2019-05 awards the Annual Liquid Ferric Chloride Contract to PVS Technologies, Inc., in the amount of $144,500.00 (500,000 pounds @ $0.289 per pound). He further stated that this product is used in the coagulation process at the BAWA Surface Water Treatment Plant and that bids for this item were opened Monday, January 7th, 2019, at 9:30 a.m., with PVS Technologies, Inc. having the lowest bid. A motion was made by Director Brandon Benoit, and seconded by Secretary Frank McKay III approving Resolution No. 2019-05, regarding agenda item 21 The vote was as follows: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, Secretary Frank McKay III, Director Brandon Benoit Nays: None Other: Director Harland Forrest, Jr. (Absent) Approved RESOLUTION NO. 2019-05 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 FORTY- FOUR THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($144,500.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. d. Consider a resolution awarding the Annual Sodium Hydroxide Contract to Brenntag Southwest Inc. BAWA Superintendent Sterling Beaver presented agenda item 2.d. and stated that Resolution No. 2019-06 awards the Annual Sodium Hydroxide Contract to Brenntag Southwest Inc., in the amount of $207,391.00 (407,000 pounds @ $0.273 per dry pound at 50% and 290,000 pounds @ $0.332 per dry pound at 25%). He further stated that this product is used to control pH at the BAWA Surface Water Treatment Plan and that bids for this item were opened Monday, January 7th, 2019, at 9:30 a.m., with Hydroxide Contract to Brenntag Southwest Inc. having the lowest bid, which is 4% lower than last year's contract. BAWA Board Regular Meeting Minutes January 16, 2019 Page 6 of 9 A motion was made by Vice President Mike Wilson, and seconded by Director Brandon Benoit approving Resolution No. 2019-06, regarding agenda item 2.d. The vote was as follows: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, Secretary Frank McKay III, Director Brandon Benoit Nays: None Other: Director Harland Forrest, Jr. (Absent) Approved RESOLUTION NO. 2019-06 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 TWO HUNDRED SEVEN THOUSAND THREE HUNDRED NINETY-ONE AND NO/100 DOLLARS ($207,391.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 3. REPORTS a. Receive an update regarding the Baytown Area Water Authority East Plant Project. City Engineer Jose Pastrana presented an update on the Baytown Area Water Authority East Plant Project by showing the Board a bird's eye view of the BAWA East Plant construction site and stated that work continues to progress and that the project is on schedule at a current completion rate of 19%. He also noted that there continues to be some issues with dewatering that Staff believes is a contractor issue, as such; staff is pursuing a workable solution with the contractor at their cost. Lastly, Mr. Pastrana stated that the cost for the project is currently at an estimated 8.5 million dollars. b. Receive the Baytown Area Water Authority's Annual Financial Report for the fiscal year ended September 30, 2018. Stephanie Harris representative of Belt Harris Pechacek, LLLP presented the Baytown Area Water Authority's Annual Financial Report for the fiscal year ended September 30, 2018, and stated that they issued a clean unmodified opinion on the BAWA's Financial Statements, which is the highest level of assurance that they can provide and that the financial statements are materially correct and that all disclosures required by general accepted accounting principles have been included. As an overview Ms. Harris stated that the reports that she will present are comparative reports for the 2018 and 2017 fiscal year, and that she will focus primarily on BAWA Board Regular Meeting Minutes January 16, 2019 Page 7 of 9 an overview of the 2018 fiscal year. She stated that the Authority ended the year with total assets of approximately $93.5 million which is a significant increase over the prior year which is primarily a result of bond proceeds and capital investments. Ms. Harris also noted that BAWA ended the year with total liabilities of $38.4 million compared to $14.3 million the prior year, which a majority of it is a result of the issuance of the 2018 contract revenue bonds. She further noted that BAWA ended the year with a positive net position of $55.1 million in comparison to $50.1 million from the prior year with the most notable increase being the Authority's net position and capital assets. Ms. Harris noted that in regards to BAWA's operating statement, listed on Page 15 of the report that the total operating revenues collected were at $13.7 million; total operating expenses at $8.4 million; and operating income at $5.3 million. She further noted that after the non- operating items (investment income and interest expense in the Authority's long term debt) there was a negative net expense of $307,000, and an overall increase for the net position for the year of $4,998,000. During further discussion regarding the statement of cash flows as predicted on Page 17 of the report, Ms. Harris stated that the BAWA had net cash provided for the 2018 Fiscal Year of $8.4 million due to noncapital items of $109,000 and Net Cash Provided from Capital Activities of $8.7 million in which the net adjustment is a result of the issuance of the long term debt. Ms. Harris reported that for the year there was an overall positive increase in cash of $6.1 million and ended the year with $21.3 million in total cash, of which $7.5 million is unrestricted and $13.7 million is restricted for the purpose of debt service and future expenditures of bond proceeds and offered any questions from the Board. Vice President Mike Wilson questioned the difference in net cash provided and Ms. Harris responded that in relation to cash flows from capital activities that typically capital would see a net reduction in cash from capital investments during the year; however the debt proceeds offset what was actually spent in the same time period this year. C. Receive the Baytown Area Water Authority's Quarterly Financial and Investment Reports for the Quarter Ending December 31, 2018. Finance Director Wade Nickerson presented the Baytown Area Water Authority's Quarterly Investment Report for the quarter ending December 31, 2018, and stated that he will provide the Board a general overview of the report; as such he will only address items that are over the 25% range. Mr. Nickerson stated that revenues are at 24.64% which is right where staff expects it to be; however, he noted that this number might increase as the summer months approach. Maintenance came in at 6.22% which appears to be relatively low and that these maintenance projects do not always happen in a linear fashion and that staff believes it will come within budget. Capital outlay came in at 41% due to improvements and purchase of vehicles and that staff believes it will come within budget as bottom line is well under the expected 25% for this time of year. BAWA Board Regular Meeting Minutes January 16, 2019 Page 8 of 9 He further stated that the CIP fund which is revenues that are transfers from the operating fund and that expenditures and encumbrances are at approximately $3.3 million in which this line item covers large projects such as chain of flight, bulk tanks, high service pumps and etc. Mr. Nickerson clarified that this line item does not include the BAWA East Construction Project expenditures as they are accounted for in the bond funds since debt was issued for the project. Lastly, Mr. Nickerson presented the quarterly interest earnings report by stating that at the end of the quarter (December 31, 2018) there was $34,365,000 in the bank, which includes the proceeds from the bond issuance from the prior year and an interest earnings of 2.4% for a total earnings of $205,428 for the quarter. Vice President Mike Wilson questioned the forms of investment and Mr. Nickerson responded that they are invested in two different governmental pools, commercial paper, Federal and U.S. agency treasury notes and he reiterated that they only invest with Triple A rated agencies. 4. MANAGER'S REPORT a. The next Baytown Area Water Authority meeting is scheduled for Wednesday, February 20, 2019, at 9:00 a.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas 77520. General Manager Rick Davis presented the Managers Report and stated that the High Service Pump Project will provide a huge significance of water supply to the citizens and directed Sterling Beaver to present an update to the Board. Mr. Beaver presented an update on the Project and stated that he will coordinate a tour for the Board once the project is complete, as well an open house for the public. President Bradley Smith and Vice President Mike Wilson provided accolades for all of their work and Mr. Davis concluded the Manager Repot by announcing the next Baytown Area Water Authority meeting for February 20, 2019, at 9:00, in the Council Chamber. 5. ADJOURN A motion was made by Director Brandon Benoit, and seconded by Secretary Frank McKay III to adjourn the January 16, 2019, BAWA Board Regular Meeting. The vote was as follows: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, Secretary Frank McKay III, Director Brandon Benoit Nays: None Other: Director Harland Forrest, Jr. (Absent) Approved BAWA Board Regular Meeting Minutes January 16, 2019 Page 9 of 9 With there being no further business to discuss, President Bradley Smith adjourned the January 16, 2019, BAWA Board Regular Meeting at 9:33 A.M. Le icia Brysch, Assistant Secretary City of Baytown