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2020 05 20 BAWA MinutesMINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY May 20, 2020 The Board of Directors of the Baytown Area Water Authority (BAWA) met in a Regular Meeting on Wednesday, May 20, 2020, at 4:33 P.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 Nick Woolery Ignacio Ramirez, Sr. Leticia Brysch President (In Person) Vice President (Teleconference) Secretary (Teleconference) Presiding Manager General Counsel Assistant Secretary President Bradley Smith convened the May 20, 2020, BAWA Board Regular Meeting with a quorum present at 4:33 P.M., all members were present with the exception of Directors Forrest and Benoit who were absent. 1. MINUTES a. Consider approving the minutes of the Baytown Area Water Authority Regular Meeting held on March 18, 2020. A motion was made by Vice President Mike Wilson, and seconded by Secretary Frank McKay III to approve the Baytown Area Water Authority minutes for the meeting held on March 18, 2020, as submitted. The vote was as follows: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, and Secretary Frank McKay III Nays: None Other: Director Harland Forrest, Jr. and Director Brandon Benoit (Absent) Approved 2. BAYTOWN AREA WATER AUTHORITY FY2020-21 PROPOSED BUDGET a. Receive and discuss the Baytown Area Water Authority's Fiscal Year 2020- 21 Proposed Budget. Assistant General Manager Nick Woolery presented the item and stated that the proposed budget was included in the agenda packet and staff is going to hit a few of the high points and then BAWA Board Regular Meeting Minutes May 20, 2020 Page 2 of 8 answer any questions. Mr. Woolery noted that the budget being presented today will have its public hearing and consideration at the BAWA June meeting. He noted that a couple of the high points in this year's budget, based on the revenue and expenditure trends, staff is recommending a three percent (3%) rate increase. He further noted that staff is currently working with a consultant on a rate study that should be completed in the next couple of months, which will help advise the board on future rate setting decisions. A couple of the things that really factored into this recommendation of the 3% increase are: (1) the fact that there were flat expenditures this year, but the Authority still has a budget deficit of an estimated $911,000; (2) the building of the BAWA East Plant and (3) an increase in debt service. Mr. Woolery noted that after a lot of work to find efficiencies on the operations side of the equation, the Authority still was not able to bring in the needed revenue to match. However, the Authority was able to get by without increasing rates to its customers because of its fund balance. In fact, going into Fiscal Year 2019, the Authority had two hundred and eighty-one days (281) of operating expenditures in the fund balance; however, the proposed FY '21 budget is down to one hundred and seven days (107). Mr. Woolery noted that while 107 days of fund balance is still a healthy number, the trend is moving in the direction of increasing rates in order to mitigate that decrease in fund balance. Mr. Woolery also noted that the flat operating expenditures did include the full operating expenditures of the BAWA East Plant, which are included in this budget, but any other increases that will be needed to fully staff and run the new plant are included in the Fiscal Year 2021 budget. Mr. Woolery noted that those are the main points on the operating side of the budget, and on the capital side, things are looking better. BAWA Superintendent and City of Baytown Public Works and Engineering Director Frank Simoneaux presented the board members an overview of the capital side of the proposed budget. Director McKay asked the staff regarding the need for the rate increase and noted that with COVID and the extreme pain that it is dealing the communities serviced by BAWA is it the right time for the 3%? He asked if staff is assuming that in the ten year plan, BAWA is going to have a rate increase every year? Mr. Woolery noted in response that the staff is not assuming anything about rates at this point, which is why staff wanted to do the rate study to have someone from the outside look at BAWA's future capital projects, future expenditures, and really give the Board an objective view of what needs to be considered with future rates. However, in looking at the current revenues and expenditures, staff is pretty clear that rates will have to be increased to cover the expenditures, and has included the 3% increase in the proposed budget. Mr. Woolery noted that BAWA's previous rate study had run out and there is no rate study to refer to at this time, and staff made its recommended increase based on the budget numbers. However, one thing to note is that the Authority's annual expenditure increases are because of the yearly 2.8% rate increase from the City of Houston to purchase water from them, and that is nothing that staff can control. Mr. Woolery further noted that BAWA rates were last increased two years ago, and before that they were increased in 2014, so basically rates have increased twice in the past eight years. Mr. Simoneaux gave an overview of the plan for the upcoming year of capital projects, which is pretty flat, and includes the following: BAWA Board Regular Meeting Minutes May 20, 2020 Page 3 of 8 BAWA Chemical Feed System ($2.8 million), which is a project that replaces bulk storage tanks for the BAWA chemicals and it also converts the current ammonia gas disinfection system to liquid ammonia sulfate, and is about twenty percent complete. Mr. Simoneaux noted that the BAWA Chemical Feed System is actually an FY '20 project that went into construction in February, and is estimated for completion in February of 2021. This project replaces bulk storage tanks for our chemicals and it also converts our current ammonia gas disinfection system to liquid ammonia sulfate. • BAWA East Sanitary Sewer ($160,000) is for the design of running the line, and installing the system, as well as, any easement costs that might be incurred to build a lift station and force main to take the wastewater from the operations building to a treatment plant that CCID# l . Mr. Simoneaux stated that during the original design for BAWA East, it included a lift station and force main to take the wastewater from the operations building to a treatment plant that CCID#1 operates because the City of Baytown does not have any treatment facility close to the BAWA East plant. This was going to be a fairly long force main, costing several hundred thousand dollars, so as a part of the initial value engineering; staff looked at taking out that force main and trying to do an onsite septic system instead. Staff is working with CCID#1 to get an easement for our spray field to put in an on -site septic system, which save us the cost of having to run the force main. In discussion with CCID#1, they stated that they plan on running a gravity sewer when they develop the property just south of the BAWA East plant, which will then at some point, allow us to connect to a gravity sewer at that location. Once this happens, the on -site system can be abandoned at that point. Mr. Simoneaux noted that the S 160,000 is an estimate of the costs associated with the engineering and design of the line, and is budgeted on the high side. Mr. Simoneaux further noted that because it is a couple of miles of force main, the Authority would then have to pay the electric costs of running that lift station, this proposed alternate system is going to result in a fairly large savings. He further noted that staff has also worked to try to take some of the flows that would have gone into that system off so in order to re -circulate the flow. Mr. Simoneaux noted that some of the sampling water was included in the original design, and the Board will see later on in the meeting a change order to take that sampling water out of the sanitary sewer and put it back into the plant system, in order not to have to treat it. He also noted that staff is having a lot of problems getting CCID#1 to take that much flow in to its system, so this is a better solution all around. In response to a question from the Board as to whether or not this issue was something that was missed by the engineering, Mr. Simoneaux noted that originally, they had the sampling water going into the sanitary sewer as part of the original design and that is not how it is at the main BAWA plant. Staff caught that issue late in the design and noted that really that should not even be going there, so he did not believe that anybody really stepped back at that point and said, "Well, if we take that water off, it really makes the flow of wastewater decrease substantially." So because the plant really does not need the big lift station and pumping capacity to pump that much water and are only treating what is coming out of the operations building, which amount to a few restrooms and a kitchen, an on -site system for a flow that is low made sense. Mr. BAWA Board Regular Meeting Minutes May 20, 2020 Page 4 of 8 Simoneaux noted that this was kind of an evolutionary process of going through the value engineering and thinking through the process that originally had the water going into the sanitary sewer, which was part of the original design, that was then removed, which staff did not catch, and should not have been there. President Smith inquired if the Authority now had an oversized lift station. Mr. Simoneaux noted that her assessment is correct and that the money related to the lift station is a sunk cost. • BAWA Raw Water Rehabilitation Design ($200,000) is the design only of the raw water rehabilitation project for the main BAWA plant. The objective of the project is to replace the four -bay liner at the BAWA plant. The current liner has tears and holes in it and it is causing a loss of water in the four -bay. Staff is also going to replace the raw water pumps that had been rebuilt over a period of years, as well as, looking at the structural supports of the pump station to ensure that they are stable. • Utility Billing Office Re -location ($260,000), which is only a portion of the $2.6 million project that will relocate the Utility Billing Office to a new location at the renovated Citizen's Bank Building on Texas Avenue There being no more questions on the budget, the President thanked staff for the presentation and moved to the next item. b. Consider a resolution calling for a public hearing regarding the Baytown Area Water Authority Fiscal Year 2020-21 Proposed Budget. A motion was made by Vice President Mike Wilson, and seconded by Secretary Frank McKay III a motion to approve Resolution No. 2020 -05, related to Item 2.b. The vote was as follows: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, and Secretary Frank McKay III Nays: None Other: Director Harland Forrest, Jr. and Director Brandon Benoit (Absent) Approved RESOLUTION NO. 2020-05 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 PROPOSED BUDGET; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 3. PROPOSED RESOLUTIONS BAWA Board Regular Meeting Minutes May 20, 2020 Page 5 of 8 a. Consider a resolution authorizing Change Order No. 8 with Pepper Lawson Waterworks, LLC, for the BAWA 6 MGD Surface Water Treatment Plant. Assistant Director of Engineering Andrea Brinkley presented the item and stated that the Baytown Area Water Authority ("BAWA") and the City of Baytown (the "City") approved the contract with Pepper Lawson Waterworks LLC, ("PLW") for the construction of a 6 MGD Surface Water Treatment Plant (the "Project") in May 2018. Mrs. Brinkley stated that change order number nine is in the amount of $52,385.76 and relates to completion items needed for the project. She noted that staff has taken a very hard look at the operations building and have been through the structures several times not just to talk about problems, but just to look at progress, and make decisions. She further noted that the project is on schedule, but there are some items related to the operations such as building, raw water conveyance and power reliability that must be addressed. Mrs. Brinkley noted that the first two items listed on the change order are deductive items and these are items that will serve as the good news up first, and basically are savings to the project. The first is a decrease of ($4,025.00) for the Operations Building Chemical Storage Area Column Masonry deletion. Seven structural steel columns at the operations building's chemical area were modified by previous change order (Change Order No. 7), which caused the brick masonry to conflict with column anchor plates. BAWA staff elected to delete the masonry brick, as this was aesthetic and not structural, resulting in this credit, and the second item of work is a decrease in the amount of ($7,014.50) related to the operations building's structural modifications (Change Order No. 7), which required larger structural steel components and resulted in less interior surface area in the lobby to attach the decorative accent stone in the plans. Accent stone to three lobby walls was deleted, and the south wall was substituted as an accent wall, maintaining the stone veneer in this location. The third item of work is for an increase in the amount of $4,100.00 for the addition of an epoxy floor coating in the operations building's second floor trough drain in the laboratory analyzer and eye -wash areas. This coating will act as a waterproofing agent and a secondary containment coating for the analyzer wet zone. The fourth item of work is for an increase in the amount of $3,815.00 for adjustment to the height of the pony wall at the operations building's second floor administration area, to reduce the height to 42 inches along the face, and 30 inches along the side to meet the Americans with Disabilities Act's requirements. The fifth item of work is for an increase in the amount of $4,530.00 to modify the millwork and remove cabinets in two locations, bracing the countertop, repair the wall and flooring. The cabinets were in conflict with the Supervisory Control and Data Acquisition (SCADA) operations area desks at the second floor of the operations building. The sixth item of work is for a no cost change for modifications to the Operations Building administrative area, to delete the decorative veneer brick and substitute with accent tile. BAWA Board Regular Meeting Minutes May 20, 2020 Page 6 of 8 The seventh item of work is for an increase of $1,500.00, which provides a cabinet below the operations building's laboratory double -sink, instead of an exposed sink base. The eighth item of work is an increase of $21,880.08 to upsize the 25 KVA transformer in the high service pump station's electrical building to a 37.5 KVA unit. Without this change, the existing transfonner will not be able to handle the load and the associated heat trace panel will not operate as designed, which will cause the high service pump station and transfer pump station to shut down. The ninth item of work is an increase of $27,600.18 to connect the operations building's laboratory analyzer trough drain and sinks to the sludge pump station and change the destination of the raw water from the sanitary sewer lift station to the sludge pump station. This item was identified during the first change order, and the engineer issued a drawing; however, this work was not included in a change order or completed. A motion was made by Vice President Mike Wilson, and seconded by Secretary Frank McKay III to approve Item 2020-06, related to Item 3.a. The vote was as follows: Ayes: President Brenda Bradley Smith, Vice President Mike Wilson, and Secretary Frank McKay III Nays: None Other: Director Harland Forrest, Jr. and Director Brandon Benoit (Absent) Approved RESOLUTION NO. 2020-06 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY AUTHORIZING CHANGE ORDER NO. 9 WITH PEPPER LAWSON WATERWORKS, LLC, FOR THE BAWA 6 MGD SURFACE WATER TREATMENT PLANT PROJECT IN THE AMOUNT OF FIFTY-TWO THOUSAND THREE HUNDRED EIGHTY-FIVE AND 76/100 DOLLARS ($52,385.76); AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 4. REPORTS a. Receive the Baytown Area Water Authority's Quarterly Financial and Investment Reports for the Quarter Ending March 31, 2020. Finance Director Victor Brownlees presented the item and stated that he was pleased to present the second quarter's financial report and noted that just a shade over forty percent of budget BAWA Board Regular Meeting Minutes May 20, 2020 Page 7 of 8 revenue has already been collected at the midway point in the year, which is fairly consistent with the prior year. On the expenditure side, he noted that the Authority is somewhat fortunate, and is lagging behind the budget right across the board, which is a result of savings in personnel, and some other savings in supplies and maintenance. Mr. Brownlees stated that staff did not anticipate to end the year dramatically off -budget, but currently, the Authority is sitting at about forty percent of budget. Mr. Brownlees noted that the other couple of sheets deal largely with the capital investment program. The first is not earth -shattering at all. It is purely the money that is moved across from the operating fund to help fund the Authority's ongoing capital investments and halfway through the year, fifty percent has been transferred into that fund. The last page deals with the projects that are currently in hand and Frank has already discussed some of those that are underway, and that will be completed in the next year. Lastly, he noted that the report deals with the Authority's investments, which are really very much in line with the market. a. Receive an update regarding the Baytown Area Water Authority East Plant Project. Mrs. Brinkley gave the Board and overview of the plant's status in terms of construction and showed detailed pictures and drone footage of the plant and its progress. Mrs. Brinkley noted that the plant is in its pre -startup, demonstration and training phase. She noted that staff has been undertaking about four weeks of training; the contractor has had all the equipment manufacturers on- site and have had staff check out of the equipment, as well as conducted some training, which is all recorded and will be available to be replayed for future staff, or in order to just reinforce training in the future; this will go on for at least another six weeks. She noted that the project is trending well and the major treatment train manufacturer has been on -site and they have conducted some of initial testing. The plant's sixteen -inch water line is complete and staff has chosen to utilize potable water for that treatment train startup, and that is something that had not been anticipated at the start, but staff thought it was a benefit to the project, so instead of sending water away, for the time being, the water will be sent to the plant, complete startup, and then when that is ready to go in the other direction as it should be, it will be ready. The project team is planning for commissioning and have been meeting weekly to establish the plan, the roles and responsibilities, as well as, tracking different items of work that still need to be completed. Mrs. Brinkley noted that the project is on track for completion in the July, August timeframe, but this is tentative. Mrs. Brinkley showed pictures and drone footage of the plant, the facilities and staff. 5. MANAGER'S REPORT a. The next Baytown Area Water Authority meeting is scheduled for Wednesday, June 17, 2020, at 4:30 p.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas 77520. The next Baytown Area Water Authority meeting is scheduled for Wednesday, June 17, 2020, at 4:30 p.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas 77520. There were no additional, comments aside from the reminder of the next meeting. BAWA Board Regular Meeting Minutes May 20, 2020 Page 8 of 8 6. ADJOURN With there being no further business to discuss, President Bradley Smith adjourned the May 20, 2020, BAWA Board Regular Meeting at 5:25 P.M. Leticia Brysch, Assistant City of Baytown