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2003 06 23 WS MinutesMINUTES OF THE WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN June 23, 2003 The City Council of the City of Baytown, Texas, met in work session on June 23, 2003, at 8:10 a.m. in the Hullum Conference Room of Baytown City Hall, 2401 Market Street, Baytown, Texas, with the following in attendance: Ronnie Anderson Council Member Coleman Godwin Council Member Calvin Mundinger Council Member Don Murray Council Member Mercedes Renteria III Council Member Pete C. Alfaro Mayor Gary M. Jackson City Manager Ignacio Ramirez, Sr. City Attorney Gary W. Smith City Clerk Absent was: Scott Sheley Council Member The meeting was opened with a quorum present after which the following business was conducted: Discuss enterprise fund issues as follows: Water and Sewer Fund, including: Expanded wastewater infrastructure. Gary Jackson, City Manager, noted that the discussion would involve the water and wastewater items in the utility fund. The more significant items are on the wastewater side of the fund. In order to address the needs of the infrastructure, Council has substantially increased the utility capital improvement plan to $49,202,000. The system includes 200 miles of concrete pipes that are deteriorated and need replacement. Baytown is receiving significant interest from developers, including large developments. Wastewater capacity and infrastructure is necessary to accommodate the developments. The wastewater system may require up to $200,000,000 in repairs. Funding in the current plan is $5.4 million in 2002; $9.8 million in 2003; $14 million in 2004; $15 million in 2005 and $4.7 million in 2006. These expenditures are not making significant progress on the problems. At least $10 million per year will be needed. This will impact rates. The City is not currently under any Administrative Orders. It will take many years to fix the problems and it will be very expensive. The work will focus on the areas involving compliance problems first. The problems exist throughout the system. A rate study was done to allow us to look at the costs and to understand the costs of the system and to assure that all ratepayers are paying a fair amount. The rate study will be discussed, but the discussion will not include the rate design. That discussion will be scheduled in a later meeting. Page 2 of 4 Minutes of the Work Session — June 23, 2003 f Discuss enterprise fund issues as follows: Water and Sewer Fund, including: Water /Sewer Rate /Cost of Services Analysis. Bob McLain of Maximus presented the water and sewer rate study. A rate study usually consists of two phases, the revenue requirements and the rate design. The objectives of a rate study include the revenues required for rates (multi -year financial plan), rate design (how to get the revenues) and customer impact. The multi -year financial plan is based on the following assumptions: maintaining sixty days of working capital reserves and 1.25% annual actual debt service coverage and 1.25% annual average debt service coverage. The debt service coverage is required by bond covenants. When the new wastewater plant is added, the annual operating expenses will increase $1.3 million. A rate increase from BAWA from $1.26 to $1.38 is anticipated. The growth rate of the customer base is assumed to be 0.5% per year. All other growth and inflation is estimated at 3% per year. In a multi -year financial plan, the first year is significant. All other years are subject to review and adjustment. The impact of the 10 -year plan is as follows: 2004 $16 million 2005 $15 million 2006 $6.5 million 2007 $10 million The debt in the enterprise fund increases from $3 million to $11 million in ten years. The operations and maintenance costs increase significantly when the new plant is added, but otherwise increase at 2.3% per year. The gross cost of service increases from S16 million in 2001 to $31 million in 2013. The transfer to the General Fund remains flat at $1.03 million per year. If the customer growth is greater than projected, additional revenues may be produced, but additional costs may be incurred. The rate study reflects that an initial change in rates will be necessary to maintain 60 days of working capital reserves. Later in the period, an increase in rates may be driven by the debt coverage tests. In designing rates, the Council may consider a readiness to serve charge (minimum bill) based on the maximum continuous flow rating for each size meter and conservation rates. The American Water Works Association recommends that rates generate adequate revenues, are legal, be predictable, and promote efficiency in the use of water. Predictability is significant in rate design. Baytown has not increased the base rate since 1994, with all increases being included in the volume rates. With increased rainfall, the additional revenues have not been produced. The rate design must produce sufficient funds to pay the bonds. The rate design must encourage users to install properly sized meters. Page 3 of 4 Minutes of the Work Session — June 23, 2003 The meeting recessed for five minutes. Discuss enterprise fund issues as follows: Water and Sewer Fund, including: "Radio Read" water meter reading system. Rhonda Young, Treasurer, explained that the "radio read" water meter reading system is included in the capital plan for implementation in 2003 -2004 for $5 million. The cost will be recovered over a four to five year period. The "radio read" system does not require the manual reading of meters and entry onto the customers' property. The system has a component that reads the meter and sends the information to an interface unit. The interface unit transmits the data to a computer mounted in a vehicle. The computer downloads the data into the billing computer. This allows meters to be read quickly, in all weather. Estimated bills will be greatly decreased, if not eliminated. The accuracy of the readings will be improved. The safety of the meter readers is improved, as dogs, snakes, mosquitoes, and poison ivy are avoided. The man -hours for reading the meters are reduced. The truck fleet and maintenance thereon is reduced. Currently six persons are employed in meter reading. They walk routes and enter data. The information is uploaded to the computer into the billing system. Pasadena has used a "radio read" system for four years and has had an excellent experience. They have eliminated estimated bills. They have had a 60% reduction in lost water and increased their efficiency to 80 %. Under the current system the difficulties include weather, covered meters, dogs, snakes, mosquitoes, poison ivy and traffic. The proposal on the "radio read" system is for a turnkey replacement of all meters over five years old. Seventy-three percent of the meters in Baytown are over five years old. Forty -six percent of the meters are over eighteen years old. The benefits of the system include a recovery of the cost within four to five years and increasing water accountability from 72% to 85 -90 %. Any employees displaced by the system are planned to be relocated to other duties. Donna Sams, Finance Director, reported that 28% of the water is unaccounted, resulting in $5.6 million in lost revenues ($3 million in water and $2.7 million in sewer). Discuss NPDES Storm Water Phase II compliance and establishment of a Storm Water Enterprise Fund for fiscal year 2003 -2004. Mike Lester, Director of Health and EMS, reported that under NPDES Storm Water Phase 11 the City is responsible for the quality of storm water runoff. Our program must demonstrate that the City is not negatively impacting storm water. The City may either study the existing system and engineer changes and thereafter, dealing directly with EPA, design a unique permit, or may give notice of its intention to comply with the state system. Compliance with the state system is recommended. Annual reports will be required and they will reveal whether or not the City is complying with the permit. Page 4 of 4 Minutes of the Work Session — June 23, 2003 r A significant question is how to pay for this program. The first year was included in the General Fund. For the next fiscal year, it is recommended that an enterprise fund be established. The method of determining fees will be decided later. It may be based on lot size and use and permeability of the surface of the lot. The City will have five years to implement the program after the permit is approved. Presently staff recommends a plan that meets compliance requirements only. The plan could include other issues, as drainage, but that is not within staffs recommendation. Discuss Solid Waste Fund and the proposed erosion control project at the closed East District Landfill. Mr. Jackson explained that a report of erosion into an old landfill along Cedar Bayou had been received. The report was investigated and confirmed. Samples of the leakage and testing of the samples have been completed. No risk to humans exists and there are no environmental problems. ERM, our environmental consultants, have indicated that the City must shore up the banks and do restoration work. The proposed remedial work has been reviewed by the Texas Commission on Environmental Quality without objection. The work is estimated to cost between $670,000 and $1,000,000 for erosion control. The information is very preliminary and a more detailed analysis will be prepared. Adjourn. There being no further business, Council Member Anderson moved adjournment. Council Member Renteria seconded the motion. The vote follows: Aye: Council Members Anderson, Godwin, Mundinger, Murray and Renteria Mayor Alfaro Nay: None. The motion carried and the meeting adjourned at 10:15 a.m. Gary W. Simith City Clerk MINUTES OF THE SPECIAL SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN June 23, 2003 8:00 a.m. The City Council of the City of Baytown, Texas, met in special session on June 23, 2003, at 8:00 a.m. in the Hullum Conference Room of the Baytown City Hall with the following in attendance: Ronnie Anderson Council Member Coleman Godwin Council Member Calvin Mundinger Council Member Don Murray Council Member Mercedes Renteria III Council Member Pete C. Alfaro Mayor Gary Jackson City Manager Ignacio Ramirez, Sr. City Attorney Gary W. Smith City Clerk The following Council Member was absent: Scott Sheley Council Member The meeting was opened with a quorum present after which the following business was conducted: Consider Proposed Ordinance No. 030626 -1, approving a professional services contract in connection with building repairs at the Baytown Municipal Court /jail complex. City Manager Gary Jackson reminded Council that counsel, Coats/Rose, had recommended retaining de Oplossing, Inc. in connection with the bid package and the repairs to the Municipal Court/Jail complex, excluding the curved roof. The seven -day notice letter was sent to Fireman's Construction, Inc., the contractor last week. Should the contractor fail to make the necessary repairs before the end of the seven - day period, it will be necessary to proceed to bidding the work and making the repairs to the complex. Prior to the end of the seven -day period, the microbial investigation should be commenced to determine if any additional work is required from the roof leaks and other water intrusions. The bids and repair work, if required, would not include the curved roof and would be overseen by de Oplossing. Funds for the contract and the repairs will come from the retainage. Council Member Renteria moved adoption of the proposed ordinance. Council Member Godwin seconded the motion. The vote follows: Ayes: Council Member Anderson, Godwin, Mundinger, Murray and Renteria Mayor Alfaro. Nays: None. The motion carried. Page 2 of 2 la Minutes of the Special Meeting —June 23, 2003 ORDINANCE NO. 9578 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH DE OPLOSSING, INC., TO PERFORM A MICROBIAL INVESTIGATION AS WELL AS TO PERFORM RE -BID SOLICITATION AND CONSTRUCTION MANAGEMENT SERVICES FOR THE BAYTOWN COURT AND JAIL FACILITY; AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN IN AN AMOUNT NOT TO EXCEED EIGHTEEN THOUSAND TWO HUNDRED SIXTY AND NO /100 DOLLARS ($18,260.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. Adjoum. There being no further business, Council Member Mundinger moved adjournment of the meeting. Council Member Renteria seconded the motion. The vote follows: Ayes: Council Member Anderson, Godwin, Mundinger, Murray and Renteria Mayor Alfwo. Nays: None. The meeting adjourned at 8:09 am. 00, i G W. Sfnith City Clerk