Winston Tustison, Vice Chair
Rick Davis, Commissioner
Robert Milkey, Commissioner
Sue L. Novelli, Commissioner
Elizabeth Shapiro, Commissioner
John Hoffmann, Commissioner
EXCUSED: David Powell, Chair
|
PRESENT: |
Winston Tustison, Vice Chair Rick Davis, Commissioner John Hoffmann, Commissioner Robert Milkey, Commissioner Richard Reynolds, Commissioner Elizabeth Shapiro, Commissioner |
| EXCUSED: | David Powell, Chair |
| 1. |
APPROVAL JULY 13, 2009 MINUTES |
MOTION: A motion was made by Commissioner Davis and seconded by Commissioner Reynolds to Amend
MOTION carried, 6-0.
| 2. |
WATER RATES ANALYSIS (S. Seng) |
Vice Chair Tustison reported that one of the members of the Town Council at the Study Session regarding water utility fees made an emphatic speech that in his opinion the way to control rates is to cut expenses. In light of the Council thoughts, he encouraged the Commission members to pay close attention to which items or expenses were flexible or the Utility had control over and which items were costs that could be controlled. Mr. Tustison emphasized that there had been some discussions of cutting capital expenditures. He reminded the Commission that removing capital improvement projects from the budget could ultimately delay them, but would not eliminate them for future budgets.
Ms. Seng indicated that in the Water Rates Analysis there were several different financial considerations that must be analyzed. Ms. Seng gave a power point presentation.
-Overview - O.V.Water Utility comprised of 3 Funds, Water Utility Budget, Capital Projects, Financing, Debt Service Coverage, Reduced Growth Projections, Reduction in Annual Water Use, Financial Scenarios, Proposed Schedule
-Water Utility Summary of Funds, Enterprise Fund Coverage: Revenue: Water Rates, Expenses: Personnel, Operations & Maintenance, Existing System, CIP & Debt Services
Alternative Water Resources Impact Fee Fund (AWRDIF) Coverage: Revenue: Impact Fees & GPF, Expenses: CIP & Debt for Reclaimed & CAP Projects, Potable Water System Impact Fee Fund (PWSDIF) Coverage: Revenue: Impact Fees, Expenses: CIP & Debt for Growth-related projects
-Oro Valley Water Utility Budget Graph: (Combination of Enterprise -AWRDIF -PWSDIF)
Capital Budget ($11 million) -Debt Service ($6.4 million) -Personnel ($2.4 million) -O&M ($4.6 million)
-Enterprise Fund O&M Budget Major Components: Administration- Water Resource Management & Conservation, CAP Charges, CAGRD Charges ($666,000) Subtotal $1.6 million, Customer Service/Meters - General O&M & Billing Related Costs Subtotal $313,000 Engineering & Planning- Production, General O&M, Reclaimed Water Purchased, Power for Pumping Subtotal $2.2 million, Distribution, General O&M & Water Quality Testig Subtotal $304,000
Total O&M Budget $4.6 million
Ms. Seng pointed out the General O&M expenses for all divisions equals 25% of the Utility’s Budget totalling $1.1 million.
-Capital Projects Components
Enterprise Fund - Budget: ($6.3 million) Estimated Actual: ($4.9 million) -Could be less - La Canada Reservoir sizing (3MG or 2MG)
PWSDIF Fund - Budget: ($1.9 million) Estimated Actual: ($1,9 million). Ms. Seng indicated that the majority $1.5 million will help pay the expansion related portion of the La Canada Reservoir there is also an existing bond in place.
AWRDIF Fund - Budget: ($3.0 million) for CAP expenses Estimated Actual ($0) subject to change and could be used for design expenses
-Financing
-WIFA approved loan for $3.4 million on 6/25/09. Ms. Seng explained that Council originally approved borrowing upto $11.0 million however the Utility reduced the loan by removing CAP & other expenses. -Received loan documents 8/3/09 -Potential interest rate 3.6% - 4.25%. Staff is not certain if loan will take place because interest rates are too high. Unable to determine the interest rate until loan closing date. Analysis: -Finance thru WIFA or pay cash for FY09-10 projects -pay off 2001 existing bonds -finance future projects
-Debt Service Coverage
-Mayor & Council Water Policies: requires the Utility to carry a 1.3 debt service coverage ratio (operating revenue must be equal to 1.3 times debt service coverage for that year)
-TOV Financial & Budgetary Policies: General Fund will meet debt service coverage for bonds were excise taxes are pledged. This includes all OVWU bonds with the excepton of the Series 2003 bonds. These bonds are backed by water revenues. The bond covernant calls for a 1.2, but if it drops below 1.3 the Utility would have to fund with the debt service reserves.
-The Water Utility will meet debt service coverage for 2003 bonds at 1.3 and all other bonds at 1.0. Ms. Seng explained that under this scenario the Utility net revenues would have to be 5.8 million.
-Related Growth Projects
-Growth projections from the last rates analysis: FY 09-10 thru FY 12-13 were 320 new meters or 400 EDUs annually.
-Revised growth projections from the Finance Department: Ms. Seng explained that the Utility was estimating 75 meters for FY 09-10 but is now estimating 75 new meters for the entire five year projections.
-Need to consider current vacancy rate: The other issue is the current vacancy rate January 2006 - July 2009 there were 629 service terminations than service establishments. These figures must be accounted in the Utility’s projections.
-Reduction in Annual Water Use (Graphs)
-Reduction in (potable water use): For 2006, 2007 & 2008 actual water use figures, For 2009 actual water use from January - July then assumed same water use in August - December that occurred in 2008
-Non-turf decline (potable & reclaimed water use) between 2007 to 2009 = 7.3% -Turf decline between 2007 to 2009 = 7.6%
-Average residential usage in 2008 dropped from 9,000 gals. to 8,093 gals.
-Financial Scenarios
-Typically prepare 1 baseline scenario
-This analysis will have 2 baseline scenarios: With WIFA funding as authorized by Council, Without WIFA funding because of the potential interest rate
-Baseline scenarios never include rate increases
-Will develop several scenarios with increases in GPF, Base rate & Commodity rates
-No change in any thresholds in the commodity tiers
Commissioner Davis asked what were the commodity tiers threshold based on? Ms. Seng explained they consisted of the GPF quantity, meter size and capacity
-Water Rates Analysis Proposed Schedule - 2009
-July: Staff compiles information -August: Staff prepares intial scenarios -8/25/09 Tentative Finance Subcommittee -9/14/09 WUC meeting -9/17/09 Finance Subcommittee
-9/28/09 WUC meeting- Recommendation on Water Rates -9/30/09 Council Study Session
-10/07/09 Council to consider Notice of Intent to Increase Water Rates -11/18/09 Public Hearing-Council to consider Resolution for Water Rates
Ms. Seng ended her report. No Action required on this Item.
Vice Chair Tustison requested a brief update from Ms. Lemos Finance Director. Ms. Lemos indicated she was working closely with Staff on the Financial Scenarios, assumptions making sure they were consistent with the tax base funds.
-Ms Shapiro asked why does turf for reclaimed water decline in 2009? Ms. Seng explained that the golf courses are conserving more reclaimed water and potable water is also declining.
Vice Chair Tustison stated that all golf courses are cutting back on expenses, the superintendants are being stressed to control their water usage and cost of living continues to rise.
Mr. Ruiz indicated that the golf courses are being more effiicient by practicing better water management techniques, reducing areas of irrigation and converting them to low water usage and more desert landscaping. The Hilton El Conquistador is now using other types of grasses requiring less water. He mentioned that several of the Golf Course Managers and Water Providers attended a golf course irrigation and reclaimed water presentation in Oro Valley given by Dr. Kopeck University of Arizona.
Commissioner Shapiro asked about CAGRD finances and where does the funding go. Ms. Seng explained they are responsible for recharging groundwater and also have substantial amount of expenses.
CALL TO AUDIENCE: Vice Chair recoginized Mr. Mckee
Mr. Mckee voiced his concerns:
-Reviewed other towns budget statements did not anticipate rate increases
-Utility must do a better job of justifying why the rate increase are necessary. Staff has done a good job discussing the increases but the whys are need explaining.
-Concentrate on decrease revenue and how conservation & water reduction practices are continually affecting revenue stream.
-Explain to Council that CAP expenses are not administrative costs but are actual operating costs.
-Reevaluate Growth Projection - 75 meters for 5 year period not realistic and could bottom out. Project 75 meters for 2-3 year period. Mr. McKee ended his report.
Vice Chair Tustison stated, we as the Commission must focus on these issues for the next several years and think in longer terms. We must be careful and find resolutions to these problems.
Mr. Ruiz brief overview on the MOU between the NW Water Providers (Town of Marana, Flowing Wells Irrigation District, Metro Water and Town of Oro Valley. following :
-The MOU will be signed by all the water providers and Councils. This MOU will reaffirm the NW Water Providers commitment to cooperate in the development of a northwest regional water system to treat and deliver renewable water resources with focus on the Central Arizona Project Water.
-Cost Study Estimate was completed in February 2008. On June 30, 2009 a Pipeline Routing Study was completed.
-NW Water Providers will develop an Intergovernmental Agreement (IGA) formalizing and implementing the goals and objectives set in the MOU. The IGA would include the structure for governance a cooperative venture, administrative, financial, technical and operational procedures.
-Packet: Draft Copy of MOU
-Staff is working on water system capabilities, CAP water delivery and water quality. The Water Utility sent out some Request For Qualificatons (RFQs). Five consultants submitted their RFQs. Interviews were concluded last Wednesday. The Utility has selected CH2M Hill consultants to conduct a study focusing on water quality relative to O.V. Water system, target and delivery means, construction of infrastructure to accommodate groundwater blending process.
-A meeting with CH2M Hill will take place next week to discuss costs for the Scope of Services. This Study will include a Public Education Program on CAP water. The Utility wants to make sure the Public is very receptive to the delivery of CAP water.
Mr. Ruiz ended his report. No Action Required on this Item.
A question and answer session occurred:
-Vice Chair Tustison asked about the schedule and timeline of the project and wanted to know who will be overseeing the administration and operations of the system. Mr. Ruiz indicated that Mr. Saletta is working with the other providers coordinating a schedule. He was not certain of the timeline but felt that year 2014 was more of a realistic date but it was also dependant on the Utility’s budget finances. The schedule will have to be revisited. There are alot of issues that must be worked out such as water treatment methods, TDS levels, water quality, and delivery.This is an ongoing process that must be worked on.
Mr. Ruiz indicated that all the NW Water providers are also interested and concerned about the operations of the facility and need to be represented.
-Commissioner Shapiro asked about Tucson’s CAP water recharge process and delivery to Oro Valley. Mr. Ruiz emphasized that the MOU focuses on CAP recharge and delivery to Oro Valley on a interim basis only. These details must to be worked on with the City of Tucson they are very receptive to this idea. It is important to remember that we are saving groundwater.
Mr. Ruiz mentioned that Mr. Saletta will keep the Commission informed on the ongoing negotiations with the City of Tucson.
Customer Methods for Payment
Walk-in with check -Cash or credit card -Phone in with credit card -Mail in check
ACH - Automatic withdrawal from checking account -Place in 24-hour drop box by Utility’s front door.
Implementation of 2 more ways to pay water bill
8/6/09 - Went live with Interactive Voice Response (IVR). Customer does not need to call the Utility but can call a 1-888 toll free number to make payments. This system will discontinue credit card payments over the phone to Customer Service. (Received 8 payments since system was activated).
8/7/09 - Went live with On-Line Credit Card Payments (Received 11 payments since the system was activated).
There is a $1.50 conveinence fee for any credit card payments made on-line or by telephone.
E-Bill Option
9/2/09 E-Bill option anticipated to go live. If you register online customers will no longer receive a paper bill but can print bill one if needed.
Chase Bank
Chase Bank is re-programming the processing of on-line checks made by customers. Currently it takes 7-10 days for the customers online check to reach the Utility’s account. Chase Bank is making arrangements with various vendors and accounts to deposit the on-line checks electronically to the Town’s bank by the next business day. No manual checks will be entered by Customer Service.
Meter Installations
-July 09 Meter Installations total of 4 (all were 5/8" residential meters). The new Fiscal Year began in July.
-FY 09-10 Meter Projections per year (75 new meters per year and 112 EDUs)
Ms. Seng ended her report.
Mr Jacklitch overview on Capital Projects:
-Enterprise Fund and CIP projects - The Enterprise Fund helps pay for existing system infrastructure improvements such as wells, reservoirs, boosters and mains
CIP Projects
-Innovation Park Drive 16-inch Main - Replacement and installation of 2,000 feet of 16-inch main on Innovation Park Drive was awarded to Arizona Underground. Contract amount $360,000. This project will take 4-5 months -Completion Date: November or December
E-zone Well (E-1) replacement - Location: Tangelo and First Ave. Contract started last week. A 16 foot sound barrier wall was built. The wall is temporary and will help reduce noise levels to nearby residents. The drilling process is a 24-7 operation and will only take 2-3 weeks. Once this portion of the work is done, the wall will be removed but the drill will stay.
-La Canada Reservoir sizing- This 3MG in ground reservoir project will be funded by two funds 50% from the Enterprise Fund and 50% from Potable Water System Development Impact Fee Fund. This project could be changed to a 2 mil. gal. reservoir and reduce costs. The project is currently out for public bid and is being advertized. There are two bids: Base bid 3MG reservoir, alternative bid 2MG reservoir. Opening Bid Schedule: September 17th.
Design Project -Enterprise Fund
Lambert Lane Pipeline Relocation Design Project - Public Works Department working on widening the Lambert & Push View Lane to 4 lanes. The Utility needs to determine which existing water mains have to be moved out of the construction area. Public Works Roadway Construction Schedule: August/September 2010
Mr. Jacklitch ended his report.
Question and answer session occurred:
-Commissioner Milkey asked if the La Canada Reservoir site will need more capacity in the future. Mr. Jacklitch stated that based on the Master Plan a 6MG booster station is planned for this site in the future, however the projects are being phased in. Reservoir location: King Air and Moore Road.
-Vice Chair Tustison was interested in visiting the E-1 well drilling site. Commissioner Hoffmann agreed but thought it be best in cooler weather.
Mr. Ruiz reported on the Potable System:
-July 2009 Daily Demand Precipitation Report (MG) Chart
-July 2009 Precipitation - 6 rainfall events
-Significant reduction in Water Demand 7,000,000 MG
-July 2009 Overall Reservoir Storage (MGD) Chart
Potable Water Demand upto 9,000,000 (MGD)
Overall Reservoir Storage Average maintained 7,000,000 (MGD)
Storage maintained primiraly for emergency outages and fire flow. The Water Utility System has the potential of pumping roughly 14,000,000 million gallons per day (MGD).
-July 2009 Reclaimed Water Chart
Delivered over 53,000,000 gallons of reclaimed water. The Hilton El Conquistador south pond will undergo its last test this week. If the leak test proves to be successful the pond will revert to reclaimed water during the middle of August. Mr. Ruiz indicated there was a significant reduction in water usage indicating that people are managing and conserving water.
A brief discussion occurred regarding: golf course watering, evaporative transporation and reseeding of golf courses turf.
Commissioner Shapiro asked about Oro Valley’s drought situation. Ms. Seng indicated that Oro Valley was experiencing a Stage I Drought situaton.
Mr. Ruiz ended his report.
Vice Mayor Carter had several concerns and comments regarding Agenda Item 3.
Comments & Questions:
-Delivery of the 3,000 af CAP water will affect other agreements with the NW Water Providers?
-Are the NW Water Providers agreeing to the negotiations with the City of Tucson?
-Will the other providers receive part of the 3,000 af of CAP Water that is delivered?
Mr. Ruiz mentiond that the 3,000 af from Tucson Water is only an interim alternative of getting CAP Water delivered to Tucson’s Avra Valley recharge facility and Oro Valley. He also mentioned that the other providers are aware of the negotiations and that Metro Water is also entering into discussion with Tucson Water.
Mr. Ruiz gave a description of the system delivery points, existing infrastructure and future construction of the Dove Mountain C-zone reservoir.
Commissioner Shapiro questioned the costs of CAP delivery to Tucson Water Avra Valley facility versus CAGRD wet water or paper water. Ms. Seng indicated that she was not sure of the savings but CAGRD costs will never go 100% away.
Mr. Peterson explained that as groundwater is blended the water will take the characteristics of Tucson’s CAP water. He thought that since CAP delivery came into play one of the alternatives could be that Tucson Water be the sole supplier of CAP for this area.
Mr. McKee asked why was the delivery of the 3,000 af an interim solution not a permanent solution. Mr. Ruiz explained that the Director could answer these questions and they also must be addressed with Council which becomes a policy issue.
Commissioner Milkey asked how was the 3,000 af derived upon? Mr. Ruiz indicated that Oro Valley sustainable groundwater level was 5500 af. Mr. Milkey also asked if the Bureau of Reclamation was aware of the negotiations and how did it effect them. Mr. Ruiz indicated he was not certain.
Mr. Ruiz indicated there were a lot of unanswered questions and Mr. Saletta was still negotiating with Tucson Water. The NW Water providers all meet once a month. The time frame for this project could take about a year and half.
| 8. |
SUBCOMMITTEE/COMMISSIONER REPORTS |
Chair Tustison indicated the Finance Subcommittee would be meeting
in the near future.
Chair Davis reported the following:
Conservation Meeting Held: 8/5/09, Attendees: K Boyce, R. Milkey.
Meeting Objective: Improve the current audit program by developing a Water Management Program specifically for businesses and HOAs.
Issues and Concerns:
-Schools and large turf users (golf courses) are not governed by water allocations
-Reviewed the top 15 water users to determine their interest to participate in a water audit program. Water audits will include analysis of water over a 3 year period, if applicable, to determine a patter of use
-Research important statistical information to be used in various applications for example, tier water rate structures.
Landscape Committee - No meeting has been set.
Issues and Concerns
-How will the Oro Valley be able to regulate customers that are out of the Town’s boundary?
-Will Oro Valley be able to submeter non Oro Valley Water Utility services?
-Water Harvesting - can this apply to "real world" situations?
Future agenda item- Identify the top 15 water users, Discuss the Water Management Program inquiries and continue with landscape code draft review.
Upcoming Meeting - August 28th
Chair Davis ended his report.
No meeting
| 9. |
STAFF REPORTS |
-8/19: T.C. Meeting
-8/25: Finance Subcommittee Meeting (Tentative)
-9/14: WUC meeting
-8/19: T.C. Meeting
-8/25: Finance Subcommittee Meeting (Tentative)
-9/14: WUC meeting
Mr. Davis ended his report.
Commissioner Shapiro requested a Drought Stage Statis Update.
Commissioner Hoffmann
/Adjourned by Shapiro
Seconded by Milkey
MOTION: A motion was made by Commissioner Shapiro and seconded by Commissioner Milkey to Adjourn
MOTION carried, 6-0.