MINUTES
ORO VALLEY WATER UTILITY COMMISSION
Regular Session
Monday, May 10, 2010
HOPI CONFERENCE ROOM
11000 N. LA CAÑADA DRIVE
 
 
 
CALL TO ORDER: 6:00 

ROLL CALL: 6:01 

PRESENT:
David Powell, Chair
Rick Davis, Vice Chair
John Hoffmann, Commissioner
Robert Milkey, Commissioner
Richard Reynolds, Commissioner
Elizabeth Shapiro, Commissioner
Winston Tustison, Commissioner

STAFF PRESENT:   Philip C. Saletta, Water Utility Director
                          Shirley Seng, Utility Administrator
                          David Ruiz, Engineering Division Manager
                          Robert Jacklitch, Project Manager

CALL TO AUDIENCE - At this time, any member of the public is allowed to address the Water Utility Commission on any issue not listed on today’s agenda.  Pursuant to the Arizona Open Meeting Law, individual Commissioners may ask Town Staff to review the matter, ask that the matter be placed on a future agenda, or respond to criticism made by speakers.  However, the Water Utility Commission may not discuss or take legal action on matters raised during "Call to Audience."  In order to speak during "Call to Audience" please specify what you wish to discuss when completing the blue speaker card.

At this time there were no public speakers.

1.

APPROVAL APRIL 12, 2010 MINUTES  Discussion and/or possible action.


Click here for Item #1

MOTION: A motion was made by Commissioner Tustison and seconded by Commissioner Shapiro to Approve the April 12, 2010 minutes

MOTION carried, 7-0.

2.

CENTRAL ARIZONA PROJECT AND CENTRAL ARIZONA GROUNDWATER REPLENISHMENT DISTRICT PROPOSED RATES            (P. Saletta)  Discussion and/or possible action regarding the proposed rate increases for the Central Arizona Project and the Central Arizona Groundwater Replenishment District.


Mr. Saletta reported on and presented a slide of the CAGRD proposed rate increases. He specifically discussed the Infrastructure & Water Rights Components of the proposed rates.

Mr. Saletta gave a brief explanation of theTucson Active Management Area Infrastructure & Water Rights Component and that it increases dramatically from $101 in 2009/10 to $353 in 2015/16. He explained that the increases are due to CAGRD obligations to acquire new water supplies and develop recharge facilities. At this time they are purchasing excess water, but because subcontractors use significant amounts of their water CAGRD has less excess water available to them. CAGRD purchases new supplies and delivers it to various recharge facilities in the Tucson Active Management Areas.
 

Mr. Saletta also gave a brief explanation of CAGRD rates total assessment rate and proposed increases.

The possibility of using debt financing was discussed by Mr. Saletta and he indicated that CAGRD will be taking a closer look at their rates using debt financing. Increases in Enrollment and Activation Fees are being objected to by the development community. CAGRD subcommittee will discuss the enrollment fee issue as well as the debt financing issue at their upcoming May 20th meeting.  

Mr. Saletta believed that the enrollment fees were very low and could be a major factor why CAGRD is going to existing rate payers for their steep increases.

Staff will be involved with CAGRD and attend plans to the May 20th meeting. He explained that the development community is opposed to the $200 fee increase. Mr. Saletta ended his report.

Question and answer session:

-What changed between last year and this year regarding water rights? (Commissioner Milkey). Mr. Saletta shared that the ADD Water process (Acquire Develop and Deliver) and CAGRD  information regarding the acquisition costs of water rights. They also performed and updated their operations plan and based on their obligations they estimated between the infrastructure and acquiring water rights a $400 million dollar project will be needed.     

Commissioner Milkey understood it was a one time payment to acquire water rights and that there was substantial infrastructure required to deliver the water, he also felt that debt financing becomes a more attractive way of spreading it out over more years.  

Mr. Saletta gave as an example of Oro Valley’s reclaimed project financing process and also explained the Town’s future financing plan for the delivery of CAP water. 

Mr. Saletta indicated that it is very important for CAGRD to use debt financing to levelize rate increases and important for those new customers (new growth) to pay their fair share through enrollment and activation fees. 


If the total assessment rates go up $44 per a/f what does it mean to us? (Commissioner Tustison). Mr. Saletta explained we have reduced our CAGRD obligations through our contract and ground water extinguishment credits. We will have to apply these saving estimates into our rates analysis and CAGRD will have to make adjustments in Oro Valley’s behalf. 

Mr. Saletta mentioned that Oro Valley could experience a $50 rate increase due to its present CAGRD consumption of 2,000-2,500 a/f per year. Estimated cost $100,000 per year increase to the CAGRD payment.  

-Tucson Water CAP wheeling. (Commissioner Shapiro). Mr. Saletta stated that by wheeling CAP water through Tucson Water interim agreement Oro Valley’s obligation through CAGRD will be reduced, however we still have a minimum contract obligation (percentage) based on excess groundwater pumped.

There were no other questions. Mr. Saletta ended his report. No action was required on this item. 

3.

UPDATE ON IGA WITH TUCSON WATER FOR CAP DELIVERY                       (Commissioner Hoffmann & P. Saletta)
Discussion and/or possible action regarding the recent Cost of Service Study with Tucson Water and Metro Water regarding Tucson Water delivery (wheeling) of Oro Valley’s Central Arizona Project Water. This discussion may also include discussion on the possible arrangement or future proposed Intergovernmental Agreement for CAP delivery on a short term interim basis.


Commissioner Hoffmann reported that the Renewable Water subcommittee met on April 27th. Staff attendees: P. Saletta, R. Jacklitch. Commissioner Hoffmann indicated that the Utility is currently performing a Cost of Service Study for the delivery of CAP water through the Tucson Water System. This study should be completed by June or early part of July.


Mr. Saletta reported the following:
-Cost of Service Study Analysis: Several specific cost elements are being added to the analysis: Operations & Maintenance, Administrative cost for the prorated portion of the O&M and a capital charge. These elements are under review by consultants CH2MHill. Based on Tucson Water’s infrastructure and pipeline with no additional pumping or pressure they could deliver 4,000 AF of excess water. It is expected that 2,000 AF will be available to Oro Valley and 2,000 AF to Metro Water without additional or significant infrastructure improvements by Tucson Water.

However, if Metro Water should decide delivery in a different location Oro Valley could receive as much as 2,000-4,000 AF of excess water.

The Cost of Service Study will be based on the 2,000 AF amount of delivery. This study will be conducted on a base load basis evenly throughout the year, at approximately 167 AF per month delivery.

The study is on schedule and expected to be completed by the end of July. If staff is satisfied with the fees, the COS study will be presented to the Commission for approval.

A question and discussion session occurred:

-Which area will the excess water enter Oro Valley’s system? (Commissioner Shapiro). Mr. Saletta explained that Tucson Water has a C-zone system near Naranja and Shannon very close to Oro Valley’s pipeline and has pumping capability to deliver it to Oro Valley’s E-Zone. 

-If delivery from Tucson Water’s delivery is at a fix rate will it change the blending percentages? (Vice Chair Davis). Mr. Saletta indicated that during the months of high demand there will be less CAP recharged water coming through the system and will not be significantly different. He also mentioned that Tucson Water had higher TDS (Total Dissolved Solids).

Where will it be blended? (Commissioner Shapiro). Mr. Saletta explained it would come from the Naranja C-zone reservoir and would blend into Oro Valley’s E-zone through the distribution system.

Mr. Saletta indicated that the Countryside area was indirectly receiving renewable water supplies from two recovery wells in their distribution system. 

There were no further questions, Mr. Saletta ended his report. No action was required on this item.

4.

UPDATE ON NORTHWEST WATER PROVIDERS      (Commissioner Hoffmann & P. Saletta)  Discussion and/or possible action regarding the concept of delivering our Central Arizona Project Water through recharge and recovery. The discussion will include information regarding a study currently underway to evaluate and prepare cost estimates for various alternatives for the development of Central Arizona Project water.


Click here for Item #4

Commissioner Hoffmann indicated that the power point presentation focuses on recharge and recovery. He also indicated that one of the N.W. Providers were considering recharging their allotment through a recharge basin and recovering it instead of direct delivery from a reliability reservoir.

Mr. Saletta reported that Metro Water Board at their March 9th meeting directed Staff to pursue the possibility of recharge and recovery. Metro Water also initially invited the other NW Water Providers to participate however the other NW Water Providers decided to wait for Metro’s results.

Mr. Saletta mentioned that Oro Valley was also doing an independent Cost Study looking at recharge and recovery as a possibility, perhaps in lieu of direct treatment and delivery. The Utility could possibly phase in treatment in the future. Carollo Engineers is currently evaluating various scenarios and cost comparisons.

Mr. Saletta reported that because of the proposed water treatment process, brind concentrate disposal are still a major issue. Various maps locating the CAP canal, Lower Santa Cruz Recharge pond and delivery of recharged CAP water to I-10 and Tangerine were presented to geographically show how the CAP Water could be recharged and recovered.

He explained and pointed out the Avra Valley Recharge facility purchased by Metro Water through an agreement with Central Arizona Water Conservation District.  

Mr. Saletta also gave a brief explanation of Metro Water’s recovery wells, transmission mains and the use of Avra Valley Recharge Project.

Mr. Saletta explained that Oro Valley is currently storing its CAP water in the Lower Santa Cruz Recharge Facility. Oro Valley will study the possibility of constructing additional wells and share the transmission line with Metro as another alternative.

He also pointed out alternatives and the possibilities for a treatment plant. The study will look at a 30,000 acre feet per year water delivery system for the NW Water Providers (Marana, Flowing Wells, Metro Water and Oro Valley).   

Discussion and question session occurred:
-Determination of alignment and distribution of pipelines east of I-10 (Chair Powell)

-Map Alternative B-3-2 Pipeline Alignment Summary: Mr. Saletta gave a brief summary and pointed out the various the pipeline alignments. 

-What are the advantages of building a reliability reservoir and using the aquifer as storage. (Commissioner Hoffmann). Mr. Saletta indicated that the reliability reservoir would be less likely to occur because the Town of Marana is not in favor of having it within their town limits.

Using recharge and recovery provides reliability and the NW Water Providers will require the Federal government, CAWCD and CAP to provide a component of reliability regardless of the type of delivery system.

-If we use recharge and reliability is the Santa Cruz facility large enough to accommodate essentially 12 months of water? (Commissioner Milkey). Mr. Saletta indicated that the facility had the capability of storing 42,000 AF and could be expanded to 50,000 AF.

-Which entities are attached to 30,000 AF of water? (Commissioner Hoffmann). Mr. Saletta indicated that CAGRD, Oro Valley, M&I subcontractors and the Arizona Water Banking Authority however they have last priority.

-If Metro Water withdraws from the N.W. Water Providers group will it interfere with Oro Valley’s original plan? (Commissioner Tustison). Mr. Saletta indicated that Oro Valley would do a cost comparison with respect to partnering or participating independently developing its CAP Water by direct delivery or recharge and recovery.

-Town of Marana does not want a reliability reservoir built in town limits how does it effect us with the treatment plant project? (Commissioner Tustison). Mr. Saletta pointed out that the proposed pump stations, bypasses stations could be built for reliability to the treatment plant. Commissioner Tustison asked about funding the reliability reservoir. Mr. Saletta indicated that the Bureau of Reclamation and CAWCD are budgeted to plan the facility, and if this or other reliability is built the debt obligation will be paid back to the Federal government through CAWCD’s repayment contract.

-If we went with recharge and recovery would you still consider a requirement to treat that water before delivery into our system? (Commissioner Milkey).

Mr. Saletta mentioned that the treatment would not take place during the first phase of the project because there would be blending in our system. The treatment process could occur in a second phase.  

-Would we be committed having Metro Water do the same thing? (Commissioner Milkey). Mr. Saletta said there would have to be a commitment to treat included in the agreement before sharing the pipelines. 

-Is City of Tucson’s water to Oro Valley being treated? (Vice Chair Davis) Mr. Saletta indicated it is treated through recharge and recovery and is ph balanced and chlorinated. It is not treated through micro-filtration or reverse osmosis. Mr. Ruiz gave a brief explanation regarding Tucson’s treatment of recharged and recovery water, such as ph adjustment, disinfection. He also explained the only treatment that would be considered after recharge and recovery is reducing Total Dissolved Solids (TDS).  

Mr. Saletta also indicated that currently Oro Valley’s water was very low in TDS. 

Commissioner Shapiro was concerned how long the studies were taking and construction of the project.

Mr. Saletta explained that although construction and labor has been lower, materials and pipe have not gone down that much. He felt from a management stand point it was better to consider Tucson Water’s interim agreement and defer costs instead of burdening ourselves right away. 

Chair Powell stated, we absolutely don’t want to miss opportunities that are coming our way during the timing phase of this project, but it is important to continue with proper planning and that it is completed properly.

Mr. Ruiz emphasized that the Utility was not collecting impact fees that could help pay for the infrastructure because of the economic down turn. 

Mr. Saletta also said, Oro Valley has reduced its groundwater production by 20% due to renewable water supplies through the reclaimed water system. We are also collecting the GPF to payoff the reclaimed water system in addition to impact fees. He felt that the Utility was headed the right direction in terms of timing.

A discussion occurred regarding the possibility of a landfill project near Marana and water quality issues. (Commissioner Shapiro)

Commissioner Hoffmann felt it could be beneficial to find where Marana’s landfill was located relative to the proposed recovery wells, also the direction of groundwater flow, in addition to   groundwater level declines. Mr. Saletta assured the Commission that Staff would be checking all water quality issues.

There being no further comment or questions, Mr. Saletta ended his report. No Action was required on this item.

5.

  UPDATE ON CAP WATER STUDIES   (Commissioner Hoffmann & R. Jacklitch)  Discussion and/or possible action regarding the study for the delivery of treated Central Arizona Project Water into the Oro Valley Water Utility water distribution system.


Click here for Item #5

Commissioner Hoffmann introduced the next item CAP Water Distribution and Delivery Study.   

Mr. Jacklitch reported  that the study focuses on CAP wheeling of Tucson’s Water through the Town’s distribution system at Naranja and Shannon Road. A power point presentation was given.

The following information was covered in the power point presentation
 Slide 1 - Phase 1 Evaluation (Tucson Water Delivery Concept)
Objectives:
CH2MHill collects data from Tucson Water and the Town. Evaluate impacts to the Town’s distribution system. Evaluate water quality. Phase 1 evaluation assumes minimal infrastructure improvements to the Town’s system. 

Slide 2 - CAP Delivery Point CAP (recovered water)
Point of delivery will be Naranja and Shannon Road. Total recovered water 6,500 AFY = 3,000 AFY (acre-feet per year), CAP + 3,500 AFY GW (ground water). 

CH2MHill will perform another scenario at 7,500 AFY. Mr. Jacklitch stated that there would be an increase of 1,000 AF of ground water the amount of CAP water will not change. 

A discussion occurred on:
-Tucson Water’s delivery to areas near Oro Valley. Mr. Saletta pointed out several areas receiving Tucson Water such as Ironwood Ridge, Wilson School and Hardy and Northern areas.

Slide 3 - Preliminary Conclusions - Phase I
-Pipe flow direction -Some of the system currently has flow reversal.     -Limitations on existing system to receive CAP Water  -Town system will require infrastructure improvements and operational changes to our well field  -Limited capacity to move water from proposed connection point to the east and northeast portions of system
-System improvements will be identified in Phase 2

Slide 4  Conclusions
-Limited Usage of Recovery wells Hydraulic limitation  -Recovery wells located in southwest of system cannot provide supplies to east and northeast portions of system
-Unequal blending of groundwater and delivered CAP  (E and F1 zones receive primarily delivered CAP water,  Remaining zones receive various, but not equal, blending ratios of delivered CAP and groundwater  -Water Quality  (Average TDS: 223 mg/l  All water quality parameters well below SMCL)    -Minimal potential for scaling or de-scaling

A discussion occurred regarding Oro Valley’s permitted recovery wells, groundwater reduction and CAP water delivery.

Slide 5 Looking ahead to Phase 2 Evaluation
-Objective:  Evaluate CAP water delivery and distribution system scenarios and cost evaluation of alternatives -Identify infrastructure costs and provide capital improvement costs for Phase 1 

There being no further questions, Mr. Jacklitch ended his report. No action was required on this item.

6.

TOWN COUNCIL MEETINGS/COMMUNICATIONS              (Council Member Carter)


Councilmember Carter not present and no report was given.

7.

SUBCOMMITTEE/COMMISSIONER REPORTS


a.

Finance Subcommittee               (Commissioner Tustison)


Commissioner Tustison had no report. 

b.

Conservation Subcommittee            (Commissioner Davis)


Commissioner Davis reported that the subcommittee met on May 3rd. He also reported on the following:
-A WIFA Grant has been applied for by the Water Utility and it is a cost sharing grant for a study that will focus on water efficiency and causes of water loss. 
-Water Loss Program: This program includes a water system auditing program, performing leak detection on a small percentage of the distribution system. Developing a leak detection program, monitoring unmetered flow program 


Energy Efficiency and Water Conservation program
Discussion of the proposed Town Complex Landscape Project -Covered parking would support solar panels will offset 60% total annual power consumed by the Town’s facility.

The Conservation subcommittee was tasked with assisting in plant pallet and and plant placement based on location of the covered parking and solar panels.

Discussion of Southern Arizona Water Wise Landscape CD  
Commissioner Davis handed out a DVD entitled: Southern Arizona Water Wise Landscapint.This project was funded by ADWR and Bureau of Reclamation. The CD contains plants suitable for the desert how to maintain and grow them. 

Oro Valley has over 3,000 copies available for distribution.

Over 26 audits were completed in April. Highest number of audits completed for the month of April except for 2005.  
Amber Ridge HOA - Amber Ridge was one of the major areas that was audited. They are very interested in identifying leaks and other maintenance issues. 

-Landscape Ordinance - The subcommittee is developing Standard Operating Procedures (SOP) for the new Landscape Code which will go into effect June 2010.

Commissioner Davis ended his report.

c.

Renewable Water Resources Subcommittee      (Commissioner Hoffmann)


Commissioner Hoffmann had no report.

8.

STAFF REPORTS


a.

Customer Service Report                  (S. Seng)


Click here for item A

Meter Installation as of  April 30, 2010 
Projected Meter Installations for FY 09-10:    60
Actual Meter Installations for FY 09-10:        57
Projected EDUs for FY 09-10:                      90
Actual EDUs for FY 09-10:                          74

Ms. Seng ended her report.

b.

Capital Project                        (B. Jacklitch)


Mr. Jacklitch reported the following:
-Innovation 16-inch Water Main Installation: Pipeline installation is complete.

-Replacement Well E-1B: Location: Tangelo and First Avenue. The plan design for equipping the facility is 100% complete. Drawings are under review by Public Works/Planning & Zoning Department. This project will be scheduled for advertisement in June. 

-Modification of 3 Pressure Reducing Valve Stations: All three PRV stations are 100% complete.

Design Projects
-Lambert Lane Water Main Replacement:
  Location: La Canada & Pusch View Lane. The plan design is about 60% complete. Water Utility staff continues to coordinate its work with Public Works and road improvements.

-Sheraton Booster Station: Staff is currently doing additional design work electrical and pipeline configuration changes. 
Mr. Jacklitch ended his report.

c.

Potable and Reclaimed Water System Report         (D. Ruiz)


Click here for April 2010 Potable Water Reports

Click here for April 2010 Reclaimed Water System Report

Click here for April 2010 Potable Water Reports

April Reports
Potable Water Report - 2010
-Daily Demand = 4.0 - 7.0 Million (mgd). All wells will be ready for summer peak demand.  

-Potable Overall Reservoir Storage = 7.0 (mgd)

Reclaimed Water Report - 2010
Total Demand = 57.0 (mgd)

-South Hilton Golf Course: South pond will receive reclaimed water in a few weeks.
Mr. Ruiz ended his report. 

9.

DIRECTOR’S REPORT                      (P. Saletta)


a.

Report on Tucson Water Forum


Click here for Item A  Tucson Water Forum

Click here Item A Mountain Snowpack

Mr. Saletta reported the following:
-Tucson Water Forum - This forum was held on April 28th.  -Attendees: P. Saletta, Commissioner Milkey, Councilmember Snider 
Topics: Navajo Generating Station, Climate change and Colorado River shortages, ADD water Process, CAGRD, Tucson Area Realiability discussion. Mr. Saletta participated in panel.

-Bond Defeasance closed April 29. The Town will save about $300,000 in debt service obligation for the next several years for a total savings of approximately $32,000 in interest.  

-Handout: Colorado Water River Snowpack report - Mr. Saletta indicated that the upper water shed of the Colorado River was in the 70%- 89% in terms of snowpack. Arizona's higher elevations have a considerable amount of snowpack but the lower portion has decreased. 

b.

Upcoming Meetings


5/19: Council meeting Topic: Tentative adoption of budget
5/20: CAGRD meeting  
6/02: Council meeting
6/08 - 6/09: WRRC Conference, Commissioner Reynolds will attend June 9th.
6/14: WUC meeting
Mr. Saletta ended his report.


10.

FUTURE AGENDA ITEMS


There were no future agenda items suggested. 

CALL TO AUDIENCE - At this time, any member of the public is allowed to address the Water Utility Commission on any issue not listed on today’s agenda.  Pursuant to the Arizona Open Meeting Law, individual Commissioners may ask Town Staff to review the matter, ask that the matter be placed on a future agenda, or respond to criticism made by speakers.  However, the Water Utility Commission may not discuss or take legal action on matters raised during "Call to Audience."  In order to speak during "Call to Audience" please specify what you wish to discuss when completing the blue speaker card.

No audience blue cards were submitted and no one from the audience spoke.

NEXT MEETING: June 14, 2010   Location: Hopi Conference Room

ADJOURNMENT: 7:33 p.m. 

MOTION: A motion was made by Commissioner Shapiro and seconded by Vice Chair Davis to Adjourn                 


MOTION carried, 7-0.