MINUTES
ORO VALLEY WATER UTILITY COMMISSION
REGULAR SESSION
Monday, September 13, 2010
HOPI CONFERENCE ROOM
11000 N. LA CAÑADA DRIVE
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PRESENT: |
Dave Powell, Chair
Richard Davis, Vice Chair
Robert Milkey, Commissioner
Richard Reynolds, Commissioner
Elizabeth Shapiro, Commissioner
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| EXCUSED: |
John Hoffmann, Commissioner
Winston Tustison, Commissioner
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STAFF PRESENT:
Philip C. Saletta, Water Utility Director
Shirley Seng, Utility Administrator
David Ruiz, Engineering Division Manager
Robert Jacklitch, Project Manager
OTHERS PRESENT:
Council Liaison, Barry Gillaspie
Councilmember, Joe Hornat
There were no speakers.
Mr. Saletta explained the election process for officers and opened the nominations for Chair and Vice Chair.
Motion to nominate Dave Powell as Chair was made by Commissioner Shapiro.
Motion to nominate Richard Davis as Vice Chair was made by Commissioner Milkey.
MOTION: A motion was made by Commissioner Milkey and seconded by Commissioner Reynolds close the nominations for Chair and Vice Chair and to treat the elections by acclamation.
MOTION carried, 5-0.
There were no corrections to the July 12, 2010 minutes.
MOTION: A motion was made by Commissioner Shapiro and seconded by Commissioner Milkey accept the July 12, 2010 minutes as written.
MOTION carried, 5-0.
Chair Powell recognized Councilmember Gillaspie as liaison to the Water Utility Commission and Councilmember Hornat as his alternate.
Mr. Saletta indicated there was a Commission Communication with an attachment regarding the Articles of Incorporation for the Water Conservation Alliance of Southern Arizona (Water CASA). WaterCASA is not part of the University of Arizona. Mr. Saletta mentioned that the members will look into incorporating independently as a 501(c)(6) non profit corporation.
The members met several times and formulated the attached Articles of Incorporation.
Primary purpose:
-Financial cost savings to the Town and Water Utility. Previously the fees were based on groundwater use. The fee will now be changed to a flat service annual fee of $5,000 per year for Oro Valley. In addition, services and pricing will be provided on as requested basis for conservation workshops and any other water conservation-related services.
Staff is requesting a motion from the Commission to recommend that Town Council approve The Articles of Incorporation for the Water Conservation Alliance of Southern Arizona (WaterCasa).
Question and answer session occurred.
-What is the anticipated operating budget? (Commissioner Milkey). Mr. Saletta explained there were five members. At this time for the remaining Fiscal year October, 2010 we are looking at approximately $12,000 - $15,000 a year budget depending on minimum dues. All staffing is being hired on a part time basis.
Mr. Saletta explained that the members will consider increasing its dues to $4,000 per year depending on the services requested.
Commissioner Milkey requested clarification whether the bulk of the funding came from membership fees rather than product and services? Mr. Saletta explained that both would be included but the actual membershipfees would be for the budget and the other expenses would be on a pay as you go basis for additional services requested.
-Is there any liability for the Town in the operations of this corporation? (Commissioner Milkey). Mr. Saletta indicated there would not be and read the liability portion in the Articles of Incorporation in the last paragraph of Article 10.
-If dues are reduced from $18,000 to $5,000 per year does it include all membership or is it just Oro Valley and a standard drop for everybody, and will the corporation be financially viable and able to survive all its costs? Commissioner Reynolds.
Mr. Saletta explained that the $5,000 was the maximum membership committment for each participant. Initially, Oro Valley Water’s participation was approximately $18,000 per year. All members have agreed to pay up to $5,000 annual dues per year.
MOTION: A motion was made by Vice Chair Davis and seconded by Commissioner Reynolds recommending to Town Council to approve Resolution (R) 10-57, A Resolution of the Mayor and Council of the Town of Oro Valley, Arizona Authorizing The Articles of Incorporation for the Water Conservation Alliance of Southern Arizona
MOTION carried, 5-0.
Mr. Saletta reviewed a map outlining the CAP Water Studies discussed by the Renewable Water Subcommittee at their August 6th meeting. The map outlines the geography and various projects Oro Valley has been involved in terms of CAP Water Delivery.
CAP Concept:
-2007 Project: Preliminary cost estimates Canal I-10 and Tangerine. CAP delivery pipeline to Oro Valley.
-Lower Santa Cruz Recharge and Recovery Project
-Background History: In 2006 Council approved the Memorandum of Understanding with the NW Water Providers (Town of Marana, Flowing Wells, Metro Water and Oro Valley). In 2008 approved an Intergovernmental Agreement regarding future studies for CAP Water delivery to the NW Water Providers.
-Central Avra Valley Storage and Recovery Project (CAVSARP): Tucson Water recharge and recovery CAP water project. Currently, Oro Valley is working with Tucson Water on a cost study for interim delivery of CAP water.
Pointed out diversion points to CAVSARP and recharge ponds.
-Point of delivery to Hayden Udall plant. This plant will take care of PH adjustments and chlorination to Tucson Water’s Clearwater Reservoir.
Mr. Saletta explained that Oro Valley's second study will take a look at water quality, system pressures and water flow.
Mr. Saletta continued with a Power Point Presentation regarding CAP Delivery Recharge and Recovery.
-2007 Oro Valley reviewed CAP treatment and delivery alternatives and pipeline alignment. Metro Water has taken a look at the possibility of recharging water at the north Avra Valley Recharge Project area owned and operated by Central Arizona Water Conservation District.
Mr. Saletta gave a brief explanation of Metro Water’s recharge project well construction and wet water delivery. Oro Valley was fully informed of this study and results were very positive.
-Table: CAP Delivery Analysis list of alternatives. Carollo Engineers currently working on this study. This study will probably be completed some time in November.
Review: Recovery Well Analysis
Map 1 -Alternative 2 - 2500 feet and 700 gpm: Mr. Saletta pointed out that Staff looked at a significant array of alternatives to lay out the best project in terms of recharge and recovery.
Pointed out Lower Santa Cruz Replenishment Project is available to all CAP M&I Subcontractors and that Avra Valley Recharge Project is now owned by Metro Water. Wells within 1-mile of recharge basins are within what is known as "safe harbor". The Lower Santa Cruz facility has the capacity of storing 40,000 AF per year but is permitted for 50,000 AF per year. Currently, Oro Valley stores 2,000 AF per year at Lower Santa Cruz and 2,000 AF at Kai Farms groundwater savings facility.
Map 2 -Recovery Wells Analysis Alternative 3 - 1250 feet and 700 gpm
Map 3- Alternative 4 - 2500 feet and 1400 gpm
Map 4- Alternative 5- 1250 feet and 1400 gpm
Figure 7- Northwest CAP Delivery System -Original pipeline configuration located at I-10 and Tangerine. Alternative B-3-2 pipeline routing is the Preferred Alternative if all four entities participate.
Review: Capital Costs Summary Recovery Well Alternative
Cost per Provider Phase I - 15,000 AF/YR: -Marana $9.5 million, Flowing Wells $4.1 million, Metro Water $13.6 million, Oro Valley $13.6 million. Total for Phase I = $41.8 million. If Oro Valley proceeds on its own their cost could be $17.7 million.
Cost per Provider Phase II: Involves additional 15,000 AF/YR. This analysis is currently being performed right now.
Figure 2 Map- Potential for Well Layout Alternative 2.1 & 2.2 located in State Land area. However, Oro Valley must work out arrangements with State Land in order to drill any wells.
Figure No. 1 N.W CAP Delivery System Route Evaluation - Alternative G Pipeline Segments
Question and discussion session occurred.
Commissioner Shapiro inquired about additional pipeline infrastructure and Tucson Water future CAP wheeling plans. Mr. Saletta explained there wouldn’t be additional pipelines built but there would be a need for interconnections from the Tucson Water’s distribution system to the Oro Valley Water System. Commissioner Shapiro asked are the structures similar in design for the CAP water wheeling and recharge and recovery? Mr. Saletta explained they are similar and that regardless of the project CAP water, interim wheeling or long term must be delivered to E-zone which is one of the highest consuming zones. There were no further questions.
Mr. Ruiz and Mr. Jacklitch proceeded with the power point CAP Water Distribution and Delivery Study.
Mr. Jacklitch reviewed the following:
-Phase 1 Evaluation, wheeling CAP water through Tucson Water's distribution system has been completed.
-What are our current TDS numbers? (Commissioner Milkey). Mr. Jacklitch explained that Oro Valley’s average TDS is under 150 in our existing well field. How much is the variation throughout the Town and is it constant? Mr. Ruiz explained the TDS number are estimates for 3-4 years. In Phase I they will not be higher than 350 TDS and as low as 225 during the year.
-Phase 1 Evaluation Preliminary Conclusions relative to Water Quality and Flow reversal look very promising. There is minimal potential for scaling or De-scaling.
Mr. Ruiz explained the scaling and de-scaling process.
Mr. Ruiz clarified the following: SMCL represented Secondary Maximum contaminate levels and pipe flow direction and reversal.
Mr. Ruiz reviewed the following:
-Phase 2 Evaluation CAP Canal Delivery: Review growth, water demand, volumetric levels, adequate distribution, and infrastructure requirements.
-Phase 2 Evaluation Future Water Demand Scenarios
Mr. Ruiz explained point blending process bringing two sources together before its delivery through the system.
-Phase 2 - Future Water Demand Scenarios (10,000, 12,000 and 15,000 acre feet per year), and Volumetric target ratios of CAP water versus gound water.
-Phase 2 Evaluation- Infrastructure requirements
Phase 2 - Evaluation of Water Quality will be analyzed at 300 TDS and 650 TDS
-Review "end point" chlorine residuals. Strategic locations within the Water systems are checked known as "end point"
Mr. Ruiz ended his report and also indicated that the Study was providing good results. Oro Valley Water Utility is making sure there will be no problems introducing CAP water to the Town.
Question and discussion session occurred:
-In Phase 2 when CAP is delivered is it blended twice? (Commissioner Shapiro). Mr. Ruiz explained if we do recharge and recovery there is natural blending with ground water however, over time the CAP water will overtake the existing groundwater and will eventually reach 650 TDS (Total Dissolved Solid).
As TDS levels start to increase beyond what is acceptable we will have to determine an acceptable TDS limit and if it may require some sort of reverse osmosis treatment which reduces TDS level.
-With regards to Arroyo Grande will our CAP allocation go up? (Commissioner Davis). Mr. Saletta explained that the Arroyo Grande project was on hold because there had been changes with the State Land Commission and properties were not being sold. The Town is still interested in meeting with State Land officials in terms of the Towns planning study. The planning study revealed that if Arroyo Grande were to be built to its maximum development they would use about 8,100 AF of water. There is a portion that could be supplied by The Town however we would have to ask for additional allocation from Arroyo Grande. It is estimated that they have approximately 14,000 AF of CAP water allocations just in Pima County. They also have some transfer of CAP allocations from State Lands in Maricopa County. Oro Valley estimates about 3,500 AF will be needed if Arroyo Grande is annexed. This water could be also delivered through Oro Valley’s E-zone.
When you mentioned sustainable at 5500 does it mean that our aquifer will cease to decline? (Councilmember Hornat). Mr. Ruiz indicated with a sustainable rate there may still be minimal decline. At one point the sustainable rate was much higher before the drought at 5500 AF. In some years you may not have declines because of higher natural recharge occurrences.
There were no further questions, Mr. Ruiz ended his report. No Action Required on this Item.
Commissioner Shapiro explained that there was only one Preferred Financial Scenario and no Alternate Scenario. She also explained some of the changes for the water rates fees and charges for FY 2010-11.
-No increase in base rate for the next 5 years in the projection period
-Maintain 4 tier rate structure encouraging conservation
-No increase in the tiered rates this year followed by small increases in the tiered rates in the next 4 years
-No rate shock
-Increase Groundwater Preservation Fees (GPF)
The Preferred Financial Scenario does not include O&M expenses for CAP treatment and delivery in the 5-year projection period. CAP wheeling infrastructure costs are included as are Tucson’s Water wheeling costs.
The Water Utility reduced its debt with the redemption of 1999 bonds and defeasance of Bond Series 2001 Bonds.
-Current Debt Service Coverage ratio could be 1.8 by end of fiscal year
Commissioner Shapiro ended her update.
Ms. Seng confirmed that a draft version of the Water Rates Analysis Report was forwarded to the Commission via email. She requested that any comments be returned to her before Wednesday, September 15.
Ms. Seng proceeded with a Power Point presentation.
-Overview: Oro Valley Water Utility -3 Funds: -Preferred Financial Scenario -Proposed Schedule
-Review: Summary of All Funds by Revenue\Expenses -Enterprise Fund (Operating Fund) -AWRD Impact Fee Fund -PWSD Impact Fee Fund
Each of these funds have their own budgets. For purposes of the Rates Analysis the information in the three funds are combined to review the Utility’s total debt service coverage.
Review: Preferred Financial Scenario
-Key Assumptions: Ms. Seng pointed out no increase in base rates all 5 years, no increase in commodity rates in year 1, increases to the GPF for potable & reclaimed, increase New Service Establishment Fees, increase Meter Installation Fees, 75 new metered connections, no new debt for existing system improvements
-Results: Meets all rate setting policies & bond covenants, cash used to minimize future debt, no rate shock, water rate structure continues to promote voluntary water conservation, $1.60 per month or 4.1% increase to average customer using 8,000 gallons of water
-Reduction of outstanding debt service, management of water resources related to recovery wells, long-term storage credits & extinguishment credits (reduces obligation to Central Arizona Groundwater Replenishment District), reduction in operating costs and capital projects
-Impact to customers Table: breakdown by gallons, current\proposed increases, dollar increases, percent increases -no base rate or commodity rate increases. Increases will only be experienced in GPF. Billing figures in the table do not reflect sales tax, or sewer fees. Ms. Seng explained that approximately 85% of all customers use 8,000 gallons or less per month.
-Water Rates Analysis Proposed Schedule: -3 Finance Subcommittee meetings held (07/08, 08/03, 08/24) -09/13: Commission meeting regarding recommendation to move forward with the Preferred Financial Scenario -09/22: Council Study Session -10/06: Council to consider Notice of Intent to Increase Water Rates -11/17: Public Hearing-Council to consider resolution to increase water rates -12/18: If adopted, new water rates effective
Packet information: Provided Financial Scenario, Table for Monthly Charges & Percent Increase Comparison at 1,000 gallons
Ms. Seng ended her report.
Question and discussion session occurred:
-Looking at future year projections are there increases in the tiers and how much? (Commissioner Milkey).
Ms. Seng indicated she did not have the exact percentage, however there could be a 2% in tier 1 up to 5% in tier 4. She identified the projected increase from water rates to an average customer noted on pg. B-7 in the Water Rates Analysis Report (0.6% FY 2011-12), (1.1% FY 2012-13), (1.3% FY 2013-14) and (1.8% FY 2014-15) Water Rates Analysis Report.
There were no other questions.
Chair Powell indicated there was a motion on the table.
MOTION: A motion was made by Commissioner Shapiro and seconded by Vice Chair Davis recommend that the Water Utility Commission forward their recommendation to the Town Council to approve the resolution providing the Notice of Intent to Increase Water Rates contained within the Preferred Financial Scenario.
MOTION carried, 5-0.
Councilmember Gillaspie reported that Council was taking a look at four other Boards and Commissions DRB, ARB, PRAB, Finance & Bond Commission at their structures and how they work. He mentioned that it was important to reacquaint Council with what their role and expectations are. He would like to arrange some time with the Water Utility Commission in the future.
There will be several meetings scheduled with State Land officials regarding Arroyo Grande. Presently, they are waiting for the governor’s election results and are also concerned about the value of open space and high density development. There are many outstanding issues and decisions to be made. We must also realize that the economy is so bad that it may be tough to see people develop in this area. Councilmember Gillaspie ended his report.
Chair Powell indicated that the Subcommittee Chairs would remain unchanged unless the Commission had objections.
-Finance Subcommittee: Chair Tustison Conservation Subcommittee: Chair Davis -Renewable Water Resources Subcommittee: Chair Hoffmann
Commissioner Shapiro mentioned the Subcommittee met twice in August. The Subcommittee will plan to attend the Council Study Session regarding the Proposed Water Rates Increases.
Commissioner Davis reported that work continues with the Planning Department regarding the new Landscape Ordinance and getting request for proposals for water auditors.
No other report given.
Ms. Seng reported the following:
Meter Installation as of August 31, 2010
Total Metered Connections - 18,458
-Actual New Meter Installations as of 8-31-10: 17
-Projected EDUs for FY 10-11: 94
-Actual EDUs as of 8-31-10: 40
New metered installation summary:
Residential: 10
Commercial: 4
Ms. Seng ended her report.
Mr. Jacklitch reported the following:
Well replacement E-1B: Construction scheduled to begin. They are in the process of equipping the well and developing the site.
Lambert Lane Improvements: New 16-inch main between La Canada and the Highlands. The design phase of this project is 95% complete.
Campo Bella Area: Location - South of Calle Concordia. Notice to proceed for design services will be issued. This project will include replacing all undersized mains in the area.
Sheraton Booster Station: The design is complete and we are finalizing the contract documents. Staff expects to advertise this project no later than the end of this calendar year. Construction will begin first part of next year.
N. La Canada 3.0MG Concreted buried Reservoir: A Notice to proceed has been issued. Location - King Air Drive. Landscape mitigation will begin in September and in October excavation will begin on the site. Monthly updates will be posted on the Water Utility’s website so that the residents may be informed of the progress. This reservoir may become a good point for blending future CAP water and will be our largest potable water reservoir.
Mr. Jacklitch ended his report.
Mr. Ruiz reported that the packets included July/August Potable Water & Reclaimed Water Reports
Potable Water System 2010 - Reports include Countryside System Daily Demand
-Countryside System Total Daily Demand: 0.8 (mgd)
-Overall Reservoir Storage July & August: Averages: 8.5 - 6.0 million gallons
Reclaim Water System 2010 - July & August
Mr. Ruiz reported the South Pond was on line.
-Year to Date Total: 417.0 million gallons. Total includes all five golf courses and one school.
Mr. Ruiz ended his report.
Mr. Saletta reported the following:
-Water Summit: Schedule - 10/29 Time 8:00 -12:00 pm, Location T.C. Chambers. The concept is to gather an overall local CAP regional and state-wide education forum of Commissions, Council and citizens and customers to discuss water issues. Guest Speakers: J. Biggs -Tucson Water, K. Chavez - Pima County Regional Wastewater Reclamation Dept., C. Neal - Central Arizona Water Groundwater Replenishment District, W. Tenney - CAP Board & Metro Water Assistant General Manager, K. Smith - Arizona Department of Water Resources, R. Maguire - Arizona Department of Water Resources, J. Mawhinney - Chair, Groundwater Users Advisory Council. Training credits available for WUC.
A claim against the WUC has been submitted by a developer regarding refund of impact fee credits for infrastructure construction. The Water Utility is challenging the claim. Staff and our Legal Department have spent a significant amount of time responding to questions regarding this claim. Staff will continue to keep the Water Utility Commission updated.
Mr. Saletta reported the following:
-1st Draft of Cost of Service Study: Oro Valley’s costs are extremely high however staff will continue discussions with Tucson Water. A meeting will be scheduled as soon as possible with Oro Valley, Metro Water and Tucson Water.
-9-15: Town Council meeting
-9/16: State of The Town Address
-9/22: Town Council Study Session on Water Rates Time: 6:00 pm. Email will be sent to the Water Utility Commission.
-10/6: Town Council - Item: Notice of Intent on water rates
Mr. Saletta ended his report.
No agenda items requested.
At this time there were no public speakers.
NEXT MEETING: Next WUC meeting scheduled October 11, 2010
MOTION: A motion was made by Commissioner Shapiro and seconded by Vice Chair Davis to adjourn the meeting.
MOTION carried, 5-0.