MINUTES
ORO VALLEY WATER UTILITY COMMISSION
REGULAR SESSION
Monday, January 10, 2011
HOPI CONFERENCE ROOM
11000 N. LA CAÑADA DRIVE
 
 
 
Chair Powell called for a moment of silence for the victims in Saturday’s Tucson shootings.  

CALL TO ORDER - AT OR AFTER 6:00 P.M.

ROLL CALL 6:01 P.M.

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

STAFF PRESENT:
Philip C. Saletta, 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.

There were no speakers.

Chair Powell introduced Russell Tast and his father both Oro Valley residents. He mentioned that Russell was representing the Boys Scout merit badge group and was present to observe the Water Utility Commission meeting.

1.

APPROVAL DECEMBER 13, 2010 MINUTES  Discussion and/or possible action.


Click here for Item #1

MOTION: A motion was made by Commissioner Tustison and seconded by Commissioner Reynolds to Accept approval of the December 13, 2010 minutes as written.

MOTION carried, 7-0.

2.

COMPREHENSIVE CENTRAL ARIZONA PROJECT WATER DEVELOPMENT PLAN    (P. Saletta)  Discussion and/or possible action regarding Oro Valley Water Utility Comprehensive CAP Water Development Plan.  Discussion may include elements that should be considered in the plan, the timing of the proposed plan and the framework for presenting information to Council and the Commission.  Discussions may include updates on the Northwest Water Providers, interim delivery of CAP water through the Tucson Water System and other activities and studies pertaining to the development of CAP water.


Click here for Item 2a Power Point Presentation

Click here for Item 2b Options & Preliminary Cost Estimates

Commissioner Hoffmann reported that the Renewable Water Resources Subcommittee met Wednesday, January 5th to discuss the Comprehensive Central Arizona Project Water Development Plan. Mr. Saletta presented various scenarios on growth and water delivery options. He also discussed the pros and cons on each scenario. 

Mr. Saletta presented a power point presentation regarding the Comprehensive Water Resource Plan which primarily focused on CAP Planning issues as requested by the Commission. Mr. Saletta presented slides 1 and 2 outlining the main goals and planning process.

Graph 1 - OVWU Water Use and Supply 2007
-Illustrates high growth projections by 2025. Total Water Use Demand 17,000 AF includes alternative water resources: CAP Water and Reclaimed Water.

Graph 2 - OVWU Water Use and Supply - 2011
Illustrates ground water usage and sustainable groundwater production of 5,500 AF per year. Reclaimed Water and CAP TW Wheeling. 

Graph 3 OVWU Water Use and Supply -2011 Scenario 2
Illustrates year 2010 a Projected demand 1% to 3% growth rate. The 1% to 3% growth rate dramatically reduces the amount of demand in 2025 and illustrates increases up to 13,500 AF per year. This graph is broken down into incremental deliveries of 1,000, 1,500, and 3,000 AF/YR for CAP Tucson Water Wheeling. This first phase illustrates a total delivery of 5,000 AF/YR of CAP water delivery. 

Graph 4 OVWU Water Use and Supply - 2011 Scenario 3
Illustrates increments of 1,000, 1,500, 3,000 and 5,000 AF/YR Year 2022. Projected demand 1% to 3% growth rate. Reclaimed Water demand expected  to be 2,200 AF/YR, Groundwater Production 8,000 AF/YR down to 4,000 AF/YR  with gradual increase in the first phase of CAP delivery. 

OVWU Water Use and Supply - Scenario 3
Mr. Saletta pointed out incremental increases of 1,000, 1,500, 3,000 (Interim -TW) and 5,000 AF by year 2022. Growth rates 1 - 3%. 

The 1-3% growth rates are based on actual water use.

OVWU Water Use & Supply -2011 Scenario 1 - High Growth:  Projected Demand 2% to 5% Growth Rate, OVWU CAP Delivery Demand estimated at 16,000 AF/YR. Sequential increases 1,000 - 3,000 AF/YR (CAP TW Wheeling).

OVWU Water Use & Supply -2011 Scenario 3 - High Growth: Projected Demand 2% to 5% Growth Rate and OVWU CAP Delivery Demand estimated at 16,000 AF/YR. Sequential increases 1,000 - 3,000 AF/YR (CAP TW Wheeling).

Mr. Saletta mentioned that CAP deliveries were based on reductions from what the original numbers were and also based on the economic outlook. If we do not experience the higher growth rate we will not be able to collect the impact fees to help pay for these projects. It could cause the GPF (Groundwater Preservation Fees) to be further increased to pay the debt for CAP water development.

Mr. Ruiz discussed the options and preliminary cost estimates for wheeling of CAP Water.

Short Term Interim Wheeling through Tucson Water at 1,000, 1,500 and 3,000 AF/Year
Description of Project: Recharge O.V. CAP water in Tucson Water’s recharge basins. Staff is still working on Tucson’s Water Cost Study. 
Reviewed Preliminary costs for Short Term Interim Wheeling:
1,000 AF: Capital Costs ($50,000),  Sunk Cost ($10,000), Tucson Water Delivery ($562,000), CAP Water ($135.000), Debt Service ($0), Cost per AF ($708), Power Savings ($119,780), CAGRD Savings ($201,087), GWA Savings ($0), Adjusted Cost per AF ($387), Earliest Timeline: January 2012 

1,500 AF: Capital Costs ($515,000), Sunk Cost ($103,000), Tucson Water Delivery, CAP Debt Service, Cost per AF, Power Savings, CAGRD Savings, Adjusted Cost per AF = $445, Earliest Timeline: January 2012

3,000 AF: Capital Costs ($6,619,000) Sunk Cost ($1,686,000), Cost per AF= $678, Earliest Timeline: January 2013

Mr. Ruiz gave an explanation about the sunk costs and Oro Valley’s infrastructure needs for the various options 1,000 AF through 5,000 AF/YR of CAP water deliveries.  

Mr. Ruiz explained that Oro Valley could have Interim Wheeling from 1,000 or 1,500 AF/YR for a number of years before moving forward with the 3,000 AF/YR delivery scenario. 

He explained that in about 5 years Tucson Water’s TDS (Total Dissolved Solids) may start to rise. When we begin our TDS could be at a range of 300 TDS range and blending may not be necessary. There will be some blending in the system but when we reach 3,000 AF/YR in 5 years, the TDS could rise and the possibility of more infrastructure exists. 

Long Term Scenarios - Phase 1: Staff is currently working on two studies Recharge and Recovery and Direct Treatment and Delivery. The Capital costs for both these Options are preliminary and could change. As the studies progress the cost estimates will become more defined. The cost per AF and adjusted cost per AF for both options are undetermined.

Delivery Option 1- Timeline: Earliest July 2015
Delivery Option 2- Timeline: Earliest January 2016

Mr. Ruiz indicated that the goal will be to keep the groundwater production not much over the sustainable annual production rate.

Ms. Seng mentioned that the preliminary costs were estimates based on Tucson Water’s projections and CAGRD future rates. If these projects do not occur within our time lines the costs and savings could be significantly different.

-Does capital cost build on each other as we proceed with the short term options 1,000 through 3,000 AF/Year? (Commissioner Milkey). Mr. Ruiz explained they were separate stand alone estimates. 

Mr. Saletta also explained that the table was prepared to compare the various projects so that the Commission could see what the costs were per acre foot for each project. 

-On the Long Term Option 2 Direct Treatment & Delivery does it require building a reservoir? (Commissioner Tustison). Mr. Ruiz mentioned it would require a receiver/storage tank or by pass pump station, so it would not require a large storage reservoir. 

He also explained that the costs were based on Oro Valley doing the projects solely on their own.

-When we go with the 1,000 and 1,500 Interim Wheeling can we use this infrastructure for the Long Term Projects? (Commissioner Shapiro). Mr. Ruiz explained in terms of 1,500 AF system we could use some of the equipment and pipeline used for the 1,000 AF system. In addition, the pipeline infrastructure for the 1,500 AF system can be used for the Long Term options.

The Utility would not need to borrow money for the 1,000 and 1,500 AF system. Mr. Saletta pointed out that Oro Valley could begin do the 1,000 AF project for 1 or 2 years then move forward with the 1,500 AF in 2 to 3 years, and the 3,000 AF to possibly 5 years. However this will need to be discussed with Tucson Water.  

Commissioner Tustison felt given the economic situation in the country that the 3-5 year growth rate would be slow. If the growth rate increases how much time will it take to go from the Short Term to Long Term program? 

Mr. Ruiz mentioned that the growth rate indicators have to be analyzed year to year. We must  implement the appropriate levels based on demand and that we are sustaining growth.

Mr. Saletta explained that the financial funding must be in place before taking on a $65,000,000 Recharge and Recovery project. It could take place in 3 years, but we have some lead time if we get started on the Short Term projects.

Commissioner Milkey felt it was prudent to go ahead with the Long Term evaluation process even if we deferred the start date. If Staff makes a decision on Recharge & Recovery or Direct Treatment and Delivery and everything is in place, then we could move much faster. We should continue refining our understanding and planning efforts even if the economic indicators are not there.

Mr. Ruiz mentioned as we move along, we must review the projects and the need for further studies exists.

-Will we have to finance any of the planning for Option 1 or 2 Long Term? (Commissioner Davis). Mr. Saletta explained that the funds could be taken from the Alternative Resources Development Impact Fee Fund. The preliminary plans are not that costly however, the design portion is. It also depends how much we want to spend and increasing the GPF along the way. We want to minimize the increases to the GPF because much of the funding will also come from the Alternative Impact Fee Fund.

-What do we need to get started and can we vote on a plan now and forward it to Council? (Commissioner Shapiro). Mr. Saletta felt it would take a while, and that it was strictly up to the  Commission. He encouraged the Commission to wait until further progress was made because there were still several items that needed to be developed in the table.  

Mr. Saletta emphasized that the Council and Commission need to see how these projects will effect water rates this still needs to be completed. 

Chair Powell indicated that the table was on the agenda as an information item only, and we must realize Staff still needs to re-define several areas.

Commissioner Milkey felt a decision and conclusion should be made on the 1,000 AF/YR  Short Term Option. We need to know the cost estimates and how it will impact on the water rates. Commissioner Milkey asked if Staff could have the water rates information in a month. Ms. Seng indicated that she could provide the information on the two Short Term options.

Ms. Seng believed that she could provide the information by February and emphasized that for each option there would be a five year proforma. 

Commissioner Milkey felt that the best approach would be to implement Option 1 and possibly move up to the 1,500 AF/YR project. Mr. Ruiz explained the design and construction timeline for the 1,500 AF/YR project and also emphasized the costs and impact to the customers.

He also mentioned that the costs associated with the short term projects may be available by February but we need to finalize the price with Tucson Water. The possibility of reducing the $562 per AF amount is strictly dependant on capital costs and certain O&M charges. When the negotiations are complete a draft agreement can be developed and presented to Council for approval. All of these steps must be taken before Staff can begin to work on the design process.    

Mr. Ruiz pointed out the advantages and disadvantages for each option.

Ms. Seng reported that she would have to evaluate the increases in the budget, analyze all the projections and costs associated with the projects to determine how it impacts the rates in a five year period. Ms. Seng also pointed out there would be additional O&M costs. Ms. Seng also emphasized avoiding rate shock.

Commissioner Tustison asked about the pending Joint Study Session with Council to discuss the Comprehensive plan. Mr. Saletta mentioned that the Joint Study Session had not been scheduled but could take place in March. Commissioner Tustison felt strongly that the Commission should meet with Council first before taking any definitive steps.

Mr. Saletta explained that the budget could increase by $387,000 if Oro Valley proceeded with the projects stand alone. He mentioned that an analysis must be performed with each of these projects.

Commissioner Milkey indicated he would be fine waiting on the 3,000 AF and the Long Term projects, but we need to get some of the Short Term projects on the way and in place for approval.

Ms. Seng said, we need to know the impact to the rate payers and the preliminary costs before these projects go to Council for approval.

Mr. Saletta agreed that Staff could move quickly on the 1,000 and 1,500 AF/Year options but we also need to continue to work on the other projects. We must be certain we are moving in the right direction.

Commissioner Tustison complimented Staff for a great job and making things clearer by presenting the table.

Commissioner Milkey also felt that the Interim Wheeling of CAP water through Tucson Water was a very clever idea. 

Mr. Saletta reviewed several areas of the Phase II projects such as costs, full treatment and delivery, reverse osmosis and reduction of TDS. 

He asked if the Commission wanted a summary report with project descriptions, facility maps, graphs, time lines and a comparative table.

The Commission felt it was a good idea, but was not necessary to do right away.

Commissioner Shapiro felt that narrowing the projects to five year terms would make things simpler for Council’s approval.

Chair Powell explained that as the Commission starts to understand how things operate it will help with educating the community and Council.
 

There were no further comments. No Action was required on this item. Chair Powell felt there was great input from the Commission.

3.

  REGIONAL WATER ASSESSMENT THINK TANK            (P. Saletta)  Discussion and/or possible action regarding the recent Regional Water Assessment Think Tank Session  that was conducted by the Pima Association of Governments.


Mr. Saletta reported that he attended the regional water assessment Think Tank meetings at Pima
Association of Governments.

The basic concept was to find out the community’s thoughts about water.

The participants were asked certain questions:
-What regional water issues need to be addressed? All of the comments could be seen and evaluated by the attendees.
-What could the water use priorities be at a regional level?
-How can water resources be managed at a regional level?
-How can water use be managed more at a conservation level?
-How can water infrastructure for the region be funded?

Four to five meetings were held. The data has not been finalized but Staff will keep the Commission informed.

There were no comments or questions. No Action was required on this item.

4.

  UPDATE ON CAPITAL PROJECTS   (D. Ruiz & R. Jacklitch)  Discussion and/or possible action regarding the current capital projects that are being designed or constructed by the Water Utility.


Click here for Item #4

Mr. Jacklitch presented a power point presentation: Photos - 3.0 million gallon Potable water reservoir (reservoir concrete floor is complete, 2 sections of vertical wall has been poured), 
-Well at Tangelo (Control building wall is complete)  -Location: Tangelo Drive & 1st Avenue            -Completion: March 2011

N. La Canada 24" Pipeline: Construction begins: January 2011    -Location: Moore Rd. & King Air Drive 

Commissioner Tustison asked what is the cost for the new well? Mr. Jacklitch indicated that the construction contract was about $400,000 however the well drilling was about $600,000. The well is about 800 feet deep with 14 inch casing, depth to water approximately 254 feet from land surface. 

Design Projects:
-Chlorine storage building relocation  -Location: Reclaim facility
-Campo Bello Water Main Replacement:  Location: South of Calle Concordia
-Lambert Lane Water Main design is complete  -Bidding to take place March 2011  -Joint project with Public Works Department road widening project

-El Conquistador Booster station: The design work for this project is complete -Staff continues to work with Hilton staff on the construction easement.
There were no further questions. Mr. Jacklitch ended his report.

5.

  CUSTOMER SERVICE UPDATE   (S. Seng)  Discussion and/or possible action regarding the meter report and customer service activities.


Click here for Item #5

Ms. Seng reported on the Customer Service Report
Meter Installation as of December 31, 2010
-Actual Metered Installations as of 12/31/10: 33 
-Projected new meters for FY 10-11:  75  Tracking: 66
-Projected EDUs for FY 10-11: 94
-Actual EDUs as of 12-31-10:  59 

Meter Replacements
CY 2009 through CY 2010 = 1,100
Ms. Seng reported that prior to the Meter Replacement program the Utility only replaced 504 meters over a period of 7 years.
E-Bill Enrollment: 432 accounts currently enrolled 
On Line Payments: Started: August 2009   9,301 payments received
$ 947,033 total amount received
$ 102 average amount of each payment
 

Oro Valley Water Ways Conservation Newsletter: The newsletter is published in the Oro Valley Vista. The Vista is published once a month and is only available on line: www.orovalleyaz.gov
Also, customers have access to and can view their water use history on Water on the Web. 

-Commissioner Tustison asked about the 1,100 meter replacements. Is there more water being used now than with the old meters? Ms. Seng indicated that there has been an increase but it was difficult to do a comparative analysis. Ms. Seng also reported that the Utility changed out several large meters including a 6-inch meter at Honeywell. There were no further questions, Ms. Seng ended her report.

6.

TOWN COUNCIL MEETINGS/COMMUNICATIONS                  (Councilmember Gillaspie)


There were no Council representatives present. No report was given.

7.

SUBCOMMITTEE/COMMISSIONER REPORTS


a.

Finance Subcommittee             (Commissioner Tustison)


Commissioner Tustison had no report.

b.

Conservation Subcommittee             (Commissioner Davis)


Vice Chair Davis reported that the subcommittee did not meet but was currently working with Planning to develop standard operating procedures for implementation of the current Landscape Ordinance. 

c.

Renewable Water Resources Subcommittee       (Commissioner Hoffmann)


Chair Powell mentioned that the subcommittee met last week regarding Comprehensive CAP Water Development Plan. Commissioner Hoffmann reported that there is still extensive work to be done on the plan.

8.

STAFF REPORTS


a.

Potable and Reclaimed Water System Report                    (D. Ruiz)


Click here for Item "A" Potable Water System Report - December 2010

Click here for Item "B" Reclaimed Water System Report - December 2010

Potable Water System - December 2010 
-Demand Daily Demand: 6.0 million gallons per day dropping off to 4.0 million gallons.
-Precipitation: 4 rain events

-Reservoir levels: 7 million gallons

Reclaimed Water System - December 2010
-December Usage = 26.0 million gallons per day 
-Year 2010 Total = 648.0 million gallons used

Chair Powell also indicated that the golf courses were using less water.

9.

DIRECTOR’S REPORT                (P. Saletta)


a.

Upcoming Meetings


-1/11: 10:00 a.m. Sun City Presentation
-1/12: Town of Marana & Oro Valley Joint Council meeting 
-1/19: Town Council meeting
-1/28: 8-9:30 a.m. Reclaimed Water Forum
-2/02: Town Council meeting Topic: CAP Reliability Agreement approval
-2/14: Water Utility Commission Topic: Presentation from CAP Staff on Colorado River issues

b.

Update on Lake Mead and Lake Powell


Click here for Item "B.1"

Click here for Item "B.2"  SnowPack Information

Packet information: BOR Report Update Lake Powell is 59% full
-Lake Mead 40%  Elevation level: 1086.28
Snowpack Report: Snow pack is 130% in some areas
Mr. Saletta ended his report.

 FUTURE AGENDA ITEMS:  No suggested items at this time.

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.

There were no speakers.

11.

NEXT MEETING:  FEBRUARY 14, 2011    LOCATION: HOPI  CONFERENCE ROOM


ADJOURNMENT: 7:20 a.m.

MOTION: A motion was made by Commissioner Reynolds and seconded by Commissioner Shapiro adjourn.                 
                
                       

MOTION carried, 7-0.