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03-18-2010 MinutesMINUTES OF THE SCHERTZ-SEGUIN LOCAL GOVERNMENT CORPORATION THE STATE OF TEXAS § COUNTY OF GUADALUPE § SCHERTZ-SEGUIN LOCAL § GOVERNMENT CORPORATION § On this the 18~' day of March 2010, the Schertz-Seguin Local Government Corporation (SSLGC) convened at 1:30 p.m. in the City of Schertz Council Chambers located at 1400 Schertz Parkway, Building #4, Schertz, Texas. The following directors being present and in attendance: Ken Greenwald Robin Dwyer Patricia Ramirez Andrew Koenig Jim Wolverton Hal Baldwin and the following director being absent: President Vice-President Secretary Treasurer Director Ex-Officio Betty Ann Matthies Ex-Officio constituting a majority of the persons appointed to the Board and a quorum for the transaction of business, and notice of such meeting having been duly given in accordance with the provisions of Texas law. Also in attendance were: Alan Cockerell General Manager Douglas Faseler Seguin City Manager Don Taylor Schertz City Manager Susan Caddell Seguin Finance Director Shawn Shimek Water System Superintendent Emery Gallagher Seguin Water Utility Manager Georgia Hanks Administrative Assistant Larry Dublin Schertz City Engineer Steven White Schertz Economic Development Council Crockett Camp Consultant/Project Manager Bill Klemt Hydrologist Consultant John Winkler COriSUltant (Walker Partners) Paul Gonzalez COU11se1 (Davidson & Troilo) Jack Fickessen Legislative Consultant The first order of business was the Calling of the Meeting to Order. President Ken Greenwald called the meeting to order at 1:30 p.m. The second order of business was Public Comment. No one addressed the Board during public comment. The third order of business was Approval of the Minutes for the Board Meeting held on February 18, 2010. Director Jim Wolverton made a motion to approve the February 18, 2010 minutes as written. Treasurer Andrew Koenig seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The fourth order of business was Presentation of the General Manager's Report - Alan Cockerell, General Manager. General Manager Cockerell's written report was included in the board agenda packets. He added the following items to his written report: o Water Production. Water production and sales were normal for the month of February at 54.9% of Gonzales County Underground Water Conservation District's (GCUWCD) monthly allowable. General Manager Cockerell added that the 125% monthly allowable was changed to 150% in the rules which were approved at GCUWCD's meeting on March 16, 2010. The annual permitted amount remains at 12,910 ac-ft, but the 150% per month allows for more peaking capacity during the summer months. o Region L. A link to Region L's website was provided in Mr. Cockerell's manager's report in order for those interested to view the 2011 Initially Prepared Plan (IPP). Region L will hold three public hearings in April to provide the public the opportunity to comment on the IPP: April 12th in Victoria; April 13th in San Antonio; and April 15th in San Marcos. A notice listing these locations and times was included in the agenda packets. o GMA-13. Individual districts are working to determine and adopt desired future conditions (DFC's). The Texas Water Development Board (TWDB) has suggested that a GMA wide average drawdown be established which represents all aquifers included in the model. Tables which demonstrate base pumpage and additional pumpage (scenario 4) in Gonzales and Caldwell counties were included in the agenda packets. They show average drawdown for aquifers in various counties. GMA-13 had scheduled its next meeting on March 24th to determine which pumping scenario would be used, but the meeting may be delayed until April 1St. Mr. Cockerell will monitor the activity of GMA- 13 and update board members and staff as it moves forward. o GCUWCD. Mr. Cockerell attended a special called GCUWCD meeting on March 16, 2010. The proposed amendments to the District's rules were approved and became effective March 17, 2010. The moratorium on submitting new permit applications was lifted and several permits were submitted to the District promptly on March 1711'. Mitigation fund and well monitoring agreements with SSLGC were approved. SSLGC's four well permit applications were approved contingent on participation in the mitigation fund and acceptance of the well monitoring agreement. The District's mitigation agreement with CRWA was amended. In the future all large water producers will participate in the same well mitigation fund. The District adopted the higher pumping scenario (scenario 4) in regard to DFC's for GMA-13. o Guadalupe County Groundwater Conservation District (GCGCD). At GCGCD's next meeting directors plan to discuss the issue of available water rights in the county. While in the process of setting DFC's, GCGCD determined that 9,500 ac-ft of water is available from the Carrizo Aquifer instead of 12,583 ac-ft which had initially been used by GCGCD to allocate water rights. Mr. Cockerell, Jeanne Schnuriger with Springs Hill Water Supply Corporation (SHWSC) and David Davenport with CRWA met with Ron Naumann at GCGCD to request clarification of the new number for available water. Mr. Naumann explained that water production from the Wilcox Aquifer had been used in the larger number and previous allocated water from the Carrizo Aquifer may have to be reduced in the future. At GCGCD's April meeting Ms. Schnuriger, Mr. Davenport and Mr. Cockerell plan to address the issue with GCGCD. Presently Mr. Cockerell does not foresee a problem with the original' Carrizo water rights acquired by SSLGC from GCGCD, but he will monitor the situation and keep board members and staff informed. Operations Report. Mr. Cockerell reported that SSLGC had received approval from TCEQ regarding its plan to comply with the new groundwater rule. Other. Mr. Cockerell attended the Nixon-Smiley Youth Show on March 12, 2010, and purchased several auction items. He spent less than the amount included in the approved FY2009-2010 budget. SSLGC is in the process of renewing afive-year grazing lease with Mr. Elmo Martin at $10.00 per acre. The fifth order of business was Presentation of FY2008-2009 Audit Report - Nancy Vaughan, Armstrong,. Vaughan & Associates Copies of SSLGC's FY2008-2009 Audit Report were provided in the board agenda packets. Nancy Vaughan with Armstrong, Vaughan & Associates, P.C., presented an overview of the report. Highlights of the FY2008-2009 report are as follows: Ms. Vaughan called attention to Armstrong, Vaughan & Associates' opinion letter on page one and management's discussion and analysis on page two of the audit. She stated that SSLGC had a clean audit opinion. Ms. Vaughan continued with Page 9 of the Audit Report -Comparative statements of revenues, expenses and changes in net assets years ended September 30, 2009 and 2008 (statement of operations for year): • Operating revenue was $8,444,456 in 2009 compared to $7,144,571 in 2008 which is an increase of $1,299,885. The increase is due to an increase in water rates and water sales. • Operating expense was $2,307,456 in 2009 compared to $1,942,144 in 2008 which was an increase of $365,312. The most significant increase was in repairs and maintenance. Other operating expense was $2,550,882 compared to $2,011,543 which was an increase of $5,393.39. The largest increase is due to annual lease payments. Total operating expense increased by $904,651. • Operating Income for the fiscal year ended September 30, 2009, was $3,586,118, an increase of $395,234 from the previous year. • Other non-operating income for the fiscal year ended September 30, 2009, decreased because interest rates were lower than the previous year. • The Change in Net Assets was $3,838,260 at the beginning of the year and $4,632,429 at the end of the year which is a $794,169 increase. • Page 19 of Audit Report - SSLGC's most significant disclosure is water lease commitment. The water leases have a minimum lease period of 10 years although each lease will continue as long as SSLGC continues to make the lease payment. The lease payments do escalate over the years, but may go up or down depending on GCUWCD rules pertaining to maximum allowable production. Mr. Cockerell noted that the lease liability in 2011 is actually higher than shown in the audit because although several leases are at the end of their 10 year term, they will continue due to SSLGC's water lease requirements for production. A letter from the Auditor dated February 8, 2010, to provide the Corporation with information related to the audit was included in the board agenda packets. It detailed responsibilities of the Corporation and the Auditor. Ms. Vaughn noted the following: • No significant deficiencies were discovered. • No significant adjustments were made with the exception of the following: - Impact fees are collected by the City of Schertz and remitted at the end of the year. These fees were accrued and had the effect of increasing revenues and net assets. -A minor misstatement occurred because vacation accrual was not billed until paid. A tolerable misstatement could amount to $310,000. The vacation accrual was less than $10,000 and acceptable. Director Wolverton made a motion to approve the FY2008-2009 Audit Report as presented by Ms. Nancy Vaughn of Armstrong, Vaughn and Associates, P.C. Secretary Ramirez seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The sixth order of business was Legislative Update -Jack Fickessen, Legislative Consultant. Mr. Fickessen provided a brief summary of future events by the House Natural Resources Committee. Tentatively, a meeting regarding groundwater and attended by state agencies and groundwater districts is planned for April 15, 2010, in Austin. A second meeting is tentatively scheduled April 29, 2010, and will incorporate users of groundwater (e.g., SSLGC) and investigate rules, issues and concerns. Mr. Fickessen added that the meetings would be televised by computer and archived. He would provide the web address to anyone interested. A meeting pertaining to surface water issues was held in San Antonio on February 2010 and included representatives from the San Antonio Water System. Senator Averitt who was Chairman of the Senate Natural Resources Committee last session plans to resign. Several senators including a former senator from the Waco district could possibly take his position. The seventh order of business was Guadalupe County Expansion Proiect -Alan Cockerell, General Manager. Final designs should be completed by the end of March 2010. The eighth order of business was Gonzales County Expansion Proiect -Alan Cockerell, General Manager. President Greenwald deferred agenda item eight to Executive Session. The ninth order of business was Resolution to Accept Permits Issued by GCUWCD and the Conditions to the Permits Including an Agreement Establishing a Mitigation Fund and an Obligation to Install Monitoring Wells if Deemed Necessary by the District -Paul Gonzalez, General Counsel. President Greenwald deferred agenda item nine to Executive Session. The tenth order of business was Agreement with Cannon Regional Water Authority -Paul Gonzalez, General Counsel. President Greenwald deferred agenda item ten to Executive Session. President Greenwald closed General Session at 1: 56 p. m. The eleventh order of business was Executive Session called under Chapter 551 Government Code, Section 551.071, to seek the advice of its attorney on legal matters and Section 551.072, for deliberations regarding real estate. President Greenwald opened Executive Session at 2:03 p. m. Executive Session was held from 2:03 p. m. to 3: OS p. m. The twelfth order of business was to Consider and Take Action as a Result of Agenda Item #11. President Greenwald opened General Session at 3: OS p. m. As a result of Executive Session: Agenda Item #8 No action taken. Agenda Item #9 Vice-President Dwyer made a motion to pass Resolution #SSLGC R10-O1 to accept permits issued by GCUWCD and conditions to the permits including the agreement establishing the Mitigation Fund and obligation to install monitoring wells deemed necessary by the District. Director Wolverton seconded the motion. Upon a vote being called the motion carried by unanimous decision. Noted: Approval for SSLGC's participation in the Mitigation Fund required by GCUWCD as part of its approval of SSLGC's permits is included in Resolution #SSLGC R10-O1, page 2, item 2. Agenda Item #10 Vice-President Dwyer made a motion for SSLGC to enter into an agreement with CRWA as stated in the resolution subject to insertion of a provision that states the agreement concerns only western Gonzales County management area subject to regulation and legislation by GCUWCD. Director Wolverton seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The thirteenth order of business was Consideration and/or Action on Questions and Possible Items to be placed on the next Agenda. Financial advisors maybe invited to SSLGC's April 15, 2010 board meeting. No additional discussion was held. The fourteenth order of business was Adjournment. President Greenwald declared the meeting adjourned at 3:10 p.m. The next regular meeting was scheduled Apri115, 2010, in Seguin. MINUTES APPROVED THIS /~~~ DAY OF ~ ~ ~ , 2010. Patricia Ramirez Secretary 6