11-18-2010 MinutesMINUTES OF THE
SCHERTZ-SEGUIN LOCAL GOVERNMENT CORPORATION
THE STATE OF TEXAS §
COUNTY OF GUADALUPE §
SCHERTZ-SEGUIN LOCAL §
GOVERNMENT CORPORATION §
On this the 18th day of November 2010, the Schertz-Seguin Local Government Corporation
(SSLGC) convened at 1:35 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
Betty Ann Matthies
Hal Baldwin
President
Vice-President
Secretary
Treasurer
Director
Ex-Officio
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
Doug Faseler
Susan Caddell
Johnny Bierschwale
Emery Gallagher
Georgia Hanks
Bill Klemt
John Winkler
Patrick Lindner
General Manager
Seguin City Manager
Seguin Finance Director
Schertz Assistant City Manager
Seguin Water Utility Manager
Administrative Assistant
Hydrologist Consultant
COriSUltant (Walker Partners)
COUTlsel (Davidson & Troilo)
The first order of business was the Calling of the Meeting to Order.
President Ken Greenwald called the meeting to order at 1:35 p.m.
The second order of business was Public Comment.
No one addressed the Board during public comment.
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The third order of business was Anuroval of the Minutes for the Board Meeting held on
October 21, 2010.
Secretary Patricia Ramirez made a motion to approve the October 21, 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 for the month of October was 73.6% of Gonzales
County Underground Water Conservation District's (GCUWCD) monthly allowable.
Mr. Cockerell referred to Seasonal Pumping and Monthly Water Sales charts which were
included in the agenda packets. He stated that seasonal pumping was lower this year in
comparison to the last two years and would affect revenues which he would address later
in the agenda.
o Region L. Mr. Cockerell gave a summary of an oil production report that had been
presented at the last Region L meeting by Mr. Darrell Brownlow. Mr. Brownlow
performed a study on oil production of major oil companies operating in South Texas.
He compared the companies' investor reports which were published on-line. He found a
potential of 21,000 wells to be drilled in the Eagle Ford shale in South Texas which is
about 3.7 million acres and equates to approximately $2 billion in lease money. During
his presentation Mr. Brownlow provided a map which showed that SSLGC's property in
Gonzales County is right on the edge of the well development. It may or may not be
included in the scenario.
Mr. Cockerell reported that data pertaining to well fracturing was also included in the
report. On average, fifteen ac-ft of water is needed to fracture a well. When a staged
fracture job is performed water is consumed within about a five day period.
Municipalities do not consider 15 ac-ft to be much water, whereas others may view 15
ac-ft as a large amount. In the overall water plan it is about 2% of projected water use for
the'southern part of the state. SSLGC could possibly sell water for fracture jobs.
The fifth order of business was Resolution SSLGC R10-12 to Amend SSLGC's FY2010-
2011 Maintenance and Operating Fund Budget -Alan Cockerell, General Manager.
A budget adjustment is necessary due to a 23.9% increase in health insurance benefits for 2011.
Fifty-two thousand dollars was included in the operating budget for Guadalupe County
Groundwater Conservation District's (GCGCD) proposed rule change for well permits. GCGCD
did adopt its rule change, but will charge the Corporation for its well permits at a lower rate
which leaves a surplus in the account. Mr. Cockerell asked the Board to approve a transfer of
$5,230 from Technical Services -GCGCD to Benefits -Health Insurance. Mr. Cockerell
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explained that through the Management Services Agreement with the City of Seguin, the
operating budget developed by SSLGC is a subset of the City of Seguin's budget.
Vice-President Robin Dwyer made a motion to approve Resolution SSLGC R10-12 to
amend SSLGC's FY2010-2011 maintenance and operating fund budget by transferring
$5,230 from Technical Services - GCGCD to Benefits -Health Insurance. Secretary
Ramirez seconded the motion. Upon a vote being called, the motion carried by unanimous
decision.
The sixth order of business was Presentation of Treasurer's Report -Susan Caddell,
Finance Director and Alan Cockerell, General Manager.
A copy of the Treasurer's report was included in the board agenda packets. The report was
prepared by Director of Finance Susan Caddell and reviewed by General Manager Alan
Cockerell. Mr. Cockerell recommended approval of the following report:
a. Financial Statements for nine months ended September 30, 2010.
• Revenues, Expenses and Changes in Net Assets -Combined Statements
^ $22,010,077 (net income)
Includes $21,242,486 in bond proceeds. Without bond proceeds net income is
$767,591.
• Revenues, Expenses and Changes in Net Assets -Operating Fund
^ $1,406 (net income)
• Construction Fund Balance Sheet - 2007 -Cash on Hand
^ $2,328,503
The remainder of these funds will be used for the New Well Project.
• Revenues, Expenses and Changes in Net Assets -Interest & Sinking Fund
^ $3,809,599 (net income)
Includes I&S rates paid by participating entities for the year. This statement only
shows interest payments. Principal payments have been taken out of the Balance
Sheet from Revenue Bonds Payable accounts for each issue. Total principal
payments for the year were $840,000.
• Repair & Replacement Fund Balance Sheet -Cash Balance
^ $1,126,329
Bond covenants require the balance to be $500,000. Expenditures of $164,292
include replacement of the Nixon high service pump and repair of the discharge basin
and caustic line at the treatment plant.
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• Future Development Fund Balance Sheet -Cash Balance
^ $816,670
The expenditure for land was related to the purchase of the Brelsford property.
• Impact Fund Balance Sheet -Cash Balance
^ $574,937
Total impact fees for the year totaled $571,488. $1,000,000 was transferred to
SSLGC's Reserve Fund for the 2010 bond issue.
• Reserve Fund Balance Sheet -Cash Balance
^ $1,276,329
According to bond covenants $1,275,621 must be maintained in this fund. It is to be
used to pay holders of bonds in case they cannot be paid from general revenues.
• Construction Fund Balance Sheet - 2010 -Cash on Hand
^ $18,010,342
• Revenues, Expenses and Changes in Net Assets -Operating Fund (comparative
statement)
^ ($352,443)
Revenue decreased by $228,474 and expenditures increased by $123,969. Water
consumption for the Cities of Schertz and Seguin decreased by 531,872,000 gallons.
The largest increase in expenditures was for water leases at $343,073.
• Working Capital Trend Chart
^ Working capital has increased since June 30, 2010, by
$20,497,076
This includes receipt of bond proceeds in the amount of $21,242,786. Without the
bond proceeds, working capital would have decreased by $745,410. This is due to
the second bond payment which was made this quarter.
Director Jim Wolverton made a motion to approve SSLGC's financial statements for the
quarter ending September 30, 2010. Vice-President Dwyer seconded the motion. Upon a
vote being called, the motion carried by unanimous decision.
b. Investment Report for the quarter ending September 30, 2010.
Ms. Caddell presented the Investment Report for July 1, 2010, through September 30, 2010.
Interest earnings for the quarter ending September 30, 2010, were $17,070. Ms. Caddell plans to
request depository bids for the City of Seguin in 2011 and will include SSLGC.
Vice-President Dwyer made a motion to approve SSLGC's Investment Report for the
quarter ending September 30, 2010. Secretary Ramirez seconded the motion. Upon a vote
being called, the motion carried by unanimous decision.
c. Reimbursement to the City of Seguin in accordance with the Management Services
Agreement for the quarter ending September 30, 2010.
Ms. Caddell presented the expenditure information for the fourth quarter Julyl, 2010, through
September 30, 2010. The City of Seguin has requested reimbursement of $1,027,173 from
SSLGC for the fourth quarter of FY2009-2010. Ms. Caddell added that SSLGC was under
budget by $707,149.
Director Wolverton made a motion to authorize SSLGC to reimburse the City of Seguin in
the amount of $1,027,173 for the quarter ending September 30, 2010, in accordance with
the Management Services Agreement. Vice-President Dwyer seconded the motion. Upon a
vote being called, the motion carried by unanimous decision.
The seventh order of business was Resolution SSLGC R10-10 to review and approve
SSLGC's Investment Policy in order to conform to the Public Funds Investment Act, Texas
Government Code, Chapter 2256 -Susan Caddell, Finance Director and Alan Cockerell,
General Manager.
Mr. Cockerell reported that staff had no recommended changes and requested Board approval of
SSLGC's 2011 Investment Policy.
Director Wolverton made a motion to approve Resolution SSLGC R10-10 to adopt
SSLGC's 2011 Investment Policy. Treasurer Koenig seconded the motion. Upon a vote
being called, the motion carried by unanimous decision.
The eighth order of business was Resolution SSLGC R10-11 to review and approve
SSLGC's Brokers/Dealers list -Susan Caddell, Finance Director and Alan Cockerell,
General Manager.
Mr. Cockerell stated that staff had no recommended changes and requested Board approval of
SSLGC's 2011 Brokers/Dealers list.
Secretary Ramirez made a motion to approve Resolution SSLGC R10-11 to adopt
SSLGC's 2011 Brokers/Dealers list. Treasurer Koenig seconded the motion. Upon a vote
being called, the motion carried by unanimous decision.
The ninth order of business was Brelsford Property Grazing Lease -Alan Cockerell,
General Manager.
Mr. Cockerell reported that the Breslford property is landlocked and it is in SSLGC's best
interest to have its properties in the area leased to the same person. He has contacted Mr. Alvin
Pawelek and offered him the Brelsford grazing lease at the same terms and rate of $16.00 per
acre he currently has for the Spruiell lease. He requested Board approval of the lease.
Vice-President Dwyer made a motion to approve a grazing lease to Mr. Pawelek for the
Brelsford property for the same terms and rate of $16.00 an acre he has -for the Spruiell
property. Director Wolverton seconded the motion. Upon a vote being called, the motion
carried by unanimous decision.
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The tenth order of business was Construction of an Administration Building for SSLGC -
Alan Cockerell, General Manager.
At SSLGC's October 21, 2010 board meeting, a request was made to include construction of an
administration building for SSLGC on the November 18, 2010 board meeting agenda. Mr.
Cockerell reported that although no specific plans had been developed, amulti-purpose building
which would serve as an office, board meeting room and operations center was needed. He
referred to a diagram of SSLGC's booster pump station located on Leissner School Road which
was included in the board agenda packets and suggested it as a possible site. He stated that
although future expansion plans for the facility fill up the existing site, there may be an
opportunity to purchase additional property adjacent to it. Mr. Cockerell requested suggestions
and direction from the Board. After discussion, Mr. Cockerell was directed to work with
Engineer John Winkler and SSLGC operators to determine building requirements, e.g., size,
operational features and desirable location and report back to the Board within the next few
months. Mr. Wolverton added that he would check with the Tax Assessor's office for
foreclosures on property that might be purchased at a lower cost.
The eleventh order of business was Oil and Gas Leasing Program Implementation -Alan
Cockerell, General Manager.
Mr. Cockerell has received Global Geophysical `s seismic survey permits from Attorney Bill
Knobles' office and plans to sign and return them as soon as possible. The contract is favorable
to SSLGC and requires Global Geophysical to share interpreted Carrizo-Wilcox water-bearing
formation data obtained from the surveys with the Corporation.
Mr. Knobles continues to investigate potential offers to lease SSLGC's oil and gas mineral rights
in Gonzales County and will provide information to SSLGC as he receives it.
The twelfth order of business was Gonzales County Expansion Proiect -Alan Cockerell,
General Manager.
Mr. Cockerell provided a summary of the activity on the Gonzales County expansion project.
He showed pictures of well #12 which had been test pumped at approximately 4,500 gpm for a
12 hour period on December 17th. Chemicals were added and plans were to pump it again
December 18th. Tests will be performed on well #12 for the next couple of weeks. Contractors
will soon begin pumping well #9. A pilot hole has been drilled on well #10 which is located on
the Knobles property. Well #10 has over 300 ft. of Carrizo sand. Harris Road Company has
begun clearing and construction of a road to well #11. Contractors have begun constructing the
bore pit under Hwy. 80 and will soon begin constructing bore pits in two separate places under
CR 1117. Contracts for well pumps and the bid process for storage tanks will begin soon.
The thirteenth order of business was Legislative Update -Jack Fickessen, Legislative
Consultant.
Mr. Cockerell called attention to a position paper for the 82°d Legislature composed by the Texas
Alliance of Groundwater Districts. It was included in the board agenda packets. The paper
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describes issues that districts encounter and regulatory methods they use in the groundwater
management process.
Mr. Cockerell stated that he had emailed a list of 10 candidates who filed for late Representative
Edmund Kuempel's seat to board members. He deferred the remaining discussion to Consultant
Jack Fickessen.
Mr. Fickessen reported that change was expected with the new legislative session in Austin.
Three individuals have filed to run for Speaker of the House. Committee seats, one of the first
items to be addressed, will be determined between January 11th and February 1 lth.
Mr. Fickessen continued by saying that the Texas Commission on Environmental Quality and the
Water Development Board are now subject to Sunset Commission review every eight years
instead of the previous ten. The two entities are presently being reviewed and a full report will
be given to the legislature during this session. In examining these agencies, the Commission
found issues with the Groundwater Districts' sole authority in determining Desired Future
Condition (DFCs) for the next 50 years, scientific methods used in determining the conditions
and the amount of pumping allowed to maintain the process. Another issue considered in the
review is that there is no appeals process after the Groundwater Districts make decisions. Mr.
Fickessen said that these issues will most likely be addressed by the Water Development Board
and in turn by the House and Senate Natural Resources Committees during legislative session.
He added that SSLGC will possibly be asked to provide testimony as a resource witness by both
the House and Senate.
Mr. Cockerell added that the Bureau of Economic Geology will hold another Stakeholders'
meeting on November 30, 2010. He plans to attend the meeting, but he will send the web link to
those who are interested and cannot attend.
The fourteenth order of business was Guadalupe County Groundwater Conservation
District Proposed Rule Changes -Patrick Lindner, General Counsel.
President Greenwald deferred agenda item fourteen to Executive Session.
The fifteenth order of business was Proposed Resolution Authorizing Acquisition through
Condemnation or Purchase of Fee-Simple Title in and to 2.5 Acres out of a 459.98 Acre
being Titled in the
Name of Walter E. Koepp and being Adiacent to the East Line of Nockenut Road in
Guadalupe County, Texas, for the Necessary Public Purpose of Upgrading the Existing
Water Pipeline by and through the Installation of a Surge Tank and Related
Appurtenances and Facilities -Patrick Lindner, General Counsel.
President Greenwald deferred agenda item fifteen to Executive Session.
The sixteenth order of business was Wholesale Water Contracts with SAWS and the City
of Converse -Patrick Lindner, General Counsel.
President Greenwald deferred agenda item sixteen to Executive Session.
The seventeenth order of business was Formation of a New Local Government Corporation
- Crocket Camp, Consultant/Proiect Manager.
President Greenwald deferred agenda item seventeen to Executive Session.
President Greenwald closed General Session at 2: 32 p. m.
The eighteenth 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: 40 p. m.
Executive Session was held from 2:40 p.m. to 3:22p.m.
The nineteenth order of business was to Consider and Take Action as a Result of Agenda
Item #18.
President Greenwald opened General Session at 3:22 p. m.
As a result of Executive Session:
Agenda Item Fourteen
No action was taken as a result of Executive Session.
Agenda Item Fifteen
Vice-President Dwyer made a motion to approve Resolution SSLGC R10-09 to authorize
acquisition through condemnation or purchase of fee simple title in and to 2.5 acres out of a
459.98 acre tract titled in the name of Walter E. Koepp. Director Wolverton seconded the
motion. Upon a vote being called, the motion carried by unanimous decision.
Agenda Item Sixteen
Secretary Ramirez made a motion to approve authorization for General Manager Alan
Cockerell to sign a contract with the City of Converse. Director Wolverton seconded the
motion.
Before a vote was taken and after discussion, Secretary Ramirez amended her motion to
approve authorization for General Manager Alan Cockerell to sign a contract with the City
of Converse comparable to contracts with its other customers and based upon the rates and
terms set forth in its contract with Springs Hill Water Supply Corporation. Treasurer
Wolverton seconded the motion. Upon a vote being called, the motion carried by
unanimous decision.
Agenda Item Seventeen
No action was taken as a result of Executive Session.
No further action was taken as a result of Executive Session.
The twentieth order of business was Consideration and/or Action on Questions and
Possible Items to be placed on the next Agenda.
Mr. Cockerell stated that Mr. Milton Butcher had passed away and distributed copies of his
obituary. SSLGC presently leases 750 acres from Mr. Butcher.
No additional discussion was held.
The twenty-first order of business was Adjournment.
President Greenwald declared the meeting adjourned at 3:26 p.m.
The next regular meeting was scheduled Thursday, December 16, 2010, in Seguin.
MINUTES APPROVED THIS ~ , DAY OF ~_ ~ , 2010.
Patricia Ramirez, Sec tary