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SSLGC 05-17-2007 MINUTES OF THE SCHERTZ SEGUIN LOCAL GOVERNMENT CORPORATION THE STATE OF TEXAS ~ COUNTY OF GUADALUPE ~ SCHERTZ SEGUIN LOCAL ~ GOVERNMENT CORPORATION ~ On this the 17th day of May, 2007, the Schertz Seguin Local Government Corporation convened at 1:30 p.m. in the City of Schertz Council Chambers located at 1400 Schertz Parkway, Building #4, Schertz, Texas. The following members being present and in attendance: Members Present Robin Dwyer Ramon Cook Jim Wolverton Sydney Bauer Ken Greenwald Betty Ann Matthies Hal Baldwin Also in Attendance Alan Cockerell Doug Faseler Don Taylor John Bierschwale Susan Caddell Patrick Lindner Crockett Camp Bill Klemt John Winkler President Vice-President Secretary Treasurer Director Ex-Officio Ex-Officio General Manager Seguin City Manager Schertz City Manager Schertz Assistant City Manager Director of Finance Legal Counsel (Davidson & Troilo) Consultant Hydrologist Consultant Consultant (Bury+Partners) 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. The first order of business was the callin2: of the meetin2: to order. Vice-President Ramon Cook opened the meeting at 1:30 p.m. The second order of business was public comment. Mr. Mitch Biggs addressed the Board and stated that he and his wife Susan had in the past month submitted a contract and two fmancing proposals to purchase SSLGC property at 2431 FM 467 in Seguin. The Corporation had countered with a third proposal. A fourth proposal from Mr. Biggs was submitted along with a letter describing plans he and his wife have for the property. He understood board members planned to review his proposal in Executive Session and wanted them to know he would be available by mobile phone later that afternoon to answer questions they may have. Mr. Roy Lindner, Lindner Family Trust, addressed the Board stating that he too had submitted a contract to purchase the property. He planned to use it for hay production. Vice-President Cook reminded both potential buyers the Corporation would retain title to the narrow strip ofland close to the road due to the location of the Corporation's pipeline. President Dwyer arrived at 1:32 p.m. and presided over the remainder of the meeting. The third order of business was approval of the minutes for the meetin2: held on April 19.2007. Vice-President Cook requested the following corrections be made: Page 3, line 15, ...asked Counsel Pat "Linder"....changed to....asked Counsel Pat "Lindner" Page 3, line 16, .. .Mr. "Linder"... .changed to.... Mr. "Lindner" Page 7, line 2, .... "owns" the property. . " . changed to.... "plans to own" the property Contingent on the correction, Secretary Wolverton made a motion to approve the minutes of the April 19, 2007 meeting as written. President Dwyer seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The fourth order of business was presentation of the General Mana2:er's Report - Alan Cockerell. General Mana2:er. Mr. Cockerell thanked everyone for attending the May 16th Workshop. He added that a City Managers' Meeting was held May 2nd and the next meeting was scheduled June 6th. As before, the meeting proved to be productive as agenda items for the May 1 ih Board Meeting were addressed. The upcoming budget process will be a major topic of discussion at the June 6th meeting. A copy of Mr. Cockerell's report was provided in the board agenda packet. A summary of the report includes the following: a. Water Production and Sales A table included in the report gives a breakdown of monthly sales and year to date figures of water sold in 2005 and 2006. It also shows the trend for 2007. This table goes along with the colored monthly and seasonal water charts included in the board agenda packet. April pumpage was the lowest in the month of April since the Corporation project started due to the amount of rain received. Mr. Cockerell noted that Universal City did not use any water during the month of April. Seguin did not blend during the month of April. b. Regional Water Alliance Mr. Cockerell attended a RW A Meeting on April 26th. SAWS has requested to join this organization. Initially, SAWS had requested a change to the Interlocal Agreement, but presently only wants an explanation of the agreement. The RW A is planning a luncheon June 19, 2007. Representative Puente, Chairman of the House Natural Resources Committee, will give a legislative update on water issues. Governing bodies of members of the Water Alliance will be invited to attend. The Alliance would like to receive a tentative headcount. The location of the luncheon will be determined at a later date. 2 c. Region L A copy of the agenda was included in the board agenda packet. A meeting was held on May 3, 2007. Normal business was conducted. Dr. Jerry North gave a presentation on global warming and its effect on South Central Texas. He is associated with the Intergovernmental Panel on Climate Change (website: http://www.ipcc.cbL). The Environmental Demand Center, SARA and GBRA gave presentations on the San Antonio Bay. The next scheduled meeting is August 2, 2007. d. Gonzales County A copy of the agenda was included in the board agenda packet. A GCUWCD meeting was held in Gonzales May 8, 2007. Normal business was conducted. A mediation session between all parties regarding SAWS contested permits will be held in June. Mr. Cockerell has requested to renew permits from GCUWCD for Wells #1 thru #6 as these permits will expire August 2007. e. Guadalupe County A copy of the agenda was included in the board agenda packet. A GCGCD meeting was held in Seguin May 10,2007. Normal business was conducted. Roadways and associated water rights were discussed. Director Bill Jones gave a presentation of a meeting General Manager Cockerell and Bury+Partners Consultant John Winkler had with GCGCD regarding the Corporation's expansion project. Other Items: 1) GBRA is holding an Outreach Program and conducting a series of stakeholder meetings to discuss GBRA activities. Mr. Cockerell attended the meeting for the Seguin area. The next meeting will be for entities involved with area lakes. 2) A Wonders of Water program scheduled for teachers will be held June 4th thru 8th. Mr. Cockerell will give a presentation of SSLGC operations at the training seminar. A tour of SSLGC treatment plant facilities is tentatively planned. 3) Mr. Cockerell attended Public Funds Investment Act training in Austin. 4) The Vickery property at 2431 FM 467 will be discussed in Executive Session. 5) Pipeline repair has been delayed because of rain. Water Systems Manager Dan Drugan is on site tending to the repair and Water Utility Manager John Schraub will give the Operations Status Report in his place. The Corporation has received a few requests for crop damages due to repair on its pipeline. Counsel Patrick Lindner has reviewed easement documents and determined that SSLGC is not responsible for these damages. Responses have been sent to landowners stating that SSLGC is not responsible for crop damages on its easements, i.e., landowners plant crops on SSLGC's permanent easements at their own risk. Landowners may be confused because in the past SSLGC has been responsible for damage done to crops on temporary construction easements. Permanent easements give the Corporation 24-hour access to its pipeline. Mr. Cockerell added if anyone 3 associated with SSLGC receives calls pertaining to crop damage, they should refer the calls to the Corporation. 6) Scholarships were awarded to Nixon-Smiley Independent School District students, Megan Tristan and Maria Martinez. Mr. Cockerell will attend the graduation services June 1 st and present the scholarships on behalf of the Corporation. Presentation of Treasurer's Report - Susan Caddell. Finance Director. and Alan Cockerell. General Mana2:er Financial Statements, the Investment Report and the Management Services Agreement were included in the board agenda packet. The reports were prepared by Director of Finance Susan Caddell and reviewed by General Manager Alan Cockerell. Mr. Cockerell recommended approval of the reports. a) Financial Statements for the quarter ending March 31, 2007 Ms. Caddell presented the Financial Reports as of March 31, 2007. Report balances follow: Net Income $7,833,497.85 This amount includes the $7.5 million received from bond proceeds in January. Revenues, Expenses and Changes in Net Assets - Operating Fund $62,749.67 Ms. Caddell noted the Contingency Fund under Expenditures had a credit balance of ($2,811.00). Last year checks were issued for well mitigation. The checks were never cashed and therefore voided. Monies went back into the Contingency Fund for 2007. Mr. Cockerell added that landowners were sent release forms on several occasions by certified mail. They were to sign and return the forms in order to receive their checks. The release forms were never received, therefore, the checks were never mailed. Construction Fund Highlights *Revenues Bond Proceeds $7,500,000.00 Expenses Guadalupe County Project Well #9 $136,803.00 -0- *Ms. Caddell referred to page 5, Construction Fund Balance Sheet Treasuries - $7,000,000 instead of $7,500,000 because payments of $250,000 each were made to the City of Schertz and the City of Seguin from bond proceeds in order to repay respective loans. Balance Sheet - Interest & Sinking Fund $1,804,35.49 Last quarter neither city was asked to contribute for the first payment February I st. Enough money was available in the I & S Fund to make the first payment. Because of refinancing activities, the fIrst payment was actually lower than normal. The next 4 payment will be due August 1 st. This payment will be larger due to refmancing and recently received new bonds. Both cities will probably be asked to contribute a small amount, although the I & S Fund is getting close to being covered by the Corporation's rates. Revenues, Expenses and Changes in Net Assets - Interest & Sinking Fund $556,583.56 Balance Sheet - Repair & Replacement Fund $469,240.65 Bond covenants require this fund to be maintained at $500,000 and the fund will have to be replenished. Later in the agenda the Board will have the opportunity to pass a resolution to amend the 2006/2007 SSLGC Maintenance and Operating Fund Budget of the City of Seguin in order to transfer funds monthly to the Repair/Replacement Fund. Considering present expenditures and outstanding purchase orders, the plan is to replenish the fund at $8333.33 per month for 16 months. Revenues, Expenses and Changes in Net Assets - Future Development Fund ($144,489.48) This account was fmalized as of March 31, 2007. It includes Bury+Partners expenses for the recent Impact Fee Study. Comparative Statement of Revenues, Expenses, and Changes in Net Assets for the Operating Fund $62,749.67 Revenues have increased by $181,858.59. Expenditures have increased by $90,304.56. Net Income for 2007 is $62,749.67. Net Income for 2006 was a decrease of $28,804.36 before transfers were made. Springs Hill actually decreased by $67,410.00. Last year all of Springs Hill revenue was put into the Operating Account. This year the monies are being separated between the Operating, Repair and Replacement, Future Development and I & S funds. Springs Hill has added $191,100.00 as of March 31,2007, which is $39,000.00 more than last year. Working Capital Trend Chart Working capital has increased from December 31, 2006, by $6,593,212 due to proceeds received from the bond issue. b) Investment Report for the quarter ending March 31, 2007 For the fIrst three quarters, interest in the amount of $122,784.00 was earned. Yields are holding stable. Treasuries are bringing in about 5.27 percent and pools are bringing in about 5.3 percent on the average. c) Reimbursement to the City of Seguin in accordance with the Management Services Agreement for the quarter ending March 31, 2007 Expenditures for January 1,2007, through March 31, 2007, were $547.184.00. Ms. Caddell reiterated the Contingency Account under Expenditures which shows a credit amount of ($3,296.00) was due to voided checks. The Corporation is presently under budget for all accounts. Mr. Cockerell added the Corporation is under budget now because it has not 5 entered into the high cost season of summer when high pumpage causes chemical and energy mcreases. Secretary Wolverton made a motion to reimburse the City of Seguin $547,184.00 in accordance with the Management Services Agreement. Director Greenwald seconded the motion. Upon a vote being called, the motion passed by unanimous decision. Secretary Wolverton made a motion to approve the Financial Statements and Investment Report for the quarter ending March 31, 2007. Director Greenwald seconded the motion. Upon a vote being called, the motion passed by unanimous decision. The sixth order of business was Resolution SSLGC # R07-08 to amend the 2006/2007 SSLGC Maintenance and Operatin2: Fund Bud2:et of the City of Se2:uin to transfer funds monthly to the Repair/Replacement Fund - Alan Cockerell. General Mana2:er and Susan Caddell. Finance Director. In January, the Board of Directors approved to use funds from the Repair/Replacement Fund for repair to wells and replacement of drain valves on the 36-inch line from the Booster Pump Station to the City of Schertz. These expenditures have brought the cash balance of this fund to below $500,000.00 as required by bond covenants. The Corporation is allowed to rebuild the fund on a monthly basis for a monthly amount not less than $8,333.33. This budget amendment would allow monthly transfers of$8,333.33 for May through September of the current fiscal year for a total repayment amount of$41,667.00. Reimbursement of the fund would be included in the FY 2007/08 budget and continue until the fund is completely replenished to the required $500,000.00. The fund could be reimbursed at a higher rate, however, it is interest free and staffrequests the fund to be replenished at $8,333.33 per month as required. President Dwyer made a motion to approve the amendment to the 2006/2007 SSLGC Maintenance and Operating Fund Budget of the City of Seguin to transfer funds monthly to the Repair/Replacement Fund at $8,333.33 per month. Vice-President Cook seconded the motion. Upon a vote being called, the motion passed by unanimous decision. The seventh order of business was a Proposal for Professional En2:ineerin2: Services. a Backwash Water Dischar2:e Permit and Slud2:e Re2:istration Applications (TCEO). Amendment 6 to A2:reement for Professional Services between SSLGC and Burv+Partners-Public Works. Inc. - Alan Cockerell. General Mana!!er. A copy of the amendment which describes services, timelines and costs was included in the board agenda packet. Staff requested Amendment 6 to the Agreement for Professional Services between SSLGC and Bury+Partners-Public Works, Inc., to provide authorization for Bury+Partners to prepare a wastewater discharge permit application for submission to the Texas Commission on Environmental Quality (TCEQ) for the discharge of backwash water from SSLGC's existing Gonzales County water treatment plant, and to prepare a Sludge Registration application for submission to TCEQ. These applications are necessary to replace the previous permits and registrations SSLGC held which have expired. Bury+Partners proposes to conduct this work on a lump sum basis with a budget not to exceed $12,000. This fee includes preparation of initial permit applications and working 6 with TCEQ staff throughout the permit review and approval process, as required. Execution of this amendment shall incorporate these modifications into Bury+Partners' existing Agreement with SSLGC. Distribution of the lump sum payment includes the following: a. Backwash Permit Application $5,000 b. TECQ Coordination $1,000 c. Sludge Registration Application $5,000 d. TCEQ Coordination $1,000 Secretary Wolverton made a motion to approve Amendment 6 to the A2:reement for Professional Services between SSLGC and Burv+Partners-Public Works. Inc.. for the Proposal for Professional Em!ineerin2: Services for a Backwash Water Dischar2:e Permit and Slud2:e Re2:istration Applications not to exceed $12.000. Treasurer Sydney Bauer seconded the motion. Upon a vote bein2: called. the motion passed bv unanimous decision. The ei2:hth order of business was Water Lease Contracts for Guadalupe Countv- Alan Cockerell. General Mana2:er and Patrick Lindner. Le2:al Counsel. Davidson & Troilo. Legal Counsel Patrick Lindner deferred agenda item #8 to Executive Session. The ninth order of business was Water Lease Contracts for Gonzales County - Alan Cockerell. General Mana2:er and Patrick Lindner. Le2:al Counsel. Davidson & Trolio. President Dwyer deferred agenda item #9 to Executive Session. The tenth order of business was the Expansion Project in Gonzales and Guadalupe Counties - Alan Cockerell. General Mana2:er and John Winkler. Burv+Partners. A progress report submitted by Bury+Partners regarding the Guadalupe County Project was included in the board agenda packet. A second Design/Review Meeting conducted by Bury+Partners was held May 1st. Attendees included Bury+Partners engineers, SSLGC operators and staff, and Vice-President Ramon Cook. The purpose of the meeting was to review Technical Memoranda which included TM 02 Regulatory Requirements, TM 05 Easement Widths, and TM 09 Storage Facility Sizing and Material of Construction. Proposed well field layout was also discussed. The meetings will continue on a monthly basis. Proposals will soon be brought to the Board regarding specific decision items. A pumping test on Blumberg Well #2 was done April 23rd. The test was ended approximately five hours after it started due to large amounts of sand being produced. A Blumberg-Carrizo Well Study by John Winkler was provided in the board agenda packet. As stated in the Bury+Partner report, "Based on available information and review of test results, the long-termed reliability of Well 2 for potable water well service is questionable. Additionally, a similar serious sand production issue was noted with Well #3 during the initial construction of the well. The problems observed in Well #2 and Well #3 will not improve with time. Based on a review of available completion data, pump test results, and historical records for the area, the inclusion of either Well #2 or Well #3 as part of the proposed Guadalupe County well field for SSLGC is not recommended. Following this recommendation and not utilizing Well #2 and Well #3 no longer fixes the locations and separation of these wells. Retrofitting only Well #1 on the Blumberg property with a 500 gpm well pump and then drilling six new 700 gpm wells in accordance with the spacing 7 requirements of Guadalupe County Underground Water District will provide a total capacity of 4,700 gpm or slightly more than the original well field configuration. This scenario would result in retrofitting two less wells and drilling one additional well as compared to the initial well field configuration. In summary, SSLGC will realize benefits from both a construction and operations standpoint with the new well field configuration. The revised layout results in the operation of one less well, less piping, and greater efficiencies in the specific capacity of the wells. Therefore, SSLGC will realize an annual savings in the operational cost of the well field. " Mr. Cockerell stated that the fmancial impact of recommendations from the report and arrangements with landowners would be discussed in Executive Session. Vice-President Cook referred to a Time-Line Chart prepared by Bury+Partners to insure that everyone understood the importance of expediting certain procedures in order to get the plant operational in accordance with the time-line. Vice-President Cook also referred to an aerator shown in the Guadalupe County Project meeting notes prepared by Bury+Partners which he believes is not suitable for Corporation purposes. Discussion was held regarding repair of Well #2 on the Blumberg property. Mr. Klemt estimated costs of $70,000 to $100,000 to repair Well #2. Mr. Winkler added complete data was not available for Well #2 and that getting Well #2 approved by TCEQ would also be difficult. Also noted was the fact that as problems increase, costs increase. Drilling a new well with specifications required by the Corporation would be beneficial in terms of energy costs. Costs of drilling a 500 gpm well or a 700 gpm well would be approximately the same except for the cost of the well pump. Discussion was held regarding purchase of a concrete storage tank. Mr. Winkler stated that the Corporation's largest storage tank, the pipeline from its treatment plant to Schertz and Seguin, is concrete lined. Construction of the concrete lined storage tank in question is similar to the Corporation's concrete lined pipeline. It is a steel cylinder wrapped by wire and mortar coated, interior and exterior, to protect the steel cylinder. Almost zero maintenance is required on a concrete lined storage tank. The only maintenance would possibly be to paint the exterior surface for aesthetic purposes and the storage tank would not have to be taken out of service in order to paint it. For the Board's information, Mr. Winkler displayed a map which had been updated to include the SAWS area along with the Corporation's existing leases. The eleventh order of business was presentation of the Operations Status Report includin2: WelllPipeline Repair Status - Dan Dru2:an. Water Systems Mana2:er. Mr. Drugan was on site for pipeline repair fInishing the last two valves on the 36-inch pipeline to Schertz, therefore, Water Utilities Manager John Schraub presented the Operations Status Report. Two valves remain to be repaired by installing stainless steel bolts, and all valves from the Booster Pump Station to the City of Schertz will have been repaired. Mr. Schraub reported that corrosion on the bolts was less significant the closer to Schertz the valves were. 8 Peerless Equipment, Ltd., has begun work on Well #8 and it should be operating shortly. After finishing Well #8, Peerless will move the rig to Well #4. By the end of the week, seven wells should be in operation. Mr. Cockerell added the ship date for the stainless steel pumps is scheduled for June 5, 2007. Peerless Equipment expects to receive the stainless steel pumps later that week and would have to inspect them. The Corporation should receive the stainless steel pumps by the middle of June. One stainless steel pump will be installed in Well #1 and the other stainless steel pump will be held as a spare. By mid-June all wells should be in operation. Mr. Schraub informed the Board that the City of Seguin had requested bids for chemicals the week of May 6th for its water plant and the Corporation's water plant. Mr. Cockerell advised the Board that he and Mr. Schraub had gone out to FM 467 due to a landowner's request to inspect two large holes on both sides of the road. No damage to the pipeline was found, however, repair should be done in order to prevent injury to anyone and to protect the pipeline. Mr. Cockerell has provided Bury+Partners with the information so that they can determine exactly what work should be done. Approval for expenses may be presented to the Board at the next board meeting. Funds may be available in the Operating Budget. The twelfth order of business was the contract between SSLGC and Crockett Camp detailin2: his participation in the expansion project in Gonzales and Guadalupe Counties - Alan Cockerell. General Mana2:er. Don Tavlor. Schertz City Mana2:er and Dou2: Faseler. Se2:Uin Citv Mana2:er. Action was taken at the Workshop on May 1 ih to address this issue. Mr. Cockerell stated that a temporary contract was in place and a permanent one would follow in the next few weeks. No action was taken on agenda item #12. The thirteenth order of business was presentation of consultant report - Crockett Camp. Consultant. Mr. Camp gave an update regarding water legislation. He stated that a Senate sponsor had put a floor amendment on the Edwards Aquifer Bill which gave some unnamed party a free pass to drill a well in Caldwell County without being subject to regulation by local districts. He added that the amendment was now a part of the Edwards Aquifer Bill although it had nothing to do with the Edwards Aquifer. The unnamed party does business in four counties, three of which are in the Edwards Aquifer. Mr. Camp will provide the Cities of Schertz and Seguin with information to contact Representative Kuempel regarding water issues. Counsel Patrick Lindner advised Mr. Camp to defer information dealing with land acquisition to Executive Session. The fourteenth order of business was presentation of consultant report - Bill Klemt. Hvdrolo2:ist Consultant. Mr. Klemt reported that early summer water levels would be measured June14th and 15th. 9 Counsel Patrick Lindner advised Mr. Klemt to defer the remainder of his presentation to Executive Session. President Dwyer closed General Session at 2:47p.m. The fifteenth order of business was Executive Session called under Chapter 551 Government Code. Subsection 551.071. to seek the advice of its attorney on le2:al matters relatin2: to the Board of Directors' ri2:hts and liabilities under certain contracts and Section 551.072 to deliberate the purchase of and/or sale of certain real estate. Executive Session was held from 2:58 p.m. to 3:56 p.m. Mayor Matthies left the meeting at 3:40 p.m. Mayor Baldwin left the meeting at 3:55 p.m. The sixteenth order of business was to consider and take action as a result of A2:enda Item #15. President Dwyer opened General Session at 3:57p.m. No action was needed as a result of Executive Session. The seventeenth order of business was additional Board of Directors discussion and/or comments. No new discussion and/or comments were discussed. The ei2:hteenth order of business was adjournment. President Dwyer declared the meeting adjourned at 3:58 p.m. The next regular meeting was scheduled June 21, 2007, in Seguin. 10 MINUTES APPROVED THIS DAY OF ,2007. SIGNATURE OF DIRECTORS Robin V. Dwyer, President Ramon J. Cook, Vice-President Jim Wolverton, Secretary Sydney Bauer, Treasurer Ken Greenwald, Director 1\