SSLGC 11-15-1999
MINUTES OF THE SCHERTZ/SEGUIN
LOCAL GOVERNMENT CORPORATION
THE STATE OF TEXAS !
COUNTY OF GUADALUPE !
SCHERTZ/SEGUIN LOCAL !
GOVERNMENT CORPORATION !
On this, the 16th day of November, 1999, the Schertz/Seguin Local
Government Corporation convened at 1 :30 p.m. in the City of Schertz
Council Chambers, located at 1400 Schertz Parkway, Schertz, Texas with
the following members being present and in attendance:
Robin Dwyer
Jim Wolverton
Sidney Bauer
Gloria Rivera
President
Secretary
Director
Director
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 Ken Greenwald, Eric Vordenbaum, Kerry Sweatt and Jack
Hamlett. Absent: Vice-President Ramon Cook.
President Robin Dwyer called the meeting to order.
The second order of business was Approval of Minutes for the dates of
September 16, 1999 and October 21, 1999. Eric Vordenbaum pointed out
that in the minutes of September 16, 1999, under discussion of the
engineering report, the figure of 17,184 acre feet of water per day should be
changed to water per year.
Secretary Wolverton moved to approve the minutes, as corrected, for the
meeting of September 16, 1999. Director Rivera seconded the motion,
which carried by unanimous vote of all Directors present. Secretary
Wolverton then moved to approve the minutes, as submitted, for the
meeting of October 21, 1999. Director Bauer seconded the motion, which
carried by unanimous vote of all Directors present.
The third order of busin$ss was to receive the consultant's activity report,
but due to the fact Mr. Crockett Camp had just arrived at the meeting and
needed some time to get ready for his presentation, Item #4, Consider and
take action regarding bond sale schedule and presentation, was moved up
on the agenda as the next order of business.
Duane Westermann reported they had a good meeting this morning with
the working group which consisted of bond attorneys, underwriters
counsel, city attorneys and all of the players here that could attend. The
purpose of the meeting was to discuss the documents that are being
prepared for the bond issue, the take-or-pay contracts between the cities
and the Corporation, the official statements and other information needed
in order to move forward.
The biggest discussion item concerned the take-or-pay contract and the
joint and severable liability of the two cities as it was worded initially. Mr.
Westermann stated he feels they have come to at least a temporary
conclusion that they are going to try to set up an emergency fund within
the Corporation that would be, in essence, half of the annual payments.
Worst case scenario being, that if for some reason one of the cities could
not make their payment for a year, this fund would pick up that payment. In
addition to that, they will be setting up a bond reserve fund which will
cover an average annual requirement of the debt service on the bond issue.
So they'll have with that what should be, in essence, 18 months of
coverage should the worst thing happen. Upon doing this, they will change
the joint and severable liability to severable in that each city would be liable
for 60% of the debt service payments and 0 & M expenses of the
Corporation. They are taking away the joint liability because that was
going to cause each city to budget 100% and that just wasn't feasible.
President Dwyer inquired about the source of the funds. Mr. Westermann
replied that's still under consideration and can be funded from the bond
proceeds if they want to do that or it can be set up so it's funded over a
period of time - generally not more than 6 years. President Dwyer then
asked what kind of requirements these funds have as far as where they are
held and Mr. Westermann answered they could be held in an account of the
Corporation. Due to tax laws, the account might have to be yield-restricted.
Director Bauer asked if there are any restrictions on the emergency fund
use. Could they be used for a true emergency? Mr. Westermann replied
they could be used for an emergency, but would need to be replenished
within 1 year.
Director Bauer then inquired if going to severable liability will affect the
rating. Mr. Westermann acknowledged that was the biggest part of the
discussion and setting up this emergency fund was the way they felt they
could work around that. Mr. Westermann stated the next part of their
discussion was the time line. They would like to get these documents to
the rating agencies and the insurance companies so they can preview them
and start studying them. If for some reason, the severable liability is going
to hinder them, they can come back to the joint and severable.
Director Rivera asked how this would impact the citizens. Jack Hamlett
pointed out if the cities had to set aside 100%, that would be a definite
impact.
Mr. Sweatt commented they need to satisfy the bond buyer that both cities
have the wherewithall to pay. Mr. Westermann added they are trying to
make it easy on the two cities and yet satisfy the bond holder. This is the
compromise they feel is best. Once the bonds are sold, they will have to
establish the funds.
Director Rivera expressed concern about the fact water won't start flowing
until the year 2002. What about the interim? Mr. Hamlett explained they
will be paying on some of these before there's water coming and that's one
reason they're trying to make it easy on the utility systems.
Mr. Westermann went on to say they did have some changes to the initial
time line. They thought they would try to approve the 2 take-or-pay
contracts with the cities before they sold the bonds. In light of all the
things going on, that wasn't practical and they concluded those contracts
would be able to be approved December 7th at the same time or when the
bonds are sold. The Corporation needs to meet that day so the City
Councils can meet that night. A meeting was scheduled for the
Corporation in Seguin on Tuesday, December 7th at 1 :30 p.m.
Mr. Westermann noted they discussed the preliminary official statement
relating to the sale of the $10,000,000 in bonds. Most of that discussion
centered around bringing forth the risks that are associated for the
potential bond holderlbuyer, and hopefully all that information will be out to
the rating agencies and insurance companies by next Monday. Mr. Kuhn
is going to do his best to get out the next draft of the take-or-pay contracts
and the bond resolution by next Monday.
President Dwyer asked when they can expect to see the official statement.
Mr. Westermann answered either by the end of this week or at the latest
next Monday. Mr. Hamlett asked President Dwyer if he is wanting to have
a meeting before December 7th and President Dwyer replied perhaps.
There was a brief discussion about the draft they currently have and when
it would be too late for them to receive changes. Director Bauer suggested,
if there are serious concerns, they could forward the changes to them and
they could then decide if'they need a meeting. President Dwyer inquired if
they don't need to post a meeting 72 hours in advance and Mr. Hamlett
replied that's correct. Director Rivera indicated she would prefer to have a
meeting and everyone agreed. The consensus was to schedule a meeting
for Friday, December 3rd. There would be one agenda item only - review
of the documents.
Mr. Sweatt suggested they hold the meeting on December 3rd in Seguin at
1 :30 p.m. and change the location of the meeting on December 7th to
Schertz at 1 :30 p.m. That was agreeable to everyone.
Mr. Westermann related they have scheduled meetings with the insurance
companies and the rating agencies regarding this issue. Right now they
are scheduled to meet with 3 insurance companies and 2 rating agencies.
The purpose of the meetings with the insurance companies is two-fold.
One, they are interested in getting the bonds insured to get a triple A rating
and the lowest possible interest. Two, they want to analyze the bond
reserve fund as to whether it can be funded with cash or purchase of a
surety bond.
The fourth item of business was to consider and take action offering
statement and related documents pertaining to Schertz/Seguin Local
Government Corporation contract revenue bonds series 1999.
Mr. Sweatt noted they had furnished copies of a resolution that had been
drawn by the bond counsel asking the Board of Directors to authorize the
preparation and distribute the preliminary official statement. Admittedly,
the Board doesn't have a copy of the final official statement. The
Corporation counsel has reviewed this and found no differences with it.
The Board is being asked to consider adopting the resolution that
authorizes the preparation of the preliminary official statement.
President Dwyer emphasized he doesn't see any way they can do this
unless the resolution is altered in some way, shape or form. Mr. Pat
Lindner commented it is worded in such a way that the consultants are
authorized to complete the document. The draft official statement that the
Board is authorizing to be circulated is not a finished document at this
point in time. They have to include the risks and the project description.
Normally the process for the bond sale is to authorize the draft official
statement and on the meeting of December 7th, the Board would approve
the final official statement. That final official statement is what would
actually be distributed among the bond-buying public.
President Dwyer asked to have the 3 Whereas's on page two explained to
him. Does the Whereas at the top of the page reflect something to happen
in the future? There was a brief discussion about this with Mr. Lindner
stressing the critical bottom line of this resolution is some type of official
authorization to use the draft document. He added they don't want to go
into this process with concern on the part of the Board about what actions
may be taken.
After further discussion and a statement by President Dwyer he has no
problem with the facts presented as long as they're not doing it today - as
long as they say prospective, Secretary Wolverton moved to accept the
resolution as presented. It was pointed out to Secretary Wolverton, that as
a point of clarification, it should be as typed UP versus as presented.
Secretary Wolverton amended the motion to indicate that change. Director
Bauer seconded the motion, which carried by unanimous vote of all
Directors present.
The fifth item of business (originally agenda item #3) was to receive
consultant's activity report. Mr. Camp stated that with all the attention on
the bond issue, he wants the Board to understand they have every hope it
will sell and things will move forward. Meetings have already begun and
Clay Roming wil be managing the engineering - the technical construction
side of the project Bill Klempt has already been to TNRCC to make sure
we're reading their rules the same way they do on getting the well designs
approved. Clay Roming will now bring you up-to-date on what he's doing
to prepare for this.
Mr. Roming reported they had agreed to be the engineering managers for
the project as a means of coordinating everyone's activities to make sure
they mesh well. After saying they had prepared a breakdown of all costs,
Mr. Roming outlined the project schedule. It is anticipated the engineering
work will begin in January. Preceding that, they must bring to the Board an
engineering services contract. If the engineering work begins in January, it
is expected it will be completed by December.
Mr. Roming went on to say they will assist with the bids and make
recommendations as to which contractors should be awarded bids. There
will probably be one contract for the well drilling and furnishing of the
equipment for the wells, one for the water treatment plant , booster pump
station and main pump station, He expects they will go with three separate
contractors for the pipelines. They will manage all the taking of bids and
furnish the on-site administration of construction. Mr. Roming indicated he
intends to be the project manager.
Mr. Roming stated he foresees construction beginning in January or
February of 2001 and this should allow for completion by June 1, 2002.
Among the many things that still need to be done are going before the
Water Development Board, coordinating with Bill Klempt and his team,
acquiring right-of-way, and negotiating power contracts. They will keep the
Board updated on all progress and/or problems. Director Rivera asked if a
summary had been supplied to the Regional Water Planning Group
advising them there is a project and was told they had been informed.
Mr. Camp mentioned they had a good meeting with TNRCC and have an
agreement, in principle, for three tiers of permits. They did not have such a
good meeting with the Gonzales County District who turned down their
application to work over the Ashley well. After speaking with President
Dwyer, he filed for a re-hearing to give them one more chance. The basis
for turning it down is the proximity to another well and the only one in
close proximity is the Bustos well. Since the District doesn't appear to
want to do the hard part of its job, Mr. Camp indicated he wants to file with
the State of Texas with the water well drillers board and ask that they
inspect the Bustos well and if it is communicated between the two aquifers
that they do their job and have it plugged. One of the things he included in
his motion asking for the re-hearing is that the Bustos well is not properly
registered under their rules. Under their rules, the existing exempt well
(domestic and livestock well) had to be registered within one year of the
enactment of their rules. It's not going to be as easy to do these things
and not as rational as they might have hoped. One of the concerns at this
point is that anyone else can go across the property line from us and drill
another one of these exempt wells.
Mr. Camp further stated they may want to consider they have room on the
Ashley place to put wells. They can back far enough away from the Bustos
well if they can put a well in. It may be good to locate a well and file an
application for a permit to construct a well. They can get a permit and keep
it alive for 240 days without actually having to do anything. Once they file
their application, they are protected once they get the permit. It might be a
good idea to go ahead and do this, but not stop pursuing the Bustos well.
He doesn't know if they will be back next month recommending they file a
suit, but the Board should be prepared to do that. It's one of those things
we either face now or later.
President Dwyer inquired if the proceeding before the water well drillers
board is an administrative proceeding and Mr. Camp replied yes it is.
President Dwyer then asked if there's any thought on a time frame for a
hearing and Mr. Roming answered they are meeting with Mr. Wiley on
December 23rd. Mr. Camp was not sure how long it would take to have a
hearing.
Director Rivera brought up the fact that a while back they had decided on a
good neighbor policy. She's concerned about what fighting it out will do to
this policy. She would rather solve this problem without bad headlines in
the newspaper. Mr. Camp acknowledged he has the same concerns.
There's a real problem with these district rules, and if they're giving a
status to exempt wells that no one else in the State does and if they're
requiring this extreme spacing back from the well, it doesn't make any
scientific sense. The district is supposed to have a rational basis for these
rules.
President Dwyer, addressing Director Rivera, said we want this project to
go forward and be able to spend money and make contracts to acquire
water rights in Gonzales County, so we need to resolve this issue or can
this project. Director Rivera, saying she understands, still emphasized the
need to resolve it without a lot of mud slinging.
After more discussion about the Ashley well, Secretary Wolverton said he
would like to see them proceed with whatever is necessary to get the
Ashley well back in operation. We have a contract with him that we're
leasing back to him and that well is part of it.
President Dwyer asked if they have to take any action on this. Mr. Camp
answered they will pull all their information together, but in the event they
have some kind of time limit, they would go ahead and file to keep their
options alive. Director Rivera remarked she feels the Board will trust
whatever Mr. Camp is going to do to solve this problem.
There was some discussion about the re-hearing and when it would be
scheduled, so Eric Vordenbaum asked if the Board could request to be on
the mailing list to get a copy of every agenda. He felt they need to cover all
the bases.
President Dwyer moved to authorize Mr. Camp and Mr. Klempt to move
forward with the water well drillers board to ask for some enforcement of
action on the Ashley well. Secretary Wolverton seconded the motion,
which carried with the unanimous vote of all Directors present.
The sixth item of business was to consider and take action regarding
selection of auditor for fiscal year end report. Mr. Hamlett recommended
Armstrong, Vaughan and Associates and distributed a report of what was
spent in the last year. Mr. Greenwald related the City of Schertz had
Armstrong, Vaughan and Associates as their auditor for several years and
had no problem with their work.
Secretary Wolverton moved to approve the services of Armstrong,
Vaughan and Associates as the auditor for the fiscal year end report for the
Schertz/Seguin Local Government Corporation. Director Bauer seconded
the motion, which carried with the unanimous vote of all Directors present.
The seventh item of business was an Executive Session called under
Chapter 661 Local Government Code, Subsection 661.072, deliberation
regarding real property.
An Executive Session was held from 3:23 p.m. until 3:60 p.m.
The eighth item of business was to consider and take action as a result of
the Executive Session. No action was required.
The ninth item of business was Other Business as follows:
Director Rivera mentioned the Regional Water Planning Group and their
evaluation of 67 options. She explained that part of the evaluation was
based on cost, construction and local plans. The entire group will field all
alternatives and a consensus is desired. The Board's project is included in
one of the options.
Director Rivera hopes the Board can give an update that our plan meets the
50-year planning scope. Do we have a drought management plan for 60
years.? Both Mr. Sweatt and Mr. Hamlett pointed out there is a drought
management plan for a period of time, but not for 60 years. Director Rivera
emphasized there isa need for long-range planning that is implementable.
She indicated the Planning Group was impressed with the Boards's
initiative and there could be a solution for everyone involved. She also
mentioned she can't agree with the evaluation that all should be based on
cost and because her view was not considered, she resigned for a short
time, but she is now non-resigned.
President Dwyer related he gave a check (the first) to Mr. Hamlett for the oil
and gas runs from Mr. Ashley's tract.
There being no further business offered, it was moved and seconded that
the meeting be adjourned. Upon a vote being taken, the motion carried by
a unanimous vote of all Directors present and the meeting was adjourned
at 4:00 p.m.
J
MINUTES APPROVED this the day of , 2000.
Signatures of all Directors
Robin Dwyer, President
Ramon J. Cook, Vice-President
Jim Wolverton, Secretary
Sidney Bauer, Director
Gloria Rivera, Director