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05-20-2010 MinutesMINUTES OF THE SCHERTZ-SEGUIN LOCAL GOVERNMENT CORPORATION THE STATE OF TEXAS § COUNTY OF GUADALUPE § SCHERTZ-SEGUIN LOCAL § GOVERNMENT CORPORATION § On this the 20~' day of May 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 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 Douglas Faseler Don Taylor Susan Caddell Johnny Bierschwale Shawn Shimek Emery Gallagher Georgia Hanks Sam Willoughby George Antuna Crockett Camp - Bill Klemt John Winkler Patrick Lindner Jack Fickessen General Manager Seguin City Manager Schertz City Manager Seguin Finance Director Schertz Assistant City Manager Water System Superintendent Seguin Water Utility Manager Administrative Assistant Schertz Public Works Director Schertz Governmental Liaison Consultant/Project Manager Hydrologist Consupant- CoriSU.ltant (Walker Partners) COU11sel (Davidson & Troilo) 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. Mayor Hal Baldwin addressed the Board and stated that he had attended a Greater Bexar County Council of Cities meeting in San Antonio at ACOG. A briefing by SAWS regarding its water rate increase and water structure for Bexar County cities was on the agenda. The speaker expressed excitement about the relationship which has developed between SAWS and SSLGC for water resources. President Greenwald congratulated Mayor Baldwin on his reelection as Mayor of the City of Schertz. The third order of business was Approval of the Minutes for the Board Meeting held on Apri115, 2010. Director Jim Wolverton made a motion to approve the April 15, 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 April at 64.5% of Gonzales County Underground Water Conservation District's (GCUWCD) monthly allowable. Seasonal Pumping and Monthly Water Sales charts were included in the agenda packets. The seasonal chart follows the trend of previous years although production for the month of April was a little lower due to recent rainfall. o Region L. Various projects within the Regional L plan have separate transportation systems. Several cities and Springs Hill WSC want to join with SSLGC to develop an entity to consolidate transportation pipelines into a regional system. SSLGC would be heavily involved with its current and future infrastructure. State funding may be available to obtain an oversized pipeline. A meeting is scheduled with the Water Development Board on May 25, 2010, in Austin to discuss possible state funding. o GCUWCD. Mr. Cockerell called attention to a fmancial statement for GCUWCD's recent mitigation fund in Gonzales County which was included in the agenda packets. -- - - -Canyon Regional-Water Authority (CRWA)-has submitted its mitigation fund-payment- and SSLGC will be required to submit its payment later in the year. SSLGC has received its copy of the draft of the Mitigation Fund Procedure Manual. Mr. Cockerell and staff are in the process of reviewing it. The manual provides the District with guidelines pertaining to who qualifies for well mitigation and how to conduct mitigation requests. Mr. Cockerell provided summaries of SSLGC's permitted wells and historic use for individual wells in Gonzales County in the board agenda packets. SSLGC will be recognized for 11,725.81 ac-ft per year of historic use which is close to its yearly permitted amount. A synopsis of the Hearings Examiner's Report on the SAWS case was included in the board agenda packets. In summary, the Hearing Examiner recommends that the District grant SAWS its permits in Gonzales County. GCUWCD will include SAWS permits on its June or July 2010 agenda. o Operations Report. Mr. Cockerell reported that Magna-Flow Environmental Company had been hired to remove sludge out of both discharge basins at the Nixon Water Treatment Plant and to dispose of the waste on SSLGC's permitted land application site. Due to the large amount of sludge a contract extension was required and approval will be requested later in agenda item #7. During the removal of the sludge a wall of one of the discharge basins failed. A request for approval to repair it and a caustic line will be addressed in agenda item #8. Bryan Construction had the lowest bid for the repairs and if approved will be responsible for the repair. Premium Water Well Services pulled pump #1 for inspection and found irregular wear on the bearings. Maintenance will be performed as soon as possible to get the well back into service. The Water Treatment Plant in Nixon experienced a power outage on May 14th. When the power returned it caused a surge which ruptured the 42 inch pipeline in the vicinity of County Road 114. Mr. Cockerell explained that delays and various protections are built into the control system, but the quick off and on of the power may have confused the control circuitry. Engineers and contractors are investigating to determine the actual cause of the water surge which ruptured the pipeline. Holloman Construction was called to temporarily weld a patch on the pipe until a permanent repair could be made. Both Seguin and Schertz were notified and they initiated blending while maintenance was performed. SSLGC operators are conducting an inventory of repair kits that are stored at the Booster Pump Station. On May 24~' Mr. Cockerell and John Winkler with Walker Partners will meet to evaluate the inventory and contact Hanson Pipe, the manufacturer of the pipe, to coordinate the repair with Holloman Construction and other contractors. Other. The City of Schertz is planning a Water Development Summit tentatively - - scheduled September 8, 2010; from 10:00-a.m. to 4:00 p~m. in Schertz: TML Region 7 is the key audience. Working together to solve water issues will be the primary message and SSLGC will be the role model. Mr. Cockerell discussed a possible agreement between the City of Smiley and CRWA which was included in the agenda packets. Mr. Cockerell met with CRWA General Manager David Davenport. Mr. Davenport is working to ensure that CRWA get its additional permits in Gonzales County. He believes if Smiley has issues in the future, GCUWCD will have to address them and this could affect other entities' permits. 'The City of Smiley may allow CRWA to perform tests and evaluations and possibly suggest recommendations for Smiley's water issues. Mr. Cockerell plans to attend the Nixon-Smiley High School graduation on May 21, 2010, to present scholarships to four students on behalf of SSLGC. The fifth order of business was Consideration and Approval of a Resolution by the Board of Directors of SSLGC Approving the Corporation's Preliminary Official Statement and Appointing the Underwriters and Certain Other Professionals Pertaining to the Sale of Obligations Designated as "Schertz-Seguin Local Government Corporation Contract Revenue Bonds, Series 2010"; Complying with the Requirements Contained in Municipal Securities Rule Making Board Rule 15c2-12; and Other Matters in Connection Therewith - Mark McLiney, Southwest Securities and Duane Westerman, SAMCO. Mr. Mark McLiney with Southwest Securities introduced Ryan Cunningham with Southwest Securities and Co-Financial Advisors Duane Westerman and Alan Westerman with SAMCO. He provided copies of the Preliminary Official Statement (POS) for board members to review and presented an outline of the timeline for the bond funding for four additional wells and operational improvements in Gonzales County. The POS he distributed was the second draft and had been reviewed by staff, bond counsel and potential underwriter's counsel. Board members received the second draft by email and had the opportunity to read it before the meeting in progress. Mr. McLiney planned to request approval of Resolution No. SSLGC R10-02 to distribute the second draft of the POS to the underwriter's counsel, bond counsel, rating agencies and insurance company. Bond pricing and interest will be determined June 14, 2010. At the June 15, 2010 board meeting, the following items will be included on the agenda: Approval of resolution for final pricing and POS for the bond issue Approval of an underwriting syndicate On the evening of June 15, 2010, both Schertz and Seguin city councils will be asked to approve the actions of SSLGC and authorize the sale of the bond issue. Discussion was held regarding the final requested amount, optional resources for the debt service reserve fund and market conditions. A recommendation was made to use monies from SSLGC's impact fee account for the bond issue debt service reserve fund to lessen the amount borrowed. General Manager Cockerell called attention to a summary of the debt service funds and projected debt service-requirements which was included in the agenda -packets. Mr. McCliney presented a - - general overview of the debt service funds included in the summary, i.e., sources and uses of funds. Discussion followed regarding construction of the wells and necessary land and easements for the wells. President Greenwald read resolution SSLGC R10-02: "A resolution by the Board of Directors of the Schertz-Seguin Local Government Corporation approving the Corporation's Preliminary Official Statement and appointing the underwriters and certain other professionals pertaining to the sale of obligations designated as `Schertz-Seguin Local Government Corporation Contract Revenue Bonds, Series 2010'; complying with the requirements contained in municipal securities rule making board rule 15c2-12; and other matters in connection therewith." Director Jim Wolverton made a motion to approve resolution SSLGC R10-02. Vice- President Dwyer seconded the motion. Upon a vote being called, the motion carried by unanimous decision. Director Jim Wolverton made a motion to place $1,000,000 from the Corporation's impact fee account into a dedicated account for the debt service reserve fund. 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 & Alan Cockerell, General ManaEer. 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 six months ended March 31, 2010. • Revenues, Expenses and Changes in Net Assets -Combined Statements ^ $880,168 (net income) Includes water sales billed for the first debt service payment made February 1, 2010 along with interest payments for the debt service payment. • Revenues, Expenses and Changes in Net Assets -Operating Fund ^ $37,316 (net income) Schertz and Seguin are very close in water usage. • Construction Fund Balance Sheet -Cash on Hand ^ $2,751,654 $2,261,000 remains in outstanding purchase orders. • Revenues, Expenses and Changes in Net Assets -Interest & Sinking Fund ^ $710,183 (net income) Includes I&S rates paid by participating entities for the first and second quarters. Also includes first bond payment made February 1st in the amount of $2,124,742. __ _ _ _ _. • Repair & Replacement Fund Balance Sheet -Cash Balance ^ $1,009,680 Bond covenants require the balance to be $500,000. • Future Development Fund Balance Sheet -Cash Balance ^ $891,310 • Revenues, Expenses and Changes in Net Assets -Impact Fund ^ $103,072 (net income) • Revenues, Expenses and Changes in Net Assets -Operating Fund (comparative statement) ^ $41,687 (net income) Working Capital Trend Chart ^ 1,318,985 (decrease since December 31, 2009 in working capital) First bond payment in the amount of $2,124,742 made on February 1, 2010 Vice-President Dwyer. made a motion to approve SSLGC's financial statements for the quarter ending March 31, 2010. Director Wolverton seconded the motion. Upon a vote being called, the motion carried by unanimous decision. b. Investment Report for the quarter ending March 31, 2010. Ms. Caddell presented the Investment Report for January 1, 2010, through March 31, 2010. Interest earnings for the quarter ending March 31, 2010, were $3,761. Secretary Ramirez made a motion to approve SSLGC's investment report for the quarter ending March 31, 2010. Treasurer Koenig 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 March 31, 2010. Ms. Caddell presented the expenditure information for the second quarter January 1, 2010, through March 31, 2010. The City of Seguin has requested reimbursement of $748,905 from SSLGC for the second quarter of FY2009-2010. Ms. Caddell added that SSLGC was under budget for the second quarter of FY2009-2010 by $2,564,238. Vice-President Dwyer made a motion to authorize SSLGC to reimburse the City of Seguin in the amount of $748,905 for the quarter ending March 31, 2010, in accordance with the Management Services Agreement. Director Wolverton seconded the motion. Upon a vote being called, the motion carried by unanimous decision. General Manager Cockerell commented that the Corporation was under budget because it had not yet entered into the summer peak pumping season. The seventh order of business was Extension of Magna Flow Sludge Removal from Discharge Basins at Nixon Plant -Alan Cockerell, General Manager. Mr. Cockerell stated that $15,000 was included in the FY2009-10 budget for sludge removal from the discharge basins at the Nixon WTP. After 500,000 gallons were removed, a significant amount of sludge remained. During the sludge removal, operators found that one of the concrete walls in one of the basins had cracked. To fully estimate the problem, all of the sludge from both basins had to be removed. Mr. Cockerell added that in the future $15;000 annually should be appropriate for sludge removal. When engineers design the Guadalupe project discharge basins an improved process will be investigated. Mr. Cockerell requested approval of an additional $15,194 payable to Magna Flow for completion of the sludge removal to be taken from the contingency line of the budget. Director Wolverton made a motion to approve the completion of sludge removal from the discharge basins by Magna Flow in the amount of $15,194 from the contingency line of the FY2009-2010 budget. Vice-President Dwyer seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The eighth order of business was Repair of Discharge Basins and Caustic Line at Nixon Plant -Alan Cockerell, General Manager. At the time the wall in the concrete discharge basin cracked, John Winkler with Walker partners was in the process of examining the caustic line at the Nixon WTP which needed repair. He combined the two repairs into one package and a "request for bids" was sent out. Three bids were submitted and Bryan Construction Company was the lowest at $174,900. Mr. Cockerell had already requested approval from the executive committee to award the contract to Bryan Construction in order to begin the process as soon as possible in order to stay in compliance with TCEQ safety and environmental regulations. He asked for board approval for the contract to be funded from the emergency repair fund. Director Wolverton made a motion to approve repair of the discharge basin and caustic line at the Nixon WTP in the amount of $174,900 by Bryan Construction Company. Costs of the repairs will be taken from the repair and replacement fund. Vice-President Dwyer seconded the motion. Upon a vote ,being called, the motion carried by unanimous decision. The ninth order of business was Lawn Mower Disposal -Alan Cockerell, General Manager. General Manager Cockerell requested approval to dispose of a lawn mower that was replaced in 2008. Costs to repair the lawn mower would be greater than its worth. Director Wolverton made a motion to approve disposal of the lawn mower. Treasurer Koenig seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The tenth order of business was Legislative Update -Jack Fickessen, Legislative Consultant. __ . President Greenwald deferred agenda item ten to Executive Session as recommended by General Counsel Patrick Lindner. The eleventh order of business was Guadalupe County Expansion Proiect -Alan Cockerell, General Manager. General Manager Cockerell called attention to a Power Point presentation of the Guadalupe County project which was included in the agenda packets. He stated that staff is in the process of looking for a funding mechanism for the Guadalupe project that will help lessen the negative impact on water rates for the citizens of Schertz and Seguin. Existing wholesale customers and potential new customers could participate in the process by forming a new entity. SSLGC would provide management and operation of the water system. Each participant would help fund the project. SSLGC has already fiinded the project with approximately $2,441.274. SSLGC has acquired the treatment plant site and eight well sites and final designs have been completed. Water rights for 3,757 ac-ft per year of water are leased and permits for five - 500 GPM wells have been issued to SSLGC by GCGCD. Mayor Baldwin stated for the record that he was not in favor of sharing control of any future projects by SSLGC with any other entities. President Greenwald deferred the remainder of agenda item eleven to Executive Session. The twelfth order of business was Gonzales County Expansion Project -Alan Cockerell, General Manager. President Greenwald deferred agenda item twelve to Executive Session. President Greenwald closed General Session at 2: 40 p. m. The thirteenth 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: SD p. m. Executive Session was held from 2: SO p. m. to 4: 30 p. m. The fourteenth order of business was to Consider and Take Action as a Result of Agenda Item #13. President Greenwald opened General Session at 4: 30 p. m. As a result of Executive Session: Agenda Item 12 -Gonzales County Expansion Project -Brelsford Property Director Wolverton made a motion to authorize General Manager Alan Cockerell to -- engage- in- contract--negotiations- to -purchase the- Brelsford- property in -Gonzales County- - - - - which consists of 87.5 acres. Secretary Ramirez seconded the motion. TJpon a vote being called, the motion carried by unanimous decision. The fifteenth order of business was Consideration and/or Action on Questions and Possible Items to be placed on the next Agenda. Director Wolverton suggested that the Corporation look into utilizing properties it owns for endeavors other than grazing leases, e.g., recreational opportunities. He asked Assistant City Manager of Schertz Johnny Bierschwale and Consultant/Project Manager Crockett Camp to develop and present to the Board a plan for other opportunities which would increase the Corporation's return on its investment. No additional discussion was held. The sixteenth order of business was Adjournment. President Grreenwald declared the meeting adjourned at 4:40 p.m. The next regular meeting was scheduled Tuesday, June 15, 2010, in Seguin. MINUTES APPROVED THIS ~ DAY OF , 2010. Patricia Ramirez, Sec tart' 9