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01-13-2011 SSLGC.MinutesMINUTES OF THE SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION THE STATE OF TEXAS § COUNTY OF GUADALUPE § SCHERTZ/SEGUIN LOCAL § GOVERNMENT CORPORATION § On this the 13~' day of January 2011, the Schertz/Seguiri Local Government Corporation (SSLGC) convened at 1:36 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 President Patricia Ramirez Secretary Andrew Koenig Treasurer Jim Wolverton Director Betty Ann Matthies Ex-Officio and the following directors being absent: Robin Dwyer Vice-President Hal Baldwin 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 Johnny Bierschwale Emery Gallagher Georgia Hanks Crockett Camp Bill Klemt John Winkler Patrick Lindner Jack Fickessen General Manager Schertz Assistant City Manager Seguin Water Utility Manager Administrative Assistant Consultant/Project Manager Hydrologist Consultant COriSUltant (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 1:36 p.m. The second order of business was Public Comment. Mr. Robert Brockman, a Schertz resident, addressed the Board during public comment. He referred to an article in the San Antonio Express News which said that State Senator Troy Fraser had written a bill that would make groundwater a vested property right, i.e., property owners would own the water before it is pumped from the ground. Currently, property owners own the groundwater after it is pumped from the ground. The third order of business was Approval of the Minutes for the Board Meeting held on December 16, 2010. Secretary Patricia Ramirez made a motion to approve the December 16, 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 December was 56.5% 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, mostly due to weather, and consequently sales were also lower than the last two years. o GCUWCD. The Underground District met January 11, 2011. A copy of the agenda was included in the board agenda packets. Mr. Cockerell referenced several agenda items which included: a) Agenda Items 7 - 21 -Requests from irrigators in the county for historic use pumpage status. These agenda items were tabled due to District Rules which require a 30 day notice for exceptions to the rules. Landowners/irrigators did not meet the June 2010 deadline with their applications and asked for exceptions to the rules. The District will put a notice in the paper and include exception and application for historic use status on its February 2011 agenda to comply with the 30-day notice for exceptions to the rules. b) Agenda Item 22 -Dual-annexed area in Caldwell County (annexed by Gonzales County and Plum Creek). No action was taken. Legal litigation may follow. Mr. Cockerell will keep board members informed. c) Mr. Cockerell read a portion GCUWCD District Manager Greg Sengelmann's report which stated that the Water Protection Agency in Gonzales County is in the process of suing GCUWCD for issuing water permits to SAWS. The deadline for filing a response to the lawsuit is January 24, 2011. d) Mr. Cockerell referenced an article, "Eagle Ford Shale Play and the Carrizo Aquifer" by Darrell Brownlow. Mr. Brownlow stated in the article, "Hydraulic fracturing using groundwater from the CarriZO Aquifer in the Eagle Ford Shale a has enormous economic potential for landowners, oil production companies and the entire region. Moreover, from a geologic and water planning perspective, additional impact on the aquifer (beyond existing planned groundwater uses) appears minimal." Discussion was held regarding the amount of water used in a hydraulic fracturing job and the definition of a "large" amount of water which is relative to .the industry using the term. e) Mr. Cockerell informed the Board that Mr. Kenneth Schoenfield (SSLGC grazing lease tenant on the Ashley Ranch) has complained of gates being left opened, stolen tools and small equipment and damage to his oats field in the vicinity where Global Geophysical is doing. its seismic survey. Mr. Cockerell is working with Global Geophysical to compensate Mr. Schoenfield for any damages. f) Attorney Bill Knobles has informed Mr. Cockerell that he may have a possible oil and gas lease to present to the Board at the next board meeting. The lease will be presented to the executive committee at the February executive committee meeting before being presented to the Board. g) Mr. Cockerell gave a plant tour to representatives from the City of Converse, Councilman Steve Brown and Interim City Manager John Quintanilla. They were interested in SSLGC's operation, water planning and water use in general in the Carrizo Aquifer. Mr. Cockerell complimented SSLGC Water Superintendent Shaw Shimek and SSLGC operators for their help with the tour and the excellent condition of the Nixon plant. The fifth order of business was Resolution SSLGC Rll-O1 to Amend SSLGC's FY2010- 2011 Maintenance and Operating Fund Budget for 3/4 Ton Full Size Pickup -Alan Cockerell, General Manager. Mr. Cockerell explained that agenda items S and 6 would be discussed collectively. A budget adjustment is necessary in order to approve the vehicle purchase in agenda item 6. The funds approved in the Capital Outlay section of the FY 2010-2011 Maintenance and Operating Fund Budget were not enough to pay for the vehicle. Mr. Cockerell asked the Board to approve Resolution SSLGC Rl l-O1 to transfer $3,426.84 from Technical Services to Capital Outlay. He explained that he had anticipated a larger amount to be paid to Guadalupe County Groundwater Conservation District than actually required and excess funds for the truck purchase were available in that line item of Technical Services. Director Jim Wolverton made a motion to approve Resolution SSLGC Rll-O1 to amend SSLGC's FY2010-2011 Maintenance and Operating Fund Budget by transferring $3,426.84 from Technical Services to Capital Outlay for the purchase of a 3/4 ton full-size pickup. Secretary Ramirez seconded the motion. Upon a vote being called, the motion carried by unanimous decision. 3 The sixth order of business was to Approve Truck Purchase -Alan Cockerell, General Manager. Mr. Cockerell referred to a bid tabulation sheet prepared by the City of Seguin for the purchase of several vehicles. Although the bid for SSLGC's truck was not the lowest, it did meet the requirements for a local purchase. He asked the Board to approve the purchase of the truck from Griffith Ford in the amount of $31,426.84. Director Jim Wolverton made a motion to accept the bid from Griffith Ford in the amount of $31,426.84 for the purchase of a 3/4 ton full-size pickup. Secretary Ramirez seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The seventh order of business was Resolution SSLGC Rll-02 to Revise SSLGC Rate Study and Long-Term Financial Plan Prepared by Economists.com -Alan Cockerell, General Manager. Mr. Cockerell handed out a copy of a presentation by Dan Jackson with Economists.com of a modified rate study and long-term financial forecast for SSLGC. He gave a summary of the changes in the rate study as he referred to sections of the presentation. Earlier in the year the Board had approved SSLGC's rate study and long-term financial plan which was prepared by Mr. Jackson. The study included status quo and SAWS scenarios. It was based upon certain assumptions of how costs would be allocated between SSLGC, SAWS and other customers. The study showed that due to "economies of scale," a contract with SAWS would be beneficial to SSLGC, SAWS and SSLGC's current customers in terms of rates. After negotiations with SAWS, two major assumptions were changed and Mr. Jackson updated the rate study with the following: 1) SSLGC water lease costs were removed from the SAWS rate; and 2) debt services costs to include all assets that are used and useful to SAWS were included. The water lease costs pertain to SAWS water that SSLGC would treat and transport for SAWS. SSLGC's excess water would be sold at the same rate as other SSLGC customers. After the water lease costs were removed from the SAWS rate, Mr. Jackson .and SSLGC staff reevaluated debt services costs. Although SAWS would have a lower cost of service and SSLGC would have lower savings, SSLGC would continue to realize a significant savings. In conclusion, Mr. Cockerell asked board approval of SSLGC's revised rated study prepared by Economists.com, Resolution SSLGC Rl 1-02. Director Wolverton made a motion to approve SSLGC's revised Rate Study and Long- Term Financial Plan prepared by Economists.com, Resolution SSLGC Rll-02. Treasurer Koenig seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The eighth order of business was to Approve SSLGC Credit Card Agreement and Authorization for American Bank of Texas Credit Card -Alan Cockerell, General Manager. -~~ Mr. Cockerell asked for Board approval for a Corporate credit card for the general manager from American Bank of Texas with a credit limit of $5,000. He also asked for approval of SSLGC's Credit Card Agreement which addresses guidelines for employee use of the credit card. 4 Secretary Ramirez made a motion to approve SSLGC's Credit Card Agreement and authorization for an American Bank of Texas credit card with a limit of $5,000 for the general manager. Treasurer Koenig seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The ninth order of business was Gonzales County Expansion Proiect -Alan Cockerell, General Manager. Mr. Cockerell provided a summary of the activities below on the Gonzales County expansion project: o A construction update meeting was held with Weisinger, Incorporated and Harris Road Company on December 22, 2010. Another update meeting will beheld in late January. o The collection system, roads and pipeline construction are on schedule. o Mr. Cockerell and Consultant John Winkler will meet with Gonzales County officials on January 14, 2011, regarding repairs to CR114. o At the request of Gonzales County Commissioner Bud Wuest, SSLGC supplied water without charge to Gonzales County for repair to CR127. The amount of water supplied was deducted from the amount used to determine SSLGC's transportation costs to the District. o Water quality analyses performed on well #9 and well #121ook good. o Pumping tests on well #10 will begin in the next few weeks. o Pipe has been laid to well #11. o Aright of entrance and easement has been obtained from Mr. Walter Koepp for the surge tank location. Bids for storage tanks will be requested soon. The tenth order of business was Legislative Update -Jack Fickessen, Legislative Consultant. Mr. Fickessen extended an invitation from Representative John Kuempel for SSLGC board members and staff to visit him in Austin. He reported that members of the Texas State 82nd Legislature were in the process of forming committees and electing Chairmen of those committees. Senator Troy Fraser will most likely be appointed Chairman of the Natural Resources Committee. Mr. Fickessen reiterated that Senator Fraser had written a bill that would make groundwater a vested property right as mentioned by Mr. Brockman during Public Comment of the meeting in progress. He added that a bill would eventually come forth from the House of Representatives regarding issues such as Desired Future Conditions and permit allocation. The bill should address how these issues correlate between the Districts and Management Service Areas in order to make sure the requirements are the same. He concluded by mentioning an article Mr. Cockerell had included in the board agenda packets pertaining to Bexar Met. s The eleventh order of business was Wholesale Water Contracts with SAWS and the City of Converse -Patrick Lindner, General Counsel. Counsel Patrick Lindner referred to the contract between SSLGC and the City of Converse. The Board had previously approved the contract and the City of Converse has agreed to the rate. However, Converse city representatives asked for two additional months to complete the point of delivery. The contract states that payment would begin when Converse begins taking water or six months from the effective date. They want to modify the contract to state that payment would begin when Converse begins taking water or eight months from the effective date to accommodate delays in the field. Counsel Lindner asked the Board to reapprove the contract with the City of Converse as amended. Director Wolverton made a motion to approve a water supply contract between SSLGC and the City of Converse as amended. Secretary Ramirez seconded the motion. Upon a vote being called, the motion carried by unanimous decision. Counsel Lindner stated that items for discussion regarding the SAWS contract would be for a financial/managerial decision by board members and not a legal decision. He would answer questions from board members regarding their rights and obligations under the contract in Executive Session. He continued by presenting the contract to the Board and explained that it was the most reasonable and fair contract that he, consultants and other staff members were able to negotiate in concurrence with the financial reports Mr. Jackson had prepared. He noted that the financial reports showed a substantial savings to SSLGC and its customers by contracting with SAWS. Counsel Lindner referred to the executive summary of the contract which was included in the board agenda packets and stated that nothing substantial had changed from the contract presented to the Board in December 2010. He added that Bond Counsel had reviewed the contract three times since December and only made changes they deemed necessary to enhance the ability to issue contract revenue bonds described in the contract and to enhance the enforceability of the contract revenue bonds to the bond holders. Mr. Cockerell handed out a copy of the contract with the latest revisions to board members for their review. He stated that SAWS would address the .contract on February 1St. He concluded by saying that if the Board moves forward with the SAWS contract, both contracts (the City of Converse and SAWS) would be presented to the City Councils of Schertz and Seguin for approval the following week. Director Wolverton made a motion to approve a water contract with SAWS and requested the city councils of Schertz and Seguin to proceed with review and approval. Secretary Ramirez seconded the motion. Upon a vote being called, the motion carried by unanimous decision. At the advice of General Council Patrick Lindner, Director Wolverton made the following motion: Director Wolverton made a motion to grant President Greenwald authorization to sign further non-substantial amendments to the water contract with SAWS which are agreed upon by SSLGC's executive committee. Secretary Ramirez seconded the motion. Upon a vote being called, the motion carried by unanimous decision. 6 Upon recommendation from General Counsel Patrick Lindner, agenda items twelve and thirteen pertaining to executive session were passed. The twelfth 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. Passed The thirteenth order of business was to Consider and Take Action as a Result of Agenda Item #12. Passed The fourteenth order of business was Consideration and/or Action on Questions and Possible Items to be placed on the next Agenda. No additional discussion was held. The fifteenth order of business was Adjournment. President Greenwald declared the meeting adjourned at 2:31 p.m. The next regular meeting was scheduled Thursday, February 17, 2010, in Seguin. MINUTES APPROVED THIS DAY OF ~ , , 2011. /2~ ecretary, Board of Directors