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08-18-2011MINUTES OF THE SCHERTZISEGUIN LOCAL GOVERNMENT CORPORATION THE STATE OF TEXAS § COUNTY OF GUADALUPE § SCHERTZISEGUIN LOCAL § GOVERNMENT CORPORATION ~ On this the 18th day of August, 2011, the Schertz/Sequin Local Government Corporation {SSLGC) convened at 1:33 p.m. in the City of Sequin Council Chambers located at 210 E. Gonzales, Seguin, Texas. The following members being present and in attendance: Ken Greenwald President Robin Dwyer Vice-President Timothy "Jake" Jacobs Secretary Andrew Koenig Treasurer Kerry Koehler Director Hal Baldwin Ex-Officio Betty Ann Matthies 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: Doug Faseler Johnny Bierschwale Susan Caddell Sam Willoughby Patrick Lindner Bill Klemt John Winkler Crockett Camp Jack ~'ickessen Alan Cockerell Shawn Shimek Regina Franke City Manager Sequin Assistant City Manager Schertz Finance Director Seguin Public Works Director Schertz Counsel (l]avidson & Troilo) HydrologistlConsultant Consultant (Walker Partners) Consultant/Project Manager Legislative Consultant General Manager SSLGC Water System Superintendent SSLGC Adrninistrative Assistant SSLGC The first order of business was to Call the Meeting to Order. President Ken Greenwald called the meeting to order at 1:33 p.m. The second order of business was Public Comment. No public comment The third order of business was A royal of the Minutes for the Board Meetin held on July 21, 2011. Director Koehler made a motion to approve the July 21, 2011 minutes as read. Vice- President Dwyer seconded the motion. Upan a vote being called, the motion carried by unanimous decision. The fourth order of business was GBRA Presentation -Water uali. arlcl Frackin Debbie Main. Ms. Magin provided pamphlets regarding fracking. She advised that testing is available to landowners far $375, if interested, in an effort to establish a baseline. President Greenwald stated that it is the intention of SSLGC to have testing done on owned properties to establish such a baseline. Ms. Magin stated that recent legislation has been passed whereas the chemicals used in the fracking process are now required to be made public; quantity of such chemicals is not required to be disclosed however. She advised that there has been no pz•oven water contamination found in the State of Texas from recent fracking. In the states where a concern over contamination exists, further research is being conducted to determine whether the contazxzinates were present prior to the fracking process. The fear regarding contamination in the Fort Worth area also has been questioned due to the fact that it is a more urban area and other construction factors could be to blame for such contamination. The fifth order of business was Presentation of the General Mana er's Re ort -Alan Cockerell, General Manager. General Manager Alan Cockerell's written report was included in the board agenda packets. He added the following items to his written report: - Water Production Seasonal pumping and monthly water sales charts were included in the board agenda packets. Water production for the month of July 2011 was at 91.6% of Gonzales County Underground Water Conservation District's {GCUWCD} monthly allowable. Mr. Cockerell advised that he believes water production io be dowzi due to showers received in June and July as well as people simply abandoning the process of watering their yards. y GCUWCD The meeting was held on July 12, 2011 and Mr. Cockerell attended. A copy of the agenda is included in the board packet including information regarding the Western Mitigation Fund. Jean Patez•ek resigned from the board due to personal reasons. Her resignation was submitted prior to the meeting and there was no discussion regarding filling the vacancy. - GCGCD z Mr. Cockerell will attend the meeting this afternoon {August I8, 2011). Redistricting appears to be the most pertinent item on their agenda. y Region L/GMA-13 Mr. Cockerell (Agriculture position} was appointed to the planning group along with Kevin Janak (Electric Generating Utility position) Commissioner from Victoria to fill the two vacant positions. All incumbents were reappointed to the planning group. Five additional members will be appointed by the Groundwater Managezxzent Areas (GMA} within the region due to recent legislation. Region L may not meet in November due to TWDB water use projections not being available until after the first of the year. The sixth order of business was Presentation of Treasurer's Report -Susan Caddell, Finance Director & Alan Cockerell, General Manager. a. Financial Statements for the quarter ending June 30, 2011. Mrs. Caddell advised that attached are the financial reports for the nine months ended June 30, 2011. These include the Balance Sheet and the Statement of Revenues, Expenses and Changes in Net Assets. A net loss of $4,229,239.80 is indicated, which is largely attributable to the spending funds from the 2007 and 2010 Construction Funds. Page four (4) is the Statement of Revenues, Expenses and Changes in Net Assets for the Operating Fund; near the bottom of the page is the "Net Incon~e (Loss) Before Transfers" of $650,234.13. Mrs. Caddell advised that is was recommended by our rate consultant, Dan Jackson of Econozxzist.com, rather than having different rates for revenue for Operating Fund, Repair and Replacement Fund and the Future Development Fund, we put all the revenue in the Operating Fund and make transfers to the other funds as necessary. The transfers to the two {2} funds are based upon $0.14 per thousand gallons of usage for the first three (3) quarters of FY2011. Mrs. Caddell stated that the statements for the 2007 Construction Fund, which account foz• the expenditures of the bond proceeds from the 2007 bond issue, can be found on pages S and 6. Tlie total cash on hand is $363,292.99; all have been encumbered. On pages 7 and 8 the Balance Sheet and Statement of Revenues, Expenses and Changes in Net Assets for the Interest and Sinking Fund (I&S) is included. The first bond payment was made February 1, 2011 in the amount of $2,277,912.71 which includes some of the capitalized interest from the 2010 bond issue. The next bond payment was recently made on August 1, 2011 in the amount of $1,723,761.88; this will be included on the September 30, 2011 financial statements. The cash balance for the Repair and Replacement Fund is $1,376,908.94. The transfer from the Operating Fund as mentioned earlier is indicated on page 10. The expenditures for distributiozl maintenance are for tl~e repairs to the discharge basin and caustic line at the Nixon Water Treatment Plant. On page 11 and 12 are the Balance Sheet and Statement of Revenues, Expenses and Changes in Net Assets for the Future Development Fund. The cash balance is currently $843,500.57. Noted on page 12 is the transfer from the Operating Fund, as mentioned earlier. The expenditure for the Western Mitigation Fund for this fiscal year is shown to be $318,516.00 as well as the $50,000.00 cost for the Preliminary Engineering Report (PER) for the San Antonio Water System {SAWS} Project. The $50,000.00 in Miscellaneous Revenue accounts for the reimbursement from SAWS for that PER. Statement of Revenues, Expenses and Changes in Net Assets for the Impact Fand are included on pages 13 and 14. Total impact fee for water impact revenue are $545,815.00. According to accrual accounting policies followed by SSLGC, revenue is not recognized until the work has been campleted; the deferred amount of $12,203.54 is such revenue. NOTE: Payment is required from customers before the water connection is made. This amount has been paid for a connection, but the work was not completed as of .Tune 30, 2011. These are payments made to the City of Seguin. When the City of Schertz submits payment to this fund, their work has been completed. The required amount io maintain in the Reserve Fund according to bond covenants is $1,275,621.10. The current cash balance exceeds this requirement, standing at $1,277,610.93. Interest earning and expenditures for the new wells are included on pages 17 and 18 in the 2010 Construction Fund Statement of Revenues, Expenses and Changes in Net Assets. On page 19 are the Comparative Statement of Revenues, Expenses and Changes in Net Assets for the Operating Fund. Revenue has increased by $1,241,986.65; of this $269,000.00 is revenue from the initial payment far the SAWS reservation fee. Consumption has increased from this time last year in the amount of 214,974,000 gallons by City of Schertz and City of Seguin. This amplified consumption has resulted in a revenue increase and all the revenue has been put into this account with the transfers included at the bottom of the report. Expenditures have increased by $636,171.02. Of this amount $269,000.00 was to pay the two cities the SAWS reservation fee which was received. Other substantial increases were due to water lease payments and Professional Services. This was largely due in part to cell refurbishing on the high service pump and increased legal fees. The Net Income increase from this time Last year is $17,109.19. Working capital has decreased since March 31, 2011 by $550,262 due in large part to spending additional bond funds. Vice-President Dwyer questioned the reasoning behind the action of the distribution of the $269,000.00. Mr. Cockerell advised that the Board had approved the City of Seguin and City of Schertz requests to have that money returned to the cities io enable them to better manage their rates. Mrs. Caddell advised that the City of Seguin will utilize their first distribution payment for the CVLGC Project; the following distribution payments will be used to help minimize the rates for the citizens of the City of Seguin. 4 Treasurer Koenig made a motion #o approve SSLGC's financial statements for the quarter ending June 30, 2011. Director Koehler seconded the motion. Upon a vote being called, the motion carried by unanimous decision. b. Investment Report for the quarter ending June 30, 2011. Ms. Caddell presented the Investment Report foz• April 1, 2011 through June 30, 2011. Interest earnings for the quarter ending June 30, 2011 were $8,416.04. Ms. Caddell stated that intezest rates for the bank is zero; this allows for SSLGC's reserve requirement to be less thus allowing SSLGC to take more money out of the bank and place it in higher investment earnings. Treasurer Koenig inquired if there is any discussion regarding amending what is acceptable investments. Mrs. Caddell advised she presents the Board each year with the Investment Policy for approval. She invites any suggestions and is scheduled to present to the Board by October 2011. Treasurer Koenig asked if there was any discussion at a higher level referencing the Public Funds Investment Act and Mrs. Caddell advised that she has not received any notice of changes. Vice-President Dwyer made a motion to accept SSLGC's Investment Report for the quarter ending June 30, 2011. Secretary Jacobs 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 June 30, 2011,. Included in the board packet is a list of expenditures from the Operations and Maintenance budget which is paid by the City of Seguin. Mrs. Caddell advised that the only correction to the listed budget was that the expenditures for the Guadalupe County Groundwater Conservation District's (GCGCD) fees were initially noted under the Gonzales County Underground Water District's {GCUWCD} expenses. Mrs. Caddell provided an updated version of this list of expenditures with the above mentioned being the only z~nodification. Vice-President Dwyer made a motion to approve SSLGC to reimburse the City of Seguin in the amount of $993,G59.00 for the quarter ending June 30, 2011 in accordance with the Management Services Agreement. Treasurer Koenig seconded the motion. Upon a vote being called, the motion carried by unanimous decision.. The seventh order of business was Le islative Udate -Jack Fickessen Le islative Consultant. Mr. Fickessen advised that the new standards developed by the State of Texas regarding groundwater district rules are expected to be made public by or before January 1, 2012. Mr. Fickessen advised with the amount of oil and gas drillinglproduction that there is a demand for water to use for frocking. The ei hth order of business was a royal of Mana ement Services A reement MSA between SSLGC and each of the Cities of Schertz and Se uin. ~- Resolution # SSLGC R11-11 -MSA between SSLGC and City of Schertz y Resolution # SSLGC R11-12 -MSA between SSLGC and City of Seguin Mr. Cockerell advised that these are approved on an annual basis. There were not any recozxzmended changes. Mr. Cockerell advised that each city will put these before each of their city councils at a later date. Vice-President Dwyer made a motion to approve the MSA between SSLGC and each of the City of Schertz and the City of Seguin. Secretary Jacobs seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The ninth order of business was a royal of Mana ement Services A reenaent MSA between SSLGC and Cibolo Valley. Local Government Corporation CVLGC}. y Resolution # SSLGC R11-13 -MSA between SSLGC and CVLGC Mr. Cockerell advised that the CVLGC Board approved the MSA at their July 28, 2011 Board Meeting with the revisions. Secretary Jacobs made a motion. to approve the MSA between SSLGC and CVLGC with the corrected spelling of Starcke on Page 3 of 5; Paragraph V; Sentence 1. Director Koehler seconded the motion. Upon a vote being called, the motion carried by unanimous decision. The tenth order of business was SSLGC Construction Udate -John Winkler Walker Partners & Alan Cockerell, General Manager. Mr. Cockerell advised that Well # 9 is producizlg. He stated that there was a delay in some of the control cabinets; the current controls for Well # 9 arc temporary. Once the parts arrive cabinets will be installed for all the wells and Well # 9 will be temporarily removed from service to retrofit it for the control cabinets. Mr. Cockerell advised that Weil # 7 is currently out of service for mechanical issues and this well will be the first well that will receive maintezlance, as part of this contract, once the four new wells are all functioning. Harris Road Company will continue to work toward completion of their portion of the project. G The holding tank slab at the Booster Pump Station is expected be poured the week of August 22, 2011. The eleventh order of business was SAWS Ex ansion Pro'ect -John Winkler Walker Partners. Mr. Cockerell advised that SSLGC does have the notice to proceed from SAWS. Mr. Winkler advised that meetings with the operators will be scheduled soon to discuss the logistics of the chemical feeds, etc. Mr. Cockerell stated that the Texas Water Conservation Association has requested far he and Gary Guy to make presentation at their conference in October 2011. The twelfth order of business was Oil & Gas Leasin Pro ram -Sill Knobles S ecial Counsel & Alan Cockerell, General Manager. Mr. Cockerell stated that there have been some inquiries and they are working through Mr. Knobles. Ile advised that there has been some interest in SSLGC providing water for the frocking process. Mr. Cockerell will keep the Board advised. The thirteenth order of business was Elk En ineerin Technical Memorandum - Re ort on CTPS Results --John Winkler Walker Partners & Alan Cockerell General Mana er. Mr. Cockerell reminded the Board that Elk Engineering was hired to perform a Close Interval Potential Survey (GIPS). This was recommended by Hansen, the manufacturer of the transmission pipeline, to detect any issues with that pipeline. The concern was that SSLGC's main transmission pipeline parallels a gas pipeline which has an induction system to protect the gas pipeline. Mr. Winkler stated that the result frozxz the GIPS indicates SSLGC's main transmission pipeline (over 90%) is picking up a current which exhibits a potential for corrosion. TI~e recommendation is io add more testing stations at closer intervals {1300 _ 1500 feet intervals} to provide a clearer understanding of the issues with the pipeline and aid in determining the method of action necessary. Once those are installed there would be a recommendation for the best design of a cathodic protection system. The final step would be to install the cathodic protection system. This would induce a current on SSLGC's pipeline to protect it. Mr. Winkler advised that the reason for the test stations would be to provide data to specify how much current would be necessary io protect the pipeline; too much current could actually do more damage. Mr. Winkler advised the request to the Board is that approval is given to proceed with the process to obtain bids with the anticipation to present the Board with a viable choice to consider by the October 20, 2011 Board Meeting. Secretary Jacobs made a motion to approve Mr. Winkler's request to proceed with obtaining bids. Vice-President Dwyer seconded the motion. Upon a vote being called, the motion carried by unanimous decision. ,~ _ s II Y. _ a~+ ~a - - .. '