08-21-2014MINUTES OF THE
SCHERTZ /SEGUIN LOCAL GOVERNMENT CORPORATION
THE STATE OF TEXAS
COUNTY OF GUADALUPE
SCHERTZ /SEGUIN LOCAL
GOVERNMENT CORPORATION
On this the 21" day of August, 2014 the Schertz /Seguin Local Government Corporation (SSLGC)
convened at 1:30 PM at SSLGC Administrative Building located at 108 W. Mountain Street, Seguin, Texas.
The following directors being present and in attendance:
Ken Greenwald
President
Robin Dwyer
Vice - President
Kerry Koehler
Treasurer
T. "Jake" Jacobs
Assistant Secretary
David Scaghola
Ex- Officio
and the following member(s) being absent:
Larry Dublin
Secretary
Mayor Keil
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
City Manager (City of Seguin)
Susan Caddell
Director of Finance (City of Seguin)
Sam Willoughby
Public Works Director (City of Schertz)
Patrick Lindner
General Counsel (Davidson, Troilo, Ream & Garza)
Steven Siebert
San Antonio Water System (SAWS)
John Winkler
Consultant (Walker Partners)
Crockett Camp
Consultant
Bill Klemt
Consultant /Hydrologist
Mark M -Liney
Financial Advisor (Southwest Securities)
Duane Westerman
Financial Advisor (SAmco)
Allen Westerman
Financial Advisor (sAMCo
Billy Phenix
Legislative Consultant
Steve White
Director /Treasurer (CVLGC)
Robert Brockman
Citizen of Schertz
Alan Cockerell
General Manager (SSLGC)
Shawn Shimek
Water Superintendent (SSLGC)
Regina Franke
Administrative Assistant (SSLGC)
The first order of business was to Call the Meeting to Order.
President Ken Greenwald called the meeting to order at 1:36 PM
The second order of business was Public Comment.
President Greenwald called for a moment of silence in honor of Secretary Larry Dublin's passing.
The third order of business was Approval of the Minutes for the Board Meeting held July 17,2014:
Vice - President Dwyer made a motion to approve the July 17, 2014 minutes as read. Assistant
Secretary Jacobs 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:
➢ Water Production
Seasonal pumping and monthly water sales charts were included in the board agenda packets.
Water production for the month of July was 70.6% of Gonzales County Underground Water
Conservation District's (GCUWCD) monthly allowable.
➢ GCUWCD
GCUWICD Mules Meetinn
The District conducted a meeting, July 29, 2014, with all parties that submitted comments on the
District rule changes at the District's office. SSLGC representatives were in attendance. The
discussion focused on the contiguous requirement and brackish development. The next meeting
was scheduled for August 19, 2014, to continue discussions.
Monthly Meeting
The monthly meeting was held August 12, 2014. Mr. Cockerell attended. A copy of the meeting
agenda was included in the board packet. The meeting began with a public comment requesting
the Board terminate SSLGC's permits due to the article in the Express News regarding the ribbon
cutting ceremony for the SAWS Carrizo Project. The Board did not react to the comments and no
action was taken.
SSLGC reported to the District that flow meter on Well # 4 had not been totalizing properly since
the last week in May. We were able to extract the production data from our SCADA system and
made corrections to our past production reports. The District had requested calibration
certification of the SSLGC well meters to be provided. The flow meters were calibrated earlier this
year and Staff would deliver the requested records to the District.
➢ GCGCD
Monthly Meeting
The meeting was held August 14, 2014; Mr. Cockerell attended. The agenda was included in the
board packet. Both SSLGC projects were reviewed at the meeting and copies of the handouts
were included in the board packet.
Discussion, regarding Hilmar Blumberg's request to modify the District's rules for Wilcox
production, continue.
➢ Region L /GMA -13
Region LQuarterly Meeting
The meeting was held August 7, 2014; Mr. Cockerell attended. A copy of the agenda was included
in the board packet. Both SSLGC projects were reviewed at the meeting and copies of the
handouts were included in the board packet. The next Region L meeting was scheduled for
November 6, 2014.
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➢ CVLGC
The CVLGC Board meeting was held on July 24, 2014 in Cibolo and concentrated on finalizing
the reorganization, due to the withdrawal of Converse. Schertz and Cibolo intend to continue with
the planned water supply project in order to meet their future long term needs. The meeting
agenda was included in the board packet. The next meeting was scheduled for August 28, 2014 in
Schertz
➢ Board Meeting Schedule
Due to bond re- funding and new bond issuance, the board meeting schedule for the remainder of
2014 needed to be modified. The Board agreed to the following schedule:
September 16, 2014 — Regular monthly meeting to include bond refunding (scheduled on
the same day as each of the cities' council meetings). The September 18, 2014 meeting was
bumped up to that date.
❖ October 16, 2014 — Regular monthly meeting
❖ December 2, 2014 — Regular monthly meeting to include approval of the new bond sale
(scheduled on the same day as each of the cities' council meetings). The November &
December meeting was combined and rescheduled for that date.
The fifth 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, 2014.
Attached were the financial reports for the nine months ended June 30, 2014. The first two pages were
combined statements for all the SSLGC funds, not including the SAWS project funds. Those include
the Balance Sheet and the Statement of Revenues, Expenses and Changes in Net Assets. Page 2
indicated net income of $4,263,498.27. Beginning with page 3, provided were the statements for each
fund which would provide fixrther detail. On page 4, were Statement of Revenues, Expenses and
Changes in Net Assets for the Operating Fund. The water sales revenue from SAWS was at
$2,427,135.55. Near the bottom of the page, was "Net Income (Loss) Before Transfers" of
$2,294,504.16. This year, the budget included transfers to the Repair /Replacement Fund of $800,000
and to the Future Development Fund of $500,000. Those transfers are divided into monthly
contributions. The bottom of the page indicated net income of $1,319,504.16.
On page 5 and 6, were the Balance Sheet and Statement of Revenues, Expenses and Changes in Net
Assets for the Interest and Sinking Fund. That included the I &S rates paid by participating entities.
The first bond payment was made on February 1 in the amount of $3,117,180.63.
On page 7, was the Balance Sheet for the Repair and Replacement Fund. The cash balance was
$2,117,144.46. On page 8, was the transfer from the Operating Fund, as mentioned earlier. The
expenditures listed were those for the repairs to pumps #1 and #4.
On page 9 and 10, were the Balance Sheet and Statement of Revenues, Expenses and Changes in Net
Assets for the Future Development Fund. The cash balance in that account was $1,453,614.30. On
page 10, was the transfer from the Operating Fund, as mentioned earlier. There have been no expenses
charged to that fund through June 30, 2014.
Pages 11 and 12 were the statements for the Impact Fund. The cash balance in that account as of June
30 was $2,682,109.81. The Statement of Revenues, Expenses and Changes in Net Assets for that fund
indicated $309,854.59 of water impact revenue. On the Balance Sheet for that fund, was $21,756.54 in
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a deferred revenue account. According to the accrual accounting policies followed by SSLGC,
revenue would not be recognized until the work had been completed. Payment was required from
customers before the water connection was made. That amount had been paid for a connection, but the
work was not completed as of June 30, 2014. Those were payments made by the City of Seguin.
When the City of Schertz submits payment to that fund, their work has already been completed.
Pages 13 and 14 were statements for the Reserve Fund. The required amount to be maintained in the
Reserve Fund, according to bond covenants, was $1,275,621.10. The cash balance was $1,282,048.41.
On Page 14 was the interest earnings for the nine months.
Pages 15 and 16 were statements for the 2010 Construction Fund. The cash balance in that fund was
of June 30, 2014 was $2,230,006.44. The Statement of Revenues, Expenses and Changes in Net
Assets showed the interest earning and the expenditures for the administration building, filter
expansion, Seguin crossing, and Seguin connection.
Beginning on page 17, were the statements for the SAWS project. Pages 17 and 18 included the
statements for the Construction Fund for the SAWS project, while pages 19 and 20 were the statements
for the I &S Fund. Those statements were not included in the combined statements on pages 1 and 2.
On page 21, was the Comparative Statement of Revenues, Expenses and Changes in Net Assets for the
Operating Fund. Revenue had increased by $2,115,548.58. That was due to SAWS purchasing excess
water. Not including SAWS and Springs Hill usage, consumption had decreased by 200,297,000.
Expenditures have increased by $796,472.23, with the largest being in utilities services of $502,092.
Net income before transfers increased from last year by $1,319,076.35, while net income after transfers
also increased by $531,576.35. That was largely due to the purchase of water by SAWS.
Finally, page 22 was the working capital trend chart. Working capital had increased since March 31,
2014, by $1,420,654. That was due to the fact the second bond payment had not been made until
August 1, 2014, while the payments had been coming in from the entities for that payment.
Assistant Secretary Jacobs made a motion to approve SSLGC's financial statements for the quarter
ended June 30, 2014. Treasurer Koehler seconded the motion. Upon a vote being called, the
motion carried by unanimous decision.
b. Investment Report for the quarter ending June 30, 2014.
Mrs. Caddell presented the Investment Report for April 1, 2014 through June 30, 2014. Interest earnings
for the quarter ended June 30, 2014 were $ 3,323.
Vice - President Dwyer made a motion to accept SSLGC's Investment Report for quarter ended
June 30, 2014. Assistant 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, 2014.
Included in the board packet was a list of expenditures from the Operations and Maintenance budget
which was paid by the City of Seguin. The expenditures for April 1, 2014 through June 30, 2014, as
indicated in the first column on the report, were $1,848,637. The second column was the expenditures
through June 30, 2014. Mrs. Caddell advised that three items were over budget. Life Insurance, Attorney
Fees, and Office Space Rental. There should be sufficient funds in Health Insurance to cover the overage
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in Life Insurance. An increase in legal services were the result of land acquisition and issues that had
occurred with the water tank, which have caused Attorney Fees to exceed the budget. When the budget
was originally created, Staff intended to occupy the new SSGLC Administrative Office by October 1,
2014. That did not occur due to renovations, therefore there were costs incurred for continuation of
Office Space Rental. During the next month, Staff would be reviewing all overages and would make
internal budget amendments.
Assistant Secretary Jacobs made a motion to approve the reimbursement to the City of Seguin in
accordance with the Management Services Agreement of $1,848,637. Vice - President Dwyer
seconded the motion. Upon a vote being called, the motion carried by unanimous decision.
The sixth order of business was CONSIDERATION AND APPROVAL OF 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
REFUNDING BONDS, NEW SERIES 201499; COMPLYING WITH THE REOUIREMENTS
CONTAINED IN MUNICIPAL SECURITIES RULE MAKING BOARD RULE 15c2 -12; AND
OTHER MATTERS IN CONNECTION THEREWITH — Jeffrey Kuhn, Fulbright Jaworski LLP
& Mark McLiney, Southwest Securities & Duane Westerman, SAMCO
➢ Resolution # SSLGC R14 -14
Mr. Westerman advised that since the last board meeting the savings potential had increased from
$660,000 to $734,000 for SSLGC. That refunding would be a deemed bank qualified and that would
require certain parameters. SSLGC would have to contribute approximately $295,000.
Mr. M`Liney advised that the Board was being asked to consider and approve the Preliminary Official
Statement (POS) and the underwriters Raymond James and ME Allison. There would be no
commitments until the Board was presented with interest rates.
Mr. Cockerell stated (for clarification) that the only request for today was approval of the POS and to
name the underwriters. Mr. McLiney answered to the affirmative. Mr. Cockerell asked if each of the
financial advisors would be working with each of the cities to ensure they would have all they needed for
the city council meetings. Mr. M`Liney advised that he would work with the City of Schertz and Mr.
Westerman with the City of Seguin. Once the POS was complete (after Mr. Kuhn and the underwriters
had resolved all their comments) it would be represented for review in electronic version distributed by
Staff, prior to September 16, 2014.
President Greenwald reiterated that the action requested was the authorization to proceed to find out what
the final costs and interest would be to determine if there would be a significant savings.
Vice - President Dwyer made a motion to approve Resolution # SSLGC R14 -14, to approve the
Corporation's Preliminary Official Statement and appointing the underwriters, Raymond James
and ME Allison, and certain other professionals pertaining to the sale of obligations designated as
"Schertz /Seguin Local Government Corporation Contract Revenue Refunding Bonds, New Series
2014. Treasurer Koehler seconded the motion. Upon a vote being called, the motion carried by
unanimous decision.
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Mr. Cockerell asked President Greenwald if the Board would prefer to address the meeting dates for
September 2014. The Board agreed to move the regularly scheduled board meeting from September 18,
2014 to September 16, 2014 to include the bond refunding. That would coincide with each of the cities'
council meeting dates.
The seventh order of business was ApI)rove SSLGC/City of Seguin Management Services,
Agreement FY2014 -2015 — Alan Cockerell, General Manager & Susan Caddell . City Seguin
Director of Finance
➢ Resolution # SSLGC R14 -10
Mr. Cockerell advised that the bulk of the changes made in the document were a result of the purchase of
the SSLGC Administrative Office Building and the redefined City of Seguin reimbursement for services
(financial & technical).
Vice- President Dwyer called attention to the misspelled word superintendent. The document would be
proofed for grammatical and spelling errors before the final copy was printed. Staff recommended
approval with the noted corrections.
Treasurer Koehler made a motion to approve Resolution # SSLGC R14 -10 with corrections. Vice -
President Dwyer seconded the motion. Upon a vote being called, the motion carried by
unanimous decision.
The eighth order of business was Approve SSLGC /City of Schertz Management Services
Agreement FY2014- 201.5 — Alan Cockerell, General Manager & Susan Caddell, City of Seguin
Director of Finance
➢ Resolution # SSLGC R14 -11
Mr. Cockerell advised that the MSA with Schertz is different than that with Seguin, as the City of Seguin
provides accounting services and the operations staff and Regina are employees of the City of Seguin.
Whereas, Mr. Cockerell is a City of Schertz employee. There were only minor changes made to the MSA.
Staff recommended approval.
Assistant Secretary Jacobs made a motion to approve Resolution # SSLGC R14 -11. Treasurer
Koehler seconded the motion. Upon a vote being called, the motion carried by unanimous
decision
The ninth order of business was Approve SSLGC / CVLGC Management Services Agreement
MSA) — Alan Cockerell, General Manager
➢ Resolution # SSLGC R14 -13
Mr. Cockerell advised that CVLGC Board had approved the MSA at their previous board meeting.
Assistant Secretary Jacobs asked if CVLGC would be using the same location address as SSLGC. Mr.
Cockerell advised to the affirmative but was uncertain if CVLGC would hold the board meetings at the
SSLGC Administrative Building. No substantive changes were made. Staff recommended approval.
Treasurer Koehler made a motion to approve Resolution # SSLGC R14 -13. Vice - President Dwyer
seconded the motion. Upon a vote being called, the motion carried by unanimous decision
The tenth order of business was Booster Pump Station (BPS) 36" Piping — John Winkler, Walker
Partners
➢ Task Order # 14 — BPS Piping
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tiIGNFJ) ORI(.AINAI. (S ):
Mr. Winkler advised that the task order was to provide engineering at the BPS, west of Seguin (Leissner
School Rd). In some of the meetings with SAWS the topic was brought up to install an interconnecting
pipeline between the current smaller tank and the larger new tank. Mr. Winkler agreed that it would be a
good idea to have that connection. The connection between the two tanks would allow for the new
booster pump station to draw from the smaller tank. In the current state, the larger tank must be online
for the new larger booster pump station to be in operation. Use of the larger booster pump station would
allow SSLGC to meet the obligations to SAWS.
Vice - President Dwyer asked what the costs were for the modification. Mr. Winkler advised that
construction was approximately $250,000 and the engineering amount was $22,000. Mr. Winkler
reminded the Board that due to oil field construction, it made it difficult to estimate the construction costs.
Vice - President Dwyer inquired if that construction was necessary for SSLGC to meet its contractual
obligations to SAWS. Mr. Winkler advised to the affirmative; in the event that there were any issues with
the larger tank that connection would be necessary to meet those commitments. Mr. Cockerell advised
that the suggestion had come from SAWS and it was not clear, at that point, if the use of SAWS Contract
Revenue Bond funds would be possible. He expected to discuss that matter with SAWS on Friday,
August 22, 2014. Mr. Cockerell advised that the only action that was being requested today was for the
Board to approve Task Order # 14 to allow Mr. Winkler to move forward with the engineering portion.
Vice - President Dwyer asked to delay further discussion to Executive Session.
The eleventh order of Business was SSLGC Construction Update /Seguin Connection — John
Winkler, Walker Partners & Alan Cockerell.
➢ Resolution # SSLGC R14 -15
Mr. Cockerell advised that the Seguin Connection was progressing and he would continue to keep the City
of Seguin involved when it would be necessary to shut down and make that connection. Vice - President
Dwyer noted that there had not been construction activity at that location. Mr. Cockerell advised that pipe
was ordered and they were awaiting delivery. Mr. Winkler advised that there was a long process to
produce/ fabricate all the parts and materials necessary to complete that job. Everything had been ordered
and the contractors would move forward with completion.
Mr. Cockerell advised that there were more renovations necessary to complete the update to the building.
Assistant Secretary Jacobs inquired about what ADA issues were still remaining. Mr. Cockerell advised
that as of right now, the parking lot was the only item that he knew which would require ADA update, but
there may be some that arise during the accessibility inspection. The other items were issues that were not
included in the initial renovation (retaining wall, flower beds, irrigation system etc.). Mr. Cockerel noted
that there were not specific quotes at that time, but he did not want to wait until the next board meeting to
address those issues, as there was a tentative scheduled building dedication late September or early
October 2014. Mr. Cockerell advised that there was approximately $827,000 available in the 2010 Bond
Fund.
Vice - President Dwyer made a motion to approve Resolution # SSLGC R14 -15 to complete
renovations to the SSLGC Administrative Building up to $100,000 and authorize the use of excess
funds from the 2010 bond fund. Assistant Secretary Jacobs seconded the motion. Upon a vote
being called, the motion carried by unanimous decision
The twelfth order of business was SAWS Ex ansion Project U date — Lo Winkler, alker
Partners & Alan Cockerell, General Manager.
Mr. Winkler advised that a shut -down was scheduled for Thursday, August 28, 2014 to make the
connection at the plant and to replace a faulty valve. He noted that this would be the last shut down and
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major construction. A walk through was scheduled for Friday, August 29, 2014 with Pepper- Lawson, Mr.
Cockerell and Staff. Mr. Winkler anticipated a long punch list to result from the walk through. Mr.
Cockerell advised that Pepper- Lawson had requested a certificate of substantial completion and he and
Mr. Winkler had performed an inspection. Mr. Winkler had issued a letter that specified two issues that
needed to be addressed before he would consider that request. Once the items were addressed then Mr.
Winkler would present them with the certificate of substantial completion.
The thirteenth of business was Legislative Update — Billy Phenix, Legislative Consultant & Alan
Cockerell, Executive Director.
Counselor Lindner recommended Executive Session.
President Greenwald deferred item thirteen to Executive Session.
The fourteenth order of business was OHV Park — Alan Cockerell, General Manager & Steve
Thompson, TPWD & Bill Nicholson, Nicholson Innovations
Executive Session Recommended
President Greenwald deferred item fourteen to Executive Session.
The fifteenth order of business was Status Update BPS Ground Storage Tank /Preload and Action
in Response to Same — Patrick Lindner, General Counsel & John Winkler, Walker Partners& Alan
Cockerell, General Manager.
Executive Session Recommended
President Greenwald deferred item fifteen to Executive Session.
The sixteenth order of business was Guadalupe Project Wholesale Water Contracto -) — Patrick
Lindner, General Counsel.
Executive Session Recommended
President Greenwald deferred item sixteen to Executive Session.
The seventeenth order of business was Gonzales County & Guadalupe County Carrizo and
Wilcox Water Leases — Alan Cockerell, General Manager.
Executive Session Recommended
President Greenwald deferred item seventeen to Executive Session.
The eighteenth 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 closed General Session at 2.32 PM
Executive Session was held from 2:40PM to 3:54 PM
The nineteenth order of business was to Consider and Take Action as Result of Agenda Item
Number eighteen.
President Greenwald reopened General Session at 3:54 PM
Agenda Item # 10:
No action requested /No action taken
Agenda Item # 13:
No action requested /No action taken
Agenda Item # 14:
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No action requested /No action taken
Agenda Item # 15:
No action requested /No action taken
Agenda Item # 16:
No action requested /No action taken
Agenda Item # 17:
Assistant Secretary Jacobs made a motion to approve the water lease 94.25 acres /Zietz property
under the pre- established lease price ($110). Vice - President Dwyer seconded the motion. Upon a
vote being called, the motion carried by unanimous decision
The nineteenth order of business was Consideration and /or Action on Questions and Possible
Items to be placed on the Next Agenda.
❖ The next board meeting was scheduled for September 16, 2014 in the SSLGC Administrative
Building at 1:30 PM
The nineteenth order of business was Adjournment.
President Greenwald declared the meeting adjourned at 4:01 PM
MINUTES APPROVED THIS 16`h DAY OF SEPTEMBER, 2014.
T. "Jake" J cobs, retary
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