12-02-2014MINUTES OF THE
SCHERTZ /SEGUIN LOCAL GOVERNMENT CORPORATION
THE STATE OF TEXAS
COUNTY OF GUADALUPE
SCHERTZ /SEGUIN LOCAL
GOVERNMENT CORPORATION
On this the 2nd day of December, 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 board members being present and in attendance:
Ken Greenwald
President
Robin Dwyer
Vice - President
T. "Jake" Jacobs
Secretary
Steve White
Director
Jim Fowler
Ex- Officio
Mayor Keil
Ex- Officio
and the following member(s) being absent:
Consultant (Walker Partners)
Kerry Koehler
Treasurer
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)
John Bierschwale
Executive Director (City of Schertz)
Susan Caddell
Director of Finance (City of Seguin)
Patrick Lindner
General Counsel (Davidson, Troilo, Ream & Garza)
Steven Siebert
San Antonio Water System (SAWS)
Lisa Guardiola
San Antonio Water System (SAWS)
John Winkler
Consultant (Walker Partners)
Crockett Camp
Consultant
Bill Klemt
Consultant /Hydrologist
Billy Phenix
Legislative Consultant
Duane Westerman
Financial Advisor (SAMCO)
Andrew Friedman
Financial Advisor (Southwest Securities)
Mark M4Liney
Financial Advisor (Southwest Securities)
Alan Cockerell
General Manager (SSLGC)
Regina Franke
Administrative Assistant (SSLGC)
The first order of business was to Cali the Meeting to Order.
President Ken Greenwald called the meeting to order at 1:34 PM
The second order of business was Public Comment.
There was no public comment.
The third order of business was Approval of the Minutes for the Board Meeting held October 16s
2014.
Secretary Jacobs made a motion to approve the October 16, 2014 minutes as read. Director White
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 October was 78.2% of Gonzales County Underground Water
Conservation District's (GCUWCD) monthly allowable.
➢ GCUWCD
MoaLly Meeting.
The monthly meeting was held November 11, 2014. Mr. Cockerell attended. A copy of the meeting
agenda was included in the board packet. Public comments were made regarding SSLGC selling
excess water to SAWS. The Board did not take any action, but indicated that they would request a
review by their legal counsel. Included in the board packet was an article from the Gonzales Inquirer
that was published prior to the meeting.
➢ GCGCD
llorksho :
The workshop was held on October 23, 2014; Mr. Cockerell attended. Discussion focused on
modifying the District rules for the Wilcox Aquifer. No action was taken.
Monthly Meeting
The monthly meeting was held November 13, 2014. Mr. Cockerell attended. A copy of the meeting
agenda was included in the board packet. The District took action to keep the existing Wilcox rules in
force with no changes at that time.
Post Oak Larrdtill
The TCEQ had intervened in the case to argue that the district did not have the authority to enforce
its rule regarding landfills. Copies of the TCEQ Petition in Intervention and Motion to Abate Ruling
was included in the packet. The District's attorney had asked SSLGC to submit an amicus brief
opposing the TCEQ's position. The Executive Committee had authorized Jo Reset of DTRG law
firm to start the legal research and prepare the brief because Counselor Lindner thought the District's
lawsuit was a good strategy.
➢ Region L /GMA -13
IZ,gion L jl,le h & Public Heev ili s:
The meeting was held November 6, 2014; Mr. Cockerell attended the meeting. A copy of the agenda
was included in the board packet as well as a couple of handouts from the meeting (wholesale tables
for SSLGC & CVLGC and the needs for Bexat County). Several Water Management Strategies were
discussed:
❖ GBRA Integrated Water Power Project (IWPP)
❖ Luiling ASR Project
❖ TWA Trinity Well Field Project
❖ Hays County Forestar Project
❖ SAWS Vista Ridge Project
':• Seawater Desalination for SAWS
❖ Victoria County Steam Electric
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❖ HCPUA + TWA + GBRA MVWSP Joint Project
All meeting information can be found on the Region L Website: w,,vwxegionitexas.org
The meeting schedule for 2015 was as follows:
❖ February 5, 2015
❖ April 2, 2015
❖ August 6, 2015
❖ November 5, 2015
Regional Wlatertllliarne Meeting
Information from the Region L meeting was presented and discussed.
➢ CVLGC
The CVLGC Board meeting was held on October 23, 2014 in Schertz. Progress was being made with
the planned water supply project to meet the future long term needs. The next board meeting was
scheduled for December 4, 2014 in Cibolo
Vice - President Davyer arrived at the board meeting 9:42PM.
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 September 30, 2014.
Attached were the financial reports for the year ended September 30, 2014. The first two pages were
combined statements for all the SSLGC funds, but not including the SAWS project funds. Those
included the Balance Sheet and the Statement of Revenues, Expenses and Changes in Net Assets. Page 2
indicated net income of $4,463,576.42. Beginning with page 3, were statements for each fund which
would provide further detail. On page 4, were the Statement of Revenues, Expenses and Changes in Net
Assets for the Operating Fund. Notice water sales revenue from SAWS was at $3,192,716.74. Near the
bottom of the page, was "Net Income (Loss) Before Transfers" of $3,473,519.97. This year, our budget
included transfers to the Repair/Replacement Fund of $800,000 and to the Future Development Fund of
$500,000. The bottom of the page indicated net income of $2,173,519.97.
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, 2014 in the amount of $3,117,180.63. The interest payments
were included in the Statement of Revenue, Expenses and Changes in Net Assets while the principal
payments were included in the balance of each of the bonds payable accounts in the Balance Sheet. The
final bond payment for the fiscal year was made on August 1, 2014 in the amount of $1,660,805.63.
On page 7, was the Balance Sheet for the Repair and Replacement Fund. The cash balance was now at
$2,317,446.19. 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 currently $1,528,656.62.
On page 10, was the transfer from the Operating Fund, as mentioned earlier. The expense for Land was
part of the down payment for the Booth property.
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Pages 11 and 12 were the statements for the Impact Fund. The cash balance in this account as of
September 30 was $2,774,507.98. The Statement of Revenues, Expenses and Changes in Net Assets for
this fund indicated $449,997.04 of water impact revenue. On the Balance Sheet for this fund, was
$19,144.54 in a deferred revenue account. According to the accrual accounting policies followed by
SSLGC, revenue is not recognized until the work has been completed. Payment is required from
customers before the water connection is made. That amount had been paid for a connection, but the
work was not completed as of September 30. 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 maintain in the Reserve
Fund according to bond covenants was $1,275,621.10. Our cash balance was $1,282,155.78. On Page
14, were the interest earnings for the year.
Pages 15 and 16 were statements for the 2010 Construction Fund. The cash balance in this fund as of
September 30, 2014 was $2,124,564.99. There still remained over $500,000 in purchase order balances.
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, was the statements for the SAWS project. Pages 17 and 18 were 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 $3,032,631.36. That was largely due to SAWS purchasing
our excess water. Not including SAWS and Springs Hill usage, consumption had increased by
97,138,000. Expenditures had increased by $650,530.30, with the largest being in utilities services of
$698,114.00. Our net income before transfers increased from last year by $2,382,101.06, while net
income after transfers also increased by $1,332,101.06.
Finally, page 22 was the working capital trend chart. Working capital had increased since June 30, 2014,
by $200,078.
Director White asked Mrs. Caddell if she expected any great changes with the audit. She answered that
she did not expect any major modifications.
Vice - President Dwyer made a motion to approve SSLGC's financial statements for the quarter ended
September 30, 2014. Director White seconded the motion. Upon a vote being called, the motion
carried by unanimous decision.
a. Investment Report for the quarter ending September 30, 2014.
Mrs. Caddell presented the Investment Report for July 1, 2014 through September 30, 2014. Interest
earnings for the quarter ended September 30, 2014 were $2,937.
Director White made a motion to accept SSLGC's Investment Report for quarter ended September
30, 2014. Vice - President Dwyer seconded the motion. Upon a vote being called, the motion carried
by unanimous decision.
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b. Reimbursement to the City of Seguin in accordance with the Management Services
Agreement for the quarter ending September 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 July 1, 2014 through September 30, 2014, as indicated in
the first column on the report, were $1,814,099. The second column was the expenditures for year ended
September 30, 2014 and all items were under budget.
According to the Management Services Agreement between the SSLGC and the City of Seguin, the City of
Seguin was requesting reimbursement for the expenditures for the fourth quarter of fiscal year 2014 in the
amount of $1,814,099.
Secretary Jacobs made a motion to approve the reimbursement to the City of Seguin in accordance
with the Management Services Agreement of $1,814,099. Vice - President Dwyer seconded the motion.
Upon a vote being called, the motion carried by unanimous decision.
The sixth order of business was Approve the Purchase of a New Vehicle — Alan Cockerell. General
Manager.
➢ Resolution # SSLGC R14 -18
The bid tab was included in the board packet. Mr. Cockerell advised that the lowest bid was Caldwell
Country Chevrolet with a bid of $26,880 for a Chevy Traverse. Griffith Ford was the next closest bid, and
with the 5% rule, it would allow for the bid to be granted to a local vendor. Mr. Cockerell recommended that
the Board award the bid to Griffith Ford in the amount of $27,672.02.
Vice - President Dwyer made a motion to approve Resolution # SSLGC R14 -18 to award the bid to
Griffith Ford in the amount of $27,672.02 for purchase of a new vehicle for SSLGC. Secretary Jacobs
seconded the motion. Upon a vote being called, the motion carried by unanimous decision
The seventh order of business was OHV Park — Alan Cockerell General Manage
Mr. Cockerell stated that after the last board meeting he had spoken with the two men from TPWD. He
advised them that the Board most likely would not make a decision until the March 2015 board meeting
regarding this matter. They explained that TPWD would need a decision no later than May 1, 2015; in the
event that SSLGC declined the grant, TPWD could reallocate those funds.
Mr. Cockerell also noted that he had met and visited with a friend of President Greenwald's that worked at
Palmetto State Park, in Gonzales County.
Mr. Cockerell noted that no action was requested, that he only wanted to advise the Board of the timelines.
The eighth order of business was Guadalupe LandlWater Rights Acquisition °- John Winkler,
Walker Partners
➢ Task Order # 15 — SSLGC Guadalupe Water Rights &gWrdtion
Mr. Cockerell advised that this task order was to allow for Mr. Winkler /Walker Partners to work to gather
more water rights for the Guadalupe Project. The cost of this task order was not to exceed $42,500. The
minimum acre feet of water rights desired for the Guadalupe Project was 5,000 and the ideal would be 6,000.
This task order would be funded by the 2010 Construction Bond Fund money which remained.
Vice - President Dwyer made a motion to approve Task Order # 15 not to exceed $42,500. Director
White seconded the motion. Upon a vote being called, the motion carried by unanimous decision
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The ninth order of business was SSLGC Filter Expansion — Alan. Cockerell, General Manager & John
Winkler, Walker Partners.
➢ Change Order # 3 — _Pepper -Law, own
Mr. Cockerell advised that there would be a credit issued of $11,406.42 by Pepper- Lawson and the cost of the
stainless steel head and level transmitter would be $16,101.56. This would result in a total cost to SSLGC of
$4,695.14.
Mr. Winkler advised that there were some issues noted recently with the stainless steel headers, but that they
would not be able to determine if the cause was from poor workmanship or iron bacteria issues until they
were sent off to be examined
Secretary Jacobs made a motion to approve Change Order # 3 in the amount of $4,695.14. Director
White seconded the motion. Upon a vote being called, the motion carried by unanimous decision.
The tenth order of business was Approve to Award Contract -- Booster Pump Station (BPS) Piping —
Alan Cockerell, General Manager &john Winkler, Walker Partners
➢ Resolution # SSLGC R14 -19
Mr. Winkler advised that he felt the bid was fair and within his estimate. SAWS agreed to pay for this
construction so that there would be more flexibility allowing for the ability to switch between the two tanks at
the BPS and deliver water to SAWS. Currently, that is not possible. Mr. Winkler advised that SAWS had
worked with Wauters Engineering on other construction projects and there were no reported issues.
Director White made a motion to approve Resolution # SSLGC R14 -19 to award the contract for BPS
Piping to Wauters Engineering in the amount of $240,712.78 and authorize the General Manager to
sign said contract. Secretary Jacobs seconded the motion. Upon a vote being called, the motion
carried by unanimous decision.
The eleventh order of business was SSLGC Construction Uisdate /Seffuin Connection -- iohn
Winkler, Walker Partners & Alan Cockerell.
Mr. Winkler advised that the structure and building were completed; only the electrical and instrumentation
remained. Mr. Cockerell noted that he anticipated the job would be completed by the January 15, 2015 board
meeting.
The twelfth order of business was SAWS Expansion Project Update — John Winkler, Walker Partners
& Alan Cockerell, General Manager.
Mr. Cockerell advised that Counselor Lindner had sent Pepper- Lawson a memo advising of the total of
liquidated damages in the amount of $472,500. Mr. Cockerell stated that Pepper- Lawson was shocked. He
noted that there was a meeting planned between SAWS, Pepper- Lawson and himself to discuss this matter.
Mr. Winkler explained that Pepper- Lawson should not be shocked as there has been ongoing correspondence
advising of the potential for liquidated damages if Pepper - Lawson did not meet the completion date.
Counselor Lindner had sent a letter to define the terms of $3,500 per day for each day that Pepper- Lawson
had not obtained substantial completion by the amended contract date of April 10, 2014. After a walk
through with Pepper- Lawson and the Project Engineer the substantial completion date was determined to be
September 2, 2014. That was 135 days.
Mr. Cockerell advised that there was lost revenue in SSLGC's inability to deliver water to SAWS during that
time so the amount would exceed the $3,500 /day amount. He noted that Pepper- Lawson worked hard
throughout the summer, however if they had worked to that standard initially, they would most likely have
completed the project in the agreed contract timeframe.
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The thirteenth order of Business was Legislative Update — Billy Phenix, Legislative Consultant &
Alan Cockerell, General Manager.
Counselor Lindner recommended Executive Session.
President Greenwald deferred item thirteen to Executive Session.
The fourteenth 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 fourteen to Executive Session
The fifteenth of business was Guadalupe Project Wholesale Water Contracts) — Pa_trick_Lindner,
General Counsel.
Executive Session Recommended
President Greenwald deferred item fifteenth to Executive Session.
The sixteenth order of business was Gonzales County Water Rights and Permits — Patrick Lindner,
General Counsel & Alan Cockerell General M na er.
Executive Session Recommended
President Greenwald deferred item sixteenth to Executive Session.
The seventeenth order of business was Gonzales County & Guadalupe County Carrizo and Wilcox
Water Leases and Property Purchases — Alan Cockerell, General Manager.
Executive Session Recommended
President Greenwald deferred item seventeenth 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 2:19 PM
Executive Session was held f -aw 2:32 PM to 3:34 PM
Ex-officio Mayor Keil left meeting at 3:00 PM during Executive Session.
The nineteenth order of business was to Consider and Take Action as Result of Agenda Item
Number eighteen.
President Greenwald reopened General Session at 3:39PM
Agenda Item # 13:
No action requested /No action taken
Agenda Item # 14:
No action requested /No action taken
Agenda Item # 15:
No action requested /No action taken
Agenda Item # 16:
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No action requested /No action taken
Agenda Item # 17:
No action requested /No action taken
The twentieth order of business was CONSIDERATION AND APPROVAL OF A
RESOLUTION BY THE BOARD OF DIRECTORS OF THE SCHERMSEGUIN
LOCAL GOVERNMENT CORPORATION AUTHORIZING THE ISSUANCE OF
"SCHERTZ /SEGUIN LOCAL GOVERNMENT CORPORATION CONTRACT
REVENUE IMPROVEMENT AND REFUNDING BONDS, NEW SERIES 2015".-
PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON
THESE NEW SERIES BONDS AS PROVIDED HEREIN, ON PARITY WITH CERTAIN
CURRENTLY OUTSTANDING NEW _SERIES BONDS, THE TERMS AND
CONDITIONS OF SUCH NEW SERIES BONDS, AND THE FUTURE ISSUANCE OF
ADDITIONAL NEW SERIES BONDS ON PARITY THEREWITH, FORECLOSING
THE ABILITY TO ISSUE ADDITIONAL OBLIGATIONS THAT ARE SENIOR IN
SECURITY AND PRIORITY OF PAYMENT TO THE NEW SERIES BONDS AND
ADDITIONAL NEW SERIES BONDS HEREAFTER ISSUED ON PARITY
THEREWITH• AND RESOLVING OTHER MATTERS INCIDENT AND RELATING
TO THE ISSUANCE, PAYMENT, SECURITY, SALE, AND DELIVERY OF SUCH NEW
SERIES BONDS, INCLUDING THE APPROVAL OF THE DISTRIBUTION OF AN
OFFICIAL STATEMENT RELATING THERETO; AUTHORIZING THE EXECUTION
OF A PAYING AGENT /REGISTRAR AGREEMENT, AN ESCROW DEPOSIT LETTER,
AND A BLIND PURCHASE CONTRACT; COMPLYING WITH THE REQUIREMENTS
OF THE DEPOSITORY TRUST COMPANY'S LETTER OF REPRESENTATIONS;
AND PROVIDING AN EFFECTIVE DATE — Duane Westerman, SAMOO & _Mark
M'UM, Southwest Securities
➢ Resolution # SSLGC R14 -20
Mr. Cockerell asked if we need to print out any future bond packets that are this large to include in
the board packets or can we simply email them out to be reviewed since they are not the official, final
draft. Mr. M`Liney advised that the email version would be acceptable.
Mr. M`Liney noted that Mr. Westerman and Mr. Kuhn were in route to the meeting.
Mr. M`Liney handed out two ratings (Standard & Poor's and Fitch). Fitch confirmed the AA- and
Standard & Poor's increased our rating to AA from A. He explained that Standard & Poor's blends
the two (Cities') ratings and Fitch takes the lesser of the two (Cities') ratings. He congratulated the
City of Seguin for being upgraded, which contributed to SSLGC's increased rating.
Mr. M`Liney stated that they sold $41,720,000 worth of bonds. $7,300,000 was for new money going
into the construction account. The total principal amount of bonds for the new money portion was
$7,090,000, but because the purchasers paid a premium $7,300,000 would be deposited into
construction fund account, which was the requirement. The average interest rate was a fixed rate of
3.91 %, which Mr. M`Liney advised was a great rate.
Mr. M`Liney called attention to the second page of the hand out, which was the refunding portion of
the bond. He noted that if we did nothing different, the current debt service for the refunding
portion (originally the 2005 bonds) would equal $63,783,964.58. The new bonds would become
callable January 10, 2015 (we can take them from the investor at that time). Total savings net (after
all cost) would be $3,138,272.08 (approx. $120,000 annually) to SSLGC. The existing average interest
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rate on the bond we were taking out, was 4.47 %. The new fixed rate on the refunding portion was
3.897% which made the percentage of Present Value (PV) savings of 5.56 %.
Mr. M`Liney advised that he perceived that the bonds would close January 13, 2015 and he would call
them immediately and pay them off at that time.
Mr. Cockerell advised that this bond refunding would be presented to each of the Cities for their
approval at their respective council meetings tonight (Tuesday, December 2, 2014)
Vice - President Dwyer asked what the principal amount of the bonds being refunded was. Mr.
M`Liney advised that $34,630,000 in principal bonds that were refunded. Vice - President Dwyer asked
if that would be done on January 10, 2015 and Mr. M`Liney advised that we would close on the
refunding on January 13, 2015 and that they would be called February 1, 2015 by Mr. M`Liney & Mr.
Westerman. This would give time for all the paperwork to be filed. He noted that the moment they
close Qanuary 13, 2015) they were off the SSLGC books, the cash would be set aside with an escrow
agent to make that payment.
Counselor Lindner asked when the new money would be funded to SSLGC so they could pay the
promissory note for the property purchase and Mr. M`Liney advised January 13, 2015.
Director White made a motion to approve Resolution # SSLGC R14 -20. Secretary Jacobs seconded
the motion. Upon a vote being called, the motion carried by unanimous decision.
The twen -fir t order of business was Consideration and/or Action on Questions and Possible
Items to be placed on the Next Agenda.
•b The next board meeting was scheduled for Thursday, January 15, 2015 in the SSLGC Administrative
Building at 1:30 PM
❖ Honor Ex- Officio Scaghola and Director White for their service to SSLGC
❖ Election of Officers
'The tuYenty- second order of business was Adjournment..
President Greenwald declared the meeting adjourned at 3.57 PM
MINUTES APPROVED THIS 15th DAY OF JANUARY, 2015.
Secretary Name Printed
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