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SSLGC 03-26-2009MINUTES OF THE SCHERTZ-SEGUIN LOCAL GOVERNMENT CORPORATION THE STATE OF TEXAS § COUNTY OF GUADALUPE § SCHERTZ-SEGUIN LOCAL § GOVERNMENT CORPORATION § On this the 26th day of March 2009, the Schertz-Seguin Local Government Corporation (SSLGC) convened at 1:46 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: Sydney Bauer President Robin Dwyer Secretary Jim Wolverton Treasurer Hal Baldwin Ex-Officio Betty Ann Matthies Ex-Officio and the following directors being absent: Patricia Ramirez Director Terry Wells Director 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 Don Taylor .Susan Caddell Johnny Bierschwale Sam Willoughby John Schraub John Bailey Georgia Hanks Crockett Camp Bill Klemt John Winkler Patrick Lindner General Manager Schertz City Manager Seguin Director of Finance Schertz Assistant City Manager Schertz Public Works Director Seguin Water Utility Manager Water Superintendent Administrative Assistant Consultant/Proj ect Manager Hydrologist Consultant Consultant ~,~ COU11se1 (Davidson & Troilo) The first order of business was the calling of the meeting to order. President Sydney Bauer called the meeting to order at 1:46 p.m. The second order of business was public comment. Mr. Ken Greenwald, a Schertz resident, addressed the Board during public comment. He handed out an article from the Seguin Gazette-Enterprise which contained a public notice from the Springs Hill Water Supply Corporation regarding a MCL coli-form violation. He expressed concern and asked if SSLGC's water system was protected by a back-flow preventer or an air-gap between it and the Springs Hill system. General Manager Alan Cockerell reported that the Corporation does have an air gap between its system and the City of Seguin Water System. Seguin Water Utility Manager John Schraub stated that another air gap was located at the Corporation's Booster Pump Station. The third order of business was approval of the minutes for the board meeting held on February 19, 2009, and a Special Called Meeting held on March 4, 2009. Treasurer Jim Wolverton made a motion to approve the February 19, 2009, minutes as written. Secretary Robin Dwyer seconded the motion. Upon a vote being called, the motion carried by unanimous decision. Secretary Dwyer made a motion to approve the March 4, 2009, minutes as written. Treasurer Wolverton seconded the motion. Upon a vote being called, the motion carried by majority decision. President Bauer abstained as he was not present at the March 4th meeting. 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: Gonzales County Underground Water Conservation District (GCUWCD). Mr. Cockerell referred to GCUWCD's 2008 Annual Report which was included in the board agenda packets and stated that it provided a good summary of the District's events for the past year. General Manager Cockerell and staff conducted a tour of SSLGC facilities in Gonzales County for GCUWCD directors. Mr. Cockerell commended Water Superintendent John Bailey and Chief Operator Shawn Shimek for providing excellent explanations regarding the operation of the plant and answering questions from the group. GCUWCD has scheduled a public hearing on April 9, 2009, regarding proposed amendments to its Management Plan. A draft of the proposed plan was included in the board agenda packets. In summary, the major change in the plan is in Section 5, Managed Available Groundwater. Highlights of the changes were included in Mr. Cockerell's Manager's Report. Discussion was held regarding the Corporation's permit renewals. Mr. Cockerell reported that permits for SSLGC wells 1 - 6 are currently renewed every two years. When the permits are renewed in the fall of 2009 they will be renewed for five years. a GCUWCD began with afive-year cycle for permit renewals, changed it to two-year and has now returned to afive-year cycle. Water Protection Agency (WPA). Mr. Cockerell attended a meeting on March 10, 2009. At the meeting he gave a short overview of the Corporation's history and its participation in the Nixon-Smiley community which was well received by WPA members. Guadalupe County Groundwater Conservation District (GCGCD). Mr. Cockerell submitted SSLGC's well permit application to GCGCD on March 5, 2009. The application included one well-field permit and eight individual well permits. Although the permit application was on the agenda at GCGCD's March 12, 2009, board meeting, no action was taken. Mr. Cockerell is working with GCGCD to clarify a few issues with the permitting process and associated forms~and fees in order for SSLGC to comply with GCGCD requirements. GCGCD's next board meeting is scheduled April 9, 2009, at approximately the same time GCUWCD is having its meeting. Mr. Cockerell plans to attend the GCUWCD meeting and Engineering Consultant John Winkler and Hydrologist Consultant Bill Klemt plan to attend the GCGCD meeting. Region L. Mr. Cockerell attended a Region L meeting March 19, 2009. He stated that directors had voted to amend the 2006 Regional Water Plan. The cost of the amendment is approximately $27,040. The costs will be funded equally by SAWS, SARA and GBRA. GBRA gave a presentation on its mid-basin/Gonzales County project which is a combination of surface water and possibly groundwater from the Gonzales area to the San Marcos/New Braunfels area. The plan will be available at the August 2009 Region L meeting. The 2009 plan will fold into the planning cycle for the 2011 plan. SAWS gave a presentation on its 2009 Water Management Plan which was included in the board agenda packets. In the plan SAWS provides a breakdown of the various feasibility plans it has had in the past. Mr. Cockerell called attention to page 13 where SAWS shows a regional Carrizo project of approximately 11,000 ac-ft in 2034. On page 17 SAWS plans to focus on western Gonzales permit applications for 'its Regional Carrizo project. At this point the Carrizo water SAWS is counting on is in the well field in western Gonzales County only. Wilson County and eastern Gonzales County are presently not included in the plan. Operations Report. Mr. Cockerell summarized the operations report with the following: • SSLGC experienced a leak on its 36 inch main at the vicinity of the bore under IH-10 on March 2, 2009. The pipeline to the City of Schertz was shut down for three days. The leak may have occurred due to dry weather conditions and shifting ground. The leak was located at a union joint between two pieces. of pipe which may have attributed to the problem. The leak has been repaired. • Another leak was detected at the collection line of well #2. It has been repaired. 3 • Replacement parts for the pump repairs on well #1 have been ordered by Peerless Equipment, Ltd. When the parts are received Peerless representatives will install the pump at no charge. • Concrete manholes and rings have been removed. Water Superintendent John Bailey worked with a local contractor to have this material removed from SSLGC property and easements. The fifth order of business was Presentation of FY2007-2008 Audit Report -Nancy Vaughn, Armstrong, Vaughan & Associates, P.C. Copies of SSLGC's FY2007-2008 Audit Report were provided in the board agenda packets. Nancy Vaughan with Armstrong, Vaughan & Associates, P.C., presented an overview of the report. Highlights of the FY2007-2008 report are as follows: Page 7 of Audit Report -Comparative Balance Sheet -Assets • The Corporation ended the year with $3,062,697 in current assets with $2.1 million in operating cash and $5,659,660 in restricted cash and cash equivalents which include I & S funds, repair and maintenance funds, and other restricted fiends, e.g., bond funds which have not been spent. • Since the inception of the Corporation approximately $55,000,000 has been invested in its system net of depreciation which leaves $49,255,115. • Other Assets shows bond issue costs and unamortized lease acquisition costs. Lease acquisition costs are paid up front in bonus payments and do not include annual lease payments. Page 8 of Audit Report -Comparative Balance Sheet (Continued) -Liabilities & Net Assets • Liabilities and Net Assets total $56,327,784 of which approximately $55,000,000 is in long-term debt and bonds. • Net Assets total $3,838,260 which has increased about $600,000 from the previous year. Page 9 of Audit Report -Comparative Statements of Revenues, Expenses and Changes in Net Assets • Total operating revenue is $7,144,571 compared to $4,999,038 the previous year. This increase is due to an increase in water sales and impact fee revenue. • Operating Income is $3,190,884 compared to $1,284,130 the year before. This increase is due to the fact that operating and maintenance expenses and depreciation and amortization of lease payments remained relatively stable. Ms. Vaughn noted that this year was the first year since the inception of the Corporation that neither the City of Seguin nor the City of Schertz made additional contributions to the Corporation. A letter from the Auditor dated February 09, 2009, to provide the Corporation with information related to the audit was included in the board agenda packets. It detailed responsibilities of the Corporation and the Auditor. Ms. Vaughn noted the following: • No internal control issues were discovered. • SSLGC was found to be in compliance with the Public Funds Investment Act. 4 • In regard to revenues, i.e., water usage rates, the report stated: "The Corporation changed the method of charging the cities of Schertz and Seguin the debt service portion of usage rates during the current fiscal period. The change was to provide a level debt service payment, rather than a rate based on usage. The effect was to lower the total paid for water to an average rate below that charged to some customers." As a recommendation, the report stated: "The Board should consider the effect of charging a level debt service payment on the total average rate for usage, and document the resolution (where appropriate) in years when the average rate charged to Schertz and Seguin falls below the average rate charged to other customers. The Board may also want to consider documenting the effect on future years of paying more than the average rate in years when usage is less than required to provide debt service cash flow." Ms. Vaughn stated that the dollar amount was not significant, but could be in the future. After discussion, all agreed to address the issue in the near- future. President Bauer asked Ms. Vaughn if she had any recommendations for changes in regard to the accounting or operations of the Corporation. Ms. Vaughn stated that she had no changes in particular to report. She added that several duties had been transferred from the Seguin Finance Department to the Corporation over the past two years and she believed this to be a positive move. Ms. Vaughn reported that she sees no problems with the basic accounting structure. The City of Seguin Finance Department uses separate accounts to tract Corporation funds, e.g., repair and replacement fund, I & S fund, bond issue costs and revenues, etc. Ms. Vaughn stated that when she has made suggestions in the past, they have always been addressed by the City of Seguin and the Corporation. Presently she has no additional recommendations to make. Treasurer Wolverton made a motion to approve the FY2007-2008 Audit Report as presented by Ms. Nancy Vaughn of Armstrong, Vaughn and Associates, P.C. Secretary Dwyer seconded the motion. Upon a vote being called, the motion carried by unanimous decision. General Manager Cockerell noted that Mr. Bauer had reported a typographical error on page 3 of the Audit, Table 1, Net Assets: "Invested in Capital Addets....." should be changed to "Invested in Capital Assets..." After discussion, board members agreed the change would be made before the audit reports are sent out. The sixth order of business was Water Leases -Gonzales County -Alan Cockerell, General Manager. President Bauer deferred Agenda Item #6 to Executive Session. The seventh order of business was Engineering Services -Alan Cockerell, General Manager and John Winkler, G. E. Walker & Associates, L.L.C. Mr. Cockerell reported that he had received a letter from Lockwood, Andrews & Newnam, Inc. (LAN) acknowledging that they had received the letter of stop work from the Corporation for various projects (letter included in board agenda packets). Corporation staff continues to work with LAN to finish the filter rehabilitation project, Phase II. Presently, all other Corporation projects with LAN have been discontinued. LAN has been cooperative in providing the Corporation with requested data (e.g. electronic data, maps, etc.) in order to close out specified projects and to complete the filter rehabilitation project. A summary of costs for proposed projects by John Winkler with G. E. Walker & Associates, L.L.C., was included in the board agenda packets. The proposed fee comparison illustrates a savings of $454,120 for four projects, Guadalupe well field, Gonzales well field, operational improvements and storage improvements transitioned from LAN to Mr. Winkler. A copy of the base contact and four task orders were included in the board agenda packets. General Counsel for the Corporation Patrick Lindner reported that he had reviewed the contract and task orders and found no issues or discrepancies within the documents. General Manager Cockerell gave a brief summary and requested approval for the contact and four task orders listed below: Contract Discussion was held regarding whether or not Consultant John Winkler's signature as the designated project manager should be included with G. E. Walker & Associates as the contractor on the contract and task orders. Counsel Patrick Lindner stated that the contract was correct as written with G. E. Walker & Associates as the contractor. Board members agreed. President Bauer made a motion to approve the contract between G. E. Walker & Associates, L.L.C., and SSLGC. Treasurer Wolverton seconded the motion. Upon a vote being called, the motion passed by unanimous decision. Guadalupe Well Field Project (Task Order 1) Secretary Dwyer asked for clarification regarding 'the process of payments for the total ~- cost of $1,410,000 for the project. Mr. Winkler explained that each segment of work performed in the order needed would be approved by General Manager Alan Cockerell before partial work begins or costs for the work are applied. Treasurer Wolverton made a motion to approve Task Order 1 with G. E. Walker & Associates, L.L.C., for the Guadalupe well field project in the amount of $1,410,000. President Bauer seconded the motion. Upon a vote being called, the motion passed by unanimous decision. 6 Gonzales Well Field Project Task Order 2~ Mr. Winkler, stated that this project would be conducted the same as in Task Order 1 in regard to approval from Mr. Cockerell before partial work begins or costs are applied. Treasurer Wolverton made a motion to approve Task Order 2 with G. E. Walker & Associates, L.L.C., for the Gonzales well field project in the amount of $760,000. Secretary Dwyer seconded the motion. Upon a vote being called, the motion passed by unanimous decision. Gonzales Well Field Operational Improvements (Task Order 3~ Mr. Winkler stated that this project would be conducted the same as in Task Order 1 and 2 in regard to approval from Mr. Cockerell before partial work begins or costs are applied. The project includes an upgrade to the SCADA system and design work for an entry road from FM 1117 directly to the WTP1 site and is contingent on one and/or both of the previous two task orders for expansion being in place. Treasurer Wolverton made a motion to approve Task Order 3 with G. E. Walker & Associates, L.L.C., for operational improvements in the amount of $165,000. Secretary Dwyer seconded the motion. Upon a vote being called, the motion passed by unanimous decision. Storage Improvements (Task Order 4~ Mr. Cockerell stated that this project includes an additional storage unit at the existing WTPl, an additional storage tank at the Booster Pump Station and surge tank at the high point of the transmission line. He added that costs for storage tanks for the Guadalupe project were included in its respective task order. He concluded that storage units included in this task order are for SSLGC's existing system and that redundant storage tanks are necessary in order for repair or maintenance to be performed on the existing tanks. Secretary Dwyer asked if payment for the storage tanks would be taken from previous bond money funds. Mr. Cockerell stated that costs for engineering would come from previous bond money, but money for the actual constructions would come from new bond money. Treasurer Wolverton made a motion to approve Task Order 4 with G. E. Walker & Associates, L.L.C., for storage improvements in the amount of $237,000. Secretary Dwyer seconded the motion. Upon a vote being called, the motion passed by unanimous decision. The eighth order of business was Gonzales County Water Treatment Plant Filter Rehabilitation Project, Phase II -Alan Cockerell, General Manaser and John Winkler, LAN. Mr. Cockerell requested approval for change order #2 from Associated Construction Partners, Ltd., for epoxy filler material and labor in the amount of $4,140. Secretary Dwyer made a motion to Construction Partners, Ltd., in the President Bauer seconded the motion. by unanimous decision. approve change order #2 from Associated amount of $4,140 for epoxy filler material. Upon a vote being called, the motion passed Mr. Cockerell added that filter #6 had passed its bacterial testing and has been placed back in service. The first bacterial test on filter #4 has been submitted and the second one will be submitted the afternoon of the meeting in progress. Water Superintendent John Bailey has performed a preliminary walk-through with the contractor to address minor clean-up items. Mr. Cockerell expressed appreciation for the contractor and painter for a job well done. The ninth order of business was Selma Off-Peak Water Contract -Alan Cockerell General Manager. This issue was discussed at the last board meeting. From the direction Mr. Cockerell received from board members at that meeting, he has worked with representatives from the City of Selma and modified the original off-peak water interlocal agreement as requested by the City of Selma. A copy of the amendment was included in the board agenda packets. The benefit of the City of Selma using SSLGC water in the winter so that it could pump more Edward's water during the summer did not materialize because Selma never took its full allocated 800 ac-ft. In the future, if the situation changes, the ofF peak agreement could be beneficial. The original off-peak water contract with the City of Selma expires December 31, 2009. Anew one may be negotiated. Counsel Patrick Lindner had reviewed the amendment to the original off-peak contract and Mr. Cockerell requested its approval. Treasurer Wolverton made a motion to approve the amendment to the interlocal agreement for off-peak water between SSLGC and the City of Sehna. Secretary Dwyer seconded the motion. Upon a vote being called, the motion passed by unanimous decision. The tenth order of business was Legislative Update -General Counsel Patrick Lindner, Davidson & Troilo. President Bauer deferred Agenda Item #10 to Executive Session. The eleventh order of business was Guadalupe County expansion proiect -Alan Cockerell, General Manager. President Bauer deferred Agenda Item #11 to Executive Session. The twelfth order of business was Gonzales County expansion proiect -Alan Cockerell, General Manager. President Bauer deferred Agenda Item #12 to Executive Session. President Bauer closed General Session at 2: 40 p. m. The thirteenth order of business was Executive Session called under Chanter 551 Government Code, Subsection 551.071, to seek the advice of its attorney on legal matters relating to the Board of Director's rights and liabilities under certain contracts, Section 551.072, to deliberate the purchase of and/or sale of certain real estate and Section 551.074, for deliberations regarding a specific officer or employee. President Bauer opened Executive Session at 2: SS p. m. Executive Session was held from 2: SS p. m. to 4: OS p. m. The fourteenth order of business was to consider and take action as a result of Agenda Item #13. President Bauer opened General Session at 4: OS p. m. As a result of Executive Session: Agenda Item #6 -Water Leases -Gonzales County No action was taken. Agenda Item #10 -Legislative Update Secretary Dwyer made a motion to ratify the corrected agreement between SSLGC and Jack R. Fickessen for legislative services in the amount of $132,000. Treasurer Wolverton seconded the motion. Upon a vote being called, the motion passed by unanimous decision. Agenda Item #11 and Agenda Item #12 No Action was taken. The fifteenth 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 sixteenth order of business was adjournment. President Bauer declared the meeting adjourned at 4:05 p.m. The next regular meeting was scheduled April 16, 2009, in Seguin. ~~~~"" , MINUTES APPROVED THIS ~ QV\ DAY OF , 20.A~9--~ Robin Dwyer Secretary