MINUTES OF MEETING
The regular meeting of the
Board of Supervisors of the Coral Springs Improvement District was held on
Present and constituting a quorum were:
Bob Fennell President
Glen Hanks Vice President
Sharon Zich Secretary
Also present were:
Dan Daly Interim Manager
Ed Goscicki Co-Manager –
Dennis Lyles Attorney
John McKune Engineer
Isabello Rodriguez CH2M-Hill
Jane Early CH2M-Hill
David Green CH2M-Hill
Sean Skehan CH2M-Hill
Cory Johnson CH2M-Hill
Randy Fredericks Field Supervisor
Doug Hyche District Staff
FIRST ORDER OF BUSINESS Roll Call
Mr. Fennell called the meeting to order and called the roll.
SECOND ORDER OF BUSINESS Approval of the Minutes of the March 19, 2007 Meeting
Mr. Fennell stated each Board member
received a copy of the minutes of the
There not being any,
THIRD ORDER OF BUSINESS Presentations by CH2M-Hill
A. Rate Study
Mr. Green from CH2M-Hill provided the following PowerPoint presentation on the water and wastewater rate analysis, which will be made a part of the official record:
• Overview of rate development process
○ Utility revenue requirements
○ Revenues to be recovered from user charges
• System revenue requirements
○ Cash basis
○ Projected operating costs, renewal and replacement funds, existing and new debt service requirements through 2012
• Capital improvement program
○ $54.3 million
▪ First phase (now): $39.6 million for 7.4 mgd nano water treatment, A&N wastewater plant, solids handling and monitor well
▪ Second phase (2012): $14.7 million for reclaimed facility/conveyance and operations building
• Capital improvement funding
○ First revenue bond - $44.6 million
▪ 3.1% issuance cost with insurance
▪ 4.2% interest rate
▪ 30 year debt repayment schedule
▪ 2 years capitalized interest
○ Second revenue bond - $44.6 million
▪ 3.1% issuance cost with insurance
▪ 4.2% interest rate
▪ 30 year debt repayment schedule
• Bond repayment schedules
• Total system revenue requirements with new debt service
• Revenue requirements with new debt service and projected revenues under existing rates
• Required change in rate revenues with new debt service
• Additional rate revenue requirement options
○ Option 1: Keep current rate structure; apply uniform change in all rates
○ Option 2: Recover new debt service costs through annual institutional charge or assessment; recover other costs through uniform adjustment in current rates
○ Option 3: Rate structure revisions to reflect cost of service
• Recommendations and conclusions
○ Current rates will not support projected costs of utility operations and new debt service requirements
○ Adjust rates and other sources of income to cover projected costs and other financial commitments
○ Schedule public hearing to consider proposed rate adjustments
• Scope of work
B. Capital Improvement Program Summary Report
Mr. Skehan provided a report on the capital improvement program.
SIXTH ORDER OF BUSINESS Consideration of Work Authorizations
A. No. 34.1 for 8-MGD Nano-Filtration Water Treatment Plant
Mr. Hanks asked what is the cost differential; capital and operational for a Lime Softening Plant and Nano Filtration Plant? What happens if there is a gasoline spill within our wellfield? Are the regulations adequate to address environmental contamination?
Mr. Skehan responded the lime softening is less likely to do this.
Mr. Johnson stated if you were to have a contamination spill of gasoline, there are going to be volatile organics and some made up of soluble water. The water soluble ones are going to be removed by a nano filtration membrane because the molecules are large enough to be removed. If they are gaseous, they are volatile. There is a good chance some of them will be removed in your aeration system.
Mr. Hanks stated it is a “what if” scenario.
Mr. Johnson stated the flip side is if you were not doing some type of nano filtration. Lime softening is not going to give you the removal a nano filtration plant would.
Mr. Fennell stated the EPA will still come out and shut us down anyway. I hear what you are saying but I am not sure they are going to believe us.
Mr. Skehan stated you will be shutting down one well; not your entire system. One well may possibly be contaminated. Because you have a number of wells in your wellfield and there is some redundancy to what you have for your wells, the spill potentially taking place will not be large enough to contaminate your entire wellfield; unless you are sprayed with gasoline for some period of time. This is not likely.
I do not mean to say the future regulation is the most significant item, but it is a significant item. On the water quality side, organics, water and color removal are significant. You disinfect byproducts as you chlorinate and get some color into your water. You have to be careful about what those by-products are. Those by-products have come under very close scrutiny from a regulatory standpoint over the past several years. Being able to maintain adequate contact time for your water supply in the system and making sure you have adequate residual out into the furthest extent of your system are extremely important. With nano filtration, it will be easier to do this because you do not have concern over those by-products being present as you would in the lime softening.
Mr. Fennell stated I thought you said you reduced the chlorine content in the water.
Mr. Johnson stated you currently chlorinate. By doing this, you add chlorine and there is ammonia in the water, which does not form by-products. The problem is there is not sufficient ammonia. This will allow you to have a pre-chlorinated system rather than a chlorinated system. They typically have to do more flushing due to potential biological re-growth in the system. I am not sure whether or not you have a problem with this.
Mr. Fennell stated if we go through the nano filtration process, how will it give us healthier water? What is the benefit?
Mr. Skehan responded I provided a handout to the Board going through great detail with respect to some of these questions.
Mr. Hanks asked what are potential impacts to the water distribution system?
Mr. Johnson responded you are going to remove significantly more organic matter from the water. It is a stronger oxidant and should have less chance for biological re-growth in the system. In addition, we can tailor the water. Whenever you change the water quality going into the distribution system, it changes the scale.
Mr. Hanks asked can you explain what scale is?
Mr. Johnson responded yes. When you have a certain amount of calcium content in the water, scale will form inside pipes through calcium precipitation. You will see scale when you replace your hot water heater every couple of years. We can tailor the water to whatever calcium content we need for the system. I believe this plant does not have a significant scale problem because you have phosphate.
Mr. Hyche stated we started the phosphate process three years ago.
Hyche stated so does the City of
Mr. Hanks stated it is just a matter of how we are treating it. I wanted to put this on the record to see whether or not this will have any impact.
Mr. Johnson stated certainly a distribution system likes a stable or consistent water quality. When you make the switch from a Lime Softening Plant to a Nano Filtration Plant, your water quality may be different for a period of time.
Mr. Hanks asked do we have the ability to pull PH as the water flows out of the plant?
Mr. Johnson responded yes, but the design will need to incorporate some type of PH adjustment on the front and back side of your treatment system. We may have some acid on the front side to help with hydrogen sulfide removal, however, as we get deeper in the design, we can flush this out. On the back side, we will add sodium hydroxide. This will give you the flexibility to adjust your PH to a more stable level.
Currently the regulated by-products are methanes and acidic acids, which were a large effort for the EPA because they performed studies on those chemicals and found cancer causing issues. They regulated those at 60 mgd and your plant is well below this level because you chlornaminate and the weaker oxidant does not attack the organics in the water. EPA is starting to look at the chlornaminated by-products in the water. From the preliminary tests performed, they found disinfection may actually be worse than the previous by-products.
Mr. Fennell asked what do you mean by worse?
Mr. Johnson responded it is worse as far as the long-term effects of ingesting these by-products. The regulation of these are further into the future as it has to go onto the contaminate candidate list. It is not inconceivable 20 years from now; you will have regulations on those.
Mr. Hanks stated 20 years ago, all you were looking at was how much chlorine you had going out and whether you had bugs in the system.
Mr. Johnson stated correct. Years ago, utilities were bleaching the color out of the water. They would apply massive doses of chlorine and it would react to these organics and people were ingesting these carcinogens in large quantities.
Mr. Fennell stated no one admitted to doing so.
Goscicki stated I can name three facilities in
Johnson stated the bulk of the current utilities facing what you are currently
facing are starting to look at newer technologies like lime softening with an
added filtration process. It is a more
cutting edge process to install. We have
not been doing as many lime softening designs because most utilities are moving
in the other direction. Some examples are
Goscicki stated the City of
Mr. Fennell stated you are implying there may be some hidden health costs that we do not know about.
Mr. Goscicki stated you are buying some insurance with nano filtration because you are getting a treatment process, which is much more inclusive in the removal of soluble material at a much higher degree where lime softening is precipitating out your hardness. You are getting a degree of insurance and paying for it.
Mr. Fennell stated it costs 10% more to do this. It will be $25 million versus $18 million. When you think about it, $25 million is half of our bond issue.
Mr. Hanks stated we are going to be using a certain portion of our plant for lime softening or nano filtration. Another consideration is the cost of real estate.
Mr. Fennell asked will this process get us a new plant or a re-built plant?
Mr. Skehan responded both. Some components will have to be re-built and some parts are new.
Mr. Fennell stated it will still be good for 30 years.
Mr. Skehan stated we do not know based on the unknowns with where the regulations are going.
Mr. Hanks stated assuming everything is equal and the regulations remain constant, the physical plant will last 30 years.
Skehan stated correct. One of the things
you do not see is the ease of operations and maintenance. There is a significant difference between the
operations and maintenance of a Nano Filtration Plant. The key item is it is a consistent operation,
less operator intensive, eliminates your sludge handling and is highly
automatable. There are cost savings
built into each of those items. You do
not have any more sludge handling. From
an operator’s standpoint, you can potentially operate with fewer staff. The automation component speaks for itself as
far as staff and the consistency. One
significant item in your cost for operation is the chemicals.
Mr. Goscicki asked have you done an analysis looking at both the capital and O&M costs?
Mr. Skehan responded not a detailed one. We anticipated some questions and doing a justification between these two different technologies and moving into nano filtration. This question is important in trying to make sure the dollars you are spending are going to be the best dollars for the technology as an insurance policy and will take you through these benefits. It has been done to some level of detail. We talked earlier today with Mr. McKune and Mr. Hyche to try to get some of the costs but we did not have enough time to digest those numbers to where we are comfortable.
Mr. Hanks asked what is the capacity?
Mr. Skehan responded 7.4 mgd.
Mr. McKune stated this is the current maximum plus 10%.
Mr. Hanks asked what about redundancy for compliance with the permits? What additional capacity do we need in order to meet the regulations?
Mr. McKune responded it will be sufficient based upon the size of the train.
Mr. Goscicki stated you build multiple trains in the Nano Filtration Plant and you size it.
Mr. Hanks stated this is giving us enough plant capacity to meet the permit conditions for DEP, whether it be for nano filtration or lime softening.
Mr. Skehan stated it will leave some portion of your lime softening system intact. You do not want to lose all the capital. Your newest train on the lime softening will maintain it so there is some balance of the nano filtration and lime softening of the water.
Mr. Johnson stated the 7.4 mgd will cover your current capacity needs plus 10%.
Mr. Goscicki asked is the 7.4 mgd the nano filtration or the nano and the existing portion of the lime softening?
Mr. Skehan responded just the nano.
Mr. Johnson stated you will have a lime softening train set in standby mode in the event of a catastrophic event, which is highly unlikely and you need to bring the plant back online so you have flexibility.
Mr. Goscicki asked what are you doing with the waste stream from the nano plant?
Mr. Skehan responded fortunately you have two injection wells. The waste stream from the nano filtration is not the most aggressive waste stream as far as the concentrate. Up until the time we know more details, it could potentially be brought back into our reuse system so there are no loses from the nano filtration process. Otherwise, this will go into the injection well system.
Mr. Goscicki asked is there sufficient capacity in the existing injection well to undertake this?
Mr. Skehan responded yes.
Mr. Fennell asked does the $25 million include any necessary updates for the lime softening? Some of these components are in bad shape.
Mr. Skehan stated one component does not need much work. The holder components are where the significant amount of the work will be. One necessary component is the sludge handling. This will go away if you are minimizing the use of the lime softening facility and the watering which was considered part of an upgrade and maintaining what you currently have for the lime softening system.
Mr. Hanks asked what cost savings will we have in our capital improvement plan if we go with nano filtration?
Mr. Skehan responded the capital improvement plan is currently structured with the nano filtration. This is the assumption we used.
Mr. Hanks asked was the sludge and dewatering related to the waste stream and not the line sludge?
Mr. Goscicki responded yes, certainly on the wastewater side.
Mr. Hanks asked where does our lime and sludge go?
Mr. Skehan responded I am not sure where it is being hauled off to.
Mr. Hyche stated DRD hauls it to farms up north. They have their own permitted areas to haul the sludge to.
Mr. Fennell asked are you coming back to us with a proforma statement reflecting our current operating and proposed costs?
Mr. Skehan responded yes.
Mr. Fennell stated I want an estimate of our operating costs for nano filtration for year one because I have to justify $6 million. If we are going to get a 25% to 30% reduction in operating costs, this makes it an equal expenditure. It is great if we can get an operating benefit.
Mr. Goscicki stated I assume the rate model did not go into great detail of assuming cost efficiencies from one operation. You just escalated the current budget.
Mr. Green stated we have a budget to 2011 and estimated a $400,000 savings in operating expenses.
Mr. Skehan stated we have a generalized schedule. In a report we will provide to you, there is a much more detailed schedule covering each of the projects. For ease of discussion, you have several projects such as nano filtration, Wastewater Treatment Plants A&B, solids and handling. We started earlier this year and moved forward quickly with the validation for the nano filtration and Lime Softening Plant. This is part of the report; not just the benefits of nano filtration. The design will be taking place in April, assuming we start right now. We brought with us a task order to do this. The design will take us out until January or March of next year and then the construction period will take us out to 2010. The other projects will have a much shorter term, taking us out into early or mid 2008. The solids handling will go out to mid 2008. These are the bulk of the projects in Phase 1 or $39 million phase of the capital improvement plan.
For Phase 2, there is a great deal of unknown. There have already been discussions taking place between the Water Management District and the City of Coral Springs in looking at different options because the Water Use Permit requires evaluation of reuse. The current Water Use Permit is a component of what we are doing to be able to maintain the allocation from the Biscayne Aquifer. The current operating permit for the Wastewater Treatment Plant will have to be renewed in three years. There was a great deal of difficulty obtaining this permit the last time we renewed it due to the reuse component. As part of this permit, DEP has called for implementation of some level of reuse. You are seeing the gathering storm with the Water Management District and DEP in pushing reuse because of drought conditions, water considerations and being located next to the everglades and maintaining environmental considerations. All of these items play into what is taking place in CSID and NSID. The cost for the project is $39.1 million for Phase 1 and $14.7 million for Phase 2 bringing us to a total of $54 million for the entire capital improvement plan.
Mr. Fennell asked how much of this project can we currently cover?
Mr. Goscicki responded none of this is covered. You started obtaining a loan as the District does not have enough funds in the bank to complete the current $6.8 million project. This is why we are working quickly on the rate increase and the short-term financing to keep this project going and then rolling the remaining funds into the long-term finance to pick up the bigger program.
Mr. Fennell stated I noticed we have $3.6 million in investments and $2.4 million in the State Board Administration Account. What is this money doing for us?
Mr. Goscicki responded your balance sheet gives you a picture of the money you have on hand. You received all of your revenue for the year, which is reflected on the balance sheet. You still need to cover your O&M expenses for the balance of the year out of the Revenue Fund.
Mr. Fennell stated this is for the General Fund. The water and sewer are paid every month and we still have funds flowing in. I see $6 million. Are you telling me I cannot spend it?
Ms. Rowan responded I have not seen those financial statements.
Mr. Fennell stated I liked the format. They finally got them down to a business form, which I can read.
Mr. Goscicki stated you cannot look at the assets. You have to look at the net payment. If you look at the assets, you have to subtract out the liability.
Mr. Fennell stated we have $3.6 million in investment restricted cash and $2.4 in the State Board Administration Account.
Mr. Goscicki stated correct. You have to look at page two and all the liabilities you have on the book and the last two lines of the fund balance. This is where you have no money left.
Mr. Fennell stated this is money already invested.
Mr. Goscicki stated the fund balance designated for reserve. The non-reserved funds are all you have to work with. Everything else is committed.
Mr. Fennell asked what is the $6 million committed to?
Mr. Goscicki responded I will have to review the financials in detail.
Ms. Rowan stated you have debt service payments due at the end of this month for our bond payments due on June 30th.
Mr. Goscicki stated this is a difficult format to look at to fund capital improvement programs off of. I spent an hour with Ms. Kay Woodward last week going through these financials and asking her to show me where the money is. You start at fund equity of your unreserved funds and then determine what you anticipate spending. Mr. Daryl Kissoon is working with Ms. Woodward and Ms. Rower to put together a five year cashflow analysis, which takes your total revenue, operating expenses and debt service and throws in your bond payments or any cash for any capital projects you are doing for the year and comes up with a total. You either come up with a fund balance forward or a negative number. If you end up with a negative number, you have to borrow money. We are trying to put all of this into a one page spreadsheet, summarizing it down to something readable. We did this for a number of our other districts. Mr. Kissoon provided me with a preliminary copy this morning but I did not like the numbers. We are verifying the fund balance forward for the beginning of this year.
Ms. Rower stated I request Mr. Daly to work with us because of the fact the financial information is generated here by Ms. Woodward but in order for us to get this information, we need to work together.
Mr. Fennell stated we need a flow of funds and use of funds type of report, which is usually the third stage of any financial report. I like this balance sheet but we also need a cashflow sheet.
Mr. Goscicki stated we typically do this on an annual basis and make it part of your budget process going forward. We take the CIP and any debt service associated with it and roll it into this. We will put additional tabs in your budget so you are approving the capital budget for the upcoming year as part of your budget process; know where the impacts are going to be, what you are going to be paying out of your R&R funds and what is coming out of debt service. It is an easy document to work from.
Mr. Fennell stated you need to provide us with a cashflow of funds every month. This is going to be more important to us than seeing an operating statement or balance sheet. The reason why it is more important is because the operations will not change much and the balance sheet only shows the assets.
Mr. Goscicki stated the balance sheet is nothing more than an annual report on a month to month basis. If you are a finance person, you will like it.
Mr. Fennell stated I want to see what we owe, what we pay every month and how it is going to be covered.
Mr. Rodriguez stated you have the capital improvement program in the evaluation report, which shows the recommended spending.
Mr. Fennell stated I currently have a project taking place and I want to know where the money will come from to pay for it and when do I have to tell them to stop. Can you provide this information to us?
Mr. Goscicki stated I was hoping to do it at this meeting. However, we still need to verify some of the accounting information before I can provide it to you. We will be working tomorrow with Ms. Woodward. This needs to be a priority issue because we need to do this.
Ms. Rower stated this is why I asked for direction from Mr. Daly.
Mr. Fennell stated I do not think Mr. Daly will have any problem helping you. I want to see as well as the rest of the Board a cashflow sheet every month showing what programs are taking place, how much we have left to pay and what money can be used to pay for these programs.
Mr. Goscicki stated I could not agree more because as your manager, you look to us to figure out whether or not you have enough money to pay for these projects. I do not know and I want to be able to give you those answers.
Mr. Fennell stated I understand what you are saying but it looks like I have $6 million tied up somewhere, which I cannot use and cannot get a good return on. When can you get back to us? Obviously, we are going to get some money from the rate increases. When do we have to go out for the bonds?
Mr. Goscicki responded we are moving as quickly as we can.
Mr. Fennell asked if we have the rate hearing next month and are lucky enough to get approval, can we vote on the rates?
Mr. Goscicki responded yes.
Mr. Fennell asked how soon could we have the bond money?
Mr. Lyles responded we have a short-term financing that is going to be in the form of a Bond Anticipation Note. This note can be $7.5 million, which you can receive within 30 days.
Mr. Fennell asked do you think this can still happen?
Mr. Goscicki responded yes. We are planning on a short-term finance. We need to get the rate approval first because when you roll the short-term financing into the long-term financing, it will result in a rate increase. You need to have the rate increase approved first before taking out the short-term loan.
Mr. Lyles stated we will go to a larger bond issue, which is going to require validation. This will be a 60 day process.
Mr. Goscicki stated there will not be a time crunch because you will have working capital with your Bond Anticipation Note or short term financing. It is functionally the same. It anticipates when you do your long term funding, you will take the short-term note out. Bond Counsel has been working with us on the appropriate resolutions. This gives us time to work through the long-term financing, get better numbers from the engineer, structure the program and move it through.
Mr. Fennell asked how soon will the long-term funding arrive?
Mr. Goscicki responded I am hoping within 30 days.
Mr. Fennell stated by June, you can have a whole new Board. I do not want to pass this on to a new Board.
Mr. Hanks asked how can we speed this up?
Mr. Goscicki responded by June, you will have already approved the rates and they will be in effect. You already authorized staff to move forward with the short-term financing.
Mr. Lyles stated we need a bond resolution from Bond Counsel allowing me to file the necessary proceedings in Circuit Court for validation of this larger bond issue. This will occur after the rate hearing next week and will be a 45 to 60 day process. There is no way to reduce it.
Mr. Fennell asked is this for the $7 million?
Mr. Lyles responded no, for the full amount.
Mr. Fennell stated I assume we need money to cover current construction.
Mr. Goscicki stated correct.
Mr. Lyles stated the money is due no later than the week before your June meeting, which is the election.
Mr. Fennell asked who will be on the Board in June?
Mr. Lyles responded it depends on how you want to structure it. The Special Act requires there an election in June. Traditionally, it has been in connection with the June Board meeting but it is not required. You can have your regularly scheduled June meeting as a business meeting and schedule your landowners election, which is separately noticed at a later time in June.
Mr. Goscicki stated it can be at the end of the regular June meeting.
Mr. Hanks asked is there a concern the way we schedule it will affect how we will be able to meet our obligations?
Mr. Lyles responded the short term money will be meeting your short-term needs.
Mr. Hanks stated we would feel a lot better if we can move forward quickly on the short-term funding. What do we need to do to get everything in line for the short term funding in order to proceed as quickly as possible?
Mr. Lyles responded call a special meeting in two weeks.
Mr. Hanks asked what will the topics for this meeting be?
Mr. Lyles responded the public hearing on the rate study, bond resolution and authorization to proceed with the long term funding process. Theoretically you can complete it by the end of June before the election.
Mr. Hanks asked when are our obligations due?
Mr. Goscicki responded you are drawing against funds. We need to look at when we reach the point where we have to tell the contractor to stop working until the funding is in place.
Mr. Hanks stated my preference is to structure this so we do not have to do that.
Mr. McKune stated this should not be a problem.
Mr. Fennell asked how quickly should we pursue this?
Mr. Goscicki responded as quickly as possible. It will be appropriate to schedule a special public hearing to address the rate study and conduct the regular meeting afterwards to deal with any resolutions we need to get into place in order to proceed with the long-term financing.
Mr. Fennell stated I am available the first Tuesday in May.
After further discussion, there was consensus from the Board and staff to schedule the rate hearing for Wednesday, May 2, 2007.
Mr. Skehan stated I provided to the Board the projected rate adjustment to the Board, which gives you each item on a percentage basis. For the current year, the increase is $5 per month for the average user. In 2009, the increase will be less than $6 per month. In 2010, it will increase to $7 per month.
Mr. Hanks asked has it increased over the prior year?
Mr. Goscicki responded yes.
Ms. Zich asked is this the total increase?
Mr. Skehan responded yes.
Mr. Green stated we slightly changed those percentages.
Mr. Skehan stated this was the 14%, 14% and 14% as originally discussed. This projection gives you a look into the future. If you are staying with the Phase 1 component, the increase is less than $3. Keep in mind, the 2008 rate increase is capturing what you have to do for your current operation and debt service. This is not for the capital improvement plan at all. The capital improvement plan is tied to an increase of $13 over a two year period.
Mr. Goscicki stated this is good for the 5/2 meeting.
Mr. Fennell stated we have a public relations firm and we need to explain this to our constituents. We should send out a PR release as well as an informational sheet to provide to the residents at the next meeting explaining why we are doing this and what the benefits are.
Mr. Goscicki stated I have a conference call meeting with Ron Sachs and will get these items to you ASAP.
Mr. Fennell stated you have sold the Board but we represent over 40,000 people and need to relay to them this is the best thing to do. We need to get the word out to them and take proactive measures.
Mr. Daly asked do you want to explain anything to the city?
Mr. Fennell responded we can but lets get the PR statement out first. We can put something out on our website. As soon as this gets out, you are going to receive phone calls. Explain to them what we are doing, why we are doing it and what the benefits will be. Everyone should have a copy of this PR release.
Mr. Goscicki stated we need to have this release before public notification goes out.
Mr. Lyles stated the proposed legislation modifying our Special Act cleared the three committees with positive recommendations, most recently as last Thursday. The next step is running this by the House and the Senate. I am not going to make a prediction but while we have a piece of legislation pending, someone may say this Board is increasing rates substantially. It would be better if these two things were not going on at the same time. I am not cautioning you or telling you this is going to happen but I would be remiss if I did not point this out, as remote as it might be.
Mr. Fennell stated you are correct but I do not think there is anything we can do. The Board’s responsibility is to keep this going. We need to do what we have to do. This is all the reason why we need to have a clear statement of what we are doing and why we are doing it. We should probably have a couple of paragraphs about the current legislation and other things occurring in CSID.
Mr. Hanks asked is there anyone we can call in the legislature to assist us?
Mr. Lyles responded no. CSID has quite a record. I do not think anything more needs to be said. If a problem were to arise, we could point to the lengthy discussions and input from the engineers as to why this is appropriate and necessary. This is as out in the open as it can possibly be.
Mr. Skehan stated the work authorizations are tied into the work taking place in the capital improvement plan.
Mr. Fennell stated I do not wish to authorize any more money.
Mr. Skehan stated this is tied into the short-term funding.
Mr. Fennell stated I want to see the money in my pocket first.
Mr. Skehan stated when the short-term funding is in place, we will come back to the Board with these work authorizations. This is the guidance I need.
FOURTH ORDER OF BUSINESS Consideration of Investment Banking Agreement with Prager, Sealy & Co.
Mr. Fennell asked do we need to consider this agreement tonight?
Mr. Goscicki responded yes.
Mr. Fennell asked why are these the best people to go with?
Mr. Goscicki responded they have the history with the District. As we looked into this and had discussions with Bond Counsel and District Counsel as well as with SunTrust, the general consensus and my recommendation is we need their history. The complexities of your existing bonds, limitations and peculiarities of your enabling legislation in terms of what you can and cannot do, we felt we were best serving the District, particularly in the tight time frame we are dealing with. If we were moving in a more leisurely pace, I would say “Let’s go out and solicit proposals”. There are only two firms dealing with CDD bond issues; Prager, Sealy and Bank of America. Our recommendation is to stay with Prager, Sealy. They served this District well in the last 30 years and bring their expertise to the table.
Mr. Hanks asked do we need to go out for proposals?
Mr. Lyles responded no. This is a specialized consulting service, which does not need to be bid and is not the subject of an RFQ process. It is not apparent from the agreement in your agenda package the payment is contingent on the closing of the bonds. They have to do all of their work for you satisfactorily before your obligation to pay arises.
Mr. Hanks asked do you have any concerns with this firm?
Mr. Lyles responded no. I worked with them many times.
Mr. Fennell stated the cost of issuance is $1.685 million, which is 3% of the total cost of the bond. Why is this a good deal?
Mr. Goscicki responded it is not a great deal but it is the usual deal. If we shop around, we might be able to pay less but this is the current rate.
Mr. Fennell asked what does this agreement do?
Mr. Lyles responded it authorizes Prager, Sealy to proceed as your Investment Banker with putting together the bond financing program both short-term and long-term to accomplish the funding of the program as described to you by your engineer and managers.
FIFTH ORDER OF BUSINESS Consideration of Resolution 2007-3 Issuing Tax-Exempt Bonds to Finance Improvements to the Water and Sewer System
Mr. Goscicki stated Bond Counsel recommended putting this resolution forward. It recognizes the fact you are going to be spending monies on this short-term financing, which is then going to be taken out by a long-term financing. They wanted to get this resolution on the record so the Board recognizes we are moving forward.
Mr. Hanks asked does the attorney have any issues with this resolution?
Mr. Lyles responded no. Going into any significant detail on this resolution will require Bond Counsel to be present. Everyone was in agreement this early step was not necessary. This resolution declares the Board’s intent to proceed with this program. Because of some of the restrictions in the old bonds, predating my involvement in this District, there are strings attached to being able to take funds out of certain accounts and putting them into others. This is a step to make it clear, we are intending to do this. I recommend the Board adopt this resolution.
SEVENTH ORDER OF BUSINESS Discussion Items – June 18, 2007 Landowners Election
Mr. Fennell stated each Board member received a sample copy of the landowners proxy.
Mr. Lyles stated we looked at the proxy form and made some suggestions, which Mr. Daly incorporated and distributed. You are not a Chapter 190 CDD but you are operating in a similar way. Some of the legislation we have pending brings you more into line with Chapter 190. It is not required by your Special Act; but is required in Chapter 190 on a proxy, where you indicate all requested information and in addition, provide the street address, legal description of the property or the tax parcel ID#. I request the Board add these lines to the proxy. If the Board is in agreement, we will modify the form.
EIGHTH ORDER OF BUSINESS Staff Reports
There not being any, the next item followed.
i. Permit Criteria Manual Revisions
Ms. Early stated we have been working with Mr. Hanks on revisions to the Permit Criteria Manual. I provided a handout to the Board with those changes and will bring the entire manual to the next meeting. I will provide a loose copy of the manual to Mr. Daly so he can post it to the website.
ii. Contract Options for Replacement of Wastewater Treatment Plants A & B
Mr. McKune stated one of the items we have on our capital improvement program is the replacement of Wastewater Treatment Plants A&B with a new one, called Plant F. Plant F will be identical to a plant bid in 2001. It had the same size, capacity and equipment. We have the option and the contractor agreed to build this plant for the same amount bid in 2001 with an escalation of approximately 6.5% per year to cover increases in material costs, which in my opinion is a good deal. I want to consider this as a unit price and do it by Change Order. It is still an existing contact. This is predicated on the fact we still have the money, once we have the short term planning.
Mr. Lyles stated what he is discussing is the need to bid things and whether or not we are going to spend more or less money by putting something out for bid when we have a good set of unit prices already in place from a previous contract. The problem we run into and every District and government entity runs into is even though you are getting a good deal, if they are willing to do the next increment of work, is to bid it this way in the first place and put in a condition for these prices to be bid at the option of the District to use for a future phase of work. You are going to run into problems with people saying, “If I knew that, I would have bid a lower number”. I am not sure we have this language in this agreement but if we do, we will go ahead and notice it.
Mr. Hanks stated construction prices increased but there may be someone out there who is hungry.
Mr. Fennell stated we will consider this once we get some money.
iii. Stormwater Pump Stations 1 & 2 Evaluation Report
Ms. Early stated we provided a draft report for the Board’s review. We want to meet with Mr. Hyche, Mr. McKune and Mr. Frederick. We have an itemized list by need of importance and will go through with District staff on what they feel are priority items. Some items were based on safety while others were based on operations.
Mr. Fennell asked did you perform an inspection?
Ms. Early responded yes.
Mr. Fennell asked is District staff going to review this report to see if anything needs to be added. This sounds like normal maintenance.
Ms. Early stated they are routine maintenance items; items deteriorating around the plant. Some items we were suggesting for safety.
Mr. Green stated FEMA is looking at the levy around the conservation area.
Mr. Fennell asked what does this mean?
Mr. Green responded it relates to our drainage study. Every 10 years they are supposed to update the elevations.
iv. Status of Canal Bank Reshaping
Mr. McKune stated this will close out our relationship with NRCS relating to the Eagle Trace bank repair. NRCS authorized an amount not to exceed $750,000 to repair the bank in Eagle Trace for five lots. This amounts to $150,000 per lot. We elected to try something innovative on one lot and it worked well. It only cost us $43,000. We come up with the Geo-tube for canal bank reshaping and repair, which we were authorized to do by NRCS. We did this for not only the remaining four lots but also for 18 additional lots in the Ramblewood Subdivision. The cost for this work amounted to $17,000 per lot. NRCS visited all of the sites today and thought we did a great job. They are willing to reimburse us back 75% of all costs. They are very happy and this concludes all of the NRCS issues. This will give us a total reimbursement of $1,773,000 for the General Fund.
Mr. Daly asked was there an issue with the bill?
Mr. McKune responded the initial $43,000 repair was an emergency repair because it was my fault. We authorized Intrastate Construction to give us an estimate on the original $750,000 repair. We were authorized by the Board to try the $43,000 option, which worked. We came back to the Board and showed pictures of the rip raff wall and explained the Geo-tube option. The said it looked good and recommend we try it out, which we did.
Mr. Fennell asked do we need to do anything?
Mr. McKune responded I do not believe so. We needed to make sure you understood this contract was authorized on an emergency basis and continuing in this manner through completion.
Mr. Daly asked was it a written and signed contract?
Mr. McKune responded no, it was authorized verbally by the Board up to the $750,000. It actually ended up costing half.
Mr. Daly asked should we pay the last invoice?
Mr. McKune responded yes.
Mr. Fennell asked which invoice?
Mr. McKune responded there was an outstanding invoice for $74,000. To complete the job will cost another $300,000, which will come out of the General Fund.
i. Overall CIP Funding
Mr. Goscicki stated we had a detailed CIP presentation earlier in the meeting and I have nothing further to add.
ii. Monthly Water & Sewer Charts
iii. Utility Billing Work Orders
iv. Complaints Received/Resolved
There not being any, the next item followed.
NINTH ORDER OF BUSINESS Discussion Item – District Management Options
Mr. Fennell stated I saw something about different job options and the status of the organization going forward. We had a special meeting two weeks ago where we had many directions. At that point, we directed staff to define the right structure for the job going forward. How is this going?
Mr. Goscicki responded Mr. Daly and I discussed this matter today. We are close in terms of our overall approach. I prepared a brief flowchart outlining Severn Trent Services philosophy and trying to reflect the interest of the Board. One of the issues the Board focused on at the last meeting was the need for an Operations Manager or onsite General Manager; someone to manage the day-to-day operations of the District and at the same time recognize the desire to keep a firm like Severn Trent Services on board to deal with fiscal planning, policy issues, strategies, high level management issues as well as records administration and management. We tried to look at where you have been, where you are now and how you might merge these together. One of the issues frustrating the Board is Severn Trent Services is not here full-time on-site. Even when we had someone here in the office, they were not full-time with the District. They were working on multiple Districts. Beyond this, you had a number of people who were District employees who reported to the manager. You had a HR Manager, Operations Manager, Utility Billing and Customer Service Manager and Accountant.
What we are proposing is some consolidation and recognizing when it comes to on-site day-to-day matters, you only have two operations; the operations of the physical utility and stormwater management, which Mr. Hyche manages and has been managing for some time now. You also have the administration aspect such as the utility billing and customer service, HR functions, other office administration and managing the accountants on-site and how they are managed and whether there is some accountability. One of the solutions is to consolidate those under one individual. All of the CSID employees on-site will report to two individuals; the Director of Administration and Director of Operations. Mr. McKune serves as a Consultant and will still report to the District Manager. The rest of the team are Severn Trent Services employees; which include your finance team headed by Ms. Rower who deals with the budget and analysis, assessments on an annual basis, fiscal planning and programming. Ms. Mona Slaughter and the rest of our records management group deals with the minutes and records administration.
The top end of the organization is the way almost every district in the state is structured. You have a District Manager who reports to the Board, District Attorney and District Engineer. You have CH2M-Hill who provides the district engineering on an ongoing, routine, day-to-day type of operation. You then have this major capital improvement program, which falls under Mr. McKune. We have the general engineering on an ongoing basis to make sure the District meets those engineering obligations, coordinates with other entities and deals with the capital improvement program.
Mr. Daly stated what we are missing is leadership with forward thinking, planning and finance. Whether this should be a consultant or full-time management team, Severn Trent Services or outside Management Company, will satisfy the District’s needs.
Mr. Hyche stated I agree. We operate well and have been for a long time.
Mr. Hanks stated one of my concerns with what has recently transpired is the accountability of the manager as an individual to the Board and how the Board has not been fully informed about matters. Some projects may have moved ahead differently than our intentions. We need to figure out a way to restore our trust in the manager.
Mr. Goscicki stated we discussed with the Board a number of times what is reflected in our organization and where you have been in the past year. What we are showing in the organization is the accounting continue to remain here but all of the fiscal management associated with the accounting resides with Severn Trent Services. Shame on Severn Trent Services for allowing what occurred over the last year as too much was migrated into one office and the checks and balances were lost. You had one manager overseeing this. The structure we are proposing is leaving the fiscal management with Severn Trent Services and Ms. Rower in terms of the overall budgeting and analysis, assessment roll development, maintenance, fiscal planning and programming. The accountant has a reporting relationship both with Mr. Daly on the day-to-day activity but in terms of providing information as we have an obligation to make sure the information is provided. Having the Fiscal Manager perform the checks and balances, does not work for me. As a District Manager, she reports to the General Manager and not to any individual District Manager. We do this deliberately to create the checks and balances within Severn Trent Services. The District Manager has limited authority in what this person can do on their own. The same with our records administration, which is also separate. We have three separate checks and balances built in so managers do not go off and do things on their own. They have to follow protocol.
The purpose of having the checks and balances on the records administration side is to avoid having contracts awarded without the Board’s review and approval. It needs to be on the agenda and we need to do public notification. The checks and balances from the finance side is having an independent finance person looking at what is going on with the District and making sure money is available and procedures are being followed.
Ms. Rower stated our assessments are separate and reviewed by another individual instead of through the District Manager.
Ms. Zich asked how much time do you spend on CSID?
Ms. Rower responded it depends on what we are working on. For the CIP, Mr. McKune and I had conversations. Mr. Daryl Kissoon who works under my direction, has been working on this project solely for the past two to three weeks. A good deal of this entails putting together the numbers. There could be a few days where I do not work on CSID and then Mr. McKune calls me and asks me if we can finance some of the numbers. Mr. Kissoon can then take two to three days putting a spreadsheet together. It is an ongoing process. It fluctuates depending on what we are working on. When we get to assessments, I can guarantee our assessment staff will be working at least 60 hours a week.
Ms. Zich stated we are talking about the person overseeing the accounting.
Mr. Goscicki stated one of the things we want to re-institute in this program is a Senior Accountant. The way we structure our other districts, the District Accountant reports to one of three Senior Accountants. The Senior Accountant is overseeing the work on a day-to-day basis. However, for reasons unknown to us, this has never been the case here. We need to establish this here. Ms. Woodward used to be one of our Senior Accountants and is familiar with this working relationship. We propose re-establishing these relationships. We understand the Board wants their own accountant. You have your own AP person. We have no problem with this but we want to make sure we do not have the conversations we had earlier today with the money and whether or not we have enough funds. We need to make sure we are in control and providing good information for you.
Mr. Daly stated I do not think the issue is where the money is. The issue is it was not looked at for the last year. The problem is not with staff not doing a good job but with something occurring months ago.
Mr. Goscicki stated the problem is with Severn Trent Services. We allowed the process to migrate the way it should not have.
Mr. Daly stated I do not know if we fix it by saying “Let’s dump more work into someone else’s direction because of past mistakes”.
Ms. Rower stated there is a difference between the financial side and the assessment side.
Mr. Daly stated we intend to do the assessments just like we always have.
Mr. Goscicki stated the assessments were done by Severn Trent Services.
Mr. Fennell stated it sounds like many good conversations took place tonight about who does what and who reports to who. I suggest we go back to the committee and discuss it more.
Mr. Hanks stated I like what we have been doing so far but my main concerns are still where the money is, whether we are working on the projects and how we are going to fund the right projects.
Mr. Goscicki stated I completely agree. The key is breaking out those levels of authority.
Mr. Hanks stated as well as the best way to move forward.
Mr. Goscicki stated we are not looking to add back but to do what you always contracted us to do. I think we have not lived up to what I expect us to do as your manager. We should not just say, “Well you have an accountant on staff and we will allow the accountant to do this work”. Our obligation is to the Board. We are picking up items not done for the past year.
Mr. Fennell stated I am not sure about the reporting structure but it sounds like you are getting an idea. Going forward, you need to bring in someone to serve as the interim co-District Manager. I want to see a strong operational presence every month. I am sure Mr. Hyche and Mr. Daly will be happy if someone came in to take on the strong strategic viewpoint. From a financial standpoint, every good organization has checks and balances. This is not just about the finance or where the cashflow is. It is making sure someone is not spending an extra $1,000. You want someone on the outside checking the financials. The fiscal and budget planning can be connected to one another. Is there any reason why they cannot have access to our records?
Ms. Rower responded they are on a new system. I have to look at how to integrate it and talk to Mr. Daly about access.
Mr. Fennell stated you need to pull data from it to see what is happening from an operational standpoint. It is a question of figuring this out. It is a secure site as it is remote and only has one terminal.
Mr. Daly stated I gave people access.
Mr. Fennell stated this sounds like one solution, where someone we trust can look into our system, give us oversight and be a conduit of information.
Mr. Hanks stated I want to see continued input from Severn Trent Services. Not all of us have agreed with what the engineers presented. If there is something else we need to consider, let’s hear it. I want to know all our options.
Mr. Fennell stated on the other hand, we do not want to funnel this through one manager.
Mr. Goscicki stated you are absolutely correct. Our role is not to be a funnel limiting communication. Our role is to coordinate and provide direction based on the Board’s policies. The past two weeks have been encouraging. We had actual meetings on some tough issues with staff and your consultants. There was some discourse this afternoon and we had some healthy debate with the engineer on how to move this program forward. The Board needs to hear this but you also want us to come to you at some point with some consensus; not control. If we cannot reach consensus, then you want to know varying viewpoints.
Mr. Hanks stated this is what we want.
Mr. Goscicki stated you are in a critical stage for this organization where you are undertaking a major capital improvement program, making major hurricane repairs and re-working your legislation at the same time. As we get through the stage of getting the program up and running, we need to report back to you on what we are doing rather than you having to make big policy decisions.
Mr. Fennell stated we want to see agreement from everyone for this organizational chart. At this point, we have strong input from operations but it depends on the strategic input Severn Trent Services is going to give to us. I still expect from staff the services you are going to provide to us and a breakdown of services and costs as well as what other services you will provide. I know you have many services but if you are going to provide them, I want to see them listed. I expect the bill to be somewhat reduced from what it was because you will be serving more in an advisory role rather than managerial. This may require a revised contract, which I expect Mr. Hyche and Mr. Daly to be a part of. Some services should be cost out.
Mr. Goscicki stated I am happy to do so.
Mr. Fennell stated you have the expertise.
Mr. Goscicki stated if there are any additional services, we will make you aware of them. Severn Trent Services brings a unique set of criteria and qualifications to the District going beyond a management services company because we also happen to be a utility operations company. We can come in and do a massive inventory of the District or some maintenance programs. There are other parts of Severn Trent Services you can access through our contract if you choose to do so.
Mr. Fennell stated I want you to come to us with a yearly contract identifying each service and the cost.
TENTH ORDER OF BUSINESS Supervisor Requests and Audience Comments
Mr. Daly stated we have a plaque to present to District staff for the waterway cleanup. We express our thanks to Mr. Fredericks and his staff.
ELEVENTH ORDER OF BUSINESS Approval of December Financials and Check Registers
TWELFTH ORDER OF BUSINESS Adjournment
Ms. Rower stated I noticed my sewer bill always equals my water bill. Does this also mean I am getting a $5.72 increase in my sewer bill for a total of $11.40?
Mr. Green responded no, the total is $5.72.
Mr. Goscicki stated we will put the entire rate schedule into the advertisement.
There being no further business,
Sharon Zich Robert Fennell
Notes for 4/16/07 Meeting
Agenda Items for Next Meeting
1. Provide to the Board a cashflow of funds worksheet every month showing what programs are taking place, how much money is left and what money can be used.