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HomeMy WebLinkAbout2005-11-29 - MinutesMayor Dan Coody City Attomey Kit Williams City Clerk Sondra Smith City Council Water & Sewer Meeting Minutes Nov. 29, 2005 Page 1 of 7 Member Aldermen aye evi le AR KA N SA 5 City of Fayetteville Arkansas City Council Water & Sewer Committee Meeting Minutes November 29, 2005 Ward 1 Position 1 Ward 2 Position 1 Ward 3 Position 2 Ward 4 Position 2 - Robert Reynolds - Kyle B. Cook — Robert Ferrell - Lioneld Jordan A meeting of the Fayetteville City Council Water & Sewer Committee was held on November 29, at 5:30 p.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. MEMBERS PRESENT: Chairman Kyle Cook, Alderman Robert Reynolds, Alderman Robert Ferrell Staff Present: Steve Davis, Gary Dumas, David Jurgens, Susan Thomas, Tim Conklin and Ron Petrie Chairman Kyle Cook called the meeting to order. 1. Approval of the Minutes of November 7 Water/Sewer Committee Meeting. The motion was made and seconded to approve the minutes of the November 7 Water & Sewer Committee meeting. The motion passed unanimously. 2. WSIP Update. a. Presentation by Stephens Inc on financing options for the WSIP. Dennis Hunt of Stephens, Inc. spoke about a preliminary comprehensive financing plan to address wastewater system improvements, including the additional costs incurred as it relates to the development of the project. Mr. Hunt said it would take a combination of sales tax financing and system revenues to fulfill all the debt requirements associated with the improvements of the wastewater treatment plant. He explained that using a combination of the $72 million from sales tax and the $20 million that Stephens recommends the City request under the Arkansas Natural Resources Revolving Loan Fund (RLF), assuming 4.5% growth rate, the sales tax bonds will be paid off in 2012. The RLF would pay off around October of the next year. The next step would be to go to Arkansas Natural Resources Commission to obtain the additional $20 million. Steve Davis said he has a meeting with the managers of the Arkansas Natural Resources Commission (formerly Arkansas Soil & Water) RLF program on Nov. 30 at 2:00 p.m. He expects a loan agreement will be brought to the Council sometime in January. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes Nov. 29, 2005 Page 2 of 7 Dennis Hunt felt it is safe to expect, from past experience with Arkansas Natural Resources that they will be interested in placing this loan. They have already made a commitment to the City to loan up to $100 million in association with this project. Alderman Cook asked for the total amount to be borrowed from Arkansas Natural Resources. Steve Davis said the project estimate is $175 million, and we are looking at $70 million from Arkansas Natural Resources at the most. We will be exploring ways to reduce that number. Among the options would be the sale of the land, impact fees and the 2005, 2006 and 2007 rate revenue, all of which can be used to bring down that borrowing number. Alderman Cook asked if we anticipate any more increases in the sewer rates other than the three 9% increments voted on by citizens. Steve Davis said we need a greater comfort level on the total cost of the project and that will come from the bid market. Bids will open in January on some fairly large pipelines within the project. That will be a critical point for us to make sure the $175 million project total is going to be possible. At that point we will need to figure out how much more money may be needed and whether we will structure the water & sewer fund to cash fund as much as possible and if impact fee revenues will be applied to this project (the money from the sale of the 35 acres will have to be applied to it). These are decisions that the Council will need to address. The amount still remaining after all other sources of funds are expended will determine if any further rate increase will be needed. By the end of January we should have a better idea of what the total project cost will be and some decisions can be made at that time. In response to a question from Alderman Cook, Mr. Davis said that the impact fees are a capacity -related fee. We used the cost of the west plant as a basis for calculating the capacity fee. Mr. Davis said there is a difference of opinion among staff as to whether the money from those fees could be used on the west plant, the lines and the lift stations or only on the west plant. The expanded fees are a different "ballgame" because we are using the increased capacity for the lines and the lift stations to develop the fee. Dennis Hunt continued his presentation by giving an overview of the system debt. The total amount of debt outstanding is about $12,615,000. He said that for a community of this size, that is a very low amount of debt to be operating a water & sewer system of this magnitude. After looking at a variety of options, Mr. Hunt and Stephens recommends that the City seek money from the RLF as the most cost effective way to finance the balance of this project. He asked for this committee to give staff and Stephens the go ahead to begin working with Arkansas Natural Resources. Alderman Ferrell moved that we move forward with this. Alderman Jordan seconded the motion and it passed unanimously. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes Nov. 29, 2005 Page 3 of 7 b. ECO Construction Phase Services Contract. David Jurgens said this contract amendment was on the agenda for City Council in July but was pulled by staff for further review. The contract presented to the committee at this time has been renegotiated and the scope of work revised with significant input from both consultants executing design work on the west side system. In this process, staff was able to cut the amount by $20,000. This contract is for the environmental consultant that will provide overwatch for all of the wastewater system improvement project jobs. This consultant will oversee storm water permitting, Corps of Engineers permitting, wetlands mitigation and permitting and will providing inspections on all of these projects. If there is a storm water or wetlands permit violation, the State will fine the owner (City) and we would have to go back to the contractor for the money. Having this oversight and inspection is intended to ensure that those violations do not occur. The contract will also go a full year beyond the construction period to do all the post - construction notifications to the State, post -construction inspections, etc. After some discussion between committee members and staff, Alderman Ferrell moved that the contract be sent to the full Council for review. Alderman Jordan seconded the motion and it passed unanimously. c. Project Staffing. David Jurgens said a budget is being developed identifying anticipated staffing needs for WSIP management. The plan includes three staff members: a project manager who would handle the scope of all the construction contracts; a field inspector (using the job description of the Engineering division's field inspector); and a clerk. These positions would be paid out of the WSIP project fund and would be limited to the duration of the project. The cost for this is roughly $200,000 per year plus the purchase of two vehicles. This would be approximately $750,000 to $800,000 for the duration of the project. This is roughly 50% of what we were estimating for Burns & McDonnell to do project management on this project. The staff members would be housed in the new operations center where space has already been designated for the team. Alderman Ferrell asked if there is any way these employees could be considered contract employees. His concern is that after the project is complete, there might be an inclination to keep the positions rather than let trained staff go. David Jurgens said after looking at the options, staff felt it was better that they be city staff rather than contract employees. Gary Dumas said if the system continues to grow as it has over the past several years, there could be at least a discussion about keeping these positions. But since there is no money in the budget for them, that would be a Council decision to make at that time. Steve Davis also explained that if you designate these positions as temporary employees they would not be eligible for full benefits and it is already difficult to hire engineers without that obstacle. We could not call them contract employees because they would be working on City facilities, using our equipment and being directed by the City in what they do. That does not meet the IRS test for a contract employee. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes Nov. 29, 2005 Page 4 of 7 Alderman Ferrell stated that the Committee or the Council would like to meet with the project manager and/or site supervisor of Brassfield & Gorie and our project manager regularly (quarterly or maybe twice a year) at the site. David Jurgens said he has discussed with McGoodwin, Williams & Yates presenting updated photos of the project at each Water & Sewer Committee meeting. Monthly project reports will be distributed as well. He said he would also like to arrange reoccurring Council tours of the site. Steve Davis said the contractors' will have monthly project updates and the committee could also attend some of those meetings. d. Backup Power Generator Alternatives. David Jurgens said that we purchased a back-up power generator for the Noland WWTP, anticipating that it would be used to take the peak loads off the plant to reduce the electrical costs. We estimated that this would save $12,500 per month. Staff is pleased to announce that using the generator has created a monthly savings of $16,000. The contractor, Power Secure, monitors Ozarks Electric and the entire electrical grid for the region and when they see the power consumption peaking, they automatically turn on our generators. Based on what we are saving now, we anticipate the generator will pay for itself in less than 4.2 years. Power Secure has now brought forward a proposal for providing generators for the West Side WWTP and the Hamestring Lift Station. We are required to have backup power supply at both of these locations. Staff will look at alternatives on how to purchase the generators. We will also consider purchasing the generators now as opposed to when the plant comes on line because the cost for diesel motors of this size will increase after 2006 by about 18% due to changes in the diesel motor emissions criteria coming into affect January 1, 2006. Cost per generator is around $750,000 to $800,000. This will probably be coming forward to this Council at the first meeting in January. e. Easement Status Update. David Jurgens said as of yesterday there are ten easements remaining outstanding on the west side. Unless the owners of these properties change their minds within the next few days, these will go to the City Attorney for action. Staff is preparing packets and case histories to turn over to the City Attorney by the end of this week. 3. West Side (Hamestrinq Basin) Interim Sewer Collection System Evaluation. David Jurgens said staff had received the draft report from RJN Group on Nov. 28. It identifies short term alternatives in the Hamestring basin. This report, based on current real data, confirms earlier analysis that, if we maintain the current rate of new services coming on line plus a safety factor, no temporary wastewater facilities should be needed in the Hamestring basin. The final report will identify short term alternatives should the growth rate increase; the final report will be presented within two weeks. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes Nov. 29, 2005 Page 5 of 7 Alderman Jordan asked for some sort of regular update, possibly quarterly, on the number of houses coming in to that area and the stress on the system. 4. Sanitary Sewer Rehabilitation Project Update a. Basin 1-5, 18 & 19 Sewer Rehabilitation Construction. David Jurgens said that all easements for this project have been obtained; all the paperwork to Arkansas Natural Resources has been completed. This project, which involves replacing approximately 15,000 feet of sanitary sewers city wide, and which is funded in part by the USEPA STAG grant loans, will advertise in December with a bid opening in January. b. Hamestring Basin Sewer Evaluation. David Jurgens explained that smoke testing is completed on this project. Manhole investigations are almost complete, and further field investigations are underway. The report on this will be completed probably by next spring. c. Farmington Area Sewer Rehab David Jurgens reported that manhole rehabilitation is complete on this project. There were about 12 manhole inserts that had to be changed out. The last videos were delivered three weeks ago to our consultant. Final design is underway for line work, in accordance with the arbitration agreement. d. Insituform Term Contract Renewal. David Jurgens said this would be the fifth term contract with this company. The process involves putting a flexible liner inside a sewer line and hardening it. The contract was initially bid in 2002. The cost of this process is about 1/3 of "dig & replace". The City does all the engineering and excavation in-house. The contractor simply comes in and lines the pipe. To date, there has been no increase in the cost from the 2002 bid, although it is likely there will be an increase in unit prices for 2006. This is a very cost effective method of getting pipelines repaired fast with minimum disruption, but can only be used in specific applications. These services are used on an as -needed basis as part of the ongoing sanitary sewer rehabilitation program. This contract renewal will be coming to the Council in January. 5. Double Springs Road Development Request to Tie to Sewer. David Jurgens asked to table this item until the next meeting. 6. OMI Contract Amendment No. 13, for 2006. David Jurgens said that this contract amendment is included in the 2006 budget. The amendment represents a total of a 5% increase in net contract costs. The operating expenses for fiscal year 2006 contain a slight increase from 2005 due to significantly higher fuel and electrical costs, labor, aging equipment and growth of loadings. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes Nov. 29, 2005 Page 6 of 7 7. Beaver Water District Negotiations. David Jurgens said that in the NPDES permitting for the Noland Plant, ADEQ made the permit more stringent for monthly phosphorous average. They said that if we could negotiate with Beaver Water District and put some watershed protections in place, the permit would be changed to 1.0 limit. That language has in fact been changed on the permit unless we do not reach an agreement with Beaver Water District. Beaver Water District has sent us their initial proposal. Ron and David have both looked at it and there will be further negotiations. The work identified within the agreement should be a net cost savings to the City and should produce more tangible results for water quality. Ron Petrie said this dovetails nicely into our EPA Phase 2 storm water management program. There is money already allocated for that program and it can be all wrapped together. 8. Elkins Contract Review Steve Davis said this item was tabled indefinitely at the last Council meeting at the recommendation of the City Attorney. To consider the contract a City Council member will need to move to bring the contract off the table. This item should be brought forward in connection with Item 10 (Postponement of the Next Sewer Rate Increase) so this contract is approved simultaneously with the rate ordinance adjustment because the contract does have a rate reduction. Steve explained the administrative procedure that the City must follow under State law: the rate ordinance must be read on Dec. 6 and then tabled until the next meeting. A public hearing must then be advertised for a period of not less than 10 days. On Dec. 7 we are scheduled to place the ad so that on Dec. 20 the Council can consider the rate reduction. 9. Farmington Contract Update. David Jurgens reviewed a map tracking the current and potential path for the Farmington wastewater to flow entirely through our system. As Farmington has annexed to the north, it is becoming a possibility that some Farmington water would go up to one of two lift stations on Owl Creek. Some Farmington water would then flow a different route until it merged with the current path. Steve Davis explained that the restriction in the Farmington contract is that there is a single point of connection at one lift station. For Farmington to have a second point of connection, the existing contract would have to be amended. The main purpose for this discussion is for the negotiating team. We have constructed facilities from the Fayetteville City limits to the Noland Plant that will, once the West Plant comes online, have capacity to service Farmington's customers. There is a concept called "stranded costs" where a utility has assets that they've put into place to service a customer group which that customer group no longer uses. As part of the negotiation with Farmington, we have capacities that diminish as we get closer to Noland that represent stranded costs. Mr. Davis' question to the Committee is how much of those costs the team should seek to recover through the negotiation with Farmington. Farmington only wants to pay for what they use, but on Fayetteville's side, we have constructed facilities to 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes Nov. 29, 2005 Page 7 of 7 accommodate Farmington for which we no longer have a use but for which we have to pay. A possibility is to structure a plan over several years whereby we recover a fair share of those costs. There are questions regarding boundaries to be used in these considerations — do we stop at 1540 or anywhere between there and the Noland plant? The decision made by the committee regarding how much of the stranded costs the city will try to recover dictates how much work city staff will have to commit to developing the city's investment in those pipes and all the maps and paperwork to be used to sit down to negotiate with Farmington. David Jurgens said the staff is now in process of doing a line segment by line segment evaluation of the pipes, looking at construction date, length, capacity, how much capacity is used by Fayetteville and how much by Farmington, etc. After discussion of estimated capacities from the lift station to 1540, to Razorback Rd. and then on to Noland, it was decided to concentrate efforts on evaluating the stranded costs only on the lines west of Razorback Road. 10. Consideration of Postponement of the Next Sewer Rate Increase. Steve Davis stated that the Mayor has requested Staff to develop rate implementation options for Sewer Committee consideration. The recommendation postpones the next rate increase (scheduled to be implemented Jan. 1, 2006) to May 1, 2006. It also implements the negotiated rate in the Elkins contract. In response to a question from Alderman Jordan, Mr. Davis stated that the average Fayetteville customer will save around $1.15 per month. Although it isn't much, it is the only thing the City can do to offset some of the increased costs everyone is facing with their utilities. The total cost to the City for postponing this increase is around $309,000 in the Water & Sewer fund. Alderman Reynolds moved that this item be moved forward to the City Council for review. Alderman Jordan seconded the motion and it passed unanimously. 11. Discussion of Implementing a CPI Indexed Water Rate Adjustment. Steve Davis asked that this item be tabled until a later date. 12. Scheduling the Next Water/Sewer Committee Meeting. The next meeting of the Water & Sewer Committee was scheduled for January 10, 2006. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org