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Minutes - 06/29/2011MINUTES FROM THE HUNTSVILLE CITY COUNCIL MEETING HELD ON THE 29TH DAY OF JUNE 2011, IN THE CITY HALL, LOCATED AT 1212 AVENUE M IN THE CITY OF HUNTSVILLE, COUNTY OF WALKER, TEXAS AT 5PM. The Council met in a workshop and regular session with the following: COUNCILMEMBERS PRESENT: J. Turner, Tom Cole, Mae Woodward, Jack Wagamon, Wayne Barrett, James Fitch, Don H. Johnson, Keith D. Olson COUNCILMEMBERS ABSENT: Lydia Montgomery OFFICERS PRESENT: Bill Balne, City Manager, Lee Woodward, City Secretary WORKSHOP SESSION [5:00] - The Council will hear a presentation and discuss the Texas River Authority (TRA) plant upgrade, engineering plans, budget, and funding. (Powerpoint available In the City Secretary's office.) [5:02pm] Carol Reed, Director of Public Utilities reminded the Council they would be considering an expenditure to TRA for its proposed contract with Alan Plummer and Associates for the plant expansion. The Council heard a presentation from David Gudal of Alan Plummer and Associates, Inc. The Mayor confirmed Alan Plummer and Associates conducted the 1998 Tenaska expansion of the plant. He also asked why Task #1 in the October 16, 2007 Agreement, PRELIMINARY DESIGN FOR EXPANSION UP TO FIRM CAPACITY OF 12 MGD, was being treated as an improvement and not an expansion. Mr. Gudal said his firm had done many reports on costs and options that included preliminary designs, not plans and specifications. Councilmember Wagamon asked about major pumps in the system and a pump capacity of just over 9MGD, noting it would include the City's wells and whether the study implied a primary well and primary TRA pump going out at the same time. Mr. Gudal said he had taken the information from the City capacity study from Crespo Consulting. Councilmember Wagamon said he had not seen a TCEQ (Texas Commission on Environmental Quality) report stating the City needed to perform the proposed expansion. He noted a prior Council had been advised that it was routine for a City to own a plant after the water authority carried the note for an expansion project. Ms. Reed responded by pointing out the intent of the work session was for the engineer for Alan Plummer to present the plans for the expansion of the plant, and that he had not been asked to speak on other studies. Councilmember Woodward referred to the Alan Plummer 2007-2008 plans and specifications, called a planned improvement, saying he believed it had intended to deliver 12MGD capacity. Mr. Gudal said it was, although he noted the State was not asked to approve capacity at 12MGD and the parts show that capacity, and that the plans have the ability to do so, Councilmember Woodward confirmed the intake forward has to be redesigned, which was not included in the 2007-08 report. Mr. Gudal said a design report would then be defended to the State. Councilmember Woodward asked if the increase in cost in doing the expansion since 2008 was $2 million and would likely continue to increase over time. He said his personal opinion was that he, as a Councilperson, had a duty to see the City had the necessary quality and quantity of water, and did not think it was responsible to wait for the TCEQ to tell the City it was needed. The Mayor asked about Task #2 of the October 2007 Agreement, DETAILED DESIGN FOR EXPANSION UP TO FIRM CAPACITY OF 12 MGD, for which the City paid $468,000, and why the issue of the river to the plant was not addressed at that time. Mr. Gudal said the objective at the time was improvements to the plant, not the expansion of the plant. The Mayor reread the phrases from Tasks #1 and #2 which included the term "expansion," asking if the firm was tasked to do detailed design for expansion for a firm yield of 12MGD, noting there was no discussion of "improvement." Councilmember Woodward said the contract only dealt with the plant and that he remembered that the plant was firm at 6MGD but would do 8MGD, but that the improvements outlined in the contract would only gain another million and a half gallons, not increase to 12MGD, but that intake pumps were not dealt with at that time. The Mayor said that he recalled, with the Tenaska expansion, that the intake was moved further out into the river to cover both Tenaska and the 12 MGD functions. Mr. Gudal said that set of plans would not address raw water pumps. The Mayor asked if Tasks #1 & #2 would meet the expansion to 12MGD if built, and Mr. Gudal said yes. Councilmember Woodward said this met with his recollection. Councilmember Woodward and Mr. Gudal agreed that the plant could produce 12MGD if water did not go to Tenaska. Mr. Gudal said the firm capacity would be 16MGD. Kyle Mathews, Water Assistant Superintendent, noted some water went to the Ellis and Estelle Units. The Mayor asked about the capacity of the pumps for intake from the river and Mr. Gudal referred to a letter he had sent previously and the need to add a 4MGD pump. The Mayor said the Crespo Consulting report said the total raw water capacity was approximately 24MGD and Mr. Gudal stated that firm capacity was around 16MGD. The Mayor said the bottom line was that the $99,000 would be required to increase the capacity. Councilmember Olson said the total amount of water the City was producing now was not sufficient and asked if there was any documentation from TCEQ encouraging the City to take action. Ms. Reed said TCEQ requirements were telling the City what they needed to do. She said the City was not in violation, but that water does not have a trigger point as wastewater does and was based on demand from users and amount of capacity required per connection, which, she said the City was not meeting, acknowledging there was some subjectivity as to how the number of connections were determined. She said one of the main tasks of the Crespo study was to determine equivalent connections and that there had not been a TCEQ inspection since that report. The Mayor pointed out that the Crespo report had three different calculations for equivalent connections, one of which showed the City was not above capacity. Councilmember Woodward remembered the 1998 report cost about $800,000, and asked Winston Duke, Finance Director, if the money could be included in the bonds. Mr. Duke and the Mayor said the money was borrowed and paid from the Water Fund, that the City could reimburse itself and add the amount to the debt. Councilmember Woodward said the Council had looked at projections in water rates a short time ago and said revisions would be presented in the near future. Councilmember Wagamon asked that a future meeting discuss the way in which relationships including TRA be handled, saying he had felt that the City staff and TRA staff had formerly been "too cozy" in the past. He said he felt it was a healthier relationship if TRA was the expert but that the City decided how the money was spent. He reminded the media and the public that, regardless of who handled the bonds, the water customers and citizens would pay the costs. He said he did agree with Councilmember Woodward that something needed to be done, although perhaps they didn't agree on the timing. Councilmember Woodward said the bonds would be paid for through revenue, not tax increases, and that the desire was to keep the rates as low as possible. He said he was still concerned about a large contractual debt burden continuing in 2020 when raw water rates would also increase. Councilmember Johnson said he thought the Council agreed on the basics and personally wished this had been done when the need was first apparent, that a premium was being paid for the delay. Councilmember Olson said that, in talking with TRA and looking at the contracts, TRA was not making money, it was reimbursement. The Mayor clarified that Councilmember Wagamon was talking about capital expenditures and the City did not own the plant. Councilmember Olson said he understood from Councilmember Wagamon's comment was that TRA would make money on the water and that he believed the State set the upper limits on the revenue charge on the water. The Mayor said the City had a 40 -year contract that determined the rate. Councilmember Olson said the market price the City would pay in 2020 was set by an entity, that all municipalities would be "in this together." Councilmember Wagamon said he didn't mean to say that TRA was seeking to make a profit, and agreed with Councilmember Woodward that it was not a tax increase, but wanted to emphasize that it was a user -bome expense and customers pay for the expansion through water rates. Councilmember Woodward observed that the discussion was well worth it since it was necessary to make the best decision for the community. The work session was adjourned at 6:11 pm. REGULAR SESSION' [6:OOPM] 1. CALL TO ORDER Mayor Turner called the meeting to order at 6:12pm. 2. PLEDGES AND INVOCATION Councilmember Barrett gave the invocation. 3. PUBLIC COMMENTS There were no public comments. 4. Presentation, discussion, and possible action to approve $99,000 for engineering and design for capacity increase of Texas River Authority (TRA) plant to Alan Plummer & Assoc., Inc. [Carol Reed, Director of Public Utilities] Councilmember Woodward made a motion to approve the expenditure and was seconded by the Mayor. Councilmember Olson confirmed with Mr. Gudal that this expenditure would include all the expenses to get 12MGD approved by the TCEQ but did not include construction costs. Councilmember Olson asked Ms. Reed where the Council would get a "real, take - to-the -bank number." Ms. Reed said the numbers did not include finance costs, as noted in the PowerPoint presentation. Councilmember Johnson referred to the slide below, confirming with Mr. Gudal that $16,516,000 was a turnkey number (plus other costs as noted on the slide) and included the $99,000. Councilmember Fitch confirmed the $99,000 being considered would cover everything necessary up until the project was ready to build. F—I L The Mayor said he hoped the Council would continue to address distribution, that it was necessary for a great water system. Councilmember Woodward said he thought this was one of the reasons the Finance Committee had looked at having the additional monies built in for distribution and other issues, and that the whole system had to be considered. 1: The motion passed unanimously, 8-0. Councilmember MooMomery gtLe_nJ, Mr. Baine said everything in the plant would be thirty-four years old when the project is completed and said he would like to acknowledge that TRA had done a good job. He did note there were still distribution lines at eighty years of age or more. 3. ADJOURNMENT The meeting was adjourned at 6:28 p.m.