Water Resources Municipal Property Corporation

MINUTES OF THE BOARD OF DIRECTORS OF THE TOWN OF GILBERT, ARIZONA WATER RESOURCES MUNICIPAL PROPERTY CORPORATION ANNUAL MEETING, TUESDAY, JANUARY 17, 2018 5:00 P.M., CONFERENCE ROOM 233, GILBERT MUNICIPAL CENTER, 50 EAST CIVIC CENTER DRIVE, GILBERT, ARIZONA BOARD MEMBERS PRESENT: President Kevin Boudreau, Vice President John Wilcock, Secretary-Treasurer Bryan Scienza, Director Noah Mundt, and Director Mark Safsten COUNCIL LIAISON PRESENT: Council Member Jared Taylor BOARD MEMBERS ABSENT: None STAFF PRESENT: Kelly Pfost, Management and Budget Director Mary Goodman, Assistant to Town Manager Tanya Wright, Accounting Manager David Polk, Senior Accountant Susanna Struble, Assistant Town Engineer/ CIP Manager Florence Shultz, Accounting Manager David Polk, Senior Accountant Jeanne Jensen, CIP Manager Kim Leone, Management and Budget Specialist CALL TO ORDER President Boudreau called the meeting to order at 5:01 p.m. OATH OF OFFICE Council Member Taylor administered the Oath of Office to Directors Scienza and Safsten. ROLL CALL Management and Budget Specialist Leone called roll and declared a quorum was present. COMMUNICATIONS FROM CITIZENS None received 1. OVERVIEW of WRMPC – President Boudreau provided an overview of the purpose/function of the WRMPC. The Board was established with an underlying purpose to have growth pay for itself and not have the burden of water and wastewater infrastructure become a burden on existing taxpayers. This Corporation is a subsidiary of the town that operations independently in many respects but reports to the Town Council. This Corporation issues bonds for both water and wastewater  Town of Gilbert AZ Water Resources MPC January 17, 2018 Page 2 of 6 projects which will be repaid by system development fees calculated and collected when permits are pulled by new businesses and residents. 2. ELECTION – consider nomination and election of officers for 2018. Noah Mundt was nominated as President. Kevin Boudreau was the nominated as Vice President. Bryan Scienza was nominated as the Secretary-Treasurer. A MOTION was made by President Boudreau seconded by Director Safsten for the above nominations. Motion carried 5-0. 3. MINUTES – consider approval of the minutes of the meeting of January 17, 2017. A MOTION was made by Director Safsten seconded by Secretary-Treasurer Scienza to approve the minutes of the meeting of January 17, 2017. Motion carried 5-0. 4. PLANT EXPANSIONS/BONDS – discussion related to the planned Greenfield Wastewater and funding requirements Budget Director Pfost mentioned in 2016 we did the funding for the Santan Plant which is going along well. We are now almost ready to start construction on the Greenfield Plant. CIP Manager Jensen provided an overview of the Greenfield Wastewater Reclamation Plant Expansion Phase 3 which is split into two capital project numbers WW075 and WW114. WW075 represents the portions of the project related to the expansion and WW114 represents the various upgrades, equipment replacement, etc. related to the facility. The differentiation is the bond and funding source. WW075 will be seeking bond funding and WW114 will be repaid through the wastewater fund and replacement funds. Budget Director Pfost clarified that the split is based on what is new growth related and what is considered new system development we are seeking bond funding for. WW114 is repair and replacement for the existing facility and is not new growth related. CIP Manager Jensen stated the Phase 3 expansion will add 4 million gallons of liquids capacity at the facility for Gilbert’s use Mesa is adding 10 million gallons of capacity and Queen Creek will not be adding additional capacity in Phase 3 but plan to add capacity in Phase 4. WW114 portion applies to the 8 million gallons of liquids treatment we already have and WW075 applies to the 4 million gallons we are adding. City of Mesa is the lead agent for the project. Design is complete and the final section of the design is currently in design review. Director Safsten asked for clarification on Queen Creek waiting until Phase 4 to participate financially. CIP Manager Jensen answered Queen Creek is financially participating within Phase 3 for the portion of the project considered WW114 and has a fairly substantial investment in this project although they gain no additional capacity. They felt they could hold out until the next expansion to add capacity to what they already own. The Construction Management at Risk is McCarthy Building Company who are mobilized on site and working on some of the initial construction. We have issued GMP 1; GMP 2 is still in negotiations. We are currently making sure GMP 2 is brought into alignment with our financial situations and final design piece. They are already working on several initial pieces to include mass excavation where 200,000 yards of dirt will be removed from the site with a significant  Town of Gilbert AZ Water Resources MPC January 17, 2018 Page 3 of 6 portion returned for backfill. Construction began in November and is anticipated to take 33 to 36 months to complete with a projected close date of September 2020. CIP Manager Jensen reviewed the timeline for project and stated that although there currently has been only one official open house that has occurred communication is being handled through Macpro Services and it is an ongoing communication process. There are a few things to button up on the IGA with Queen Creek and Mesa. CIP Manager Jensen discussed the financing and explained WW075 total required funding projected to be over $45 million for the expansion and WW114 total required funding projected to be over $18.5 million. Director Wilcox asked if the funds discussed represented total cost. CIP Manager Jensen explained this is only Gilbert’s proportional and the actual total project costs are closer to $210 million dollars. We are responsible for about 32.1% cost participation in this project. CIP Manager Jensen provided a visual overview of the Greenfield Wastewater Reclamation Plant Expansion and explained what will be built per project phase. Secretary-Treasurer Scienza asked if what was being provided was the maximum size this plant could be as it seems there is space for more growth. CIP Manager Jensen stated the plant expansion must remain within the fence line and the additional land surrounding the Plant are set backs required to be in place due to regulations from our controlling agencies. The additional property essentially serves as a buffer zone to protect the residents from odor, noise, ect. Budget Director Pfost asked for clarification on if the final Phase 4 would be enough for build out. CIP Manager Jensen confirmed it is what they are anticipating. The exact amount of flow we plan on purchasing in Phase 4 is a perpetually moving target dependent upon how residential and commercial builds out. President Mundt asked if there would be a metric tied to MGD that would be taken that would ultimately drive the total cost for the Town. CIP Manager Jensen stated there is. We have an estimated budget that has been floated that will be honed in as the project progresses. CIP Manager Jensen provided overall construction status that included where the excavation is occurring and where the dirt will be stored as well as a 360 degree imaging of the construction job site. Director Wilcock asked if there would be a need for any additional infrastructure coming into the plant. CIP Manager Jensen said there is no need as most of the infrastructure is already in the ground for conveying the waste water and the pipes laid were already sized for their eventual capacity. There is an ongoing water master plan that may identify the occasional lateral piece of infrastructure that is not exactly quite sized but is anticipated that everything required is already in place. Director Wilcock asked if the constructed access road would be south of the plant. CIP Manager Jensen answered it would be directly east of the plant directly opposed across the arterial to the neighborhood streets to maximize the usability for cars turning in the area to reduce any traffic challenges. Budget Director Pfost stated that the Greenfield plant is about to go into major construction and we have been waiting to do financing on this because we did not want to pay interest for two years when we did not need to. We are getting to the point where we will be needing construction dollars and the bond reimbursement resolution requirements with the IRS will only allow the Town to go back so far. We are reaching the point where we will need to do the full financing instead of the reimbursement resolution. We anticipate we will need financing set up by late March or early April and will be reaching out to the Board for an additional meeting to be able to authorize that financing for the project. We are looking at sizing the bond as small as possible and are targeting a $48 million dollar range and will use cash system development fees  Town of Gilbert AZ Water Resources MPC January 17, 2018 Page 4 of 6 if the project comes in more than what was requested. We are also looking at targeting a bond issuance of 15 years to pay less interest and to match up the time frame with system development fees coming in. All of the details will be brought back to the Board in late March. Vice-President Boudreau asked if project WW114 will be funded by the MPC. Budget Director Pfost stated it will not be funded by the MPC and will instead be funded by repair and replacement funds that are set aside annually to be able to cash fund these types of projects. Director Wilcock asked for clarification on if the total requested is $50 million in bonds. Budget Director Pfost confirmed this is the case. President Mundt asked if we had a financial picture based upon a cross referencing of the planning and zoning projections as to how these fees should be coming back on a payback period that would sustain the 15 year issuance. Director Pfost stated we have a historical and what land we know is available and are currently one third built out and anticipate if the growth does not come we will have the capacity obtained in Phase 3 but will not need Phase 4. President Mundt asked what the pricing model for outside agencies is for sending their wastewater and does it include operating, maintenance, and electricity costs built in. CIP Manager Jensen stated that these costs are included in the overall IGA to ensure each agency is paying appropriately. We are going through and updating the cost of service model now because of the expansion to ensure all parties are accountable for their fair share of costs. President Mundt asked if there were a safety issue is the Town isolated from this given that Mesa will be the operating entity of the plant. CIP Manager Jensen commented Mesa would be the covering agent once the project is completed with McCarthy acting as our buffer during construction. 5. CAPITAL PROJECTS – status report on the capital projects and Santan Vista Water Plant Expansion CIP Manager Jensen provided an overview of WA070 – the Santan Vista Water Treatment Plant expansion located in the southeastern area of the Town which serves the southern residents in partnership with the City of Chandler. It is five weeks from completion of the Phase 2 plant expansion project which will provide Chandler and Gilbert 24 million gallons per day capacity each and puts us at the same capacity as our North water plant. Gilbert is lead agent of this project and has no designs for any additional expansions but there is room on the site for expansion if ever needed. The project is currently on schedule for substantial completion on February 23, 2018 and on budget. In fact, we are projecting a savings of between $1.5 to $2.5 million that is expected to be returned by the contractor. CIP Manager Jensen gave a review of where the project started, where the project is today, and several construction highlights using drone video footage and a video provided by Sundt Construction. 6. ANNUAL REPORT – consider approval of the annual financial report. Accounting Manager Wright discussed several items of interest on the annual report where we had a decrease in cash and an increase in property and equipment because of the Santan and Greenfield project costs. Director Wilcock asked about the $58 million for the Santan project and if $9 million was project administrative cost. CIP Manager Jensen answered the $9 million was for project design and construction management.  Town of Gilbert AZ Water Resources MPC January 17, 2018 Page 5 of 6 President Mundt asked if the time for the $2 million was coming to an end in which the MPC can allocate the funds from the Town. Accounting Manager Wright answered it was not a Town restriction but an IRS restriction for the reimbursement resolution that went to Council in August of last year. A MOTION was made by Vice-President Boudreau seconded by Secretary-Treasurer Scienza to approve the Annual Report. Motion carried 5-0. 7. FINANCIAL UPDATE – Discussion related to the current year and FY 2019. Accounting Manager Wright stated the items of interest are similar to the prior report in where we had decrease in cash and increase in property and equipment because of the Santan and Greenfield project costs. FUTURE AGENDA ITEMS/MEETINGS: 8. Identify future agenda items President Mundt mentioned the need for a special meeting to address future bond issuing needed to be set in late March or early April. Budget Director Pfost stated we are working with our financial advisor to determine best timing for the bonds and would let the Board know when the time is appropriate for the meeting which is projected for the last week of March at this time. Vice-President Boudreau asked if we were using Cafiso for the bond council. Budget Director Pfost answered we are using Jim Strickland but are using a different bond council, Gust Rosenfeld. COMMUNICATIONS 9. From the PRESIDENT on current events. None. 10.From the BOARDMEMBERS on current events. None. 11.From the COUNCIL LIAISON on current events. None. 12.From STAFF on current events. None. ADJOURN A MOTION was made by Secretary-Treasurer Scienza seconded by Director Safsten to adjourn the meeting. Motion carried 5-0.  Town of Gilbert AZ Water Resources MPC January 17, 2018 Page 6 of 6 The meeting was adjourned at 6:11 p.m. ATTEST: Noah Mundt, President Bryan Scienza, Secretary-Treasurer CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the annual meeting of the Town of Gilbert Arizona Water Resources Municipal Property Corporation was held on the 17th day of January 2018. I further certify that the meeting was duly called and held and that a quorum was present. Dated this __ day of . Bryan Scienza, Secretary-Treasurer