Water Resources Municipal Property Corporation

MINUTES OF THE BOARD OF DIRECTORS OF THE TOWN OF GILBERT, ARIZONA WATER RESOURCES MUNICIPAL PROPERTY CORPORATION BOND MEETING, MONDAY, JANUARY 28, 2019, 5:00 P.M., CONFERENCE ROOM 233, GILBERT MUNICIPAL CENTER, 50 EAST CIVIC CENTER DRIVE, GILBERT, ARIZONA BOARD MEMBERS PRESENT: President Noah Mundt, Vice President Kevin Boudreau, Secretary-Treasurer John Wilcock, Director Bryan Scienza, and Director Mark Safsten BOARD MEMBERS ABSENT: None COUNCIL LIAISON PRESENT: Councilmember Jared Taylor STAFF PRESENT: Kelly Pfost, Management and Budget Director Håkon Johanson, Finance & Management Services Director Mary Goodman, Deputy Town Manager Chris Payne, Town Attorney David Fabiano, Town Engineer Susanna Struble, Assistant Town Engineer/CIP Manager Jeanne Jensen, CIP Supervisor Anthony St. George, Accounting Supervisor Patti Hageman, Management and Budget Specialist OTHERS PRESENT: None CALL TO ORDER President Mundt called the meeting to order at 5:02 p.m. OATH OF OFFICE. None at this time. ROLL CALL President Mundt called roll and declared a quorum was present. COMMUNICATIONS FROM CITIZENS None received. AGENDA ITEMS 1. ELECTION – nomination and election of officers for 2019. Noah Mundt was nominated as President. Kevin Boudreau was nominated as Vice-President. John Wilcock was nominated as Secretary-Treasurer.  Town of Gilbert AZ Water Resources MPC January 28, 2019 Page 2 of 6 A MOTION was made by Secretary-Treasurer Scienza seconded by Director Safsten for the above nominations. Motion carried 5 – 0 2. MINUTES – consider approval of the minutes of the meeting of April 2, 2018. A MOTION was made by Director Safsten and seconded by Director Scienza to approve the minutes of the meeting of April 2, 2018. Motion carried 5-0. 3. CAPITAL PROJECTS – status report on capital projects. CIP Supervisor Jensen introduced herself and started a presentation of the expansion project at GWRP with a Google aerial photo of the facility before the start of construction and one to date. She proceeded to review all current construction activity at GWRP. Jointly owned by the Town of Gilbert, Queen Creek and the City of Mesa, with Mesa acting as lead agent, CIP Supervisor Jensen explained that the purpose of the current expansion project (WW0750) at GWRP, from Gilbert’s perspective, is to add capacity. At present, the facility treats 16mgd. After completion of Phase III, the facility’s capacity will be almost doubled at 30mgd. However, CIP Supervisor Jensen cautioned that the biggest challenge in using the mgd number is that it refers to the liquid flow coming into the plant, but does not fully address the number of pounds of solids entering the plant, which was one of the most important driving factors for the expansion. Individually by the end of Phase III, Gilbert will go from 8mgd to 12mgd with their ownership of the plant going from 50% to 40%. Mesa will be increasing from 4mgd to 14mgd with their ownership going from 25% to 46.7%. Queen Creek opted not to add any new flow capacity so they will stay at 4mgd with a 13.3% ownership. Queen Creek is, however, still participating in the project in order to get additional solids capacity over the original design of the facility. CIP Supervisor Jensen explained that buildout ownership capacity is currently following the 2004 IGA, but as each municipality completes their individual water resources master plans and identifies long- term needs, the final numbers could shift slightly. CIP Supervisor Jensen reviewed all the partners and contractors involved in the project. The design and construction management is being handled by Carollo. The subcontractor is Brown & Caldwell, and the CM@R is McCarthy. Construction is on schedule with final completion slated for September or October of 2020. CIP Supervisor Jensen went over the GWRP Phase III Expansion timeline, noting that there are no dates listed after March of 2018, when the bond was issued, because the project after that date was technically in construction. CIP Supervisor Jensen stated that the GWRP Phase III Expansion, totaling approximately $71 million, is technically two projects, WW0750 and WW1140, from two funding sources, WRMPC Bonds in the amount of $50.4 million and Wastewater Replacement Fund in the amount of $20.6 million.  Town of Gilbert AZ Water Resources MPC January 28, 2019 Page 3 of 6 CIP Supervisor Jensen spent some time showing photos and explaining in detail the current construction projects taking place at GWRP. She explained that GMP1 handled the mobilization of the contractor and mass excavation of the dirt and soil. Currently the project is in GMP2 with work being done on the headworks facility decking, aeration basin and filter complex, secondaries, digesters, and primary clarifier. CIP Supervisor Jensen asked if there were any questions about the Greenfield Plant before she moved onto the update on the Santan Vista WTP Expansion. There were no questions. CIP Supervisor Jensen gave an overview of the Phase II expansion at the Santan Vista WTP (WA0700). She said the project was functionally complete as of April 2018. The project expanded the facility from its original capacity of 24mgd to 48mgd, while maintaining the flow split of 50/50 between Chandler and Gilbert. The Phase II expansion represents buildout, and no additional expansions are anticipated at this time. The project was completed on schedule and under budget. Construction was intended to be twenty months with substantial completion on February 23, 2018. Substantial completion means the first day water was made at the facility. April 24, 2018 was the official final completion date. While ownership of the facility is 50/50, cost participation was not. Most of the difference was due to the cost affiliated with actual construction. Costs on professional services, design and construction management was split 50/50, but Gilbert carried the cost of the project manager, a new 6mg reservoir on the site and their different sized surge system. Overall, about 93% of full project budget was spent. The remaining funds will be used to address an issue that has arisen due to the plant expansion. CIP Supervisor Jensen explained that one of the challenges discovered last summer was that the increased flow rate coming into the plant has a hydraulic influence on the entire width of the canal, not just the first couple feet. This means that a naturally occurring endemic single cell algae species, called rock snot that attaches itself to rock surfaces under the water, has flourished and is becoming an operational challenge. To solve this issue, the remaining project funds will be used to make modifications to the current well-water strainers in order to better accommodate the new water flow conditions. It is anticipated that by the fall of 2019, the new strainers will be in place, and there is no anticipation that extra funding will be needed to complete the project. Town Engineer Fabiano asked CIP Supervisor Jensen to give an explanation of the operational challenges faced by staff to keep the plant functioning after the rock snot showed up. CIP Supervisor Jensen explained that due to the warmer temperatures rock snot started to show up at the Santan Vista plant in May with its full impact occurring in July. CIP Supervisor Jensen said that there was a one week period last summer where staff had to cut water flow by 80% in order to dismantle and clean the three strainers by hand every 90 minutes 24 hours a day to prevent them from plugging up, causing not only a burden on staff, but also a safety issue due to the size and weight of the strainers. Under normal conditions, strainers are only cleaned once every month to month and a half. The strainers that are being proposed are self-cleaning with a built in backwash system that allows them to wash themselves as they are operating which will eliminate staff need to clean strainers by hand and allow plant capacity to be maintained in July.  Town of Gilbert AZ Water Resources MPC January 28, 2019 Page 4 of 6 President Mundt asked if new self-cleaning strainers are adapted to this type of organism. CIP Supervisor Jensen replied that Apache Junction can be thanked for having already installed a 1mgd version of the self-cleaning strainer and piloting it last summer. They were able to stay online at full capacity and are on the same watershed as Gilbert. As a result, Apache Junction’s experience greatly influenced Gilbert’s design process and decision to use a perforated screen to limit the algae’s ability to attach itself to the screen. The screen is being designed and manufactured in the United States in order to reduce time in the supply chain if the straining basket needs to be replaced in the future. To CIP Supervisor Jensen’s knowledge, Gilbert is the first water utility that is actively managing rock snot, with the exception of Apache Junction, in Arizona. In closing, CIP Supervisor Jensen mentioned that Santan Vista WTP has won two awards. They won Arizona’s Water Associations Water Treatment Plant Project of the Year and were one of the top projects listed in Water and Waste Digest. Councilmember Taylor asked if full impact on the FTE will be known after fall of 2019. CIP Supervisor Jensen stated that the FTEs were included in the renegotiated IGA for Santan WTP so she believes that decision was made as a function of the facility expansion, so not expecting any additional need in regards to maintaining the strainers. Secretary-Treasurer Wilcock asked if Gilbert can go back to CAP and ask that they manage the rock snot algae. CIP Supervisor Jensen said that staff did attend the quarterly Central Arizona Project Users Meeting and were informed that there is nothing CAP can do about rock snot as there is limited technology in regards to controlling this algae species. In essence, this is an environment in which rock snot thrives and physically scraping a lake is not realistic. CIP Supervisor Jensen asked if there were any other questions. There were none. She invited board members to take a tour of the facility. Staff will arrange date and time for a tour. 4. ANNUAL REPORT – Consider approval of the annual financial report. Accounting Supervisor St. George briefly went over the financial report. For comparison purposes, there were two sets of financial statements provided in the agenda packet, one as of June 30, 2018 and one as of December 31, 2018. Each set included a Statement of Net Position and a Statement of Revenues, Expenses, and Changes in Net Position. Essentially, the Statement of Net Position is the balance sheet for the Corporation. It shows the fund balance of assets and liabilities and is a good indicator of how the Corporation is doing at a specific point and time. The Statement of Revenues, Expenses, and Changes in Net Position, which is equivalent to an income statement for the fiscal year, shows the Corporation’s revenues and expenses. These financial statements allow one to see the data for the Corporation in total. At the end of each financial statement, there is a report showing the individual issuances and their activity separate from the corporation as a whole. Accounting Supervisor St. George asked if there were any questions.  Town of Gilbert AZ Water Resources MPC January 28, 2019 Page 5 of 6 Vice President Boudreau asked about the allocation of cash balances between the unfunded portion of construction and what was collected from impact fees. Budget Director Kelly answered that a portion was from bond issuance, which was enough to cover Santan WTP and also WA062. CIP Supervisor Jensen said that the Santan WTP portion of the issuance has approximately $4.8 million in total unspent funds, but we only expecting to spend $3.5 million. Accounting Supervisor St. George pointed out that restricted cash and investments are described in the footnotes on the bottom of page three of each financial statement. Secretary-Treasurer Wilcock asked about Gilbert’s credit rating. Budget Director Kelly stated that Gilbert has a AAA rating. President Mundt asked about depreciation expenses for Greenfield WRP. Accounting Supervisor St. George stated that depreciation does not begin until project is complete. Vice President Boudreau reminded President Mundt that once bonds are paid off the asset is turned over to the Town. A MOTION was made by Vice President Boudreau seconded by Director Scienza to approve annual financial report as written. Motion carried 5 - 0 FUTURE AGENDA ITEMS/MEETINGS: 5. Identify future agenda items None at this time. COMMUNICATIONS 6. From the PRESIDENT on current events. None. 7. From the BOARDMEMBERS on current events. None. 8. From the COUNCIL LIAISON on current events. None. 9. From STAFF on current events. None. ADJOURN  Town of Gilbert AZ Water Resources MPC January 28, 2019 Page 6 of 6 A MOTION was made by Vice President Boudreau, seconded by Director Scienza to adjourn the meeting. Motion carried 5-0. The meeting was adjourned at 5:46 p.m. ATTEST: ___________________________ ________________________________ Noah Mundt, President John Wilcock, Secretary-Treasurer CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the bond meeting of the Town of Gilbert Arizona Water Resources Municipal Property Corporation was held on the 28th day of January 2019. I further certify that the meeting was duly called and held and that a quorum was present. Dated this __ day of _____________, 2020. ___________________________________ John Wilcock, Secretary-Treasurer