Water Resources Municipal Property Corporation

MINUTES OF THE BOARD OF DIRECTORS OF THE TOWN OF GILBERT, ARIZONA WATER RESOURCES MUNICIPAL PROPERTY CORPORATION MEETING, WEDNESDAY, FEBRUARY 15, 2023 AT 2:00 P.M., VIRTUAL MEETING, GILBERT, ARIZONA BOARD MEMBERS PRESENT: President Kevin Boudreau Vice President Nicholas Macaluso Secretary-Treasurer John Dalen Wilcock Director Shane Cook Director James Graham BOARD MEMBERS ABSENT: None COUNCIL LIAISON PRESENT: Councilmember Scott Anderson TOWN STAFF PRESENT: Kelly Pfost, Management and Budget Director Susanna Struble, Assistant Town Engineer Hakon Johnson, Finance Management Services Director Jeanne Jensen, Capital Improvement Projects (CIP) Project Supervisor Emily Harmon, Accountant III Nicholas Baldelli, FM Services Accounting Supervisor Rachel Shaver, Management and Budget Specialist OTHERS PRESENT: Clint Sundt, Vice President of Sundt Construction Jon Westervelt, National Operations Manager of Kennedy Jenks CALL TO ORDER President Kevin Boudreau called the meeting to order at 2:03p.m. OATHS OF OFFICE President Kevin Boudreau announced the new and returning board members and welcomed them to the board. Councilmember Scott Anderson gave the Oath of Office to new board member, Shane Cook and returning board members, Kevin Boudreau and John Dalen Wilcock. ROLL CALL Management and Budget Specialist Rachel Shaver called roll and declared a quorum was present. COMMUNICATIONS FROM CITIZENS None received.  Town of Gilbert AZ Water Resources MPC February 15, 2023 Page 2 of 6 AGENDA ITEMS 1. WELCOME AND INTRODUCTION TO MUNICIPAL PROPERTY CORPORATION (MPC) President Kevin Boudreau welcomed those in attendance. For the benefit of the new member, Management and Budget Director Kelly Pfost gave a quick overview of the purpose and function of the Water Resources Municipal Property Corporation (WRMPC). Director Pfost explained that we have the WRMPC and the PFMPC, both of which are run by independent citizens that are appointed by Council. They operate as a mechanism for the Town to be able to issue debt when it is appropriate. The boards help decide when that time is appropriate and for the projects that are needed. If the debt is approved both by the board and Council, a bond will be put in place. The Town gives a lease payment to the MPC board and the board is then responsible to pay that debt each year. Once all of the debt is repaid, the ownership transfers over to the Town. Even though there is little debt associated with this area, it is a helpful part of creating infrastructure that the town needs to provide services. Nicholas Macaluso joined the meeting at 2:09pm. 2. ELECTION – Consider nomination and election of officers for 2023. Shane Cook volunteered as President, Nicholas Macaluso volunteered to continue as Vice President, and Kevin Boudreau volunteered as Secretary-Treasurer. A MOTION was made by President Kevin Boudreau and seconded by Director Shane Cook for the above nominations. Motion carried 5 - 0 3. MINUTES – Consider approval of the minutes of the meeting of April 25, 2022 as well as the meeting of June 9, 2022. A MOTION was made by President Shane Cook and seconded by Director James Graham to approve the minutes of the meetings held on April 25, 2022 and June 9, 2022 as written. Motion carried 5 - 0 4. REVISION TO THE WATER RESOURCES BYLAWS – Review and consider the updated PFMPC Bylaws for approval before ratification by Town Council. Management and Budget Director Kelly Pfost gave an overview of the revisions needed to the WRMPC Bylaws. Corrections to the address of Town Hall (previously listed as the address for the chamber building) as well as grammar and typographical edits were needed. An update was also made to indicate notice of meetings is given by the Town Manager (or designee) and removes the need for notifying officers of meetings via certified mail or other avenues. Remaining revisions include updates to Officer duties that reflect current responsibilities, and language added to allow for a director to temporarily fill duties of an officer on a pro tempore basis if the officer is temporarily unavailable.  Town of Gilbert AZ Water Resources MPC February 15, 2023 Page 3 of 6 A MOTION was made by President Shane Cook and seconded by Secretary-Treasurer Kevin Boudreau to pass the new bylaws as suggested. Motion carried 5 - 0 5. CAPITAL PROJECTS – Status Report CIP Project Supervisor, Jeanne Jensen, gave an update on the North Water Treatment Plant (NWTP) as well as the well program that will be supported with the new bond money. Supervisor Jensen first addressed the Colorado River supply and explained that CIP is working closely with the Water Utilities division and Water Resources team to identify projects that will allow us to ensure that the shortage of the river does not result in a shortage off the top (to the Town). Jensen then addressed the key factors of the NWTP project along with a visual presentation, which is included in the WRMPC Agenda Packet for February 15, 2023. The NWTP, located at the corner of Higley and Guadalupe, serves about 150,000 residents and will serve about 250,000 residents at buildout. This plant is an important part of our distribution system and our ability to provide safe and reliable water. The facility was designed in such a way that no longer meets the service requirements, and now requires a substantial investment. The bond approval for this investment was facilitated by the WRMPC and is a continued effort for the Town. Time is of the essence with the water shortage; however, this facility being served by SRP (not the Colorado River) makes it more robust and resilient. The project team has been working together since the summer of 2020 with the focus of common alignment on project goals, knowing the importance of being good stewards of the public’s dollar, using safe reliable water, and being proactive with communication. The project broke ground on March 1, 2022 and is on schedule for completion of GMP #1. It is being constructed in multiple phases to allow for design to come to maturity and the contractor to begin working, so that by the time they finish that phase of work, the next design package is available. This helps maintain an efficient schedule as well as good use of the Town’s dollars. The project is currently on budget, with GMP #1 being estimated at 18 million and contract work in progress. Any remaining dollars from the first package will then be rolled into the next package and so on until the completion of all packages. GMP #2 consists strictly of procurement and was approved by Council in June 2022, with no budget changes anticipated. GMP #3 received 90% drawings from the design team on January 31, 2023 and the contractor will be working to price those into a guaranteed maximum price (GMP) package. This package will take around 3 years to complete, as it includes the construction of the majority of the treatment complex and is anticipated to be presented to Council in June 2023. GMP #4 (granulated activated carbon facility) will likely go before Council in the fall of 2023 and includes the construction of the large water polishing facility. GMP #5 is the last package, which involves the demolition of any facilities on site that are no longer in use or can no longer be safely maintained in place. There is yet to be a specific date on GMP #5 as it is dependent on the rest of the construction being complete. Once GMP #5 is complete, the presedimentation structures will go up where the existing treatment plant sits currently, so that the space is used efficiently. Secretary-Treasurer Kevin Boudreau asked if Supervisor Jensen had a figure of the dollar amount given to each phase from the WRMPC bond. Jensen explained that an upcoming slide would lay out the budget amounts specifically.  Town of Gilbert AZ Water Resources MPC February 15, 2023 Page 4 of 6 Supervisor Jensen went through the budget, showing that the original cost model for GMP #3 came in at $322 million, which was higher than anticipated. Council approved a 120 day stand down where VE efforts were utilized to identify sufficient savings, bringing the package down to $295 million. The amounts broken down for each package are as follows: GMP #1 – $23.8 million, GMP #2 – $15.8 million, GMP #3 – $295 million, GMP #4 – $80 million, and GMP #5 – $65 million. Vice President Nicholas Macaluso asked for clarification on the amounts for packages four and five. Supervisor Jensen gave the amounts of about $80 million for package four and about $65 for package five. 6. ANNUAL REPORT – Approval of the annual financial report. Finance and Management Services Accounting Supervisor Nicholas Baldelli briefly reviewed the annual financial report dated June 30, 2022 and the interim report dated December 31, 2022. The report dated June 30, 2022 contains financial statements from July 1, 2021 through June 30, 2022, which is referred to as fiscal year 2022. The statement and deposition (balance sheet) offers a consolidated view of all the issuances together and then progresses into each issue for each infrastructure type. The balance sheet is comprised mainly of cash investments, either for restricted or scheduled debt service payments, with the transfers in from the Town made up of bond proceeds. A large increase is shown of restricted cash from investments made primarily of the new 2022 water bonds that were issued. Also shown are capital assets and CIP, ranked by the bond proceeds for charges which are amortized over the life of the debt until the debt is paid off. The new issuance is shown on this statement, with roughly 582 million and a AAA rating on the MPC bonds. Supervisor Baldelli moved on to the statement of revenues expenses and changes in net position (consolidated balance sheet), comprised mainly of lease payments that will be transfers in from the Town for paying for the required service payments as they come due. He explained that it is important to note that repayment of debt principal is recorded as a reduction for liability on the balance sheet directly, so it doesn’t show as an expense. Also, bond issuance costs are specific to when new bonds are issued, which are currently present. Mr. Baldelli then gave a quick overview of what the statement and deposition looks like for each individual type of infrastructure. Secretary-Treasurer Kevin Boudreau inquired regarding footnote D, referencing unspent bond proceeds, and asked if there were not plans to spend that portion. Supervisor Baldelli explained that there are plans to spend that portion, but those funds have not been spent as the fund payments have yet to be scheduled. Secretary-Treasurer Boudreau then clarified that he was referencing the wastewater side and asked if the answer was still the same due to construction still needing to be done. Director Kelly Pfost explained that yes, construction is still in process and the funds will be spent out as soon as it is finished. Mr. Baldelli moved on to the summary, explaining that it is broken out for each issuance on the PML side. There are payables on the balance sheet, which are mostly timing differences, but show the debt payments scheduled to be paid on July 1, 2022. After that, there is not a lot of movement in cash because as we spend down those scheduled debt payments and interest,  Town of Gilbert AZ Water Resources MPC February 15, 2023 Page 5 of 6 we also get revenue in to cover that as well. Even though this is a summary through December 31, 2022, we did make our regular scheduled payments on January 1 and January 15, 2023, which were interest only portions of the payments. Moving down to the construction costs, we can see the different capital projects and what we have spent, mainly 13 million on the NWTP for the first six months of the fiscal year. Also included are deliverables of bond payment schedules for different projects that were budgeted, including what has been spent in prior years and what has been set aside for 2023. President Shane Cook asked if the other directors had any questions and entertained a motion to approve the annual financial report as written. The MOTION was seconded by Director James Graham. Motion carried 5 – 0. FUTURE AGENDA ITEMS/MEETINGS: President Cook stated there were no future agenda items to discuss. COMMUNICATIONS From the PRESIDENT on current events. None. From the BOARDMEMBERS on current events. None. From the COUNCIL LIAISON on current events. Councilmember Scott Anderson congratulated the new WRMPC members and thanked Secretary-Treasurer Kevin Boudreau for his years of service. He also addressed President Shane Cook, stating that he looks forward to his leadership. Considering the water shortages and issues at hand, Councilmember Anderson appreciates the diligence in helping the Town through this time. President Shane Cook thanked Mr. Anderson and added that, as a realtor, he understands that water is at the top of everyone’s minds and appreciates the work of the Town and the effort that is put forward. From STAFF on current events. Management and Budget Director Pfost also thanked the board for their efforts. Director Pfost also added that we are not planning to issue any additional WRMPC bonds this year and will plan to meet again in February 2024. ADJOURN President Cook thanked the board and adjourned the meeting.  Town of Gilbert AZ Water Resources MPC February 15, 2023 Page 6 of 6 The meeting was adjourned at 3:03 p.m. ATTEST: ___________________________ ________________________________ Shane Cook, President Kevin Boudreau, 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 15th day of February 2023. I further certify that the meeting was duly called and held and that a quorum was present. Dated this __ day of _____________, ______. ___________________________________ Kevin Boudreau, Secretary-Treasurer