Morgantown Utility Board

MINUTES OF THE MORGANTOWN UTILITY BOARD November 10, 2020 Due to the Coronavirus Pandemic, West Virginia Governor Jim Justice issued, on March 23, 2020, restrictions on nonessential business operations and a ‘stay at home order’ across our state. The meeting of the Morgantown Utility Board was held by video conference at 5:30 P.M., Tuesday, November 10, 2020. Present by video conference were Board Chairman Straface and Members Cayton, Kunz and Parsons. Board Member Witt joined the meeting at 5:33 P.M., following approval of the Minutes. Staff also present by video conference were General Manager Ball, Deputy General Manager McNulty, Assistant General Manager Fetty, Comptroller Osborne, and Attorney Ray. The meeting was broadcast live across several internet-based outlets. Public participation and comments were accommodated by invitation for advance submission of comments by mail, email, and telephone. Chairman Straface called the meeting to order. It was moved by Ms. Parsons to approve the minutes for the Regular Meeting of October 21, 2020, as submitted. The motion was seconded by Ms. Cayton and passed unanimously (4-0). Public Portion: • The public was invited to participate in the meeting with comments submitted in advance to the Morgantown Utility Board, no later than 4:00 P.M., the day of the meeting. Mr. Ball reported that no public comments were received. New Business: • Cost of Living Adjustment: Manager Ball stated that when the FY 20-21 budget was approved, we did not provide the customary annual cost of living adjustment (COLA), due to concerns regarding the budgetary impacts of COVID 19. We promised the employees that the COLA might be reconsidered later if circumstances allowed. While we did suffer a one-time loss of revenues when sales reduced during the economic shutdown, demands and revenues have returned to near normal levels since June. Manager Ball recommends that MUB provide a 3% increase, effective January 1, 2021, for all employees on payroll on July 1, 2020. Mr. Ball explained that the raise would not be retro-active. Chairman Straface asked how we see this going forward with the budget. Manager Ball responded, assuming the year long delayed inflationary rate increase is approved when submitted to City Council in early 2021, then there should be no problems looking forward. If the rate increase is not approved, then it would become a budgeted expense which could be offset to some degree by managing expenditures more aggressively. It was moved by Ms. Cayton to approve an “across the board” pay increase of 3%, effective January 1, 2021; and applying to all employees who were on the payroll on July 1, 2020, but not applying to employees hired since that date. The motion was seconded by Ms. Parsons and passed unanimously (5-0). • Approval of IJDC loan and debt service surcharge as funding approach at MIP: Manager Ball informed the Board of a major food processing facility, known as Mountain Top Beverage (MTB), being proposed at Morgantown Industrial Park (MIP). The proposed investment value is approximately $100 million, and, once in operation, it is expected to employ 60-100 persons. This facility is the anchor for which the new Harmony Grove interchange on I-79 is proposed, and those improvements are expected to encourage other new “spin off” investments in other adjacent available areas of the MIP. The proposed MTB facility will consume a large amount of water and sewer service (500 gallons per minute each at full production) and will require substantial improvements in our systems to deliver such service. Those improvements are estimated to be $4.1 million for water, and $3.9 million for sewer. Typically, the improvements are normally the responsibility of the Applicant, and we require that they be paid to MUB in advance of construction. The high initial capital expense of the necessary utility upgrades and extensions threatens the viability of the project. The Owners of MIP have proposed that we utilize IJDC loans to fund the work, and then recover the long-term debt service from the new customers via a debt service surcharge, which would be applied in addition to their normal bills for water and sewer service. Under that proposal, MUB effectively serves merely as a conduit for the loan, and the customers so served repay the loan. Mr. Ball pointed to four previous examples where a debt service surcharge had been used. The subject MTB project at MIP would be the first commercial / industrial application of the approach and brings with it a much higher risk of default of the promised debt service payment by the customers. For that reason, we have insisted that a special “backstop” must be provided to ensure payment of the debt service, and that MUB will not accept the loan risk absent such a “backstop”. All parties agree that a backstop is necessary and reasonable. Manager Ball asked the Board for approval to pursue, in concept, this proposed funding approach to the project, with the necessary backstops in place. He clarified that several subsequent approvals would be necessary before the proposed debt would ever be actually incurred. Chairman Straface stated that, for reasons of a potential or perceived conflict of interest, he would choose to withdraw from participating in this segment of the meeting and at 6:06 P.M. asked Vice-Chair Parsons to preside over the remainder of this topic, so that the Chairman could abstain. Vice-Chair Parsons asked the Board for a motion to pursue the funding concept with the backstop and no commitment to proceed. It was moved by Ms. Kunz to approve the funding approach of using IJDC loans for extension of water and sewer service to the proposed Mountain Top Beverage facility at the Morgantown Industrial Park; with said loans being used to pay costs which are normally the responsibility of the Applicant for service, and to recover said costs by implementation of debt service surcharges which will apply, for the life of said loans, in addition to the normal tariff charges for water and sewer service; with these plans being subject to approval by City Council of Authorizing Ordinances, Bond Ordinances, and Rate Ordinances, for water and sewer respectively; with this approval being contingent upon an irrevocable “backstop” being provided by an appropriate party other than MUB, to ensure that payment of the proposed debt service will be guaranteed without risk to MUB; and further authorizing the General Manger to make the necessary funding applications to IJDC, and presentation/proposal of draft ordinances to City Council, and to  execute all documents related thereto. The motion was seconded by Mr. Witt and approved (4-0), with the Chairman abstaining. Following the vote, Vice-Chair Parsons turned the meeting over to Chairman Straface at 6:09 P.M. Old Business: • Cobun Creek Reservoir Project: Mr. Ball reported that the contractor is well over a year behind schedule, and that a change order addressing that is being negotiated. Placement of concrete walls for the spillway and placement of the ogee weir in the spillway are completed. The contractor is now 51% complete. Manager Ball introduced Assistant General Manager / Chief Engineer Jim Fetty who provided the Board with a detailed virtual tour of the ongoing construction at the Cobun Creek Reservoir, as described above by Manager Ball. The Board was very appreciative to view the progress of the reservoir construction. Manager Ball stated the raw water line has been completed. Reclaim LLC is 60% complete overall with the stream restoration at Fike Run. Reclaim’s stream work and hydroseeding is completed, and they now prepare for the fall / winter shutdown. Manager Ball introduced Assistant General Manager / Chief Engineer Jim Fetty who provided the Board with a detailed virtual tour of the ongoing stream restoration at Fike Run, as described above by Manager Ball. The Board was very appreciative to view the progress of the reservoir construction. • WWTP Project: Mr. Ball reported that the contractor is 94% complete based on contract price. They have recently been least six months behind the original schedule but within budget but have recently submitted a request for a COVID related time extension with a revised estimated completion date of September 28, 2021. A change order addressing the later completion date is being negotiated Major work now underway includes electrical, pumps and piping, and control work for the new digester; mechanical upgrades to the existing activated sludge clarifiers (about 66% complete); upgrades to the existing aeration lines for the activated sludge basins; upgrades to the existing digester pumps and piping; and upgrades to the digester gas handling and heating systems. General Manager’s Report: • General Remarks: COVID 19 continues to dominate much of the attention of our team. Inasmuch as our protocols have not reduced quality of customer service, our COVID protocols will remain in place, for the foreseeable future. • Office Closure: With COVID infections remaining a significant risk in West Virginia and especially in Morgantown, the offices remain closed. All workers, including Office workers, are now required to wear a mask when proper social distancing cannot be achieved.  • Financial Impacts of COVID: The COVID crisis has continued to affect us in the following ways: ▪ Recall that at the peak of the spring shut down our demands were off by 12%. Water demands returned to normal in early June and remained normal for the rest of the summer. Since the start of school in September, demands have been down 3% to 4%, presumably due to the use of virtual instruction for portions of the WVU curriculum. We continue to watch these trends closely. For the last two weeks in October, demand was down only 1.3%. ▪ To date we have received $261,000 in reimbursements from the CARES program and continue to make monthly applications. ▪ The Governor has recently announced a new feature in the State’s CARES program, to assist delinquent customers in paying their past due utility bills. Customers will apply for the relief through their utility, and the utility will include those requests in its monthly grant application. We sent letters inviting about 1800 eligible customers to apply for assistance with only 249 applications received to date, for a total amount of $49,000. We will offer deferred payment plans, or other collection procedures for the non-participants. • BABs Refinance: The refunding of the 2010 Build America Bonds has been completed with the issuance of Series 2020A. Annual savings as a result of this refinance, initially estimated to be $300,000, will actually be in excess of $400,000, saving our customers $8 million dollars over 20 years. Board Issues: • Mr. Witt commended staff on the excellent job providing the multiphasic blood drive at the MUB Annual Health Fair. • Ms. Parson also commented on staff’s excellent job of responding very quickly and resolving issues from wherever they are working. She applauded the excellent customer service. There being no further business to come before the Board, upon a motion by Ms. Parsons seconded by Ms. Kunz and unanimously approved (5-0), the meeting adjourned at 6:38 P.M. J. T. Straface, Chairman Karen Kunz, Secretary