Water & Sewer Committee

Sammy Rich, City Manager Mike Hackett, Director John Boyd, Assistant Director WATER AND SEWER DIVISION Customer Service Department Bryan Parris, Director Operations Department Brandon M. Cook, Director Water Reclamation Facilities Jeff Hill, Director Water Treatment Facilities Wayne Stanley, Director WATER AND SEWER COMMITTEE MEETING City Hall, 601 Broad Street, Sam King Room Thursday, October 5, 2023 9:00 AM PRESENT: Chairperson Jim Bojo Commissioner Craig McDaniel Commissioner Elaina Beeman Mr. Sammy Rich, City Manager Mrs. Meredith Ulmer, Assistant City Manager Mrs. Toni Rhinehart, Finance Director Mr. Doug Walker, Public Information Officer Mr. John Boyd, Assistant Division Director Mr. Bryan Parris, Customer Service Director Mr. Wayne Stanley, Water Treatment Facilities Director Mr. Jeff Pope, Assistant Water Treatment Facilities Director VISITORS: David Crowder WRGA News Multiple citizens present CALL TO ORDER Chairperson Jim Bojo welcomed everyone and called the meeting to order. REVIEW OF THE MINUTES No changes to the September 7, 2023, minutes were suggested, and minutes were approved by common consent. FINANCIAL REPORT Minutes prepared by: Bryan Parris, Customer Service Director Water and Sewer Committee/ Commission Minutes, September 7, 2023 Page 1 of 4 Mrs. Rhinehart reported August revenues were up around $1.7 million from this time last year and above budget at this point. About $1.5 million of that is from the rate increase in effect from January 1st to September 1 st. Interest income in comparison is up $1.6 million due to the large deposit from legal settlement and we are earning a little over 5.2% interest. Total revenues are up about $3.5 million. Expenses are pretty much right at or below budget so not really anything much to discuss, total expenses are up about $1.1 million from last year but just slightly above budget and is most likely just a timing issue with equipment and supplies at this point in the year. Transfers out is up about $2.7 million primarily due to engineering, WTP upgrades and the meter change out program that we didn’t have at this point last year. Cash and bond coverage, we have very little debt right now, so bond coverage is extremely healthy at 31, that is with taking out the settlement money to make it more operating revenues and represent where we stand now. The cash balance is $179 million but $154 million of that is the settlement money so really, we are at $24.8 million. OLD BUSINESS None NEW BUSINESS Rate Study Proposal Mr. Boyd presented a 2023 rate study proposal to the committee saying it is recommended that we postpone the 2023 rate study to 2024 and extend the savings to our customers resulting from the rate rollback in September. He also added the interest we are earning will offset the delay in any rate increase for the next 12 months. Mr. Boyd recommended we begin the rate study for 2025 in the summer of 2024 and in addition to evaluating water and sewer rates that we also include commercial meter installations as these have not been evaluated in several years and cost have increased considerably. The Committee agreed. Chulio Hills Sewer Mr. Hackett recapped previous discussions of the Chulio Hills Sewer Project. Beginning with the project details at an estimated project cost of $5 million for approximately 9,500 feet of 8” Pipe (SDR – 26), approximately 50 Manholes, and 5,000 feet for service laterals. The project completion time is estimated at 1.5 years. The population served would be 65 lots including Shady Lane but excluded Jewel Point. Only 40 of those lots would be serviceable, 29 City / 11 County, five vacant lots with two currently for sale. Cost per account comes to $125,000.00 and does not include tap fees or private pluming expenses. With an average monthly bill of $65.00 there would be a 160-year payback period and a negative ROI due to the 160 years being more than twice the manufacturing recommended replacement. These figures are also based on 100% participation from 40 accounts and a full bill applied to the original capital cost with none going to operational cost. Mr. Hackett also offered the following context: In approximately 1984, City representatives, including newly appointed City Manager John Bennett met with the Chulio Hills Community at one of its Community Churches. The purpose of the meeting was to discuss improvements needed for roads, water and to provide sewer. The Community asserts that an agreement was made whereby the residents would annex into the city. And the City would make improvements requested, but sewer was not available, and the issue was discussed. The Community asserts that John Bennett stated that as the Highway 411 corridor developed, sewer became available in the area. The sewer could be extended to serve the Chulio Hills Community. Minutes prepared by: Bryan Parris, Customer Service Director Water and Sewer Committee/ Commission Minutes, September 7, 2023 Page 2 of 4 Former City Manager John Bennett asserts that Sewer was discussed but no promise was made that it would be extended. Records research has not produced any meeting or asserted commitment documents. In the 1990’s a Sewer extension from the Turner Chapel area to HWY 411 Near the bypass was constructed. The construction included a large diameter pipe, a lift station, and river crossing that would easily cost $15 Million or more today. This project was meant to encourage development in the Hwy 411 corridor but has remained largely underutilized for the past 30 years. Walmart has been the only substantial addition to the system. Mr. Hackett urged the Committee to make the following considerations: Since 2003 any community or developer requesting sewer by the city has been categorically denied. Liability with past developers who lost projects and those who funded sewer extensions. Liability for knowingly choosing to fund an unsustainable Payback or negative ROI Project. It seems a project of this size would have at least been presented to the commission and possibly required approval. It seems that a binding promise made at the meeting could have been misinformed or in legal excess of authority. This should be referred to legal counsel. Can past City Managers or Commissioners bind present and future Commissions by written or verbal Agreements/Commitments? This also should be referred to legal counsel. Breach: If an agreement indeed exists, it appears to currently be in Breach by both parties. The city has only completed 70% of the Sewer and the Community has only annexed 72% of severable lots. Hackett concluded with: The project cannot provide the Payback/ROI to be considered for funding by the RWSD or the City. If the situation cannot be finalized by the Commission. Further Action may be better suited for The Courts to determine the actual responsibilities and the legitimacy of the “Agreement/Commitment.” Project Progression? Should be by Commission approved written contract. Whereby the City will place the funds in escrow to complete the project. All 40 Community accounts will annex into the city and place $8000 in escrow for turn-key connections to be implemented after construction. No single party buy-outs should be allowed. The project should not begin until the full Community Commitment has been made to escrow. Commissioner McDaniel stated on two separate occasions Mr. Bennett assured him he did not promise sewer service. McDaniel summarized, we don’t make those promises and if we start doing it now, we are going to get lawsuits from every developer that has ever had to pay for an extension. The city does not do these kinds of extensions, in the past all other developers have paid for these extensions and in his opinion, this was not a topic for further discussion. Chairperson Bojo said he also spoke with Mr. Bennett and was told there were no commitments made by either side. Preparing for an R.O. Future Mr. Hackett presented the newest design sketch of the new RO plant showing some changes added to improve efficiency and reduce overall cost. Chairperson Bojo said the one concern he is hearing the most about is the location and appearance, saying this is prime real estate of great value. Mr. Hackett agreed and added water service is very important and both he and Mr. Rich assured everyone this facility as the most expensive piece of infrastructure we have and will be visually pleasing having more of a nice office building appearance with landscaping and berms to hide the large tanks. Minutes prepared by: Bryan Parris, Customer Service Director Water and Sewer Committee/ Commission Minutes, September 7, 2023 Page 3 of 4 Commissioner McDaniel asked what would happen to the existing treatment structure? Mr. Hackett said he would be covering that shortly, but we would continue to use it. Mr. Hackett and Mr. Stanley updated the committee on the considerations we need to focus on as we are preparing for a Reverse Osmosis future. Mentioning 30% design pricing will be available for the November meeting and 100% design pricing will be available Summer/Fall of 2024 with a completion date in 2026. Hackett showed the current WTF Organizational Structure saying we will need to restructure the New ROWTF adding additional personnel bringing it more in line with the current WRF Organizational Structure which would include creating Maintenance and Lab Supervisor positions, increase WTF Personnel from 14 to 21. Budget addition of approximately $400K per year. The original estimated operational increase by Insite Engineering was $3 million annually. Hackett and Stanley emphasized how critical and how difficult it was for the department to attract, train, and retain qualified personnel for these positions. Hackett stated initially we expect full operation to be over a period of 6 months from 1 MGD to full operational demand. This will not be possible at current staffing levels. For the transition period both plants will have to be operated simultaneously. It will take two years at least to acquire, train, and attain licensure for the plant needs. 7 Additional personnel will be needed at a minimum but 10 is more likely the right number. It will be important for the new personnel that ultimately stay to be a part of the construction process and start up training. Chairperson Bojo questioned was there were funds in the lawsuit to cover the additional personnel expenses? Mr. Hackett said originally there was going to be but since we reached a settlement, and it did not go to court it was just a lump sum. OTHER Members of the Committee thanked Mr. Hackett for all his efforts and accomplishments over the past twenty years in making the Water and Sewer Division something that we are all proud of and wished him the best in his new position. Adjourn There being no further business to discuss the meeting was adjourned. Respectfully submitted. John Boyd, Assistant Director Rome Water and Sewer Division Minutes prepared by: Bryan Parris, Customer Service Director Water and Sewer Committee/ Commission Minutes, September 7, 2023 Page 4 of 4