.
>> Okay. Welcome, everybody. We're going to call the May 8
th, 2017 Public Utilities Board meeting to order. It's 9 o'
clock. We're going to start the morning and work session.
So right off the bat, we've got work session agenda A. I
guess Chuck Springer is going to lead us on this.
>> Yeah, Chuck's our finance director, and he's going to
make this presentation for item A and B.
>> Okay. Morning.
>> Morning.
>> I'm sure you spent the weekend reading over the exciting
budget document we put in the packet, but I will go over it
a little bit more.
Of course, I left it on the last slide, so we'll start off
at the beginning.
>> I'm glad you made that picture. I thought that was a gu
illotine.
>> That is the bell that they're putting up by the fire
station. They removed the old bell from the City Hall West
and putting it up, and part of the steel is from the Twin T
owers.
So it's being constructed and put up through the Public Art
Committee.
We're going to start off kind of going over the goals and
accomplishments for the wastewater utility today.
They've completed the design of the Hickory Creek and the
West Peak Flow detention facilities. Those are going out
for bids soon.
Awarded the Pecan Creek Interceptor Phase 4 project for
construction.
They met the TCEQ phosphorus limits. You remember a couple
years ago that was a major budget issue.
They've been meeting those due to the plan improvements and
the additional chemicals they've added.
They continue with their in-house construction and prevent
ive maintenance program, and those costs are lower than
external contracted costs.
They've reduced their sanitary sewer overflow volumes last
year during a wet year, and the compost operation received
the Ron Sigler Award from the Water Environmental
Association of Texas.
In terms of upcoming goals for the upcoming year, to begin
the construction of those two projects, the Hickory Creek
and the West Peak Flow detention facilities, to continue to
meet the EPA administrative orders.
Here's just some of the items that they're doing in order
to continue meeting that administrative order.
Again, the in-house construction and preventive maintenance
costs continue to be lower, and they want to complete an
update of the wastewater master plan during the upcoming
year.
In terms of performance measures and across really the city
organization, we've been looking at updating these.
So we've got the current performance measures of O&M cost
per account and O&M cost per million gallons treated, but
they're looking at additional performance measures to add
in.
The first one, kind of the comparing the compost sales
revenues plus the cost avoidance, be able to use that sl
udge instead of having to dispose of it, compared to the
cost of that operation.
A goal for sanitary sewer overflows less than three per
hundred miles of sewer lines.
Again, to continue to maintain their cost comparisons
between their in-house services for items such as sewer
line cleaning, their closed circuit television monitoring
of the lines and construction,
just to continue to compare those against doing that
externally.
And then the sewer main chokes less than one per 1,000
customers.
And you can see the last three years where they've been in
terms of that goal.
Another emphasis this year is on cost containment
strategies.
You'll see some of these numbers reflected when I get to
the detail in the budget.
But in terms of what they are, they've eliminated some FTEs
.
The departmental reorganization in terms of administration.
The savings of about 40,000 in terms of how administration
been reorganized.
In terms of the elimination of the FTEs, it was really one
supervisor and one administrative intern that was
eliminated.
They had a supervisor that's now over both construction
maintenance, one over that in the flushing crew.
In terms of from the O&M budget, really did an exercise
where they went through line item by line item within the
divisions to look at historically what have we been
spending in these line items versus what we have budgeted.
So you see a reduction from the budget in the current year
to the proposed budget of about 255,000.
And those are the major areas that those reductions came
through.
But there are also other line items.
We made some changes in terms of their timing of their debt
service sale to balance against when they're spending the
funds.
Trying to just incur the debt closer to when the projects
are starting.
This year we're not selling for the waste water.
We're carrying that sale of 6 million over to next year
because we have the cash balances within that fund.
The CEO fund to cover the projects for this year.
So by just kind of matching that a little bit better, we're
able to lower the debt service going forward.
Another item, and I'll show this a little closer in future
slides, but we've kind of leveled the revenue funded
capital out.
Historically, as they've budgeted the projects, then they
've budgeted the revenue funded capital.
But what we've tried to look at is leveling that out over
the five year period versus the peaks and valleys.
We do have cash available in that revenue capital funded or
that revenue capital fund.
Currently there's about 13 million that's budgeted but unex
pended and not encumbered.
So we feel like we have a large enough cash balance in
there to level that out over the five years versus the
peaks and valleys.
And I'll kind of show that when I show the five year
summary.
Their maintenance and operation program resulted in what
the PUB is very familiar with in rescinding the EPA consent
decree.
And estimated savings is about 100 million in terms of a
reduced capital program.
One of the reasons this is here is I think we need to
highlight it for the city council.
They will also get this presentation and a lot of them were
not here when we were going through that process.
So I think that's something important to highlight.
So the total reductions from all these changes would equate
to about a 2.4% rate increase.
So we're proposing no rate increase for this year, so we've
been able to reduce that.
In terms of process improvements within the fund, they
continue to refine their conditions assessments and life
cycle assumptions for their waste water assets.
And they performed a lean improvement program this year
where they approved the information amongst departments for
construction plan information.
There's different departments within the city that handle
the construction plans.
And they really looked at a process so they could get the
information they needed for their permanent files on a
timely basis and also make sure it all came through
correctly.
In terms of future process improvements that the fund is
looking at,
looking at a criticality ranking for the plant and lift
station equipment, equipment reliability analysis,
just trying to determine what's most important, what do we
need to keep track of more, what might need to be replaced
more often because of that ranking.
They're looking to create workflow charts of all the
critical plant activities, improve the work order data with
City Works,
and just to continually improve the asset management
program.
In terms of future risks and how to mitigate those risks,
one of the risks really across the city and across the
Metroplex is just increased contractor costs for CIP
projects.
A lot of this is driven by the economy and the Metroplex.
If you drive around, I was driving out through Dallas one
day trying to count all the cranes along the way and I lost
count at some point.
It's just amazing how much activity is going on.
But that kind of demand drives up cost.
There's discussions, nothing's been set,
but there's some discussion starting about setting
discharge limits for sulfate and chlorides that come out of
the wastewater treatment plant.
If this were to occur, it would be some additional cost in
order to, one, monitor to that and two, to control that.
And they're currently testing their discharge to see where
they're at.
O&M cost, again, trying to mitigate those by refining their
forecast and their asset management program
and additional regulatory requirements that could come
forward that we're not even aware of.
In terms of assumptions for the budget, all the rates are
based on cost of service.
The goal is at least a minimum debt service coverage ratio
of 1.25, but striving for much better than that.
The annual revenue funded capital is based on the asset
management program.
Collection and those goals are the collection system
replacement is 100% revenue funded and treatment plant
infrastructure is 25% revenue funded and 75% debt.
So with the five year leveling out, they are still meeting
those revenue funding goals.
Reserves the goal is 100 to 140 days and again, use long
term planning to try to minimize customer rate impacts.
This is a summary of the budget in terms of revenues for
the wastewater utility.
I just want to highlight a couple things on here.
And this just really takes into account for 17, 18, just
regular growth.
There's no rate increases proposed in here, but regular
growth.
But one of the items you can see that use of reserves in 16
, 17 that was budgeted at 4 million, 3.
If you remember, we did a refunding of the revenue debt,
outstanding revenue debt.
And across the three utilities, we're able to free up funds
from reserve funds that were required and some other cash
funds that were required by those revenue bonds.
And so we planned a use of reserves about 4.4 million came
into the wastewater utility.
We plan to transfer all that over to revenue funded capital
.
You can see they're estimating a little bit less this year
in terms of a transfer.
But when you look at the projection for 17, 18, the draw
down of fund balance is really the remainder of that
transfer.
And I'll show that on the next slide.
And here we have the proposed expenditures.
And you can see in terms of changes, there's increases in
personnel services.
A slight increase in materials and supplies from the
estimate, but below the budget.
A portion of that is due to they're really estimating what
kind of chemicals they would need for the phosphorus limits
.
They've been able to get a better handle on what's going to
be necessary with that.
And you can see the major difference is that transfer for
capital projects because we had the one time larger
transfer.
And you see the reduction of two personnel positions or
excuse me, one and a half personnel positions.
So this is kind of the baseline for all of the funds in the
city this year.
The baseline, which is kind of no rate increases over the
five year period.
And I pointed out this drawdown here, about 800,000 in
terms of a drawdown.
Again, we had that planned use of reserves about 4.3
million.
They were only projecting use about 3.3.
So this drawdown is really related to taking those funds
over to the revenue funded capital.
And you can see the proposed rate increases last year, we
're estimating about 2%.
You can see we draw down what's highlighted in yellow is
where the number of working days in terms of working
capital goes below the target of 100 to 140.
So what we've proposed in the proposed budget, there were
two in your packet, is a 2% rate increase in the future
years.
Option one is what I just showed you, 2018 to 2022.
It would withdraw about 5.3 million from reserves and they
fall below the target.
Option two is 2% increases in the last three years would
reduce that drawdown to 1.1.
Now, let me emphasize really what we're adopting is the
budget for '17-'18.
So we're just looking at the one year, but we try to
project out on what we're going to be doing over the five
year period and give a realistic look at that.
Also included within the adopted budget document is a five
year forecast.
So we want to put a five year forecast in the budget that's
realistic in terms of what we really expect.
And here is the proposed five year forecast.
You can see the really only difference is these 2% rate
increases in terms of expenditures.
About the only area that that impacts is the ROI and
franchise fee is a little bit higher because you have a
higher amount of revenues.
And you can see with this change that the number of working
days stays within the 100 to 140 day target here.
I did want to break out drainage out of this.
The drainage fee and the drainage function is within the
wastewater system.
It's kind of a net.
The revenues and expenditures are equal, but just to be
able to break that out a little bit.
So here's the five year projection for the drainage portion
of revenue and expenditures within the wastewater fund.
And the only thing to point out here, there's no rate
increases assumed in this, just growth in terms of revenue.
But if you look down at the debt service line, you can see
that that starts to decline significantly.
And what that allows for if you go to the revenue funded
capital, you can see the debt service begins to decline in
'19.
It goes down significantly.
What that allows for is revenue funded capital so we can do
capital projects related to drainage increases annually on
that basis.
And here's the five year capital plan in terms of the
wastewater fund.
I've got a table or a graph that kind of shows this in
terms of across the community.
But you can see the breakdown in terms of collection system
upgrade, field service replacement are the largest.
And then we've broken it down here in the bottom.
How much is revenue funded capital versus CEOs?
This is footnoted.
We only plan to issue two million for these projects, but
there's a six million dollar carryover from the current
year.
So we would issue eight million in 20 years, CEO next year,
plus the 350,000.
But in terms of the projects shown here, we only need two
million to fund that.
This gives a breakdown and it's color coded.
I know it's a little bit hard to see, but in terms of the
projects by different fiscal year.
If you have any questions on this, I'll gladly allow one of
the experts in the wastewater fund to come up and answer
any capital questions you may have.
I'm used to doing these budget presentations with the city
council when I'm not stopped with questions on every other
slide.
It makes me a little bit nervous. So let me know if you
have some questions.
I'm not used to going through on this quickly.
Chuck on the just to make you feel more comfortable.
Appreciate that.
Two questions. One is on the on the reserve days.
We did was it last year we did a study or two years ago
that kind of did a comparison of where we are, where we
should be is 100 to 140 days.
Was that in line with the study or what it said or was that
and I think Dr. Banks had done a study.
I know we had updated some of them two years ago where we
increase the amount, but I don't believe we made any
changes last year.
But I'll turn it over to Dr. Okay.
Good morning. Morning. Yes, we've we've been looking at the
reserve level on both the water wastewater side as well as
solid waste and DME for that matter.
And we went through a large number of survey data to try to
figure out exactly where we were needing to be.
The way that's calculated is different, different among
different agencies.
And so we struggle quite a bit on on how that day's
calculation was actually done, whether it included debt
service, if it was just strictly operating, et cetera.
We have systematically adjusted those reserves upwards.
We are now at 100 to 140 days and that puts us pretty well
in the midpoint of what the survey data was showing us.
And so it is a I think a reasonable target to be at
considering what we saw in the in the data and then also
what we have experienced in terms of year over year losses.
So basically the programming for that was to allow us at
the top end to be able to tolerate two to three
historically bad years back to back.
And so that allows us to we think to survive if we end up
having a couple of bad years and still be able to keep
operations going just fine.
So does that answer your question? Where were we before on
the reserve?
We were we prior to this last adjustment, we were 90 to 120
.
Okay. And then we went to the 100 to 140. So we we increase
the lower level and broaden the range.
Okay. All right. Yeah, I think I think it's good that we're
recognizing that the water wastewater is one of the more
vulnerable to weather fluctuations, more volatile from a
revenue side.
And so, yeah, that's good.
Any other questions? I do have a question on that slot the
five years slide that there's $1.2 million loss. And is
that again just carry over?
Go back another one. This right there and I know that our
focus is really 2018. But in 2019, is that again from the
planned use of reserves or is that?
That's that's really just what it shows with a zero rate
increase in that year and one of the items.
Also, to consider when we're doing the plan use of reserves
, we're up at 204 here after this year and coming down but
it kind of brings us into the middle of that range.
I just want to make sure I understood that right. Yeah, and
it's really, it's really the following year that we would
propose the two percent.
So we don't continue that decline. And again, you know, we
'll refine these numbers as we go into that year. So it's
somewhat of an estimate and close estimate, but somewhat of
an estimate.
Thank you.
I remember I said I had two questions. I just remember that
. Okay.
Any any adjustments made to the five year capital
improvement program from what it was what it has been to be
thing delayed or or taken out is it looks the map looks
pretty much the same all the projects but just just just
comment on
right about the map looks about the same.
The delays are usually it is tied to getting easements so
engaging the property owners and buying the easements to do
the installation.
So we have made some adjustments on some projects because
of that.
But within the five year window. We still have pretty much
the same projects.
Okay.
No delays or taking projects or delaying projects because
of no rate increase.
Not on the wastewater site.
I haven't really.
What has helped is actually balancing out the just in time
funding for the projects and also the revenue funding. So
that balance it out.
Okay.
Good.
Thank you.
We always show these kind of comparisons where our rates
are versus other communities in the area this is
residential.
And this will come back to the P.U.B. after others make
their rate adjustments. So after everyone's budget process
will come back. But you can see in terms of residential
where we're at.
And this one shows commercial at fifty thousand gallons.
And then commercial at two hundred thousand gallons.
So a little bit higher on the scale on commercial than we
are residential.
And with that I'll go to my last and first slide. Questions
and comments.
And in terms of timing we've presented this information we
've also got in the backup to detailed budget backups kind
of the baseline budget and the proposed budget which again
is the same for the first couple of fiscal years.
We've got all this information.
We'll come back with put this on the agenda in June again
for questions and look for a recommendation on the budget
by the end of June to be able to take it to counsel during
the July timeframe into July when we take a proposed budget
.
So there's additional time for the committee to discuss
this budget.
Future meetings.
Everybody's reading the next presentation.
Let me drop off a little paperwork and pick up a little bit
.
In terms of the solid waste fund and I'll go through it in
the same manner as the other one.
Same emphasis in terms of the accomplishments expanding the
alternative fuel facility so that we can get C&G actually
through our own facility versus bringing a contractor out.
At least right now on a per gallon equivalent, C&G is about
50 cents less than diesel in terms on a per gallon
equivalent.
To they began the landfill cell construction estimated
completion of it kind of at the end of this calendar year
of the latest cell and the cell life is about ten years.
There's three grants that the fund received for their C&G,
the home chemical center and for mining equipment.
They're currently fully compliant on all the regulations
from TCEQ and one of the goals and you'll see in terms of
when we look at new performance measures is adding
commercial to the recycling program.
So they added 38 accounts, multi-family accounts this year
and that brings up the participation rate for multi-family
from about 28% of the multi-family customers to about 36%.
In terms of the goals, hope to increase the building
materials recovery program by about 7%.
Mining operations in this first 17-18 will be really the
first year where they're fully geared up.
They hope to process about 216,000 cubic yards to give you
a little bit of reference.
They estimate that the total amount of mining is about
three million cubic yards.
Hope to do it over a ten year period.
That's the first year, but they hope each year to be able
to mine more cubic yards as they get more efficient and get
more knowledgeable on the process.
I know that it's come to this board some of the fleet
software that the solid waste has looked at and they hope
to improve efficiencies in their information management
from that new fleet software that will be
has some vehicle location and mapping capabilities, reduce
preventable accidents by 10% and kind of continue to refine
the business plan for the regional household chemical
center.
In terms of performance measures, the current ones are the
residential reef refuge and recycling tonnage and the
commercial refuge and recycling tonnage, those percentages
and the pounds disposed per capita.
Some of the new performance measures that they would like
to add, increasing their commercial recycling accounts and
tracking their cubic yards processed in their mining
operations and then just achieving their optimal waste comp
action by 1100 to 1200 pounds per cubic yard.
Really that allows the breakdown of materials as well as
kind of maximizing that methane gas recovery that's
captured within the landfill and used to produce
electricity for DME.
In terms of cost containment strategies, the solid waste
fund did delay some issuance and reduce some issuance on
their capital program by 9.4 million for 16-17 that reduced
their debt service by about 1.1 million in the upcoming
year.
They transitioned seven FTEs that were construction crew
out at the landfill over to the mining operation as a lot
of their construction activities geared down.
They have future construction activities to look at
contracting that out.
They also went through the same type of exercise in terms
of line item by line item looking at their historical
expenses and reducing their O&M expenses from the budget in
16-17 to 17-18 by about 620,000.
You can see some of the main categories that are in there.
They've eliminated two FTEs that were vacant in terms of
planning for 17-18.
They're in the public outreach division, a public outreach
manager, and a business account coordinator were the two
that were eliminated.
They've also reduced communication services and equipment
going with a new vendor.
That's their push to talk system. Estimate that'll save
them about 175,000 over the five-year life of that contract
.
Question?
On the public outreach, what could you explain a little bit
about what's involved there?
I'm going to turn that over to Vance to answer that
question.
Good morning.
Yes. Public outreach is part of our public education and
the outreach we do in the community.
We've looked at how we can better coordinate those
activities through the organization and we think that by
doing that and a better job, we can actually reduce that
one position.
And the second position has not been filled in a few years.
We were looking at expanding our commercial and multifamily
recycling and utilizing that one position to market and
educate.
We've been able to do that in-house, so we just never have
filled that position.
So those are the two.
Do we have any programs that go into the schools to start
with the children?
Yes. Yes. That is not being cut.
We think that's an important long-term program called the
Denton Sustainable Schools Program, and that will continue
on.
We've been doing that for probably 14 years, and that has
been very successful.
So we're seeing those first students moving out, graduating
from high school, and coming into the community.
So it's one of those long-term programs that is really
needed.
And to maintain our high amount of diversion and recycling,
we have to have an ongoing public education program, both
in the schools and in the community.
I think that's very important. Thank you very much.
Thank you.
In terms of process improvements out at the landfill and
their operations, they're hoping to reduce turnaround time,
really getting a second inbound and outbound scale so that
folks can come in and out more quickly and help reduce that
turnaround time,
make it more efficient and more pleasing for those who
choose to come and use our services.
And just improving their forecasting, budgeting, and CIP
process materials forecasting.
Some of the future improvements, looking at improving the
accounting and information management processes with a
software upgrade
and the new fleet management software looking to
incorporate that and really find some efficiencies through
the use of that new software,
and then collaborate with fleet services to reduce vehicle
maintenance cost.
In terms of future risk and what's being done to mitigate
those, the mining operations is really offsetting future
expense to add landfill cell space,
and it also materials recovery and the sales and revenue
that's coming from that.
The Mosley Road landfill wanted to stress that we've
identified funding available for necessary improvements,
but we may have to do to that landfill of 6.2 million,
sorry, 6.4 million.
3.2 is currently available, and there's another 3.2 in the
upcoming CIP.
We're currently evaluating what needs to be done out there,
doing some testing, and we'll know more in the next couple
of months,
but we do have funds identified to be able to do remed
iation as necessary.
What's coming up is final approval of the municipal solid
waste permit amendment.
The public notice phase is coming forward and all the
regulatory requirements as we go through that process.
And hopefully avoid any hiccups during the legislature this
year and continue to move forward.
Also looking at wholesale customers, really external
customers from the city that use our services,
and analyzing any need for contractual agreements over the
long term with those customers to maintain that customer
base.
In terms of the assumptions for their budget, revenue
growth is really based on historical trends and customer
data.
I've got another slide where they changed their growth
estimates for '17-'18 a little bit less than what they
showed PUB a few months ago.
The rates, again, based on cost of service, they also shoot
for minimum debt coverage of 1.25, but would like to have
higher than that.
Their funding goals in terms of cash funding of capital for
equipment is heavy duty vehicles.
Their goal is to fund those 50% and light duty 100%.
There is the revenue funded capital within the budget.
I'll show you that line when we get there.
And they're not proposing any rate increases for about a
four year period.
They're looking at a rate increase at year five.
Kind of evaluating the potential increased expenses for new
programs as we move forward.
I stated they're going to continue to do an analysis of a
regional household hazardous chemical center, the mining
operation, and the CNG.
Some of those costs are still in process and making sure of
those once we have like a full year of experience with
those facilities.
I mentioned an updated growth forecast.
You can see the original forecast for the upcoming fiscal
year on the left in terms of residential customer growth,
commercial growth, and retail and wholesale tonnage at the
landfill.
And you can see the revised numbers here.
So this budget and the revenues is based on that updated
column.
In terms of revenues, we've broken these out a little bit
differently than in prior years.
In terms of the first one, asset sales and interest income,
most of the asset sales are just sales of equipment when we
replace the equipment and auction that off.
We've broken it down between residential and commercial and
landfill gate.
You can see the importance of those external customers in
terms of the landfill gate.
Recyclable materials, miscellaneous.
And I do want to point out the alternative fueling station.
This is the CNG.
For our purposes, how we handle this is it will show up, at
least on a budgetary standpoint, as a revenue and an
expense.
When they go into fuel, they'll have to be using a card so
it shows up as a revenue even with our own vehicles.
And then it'll be an expense on the other side.
So that's really why you see such a large increase in that.
We'll also sell to the public, part of that grant is it has
to be available to sell to the public.
So via credit card, we'll be able to sell to the public.
But the majority of that is really internal city operations
from the solid waste.
But that's a little bit different.
And then you can see the use of reserves.
And I'll show these in the summary slide.
Last year, last fiscal year, DME purchased some land out at
the landfill.
And about half of that money, they wanted to use that for
cash funded capital.
About half of it was transferred in '15-'16.
So they want to have budget authority to transfer the other
half of that over to their cash funded capital.
So that's really what they're using the reserves for in '17
-'18.
This is just a summary of their expenditures.
And we've tried to break these down.
These are kind of the standard categories to be broken down
.
In terms of personnel services, most of that increase is
due to kind of the full year of the mining operation,
because we did reduce two FTEs.
But as we get into the full year of the mining operation,
you can see that increase.
You can see some of the other line items have stayed the
same.
The franchise fee is simply a percentage of revenues.
Their operations go up.
And you can see even with the delay in debt service, you
can see their debt service expense goes from about $8
million to about $9.6.
And under the operations, I always look at what you
actually spent versus what you're proposing.
So in that operations, that's the increase from the mining
operations?
The majority of that is the mining operation.
In terms of the equipment and the fuel used by the
equipment, those type of things.
About the same if you look at from '15-'16 to '16-'17 in
terms of personnel services.
>> Right.
>> Was also almost all of the mining operation.
In terms of their five year capital plan, it's broken down
here.
And we've broken it down at the bottom in terms of
certificates of obligation.
Five year, ten year, and 20, we match the life of the asset
to the term of the debt.
So that's broken down in that way.
And I'll leave this up here.
And if you have some questions in terms of their capital
program.
I did mention that Mosley Road facility where we were going
to sell some additional debt.
In terms of Mosley Road, would you like to cover that one?
Kenny, it's really a landfill outside of the city limits
that was run by the city.
And I don't know during what years it was run by the city.
>> I'm not sure if I know what year it is either.
Vance, can you help me on that?
>> It was in '84.
>> Okay.
>> So they stopped utilizing that landfill in the early
1980s.
And I'm not sure when they started using it.
It may have been as early as about 1960.
So prior to that, there was a landfill, so to speak, over
where facility management's offices are right in that area.
And they left out of there somewhere in the late '50s,
early '60s.
So we have those old areas where the city used to put their
waste that we don't have closure,
post closure funding for because that wasn't a requirement
then.
But we still, as a property generator of the waste and
property owners, still have the obligation to maintain that
.
>> Did that answer -- could I provide any more information
on that?
>> Yeah.
>> We do have some repair work that needs to be done on
that facility.
Some dressing that has to be done on the top to level it
back out.
It's settled over time.
And so that's what we're working through right now.
>> Okay.
And I'll kind of give the same two five-year forecast.
This is the zero rate or the baseline five-year forecast.
And you can see kind of in the out years where the number
of working days target starts to decline
and where we have kind of some small net income losses, 20,
21, and 22.
You can see like for FY '19, it's showing an increase in
the net income.
And their target is 52 to 66 days.
Again, you can see partially because of that land sale in
2016 where the number of working days jumped up to about 91
days.
So part of that this year is budgeted to that plan use of
reserves to put that over into capital.
>> What is the debt coverage ratio requirement under the
bond covenants, 1.2?
>> Well, it was under the old revenue bonds, was one and a
quarter.
We have new revenue bond covenants.
We've only issued for DME for the generation facility.
The new covenants are just 1.0.
But in terms of still setting a policy, we like to have
that coverage of 1.25.
Really for the utilities, we're issuing certificates of
obligation, so it's got a tax pledge and a pledge of the
utility revenues.
I think the 1.25 gives a little bit more comfort that we
won't ever have to dip into the tax pledge to do that.
So it's really just kind of a performance goal.
And in terms of revenue bonds ratings, 1.25 is kind of on
the lower end where they're wanting to have 1.5 up to 2 for
higher rated utilities.
So that's why I mentioned the 1.25 is kind of a minimum,
but a stronger coverage ratio would be seen by them as
better.
And I mentioned the proposed really just has a 1% increase
out in the last fiscal year.
But you can see what that does is kind of maintains us at
the upper end of the number of working day targets, keeping
it up to the upper end in these outer years.
Again, really the budget we're focusing on is for this
fiscal year.
But we like to have a good idea and give a good indication
of what the five year plan looks like.
And this is just if an increase occurred in the last year,
the fiscal year, what that increase would be and shows kind
of the current rates for standard and large cart and the
landfill gate rates.
But we've tried to do the same type of comparison that we
do for the water and the wastewater.
It's a little bit more difficult. There's a lot more
variability in terms of what kind of services are offered
by solid waste, how often the pickup is, those kind of
things.
But we've got the darker color is larger carts and the
lighter color is the standard carts.
Ditten is kind of green in the middle here.
We've put this one kind of in alphabetical order, but you
can see in terms of somewhat around the Metroplex, we're a
little bit on the higher side in terms of those services.
You can see Austin that has a higher level of service, more
comparable to ours.
But we try to put this comparison together and be a little
bit consistent between the different utilities.
And with that, I'll answer any other additional questions
you may have or call someone up to the podium.
Chuck, I did have one question on the gate and material of
the gate rate.
What percentage of that revenue is wholesale when you're
talking about converting some of that to with contracts?
Because it's not really I'm assuming that there's not a lot
of residents that are going through the gate.
This is this is mainly going to be a hope, I guess what you
'd call a wholesale rate.
So but what percentage is that? Is it 90 percent or?
OK.
Intuitively, we know it's a very high percentage. Yeah. And
I guess the point being that we're holding rates, no
increases for four years and then one percent increase in
five years.
I just I'm just wondering if we looked at more of a mixture
of is there an opportunity more of an opportunity for
wholesale rate increases?
I don't know what the other options are in the area. And
obviously, I don't want to, you know, we don't want to if
that's a very profitable piece of business, you've got to
be competitive.
But at the same time, just I'm just making the comment that
if there are opportunities on the wholesale side, I'd
rather see those.
I think Scott. The landfill revenues for twenty eighteen,
they're about six point nine million and they're made up of
fees and landfill gate rates and the retail and wholesale
rate.
The wholesale rates approximately two point six million and
the retail rate is three.
I don't have the detail with me is three to three point
five million. So wholesale is still a significant figure at
two point six million.
Mr. Robinson, I can tell you, we've looked at the wholesale
rate every year and we we've had it flat for a number of
years.
And I can tell you that it's our assessment of the
marketplace that we're still in a position to keeping it
flat that makes using our facility attractive,
especially considering all the transportation costs that
some of those wholesalers have to incur to come this far
north.
And so we think that in the future there may be a need to
adjust that rate. But right now we feel like it's the
appropriate level based on the market and what people are
having to pay elsewhere.
Can we sell natural gas when they come?
Any other questions?
Comments? Again, this is this will be the last time we see
this. So we'll have other opportunities.
OK, thank you, Chuck. Appreciate it.
OK, next we have items for individual consideration. Item A
is to consider approval of the Public Utilities Board
meeting minutes of April 24th, 2017.
Those have been distributed, published in advance.
Any questions? Comments? Changes? Hearing none, those will
be adopted as presented.
Item number B is to consider recommending adoption of an
ordinance authorizing city manager to execute a sewer main
cost participation agreement between the city of Denton and
Crawford Hospital Partners, LLC.
This is in participation of oversizing sewer mains.
And PS Aurora is going to leave this discussion.
Just to get you all oriented where we are, this 35W Craw
ford Road, Roads and Ranch is further back west here.
And this is all Hillwood property for Hunter Ranch. And
this project is coming along here, the surgical hospital.
We have an existing sewer line that serves country lakes
development here. And we had oversized that. Why do we
oversized?
A development is required to put a line in to serve their
property.
But if we have outside areas that will drain naturally
through the property, then we look at or we estimate what
the wastewater flows will be from that area.
And that allows for partnering with the development and ups
izing that line. So we pay for that cost.
What is the upsize cost? They may need an 8 inch, but we
participate beyond 10 inch. That's the ordinance that we
have.
So anything beyond 10 inch, if we need to oversize, we pay
for it. And that's what this item is for.
You have seen the cost there. It generally works out pretty
good because what we get is an oversize participation that
if we had to go out and lay that capacity line, that cost
would be much higher.
By doing the oversize participation, we're able to get a
perfect cost, which is much lower cost for us.
This development won't even use an 8 inch full capacity,
but we go to 18 inch.
This allows us to take flows from Hunter Ranch. And we have
a project coming along that would probably take all of the
Robson Ranch project and run it through this line here.
And we are still working on it, and we'll have that back
here for the meeting after the next one possibly.
Okay. So if there are any questions, I'll be happy to
answer.
So basically these oversize participation is going to be
the cost of the pipe, really. I mean, because it didn't
cost that much more.
That's right.
It has to be the same size and it's really the material
cost.
It had to be a little deeper, but that's a little bit of
the cost there.
There's a big drainage ditch by I-35W, and we didn't want
to do an aerial crossing on it.
So we made the line a little deeper.
Okay. Very good. Any other questions?
Question.
Yes, Barbara.
Is this agreement, this looks very similar to the one we
considered last meeting? Am I correct?
Yeah, that was for water.
That was for water.
That is for wastewater.
Thank you.
Okay.
Yeah. Okay.
Other questions?
Okay, this is an item to take action on. Is there a motion
then to on this item?
Move approval.
Second.
Motion to approve. Barbara, second by Susan. Any discussion
?
All in favor then say aye.
Aye.
Any opposed? Same sign.
Okay, motion carries.
Next item we have is our ACM update.
Yes, what we have for you is the action matrix, and it
looks like we've completed most of the items.
I do recognize it says completed, but we still owe you
information on the solid waste salary, FTE comparison, and
we'll have that to you as soon as we can.
Okay.
That's all I have.
Okay.
Okay, concluding items, A is for any ask of any member of
the public utilities board or the public if they have,
would like to see any item on the, any future agendas.
Nobody's raising their hands, so I guess not.
And I guess the, the only other thing left is to adjourn
before I do.
John, is this your last meeting, PUB meeting?
I just want to, I'm starting to get a little bit of bad
vibe from people sitting on my left.
But I do, over the years you've been a big part of the
public, since I've been on it, PUB in one way or another. I
just want to thank you for the job you've done and wish you
good luck in the future.
Well thank you very much. It's been a pleasure working with
each of you and I wish you the very best.
This is a hard decision for me, but one that's exciting at
the same time, but I've enjoyed my time here and I've
appreciated getting to work with each of you. Thank you.
Very good.
With that, is there a motion to adjourn?
So moved.
Motion and a second?
Second.
Thank you, Allen. All in favor say aye.
Aye.
[PAUSE]