Jun 26, 2023 Public Utilities Board on 2023-06-26 9:00 AM

Okay, it is nine o'clock and we do have a quorum, so I'll call to order the Public Utilities Board for the City of Denton on Monday, June 26, 2023. The first item is presentations from the public. Does anyone from the public wish to speak? Oh, you're not public. Okay, seeing none, we'll move on to the consent agenda. Does any board member wish to pull any items of A through D? I see none. Do we have a motion to approve the consent agenda items A through D? Move approval. Okay. Barber approved. Second. And Devin seconds. All in favor say aye. Aye. Aye. That carries. The next item is consider approval of the June 12, 2023 minutes. Are there any changes or corrections? Move approval. It moves approval. Devin seconds. All in favor? Aye. That carries. Management reports. Mr. Dixon. We'll see if it wants to cooperate. There it goes. Good morning, Madam Chair, board members. We have nothing this week to present. Okay. This is going to be a quick board meeting. Okay. That brings us to concluding items. Does any board member wish to have a future item added to an agenda or have anything they'd like to say to the public? I would just like to thank Larry Beck for his service on the PUB for the last couple of years. He has resigned, so we're looking for replacements, which is why we're almost not at a quorum today. But that's it. Okay. In the next public session, receive a report and hold a discussion and give direction regarding the solid waste recycling and water fiscal year '23-'24 preliminary budgets. This will take a little bit longer. Good morning, PUB, Danielle Stanford, budget manager. So this format will be similar to what you saw at the last PUB meeting. So we'll have the department present the first portion of the presentation, and then I'll come back up for the financial portion of the presentations with Tammy if you'd like to come up. We'll start with the solid waste budget. Good morning. Tammy Clausing, assistant director for solid waste. Currently the landfill has 65 years of useful life left, and in order to extend that life, one of the tactics we use is diversion, being able to divert as much as possible. I want to draw -- I'm not going to go through all of these metrics, but the one that I want to draw you to is the bottom one, the overall diversion rate. All of the metrics above it some way somehow feed into that. So last year we had an overall diversion rate of 8 percent. This year our year-end estimate is roughly 10 percent, and we have a goal of 15 percent, which I believe to be a little conservative. We have a organics pilot that we're running, and hopefully it's successful and we can expand that along with a commercial diversion article that we're going over in the next month or so, and hopefully that can increase the diversion as well. But we're making progress in increasing that diversion and extending the life of the landfill. Our current department structure, we have our director of solid waste with the deputy director, myself, and the safety coordinator reporting. We have a landfill team, an operations team, administration team, site ops, and a home chemical collections with a total FTE count of 135. Here we have a breakdown by FTEs by HBU. Last year we had 128. We asked for seven more and got 135, and next year we'll have 133. Two of those FTEs moving to the environmental services and sustainability where they more appropriately belong. Our strategic initiatives, goals, and visions. Our first initiative is implementing our comprehensive solid waste management strategy, and we'll be implementing our comprehensive diversion ordinance, also known as our commercial diversion article, expanding our organics diversion program, expanding our home chemical center capacity and reuse, identifying and implementing alternative diversion opportunities like styrofoam densifying, plastic film, pallets, mattresses, any opportunities we can find. We'll also be providing education and outreach to support these program implementations. And our second initiative is repairing our Mosley Road landfill property by completing repairs and determining long-term use of landfill property. This we'll hand it over to Danielle. Thank you. >> All right, so the financial assumptions for the solid waste fund are 2.5% residential growth, if that's consistent with the other utilities, a 3% commercial roll-off growth. The revenue projections include the wholesale agreements in the amount of $4 million. The expense projections include a contribution to the post-closure, post-closure fund, an increase in personnel services costs, the same increase that you saw last week for electric and environmental services. It is the compensation classification study that was previously approved by city council on May 16th. Merit increases, those are contingent upon city council approval with the budget. And then annual inflation costs. And then additionally, it includes a 2% increase in operations and maintenance growth. So you can see the pro forma here. We expect to end the current fiscal year about $2 million under budget and revenue. You can see at the top, the total resources there. Expenditures line up with what we're planning to receive in revenue, about $2 million under budget for the current fiscal year. For FY24, no major changes. That jump in personnel services is comp in class. Again, the 2% across the board in operations and maintenance expenses. And that looks like it's about it for that. We are not contemplating rate increases until FY26 in this pro forma. However, we are meeting all of our minimum target reserves and the debt service coverage ratio requirements. Can you explain the non-rate revenues? Sure. Tammy, I'm going to let you -- you want to know what makes that up, right? The non-rate revenue. We get a little bit back from our recycling program. I'm trying to remember some of the other scrap metal, just different items that we're able to sell. More of the diversion type opportunities. Okay. Thank you. Any other questions on the pro forma? Seeing none. So proposed rate changes, we are undergoing a cost of service study now. So the consultant will be with us on the meeting on July 10th to go over their findings in the study. We do have some fees outside of the study that we're proposing to change. We're proposing to implement a recycling card fee of $15. This would apply to any residents receiving three or more cards. So the first three would be included. And then the fourth one would begin that $15 additional fee. And then a few -- some updates to the rate ordinance language, just to specify that any waste greater than four cubic yards will not be picked up, and it will require a container or a roll-off. The outside of container bag charge, that this will be limited to five. And then finally, that appliances and electronics does not include dishwashers. Yes, ma'am? Give me an example of what four cubic yards is. That's a great question. Four dish -- four washer or dryers. So take a washer, and that would be one cubic yard. So four of those. About four of those. Yeah. About this. Yeah. And then your cart would be very similar. And this applies -- Thanks. That's a good example. And this applies just to kind of solid waste and large household -- what's the term? Large household weight objects or -- The bulky waste? Bulky waste. Yeah. So not like yard waste. No. We have -- this is more of cleaning up some of the rates in the rate book. It's just like a floating sentence there doesn't -- kind of what chapter or what section it applies to. Just want to make sure. I do have some questions on -- so this year are -- both revenues and expenditures are below pretty -- like this year's budget. But there's a significant step up, basically, to the 2023 budget -- 2024 budget is slightly larger than 2023 budget. But personnel is showing this year to be a million dollars under what was budgeted. And then the revenues seem to -- I'm curious -- I just need to understand how we budgeted at 41, come in at 39, we're budgeting at 41 and a little bit, like, you know, a couple percent growth. What caused this dip and why do we think the dip is going to be over next year? You're talking about the dip and the estimate to propose, is that right? Estimate to -- yeah, so we had a budget and then we had an estimate and then we're recovering -- then our next budget seems to be linear off the budget. So that seems to indicate we think the actuals this year were a one-time occurrence to be, you know, over -- what is that -- one in a two million-ish below revenue and two million below on expenditures. So our revenue is actually only about a million less. If you look at the total revenue line at the top section, the budget was 39.4 million. We're estimated to come in at 38.4 million. That difference -- Yeah, so that -- we're using reserves to make up the expenditure amount, the difference in expenditures. We are expected to be under and personnel services this year. That's based off of a forecast of what we spent year to date. What we do anticipate with comping class and the possible merit increase that that will come back up for FY24. Okay. Yeah, so I guess looking at just rate revenues, we were at 31.3 in 2022. We budgeted 31.4 -- or 33.4, and we landed at 33.1 estimate this year. And then we're expecting to go to 33.5. So that's -- we're expecting our rate revenue to grow by 350,000. And then our non-rate revenues, they dipped from previous year and from budget, and we're expecting them to increase by a half a million dollars or about 30% from this year actual to next year budget. And then personnel were over a million dollars below, but then we're expecting to spend two million dollars more next year. So I feel like there's just kind of a standard trend here, and the indication is there was like a one-time dip in the financials, and we're going to go back. And I'm just wondering what justifies that view that it's a one-time -- just this year we have less revenue and less personnel cost, but next year we're going to be right back on trend. >> Well, and you also don't have any information on proposed rate changes, so we don't know if that's part of your budget. >> Well, yeah, just trying to understand. I'm not like -- >> 2.5% increase. >> Sure. I'll have to look a little deeper. I don't know that number off the top of my head, but I'll have to dig a little bit to get that answer for you. >> Okay. And one more, just slightly more focused question, the personnel expenditures were a million dollars under budget. Is that like less overtime, or kind of less services needed, or was that just a lot of belt tightening? >> Well, I believe we forecasted the comp and class study to occur a little earlier in the year. Is that -- >> The current fiscal year -- if you remember back to last -- the fiscal year we're in now, we added an amount for solid waste to have the comp and class study for the full year. We didn't -- we're not implementing that until late July, early August. So the budget for the current fiscal year is somewhat elevated due to that comp and class amount that we haven't utilized. Also, this contemplates the vacancies that are in the solid waste fund. >> Okay. Yeah, that's great information. I'm just trying to -- >> Sure. >> I'm just trying to understand -- >> Yeah, no problem. No problem. I appreciate the questions. >> When it trends down, but we're saying it's going up. >> Sure. >> You know, so -- >> Sure. And the same for non-rate revenues. Those are -- that's based on a projection of year-to-date actuals, so it could be that, you know, they see some of their revenue in the summertime or something similar to that. I know with water and with DME, that's the case, so -- >> Yeah. Yeah. Thank you. >> Sure. Any other questions on -- >> Any questions? >> On this slide? Okay. >> All right. Thank you. >> So I'm sorry. >> Sure. >> It doesn't have to be on that slide. It can be on proposed rate changes, but since you are waiting on the compensation study -- >> Correct. Still -- or not the compensation, but the rate -- >> The cost of service studies. >> Cost of service. >> Mm-hmm. >> Okay. Did you use the current rates to figure all your revenues and such? >> The current rates are calculated in this pro forma. >> All right. That's all. Thank you. >> Sure. And then we are proposing to change a few rates outside of the cost of service study. The less than 12-foot grass and leaves and brush is currently 25, proposing to increase all of these rates by $5. Grass leaves and brush over 12 feet, the non-city of Denton brush rate, and the minimum charge for brush. >> And that's for -- that goes into the landfill, not the recycling, or is it the recycling? >> This is for the landfill, I believe. >> Okay. >> It's recycling. Oh, I'm sorry. This is recycling. >> Okay. Okay. >> Any other questions on that one? >> I need to make sure I understand something, but this is when I bring it to your facility. It's not what's going out on the curb at my house. >> I believe wastewater asked for increased rates for this, so they could cover costs of the beneficial reuse. >> Okay. >> So this is what it costs to go over the scale with your yard waste. >> Okay. Thank you. >> So I want to give you a specific example of a friend of mine. >> He's asking for a friend. >> I'm asking for a friend. That's right. Honestly, my neighbor doesn't have a pickup truck, and he said, "Hey, we carry this stuff out to the landfill so we can recycle it with those trash bags full of leaves," right? So I get to the landfill. That's my first time in 10 years I've probably been there, you know, but I say, "Okay, I've got, you know, 12 bags of very full leaves only, maybe some brush, but it's all yard waste." He said, I said, "Can I take it to recycling?" He said, "Oh, yeah," he said, "but you'll have to break those bags open yourself, cut all those bags open and dump it into the recycling area." I said, "How much just to put it in the landfill?" Of course, that's me being lazy. He said, "Oh, $25 by the size of your pickup." I'm like, "Okay, here we go landfill." So anyway, I guess that's more of a comment than a question of, I don't know if there's something we can do to promote lazy people like me to go to do their recycling better or what, but you do all your work at the recycling when you drop off things that are recycling, right? Unless you put it in your blue cart out in front of your house. So that $25 minimum charge would apply to the yard waste as well. So if it's less than a ton or less than whatever the difference of what tonnage is, I think it's half a ton or 0.45 would be $25 no matter what you bring in, so it would be the yard waste as well as trash. Right, I guess more of my comment was it promoted me to go to the landfill instead of the recycling area. I'm working with wastewater to make sure that we're making it more of an incentive to recycle versus bring it to the trash. So all of these would still be less than the landfill rate. I'd rather pay you the $25 or $30 and you break open the bags, you know what I'm saying? I could see that, but then that would cause for an FTE, I imagine, to be breaking all that plastic open. So then it wouldn't be $25 anymore. I don't know, recycling guy just said recycle. They sell paper bags for yard waste at Walmart and Ace. This was my name, you just didn't have a pick-up, I don't own a lawn mower, so that shows you where my leaves go. Okay, then we have a couple that we're proposing to remove, the contaminated grass, brush and leaves for $44 and then the whole trees and stumps removal of $50. And so those just become a regular solid waste or a regular brush. Right. So moving on to their capital plan, for FY2024, solid waste has $10.6 million planned for capital projects or capital expenses, I'm sorry, and then 8.9 in FY25 and moving on from there for a total five-year CIP of $54.4 million. Of that amount, $45.8 million will be bond funded and $8.9 million revenue funded. In FY2024, we're contemplating $7 million of bonds and $3.5 million of revenue funded for a total of $10.6 million for '24. So the key projects included in that are cell 5 and 6 construction in years '24 and '25 for a total of $5.4 million, the home chemical collection storage capacity in fiscal year 2024 for $2 million, and vehicle replacements in 2024 of $5.6 million. Question on the vehicle plan, does that include any heavy equipment? I believe it does. Okay, because it says vehicles here, and I don't think there's a backup in here of what you're buying. Is there? There's not. You're correct. Why would you not? I mean, is that -- We can provide it if you'd like. Yeah. Sure. Yes, please. Yes, please. No problem. Would you all like that for the funds you've already seen as well for DME and environmental services? I don't think environmental services had any, but for DME, would you like the same information? For DME? You've already seen that presentation. I'm not talking about the transmission lines or anything like that. No, just the vehicle replacement plan. Yeah, there you go. Please. Okay. So any other questions on capital before we move on? No. So Solid Waste does not have any baseline adjustment requests, and they have two supplemental requests, one is the merit increase, and then the second is a cart washing truck for $130,000 that is coming from the capital budget versus the operating budget. And then the next steps is we'll come back with to you all on July 10th for the rates, and then for your approval on July 24th. Any other questions? Seeing none. Thank you. Right, you're welcome. So we will move into the water presentation, looking around the room for Steven, oh, there he is. I'm like, where'd he go? I didn't leave you, Danielle. Hi, Steven Gay, Director of Water Utilities. Good morning. So, I'm just showing you the matrix, one of the matrix we go by is our breaks per hundred miles of pipe, industry standard is 13 or 15 breaks per hundred miles of pipe, is representative of a well run maintained distribution system. You can see in 2020 we had a little blip there, that was due to winter storm Uri, but for all intents and purposes we're trending in the right direction. So here's the organizational chart, we currently have 173 FTEs on the water side of the equation, I've got myself, and there's four functional areas of planning and engineering division, treatment division, field operations division and administrative division. FTE summary, you'll see that there's a slight increase in both our admin and in our production teams, and that is due to the request or supplemental request to add on the administrative side of the equation one project manager and one inspector, and on the production side of the equation it's two electricians and two maintenance mechanics. And there they are right there. Strategic initiatives is develop and to develop and update our master plans, as you've heard me talk about our wastewater master plan, we're also doing what we call our one water master plan, which includes our reclaim water master plan, our water master plan, our comprehensive water supply plan, we're also doing our drought management plan, and we're doing conservation planning as well, we're refreshing that. With regards to contracts and operating agreements, we are diligently working to resolve some expired agreements with the city of Dallas, Upper Trinity, but we have updated our wastewater agreements for Crumb, Argyle, Lake Cities and Corinth, and we're negotiating those agreements currently. With regards to regional partnerships, you know, it's our intention to foster regional collaboration in developing sustainable supply water supplies with the city of Dallas and Upper Trinity Regional Water District, we're also looking at fostering collaborative working relationships with those partner cities, Crumb, Sanger, Corinth, Argyle, and Lake Cities as well. I believe that's pretty much it from the water perspective, and I'll turn it over to Danielle for the financials. I just want to make one quick comment on Stephen's. In initiative three, this does say Ponder, we don't have a partnership with Ponder, so just wanted to make that clear that there is a mistake in your presentation. Okay, so for water financials, the same growth percentage as the other utilities, also the same expense projections, increase in personnel services for comp and class, merit increases and inflation costs, as well as the 2% increase in maintenance and operations. There are no rate increases contemplated for FY 2024. As you can see here, we are expected to come in under budget on revenue, as well as expenditures for the current fiscal year. Again, that's in personnel services, the expenditure is, it includes the year, includes the full compensation and classification study, we're not implementing that until later this year, so we do have a savings, so to speak there, that is, and then the revenue funded capital is expected to be about $7 million less, so those two items make up the large portion of the decrease in expenses for the current fiscal year. For FY 2024, we're using more impact fees, as you can see in the revenue, we're bringing in $11.6 million, which is $5 million more than we did last year. You can see in the expenses that we're also expending that, those impact fees and impact fee revenue funding, and that makes up for some of the difference in the higher expenses in FY 2024. So you'll see that personnel services decrease, that's due to some positions going to the Environmental Services and Sustainability Fund, and also some of those expenses moved over there with those, so that's why there's a decrease in operating expenditures as well. Same for transfers, so moving those positions had a big change to the water fund because that's where a lot of this came from. And then we are meeting all of our target reserves, we're contemplating a rate increase beginning in FY 2025 with a 7%, 8% in '26, 9% in '27, and 3% in 2028. That does keep us within our target reserves as well as meet the debt service coverage ratio requirement. Is there a reason why you're not contemplating a rate increase this year to kind of flatten the, so it's not such a large increase in the next three years? We could, we could look at that scenario. We're trying to keep the rate increases to a minimum, and we know that there's possibly going to be a rate increase in solid waste depending on the cost of service study, and the same for DME. So we're just trying to keep the rate increases to a minimum. And you'll likely see, wastewater is not being presented today, but you'll likely see a rate increase on the wastewater side, so trying to just do what we can to keep the rates overall at a minimum. All right. Thank you. All right. That's fine. Any other questions on the pro forma before we move on? Okay, so the water capital plan contemplates about $97 million for FY 2024. You can see the largest drivers there are the plant improvements and the replacement lines. Of that $96.5 million, $82.7 million is bond funded. About $8 million is revenue funded, $5 million is impact fee funded, and then $810,000 is the vehicle replacement funds, and we'll get you a list of what that includes. And then for '25 and '26, you can see that we've increased the use of impact fees. That was also reflected in the pro forma, to help with that $118 million in the CIP. Over the five years, we have a total of $377 million across the five years in this water CIP. Some of their key projects and ... Oh, go ahead. I missed what you said about impact fees. Sure, no problem. So if we come back to the pro forma, you can see that we've used about $6.6 million up to this point in 2024, we're starting to increase the use of impact fee funding, so we're increasing it by $5 million in '24, by $20 million in '25, and $10 million in 2026, so we're just trying to bring that balance down and actually use what we have available to help offset those rate increases in some of that capital debt service. And so that's impact fees that have been collected over the past ... Correct, that's ... Yeah, I was like, that is a whole lot of residential lots going in in 2025. Yes, sir. That's a good clarification. Yes, sir. Thank you. That is funds we have existing in the fund that we're just using at this point. Some of the large capital improvement projects are the AMI/AMR replacements, though that's going to occur in '24 and '25. The Lake Louisville plant raw water transmission line for $7.5 million, that's scheduled to happen in FY 2024. The Ray Roberts plant expansion and the capacity re-rate and performance upgrades, those are very large amounts. You can see these totals are across the five-year CIP, those are not only 2024 totals. And then finally the supplement to the bond 2019 for $27 million for a total of $235.9 million over the five years for the key projects. Water has no baseline adjustments requests, a handful of supplemental requests, as Stephen's already touched on. He's requesting a project manager, an inspector, and four technicians, and then the merit increase and a vehicle and truck. The total supplemental request is $1.1 million for FY 2024. Any questions on supplementals? Sure. So the new positions get a truck, and then there's just adding another truck, too, just so I understand that. Correct? We are adding a truck. I'll have to look and tell you what that is for specifically, but you are correct. It is not added. It is not related to an FTE. Okay. Thank you. Sure. When city people have trucks or cars or things, so many of them don't live in Denton. Do they take their cars home at night? I don't believe so. I believe the only time that they take a vehicle home is if they're on call, but I will get you a firm answer on that. Stephen's coming up. Oh, okay. I definitely understand police taking their -- that's a service. Danielle is correct on that. They don't take the vehicles home, only if they're on call, and then there's also -- the employee is charged a fringe benefit fee on their pay because it's considered a fringe benefit when they take a vehicle home. Okay. Thank you. IRS rules. Appreciate that. Any other questions on the supplementals? Thank you. You're welcome. Okay. So for rate changes, we're requesting that two rates be removed, the Dino dirt overs for $3 a cubic yard and the Dino Deco colored mulch for $30 a cubic yard. What is an over? That's a great question. You're getting your steps in today. It's essentially some excess. So if we have excess materials, we sell it as an overage. Excuse me. I can't hear you. I'm sorry. It's essentially an excess. So when we have excess materials, it's an overage, and we sell it at a reduced price. Okay. Those are just -- Going away. Going away. Yes, sir. Well, I think she's not wrong. Yeah. Well, just jumping into rates again, you're waiting on the rate study, obviously, right? We do not have a rate study for water going on. Okay. So what about the -- I'm going to miss the impact fees was going to be my question. Do you see those increasing? We are under the -- so can you hear me? Yeah. We're currently looking at our impact fees, but we're going to align our impact fee study with the roadway impact fee study, because there's some special considerations with the Hunter coal development, and so we just want to make sure that we're both -- both of those studies are in lockstep with one another. I understand. The big developments, you're going to go in and make a deal, right? Yes, sir. Yeah. I mean, that's -- it is electric, water, silver, everything, but, like, just -- there's going to be a standard impact fee for a guy buying four lots or something, right? Yes, there will be. It will continue to be that way. Do you see that increasing as well? I do see it increasing slightly. Okay. Yeah. How's this going on? That's probably your concern too. Yeah. Okay. Thank you. So the next slide -- the final slide is just the next steps, same as solid waste. Okay. Any final questions? Okay. Any final questions? No? Thank you. Okay. Thank y'all. All right. It is 935. Do you -- motion to adjourn, Billy? I'd like to make a motion to adjourn. Okay. You're adjourned. Thank you. [end of transcript]