- Okay, it is six o'clock.
Let's call the March 25th, 2019
Public Utilities Board to order.
The first item, and we do have a quorum.
Yay. (laughs)
The first item is to receive a report
and hold a discussion recommending the approval
of the Wastewater Service Agreements.
- Good afternoon, Board.
I am Kenny Banks.
I'm the General Manager of Utilities.
And I am going to give you a quick presentation
on the Robeson Water Reclamation Plant Abandonment Project.
We've been working on this project now for a couple of years.
It's a very important project for the area.
So right now, Robeson Ranch is serviced
by its own wastewater treatment plant.
And that wastewater treatment plant right now
has a treatment capacity of about 375,000 gallons per day.
And due to the development of Robeson Ranch,
it is reaching capacity.
Robeson is roughly about 1/3 built out right now.
This plant is getting close to its capacity
and getting close to us needing to push
into the design phase for a new plant.
I don't know if anyone's priced
wastewater treatment plants lately,
but they're very expensive.
And as a result, we are estimating that at full development,
the plant would need to be expanded
to about a 1.6 million gallon per day plant.
And that is estimated to cost somewhere
around roughly $16 million, quite a bit of money.
And because of this issue, the Robeson folks reached out
to the City of Denton for possible other solutions
other than just constructing the plant.
And it's a vested interest for the City of Denton as well.
Even though Robeson owns the plant, we operate it.
And we have intentions, according to our design criteria,
to place a larger plant in the Hickory Creek Basin
at some point in the future.
And just from an economies of scale standpoint,
it doesn't make a lot of sense to have a smaller plant
in the Hickory Creek Basin, a larger plant
in the Hickory Creek Basin,
and then also the Pecan Creek plant.
So we went shopping around for some possible solutions.
Like I said, this has been going on several years.
The Denton City Manager, Assistant City Manager
for Utilities and Wastewater Staff met with Robeson
to talk about some possible solutions.
We reached an understanding
to abandon the Robeson Ranch Water Reclamation Plant
and then pump all wastewater flows from Robeson Ranch
to Denton's wastewater collection system,
ultimately being treated at Pecan Creek.
And that project provides benefits
for Robeson Ranch and the city.
So some quick highlights.
We agreed that we would facilitate the acquisition
of the off-site easements, complete design,
and construct the wastewater diversion facilities
necessary for this project to be in place
and to decommission the plant.
They will pay us $4 million
for the wastewater diversion project.
Once it's completed and in place,
Robeson agreed to pay wastewater fees on new construct,
impact fees, I should say, on new construction
that occurred in their facility.
With that in place, the Robeson development
will not need the additional wastewater treatment capacity
and that particular facility will be decommissioned
and then converted into a pump station
to facilitate this type of development.
Robeson will receive a credit
since they are paying for the actual cost
associated with the installation of this facility.
$1,000 off of their impact fee,
a $1,000 impact fee credit for new homes
up to a total of 1,000 homes.
So total of a million dollars.
So real briefly, this is the Robeson system
as it exists today.
We've got the Robeson Ranch Southwest Lift Station here
that actually conveys wastewater
to the Robeson Ranch Water Reclamation Plant.
And then over on this side,
there's a lot of topography out there.
We've got the East Lift Station,
which collects from this area
and basically through a force main,
moves that waste material over
to the Robeson Ranch Water Reclamation Plant.
What we're proposing to do is actually collect here,
lift to this plant, turn this plant into a pump station,
run this force main in a direction
that is opposite of what it is right now
to the Eastern Lift Station.
And then I've got a separate graphic over here.
Here's the Eastern Lift Station.
This is a new line that we will construct,
a new force main that will convey the wastewater here,
right to the edge of the Hunter Ranch property on this side,
down to the Robeson Ranch Road line,
that's our Robeson Ranch Road intersection here.
And then basically, this is where it turns
from a force main to a gravity main
to be conveyed over across I-35
and hooking into the existing 18-inch gravity sewer system
over near Crawford Road.
The Hunter Ranch facility is owned by Petrus and Hillwood.
We met with them and worked with the Hillwood group
to acquire the needed off-site easement
that runs through the Hunter Ranch property.
It's a little hard to see,
but this easement right here is on Robeson's property.
It switches over here,
and this easement right here is on the Hunter property.
So we met with them,
put together a development agreement
for wastewater services that included the easement documents
that would be needed to get this project on the ground.
The easements were granted for a nominal $20 fee.
We also agreed to provide wastewater capacity
in the gravity main that's running through the property
for at least 800 single-family equivalents.
That would provide some capacity for growth
to start in that area.
In that area in Hunter Ranch,
wastewater impact fees will be required for all connections
at whatever the prevailing rate is at the time.
And at some point, the Robeson flows
are actually going to be diverted
through Hunter Ranch and Coal Ranch in the future.
We're probably talking a couple of decades
somewhere around in that timeframe.
After the sewer lines and those developments
have been constructed and the waste
is actually transferred through that system,
which is referred to as the Roart branch,
then the existing force main for Robeson will be abandoned,
and the only service that will be available
will be the gravity line to the south.
So in summary, the project cost is $4 million for Robeson.
Their benefit is the avoided cost
of the additional plant expansions, the permits,
and all the complications associated
with that plant.
They do get an impact fee credit, as we mentioned.
Our cost on that is nothing.
Basically, this will be enough to cover
the cost of the installation, according to our estimates.
Petrus-Hillwood, their cost is the dedication of the land.
Their benefit is to basically get 800
single-family equivalents of wastewater capacity,
and then our cost on that's that nominal 20
that I mentioned to you earlier.
Denton's savings are estimated to be annually
when we're comparing a wastewater diversion project
like this instead of a 1.6 million gallon
per day plant operation.
We estimate that our annual O&M cost
and on a total 20-year basis will come in somewhere
around $16.6 million.
So, comparing the plant option annual O&M of 895
to our wastewater diversion project,
which we estimate will be about $65,000 a year,
would save an annual of 830,
and basically we're looking at a 20-year lifespan
approximately of this asset, so about $16.6 million.
So, the summary is basically it provides benefits
to everyone, and Denton is being able
to avoid the operational cost.
Robeson gets the avoidance of the cost of the plant,
and then Petrus Hillwood gets the opportunity
to have those 800 SFPs.
I'd be glad to answer any questions.
- Questions?
Oh.
- What is the whole impact fee credit?
- Okay.
- What is that all about?
Why are you giving them a credit?
- The impact fees are designed to pay for the impact
on the system, right?
So, the impact on this particular system is two-fold.
One of those impacts is the cost associated
with building this force main system and pump station
and all those things internal to Robeson.
And the second component of it
is the actual treatment capacity
that we're going to be using at Pecan Creek.
Because we're conveying this all the way over,
Pecan Creek will have a higher wastewater flow,
and therefore we're entitled to an impact fee
to offset the things we're going to have to do
to basically deal with that higher flow.
So, they are being given a credit
because they're actually fronting the cost
of the construction that is internal to their facility.
And so they are paying us $4 million,
which is enough cost to cover all of the construction.
So really we're giving them a credit to offset that cost
and still recuperate impact fees at a level
that's high enough to be able to allow us
to do the treatment at the plant.
So, the reason is that they're basically paying for a good,
they're paying for the entirety of this system
at the time that it's installed.
- Okay.
And so the impact fees, those are going to be credited once?
- That's correct.
It's for those first 1,000 homes,
and as soon as they get through with those first 1,000,
the remainder of those homes,
I think they're at about 7,200, 7,300
is their total build out.
They've got about 2,300 now.
So, everything past that 1,000 homes that comes in
after this facility is built will be charged
the full impact fee at whatever
the prevailing rate is at the time.
So, it's just an attempt to try to acknowledge
that they're coming up with all of the upfront cost
for the facility on their property
and conveyance of the waste to our Crawford branch.
- Why did they, and you may not know the answer to this,
but I'm just wondering, why did they build this plant?
- Could you go closer to your mic so it's not picking it up?
- I'm just curious as to why they built this plant
in the first place that wasn't going to be able
to sustain their growth,
and now they're turning to the citizens of Denton
to help.
- Right, two things I can say about that.
One, the cost of the plant,
plant costs have gone up dramatically compared
to consumer price index.
And so, it's a very large cost
that they're going to have to incur.
And in terms of your statement about the rate payers
of Denton, this is a cost neutral situation
for the rate payers because they're going to be paying
wastewater fees, because they have paid for the construction
of the facility itself, and because they're going
to be paying at first a discounted impact fee,
and then after those first 1,000 homes,
the full impact fee, the rate that they're being charged
and the impact fee that they're being charged
after those 1,000 homes is exactly the same
as any other rate payer in the city would be charged.
So, it's rate neutral in that cost.
The rate payers are not bearing any additional cost.
- Okay, that's the one thing that I wanted to make.
- That's the one thing residents pay the city of Denton
for wastewater.
- That's correct.
- Okay.
- Yeah, they will pay for the wastewater services, correct.
- Okay, that's what I wanted you to say.
- Okay.
- That was a good clarification.
- Yes.
- I just had a quick question.
Do we have the capacity for all this stuff?
Are we going to need to expand our plant?
- We do have the capacity to treat it.
As I said, at some point in the future,
we will be looking at locating
a wastewater treatment facility
within the Hickory Creek area.
But right now, we have the capacity
to be able to deal with it.
And we have another project that we'll be bringing to you
later tonight to talk about some design work
and some experimental work that has been done
on the Pecan Creek plant
that actually appears to be able to allow us
with the existing footprint of the plant
to have somewhere between four and five million gallon
per day of additional capacity.
So that'll buy us quite a bit of time
even with this waste stream in place
and allow us to push off the capital project
associated with building that larger Hickory Creek plant
as long as we possibly can.
So the short answer is yes,
but we're also looking at that.
- And any new homes being built out there
will pay the impact fee,
just like any other development community.
- That's correct.
- All right, and that's the whole purpose.
- Right.
- Are there any particular challenges
to building this type of system?
Pushing a line that was going one way,
pushing it back the other way.
- No.
- Business as usual.
- Yeah, it's a pipe and a force main,
so it's not a problem going one direction or the other.
In this particular situation.
- Okay, and they built to a standard
similar to the way we build and--
- We're actually going to be constructing it ourselves.
- Well, what about the existing stuff?
It'll tie in with--
- Yes, I mean, it was built to the specifications
that we required, so it's, yeah, it's fine.
- All right, thanks.
- Sure.
- Other questions?
- We have a couple of questions, Dr. Banks.
What's the current wastewater impact fee?
It may have been in here, but I didn't catch it.
- It is, we just got it adopted.
I have it written down in my notebook.
I should have brought it up here.
I think it's $4,712 for wastewater.
- For wastewater.
- That's correct.
- Okay, so next question.
It's going across the properties of the coal
and Hillwood development areas.
- Right.
- Is this line being upsized in anticipation of that?
- It is on the gravity portion,
because that's the part that they're going to be using
for the 800 SFE's.
But the intention is once that,
once the new line is being put in,
which will also go through the Hunter and Coal branch areas
to hook up with the work branch system,
the intention is for the force main portion of that
to be abandoned.
And so the answer to your question is part of it is,
the part that's anticipated to remain is being sized
to accommodate that additional 800 SFE's.
But the part that is not needed for that
on the force main side is being sized
to accommodate the full build out of Robeson.
- Could you move closer to your mic, please?
- Yes, excuse me.
So it sounds like Hillwood and coal and that whole group
have been cooperative by donating,
basically donating the property for 20 bucks.
- Right. - Correct?
- That's correct.
Are they cooperating with the design of the capacity
that they may need?
Is that gonna be on that,
will that work on that side of the property
or are they gonna have to put more on the other side?
- Well, the short answer is to fully build out that property.
They're going to need to have the work branch in place.
But for that portion of the property
that's there near Robeson,
that 800 SFE's will allow them to build a significant amount
in that property.
And so it's going to be a little bit of both.
There's going to be portions that are going to be going
to the gravity section that will remain along Robeson Road
and there'll be portions that will be serviced
by the work branch at some point in the future.
- Okay, all right.
So the $4 million, is that a flat fee
or are they deciding, are we going to even out with them
once the construction is complete?
- It's a flat fee but it's paid in a couple of installments.
They're going to pay for the design first
and then they're going to pay for the actual construction.
- But you know, construction's not perfect obviously
and a lot of things aren't planned for
and they don't usually come under their budget.
- Right. - Is what I'm getting at.
- Right, I think we've made our best case estimate on this
but at the same time, you gotta keep in mind
that we're putting this in place
with city construction crews.
So we know what the price is because our own folks
are going to be the ones that are putting it in.
So materials costs are going to be the only thing
that's gonna be different.
- Well there is talk around the city
to cut back on what's performed in house
and so that's one of the reasons why I'm curious
about that question. - Right.
- There's been a lot of talk about--
- Sure.
- Downsizing the existing interior construction folks so.
- Well, we feel very confident that we'll be able
to get this thing in for the at or below the price
that we have established.
- So if it's below, they still pay four million.
- That's my understanding is that I'll look over at yes.
If the amount is less than what they have paid for,
do we reimburse or is it a flat fee?
- It's a flat fee. - That's what I thought.
So he's confirmed it's a flat fee.
- It goes over, we eat some.
If it comes under, we do better.
- Okay.
Let's go ahead, thank you.
- I will point out that there are two consent agenda items
for your consideration.
One of them for the Robson portion of this agreement
and one of them for the Hillwood Petrus
portion of this agreement.
So those will have to be approved
and both will have to be approved
in order to make this deal work.
Staff's recommendation is for approval
on both of those ordinances.
- And thank you for mentioning the consent calendar
or agenda because we're gonna move the agenda
around a little bit after the work session.
We're gonna go into the consent agenda
and then we'll go into closed session
just to speed things along a little bit.
- Thank you.
- All right, the next item is hold a report
and a discussion and give staff direction
regarding the credit and collection policy.
- Good evening, Tiffany Thompson,
Director of Customer Service.
I have a couple of guests in the audience
I wanna introduce first.
We do have a new customer service manager, Krista Foster.
She joined us just a couple months ago
so you're gonna be seeing and hearing from her
in the future and also we have some guests
from Navigant Consulting.
Navigant is the consulting firm
that we secured back in 2008 to look over our operation
and then give us recommendations
on our credit and collection policy
that we ultimately ended up adopting in 2010.
So they're here tonight to go over our progress
over those years and then also how we measure up
to private and public utilities currently right now
with our processes.
So Christine with Navigant is gonna come up again
for her presentation and then I'll come up afterwards
and discuss the impact and the changes
that we made about a year ago.
Christine, you can go ahead and come up.
- Good evening, I'm happy to be here today
to share the results of the study we did.
As Tiffany mentioned, we were here back in 2008.
Did a more, a broader study of customer service in general.
The study we did this year starting in January
and completing in March focused on the credit
and collections group.
So I'll take you through that.
It'll take about 20 minutes hopefully
and then I'll be happy to answer any questions
that you might have.
Just a little bit of background on the study.
Again, it was focused just looking at credit
and collections practices with a goal
of evaluating the performance and to understand
if there's any opportunities for improvement.
We made a number of recommendations back in 2008.
So we wanted to make sure that those recommendations
had been implemented and really kind of understand
what the impact had been following that.
You can see the steps of our study, they're listed here.
And we will go into more detail about the benchmarking
that we conducted to compare Denton against industry.
Before we get into the details, just a little bit
of reminder about some of the changes that happened
within the credit and collections organization.
When we were here back in 2008, again,
we made a number of recommendations
which resulted in some policy changes
and changes to the way that collections
is conducted in Denton.
And I've listed those here in the upper table
just to kind of remind everyone
and put context to the discussion.
It was a pretty significant change.
We basically took the organization
from a one size fits all collection approach
to a more targeted risk-based collection
which means that we wanted the organization
to focus on those accounts that needed to be focused on
based on the financial risk.
So you can see the examples of some of the practices
that were put in place.
Some of it involved changes to the technology.
Some of it involved securing a service
to conduct credit screening of customers
when they apply for service.
And then we put in some capability to determine
if a deposit would be required or not
and if you have good payment behavior,
we would waive that deposit for new applicants.
Some changes were put in place
in January or February of 2018
and those are listed in the bottom table.
Basically, some changes to the deposit requirements
which lessened the amount of deposits
that were being secured from customers,
especially the customers
that were a little bit riskier financially.
And there were also some changes made
to the internal credit score point system
which meant that more actions would occur on account
before they moved into a riskier credit category.
So just keep those in mind
kinda as we go through the results.
First, I'd like to talk about the benchmarks
that we conducted.
We view benchmarking as an important tool
to really understand performance of an entity
and to really target and figure out
what areas can be improved going forward.
In this case, we had two panels that we assembled
to compare Denton's performance against.
The first was a panel of 15 municipal utilities
and they're listed in the upper table.
So you can see who is in that panel.
And then we had a separate panel
of about 59 other US utilities.
They're composed of cooperatives, investor-owned utilities
and municipal utilities.
We have a list of those further on in the report.
But we felt it was important to have two panels,
collections tends to be a very state-specific activity.
Lots of regulations, they vary across the nation,
east to west, north to south.
So we wanted to look at Texas in general
to understand how Denton compares to peers, local peers,
and then also look more broadly across the US
for opportunities to improve and really understand outcomes
and how Denton compares.
So this table might be kind of hard to read,
but it's basically the results of our Texas panel.
And we asked some specific questions of the utilities
to understand, first of all,
what did they look like, how many customers,
whether or not they have AMI smart meters in place,
if they require a deposit of residential customers,
and then how did they waive deposits
if they do waive them or not.
What did we find?
Well, Denton's pretty comparable.
And I was surprised at the high level of smart metering
that's in place with any municipal utilities in Texas.
That's obviously a very key benefit for a lot of things,
but especially for collections
in terms of reducing field trips
and really getting billing data quicker.
We found everyone has a deposit for residential customers.
A large portion of them, most of the cities
do waive the deposit if you have a letter of credit
from another utility, as Denton does.
A smaller portion of those utilities use credit scoring,
like Denton does, to waive the deposit.
And even the same size portion
doesn't waive the deposit at all.
So I think in general, pretty comparable to this panel.
We've got some additional comparisons
for the Texas panel where we looked at the timing
of the collection cycle,
how many days until a certain action occurs,
and the fees that are put on a customer
once they reach a specific credit action.
And again, we found that Denton compares very favorably
to this group, this panel, Texas panel.
The fees are very comparable.
I'll call your attention to the ReConnect fee.
Denton's fee is significantly lower than the panel average.
And just to orient you, Denton is in blue.
Here's the average of AMI utilities,
and then everybody else as one group average.
Other things to note here that just about all the utilities
charge a specific fee for same-day service
or same-day ReConnects, as Denton does.
And the late fee, most of the,
just about all the utilities in this panel
charge a fixed percentage, either five or 10%,
whereas Denton charges a fixed flat fee of $20.
Both approaches are common across the industry,
and both work.
I mean, the goal of a late fee is to get a timely payment
from customers, so you want it to be something
that gets their attention.
- What are the blanks?
Are they just numbers you couldn't acquire?
- Couldn't get that data from a couple of them, yeah.
Not as responsive, unfortunately.
- Garland wasn't responsive?
- No.
- We also, as I mentioned, conducted some benchmarking
with a bigger group of utilities from across the US,
and this was a little bit different.
We wanted to focus on outcomes
and more typical benchmark metrics of performance,
both effectiveness and efficiency measures.
So we had to ask for a good bit of data from them,
which involved getting an idea of the type of activities
that they conduct during their collections practices,
as well as the cost associated to conduct those.
And when we talk about collection actions here,
we're talking about active and inactive accounts,
and it's basically the inside collections, folks.
It's not the field.
And by keeping it pretty specific,
we're able to gather the right information from everybody
and compare them as a panel.
So we'll go into some of the metrics here
and kind of give you an idea of what we looked at.
For your reference, we've included a table here
that shows the four primary metrics
that we're gonna show you charts on in the next four pages.
And there's a definition included as well
for later reference.
But basically, there's two measures
that look at effectiveness and then two measures
that look at efficiency, productivity, and unit cost.
So the first metric, if I had to pick one metric
for collections, this would be the metric I would look at.
It's an outcome metric.
It's the percent of net write-offs,
which basically tells you how much money
you could not collect as a percentage of your revenue.
So again, what we've done here is,
because we did have the opportunity
to review performance back in 2008,
we've included the performance as we saw it in 2008
against what we found in 2018.
And as you can see from the chart,
Denton is in the darker bar there.
And the performance was almost above
all the panel segments in 2008.
But since then, in the 10 years,
Denton has significantly reduced the percentage of bad debt,
as you can see in the chart on the right.
The next metric is called end row.
It's the equivalent number of days
that revenue is outstanding.
Basically tells you how quickly you get your money.
It's a pretty popular metric in all industries.
The quicker you get it is the goal.
When we measured this back in 2008,
Denton was on the high side of our panel
of all the segments we looked at.
When we look at it again in 2018,
Denton is leading the pack with a significant improvement,
basically taking about eight days off of that cycle.
And we feel like that,
end row has been positively impacted,
obviously by shortening the collection timeline
and the late fee.
It does change people's payment behavior
and you will get your money quicker
with a significant late fee.
The next two charts look at efficiency.
The first one is a cost per unit cost,
cost per collection action.
So what we did was we collected the cost
of the group that is performing the collection actions.
And that includes labor cost,
includes overtime, any outside contractors or agencies,
and then anything else that is non-labor.
And we asked this of all the utilities.
We also had them tell us how many actions they conducted.
And this is an annual figure.
So the difference there of cost per action,
you can see on the charts.
And when we looked at it in 2008,
Denton had a pretty good cost per action.
And again, has a pretty good cost per action in 2018,
which tells me that they're pretty effective
at conducting these collection actions.
The next is a typical productivity metric,
which is how many actions per person
is being completed by the group.
Again, the productivity was good in 2008,
much better in 2018.
And keep in mind that a lot of these actions are automated.
There are phone calls that are sent from the IVR system,
and there's letters that are automatically spit out
of the customer information system.
But either way, they've been very effective
and efficient at producing these collection actions.
Here's the list I referred to earlier.
I guess just in summary,
the benchmark metrics show good performance improvement
from 2008 to 2018, both from our panel in Texas,
as well as our utilities nationwide.
Okay, so let's kind of sum up what did we find.
Obviously, the benchmark metrics show good performance,
but we did look at other things within the department.
And I'll go through those now.
Just to kind of show you where they were
and where they are now, I've prepared this slide,
which shows what we found on the 2008 column.
Again, sort of a one-size-fits-all.
They weren't writing off bad debt off the books.
They weren't very good or consistent at returning deposits.
And they were sending accounts to collection
at 120 days or more.
And there was a large bad debt allowance each year,
getting bigger every year.
In 2018, now they're routinely writing off bad debt.
Obviously, the bad debt has come down significantly
since then, and they've put in place
this risk-based collection treatment
to really focus the attention on the accounts
that need attention.
These two charts, I think, are quite dramatic
in terms of what's been accomplished by this group.
The green columns show that the dollars of bad debt
that have been written off in the last five years,
you can see a significant improvement there,
a decline in those dollars.
The blue chart is the number of delinquent accounts,
the number of accounts that are being worked.
And that dropped significantly, I guess,
in the 2010, 2011 timeframe with the late fee,
the rise in the late fee.
Otherwise, we think that the group has,
and the customer service department in general,
has made good use of the technology that's available.
The AMI smart meters are key for collections.
You're getting your data sooner.
You're able to act on it remotely.
A lot of opportunity and potential there.
They've also introduced a pay-as-you-go program,
which uses an app and website to manage that.
We think that's a great addition.
And then, of course, the Engage Denton app,
which is more broadly available for the city,
but does get customers pointed to the right direction
if they want to make a payment or look into their account.
We think that the reps are having better conversations
with customers.
It's now clear what the requirements are.
They're listed explicitly on the website.
We think customers understand them,
and as such, are having better conversations.
The customer service organization has also done
a good job at training and making sure that reps
are prepared to have those conversations.
And, of course, more funding has been made available
for assistance, which helps customers
who are really struggling.
And, of course, as I mentioned earlier,
we're getting the money eight days quicker,
which makes the finance department happier, I'm sure.
And the performance, again, is very favorable
when we look at both panels.
I have, however, we are noticing when we take a look
at bad debt since 2018, we're noticing an increase now.
And this is following the changes that were put in place
in January, February timeframe to really lessen
the deposit requirements.
We don't have a full year's worth of data yet.
We had about six months.
So we projected what we think the full year will look like,
and it's about a 14% increase in bad debt for this period.
We're also seeing, obviously, if you take the number
of delinquent accounts and you divide it by bad debt,
we're seeing an increase in the average delinquency amount.
So we find that concerning.
We also, more broadly, just looking at the organization,
think that there's some opportunity to automate
some of the more manual tasks that are still remaining
in the group.
So that's sort of a to-do for management going forward.
And then we also notice that customers do not have
any self-service options to ask for a payment extension
or a payment plan through the website
or automated phone system.
It's a popular option across the country
with other utilities.
And when you talk about financial concerns,
a lot of people prefer to do it in a self-service manner.
Okay, just to quickly sum up,
we do have some recommendations
after looking at the performance.
Continue doing what they're doing.
There's a lot of good best practices in place,
and we still feel strongly that they are the right practices.
We do have some options, opportunities for them
to grow and improve.
We talked about more self-service and automation.
We think it's important because of these changes
to the policy last year and the negative trending
of bad debt that the department should follow more closely
those accounts and be prepared to act quickly
if they need to.
And then I think just looking at what's going on
in the industry, there are some options for the city
and for the department to really focus
on expanding outreach for customers
who are having difficulty paying their bills
and to really work with the reps
so that they are better able to counsel
and have that difficult discussion
and point customers in the right direction.
And then maybe the city in the future
will think about some options,
perhaps different rates or different discounts
for customers who are really on the edge
and having a difficult time paying their bill.
Other cities have done this in Texas and elsewhere.
And just one more time, again, we do find it troubling
that the bad debt is going up.
So we suggest that the collections team
monitor these accounts more closely.
They work on some segmentation
so that they can better understand what's happening
and look at the payment behavior of that group.
And then perhaps use triggers
to consider assessing the deposits based on a change
rather than waiting quarterly to do it.
And then if customers, for instance,
leave the auto pay program,
look at assessing the deposit at that point in time too,
basically acting quicker and just keeping an eye on things.
And at some point, I guess, after a year's worth of data,
at least it'd be good to circle back
and really consider are you happy with these changes
and the direction that you're going or not
and then consider if any changes to the policy
would be appropriate.
I think the Pay As You Go program is a good addition
that will help with those customers
who are challenged to make a deposit,
have the money to put down,
as well as those who have trouble avoiding the late fees.
It makes it simple.
They pay for what they need when they have it.
That's all I have prepared.
I'd be happy to answer any questions you might have.
Questions?
- I have a question.
Can one account have multiple collection actions?
- Yes.
- Okay, so I guess by this definition,
they could have many even.
- Yeah, during one month, I mean,
you could move from having a late fee
on your added to your account
because you're late on your payment
and if you still don't make a payment,
you would get a call to tell you that you missed your payment
and then you get a call to say you're gonna be disconnected
and then you might be disconnected,
so that'd be three or four on that one month.
And then you take it times 12, you know.
- Where are we seeing the increase of 14%?
Is that primary residential?
- Yeah.
(sighs)
- Questions?
Well, the trend is disappointing.
(laughs)
- Yeah, thank you very much.
- Thank you.
- Did we just enable the pay as you go thing?
Not so long ago?
- Yes, when did we enable pay as you go?
- It went live February for the public watch.
- Yeah, so we haven't really got it.
- And I've got some updated numbers to share with you.
I was waiting for that question.
I know y'all are gonna have more questions than that for me.
I told Christina, they're gonna give you
all the hard questions and then I won't get any hard questions.
So again, I'm gonna just go over the impacts
of the changes that we made last year.
Just a little bit of background.
In 2010 is when we updated the ordinance
with those credit and collection policies.
That was in response to our high amount of bad debt
and just opportunities to enhance
the credit and collection policies.
So really in fall of 2017, we started discussions
with the Public Utilities Board and City Council
over several months and then in February of 2018,
we implemented some changes.
And the changes that we made
were in the plus one utility program.
We increased funding by $25,000.
We allowed customers to get assistance up to three times.
Previously, they were only able to get assistance
once in a 12 month period.
And then also they were able to get assistance
with their deposits, but that was not an option previously.
And then we added additional deposit waivers for customers
and so they could enroll in automatic payment draft
and get the deposit waived.
And then also with our new payment system,
if you signed up for recurring credit or debit card
or electronic checks or ACH,
you can get your deposit waived as well.
And then those customers that were experiencing homelessness
or working through a rapid rehousing program
could get deposit waivers as well
through the homelessness deposit waiver.
The additional changes that we did
was the overdue interest
was no longer a credit rated event.
So there was no points associated with the overdue interest.
That impacted about 1500 customers when we made that change.
So 1500 customers either required less a deposit
or no deposit with that change.
And then additionally, we changed the customer ranking,
points accrued and deposits assessed for our customers.
So we eliminated that F credit rating
and then moved everyone up and the C through E points expanded.
And so if you were a D,
now you only required a one month deposit
versus previously it was a two month
and then the E ratings was a two month deposit.
So this impacts, we had 710 customers
no longer needed a deposit increase
once we made this change.
And then 1882 customers moved from a two month
to a one month deposit.
So we had a pretty substantial deposit refund
that I'm gonna talk to here pretty soon.
So previously about 89% of our customer base
didn't need a deposit.
And currently 93% of our customers base
doesn't need a deposit with the changes.
So we were able to help eight families
with the homelessness deposit waiver
since we've implemented this.
And then for our deposit waivers
for the preauthorized or the reoccurring payment,
what that did with that payment channel
is increased adoption by 16%.
So our customers really did take to that option
of waiving the deposit, obviously with that.
But what we ultimately found over the last several months
is that when we were doing those quarterly deposit audits
and assessments to see what the health is of the account,
what do we need to charge,
55% of them had not either signed up
for the reoccurring payment option online
or did not maintain it.
And one of the challenges why that occurred
is they do need to do that themselves
because they're putting in their sensitive card information,
checking account information,
they're managing it themself online.
We don't do that for them.
So they can dynamically change it as needed with that.
So that's definitely an opportunity
that we're gonna discuss further on.
- Let me just make sure I understand that.
So they initially signed up,
they didn't need to have a deposit,
but they didn't renew it.
So now they probably should have a deposit,
but they don't.
- Correct. - Okay.
- Correct.
- It was a circle.
- Sure was. - Yeah.
- So this is our deposits by class that's on file,
broken out by multifamily, residential and commercial.
And so you can see that our commercial deposits
have increased what we have on file
compared from March of 2018 to January, 2019.
But overall 33% fewer accounts have deposits now
and our reduction in our deposit balance has been $822,000.
And so currently 13% of our accounts
have deposits on them.
Previously, we had about 20 to 21% of our customer base
had deposits on there.
So also our deposit refunds on active accounts
increased by 12% based off of all those changes.
So that's really what influenced that reduction
in the deposits while we had so many deposit refunds
with that this year.
So I think this is an important story to tell
what we have on file right now.
So our unrecoverable debt, that is our debt
that goes 180 days past the final billing date.
That's when we deem it unrecoverable debt.
And so one of the things I wanna point out
is that we do not, and Christine pointed this out,
we don't have a full year's worth of data
'cause we have to wait until 180 days
and then we write it off.
So we still need to do September of last year
currently right now.
So that's a big sticking point with this presentation
is we don't still have a whole year of impact with this.
But what we are seeing right now
is a projection of about $38,000 increase in total debt.
So it's going from 381,000 last year
to approximately 419,000 in our unrecoverable debt
at this point.
But again, we do not have a full year's worth of data.
So with the Plus One Assistance Program,
that is administered through our Interfaith Ministries
contact that we have.
And because there's a financial tie to this,
we wanna make sure that we're getting a good experience
with our customers with that contract.
And we recently did a customer satisfaction,
a survey component that had,
we surveyed customers that got assistance,
customers that were denied assistance.
And also we did a secret shopper component as well with this.
And what we found is 90% of the customers
that sought out Interfaith for assistance
were pleased and satisfied
and would recommend to family or friends.
But there were some opportunities
that we need to address as well.
We did have some customers that were not called back
when we reached out to Interfaith.
The secret shopper that went in person
was not called back to get assistance.
And then we had some conflicting information
on the website and on the phone.
So we sent a letter letting them know,
we did this survey and these are our findings
and we would like an action plan
on how you plan to address those.
And over the last week or so,
we've been going back and forth with Interfaith
on follow-up questions.
So we can really get a good service level agreement
and how we can make sure
that our customers are getting what they need.
'Cause a lot of times the customers
that are seeking assistance need it quickly
because they could potentially be disconnected
for non-payment and are just experiencing something
that's very challenging.
So with that being said,
81% of the customers that sought out an appointment
were granted an appointment with that.
And if they did not get an appointment,
the reasons being is they either canceled the appointment,
they didn't need it any longer,
there wasn't a true crisis,
or they want the account older
or they weren't on the actual utility bill.
But for the customers that did get an appointment,
68% of them did receive assistance.
And so the reasons why they get denied the assistance,
74% of them didn't show up to the appointment,
they either canceled the appointments
or they didn't fill out the required documentation.
The biggest change from when we updated the parameters
from last year to this year,
the number one reason why they were denied an appointment
or assistance is 'cause they needed it more than once
in that 12-month period.
So with that change in the program,
that's been completely eliminated
as a reason why customers were being denied.
So overall, the increased funding
has made a positive impact.
We've been able to assist 71 more customers for them,
have got deposit assistance,
and 35 families have been able to receive multi-month.
And so those 35 families wouldn't have qualified previously
under the old parameters.
So we're assisting about seven more families a month.
And right now, our fund forecast
for this current fiscal year is we're right on track.
However, our big months,
June, July, August are coming up,
and sometimes those can be a bit unpredictable,
but those are always our highest
when the customers have the most need.
So if we're right where we need to be,
we're saying we've got enough.
However, if the board and council wanted
to add additional funds this fiscal year,
we do have some savings in our budget
to be able to accommodate that.
So we could do a five to $10,000 increase
if that is something that the board has an appetite for.
So Pay As You Go is a program
that we did our public launch on February 7th.
Prior to that, several months before that,
we were giving customers the option
when we were talking to them over the phone
so we could really grow into the program
and make sure we were ready to go for the public launch.
I have an updated number as of about two hours ago.
We're up to 104 customers on the prepaid program.
So just since March 5th,
we've increased it by 20-something customers.
So we're able to take the deposits on customers' accounts
and make that to payments on the account.
We're reducing the debt that they've had
on the accounts currently.
The majority of the customers that are on the Pay As You Go
have been customers who have switched from post to pre.
So they were postpaid previously.
Now they're going to the prepaid.
So about 64% of the customers that are on it
have switched over.
And then the rest are 36% are new customers
coming into the utility system
that have opted to go for Pay As You Go with it.
So we're pretty excited about that,
the Pay As You Go option that eliminates deposits,
late fees, bad debt.
Just really excited about it.
So our continued improvement.
So through our collaboration with Navigant
and our own internal analysis,
we have found that we truly need to have
further assessments of the impacts over time.
Right now, again, we don't have that full year.
And so we're wanting to make sure
that we're addressing the things
that we are seeing now specifically.
As Christine brought up,
those customers that have said,
"Yes, I want to waive my deposit.
"I'm going to sign up for reoccurring."
We need to make sure, how do we verify that?
And so the challenge with that
is we're needing to create some reporting
with our payment system
and also our customer information system.
We've already been working on that
for the last several weeks.
How we can do that.
So we can address that
when someone is not being compliant
to what they said they were going to do.
Not wait till that quarterly deposit assessment
and address it immediately
as soon as they are not showing compliance
with why the deposit was waived in the first place.
And then continued enhancements for the Plus One program.
So this year, if additional funding wanted to be given,
we could do that.
We are going to go ahead
and put in an additional $50,000 in our budget for '19-'20.
Just in anticipation of just need for our customers
and just want to be responsive to that.
And then educating our customers on the assistant options.
So Navigant did bring up,
how can you take those customers
that may say trigger things like financial crisis,
health issue, how can we address what their need is
in a more holistic manner.
And so making sure they know all the options
that are open in the community.
So we're having some conversations with the team right now
on how we could train certain reps
to have a group of people that work through
kind of these crisis situations
in addition to the interfaith ministry program.
And then continue to review our current contract
with the interfaith ministries and our available options
to make sure that we have that good customer service
experience and responsiveness
that we desire for our customers.
And then lastly, just continue to increase
that pay-as-you-go option,
make sure we got that public awareness.
We just went live a month ago,
so now we're actually crafting some videos
and additional marketing that we could do
to make sure the customers know about that option.
And then just ongoing staff training regarding that.
So those are the changes I wanted to discuss
over the last year, where we're at right now,
what our plan is to address what we've seen thus far.
And I'm happy to answer any questions.
- Questions?
- Can we go back to the,
it's the plus one assistance program
with the interfaith logo on the top.
- This one or the next one?
- The next one, I'm sorry.
Yes.
Okay, on the funds forecast.
- Could you move closer to the mic again?
- I'm sorry, I'm sorry.
I'll have to lay back.
Opportunity for additional five to $10,000.
I don't recall how that funding works
and how those monies become deposited
into that account for use.
- So we give interfaith ministries,
we write a check for them,
I believe on it's a quarterly basis right now.
And that's the pool of money that they have to use.
Yes, sir.
For the plus one.
And so we get a report on a monthly basis
saying here's all the funds that we've used.
They do call us daily or send an email to SLS.
No, I'm gonna help Dr. Banks with this amount of money.
So we're able to see daily what they're doing for us
so we can document that on the customer's account,
prevent them from being disconnected
while we receive those funds with it.
But that's, we distribute the money to them
to be able to use.
- Yes. - That's how that process works.
- So does the total balance of the plus one account
go out to interfaith or is it just as they request
what they need, that's it?
- It's the contract amount per year.
So I don't know, correct me,
how much do we give them on a quarterly basis?
- It's gonna be $25,000.
- Flat fee? - Flat, I'm sorry.
- Okay. - That includes their admin fees
and the distributions for the amount to be administered to.
- So, yeah, I'm sorry.
Their administration fee is a flat fee.
It's not based on how much they disperse.
- Correct, their administration fee for this year
when we upped it to $125,000 is $18,966 on an annual basis.
- Okay, it's this annual budget of $125,000.
- Yes.
But we pay them quarterly. - Correlatively.
- Yes. - Okay.
- But we're in constant contact with them
to make sure that they don't run out of funds
and that the customers are never given the reason.
- What's the balance of that account, our account?
- Right now for this fiscal year.
- Just total.
- Well, it's based off of fiscal year.
- So you don't keep, I mean,
like if you have $25,000 left over,
you don't keep that in that account?
You erase it at the end of the year?
- No, we pay them out on a quarterly basis.
No, we don't.
I see what you're saying. - Yes.
- We use all the funds.
We've used all the funds every single year.
- Yeah, I was gonna say.
- They could use more than every year.
- Yes. - Yeah.
- So the average amount that a customer gets assisted
right now is about $369 and 40% of the customers
that get assisted is over $500 when they get assistance.
So when they do make assistance for a customer,
it's pretty substantial for it.
But I can find out exactly how much we have left
unless Adam can pull that while we're--
- Let me make sure I understand this again.
Maybe I didn't understand what you were saying.
At the end of the year, if you've got a balance
of $25,000 in the plus one account that you haven't used,
do you clear the account?
- No, we can continue to still use those funds.
- So that--
- It can be rolled over, but we've never had an extra
to be able to roll over. - Where does it go?
Where does the $25,000 go if it doesn't roll over?
- It's always been used. - We've never had it.
- It's always used.
- It's always been used. - It's always used.
- So have you taken more out of the city's accounts
to if you've under collected for that $125,000?
- I'm sorry, I guess I'm not following the question.
- Okay, so let's say you didn't collect $125,000
from plus one.
- Well, we allocate, in our budget, customer service budget,
we have a line item that's for interfaith ministries,
the plus one program for 125,000.
So we fund it at the beginning of the year.
- So if you do collect or you don't collect,
you're giving them 125,000.
- Yes.
- And then the returns may just come out of general revenues,
or not general, but utility revenues.
- Yes, sir.
So we fund it October 1st.
We're funded for 125,000 for that year.
And then we give interfaith that payment on a quarterly basis
for them to be able to use.
If they say, hey, we're running short or low,
then we can always increase that for them.
- But the one slide said that you had an opportunity
to put another $5,000 to $10,000 into that.
- So we can increase our,
but we can do a budget amendment for this year,
'cause right now we have appropriation for 125,000.
If we say that we wanna have additional funding
for these families coming in with the heavy months,
then we can increase that by 10,000.
So we'll have an additional $10,000 to assist.
- I heard that and I read that,
but why, where those numbers come from,
the number five to $10,000?
- That's just a projection
based off what we're seeing right now
with the heavier amounts coming in
and the amount that they're assisting right now
with 40% of the customers are getting up to $500
when they're coming in, and that's right now.
- So you think that number's gonna be higher
is why you've thrown out the--
- Well, the summer month utility bills are higher,
so usually that's what's obviously
increasing the fund need for that.
- But we had summer months last year.
That's what I'm not understanding is what--
- We have summer months, that's correct,
but one of the things with the changes in the program,
a customer can get assistance up to three times now,
and so the same person, repeat customer,
can go back and need assistance again.
So that's been the change in the additional need.
And also deposits are also included
where they weren't previously.
So a new customer coming in
or a customer that gets assessed an additional deposit,
they get assessed a $200 deposit,
they can go to Interfaith and say,
I'm struggling with this,
they can get assistance for the deposit.
So that's another thing we did not have last year.
So again, we're trying to really grow through this
to see, okay, this is the needs that we're seeing
with the program changes.
So we didn't have those changes last summer months.
I just wanna make sure that if you had an appetite
to increase those funds,
that we were able to help those families.
- If you foresee it going over our usual budget,
that I'm all for increasing that number, so.
- Thank you for the questions.
- Thank you.
- I have a question, but I can see you want one.
So go ahead, Brent.
- I have a question, just kind of what you talked about,
a little bit about the prepay program,
not the pay as you go,
but the prepay where they get the deposit waiver
if they sign up for preauthorized payments.
Do you give them that deposit waiver
before they actually sign up for preauthorized payments?
- So that's one of the opportunities
is that they're coming into the utility system
and we usually collect the deposit upfront
to establish the account.
Their account number isn't established
and they need the account number
to set up their payment portal
to be able to sign up for draft.
So that's one of the challenges
is you don't have the account number set up
until we've gotten the first bill
and it's established for you to get your account number.
So that's one of the challenges that we have found
is we're kind of trusting that they're gonna do it
and that hasn't worked.
So we're gonna have to find different ways.
- Do we have an idea of how many of them
promise and then don't follow up?
- 55%.
- Oh, maybe that's not an option.
- You said it, I didn't, so.
- Well, perhaps that could just be simplified
by collecting the deposit and then reimbursing it
when they've set it up.
I mean.
- That's a recommendation that we definitely can take
'cause what is happening is I know
during the deposit assessment, the audit,
55% said they're gonna do it.
That number is the exact same number of people
who took that option and just didn't maintain it
or didn't do it.
- And they're already high-risk customers anyway, right?
- Coming into the utility system,
we have about 26.8% of our customers coming in
would require a one-month deposit
and then 34.2% would require the two-month deposit
and 45% of those customers coming in that need a deposit
say I'll just pay the deposit.
The other 55% say no, I'll do the deposit waiver
and then we're finding that 55% did not sign up
for the waiver nor maintain it.
So it's very correlated to what's going on.
- From where I'm sitting, then we either do like Brendan said,
you charge in the deposit and refund it after they sign up
or we don't do it anymore because the bad debts are,
I'd rather give more money to the plus one program
to help those people who really need it
than to be doing this.
- That's an option we're vetting out right now
and we don't need an ordinance change with that.
That's an internal thing.
So that's definitely a takeaway for us to dive into.
- I have one more question.
So after 90 days, we send it to a collection agency.
Do we bid those services out annually?
- Yes, it goes to, it's not bid annually.
It's a three-year contract, one-year renewals
customer, pardon me, credit collections international
has that contract right now.
They have about a 30% return rate for that overall
for what we've placed with them.
They've collected 30% for us.
- And then after 180 days, we really, really write it off
or we sell the debt to somebody?
- We do not sell the debt to someone.
We just write it off of our books.
So we know what our age debt is with it.
But CSI, the collection agency continues collection efforts
'cause obviously they do not get paid until they collect.
And so they continue to scrub accounts
and see if someone has popped up in another utility system.
- That's part of our contract.
- Yeah, we don't, that's inactive collection.
So we pay them to do it.
- Okay, all right.
- Could you go back to the slide
where you showed our previous, what, our policy, what,
oh, you almost go back this way.
That one. - This one?
- So do you have any data that would say
if we kept both of them at two month average,
would that have made a difference also?
Or the deposit is working, the deposit itself,
whether it's one month or two month, works
if they actually sign up for the reoccurring?
Is that the item, I guess is what I'm trying to ask,
that's probably causing the increases,
that we're not getting a deposit
when somebody should have had one?
- Particularly not getting the deposit
based off the payment behaviors that are going to come.
And then also it's always based off
of what ends up happening with that account.
And because it's a postpaid environment
for most of these accounts, they got that current bill
and then what they used, 'cause we're not billing it
till 45 days out with it.
And so that one month deposit isn't covering
that last bill amount.
- Which is why most utilities use a two month average.
- Yeah. - 'Cause it's too late.
- So it's definitely an influencer.
- All right, thank you.
Other questions?
Okay, did you need direction from us?
- We go to council tomorrow with the same thing.
So definitely if they are supportive
of an additional plus one increase for this year,
then we'll be coming back with a budget amendment
regarding that.
So I think that's the item that I'm seeking direction on
right now.
- Everybody's shaking heads, so.
- 'Cause those hot months are gonna be really hard
on the elderly and some other--
- And with the program changes,
we really don't know how it'll be impacted
since we changed it significantly
by the last three months. - Correct.
- We're gonna know come the summer
and I'd rather have additional funding.
And of course if we don't use that funding,
we can roll it over and use it.
I think we're gonna use it though.
- Yeah.
- Keep us, try to find some way to keep us up to date
on their responses to their performance improvements
on responding to people who get back with them.
I'd hate to think that they weren't meeting
their contractual responsibility.
- We can definitely, what we can do is share the response
to the action plan where we asked and then the follow-up
questions, we're still working through that,
so I didn't have that final document to share with you
tonight, but wanted to let you know about the conversation
that we're having, but we can bring it with an ACM update,
have it as backup material and be happy to answer
any questions once we get over that.
- Is the mechanism for making sure they actually
disperse those funds to people in need part of this review
or no, you're confident--
- We can definitely see that they're dispersing the funds
since we can, they're calling us and emailing us.
So we knew they were using the funds appropriately
with it, it was just, we were doing our own kind of calling
of the system and we're seeing some conflicting
information, like, you know, let's just make sure
that our customers are getting what they need
and some responsiveness and so we're glad that we checked in
and kind of trust but verify.
- Thank you.
- Anything else?
Thank you for your time tonight.
- All right, the next item, unless does anybody need a break?
No, okay, receive a report and hold discussion
to provide direction on the peak concrete
water reclamation plant capacity expansion feasibility.
Thank you all for coming, appreciate it.
- Thank you.
- So are you ready to go?
- Ready to go.
- Okay, good evening.
Take a minute here and introduce Brad Miller.
He is with our consulting firm of Hayden and Sawyer.
He's an associate with them and he's the project manager.
So we'll be doing a tag team presentation here on this one.
So Ken Banks was talking a little bit earlier
about the capacity and also we will discuss
that a little bit with you.
There are two plants, the Robeson Ranch plant
that you heard about is the small plant,
captive for Robeson Ranch.
The larger plant is the Pecan Creek plant,
which is off of Mayhill Road.
Spencer Road comes into Mayhill and you just go straight
they'll take you to the plant there.
So this plant is permitted to treat 21 million gallons
per day average flow.
And we can treat up to 46 million gallons
during peak wet weather conditions.
So for up to two hours, we can treat 46 million gallons.
So TCEQ has a rule on when plant capacity
has to be expanded.
This is called the 75 90 rule.
So when the plant capacity on an average daily basis
365 day running gets to 75% of the permitted capacity,
which is 21 million gallons.
So 21 times 0.75 gives you point 15.75 MGD.
And then that's the time the design has to begin
for the plant expansion.
And when the capacity gets to 90%,
which is 0.9 times 21 gets to 18.9 MGD,
then the construction has to begin.
So we can keep up with the flows coming to the plant
and continue to provide the service
for expansion in the city.
So if you look at the data,
here is the actual flows that we have experienced
in the last few years from 2014 through 2018.
This is the projection going forward, as you can see.
So if you go by that 15.75 MGD,
sometime between 21, 22,
we will probably hit that number.
So that's what we are looking at,
as to when we will have to do a plant capacity expansion.
And this is one way to keep up with that.
Plant costs have gone up substantially
in the last several years.
Just to give you a comparison
when we did the plant expansion back in 2002, 2003,
we were able to do it about $3 a gallon.
And we added about six MGD capacity at that time
for roughly less than $18 million at that time,
17 million, 700,000, and then design costs and all.
So it was over 19 million with design costs.
But we added a lot of concrete for our beneficial reuse
for the compost operation as part of that.
Now, we look at the Metroplex,
and if you go west, it's even higher.
$10 to $20 a gallon of wastewater treated,
depends on the size of the plant.
Small plants cost more,
and larger plants, because of economy of scale,
they cost a little bit less money.
So if you just use a number of five million gallon
plant expansion, or to build a new plant,
50 to 75 million dollars,
based on the level of treatment required.
And this is getting more and more stringent
as you go forward.
Trying to get a permit from TCEQ,
going to a lake is getting harder and harder.
And with that, I'm gonna turn this over to Brandt here
for the next few slides, and I'll come back after that.
- All right, thank you, PS,
and thank you all for the time this evening
to share a little bit about this project.
As PS mentioned, kind of faced with those costs
for expansion of the plant.
Pretty high, $10 to $20 per gallon.
He wanted to first look at,
are there things that we could do
with the existing infrastructure
to get more capacity of the plant?
Are there new technologies out there
that would allow them to take advantage
of the investment that you've already made
in the concrete plant?
And really with the goal to increase capacity
at a lower overall cost.
And the criteria that we were given by PS and his group
was that they were trying to get an additional five MGD
out of the plant in terms of average daily flow.
They did not want to expand the plant
in terms of the actual physical footprint.
They wanted us to look at enhancement technologies
on the market today.
And so we several years ago had partnered with PS's group
to develop a process model,
which basically models the existing facility
and the performance of that facility
through a computational model, computer-based model.
And so we plan to use that same model
to evaluate some of these technologies.
We're able to do that feasibility or a desktop level analysis
before actually putting anything in the ground.
So we proceeded to identify several alternatives
to look at as part of this project.
And they're kind of categorized as one, two, three,
but the first one is targeting primary treatment,
which is the first major unit process of the plant.
Really there to remove most of the solids coming in.
And the three kind of sub options to enhance treatment,
that unit process treatment was one,
to add chemical to the process
to be able to get more solids out
and increase overall treatment capacity.
The second one was to put in
some kind of filtration technology,
which again, the goal would be to remove more solids
upfront of the biological process.
And then the third one is called the Captivator system,
which is trademarked by Evoqua.
They're the only ones that make the system,
but it's essentially a technology that enhances
the solids removal in that phase of treatment.
The second area that we looked at
was the secondary process itself,
which is the aeration basins, it's the biological process.
And several options that we looked at,
one again is trademarked by Evoqua is called BioMag,
which is basically adding magnetite to the wastewater,
it allows you to push more flow through your existing plant.
IFAS, which is integrated fixed film activated sludge,
which essentially is growing biomass on plastic media
that you add to the basins.
So you're not expanding concrete,
you're trying to get more treatment
out of your existing volume.
And then the MABR is the membrane aerobic bioreactor,
which is essentially IFAS on steroids.
It's a technology improvement beyond IFAS
that uses membranes to infuse air
into the treatment process.
The last one was really just to look at
the site specific conditions.
So the clarifiers that you have out there,
the settling characteristics of the sludge,
sometimes those things are better from one plant to another
and we're able to justify additional capacity
just based on the characteristics of your sludge.
And then the last one is recycled solids.
With any wastewater treatment plant,
you're also treating solids that are leaving the process
and you have some solids that come back to the plant.
If we can improve that removal efficiency
and get those solids out,
then it increases overall capacity.
So at the end of the day,
what we found was that SEPT,
chemically enhanced primary treatment,
was the least cost option to get the additional 5-MGD.
Our planning level capital costs
showed that this was about $2.80 per gallon.
So very similar to the 2002 expansion that was done
and much lower than the 10 to $20 per gallon.
So total cost would be about $14 million
and that includes additional solids handling capacity
'cause you've now increased the total capacity of the plant.
You have to be able to handle those solids as well.
And as I mentioned, it did compare favorably
to the $50 to $75 million that PS had just mentioned.
And one other thing to note,
one reason this option was fairly attractive at the plant
was because one of the chemicals that is used is iron
and you're already using iron at the plant
to remove phosphorus.
So we're kind of taking, killing two birds with one stone,
taking advantage of what you already have to do
to also increase capacity at the plant.
(mumbles)
- Thank you, Brian.
So the 5-MGD was my high number.
I didn't think that we could get 5-MGD.
I always, all these years,
I thought I could always get two to 3-MGD.
So we actually did some jar testing
and with the jar testing,
that data was put into the model for the CEP process.
So there's a little bit more comfort level
that yes, we can get there.
If we do this 5-MGD expansion here,
then we have a plan to build
in Hickory Creek Basin in the future.
We can continue to pump flows
from the Hickory Creek Basin to this plant.
And we, instead of building a plant there in 2027-28 timeframe,
we can push it by 12, 13, about 2040 timeframe.
So that really makes a big difference
in how much money we have to put out.
'Cause that plant, we looked at total build out,
based on projections, was 24 million gallons per day.
So I was looking at first module of 8-MGD
and then another rate and another rate after that.
So 8-MGD plant, at least $80 million.
So we don't have to put out $80 million in 2027.
But we can do this about $14 million
and push that expense further down the road.
On top of that, when we do build that plant
in Hickory Creek Basin, we have a permit
for a small plant in Clear Creek Basin.
0.95 million gallons per day, 950,000 gallons per day.
We are going to do away with the plant construction
in the Clear Creek Basin and pump all that
to the Pecan Creek plant.
And down the road, when all the flows
from the Hickory Creek Basin are diverted
into the Hickory Creek plant,
then we have excess capacity left over
in the Pecan Creek plant that will serve
for the entire Clear Creek Basin.
So it's a huge saving.
It'll add up to a couple hundred million dollars
by the time it's all said and done.
So how we get there?
Now we know that, yes, it is feasible for us
to do this plant.
By the way, we actually asked our consultant
to also look at the loading
from the plant effluent at 25 MGD.
And what will be the plant effluent
that TCEQ should be giving us?
And if we don't load any more pounds
of the same pollutants,
we can live with the lower discharge limit on us
because we treat at a level much lower than right now.
So talking to my plant guys and our plant superintendent,
they feel very comfortable that we can take a lower limit
on the plant effluent and still provide the treatment
and meet the regulatory criteria.
The estimated cost for the sub-process upgrade
where we are not adding any more capacity right now,
'cause we don't have a permit, right?
But we can change the process
and we work with TCEQ and show them
that this is what we're going to do.
Majority of the system is already in place
as part of the phosphorus removal process,
but we have to add polymer.
So we have to house that unit.
We have to put a pump for it, electrical.
There is some additional sampling equipment to buy
to get all the data.
So we will then, once this is set up,
then we will run the plant in this mode for about a year
to prove to TCEQ that, look, this works.
So we want to come back and do a major amendment
to our permit to get the 26 MGD instead of 21 MGD
average daily flow capacity.
So if the board will give the direction today
to move forward with the sub-process,
then we will come back at you for the authorization
to spend the $100,000 as we collect the data
from the vendors and we bid that and we come back at you
that this is the expenditure we're going to do.
And with that, I stand for any questions.
- Nope.
So just to clarify, we would switch to the SEPT process
but not actually do the treatment.
Is that what you're saying?
- No, we will do the treatment with that.
We are already actually adding ferric chloride downstream.
This will allow us to add that ferric chloride
upstream process in the primary site.
And so-- - I guess I'm confused
how we, how does what we want to do differ
from what we're going to end up doing?
Because it says it's only going to cost $100,000
to move to that process. - Oh, the $100,000
is to install the initial system to,
because in the future then we'll have to add a digester,
we have to have more irrigation capacity,
we have to have, those are the two big things.
So those costs are also added into the $14 million.
So those we don't need right now.
- So this is more like the pilot program.
- Yes. - To prove it.
- Very true. - And then, okay.
- Got it.
- On page three, you show some historical projection data.
Did we build a new treatment plan or something in 2017?
What-- - No, sir, this is--
- How did we get a reduce
and that kind of reduction in flows there?
- These two years ago, if you remember,
we got 57, 60 inches of rainfall.
- Oh, yeah.
- And during that time, we get infiltration,
inflow in the sewer lines.
If a manhole, somebody opened a manhole cover
in the, where the creek is and the line is there,
water gets into it.
There are cracks in the lines, groundwater gets high,
it goes through the cracks into the sewer line.
- Okay. - And it goes
through the manholes, which are in the creek area,
through the manholes, so they get more flow.
TCEQ recognized that, that this happened
not only in Dallas area, but around Texas.
So they didn't come after anybody
to start expanding the plant at that time.
And as you can see, we do have a very robust infiltration
inflow control program in place,
working with our asset management program.
So we continue to enhance our system
on the collection system side.
So the intent is to spend the money there,
so we don't have to spend the big bucks
to expand the plant.
That's what it would, that's what it is doing for us.
'Cause the flows are right now,
what we had back in 2003.
And we probably added about 35, 40,000 people
in the city during that window, and lots of businesses.
So it's a testament to the money we've been spending
on new lines, new interceptor sewers,
and all the existing sewer system that we have
that we continue to rehab those.
Either we do point repairs, or we go in
and put a brand new line to replace the existing line,
so that it cuts down the infiltration inflow.
- Okay. - Okay.
- Do we know of anybody else who's done this before?
- The CEPT process is not new, so yeah, it's been around.
In fact, when we started out the phosphorus project,
CEPT was one of the options at that time.
It's kind of, we already have this,
because we have multiple points of injection
of ferric chloride that were built.
So the point we will be introducing ferric chloride now
is already built into the system.
- Okay, all right.
- Okay, so it's been done before,
but we still have to prove it?
- We have to prove it to get the additional capacity.
- For the permit? - For 21MVD,
we could do it. - Oh.
- Yeah, to get the additional 5MVD,
yeah, we need to get that.
- Okay. - Okay, so what does
the $13.9 million, what does the 13.9 pay for?
- Well, it will pay for the total 5MVD expansion.
- What is that?
- Well, it will include, the chemical feed is already there,
but it has the digester, like I said,
it has the aeration equipment,
we'll have to add more aeration,
so we'll have to buy more compressors
to put more air out there, I'm trying to remember.
The solids handling in the system,
that will be upsized. - The what ones?
- Solids handling,
because when we precipitate out the solids,
we have to treat those, right?
- Yes, I hope so. - So that system
will be, as part of that expansion,
it will be put in place also.
- So is there, but there's not a lot more expansion
of capacity as far as what you're storing
or letting settle, like in the past, is that correct?
- Correct. - Okay.
- The vast, PS mentioned the vast.
- You need to go to the mic.
- As PS mentioned,
I think the vast majority of the 14 million
is in solids handling,
so we looked at the capacity of all the existing
unit processes to handle the solids,
so that's thickening and then digestion, he mentioned,
which gets it to that compost product that you all use,
you have to do digestion,
and then dewatering to remove water
before you send it to composting.
And all of those areas were designed for 21-MGD,
so when you go to 26-MGD,
you have to have more volume and more capacity
and more mechanical equipment
to be able to treat those solids,
and there's really no intensification option
to get more out of those than you already have.
- This is more on the end
than the beginning of the treatment?
- Yes. - Okay.
- So today you're asking for head shakes
on $100,000 to prove it.
- Yes. - Okay.
- And you're really gonna prove it by showing
that the affluent is getting properly treated, right?
We're not increasing our capacity,
we're just changing to this system,
dumping this chemical in there,
and then gonna demonstrate that yes,
this chemical's working with our affluent.
- Yes. - Okay, okay.
- And you'll bring the item back officially?
- Yes, once we get authorization from you,
we are going to go ahead and start putting together the bits
for buying some of the equipment that we need.
That is what the cost is. - Okay.
- 'Cause we have to house, we have to build a small building
to house the chemical unit there, the pump,
the electrical instrumentation, all those things in there.
- Okay.
- I suspect we're gonna be pulling this chemical back out
before we dump it in the water, right?
- In the creek? - Yes.
- Yeah, it's not going into the creek, because--
- It just goes without saying.
- Yeah, it goes in-- - We want it back out
before we dump it back in the creek.
- Just close it downstream from our--
(laughing)
- It gets precipitated, and then it goes into our digester,
and then we press it, then it goes into the compost.
- All right, okay, thank you.
- So head shakes?
Oh, I'm sorry, go ahead. - Oh, yeah,
I just had a quick question, could you,
what are the chemicals that are going to be added?
- Fetichloride and anionic polymer.
There's another polymer we'll be adding
to enhance the settling.
- And that's it?
- That's it. - That's it.
Okay, thank you.
- So, direction, everybody's good?
- I'd move forward. - Move forward?
- I think. - I think so.
- Yeah, that would be a good plan.
- That's the only way to spend your money.
- Thank you.
All right, so we're gonna skip the closed,
and we'll go into the consent agenda.
Does any board member wish to pull an item
from the consent agenda?
Items A through, oh, J, long one.
- I do, I'd like to, I'm sorry.
- That's okay. - I'd like to pull
item G.
- All right.
- And I'd like to pull item D, as in dog.
- D as in dog. - Dog.
- G as in girl.
- And just, what's the relationship between A
and the work session item that we heard about?
- That would be approving the agreement with--
- Taking action.
- What he's already presented on.
- Correct. - Correct.
- All right, so do we have a motion to approve items
A through C, B, F, H, I, and J?
- I move for approval recommendation.
- I second.
- All in favor say I.
- I. - I.
- Opposed?
Carries, okay, item D.
Anybody here to address item D?
Oh.
- We don't wanna get out there.
(laughing)
- It won't be hard at all. - Sorry about that.
- That's all right, good evening.
I'm Jim Janes, I'm one of the project managers
in the engineering capital improvements division.
So I can answer particular questions
or I can do a brief run through of what the item entails.
- Maybe I can get you out of this real quick.
My question is, my clarification question would be,
the reason the increase in the engineering fee
is because there's additional right of way
that wasn't planned for originally, is that correct?
That needs to be acquired?
- Yes, additional easements and right of way parcel.
Acquisitions that weren't immediately apparent,
but as our consultant got well into the design,
they found that they were necessary.
- So that could be additional funds necessary
to acquire those easements and right of ways?
- Yes.
- We don't have an estimate for that number yet?
- No sir.
- Okay.
- I don't have that for you tonight, I'm sorry.
- Okay, that clarifies, I'm fine.
- Okay.
- Okay, do we have a motion to approve item D?
- Move approval.
- Second.
- Okay, all in favor say aye.
- Aye.
- Opposed?
Carries.
Item G.
Do we have, oh, here we go.
Of course you're gonna pull a network contract.
Do you have a specific question?
- Well, my questions are actually kind of have more to do
with like how many employees are we providing
safety shoes to?
- I knew you were gonna ask me that
because I do not have the answer specifically.
It's for all of our field service crews.
So that includes water, wastewater, drainage, solid waste,
the warehouse staff, parks, airport,
anywhere that they're having out in the field working,
they have certain safety requirements.
- Does anyone have a guess?
200, 500, 300, 150?
- That looks like about 600 and some odd pairs a year
at $150 a pair of boots.
- Yeah, our average is about $150 per boot.
- So it's one kind of boot.
It's not multiple types of foot gear.
It's just one type of boot essentially.
- It's a type of boots,
but they can choose different styles, right.
- Do they have any financial responsibility
for acquiring the boot or is it just something we provide?
- No, the city provides it as part of their uniform.
- And if they work for us for three months,
they get the boots?
- We do have, each department has their own specific policy
for their uniform, but I believe they get one pair a year.
- Okay.
Okay, all right, thank you.
- Okay, that was easy.
- That was just a lot of money for boots.
I just wanted to know who we were giving boots to.
- Move approval. - Okay, second?
Is there a second?
- Second.
- All in favor say aye.
- Aye.
- Carries.
All right, so then now we go into closed.
Okay, it's about 822 and we'll reopen the public portion
of the board meeting.
Next item is consider approval
of the public utilities board minutes of February 25th.
Are there any changes or corrections?
Then they'll stand approved as presented.
And our next item is consider the adoption
of an ordinance authorizing the city manager
for the sale of natural gas with enterprise projects
in operating LLC.
- Thank you very much.
Good evening, George Morrow, general manager of DME.
I'm here tonight bringing forward to you
for your consideration a proposed natural gas contract
for the deck.
Our current contract expires at the end of this month,
so this would be a replacement arrangement.
And it's with a party that we have some experience with
called Enterprise Products Operating LLC.
And that experience has been extremely positive.
So I wish I could say more tonight,
but just the nature of the competitive gas market
and the terms of our business arrangements to buy gas,
I'm really not at a liberty to go further into it.
Though I would mention to the public
that we did hold a closed session earlier
to kind of go through the details of that arrangement.
So with that, I'm interested if you're in the recommendation
from the PUB to authorize city manager
to enter into this agreement with enterprise.
- Yeah, I'd like to make a motion to approve consideration B.
- Okay, all in favor say aye.
- Aye.
- Opposed?
Motion carries.
- Thank you very much.
- Take over Kenny.
- Okay, I will.
Thank you, Madam Chair.
We have a few items on the ACM update.
The first one is the FY18-19 first quarter financial report.
There's a large amount of information available to you.
Mr. Tony Puente is here to answer any questions
any of you that might have on that.
Item two is the wastewater services agreement update.
That item went forward as an informal staff report
to the city council on the last Friday reading file
because we were not able to get scheduled
a work session item on that.
The work sessions are getting very stacked up.
And so we provided it as an ISR
and I just simply wanted the board to have the opportunity
to see the exact same information
that we had provided to the council.
DME has provided the Georgetown power supply overview
and I'm sure that George would be happy to answer
any questions that any of you might have.
On our future agenda item list,
we have a couple of items that are still pending.
The MCI poll attachment agreement we're still working on
and so we'll work on getting that rescheduled
to a future meeting.
The same is true of the EGLE substation item.
The Hazen and Sawyer wastewater treatment plan expansion
you heard this evening so that one's been completed.
And then the pipe bursting agreement.
We're still working on that.
We're actually progressing with the design phase on it
but we've got to finalize the agreement.
We're getting close and we hope to bring that back
to you shortly.
The only other item is the new business matrix
and we have two items on that matrix
at the current time.
One of them was to consider whether or not
to move the public utility board meetings
to morning time only and we'll schedule that
to come forward at some time in the near future.
And then we have another pending item from Mr. Cheek
regarding what we're paying for the energy
and how long the contracts are, the options.
So we'll be able to bring that back
at some point in the future.
- Did we just do that?
- Well, essentially, yes.
- Plans, we have our weather plans
and our existing up there.
- Yes, Dr. Banks, so in the closed session we just had,
we touched on that subject as part of our review
of renewable rate agreements.
So I think unless there's further questions
then I think we've, I'd offer that we've done that.
- That's a pretty good presentation, thank you, George.
- Thank you.
- And that's all I have.
- All right, and we're on to concluding items.
Are there any items that a board member
would like to be brought back
in the next board meeting, our future board meeting?
Okay, hearing none, do we have a motion to adjourn?
- I move we adjourn.
- Second. - Second.
- Okay, we're adjourned.