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 The board of the City of Denton for Monday, June 10, 2024.

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 The first item is presentation from the members.

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 Kathy, did anyone sign up?

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 Okay.

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 The next item, oh.

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 [no audio]

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 Two board members wish to pull a few items.

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 We'll start with Mr. Cheek.

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 Okay.

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 This may cover the -- excuse me.

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 Let me speak closer to the microphone for Mr. Matthews.

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 I'd like to pull consent agenda items.

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 A is in Alpha.

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 F is in Frank.

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 G is in Gorilla.

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 M is in Mary.

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 N is in Nancy.

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 All right.

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 And then Mr. Rayner, which ones did you wish to pull?

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 Besides those same, I would also like to pull D as in David.

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 Okay.

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 I'm sure I've got them all right.

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 So then do we have a motion to approve items B, C, E, H, I, J, K, L?

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 And that's it.

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 So moved.

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 So moved.

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 Okay.

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 And Mr. Taylor seconded.

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 All in favor say aye.

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 Aye.

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 Okay.

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 First item is PUB 24100 for the right of way.

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 Who from staff is here?

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 Good morning.

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 I'm Doug Breon from the GME Engineering Group.

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 Good morning.

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 Thank you for being here.

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 I was looking at A and as I was reading it, it started talking about frontage location I-35, then it jumped to I-35E and then I-35W.

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 Then we got down to 2499 and 1515.

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 I was just hoping for a little explanation or maybe even an aerial as to what is all of that?

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 There's three other projects involved in this signature authority.

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 The first one would be I-35E and that's where the UP Railroad crossings are.

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 They're redoing the frontage roads on both of those.

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 So that's one project.

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 FM 1515 is another project on there and that's from the airport area over to I-35E.

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 Yes.

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 And then the I-35W project is the frontage roads going from FM 2499 going south.

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 And so you were able to get all three of those projects into one request?

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 Yes.

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 There'll be three different projects in there, yes, but it's all under the same signature authority.

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 I think that's great.

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 That leads to a question I'll have later on some others.

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 Sorry to take up your time.

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 I just wanted to get a visual on it because it was a plate of spaghetti.

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 Yeah, it is.

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 Press two.

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 Understanding it's a signature authority means it was already in your plans to do this.

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 That's correct.

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 Okay.

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 Yes.

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 All right.

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 So these were all utilities that were in the states right away, correct?

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 Correct.

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 Just the electric utilities.

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 Just the electric.

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 Yeah, I got that.

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 Yeah.

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 You're a DME.

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 Okay.

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 He asked the questions I was curious about as well.

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 So that's all I've got on that.

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 All right.

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 Any other questions?

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 Do we have a motion to approve item A?

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 So moved.

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 Second.

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 Mr. Rayner, second.

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 All in favor say aye.

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 Aye.

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 Carries.

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 Thank you.

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 Item D, approval of First Amendment to contract between the City of Denton and Freeport Welding

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 and Fabricating.

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 Good morning.

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 Cody Snorrio, DME Engineering.

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 Here for item D.

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 I have a question.

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 Yes, sir.

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 Thank you for being here.

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 I was reading this and I looked at the backup material.

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 Am I correct, the original request did not have the $140,000.

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 It came back as an amendment too.

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 Is that correct?

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 Yes, sir.

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 And I'm just curious, how did that slip through our net the first time?

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 Initially, when the contract was approved back in 2023 of last year, we got the quote

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 from the supplier.

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 Since then, the transportation costs have increased, and for those three tanks, they're

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 really large.

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 So that was a result of the increase in transportation costs since that time.

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 They gave us the quote in the time that they were actually delivered at the beginning of

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 May.

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 So we're just held hostage for time, because in the beginning it would have worked, but

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 because of whatever the reason is, can we blame that on them for the delays that cost

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 us the $140,000?

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 I really can't speak to that.

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 Well, I can, just so that we can pass the buck to somebody.

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 But is this a common thing that you have seen?

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 No, sir.

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 Okay, that's what I really wanted to hear.

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 Yeah, this is not common.

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 It's just such a long, long time between the two that it increased on the transport.

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 Thank you.

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 Oh, how contracting has changed.

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 Used to turn in a bid, and that was your bid.

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 And unless the plans, specifications, or engineering were incorrect or changed, the contractor

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 had to honor their original bid.

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 In this case, none of the PS&E changed, plans, specifications, or engineering, and we're

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 having to eat the $140,000 as a request by the contractor saying that he can't get it

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 delivered for his original price.

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 Is that correct?

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 Yes, sir.

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 Okay.

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 And what is the reason for that?

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 Oh, I'm sorry.

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 What is the reason for that?

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 I mean, did they give you one other than?

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 Only response was that there was just an increase in transportation costs with the permitting

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 and everything else, and that's what resulted in the $140,000.

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 Thank you.

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 This is not an isolated incident.

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 That's, I think, the concern.

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 Just want to bring it up, and it's not just about this item.

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 Terry, it's not just about this item.

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 I promise you that.

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 It's not just about.

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 No, I apologize, board members.

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 Terry Nalte, Assistant General Manager.

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 So the original contract for the tanks included an allowance for transportation, but the actual

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 cost of transportation exceeded the allowance as a result of the size of the tanks and the

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 routing that had to be made.

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 These tanks would not fit under normal bridges, and some utility lines had to be potentially

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 relocated and things like that.

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 Did they redesign the tanks?

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 They did not, but I guess the way that the contract was actually led, it just gave an

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 allowance for the amount of transportation cost, and when the permits were acquired for

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 the transportation and the routing was determined, this was the increased cost.

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 Tanks have been delivered and have been erected.

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 I guess the point being it's not very often, and it hasn't happened in recent years, that

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 somebody comes to you and says, "Oh, we overpriced the hall on this thing.

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 We'd like to give you half off today."

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 Well, that would be nice, wouldn't it?

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 Oh, I know of one time when it's been done in this city.

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 It was probably from a local vendor or something, but.

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 Okay.

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 Further questions?

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 Thanks, Cody.

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 Okay.

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 Do we have a motion to approve item D?

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 So moved.

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 Okay.

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 Mr. Cheek moved.

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 Do we have a second?

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 Second.

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 Okay.

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 Mr. Rayner?

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 Okay.

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 All in favor say aye.

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 Aye.

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 Aye.

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 Those opposed?

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 Okay.

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 Motion carries.

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 Thank you.

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 Item F. Thank you.

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 Another utility relocation.

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 Is this both of ours, Rob?

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 Good morning.

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 Sean Messick with Accountable Projects.

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 Okay.

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 This is mine.

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 I pulled this.

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 Let me go back.

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 This is F, right?

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 Yes.

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 We're on F.

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 So it's the relocation at Fort Worth Drive project.

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 Okay.

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 This was just a low bidder project.

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 Is that correct?

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 Yeah.

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 Okay.

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 All right.

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 So how's Mountain Cascade doing with you around town?

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 Oh, they're phenomenal.

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 Really?

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 Yeah.

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 Are you driven down Pony Brae Street?

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 On the I-35 stuff, they're doing good.

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 Is that what you're talking about?

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 Yeah.

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 Yes.

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 Okay.

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 Wow.

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 In some cases, people might go to a second bidder on a situation like that.

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 But okay.

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 That's all I got.

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 Further questions?

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 Oh, go ahead.

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 So I was curious.

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 Is it fair to say that it looked like F -- will you be addressing M and N as well?

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 N.

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 N as in Nathan?

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 Yes.

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 And M as in Michael?

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 Not Michael.

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 Okay.

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 Well, I looked at all three of those as kind of dovetailing together.

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 And I was just curious, since we had three projects into one, now we have three projects

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 into three.

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 I was just curious, what is the -- like on the F, let's talk about it first.

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 Going down along 377 to Locust and the widening and such.

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 You're working with Textile.

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 Is that correct?

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 Yes, sir.

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 Okay.

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 So my question then is, does F, M, and N -- because you can't address to M, evidently.

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 But do all of these coincide with each other?

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 Are they all within a similar timeframe?

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 Are they overlapping?

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 What?

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 No.

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 Mike is actually Aaron's project.

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 And so that one is a supplemental agreement to the Textile initial agreement.

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 So it's -- any additions to funding that happened there to finalize the payments on that.

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 Foxtrot in November are the one project that's just on 377 and the funds are there for Textile.

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 There are two Textile projects.

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 Trevor Crane, Director of Capital Projects.

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 So F is the actual construction contract for Mountain Cascade to go out and do the utility relocations.

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 These are all Textile projects.

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 The utility -- well, the utility relocates are in response to Textile's widening.

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 So F is an actual construction contract for Mountain Cascade to move utilities so that Textile can come out

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 and do the relocations or do their widening.

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 The other two, M and N, are actually the agreements that allow us to be reimbursed for those utilities.

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 So all separate projects, one, the F is an actual construction contract for us to do the utility relocates.

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 M and N are actually amendments to our standard utility agreement with Textile that allow us to be reimbursed for that work.

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 But they all are married together.

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 Correct.

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 Where was the second bidder?

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 It's not on the agenda sheet, so I have to ask.

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 I have to go back and look.

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 I don't remember.

253
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 So all the Textile projects, we actually have a pre-qualified list of contractors.

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 The people on that list are Oscar Renda, Mountain Cascade, and S.J. Lewis.

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 S.J. Lewis hasn't been bidding on them recently, so it's been Oscar Renda and Mountain Cascade.

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 Both have been awarded contracts on I-35.

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 But Lori can probably speak.

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 Lori Hewlett, Purchasing Manager.

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 And I can forward you the evaluation tab that got missed from the agenda packet.

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 If it was pre-qualified, that would have just been a little better.

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 It was a little bit, yes.

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 And the other bid was $2.7 million.

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 Around that.

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 It was over $2 million.

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 So it was a very large bid.

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 That may have been the better bid.

267
00:12:46,000 --> 00:12:48,000
 Okay.

268
00:12:48,000 --> 00:12:51,000
 So almost a $2 million spread.

269
00:12:51,000 --> 00:12:55,000
 Yes, ma'am.

270
00:12:55,000 --> 00:13:00,000
 What did Mountain Cascade miss?

271
00:13:00,000 --> 00:13:02,000
 I don't think they've missed anything.

272
00:13:02,000 --> 00:13:06,000
 They're already established in the area.

273
00:13:06,000 --> 00:13:08,000
 They've got contracts.

274
00:13:08,000 --> 00:13:09,000
 They're already working.

275
00:13:09,000 --> 00:13:11,000
 So I feel like a lot of it was in the mobilization.

276
00:13:11,000 --> 00:13:14,000
 I'd have to go back and look at exactly at the bids.

277
00:13:14,000 --> 00:13:21,000
 But they already have crews that are mobilized, that are coming off other projects and ready to kind of mobilize on this one.

278
00:13:21,000 --> 00:13:22,000
 Okay.

279
00:13:22,000 --> 00:13:31,000
 But absolutely it's something we look at because that's a huge spread and we want to make sure that they're not missing anything and we're not going to have to be chasing them through change orders at the end of the project.

280
00:13:31,000 --> 00:13:32,000
 Correct.

281
00:13:32,000 --> 00:13:33,000
 All right.

282
00:13:33,000 --> 00:13:35,000
 Further questions?

283
00:13:35,000 --> 00:13:42,000
 Do we have a motion to approve item F?

284
00:13:42,000 --> 00:13:44,000
 Is it just me?

285
00:13:44,000 --> 00:13:45,000
 Move approval.

286
00:13:45,000 --> 00:13:46,000
 Okay.

287
00:13:46,000 --> 00:13:48,000
 Mr. Cheek, do we have a second?

288
00:13:48,000 --> 00:13:50,000
 I second.

289
00:13:50,000 --> 00:13:51,000
 Okay, Mr. Rayner seconds.

290
00:13:51,000 --> 00:13:52,000
 All in favor say aye.

291
00:13:52,000 --> 00:13:54,000
 Aye.

292
00:13:54,000 --> 00:13:55,000
 Nobody.

293
00:13:55,000 --> 00:13:56,000
 That's okay.

294
00:13:56,000 --> 00:13:57,000
 That carries.

295
00:13:57,000 --> 00:14:00,000
 Item G, landfill entrance facility.

296
00:14:00,000 --> 00:14:02,000
 I just want to see a picture of this thing.

297
00:14:02,000 --> 00:14:04,000
 That's not very exciting.

298
00:14:04,000 --> 00:14:07,000
 I'm Christine Stewart, project manager at Capital Projects.

299
00:14:07,000 --> 00:14:11,000
 We're really just doing a facelift on the entry.

300
00:14:11,000 --> 00:14:20,000
 So there's the removal of the existing scales will be in placing some temporary scales and then putting new scales back.

301
00:14:20,000 --> 00:14:28,000
 There will also be an upgrade to the system that processes all the scales and the weights that come in.

302
00:14:28,000 --> 00:14:30,000
 So a software update?

303
00:14:30,000 --> 00:14:33,000
 Some of it, yes.

304
00:14:33,000 --> 00:14:37,000
 Is there a problem with the existing one?

305
00:14:37,000 --> 00:14:41,000
 It's more about the spacing and how the scales were positioned.

306
00:14:41,000 --> 00:14:48,000
 So if you go into the facility right now, there's a hanging apparatus and it keeps getting knocked into.

307
00:14:48,000 --> 00:14:51,000
 So there's no spacing in between the scales.

308
00:14:51,000 --> 00:14:54,000
 So that's part of what the reconfiguration is for.

309
00:14:54,000 --> 00:14:56,000
 You're replacing the scales?

310
00:14:56,000 --> 00:14:57,000
 We are.

311
00:14:57,000 --> 00:14:58,000
 Okay.

312
00:14:58,000 --> 00:15:00,000
 And we're adding an additional one.

313
00:15:00,000 --> 00:15:01,000
 Two lanes?

314
00:15:01,000 --> 00:15:02,000
 It will be, yes.

315
00:15:02,000 --> 00:15:03,000
 Gotcha.

316
00:15:03,000 --> 00:15:05,000
 That was really my question at 3.4 million.

317
00:15:05,000 --> 00:15:07,000
 It had to be more than software.

318
00:15:07,000 --> 00:15:08,000
 Yes.

319
00:15:08,000 --> 00:15:09,000
 Okay.

320
00:15:09,000 --> 00:15:10,000
 Absolutely.

321
00:15:10,000 --> 00:15:11,000
 All right.

322
00:15:11,000 --> 00:15:12,000
 No picture.

323
00:15:12,000 --> 00:15:13,000
 No picture.

324
00:15:13,000 --> 00:15:15,000
 Well, we'll see them later.

325
00:15:15,000 --> 00:15:16,000
 True.

326
00:15:16,000 --> 00:15:18,000
 Any further questions?

327
00:15:18,000 --> 00:15:19,000
 All right.

328
00:15:19,000 --> 00:15:21,000
 Do we have a motion to approve item G?

329
00:15:21,000 --> 00:15:22,000
 So moved.

330
00:15:22,000 --> 00:15:23,000
 Mr. Pluck moved.

331
00:15:23,000 --> 00:15:25,000
 And do we have a second?

332
00:15:25,000 --> 00:15:26,000
 Second.

333
00:15:26,000 --> 00:15:27,000
 Mr. Taylor seconds.

334
00:15:27,000 --> 00:15:28,000
 All in favor say aye.

335
00:15:28,000 --> 00:15:29,000
 Aye.

336
00:15:29,000 --> 00:15:30,000
 Aye.

337
00:15:30,000 --> 00:15:31,000
 All right.

338
00:15:31,000 --> 00:15:35,000
 Item M, Mountain.

339
00:15:35,000 --> 00:15:36,000
 You say Mountain.

340
00:15:36,000 --> 00:15:39,000
 Michael, whatever we called it before.

341
00:15:39,000 --> 00:15:40,000
 Mary.

342
00:15:40,000 --> 00:15:41,000
 Okay.

343
00:15:41,000 --> 00:15:46,000
 This was both Mr. Rayner and Mr. Cheek.

344
00:15:46,000 --> 00:15:47,000
 Correct?

345
00:15:47,000 --> 00:15:51,000
 I was just, he just said it and so I circled it.

346
00:15:51,000 --> 00:15:52,000
 All right.

347
00:15:52,000 --> 00:15:55,000
 Aaron Skinner, Senior Project Manager, Capital Projects.

348
00:15:55,000 --> 00:16:00,000
 Oh, I'm sorry.

349
00:16:00,000 --> 00:16:04,000
 I really got my answer, but I appreciate you coming up.

350
00:16:04,000 --> 00:16:05,000
 So it's a reimbursement.

351
00:16:05,000 --> 00:16:06,000
 Yes, sir.

352
00:16:06,000 --> 00:16:08,000
 So are we looking at the reimbursement of 1.8 million?

353
00:16:08,000 --> 00:16:09,000
 Is that what they're saying?

354
00:16:09,000 --> 00:16:11,000
 The additional 1.8 million, yes, sir.

355
00:16:11,000 --> 00:16:12,000
 An additional?

356
00:16:12,000 --> 00:16:13,000
 Yes, sir.

357
00:16:13,000 --> 00:16:14,000
 Okay.

358
00:16:14,000 --> 00:16:15,000
 And does that, where does that go?

359
00:16:15,000 --> 00:16:17,000
 Where does that pigeon hole when you get that?

360
00:16:17,000 --> 00:16:19,000
 That goes back to the project fund.

361
00:16:19,000 --> 00:16:20,000
 Okay.

362
00:16:20,000 --> 00:16:21,000
 Great.

363
00:16:21,000 --> 00:16:22,000
 That just brought up another question.

364
00:16:22,000 --> 00:16:25,000
 So the total cost of this was?

365
00:16:25,000 --> 00:16:26,000
 Just north of 17, I believe.

366
00:16:26,000 --> 00:16:30,000
 So you're saying that basically 15 of that is something we owned already anyway?

367
00:16:30,000 --> 00:16:31,000
 Yes, sir.

368
00:16:31,000 --> 00:16:33,000
 That was in supplemental agreement one.

369
00:16:33,000 --> 00:16:34,000
 Okay.

370
00:16:34,000 --> 00:16:36,000
 It was estimated, I believe it was about 15 and a half.

371
00:16:36,000 --> 00:16:37,000
 Okay.

372
00:16:37,000 --> 00:16:39,000
 So this is the true up of that additional 1.8.

373
00:16:39,000 --> 00:16:40,000
 Yeah.

374
00:16:40,000 --> 00:16:41,000
 Gotcha.

375
00:16:41,000 --> 00:16:45,000
 I'm fine, thank you for your time.

376
00:16:45,000 --> 00:16:46,000
 Okay.

377
00:16:46,000 --> 00:16:47,000
 Any further questions?

378
00:16:47,000 --> 00:16:48,000
 Okay.

379
00:16:48,000 --> 00:16:49,000
 Thank you.

380
00:16:49,000 --> 00:16:50,000
 Thank you.

381
00:16:50,000 --> 00:16:51,000
 Do we have a motion to approve item M?

382
00:16:51,000 --> 00:16:52,000
 So moved.

383
00:16:52,000 --> 00:16:55,000
 Mr. Pluck, can we have a second?

384
00:16:55,000 --> 00:16:56,000
 Second.

385
00:16:56,000 --> 00:16:57,000
 Mr. Cheek?

386
00:16:57,000 --> 00:16:59,000
 All in favor say aye.

387
00:16:59,000 --> 00:17:00,000
 Aye.

388
00:17:00,000 --> 00:17:01,000
 Opposed?

389
00:17:01,000 --> 00:17:02,000
 Carries.

390
00:17:02,000 --> 00:17:06,000
 Item N. Do we need him to come up or?

391
00:17:06,000 --> 00:17:08,000
 I'm happy.

392
00:17:08,000 --> 00:17:09,000
 He's not.

393
00:17:09,000 --> 00:17:11,000
 Are you happy, Billy?

394
00:17:11,000 --> 00:17:13,000
 Yeah, I'm fine.

395
00:17:13,000 --> 00:17:14,000
 Billy's happy?

396
00:17:14,000 --> 00:17:15,000
 Okay.

397
00:17:15,000 --> 00:17:18,000
 Do we have a motion to approve item N?

398
00:17:18,000 --> 00:17:20,000
 So moved.

399
00:17:20,000 --> 00:17:23,000
 Thank you, Mr. Newquist.

400
00:17:23,000 --> 00:17:26,000
 Do we have a second?

401
00:17:26,000 --> 00:17:27,000
 Second.

402
00:17:27,000 --> 00:17:28,000
 Mr. Pluck, all in favor say aye.

403
00:17:28,000 --> 00:17:29,000
 Aye.

404
00:17:29,000 --> 00:17:30,000
 Aye.

405
00:17:30,000 --> 00:17:31,000
 Opposed?

406
00:17:31,000 --> 00:17:32,000
 Put that on the plaque, Aaron.

407
00:17:32,000 --> 00:17:33,000
 Jump in.

408
00:17:33,000 --> 00:17:34,000
 My feet moved.

409
00:17:34,000 --> 00:17:35,000
 You got in.

410
00:17:35,000 --> 00:17:36,000
 All right.

411
00:17:36,000 --> 00:17:37,000
 Perfect, that's why.

412
00:17:37,000 --> 00:17:40,000
 Yeah, there you go.

413
00:17:40,000 --> 00:17:44,000
 Next item is considered the approval of the May 20th, 2024 minutes.

414
00:17:44,000 --> 00:17:47,000
 Were there any changes or corrections?

415
00:17:47,000 --> 00:17:51,000
 Seeing none, do we have a motion to approve the minutes?

416
00:17:51,000 --> 00:17:53,000
 So moved.

417
00:17:53,000 --> 00:17:54,000
 Thank you.

418
00:17:54,000 --> 00:17:56,000
 And a second?

419
00:17:56,000 --> 00:17:57,000
 Second.

420
00:17:57,000 --> 00:17:58,000
 Thank you.

421
00:17:58,000 --> 00:17:59,000
 All in favor say aye.

422
00:17:59,000 --> 00:18:00,000
 Aye.

423
00:18:00,000 --> 00:18:02,000
 Motion carries.

424
00:18:02,000 --> 00:18:24,000
 Next item is considered the approval of the May 20th, 2014 minutes.

425
00:18:24,000 --> 00:18:32,000
 Good morning, I'm David Brown, project manager of Water Utility City of Denton.

426
00:18:32,000 --> 00:18:37,000
 Today I have for your consideration a contract with Archer Western for construction for the project at Ray Roberts Water Treatment Plant.

427
00:18:37,000 --> 00:18:43,000
 It's a capacity rerate performance improvements project.

428
00:18:43,000 --> 00:18:45,000
 So let's talk a little bit about Ray Roberts.

429
00:18:45,000 --> 00:18:50,000
 Ray Roberts Water Treatment Plant was constructed about 20 years ago, put into service in 2002,

430
00:18:50,000 --> 00:18:54,000
 and there's not been any significant upgrades or maintenance.

431
00:18:54,000 --> 00:18:59,000
 Well, there's been maintenance done, but not larger maintenance type projects done out there since 2002.

432
00:18:59,000 --> 00:19:07,000
 It is anticipated with this project it will add approximately up to 10 million gallons a day of additional treatment capacity.

433
00:19:07,000 --> 00:19:11,000
 And this is just with improvements within the site itself.

434
00:19:11,000 --> 00:19:15,000
 No additions as far as in the train of treatment.

435
00:19:15,000 --> 00:19:20,000
 The project is anticipated to be completed in 2028.

436
00:19:20,000 --> 00:19:27,000
 So in this project is replacement of valves and actuators throughout Ray Roberts Water Treatment Plant.

437
00:19:27,000 --> 00:19:36,000
 Approximately about 86 valves and actuators move to a field bus type actuator system, which improves flexibility.

438
00:19:36,000 --> 00:19:45,000
 Also, the solids handling will be rehabilitated, which is a chain of flight mechanism within a sedimentation basins.

439
00:19:45,000 --> 00:19:51,000
 Also, we're going to replace the filters with granulated activated carbon, which is GAC.

440
00:19:51,000 --> 00:19:54,000
 Currently right now is just normal sand.

441
00:19:54,000 --> 00:19:59,000
 So with that, we're going to go ahead and replace the GAC.

442
00:19:59,000 --> 00:20:03,000
 Also, we're going to construct a new backwash system.

443
00:20:03,000 --> 00:20:06,000
 The backwash system now is slower.

444
00:20:06,000 --> 00:20:09,000
 You have to backwash each filter, which there's eight filters out there.

445
00:20:09,000 --> 00:20:13,000
 It does not have a gravity storage tank.

446
00:20:13,000 --> 00:20:22,000
 We will be constructing a gravity storage tank as well, meaning we'll be able to use gravity and some pumps to backwash.

447
00:20:22,000 --> 00:20:31,000
 And that's where we're going to get our -- hopefully we get better capacity would be through the ability to do faster backwashes.

448
00:20:31,000 --> 00:20:42,000
 We're going to install VFDs or variable frequency drives for 1,000 horsepower distribution pumps that have been run a total probably about two hours and 20 years

449
00:20:42,000 --> 00:20:49,000
 because they have such a huge pumpage that we are not currently having that demand.

450
00:20:49,000 --> 00:20:58,000
 But when we do install the VFDs, we'll be able to control those motors and to utilize those for increased capacity.

451
00:20:58,000 --> 00:21:04,000
 So we did send it out to bids, and we got two bids back, one from Felix and one from Archer Western.

452
00:21:04,000 --> 00:21:10,000
 Archer Western came back with a lower bid of $39,995.

453
00:21:10,000 --> 00:21:16,000
 Of course, there's a contingency of 10%, a total of $43,994,500.

454
00:21:16,000 --> 00:21:18,000
 The contract day is $1088.

455
00:21:18,000 --> 00:21:23,000
 And I'll be glad to answer any questions.

456
00:21:23,000 --> 00:21:28,000
 Mr. Cheek. Oh, I'm sorry.

457
00:21:28,000 --> 00:21:32,000
 Okay. Mr. Taylor.

458
00:21:32,000 --> 00:21:38,000
 So I think you just touched on it with your comment regarding the run time on those large pumps.

459
00:21:38,000 --> 00:21:46,000
 So I was curious if we're increasing capacity by 50% if we needed to increase the pumping capability.

460
00:21:46,000 --> 00:21:49,000
 But it sounds like it might have been already built.

461
00:21:49,000 --> 00:21:55,000
 Yes, sir. The pumping capability of those pumps, I believe, are about 50 MGD.

462
00:21:55,000 --> 00:21:57,000
 We just have not been using them.

463
00:21:57,000 --> 00:22:00,000
 We haven't had the actual need for them.

464
00:22:00,000 --> 00:22:04,000
 So our forefathers planned ahead to be ready.

465
00:22:04,000 --> 00:22:09,000
 And there's actually another one slot out there for another pump.

466
00:22:09,000 --> 00:22:11,000
 So as far as pumping, we're ready.

467
00:22:11,000 --> 00:22:17,000
 It's just a matter of we need to put those VFDs on there so we can control them and actually turn them down.

468
00:22:17,000 --> 00:22:20,000
 So there must be smaller pumps that are used.

469
00:22:20,000 --> 00:22:21,000
 Yes, sir. Right.

470
00:22:21,000 --> 00:22:23,000
 Currently, we use smaller pumps.

471
00:22:23,000 --> 00:22:28,000
 And with that, also, like I said, we're going to build a building for the VFDs.

472
00:22:28,000 --> 00:22:29,000
 So VFDs will be separate.

473
00:22:29,000 --> 00:22:32,000
 We'll also help with any kind of emergencies.

474
00:22:32,000 --> 00:22:36,000
 And are any of the existing pumps on VFD or are they all soft?

475
00:22:36,000 --> 00:22:39,000
 They're all on VFDs. The smaller ones are.

476
00:22:39,000 --> 00:22:40,000
 Okay. Yeah.

477
00:22:40,000 --> 00:22:43,000
 All right.

478
00:22:43,000 --> 00:22:49,000
 So I just saw we only had two bidders in this case.

479
00:22:49,000 --> 00:22:50,000
 Yes, sir.

480
00:22:50,000 --> 00:22:54,000
 Any reason why Sunt didn't bid this one?

481
00:22:54,000 --> 00:22:57,000
 Because they've been involved with these before, correct?

482
00:22:57,000 --> 00:22:59,000
 Yes, and that's what we held.

483
00:22:59,000 --> 00:23:03,000
 Actually, we actually held two walkthroughs to invite bidders.

484
00:23:03,000 --> 00:23:07,000
 And that's what we received was Arch Western and Felix.

485
00:23:07,000 --> 00:23:09,000
 I have no idea why Sunt wasn't involved.

486
00:23:09,000 --> 00:23:10,000
 And walkthroughs?

487
00:23:10,000 --> 00:23:11,000
 No, sir.

488
00:23:11,000 --> 00:23:13,000
 Not that I know of.

489
00:23:13,000 --> 00:23:19,000
 Actually, the Felix bid was actually -- they were going to combine with Schofield to do --

490
00:23:19,000 --> 00:23:22,000
 kind of team up to actually do the project.

491
00:23:22,000 --> 00:23:25,000
 So lots of work going on in the region.

492
00:23:25,000 --> 00:23:26,000
 Just busy.

493
00:23:26,000 --> 00:23:27,000
 Yes.

494
00:23:27,000 --> 00:23:29,000
 Yeah.

495
00:23:29,000 --> 00:23:34,000
 Sunt's already here doing some wastewater treatment work, aren't they?

496
00:23:34,000 --> 00:23:35,000
 Yes, sir.

497
00:23:35,000 --> 00:23:41,000
 They're going to do the CMAR over at the concrete water reclamation plant.

498
00:23:41,000 --> 00:23:42,000
 I saw that.

499
00:23:42,000 --> 00:23:48,000
 I remember that Arch Western was much lower in their bid.

500
00:23:48,000 --> 00:23:56,000
 But they were less rated in your overall rating of them versus Sunt.

501
00:23:56,000 --> 00:23:57,000
 Yes, sir.

502
00:23:57,000 --> 00:24:06,000
 What we went through was we had a -- actually, evaluation for the CMAR and Arch Western and Sunt.

503
00:24:06,000 --> 00:24:08,000
 They were both involved.

504
00:24:08,000 --> 00:24:13,000
 And for that aspect, Sunt was chosen just because of their CMAR abilities.

505
00:24:13,000 --> 00:24:16,000
 And now, I mean, of course, we're going to have coming up expansion.

506
00:24:16,000 --> 00:24:19,000
 I'll just tell you there's going to be an expansion at Ray Roberts.

507
00:24:19,000 --> 00:24:23,000
 And that will be also construction manager at risk as well.

508
00:24:23,000 --> 00:24:28,000
 So we're going to entertain, and in fact, it's going to be opening pretty soon.

509
00:24:28,000 --> 00:24:34,000
 So we're going to entertain whoever, hopefully, will get some more players in that market.

510
00:24:34,000 --> 00:24:36,000
 I hope so.

511
00:24:36,000 --> 00:24:39,000
 And I think I voiced my concern before with the CMAR.

512
00:24:39,000 --> 00:24:45,000
 I understand the reasoning in it that sometimes the lowest bid is not the best bid.

513
00:24:45,000 --> 00:24:53,000
 But I questioned that bid because Arch Western, I thought, you can't really beat a company that large.

514
00:24:53,000 --> 00:25:04,000
 And they'll correct things, but correct things that you think aren't going well is what I mean for that.

515
00:25:04,000 --> 00:25:06,000
 But now they're rated really high.

516
00:25:06,000 --> 00:25:09,000
 And this is just design, bid, build, Mr. Chief?

517
00:25:09,000 --> 00:25:11,000
 Yeah.

518
00:25:11,000 --> 00:25:12,000
 Just design, bid, build?

519
00:25:12,000 --> 00:25:13,000
 Well, it's going to be build.

520
00:25:13,000 --> 00:25:14,000
 That's pretty complicated.

521
00:25:14,000 --> 00:25:17,000
 That's probably the most complicated contract you can make.

522
00:25:17,000 --> 00:25:20,000
 But what I meant was that it's DBB.

523
00:25:20,000 --> 00:25:25,000
 It's not a CMAR project.

524
00:25:25,000 --> 00:25:27,000
 Further questions?

525
00:25:27,000 --> 00:25:30,000
 Kyle Pedigo, planning and engineering manager for water utilities.

526
00:25:30,000 --> 00:25:40,000
 So during the evaluation, during the CMAR evaluation, Sunt scored higher on the CMAR delivery method.

527
00:25:40,000 --> 00:25:46,000
 And Arch Western was more of a traditional delivery method, which this project falls under.

528
00:25:46,000 --> 00:25:50,000
 So that's why the ratings are different between the two projects.

529
00:25:50,000 --> 00:25:57,000
 I understand the difference between the two categories of letting the CMAR and the design build bid.

530
00:25:57,000 --> 00:26:07,000
 And I would argue with you that this is the more complicated thing to get done than a CMAR bid.

531
00:26:07,000 --> 00:26:14,000
 But that's just my opinion and I want to continue to voice that because I have concern about these type of bids.

532
00:26:14,000 --> 00:26:18,000
 And I'm not trying to isolate you guys out for this and we make that clear.

533
00:26:18,000 --> 00:26:34,000
 But I believe that we are stacked deep with bids with contracts in this city that are just given according to sometimes a subjective reasoning.

534
00:26:34,000 --> 00:26:39,000
 And you would argue that they're not that the rules are playing, I would think.

535
00:26:39,000 --> 00:26:41,000
 And I disagree with you.

536
00:26:41,000 --> 00:26:50,000
 So I've sat in conversations with evaluations that were subjective.

537
00:26:50,000 --> 00:26:53,000
 Words were used anyway.

538
00:26:53,000 --> 00:26:57,000
 I hope the city council hears me on this because that's who I'm really talking to.

539
00:26:57,000 --> 00:26:58,000
 So thank you for your time.

540
00:26:58,000 --> 00:26:59,000
 And I apologize.

541
00:26:59,000 --> 00:27:03,000
 And I did not mean to single you out on this and make that clear.

542
00:27:03,000 --> 00:27:04,000
 It's the concept.

543
00:27:04,000 --> 00:27:07,000
 So that's all I got.

544
00:27:07,000 --> 00:27:09,000
 >> Further questions?

545
00:27:09,000 --> 00:27:11,000
 Thank you very much for coming up.

546
00:27:11,000 --> 00:27:16,000
 Do we have a motion to approve PUB 24110?

547
00:27:16,000 --> 00:27:18,000
 >> So moved.

548
00:27:18,000 --> 00:27:19,000
 >> Mr. Taylor, moved.

549
00:27:19,000 --> 00:27:21,000
 Do we have a second?

550
00:27:21,000 --> 00:27:22,000
 >> Second.

551
00:27:22,000 --> 00:27:23,000
 >> Thank you, Mr. Pluck.

552
00:27:23,000 --> 00:27:24,000
 All in favor say aye.

553
00:27:24,000 --> 00:27:25,000
 >> Aye.

554
00:27:25,000 --> 00:27:27,000
 >> Opposed?

555
00:27:27,000 --> 00:27:28,000
 Carries.

556
00:27:28,000 --> 00:27:29,000
 Thank you.

557
00:27:29,000 --> 00:27:31,000
 Management reports.

558
00:27:31,000 --> 00:27:36,000
 Thank you.

559
00:27:36,000 --> 00:27:41,000
 >> Taking a minute there.

560
00:27:41,000 --> 00:27:46,000
 I don't want Billy coming in here getting after me, the other Billy.

561
00:27:46,000 --> 00:27:48,000
 Frank Dixon, assistant city manager.

562
00:27:48,000 --> 00:27:50,000
 We have nothing at this time.

563
00:27:50,000 --> 00:27:55,000
 If there's anything the board would like to hear, we'd be happy to present it.

564
00:27:55,000 --> 00:27:56,000
 >> That's fine.

565
00:27:56,000 --> 00:27:57,000
 Thank you.

566
00:27:57,000 --> 00:27:59,000
 That brings us to concluding items.

567
00:27:59,000 --> 00:28:04,000
 Does any board member wish to have a future item presented on the agenda or have something

568
00:28:04,000 --> 00:28:06,000
 to say to the public?

569
00:28:06,000 --> 00:28:09,000
 This is where you get to speak, Aaron.

570
00:28:09,000 --> 00:28:10,000
 >> Good morning.

571
00:28:10,000 --> 00:28:11,000
 Aaron Newquist.

572
00:28:11,000 --> 00:28:12,000
 Glad to be here.

573
00:28:12,000 --> 00:28:16,000
 I've been a resident of Denton for the last 12 years.

574
00:28:16,000 --> 00:28:22,000
 Plus some time in the late '90s at UNT.

575
00:28:22,000 --> 00:28:29,000
 And just my background is I'm a 20-year banker, the last 15 here in Denton, currently with

576
00:28:29,000 --> 00:28:32,000
 American National Bank and Trust for the past five years.

577
00:28:32,000 --> 00:28:37,000
 My son Brady is a graduate of Denton Ryan High School and off to Texas Tech.

578
00:28:37,000 --> 00:28:44,000
 But, again, just pleased to be here and look forward to serving with you all.

579
00:28:44,000 --> 00:28:45,000
 >> Thank you.

580
00:28:45,000 --> 00:28:46,000
 All right.

581
00:28:46,000 --> 00:28:47,000
 That brings us -- yes, welcome.

582
00:28:47,000 --> 00:28:50,000
 Glad to have you.

583
00:28:50,000 --> 00:28:52,000
 That brings us to our work session.

584
00:28:52,000 --> 00:28:58,000
 We receive a report, hold a discussion, and give staff direction on the fiscal year 2024-25

585
00:28:58,000 --> 00:29:08,000
 preliminary utility forecast for solid waste, water, wastewater, and electric.

586
00:29:08,000 --> 00:29:12,000
 >> Okay.

587
00:29:12,000 --> 00:29:18,000
 Good morning, members of PUB.

588
00:29:18,000 --> 00:29:19,000
 My name is Matt Hamilton.

589
00:29:19,000 --> 00:29:24,000
 I'm the budget manager with the city here today to present what will be the first in

590
00:29:24,000 --> 00:29:29,000
 a series of budget presentations for you over the next couple weeks.

591
00:29:29,000 --> 00:29:37,000
 Today's presentation focuses on where the utilities funds ended for fiscal year 2023.

592
00:29:37,000 --> 00:29:44,000
 And then also just to talk a little bit about some of the assumptions that we are putting

593
00:29:44,000 --> 00:29:49,000
 together for you for the fiscal year 2025 budget.

594
00:29:49,000 --> 00:29:59,000
 So our anticipation is to bring forward on June 24th all the utility performance budgets

595
00:29:59,000 --> 00:30:06,000
 for next year, which will include all the budgetary requests, supplementals, baselines,

596
00:30:06,000 --> 00:30:13,000
 in addition to the five-year capital improvement plan for each of the funds, as well as an

597
00:30:13,000 --> 00:30:17,000
 outlook on preliminary rates at that time as well.

598
00:30:17,000 --> 00:30:24,000
 So certainly a very detailed presentation coming up for you on June 24th.

599
00:30:24,000 --> 00:30:30,000
 The presentation today simply provides just an overview of the process and where we ended

600
00:30:30,000 --> 00:30:35,000
 the prior fiscal year.

601
00:30:35,000 --> 00:30:41,000
 So as I mentioned, we'll cover the upcoming budget process, what that looks like, some

602
00:30:41,000 --> 00:30:45,000
 of the economic conditions that we're seeing, financial assumptions that we're making for

603
00:30:45,000 --> 00:30:53,000
 2025, and then also the 2023 financial performance.

604
00:30:53,000 --> 00:30:59,000
 So just to start, I know many members of the board have gone through the budget process

605
00:30:59,000 --> 00:31:05,000
 before, but for the new member, just wanted to provide an overview of what the utility

606
00:31:05,000 --> 00:31:12,000
 budget process looks like, so the city's fiscal year begins on October 1st.

607
00:31:12,000 --> 00:31:19,000
 In January and February timeframe, we do a budget kickoff citywide, which includes both

608
00:31:19,000 --> 00:31:22,000
 utility and non-utility departments.

609
00:31:22,000 --> 00:31:29,000
 The departments have approximately 30 to 45 days to compile their budgets, and budget

610
00:31:29,000 --> 00:31:31,000
 submissions are due in March.

611
00:31:31,000 --> 00:31:37,000
 Following the budget submissions, the finance department and the utility departments get

612
00:31:37,000 --> 00:31:45,000
 together to review the submissions and determine financial feasibility, at which time we then

613
00:31:45,000 --> 00:31:50,000
 schedule meetings with the city manager's office to review the requests and the financial

614
00:31:50,000 --> 00:31:59,000
 forecasts, which then brings us here today, June timeframe, to present these findings

615
00:31:59,000 --> 00:32:08,000
 and preliminary budgets to the PUB for your review and recommendation before we then submit

616
00:32:08,000 --> 00:32:13,000
 it to council and hold workshops with council in July and August.

617
00:32:13,000 --> 00:32:21,000
 Following the workshops with the city council, we have public hearings for any feedback from

618
00:32:21,000 --> 00:32:24,000
 the public regarding the proposed budgets.

619
00:32:24,000 --> 00:32:32,000
 Finally, it culminates in budget adoption late September, and the process starts all

620
00:32:32,000 --> 00:32:36,000
 over again for the next fiscal year.

621
00:32:36,000 --> 00:32:41,000
 We just wanted to talk a little bit about some of the economic conditions that were

622
00:32:41,000 --> 00:32:48,000
 seen broadly throughout the city, but in particular with the utilities.

623
00:32:48,000 --> 00:32:55,000
 You know, Denton has seen quite a bit of growth over the last couple years, and we anticipate

624
00:32:55,000 --> 00:33:02,000
 quite a bit more growth within the city, and the question is how to pay for that growth

625
00:33:02,000 --> 00:33:08,000
 with today's dollars, because those future developments aren't here quite yet, but the

626
00:33:08,000 --> 00:33:14,000
 infrastructure is needed in order to move forward with those developments and growth.

627
00:33:14,000 --> 00:33:22,000
 So in addition to the growth piece of it, there's also the responsibility to maintain

628
00:33:22,000 --> 00:33:29,000
 our existing infrastructure, and so we do have a number of capital needs, large capital

629
00:33:29,000 --> 00:33:36,000
 needs, that you'll see on June 24th as part of the CIP plan that we're looking to address.

630
00:33:36,000 --> 00:33:42,000
 And finally, the big challenge over the last couple years, but this year as well, has been

631
00:33:42,000 --> 00:33:51,000
 inflation and the cost of goods and services has gone up quite a bit, especially, you know,

632
00:33:51,000 --> 00:33:59,000
 cost of personnel and, you know, in addition to materials and supplies.

633
00:33:59,000 --> 00:34:05,000
 But some of our current opportunities that we're looking at to fund some of these financial

634
00:34:05,000 --> 00:34:11,000
 needs is we've really taken a close look at federal and state funding opportunities to

635
00:34:11,000 --> 00:34:18,000
 fund some of these large infrastructure projects, and we'll be pursuing all of those available

636
00:34:18,000 --> 00:34:25,000
 programs, bringing to you any opportunities that we find where we can leverage our existing

637
00:34:25,000 --> 00:34:29,000
 dollars to help pay for some of that growth.

638
00:34:29,000 --> 00:34:37,000
 As part of that, we've also reexamined our debt portfolio, our five-year CIP, to, you

639
00:34:37,000 --> 00:34:44,000
 know, refocus our priorities on what needs to be accomplished, what infrastructure we

640
00:34:44,000 --> 00:34:47,000
 can afford.

641
00:34:47,000 --> 00:34:54,000
 And finally, you know, looking at some potential rate increases across the utilities as we've

642
00:34:54,000 --> 00:35:00,000
 brought forward previously, and I know through the last budget cycle, we as a city haven't

643
00:35:00,000 --> 00:35:08,000
 raised utility rates really since 2017, and there were a number of years, 2019, 2020,

644
00:35:08,000 --> 00:35:14,000
 2021, where we actually decreased rates pretty significantly.

645
00:35:14,000 --> 00:35:21,000
 So I know DME had implemented a midyear rate increase this year.

646
00:35:21,000 --> 00:35:30,000
 We did increase wastewater rates last year, but, you know, just given the costs today

647
00:35:30,000 --> 00:35:36,000
 versus, you know, what will be eight years ago, they're simply not the same.

648
00:35:36,000 --> 00:35:45,000
 So our financial assumptions going into 2025, we're assuming that the city is growing at

649
00:35:45,000 --> 00:35:53,000
 nearly a 3 percent rate, which is contributing some increased system demands.

650
00:35:53,000 --> 00:35:59,000
 As I mentioned, we have a lot of growth that we're looking at in the future.

651
00:35:59,000 --> 00:36:05,000
 Part of that, a significant part of that, is the hunter coal developments, which we

652
00:36:05,000 --> 00:36:09,000
 have accounted for, as you'll see in the five-year CIP.

653
00:36:09,000 --> 00:36:16,000
 Solid Waste just wanted to note that we base their forecasts on customer counts, tonnage,

654
00:36:16,000 --> 00:36:18,000
 and service frequency.

655
00:36:18,000 --> 00:36:24,000
 Water and wastewater, it's a consumption forecast based on actual consumption.

656
00:36:24,000 --> 00:36:30,000
 And then I had mentioned some alternative funding options, so specific to water and

657
00:36:30,000 --> 00:36:37,000
 wastewater, we've done quite a bit of work on the WIFIA program and the SWIFT program,

658
00:36:37,000 --> 00:36:44,000
 WIFIA being a federal program through the EPA and SWIFT being an infrastructure program

659
00:36:44,000 --> 00:36:47,000
 through the Texas Water Development Board.

660
00:36:47,000 --> 00:36:57,000
 And so we'll be bringing to you funding options, which include both of those programs.

661
00:36:57,000 --> 00:37:03,000
 And finally, just that we have included an updated assumption based on the media rate

662
00:37:03,000 --> 00:37:09,000
 adjustments for electric in next year's financials.

663
00:37:09,000 --> 00:37:16,000
 So getting into specific funds, for the Solid Waste Fund for '24-'25, we do anticipate

664
00:37:16,000 --> 00:37:23,000
 growth of about 2.6 percent in residential customers, 2 percent in commercial front-load,

665
00:37:23,000 --> 00:37:28,000
 side-load poles, and 2.1 percent growth in landfill customers.

666
00:37:28,000 --> 00:37:31,000
 This is relatively in line with prior years.

667
00:37:31,000 --> 00:37:37,000
 Solid waste is more or less one of the more predictable funds.

668
00:37:37,000 --> 00:37:44,000
 We are in the process of concluding a cost of service study, which we anticipate the

669
00:37:44,000 --> 00:37:47,000
 completion of which will be this month.

670
00:37:47,000 --> 00:37:54,000
 We received some draft documentation from the consultant, and so we'll be bringing

671
00:37:54,000 --> 00:38:00,000
 that information forward to you over the next several weeks and months.

672
00:38:00,000 --> 00:38:03,000
 There is the potential, as I mentioned, for a rate increase.

673
00:38:03,000 --> 00:38:10,000
 Solid waste was one utility where they have not had any type of rate increase since 2017.

674
00:38:10,000 --> 00:38:14,000
 The cost to the vehicles has increased substantially.

675
00:38:14,000 --> 00:38:18,000
 The cost to personnel has increased substantially.

676
00:38:18,000 --> 00:38:24,000
 So it may be something that we look at for fiscal year 2025.

677
00:38:24,000 --> 00:38:34,000
 On the expense side, we will include a contribution, as we've done in the past, for closure post-closure.

678
00:38:34,000 --> 00:38:42,000
 We do anticipate citywide a compensation adjustment for inflation and the ongoing competitive

679
00:38:42,000 --> 00:38:45,000
 labor market that we're seeing.

680
00:38:45,000 --> 00:38:51,000
 And then debt service for the Solid Waste Fund is projected to increase in 2025.

681
00:38:51,000 --> 00:38:58,000
 This is due to the bond issuance that we are in the process of completing this year,

682
00:38:58,000 --> 00:39:06,000
 which the debt service will start next year, primarily the $2 million for the fleet shop

683
00:39:06,000 --> 00:39:13,000
 at Solid Waste and then $1.8 million in vehicles.

684
00:39:13,000 --> 00:39:21,000
 So this is a graphic that we've shown in the past that just details the 10-year growth

685
00:39:21,000 --> 00:39:27,000
 projections for residential customer accounts, front-load, side-load commercial, the roll-off

686
00:39:27,000 --> 00:39:31,000
 hauls, and landfill transactions.

687
00:39:31,000 --> 00:39:38,000
 What we included on the very left-hand column is our 2023 estimate where we thought those

688
00:39:38,000 --> 00:39:41,000
 numbers would come in.

689
00:39:41,000 --> 00:39:48,000
 The second column is 2023 actuals, where the numbers actually came in for 2023.

690
00:39:48,000 --> 00:39:52,000
 For the most part, we were very, very close.

691
00:39:52,000 --> 00:40:03,000
 We think these trends will continue, as noted here, going into 2025 as well.

692
00:40:03,000 --> 00:40:09,000
 So taking a look at the Solid Waste Fund and the financial performance, this is the fiscal

693
00:40:09,000 --> 00:40:15,000
 year 2023, which ended September 30th of last year.

694
00:40:15,000 --> 00:40:24,000
 So the fund, from a revenue perspective, ended about $1 million higher than budget, which

695
00:40:24,000 --> 00:40:27,000
 is always good.

696
00:40:27,000 --> 00:40:35,000
 And as you'll see at the bottom, the net income, we did have a use of reserve of $207,000.

697
00:40:35,000 --> 00:40:42,000
 However, the budget was originally budgeted to use $2.3 million in reserve.

698
00:40:42,000 --> 00:40:51,000
 So the fund ended better than we thought it would, which in large part had to do with

699
00:40:51,000 --> 00:40:57,000
 non-rate revenues associated with some of the special waste that was collected at the

700
00:40:57,000 --> 00:41:02,000
 landfill, along with just some reduction in expenses, O&M expenses.

701
00:41:02,000 --> 00:41:05,000
 So, overall, the fund did very well.

702
00:41:05,000 --> 00:41:12,000
 What you see in the 2024 budget that we had included in the current year was, again, a

703
00:41:12,000 --> 00:41:21,000
 $2 million use of reserve, and the annual budgeting of this use of reserve is really

704
00:41:21,000 --> 00:41:26,000
 intended to keep rates low, but there's only so many years that we're able to budget this

705
00:41:26,000 --> 00:41:34,000
 without increasing rates and revenue.

706
00:41:34,000 --> 00:41:41,000
 So moving to the water fund, we anticipate a 3.4% growth in residential customers for

707
00:41:41,000 --> 00:41:46,000
 water and 5.3% growth in commercial customers.

708
00:41:46,000 --> 00:41:51,000
 We have included some additional factors, such as 100 coal and the timing of those developments

709
00:41:51,000 --> 00:41:56,000
 in the five-year CIP and in their long-term operating budgets.

710
00:41:56,000 --> 00:42:04,000
 Revenue projections, we anticipate a 3% increase in rate revenues, just simply based on

711
00:42:04,000 --> 00:42:05,000
 growth.

712
00:42:05,000 --> 00:42:11,000
 Something else that we are including in our long-term financial forecasts is a reduction

713
00:42:11,000 --> 00:42:13,000
 for water conservation.

714
00:42:13,000 --> 00:42:19,000
 So the department is very focused on, you know, maintaining our long-term resources

715
00:42:19,000 --> 00:42:26,000
 and how we use those resources, and as part of that, as conservation efforts are implemented

716
00:42:26,000 --> 00:42:33,000
 over the next several years and we see residents potentially decreasing their consumption,

717
00:42:33,000 --> 00:42:42,000
 we would then see a decrease in revenues associated with that.

718
00:42:42,000 --> 00:42:50,000
 As I mentioned before, the SWIF funding, that's something that we've been actively pursuing

719
00:42:50,000 --> 00:42:59,000
 and would be a potential revenue source for us to use to fund some of the infrastructure.

720
00:42:59,000 --> 00:43:05,000
 On the expense projection side, as I had mentioned, citywide compensation adjustments for inflation

721
00:43:05,000 --> 00:43:10,000
 and the competitive labor market that we're seeing, and we do anticipate an increase in

722
00:43:10,000 --> 00:43:16,000
 overall debt service for the water fund based on the $20 million issued for the Ray Roberts

723
00:43:16,000 --> 00:43:26,000
 water treatment expansion this year, as well as the $12.2 million for water line replacements.

724
00:43:26,000 --> 00:43:32,000
 So taking a look at the water funds, in 2023 we budgeted $62.1 million.

725
00:43:32,000 --> 00:43:41,000
 Actuals were $55.4 million, budgeted expenditures were $60 million, or $63 million, excuse me,

726
00:43:41,000 --> 00:43:44,000
 and $49 million in actuals.

727
00:43:44,000 --> 00:43:50,000
 The reason that this number looks so different, budget to actual, is because we had anticipated

728
00:43:50,000 --> 00:43:58,000
 receiving external funding, which we did not receive in 2023.

729
00:43:58,000 --> 00:44:05,000
 So, overall, we had anticipated the use of reserve of $908,000.

730
00:44:05,000 --> 00:44:10,000
 As the fund ended up, we were positive $5.4 million.

731
00:44:10,000 --> 00:44:16,000
 What's that?

732
00:44:16,000 --> 00:44:31,000
 The external funding, that had to do with TEXDOT, some TEXDOT funding.

733
00:44:31,000 --> 00:44:34,000
 And your revenue funded capital was way down.

734
00:44:34,000 --> 00:44:44,000
 Yes, and the impact fee actuals, so if a project that is budgeted to use impact fees does not

735
00:44:44,000 --> 00:44:48,000
 move forward due to, you know, schedule or any other reason.

736
00:44:48,000 --> 00:44:49,000
 That's what I was asking.

737
00:44:49,000 --> 00:44:53,000
 Yeah, we don't make a transfer of the impact fees.

738
00:44:53,000 --> 00:44:54,000
 Right.

739
00:44:54,000 --> 00:44:55,000
 Yep.

740
00:44:55,000 --> 00:45:02,000
 I didn't know if it was a specific project.

741
00:45:02,000 --> 00:45:03,000
 Not to my knowledge.

742
00:45:03,000 --> 00:45:07,000
 I believe that there is a specific TEXDOT project that this is related to.

743
00:45:07,000 --> 00:45:15,000
 I don't know what it is offhand, but it did not relate to Hunter Cole.

744
00:45:15,000 --> 00:45:24,000
 And then for 2024, you can see the budget there as well, $58.7 million.

745
00:45:24,000 --> 00:45:31,000
 So those impact fees, are those tied to Hunter Cole or another specific project, or is that

746
00:45:31,000 --> 00:45:35,000
 $7 million just kind of a placeholder for '24?

747
00:45:35,000 --> 00:45:37,000
 On the impact fees?

748
00:45:37,000 --> 00:45:38,000
 Budget.

749
00:45:38,000 --> 00:45:39,000
 Yeah.

750
00:45:39,000 --> 00:45:40,000
 I don't know offhand.

751
00:45:40,000 --> 00:45:45,000
 I don't believe we do have a number of Hunter Cole infrastructure projects that are coming

752
00:45:45,000 --> 00:45:50,000
 up that we anticipate using the impact fees for.

753
00:45:50,000 --> 00:45:55,000
 It's possible that some of those projects were associated with that, although we do

754
00:45:55,000 --> 00:46:00,000
 have a number of other water and wastewater projects.

755
00:46:00,000 --> 00:46:06,000
 This is just water specific, but projects that we anticipated using impact fee funds

756
00:46:06,000 --> 00:46:13,000
 on.

757
00:46:13,000 --> 00:46:22,000
 One other note that I just want to make on the impact fees is that not all impact fees

758
00:46:22,000 --> 00:46:25,000
 are used as current year revenue funding.

759
00:46:25,000 --> 00:46:32,000
 That we do use impact fees where eligible to pay the debt service of impact fee eligible

760
00:46:32,000 --> 00:46:33,000
 projects.

761
00:46:33,000 --> 00:46:41,000
 So some of the impact fee usage is for projects that we may have issued debt for over the

762
00:46:41,000 --> 00:46:46,000
 last several years as they were identified in the prior impact fee study.

763
00:46:46,000 --> 00:46:50,000
 So it's carried as an asset before then?

764
00:46:50,000 --> 00:46:55,000
 Where does the impact fee go before you put it into your revenue?

765
00:46:55,000 --> 00:46:57,000
 It's in an impact fee fund.

766
00:46:57,000 --> 00:46:58,000
 We segregate it.

767
00:46:58,000 --> 00:46:59,000
 And that's an asset?

768
00:46:59,000 --> 00:47:00,000
 Yes.

769
00:47:00,000 --> 00:47:01,000
 Yeah.

770
00:47:01,000 --> 00:47:15,000
 So this is a graphic of water production.

771
00:47:15,000 --> 00:47:23,000
 The blue area is representative of the five year average of billable volume.

772
00:47:23,000 --> 00:47:27,000
 The yellow is the 2023 actuals.

773
00:47:27,000 --> 00:47:31,000
 The green is 2024 budget.

774
00:47:31,000 --> 00:47:36,000
 And red is the current year 2024 actuals.

775
00:47:36,000 --> 00:47:45,000
 So, you know, what we've seen, what we saw in 2023 was the consumption was quite a bit

776
00:47:45,000 --> 00:47:54,000
 higher starting in June over both the five year average and our projected budget increase.

777
00:47:54,000 --> 00:48:03,000
 So that's largely what contributed to the substantial increase in revenue for the water

778
00:48:03,000 --> 00:48:04,000
 fund last year.

779
00:48:04,000 --> 00:48:12,000
 As we look at the fund year to date, you'll see that up until January it was trending

780
00:48:12,000 --> 00:48:14,000
 relatively to budget.

781
00:48:14,000 --> 00:48:28,000
 We did see an increase in March and a decrease back to really the average there in April.

782
00:48:28,000 --> 00:48:35,000
 In terms of water demand, this is a graphic I think you may have seen several times before,

783
00:48:35,000 --> 00:48:39,000
 but this is really looking at our capacity.

784
00:48:39,000 --> 00:48:47,000
 And what this graphic shows is in 2028, as was presented earlier, we will need to complete

785
00:48:47,000 --> 00:48:55,000
 the Lake Ray Roberts water treatment plant expansion in order to be able to produce enough

786
00:48:55,000 --> 00:48:57,000
 capacity.

787
00:48:57,000 --> 00:49:02,000
 The blue shaded area is our 2023 maximum daily demand.

788
00:49:02,000 --> 00:49:06,000
 The areas in red is the anticipated city growth.

789
00:49:06,000 --> 00:49:17,000
 And the black line is the treatment plant capacity.

790
00:49:17,000 --> 00:49:24,000
 So the wastewater fund, we anticipate a 3.4% growth in residential customers, 4.2% growth

791
00:49:24,000 --> 00:49:31,000
 in commercial customers, 3.7% increase in rate revenues based on that growth.

792
00:49:31,000 --> 00:49:37,000
 And as we presented last year, we do feel that the wastewater fund will need some type

793
00:49:37,000 --> 00:49:42,000
 of rate increase or rate adjustment going into 2025.

794
00:49:42,000 --> 00:49:49,000
 On the expense projection side, as with all funds, we anticipate that citywide compensation

795
00:49:49,000 --> 00:49:54,000
 and we do anticipate an increase in debt service for the capital improvements.

796
00:49:54,000 --> 00:49:59,000
 $24 million was issued this year for the concrete water reclamation plant, as well as $8 million

797
00:49:59,000 --> 00:50:05,000
 for wastewater line replacements.

798
00:50:05,000 --> 00:50:15,000
 So the wastewater fund financial performance for 2023, the actual revenue was $40.2 million,

799
00:50:15,000 --> 00:50:23,000
 actual expenditures $51.8 million, for a use of reserve of $11.5 million.

800
00:50:23,000 --> 00:50:29,000
 Something that is important to note here with the wastewater fund, just looking at it, is

801
00:50:29,000 --> 00:50:40,000
 that in 2022, we had actually received $10 million from TexDOT in September that we had

802
00:50:40,000 --> 00:50:44,000
 not anticipated to receive until 2023.

803
00:50:44,000 --> 00:50:53,000
 So the use of reserve, that $10 million, 10 of the 10.2, was anticipated to be used because

804
00:50:53,000 --> 00:50:56,000
 the money was sitting in the fund balance at the end of the year.

805
00:50:56,000 --> 00:51:02,000
 So per accounting standards, we have to book the revenue in the period that it was received

806
00:51:02,000 --> 00:51:11,000
 and there wasn't a good way around, you know, budgeting it any other way.

807
00:51:11,000 --> 00:51:21,000
 So, you know, really as we look at the financials, we were down about $1.3 million in the wastewater

808
00:51:21,000 --> 00:51:29,000
 fund, but something else to keep in mind is also that this was prior to the rate adjustment

809
00:51:29,000 --> 00:51:31,000
 that was made in 2024.

810
00:51:31,000 --> 00:51:35,000
 So as we were looking at the financials last year and the year before, we saw that there

811
00:51:35,000 --> 00:51:42,000
 was a use of reserve, you know, that's what drove the 11 percent rate increase in wastewater

812
00:51:42,000 --> 00:51:44,000
 in 2024.

813
00:51:44,000 --> 00:51:51,000
 And just looking at 2024, and we'll get into it more on the 24th, but revenues, you know,

814
00:51:51,000 --> 00:51:58,000
 have increased with that rate increase to where, you know, the fund is looking much

815
00:51:58,000 --> 00:52:05,000
 better.

816
00:52:05,000 --> 00:52:09,000
 An overview of the drainage division, which is part of the wastewater fund.

817
00:52:09,000 --> 00:52:17,000
 So not a whole lot to note here other than in the non-residential drainage fees, there

818
00:52:17,000 --> 00:52:22,000
 was a refund, a fairly large refund that was made in 2023.

819
00:52:22,000 --> 00:52:30,000
 You'll see the non-residential drainage fees came in at $2.6 million rather than $3.6 million,

820
00:52:30,000 --> 00:52:37,000
 and that was just due to some billing issues that needed to be corrected.

821
00:52:37,000 --> 00:52:43,000
 So the impact of that was a reduction in the capital and admin transfers on the expenditure

822
00:52:43,000 --> 00:52:51,000
 side to reduce it down to the amount of revenue that was actually received and could be used

823
00:52:51,000 --> 00:52:52,000
 by the drainage fund.

824
00:52:52,000 --> 00:53:01,000
 So the 2024 budget, as you'll see, looks very similar to the 2023 actuals.

825
00:53:01,000 --> 00:53:09,000
 And we'll go through year-to-date 2024 on the 24th, but drainage is trending very well.

826
00:53:09,000 --> 00:53:24,000
 A large refund.

827
00:53:24,000 --> 00:53:34,000
 Yes, there were some entities that were exempt that the billing system had billed, and so

828
00:53:34,000 --> 00:53:37,000
 that's what drove the refund for those properties.

829
00:53:37,000 --> 00:53:40,000
 Oh, okay.

830
00:53:40,000 --> 00:53:43,000
 Interesting.

831
00:53:43,000 --> 00:53:46,000
 Okay.

832
00:53:46,000 --> 00:53:54,000
 The electric fund for 2025, we anticipate a 7.53% growth in retail sales, megawatt hours

833
00:53:54,000 --> 00:53:57,000
 from known residential and commercial projects.

834
00:53:57,000 --> 00:54:05,000
 We do have an ongoing cost of service study for the electric fund, and you know, which

835
00:54:05,000 --> 00:54:10,000
 may result in a small potential rate increase.

836
00:54:10,000 --> 00:54:18,000
 Again, citywide compensation adjustments will be part of the electric fund performa and

837
00:54:18,000 --> 00:54:21,000
 increases in debt service for capital improvements.

838
00:54:21,000 --> 00:54:29,000
 The electric fund issued about 60 million this year, but had reduced it from 82.5, so

839
00:54:29,000 --> 00:54:38,000
 the increase in debt service is actually lower than what it was originally planned to be.

840
00:54:38,000 --> 00:54:44,000
 So the electric fund, this is something I know you've seen before as the midyear rate

841
00:54:44,000 --> 00:54:48,000
 adjustment was presented to you earlier this year.

842
00:54:48,000 --> 00:54:56,000
 But the electric fund ended fiscal year 2023 with $334 million in revenue and $365 million

843
00:54:56,000 --> 00:55:03,000
 in expenditures, resulting in a use of reserve of $31.2 million.

844
00:55:03,000 --> 00:55:12,000
 For 2024, the budget had included $290 million in revenue and $308 million in expenditures,

845
00:55:12,000 --> 00:55:30,000
 which we had anticipated a use of reserve of $17 million.

846
00:55:30,000 --> 00:55:41,000
 I don't have it offhand, but it's certainly something that we'll cover on the 24th.

847
00:55:41,000 --> 00:55:48,000
 The electric forecast for retail sales, this is just a graphical representation of that

848
00:55:48,000 --> 00:55:59,000
 about 7.5 percent that I noted on the prior slide.

849
00:55:59,000 --> 00:56:05,000
 And just a quick overview of the electric specific financial assumptions.

850
00:56:05,000 --> 00:56:11,000
 Earlier this year, we did finance $31.26 million of energy expenses.

851
00:56:11,000 --> 00:56:17,000
 They were financed with five-year utility system revenue bonds, which are self-supported

852
00:56:17,000 --> 00:56:19,000
 by DME revenue.

853
00:56:19,000 --> 00:56:28,000
 The cost of service study results and recommendations are anticipated in the next few weeks, and

854
00:56:28,000 --> 00:56:34,000
 our anticipation is that the primary consideration will be on the fixed cost facility and usage

855
00:56:34,000 --> 00:56:35,000
 charges.

856
00:56:35,000 --> 00:56:44,000
 And additionally, we have a value of solar study, which we will incorporate the results

857
00:56:44,000 --> 00:56:51,000
 and recommendations as part of the 2025 budget.

858
00:56:51,000 --> 00:56:58,000
 So, looking forward, as I had mentioned a number of times, June 24th is when we intend

859
00:56:58,000 --> 00:57:05,000
 to bring forward the 2025 budgets and the detail associated with the budgetary request

860
00:57:05,000 --> 00:57:07,000
 and the five-year CIP.

861
00:57:07,000 --> 00:57:16,000
 Following the 24th, we'll come back again on July 8th to review those budgets and have

862
00:57:16,000 --> 00:57:22,000
 you provide a recommendation, both on the budget and rates.

863
00:57:22,000 --> 00:57:30,000
 On July 23rd, we will review the utility budgets and rates with Council before coming back

864
00:57:30,000 --> 00:57:35,000
 to Council again on August 10th for the citywide budget workshop.

865
00:57:35,000 --> 00:57:41,000
 We intend to have public hearings on September 10th as well as September 17th, along with

866
00:57:41,000 --> 00:57:46,000
 budget adoption on the 17th.

867
00:57:46,000 --> 00:57:48,000
 And any questions?

868
00:57:48,000 --> 00:57:50,000
 Questions?

869
00:57:50,000 --> 00:57:55,000
 Mr. Rayner, go ahead.

870
00:57:55,000 --> 00:58:02,000
 Could you go back to one of the earlier slides on the economic conditions, the current challenges,

871
00:58:02,000 --> 00:58:05,000
 community-wide growth?

872
00:58:05,000 --> 00:58:16,000
 Sure.

873
00:58:16,000 --> 00:58:23,000
 So, on the paying for tomorrow with today's dollars, existing new infrastructure needs

874
00:58:23,000 --> 00:58:32,000
 and such, so, are you getting your growth analysis from, such as the Hunter Cole apartments

875
00:58:32,000 --> 00:58:36,000
 that are in the pipeline of being approved and such?

876
00:58:36,000 --> 00:58:42,000
 So, are those really the main factors that drive you as to what part of town we need

877
00:58:42,000 --> 00:58:46,000
 to be addressing versus whatever?

878
00:58:46,000 --> 00:58:47,000
 Yeah.

879
00:58:47,000 --> 00:58:55,000
 So, we have received information from the developers, and we do incorporate that into

880
00:58:55,000 --> 00:58:57,000
 our financial assumptions.

881
00:58:57,000 --> 00:59:03,000
 However, we also work very closely with the city of Denton's development services, looking

882
00:59:03,000 --> 00:59:10,000
 at not just specific developers, but citywide and the projects that they know are in the

883
00:59:10,000 --> 00:59:13,000
 pipeline.

884
00:59:13,000 --> 00:59:19,000
 We really couple that with looking back at actuals as well, because we know that there's

885
00:59:19,000 --> 00:59:24,000
 a lot of interest in development within the city from developers.

886
00:59:24,000 --> 00:59:27,000
 We know that development timelines often change.

887
00:59:27,000 --> 00:59:35,000
 And so, you know, what we do is, you know, we base a lot of our trends on actuals, that

888
00:59:35,000 --> 00:59:42,000
 until those water meters, you know, go in, you know, we're being more conservative with

889
00:59:42,000 --> 00:59:43,000
 our forecasts.

890
00:59:43,000 --> 00:59:51,000
 So, we do look at a variety of different data sources in putting these together.

891
00:59:51,000 --> 01:00:00,000
 You know, especially with Hunter Cole, you know, we're basing our infrastructure needs,

892
01:00:00,000 --> 01:00:07,000
 you know, on their projected timelines to ensure that that infrastructure is in place,

893
01:00:07,000 --> 01:00:11,000
 you know, prior to the homes being able to go in.

894
01:00:11,000 --> 01:00:18,000
 So, you know, as we look at different funding options, I think what's important to us is

895
01:00:18,000 --> 01:00:26,000
 having that generational equity where the residents today are not burdened with, you

896
01:00:26,000 --> 01:00:33,000
 know, the entirety of the cost of this infrastructure that ultimately future residents will, you

897
01:00:33,000 --> 01:00:36,000
 know, enjoy.

898
01:00:36,000 --> 01:00:39,000
 Does that get to your question?

899
01:00:39,000 --> 01:00:41,000
 Yes.

900
01:00:41,000 --> 01:00:44,000
 The old joke used to be the sidewalk that went nowhere.

901
01:00:44,000 --> 01:00:51,000
 And so that's kind of what I -- and so then what we have, what I see as a driving force

902
01:00:51,000 --> 01:00:55,000
 further away from our city limits to stretch us is a school board.

903
01:00:55,000 --> 01:00:58,000
 We've got new high schools coming in.

904
01:00:58,000 --> 01:01:01,000
 We've got a school over by where Carter's house used to be, I understand.

905
01:01:01,000 --> 01:01:05,000
 I'd like to go and look at that 80 acres again to make sure that it's not underwater.

906
01:01:05,000 --> 01:01:11,000
 Would we be involved with the NAVO Elementary behind Prairie House or would that be part

907
01:01:11,000 --> 01:01:14,000
 of our bailiwick as well?

908
01:01:14,000 --> 01:01:16,000
 I don't know off hands.

909
01:01:16,000 --> 01:01:17,000
 Okay.

910
01:01:17,000 --> 01:01:22,000
 I understand there's going to be a lot of -- besides Hunter Cole, a lot of other -- we're

911
01:01:22,000 --> 01:01:25,000
 going to have six high schools coming in.

912
01:01:25,000 --> 01:01:27,000
 Not additional, but we will.

913
01:01:27,000 --> 01:01:32,000
 And I'm asking you, are you -- and I'm sure you are, but those are items that I think

914
01:01:32,000 --> 01:01:38,000
 the school may be accelerating beyond a comfort level that the city has.

915
01:01:38,000 --> 01:01:46,000
 And so I just want to say that, I guess, more than anything else.

916
01:01:46,000 --> 01:01:48,000
 Without a doubt.

917
01:01:48,000 --> 01:01:52,000
 The umbrella is really growing, but at the same time, I don't want to just sit out there

918
01:01:52,000 --> 01:01:56,000
 and we just start counting the spider webs.

919
01:01:56,000 --> 01:01:58,000
 But yeah, we know it's there.

920
01:01:58,000 --> 01:02:00,000
 I know that you will do this.

921
01:02:00,000 --> 01:02:02,000
 I will just say it.

922
01:02:02,000 --> 01:02:09,000
 The effectiveness and the appropriate spending of money within the time frames that we think,

923
01:02:09,000 --> 01:02:11,000
 it's a Las Vegas gamble, I understand.

924
01:02:11,000 --> 01:02:13,000
 And you've got a project, and I can't wait until the 24th.

925
01:02:13,000 --> 01:02:15,000
 That's going to be a wild one.

926
01:02:15,000 --> 01:02:21,000
 Those are factors that are accelerating that I don't know if many people in the city

927
01:02:21,000 --> 01:02:29,000
 realize being the school district is one that's a big catalyst.

928
01:02:29,000 --> 01:02:34,000
 So to that point, I will tell you that we meet on a constant basis with DISD and with

929
01:02:34,000 --> 01:02:36,000
 Dr. Wilson and his staff.

930
01:02:36,000 --> 01:02:39,000
 And that's one of the things that we cover in our two meetings per year with the entire

931
01:02:39,000 --> 01:02:44,000
 council and with the school board is what their forecasted growth pattern looks like.

932
01:02:44,000 --> 01:02:49,000
 So we can combine that with what Matt has explained to make sure that we're looking

933
01:02:49,000 --> 01:02:51,000
 at it in a holistic way.

934
01:02:51,000 --> 01:02:56,000
 And will we be able to be part of that party under the tent as far as getting to see what

935
01:02:56,000 --> 01:02:58,000
 the projections are besides the council getting it?

936
01:02:58,000 --> 01:03:01,000
 So whenever we have those meetings, they are posted for the public.

937
01:03:01,000 --> 01:03:04,000
 And we do broadcast those as well.

938
01:03:04,000 --> 01:03:06,000
 I'm just talking about this committee.

939
01:03:06,000 --> 01:03:09,000
 Yeah.

940
01:03:09,000 --> 01:03:10,000
 I couldn't answer that.

941
01:03:10,000 --> 01:03:12,000
 Thank you.

942
01:03:12,000 --> 01:03:15,000
 I appreciate it.

943
01:03:15,000 --> 01:03:16,000
 Further questions?

944
01:03:16,000 --> 01:03:17,000
 Yes, go ahead.

945
01:03:17,000 --> 01:03:24,000
 Sir, on the waste side, non-waste revenues, special waste, what kind of things would I

946
01:03:24,000 --> 01:03:31,000
 expect to see in that extremely large increase versus what we thought and what we think in

947
01:03:31,000 --> 01:03:33,000
 the future?

948
01:03:33,000 --> 01:03:36,000
 Just give me an idea of what I'm going to see in there.

949
01:03:36,000 --> 01:03:37,000
 Yeah.

950
01:03:37,000 --> 01:03:41,000
 So there's really two components, two things that are going on here.

951
01:03:41,000 --> 01:03:51,000
 One is -- so there's the landfill gate revenue, and then there's also a landfill special waste

952
01:03:51,000 --> 01:03:57,000
 fee that's collected for any type of, you know, special waste.

953
01:03:57,000 --> 01:04:02,000
 I don't have that list of what the special waste, you know, includes, but could certainly

954
01:04:02,000 --> 01:04:03,000
 provide that.

955
01:04:03,000 --> 01:04:07,000
 Here she comes.

956
01:04:07,000 --> 01:04:09,000
 Tammy Clausing, deputy director.

957
01:04:09,000 --> 01:04:11,000
 Special waste includes sludge.

958
01:04:11,000 --> 01:04:12,000
 We do have construction.

959
01:04:12,000 --> 01:04:17,000
 We had two new rates last year, construction demolition and shingles.

960
01:04:17,000 --> 01:04:19,000
 Those were coded to the wrong ones.

961
01:04:19,000 --> 01:04:24,000
 They'll be coded -- we caught it a few months in, so that's part of what's going on there.

962
01:04:24,000 --> 01:04:27,000
 But we also have an increase in our scrap metal.

963
01:04:27,000 --> 01:04:32,000
 We've been collecting a lot more scrap metal at our HCC where they're recycling the public

964
01:04:32,000 --> 01:04:37,000
 disposal, so a lot -- we've been collecting it off a bulky route, so our scrap metal has

965
01:04:37,000 --> 01:04:39,000
 gone up increasingly.

966
01:04:39,000 --> 01:04:42,000
 Our recycling rebate has also increased.

967
01:04:42,000 --> 01:04:47,000
 We've been doing a very good job in increasing our diversion, so.

968
01:04:47,000 --> 01:04:57,000
 Thank you.

969
01:04:57,000 --> 01:04:59,000
 One other real quick question, if I may.

970
01:04:59,000 --> 01:05:00,000
 Sure.

971
01:05:00,000 --> 01:05:07,000
 On the electric side, bank debt issuing slower -- I'm sorry, slow projects, kicking cans

972
01:05:07,000 --> 01:05:11,000
 down the road, savings probably not due to increases.

973
01:05:11,000 --> 01:05:17,000
 Just what was kind of going on there and how were we able to not put out as much as we

974
01:05:17,000 --> 01:05:18,000
 expected?

975
01:05:18,000 --> 01:05:25,000
 Yeah, so it's important, I think, to keep in mind that the budget process really starts

976
01:05:25,000 --> 01:05:28,000
 18 months prior to when the funding is needed.

977
01:05:28,000 --> 01:05:36,000
 So, you know, even as, you know, we may have budgeted $82 million, throughout that 18-month

978
01:05:36,000 --> 01:05:41,000
 time period, you know, we're reviewing the projects in terms of, you know, where they

979
01:05:41,000 --> 01:05:44,000
 are schedule-wise, what's needed.

980
01:05:44,000 --> 01:05:46,000
 There may have been some other opportunities.

981
01:05:46,000 --> 01:05:51,000
 It could be that the project we thought was going to be needed and wasn't.

982
01:05:51,000 --> 01:06:00,000
 So, the projects are thoroughly scrubbed before they, you know, get to the bond issuance.

983
01:06:00,000 --> 01:06:07,000
 And the other, you know, is just financial affordability, that some of these projects

984
01:06:07,000 --> 01:06:14,000
 that are a lower priority are pushed out, because, you know, looking at the financials,

985
01:06:14,000 --> 01:06:22,000
 we feel like an $82 million, you know, issuance, you know, adds more debt service than we would

986
01:06:22,000 --> 01:06:23,000
 like in that next fiscal year.

987
01:06:23,000 --> 01:06:28,000
 So, I think that there's a lot of contributing factors, you know, in terms of what we look

988
01:06:28,000 --> 01:06:29,000
 at.

989
01:06:29,000 --> 01:06:35,000
 But some projects could be scheduled, some projects not needed.

990
01:06:35,000 --> 01:06:36,000
 Just -- it just depends.

991
01:06:36,000 --> 01:06:37,000
 Thank you.

992
01:06:37,000 --> 01:06:38,000
 Mm-hmm.

993
01:06:38,000 --> 01:06:43,000
 Any further -- oh, here comes Devin.

994
01:06:43,000 --> 01:06:50,000
 So, I just have a -- I guess a couple of comments and a few questions.

995
01:06:50,000 --> 01:06:51,000
 Sure.

996
01:06:51,000 --> 01:06:55,000
 Whenever we show use of reserve, it would be helpful to show maybe the reserve and the

997
01:06:55,000 --> 01:06:56,000
 reserve target.

998
01:06:56,000 --> 01:06:57,000
 Yeah.

999
01:06:57,000 --> 01:07:00,000
 So, we have, in some cases, some pretty substantial use of reserve.

1000
01:07:00,000 --> 01:07:04,000
 And, you know, you explained that $10 million that was -- had to be put in the reserve to

1001
01:07:04,000 --> 01:07:07,000
 transfer it one month to bid and then spend it.

1002
01:07:07,000 --> 01:07:11,000
 But in general, all of these are showing, you know, use of reserves in the millions,

1003
01:07:11,000 --> 01:07:15,000
 which may be a goal if the reserves are above their target.

1004
01:07:15,000 --> 01:07:16,000
 Mm-hmm.

1005
01:07:16,000 --> 01:07:20,000
 But it looks a little scary to show a number at the bottom that's negative several million

1006
01:07:20,000 --> 01:07:21,000
 dollars.

1007
01:07:21,000 --> 01:07:22,000
 Yeah.

1008
01:07:22,000 --> 01:07:32,240
 The revenue-funded capital on several of the funds is significantly lower than -- in actuals

1009
01:07:32,240 --> 01:07:33,240
 than budget.

1010
01:07:33,240 --> 01:07:42,240
 I mean, I know projects move, but that's also a really good way to make up a shortfall is

1011
01:07:42,240 --> 01:07:46,240
 to kick the can down the road, to delay a project.

1012
01:07:46,240 --> 01:07:53,240
 So, whenever we have a, you know, $10 million shift in revenue-funded capital --

1013
01:07:53,240 --> 01:07:54,240
 Yep.

1014
01:07:54,240 --> 01:07:57,240
 -- I'd just like to understand where those come from.

1015
01:07:57,240 --> 01:07:58,240
 Yeah.

1016
01:07:58,240 --> 01:08:03,240
 So, in what I believe -- and I'll go back and double-check, and we can -- you know,

1017
01:08:03,240 --> 01:08:11,240
 I can bring some detail for it on the 24th as well -- is that if that revenue was external

1018
01:08:11,240 --> 01:08:20,240
 funding, like TextDOT or a developer contribution, or if it were to be impact fees -- because

1019
01:08:20,240 --> 01:08:26,240
 what happens is that money comes in on the revenue side, but then goes out on the revenue-funded

1020
01:08:26,240 --> 01:08:29,240
 capital side if it's in the same fiscal year.

1021
01:08:29,240 --> 01:08:37,240
 So, to your point, having some additional, you know, clarity, you know, on those revenue-funded

1022
01:08:37,240 --> 01:08:40,240
 transfers, you know, we can provide that.

1023
01:08:40,240 --> 01:08:45,240
 And then, as far as -- you did mention showing the fund balance.

1024
01:08:45,240 --> 01:08:50,240
 And we do typically -- that's what you'll see on the performance, is you'll see the

1025
01:08:50,240 --> 01:08:55,240
 beginning fund balance, all the, you know, financial activity, the ending fund balance,

1026
01:08:55,240 --> 01:08:59,240
 and then the reserve targets as well as the debt service coverage ratio.

1027
01:08:59,240 --> 01:09:00,240
 Okay.

1028
01:09:00,240 --> 01:09:03,240
 Should be called a rate stabilization fund.

1029
01:09:03,240 --> 01:09:04,240
 Yes.

1030
01:09:04,240 --> 01:09:05,240
 Yep.

1031
01:09:05,240 --> 01:09:11,240
 And then, going to -- if you could move to the electric fund.

1032
01:09:11,240 --> 01:09:12,240
 Sure.

1033
01:09:12,240 --> 01:09:18,240
 I don't know the -- so, in general, we can look at these performance and next year's

1034
01:09:18,240 --> 01:09:23,240
 budget, and we can get a pretty good idea of what rates need to do.

1035
01:09:23,240 --> 01:09:28,240
 It gets a little more complicated in water because water use varies, your water use showed.

1036
01:09:28,240 --> 01:09:33,240
 Like, 2023 was a dry year, so it had higher revenue that isn't necessarily going to be

1037
01:09:33,240 --> 01:09:35,240
 repeated this year or next year.

1038
01:09:35,240 --> 01:09:39,240
 So, you have to interpret water a little differently.

1039
01:09:39,240 --> 01:09:48,240
 Electricity is its own ballgame, and I don't know if it's possible to separate base costs

1040
01:09:48,240 --> 01:09:58,240
 from kind of ECA, energy-related costs, but that -- I think that might be useful for us

1041
01:09:58,240 --> 01:10:00,240
 whenever we're looking at rates.

1042
01:10:00,240 --> 01:10:07,240
 Is the base rate needing to increase, or is this variability that's going to affect ECA?

1043
01:10:07,240 --> 01:10:15,240
 And so, you know, you can't put that -- it might not fit in one PowerPoint slide, too,

1044
01:10:15,240 --> 01:10:20,240
 but I think that's also important for us to be thinking about is, are the general capital

1045
01:10:20,240 --> 01:10:27,240
 costs and personnel costs increasing that we need to increase base rates, or is, you

1046
01:10:27,240 --> 01:10:32,240
 know, wholesale power in ERCOT more expensive, or those types of things, because they will

1047
01:10:32,240 --> 01:10:37,240
 affect two different sections, one of them being the annual budgeted rate and one of

1048
01:10:37,240 --> 01:10:40,240
 them being our, you know, our six-month variable rate.

1049
01:10:40,240 --> 01:10:44,240
 I think that's where the cost of service study will come in and help us, because that's where

1050
01:10:44,240 --> 01:10:48,240
 they're going to determine what are the fixed costs, and is that where most of it needs

1051
01:10:48,240 --> 01:10:49,240
 to go.

1052
01:10:49,240 --> 01:10:50,240
 >> Right.

1053
01:10:50,240 --> 01:10:54,240
 But then, as we look -- but as we watch it happen, you know, once we get to the cost

1054
01:10:54,240 --> 01:10:58,240
 of service, we're going to have, every six months, we're going to be reviewing those

1055
01:10:58,240 --> 01:11:04,240
 rates, and so understanding, in this budget process, which of these affects the base rate

1056
01:11:04,240 --> 01:11:08,240
 and which of these affects the energy rate would be helpful.

1057
01:11:08,240 --> 01:11:14,240
 >> And we did make that move, it was last year or the year before, to make the ECA more

1058
01:11:14,240 --> 01:11:16,240
 transparent and more about the -- >> Yes.

1059
01:11:16,240 --> 01:11:17,240
 >> Right.

1060
01:11:17,240 --> 01:11:18,240
 >> And this is for us to -- >> Yes.

1061
01:11:18,240 --> 01:11:19,240
 >> -- to keep that out.

1062
01:11:19,240 --> 01:11:20,240
 >> That'll spell that out.

1063
01:11:20,240 --> 01:11:21,240
 >> That's right.

1064
01:11:21,240 --> 01:11:22,240
 Very good.

1065
01:11:22,240 --> 01:11:23,240
 >> Keep it very transparent.

1066
01:11:23,240 --> 01:11:27,240
 >> And last, can we finish on the projected water demand chart?

1067
01:11:27,240 --> 01:11:38,240
 >> Sure.

1068
01:11:38,240 --> 01:11:39,240
 >> This one here?

1069
01:11:39,240 --> 01:11:42,240
 >> Yeah, that one there.

1070
01:11:42,240 --> 01:11:50,240
 And I appreciate the challenge of -- we want to base our revenue forecasts on what we actually

1071
01:11:50,240 --> 01:11:57,240
 think will get built and turned on, but we have to base our infrastructure forecasts on

1072
01:11:57,240 --> 01:12:00,240
 what's the fastest this stuff could really arrive.

1073
01:12:00,240 --> 01:12:01,240
 >> Yeah.

1074
01:12:01,240 --> 01:12:03,240
 >> I was curious, that red line is really aggressive.

1075
01:12:03,240 --> 01:12:11,240
 Is that some -- that WWMP, is that some kind of a standard that shows the really rapid

1076
01:12:11,240 --> 01:12:12,240
 growth there?

1077
01:12:12,240 --> 01:12:18,240
 >> WWMP stands for the Wastewater Master Plan, and so these were the population projections

1078
01:12:18,240 --> 01:12:26,240
 that were included by Frieza Nichols in that master plan.

1079
01:12:26,240 --> 01:12:35,240
 You know, we don't use as an aggressive population in some of our financial forecasting, as opposed

1080
01:12:35,240 --> 01:12:44,240
 to this water demand forecast, but it is -- it is very aggressive, as you noted.

1081
01:12:44,240 --> 01:12:53,240
 I think, you know, from this perspective, we're being more conservative in understanding

1082
01:12:53,240 --> 01:12:58,240
 when we really need this infrastructure, and then on the financial side, we're also being

1083
01:12:58,240 --> 01:13:03,240
 conservative in terms of revenue so that we're not overexpending and putting the fund into

1084
01:13:03,240 --> 01:13:05,240
 a deficit position.

1085
01:13:05,240 --> 01:13:16,240
 So, yes, it's -- but, you know, I think overall, we anticipate quite a bit of growth and the

1086
01:13:16,240 --> 01:13:21,240
 need for these plant expansions, particularly the one at Ray Roberts.

1087
01:13:21,240 --> 01:13:22,240
 >> Yeah.

1088
01:13:22,240 --> 01:13:28,240
 Yeah, and I definitely -- I wonder if this was re-baselined off of the dry year in 2023

1089
01:13:28,240 --> 01:13:35,240
 that had a high water demand, because for us to be projected to be 20% below our capacity

1090
01:13:35,240 --> 01:13:43,240
 to be 20% below our demand in four years, I mean, that's -- that seems like something's

1091
01:13:43,240 --> 01:13:49,240
 got to be wrong there, or something went wrong several years ago that allowed us to get to

1092
01:13:49,240 --> 01:13:51,240
 that point.

1093
01:13:51,240 --> 01:13:58,240
 >> Go ahead.

1094
01:13:58,240 --> 01:14:00,240
 >> Stay with the red lines.

1095
01:14:00,240 --> 01:14:04,240
 So according to Freese and Nichols, those reflect population growth?

1096
01:14:04,240 --> 01:14:06,240
 Is that what you're saying?

1097
01:14:06,240 --> 01:14:18,240
 >> It reflects city growth in M.G.D., so the demand of water.

1098
01:14:18,240 --> 01:14:27,240
 >> So how is that -- so how does population correlate with what you just said?

1099
01:14:27,240 --> 01:14:34,240
 >> So, I mean, population obviously plays a part in the consumption.

1100
01:14:34,240 --> 01:14:41,240
 I think the only point I was trying to make is just in some of our financial forecasts

1101
01:14:41,240 --> 01:14:45,240
 where we're looking at the number of individuals in the city.

1102
01:14:45,240 --> 01:14:52,240
 Earlier in the presentation, you saw it was close to 3%, but that doesn't -- we're being

1103
01:14:52,240 --> 01:14:54,240
 conservative on that end.

1104
01:14:54,240 --> 01:15:00,240
 Here, you know, this is representative of the water consumption, which in the beginning

1105
01:15:00,240 --> 01:15:03,240
 years, it's hard to see at the bottom.

1106
01:15:03,240 --> 01:15:09,240
 The growth is 8.1%, and then levels back down to the 3.5% and the 2%.

1107
01:15:09,240 --> 01:15:14,240
 >> So I guess my question is, would it be too cumbersome to give me a better definition

1108
01:15:14,240 --> 01:15:18,240
 of what those red lines -- what the population numbers are for those red lines?

1109
01:15:18,240 --> 01:15:19,240
 >> Sure.

1110
01:15:19,240 --> 01:15:20,240
 Yeah.

1111
01:15:20,240 --> 01:15:21,240
 You can have water.

1112
01:15:21,240 --> 01:15:25,240
 >> I mean, because -- yeah.

1113
01:15:25,240 --> 01:15:30,240
 Because I know we've got some wild crystal ball going on, and I realize the growth is

1114
01:15:30,240 --> 01:15:36,240
 it, but I think at some point we might even come to a realization that some of that may

1115
01:15:36,240 --> 01:15:38,240
 be fantasy.

1116
01:15:38,240 --> 01:15:44,240
 >> Fantasy when there are 8,000 people.

1117
01:15:44,240 --> 01:15:52,240
 >> I'm going to turn off my mic if you're going to talk that way.

1118
01:15:52,240 --> 01:15:55,240
 >> Oh, I didn't say it.

1119
01:15:55,240 --> 01:15:56,240
 >> To that --

1120
01:15:56,240 --> 01:15:57,240
 >> You got picked up on it a little bit.

1121
01:15:57,240 --> 01:15:58,240
 Go ahead, Aaron.

1122
01:15:58,240 --> 01:16:02,240
 >> To that point, this study being 2018 and what we've seen since then, how often is this

1123
01:16:02,240 --> 01:16:09,240
 updated and does it need to be updated should we be off, you know, even worse, more severely

1124
01:16:09,240 --> 01:16:12,240
 than 20% in '28?

1125
01:16:12,240 --> 01:16:13,240
 >> Yeah.

1126
01:16:13,240 --> 01:16:18,240
 So this -- I believe that this was updated since that time.

1127
01:16:18,240 --> 01:16:22,240
 I believe that the master plans are done every three to five years.

1128
01:16:22,240 --> 01:16:23,240
 >> Every five years.

1129
01:16:23,240 --> 01:16:27,240
 >> I could be mistaken on that.

1130
01:16:27,240 --> 01:16:32,240
 And we just went through that last year, the master plan?

1131
01:16:32,240 --> 01:16:33,240
 Yes.

1132
01:16:33,240 --> 01:16:36,240
 >> Fairly -- yeah, it's fairly recent.

1133
01:16:36,240 --> 01:16:39,240
 >> A good question.

1134
01:16:39,240 --> 01:16:40,240
 Other questions?

1135
01:16:40,240 --> 01:16:48,240
 >> So we still have a board seat on the NPEM in North Texas for our district.

1136
01:16:48,240 --> 01:16:49,240
 >> I don't --

1137
01:16:49,240 --> 01:16:57,240
 >> Whatever one that we used to have, Tim Fisher used to be on it for us.

1138
01:16:57,240 --> 01:16:58,240
 >> Oh.

1139
01:16:58,240 --> 01:16:59,240
 >> We do?

1140
01:16:59,240 --> 01:17:00,240
 >> We do.

1141
01:17:00,240 --> 01:17:01,240
 >> Who's on there?

1142
01:17:01,240 --> 01:17:02,240
 Thank you.

1143
01:17:02,240 --> 01:17:03,240
 >> Steven.

1144
01:17:03,240 --> 01:17:04,240
 >> Steven.

1145
01:17:04,240 --> 01:17:05,240
 >> Oh, Steven.

1146
01:17:05,240 --> 01:17:06,240
 Okay.

1147
01:17:06,240 --> 01:17:07,240
 Good.

1148
01:17:07,240 --> 01:17:08,240
 All right.

1149
01:17:08,240 --> 01:17:09,240
 No other questions?

1150
01:17:09,240 --> 01:17:12,240
 It's going to be a long one on the 24th.

1151
01:17:12,240 --> 01:17:13,240
 >> That's right.

1152
01:17:13,240 --> 01:17:21,240
 >> Can we have pizza for breakfast?

1153
01:17:21,240 --> 01:17:22,240
 >> Thank you.

1154
01:17:22,240 --> 01:17:23,240
 >> All right.

1155
01:17:23,240 --> 01:17:24,240
 Thank you.

1156
01:17:24,240 --> 01:17:25,240
 Thank you for the presentation.

1157
01:17:25,240 --> 01:17:26,240
 All right.

1158
01:17:26,240 --> 01:17:28,240
 With that, there's no further business.

1159
01:17:28,240 --> 01:17:29,240
 It is 1017.

1160
01:17:29,240 --> 01:17:32,240
 Do we have a motion to adjourn?

1161
01:17:32,240 --> 01:17:33,240
 We are adjourned.