The board of the City of Denton for Monday, June 10, 2024.
The first item is presentation from the members.
Kathy, did anyone sign up?
Okay.
The next item, oh.
[no audio]
Two board members wish to pull a few items.
We'll start with Mr. Cheek.
Okay.
This may cover the -- excuse me.
Let me speak closer to the microphone for Mr. Matthews.
I'd like to pull consent agenda items.
A is in Alpha.
F is in Frank.
G is in Gorilla.
M is in Mary.
N is in Nancy.
All right.
And then Mr. Rayner, which ones did you wish to pull?
Besides those same, I would also like to pull D as in David.
Okay.
I'm sure I've got them all right.
So then do we have a motion to approve items B, C, E, H, I, J, K, L?
And that's it.
So moved.
Okay.
And Mr. Taylor seconded.
All in favor say aye.
Aye.
Okay.
First item is PUB 24100 for the right of way.
Who from staff is here?
Good morning.
I'm Doug Breon from the GME Engineering Group.
Good morning.
Thank you for being here.
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.
Then we got down to 2499 and 1515.
I was just hoping for a little explanation or maybe even an aerial as to what is all of that?
There's three other projects involved in this signature authority.
The first one would be I-35E and that's where the UP Railroad crossings are.
They're redoing the frontage roads on both of those.
So that's one project.
FM 1515 is another project on there and that's from the airport area over to I-35E.
Yes.
And then the I-35W project is the frontage roads going from FM 2499 going south.
And so you were able to get all three of those projects into one request?
Yes.
There'll be three different projects in there, yes, but it's all under the same signature authority.
I think that's great.
That leads to a question I'll have later on some others.
Sorry to take up your time.
I just wanted to get a visual on it because it was a plate of spaghetti.
Yeah, it is.
Press two.
Understanding it's a signature authority means it was already in your plans to do this.
That's correct.
Okay.
Yes.
All right.
So these were all utilities that were in the states right away, correct?
Correct.
Just the electric utilities.
Just the electric.
Yeah, I got that.
Yeah.
You're a DME.
Okay.
He asked the questions I was curious about as well.
So that's all I've got on that.
All right.
Any other questions?
Do we have a motion to approve item A?
So moved.
Second.
Mr. Rayner, second.
All in favor say aye.
Aye.
Carries.
Thank you.
Item D, approval of First Amendment to contract between the City of Denton and Freeport Welding
and Fabricating.
Good morning.
Cody Snorrio, DME Engineering.
Here for item D.
I have a question.
Yes, sir.
Thank you for being here.
I was reading this and I looked at the backup material.
Am I correct, the original request did not have the $140,000.
It came back as an amendment too.
Is that correct?
Yes, sir.
And I'm just curious, how did that slip through our net the first time?
Initially, when the contract was approved back in 2023 of last year, we got the quote
from the supplier.
Since then, the transportation costs have increased, and for those three tanks, they're
really large.
So that was a result of the increase in transportation costs since that time.
They gave us the quote in the time that they were actually delivered at the beginning of
May.
So we're just held hostage for time, because in the beginning it would have worked, but
because of whatever the reason is, can we blame that on them for the delays that cost
us the $140,000?
I really can't speak to that.
Well, I can, just so that we can pass the buck to somebody.
But is this a common thing that you have seen?
No, sir.
Okay, that's what I really wanted to hear.
Yeah, this is not common.
It's just such a long, long time between the two that it increased on the transport.
Thank you.
Oh, how contracting has changed.
Used to turn in a bid, and that was your bid.
And unless the plans, specifications, or engineering were incorrect or changed, the contractor
had to honor their original bid.
In this case, none of the PS&E changed, plans, specifications, or engineering, and we're
having to eat the $140,000 as a request by the contractor saying that he can't get it
delivered for his original price.
Is that correct?
Yes, sir.
Okay.
And what is the reason for that?
Oh, I'm sorry.
What is the reason for that?
I mean, did they give you one other than?
Only response was that there was just an increase in transportation costs with the permitting
and everything else, and that's what resulted in the $140,000.
Thank you.
This is not an isolated incident.
That's, I think, the concern.
Just want to bring it up, and it's not just about this item.
Terry, it's not just about this item.
I promise you that.
It's not just about.
No, I apologize, board members.
Terry Nalte, Assistant General Manager.
So the original contract for the tanks included an allowance for transportation, but the actual
cost of transportation exceeded the allowance as a result of the size of the tanks and the
routing that had to be made.
These tanks would not fit under normal bridges, and some utility lines had to be potentially
relocated and things like that.
Did they redesign the tanks?
They did not, but I guess the way that the contract was actually led, it just gave an
allowance for the amount of transportation cost, and when the permits were acquired for
the transportation and the routing was determined, this was the increased cost.
Tanks have been delivered and have been erected.
I guess the point being it's not very often, and it hasn't happened in recent years, that
somebody comes to you and says, "Oh, we overpriced the hall on this thing.
We'd like to give you half off today."
Well, that would be nice, wouldn't it?
Oh, I know of one time when it's been done in this city.
It was probably from a local vendor or something, but.
Okay.
Further questions?
Thanks, Cody.
Okay.
Do we have a motion to approve item D?
So moved.
Okay.
Mr. Cheek moved.
Do we have a second?
Second.
Okay.
Mr. Rayner?
Okay.
All in favor say aye.
Aye.
Those opposed?
Okay.
Motion carries.
Thank you.
Item F. Thank you.
Another utility relocation.
Is this both of ours, Rob?
Good morning.
Sean Messick with Accountable Projects.
Okay.
This is mine.
I pulled this.
Let me go back.
This is F, right?
Yes.
We're on F.
So it's the relocation at Fort Worth Drive project.
Okay.
This was just a low bidder project.
Is that correct?
Yeah.
Okay.
All right.
So how's Mountain Cascade doing with you around town?
Oh, they're phenomenal.
Really?
Yeah.
Are you driven down Pony Brae Street?
On the I-35 stuff, they're doing good.
Is that what you're talking about?
Yeah.
Yes.
Okay.
Wow.
In some cases, people might go to a second bidder on a situation like that.
But okay.
That's all I got.
Further questions?
Oh, go ahead.
So I was curious.
Is it fair to say that it looked like F -- will you be addressing M and N as well?
N.
N as in Nathan?
Yes.
And M as in Michael?
Not Michael.
Okay.
Well, I looked at all three of those as kind of dovetailing together.
And I was just curious, since we had three projects into one, now we have three projects
into three.
I was just curious, what is the -- like on the F, let's talk about it first.
Going down along 377 to Locust and the widening and such.
You're working with Textile.
Is that correct?
Yes, sir.
Okay.
So my question then is, does F, M, and N -- because you can't address to M, evidently.
But do all of these coincide with each other?
Are they all within a similar timeframe?
Are they overlapping?
What?
No.
Mike is actually Aaron's project.
And so that one is a supplemental agreement to the Textile initial agreement.
So it's -- any additions to funding that happened there to finalize the payments on that.
Foxtrot in November are the one project that's just on 377 and the funds are there for Textile.
There are two Textile projects.
Trevor Crane, Director of Capital Projects.
So F is the actual construction contract for Mountain Cascade to go out and do the utility relocations.
These are all Textile projects.
The utility -- well, the utility relocates are in response to Textile's widening.
So F is an actual construction contract for Mountain Cascade to move utilities so that Textile can come out
and do the relocations or do their widening.
The other two, M and N, are actually the agreements that allow us to be reimbursed for those utilities.
So all separate projects, one, the F is an actual construction contract for us to do the utility relocates.
M and N are actually amendments to our standard utility agreement with Textile that allow us to be reimbursed for that work.
But they all are married together.
Correct.
Where was the second bidder?
It's not on the agenda sheet, so I have to ask.
I have to go back and look.
I don't remember.
So all the Textile projects, we actually have a pre-qualified list of contractors.
The people on that list are Oscar Renda, Mountain Cascade, and S.J. Lewis.
S.J. Lewis hasn't been bidding on them recently, so it's been Oscar Renda and Mountain Cascade.
Both have been awarded contracts on I-35.
But Lori can probably speak.
Lori Hewlett, Purchasing Manager.
And I can forward you the evaluation tab that got missed from the agenda packet.
If it was pre-qualified, that would have just been a little better.
It was a little bit, yes.
And the other bid was $2.7 million.
Around that.
It was over $2 million.
So it was a very large bid.
That may have been the better bid.
Okay.
So almost a $2 million spread.
Yes, ma'am.
What did Mountain Cascade miss?
I don't think they've missed anything.
They're already established in the area.
They've got contracts.
They're already working.
So I feel like a lot of it was in the mobilization.
I'd have to go back and look at exactly at the bids.
But they already have crews that are mobilized, that are coming off other projects and ready to kind of mobilize on this one.
Okay.
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.
Correct.
All right.
Further questions?
Do we have a motion to approve item F?
Is it just me?
Move approval.
Okay.
Mr. Cheek, do we have a second?
I second.
Okay, Mr. Rayner seconds.
All in favor say aye.
Aye.
Nobody.
That's okay.
That carries.
Item G, landfill entrance facility.
I just want to see a picture of this thing.
That's not very exciting.
I'm Christine Stewart, project manager at Capital Projects.
We're really just doing a facelift on the entry.
So there's the removal of the existing scales will be in placing some temporary scales and then putting new scales back.
There will also be an upgrade to the system that processes all the scales and the weights that come in.
So a software update?
Some of it, yes.
Is there a problem with the existing one?
It's more about the spacing and how the scales were positioned.
So if you go into the facility right now, there's a hanging apparatus and it keeps getting knocked into.
So there's no spacing in between the scales.
So that's part of what the reconfiguration is for.
You're replacing the scales?
We are.
Okay.
And we're adding an additional one.
Two lanes?
It will be, yes.
Gotcha.
That was really my question at 3.4 million.
It had to be more than software.
Yes.
Okay.
Absolutely.
All right.
No picture.
Well, we'll see them later.
True.
Any further questions?
All right.
Do we have a motion to approve item G?
So moved.
Mr. Pluck moved.
And do we have a second?
Second.
Mr. Taylor seconds.
All in favor say aye.
Aye.
All right.
Item M, Mountain.
You say Mountain.
Michael, whatever we called it before.
Mary.
Okay.
This was both Mr. Rayner and Mr. Cheek.
Correct?
I was just, he just said it and so I circled it.
All right.
Aaron Skinner, Senior Project Manager, Capital Projects.
Oh, I'm sorry.
I really got my answer, but I appreciate you coming up.
So it's a reimbursement.
Yes, sir.
So are we looking at the reimbursement of 1.8 million?
Is that what they're saying?
The additional 1.8 million, yes, sir.
An additional?
Yes, sir.
Okay.
And does that, where does that go?
Where does that pigeon hole when you get that?
That goes back to the project fund.
Okay.
Great.
That just brought up another question.
So the total cost of this was?
Just north of 17, I believe.
So you're saying that basically 15 of that is something we owned already anyway?
Yes, sir.
That was in supplemental agreement one.
Okay.
It was estimated, I believe it was about 15 and a half.
Okay.
So this is the true up of that additional 1.8.
Yeah.
Gotcha.
I'm fine, thank you for your time.
Okay.
Any further questions?
Okay.
Thank you.
Do we have a motion to approve item M?
So moved.
Mr. Pluck, can we have a second?
Second.
Mr. Cheek?
All in favor say aye.
Aye.
Opposed?
Carries.
Item N. Do we need him to come up or?
I'm happy.
He's not.
Are you happy, Billy?
Yeah, I'm fine.
Billy's happy?
Okay.
Do we have a motion to approve item N?
So moved.
Thank you, Mr. Newquist.
Do we have a second?
Second.
Mr. Pluck, all in favor say aye.
Aye.
Opposed?
Put that on the plaque, Aaron.
Jump in.
My feet moved.
You got in.
All right.
Perfect, that's why.
Yeah, there you go.
Next item is considered the approval of the May 20th, 2024 minutes.
Were there any changes or corrections?
Seeing none, do we have a motion to approve the minutes?
So moved.
Thank you.
And a second?
Second.
Thank you.
All in favor say aye.
Aye.
Motion carries.
Next item is considered the approval of the May 20th, 2014 minutes.
Good morning, I'm David Brown, project manager of Water Utility City of Denton.
Today I have for your consideration a contract with Archer Western for construction for the project at Ray Roberts Water Treatment Plant.
It's a capacity rerate performance improvements project.
So let's talk a little bit about Ray Roberts.
Ray Roberts Water Treatment Plant was constructed about 20 years ago, put into service in 2002,
and there's not been any significant upgrades or maintenance.
Well, there's been maintenance done, but not larger maintenance type projects done out there since 2002.
It is anticipated with this project it will add approximately up to 10 million gallons a day of additional treatment capacity.
And this is just with improvements within the site itself.
No additions as far as in the train of treatment.
The project is anticipated to be completed in 2028.
So in this project is replacement of valves and actuators throughout Ray Roberts Water Treatment Plant.
Approximately about 86 valves and actuators move to a field bus type actuator system, which improves flexibility.
Also, the solids handling will be rehabilitated, which is a chain of flight mechanism within a sedimentation basins.
Also, we're going to replace the filters with granulated activated carbon, which is GAC.
Currently right now is just normal sand.
So with that, we're going to go ahead and replace the GAC.
Also, we're going to construct a new backwash system.
The backwash system now is slower.
You have to backwash each filter, which there's eight filters out there.
It does not have a gravity storage tank.
We will be constructing a gravity storage tank as well, meaning we'll be able to use gravity and some pumps to backwash.
And that's where we're going to get our -- hopefully we get better capacity would be through the ability to do faster backwashes.
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
because they have such a huge pumpage that we are not currently having that demand.
But when we do install the VFDs, we'll be able to control those motors and to utilize those for increased capacity.
So we did send it out to bids, and we got two bids back, one from Felix and one from Archer Western.
Archer Western came back with a lower bid of $39,995.
Of course, there's a contingency of 10%, a total of $43,994,500.
The contract day is $1088.
And I'll be glad to answer any questions.
Mr. Cheek. Oh, I'm sorry.
Okay. Mr. Taylor.
So I think you just touched on it with your comment regarding the run time on those large pumps.
So I was curious if we're increasing capacity by 50% if we needed to increase the pumping capability.
But it sounds like it might have been already built.
Yes, sir. The pumping capability of those pumps, I believe, are about 50 MGD.
We just have not been using them.
We haven't had the actual need for them.
So our forefathers planned ahead to be ready.
And there's actually another one slot out there for another pump.
So as far as pumping, we're ready.
It's just a matter of we need to put those VFDs on there so we can control them and actually turn them down.
So there must be smaller pumps that are used.
Yes, sir. Right.
Currently, we use smaller pumps.
And with that, also, like I said, we're going to build a building for the VFDs.
So VFDs will be separate.
We'll also help with any kind of emergencies.
And are any of the existing pumps on VFD or are they all soft?
They're all on VFDs. The smaller ones are.
Okay. Yeah.
All right.
So I just saw we only had two bidders in this case.
Yes, sir.
Any reason why Sunt didn't bid this one?
Because they've been involved with these before, correct?
Yes, and that's what we held.
Actually, we actually held two walkthroughs to invite bidders.
And that's what we received was Arch Western and Felix.
I have no idea why Sunt wasn't involved.
And walkthroughs?
No, sir.
Not that I know of.
Actually, the Felix bid was actually -- they were going to combine with Schofield to do --
kind of team up to actually do the project.
So lots of work going on in the region.
Just busy.
Yes.
Yeah.
Sunt's already here doing some wastewater treatment work, aren't they?
Yes, sir.
They're going to do the CMAR over at the concrete water reclamation plant.
I saw that.
I remember that Arch Western was much lower in their bid.
But they were less rated in your overall rating of them versus Sunt.
Yes, sir.
What we went through was we had a -- actually, evaluation for the CMAR and Arch Western and Sunt.
They were both involved.
And for that aspect, Sunt was chosen just because of their CMAR abilities.
And now, I mean, of course, we're going to have coming up expansion.
I'll just tell you there's going to be an expansion at Ray Roberts.
And that will be also construction manager at risk as well.
So we're going to entertain, and in fact, it's going to be opening pretty soon.
So we're going to entertain whoever, hopefully, will get some more players in that market.
I hope so.
And I think I voiced my concern before with the CMAR.
I understand the reasoning in it that sometimes the lowest bid is not the best bid.
But I questioned that bid because Arch Western, I thought, you can't really beat a company that large.
And they'll correct things, but correct things that you think aren't going well is what I mean for that.
But now they're rated really high.
And this is just design, bid, build, Mr. Chief?
Yeah.
Just design, bid, build?
Well, it's going to be build.
That's pretty complicated.
That's probably the most complicated contract you can make.
But what I meant was that it's DBB.
It's not a CMAR project.
Further questions?
Kyle Pedigo, planning and engineering manager for water utilities.
So during the evaluation, during the CMAR evaluation, Sunt scored higher on the CMAR delivery method.
And Arch Western was more of a traditional delivery method, which this project falls under.
So that's why the ratings are different between the two projects.
I understand the difference between the two categories of letting the CMAR and the design build bid.
And I would argue with you that this is the more complicated thing to get done than a CMAR bid.
But that's just my opinion and I want to continue to voice that because I have concern about these type of bids.
And I'm not trying to isolate you guys out for this and we make that clear.
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.
And you would argue that they're not that the rules are playing, I would think.
And I disagree with you.
So I've sat in conversations with evaluations that were subjective.
Words were used anyway.
I hope the city council hears me on this because that's who I'm really talking to.
So thank you for your time.
And I apologize.
And I did not mean to single you out on this and make that clear.
It's the concept.
So that's all I got.
>> Further questions?
Thank you very much for coming up.
Do we have a motion to approve PUB 24110?
>> So moved.
>> Mr. Taylor, moved.
Do we have a second?
>> Second.
>> Thank you, Mr. Pluck.
All in favor say aye.
>> Aye.
>> Opposed?
Carries.
Thank you.
Management reports.
Thank you.
>> Taking a minute there.
I don't want Billy coming in here getting after me, the other Billy.
Frank Dixon, assistant city manager.
We have nothing at this time.
If there's anything the board would like to hear, we'd be happy to present it.
>> That's fine.
Thank you.
That brings us to concluding items.
Does any board member wish to have a future item presented on the agenda or have something
to say to the public?
This is where you get to speak, Aaron.
>> Good morning.
Aaron Newquist.
Glad to be here.
I've been a resident of Denton for the last 12 years.
Plus some time in the late '90s at UNT.
And just my background is I'm a 20-year banker, the last 15 here in Denton, currently with
American National Bank and Trust for the past five years.
My son Brady is a graduate of Denton Ryan High School and off to Texas Tech.
But, again, just pleased to be here and look forward to serving with you all.
>> Thank you.
All right.
That brings us -- yes, welcome.
Glad to have you.
That brings us to our work session.
We receive a report, hold a discussion, and give staff direction on the fiscal year 2024-25
preliminary utility forecast for solid waste, water, wastewater, and electric.
>> Okay.
Good morning, members of PUB.
My name is Matt Hamilton.
I'm the budget manager with the city here today to present what will be the first in
a series of budget presentations for you over the next couple weeks.
Today's presentation focuses on where the utilities funds ended for fiscal year 2023.
And then also just to talk a little bit about some of the assumptions that we are putting
together for you for the fiscal year 2025 budget.
So our anticipation is to bring forward on June 24th all the utility performance budgets
for next year, which will include all the budgetary requests, supplementals, baselines,
in addition to the five-year capital improvement plan for each of the funds, as well as an
outlook on preliminary rates at that time as well.
So certainly a very detailed presentation coming up for you on June 24th.
The presentation today simply provides just an overview of the process and where we ended
the prior fiscal year.
So as I mentioned, we'll cover the upcoming budget process, what that looks like, some
of the economic conditions that we're seeing, financial assumptions that we're making for
2025, and then also the 2023 financial performance.
So just to start, I know many members of the board have gone through the budget process
before, but for the new member, just wanted to provide an overview of what the utility
budget process looks like, so the city's fiscal year begins on October 1st.
In January and February timeframe, we do a budget kickoff citywide, which includes both
utility and non-utility departments.
The departments have approximately 30 to 45 days to compile their budgets, and budget
submissions are due in March.
Following the budget submissions, the finance department and the utility departments get
together to review the submissions and determine financial feasibility, at which time we then
schedule meetings with the city manager's office to review the requests and the financial
forecasts, which then brings us here today, June timeframe, to present these findings
and preliminary budgets to the PUB for your review and recommendation before we then submit
it to council and hold workshops with council in July and August.
Following the workshops with the city council, we have public hearings for any feedback from
the public regarding the proposed budgets.
Finally, it culminates in budget adoption late September, and the process starts all
over again for the next fiscal year.
We just wanted to talk a little bit about some of the economic conditions that were
seen broadly throughout the city, but in particular with the utilities.
You know, Denton has seen quite a bit of growth over the last couple years, and we anticipate
quite a bit more growth within the city, and the question is how to pay for that growth
with today's dollars, because those future developments aren't here quite yet, but the
infrastructure is needed in order to move forward with those developments and growth.
So in addition to the growth piece of it, there's also the responsibility to maintain
our existing infrastructure, and so we do have a number of capital needs, large capital
needs, that you'll see on June 24th as part of the CIP plan that we're looking to address.
And finally, the big challenge over the last couple years, but this year as well, has been
inflation and the cost of goods and services has gone up quite a bit, especially, you know,
cost of personnel and, you know, in addition to materials and supplies.
But some of our current opportunities that we're looking at to fund some of these financial
needs is we've really taken a close look at federal and state funding opportunities to
fund some of these large infrastructure projects, and we'll be pursuing all of those available
programs, bringing to you any opportunities that we find where we can leverage our existing
dollars to help pay for some of that growth.
As part of that, we've also reexamined our debt portfolio, our five-year CIP, to, you
know, refocus our priorities on what needs to be accomplished, what infrastructure we
can afford.
And finally, you know, looking at some potential rate increases across the utilities as we've
brought forward previously, and I know through the last budget cycle, we as a city haven't
raised utility rates really since 2017, and there were a number of years, 2019, 2020,
2021, where we actually decreased rates pretty significantly.
So I know DME had implemented a midyear rate increase this year.
We did increase wastewater rates last year, but, you know, just given the costs today
versus, you know, what will be eight years ago, they're simply not the same.
So our financial assumptions going into 2025, we're assuming that the city is growing at
nearly a 3 percent rate, which is contributing some increased system demands.
As I mentioned, we have a lot of growth that we're looking at in the future.
Part of that, a significant part of that, is the hunter coal developments, which we
have accounted for, as you'll see in the five-year CIP.
Solid Waste just wanted to note that we base their forecasts on customer counts, tonnage,
and service frequency.
Water and wastewater, it's a consumption forecast based on actual consumption.
And then I had mentioned some alternative funding options, so specific to water and
wastewater, we've done quite a bit of work on the WIFIA program and the SWIFT program,
WIFIA being a federal program through the EPA and SWIFT being an infrastructure program
through the Texas Water Development Board.
And so we'll be bringing to you funding options, which include both of those programs.
And finally, just that we have included an updated assumption based on the media rate
adjustments for electric in next year's financials.
So getting into specific funds, for the Solid Waste Fund for '24-'25, we do anticipate
growth of about 2.6 percent in residential customers, 2 percent in commercial front-load,
side-load poles, and 2.1 percent growth in landfill customers.
This is relatively in line with prior years.
Solid waste is more or less one of the more predictable funds.
We are in the process of concluding a cost of service study, which we anticipate the
completion of which will be this month.
We received some draft documentation from the consultant, and so we'll be bringing
that information forward to you over the next several weeks and months.
There is the potential, as I mentioned, for a rate increase.
Solid waste was one utility where they have not had any type of rate increase since 2017.
The cost to the vehicles has increased substantially.
The cost to personnel has increased substantially.
So it may be something that we look at for fiscal year 2025.
On the expense side, we will include a contribution, as we've done in the past, for closure post-closure.
We do anticipate citywide a compensation adjustment for inflation and the ongoing competitive
labor market that we're seeing.
And then debt service for the Solid Waste Fund is projected to increase in 2025.
This is due to the bond issuance that we are in the process of completing this year,
which the debt service will start next year, primarily the $2 million for the fleet shop
at Solid Waste and then $1.8 million in vehicles.
So this is a graphic that we've shown in the past that just details the 10-year growth
projections for residential customer accounts, front-load, side-load commercial, the roll-off
hauls, and landfill transactions.
What we included on the very left-hand column is our 2023 estimate where we thought those
numbers would come in.
The second column is 2023 actuals, where the numbers actually came in for 2023.
For the most part, we were very, very close.
We think these trends will continue, as noted here, going into 2025 as well.
So taking a look at the Solid Waste Fund and the financial performance, this is the fiscal
year 2023, which ended September 30th of last year.
So the fund, from a revenue perspective, ended about $1 million higher than budget, which
is always good.
And as you'll see at the bottom, the net income, we did have a use of reserve of $207,000.
However, the budget was originally budgeted to use $2.3 million in reserve.
So the fund ended better than we thought it would, which in large part had to do with
non-rate revenues associated with some of the special waste that was collected at the
landfill, along with just some reduction in expenses, O&M expenses.
So, overall, the fund did very well.
What you see in the 2024 budget that we had included in the current year was, again, a
$2 million use of reserve, and the annual budgeting of this use of reserve is really
intended to keep rates low, but there's only so many years that we're able to budget this
without increasing rates and revenue.
So moving to the water fund, we anticipate a 3.4% growth in residential customers for
water and 5.3% growth in commercial customers.
We have included some additional factors, such as 100 coal and the timing of those developments
in the five-year CIP and in their long-term operating budgets.
Revenue projections, we anticipate a 3% increase in rate revenues, just simply based on
growth.
Something else that we are including in our long-term financial forecasts is a reduction
for water conservation.
So the department is very focused on, you know, maintaining our long-term resources
and how we use those resources, and as part of that, as conservation efforts are implemented
over the next several years and we see residents potentially decreasing their consumption,
we would then see a decrease in revenues associated with that.
As I mentioned before, the SWIF funding, that's something that we've been actively pursuing
and would be a potential revenue source for us to use to fund some of the infrastructure.
On the expense projection side, as I had mentioned, citywide compensation adjustments for inflation
and the competitive labor market that we're seeing, and we do anticipate an increase in
overall debt service for the water fund based on the $20 million issued for the Ray Roberts
water treatment expansion this year, as well as the $12.2 million for water line replacements.
So taking a look at the water funds, in 2023 we budgeted $62.1 million.
Actuals were $55.4 million, budgeted expenditures were $60 million, or $63 million, excuse me,
and $49 million in actuals.
The reason that this number looks so different, budget to actual, is because we had anticipated
receiving external funding, which we did not receive in 2023.
So, overall, we had anticipated the use of reserve of $908,000.
As the fund ended up, we were positive $5.4 million.
What's that?
The external funding, that had to do with TEXDOT, some TEXDOT funding.
And your revenue funded capital was way down.
Yes, and the impact fee actuals, so if a project that is budgeted to use impact fees does not
move forward due to, you know, schedule or any other reason.
That's what I was asking.
Yeah, we don't make a transfer of the impact fees.
Right.
Yep.
I didn't know if it was a specific project.
Not to my knowledge.
I believe that there is a specific TEXDOT project that this is related to.
I don't know what it is offhand, but it did not relate to Hunter Cole.
And then for 2024, you can see the budget there as well, $58.7 million.
So those impact fees, are those tied to Hunter Cole or another specific project, or is that
$7 million just kind of a placeholder for '24?
On the impact fees?
Budget.
Yeah.
I don't know offhand.
I don't believe we do have a number of Hunter Cole infrastructure projects that are coming
up that we anticipate using the impact fees for.
It's possible that some of those projects were associated with that, although we do
have a number of other water and wastewater projects.
This is just water specific, but projects that we anticipated using impact fee funds
on.
One other note that I just want to make on the impact fees is that not all impact fees
are used as current year revenue funding.
That we do use impact fees where eligible to pay the debt service of impact fee eligible
projects.
So some of the impact fee usage is for projects that we may have issued debt for over the
last several years as they were identified in the prior impact fee study.
So it's carried as an asset before then?
Where does the impact fee go before you put it into your revenue?
It's in an impact fee fund.
We segregate it.
And that's an asset?
Yes.
Yeah.
So this is a graphic of water production.
The blue area is representative of the five year average of billable volume.
The yellow is the 2023 actuals.
The green is 2024 budget.
And red is the current year 2024 actuals.
So, you know, what we've seen, what we saw in 2023 was the consumption was quite a bit
higher starting in June over both the five year average and our projected budget increase.
So that's largely what contributed to the substantial increase in revenue for the water
fund last year.
As we look at the fund year to date, you'll see that up until January it was trending
relatively to budget.
We did see an increase in March and a decrease back to really the average there in April.
In terms of water demand, this is a graphic I think you may have seen several times before,
but this is really looking at our capacity.
And what this graphic shows is in 2028, as was presented earlier, we will need to complete
the Lake Ray Roberts water treatment plant expansion in order to be able to produce enough
capacity.
The blue shaded area is our 2023 maximum daily demand.
The areas in red is the anticipated city growth.
And the black line is the treatment plant capacity.
So the wastewater fund, we anticipate a 3.4% growth in residential customers, 4.2% growth
in commercial customers, 3.7% increase in rate revenues based on that growth.
And as we presented last year, we do feel that the wastewater fund will need some type
of rate increase or rate adjustment going into 2025.
On the expense projection side, as with all funds, we anticipate that citywide compensation
and we do anticipate an increase in debt service for the capital improvements.
$24 million was issued this year for the concrete water reclamation plant, as well as $8 million
for wastewater line replacements.
So the wastewater fund financial performance for 2023, the actual revenue was $40.2 million,
actual expenditures $51.8 million, for a use of reserve of $11.5 million.
Something that is important to note here with the wastewater fund, just looking at it, is
that in 2022, we had actually received $10 million from TexDOT in September that we had
not anticipated to receive until 2023.
So the use of reserve, that $10 million, 10 of the 10.2, was anticipated to be used because
the money was sitting in the fund balance at the end of the year.
So per accounting standards, we have to book the revenue in the period that it was received
and there wasn't a good way around, you know, budgeting it any other way.
So, you know, really as we look at the financials, we were down about $1.3 million in the wastewater
fund, but something else to keep in mind is also that this was prior to the rate adjustment
that was made in 2024.
So as we were looking at the financials last year and the year before, we saw that there
was a use of reserve, you know, that's what drove the 11 percent rate increase in wastewater
in 2024.
And just looking at 2024, and we'll get into it more on the 24th, but revenues, you know,
have increased with that rate increase to where, you know, the fund is looking much
better.
An overview of the drainage division, which is part of the wastewater fund.
So not a whole lot to note here other than in the non-residential drainage fees, there
was a refund, a fairly large refund that was made in 2023.
You'll see the non-residential drainage fees came in at $2.6 million rather than $3.6 million,
and that was just due to some billing issues that needed to be corrected.
So the impact of that was a reduction in the capital and admin transfers on the expenditure
side to reduce it down to the amount of revenue that was actually received and could be used
by the drainage fund.
So the 2024 budget, as you'll see, looks very similar to the 2023 actuals.
And we'll go through year-to-date 2024 on the 24th, but drainage is trending very well.
A large refund.
Yes, there were some entities that were exempt that the billing system had billed, and so
that's what drove the refund for those properties.
Oh, okay.
Interesting.
Okay.
The electric fund for 2025, we anticipate a 7.53% growth in retail sales, megawatt hours
from known residential and commercial projects.
We do have an ongoing cost of service study for the electric fund, and you know, which
may result in a small potential rate increase.
Again, citywide compensation adjustments will be part of the electric fund performa and
increases in debt service for capital improvements.
The electric fund issued about 60 million this year, but had reduced it from 82.5, so
the increase in debt service is actually lower than what it was originally planned to be.
So the electric fund, this is something I know you've seen before as the midyear rate
adjustment was presented to you earlier this year.
But the electric fund ended fiscal year 2023 with $334 million in revenue and $365 million
in expenditures, resulting in a use of reserve of $31.2 million.
For 2024, the budget had included $290 million in revenue and $308 million in expenditures,
which we had anticipated a use of reserve of $17 million.
I don't have it offhand, but it's certainly something that we'll cover on the 24th.
The electric forecast for retail sales, this is just a graphical representation of that
about 7.5 percent that I noted on the prior slide.
And just a quick overview of the electric specific financial assumptions.
Earlier this year, we did finance $31.26 million of energy expenses.
They were financed with five-year utility system revenue bonds, which are self-supported
by DME revenue.
The cost of service study results and recommendations are anticipated in the next few weeks, and
our anticipation is that the primary consideration will be on the fixed cost facility and usage
charges.
And additionally, we have a value of solar study, which we will incorporate the results
and recommendations as part of the 2025 budget.
So, looking forward, as I had mentioned a number of times, June 24th is when we intend
to bring forward the 2025 budgets and the detail associated with the budgetary request
and the five-year CIP.
Following the 24th, we'll come back again on July 8th to review those budgets and have
you provide a recommendation, both on the budget and rates.
On July 23rd, we will review the utility budgets and rates with Council before coming back
to Council again on August 10th for the citywide budget workshop.
We intend to have public hearings on September 10th as well as September 17th, along with
budget adoption on the 17th.
And any questions?
Questions?
Mr. Rayner, go ahead.
Could you go back to one of the earlier slides on the economic conditions, the current challenges,
community-wide growth?
Sure.
So, on the paying for tomorrow with today's dollars, existing new infrastructure needs
and such, so, are you getting your growth analysis from, such as the Hunter Cole apartments
that are in the pipeline of being approved and such?
So, are those really the main factors that drive you as to what part of town we need
to be addressing versus whatever?
Yeah.
So, we have received information from the developers, and we do incorporate that into
our financial assumptions.
However, we also work very closely with the city of Denton's development services, looking
at not just specific developers, but citywide and the projects that they know are in the
pipeline.
We really couple that with looking back at actuals as well, because we know that there's
a lot of interest in development within the city from developers.
We know that development timelines often change.
And so, you know, what we do is, you know, we base a lot of our trends on actuals, that
until those water meters, you know, go in, you know, we're being more conservative with
our forecasts.
So, we do look at a variety of different data sources in putting these together.
You know, especially with Hunter Cole, you know, we're basing our infrastructure needs,
you know, on their projected timelines to ensure that that infrastructure is in place,
you know, prior to the homes being able to go in.
So, you know, as we look at different funding options, I think what's important to us is
having that generational equity where the residents today are not burdened with, you
know, the entirety of the cost of this infrastructure that ultimately future residents will, you
know, enjoy.
Does that get to your question?
Yes.
The old joke used to be the sidewalk that went nowhere.
And so that's kind of what I -- and so then what we have, what I see as a driving force
further away from our city limits to stretch us is a school board.
We've got new high schools coming in.
We've got a school over by where Carter's house used to be, I understand.
I'd like to go and look at that 80 acres again to make sure that it's not underwater.
Would we be involved with the NAVO Elementary behind Prairie House or would that be part
of our bailiwick as well?
I don't know off hands.
Okay.
I understand there's going to be a lot of -- besides Hunter Cole, a lot of other -- we're
going to have six high schools coming in.
Not additional, but we will.
And I'm asking you, are you -- and I'm sure you are, but those are items that I think
the school may be accelerating beyond a comfort level that the city has.
And so I just want to say that, I guess, more than anything else.
Without a doubt.
The umbrella is really growing, but at the same time, I don't want to just sit out there
and we just start counting the spider webs.
But yeah, we know it's there.
I know that you will do this.
I will just say it.
The effectiveness and the appropriate spending of money within the time frames that we think,
it's a Las Vegas gamble, I understand.
And you've got a project, and I can't wait until the 24th.
That's going to be a wild one.
Those are factors that are accelerating that I don't know if many people in the city
realize being the school district is one that's a big catalyst.
So to that point, I will tell you that we meet on a constant basis with DISD and with
Dr. Wilson and his staff.
And that's one of the things that we cover in our two meetings per year with the entire
council and with the school board is what their forecasted growth pattern looks like.
So we can combine that with what Matt has explained to make sure that we're looking
at it in a holistic way.
And will we be able to be part of that party under the tent as far as getting to see what
the projections are besides the council getting it?
So whenever we have those meetings, they are posted for the public.
And we do broadcast those as well.
I'm just talking about this committee.
Yeah.
I couldn't answer that.
Thank you.
I appreciate it.
Further questions?
Yes, go ahead.
Sir, on the waste side, non-waste revenues, special waste, what kind of things would I
expect to see in that extremely large increase versus what we thought and what we think in
the future?
Just give me an idea of what I'm going to see in there.
Yeah.
So there's really two components, two things that are going on here.
One is -- so there's the landfill gate revenue, and then there's also a landfill special waste
fee that's collected for any type of, you know, special waste.
I don't have that list of what the special waste, you know, includes, but could certainly
provide that.
Here she comes.
Tammy Clausing, deputy director.
Special waste includes sludge.
We do have construction.
We had two new rates last year, construction demolition and shingles.
Those were coded to the wrong ones.
They'll be coded -- we caught it a few months in, so that's part of what's going on there.
But we also have an increase in our scrap metal.
We've been collecting a lot more scrap metal at our HCC where they're recycling the public
disposal, so a lot -- we've been collecting it off a bulky route, so our scrap metal has
gone up increasingly.
Our recycling rebate has also increased.
We've been doing a very good job in increasing our diversion, so.
Thank you.
One other real quick question, if I may.
Sure.
On the electric side, bank debt issuing slower -- I'm sorry, slow projects, kicking cans
down the road, savings probably not due to increases.
Just what was kind of going on there and how were we able to not put out as much as we
expected?
Yeah, so it's important, I think, to keep in mind that the budget process really starts
18 months prior to when the funding is needed.
So, you know, even as, you know, we may have budgeted $82 million, throughout that 18-month
time period, you know, we're reviewing the projects in terms of, you know, where they
are schedule-wise, what's needed.
There may have been some other opportunities.
It could be that the project we thought was going to be needed and wasn't.
So, the projects are thoroughly scrubbed before they, you know, get to the bond issuance.
And the other, you know, is just financial affordability, that some of these projects
that are a lower priority are pushed out, because, you know, looking at the financials,
we feel like an $82 million, you know, issuance, you know, adds more debt service than we would
like in that next fiscal year.
So, I think that there's a lot of contributing factors, you know, in terms of what we look
at.
But some projects could be scheduled, some projects not needed.
Just -- it just depends.
Thank you.
Mm-hmm.
Any further -- oh, here comes Devin.
So, I just have a -- I guess a couple of comments and a few questions.
Sure.
Whenever we show use of reserve, it would be helpful to show maybe the reserve and the
reserve target.
Yeah.
So, we have, in some cases, some pretty substantial use of reserve.
And, you know, you explained that $10 million that was -- had to be put in the reserve to
transfer it one month to bid and then spend it.
But in general, all of these are showing, you know, use of reserves in the millions,
which may be a goal if the reserves are above their target.
Mm-hmm.
But it looks a little scary to show a number at the bottom that's negative several million
dollars.
Yeah.
The revenue-funded capital on several of the funds is significantly lower than -- in actuals
than budget.
I mean, I know projects move, but that's also a really good way to make up a shortfall is
to kick the can down the road, to delay a project.
So, whenever we have a, you know, $10 million shift in revenue-funded capital --
Yep.
-- I'd just like to understand where those come from.
Yeah.
So, in what I believe -- and I'll go back and double-check, and we can -- you know,
I can bring some detail for it on the 24th as well -- is that if that revenue was external
funding, like TextDOT or a developer contribution, or if it were to be impact fees -- because
what happens is that money comes in on the revenue side, but then goes out on the revenue-funded
capital side if it's in the same fiscal year.
So, to your point, having some additional, you know, clarity, you know, on those revenue-funded
transfers, you know, we can provide that.
And then, as far as -- you did mention showing the fund balance.
And we do typically -- that's what you'll see on the performance, is you'll see the
beginning fund balance, all the, you know, financial activity, the ending fund balance,
and then the reserve targets as well as the debt service coverage ratio.
Okay.
Should be called a rate stabilization fund.
Yes.
Yep.
And then, going to -- if you could move to the electric fund.
Sure.
I don't know the -- so, in general, we can look at these performance and next year's
budget, and we can get a pretty good idea of what rates need to do.
It gets a little more complicated in water because water use varies, your water use showed.
Like, 2023 was a dry year, so it had higher revenue that isn't necessarily going to be
repeated this year or next year.
So, you have to interpret water a little differently.
Electricity is its own ballgame, and I don't know if it's possible to separate base costs
from kind of ECA, energy-related costs, but that -- I think that might be useful for us
whenever we're looking at rates.
Is the base rate needing to increase, or is this variability that's going to affect ECA?
And so, you know, you can't put that -- it might not fit in one PowerPoint slide, too,
but I think that's also important for us to be thinking about is, are the general capital
costs and personnel costs increasing that we need to increase base rates, or is, you
know, wholesale power in ERCOT more expensive, or those types of things, because they will
affect two different sections, one of them being the annual budgeted rate and one of
them being our, you know, our six-month variable rate.
I think that's where the cost of service study will come in and help us, because that's where
they're going to determine what are the fixed costs, and is that where most of it needs
to go.
>> Right.
But then, as we look -- but as we watch it happen, you know, once we get to the cost
of service, we're going to have, every six months, we're going to be reviewing those
rates, and so understanding, in this budget process, which of these affects the base rate
and which of these affects the energy rate would be helpful.
>> And we did make that move, it was last year or the year before, to make the ECA more
transparent and more about the -- >> Yes.
>> Right.
>> And this is for us to -- >> Yes.
>> -- to keep that out.
>> That'll spell that out.
>> That's right.
Very good.
>> Keep it very transparent.
>> And last, can we finish on the projected water demand chart?
>> Sure.
>> This one here?
>> Yeah, that one there.
And I appreciate the challenge of -- we want to base our revenue forecasts on what we actually
think will get built and turned on, but we have to base our infrastructure forecasts on
what's the fastest this stuff could really arrive.
>> Yeah.
>> I was curious, that red line is really aggressive.
Is that some -- that WWMP, is that some kind of a standard that shows the really rapid
growth there?
>> WWMP stands for the Wastewater Master Plan, and so these were the population projections
that were included by Frieza Nichols in that master plan.
You know, we don't use as an aggressive population in some of our financial forecasting, as opposed
to this water demand forecast, but it is -- it is very aggressive, as you noted.
I think, you know, from this perspective, we're being more conservative in understanding
when we really need this infrastructure, and then on the financial side, we're also being
conservative in terms of revenue so that we're not overexpending and putting the fund into
a deficit position.
So, yes, it's -- but, you know, I think overall, we anticipate quite a bit of growth and the
need for these plant expansions, particularly the one at Ray Roberts.
>> Yeah.
Yeah, and I definitely -- I wonder if this was re-baselined off of the dry year in 2023
that had a high water demand, because for us to be projected to be 20% below our capacity
to be 20% below our demand in four years, I mean, that's -- that seems like something's
got to be wrong there, or something went wrong several years ago that allowed us to get to
that point.
>> Go ahead.
>> Stay with the red lines.
So according to Freese and Nichols, those reflect population growth?
Is that what you're saying?
>> It reflects city growth in M.G.D., so the demand of water.
>> So how is that -- so how does population correlate with what you just said?
>> So, I mean, population obviously plays a part in the consumption.
I think the only point I was trying to make is just in some of our financial forecasts
where we're looking at the number of individuals in the city.
Earlier in the presentation, you saw it was close to 3%, but that doesn't -- we're being
conservative on that end.
Here, you know, this is representative of the water consumption, which in the beginning
years, it's hard to see at the bottom.
The growth is 8.1%, and then levels back down to the 3.5% and the 2%.
>> So I guess my question is, would it be too cumbersome to give me a better definition
of what those red lines -- what the population numbers are for those red lines?
>> Sure.
Yeah.
You can have water.
>> I mean, because -- yeah.
Because I know we've got some wild crystal ball going on, and I realize the growth is
it, but I think at some point we might even come to a realization that some of that may
be fantasy.
>> Fantasy when there are 8,000 people.
>> I'm going to turn off my mic if you're going to talk that way.
>> Oh, I didn't say it.
>> To that --
>> You got picked up on it a little bit.
Go ahead, Aaron.
>> To that point, this study being 2018 and what we've seen since then, how often is this
updated and does it need to be updated should we be off, you know, even worse, more severely
than 20% in '28?
>> Yeah.
So this -- I believe that this was updated since that time.
I believe that the master plans are done every three to five years.
>> Every five years.
>> I could be mistaken on that.
And we just went through that last year, the master plan?
Yes.
>> Fairly -- yeah, it's fairly recent.
>> A good question.
Other questions?
>> So we still have a board seat on the NPEM in North Texas for our district.
>> I don't --
>> Whatever one that we used to have, Tim Fisher used to be on it for us.
>> Oh.
>> We do?
>> We do.
>> Who's on there?
Thank you.
>> Steven.
>> Oh, Steven.
Okay.
Good.
All right.
No other questions?
It's going to be a long one on the 24th.
>> That's right.
>> Can we have pizza for breakfast?
>> Thank you.
>> All right.
Thank you.
Thank you for the presentation.
All right.
With that, there's no further business.
It is 1017.
Do we have a motion to adjourn?
We are adjourned.