Aug 03, 2020 Public Utilities Board on 2020-08-03 8:30 AM (SPECIAL CALLED MEETING)

Yes, Russ. I was absent on the 13th, so I won't vote on that one. Okay, so we'll need to take them in two different. Okay. I have nothing on the 13th, so we can approve that as far as I'm concerned. Okay, do we have a motion? I second his motion to approve. Okay. Assuming Russ was effectively a motion to approve, I second. Okay. All in favor, aye? Aye. Opposed? And Karen's not voting, so that's a record. Okay. July 27th. Russ, you have a? Yeah, just to comment on item C, where we discussed that pump failure. And the comment – what I think is maybe the most important comment was not listed in the minutes, and that comment is the discussion we had with Ken Banks about the need to have a policy to require a written, formal, root-caused analysis or a root-caused analysis or a failure analysis when something like that happens. And he said he was going to make sure that requirement was in his policies, and if not, he was going to add it to his policies. That's, to me, the most important thing that came out of that. We can certainly go back and amend those minutes and bring them back to you. So, Russ, the PUB received a fairly thorough report on that right afterwards. I've never received – I've never received anything about it. Right, because you weren't on the board at that point. So it might be useful if somebody could let you know the date of the minutes or the date of the presentation, and you could go back and look at our backup. Okay. That's fine. Yeah. I can do a pretty detailed report once something like this happens. Okay. I guess the question was, is it a requirement written down in any policy of the department? That's the issue. Or is it just kind of a hit-and-miss thing? I think it's a routine, isn't it, Tony? Yes, it is. I think Kenny wanted to verify whether or not it was in the policy. He was pretty confident that it was, but I don't think he's completed his review of that. Okay. But we can certainly get back with you, Mr. Bradford, and kind of let you know kind of where that is. All right. Thank you. That's the only thing I had on that. So do we just table this? I have a couple of amendments to the minutes as well. Okay. Go ahead. Where are you, Charlie? First, on the Item 2B, just for the sake of abundance of caution, I think we should mention that Bill Chee left the meeting and recused himself from the discussion, not just that he recused himself for the discussion. Given the scope and the size of that, I think we should document it in the minutes that he left the meeting. And then- The clarification, actually. The second clarification on the lawsuit issue, the minutes refer to it as a lawsuit between DME and former employees, and that seems a little bit misleading. The lawsuit is grim and- Excuse me, Charlie? Charlie? Yeah. Can you turn your camera on, please? Thank you. I can't look at- I'll have my camera on in just a second. I've got to read off of my word, then I'll turn my camera off. But the lawsuit is entitled Grim and Maynard versus City of Denton. So it's a little misleading to call it a lawsuit between DME and former employees. And it also says that the judgment has not been received or arrived at. The jury awarded a $3.9 million verdict on or around February, what, 10th of 2020. So I think covering it differently seems- And I've got my video on now. I just wanted to look at my notes on that. I think we should be accurate in the minutes and not call it a lawsuit involving DME and former employees. Grim versus City of Denton is the title of a lawsuit. We can certainly work with the city attorney's office and get those corrected. So I'm assuming we need to table them for now? Correct. And just a point, Larry, if I'm wrong, we need to keep our faces on when we're speaking because this is an open meeting and they need to be recording us visually. Right. So don't turn your cameras off. Sorry. My only reason for turning the camera off was that I was looking at a Word document. I'm down to one computer screen. Okay. All right. That's why I use two different devices. That's okay. Next item is management update, new business action items. So Madam Chair and PB members, there was a couple of items that are still outstanding. I just wanted to go over the items that have been completed. So we've provided the copy of the 2015 fleet ordinance and also the information on the preferred purchasing policy. Those two items have been provided. I think there was some additional feedback from Mr. Sofe regarding the purchasing policy that we'll be taking back to the COE. The item, item number three on the capital utilities approved dollars versus spend dollars that will be covered in today's budget presentations. So we hope that that'll meet your, your expectations on, on that particular item. And then the item number one, which had to do with the, with this pending litigation, I know that at the last meeting, I think it was a three, three kind of vote, but I think the city attorney's office may have some additional information to provide. So I'll look at Larry to see if he wants to chime in on, on that front. Not right now. It's just the appropriate time to get Mr. Chief. I'm actually reversing my decision after I did some reading this weekend. I think we should have an update so that we do understand what's going on knowing that it needs to be in closed session and anything we hear cannot be discussed in public. Billy, what did your thoughts? What was the, what was the item you were speaking which I'm not clear where you're coming from Grimm versus city of Denton, right? The lawsuit. Do we, do you want to hear an update on what is going on with the lawsuit? Yes. You need to request that of city council. Yes, I, I do, but I'm not sure why you were asking me specifically because you were the only one that was not on and it was three, three. Oh, okay. Okay. If that's the, if that's the will of the majority, I'm fine with receiving a report. I was one of the people who was just on the basis that it was a personnel issue. I was there too, Karen. I am. I understand. And I'll make a comment on that, Karen. I think the city attorney is not going to let them give us anything that they don't think is appropriate for us to see. And they shouldn't. Yeah, that's true. That's true. And I think if it affects the budget, that's really where we ought to be coming from. Yeah. So what will it do with the personnel issue itself? We don't need to know anything about the personnel file, just the impact. I want to make sure this is clear. I mean, you need to make sure the record states why, why you're wanting to hear information about the lawsuit, what you're wanting to hear with respect to the lawsuit, when you make that request of council, it doesn't need to be just, Hey, we want to hear everything about that. And Mr. Cheek is right. That's where I was coming from the last meeting is when you look at the charter, you have the responsibility. The PB is with respect to the really the financial operation, the utilities, there's nothing about personnel decisions within that, that's reserved to the city council, the city manager. Right. So from my perspective, what is the financial impact? What is the worst it can be and what is the best it can be and limit it to what our financial obligation to that would be. Any other board member want to weigh in on, is that the correct direction? Certainly if the, the impact of the jury's verdict is something that's going to be absorbed by the city's budget and the general fund, I would agree. It's not within our scope particularly, but if it's the intention of the city manager and the city attorney's office to have the municipal utilities funds absorb some of the cost of the lawsuit, then yes, it's very germane to our committee to certainly know the publicly available information and any non-public information that is, that's germane to our decision or. Yeah, expanding on Charlie's point, we, you know, if it's going to be a policy to not come up and make a, a settlement that affects the budget and this can, this policy continues. It will affect all future budgets and therefore, although we don't need to get into the personnel issue, we need to get into the policy of what is our, what is the city's decision, what are the city's decision going to be handling employees with lawsuits as it affects the budget? Does that make sense? And Tony, typically in, from the accounting perspective, the fund that is affected is usually the one charged so. That is correct. Obviously there's insurance implications as well. We do have business practice insurance, but generally speaking, a lot of these expenses will come out of the city's risk fund that ultimately ends up being allocated back out to the, to the respective fund. However, depending on the amount that we may be talking about, it could come directly out of the utilities. I mean, ultimately in this particular one, it'll, it'll be the electric fund that would be burdened with any, any expenditure. All right. Is it clear what we're asking Larry? Yes. Okay. All right. And I, I do need to tell you that we need to be done by 10 30 because the city council is meeting today. So let's move on to concluding items. Does any board member wish to have an item added to the future agenda or have any comments to make? I see none. So let's move on to the work session and receive a report, hold a discussion and give direction to the water wastewater drainage and solid waste and fiscal year 2021 proposed budget capital improvement program and five year financial forecast. So PB members will turn this over to Nick Vincent. Good morning. PB members, chair and Nick Vincent assistant finance director. First of all, I want to thank everybody for being here today for this special called meeting. We do have three budget presentations to go through the water utility, wastewater utility and solid waste and each of the presentations are broken into two different discussions. The first part of the presentation is an operational discussion and at the end of that, there'll be a slide for questions and then I'll return to the podium to go through the finances for each utility. With that, I'll turn it over to Frank Pugsley to go for water. Thank you, Nick. Good morning, Madam Chair, PB members. I am Frank Pugsley, the water and wastewater utilities director here to discuss the operational portion of the water utilities fiscal year '21 budget presentation. I'd like to start with a few accomplishments and future goals. Just kind of hit a few highlights if you have any specific questions on any of these, please don't hesitate to ask in the Q&A portion. We do have a couple of significant projects ongoing at the Louisville Water Treatment Plant for some major upgrades and as well as zebra mussel control and we have two major water transmission projects in the All Red John Payne Main and the North South Water Transmission Main, which will significantly increase our ability to move water from the north side of town to the south side of town, generally along Bonnie Bray and All Red Road. Some of our future goals in this next fiscal year, we intend to enter into a project to study advanced metering infrastructure for water distribution that'd be similar to the smart meters for electric, so we're going to start investigating that and see what may or may not be the best options for us in the future. And we also intend to continue to make full use of our asset management program that we completed this past fiscal year to make sure we are replacing the right pipes at the right time in their life cycle, as well as coordinating those conditions of those pipes with the street condition index so that we can touch the streets as few times as practical. Some of our philosophical changes that we've had over the past 12 to 18 months, we've really spent a lot of time really focusing on culture building as we've begun to lose a lot of long tenured employees. We started breaking down silos and really working on process and functional integration with other departments in the city, including tech services, IT, public works, capital projects, so we are actually, I think, doing a lot more today than we have done in recent history with fewer people, you know, tighter budgets, and in light of a pandemic, we're still being extremely successful. Some of our planning and cost saving items, as you probably are aware, we are intending on expanding the Ray Roberts water treatment plant significantly. The current planned expansion was for 30 million gallons per day, increasing above the current 20MGD capacity. Through a capacity upgrade process that we're going to pursue with the TCEQ, we're actually able to push back the major 30MGD upgrade to be online around 2029 or 2030. So that major upgrade will be the $100 million project you've been hearing about, but we think we can get an extra 5MGD to 10MGD out of the current plant and the current processes within current TCEQ regulations, so that way we can utilize that plant to its full capacity. That has kind of a secondary benefit, and that 30MGD expansion would then be somewhere between, you know, 37 to 45MGD for about the same cost, so we're actually getting a two for one there in some ways. Here's some operational data from our water production. The gray shaded area is our five-year average of monthly water production. The kind of brown-orange line at the top was our 2020 fiscal year budget for water production. The green line was last fiscal year, and the blue line is this fiscal year. As you can see, we've kind of been at or just near our budgeted amounts this year, adjusting for weather. We're doing fairly well, and we finished July basically right in between last fiscal year and our budget, so we're doing pretty well on the water production side. Operational data for the water distribution and asset management groups. We intend to flush 11,000 hydrants this year. That is, on average, each hydrant about twice a year. We have just over 5,000 hydrants in the city, and additionally replace 3,200 meters. And for our system major maintenance, which is our replacement of some of our aging lines, this fiscal year, we've set a minimum goal to replace 29 or 24,000 linear feet. That's based on our new asset management program we've started this year. And in order to accomplish that, we've really partnered heavily with Streets and Public Works and the Capital Projects Group to outsource that additional replacement. So you can see in past fiscal years, we've outsourced very little system replacement, whereas this fiscal year, we're nearly 30,000 feet of outsourced lines. So we're far exceeding that amount this year, close to 44,000, and then we're going to increase that goal next year as we really work together with the Streets program to push that to about 46,000 feet. The benefit we see here is that we can turn outsourcing of this major maintenance on and off. We really can't outsource emergencies or some of the minor maintenance activities. So we're able to keep our core in-house crews fully utilized and fully busy while we can turn up and down the outsourcing and still meet our 24,000-foot goal. In view of the FTE summary, our full-time employees, we began this year with 107.5. We had 18.5 vacancies, including DSP departures, and we were approved to refill 12 and a half of those, leaving us with 101 and a half FTEs going into next fiscal year. And that salary savings for next fiscal year is about 540,000. And you'll see the positions that were eliminated from the budget listed there in the bulleted list, and we've done all this really with no reductions in level of service. The plants are still operating well. We're still completing our system replacement and our minor maintenance. We're very proud of our ability to continue to work at a high level with fewer staff and more efficiently. The organizational chart for the utilities, you'll see here broken down in basically functional areas. We're familiar with our general manager of utilities, Kenny Banks, and his six direct reports are listed there with their functional responsibilities. I will just note, and I'll probably note it again in the wastewater presentation, you'll see the red box around the Clear Creek Natural Heritage Center. The educational programming components of Clear Creek, as well as the Sustainable Schools Program have been shifted to the Parks Department, so Gary will provide more details on that in his presentation. With that, I will open it up to any questions on the operational aspects of the water utility. Questions of the board? Yes, sir. Does anyone have a question? Frank, on your operational data, slide number four. Yes, sir. The increase in water produced between June of '19 and this year is roughly, according to the way I read it, around 140 million gallons, something like that, which is about a 24% increase. That's a pretty big jump. What's the reason for that increase? I don't have the data right in front of me, but I think if we all can rack our brains, we can remember last spring into summer, it was a very wet year. We really didn't see that uptick in water production until August and September, so we really made up a lot of ground in late July, August, and September of last year. Up until June, it was just rain and cats and dogs, and we weren't seeing the irrigation demand that we are this year. Then you're relying more on the five-year average than just last year? Correct. Yeah, we like to compare to the five-year average because obviously with growth, we'd like to see our production continue to increase in accordance with our plans. What do you think the main reason for the increase is lawn sprinklers, basically? Yes, it's primarily driven by weather. We had a pretty hot and dry June compared to last year. How close are you? You talked about the upcoming plant capacity increases, and it's going to come online. How close are you now to your capacity? Our peak day that we've experienced all time, I believe, is in the 37 to 39 MGD range. We have 28 or 29 MGD of capacity at the Lewisville plant plus the 20 at Bray Roberts. We have 49, almost 50 MGD of capacity. We have about 11 MGD of spare capacity today, but with the Hunter and Coal Ranch developments, as well as any renewed interest in development in the city of Denton, that additional spare capacity that we have right now will be consumed, we expect, in the next decade. Okay, thanks. Barbara, go ahead. In the past, the zebra mussels have been a big issue. Are we making improvements? Are we getting a hold of that better? Yes, so part of those Lake Lewisville upgrade projects are some zebra mussel control technologies at both raw water intakes at Bray Roberts and at Lewisville Lake. One of the things that's interesting about zebra mussels, you may have seen in the news this week that grapevine has now been determined to be fully infested. Bray Roberts and Lewisville already are. Whenever we see the initial surge in zebra mussels, it seems like their population peaks and then begins to subside. We haven't had too many issues with them in the last several years. Whenever we go into Bray Roberts, we're having a major upgrade project between now and the capacity expansion. We'll go in and we'll clean our raw water line out, because we probably will find some accumulation of shells in the line. Thank you. Any other questions? Go ahead. Yeah, I'd just like to make a remark about your goals and congratulate you on the improved communication and collaboration and, as you say, the breaking down of silos. I think this is very healthy that the more inner communication on various projects and initiatives and strategies between various departments is very good, because the more brains the more ideas for sure. Thank you. Thank you. Yeah, we're trying to be as efficient as we possibly can, so we're not, you know, we know the right hand and left hand need to know what each other are doing so we can cooperate. And Frank, is that why we're increasing? I know you've got it in the slide, but I just want the public to hear it, that we're increasing what we used to do in street rehabilitations to about 46,000, and that's because we're aligning with the street projects that are going on. So when they tear up the street, we're going in and we're doing utilities, so it's more coordinated and we're not tearing up a good street to put in utilities. Correct. Yes, we are definitely coordinating heavily with the street replacement program. And you know, we're looking also very intently on the condition and criticality of the utilities in that street. If we feel like they have ample life left that we don't need to replace them today, we're not going to throw good money in replacing good pipes. We'll let the street project go and we'll plan to come back in, you know, 15 or 20 years to replace the utilities when the next street project comes through. So we're definitely trying to synchronize all that so we minimize the impacts to the residents and to, like you said, we don't want to tear up a good street. Good idea. Oh, Karen. I was just noticing on page six, you're eliminating an auditor position. How many auditors do you currently have? If Kenny Banks is on the line, I'll let him tackle that question. Good morning, board members. This is Ken Banks, general manager of utilities. Can you hear me? Yes. Yes. Good morning. To address your question, we have had a single auditor position and it's really that position over time has changed more into a business manager position. So that title was retooled this year and we have made that into a business management position. So we had one that did some auditing, but predominantly was dealing with performance measures, business metrics, et cetera. And now we have essentially the same function. It's just more the title is more aligned with what the job actually does. So you have zero auditors then? That is correct. Having a formal auditor in the utilities, we do not have one. We have an overall city auditing program. So we didn't want to have any overlap there and so this is basically just a business management position. Okay. Thank you. So to make it clear, the internal auditor's office is still looking at your department. Yes. I mean, the internal auditor's department examines all aspects of city operations and utilities has certainly been one that they've looked at on a variety of programs. Billy, did you have a question or no? Yeah. I'm going to comment as a whole, it's not just for water, it's for all the utility budget presentations. We're not looking at a preliminary budget, we're looking at a presentation. We don't really see the details. There's a number for capital expenditure, but there is no detail as to what those, and I mean purchases of equipment, vehicles, improvements, there's no details of those items. Council sees this in a few minutes. I really can't give any good advice without any detail and I'm not saying anything against staff. I think this is, seems to be the philosophy at the city right now, is that there's no reason to get the board to any detail. So if there's no reason to give the board to any detail or time to consider these things and looking at preliminary budget, how can we possibly advise the council? I think the answer is we can't. I don't see any way to be able to give advice to the council. If we don't get preliminary budgets with detail and discussion. And in previous years, I think Nick's going to respond, what the process is for this year. Yes, Mr. Cheek, and I should have mentioned that earlier and for all the board members, this is fully the intent of the finance department, the city management team and the utilities was to take an abbreviated budget presentation forward for the utilities. What we'll do, and you'll see this is part of the financial discussion, we do fully intend to circle back with the public utility board and city council to have that detailed budget discussion that you're talking about. So to talk about raise, to talk about the capital plan in detail and to talk about the operating budget. Yeah, it's obvious third. So I think that's what I'm saying. I think it's going to be redundant. And all of a sudden we get a detailed budget and go to prove this place. I mean, I would assume, and I shouldn't, that we'd get this budget detail before the council sees it, because there's so many items now that we're getting either after council's already approved it. So what's the use in presenting it to the PUB? I think it's a bad philosophy. There's no reason to have the boards or commissions. There's zero reason. We have no, I'm not blaming you, Frank, I'm not blaming the staff at all. I think it's a philosophy and it comes from the top down. There's no reason for us to have these boards and commissions that we don't have time to go over the detail and how it affects the city. Well, Billy, I would just say that we do, again, as Nick said, we do plan to circle back with the PUB with all the detail on the budget. I think that the reason why we're doing this today is because of the pandemic. We've certainly over the last several months have been concentrating on that. And so we do plan to come back to the PUB with all the detail, giving ample time to consider that and then be able to make a recommendation back to council. We're not asking you for a recommendation to the council today. This is simply a work session, but we do plan to do that. And again, it's because of where we are with the pandemic and where we were with the budget, a lot of uncertainty. And it's only been in the last couple of weeks that we really had a better idea of where we were headed and what the impact had been. We've been very open with the PUB and the council that there's a delay in when we knew that when we would know what the financial impact was, was going to be from the pandemic. And so that's why we're here today. Okay. It was the same way last year too, Tony, is what I'm saying. So I mean, this is no change and we're on, we have electronics, there is detail to the budget, I'm sure. Otherwise you can't formulate these numbers, they've got to come from somewhere. And I don't understand the reason why that's not included in the agenda pack. I really don't. And Mr. Sheik, this is Nick again. We can get that information to you prior to budget adoption. We're not actually seeking any new formal direction from PUB today. It's eventually intent to be an informational session to update the PUB where we are. So before budget adoption and before we ask you to take any action on the budget or rates, we'll get you a detailed budget where you can look at. Okay. And I appreciate that, Nick. I really do. What I'm saying is a few years ago, you know, this may be the way we used to do it thing, which everybody hates, we said that, but we had budget season. It wasn't just a budget presentation. Budget season started in the spring and the board would see the details starting in the spring and start having discussions about, hey, what do we want to do with this section? Today's water, we're going to go over some of the water deals. Two weeks later, we go over solid waste and vice versa. I'm just telling you, I don't believe in the philosophy. I think the boards and commissions become useless at this point if we don't have time to go over the budget. And I'll leave it at that. For the record, I'll agree with Billy's comment and also add a couple of things. I know in our last meeting, we had roughly 400 pages of detail and we got those details on Friday morning, maybe Thursday night, but typically Friday morning and we have our meeting on Monday morning. 400 pages is a lot of detail to review in 72 hours. And I realize that that 72 hours is a minimum for the public posting, but I don't believe there's anything wrong with providing it to the members of the PUB a little earlier so that we can have a little bit of time to work. And I think a perfect example of Billy's comment is I'm aware that historically at Lake Ray Roberts, we had some hydroelectric production capability and that that has been shuttered for a number of years, but there is a little bit of hydroelectric capability there. That would be something to include in this level of discussion at the PUB work session. If we had several iterations and could have open discussions about this rather than such formalized presentation, the idea of adding some hydroelectric to our mix seems really desirable to me and a former director of utilities was the one who made me aware of it. So that's an example of something that could be brought to light and we could have a discussion about it. It may be that it's unfeasible as heck, that's fine, but the idea of power we don't have to pay five kilowatt of would be pretty desirable. Other comments? Yes, Ed, go ahead. I'd just like to say is with Mr. Cheek's institutional memory, having seen a lot of what's gone down obviously in this on this board, I strongly support examining the means of dissemination of the information. So because it's just in my short time, it is pretty, pretty some of these agendas and backup materials that you get on Friday and you have to get ready for Monday. It's pretty, pretty daunting sometimes and especially something like the budget. I see absolutely no reason not to more compartmentalize presentations over an organized schedules. And I think what he said about budget season is the perfect analogy for this. I think it's a very, very important, obviously very important subject that requires, I think a little more depth in presentation and discussion from us. Thank you. And we did used to get more detailed. Barbara, you and I were both on here a few years ago. I mean, it would be detailed presentation, two weeks, then you, you know, so you had time to digest and ask questions before we came back. And I know this is an unusual year, but like Billy said, maybe last year, maybe we didn't have it either. I'm not really remembering and have to go back and look, the years begin to blend. So Susan, let us, let us take this feedback back and, and take a look at what we've done in the past and kind of where we are today and let's even come back with some additional recommendations, obviously maybe too late for this year, but certainly going into next year. And this year is a little different. I understand. Yeah. Karen had a question. Yeah, I just wanted to follow up on Ed's comment. And I only have two years institutional memory on this board, but I've got 13 years of institutional memory on other boards and the whole issue of the 72 hour notice has come up every time. I've been on, I've been on commissions where I'm representing a neighborhood and I need to give my constituents time to go to the torch and pitchfork store, you know, to get ready for the meeting next week so that they can attend the meeting prepared. And it was very frustrating. And we did manage to get staff to bump information to the previous Wednesday, just if something came up that was going to be controversial, the commission could get information a little bit earlier. But that took probably two years. So this might be something that needs to come up at the city level or, you know, with boards and commissions as a whole, because nobody can do much in 72 hours, especially if there's going to be a public hearing and you need to get people prepared to present. So this might be a discussion for, you know, a longer discussion and more general discussion. 72 hours is just not, you know, we're sleeping for 40 some of those. So we need more time. All right. I agree with that so much, even even when I was on another commission, we had five days and this turnaround, you've got to be absorbed. If you want to go out and look at something that's mentioned in this, it doesn't leave you time to do research. And so that would be great. And regarding the budget, seems like this is my first time now, but previously when I was on, we would take one at a time and discuss it. I know this year's different and I thought, well, maybe this is the new normal here, but it didn't used to be that way. So anyway, I agree with the remarks that have been made. All right. With that. Go ahead, Nick. I'll walk you through the budget slides that we do have for you today. And of course, we'll follow back up with you on the requested information about a detailed discussion. So real quick, the financial assumptions we're going to cover today, Frank, you kind of touched on this a little bit, the growth in the out years. We are currently forecasting a 2% growth in forecasted revenues, and I'll show that to you shortly on the forecast. We are continuing to utilize impact fee funding to revenue fund projects. If you remember last year, we transitioned from using revenue or impact fee funding to just offset debt service to actually revenue funding projects to mitigate that cost associated with issuing that debt for those projects. We do have the Hunter Coal Ranch development included in these forecasts that you will see starting near 2024. They do start showing up in both the water, wastewater, and solid waste utilities. We are forecasting 3% growth in expenses in the out years, and then the Hunter Coal Ranch statement I made about revenues. We are currently proposing to the board, we do not have to take any action on this today, a 2% rate decrease for water customers, so residential and commercial. We have a few updates to the rate ordinance we want you to look at today and consider in August for adoption. These are mostly contractual updates and then anything to do with the rate decrease. So we do fully intend to circle back in November, December to discuss the rates further with the cost of service study. The water utility is currently going through a cost of service study. It will be completed by then and we do plan to come back to the PUB and city council to update you of where our rates weigh up from a cost of service standpoint. So in the past, we had shown you a five-year forecast. What we are actually doing this year is showing you a 10-year forecast. And to be more transparent about the utility and where we look at or what it looks like over the 10-year horizon. So a couple of things I want to point out to you, you can see the 2020 adopted budget in this column, and this is the current fiscal year we're currently in. We do have planned use of reserves about $2.9 million. So this budget was adopted by both the PUB and city council. There are no rate increases or decreases included in the proposed budget. End of year estimate, we are really close to being what we originally intended in the budget, about $2.7 or $2.8 million in reserve usage. A couple of other things in this reform I want to point out, we do currently have a little bit of COVID impact reflected in the water fund of $617,000. And this is another reason we do want to circle back with the PUB and city council in November and December this year, we'll actually fully understand what the COVID impact or the COVID pandemic will have to the utilities at that point, and be able to update the PUB and city council accordingly. So that's another reason for those discussions coming up. And a few other reasons for doing that is our high usage months in the water utility typically, you know, tends to be July through September. So we'll have that data of kind of where we finished the year and how many bills are outstanding at that point. Moving to your right-hand side, the 2021 proposed budget, I mean, you can't see it in this column, so we have rate revenue of $39.5 million. We do have some other revenues in here that you can see, non-rate revenue. We have some revenue funding, impact fee funding. This is what I mentioned a couple of slides ago, as we are pulling this money into the operating fund to revenue funds and impact fee eligible projects. We are using some impact fees to offset debt service of eligible projects, about $3.8 million. For total resources, about $49 million. Expenses are $52.9. You can't see we did planned use of reserves about $3.9 million. At that point, a couple of slides ago, we are currently proposing a 2% rate decrease for the water utility. And this is a little bit different than what we showed you last year. We had a 2% rate increase in '22 and '23. That was before the water utility and the management staff had gone back and looked at the capacity of the water treatment plant facility. And they plan to do a performance and regulatory upgrade in 2021. And what that project does and why it's so important, it actually pushes that lake expansion out to the future years. So now you can see the construction of the lake expansion is this increase from this '11 to '18 is actually out there in '27 and '28. So pushing that lake expansion out, allowing more growth to come into the community has really improved the financial condition of this fund. Moving down the page a little bit further, you can see our operating reserve of $17.7 million. You can see our reserve requirement down here at the bottom. We've shown it like this for several years now. So you can see the minimum is 120 days or 33%. The maximum was 180 days or 50%. So you can see that 17.8 or 17.7 falls within that range. It continues to be in that range in the 10-year forecast. Slightly dropping below out here in the future years, just a couple thousand dollars. Quick question on that. On the paper you say it's a reserve target. You said it was a reserve requirement. Is that something imposed by local statute, by state statute? No, this is a reserve target for the water utility. This target is set by the city utilities and finance department. I will tell you the one thing we're going to be doing this winter is not only looking at the utilities, but looking at all the funds across the city. So any special revenue fund that the city has, any internal service fund, and what should that reserve be? So hopefully that answers your question, but that is our internal goal is to have that reserve between those reserve requirements. So that is staff's goal? Well, Charlie, I would add that the council does have a, did pass an ordinance adopting a fund balance policy. And so within that policy, these targets are included in that ordinance. Okay. So the city council has approved a target, but it's not a requirement? Not necessarily a requirement. Many of the bond rating agencies do want to look at the health of these funds. And so generally they want to make sure that we have adequate reserves to meet our operating needs as well as any debts or coverage ratios, which is another measure that's in that financial statement. Okay. For the record, I'm not against the idea of having a good solid target and being physically stable. I just didn't know whether it was some state imposed requirement or something done by staff, or if city council is the correct, that's great. Correct. Anybody else have any questions or yes, Nick. Okay. Nick. I have a question. Can you talk about impact fees a little bit and why you budget projects separately for impact fees? You bet. So that's a great question. So the city under when an impact fee study in 2018 in the fall, the winter of 2018, what that study does is it looks at any project that the water wastewater utility will do that's growth related and those projects are deemed impact fee eligible. There is a consumptive use associated with those projects. What that consumptive use identifies is how much of that asset can we recover over a 10 year period? The study takes it a step further and it divides the projects into already completed and will be completed in a 10 year horizon or a 10 year period. So the ones that are completed, of course, we have to fund with debt service. We pull that money into the operating fund to offset that eligible debt service. Anything that's a future project, we fund that money. We fund that project up front using impact fee revenue funding. Hopefully that addresses your question. I didn't capture it. Define for me what an impact fee is. What exactly is an impact fee? Great question. One was to build a house in our community, that is the fee to access to city's water infrastructure or wastewater infrastructure. So to go out there and to tap onto that wastewater line or that water line, the impact fee is that set amount to do that. So it will be charged to that household or charged to that developer. Okay it's the initial tap fee for one time thing, okay. Well tap fee and impact fee are two separate things. The water utility does have a tap fee and an impact fee. So both of those are charged when someone does tap into the system. But yes, there are a tap fee and an impact fee to answer your question. And the impact fee is paid by the particular user, correct? Yes, sir. It would be a user. Yeah. I have another question about slide 10, your 10 year budget presentation. I think I could share it with the group and Larry correct me if I'm wrong, but I think I can pull it up and address this question. Okay if you look at the adopted 2020 budget numbers for the capital projects, those numbers match what you estimate you're going to spend in 2020 also. Meaning that the way I read it, you expect to accomplish and spend 100% of what you have budgeted for those capital items. That's something that has never been done in the last three or four years. And that was the issue what I was getting at in the previous action item question about why is it that we can identify needed projects, budget for them, sell bonds for them, and then not get the project done. This year, according to the way I read your numbers, you're going to get 100% of the projects done but that's never been done in the last three or four years. And my question is, what's changed in 2020 compared to the previous years that will allow you to say you're going to get 100% of all these projects done as budgeted? >> It's a great question also. And then Frank, you come up and address the projects getting completed standpoint. From the financial standpoint, right, the 9.3 million Mr. Baffert is talking about is calling out here. This is the revenue funded capital. This represents about one fourth of the water CIP. So entire water CIP is 30 to 40 million. What we do is we do a couple of different things throughout the year. So the PUB and City Council adopts a budget and that budget may include $30 million in capital projects. Before we actually issue that debt, what we've done in the last few years, staff has taken a look at it and said, okay, what can we complete this fiscal year? So this year, for example, in the 2020 budget, we had 20 to 30 million in the capital plan. Looking back and when Frank and his staff went through those projects, we actually identified we did not need to issue any of those bond proceeds. But we still do plan to revenue fund some projects as you see called out here. A large portion of this revenue funding are field service replacement jobs. So I noticed Susan asked the question earlier about those, you know, replacements under streets and neighborhoods and such. A large portion of that is this. But I also have a financial slide in a couple of slides, Mr. Bafford, that will hopefully address your capital question a little bit better to kind of show that historical spend down. Three or four years, you're absolutely correct, three or four years ago, the water utility had a large amount of money that was unencumbered and projects were not getting done. I thank staff that here lately, those projects have been getting done and we've actually drawn down on that amount of money available in the water utility. And I'll show that to you shortly in that slide I'm talking about. Does that address your question or has you got more operational questions I can get Frank to come up and address? Oh, I'll look forward to see what you have down the road here. And if it doesn't answer your question, we'll be happy to provide you additional detail down the road. This is our first attempt to help answer your question. We'll pull it back up if that's okay, Susan. So this is the five-year capital plan. This isn't the slide to address your question, Mr. Bafford. This is the adopted or what will be considered for adoption by PUV and City Council in the coming months. So you can see in 2021, we have $35.5 million in debt issuance. Plan projects that we plan to complete in 2021. Revenue funding, this is coming from the operating fund. So rate revenue, we have about $12.9 or $13 million in project funding. Impact fee funding, which we call it on the five-year forecast, is about $2.7. We have some aid in construction and some fee accord replacement. So total CIP for 2021 is $51.7 million or $51.8. Over the five-year period, you can see that number is just around $100 million. So I'll get into a detailed discussion about the projects that are getting completed here shortly. But to my earlier point, this would be the amount included in the budget. What staff does before we formally issue this debt in the water utility, we actually do look at our project schedule and what can we complete that fiscal year. So this is the kind of project timeline of some projects we currently have. This is not a complete list of everything in the water utility. We did pick out the majority of the larger projects, the ones that we can have that discussion with you today about. There are several field service replacement projects that are smaller than this that are cash-funded. But starting at the top, you know, Elm and Locust, you can see the budgeted amount in this column of $950,000. What the expenses are today, what's unencumbered, and the funds remaining. And then one thing we wanted to provide you is kind of, you know, what was that estimated completion date, which in this project is January 31st of 2020. I'd like to draw your attention to this number down here, this $10.9 million. These projects make up about $10.9 million, about $14 million that's currently unencumbered in the water utility. Three years ago, that $14 million was about $25 to $30 million. So over the last two or three years, the water utility and Frank and his staff have done a great job getting these projects completed, and we've actually brought that unencumbered amount down in the water utility. Does anyone have any detailed question on these projects that Frank can come up and address from a completion standpoint? This looks like it, Nick. Okay. So this is not a complete list. The ordinance will come back to you, Mr. Cheek, as you had said about that detail. Before we ask you to adopt a rate ordinance, you will get a complete red line ordinance that will have all the rate changes identified in it. So looking at the 2% decrease across the water utility, that's the direction we get from the PUB. For residential, we use a 3/4 inch meter. This is the most common meter size in the residential water utility, and you can see the current rate that's currently in place is $16. This is the facility charge, but the 2% decrease, this would go to 1568. Our volume charge from zero to 15,000 gallons, and it is charged per 1,000 gallon, it's 415 per 1,000. This would decrease to 407. And then commercial, we use a 2 inch meter, so the facility charge currently in place is 5150, but the 2% decrease would be $50.47. The volume charge for commercial per 1,000 gallon is 445. This would decrease to 436. There are a couple other rates I wanted to update the PUB on today. These are contractual agreements that we have for wholesale water agreements that are out there. So the Wholesale Raw Water Service to the Upper Trinity Regional Water District, this is a rate we update every single year. It's currently set at .7401. This rate is 85% of the Dallas wholesale rate, so that rate would go to .7578. And then the pass through Lake Chapman, this is another rate we update. According to the agreement, this one adjusts annually on a CPI adjuster for the month of June. So this rate would increase from .0270 to .0275. Like I said, this is not an all-inclusive list that will come back to the Public Utility Board in a red line rate ordinance that lists all the rates. What we wanted to show, and we showed this to council last year too, and I think we've historically shown at the PUB in the previous years, this is what an average residential customer could expect to pay in the city of Denton. So at the top, you saw the electric utility last week. We are currently not forecasting any rate changes in that utility. Water we do based on 9,200 gallons. You can see what a customer would pay in the proposed budget of .5310, which is at 2% decrease. In wastewater, which you haven't seen this one yet, we're not proposing any rate changes for the wastewater utility, 3,115 would be the rate. And then solid waste, we are currently proposing a $1 decrease for residential customers, which would take that rate to $20.51. So total is $229.56. So this would be a decrease for the average residential customer of $2.08. A couple of other things, if you do remember, the PUB and city council both approved the mid-year rate decrease last November and December for the residential solid waste customers, the $3. So previously, this rate was $24.51, but you have an asterisk, it is currently $21.51. So this presentation, we'll go to council tomorrow, August the 4th. We do intend to circle back with the PUB in the coming weeks. The state may change based on our discussion today. So maybe later in August, when we get that detailed information to the public utility board. And then September 15th, the city council is currently scheduled to adopt the budget and tax rate and the capital plan. And as I previously mentioned, circling back with the public utility board in December of 2020, with that mid-year budget and rate discussion, when we fully understand the impact from the COVID pandemic. And with that, I will pull it down. That concludes the financial portion of water. I'll turn it back over to Frank to go over the operations for wastewater shortly, if you don't have any questions. Anybody have questions? You're on mute. My apologies. In terms of the rate structure, if you could guesstimate, do you have just kind of a shoot from the hip kind of cost per thousand that it costs you to operate? I mean, is it roughly, you know, $3.75 per thousand, $4 per thousand, $40 per thousand? Mr. Parker, in front of me right now, I do not have that number. I will tell you that that number will is currently being revised in that cost of service study that will come back to the public utility board in November. But we can look it up based on our current cost of service and I can provide that number to get a follow-up response. Okay, not asking for precision, but is that number in the 30s, the 40s, the 50s, 60s? The number is close to the number that you see in the presentation. So every year we do update a cost of service study that looks at the facility charge and looks at the volume charge. But to give you an exact number, I don't have it in front of me right now, Mr. Parker. The intent of the cost of service study is to make sure we just recover our costs and nothing more. That's correct. That's correct. And we do cost of service studies. Solid waste went through one, I think it was two years ago. Water and wastewater are both going through one now. And what that cost of service study do, right, it'll give us staff a working model that we can update annually, usually for about a five-year period. So we update these every five years. We will also, we intend to have a rate discussion and a cost of service discussion with you for the electric utility in November, December this year also. So there'll be four rate discussions for each of the utilities in detail coming up in November, December. Okay. I guess my question was, it looks like, is it $48 per thousand that we have for the top commercial cost? Let me pull it right back up here. Hang on, just bear with me a second, Mr. Parker. Is this the slide you're referring to for the wastewater, for the water rate? Water rates, probably two behind that, I think. Okay. My memory serves me correct. Slide 13, I believe, there. This one? Okay. So you're charging $4.45 per thousand. That's correct. And then for the lowest residential, looks like you're getting $4.15. And I would expect that to be residential being slightly lower, but about the same. What are the top commercial and top residential rates you're using right now? For the highest tier, is that your question? For the low tier, above zero to $15,000. I can get that for you. Hang on just a second. I have it. Hang on just a second. Mr. Parker. So for commercial service, we actually have a volume charge for inside the city of Denton at $4.45. So to answer your question, we do currently not have a tier in place. There's a $4.45 charge for commercial customers per thousand gallon. It's a little bit different. Residential does have a tiered structure to incentivize water conservation. So what I was showing you is zero to 15,000 gallon. As you step up on the residential water side, over 50,000 gallons would be 415 if you're in the winter. But in the summer, when we're incentivizing that conservation, it goes to $10.90. So right now you're charging large residential users more than double what you charge commercial? For over 50,000 gallons. That is currently the way that the rate ordinance is set up. If you went over 50,000 gallon, your per thousand gallon rate would be $10.90. So to answer your question, yes. If a residential customer did go over 50,000 gallons, it would be double. That seems out of line to me for people who are on semi-agricultural or larger products or homes. That seems awfully punitive when somebody like, I don't know, Safety Clean, I don't mean to pick on them as an example, is paying less than half of the rate of someone who lives on a large or old residential property. That seems like a very large difference. I certainly understand incentivizing lower usage. That makes sense. But doubling the rate seems a little overly punitive, in my opinion. So Charlie, just a question for you on your comment. Are you saying it's not fair to the residential, whereas commercial residential should be more in line? Or are you saying it's just too much? Yes. I don't understand. It seems, you know, I looked up Gainesville because it's a nearby city. And Gainesville is like 48 per thousand for everybody or for all residential. And Denton has chosen to have a punitive rate for large residential users. It just seems to me that that's a little too high a punitive rate relative to the commercial. The commercial is 48 cents, almost $11 per thousand. Seems pretty punitive. Yeah. So I'll comment on that, and I think this is the philosophy. I'm putting words in mixed mouth here, but the commercial user is using that for manufacturing or whatever purposes it may be. And so they're using that water to do their business, whereas the residential is doing to be somebody overwatering a major amount, I would assume. And the philosophy is you're trying to sell water to the commercial user, but we're trying to promote saving water to the residential user. Is that correct, Nate? Yes, Mr. Jake. That is correct. That is for over irrigation that this incentivizes people to over irrigate their yards. And one other thing, Mr. Parker, I was trying to find you on the screen here really quick. So the over $50,000 is going from the incremental amount. So anything over $50,000 would be charged at that $1090. Anything under the other rate would still apply. So let's make sure I clarify that really quick. So anything leading up that $50,000 -- sorry, Susan. No, $50,000 in a residential is a lot of water. Yeah. Agreed. A lot of water. And won't this be addressed when we do the cost of service study again, because we do it by class? Yeah. Yeah. And our full intent is to have the consultant here to help us address these questions with the Public Utility Board. Staff will have a presentation that will be detailed to go through these rates in a full presentation. And you can look at each one of them separately and ask those questions. Absolutely. And this is Tony. And that will be in November. We'll have that ready for you in work session. Russ. Yes, I have a question about Hunter coal. I believe you said you incorporated those numbers in beginning 2024 into your budget figures. My question is, how did you phase that in? Obviously, in 2024, Hunter coal is not going to be 100% built. You would probably phase that in over a period of years. What kind of assumptions did you make there? That's a great question. And Frank can definitely give us a little more detail on that. But the city did contract with a consultant to come in to look at the Hunter coal ranch development. What the consultant did, they did look at the phased in approach to that development. So starting near 2024, you're absolutely correct. There's not 100% of those residents in commercial businesses going to be built at once. So this is a phased in approach. So there is some showing up in 2024, but it's minimum in the total size of that development. So it is not everything at once. It is just what that study identified as being online and needing water service or wastewater service starting in 2024. I would think you could maybe present that in one table with years in the dollar amount per year contribution to the budget or demand on the budget. Yeah, we can we can summarize that for you, Mr. Bafford. All right, I think we need to move on. Okay, one quick question, I'm sorry, what, Nick, what's the hydrants estimate for charges going to be? I haven't, Mr. Sheik, I don't have the hydrants in front of me right now and what that what the new rate will be. For today's presentation, we went through and looked at the 2% decrease for residential commercial. But that will come back with you at that red line ordinance and you can look at it in detail. And then it's 15 to 20 pages, so it'll have all the rates outlined for you. Great. Thank you. Okay, with that, I will turn it back over to Frank to go through wastewater. Thank you, Nick. Madam Chair, PUP member, Frank Pugsley, Water and Wastewater Utilities Director, back with you again. Skip ahead here. Where are we, Nick? There we go. Wastewater utilities. Excuse me. And I may repeat a few of the things I said earlier, just in case there are new people listening to the wastewater presentation. So please excuse me. I'll still try to keep some of those brief. Again, some accomplishments and future goals, taking a little retrospective on the wastewater department. This past fiscal year, we did complete the requirements of our EPA administrative order, which essentially required us to reduce sanitary sewer overflows. We've very successfully done that through our extensive cleaning and maintenance programs. And we are getting very close to completing the Hickory Creek lift station replacement. You discussed it earlier a little bit about the root cause analysis for those failures. We've had significant issues with that facility over the last two years or so. We have a permanent tip-ray solution in place right now, and the new lift station will be online later this year. And we should be in good shape there for quite a while. Some of our future goals are to complete the design of the phase one of the Pecan Creek Wastewater Treatment Plant expansion, and that's to handle general growth in the city, as well as some of the increases we expect from the Hunter and Cole Ranch. And to prepare an extensively updated wastewater collection system master plan that will help guide us in our capital improvement plans moving forward. Again, philosophical changes, we have worked diligently over the last 12 to 18 months to really focus on improving the culture in our department, break down the silos, and make sure all of our staff are comfortable functioning together, working with other departments from tech services, public works, capital projects, so that we can be our most efficient selves at the city of Denton, and innovative planning and cost savings. We are conducting a capacity expansion at Pecan Creek Water Treatment Plant, or Wastewater Recovery Plant, Wastewater Treatment Plant, by doing some improvements to existing processes, no actual physical expansions to volumes at the plant, we're doing this with a chemically enhanced primary treatment process, and we're going to step into it in phases. The first phase I mentioned is one of our goals for this year, is to expand the solids handling program, then we will expand the filtration capacity and then implement the stepped process itself. And again, our asset management program that the software package we use to assign a score to every pipe in the city so that we know we're replacing the right pipes at the right time and also using those scores to collaborate with the streets department and tie those together with their street condition index so we make sure we're building the right CIP projects for the city. The operational data for wastewater collection, we intend to complete CCTV inspection of 120,000 linear feet of wastewater lines, gravity lines this year, as well as complete cleaning of 675,000 feet, and those goals carry forward to the next year. Our major maintenance, the replacement of aging infrastructure, again, I'll touch on a little bit, but historically we haven't outsourced much replacement, and through the collaboration with the street program and our asset management system, we've reset our minimum replacement to 24,000 linear feet a year. This year, we will hit about 37, 38,000 linear feet and intend to make 40,000 linear feet of major maintenance replacements next year, and again, we'll use that outsourcing to ramp up and ramp down our replacement so that we can meet that 24,000 linear foot goal, because we can turn, again, outsourcing on and off, but we can't turn on and off our crews for emergency response in towns. We want to make sure we keep our guys who work for the city fully utilized and we can use outside contractors to fill in the gaps where we need. Our employee summary for the wastewater department, we began the year with 125 full-time employees on the books. We ended up with 31 vacancies through unfilled positions and the VSP departures. We were approved to refill 18 of those, leaving us with 112 FTEs today and carrying into next fiscal year, so that estimated salary savings brings us almost $2 million, $990,000 in salary savings, and you'll see the positions that were eliminated from the budget in the bulleted list, and again, we've done all this with really no reductions in level of service, and we've done that through efficiently reallocating some of the responsibilities as well as those partnerships and cooperation with other departments, so we make sure we are being as efficient as practical. In the org chart, you'll remember, of course, Ken Banks, our general manager of utilities, his six direct reports, and each one of our functional responsibilities, and again, just in case someone new is listening, the Clear Creek Natural Heritage Center, that educational programming and sustainable schools initiative program, is going to be transferred to the parks department, and Gary Packin will definitely discuss more of that with everyone in the future during their presentations. With that, I will open it up to operational questions. >> Any questions? >> Yeah, I forget. On slide number four, on infrastructure replacements, there's three columns, there's three columns on slide number four, all of which are labeled 2019. >> Hang on, let me go back there. >> Maybe incorrect. >> Oh, yeah. >> Oh, yeah, I'm sorry. Yes, that's a typo. It should be '17, '18, '19. >> Okay. >> Yes, sir. >> Any other questions? Let me switch so I can see your hands. All right. Greenwich. >> Thank you very much. I will hand it back over to Nick. >> Susan, this is Tony. I just wanted to just bring your attention to the time. >> Yes. >> Thank you, Frank. Actually really quick, Daniel Kramer is going to come up and go through drainage. Once Daniel gets through drainage, I'll go through the financials for both. So let me turn it over to Daniel really quick. >> Good morning, Daniel. >> Good morning, Madam Chair, PUB members, it's Daniel Kramer, Deputy Director of Operations for Public Works. I'll be here talking about our drainage department. A few of our accomplishments and future goals that we've had for the past year, we've had multiple projects we've been able to complete. We did hit our goal of 25% of drainage inlands inspected over the past year. Some of our future goals we'll be working towards is going for a full inspect and grade of our existing storm drain systems. Currently right now we do know the sizes and the capacity of our systems, but with some of the neighborhood failures and stuff that we've seen recently in some of the storm drains, we're looking at getting a CCTV out throughout them so we can actually get a good grade on them, similar to what we use for our streets and our OCI. Also working on public awareness for our departments and making sure that everybody understands exactly what the drainage department does, because right now I think a lot of it is just what happens when there's an emergency and not what we do, normal maintenance and keeping stuff up. We're also working with our capital projects. We're going to work with engineering to reevaluate the whole capital program for drainage and make sure that we are all on the same page when it comes to the overall drainage plan for the city. Some of the service level changes that we've had here pre and post COVID. Every year we're going to continue our 100% inspection of our concrete line channels. We make sure we go through those every single year to make sure everything's flowing correctly just in case we have any weather events. Our earthen channels, we had ramped up last year with the addition of a new inspection crew. That will actually drop as I'll go through with our FTEs on how we had some changes with COVID, how it affected us with our VSP and also some other people leaving throughout the department. And as I said before, we did hit our 25 inspection of inlets over the past year. Post COVID, like I said, we'll continue with our concrete channels. Our earthen channels will just be down to the major earthen channels that we inspect every year, and the rest of them will be on an as-needed basis. And our inlet inspection will drop a little bit to 10%. Some of the operational data as we've been going through this past year, we mow roughly 155 acres, and we do try to hit four cycles per year. And currently we're on goal to hit that for this year. Lane miles swept, we do roughly about 10 cycles per year, about 770 lane miles. Now that comes up, as you can see on the goal, it actually is 7,800, but the 77 lane miles swept does not include our thoroughfares, which we do every Friday, which is around the square Elm and Locust, that we do hit those on Fridays. And our concrete channel inspection, we're still already had those full inspection for this year, and so we'll be good on that. As said with our FTEs, we did lose actually our drainage manager and supervisor, and also one of our heavy equipment operators to the VSP this past year. We did refill, instead of refilling both the manager and the supervisor, we refilled the supervisor position, and we're going to leave the manager position vacant for the time being. And we also did refill the heavy equipment operator. For the organizational chart, we did go through, as you can see, we pretty much lost the entire crew that we did add last year for inspection. That's why our inspection numbers have gone down. We are looking at different ways to move forward to be more efficient, and how we can use our personnel the best way and focus towards maintenance going forward. Any questions? I have one. Billy. Daniel, it's Billy Chief. Mr. Chief. Hey. One thing that you kind of touched on a little bit about your grading, and I tell you, I've noticed a tremendous difference the past few years in the way the city drains for the better. It seems like the downstream grading and clearing of brush and debris and the open ditches wasn't being done very well. Now it looks really good, so you guys are doing a great job keeping this water moving, because there's been a lot of it. Well thank you, sir, Mr. Chief. We have been working to make sure that we focus on our maintenance as much as possible, and also with the multiple large scale CIP projects they have been doing in drainage that's helped out a lot also. Good stuff. Other questions? Okay. Nick's back up. Thank you. I'm back. Thank you, Daniel. As a reminder, for any PB members, I think everybody's aware of this. Drainage is part of the wastewater fund, so we do present drainage separately, but it does roll up ultimately into the wastewater fund. I'll show that to you here shortly in the forecast also. So similar to the water utility, we are forecasting 2% growth in forecasted revenues for wastewater. We are continuing to utilize impact fee funding just like we do in water in the wastewater fund. We have 3% growth forecast in the out years for expenses. Here's that hunter coal ranch development is accounted for in the wastewater utility in the financial picture as it is for water. And then rates, we are currently forecasting no rate changes for the wastewater utility. So the 10-year forecast, so in an effort to increase transparency, we've historically showed the 5-year forecast. We started showing the 10-year forecast in utilities to kind of give you that long-range forecast what the utility looks like. Similar to water, I'll start in the 2020 column. You can see the adopted budget here. We had $1.6 million in reserve usage for the wastewater utility. End of your forecast, we are coming in just about budget, a little bit under about $1.9 million. Similar to water, we're currently accounting for some COVID impact in the wastewater utility of $389,000. One of the intents of circling back in December is to help quantify this amount and true this amount up as we receive that data back from customer service. So finishing the year, you can see we've got about $13.3 million in reserves in the wastewater utility. Moving forward in the proposed budget column in 2021, you can see rate revenue right in here is $30.5 million, non-rate revenue of $2.3. Impact fee funding of $500,000 is a little bit less in the wastewater utility. We don't have any minimum amount of eligible impact fee projects scheduled to be done next year that can be revenue funded. We're using about $3.7 impact funding to offset eligible debt. No usage of reserves is forecasted in 2021. We actually do show a little bit of profit at $292,000. You can see the 0% here in the green. Ending fund balance at $13.4. Here's that reserve requirement or reserve target for the wastewater fund, so a minimum of $10.3 with the top in $14.4. Going out into the future years, the wastewater utility does get a little bit below the minimum reserve requirement starting in fiscal year 2029, so you can see in '29 and 2030, we're a little bit below the minimum target, but I do want to point out this 10-year forecast has no rate increases within a 10-year period. So that may be something we had to circle back with the public utility board in the future. We'll keep you updated. So the five-year capital plan for the wastewater fund, so in 2021, the proposed budget, $32.8 million in planned projects, 5.3 in revenue funding, 500,000 impact fee funding. You can see some aid in construction of $82,000 and vehicle replacement of $1.2 million. So the grand total is $40 million, and as previously said, the wastewater utility will not automatically issue the $32.8 million. Staff will go through and look at the projects that are slated to be completed and what is the need of the wastewater utility as far as bond proceeds. Same slide we showed in water, so we picked out the major projects within wastewater. This does exclude some of the field service replacement projects that are revenue funded. At the very top, similar to water, you can see Elm and Locust in the budget of $92,000, for example, with the completion date of 131 in 2020. So all of these projects currently make up about $15.9 million in remaining funding that is out there for these projects. I do want to point out that Frank and his staff, just like in water, have done a great job in wastewater in the last two or three years of really utilizing the existing funding that is out there in these projects, looking at what needs to be completed, and from a financial standpoint, really done a good job of looking at minimizing any bond issuances that are not required for the projects that are currently slated to be completed. The drainage forecast, this is a component of the tenure that you just saw. We've just separated out here for transparency reasons. So for 2021, you can see planned revenue of $5.4 million, and this is made up of drainage fees in the community, residential drainage fees, and non-residential, so commercial. So one's $1.9 and one's $3.1 for a total of $5.4, with some miscellaneous revenue added in there. And the expense budget, to support Daniel's budget that he just came up here and presented to you is about $5.4 million. We do segregate $1 million in reserves for the drainage fund, and this is a component of wastewater. This is the utility rates file that I showed you before, so you can see the overall decrease for residential customers of $2.08, with that mid-year rate reduction for residential customers of $3, so from $24.51 to $21.51. Kind of the steps forward, so tomorrow, council will review this presentation with the rest of the utilities. They have already seen electric, but they have not seen water, wastewater, and solid waste. On the August 10th date, the state will more likely change based on the discussion of PV todays. We'll come back later in August to seek your approval. City council approval of the budget is September 15th, with that detailed budget and rate discussion and cost of service discussion in November-December timeframe. That concludes the wastewater and drainage presentations. I'll pull it down for questions. All right, Nick, no questions. I will ask Brian Burner to come up and present the operational information for solid waste. Well, good morning, Madam Chair, members of the committee. My name is Brian Burner. I'm the director of environmental, excuse me, I'm the director of solid waste for the city of Denton. Appreciate the opportunity to run through our 2021 operational budget and capital program. This last year has been a tremendous year for the department in and of itself. We've had several major accomplishments. We've implemented the downtown trash, valet trash recycling program to much acclaim. We have started our new yard waste program, and currently we have about 22% of our residential customers actually signed up for that. And as a result of the implementation of this program, we've actually seen a significant reduction in worker compensation claims due to yard waste collection. So knock on wood, we have not had any employees injured as a result of yard waste collections in this year. So outstanding program there. Based on the improvements of our collection fleet, uptime is significant. And as a result, downtime repairs, maintenance has fallen off significantly. So we thank you for helping us move forward in those improvements. As we look into next year, one of the things that we are currently working on, and hopefully you will see very shortly, is a contract to implement the comprehensive solid waste management strategy. What we want to try to do again is to identify programs and plans and possibly impediments to implementing a solid waste program that is beneficial to the entire community as well as cost effective and sustainable as we move forward. So that contract should be coming forward. We're working to replace our scale house software asset and routing software systems so we can improve accuracy and modify or modernize our operation. We continue to work in education outreach, trying to recycle right and to reduce contamination in our recycling collections. So as a result, we've got a tremendous amount of effort ahead of us. Again, at the end of the day, we are trying to provide exceptional value to our community with the programs that we provide. A couple of service level changes I would like to identify. During COVID, unlike a lot of or several cities in the state of Texas as well as across the nation, we were able to continue providing the same level of service with no downsizing. So again, I would like to commend all the drivers, our supervisors, our managers working diligently and safely throughout these past few months to be able to remain on the road, be able to service our citizens, and again, not impact the level of service that we have been providing. In this post-COVID and operational period, a couple things have changed though. While we continue to collect home chemical collections on a curbside basis, we have temporarily closed our in-person drop off as well as a reuse store to minimize public exposure. We are not accepting cash at our scale house. We are credit and debit card only. We're increasing training protocols. We're putting in place worker safety issues. As a result, we are providing and one additional outreach aspect, our scale house staff is providing assistance to beneficial reuse in the downer customer sales. We're able to, I don't want to say double dip, but again, maximize the use of the effort that we currently have in our solid waste scale house. From an operational standpoint, we continue to identify customer growth as we move forward. Dave Denton is sort of at the top of the DFW area. Growth is coming our way, and we can see that from a residential standpoint. In 2021, we estimate that by the end of that year, we're going to be servicing slightly over 35,500 residential customers. Our yard waste program remains level, so everything that we're picking up off the curb and delivering to the landfill across the scales, it's remaining consistent. So that's a good number. One of the big increases that we're going to see and one of our supplemental packages, our commercial containers haul, it continues to improve. So our business community continues to grow and remain vibrant throughout this operational season. With our valet trash recycling fully implemented, we have 131 customers in the downtown and forestry areas. And if you've been in these areas after the implementation of our valet service, you'll notice that in addition to providing additional parking resources in these areas, the appearance has improved. We've seen a significant increase in the quality of recyclables that we are collecting from this area, as well as created a communication conduit with the business owners and the community in this area. So it's beneficial on many tiers. Significantly, also, our wholesale volumes as a result of our contracts with our private providers has jumped in '19 and then in '20, but you'll notice that in '22, '23, those contracts end and there's anticipated to be a significant drop-off. In this next year, 2021, we anticipate a little over 200,000 tons coming into the landfill from third-party sources. Across the scales, we see a significant increase of retail volumes also. These are the residents as well as the business community that are paying gate rates to bring material into the landfill. With the closure of DFW landfill in Lewisville, as well as the significant growth that we're seeing in the North Texas area, this is not unexpected, but again, the growth is significant. One of the things I would like to point out here is this compaction density. Currently, we're almost, in FY19-20, we averaged about 1,156 pounds per cubic yard. With changes in equipment and operational standards, we're hoping to increase that to a little over 1,200 pound per cubic yard. What this means is we're putting a lot more trash in a lot smaller area. As a result, the increases that we've made from last year into this year actually compensate for the increased wholesale volumes that we've been getting in, so we're really net zero in the amount of space that we anticipated using in this past year, even though we took more tonnage into the facility. From a personal standpoint, we started the year with 126 FTEs. Over the year, we had 14 vacant due to the VSP program, as well as resignations and the positions that we had been keeping open through salary savings. We've been approved and refilled 11 of those. Currently, we're going to give back three positions, a solid waste analyst, the supervisor of our household hazardous waste, our home chemical collection facility, as well as the assistant collections manager in solid waste. In 2021, we'll be proposing 123 FTEs in solid waste. Organization, again, we're fairly flat. We have deputy director that manages the operations section. We have a site operations manager, which manages our maintenance, as well as runs our home chemical collection facility. From an administrative standpoint, we have a manager that handles resource management, as well as oversees our solid waste station. And then we have an analysis section that works with business development, as well as applications and software upgrades to the system. From a supplemental standpoint, we're looking at an addition of about $731,000 in this next year. With the growth, as I stated previously, of our commercial collection, we're in need of an additional roll-off truck. This service is open tops on construction sites, as well as compactors around businesses and educational facilities. So currently, we're short and relying on rental vehicles. So the addition of this roll-off truck will ease some pressure there. In addition, with the expansion of our yard waste program, as well as the growth in our residential community, we find ourselves in need of additions in our cart purchase funds. With that, I would like to go ahead and open up for any questions that you might have regarding the program or the presentation. Questions? Ed, go ahead. You're on mute. Thank you. This sort of falls in with your first future goal, which is the solid waste comprehensive management strategy. The latest 2018 greenhouse gas inventory that the city has published indicates that waste emissions account for 44% of emissions from municipal operations. And it's an increase, actually, of 31% over 2017. And one can only assume that with the growth that is forecast and expansion that is forecast for the landfill, that this number is going to increase. So I know that much of the methane emissions from the landfill is from food waste. And so I'm basically saying that I hope that this solid waste comprehensive management strategy will include a food waste diversion plan, as well as, perhaps, residential curbside composting. Food waste diversion, I think, is very, very important with this. And I would hope, as well, that the comprehensive management strategy is of a wide scope a large time frame. I know you're probably familiar with Austin's Resource Recovery Master Plan, which is an amazing document, centralizes and compacts everything, all necessary aspects of the city in working on waste reduction. And the scope of their plan is 30 years, and some of it is even further. So I hope that given the great development, both residential and commercial, that is coming to Denton, that the plan to be has a scope that reflects the development that is coming to our community. Thanks. Thank you. Okay. Any other questions? We really need to keep moving. All right, Nick, you're up. Thank you. Thank you, Brian. All right, so financial assumptions for the wastewater fund, similar to water and wastewater, we do have a 2% growth forecast in the out years. We are currently anticipating the wholesale agreements ending in fiscal year '22 and '23. I'll walk you through that in a financial performance here shortly. Expenses the same thing as the other utilities, a 2% growth forecast in the out years. We do have cell construction being moved from fiscal year '22 to '21, seeing some of that growth coming into the facility. And then rates, a 5% rate decrease for residential customers is currently what we're proposing, which is a dollar. And I showed that to you in the water presentation, I'll review it with you again shortly. We are looking to make minimum updates to contracted rates, for example, the wholesale agreements, and then minimum updates to valley rate, commercial rate, and gate disposal rate. It's the five-year forecast for the solid waste fund. We will be bringing back a 10-year forecast when we come back to the Public Utility Board with a detailed discussion later in August. But in this financial picture, what you can see, so in the adopted 2020 column, you have planned use of reserves of $3 million. We are forecasting to finish the year a little bit better, or quite a bit better, about $1.4 million positive. So actually not using reserves. So that continued growth that Brian was talking about coming into the facility has really helped out the solid waste fund. We are currently showing $280,000 for a COVID revenue impact number. We will refine this number when we come back to you in December, once we get some hard data from customer service regarding that impact. The proposed budget is in this dotted line here. In the 2021 budget, we do have planned use of reserves of $4.3 million. Moving down the page, you can see expenses of $44.1 for an ending fund balance of $8.3. In this fund, there is a minimum and a maximum goal that we have for our fund balance, 51 days being the minimum of 14% and 65 days or 18% being the maximum. So you can see we're well within that range and actually above the maximum. Moving out to the 5-year, you can see we do just below it in the 5th year in 2025 to $5.6 million with the minimum being $5.673. There's a couple of reasons for this. The main reason is you can see from '22 to '23, those wholesale agreements do go away. So you see rate revenue drop from $33.5 to $34.5. This is that $5 million associated with those agreements. If those are approved by PV and council or renewed, this will change the forecast. But currently we've taken the conservative approach and taken those out of the 5-year picture. The 5-year CIP, one thing I will say for the solid waste fund, they have transitioned over the last few years from debt funding, a lot of assets to revenue funding. You can actually see we have a minimum amount of debt planned for this fund, $3 million. This is for a fleet annex building at the solid waste facility. We have about $6.25 million in revenue funding and then $3.4 million in vehicle replacement. Did I hear somebody, Susan or? >> I'm sorry? >> Okay. I thought I heard someone ask the question. I was just -- didn't know if someone asked something or not. For the 5-year total for the CIP plan, you can see we have $41.5 million planned to kind of separate it out and give you a perspective of how much of that is a bond and how much of that is cash. We have $14.3 million in bond funding over a 5-year period with $27.1 million in revenue funding. So this fund is definitely healthy. Proposed rate changes, we are looking to make a few more updates in the solid waste rate ordinance this fiscal year prior to that detailed discussion in December. Valet shared services, so this is the downtown service for valet commercial services that was started last year. Under 2, the rate is currently 138.28, we are looking to decrease that rate to 74.16. This does align with the cost of service model that we are currently using that was updated two years ago. Yard waste services, currently this service is not offered to commercial businesses, so we are looking to put a rate in the ordinance for that of $75 per hour. This is consistent with the residential rate for yard waste service. The standard cart rate is currently 21.51. We are showing that dollar decrease that I discussed with you a couple slides ago, so you can see 20.51 would be the proposed rate for 20.21. The large cart, 26.26 is the current rate and then 25.04 would be with that decrease. Additional large cart, people can call in to order an additional large cart. We are looking to reduce this based on the cost of service model. So it goes from 17.38 to 16.57. We are looking to increase the gate rate from 46 to 48, and then the sludge, dewatered sludge landfill disposal rate from 46 to 50. One other thing down here at the bottom, we do have a note, we are looking to adjust the wholesale contracted rates by 2.3%, which is a CPI adjuster. This is identified in those contracts, and this does account for about 400,000 additional revenue per year. This is the slide I've shown you several times before. You can see the proposed overall bill for an average residential customer would be 229.56, so actually decreasing their utility bill by $2.08. It's the dates, as we said before, this August 10th date will more likely change based on the discussion with the PUV today, push that back later in August. Then September 15th, the City Council will adopt the budget, the tax rate, and capital improvement plan. And then we'll circle back with the PUV and City Council in November and December with a detailed budget, rate, and cost of service discussion. And with that, that concludes the presentation, and I will pull this down for questions. Yes. Yes, sir. Yes. Slide 52. Nick, can you put slide 52 back up? Sure. Hang on just a second. 52. Yes, sir. Yeah. Yeah, that one. The bottom two rows, fiscal year 21-22, revenue is about half of what it is prior year. What's the reason for that, again? Let me go back to the – hang on just a second to the fine-year forecast here. This may help us answer your question. We do have some revenue funding in here, capital investment for that cell development. So if you remember, I made that comment earlier about the cell construction moving from 22 to 21. Yes. So the majority of this money, to answer your question, is for the next cell development cost. We are looking to pay cash for the development of that cell. So that's about $5 million. Does that answer your question? So the reason it's not $9 million is because you're going to use half of it roughly to pay for new construction. Is that true? That's correct. Yeah. In 2021, we're going to use the majority of that money to pay for cash funding of the next cell development. And then, of course, in the five-year picture, we don't have a next cell plugged in. So the decrease in the 6.2 that you see here to the 1.9 is because we're building that cell in 2021. Okay. I also know the total working reserve is – we have above the maximum amount suggested. And I wonder if, when you contemplate issuing bonds, you ever have the discussion where you look at the total reserve and these numbers and evaluate, do you really need to issue another bond for these things? That's a great question. So we did, prior to coming to the PUB, when we met with management staff in the city, we did have $1.2 million plugged in this five-year bond program. Looking at the five-year forecast and the health of this fund, we did make the determination to cash fund that asset. With this being a building of $3 million, this fund could afford to cash fund in 2021. Staff just felt the most appropriate way to pay for this asset was bond funding it, since it is a building, and it will have longer than a 20-year life. So yes, to answer your question, we do look at the overall fund balance when considering what the revenue fund and what the debt fund. And I will say, you know, a big focus from the Solid Waste Fund, as you can see, in 2019, we had a debt service number of 8.9 million. You know, this fund from the financial department and the Solid Waste Department has done a great job of mitigating that debt issuance and cash funding more and more assets. And you can see out here, the debt service payment is cut in half, the 3.4 to 4.2 million. Well, that's a good thing. It's a great thing. And this is something to be proud of for the entire city. You really have made a lot of progress from the beginning. Absolutely. Other questions? Well, we did it. We did it. Thank you again for coming in today for the special called meeting. We really appreciate it. So Susan and PB members, one of the items that I will add to the Business Action Matrix will be a feature work session on the budget process. What we'd like to do is then come back to you along with the finance department and kind of walk you through what the process had been and kind of where we've been and then kind of turn that into just a work session discussion with you to give us some direction on what would you like that process to be going forward. Okay. Great. With that, do we have a motion to adjourn? I move we adjourn. All right. We're adjourned. Thank you. Thank you.