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09/12/1994 - Minutes f ) TIGARD WATER DISTRICT BOARD OF COMMISSIONERS MEETING MINUTES September 12, 1994 1. Call to Order Chair Froude called the regular meeting of the Tigard Water District Board of Commissioners to order at 7:05 p.m. Commissioners Present: Chair Froude,Commissioners Morgan,Mortensen,and Pederson. Commissioner Haunsperger arrived at approximately 7:35 p.m. Staff Present: Sherrie Burbank, Mike Miller, Randy Volk, and Ed Wegner 2. Visitors No visitors were present. 3. Approve August 8, 1994 Regular Meeting Minutes Commissioner Mortensen motioned to approve the meeting minutes as submitted and Commissioner Pederson seconded the motion. A voice vote was taken and the motion was passed unanimously. 4. Financial Statement 1993/94 Fiscal Year • Maintenance Services Director Ed Wegner referred the Board to the Financial Statement provided by Finance Director Wayne Lowry. A copy of this report for January 1 through June 30, 1994 will be forwarded to the State to meet financial audit requirements. Mr. Wegner also informed the Board that if they had any additional questions, they could either contact Mr. Lowry or he could forward their questions to him. • A copy of the June 30, 1994 Income Statement and Balance Sheet was also part of the Commissioners' packets for their review. Chair Froude verified that the total June 30, 1994 ending balance was $34,972.25. The Board questioned whether an official audit was necessary. Mr. Wegner indicated that all that was necessary was for the Board to accept this information and a final report and it would be forwarded to.the State. Commissioner Morgan motioned to accept the report presented and to request staff to file the report with appropriate agencies; Commissioner Mortensen TIGARD WATER DISTRICT BOARD MEETING -- September 12, 1994 Page 1 seconded the motion. A voice vote was taken and the motion passed unanimously. Commissioner Morgan also voiced the concern that the Board would like to receive a monthly or quarterly report for expenditures in order to keep abreast of non-routine items. Mr. Wegner informed the Board he would be addressing this matter when he presented his report (Agenda Item #9). 5. Division of Assets Update Mr. Wegner indicated that since the last meeting when Mr. Meigs (Economic and Engineering Services, Inc.) presented his proposal to the Board staff has reviewed the proposed changes in order to address questions and/or concerns identified by the Board. • Page 16 -- The question was about deferred compensation adjustment (legal the way it should be done). It is right to change this to be an asset and liability for the City of Tigard since all former Water District employees are now employees of the City of Tigard. This means all the figures have been dropped from King City, Durham, and TWD and have become an asset of the City of Tigard. This in turn means some minor adjustments on the bottom of the page to reflect this adjustment which Mr. Wegner explained to the Board. Board decided that this matter should be acted upon to at least indicate they understand the process and meaning of the adjustment. Mr. Wegner then stated that the agreed-upon changes will be conveyed to Mr. Meigs so the necessary pages of the report can be revised. Commissioner Morgan moved to approve the amendments to Table 4-2 and to advise the consultant to include these changes in final report. Commissioner Mortensen seconded the motion. A voice vote was taken and the motion was unanimously. • Page 11, Section D.1-a -- Evaluations must total the amounts shown by Coopers and Lybrand December 31, 1993 Audit Report. According to the financial reviewers you want to compare these figures with the Coopers and Lybrand report. The financial reviewers point out that it is the percentages that count so no matter what the figures are of the valuation the percentages need to be consistent throughout the report. In reviewing some of the Board's previous minutes, that is what you instructed Coopers and Lybrand to do --to use those figures that they had. Just always remember that this is based on the Cooper and Lybrand's Audit Report of December 31, 1993. This particular item did not require any action. TIGARD WATER DISTRICT BOARD MEETING -- September 12, 1994 Page 2 • Page 21 -- Corrections were made: - Adjustments were made under Deferred Compensation Liabilities to reflect the changes to City of Tigard. - Retained Earnings and Combined Capital is what is equal to the agencies' equity. 'Total Agency Equity" is the only line that will appear. 'Total Agency Equity" is either addition or subtraction of the Combined Capital and Retained Earnings. This will, however, change the Total Liabilities and Agency Equity figures. Commissioner Morgan made a motion to make the same motion as made with regard to Exhibit 4.2 as it applies to Exhibit 5.2 and the allocation of Liabilities and Agency Equities. Commissioner Pederson seconded the motion. A voice vote was taken and the motion was passed unanimously. Mr. Wegner indicated that everything was driven off these two pages; that is what we are telling him to change. • Appendix B -- Allocation of Land Values - Mr. Wegner advised the Board that a "0" for Reservoir 2 and Reservoir 4 indicates there is no historical record of the cost of the property. He advised the Board that they might want to consider instruct staff to have an appraiser determine the land value at the time it was either purchased or deeded to TWD and subsequently divide the allocation. It is important to realize that we have to use historical value in order to conduct a true value comparison -- we cannot use today's market value. Discussion followed regarding what would be gained and other possible avenues to use to determine the value of the land. Mr. Wegner informed the Board that one result would be to assure that if there was a split that the other parties might be eligible for a portion of the value. Commissioner Morgan moved to accept the values as stated in the Appendix B for purposes of allocation. Clarified retaining the valuation as listed in the appendix. - Mr. Wegner suggested discussing another question pertaining to the same page before making a motion. Regarding the reservoir site at Scholls Ferry Road and on the future reservoir site on 150th it was staff's recommendation to request Mr. Meigs to examine the potential for site development and determine if assets should be noted in the report for future division of assets among the jurisdictions who would serye.the area if and when they are built. TIGARD WATER DISTRICT BOARD MEETING -- September 12, 1994 Page 3 Commissioner Morgan clarified that these sites are not reservoirs which means that if any party should withdraw at some future date then there will be an evaluation of those changes that have been made since December 1, 1993. Discussion followed regarding gains from assigning additional research of assets and the basis for the validity of the figures. It was recognized that due to the lack of historical information Mr. Meigs and the Board would operating on incomplete information and that it was important to remain consistent. It was recommended that a footnote be used to identify that historical data was unavailable. Mr. Wegner informed the Board that if a party pulled out, there would need to be an evaluation of the current values to revise the "0" value. With the arrival of Commissioner Haunsperger, Mr. Wegner reviewed the current discussion items: 1) Ask for a projection of allocations for the three zeros identified in Appendix B to reflect the value of future reservoirs. 2) Since a value could not be identified for Reservoirs 2 and 4, an appraiser would need to conduct research to determine a value in order to eliminate the noted "0". It will have to be done -- either now or when a party decides to withdraw from TWD. Commissioner Morgan contended that if you assume the best possible/available data has been provided and that the undeveloped sites are the exclusive property of TWD, it would be best to evaluate the values at that time instead of spending the money now to get a "best" judgement decision. Commissioner Morgan repeated his motion to accept the allocation of land value as shown in Appendix B. Commissioner Haunsperger seconded the motion. Additional Discussion: Commissioner Pederson pointed out that if someone came across this report and was not a part of the discussion, they might question how there could be land with no value. It was suggested a footnote would be appropriate to clarify the meaning of the "0" value. Commissioner Morgan added as part of his motion to include a footnote indicating the absence of an allocation. Commission Haunsperger accepted the change as part of the motion. A voice vote was taken and the motion passed unanimously. TIGARD WATER DISTRICT BOARD MEETING -- September 12, 1994 Page 4 • Mr. Wegner indicated staff found the rest of the report acceptable and believes it meets the requirements of the agreement. Commissioner Morgan pointed out that TWD Board has had more opportunity to review the report than the other participants at the upcoming joint water meeting. He stated he believed it would facilitate the meeting if the TWD Board establishes a position regarding the plan prior to the meeting. He then read a policy position which if accepted by the Board could be presented at the joint meeting and made part of the official record. This would assure that if there was a challenge, TWD would have their position on record. Commissioner Morgan moved that the policy position of the TWD be stated and conveyed to the other agencies (see Exhibit A). Commissioner Haunsperger seconded the motion. Discussion continued recognizing that the TWD Board commissioned to have the Asset and Liability Report completed to comply with the ORS and that it was their responsibility to accept the report. A voice vote was taken and passed unanimously. Mr. Wegner stated in his opinion the Board has affirmed that the sole purpose of the Asset/Liability Report is to provide a record for the future when a party decides to withdraw from TWD. Legally the Board had to provide the basis for future challenges or withdrawal. 6. Water Supply Plan Mr. Wegner updated the Board on the Water Supply Plan and the upcoming joint water meeting. He summarized the agenda for Wednesday's night meeting. This meeting is designed to be an informational meeting to share the two topics — Division of Assets and Water Supply Plan. He also informed the Board that staff has not heard any negative comments regarding either topic. Reviewed the seven options reviewed by Murray Smith and the process they used for developing their report. Identified the top two options as City of Portland and a partnership with Lake Oswego. Bottom line -- Murray Smith recommends that IWB begin negotiations with Lake Oswego to become a partner in the water business. Informed the Board of a meeting with staff from both jurisdictions and that a negotiation team for both jurisdictions was established. After a favorable presentation to the COT Council by Murray Smith, staff is recommending that work begin with Lake Oswego after the 9/14/94 meeting. At the same time, staff will be keeping in mind the importance of a regional focus for future development. Staff is also determining operational responsibilities. Must remember that even if we agree upon this partnership right now, it will.still take three to five years to be fully operational. In the meantime, we must work out an interim plan especially to meet our summer requirements.. TIGARD WATER DISTRICT BOARD MEETING -- September 12, 1994 Page 5 Discussion followed regarding past negotiation of contracts. Mr. Wegner emphasized that Lake Oswego is open to negotiating a partnership now--the time is right. The discussion also included issues raised in relation to issuing of bonds, Measure 5 impacts, future regional focus, politics, interest (or lack of) by involved parties, and long term water contracts and usage. Mr. Wegner presented two possible scenarios for future action after the September 14 water meeting: - If there is a recommendation from IWB to accept the Murray Smith plan and to forward the plan to the COT Council, then it will be placed on either September 27 or October 11 agenda. - If IWB is not prepared to accept the plan and decide to hold it over, they could possibly meet on September 28 to approve it and pass it on to the COT Council for their October 11 or October 25 agenda. In response to Commissioner Morgan's question about TWD approval, Mr.Wegner indicated that it is not necessary for the Board to approve the plan separately since they have given the authority to their IWB representative. 7. Easement Extinguishment Commissioner Morgan moved that the City of Tigard relinquish the existing water main (Resolution 94-03) and Commissioner Haunsperger seconded the motion. A voice vote was taken and the motion passed unanimously. 8. Intergovernmental Water Board Update Commissioner Morgan indicated that the substance of his report was covered in Mr. Wegner's comments about the water supply plan. The IWB meeting on August 17 was devoted to receiving the water consultant's report and recommendation. He indicated that Mr. Wegner was present to review the timetable for water issues as he had at the TWD Board meeting on August 8. The Murray Smith report identified some of the capital costs that would be required if the recommended plans were implemented. The key issue is whether the City of Tigard would be a partner with an equity interest. It also identified the necessity for a short-term (3-5 years) plan to cover the water needs while the larger plan was being constructed. From the information presented, it is quite evident that this last year was a warning about our inadequate water supply source. He stated that the Murray Smith concluded IWB is not in a strong bargaining position except with the City of Lake Oswego because they need us. He believes the plan is acceptable, but there is no way to evaluate the costs. TIGARD WATER DISTRICT BOARD MEETING-- September 12, 1994 Page 6 Commissioner Morgan voiced a concern about the staff's capacity to meet major time requirements including public information, negotiating requirements with Lake Oswego, Portland, and Tualatin Valley regarding the needs and interests of IWB/'TVVD. He wants to recognize the possible need for assistance to assure deadlines are met especially during peak workload periods. The Board agreed that all involved parties need to recognize that additional people might be needed to accomplish the various tasks. 9. Director's Report Mr. Wegner informed the Board that the Finance Department has had numerous calls regarding the joint water/sewer bills. In addition, calls have been received as a result of customers' payments mailed from one of the pick-up points being incorrectly forwarded to San Francisco and the implementation of the new hand- held computers at the same time as new joint billing process. It was recognized, however, that USA experienced additional calls during the first two months of their new consumption-base billing process. Mr. Wegner also outlined the reorganization of the Maintenance Services Department: Randy Volk will oversee Field Operations for water, sewer, and part of storm water; Mike Miller will be responsible for water supply; and John Acker will manage the Property Division. Fleet Maintenance has physically moved to the Water Building. The City is anticipating a reduction in expenditures since all vehicle maintenance will be performed internally rather than contracting these services with an outside vendor. Mr. Wegner also informed the Board that as soon as IWB makes a recommendation regarding the Water Supply Plan, he has a contract with Murray Smith to carry through the negotiation phase and an engineering consultant to be used on water matters. He stated he recognizes that staff will need additional help due to the numerous tasks associated with the project and ongoing duties. The City of Tigard is gearing up by using both internal and external consultants. Mr. Wegner also included two monthly financial statements for July and August. The first page identifies current expenditures, year-to-date expenditures, and prior year-to-date information for historical purposes. The second page lists current month expenditures. He also explained that billing for staff services will be done on a quarterly basis and provided examples on how these services were charged. Chair Froude noted that there $4,302.69 was listed under Accounts Payable and questioned what this was for. Mr. Wegner explained that it was a partial payment for the Division of Asset Report. However, since they were not responsible for TIGARD WATER DISTRICT BOARD MEETING -- September 12, 1994 Page 7 financing the contract itself, the money which was removed in error was put back into the TWD account. 10. Non-Agenda Items There were no new agenda items introduced at this time. 11. Commissioners' Comments Commented that they like to have the meeting dates on the agendas. Also requested that staff sign-off on minutes. 12. Next Meeting The next meeting of The TWD Board will be held on October 10, 1994 at 7:00 p.m. 13. Adjournment The meeting adjourned at 9:29 p.m. sb\twd9l2 TIGARD WATER DISTRICT BOARD MEETING -- September 12, 1994 Page 8 r + EXHIBIT A TIGARD WATER DISTRICT (From 9/12/94 Meeting) System Assets and Liability Allocation Report (Draft 8/8/94) Findings and Conclusions: 1. Report appears to represent fairly and completely the assets and liabilities of the TWD as of January 1, 1994. 2. Report appears to represent and provide reasonable and equitable allocation methods of the principal components of the District's assets and liabilities among the four agencies. (The absence of definitive records and proven methodology of distributions are not considered significant or important to the results reported. ) 3. Report includes, identifies, and/or references invaluable information regarding the resources of the agencies in the water service area and imposes a major responsibility on the Water Department's management to utilize this data and information in its planning and operational functions. Recommendations: 1. TWD accepts the report as an adequate response to the requirements of the Intergovernmental Agreement and the provisions of the District's contract with Economic and Engineering Services, Inc. 2. TWD approves the methodologies employed in the identification of all the assets and liabilities of the District on January 1, 1994, and further approves the allocation recommendations advanced by the consultant to the agencies involved. 3. TWD recommends the acceptance of approval of the report to the cities of Tigard, King City, and Durham as a document to be utilized in the identification of the interest of each agency in the assets and liabilities of the district as of January 1, 1994. 4. TWD recommends that the City of Tigard in the operational management of the Water Department maintain an accounting and recordkeeping system which would allow (permit) the updating of the report at such time as may be required by reason of termination of the Intergovernmental Agreement by one or more of the signatory agencies.