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06/12/2002 - Minutes Intergovernmental Water Board Meeting Minutes June 12, 2002 Members Present: Patrick Carroll, Jan Drangsholt, Norm Penner, and Joyce Patton. Bill Scheiderich arrived at 5:40 p.m. Staff Present: Sara Danz, Dennis Koellermeier, Tom Imdieke, and Kathy Kaatz Visitors: Paul Owen and Roel Lundquist 1. Call to Order, Roll Call and Introductions The meeting was called to order at 5:30 p.m. 2. Approval of Minutes— May 8, 2002 Commissioner Joyce Patton motioned to accept the minutes of the May 8, 2002, meeting and Commissioner Patrick Carroll seconded the motion. The vote was unanimous to accept the minutes as presented. Dennis Koellermeier requested a change in the order of agenda items and asked that #8, Proposed Water Rate Adjustment: Multi-Year Approach, be discussed at that time and that#7, Proposed Meeting Schedule for Citizen Involvement in Long Term Water, be canceled and discussed at the July IWB meeting. Those changes were agreed upon. 8. Proposed Water Rate Adjustment: Multi-Year Approach Dennis Koellermeier introduced Tom Imdieke from the Finance Department who was there to assist in answering questions. Mr. Koellermeier proceeded with a PowerPoint presentation, which, if successful, would be presented to City Council. He stated that the Annual Water Rate Adjustment Plan contained a few changes. The question asked of the City Council would be whether to adjust water rates to deal with the increased costs of providing water service. Brief historical background • In 1999 the City commissioned a water rate study that was completed in April 2000. • The study contained a rate model projecting multi-year rate increases and was adopted by the IWB. • In May 2000 a 3% rate increase was approved by Council and went into effect July 1, 2000. (The amount was much less than recommended by the rate model.) • In February 2001 a 15% increase to be effective May 1, 2001, was approved. Intergovernmental Water Board 1 June 12,2002 DRAFT COPY In preparation for the 2002 rate review, the major assumptions of the 2000 rate model were reviewed. The major points included: • Purchase of water from outside entities—this remains on-going for now • 40 million dollar CIP—some of this has been accomplished • ASR development costs — more perfected now • Customer growth continuation —growing faster than the model assumed 0 City "behind" on the scheduled rate increases News issues or programs that affect the rate model are centered around the CIP. The school district bond issue was successful in passing, which requires us to move faster than we had anticipated to build the reservoir on the school's property. Basically we will have to reverse the order of building our projects. The reservoir, pump station and piping required for this project will cost approximately $9 million, which is outside of our planned ability to pay as we go and will require a revenue bond in the near future. The school district wants to move ahead quickly to build the school on that location and our agreement with them is to build the reservoir simultaneously. Preliminary engineering studies have been performed, but have basically been conceptual in nature. The school district has not focused on where the school will be located in relationship to the playing fields and parking area, however, they are farther ahead of us in that they already have the funding and it is conceivable for them to complete the school construction in two years. Commissioner Patton asked Tom Imdieke's opinion on the potential impacts of selling revenue bonds at the same time as funding the new library. Mr. Imdieke thought it would be okay in today's market given the current status of funds and also the proposed 3-year rate. Mr. Koellermeier continued explaining the multi-year strategy and stated that the proposed resolution would set rates for the next three years with increases of 10% in 2002, 6% in 2003 and 6% in 2004. It also is being proposed that effective dates be moved to October of each year, which would minimize the impact on summer water usage for the customer and also allow time for an information and conservation message campaign. A chart was reviewed entitled Non-Booster Average Bi-Monthly Water Bills (based on 22 CCF of usage) for March 2002, which indicated that even with the implementation of the proposed rate increase, the Tigard Water Service Area would still remain in the bottom third of the rate chart. Mr. Imdieke stated that a 19% increase would be needed in 2003 to get to where the CH2MHill model indicates we should be. The Public Works and Finance Departments prepared a smoother way to decrease the gap with the 3-year cycle period followed by another review and re-evaluation. Commissioner Patton appreciated the phased-in approach, which would be easier to explain and helps the ratepayers understand. Commissioner Carroll asked what increase would be seen after the revenue bond. Mr. Imdieke was not able to answer that question at that time. He added that adopting the proposed 3-year rate increase would help alleviate problems when we do go out for a revenue bond. The bond market would want to see a new model, not one completed or updated by internal staff but one prepared by an independent reviewer. Intergovernmental Water Board 2 June 12,2002 DRAFT COPY Mr. Koellermeier displayed a fee schedule with the proposed new rates projected for the 3-year cycle. Commissioner Carroll asked when we would have to break ground for the reservoir. Mr. Koellermeier indicated that it would be soon. There were legal requirements for the school board to meet on the property before work can be started. The reservoir would consist of a completely underground tank and over the top of the tank would be an artificial turf sports facility. Roel Lundquist requested further explanation about the 3-year strategy and how that would affect the revenue bond. Mr. lmdieke explained that we would be viewed in a much better position when going to the bond market if it could be shown that the Intergovernmental Water Board and the Tigard City Council both supported the multi-year rate increase and we could commit through the revenue stream. Commissioner Patton moved to approve the recommendation for the multi-year rate increase with the stipulation that the Rate Resolution Draft would come back to the IWB for approval next month. Commissioner Drangsholt seconded the motion. The vote to approve the recommended rate increase was unanimous. Dennis Koellermeier apologized for not bringing the Resolution and stated it was on the corner of his desk. 3. Conservation Update— Sara Danz Sara told the IWB that the summer conservation plan would include voluntary continuation of even/odd watering days. A new program entitled Water Saver Landscape Rebate Program would also be implemented that promotes conservation and encourages customer participation by rewarding participants for landscape conservation. The effective date of the program would be retroactive from April 1, 2002, and run through October 31, 2002. Participants interested in the program request the application and are mailed a packet, which includes a brochure explaining the program, the eligibility requirements, and an application form. Participants are required to complete an application form and attach their original receipts then mail it all to Sara who determines the amount of the rebate and sends it to Utility Billing. The rebate credit will be shown on their next water bill. Products included in the program are landscape audit, rain sensor for automatic irrigation system, lawn aeration, manual hose bib timer, and mulch. Maximum rebate amounts are $50.00 for a landscape audit and $25.00 for rain sensor, lawn aeration, hose bib timer and mulch. Application and information also are on the City's website. The prime purpose for the program is to reduce the water demands during the summer months, but customers are also welcome to call to get other information about conservation. The program also allows us to build relationships with the green industry (garden centers, nurseries and landscape contractors) and encourages the market for landscape/aeration systems, conservation products, services, education and assistance. The program budget is $5,000, and if the evaluation of the program shows a high level of customer satisfaction and support, the budget may be increased to allow for additional rebates next summer and fall. Intergovernmental Water Board 3 lune 12,2002 DRAFT COPY The rain gauges and brochures are available in the library, City Hall and the Water Building. Sara would be willing to place them in other locations if that can be arranged. The City does not have a list of contractors who provide the services. Commissioner Penner suggested including a caveat or disclaimer with the brochure to encourage participants to investigate contractors before subscribing to their services. 4. Proposed Bull Run Drinking Water Agency— Joyce Patton Last month's meeting of the Policy Setting Committee (PSC) was held in Gresham and was interesting in that the participants heard about the work being done by the technical groups and legal governance group. Information was provided on the investigation into the ORS 190 agreement, PUD, and water authorities. Some problems were brought forward as some participants are PUDs and would have to be completely absorbed into another PUD (two PUDs are not permitted within the same jurisdictional area) and water authorities also have restrictions that require evaluation. The financial group's presentation gave recommendations for acquiring a specific audit of Portland's assets. The participating agencies are not willing to pay for a full audit at this time as estimated costs to perform that level of audit range between $300,000 - $400,000. The engineering group reported on the identification of assets. That presentation was the easiest to understand of all the work groups. There was a large public audience, but not a lot of controversial questions or comments. The next meeting is scheduled for June 20tH Everyone involved is pushing forward to meet the scheduled timelines. Commissioner Scheiderich explained briefly about governance issue options and what the elected people want. An issue of concern brought up was if agency members would be allowed to decide on the extent of their participation. State law indicates that revenue bonds must be passed by each participating member in a Chapter 190 IGA. If a participant decided they did not want to support additional improvements, an option would be that they would be terminated from the partnership and cashed out on unfavorable terms. There were stumbling blocks with all the alternatives that were being brought out. Many problems were coming from the engineering technical work group whose thinking was that everyone must agree and everyone must pay whether it was in their interest or not. Another issue causing an obstacle was how the percentage of ownership would be calculated. Commissioner Patton stated that as the chair of the PSC, she has a high level of misgiving that this would be pulled off. The participants are trying very hard and working in good faith, but there have been rumors and rumblings as to what Portland might do to meet their unique needs. Commissioner Scheiderich stated that one of the issues Portland brought up was that all existing Portland Water Bureau employees must be employed by the new agency. It was pointed out to Portland that legally it was not that simple. Another problem would be how to divide an employee's time between distribution, transmission, storage or generation. Commissioner Patton said there has been a lot of sincere effort on the part of all participants, but there may be some issues that may not be able to be overcome with some of the jurisdictions involved. Commissioner Scheiderich continued by adding that some of Portland's assets cannot legally be transferred. Participants would most likely not own storage, but could own a Intergovernmental Water Board 4 June 12,2002 DRAFT COPY guaranteed outcome, which could not easily be measured. Metro has offered to take on the function of running the regional water system, if approved. 5. Assistant PW Director's Utility Report— Dennis Koellermeier Beaverton Intertie -This project should be breaking ground any day. ASR— Several documents were distributed regarding the ASR project. In review, the presentation last month recommended rehabilitation work on the ASR well ($70,000), the project was stopped temporarily, a second opinion was sought, data was reviewed, and a successful step test was completed with less than 10% capacity loss. The $70,000 rehabilitation investment would probably not have to take place. The $4,000 investment in the other engineer was a good investment. Both firms are Oregon's experts in ASR and they are now collaborating on our project. July 3rd is the date when withdrawal will begin with another water quality sampling event before injecting into the system. In mid-summer a flavor panel (blind taste testing) will be held, which will be important to the success of the ASR program. After withdrawing most of the 97 mg the final report of the study will be finalized and it will then be determined where to go from there. JWC — Nothing to report. Regional Drinking Water Supply Agency— Commissioner Patton already covered. Clute Property Sale —The reappraisal of the property brought the value up by $20,000 and is a tentative item on the City Council agenda for August 27tH A non-agenda item of information is that the warmer summer weather has caused water usage to rise up to 9 mgd. 6. Recommendations to Portland for Water Treatment Plant Options The IWB has been briefed several times at prior meetings about the Bull Run Treatment Plant Options and recommendations from the IWB were requested. Mr. Koellermeier reported that Tualatin Valley Water District and Powell Valley Water District have made official motions to endorse the membrane filter plant at Powell Butte. The Water Managers Board met earlier that day and made the same recommendation. The location of the plant at Powell Butte is an important decision. If in the future the Columbia River well field water needed to be treated, another plant would need to be built if the plant was not built at Powell Butte. The conduits have issues with length, biological growth and low flow periods. The concept would be to use the existing conduits as raw water supply pipelines that could be treated downstream from those issues instead of treating the water in multiple locations. The membrane filter is the most expensive, but would accomplish the most and has the best potential for any new advancement changes in the future. The review panel is scheduled to make their decision tomorrow. Intergovernmental Water Board 5 June 12,2002 DRAFT COPY Commissioner Scheiderich requested to know what the group's response was to the Oregonian spin that the membrane was the least proven method. Mr. Koellermeier stated that it has been discussed and it is the least used because it is new technology. There are several plants in the United States, the largest being in the 70 mgd range, that use this technology and it has been proven effective with these lesser volumes of water. Commissioner Scheiderich asked Mr. Koellermeier to explain how that method was better than direct filtration. Mr. Koellermeier explained that the Bull Run water source was already a very clean source of water with not many particles, so using a traditional filtration method requires them to dirty the water in order to clean it and that method required the use of more chemicals. The membrane treatment method required less use of chemicals. Commissioner Scheiderich said he thought the Bull Run was the most turbid of the local water sources. Mr. Koellermeier stated that at times that statement was true, but when it was not turbid, it was cleaner when compared to other sources. There was a brief discussion about the various methods of filtration, including the ozone method. The consensus was that they had not received enough informational input to base a recommendation at that time. 7. Proposed Meeting Schedule for Citizen Involvement in Long Term Water This item was rescheduled to be discussed at the July IWB meeting. 9. Informational Items Informational items were distributed for review by the Board Members. 10. Public Comments- None 11. Non-Agenda Items Commissioner Patton announced that she would be moving September 1s' and no longer be a resident of Tigard. The IWB representative would most likely be her alternate, Craig Dirksen, however the Council would be discussing these changes. Commissioner Patton's term would automatically end after this year. The election in November would bring on another Council member, so because of the short period of time, it was unlikely that an appointment would be made for the vacated seat. 12. Adjournment Commissioner Carroll motioned to adjourn the meeting and Commissioner Patton seconded the motion. The vote was unanimous and the meeting adjourned at 6:45 p.m. Intergovernmental Water Board 6 June 12,2002 DRAFT COPY