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07/14/2010 - Minutes Intergovernmental Water -�Carrd (AWB) Meeting Minutes July 14, 20110 Tigard Public Works Building 8777 SW Burnham Street Tigard, OR 97223 Members Present: Gretchen Buehner Representing the City of Tigard Ken Henschel Alternate Representing the Tigard Water District Keith Jehnke Representing the City of Durham Dick Winn Representing the City of King City Mike Stone Member At-Large Members Absent. None Staff Present: Dennis Koellermeier Public Works Director John Goodrich Utility Division Manager Kathy Mollusky Executive Assistant Visitors: Joe Healey Red Oak Consulting Paul Matthews Red Oak Consulting Art Cornelius Citizen of Tigard 1. Call to Order, Roll Call and Introductions Commissioner Winn called the meeting to order at 5:36 p.m. 2. Approval of Minutes—May 12, 2010 Commissioner Buehner motioned to approve the May 12, 2010 minutes. Commissioner Henschel seconded the motion. The minutes were approved by majority vote of the Commissioners present, with Commissioners Buehner, Henschel, Jehnke, Stone, and Winn voting yes. 3. Public Comments: When Mr. Art Cornelius moved to the City of Tigard (COT), he was told that the water was wonderful. Because of this information, he did not put a whole-house water filter in. He installed filters for his drinking water and had to replace them sooner than expected due to clogging. He called COT and discovered the water is purchased from the City of Portland who does not filter the water. He found out COT is seeking an alternative water source, which will take six years. He wants to put in a whole house filtration system and requests COT reimburse him $125 for the pair of filters that were supposed to last a year. The IWB did not ask COT to reimburse Mr. Cornelius for the filters. Intergovernmental Water Board Minutes July 14,2010 1 Mr. Koellermeier assured Mr. Cornelius that the Bull Run System is treated chemically so inert material is not harmful and it does not go through a filtration system. The silt is annoying and problematic, but not harmful. This is one of the reasons COT is leaving the Portland Water System. 4. Credit for Leak Adjustment Mr. Goodrich asked for the IWB's approval for a credit for leak adjustment submitted by Greenfield Village Apartments for a leak that occurred in their irrigation system. Commissioner Buehner motioned to approve the Greenfield Village Apartment credit as recommended by staff. Commissioner Stone seconded. The credit for the water leak was approved by unanimous vote of the Commissioners present, with Commissioners Buehner, Henschel, Jehnke, Stone, and Winn voting yes. 5. Water Master Plan Commissioner Buehner motioned to have the IWB recommend that the Tigard City Council approve the 2010 Water Master Plan. Commissioner Stone seconded. The recommendation for the City Council to approve the 2010 Water Master Plan was approved by unanimous vote of the Commissioners present, with Commissioners Buehner, Henschel, Jehnke, Stone, and Winn voting yes. 6. Water Supply Update • Mr. Goodrich reported reaching a peak of 10.6 million gallons per day (mgd) during the 100 degree day. Water use has been less than expected because of a very late, wet spring. COT easily met the 10 mgd demand. Tigard is looking at taking the 10 mil reservoir out of service and using the bypass. Mr. Koellermeier stated this will start in mid-August and will be taken out of service by September 1. • The average demand is 6 to 7 mgd. • Previous year's peak days were 12.98 to 13.26 mgd. 7. Water Rate Study and Water SDC Update for the Lake Oswego Tigard Joint Water Supply Project Partnership • Mr. Goodrich reported that this is the next phase of the project tasks to discuss revenue requirements. On June 15 a joint Council and IWB meeting was held that introduced the water financial plan project. • This project is under a tight timeline and COT is working to get the best information to Red Oak Consulting. The numbers may be updated as more information is acquired. • Mr. Paul Matthews and Mr. Joe Healy, Red Oak Consulting, gave a PowerPoint presentation, which is on record in the IWB file. • Mr. Matthews clarified the $118 million baseline amount for Tigard's share of the Lake Oswego Tigard Partnership was selected before the filtration option for the water treatment plant was selected, so these dollar figures will change in September when the treatment option is finalized and engineer estimated costs are completed. • Mr. Healey clarified the revenue requirement target of 1.35 (or 135°/x) was received from Mr. Pat Clancy, City Financial Planner. COT needs to bring in 135% revenue above operating expenses. COT can use the additional money on other systems, (i.e., CIP), however, they cannot use this money to cover operating expenses. This will not be finalized until COT enters into the agreement. COT is going to have multiple bonds issued. For instance, a 20-year bond may be issued in 2012 and due 2032; a 20-year Intergovernmental Water Board Minutes July 14,2010 2 2015 bond would be due 2035. If you issued all debt needed right now (the full $118M), the rates would increase significantly. • Revenue bonds are tax-free debt, which means the borrowers do not pay taxes. COT is using revenue bonds, which do not require voter approval, however, they can be voter referred if COT so chooses. • The growth assumptions used in this analysis are low, very close to 0%. The first year is around 0.5%, then 1%. • Percentage rate increases will drop off in 2017 due to the Portland water contract ending. • COT traditionally increases water rates in October, but are considering postponing the a increase until January 1. COT is checking with the Bond Council to consider increasing rates every six months to try to flatten out the curve. These numbers help COT understand the worst-case scenario. The rates will double by 2014 to pay for the Lake Oswego partnership, and then will just be maintenance of 5.5% traditional assumed inflation. • Mr. Koellermeier stated COT has to adopt the rate study to substantiate a rate increase in October. The IWB and Council have to decide before the document is accepted by other agencies. There is plenty of time to have smaller rate increases, but we want to evaluate their significance and limit increasing customer rates over the next 3 to 5 years. The current water SDC charge is $2,022. The upper zone SDC charge is $2,366. • Mr. Koellermeier explained how SDC revenue is used for paying debt. SDC money is segregated from other money and can only be used on future growth. • Commissioner Jehnke clarified that if someone builds a house in two years, they are only paying on 18 years, indexed for inflation. Most utilities look at every 5 years (COT every 2 years). • The SDC is currently set up to fairly charge any connection in the current Urban Services Area. Treatment and existing pipe capacity have the ability to serve outside of the boundary. • Do we need to structure for growth outside of the TWSA (for instance Areas 63 & 64)? Historically, a supplemental SDC is added for new areas: customers outside of the area pay a booster charge. Providing service outside the service area can be very expensive and sometimes requires re-piping for extra capacity. Right now, it is estimated to cost $8 million to serve. The law requires a capital improvement list that includes a list of projects and the date of the project. The project list can be adjusted. Growth would happen at separate times. The first person to build and the last person will pay the same amount. • Wilsonville invites the Home Builders Association (HBA) and developers to meetings so they know about rate increase. COT had a preliminary meeting. They have two more meetings scheduled, a CIP meeting and mechanics of SDC meeting. • Part of what drives the SDC update schedule is the legal requirement to give 60-day notice (this is the review process period). On September 21 the SDC is scheduled to be completed and ready for review. • In November, Council will consider adopting the water rate plan. • Using base rate compared to a tiered rate structure is a policy decision. 8. Informational Items a. Update from Commissioner Buehner on Lake Oswego/City of Tigard Oversight Committee activities o Last meeting was in June, next meeting will be September 8, 2010, at 3:00 in Tigard. Intergovernmental Water Board Minutes July 14,2010 3 Andrew Singelakis was appointed new Director of Land Use and Transportation for Washington County. b. Update from Commissioner Winn on West Bull Mountain Technical Advisory Committee Activities O Commissioner Winn reported they have been in hiatus. c. Updated from Commissioner Henschel on the Citizen Sounding Board activities © Commissioner Henschel reported they had its final meeting. They reviewed the different treatment technologies and citizens agreed with the recommendations. 9. Non-Agenda Items The proposed draft IWB agreement, as written, is legally sufficient and could be considered for adoption at this point. The partners could start marking up changes to the proposed agreement with their issues addressed or Tigard can prepare their changes to the draft proposed IWB Intergovernmental Agreement (IGA) as the managing partner, and then allow the IWB partners to review and suggest further proposed changes as needed. The IWB chair stated that King City would wait until Tigard has reviewed and made their changes for the other members to consider. Mr. Koellermeier stated that the proposed changes from Tigard should be available in a month. The August meeting is not required and will be cancelled as long as the IWB IGA redline is distributed to IWB Board members as soon as it is available. 10. Future Agenda Items a Future agenda items were not discussed. 11. Next Meeting: o September 8, 2010 at 5:30 p.m. Public Works Building, 8777 SW Burnham St, Tigard, Oregon 12. Adjournment At 7:45 p.m., Commissioner Winn motioned to adjourn the meeting; Commissioner Stone seconded the motion. The meeting was adjourned by unanimous vote of the Commissioners present, with Commissioners Buehner, Henschel, Jehnke, Stone and Winn voting yes. Dick Winn, IWB Chair Kathy Mollusky, IWB Recorder Date:_ / Date: °N � e5 Intergovernmental Water Board Minutes July 14,2010 4