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HomeMy WebLinkAboutMinutes_Miscellaneous_01/17/1996_Finance & Administration Committee F VILLAGE OF TEQUESTA Post Office Box 3273 • 357 Tequesta Drive Tequesta, Florida 33469 -0273 • (407) 575 -6200 Fax: (407) 575 -6203 B 4 f,CH COUNT+ VILLAGE OF TEQUESTA FINANCE AND ADMINISTRATION COMMITTEE MEETING MINUTES JANUARY 17 1996 I. CALL TO ORDER AND ROLL CALL The Tequesta Finance and Administration Committee held a regularly scheduled meeting at the village Hall, 357 Tequesta Drive, Tequesta, Florida, on Wednesday, January 17, 1996. The meeting was called to order at 4:39 P.M. by Chairman Joseph Capretta. A roll call was taken by Betty Laur, the Recording Secretary. In attendance were: Chairman Joseph Capretta and Co- Chairman Ron T. Mackail. Also in attendance were village Manager Thomas G. Bradford and Department Heads. II. APPROVAL OF AGENDA Motion was made by Co- Chairman Mackail to approve the Agenda as submitted. Motion was seconded by Chairman Capretta. The vote on the motion was: Joseph N. Capretta - for Ron T. Mackail - for The motion was therefore passed and adopted. Kenlcled Paper Finance and Administration Committee Meeting Minutes January 17, 1996 Page 2 ------------------------------------ III. STATUS REPORT RELATIVE TO TEQUESTA WATER DEPARTMENT ENHANCEMENT PROGRAM (Tom Hall and Bill Reese) Bill Reese, of Reese Macon and Associates, commented that his firm would need direction at this meeting for the ultimate and initial facility size needed for a reverse osmosis plant. Mr. Reese stated that the point had been reached where design of the plant could commence. Mr. Reese reviewed a chart which showed that in the year 1996 the Village of Tequesta would go over 90% of available capacity as measured by the current plant plus the maximum amount which could be purchased during any given day from Jupiter - -2.7 million gallons from Tequestats plant and 2.25 from Jupiter. Mr. Reese explained that the Palm Beach County Health Department required when 80%- capacity was exceeded that the next expansion must be under design and when 90% capacity was exceeded that it must be under construction; and that the Health Department could stop any further development until those requirements were met. Mr. Reese referred to another chart which reflected anticipated growth based on past growth, and explained that 6 million gallons were projected to be required by the year 2013 because of the anticipated downtown development. Village Manager Bradford reminded those present that the entire service area was being considered, not just the Village. Chairman Capretta commented that if the lawsuit with Jupiter should be lost that the price of Tequesta water would increase dramatically and that reverse osmosis would keep it at that level. Mr. Capretta stated that the days of raw water costs of 65-� - 854! were corning to a close no matter what happened, but if Tequesta won the lawsuit a reprieve might exist for approximately another ten years, and that the higher prices should initiate a dramatic reduction in water consumption. Finance and Administration Committee Meeting Minutes January 17, 1996 Page 3 Chairman Capretta questioned the minimum practical size of R/O plant which could be built, to which Mr. Reese responded that the size was 1 million gallons per day, which he hoped one well would produce, and which could be in operation by the end of next year. Mr. Reese reviewed a demand chart, and commented that rainfall had been abundant during the past three years. Chairman Capretta questioned why more wells had not been drilled. Mr. Reese commented that paying $1,500 to have a well drilled was quite different than just paying a small amount each month for a water bill. Chairman Capretta explained that he had called some well drillers and that they all had a large backlog. village Manager Bradford commented that because of the Jupiter lawsuit residents had to pay $7.00 more whether they used that amount of water or not, since the increase was a base rate increase, and conservation would not save paying that $7.00 charge. Mr. Reese explained that the Health Department did not look at the amount of water used on an average basis, but used the amount consumed on an maximum day, and that although measures could be taken to reduce the PSI that would not work indefinitely since the amount was weather driven. Water System Manager Tom Hall commented that the average was now 1.3 million purchased gallons from Jupiter, with the maximum purchased on max days. Chairman Capretta suggested that if the village won the lawsuit it might be appropriate to establish a policy of buying the maximum amount from Jupiter each day. village Manager Bradford commented that the reason for staying at the 1.3 average was to keep from forcing the minimum amount required to be purchased from ratcheting upward. Chairman Capretta commented that the pricing contract had not been applied for two years, and that Jupiter could have been raising the price each year up to $1.40; and that he did not believe reverse osmosis water could ever be produced for a price as low as $1.40. Mr. Hall explained that there Finance and Administration Committee Meeting Minutes January 17, 1996 Page 4 ------------------------------------ were plants all over South Florida producing water for $1.00 to $1.30. Mr. Hall commented that he had recently attended a seminar on the west coast of Florida which included tours of three R/O facilities which were all producing water for $1.05. Chairman Capretta stated that was great news, since he had believed R/O water to be the most expensive of the three sources available: R /O, purchases from Jupiter, and the surficial wells operated by the Village. Mr. Reese continued with his presentation, stating that several key events needed to occur before February, and that with the exception of a few snags, the program was on schedule. Mr. Reese explained that the Master Plan was intended to identify what must be done to the distribution system for discharge if the village became independent from Jupiter; where now water was incoming from two directions but without water from Jupiter there would be a single source, which would require system changes. It had been determined that this impact would be relatively minor - -that some additional pipe would be needed which would cost approximately $300,000. Mr. Reese advised that the report on this matter had been completed and was ready to be reviewed. The next item which needed to happen was issuance of the SFWMD consumptive use permit, which expired last June and for which the Village had a renewal application in place before that expiration. Mr. Reese projected issuance in February. Mr. Reese explained that his firm would attend a meeting the next Monday to go over the draft permit and that indications had been that the Village would receive most of what they had requested, which was continuation of the current surficial wells plus five new R/O wells, and reported that the permit would be for ten years, which was unexpected good news. Mr. Reese advised that if no R/O plan was on line in 2 -3 years that SFWMD would probably remove the five R/O wells from the permit. Those five wells were anticipated to produce 4 million gallons per day. Finance and Administration Committee Meeting Minutes January 17, 1996 Page 5 ------------------------------------ Chairman Capretta questioned what the permitted rate would be when Jupiter's contract ran out, to which Mr. Reese responded that SFWMD would allocate the amount the village could prove they needed. The next item which Mr. Reese commented on was the industrial waste permit which would allow discharge of R/O waste product, and explained that this permit was not the only one needed but was the hardest one to obtain. Discharge would be into the Intracoastal near the U.S. one bridge. Mr. Reese described the process which had occurred in order to obtain the permit, which he believed to be forthcoming since the time limit for raising new issues had expired, and explained that the 60 -day time frame for either issuance or denial was in process. Indications had been received that the official in charge had been too busy to get the permit drafted, and that one condition which might be attached was to only discharge on outgoing tides, with which Mr. Reese did not agree and which would add costs; and that a sampling program might be required. village Manager Bradford explained that if discharge on outgoing tide had been required that a separate storage facility would have had to be constructed from which discharge could be released only on outgoing tides. The facts that Jupiter had been discharging into the C18 canal which flowed into the river and then into the Intracoastal and that they were operating under a temporary permit was discussed. Mr. Reese commented that several other permits had been applied for during the previous week. Mr. Reese explained that the test well drilling had been delayed because the driller had had some problems; however, it was anticipated that he would mobilize in March, and his contract was bonded if he did not deliver. Mr. Reese commented that a meeting was scheduled for the next week during which more would be learned. Mr. Reese explained that potential well sites had been identified, for which Finance and Administration Committee Meeting Minutes January 17, 1996 Page 6 ------------------------------------ some latitude was allowed within the consumptive use permit. Two of the potential sites would place one well where the old tower used to be and one by the village Hall. Mr. Reese stated that the last item which needed to be covered was direction regarding the ultimate and initial size of the R/O plant. Since these plants were normally built in phases, Mr. Reese distributed photographs of Acme's 4 -34 million gallon per day plant which demonstrated this concept since it was built with space for five treatment trains with only two trains completed. Discussion of the Jupiter contract ensued. Under the assumption that Tequesta lost the lawsuit, the Village would want to get out of the contract as soon as possible. Village Manager Bradford commented that Jupiter would be in a hole to cover operational costs if they did not have Tequesta. Co- Chairman Mackail commented that Jupiter had adopted a program against Tequesta with many points they could not back up, so that there was a lot of embarrassment and whether they won or lost the lawsuit would not be a big deal. Village Manager Bradford reported he had spoken with Lee Evett, Town Manager of Jupiter, who had indicated that at the upcoming mediation Jupiter would be making offers to settle. Village Manager Bradford stated if Tequesta lost the lawsuit the Health Department requirement still stood so that an R/O plant must be built; and if the lawsuit was won the R/O plant would still be necessary because the threshold would be reached on a max day. Mr. Reese stated that he needed to know whether Tequesta would remain Jupiter's customer after the contract expiration in the year 2007, to which Committee members responded that Jupiter had been told that the Village would not continue service after that date. Mr. Reese stated that indicated that the building for the R/O plant must then be Finance and Administration Committee Meeting Minutes January 17, 1996 Page 7 ------------------------------------ large enough to accommodate all of the Village's future water, so that the only remaining question was how many trains were desired initially. Further discussion ensued regarding whether Jupiter might really want the Village to remain on their system once the lawsuit was over, since it was good business for Jupiter. Co- Chairman Mackail discussed the possibilities of Tequesta servicing other small municipalities such as Jupiter Island in the future, and stated he would like to determine whether these additional players wanted to become part of the program in order to determine the ultimate size of the plant. Mr. Reese responded that several attempts had been made to meet with South End Improvement District, a small water company on Jupiter Island which had indicated they would be amenable to a 100,000 gallon per day contract with Tequesta for purchased R/O water, and while that needed to be taken into account in determining ultimate size that it was really an insignificant amount. Chairman Capretta questioned how Tequesta's R/O plant would compare to Jupiter's in operational costs excluding any administrative costs, to which Mr. Reese responded he did not believe it would be very different -- however, he expected it to be 20W to 30W less in capital costs. Mr. Reese explained that Jupiter's plant was located on a very tight physical space so that they were forced to built upward, and that Tequesta had plenty of space so would not experience that problem. Co- Chairman Mackail discussed growth which would occur in relation to ultimate size plant requirements. Mr. Reese indicated that it was reasonable and cost effective to base the ultimate size on known factors and to arrange the site so that a second plant could be constructed in the future. Chairman Capretta commented that the first building should accommodate a number double the maximum so that the second building would not cost as much as the first. Mr. Reese advised that Tequesta's site would be tight if two 4 million gallon per day plants were anticipated. Finance and Administration Committee Meeting Minutes January 17, 1996 Page 8 ------------------------------------ Co- Chairman Mackail stated that a business plan was needed. Chairman Capretta commented that two things must be considered in formulating the business plan, (1) whether to stay with Jupiter if they offered that option, and (2) whether the Village wanted to expand to sell water to other entities. Mr. Reese commented that 1 million would be the minimum to build, which would cost approximately $1,000,000, and the benefit would outweigh the cost of building a plant which contained an expansion footprint. Mr. Capretta discussed funding, which would require a straightforward plan. Village Manager Bradford questioned whether Mr. Reese had full confidence (within 5 *) in his demand projections. Mr. Reese verified that he was confident in terms of how much each connection would use. Village Manager Bradford suggested the Village should move forward with a maximum size of 4 to 5 million gallons per day with one train installed as soon as possible, since that would be needed with or without Jupiter. Mr. Reese agreed, and explained that an additional train could be in place within another year. Village Manager Bradford speculated that if Tequesta lost the lawsuit that Jupiter would probably phase Tequesta out of their system over possibly three years or until Abacoa was operational. Discussion of funding ensued. Village Manager Bradford explained that Bond Anticipation Notes or in this case, Revenue Anticipation Notes, would allow commencement of the project, but the bond would not be closed until construction was finished and the exact amount of costs were known, therefore interest would only be paid on the amounts borrowed incrementally. Borrowing the whole amount of money in the beginning would incur the risk of arbitrage as well as possibly running out of money before the project was finished in the event that unknown factors occurred to drive UP costs. Co- Chairman Mackail recommended_ borrowing a greater amount than needed since interest rates were very low at the present time. Mr. Reese estimated that total cost of a plant with 4 Finance and Administration Committee Meeting Minutes January 17, 1996 Page 9 ------------------------------------ million gallon per day maximum and trains which cost $1,000,000 each would be $9,000,000 to $10,000,000. Village Manager Bradford stated that financial advice was needed from municipal advisors. Further discussion ensued regarding possible water customers for the Village and how Jupiter Island might react in the future. Chairman Capretta expressed his opinion that having too much water in a dry area could never be a problem, especially built at the right time at a low cost. Mr. Reese reported that the status of well 26 and well 27 was that they had both been drilled, the contract had been let to equip them, they would be able to produce the permitted capacity, and they were approximately 60 days from coming on line. Mr. Reese summarized critical events which must happen: 1) Obtain permit 2) Drill test wells to determine availability of water 3) Obtain the rest of the discharge permitting 4) Securing the well sites 5) Permitting for the plant Mr. Reese expressed concern at keeping costs in line if too much was spent to make the building attractive, and stated that the front of the building would face Old Dixie. Discussion followed regarding attractive options which were cost effective. Discussion of when another meeting was needed resulted in Village Manager Bradford's suggestion that the next meeting might be needed within 30 -60 days to discuss advice regarding financing given by the municipal advisors. Finance and Administration Committee Meeting Minutes January 17, 1996 Page 10 ------------------------------------ IV. ANY OTHER MATTERS There were no other matters to come before the Committee. V. COMMUNICATIONS FROM CITIZENS Mike Mader suggested in order to sell the idea of funding a R/O plant to the public that a business plan be formulated and maps be drawn up. Mr. Meder suggested a map of the entire service area graphically depicting current service areas and anticipated service areas, and a map of neighboring service areas depicting who those areas were served by and potential business Tequesta could pick up. Mr. Meder commented that a lot of public support might be forthcoming to build an even larger R/O plant if it could be shown that Tequesta could pick up a lot of business in other areas. In response to questions from Mr. Meder, Mr. Reese explained that the permit in process did not have a gallon per day limit, and that equipment was not guaranteed for long amounts of time, however, he knew that some plants operated with mechanical equipment that was 25 years old. Mr. Meder recommended that the maps he had suggested also show growth rates. Co- Chairman Mackail stated that before public meetings were held that he personally would like to have a program designed by Mr. Reese so that questions by the public could be answered. Mr. Meder agreed. Discussion ensued regarding Jupiter's high cost of R/O water, and how a plant could be designed to be more efficient at a lower cost. Mr. Reese offered as one example that trenches for trains could be designed wider and deeper which would accommodate larger future trains. VIII. ADJOURKHMU There being no further business before the Committee, the meeting was adjourned at 6:15 P.M. upon motion by Co- Chairman Mackail, seconded by Chairman Capretta, and Finance and Administration Committee Meeting Minutes January 17, 1996 Page 11 ------------------------------------ unanimously carried. Respectfully submitted, Betty Laur ATTEST: Recording Secretary Joann Mangani to Village Clerk DATE APPROVED: