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HomeMy WebLinkAboutMinutes_Workshop_11/01/1994 VILLAGE OF TEQUESTA Post Office Box 3273 357 Tequesta Drive Tequesta, Florida 33469-0273 (407) 575-6200 Fax: (407) 575-6203 VILLAGE OF TEQUESTA VILLAGE COUNCIL WORKSHOP MEETING MINUTES NOVEMBER 1, 1994 I. II. CALL TO ORDER AND ROLL CALL The Tequesta Village Council held a Workshop Meeting at the Village Hall, 357 Tequesta Drive, Tequesta, Florida, on Tuesday, November 1, 1994. The meeting was called to order at 5:35 P.M. by Acting Chairman Joseph N. Capretta. A roll call was taken by Betty Laur, Recording Secretary. Councilmembers present were: Joseph N. Capretta, Elizabeth A. Schauer and Earl L. Collings. Also in attendance were: Village Manager Thomas G. Bradford, Village Clerk Joann Manganiello, and Department Heads. Vice Mayor William E. Burckart arrived at 5:40 P.M. APPROVAL OF AGENDA Councilmember Collings moved to approve the Agenda as submitted. Councilmember Schauer seconded the motion. The vote on the motion was: Elizabeth A. Schauer - for Earl L. Collings - for Joseph N. Capretta - for III. The motion was therefore passed and adopted and the Agenda was approved as submitted. REVIEW OF TEQUESTA WATER DEPARTMENT WATER ISSUES: Village Manager Bradford explained direction was needed relative to seeking alternative sources of water. Since the Council had previously indicated they were in favor of .postponing reverse osmosis for as long as possible, the demand curve would be shown so that they could make an informed decision. Financial position, goals and objectives for the Village would be discussed in conjunction with a presentation by Phil and Kathy Gonot of PMG Associates, Inc. Also scheduled for discussion: Whether or not to pursue '`~ surcharges; whether or not to allow the Village to be Recycled Paner Village Council Workshop Meeting Minutes November 1, 1994 Page 2 indexed by the Town of Jupiter; and whether or not to implement indexing within the Village. At the request of Councilmember Collings, Mr. Bradford stated the objective of this meeting: The objective of the meeting is to get Council direction on the following: (1) Whether we shall pursue reverse osmosis (2) The financial position desired by the Council; and specifically, the amount the Council would like the Village to have on hand to offset any debt service undertaken for expansion of the water treatment facilities (3) To get specific direction on the surcharge in light of proposed annexation. (4) Whether the Council is willing to accept indexing of the bulk rate by Jupiter. (5) Whether the Council wishes Tequesta to implement index rates. A) Review of Water Demand Curve Consultant Bill Reese of Reese, Macon and Associates, reviewed the water demand curve. Mr. Reese stated the maximum flow capability of the system was 4.9 million gallons per day, made up of 2.7 from Tequesta's plant and 2.2 from Jupiter. Mr. Reese stated that excess of 90% capacity the Palm Beach County ECR Rule stipulates that you must be under construction with your next phase of expansion. It also stipulates that at 80% you must be under design for expansion. Historical water demand showed that in 1988 and 1989 operation levels were just short of 90%; however, no penalty was imposed by the County, and levels dropped--partly due to conservation measures instituted at that time. Since 1992, levels have risen to the point that design must be instituted. Tequesta's system is very dependent upon rainfall, which Mr. Reese pointed out had been heavier in the past two years; however, flow had also increased during the same period, indicating cause for concern if rainfall should decrease to the 1988-1989 levels. Mr. Reese stated that the number of connections to the system was also troublesome as related to total capacity. Mr. Reese's colleague, Tom Jensen, explained that in preparing the historical/projected connections chart two Village Council Workshop Meeting Minutes November 1, 1994 Page 3 ------------------------------- types of data guidelines were available--the downtown development under vested interest, wherein Palm Beach County Ordinance established how the development could be put together, and the other was the ordinance that the Village had adopted. He had used the vested interest data under which the least amount of development could occur. Mr. Jensen stated that the number of connections was rising much faster than projected. Mr. Reese summarized by stating that demand is going up, and that they had used the lower figures to indicate the urgency of the situation. He informed the Village Council that Tequesta would need to be under construction with a new facility in 1996-97, and that if rainfall should go into a more normal pattern that Tequesta would be under risk right now. Mr. Reese stated a lot of things would have to occur before a new plant could be brought on line and listed steps in the order they would need to occur, which would take some time: 1) Investigate reject disposal methods for R/O. Options are intracoastal outfall or a deep injection well. Mr. Reese stated Jupiter uses a canal but had to fight long and hard to do that and it is still not permanent. He advised that using the intracoastal would be worth the battle it would take, and the quality of the R/O reject water would be slightly better than the quality of water now in the intracoastal so it would actually be improving the water quality. Meetings are now underway to discuss those options. 2) Prepare a Water Treatment Plant master plan, which has already been done. 3) Proceed with updating Tequesta's current SFWMD well permit since the current one expires next June. 4) Proceed with Utility Master Plan (hydraulic model), which Mr. Reese explained was only a peripheral issue related to the distribution system and connects to the water system program only in the sense that it has an impact on how you get water from the plant into the system and particularly how it could be done in the absence of pursuing it with Jupiter. Village Council Workshop Meeting Minutes November 1, 1994 Page 4 5) To commence design, permitting, bidding and construction would be the final steps. Mr. Reese informed the Council their decisions were needed on a number of items including whether they would operate with or without Jupiter, and which data should be used-- vested interest or ordinance units. He explained they would not have all the facts to make their decision, for example, they would not know whether a source of R/O water was available until a well had been drilled. B) Review of Alternative Source Options Mr. Reese reviewed available water treatment plant options: REMAIN DEPENDENT UPON JUPITER: A) Expand existing plant by securing additional withdrawal capacities from wellfield • Existing contract would remain, but future increases would be realized upon contract expiration and exposure to index and base rate charges in the interim. Ability to increase wellfields another 1.0 MGD may not be feasible. B) Maintain existing contract with Jupiter and expand with an R/O facility • Viable only if Jupiter contract remains as is. Village is open for unknown increases upon contract expiration. C) Increase contract with Jupiter, no WTP upgrades required. • Costs may be prohibitive, plus Jupiter does not have excess capacity to commit without making major capital improvements. D) Maintain existing contract with Jupiter, expand existing wellfield/WPT and construct a smaller R/O facility. • Exposed to future increases from Jupiter and depends upon ability to increase wellfield with additional demands to be met by an R/O facility. Village Council Workshop Meeting Minutes November 1, 1994 Page 5 ---------------------------- BECOME AN INDEPENDENT UTILITY: A) Expand existing WTP by securing additional withdrawal capacities in wellfield. • The inability of securing additional wellsites and increasing the withdrawal rates an additional 2.8 MGD may not make this a viable option. B) Maintain existing WTP and expand with an R/O facility. • Existing WTP/wellfield would remain as is with a capacity of 2.73 MGD. • An R/O facility would be constructed with a minimum capacity of 2.8 MGD. C) Expand existing wellfield/WTP and construct a smaller R/O facility • Dependent upon the ability to increase withdrawal capacity of wellfields. In answer to a question by Councilmember Capretta, Village Manager Bradford stated all three currently planned wells would be operational by the end of 1996. Mr. Reese answered that pumping information from the first two wells should be available in about a year, and information would be obtained by pumping a lot out to see how much it would pump, and pump until the salt water interface was located, and that more wellsites would be necessary. Village Manager Bradford explained that SFWMD had picked the three sites the Village was working with and the permit had specified only three sites, and the cost for a permit was rather substantial. Mr. Reese stated that another permit could be applied for, and that DEP establishes setback clearances and SFWMD establishes where a wellfield can go geographically, and with all the required separation clearances away from septic tanks, gravity sewers, force mains, etc., there were very few places left. Mr. Reese asked for direction on which options to pursue. In response to Vice Mayor Burckart, Mr. Reese explained that Tequesta pays Jupiter for 1-1/2 million gallons per day whether it is used or not, and can buy up to 2.25 million gallons on any given one day, or could average 2.0 on a monthly basis. Tom Hall explained that under changes made last year the annual average could not exceed 1.7, and if it did then Jupiter could lock the Village in at the higher rate. Vice Mayor Burckart stated the capacity is 4.4 under the current contract, and what Tequesta needs to come up Village Council Workshop Meeting Minutes November 1, 1994 Page 6 with is 5.6. Mr. Reese agreed that was the low end using vested units. Vice Mayor Burckart reasoned that to come up with another 2.9 minimum, of that 1.7 could come from Jupiter under the current contract, therefore Jupiter would have to commit to 1.2 additional to provide all of it. He suggested that Tequesta could pay an impact or plant capacity fee for that 1.2 million, knowing the contract will not expire until 2007, thereby avoiding a R/O plant, and structure a rate with increases at some points, and gain control. Village Manager Bradford verified for Vice Mayor Burckart that Tequesta sells 12% of their total to Jupiter people in the southern part of the peninsula, which Tequesta will never lose. Councilmember Collings urged the Council to look at the bigger picture and the fact that the Jupiter/Tequesta/Robe Sound area is water starved and three wells will not solve the problem, and to consider the total growth of the area, recognizing that Jupiter will continue to expand and therefore will not be a dependable or viable source for Tequesta's future water needs, and to go for a major solution. Councilmember Capretta stated one long-term objective could be to get out of the water business, or get out in ten years when the contract with Jupiter expires. Another long-term objective could be to stay in the water business since it is highly profitable, to expand the system and not worry about the price of obtaining water because 25~ will be added to whatever the cost is in order to make a profit. Then the only thing to worry about would be finding the best place to get raw water. As long as water is available from the aquifer through wells it should be used since it is the cheapest water available. The profit margin needed would need to be determined, taking into account that cheap water sources were limited. Mr. Reese commented that you can't make rates high enough to do this before you run out of water. C) Review of Water Rates, Including Surcharges, Indexing and Water Department Financial Goals Phil Gonot, PMG Associates, stated they had studied whether the existing rate structure could be adjusted to generate surpluses to provide enough capital to address expansion of the water treatment system. Two different areas were studied, (1) changing the step rates in terms of volume, Village Council Workshop Meeting Minutes November 1, 1994 Page 7 ------------------------------- and (2) establishing a larger base rate for residential customers using larger than 5/8" meters. In each area they had determined the amount of additional revenue that category would bring in and whether that revenue generated enough to meet capital needs. Mr. Gonot reported that enough revenue to meet capital needs could not be generated in the time frames arrived at by Mr. Reese, and since portions of existing surplus had been earmarked for other projects only $400,000-$450,000 would be available from that source. Therefore, in order to meet the time line the Village would have to bond. Mr. Gonot explained that different alternatives had been studied for a structural rate increase for existing customers, which was taking the step rates and including the increased base rate. Changing the base rate would bring in approximately $39,000 per year. Under the current rate, for the first 20,000 gallons the lowest rate is paid, then it goes to the next 20, 000, then anything over 40, 000 is at the highest rate. Mr. Gonot suggested increasing to either four or five steps. Since the median for single family customers would be approximately 7,000 gallons per month and the average is 12,000 gallons, that tells you that many single family customers are extremely heavy users. In the alternatives proposed by PMG Associates, the first three steps would stay at their current rates, step four would be $4.20 per thousand gallons and step five would be $5.20 per thousand gallons, which would result in a significant increase in revenue. Mr. Gonot recommended a 3.9 MGD operation to make Tequesta totally independent from Jupiter. Mr. Gonot discussed the fact that Jupiter would be adding a base charge in the future and their increased rates would not be much different than Tequesta would pay if under a R/O system, so Tequesta was not going to save money by not choosing the R/O option. Councilmember Collings inquired if the old plant could be used at maximum capacity along with a smaller R/O plant, to which Mr. Gonot a 3.9 plant would be most cost effective, because fixed cost of water would not go up, as a totally independent operation the Village could control its costs, and water could be produced cheaper than buying it from Jupiter. Mr. Gonot stated they had not included costs for reject water because they did not know the method that would be used, and reject water should be able to be paid for through surplus. Councilman Capretta suggested joining with other communities to pipe reject water into the ocean. Mr. Village Council __ Workshop Meeting Minutes November 1, 1994 Page 8 Reese replied he would recommend the Intracoastal, since the cost would be exorbitant to build a pipe far enough into the ocean and also that would be placing fresh water into salt water. Councilman Capretta suggested raising prices every year. Mr. Gonot discussed indexing and the fact that Jupiter raises rates based on a PSC (Public Service Commission) formula, which increased their rates 1% and 1.8% over the past two years, and which was not sufficient to meet Tequesta's needs, however would offset some costs. Mr. Gonot offered to set up software for approximately $10,000 so that the Village could input cost increase percentages and the software would generate the volume rate increase needed to meet that. Village Manager Bradford compared the Village to Jupiter and verified that Jupiter was not meeting costs each year with indexing so that at some point in the future they would be faced with instituting a major rate increase. Mr. Gonot commented that a surcharge at 25%, the limit under State law, would produce $255,000-$256,000 annually, and doubling the present 8% surcharge to 16% would produce $164,000 per year, and although surcharges currently go into the general fund that could be changed to build surplus. Village Manager Bradford pointed out that of the total possible revenue to be derived from surcharges to unincorporated Palm Beach County and Martin County customers, about half were Martin County customers, and the Village was considering annexation of the unincorporated Palm Beach County residents so that half of that amount might not be realized; however it would be a selling point for annexation. Mr. Gonot explained that the 25% surcharge had been challenged and would certainly be lowered at some future date. It was the consensus of the Village Council to place on the agenda for the next Council meeting recommendation to increase the surcharge to 18% effective April 1, 1995, and 25% six months later. Councilmember Schauer questioned whether Martin County could take over the water business in the Tequesta area and was answered that they would have to pay fair market value if they took over Tequesta's property. Village Manager Bradford stated that since April, Jupiter had tried to impose indexing on Tequesta's bulk rate, however the bill they sent had not been paid since the Village Manager believed this was a ploy by Jupiter to get their foot in the door to legislate rate increases outside the bulk rate agreement, i.e., institute base rates, and raise Tequesta's rate equal to residential customers for Village Council Workshop Meeting Minutes November 1, 1994 Page 9 total gallons consumed. Village Manager Bradford expressed his opinion that by not accepting indexing Tequesta would face a rate increase of possibly 30-70, but that would be preferable to accepting indexing, to which the Village Council agreed. The Village Manager advised the Council to look at the large-scale picture in considering the long-term direction to take and in establishing financial goals, which are impacted by rates; and voiced his opinion that there would be no more water available from the surficial aquifer, so that reverse osmosis must be undertaken, possibly with Hobe Sound as a joint venture partner. He commented that Hobe Sound was considering such a partnership; however, they were also looking at the possibility of allowing ENCON to build a regional RO plant on Hobe Sound Water Department property and if that were done Tequesta would be forced to buy their water from ENCON which was not desirable. In response to Councilmember Collings, Mr. Reese advised that the approximate cost for an R/O test well would be $250,000 for a test well that would convert a production well, and Tequesta would need five wells. Mr. Reese estimated those wells would need to be approximately 2,000 feet apart, which would not be known for sure until two wells had been drilled, and that sites would not be easy to find. Discussion ensued as to possible site locations. After further discussion of the step increases, alternative two was the consensus of the Council. Village Manager Bradford advised if the Council desired to be independent, that Jupiter could be notified their water would no longer be needed by a certain date, therefore they would not have to double their R/O capacity, and should be happy to let Tequesta out of their contract. Vice Mayor Burckart stated he did not agree, but believed that Jupiter wanted Tequesta's contract badly. The Council discussed making contact with Jupiter to determine whether they wanted Tequesta's contract. Village Manager Bradford recapped the decisions of the Village Council: 1. 18~ surcharge to be effective April 1, 1995; 25~ surcharge to be effective October 1, 1995; 2. Reply "no" to Jupiter regarding indexing; Village Council Workshop Meeting Minutes November 1, 1994 Page l0 ------------------------------- 3. Proceed with Alternative 2 rate structure; 4. Institute base rate based on meter size; 5. Proceed with permitting of reject disposal systems which is the key issue for R/O costs VI. ADJOURNMENT Councilmember Collings moved that the meeting be adjourned. Councilmember Capretta seconded the motion. The vote on the motion was: William E. Burckart - for Elizabeth A. Schauer - for Earl L. Collings - for Joseph N. Capretta - for The motion was therefore passed and adopted and the meeting was adjourned at 7:37 P.M. Respectfully submitted, ~~ Betty our Recording Secretary ATTEST: Joann Manga iello Village Clerk DATE APPROVED: ~", i99s~