Commission Meeting Minutes – Thursday, November 16, 2017

For your consideration, please read the minutes from the Commission Meeting that was held on Thursday, November 16, 2017.

Commission Minutes 11-16-17 with Attachments

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Brunswick-Glynn County Joint Water and Sewer Commission

1703 Gloucester Street, Brunswick, GA 31520

Thursday, November 16, 2017 at 2:00 PM 

COMMISSION MINUTES 

PRESENT:                             

Donald M. Elliott, Chairman

Steve Copeland, Commissioner

David H. Ford, Commissioner

Cornell L. Harvey, Commissioner

Robert Bowen, Commissioner

 ALSO PRESENT:                 

Jimmy Junkin, Executive Director

Charlie Dorminy, Legal Counsel HBS

Andrew Burroughs, Deputy Executive Director

Todd Kline, Director of Engineering

Pam Crosby, Director of Procurement

John D. Donaghy, Director of Finance

Jay Sellers, Director of Administration 

ABSENT:                               

Clifford Adams, Vice-Chairman

Mike Browning, Commissioner                             

Chairman Elliott called the meeting to order at 2:05 PM.

Chairman Elliott provided the invocation and Commissioner Ford led the pledge.

PUBLIC COMMENT PERIOD

Chairman Elliott opened the public comment period.

Chuck Cook – The Future of the Utility

Mr. Cook spoke to the Commission regarding concerns for the future of the utility.  He noted that he recently moved to the area in June.  He came from Miami where he had served as a commissioner and also chairman of the commission at a public utility which served 180,000 customers. He continued to discuss a water plant expansion which had been done there and the increases to the customers’ fees.  Mr. Cook also expressed his understanding of the difficulties of running a utility like a business when it is a government entity, and how monetary and business decisions have to be made with the pressure to keep rates low which reduces the dollars available to the utility for necessary projects and replacement cycles and upgrades to the current plants.  He also noted his understanding how the staff has to respond to the needs of the utility and to also be mindful of the customers who know little about the difficulty of running the utility and who have come to expect safe potable water with little thought of how it gets to them or how much it actually costs or to the waste system either.  Mr. Cook concluded by encouraging the commissioners to keep perspective on the importance of making decisions that are tough for the future of this utility.   

Jonathan Roberts, Roberts Civil Engineering – Tap Fees

Mr. Roberts began by acknowledging that the commission has a very difficult position and have inherited a lot of infrastructure problems that it is diligently upgrading each month with projects that are going forward, and he commending the efforts to try to get the infrastructure back in operable order and he recognized that the condition of the system is not anything the current commission is responsible for.  Mr. Roberts continued that at this point in our county “we” are absolutely depending on you for a winning strategy for fixing the problems.  He noted his understanding that there are currently two ways for the commission to raise money, through rates and tap fees.  So, with those two elements at the commission’s disposal, they are being used to the fullest extent, as would seem reasonable in order to try to make the repairs.  He added that their concern is that this may fall short and may not cover the magnitude of all the problems and repairs that need to happen and “we” are depending on you for a winning strategy.  He included that each person on the board is a successful person and in the position of a lot of power and there is an opportunity to fix a tremendous problem at the benefit of the county and the benefit of the citizens. Mr. Roberts implored them to make sure that their strategy is a winning strategy.  He then noted his concern as a citizen, when he hears about Canal Crossing Development, John Callaway, whom he has been speaking with daily, got several restaurants approved on Tuesday night at the Mainland Planning Commission, but those are not going to go forward because of the tap fees.  Based on what those restaurants pay at other locations, they don’t see the market in Glynn County to overcome to upfront expense on the tap fees.  He noted then that Mr. Purdie, Mr. Lucas and Mr. Moxley all have other projects that have similar outcomes that they are not going to go forward with the current rates.  He added that the commission is creative and in a position where it can leverage potentially outside sources and it is understandable that it is leaning on the other two mechanisms that are at its disposal.  Their appeal is to think creatively; think outside of the box; talk to the state, talk to the county, talk to the city, and come up with another mechanism to get the funds to make the upgrades so that we are not putting eggs in the “fee basket”.

Tom Purdie, Development Group – Tap Fees

Mr. Purdie began by noting that he is in tune with the commission’s hardship, and that the commissioners have a seat that has been given and earned by their stature in the community and that they have all inherited a mess. He added that he has an interest in building an apartment complex on Golden Isles Parkway, and in doing their pro forma and in looking at things they ran into the tap fees which are going to be approximately $2.1M.  He continued that “with great honesty” that they cannot build with those kind of fees.  Mr. Purdie then asked if there is a way to look at this, in trying to help the commission solve its own problems, and offered that what they could do every year for it.  First they will provide a great living, safe environment, drug free for 252 individual families.  They will provide a downstream income flow of between $1M and $1.5M annually that comes out into the market place, to the restaurants, dry cleaners, automobile shops.  They will also provide an approximate $180K per year tax to the county to help pay its bills. In addition, they will also pay about $100K per year in monthly fees that go to the commission’s use.  He then noted to multiply this by 80 years and see what that does.  If you take a combination of a certain level of fee on the front end and look at the return on the back end, and if you do the math, I think you come out a winner. He offered that if there is anything they can do to help do this so that they can come to Brunswick, which they would like to come to Brunswick, to please call on him.

Art Lucas, Lucas Properties – Tap Fees

Mr. Lucas advised that commissioners that his business purchases office buildings and restores them.  They have done this on St. Simons Island, and just bought one in downtown Brunswick. He noted a young man he knows who is in the restaurant industry and who has good experience and his dream is to open up a restaurant.  He wants to do it on St. Simons, and has been working on his budget along with his father who is going to help him out, but when he got to the tap fee of which he had budgeted $4,000 for.  He told Mr. Lucas that his actual tap fee was $76,000, and that he would not be able to do his project since he did not have this in his bank account and had no other sources. Mr. Lucas advised the commission that this person would not be using his services nor the services of the commission, and he thought it was good for the commission to hear about this.

Wayne Moxley, Enclave Capital Group – Tap Fees

Mr. Moxley advised that the Enclave Capital Group was building the Enclave Apartment Complex off of Glynco Parkway, and he wanted to reiterate what the others had just said to make a similar point.  He noted that on April 17 of this year, they wrote a check to Joint Water & Sewer for the first phase of their project.  The total project would be 400 units. The check written on April 17 was for $393,370 for tap fees for phase 1.  They are in the process of moving forward with phase 2, and the tap fee estimate the received two weeks prior was just below $700,000, and this was an additional $300,000 for the exact same unit mix in phase 2.  He reiterated what Mr. Purdie spoke to, that each phase of this project was worth about $100,000 in property taxes each year. All 4 phases done, would be a $400,000 increase each year in just property taxes. Mr. Moxley added that the residuals back to Joint Water & Sewer would for each phase $75,000 per year thereabouts, a quarter of a million dollars at the end of the day once this project is developed.  The fees have become so astronomical.  The $393,720 was a big check.  It is not that they cannot make these numbers work inside of their business model, but it’s more of an emotional principal based decision.  No one wants to feel like they are being taken advantage of.  He continued that if they do phase 2, and it’s debatable whether or not they will because of this, the water and sewer fees alone will amount to 10% of the total construction costs. Mr. Moxley added that he knows the commission has a difficult task and they have to get the money from somewhere, but he thinks it is a bad idea to lose future revenue, and that a few hundred thousand dollars now will cost millions of dollars over the long haul.  The fees have become so astronomical that developers may feel they can go someplace else.

Chairman Elliott advised that normally he does not comment on Public Comment, but he would today.  He addressed Mr. Purdie and Mr. Moxley and asked if they would be comfortable financing the tap fees over a period of time.  Mr. Purdie replied that speaking for his development he would have to do a study on that, but any conversation Chairman Elliot wanted to have, he would take a part in it.  Chairman Elliott then introduced him to Andrew Burroughs and asked them to please make an appointment and talk to him.  Chairman Elliott then added, that what they needed to understand is that the money on the backside of their development does not come to us. Mr. Moxley asked, “How can that be made to happen?” Chairman Elliott added that what he was saying was now is that is we can work out an arrangement, and the commissioners agree to it, then we would finance your tap fees over a period of time. Mr. Moxley said he understands his point, but in the process what can be changed?  Chairman Elliott offered that they are certainly welcome to review the Operating Agreement, and that they have talked to the political leaders of the county, and right now we have no solution that’s been come upon to do that. Mr. Moxley questioned if it would of their interest to talk to the commission?  Chairman Elliott advised they should talk to the Board of Commissioners, yes.  He added that they are the ones that would have to agree to that.  What this commission could agree to, if it chose to, would be to finance those tap fees over a period of time so that we have the income coming in and you are not faced in doing your project with a large upfront cost, and that’s kind of where we are on that.  Mr. Purdie then asked, “By chance, not knowing your politics here and how you work, would you think the overall commission might be able to make funds available for the commission on your debt structure as well, not just your tap fees?  I don’t know where you got the dollars to do your project start with, but can they kick in any of that?  Do they have an interest in providing any of those dollars to the Joint Commission?”  Chairman Elliott responded that he understood where Mr. Purdie was saying, but this commission can’t speak to that.  Mr. Roberts thanked Chairman Elliot for the offer and added that the ultimate appeal that they were making was, with the solution to the fix of the system being something the commission was going to own and be responsible for, there is a concern that it may not be the right strategy because there is not enough impact fees or tap fees or rates that can overcome this problem. He again asked them to think outside of the box and get help from whatever outside agency is required to fix this problem outside of tap fees.  That is our ultimate appeal.  Chairman Elliott responded that he was not going to tell them what we are doing, but I can tell you that we are trying to leave no stone unturned. Chairman Elliott then said he wanted to address Mr. Lucas’ problem and asked if the businessman who wanted to open the restaurant was going into an existing structure.  Mr. Lucas advised that the building is there and he is going to build a restaurant.  Mr. Roberts noted that there was a restaurant there before which had been torn down before Mr. Lucas did his project.  Chairman Elliott said that on a $76,000 said he needed to check or asked Andrew Burroughs to check this for him.  He noted that he wants the tap fees to be looked at and for Andrew to make sure that we have a record of the existing taps that are there.  He added that the taps belong to the property, and if there were some prior taps to it, this may offset some of the tap fees unless Mrs. Tiner had already done that, which she may have when she calculated it, and included that he is willing to ask the commissioners if they are willing to finance over a period of time such that the upfront cost is not so bad.  Mr. Lucas noted that may help this young man because he just doesn’t have the money upfront; he has tapped his resources and he just can’t afford $76,000 right now. Chairman Elliott advised that he understands the situation.  He knows that all seven of the commissioners want to help this community.

There being no additional citizens for public comment, Chairman Elliott closed the public comment period. 

SPECIAL RECOGNITION AND PRESENTATION

Colonel Thomas A. Boland, Sr. – D. Elliott / J. Junkin

Chairman Elliott presented a plaque for appreciation of his service to Colonel Thomas A. Boland, Sr. and expressed how much he has enjoyed working with him on the commission, when Colonel Boland was the Chairman, and while he was the Deputy Director. Chairman Elliott also noted that like all of the Commissioners, Colonel Boland always had the best interest of the community at heart as he made decisions, and he thanked him.  Mr. Junkin added that he appreciated all of the leadership Colonel Boland gave to him while he was he was here and all the things he did before he got here.  Colonel Boland has done a lot for the organization and gotten many things worked out and got those things working in the direction they needed to be which helped him in his transition into JWSC.  As a remembrance of what Colonel Boland has contributed to JWSC, Mr. Junkin presented him with the flag that flew over the JWSC while he was in command.  Colonel Boland thanked everyone.

EMPLOYEE RECOGNITION

Certificate Presentation – Commissioner Harvey / Cindy Barnhart, T.S.I.

Mark Whitlow was presented with his Wastewater Treatment System Operator Class III Certificate by Commissioner Harvey and Cindy Barnhart from T.S.I.  Commissioner Harvey noted the importance of his position, hard work and ability to obtain his certificate.  Also present to recognize Mark Whitlow were his supervisors Mark Ryals and Alvin Lang. 

Retirement Plaque Presentation – Commissioner Harvey / Cindy Barnhart, T.S.I.

Michael E. Stapleman was presented with a plaque honoring his retirement from JWSC by Commissioner Harvey and Cindy Barnhart from T.S.I.  Commissioner Harvey thanked Mr. Stapleman for being with the organization and for the years he has given to the organization.  Mr. Stapleman noted that he could not have done his job without the group that he worked with on the wastewater crew.  Superintendent Mark Ryals and Supervisor Alvin Lang both noted his good work, extra work in training his successor, trustworthiness in doing his job the right way, and wished him the best.

Chairman Elliott requested a motion to excuse both Commissioner Adams and Commissioner Browning from the Commission Meeting.

A motion was made by Commissioner Ford and seconded by Commissioner Harvey to excuse Commissioner Adams and Commissioner Browning from the November 16, 2017 Commission Meeting.  Motion carried 5-0-2.  (Commissioner Adams and Commissioner Browning were not present for the vote.)

COMMITTEE UPDATES

Compliance & Legislative Committee – Commissioner Browning

There was no update at this time.

Facilities Committee – Commissioner Adams

There was no update at this time.

Finance Committee – Chairman Elliott

Chairman Elliott noted that everything that was discussed at the Finance Committee was on the agenda for this meeting.

Human Resources & Safety Committee – Commissioner Harvey

There was no update at this time.

 Public Information & Customer Relations Committee – Commissioner Copeland

There was no update at this time. 

APPROVAL

  1. Minutes from the November 2, 2017 Regular Commission Meeting

Commissioner Ford made a motion seconded by Commissioner Copeland to approve the minutes from November 2, 2017 Regular Commission Meeting.  Motion carried 4-1-2. (Commissioner Harvey abstained. Commissioner Adams and Commissioner Browning were absent for the vote.)

  1. Minutes from the November 2, 2017 Executive Session

Commissioner Ford made a motion seconded by Commissioner Copeland to approve the minutes from November 2, 2017 Executive Session.  Motion carried 4-1-2. (Commissioner Harvey abstained. Commissioner Adams and Commissioner Browning were absent for the vote.)

  1. Worker’s Compensation Renewal Recommendation – J. Singletary, T.S.I.

Jeffery Singletary with Teamwork Services Incorporated presented the recommendation for the renewal of the Worker’s Compensation insurance.  He advised that as per the memo, the recommendation was to remain with Zenith who has been the carrier used for the past nine years for Worker’s Compensation insurance.  He referred to the memo and the notation of the 4 carriers that were reached out to for quotes, of which only 2 others in addition to Zenith providing bids. Mr. Singletary mentioned that there was one bid slightly lower than that of Zenith, however it was not recommended to move away from the relationship with Zenith.  He also noted that Zenith has been the best carrier to work with out of the 28 that T.S.I. has to work with.  Their adjusters do a good job, the safety representative makes multiple visits to JWSC every year, and he is also a part of the safety stand down and the safety incentive program every year as well.  Zenith also provides JWSC with defensive driver’s courses every year.  Also mentioned is that if anything were to go to litigation, Zenith uses the same legal counsel group that JWSC is currently using.  Mr. Singletary expressed that during the past 9 years of quoting for Worker’s Compensation insurance, Zenith has consistently come in at the lowest or very close to being the lowest on their quotes, and the relationship has been very good.

Commissioner Ford made a motion seconded by Commissioner Bowen that the Brunswick-Glynn County Joint Water & Sewer Commission approve to award and execute a Worker’s Compensation renewal to Zenith for 2018 at a cost of $270,873.00.  Motion carried 5-0-2.  (Commissioner Adams and Commissioner Browning were absent for the vote.)

  1. Condemnation Proceedings for Parcel 03-18602 – C. Dorminy

Charlie Dorminy presented the background to the Commissioners the Resolution of the JWSC to request the Board of Commissioners of Glynn County, Georgia to commence condemnation proceeding for a water easement consisting of approximately of .024 acres of Parcel 13-18602 along Highway 99.  This easement is along Highway 99 and is a part of the project to extend the waterline down to Sterling.  This is the last section that has not been obtained.  We have attempted to negotiate with the owner, the Bank of Eastman, related to the easement.  The appraisal, included in the package, of which the value of this portion of the parcel was determined to be at $81.00. Mr. Dorminy continued that the Bank of Eastman has continued to request issuance of sewer taps in exchange for the easement. Given the urgency to obtain this easement for the project and to keep it on schedule, Mr. Dorminy recommended to pass this Resolution and being working with the County in the event that we need to take it through Eminent Domain.  Commissioner Harvey asked if we were condemning the property to take it.  Mr. Dorminy advised yes, and just the easement.

Commissioner Harvey made a motion seconded by Commissioner Ford to approve the Resolution as drafted. Motion carried 5-0-2.  (Commissioner Adams and Commissioner Browning were absent for the vote.)

  1. Surplus Equipment – P. Crosby

Pam Crosby advised that this item comes from referral by the Finance Committee on Wednesday and this is a request to declare a piece of equipment as surplus.  She referenced the memo and attached photos of the equipment as provided, and noted that it was a 2004 John Deere Excavator.  The planetary gear is no longer working and would cost an estimated $15,000 to fix it and the piece of equipment is not worth that and there are safety concerns.  It is recommended to declare it as surplus to move it out of inventory.  Commissioner Harvey asked if it was declared as surplus, how it will be disposed of.  Pam advised that it would be placed on GovDeals for sale as the other pieces of equipment have been, and it would be advertised there with notations of all of the known issues about it and photos.

Commissioner Harvey made a motion seconded by Commissioner Browning that the Brunswick-Glynn Joint Water & Sewer Commission approve the item to be declared as surplus and disposed of in a manner most beneficial to the JWSC.  Motion carried 5-0-2.  (Commissioner Adams and Commissioner Browning were absent for the vote.) 

  1. Sixth Addendum to the Operating Agreement – C. Dorminy

Charlie Dorminy advised that this item was passed forward from the Finance Committee on Wednesday.  He noted that this was previously discussed a few months prior.  He added this is to amend the Operating Agreement to give JWSC additional flexibility in structuring the rates, and also the presentation on rates to be given later in the meeting would address some of the issues that this amendment will enable JWSC to take. Mr. Dorminy provided the background that the JWSC is restricted in the manner in which is structures its rates. As currently composed, the JWSC must use the cost components identified in the Operating Agreement and utilize certain components when setting their base rates and consumption rates. By implementing the changes that are proposed here the JWSC would achieve more flexibility in setting its rate components and in mixing the components to capture more of its operations and maintenance costs within its base rate to account for irregular consumption patterns. He continued that further the JWSC would achieve the ability to utilize a flat-fee rate for water and sewer if the same is desirable from year-to-year. Each change would effectively give the JWSC control of its rate structure through its approval of the Rate Resolution annually.  Mr. Dorminy provided that there was one change to Sections 11 (b) and 11 (c), as shown on the memo.

Commissioner Copeland made a motion seconded by Commissioner Harvey for JWSC to approve the motions as outlined here and request the City and County to do the same.  Motion carried 5-0-2.  (Commissioner Adams and Commissioner Browning were absent for the vote.)

Mr. Dorminy added that he has been in communication with both the City and the County attorneys regarding these changes and Aaron Mumford would like to get together with some of the JWSC staff to talk about some of the Ordinance changes and that he may have some comments on these changes as well.

  1. 2017 Audit Report – J. Donaghy / David Irwin, Mauldin & Jenkins

John Donaghy advised that the audit and accompanying documents were e-mailed out to the Commissioners during the previous week.  Provided for this meeting were bound copies of the audit and supplementary documents, one of them being the auditors discussion and analysis. John noted that the auditor’s discussion and analysis was discussed at the Finance Committee meeting on Wednesday, and a couple of points on the audit report itself. He then introduced Mr. David Irwin from Mauldin & Jenkins to present the results of the audit.

David Irwin advised that he was the partner who oversaw the audit of this year’s financial statements.  He continued by noting that the financial statements are the responsibility of management and members of the board.  As the external auditor, it is their job to issue an opinion on these statements.  In their opinion, JWSC’s financial statements are fairly stated in all material respects in accordance with general accounting principles.  He continued that this year’s audit went well and that John and his staff continue to do an outstanding job and were always receptive to any suggestions they have had and made everything that they were asked for available.  This resulted in a very timely and efficient audit, and Mr. Irwin noted appreciation of their time and hard work. After the audit there is a Management Discussion and Analysis (MD&A) which is the most important part of the report to read. This summarizes the basic financial statements and gives a good financial overview of the financial activities throughout the year. Mr. Irwin encouraged the Commissioners to read this section. Mr. Irwin continued to explain additional portions of the audit report and financial statements. Segregation of duties was the main point of their findings and suggested recommendation.  This is so that one person does not have too many controls, for example in the reconciliation process. Mr. Irwin did not that this is the most common finding within small entities, and offered their assistance in reconciling that issue.

Commissioner Ford made a motion seconded by Commissioner Bowen to move that the JWSC accept the audited financial report for the June 30, 2017 fiscal year and authorize its release to the public and reporting agencies.  Motion carried 5-0-2.  (Commissioner Adams and Commissioner Browning were absent for the vote.) 

DISCUSSION

  1. Wastewater Treatment Plant Flows Update – M. Ryals

Mark Ryals presented an update on the plant flows at each of the wastewater treatment plants, to include Academy Creek, Dunbar and Southport. He noted this will be a monthly updated report to the Commission. He mentioned most importantly they were concerned about the inflow, the plant initial flow, effluent flow and the parameters involved in process control. Mr. Ryals advised that all 3 of the plants are working within permit limits. This can be a challenge at times, but the crews get the job done. He offered to discuss any specifics within the reports. He did add that there is an average of about 45 inches of rainfall each year and at the time we were at about three quarters of that, about 36 inches.  Basically that is the inflow at Academy Creek, which is the most affected plant out of the three. Dunbar and Southport are affected somewhat differently. Commissioner Harvey asked if it was fair to say that rainfall affects the operations at Academy Creek.  Mr. Ryals noted that yes, it does, and he has been tasked to study that, but has not come to a conclusion as to how much rain is equivalent to the amount on the inflow, but he has spoken with several project control persons and they say that it affects about one million gallons per one inch of rain. Commissioner Harvey asked him if there is some process that can alleviate this rainfall issue, or is it that the process that we employ?  Mr. Ryals noted out of the whole division of collection systems inflow and infiltration is the biggest concern right now, and they are diligently working on that. Commissioner Harvey also questioned if every process at a treatment plant will be affected by the rainfall.  Mark Ryals responded yes, because it would enter the plant through the inflow and at that time we can’t separate what is rain and what is wastewater, so we have to treat it all. He continued to note that they have been performing pretty well and have their challenges at each plant.  They are trying to lower the B.O.D. numbers, especially at Dunbar when looking at the numbers from the last 2 months of September and October with a B.O.D. of 5 which is the limit. They are studying to see what the cause is of the B.O.D. at that plant remaining at that number. Dunbar has reached its capacity and this is being worked on as well as they move forward on getting an increase on flow. Mr. Ryals noted that this will not totally solve the problem there. Commissioner Harvey noted to Mr. Junkin that he knew they were working on upgrading Academy Creek and asked if they were doing anything for Dunbar. Mr. Junkin advised that Dunbar upgrades were included on the Bond that they are looking into and that a similar assessment has been done at Dunbar as at Academy Creek. He included that it looks that the estimate has been done to fix the things that are there, make some small technology changes, and get it into really good shape again.  The estimate is at about $5.5M to fix it and pick up an extra million gallons per day and then it will be just a matter of permitting.

  1. Director of Operations Position (Budgeted 4th Quarter) – J. Junkin

Mr. Junkin noted that this position has been discussed and in looking at it, there is a variety of safety issues and concerns, including functions that require some oversight without consolidating everything yet.  He added that we can do a lot of those things that will benefit us as an organization and improve our efficiencies just by focusing particularly on our asset management program. We are going to hold off on doing anything with the position because we think we may be able to get by with a different structure on this job, but we want to go ahead and get the duties and tasks outlined and do a business case to support if this is a good remedy or a good financial opportunity to get those resources in to do those things.  Mr. Junkin added that certainly you can’t measure the payback on the safety part of it, but there is a financial payback on the asset management opportunities. So we are going to continue to evaluate that and probably look to do some more about it once we get some of the details worked out and try to talk about it before the 2019 budget.  Maybe then we will be closer to having enough facts to pull it together.  Commissioner Harvey added that basically what Mr. Junkin is saying is that we are going to take this off of our budget for this year for the fourth quarter, and we are going to take a look at it again in 2019 or the next budget year.  By then we should have a clear picture of how we want to go to restructure, and it could be on the safety issue, but we are going to take this off right now and look at it for the next budget year.  Commissioner Ford asked if it was necessary to take a vote on it if it is being removed from the budget.  Charlie Dorminy advised that what was discussed on the prior day was not to take it off the budget, but to not fill the position and keep the budget the same.  That way it wouldn’t require a vote. 

  1. Rate Model Development – J. Donaghy / Tony Hairston, Raftelis Financial Consultants, Inc.

John Donaghy presented to the Commissioners that in previous meetings alternative rate models going into next year which were also mentioned during discussion on changes to the Operational Agreement.  He introduced Tony Hairston from Raftelis Consultants, Inc. and his presentation on the Rate Model Development, the structure as it is now and possible changes for next year. Mr. Hairston advised that this was the same presentation as had been given the prior day to the Finance Committee.  He added that there are actually two major items they are working on.  The first has been delivered preliminarily which is a Financial Forecasting Model that looks at things such as revenue sufficiency over time and how you are going to fund prospective debt issues for plant improvement.  The other component is today’s subject, the Rate Structure, the base and usage charges and how the rate payers fund the cost of operations, the cost of renewal and replacement, and the cost of debt. Mr. Hairston then briefly touched upon what is currently in the Operational Agreement, the proposed changes to that, and then the rate structure options. He then discussed the various fixed and variable charges of the rates.  He then discussed some of the options that can be considered in reviewing the rates and the various charges.  There was some additional discussion among the Commissioners regarding the rates and fees and options for the future.  Mr. Hairston and Raftelis Financial Consultants will continue working with JWSC on these models and possible future options for the Rate Structure.

  1. Bond Issue Calendar – J. Donaghy / Courtney Rogers, Davenport & Company

John Donaghy advised that the original Bond Issue Calendar was based on anticipation of borrowing new money and the possible refinancing of the existing debt sometime in the Spring of 2018. However, with some of the language that is contained in the pending tax legislation in Washington, there are some reasons that it may be beneficial for JWSC to look at refunding the existing debt now before the end of the year to obtain potential savings that are in that debt to do that.  He then introduced Courtney Rogers and Doug Gebhardt from Davenport & Company to discuss those changes and the potential impact of the refinancing of the remaining 2010C debt. Mr. Rogers advised that while he was waiting for the discussion he was made aware that the house had passed the Tax Reform Bill, so it will now go to the Senate.  The Bill that John had just been discussing has been approved. This Bill would stop local governments from refinancing debt in advance of the call date, as long as it was previous to 90 days before the call date with tax exempt bonds.  This Bill was introduced two weeks prior.  The passing of this Bill means that JWSC would not be able to refinance the 2010C bonds after December 31, 2017.  Mr. Rogers and Mr. Gebhardt presented to the Commission the savings that could be incurred if the Commission were to choose to refund the debt before that date. If this was not done, it would be March of 2020 before these bonds could be refinanced since the call date on them is June 2020.  Due to the short time period for this decision and action, an RFP for the Bond Sale out. The goal is to save on the interest rates, and to free up the reserve fund which could then be put back toward capital. Mr. Rogers then discussed the process, reasons, and options along with possible savings. The revised Bond Issue calendar was presented and reviewed.  The Commissioners agreed to hold a Special Called Meeting for Davenport to present the RFP results and make a recommendation, and for the Commission to vote on the option of refinancing the bonds.  The Bond Counsel will be at the Special Called Meeting with the documents in the case that the Commission were to vote on and approve the refinancing on November 29, 2017 at 4:00 pm.

  1. Revision of Financial Policies – J. Donaghy

John Donaghy presented the Revision of the Financial Policies as a discussion item to the Commission.  The revision was in draft form only, and did not include the budget review process nor the segregation of duties which had been addressed by the auditors.  These items are to be addressed and added.  The revision of the financial Policies is expected to come back before the full Commission in the late December Commission meeting.

  1. October Month End Financial Statements – J. Donaghy

John Donaghy presented the October month end financial statements to the Commission. He reviewed the balance sheet, noting the bond sinking fund and fixed assets.  John then reviewed and explained the supplemental schedule of cash balances for October 31. The condensed revenue statement was then reviewed and discussed. The variances that were reviewed and noted in the Finance Committee meeting on the prior day will be reviewed by the superintendents each month.  John then noted the overtime report and that the hurricane expenses were factored out.  Commissioner Harvey questioned salary staff being paid overtime during the hurricane.  John noted that during a state of emergency and after it has been declared.  Commissioner Harvey questioned staff being on standby and being paid while on standby. The project report was the final item for this discussion.

  1. R & R Capital Projects Update – T. Kline

Todd Kline presented the R & R Capital Projects update to the Commission.  He discussed the various capital projects with construction in progress and being completed. Details of each project were provided and discussed. Mr. Kline then discussed and reviewed the capital projects with engineering and design in progress and noted the details of those projects and status of each.

EXECUTIVE DIRECTOR’S UPDATE

Mr. Junkin advised that Straight Talk had been hosted form JWSC on the prior Wednesday morning and that it was a good experience.  He noted that there was a Water System Management and Finance webcast on November 29 at 3:00 pm and that the commissioners may like to be present for that.  There is work being done on the RFP for SCADA systems.  They are looking at upgrading form the old DFS system that is currently in place for something more cost effective.  Regarding the customers that came in to discuss tap fees, Mr. Junkin agrees that we need to be looking at other options.  He has had some communications with Bill Brunson. 

CHAIRMAN’S UPDATE

There was no update at this time.

EXECUTIVE SESSION

There was no Executive Session.

There being no additional business to bring before the Commission, Chairman Elliott adjourned the open meeting at 4:45 p.m.