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Home My WebLink About2015-06-05 Special Meeting MinutesTrophy Club Municipal Utility District No. 1 SPECIAL MEETING TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 BOARD OF DIRECTORS JUNE 5, 2015 at 10:00 A.M. 100 Municipal Drive, Trophy Club, Texas 76262 June 5, 2015 Special Meeting Minutes The Trophy Club Municipal Utility District No. 1 Board of Directors, of Denton and Tarrant Counties, met in a Special Session on June 5, 2015 at 10:00 A.M., in the Boardroom of the Administration Building, 100 Municipal Drive, Trophy Club, Texas 76262. The meeting was held within the boundaries of the District, and was open to the public. STATE OFTEXAS § COUNTY OF DENTON AND TARRANT § DISTRICT BOARD MEMBERS PRESENT Jim Moss Jim Hase Kevin Carr Jim Thomas Neil Twomey STAFF PRESENT: Jennifer McKnight Laurie Slaght Renae Gonzales Terri Sisk President Vice President Secretary/Treasurer Director Director General Manager District Secretary Finance Manager Administration Manager CALL TO ORDER AND ANNOUNCE A QUORUM President Moss announced the date of June 5, 2015, and called the meeting to order and announced a quorum present at 10:00 a.m. REGULAR MEETING 1. Consider and take appropriate action regarding proposed water and sewer rates including: a. Summary and review of rate model developed by J. Stowe Group (aka NewGen Strategies). b. Water rate assumptions and proposed rates. c. Sewer rate assumptions and proposed rates. d. Set dates for public hearing, rate adoption, and effective date of rates. Director Thomas read a statement into the minutes which is attached to the minutes. General Manager McKnight told the Board that she recommends holding a public hearing in July and have new rates take effect on the September 2015 utility bill. McKnight gave the board a presentation of the models reviewed by the committee and the associated rates. Director Hase stated that the committee has tried to treat all customers the same and fairly. He is not in favor of the 18,000 gallon cap. He stated that he believes the no cap scenario treats everyone the same. He feels that winter averaging is not a fair rate practice because it only benefits the higher user and is a detriment to lower users. Director Twomey commended the committee and General Manager for the presentation and for using real users for the comparisons in the presentations and models. 1 of4 June 5, 2015 Special Trophy Club Municipal Utility District No. 1 Meeting Minutes Director Thomas asked that his statement be included into the minutes of the Special Meeting held on June 5, 2015. MUDl Rate Committee Report to the Full MUDl Board Forward: In 2014, TCMUD1 adopted a new set of water and sewer rates based on a ten month study and eventual recommendations from J. Stowe & Co, one of the leading consultants in the State of Texas in helping Municipalities and MUD Districts analyze and set proper water and sewer rates. Their recommendations were based on methodologies established by the American Water Works Association (AWWA) and rates that are adopted by the State's regulatory agency (TCEQ). The methodology selected by TCMUD1 used "cost of service" to determine rates, based on "customer classes". In Trophy Club we have three customer classes: residential, commercial and out of district. The Stowe study provided a five-year framework, and a very in-depth, intense, model for future use as the District so desired. Entering the second year of that proposal, the MUD1 Board set up a "Rate Study Committee" to reevaluate the original information, and ensure the best possible information was developed for the full board as it determines what rate structure needs to be adopted for the second year. Today's report has been developed by that committee and is being submitted for the full review and subsequent approval by the full MUD1 Board as it determines which set of new rates best accomplishs all objectives. Factors Used by the Committee: First and foremost, the revenues generated must be sufficient to pay for all water and sewer expenses; and should be established so that the District can start to build up a buffer of reserves in these areas. The overall process must treat each customer class fairly. The Stowe "model" was used by the committee as it already has the proper breakdowns of fixed versus variable cost percentages for every line item in the water and sewer budget. Costs are higher for this next year, for multiple reasons, and the new rates must be set to cover these increased costs. Objectives Set by the Committee: We decided that the two major objectives from the rate setting of 2014 were still paramount: 1) to minimize the overall cost effect on low volume users as we felt a large percentage ofthese are retired home owners in Trophy Club and many may be living on a fixed budget, and 2) to use sewer rates to "compliment" our efforts towards overall water conservation. The recovery of $929,000 in reserves this next year was established as a major objective, and rates need to be set accordingly. Based on recent history, $300,000 was allocated for capital water projects and another $300,000 for capital sewer projects. In the water rate, the base rate should cover all"fixed" water costs. Multiple approaches were investigated with the final objective of seeing exactly how each approach affects the two major objectives carried over from last year. Approaches Being Brought Forward for Full Board Review and Approval: Using the Stowe model, and the "objectives" stated above, the committee is recommending one specific approach to water rates. That approach will be shown within the General Manager's presentation. Concerning sewer rates, the committee decided to broaden its evaluations as much as possible, and selected four different approaches for the presentation to the full Board. 1) Continue with the Stowe numbers, keeping the sewer cap at 18,000 gallons; 2) Winter Averaging; 3) No cap on sewer costs-every account pay for sewer costs based on each accounts total use of water; and 4) Divide the total sewer cost by the total number of meters, charging each meter the same amount each month for sewer costs. Staff was asked to prepare six views of all four approaches; comparing each view to our current rate cost, and presenting them such they can be compared against each other, for the full Board's review and eventual decision. In each approach, the overall"cost'' for water and sewer are recovered by the rates established for that approach, and reflected in the six views for that approach. The views for residential include usage at 5000, 10000, 15000, 20000, 25000 and 30000 gallons. Please note that we have a 3 of4 Trophy Club Municipal Utility District No. 1 June 5, 2015 Special Meeting Minutes number of residential accounts that use in excess of 30000 gallons monthly, but the committee felt that these six views would provide sufficient information as they cover the majority of our residential customer base. Just be aware that the larger volumes in excess of 30000 gallons will generate additional cost to those customers, in several of the four approaches. The views for commercial usage include: 25000, 50000, 75000,100000, 125000 and 150000 gallons. The final data prepared by the committee will now be presented by our General Manager, Ms. Jennifer McKnight. 4 of4 Trophy Club Municipal Utility District No . 1 June 5, 2015 Special Meeting Minutes Director Thomas stated that 45% of our customers use less than 10,000 gallons. Director Thomas praised Renae and Terri for their work on the committee. General Manager McKnight stated that wastewater rates are driven by quality and flow and here in Trophy Club, there are no differences in quality between commercial and residential so our rates are solely based on flow. She stated that her recommendation would be to use the "Status Quo" rates presented as it prevents rate shock and keeps the rates fair across the board. Director Thomas stated that he too prefers the status quo scenario. Di rector Carr concurs and feels that status quo is the most fair to res i dents. Motion made by Director Twomey and seconded by Director Carr to adopt table one for the water rates. Motion carried unanimously Motion made by Director Carr and seconded by Director Twomey to adopt the status quo wastewater rate scenario. For: Thomas, Moss, Carr & Twomey Against: Hase Motion carried Motion made by Director Twomey and seconded by Director Thomas to set the effective date of the new rates for September 1, 2015 and to set the Public Hearing for the July regular meeting. Motion carried unanimously ADJOURN President Moss adjourned the Meeting at 11 :22 a.m . 2 of4