Board Meeting Date: March 25, 2013 ~ 9:00 A.M.
PERSONS PRESENT: Nancy Martin, Buzz Ahrens, Steven Woodruff, Eric Wilmarth, Mike Byrd, Robert Morrison, Tom Heard, David Kubala, Bill Graham, Rick Dobbs, Tom Roach, Wesley Banks, Dan Carson, Beth Williams, Clint Blackwell, Jeff Hooper, Dwayne Fowler, Dwight Turner, Randy Mitchell, Ryan Sarks, Jennifer Arp, Ron Banks, Craig Ferguson, and Bryce Holcomb.
Nancy Martin, Chair, called the meeting to order.
1. AN INVOCATION WAS GIVEN BY STEVEN WOODRUFF, FOLLOWED BY THE PLEDGE OF ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA.
2. DWIGHT TURNER REPORTED THAT, AT THE 8/27/12 BOARD MEETING, THE CCWSA BOARD HAD AUTHORIZED COUNSEL TO PROVIDE NOTIFICATION TO AUTHORITY CUSTOMER JON FLAIG AT 1086 LONGWOOD DRIVE OF A CROSS CONNECTION, AS WELL AS NOTIFICATION OF THE TOTAL AMOUNT DUE TO THE AUTHORITY AS A RESULT OF THIS CROSS CONNECTION. Counsel had advised the Authority that it may file a lawsuit against the customer and seek damages for use of the Authority’s collection and sewerage treatment without payment, seek payment, and seek a mandatory injunction prohibiting the customer from continuing to use well water within the home. The Board had also approved that the Authority could also physically disconnect the home from the Authority’s sewage collection system, and the Authority could contact the Cherokee County Sheriff’s Office for an investigation of possible theft of government services. Authority counsel was authorized to take any or all of the actions outlined above, and counsel would make a one-time attempt to resolve this matter which would include the payment of a fine to be determined, the payment of the estimated unpaid sewage charges and the disconnection of the use of well water within the home.
Tom Roach noted that the Authority is now in receipt of a check from Mr. Flaig in the amount of $1557.60 for payment of unpaid sewage charges. Mr. Roach noted that he had previously notified Mr. Flaig that $1557.60 was the amount due to the Authority for these unpaid sewage charges.
MOTION BY MIKE BYRD AND SECOND BY STEVEN WOODRUFF TO ACCEPT THE PAYMENT BY MR. FLAIG IN THE AMOUNT OF $1557.60 FOR SERVICES RECEIVED, AND TO ASSESS A PENALTY IN THE AMOUNT OF $250.00. NOTICE WILL BE PROVIDED TO THE CUSTOMER THAT THE AUTHORITY IS MONITORING THIS ACCOUNT AND WELL CONNECTION CONSISTENTLY IN THE FUTURE. All members present voted for the motion.
3. DWIGHT TURNER PRESENTED LEAK ADJUSTMENT INFORMATION FOR THE PERIOD ENDING FEBRUARY 2013.
4. BRYCE HOLCOMB OF CITI PRESENTED A REFUNDING UPDATE CONCERNING THE AUTHORITY’S SERIES 2003 BONDS. Mr. Holcomb noted that a few select maturities of the Series 2003 Bonds (8/1/2014 – 8/1/2021) were advance refunded when the Authority issued its Series 2011 Bonds in June of 2011. The maturities that remain (8/1/2022 – 8/1/2033) are the focus of this refunding. The Series 2003 Bonds are callable on August 1, 2013 at par. Mr. Holcomb noted that Citi plans to price the proposed Series 2013 Bonds on April 24, 2013 so that Citi may meet with the CCWSA Board at its 4/25/13 work session to present the final results of the refunding, adopt the Series 2013 Bond Resolution, and sign the Bond Purchase Agreement. Mr. Holcomb noted that the bond closing is scheduled for 5/23/13, so the plan is to current refund the outstanding Series 2003 Bonds.
Mr. Holcomb noted that as the Authority is aware, the commonly used minimum savings benchmark for a refunding in the tax-exempt market is when present value savings equal or exceed 3-5% of the refunded bonds. Currently, this refunding opportunity far exceeds 3-5%.
Mr. Holcomb noted that based on market rates as of March 1, 2013 and assuming a dated and delivery date of May 23, 2013, a refunding of the remaining Series 2003 maturities (8/1/2022 – 8/1/2033) produces a present value savings totaling $2.05 million, or 10.82% of refunded par. Contributors to these savings are:
1) Near all-time low tax-exempt fixed rates
2) The Series 2003 Bonds are being refunded near their call date so negative arbitrage is mitigated
3) The majority of the maturities being refunded are on the intermediate part of the yield curve, thereby allowing the Authority to benefit from the steepness of the yield curve
4) The Authority’s strong underlying ratings of Aa2/AA.
Mr. Holcomb set forth the following comparison of the current savings level with where savings were in late October of 2012. Interest rates have increased approximately 0.20% since late October.
CCWSA Refunding of Water and Sewerage Revenue Bonds, Series 2003
Advance Refunding Current Refunding
(as of 10/26/12) (as of 3/21/13)
Delivery Date 1/3/2013 5/23/13
Refunding Par $16,330,000 $16,230,000
All-In True Interest Cost (%) 3.21% 3.44%
Total Refunded Par Amount $18,970,000 (2022-2033) $18,970,000 (2022-2033)
Total Savings $3,207,000 $2,984,532
PV Savings as % of Refunded Bonds $2,371,000 $2,053,599
PV Savings as % of Refunded Bonds 12.50% 10.82%
Mr. Holcomb also noted that for solid “AA” rated credits, like the Authority, Citi is finding that the rating agencies and bond investors no longer require a Debt Service Reserve Fund (DSRF). In fact, common parity DSRFs, like what is required under the Authority’s Master Bond Resolution, can be cumbersome and may work against highly rated water and sewer issuers at times. As an alternative, Citi proposes the inclusion of a springing covenant with the Series 2013 Bonds that will no longer require a common parity DSRF. The springing covenant will permit the Authority to fund a DSRF by bond series only as needed on market conditions at the time of issuance.
Mr. Holcomb stated that this springing covenant would take effect once the Authority’s outstanding bonds (issued prior to the Series 2013 Bonds) have been paid off or refunded. By including the springing covenant in the Series 2013 Bonds, it has the effect of setting the placeholder for this future revision.
Mr. Holcomb noted that for the Series 2013 Bonds, there will not be an additional deposit to the Authority’s existing common DSRF. Because of the debt service savings from the 2003 refunding, there will actually be a slight reduction. In addition, the Authority should be able to pull out the $1,901,352 of cash reserves it deposited into the DSRF in January of 2010 when FGIC was in receivership and the NY Insurance Commissioner suspended FGIC’s claims paying ability. National Public Finance Guarantee Corp (the old MBIA insurer) provides reinsurance on many of FGIC’s old surety policies, and National has assumed control of these policies under a Novation Agreement. This Novation Agreement becomes effective when the final plan of rehabilitation of FGIC is approved, which is currently scheduled for April 30. At that point, National is required to issue an endorsement to the Policy that will be posted on the FGIC rehabilitation website and mailed to the Custodian. Assuming all this occurs as scheduled, the Authority should be able to pull out its $1,910,352 of cash reserves as a DSRF deposit later this year.
Mr. Holcomb also requested that the Board consider the minimum amount of present value savings needed in order to move forward with this issue.
MOTION BY ROBERT MORRISON AND SECOND BY BUZZ AHRENS TO AUTHORIZE THE AUTHORITY’S BOND ATTORNEY TO INCLUDE THE SPRINGING COVENANT IN THE SERIES 2013 BOND RESOLUTION THAT WILL BE PRESENTED AT THE 4/25/13 MEETING, AND TO SET A MINIMUM OF 10% PRESENT VALUE SAVINGS IN ORDER TO MOVE FORWARD. All members present voted for the motion.
5. DAN CARSON REQUESTED AUTHORIZATION FOR STAFF TO PREPARE AND SEND OUT A REQUEST FOR PROPOSALS FOR THE RAW WATER INTAKE #3 PROJECT.
MOTION BY ERIC WILMARTH AND SECOND BY STEVEN WOODRUFF TO AUTHORIZE STAFF TO PREPARE AND SEND OUT A REQUEST FOR PROPOSALS FOR THE RAW WATER INTAKE #3 PROJECT. All members present voted for the motion.
6. DAN CARSON REQUESTED AUTHORIZATION TO ADVERTISE FOR BIDS FOR THE 140 WEST MAIN OFFICE BUILDING PROJECT.
MOTION BY STEVEN WOODRUFF AND SECOND BY MIKE BYRD TO AUTHORIZE STAFF TO ADVERTISE FOR BIDS FOR THE 140 WEST MAIN OFFICE BUILDING PROJECT. All members present voted for the motion.
7. DAVID KUBALA REQUESTED APPROVAL OF THE PHASE 2 CONTRACT WITH JOE TANNER & ASSOCIATES FOR CONSULTATION AND SUPPORT SERVICES IN THE AMOUNT OF $25,000.00 FOR THE NORTHEAST WWTP NPDES PERMIT PROJECT.
MOTION BY STEVEN WOODRUFF AND SECOND BY MIKE BYRD TO APPROVE THE PHASE 2 CONTRACT (ATTACHED) WITH JOE TANNER & ASSOCIATES FOR CONSULTATION AND SUPPORT SERVICES IN THE AMOUNT OF $25,000.00 FOR THE NORTHEAST WWTP NPDES PERMIT PROJECT. All members present voted for the motion.
8. MOTION BY ERIC WILMARTH AND SECOND BY BUZZ AHRENS TO APPROVE THE LAKE ALLATOONA-UPPER ETOWAH RIVER COMPREHENSIVE WATERSHED PROTECTION PLAN AS PRESENTED AND TO AUTHORIZE THE CHAIR TO EXECUTE THE DOCUMENT. All members present voted for the motion.
9. RYAN SARKS REQUESTED APPROVAL OF THE FY 2013 SURPLUS LISTING (ATTACHED). Mr. Sarks noted that the items included on the listing would be sold at auction on 5/11/13.
MOTION BY BUZZ AHRENS AND SECOND BY STEVEN WOODRUFF TO APPROVE THE FY 2013 SURPLUS LISTING AS PRESENTED. All members present voted for the motion.
10. MOTION BY ERIC WILMARTH AND SECOND BY ROBERT MORRISON TO APPROVE THE 2/25/13 BOARD MEETING MINUTES AS PRESENTED. All members present voted for the motion.
11. BETH WILLIAMS PRESENTED THE FINANCE REPORT. Mrs. Williams reported that total operating revenues are approximately $741,832.00 below budget projections for the period ending 1/31/13. Mrs. Williams noted that total operating expenses are approximately $539,446.00 below budget projections for the same period.
12. CLINT BLACKWELL PRESENTED THE WATER TREATMENT OPERATIONS REPORT. Mr. Blackwell reported an average daily treatment of 12.654 MGD for the month of March 2013 at the Etowah River Water Treatment Facility. Mr. Blackwell also reported that the Hollis Q. Lathem Reservoir is currently full at 1189 feet. Mr. Blackwell reported a cumulative rainfall total of 49.45” for the past 12 months.
13. JEFF HOOPER PRESENTED THE WASTEWATER TREATMENT OPERATIONS REPORT IN THE ABSENCE OF MIKE VENTERS. Mr. Hooper reported an average daily treatment of 3.0 MGD at the Rose Creek Wastewater Treatment Facility, as well as a total reuse monthly flow of 0.0 MG. Mr. Hooper reported an average daily treatment of 3.7 MGD at the Fitzgerald Creek Wastewater Treatment Facility.
14. JEFF HOOPER REPORTED THAT A WASTEWATER SPILL OCCURRED TWO WEEKS AGO AT 1957 AUTHORITY DRIVE IN WOODSTOCK. Mr. Hooper reported that amount spilled was approximately 13,888 gallons. The cause of the spill was due to an operator who failed to correctly close the influent valve to the basin as directed by a supervisor. Mr. Hooper noted that the operator has now been trained to correctly close and operate the valve.
15. BILL GRAHAM PRESENTED THE CONSTRUCTION REPORT. MR. GRAHAM REPORTED THAT THE AUTHORITY IS IN RECEIPT OF A REQUEST BY THE CHEROKEE COUNTY FIRE DEPARTMENT FOR A FIRE HYDRANT AT/NEAR THE INTERSECTION OF MOUNTAIN ROAD AND MOUNTAIN LANE IN THE SOUTHEAST PORTION OF CHEROKEE COUNTY. The Fire Department feels that there is a need for the hydrant to adequately assist with fire suppression/protection in that area.
MOTION BY BUZZ AHRENS AND SECOND BY STEVEN WOODRUFF TO APPROVE THIS REQUEST. All members present voted for the motion.
16. TOM HEARD PRESENTED THE GENERAL MANAGER’S REPORT. MR. HEARD NOTED THAT AUTHORITY COUNSEL WILL BE PROVIDING NOTIFICATION TO THE CLERK OF COURT REGARDING UPCOMING BOARD APPOINTMENTS FOR THE MUNICIPAL, POST 1, AND POST 2 APPOINTMENTS.
17. MOTION BY BUZZ AHRENS AND SECOND BY ERIC WILMARTH TO ENTER INTO EXECUTIVE SESSION FOR THE PURPOSE OF DISCUSSION REGARDING THE POTENTIAL ACQUISITION OF REAL ESTATE. All members present voted for the motion.
MOTION BY STEVEN WOODRUFF AND SECOND BY MIKE BYRD TO EXIT EXECUTIVE SESSION AND RETURN TO REGULAR SESSION. All members present voted for the motion.
18. MOTION BY ERIC WILMARTH AND SECOND BY MIKE BYRD TO ADJOURN. All members present voted for the motion.