02-10-16 Regular Meeting of the La Porte Area Water Authority

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LA PORTE AREA WATER AUTHORITY MINUTES September 10, 2015 The meeting was called to order at 6:00 PM by President Kenneth Schlather. Members Present: Kenneth Schlather, President; Doug Martin, Vice President; Charlie Perry, Secretary; Randy Woodard Members Absent: Excused absence: Dennis Steger Others Present: Corby Alexander, General Manager; David Mick, La Porte Public Works Director 2. The August 06, 2015 minutes were reviewed and unanimously approved with Doug Martin making the motion to approve and Randy Woodard seconding. 3. David Mick provided the background to the February 28, 2015 invoice submitted by the City of Houston for the Southeast Water Purification Plant (SEWPP) improvement and expansion project bid in 2007 and constructed primarily from 2008 through 2010 with some minor construction and warranty work continuing to 2012. The expansion project true -up invoice is in the amount $293,763.82. The LPAWA share estimated in 2007 was $891,540 less a $304,980 credit for oversized items previously funded by LPAWA recouped from those entities that are participating in the 80 mgd expansion. The project, designed to increase the capacity of the SEWPP from 120 mgd to the current capacity of 200 mgd, was bid at approximately $168-million with a final cost of $171-million. Total change orders amounted to less than 2% of the contract amount. The co -owning entities that participated in the plant expansion portion of the project contributed additional funds at the start of the project equal to a 5% contingency. Those entities are receiving money back. The co -owning entities such as the La Porte Area Water Authority that did not participate in the plant expansion but did participate in the cost of enhancements to the previously existing 120 mgd portion of the plant owed additional funds. Staff received additional information from the City of Houston on several occasions, with the final submittal received September 4, 2015, as needed for staff to be comfortable recommending payment. Motion to approve staffs request to pay the $293,763.82 true -up invoice was made by Randy Woodard with Charlie Perry seconding. Motion was approved unanimously. 4. David Mick presented the background information to the FY 16 Southeast Water Purification Plant (SEWPP) budget dispute. Continuing discussions initiated in the prior meeting. As the Managing Owner, the City of Houston prepares the annual budget for the SEWPP. The contract between the co -owners provides a process for disputing portions of the annual budget provided that: 1) more than 50% of the plant co -owners, with the vote weighted by the percentage of water consumed over a 12-month period, are in agreement with the dispute, and 2) the disputed line items are not necessary for the regulatory compliance, health, safety or security. The board reviewed a summary of budget line items likely to be contested by a majority of the co -owners. The disputed amount may be as high as $0.1102/1000 gallons pending further information from the City of Houston. Staff is recommending joining with other co -owners in disputing the FY 16 budget line items totaling $0.1102/1000 gallons. Staff also recommends increasing the LPAWA FY 16 budget line item for Other Professional Services by $15,000 for a total budget of $25,000 for consulting and legal fees that may be associated with the dispute. Staff's best estimate of the worst -case cost exposure to the LPAWA in terms of legal and consulting fees is $75,000 should the dispute goes through a full trial. Motion to dispute the FY 16 SEWPP budget and to increase the Other Professional Services budget by $15,000 was made by Randy Woodard and seconded by Doug Martin. The motion was unanimously approved. 5. Corby Alexander indicated that he had no additional comments. 6. There were no additional comments concerning the authority from the board. 7. There being no further business, the meeting adjourned at 6:12 PM.