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LAKEHAVEN UTILITY DISTRICT
King County, Washington
REGULAR BUSINESS MEETING
July 14, 2005
A regular meeting of the Board of Commissioners of the Lakehaven
Utility District, King County, Washington, was held on July 14, 2005 at
the Lakehaven Center, 31531 First Avenue South, Federal Way, Washington,
98003.
President Stewart opened the meeting at 6:00 p.m. and asked
Commissioner Tweddle to lead the flag salute. Members/officials present
were as follows:
Ed Stewart - President of the Board
Beverly Tweddle - Vice President of the Board
Don Miller - Secretary of the Board
Tom Jovanovich - Commissioner
Dick Mayer - Commissioner
Bert Ross - Engineering Manager
Morgan Dennis - Director of Finance/Information Systems
Steve Pritchett - General Counsel
It was noted that Mr. Perry was not in attendance as he was out of
town.
APPROVAL OF AGENDA
Upon motion of Commissioner Tweddle, which was duly seconded by
Commissioner Jovanovich, the Board unanimously approved the evening’s
agenda as submitted.
CITIZENS COMMENTS
There was no one in the audience at this time who wished to address
the Board.
CONSENT ITEMS
- Payroll, Payroll Taxes and Voucher Approval
- Street Light System Proposal – 21st Avenue SW, South of SW 307th
Street – Set Public Hearing – Resolution No. 2005-1048
Upon motion of Commissioner Mayer, which was duly seconded by
Commissioner Tweddle, the Board unanimously approved the Consent
Items as presented.
ACTION ITEMS
#40, 26th Avenue South and South 300th Street Sewer Rehabilitation
– Reject Bid: Mr. Ross stated staff had received only one bid for
this project that had been deemed excessive and was recommending the
Board consider rejecting this bid and rebid it during a better bidding
climate.
Upon motion of Commissioner Mayer, which was duly seconded by
Commissioner Tweddle, the Board unanimously approved rejecting
for good cause, the construction bid from Insituform Technologies Inc.
for the 26th Avenue South and South 300th Street Sewer Rehabilitation
project in the total amount of $114,417.35, including tax.
As a gentleman had arrived who wished to address the Board,
Commissioner Stewart called for Citizens Comments once again.
CITIZENS COMMENTS
Paul Burton, a District ratepayer, was in the audience to update the
Board on the Marine Hills Sewer project he is proposing. He noted he
intended to come to the next Board meeting with a Developer Extension
Agreement that would include the terms that had been discussed several
months ago. He then distributed a color coded map of the area to the
Board that depicted each property owner who had been polled and
responded. He noted that some property owners were interested in paying
their stub fee up front and making payments for the remaining balance.
During the discussion, it was noted that property owners within the
former Water District 56 area were charged a rate surcharge for water
facility upgrades and the surcharge was tacked onto the bimonthly water
bill. Mr. Burton stated that he felt some of the property owners in the
area didn’t fully understand the scope of the project and suggested that
the District send out information letters to those who were not
interested in the project to clarify the proposed project. Subsequent to
the discussion, it was the consensus of the Board that an informational
letter be sent. The Board thanked Mr. Burton for the hard work he has
done so far.
INFORMATION ITEMS
#1, 2005 - 2006 Insurance Renewal: Gina Van Antwerp, from
Brown & Brown Insurance, was in the audience to present the District’s
proposed insurance renewal for 2006. She began by stating that Lakehaven
was very appreciated by the insurance carriers, as they felt Lakehaven
staff does a very good job of managing risk. These things make a
difference, which proves to be an advantage in the pricing of insurance.
She then stated that coverage continues to increase while premiums have
tended to decrease. She then began the presentation with property
coverage. She reviewed the options that were provided that increased
coverage for earth movement, which included earthquake and flood, as
well as the “extra expense” sub-limit. A discussion then followed
concerning these options. Commissioner Mayer inquired about the footnote
on the last page of the proposal regarding extra compensation. Ms. Van
Antwerp stated this language is written for all clients of Brown &
Brown.
The discussion then moved to a review of the general liability
package and the areas where coverages have increased. Ms. Van Antwerp
stated the increases for the District were not to the degree of the rest
of the program, due, in no small part, to the way the organization is
managed and the loss control practices that are in place. The remainder
of the proposal was then discussed, which was followed by a discussion
of the Board members. Subsequent to the discussion, it was the consensus
of the Board to consider this item at this meeting.
Upon motion of Commissioner Miller, which was duly seconded by
Commissioner Mayer, the Board unanimously approved amending the
agenda to add Action Item #41, 2005 - 2006 Insurance Renewal -
Approval.
Action Item #41, 2005 - 2006 Insurance Renewal – Approval:
Upon motion of Commissioner Miller, which was duly seconded by
Commissioner Mayer, the Board unanimously approved the proposal
for the 2005 – 2006 Insurance Renewal, including the options that were
proposed. The Board thanked Ms. Van Antwerp for all the hard work she
had performed on this item. Commissioner Stewart noted he appreciated
the input as he was not an insurance expert. Ms. Van Antwerp remarked
that the District’s Insurance Committee had worked very hard editing and
reviewing the documents.
INFORMATION ITEMS (cont.)
#2, CFC Monitoring and Capacity Growth: Mr. Pritchett began by
stating that the Capital Facilities Charge (CFC) monitoring program,
both for initial connections and to deal with capacity growth, had been
addressed in recent amendments to the resolution. This was done in an
attempt to make sure that the District fully and fairly shares the cost
of the infrastructure with all properties that are connected. He noted
there had been a lot of changes over the years and he wanted to review
the CFC portion of the resolution to ensure that Board and staff were in
concert. Mr. Pritchett added that he felt it was very important that the
Board understand these changes. He explained that his presentation
addressed each section of the CFC section of the Fees and Charges
resolution and provided a description of the conceptual framework for
the language. He began with the preamble of the resolution. This section
precedes the description of the individual charges and provides context
to the operative language contained in the body of the resolution. The
language has been changed over time to clarify the intention to collect
for usage of water and sewer system capacity above the amount originally
purchased. In addition, a provision was added to reflect the intention
to begin allocating “capacity rent” during the monitoring period on new
connections after December 31, 2004. Section “i” was modified in the
past few years as it deals with new growth. He added it was the position
of the Board to collect for new demand to be consistent with the
intention to sell all of the capacity that was being used. This section
also provides for the categories of collection. The premise is that
every customer pay their equitable share of capacity demand. The next
provision addressed CFC’s as a “demand-based” charge as opposed to the
previous “General Facility Fee” (GFF), which was an “area based” charge.
Section “iii” talks about the CFC being due at the time of connection,
while for a short period in the past, it was made due on application for
service. Section “iv” recognizes that if a charge for capacity was paid
previously without service, a credit would be applied. Section “v”
implements the condition that additional demand on the sewer system will
require additional CFC payments. When the charge was changed from an
area base to a demand base charge, an exchange rate became necessary.
The exchange rate was initially established to be 9 Equivalent
Residential Units (ERU’s) per acre. In 1998 it was proposed that 9 ERU’s
was too many and that 4 ERU’s was a more accurate number. The exchange
rate was then modified to 4 ERU’s, which caused a number of
implementation issues to arise. Mr. Pritchett then explained the issues
caused by the modification of the ERU’s. He noted that some analysis was
performed by PACE Engineering last fall which confirmed that modifying
the credit to 4 ERU’s per acre was appropriate. Mr. Pritchett added that
this section also establishes water consumption monitoring associated
with the payment of all new non-residential CFC’s. Commissioner
Jovanovich inquired if the current system is fairly common. Mr.
Pritchett reported that it was, adding his opinion that Lakehaven’s
system is slightly more sophisticated and more equitable than others. He
noted that the Board has always maintained that growth pays for growth
and a discussion followed as to what other utilities may do to collect
funds for growth. During the discussion, it was noted that as time has
gone by Lakehaven’s CFC has remained fairly stable, while these rates in
other utilities have increased. He added that currently, the District’s
rates are more in the middle. Mr. Pritchett also stated that he felt the
current process is a good one, as long as the Board remains committed to
the notion that growth pays for growth. Section “vi” was discussed next
and related to water. It essentially mirrors the provisions applicable
to sewer system connections, but includes an additional provision
relating to the situation of Water Cooperative Certificates, which were
issued in the 1950’s and provide one ERU credit per certificate. A
credit is also allowed where connections to the water system were
lawfully made prior to the establishment of a GFF for water connections.
Mr. Pritchett then provided an example of a connection credit. Section
“vii” addressed the matter of relating actual water and sewer system
demand to the CFC obligations for both new connections and the
additional demand associated with increased usage of the systems after
connection is made. A discussion followed concerning a situation where
it was totally unknown as to how much water was needed for a facility
and the use of the water meter to tell how much water system capacity
was being used. The ultimate system to “true-up” the system is to
monitor the water consumption. Given that, it was determined to monitor
water usage for new connections for a period of five years. In addition,
it was also stated that if water conservation is implemented during the
monitoring period, that particular period could be used to determine the
water usage. If it was determined that additional conservation was being
attempted, the monitoring period could be extended. It has been the
Board’s position to be as equitable as possible. Mr. Ross then explained
the values included in the table of the resolution. A question was then
asked when the monitoring program was developed whether the Board was
willing to “true-down” the actual consumption if the monitoring
indicated less usage and the Board agreed. In addition, if there were
more CFC’s owed at the end of the monitoring period, the property user
would have the option to lease additional CFC’s or purchase additional
CFC’s. In addition, for non single-family connections made after the end
of 2004, demand above the estimated purchase of CFC’s initially paid
would be rented during the monitoring period, pursuant to the terms of
the capacity lease program. Section “viii” establishes the CFC rate for
connections to the water and sewer systems. The CFC for each is divided
into existing and future facilities, as allowed by law. Reduced charges
for sewer connections that flow to Metro and Midway are included. An
additional section provides that if a CFC is paid and the District
reserves capacity for the payment and the connection is never made, the
billing for the CFC will begin in 18 months. The billing would be for
the base rate only; when the connection is made and consumption begins
the customer would be paying the consumption rate as well. Mr. Pritchett
then stated that Section “ix” acknowledges the fact that certain
agreements may supersede the terms of the Fees and Charges resolution as
they relate to CFC’s. Mr. Pritchett next addressed Section “x”. This
section addresses mixed use of parcels. For instance, a property owner
who has a mixed use development on multiple adjoining parcels can
combine CFC credits held on the separate parcels and put them on the
parcel that has the most use. He noted that the Board had agreed with
this procedure and added he felt this is a very fair situation. Section
“xi” is a basic leasing program that was added in the last few years.
The section provides for the leasing of capacity for temporary uses and
larger connections where the owner of the business does not own the
property. He noted that it takes a large property to be able to take
advantage of the provision in this section. As an example, Mr. Pritchett
stated that Enchanted Parks is currently being monitored and they are
leasing capacity. They purchased 625 ERU’s of credit, more than that is
being used and they are being billed for that. Mr. Ross interjected that
the City of Federal Way’s irrigation project near Lakota Creek was the
first project that took advantage of this section. Mr. Pritchett went on
to explain how the charges are billed for this type of situation. He
added that the Board approved the procedure in an effort to make the
system a little more fair and equitable. He then stated that he was
looking forward to working further on this project with Ed Cebron, a
consultant retained for this project, as well as Mr. Dennis and Mr.
Ross. He added that a large amount of credit should go to Development
Services staff for the work they have performed. He also noted that Mary
Young, a previous employee and Development Services Supervisor, had
quite a bit of work put into this and added that a large part of what
Ms. Young was doing toward the end of her career here at Lakehaven was
to finalize billings for some of these customers. Mr. Pritchett stated a
presentation would be scheduled for a Board meeting later in the year to
enable the Board to consider any changes to the Fees and Charges
resolution and to help them better understand this issue. Subsequent to
his presentation, Mr. Pritchett stated he hoped the information provided
to the Board at this presentation would give the members something to
think about when deciding on the next resolution. Commissioner Tweddle
stated she felt the presentation was exceptional and applauded staff’s
efforts and thanked Mr. Pritchett.
COMMITTEE REPORTS/COMMISSIONER COMMENTS
Commissioner Mayer announced he would be unavailable to attend the
Board meetings of July 28th and August 11th. It was also noted that Mr.
Pritchett would be unable to attend the meeting on July 28th as well.
Commissioner Miller reported on the recent Safety Committee and EMAC
meetings he had attended. He reported that there had been an attempted
break in at Lakehaven Center earlier in the week. Commissioner
Jovanovich report that City/District Liaison Committee had met earlier
in the week and reviewed some of the issues that were discussed.
STAFF REPORTS
General Counsel: Mr. Pritchett reported there had been a
tentative resolution with Pierce County concerning the Lloyd
property in Milton and went on to update the Board. It was noted
that a retirement facility is intended for the site in question and
it appears that it will be completely within the District’s
boundaries. He added that he understood an article regarding the
Conservation Calendar Award ceremony should appear in the local
newspaper on the weekend.
Director of Finance/Information Systems: Mr. Dennis
updated the Board on how the new Finance System was working. He
noted he felt the system was working very well by the number of
things that were coming to light. He provided a review of the system
and noted there were 11 invoices from District consultants that had
problems. He indicated that the problem was the detail that was
being provided on the invoices was not to the level that the
District requires. Mr. Pritchett referred to the sample of contract
billing that each such vendor receives in their contract documents.
It was noted that Pete Hupperten, the District’s Purchasing
Coordinator, reviews invoices to ensure they include the appropriate
forms as required. Mr. Dennis then provided a sample of some of the
issues that occur and went on to explain what the issues are. He
noted that the vendors in question had been informed their invoices
were not being paid as they were not in compliance. Mr. Dennis
stated that this system allows Finance to see things that he felt
were issues in the past but had gone undetected. He noted that the
SCI program was no longer on the system and is not being used
anymore. He then stated that he had originally calculated a pay back
on this purchase of three to four years and was now convinced his
estimate had been conservative.
Engineering Manager: Mr. Ross reported that the contract
award for the Lakota Beach Sewer project was scheduled to come
before the Board at the first meeting in August. He next provided
the Board with a copy of a press release that Woolpert, the
consulting firm for the District’s GIS project, would be sending out
regarding the project, pending approval from the Board. After a
brief discussion, the Board members agreed that they had no issue
with the proposed press release. Mr. Ross went on to report staff
had tentatively planned to install the meters under the expedited
process at the new Sequoyah Middle School on Saturday, July 23rd. He
noted that even though quite a few documents needed to be provided
before considering this project to be substantially completed, the
School District was asking for special consideration to have the
meters activated prior to reaching substantial completion status.
After a discussion, it was the consensus of the Board to direct
staff to allow water service to be activated at the new middle
school in order to expedite completion of the project. Mr. Ross went
on to report that projects for three schools that have had their
buildings upgraded in the last few years were languishing.
EXECUTIVE SESSION
At approximately 8:00 p.m., the regular meeting was recessed for the
purpose of conducting an Executive Session for the purpose of discussing
Collective Bargaining. It was announced that the Executive Session would
last approximately 30 minutes. At approximately 8:30 p.m., it was
announced that the Executive Session would continue for approximately 30
additional minutes. At approximately 8:59 p.m., the Executive Session
was adjourned and the regular meeting was reconvened.
ADJOURNMENT
There being no further business to come before the Board, the meeting
was adjourned at approximately 9:00 p.m. |
