October 15, 2018 CPNMD Board Meeting Video
Transcript
Describer:
CASTLE PINES NORTH METROPOLITAN DISTRICT
BOARD OF DIRECTORS
REGULAR BOARD MEETING
October 15, 2018 @ 6:00 PM
7404 Yorkshire Dr.
Castle Pines, CO 80108
Dave McEntire – President Term Expires May 2022
Robert Merritt – Vice President Term Expires May 2022
Denise Crew – Treasurer Term Expires May 2020
Kathy Rosenkrans – Director Term Expires May 2020
Norman Froman - Director Term Expires May 2020
1. Call to Order Regular Meeting/Pledge of Allegiance.
2. Roll Call/Announcement of Quorum/Disclosure of Potential Conflicts of Interest.
3. Approval of Agenda.
4. Public Comments.
5. Presentation of the Proposed 2018 Rates and Fees.
6. Presentation and Discussion of the Proposed 2018 Budget
7. Action Items.
A. Approve Minutes for the Regular Meeting of September 17, 2018.
B. Approve Minutes for the Special Meeting of September 21, 2018.
C. Accept Financial Report and Items from Finance Director.
D. Approve/Ratify Current Payables For the Month of July (Checks # 23869 -23923)
Approve Ratify
General Fund/Debt Service Approve $0.00, Ratify $68,032.38
Enterprise Fund Approve $0.00 Ratify $86,950.87
Electronic Payments (all funds) Approve $0.00, Ratify $1,995,984.00
Total Expenditures Approve $0.00, Ratify $2,350,967.25
E. Consideration of Sanitary Sewer Access Easement, Lot 235, Lagae Ranch
8. Communications Report.
9. Open Space Manager’s Report.
10. Manager’s Report.
11. Legal Counsel Report.
12. Directors’ Matters.
13. Public Comments.
14. Adjournment.
The next Regular Board Meeting is November 19, 2018 @ 6:00 PM.
Board President David: McEntire:
Good evening everybody. I'm going to call the regular meeting of October 15th, 2018 of the Castle Pines North Metro District to order. And in that same breath, ask that people attending here join me in the Pledge of Allegiance.
All Speak:
I pledge Allegiance to the flag of the United States of America, and to the Republic for which it stands. One nation under God, indivisible, with liberty and justice for all.
David McEntire:
Thank you for that. You all sounded fabulous. Uh, second item of business is going to be the roll call. When called upon, please indicate your presence by speaking into the mic, and letting us know that you're here. At the same time, if you'll disclose any potential conflicts of interest, it would be appreciated.
Board Member Director Robert Merritt:
Robert Merritt. Present. No conflict.
Board Member Director Denise: Crew:
Director Crew. Present. No conflict.
Board Member Director Norman Froman:
Director Froman. Present. No conflicts.
David:
Very good. We have a quorum. We'll move into, Director Rosenkrans is not here. I have been handed a paragraph that was authored by Director Rosenkrans. That she's not going to be here tonight. And in fact, has, tendered her resignation. So, we appreciate her service, and we'll look forward to, the steps that will follow.
Item number 3 is the approval of the agenda. And before I look for a motion from any of my colleagues, to approve the agenda, I'd like to make a couple modifications. Ironically, one of those modifications had a great deal to do with, I suspect. Well, no, I don't suspect. I'm reading the October 15th resignation letter from Rosenkrans.
And in it, she shares her feelings, that, that this reform board has lacked the vetting for factual data in recent communications distributed to customers, specifically on September 25th and October 11th. She goes on to say that "the failure to rescind these false communications", as she has coined them and characterized them, "has caused me to question the integrity of the other board members and the communications consultant. For this reason, she's asking for us to accept her resignation".
Again, thanking her for her service, resignation accepted. But again, back to the point, it was within that context, in that vein that I want to make the first amendment to the agenda. This having specific, relating specifically to, the October 11th communication from our communications director, which was really indicative and, and, become quite common since May, that this board president and this board, acknowledge the people in the audience and if they have failed or forgotten, or misjudged the the sign in sheet for a willingness to address the board.
I haven't held that against them. I haven't precluded them from speaking, but rather have invited them to be heard. This is, this was a big issue with this reform board to insist on the transparency and honesty, of this board moving forward. And nothing has changed. So it was with that intent that, communication was authorized by me.
Vetted by the appropriate professionals, to include, an invitation to the meeting tonight. As well as, as it was described, and I don't, I'll suspense with reading it. Everyone got it. But to discuss the presentation tonight of the proposed 2018 rates and fees, as well as a presentation and a discussion of the proposed 2018 budget.
None of this was, discussed in the release as being, a discussion or a motion or an action item where this board was going to take any action. And, nor was there, going to be a vote on the 2019, but rather, this was a courtesy on our part, beyond what may be required by, color by statute or the open meeting laws, etc.
And, so I'm going to ask that the agenda be modified as follows: Item 5 be renumbered to agenda Item 5A,
Which is a presentation of the proposed 2018 rates and fees. And then, immediately below agenda Item 5A, we will insert agenda Item 5B, which is going to be titled Courtesy Public Hearing Regarding Proposed 2019 Water comma, Wastewater comma, And Stormwater Rates And Fees. Again, it's a desire of this board to open that up for comment, knowing there will be no action.
Expecting each one to recognize their responsibility as a resident and share with us their, their feelings and thoughts. Keep it to three minutes, and before we move on. I would also like to, in the spirit of potentially getting into, some, some numerous conversations, I would like to, also revise the agenda by condensing the, back half of it, if, if you will, the board is in receipt of a board packet.
We have a communications report, which was stalled, but in hardcopy is forthcoming. But we will have, it only contains, according to our communications manager, copies of some correspondence received by, and as a byproduct of, of the invitation tonight. So there are no new items, but it's with that, that I move to remove the Item number 8, Item number 9, Item 10, Item 11.
And, and if it is meets with the approval of the board, to lean on the written reports that are, inside our our files again, in the spirit of having plenty of time to take any Q&A over the proposed rates and fees and the proposed 2019 budget.
With those amendments, look to the board for a motion to approve.
Robert Merritt:
I make a motion to approve the agenda that was mentioned.
David:
We have a motion on the on the floor to approve the amendments as outlined by myself earlier, to the agenda. Is there a second?
Denise:
I second.
Board Voting All Speak
Further discussion? Hearing no discussion. Please indicate your vote of approval or disapproval when called upon. Director Merritt. I. Director Crew. I. and Director Froman. I.
David:
Very good. Thank you so much. Item number 3 is approved as amended. Item number 4 is public comments. We have a sign in sheet. We have a number of folks that have joined us tonight. We have a number of folks online, I'm sure. Welcome. And thank you for viewing, turning us on or allowing us into your home online.
We appreciate the opportunity to speak to you and to have you with us. There's no one on this sign in sheet that has opted to speak, but again, I'm going to open it up, to anyone that's in the audience if they'd like to speak at this time. Is there anyone who would like to address the board?
All right. There. There are no participants at this juncture. Having a couple more, should that change,
That works for us. Gonna close the public comment section of the agenda and, open it up to Item 5A, the presentation of the Proposed 2018 Rates and Fees by Bartles and Wells. Erik right?
Erik Helgeson, Bartles and Wells:
Correct.
David:
All right, Erik:, you have the floor.
Erik:
Thank you. And as was stated, my name is Erik Helgeson. I'm a rate consultant with Bartle Wells Associates.
And we did the financial plan, update and recommended rate changes for 2019. I'll be going through this. Oh, is there a? Sorry. I mean, as pretty as the cover slide is, we probably want... I apologize. But I'll be going through, each fund. So there's the water operating fund, the water capital fund, and then the renewable water fund. And then I'll move on to wastewater and then stormwater.
Thank you Jim. No worries. And the, the main, I'll just kind of start talking so we don't waste time. But, oh, one other thing. With the public comment, would you like me to stay around for any questions for five? Okay. I will, absolutely. All right.
David:
Erik, before you get started, does this presentation, was it available for handout in the back? No?
Erik:
I think they're up here. We can,
David:
If anybody wants a copy, let us know. Otherwise, it's all the pages are going to be here.
Erik:
Yes,
David:
The board has received their copy. Is it any different than the copy that we've seen in our, study sessions?
Erik:
The only thing it changes, they added slides on the connection fees, and I did that survey of regional fees that you asked for.
David:
Super. Thank you very much. If you'll point that out, that would be great.
Erik:
Absolutely. No problem.
Describer: moves to Presentation
On Screen:
Operating Fund Overview
• Debt service associated with Chatfield project
• Capital spending and renewable project
• Growth projected to be 60 connections per year
• Expense inflation
• Prudent use of reserves
Erik:
So to get started, with the, operating fund, the main driver is the Chatfield project. Having made sure rates are sufficient to cover debt service and the debt service coverage ratio. We had some assumptions. Growth, we assume conservatively at 60 connections.
Even though, we think it's most likely going to be higher, at least in the next couple of years. We had an expense inflation assumption of 3%. And, we also want to make sure that we use reserves prudently. So this, this graph is the operating fund. The columns are the total expenses, and the green line is revenue.
And you can see we're recommending, two 3% increases to get revenues up to cover debt service. And then it looks like, in long term, you know, things can change. Water use can be higher or lower. But with the way things are at, we could probably get away with 1% increases thereafter, and maintain the operating fund.
Describer: pans to Presentation
On screen:
This is a bar graph showing the Capital Repair and Replacement and Renewable Water Project Costs from 2018 to 2028.
Ten Year Projected Capital Plan
• Water capital spending $23 million
• Renewable project capital $54 million
Erik explains.
Erik:
This is the ten year projected capital plan. The orange columns are showing the renewable water project. And the blue underneath is the, just the general capital expenses. The main capital, capital expenses in 2019 of the waterline replacement project. And after that, it's basically just assuming a level of repair and replacement. Just trying to be conservative.
You know, assume that there will be some expenses, but it's not detailed out. And, yes, as specific projects, we assumed a million and a half a year ongoing, which hopefully that's on the conservative side. The renewable water project costs are based off the most recent assessment, when there, from the previous bond election, and so those costs would probably be more spread out.
But that was just looking at, when they were, the original estimate to issue, issue debt to cover those expenses. So, the total cost was projected to be 54 million in those columns total to that number.
Describer:
On screen.
Capital Fund
• Waterline replacement of $4.0M in 2019
• Ongoing replacement assumption
- $1.5 million per year inflated
• Capital reserve transfer for renewable water project
Erik:
So the capital fund, as I mentioned, the $4 million water on waterline replacement is a big project. And I think I covered everything.
One final thing is the capital fund could have transfers to the renewable project, depending on how that goes. So that could impact that, because you do have a reserve right now. And that could be a way to use that reserve.
Describer:
On screen.
Ten-Year Projected Capital Fund Financial Plan
A bar and line graph which describes the Capital Expense, Capital Revenue, Renewable Water Fund Transfer & Reserves from 2019 to 2028.
Erik explains.
Erik:
So this graph is the capital fund. I showed, and this is a cash basis,
So I'm showing the potential transfers to renewable water. And the green line again is the revenue. The dotted line shows the reserves, so currently your reserves are sitting around $11 million. If the cap, I put the capital fund in this version if, I mean the renewable project in this version, if you, if you just chose to use cash like that, reserves would go down and then replenish as you get connection fees and the capital fee and other, and the renewable fee.
And then as you spend more money, on your transfers to the renewable project, it would draw the, the fund down again. That's why it has the zigzag line.
Describer:
On screen.
Renewable Water Project
• Projected cost $54 million
• Funding
- Monthly fee sufficient to cover renewable fund debt service
2018 $15
2019 $20
2020 $25
2021 $25
2022 $25
2023 $26
2024 $28
2025 $30
2026 $32
Financing
- $24 Million
• Review Renewable Connection Fee
Erik explains
Erik:
And so I'll move on to the, and half of you have seen this before, and half of you haven't. So feel free to interrupt with questions if, if you like, you know, slow down. And so that moving on to the renewable project fund.
The projected cost, as I said, is $54 million. I showed a scenario here with, with different renewable fees. If the project really stays on the originally intended schedule, the renewable fund, fee probably should increase on a more accelerated basis than the 3% we talked about. But I will show you connection fees and how that could alter the,
What that fee would be. My recommendation would be for that fee to be enough to cover any debt service that you incurred on the project. And I did a, a scenario where I looked at how much cash you had and were projected to have, and I tried to have as much cash financing of the project as possible.
To have the lowest amount of debt issued. And it looks like you still need about $24 million of financing if you did it. So that was kind of the assumption I went with just for these, scenarios, so you could see how that would impact all the funds. If it, if it changed, if the board makes it a different decision, I can, do that new scenario and show you new impacts and how the different funds would, would be affected.
Describer:
On screen.
Ten-Year Projected Renewable Water Fund Financial Plan
This is a line and bar graph of the Debt Service, Capital Fund Cash Expense, Renewable Fund Cash Expense, Renewable Revenue & Renewable Reserve from 2018 to 2028.
Erik Explains
Erik:
So this is the ten year projected renewable fund. You can see, I recommend, if you do it using cash upfront, and then, issuing bonds as needed or issuing debt as needed, as the project progresses and as the debt service builds, having the renewable fee gradually increase, to cover that amount.
And again, as you know spending happens, draws down the reserves, you get revenue from the connection fees and the monthly fee, and it builds it back up. That's the zigzag pattern of the reserves.
Describer:
On screen.
Renewable Water Connection Fee Options
Current connection fee is $5,175*
Connection fee options:
• Total project value
- $12,127 (Monthly fee to cover debt service $28)
• Cash financed portion of project
- $6.837 (Monthly fee to cover debt service $32)
*Fees are per single family equivalent (SE)
Erik:
So I looked at a couple options of, for the renewable connection fee. The first is looking at having it be an average fee based on the total value, which would be $12,000. With that additional amount of revenue, you can actually lower the amount of debt you needed to issue. And then at the end of the ten years, the renewable fee projected to cover debt service, and remember is a projection, cost of debt could change,
And there's some other things that could affect the final debt service amount, but my projection would be the fee of $28 would cover, a monthly fee of $28 would cover debt service. I also looked at, connection fee that only recovers for the cash funded portion of the project because it's, it's arguable that, you know, if you debt finance it, that will be paid by rates going forward.
So that fee would be $6,837. And then the monthly fee to cover debt service would be $32, because you'd have to issue a little more debt, for that scenario. The current fee is $5,175. So those are a couple of options that the board could choose to, implement if, if you want.
Describer:
On screen.
Draft Development Fee Comparison
This is a bar graph which compares the development fees for water, water supply and sewer for; Castle Rock, Ken-Caryl Ranch W&S, Stonegate, Parker W&S, East Cherry Creek Valley, Arapahoe Countym CPNMD (Existing), Roxborough & CPNMD (Proposed).
Erik explains.
Erik:
This is the, I'll show you just the sewer fees by themselves when we get to sewer.
But because renewable is a little, not every utility has it. This is the regional comparison of total development fees or connection fees. Castle Pines North is already on the high side. With the recommendations I'd move it a little bit higher. Every utility is different. You know, you're still a growing utility. Which, you know, every there's a unique situation in each district, so that's important to keep in mind.
But this, this is comparing, comparing, I couldn't get Highlands Ranch either, but this is comparing the local region and I assume your, I use your average square foot lot size, when applicable.
Describer:
On screen.
2019 Proposed Fixed Charges
• No changes to Capital Improvement Fee
• Renewable Water Fee options
2018 Customer Charge $10.75 Renewable Water Fee $15.00, Capital Improvement Fee $31.05
Proposed 2019 Customer Charge $11.08 Renewable Water Fee $15.45, Capital Improvement Fee $31.05
Erik:
These are the proposed changes to fixed charges. That 3% recommendation on the $10.75 fee would go to $11.08. The $15, which is really should have a big asterisk because depending on what you choose to do with that.
But if you just do a 3% this year, that would be $15.45. And we're not recommending a change to the capital fee at this time.
Describer:
On screen.
Proposed Commercial Drinking Water Volume Charges
This is a bar graph comparing 2018 and Proposed 2019 volume charges in cost per 1,000 gallons.
Tier 1 2018 $3.83, 2019 $3.95
Tier 2 2018 $4.97, 2019 $5.12
Tier 3 2018 $7.11, 2019 $7.33
Tier 4 2018 $13.57, 2019 $13.98
Erik:
These are the proposed changes to the volumetric charges. Again, they're all 3%. So I'll skip through that unless you have any questions. And they'll be in the presentation, which you could look copy.
Describer:
On screen.
Proposed 2019 Residential Bill Impact
From 0.0% to 25% range
Over $7 5.0%
Between $5 and $7 7.0%
Between $4 and $5 10.0%
Between $3 and $4 20.0%
Between $2.5 and $3 20.0%
Between $2.25 and $2.5 22.0%
Under $2.25 23.0%
89% of the residential drinking water bills will reflect an increase of $5.00 or less.
Erik:
So the impacts of that 3% change to the water bills. About 90% of customers will have a monthly increase of less than $5. I just looked at all the bills that occurred last year and applied the, the new rates. And, that's the the result. Kind of a, you know, is the higher you get, there's lower custo... there's fewer customers who use higher amounts of usage.
And so those bills are still all 3% though. A little less if you factor in the capital fee.
Describer:
On screen.
Wastewater Rate Study
• Financial Plan Overview
• Capital Plan
• Financial Plan
• Proposed Rates
• Customer Impacts
On screen.
Financial Planning Overview
• PCWRA cost of $5 million
• Overhaul of lift stations
• Increased operating costs associated with collection lines and lift station maintenance.
Erik:
So under the wastewater fund, the big thing driving this is the PCWRA cost: $5 million. There's also a few lift station overhauls, and, just, assuming increased operating costs with inflation and then some of the associated costs that are going to come online with the PCWRA project.
Describer:
On screen.
Ten Year Capital Plan
• Total capital spending $7.9 million
This is a bar graph compiling the costs of PCWRA, Lift Stations and Other Projects in the capital plan from 2019 to 2028.
Erik:
This is the overview of the capital, the big chunk PCWRA in 2019. There's some lift stations after that. And then we assumed, annual replacement amount of $200,000 inflating, by 3% a year.
Describer:
On screen.
Ten Year Projected Financial Plan
• Rate revenue increases of 4.0% in 2019 and 2020, 3.0% thereafter
This is a bar & line graph compiling the costs of, Debt Service, Cash Funded, Capital 0&M Expense, Reserve & Revenue from 2018 to 2028.
Erik:
And this is the wastewater fund. Again, the columns are total expense. The green line is revenue, and the dotted line is reserves. The big issue with this is to have operating revenues sufficient for the debt service required for PCWRA. So to do that, we're recommending 4% increases for the first two years and 3% thereafter. Our inflation assumption is also 3%.
So you're basically keeping up with inflation after you have those two 4% increases. The, and you'll hit your, cup.. you'll hit over one times operating coverage in the, in 2020, with the 4% increases. You'll be just shy of it in 2019. And then 2020 you'll be over it. So that's what the 4% will, will get you, but it's a little smoother and will cause less headache to customers by having a more, even gradual increase.
And one other thing I wanted to say with this, we'll talk about the connection fees for sewer at the end of the sewer section, but those don't, those don't really impact the need for rates in the near term. Because if the, the driver is all the ratio based on the operating rates. So, so the capital fees are non-operating.
So that doesn't have the impact. But what it will do is affect the, the dotted line at the end. You'll have, if you raise your connection fee, you'll have more cash for the next time you need a project in, at the end of the ten years.
Describer:
On screen.
Proposed 2019 Wastewater Use (Volume) Charge
2018 $6.21, Proposed 2019 $6.46
Erik:
The proposed change, the 4% change, to the volumetric based on winter use charge is shown here.
It goes $6.21 to $6.46,
Describer:
On screen.
2019 Proposed Fixed Charges (All Classes)
2018 $12.35, Proposed 2019 $12.85
Erik:
and the fixed charge would go from $12.35 to $12.85.
Describer:
On screen.
Proposed 2019 Wastewater Monthly Bill Impacts
Ranges from 0.0% to 45.0%
Over $3 2.0%
Between $1.75 and $3 38.0%
Between $1.25 and $1.75 45.0%
Under $1.25 19.0%
All inside service area customers will see a the fixed charge increase by $.5 and a volumetric charge increase by $.25 for each 1,000 gallons of winter use.
Erik:
The impacts, most of the impacts on the wastewater side will be between, basically between, the under $3, there's a, 50, sorry, $0.50 cent, volumetric charge increase and then $0.25 cent charge increase for every 100, for every thousand gallons of average water consumption.
So if you want to know how it'll impact your bill, you can just look at what your average winter use was and change that by $0.25 for each thousand gallons.
Describer:
On screen.
Wastewater Connection Fee Options
Current connection fee is $6,123*
Connection fee options:
• Existing system buy-in + PCWRA expansion
- $11,248
• PCWRA expansion only
- $7,417
*Fees are per single family equivalent (SFE)
Erik:
So this is the, I looked at, looked at connection fee options. The current sewer connection fee is $6,123. I looked at two different options. One would be having a portion buying into the existing system.
So just looking at the replacement cost of the system, less depreciation. And then the other big chunk is the PCWRA expansion. $4,450,000, I believe, was the amount that is necessary for new growth. And so I looked at the, the portion necessary for new growth divided by the projected new growth. And so that's the the other portion of that fee.
And what that is, is $7,417 if you just take the amount that it costs for new growth and the number of projected new connections, which is $600. So one option would be to have them pay their chunk of the PCWRA and then buy into the system. Another option is to just have them only pay that chunk of the PCWRA.
And so that would be an increase from $6000 to, $6,100 to $7,400. Or, so these are some options you could think about implementing or keep the rates the same. It'll just impact how much cash you have for your next, for the next time you need to do capital improvement projects and growth. I think you, you have a window of growth right now, which is going to go into close.
Describer:
On screen.
Draft Wastewater Connection Fee Comparison
Castle Rock $2,653
Parker W&S $3,700
Stonegate $4,000
CPNMD (Existing) $6,123
Ken-Caryl Ranch W&S $6,256
East Cherry Creek Valley $6,991
CPNMD (Proposed) $7,417
Arapahoe County $7,657
Roxborough $17,673
Erik:
So, just, some, some things to think about. I compared just the sewer connection charge and Castle Pines. Right now is right in the middle. The $7,000 option would put it near the higher end of, but within the range of, kind of average fees between $4,000 and $7,500, so.
Describer:
On screen.
2019 Stormwater Rate Recommendations
• No change in 2019
2018 $5.00, Proposed 2019 $5.00
Erik:
Stormwater rates are sufficient for operations, I recommend no increase for stormwater rates.
Describer:
On screen.
Combined Residential Bill Impacts
On screen.
Proposed 2019 Residential Bill Impact
Combined Water and Wastewater
• Average total bill increase $5.75
94% of the combined residential bills will reflect an increase of $8 or less.
Over $8 6%
Between $6 and $8 13%
Between $5 and $6 16%
Between $4 and $5 28%
Between $3.25 and $4 28%
Under $3.25 12%
Erik:
And then I looked at the combined bill impact with the 4% increase to wastewater rates and the 3% increase to water rates. And the average total bill increase is $5.75 monthly increase and 94% of bills will have a combined increase of $8 or less. Everyone is going to have an increase between 3% and 4%. And that's the, concludes the presentation.
If the board has any questions and, I'll take them. Yes.
Describer: Pans to Board
Norman:
Okay. Yeah....(unintelligible question)
Erik:
I, I just looked at their, what they showed on their websites, when I put this together. I don't know what's driving their policy decisions. I know they're more older, especially Parkers and older, but it has been around longer than Castle Pines, so that might have something to do with, it might have a different mix of growth and established, established connections.
But I could look into it further if you'd like.
Norman:
I would like to know why both of those are so much less than ours.
Erik:
Absolutely. I'll look into that and then make some phone calls and see what I can find out. Yeah.
Amanda:
Thanks. One reason, very quickly, typically that you see those rates being so much lower or the connection fees being so much lower, is it in larger districts like that, you get economies of scale that are really advantageous to the district.
So in a smaller district you've got to have the same system, the same treatment, same everything. But ultimately it's shared amongst a smaller load of residents. And because of that, your connections tend to be a lot higher. So I'm betting that's the main driver for those differences is just simply economies of scale.
Erik:
Any other questions?
David:
In your due diligence at Director Froman's request, if you find the easy answer to be those economies of scale which we all believe play a huge role in the answer, if there's any other nuances, as for same and feel free to include those as a part of our understanding of our neighbors are, setting policy, as you mentioned earlier.
If they're significantly different than ours, it'd be nice to have the heads up and to know. Nice job on the graphs. Nice job on the comparable(s). It means so much more I'm sure to this board and to the people that are participating. Very nice job.
Erik:
Thank you.
David:
If you'll hang tight. Again, as a part of the, amendment to the agenda tonight.
We've added a Item 5B, this is entitled the Courtesy Public Hearing Regarding Proposed 2019 Water, Wastewater, and Stormwater Rates and Fees. At this point, if there's anyone in the audience that would like to come to the podium, introduce themselves, their address, their email and address the board, now would be the time to do it.
Gary Jones, Castle Pines Resident:
Thank you. Gary Jones, 1073 Snow Lily Court here in Castle Pines. Several comments and questions. One is the economies of scale that came up. This has been an issue for the past boards, and I'm wondering what's being done to get us out of that stand alone being the most expensive around here. Part of the reason that this board was elected is we got tired of kind of being that rubber stamp.
The rates are going to go up because we're small. We can't afford to do anything else. Is there anything that we don't know about? I haven't been able to get to the other meetings, so anything you can enlighten me on that?
David:
Sure. I'll field that question as much as you ask the question. You nailed the answer. You're right.
When this reform board was, campaigning, that's what we talked about was, was, the blatant omission of these third party agreements and the conversation, whether they were transparent or honest or how do you want to characterize them. That seemed to be, a missed in, in considering the 2015 plan. I assure you that this, slate of board members, that we referred to as a reform board has not forgotten.
That will deliver on that promise, and is well under way. We don't have any additional details for the moment. But I also assure you that that's temporary. As is, we set the stage for, delivering on that promise. But, those economies are, as you've already highlighted, an absolute necessity, for this district moving forward to consider, and we're going to ensure that that gets done.
Gary:
And then one other question/comment. As I understand it, we'll probably get some sort of increase. If I understood it right, I'm probably looking at somewhere between, I don't know, ten. Let's just say roughly ten bucks an additional on my bill next year. My biggest problem is all the front loaded fees that I have to pay.
So if I'm here and I use no water, I'm paying you roughly 80 bucks a month right now for no usage at all. If I'm here and I'm a low end user, which I am, I'm paying you about 100 bucks a month. What I'm doing, though, is subsidizing all the high end users because there is no reason for me to conserve.
I do, but there's no reason to because I'm paying 100 bucks worth, I use a drop of water or not. Yet the guy that's using 30, 40 or more, let's say 3 or 4 times my consumption because I'm a thousand or less. If you average out their rate per gallon when you take the total fees, I'm subsidizing them.
And I'm quite honestly sick and tired of subsidizing them, especially seeing as how I'm on a fixed income. And I think that it is not a rate structure that is conducive to any type of, trying to get lower usage by anybody. I think it's discriminatory against those of us on fixed incomes and the elderly folks. And I would ask you, as you look at these rate increases, to consider building those into the consumption as opposed to a front end loaded fee.
Thank you.
David:
Anyone else in the audience like to be heard tonight? At this point?
I'm compelled to embark on a conversation with you, Gary, about, the afore, statement and question. However, while there are financial reasons that, might take us a while, there's philosophical, there's operational reasons and, an sundry of reasons that go into not only this process, but, surrounding ourselves with the very best, consultants to guide and direct these rates and fees.
The board is, on the, downhill side of, of, the information that we've been given this year. We've made no decisions. None will be made tonight. Your comments again were welcomed and are noted, and will be taken into consideration as we contemplate the, the budget for 2019. But I will, to the extent and to the level of, of my knowledge, which has its limits as well.
Invite you to correspond with me, at an email level, text level, a telephone call level, a cup of coffee level. so that, we both have a better understanding of the comments and the questions, should you wish. I invite you to do that. Thank you again tonight. All right. With that being said, that is, Item 5A as well as 5B, the following item on the agenda is the presentation and the discussion of the proposed 2019 budget.
And I see we have a typo there. Sorry about, and in fact, both of them were 2019 instead of 2018. But, Amanda all...
Amanda:
Thank you for your time. I appreciate it. I know that you got the gamut last week on the budget, the majority of you. So I'm going to keep it high level. And then any questions,
I'm happy to answer. The 2019 proposed budget. Really, in my professional opinion, looks great. I think we see, steady increases, due to cost of living increases, that sort of thing. CIP. But overall, I don't see anything bothersome or astronomical changing, which is great. When we look at the total revenues in the general fund, and I did put extra packets in the back if anybody wants one,
when we look at the total revenues in the general fund, anticipated revenues are expected to increase about $150,000. Some of that is attributable to an increase in our assessed valuation. We see about $40,000 of additional revenue due to an increase in our AV, which therefore increases our specific ownership tax. So specific ownership tax is based on the amount of mills that you receive as a district.
So you'll note in 2017, the audited 2017 SO was a lot higher. That's because we carried the debt service mill levy at that point in time. So we received specific ownership attributable to that. Since that has gone away, so too has that relative SO and that, that number does drop from 2017. But it's a slight increase from 2019. When we go through our expenditures.
Total expenditures in the general fund for operations are down about $100,000 from the 2018 budget, which is really great. We do have a couple of things going into play there. So the communications and PR budget was split amongst the funds. The the job of the communications consultant really does impact all funds, and it, it's imperative that we capture those expenses, expenses in the relative funds.
And because of that, we went ahead and split those out based on, really the use of that consultant. Beyond that, we don't have an election in 2018, which, was budgeted at $40,000 in 2018. So in 2019, that falls off, thereby decreasing expenses. When we look at expenditures for parks and recreation, which are our parks and open space rather, which are on, the second page, which is denoted page 12 in the packet here.
You'll notice that total expenditures increase about $200,000. A lot of that is attributable to, one time landscaping projects or capital projects, slope repairs that sort of thing. We did have a change in the vendor for the Christmas lights and that that was something that had to be done. It wasn't something we could choose to do. And that did increase our budget, about $10,000 there.
Beyond that, the major increase is just due to water for parks and open space. Our budget in 2018 was $210,000. That needs to increase by 20% in 2019. So we see an increase there. Other revenues and expenditures remain relatively flat. That simply is the base rental expense that's transferred to the COPs. And we'll see that when we get to that fund.
Moving on to the fourth page, which is denoted page 14. That's the conservation trust fund. That's our lottery proceeds. So we receive roughly $48,000 a year in lottery proceeds. We then invest those and get earnings on the deposit of around, $3,700 is what we're budgeting in 2019. We're seeing really good returns on investments this year. So those numbers are probably a little bit conservative, but I'd rather be conservative than overestimate those revenues.
We have budgeted for expenditures in the Conservation Trust Fund of $252,000. Those are simply reserved for projects. Should we choose to have a project come up that would allow us to use the conservation trust funds, which would really be a new park or open space project, we've got it budgeted so that we can use those funds. Typically, the district doesn't utilize those funds because you you normally save up for a big project.
It has to be something new. It can't be, repairs on an existing park. So you typically save up for a big project and we just budget for that every year. When we look at, the 2015 COP Special Revenue Fund. You'll notice the base rental revenue coming in from the general fund, that is then utilized to pay the principal interest and fees on the COPs.
And those are dictated by, the COPs payment schedule. So that's just right off the schedule sheet. The debt service fund closed out in 2018. We made the last payment on that in 2017. So that's there just for informational purposes. But nothing will be budgeted there. Moving on to what is noted as page 17. We start to get into the enterprise funds.
So water operating revenues, when we look at the water operating revenues, total revenues are anticipated to increase over the 2018 adopted budget. That they're actually slightly less than the 2018 projected budget. In 2018, we've seen a very high increase in usage. And so that's where we get those, I'll say inflated numbers for 2018. In 2019, our increase is attributable to the 3% rate increase and attributable to additional users that have come online to the system.
So if you calculated it, the increase seems, more than 3%, but it's not. It's simply a product of, additional users coming onto the system as well. So that's the primary increase within the water operating revenues. Beyond that, we do have, the ditch assessment revenue and, the, inspection for water connections hitting there that are slightly above last year.
Moving on to the total expenditures for the operating, or for the, water fund. The total expenditures are anticipated to be nearly identical to 2018. So we had budgeted 3.1 million in expenditures in 2018. We project that to be slightly higher to date. We're budgeting for 3.19 million in expenditures in 2019. And really, most of our expenses remain the same.
We've got some inflationary increases, but overall expenditures have remained the same. We are budgeting for an, additional employee in the water, wastewater and storm fund. That employee would be split amongst those funds. So you see those costs increasing in the salaries and wages. That's for that additional person. When we look at page 19, the non-operating revenues and expenses, you'll notice that both are higher than 2018.
That's primarily attributable to the CWCB loan proceeds and the Chatfield reallocation project, which, really net out for each other. Beyond that, we are anticipating 135 taps. With Lagae filing number one. And so that increases our our tap revenue or our connection fee revenue quite a bit in 2019. And then for expenditures in 2019, beyond the Chatfield reallocation project.
We also have a waterline replacement project for $4 million that's increasing those expenditures. Moving on to page 20: The wastewater fund. Wastewater revenues are anticipated to increase just over $100,000 in 2019. That's attributable to an increase in rates. And like I said, additionally, increased users coming on board there. The, you'll notice once again, the salaries and benefits increase, due to the increase or additions rather of a new employee, and total expenditures increase from, well, they decrease from the adopted budget, but they increase from the projected budget to $1.5 million.
Really, the primary changes that we're seeing in 2018, we had budgeted for, PCWRA fees of $741,000. Those actually are going to come in at $658,000 in 2018 and very similar in 2019. So that's the primary change we see there. When we look at the non-operating revenues and expenditures in the wastewater fund, you'll notice that we have the inclusion of the loan proceeds relative to the PCWRA expansion project.
We have included those in both the 2018 projected and 2019 proposed. That's simply a budgeting tool. So that if that, loan were to close later, we've got it budgeted and we wouldn't have to go in and amend either year. If it's done in 2018, it'll drop off the 2019 projected. If it's not done in 2018, we'll carry it forward in 2019.
And the net effect is zero. So it doesn't change anything there. Those funds, like I said, will go to fund the PCWRA expansion project. And we've got that budgeted in there. Beyond that, we have the storm drainage fund. As Erik said, there are no changes to the storm drainage fund revenues. So revenues within that fund increase only due to, increased users.
We don't see any increase in rates there. And then our expenditures are slightly under 2000 and, in 2018, we had budgeted 18,000 for software support in 2019. We're not budgeting for that. And that's the primary change within that fund. So I know I zipped through that really fast, but we went through it in great detail last week.
So I am more than happy to answer any questions. Should you have any?
Okay. So we will have the hearing on the budget next month. If there are any questions in the meantime, feel free to email or call me. So.
David:
Thank you. Amanda.
David:
That concludes the presentation, and discussion of the proposed 2019 budget.
The courtesy public comment portion and the presentation of the proposed 2019 rates and fees. Directors, be prepared to move on to action Item 7. With that, action Item number 7 includes an A, B, C, D, and E. In the spirit of of, the due diligence put forth by each and every one of you, I'm sure that you have, have reviewed the minutes and,
Board Voting All Speak:
It's with that understanding or assertion that I would ask for a motion to approve the minutes of the regular meeting of September 17th, 2018. Do I hear a motion to approve?
I make a motion that we approve the minutes. Director Froman is made a motion. Is there a second? I second. There's a second to on the floor to approve those minutes to September 17th of the regular meeting.
Is there any further discussion by the directors? Hearing none. We'll ask for a vote. Please indicate, your concurrence with the a or, denial with the nay upon, my calling your name.
Director Froman. I vote yes. Director Crew. I. And Director Merritt. I.
Item number seven B is the approval of the minutes for the special meeting of September 21st. Is there a motion from a director to approve those minutes? I make a motion to approve the minutes for the special meeting on September 21st, 2018. There's motion on the floor. Is there a second? I'll second it. We have a motion to approve.
And a second. The minutes of the special meeting, September 24th. Any further discussion? Hearing none. Look for a vote on the motion. When called upon. Director Merritt. I. Director Crew. I. And Director Froman. I wasn't at the meeting. Director McIntyre is, is the affirmative. I approve them as well. Motion carries. Item Action Item number 7C.
David:
This is the acceptance of the financial report for the items from the finance Director. You have that in your packet. Amanda, would you run us through that work please?
Amanda:
Sure. We have prepared for the board's review and consideration, the financial statements as of September 30th, 2018. Really as the year progresses, we're starting to see trends fall exactly as we thought, which is great.
We don't see anything out of the norm, nor do we see any anomalies that require additional attention to the board. So you'll notice that we kind of go through these ebbs and flows with our memo, where at the beginning of the year, it's a little thin because we don't yet know. In the middle of the year it gets really big because we're trying to project all.
And as the year comes to a close, that starts to narrow again. So luckily we're getting to that narrow phase again where things are trending exactly as anticipated, which is great. Once again, we continue to see investment earnings on the rise. When I calculated it out, we're anticipated to have more than $300,000 of additional interest earnings this year, which is great.
That really helps to offset future costs and increases our ending fund balance to help offset those costs, which is wonderful. As of September 30th, the general fund expenditure do exceed appropriations by about five grand. At this point in time, that's nothing really to worry about. It would be, it's more than likely that as the end of the year approaches, we'll recognize cost savings that will offset that overage, and we won't require any sort of budget amendment.
So we'll continue to monitor that. If, if it does come to the point where we need to amend the budget, we can do so. But at this point in time, I think that will fall off as projections continue throughout the year. Additionally, as of September 30th, the water activity, or wastewater rather, activity fund is projected to exceed appropriations that is simply due to the revenue bond for the PCWRA expansion project, if that closes within 2018, we will go ahead and amend.
And typically what we do is when the board adopts the 2019 budget next month, we'll just wrap the amendment in at the same time. So you'll amend 2018 and adopt 2019, which is pretty common. Once again, like I said before, that transaction really nets out because we've got the proceeds in, the expense out, but because your expenditures would exceed the original appropriations, we would be required to do a budget amendment there.
So we may be required to do that. When we look at the enterprise funds, water service revenue continues to trend over budget. Total actualized billable usage for September year to date was 526 million gallons, compared to 478 in 2017 and 490 in 2016. So you can tell even on that high year of 2016, we're still much, much, much higher than we were then.
And this is a trend I've seen across a lot of water districts. That usage is just incredibly high. It's been a drier year. We've seen increased usage. And with that, comes the increased revenue attributable to that. The golf course revenue associated with the raw water delivery is currently trending over budget as it has been. We've had year to date usage there of $66 million, compared to $55 million in 2017.
So once again, increased usage is really attributable to that driver. And then, the enterprise non-operating expenditures have been revised downward to $4.2 million from the original $7.2 million. That's simply because we shifted that work on the Castle Pines Parkway water line into 2019's budget, so that $4 million fell off the projected for 2018 and simply shifted into 2019.
So that's the primary driver there. Currently, we are wrapping up work on the 2019 budget. As you're all well aware, we've presented, we'll have presentation of that in November. It's slated for, public hearing on November 19th. And ideally, we'll be able to adopt the budget at that time. So once that's done, then we start to go through the compliance requirements of filing the mill levy certification, filing the budget with the state, all of that sort of things that go on behind behind the scenes there.
Really beyond that, I don't have anything that draws the board's attention. Like I said, everything at this point in the year is looking really good to me. I don't see anything alarming. I would anticipate having to amend the wastewater fund. But like I said, I think that overage in the general fund will be, absorbed into cost savings elsewhere.
So I don't think that will, will negate a budget amendment at this time. Are there any questions?
David:
Thank you, Amanda.
That concludes action Item... Well it doesn't conclude... I would, look to the directors, with no further discussion on the item or questions for Amanda. Any way to make a motion to accept the financial report and the items from the finance director as presented tonight. Is there a motion by a director?
Denise:
I'll make a motion to accept the financial statements.
David:
Second.
I cut, I cut you a second.
Robert:
I'll Second that.
Board Voting All Speak:
Okay, we have a, we have a motion to second. To approve The financial report is given by Amanda this evening. I'll call for vote. Director Froman. I accept. Director. Yes, Director Crew. I. Director Merritt. I. Action Item 5 or excuse me, 7C passes unanimously.
David:
This is action Item 7D, the approval and ratification of the current payables for the month of July. These are specific to checks number 23869 through 23923. I'll make the motion. If that works for my colleagues, to ratify the payables or the checks there have been written, from the general fund, of $68,032.38. The enterprise fund is $286,950.87 in the electronic payments of all funds. Which you'll notice is, a large sum, which was the establishment of the escrow account with Plum Creek, is $1,995,984 dollars for total expenditures, this month, of $2,350,967.25.
Board Voting All Speak
Is there a motion on the floor to accept that ratification? I'll make a motion to accept the ratification of the payables for the month of July. Have a motion to accept, Is there a second? I second that, I have a second to accept that motion to ratify those payables for this month. Any further discussion? Hearing none. Vote on the motion, please.
Director Merritt. I. Director Crew. I. and Director Froman. I. Director McIntyre's is an I as well. Motion is approved.
David:
This is, the last action item, identified as action Item 7E. This is a consideration of a sanitary sewer access easement for lot 235 Lagae. I don't know if, if, Jim, you're handling that and or Kim?
District Manager Jim Nikkel:
So before you this evening is a cleanup easement over at lot 235, Lagae Ranch, also known as Planning Area 6. Also commonly referred to as the Meritage Development. This is a, a little cleanup easement, due to a change in a plat as well as a request to the fire district. The fire district requested a hammerhead turnaround be installed for the access drive that this is a part of, coming down in to lift station number nine over in Lagae.
It necessitated a little additional easement to be granted to the district so that we have right of entry and right to come in and repair the driveway over the course of time. This has been through legal's review. This is actually their form that they drafted for this. And you have staff's recommendation to approve this this evening.
David:
Counsel?
Kim:
Nothing to add, Mr. Chairman. We did review it. We did draft it. It's ready to go if you're ready to approve it.
David:
Very good. It's with staff's recommendation, and in council's concurrent as well, that this board consider, this cleanup item of the sanitary sewer access easement for lot 235 Lagae Ranch. Having heard same.
Is there motion on the, from a director to approve this?
Board Voting All Speak:
I'll make a motion to the sanitary sewer assessment easement, Lot 235 at the Lagae Ranch. We have a motion on the floor from Director Merritt. Is there a second? I'll second that. Director Froman has seconded that motion. Is there any further discussion or questions, of either council or staff at this point? Hearing none. Call for vote.
Director Froman. I. Director Crew. I. Director Merritt. I. Motion carries. Item cleaned up.
David:
All right. We're going to jump ahead again leaning on the merit of, no pun intended, but, the the context merit of, of, our written reports from, the communications director or consultant, is it were, our open space manager, manager's report, legal counsel, and jump right into, Directors' matters.
If I may, open that up.
It's a, it's, it's. I have to tell you, that this resignation from Director Rosenkrans has gotten me has caught me off guard. And while I respect, her reason for her resignation, quite honestly, I had prepared to offer up discussion, as a whole board along with her, to air any differences.
Of course, garner an understanding learn from one another, etc. So that we could have some sense of, of unity moving forward.
Director Rosenkrans, during, our special meeting, when we contemplated the debt for the Plum Creek water expansion project, at which time we addressed the issue and finished with it, met me across the table with a high five. Leaving me to believe that together we had done something that was beneficial to the residents, and left me feeling accomplished, and, in more than one way.
However, I have to share with you that, the following morning, I believe it was. I may be, The specifics may be off a bit, but barraged by emails, from Director Rosenkrans to three different groups of people in our community, within the district and outside of the district, entity itself, that not only rebuked what had taken place.
Because we had authorized a, a write up, to be published and shared with the residents of the outcome of that meeting. But so it was after that publishing that that, I received this rebuking from Director Rosenkrans. It was laced with criticism and, and chastising our fellow directors, and our communications consultant, and so, you know, tension aside, things like that's gonna happen, that's our purpose is to vet those differences and, and share them with our constituents and one another,
In the spirit of, of, of, bringing forth, reform in a good way that benefits the residents first. And, and, others second, who shortly after that, that, received another one. That again was, was sent out to a variety of folks, as opposed to a telephone call or any kind of a personal outreach, to me as a president, on her part, that that,
Rebuked and questioned the the appointment of Director Crew and Director Merritt to the park authority. Again, I have no problems with differing opinions and wish she was here, so that we could have this conversation one on one. But she has, elected not to participate. And that that's okay.
A third time was when I authorized the announcement of this meeting. Again, rebuking and chastising and criticizing the people involved in, what we believed to be a ploy to include the residents in a very transparent and honest process. Knew there was some differences of opinion, and I was hoping that we could vet those tonight.
Found those actions, and I'll stand by them, as being Very disingenuous. I already accepted the resignation. This is by no means, it gives me a right or a reason to say anything, against Director Rosenkrans, because I am not.
I'm simply sharing with you the, the, chronological events that she, in part, has made mention in a resignation letter that culminates in her resignation and, quite frankly, culminates in, in our moving forward to the next director's matter. If there is a comment by a fellow director, feel free for the moment.
Norman:
Mr. President, with your permission and that of our colleagues,
David:
Director Froman, Director Froman, let me, let me just wrap up the Rosenkrans thing, okay?
Okay. Just to make sure, we're all on the same page here. The other item was was, very much in the same vein or context that I wanted to open a discussion with the board. To talk about that same disconnect, that I have, if not only observed, but have been dealing with, since being asked to be president of this district, or this board of directors for this district.
And that's with our district manager.
I don't know that I'm the only one that that feels that way, but,
I wanna take, a few moments to ask my fellow directors if if, they share in any of the that sentiment, because I'm of an opinion, that we need to air our feelings, so that, we no longer have, that kind of, distraction. We no longer have that kind of obstruction and that we reunite and and and put the residents first in everything and all the things that we do.
Moving forward, there is no 2015 plan, renewable water plan. We heard a presentation tonight where the rates and fees, gentlemen Erik: made mention of a $54,000 renewable. What did I say? thousand. Yeah. Million dollar, renewable, fee fund.
And while it may be, something that we end up pursuing, and to which time we have a plan to secure renewable water. This reform board is going to pursue it more wisely and at less cost than it has been proposed in the past.
Directors, I will open the floor, to any comments that you might have. Regarding the statement that I just made about our district manager, Jim Nikkel.
Norman:
Mr. president, with your permission and that of our colleagues, I would like to read a statement into the record. As a preface to my statement, I am compelled to remind the the viewers that I have managed high tech projects, multi-million dollar infrastructure projects are all over the world for decades.
Roughly six months ago, our district manager and his directors were campaigning hard to persuade Castle Pines residents to approve $103 million in new debt, for which I believe was ill conceived Renewable water plan. If approved, that plan may or may not have delivered a mere 50% of the new renewable water we need. Their request for $103 million in new debt alarmed the residents. In May of 2018, for the second time in two years, and by overwhelming margins, both times, the people spoke. They voted down ballot issue A. They overwhelmingly rejected paying $103 million in a new debt for a fraction of the renewable water.
They also elected four new highly talented directors to replace most of the existing board. After serving six months on this board, it has become clear to me that we have a district manager that is hostile to this board Its vision and its leadership. We have a district manager that pushes his agenda at the expense of ours. In my opinion, he is never going to be the trusted partner this board can rely on to bring our vision to reality.
In fact, I believe the opposite is true. It is my observation, our district manager demonstrates little regard, if not outright contempt, for the new directors, our oversight function, our expertise, our vision and our voter approved mandate. The district manager has never once invited me to grab a cup of coffee or get acquainted over lunch. He has never invited me to a meeting in his office to begin the process of establishing a positive working relationship. Again, the opposite is true.
He appears totally uninterested in my background, experience, or anything that I intend to accomplish for the people of Castle Pines. I believe I was elected to help secure renewable water wisely and at less cost than the district manager and previous boards proposed. I also believe that most residents recognize that our metro district is simply too small to deliver cost
Competitive renewable water to our residents. We already pay among the highest water rates in the region. I cannot sufficiently emphasize this point. I repeat, the fact that we serve only 3,200 households makes it virtually impossible for our metro district to deliver competitively priced renewable water to our customers. We must explore alternatives.
I suspect that our current district manager became accustomed to working with previous boards that endorsed with insufficient scrutiny, every proposal that he proposed. Though he may have placed previous directors in the position of having to defend the indefensible, I will not tolerate that approach. I believe the voters expected this board to explore the possibility of integrating our Metro district's water and wastewater services with other water providers, thereby improving the underlying economies of scale and the ability to control cost.
In my opinion, if given the chance, I believe our district manager would continue ignoring our reform mandate and would continue attempting to distract us from our objective. It is time that we move decisively to secure our renewable water wisely and at less cost than the plan the district manager wants to pursue. Mr. president, in recognition of the at will nature of the district's employment of District Manager Jim Nikkel, I move to terminate the district manager's employment contract and the services of Mr. Nikkel, effective immediately.
Mr. Nikkel is entitled, entitled to the compensation package as outlined in the Employment Agreement.
David:
Thank you, Director Froman, for those insights.
We have a motion on the floor.
Assuming or asserting, if I will, the way that it was articulated, that you have, along with the rest of the board, reviewed the agreement that the district has with Mr. Nikkel, as it was shared with us when I called some time ago for all of those agreements, for everyone's review.
You look like you have something to say, Director Crew.
Denise:
I do.
The four of us met last March, and put together a reform campaign that we knocked on doors, we went to meetings, we talked to the public. We listened. We promised to be transparent. I think we have done a pretty good job of that. But we've hit some fairly large roadblocks in what I believe our mission is, I will give Jim a tremendous amount of credit.
You're a smart, knowledgeable engineer. Absolutely no question about that. And I'm sure it was very difficult to have four new people come in here, with a different direction. I can, I can completely understand that. I also feel very dismissed in this process and not, not sure how to say it, taken seriously, I guess, or treated with respect that I try to give to fellow public servants.
I just think, in the spirit of moving forward as positively as we can, I think we need a district manager with a little more of an open mind to our fresh ideas and perspectives, and more of a can-do attitude. And with that, I'd like to second Director Froman's motion. Thank you.
David:
Thank you Director Crew, for those comments. We currently have a motion on the floor. And a second. I'm, I'm, curious, before asking for a vote on the motion, if, Director Merritt, you have, anything you would like to say?
Director Robert Merritt:
When you started, I wrote down a few notes. But, as the others expressed, I'm very disappointed with the relationship, obviously, with the district manager and the board.
As such, I myself can, recite in numerous instances of, however, let's just call it, confrontational at best, with everything that is, an obstruction. We'll just leave it at that. I've lived in Castle Pines for 14 years, and I've heard for the last five years that the district manager is a smart engineer. But he's difficult, and I always wondered what that meant.
Over since we've been board members now it's become, crystal clear. I've learned over the, being on the board, and the firehose of information we've gotten that he is that, he is a very smart engineer, but I believe he has his own agenda. And that agenda does not coincide, obviously, with the vote in 2015 and, the recent vote in 2018.
But as we saw tonight and we even had a resident, which was perfect timing by the way, to say that we look like we've been deterred a little bit, but it's been constant. Each time and every time we come to a public meeting, we're asked to approve another $5 million. And how are we going to afford this?
And we asked to approve $2 million and $1.9 million. And there's a lot of moving parts, but it's been difficult at best to keep our agenda going, because that's what the voters instated to us. That's what we campaigned on. The new board was, elected by the vast majority of the residents to pursue and provide renewable water, more wisely.
I would feel differently if I knew Mr. Nikkel was using his engineering expertise to help us accomplish this. My primary objective to being on this board is that to help the board vet responsible, cost effective, ways to provide renewable water. We started out knowing that we have the aquifers. Then we have the renewable water.
And being educated, then we found out we have the reuse, which is the biggest bang for the buck. And we're not even entertaining any of those ideas. And this board, when we campaigned wanted to look at joining other providers or some way providing that water at a lesser cost, more wisely. We haven't even gotten to the reuse yet. And the time on the board, I'll conclude our district manager agenda, I believe is fundamentally incompatible with the residents vote and desires, as well as this board.
David:
Wow. The level of intellect and passion and commitment and conviction from this reform slate, to fulfill their promise to the residents, To deliver renewable water more wisely, and at less cost, is impressive to say the least. I wasn't prepared for all these comments.
But I can't argue with any of them. And, I appreciate them. Before I acknowledge the motion and the second, I'd like to finish with what I was going to discuss as well. And it too was, was, a byproduct of my review of the district manager's employment agreement with the district.
And in that there were a number of places where, there is what I coined and characterized earlier as a disconnect. And it is of absolute necessity moving forward that we rectify that challenge before us. Specifically, there's a responsibility on person at that level, for maintaining and cultivating relationships within the community, state agents, agency officials, and the public at large to ensure strong relationships are at hand with other local utilities and public officials.
As president, I can't attest that that has been accomplished. Rather contrary to and indicative and reflective of the 2015 plan, and the myriad of people that I have had the pleasure and opportunity of meeting, namely all of our neighbors and a number of other people in the water business, the sanitation business, the stormwater business, the parks and the open space and trail business, have reaffirmed my belief that those relationships in a lot of cases didn't exist at all.
Additionally, the ability to build positive public image of the district and seek cooperative agreements for the benefit of the district, well I just mentioned that, and I'm not going to go into the experiences that I had as a candidate, pressing the flesh with hundreds upon hundreds of residents who had had their fill with the conduct of the district, the animosity that exists between the district and the city, the infighting, the, the individual political aspirations and agendas, the potential kingdom building.
However you want to say it, they were fed up. And when we talked about moving in a different direction, and when we talked about being unified in that spirit.
I got a second handshake from each one of them as I departed.
A person of that caliber is to also have the skills sufficient to communicate effectively with electorate officials, professional associations, and to make presentations, as well as represent, as representative of the district and it is my wholehearted opinion that in those areas, our district manager comes up short. And for that reason, I would like to move forward with the acknowledgment.
Of the motion, we have a motion on the floor, by Director Froman. That motion was to terminate the employment agreement, effective immediately with Jim Nikkel.
Acknowledging the termination provisions therein, including all of the pay and benefits, etc., that go with a termination without cause. We have a second from Director Crew. At this point, I would ask if there is any additional discussion by the board, but please indulge me one more time, if I may, Counsel.
Quickly taking some notes. As you heard us discuss, our objective is to terminate the services of the current district manager executive director, and retain the services. Obviously, in light of that termination of another immediately, you've heard us. It be recommended, or it's my understanding, the recommended way to do that.
While keeping our goal in mind and adhering to the open meeting law, will be to terminate those services, number one, effective immediately. And and, again, appoint an interim district manager, until a final offer can be made. And, of course, after board discussion in an open meeting. This process, as I understand it, is likely to span, at least, two meetings, and with the termination occurring now and potentially the employment offering being extended into November, with the, and in the interim between October and November, the finalist list, will be posted on our website.
And, and, and discussed,
Am I close?
Kim:
Mister chairman. Yeah, I think you're going to have to start a process to find another district manager if you terminate this one. I'd suggest, committee or something of the board or the board as a whole. But then you're going to have to post all of the meetings about that, to begin gathering, due to researching your new person. And part of that process under CORA, is that you need to determine as soon as possible what that job description looks like.
There is a job description on Mr. Nikkel's contract. You can use that. You change it however you want to. That decision should probably be made tonight. And the appointment of some kind of committee to pursue a new district manager. And then, of course, if you think you need it, which I think you do, you need to appointed an interim manager.
So and I would suggest that'd be two motions, appointment of the interim, and the motion to set up a committee to pursue a new district manager.
David:
So the the motion that was, made by Director Froman, seconded by Director Crew, and the conversation that ensued here in is informed sufficient, in your opinion, to call for the vote?
Kim
It is, Mr. Chairman.
Board Voting All Speak:
It is with that understanding. Then, at this juncture, that I call for, and no further discussion, I call for the vote on the motion.
Please indicate, when your vote, when called upon. Director Froman. I.
Director Crew. I. Director Merritt. I. And Director McEntire is an I.
David:
It is with that that the motion carries, and it's at this juncture in the meeting that I would excuse Jim Nikkel. And, Kim, if you would be so kind as to accompany him and Norm, to his office to check him out accordingly.
We'll finish up the meeting. Thank you.
Thank you, Norm.
Norman:
Okay.
David:
As we finish up this evening, as counsel indicated, there wants to be a potential... Well, there wants to be immediately a search committee. And and, formed, to pursue the, replacement of our, past director, and vet the qualifications, etc. all, being done between and as a part of the open meeting requirements.
The,
I, I, have to mention to the remaining directors, however, that, as I, as I as I noted earlier, I have had the opportunity to visit with all of our neighboring districts and cities. I've had the opportunity to meet with a number of professionals, inside the industry, that have some affiliation, no affiliation, But are completely astute to the operations of water districts.
I've talked to engineers. I've talked to, folks that have, a litany of, of, not only areas of individual expertise, but a resumé that, would, would qualify, them as in, in my initial estimation, as a candidate for, the district manager's replacement. It's with that that I would ask, one of the directors, for motion, to to, elect that committee and, where we can, can, pursue those, candidates, by, say, maybe October 22nd and, and, be able to vet those, over the course of this short period of time, but fully and, and,
impossibly meet on on that, replacement, in in November. I think our meeting is on November 19th. Is there a motion that could be made?
Robert:
I move to make a motion that a search committee for Director, McEntire and Crew, is forward to accept and review any and all applications for a district manager. And as we heard from council, we can use the job description and Mr. Nikkel's employment contract, outline to serve, as a job description. And as you mentioned to the board, will discuss and consider the qualifications of all in any applicants, to employ a district manager at our next regular meeting, which is, November 19th.
And this meeting shall, we'll make this meeting public as well. That meeting will vet and all the qualifications will be discussed will be online and, a public meeting as well. I make the motion.
Norman:
I, I second the motion.
David:
There's a motion on the floor, to, convene a search committee of myself and Director Crew, that we, will endeavor to receive and review applications of the district manager, position, through, October 22nd, is the date that looked like it worked. And and,
Robert:
The 19th is our...
David:
So that we're in a position to, appoint, that replacement on, on, November 19th.
We had a motion. We had a second. Is there any more discussion? Okay, let me just finish this. The comment that I had earlier about my experience with our neighbors and with other people in the profession. I was introduced to a gentleman and have had subsequent conversations with him, who seems to reflect, someone that has, not only the, talent, but the integrity of of, someone that we could consider, helping us through this temporary situation, at least.
He's not only qualified, as I mentioned, but he's actually had this position before, albeit he is not with Pinnacle any longer. Rather is immediately available to us. And should we wish to engage him as our interim district manager, his name is Jim Worley. So, it is with that motion. And the second the additional conversation, that I will pursue a vote on the motion made by, Director Crew, or Director Merritt I'm sorry.
Board Voting All Speak:
When called upon, please indicate, your concurrence or not. Director Froman. I. Director Crew. I. Director Merritt. I. Motion for the search committee has been unanimously, unanimously approved.
David:
At this time, with the, before conversation that we've had, I would like to make a motion to move. Or I move, to seat this Mr. Jim Worley as interim district manager for the duration of the employment search. Is there a second to that motion?
Denise:
I second that motion.
David:
We've got a motion on the floor to immediately move to seat.
The recommendation of Jim Worley as the interim district manager, effective immediately for the duration of the employment search. We have a second. Did we have a second? We have a second, any further discussion? Yeah, you were the second. I was..
Board Voting All Speak:
No further discussion. Please vote on the matter when called upon. Director Merritt. I. Director crew. I. and Director Froman. I. Motion carries.
David:
And somehow.
I have misplaced. May I? Misplaced my agenda. Directors' matters are complete. We'll move onto Item number 13, public comments. Open up the floor again. Having heard from no one that wanted to speak, we'll open it up again, as we have, been accustomed to and, respected by those in attendance. Is there anyone that wishes to speak, at this time?
Seeing and hearing none. Item 13 is complete. Item 14 is the adjournment, is, do we have a director that would like to make a motion to adjourn?
Norman:
I'd like to make a motion that we adjourn the meeting.
Board Voting All Speak:
Director Froman has made a motion to adjourn. Is there a second? I'll second that. Director crew is seconded.
There's a motion to adjourn. And a second. Is there any further discussion? Hearing none. Vote on the matter when called upon. Director Froman. I. Director Crew. I. Director Merritt. I. Meeting adjourned. Thank you.