PORTSMOUTH WATER AND FIRE DISTRICT
1944 East Main Road, Portsmouth, Rhode Island
Administrative Board Meeting Minutes
August 19, 2008
OPENING BY CHAIRMAN AND ROLL CALL
The meeting was called to order at 7:15 PM by Chairman Joseph Magliocco.
Board members present: Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco,
William Douglas, George Crockett and Ronald Molleur
Board members absent: None
Also present: William McGlinn, David F. Fox
Guests: James Wilkinson, Braver, Fiscal Year 2008 Financial Audit Review
Mr. Wilkinson explained to the Board that there were two adjustments made to the financial draft that was submitted to the Administrative Subcommittee. Those adjustments pertained to;
· Sakonnet River Bridge project – invoices dated May 1, 2008 were back dated to April 30, 2008 to reflect work performed during Fiscal Year 2008, which created a $43,000 receivable.
· The second adjustment was to capitalize the total value of the Sakonnet River Bridge work, even though it was not put into service during fiscal year 2008. The capital contribution from the state will be depreciated on the District’s Balance Sheet.
With regards to the Deferred Revenue amount on the Balance Sheet, the District used a different approach for estimating the usage from the average reading date through the end of the fiscal year. In the past, the District estimated unbilled revenue using the average ending reading date, average consumption, and average overage consumption rate. For Fiscal Year 2008, the calculation was doing using the average ending reading date, and actual consumptions based on the District’s daily demand, and the minimum consumption rate.
Balance Sheet –
· Restricted Cash of $1,655,000 consists of the proceeds received from the 2002 and 2007 bonds.
· There are no commitments of amounts payable from those funds.
· Net decrease of $115,000 was the bond principal that was retired during the fiscal year.
· Net worth decreased $227,000 from the prior fiscal year.
The most significant accrual was the Governmental Accounting Standards Board (GASB) required recognition of the Pollution Remediation Obligation, which is for the removal of lead from the District’s tanks and surrounding area. Although the work will be performed during Fiscal Year 2009, GASB requires that the accrual amount be included in the financials of the fiscal year of discovery.
Mr. Driscoll noted the decrease of the District’s Net Assets and asked Mr. Wilkinson for the reasoning.
Mr. Wilkinson explained that Total Net Assets for Fiscal Year 2008 were $7,912,117, which was a decrease from $8,298,832 at Fiscal Year End 2007. The majority of the decrease is associated with Unrestricted Assets.
Mr. Driscoll noted that the District’s investments decreased approximately $200,000; however the District’s Accounts Receivable increased approximately $370,000.
Mr. Wilkinson noted that both are attributed to the District’s customer’s overage consumption being billed at fiscal year end.
Mr. Driscoll further explained that the District needed to use some of the investment funds to pay for water purchased from Newport.
Mr. McGlinn added that part of the accounts receivable amount includes the approximately $175,000 invoicing to the RI Department of Transportation for the Sakonnet River Bridge Project.
The majority of the invoicing for the project will be sent as a comprehensive billing package, which will include delivery slips to the site, contractor invoices, the District’s Inspection Reports, DOT’s Inspection sheet.
Mr. Wilkinson referred to the Statement of Operations, noting an increase in both Water Sales and Cost of Water Purchases during the year. This change is attributed to the weather conditions, an increase of administrative fees, Newport water rate increase and engineering costs that were significantly higher than the previous year.
The Statement of Cash Flows reconciles the $96,000 expenses for fixed assets back to the net income and loss amounts.
There was a decrease in investments of approximately $184,000 used as part of the cash flow during the year.
Areas that are consistent with previous periods are property leases, bond principal payments on debt.
With regards to Internal Controls and Compliance Matters, it was found that;
· There were no material weaknesses in internal controls.
· No violations of laws and regulations were discovered.
· No questionable items found relative to specific “related party” billings and accounts receivable.
· No computational errors, violations of District policy or policy exceptions found during specific testing of compensated absence accruals.
· Specific testing performed on unbilled revenues based on estimates made by the District.
· Specific testing for property tax revenue from related party individuals, bidding procedures, cash disbursements and cash receipts.
Mr. Wilkinson, in response to a question presented by Mr. Driscoll, explained that the specific testing of the District’s purchasing procedure involved sample testing of no less than 20 disbursements that would require either quotes or bids to be prepared. They in turn would be traced back to supporting documentation.
Mr. Fox asked if the District’s Meeting Minutes are reviewed with regards to bids that may have been rejected and the reasons for rejection; and if it would be a reportable item to the District’s financials if they had found that a bid was accepted after a specified deadline.
Mr. Wilkinson confirmed.
Mr. Driscoll referred to the Standards of Auditing Standards (SAS) 114, which noted some management delays with providing requested information.
Mr. Wilkinson explained that it was mentioned to open the discussion of possibly the timing of the audit. As with previous years, it was found that more time is needed for the District to close their books, analyze accounts internally, prepare the Trial Balance and meet with the auditors for their review and internal testings.
Mr. McGlinn further explained that Miss Milner is not only attempting to prepare for the June audit, she is also monitoring the annual water bill mailing and tax sale process. What is being suggested is to reschedule submission of the drafted financials for the Administrative Subcommittee for later in July, with the final audit being presented for approval at the August meeting. The rescheduling would allow an extra three weeks for preparation, and the final audit would be obtained within the scheduled three months of the fiscal year end.
Mr. Wilkinson referred to the Operational Statistics and noted the following;
· Current ratio – even though the District used some of its cash reserves to fund operations, the 2.94 is well above the standard of 2.0
· Debt to Equity – the District maintains a 0.63 ratio, which surpasses the standard of between 2 to 3.
· Operating Ratio – measures operating revenues over operating expenses, with the standard being a profit of approximately 25% of revenue to fund debt services. The District has never run into an issue of not being able to pay its debt, nor has it had a need to raise revenues to generate profits to the standard of 25%.
· Cash Flow Coverage Ratio – first time the District has reported an unfavorable ratio of -0.34; however it is due to the recording of the Pollution Remediation Obligation of $426,000.
It was noted that there will be a footnote in next year’s financials that will address the recovered portion of the Pollution Remediation Obligation, based on bids that are lower than the estimate used in the Financial Statements.
Mr. Douglas asked if there were any significant adjustments that the staff needed to make this year.
Mr. Wilkinson explained that there were more entries than previous years, some of them routine, but others mostly pertained to the Sakonnet River Bridge Project.
Mr. Driscoll, seconded by Mr. Douglas, motion to approve the Fiscal Year End 2008 Audit.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Mr. Wilkinson left the meeting
CORRESPONDENCE - None
MINUTES OF MEETINGS
Administrative Board Meeting Minutes
Mr. Crockett, seconded by Mr. Douglas, made a motion to accept the Administrative Board Meeting Minutes of July 15, 2008 and Executive Session Minutes of July 15, 2008.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Extend the Period for Public Filing of Minutes Until the Next Meeting for Preparation and Review by the Board
Mr. Polselli, seconded by Mr. Crockett, made a motion to extend the period for Public Filing of Minutes until the Next Meeting for Preparation and Review by the Board.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
OLD BUSINESS - None
NEW BUSISNESS
Approve Payment of Bills
Mr. Douglas, seconded by Mr. Driscoll, made a motion to approve the payment of bills listed for August 19, 2008 for the amount of $218,808.11.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Approve Special RICWFA Bond Interest Expense
Mr. Douglas, seconded by Mr. Driscoll, made a motion to approve the RICWFA Capital Expense Payments for the total amount of $4,366.82.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Approve RICWFA Bond Capital Expenses for Tank Project
Mr. Douglas, seconded by Mr. Crockett, made a motion to approve the RICWFA Capital Expense to C&E Engineering for the total amount of $2,802.20.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Mr. Driscoll referred to a compilation of account bank balances that are included for the Board’s review and noted it is no longer needed.
REPORT FROM GENERAL MANAGER
Water Service Applications – PRESENTED
Water Service Application Approvals for Newport Federal Savings Bank, 1430 East Main Rd., Map 53, Lot 18H
Mr. Nott, seconded by Mr. Driscoll, made a motion to approve the water service application for Newport Federal Savings Bank, 1430 East Main Rd., Map 53, Lot 18H.
Mr. Driscoll noted that there is an estimated annual usage of 260,000 gallons.
Mr. McGlinn explained that the amount is for the first two years while their landscaping is underway. After that timeframe the usage is expected to be approximately 100,000 gallons each year.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Demand Report – PRESENTED
Maintenance Report - PRESENTED
Mr. Magliocco noted that the large Fort Butts tank is online. It was also noted that the fire service pressure tests for Common Fence Community Hall and Carnegie Tower passed.
Mr. Douglas referred to a recent incident in Portsmouth where one of its citizens was removed from their home for unsanitary conditions caused by an overpopulation of cats. It is requested that the service not be turned off to that property.
It was also expressed that because of the District’s customer contact, its personnel should become more proactive in relationship to community safety issues such as this.
Annual Report to RI Water Resources Board
The Annual Report to RI Water Resources Board was submitted to the Board with the Agenda package.
Mr. McGlinn noted that the RI Water Resources Board is required to submit to the state’s House and Senate an update on water demand of all systems within the state and what work is being performed.
Sanitary Survey Report from RI Department of Health
The RI Department of Health Sanitary Survey for 2008 was submitted to the Board with the Agenda Package.
Mr. McGlinn explained that the RI Department of Health performs a Sanitary Survey every three years. The survey involves a visit to the various systems examining any possible problem areas where the system could get contaminated. Items they check for are unclean conditions, rodents in pump stations, cross connections, unsecured locks and security fences with holes.
The only item that they found with the District is broken and an area of corroded barbed wire on the fence behind the office.
It was noted that the District will be replacing that fencing during its planned tank project.
FY-08 Water Audit
The District’s Fiscal Year 2008 Water Audit Report was submitted to the Board with the Agenda Package.
Mr. McGlinn explained that the unmetered water is 8.7%, which is consistent with most recent years and well below the Boards established goal of 10%, and the state wide goal of 15%.
The District’s customer base is monitored for proportionate increases to consumption in relation to the increase in customer base. Due to the District’s Leak Detection Program, public education, changes in plumbing code and demand management, the demand is not increasing proportional to customer base.
It was also noted that there has been a change of customer types; less industrial and more residential than in the past.
Mr. Magliocco expressed that he feels the public is more aware of conservation these days.
Water Quality Update
Mr. McGlinn stated that the District’s fourth quarter running average for TTHMs increased from 82.5 to 84.8, which is not a significant change.
The District is not being regulated because it does not add chlorine; however the District continues to monitor the results. Although no action needs to be taken, the District continues to report the results in its annual Consumer Confidence Report.
Mr. Driscoll stated that the District used to add chlorine at the Quaker Hill pressure reducing valve and asked if the readings are favorable.
Mr. McGlinn responded that chlorine is no longer added and the microbiological results are acceptable at the end of the system.
· Chlorine residual standard is 0.2, with the District testing between 0.05 and 0.1.
· Chlorine is added only on an emergency basis or if the heterotrophic plate count increases in the water tanks.
· Total chlorine, which is free chlorine and combined chlorine, is a bit higher, between 0.2 to0 .4 ranges.
In response to a question presented by Mr. Driscoll regarding frequency of treatment, Mr. McGlinn explained that the District adds chlorine to the tanks once or twice a year. Because the addition is done to treat a specific problem, it is not considered treatment of water on a regular basis.
Mr. Driscoll asked if it were too early to tell if the newly installed mixing system in one of the Butts Hill tanks has resulted in improved readings.
Mr. McGlinn responded that the results are similar, but it is expected to take a year or more to establish whether it is a contributing factor to the results.
It was noticed that the heterotrophic bacteria is affected more quickly and it is presumed that it is because of the new mixing system.
Newport Water Department’s results for TTHMs are high as well. Their four quarter running average is 76, which is below the compliance standard of 80. It has been noted that the results from Newport’s Station One Plant are lower than those from Lawton Valley and it is believed that it is contributing to keeping their quarterly average under the standard of 80.
The Navy is having similar issues with their four quarter average with TTHMs of 108.
It was noted that the District, Newport Water Department and the Navy-Melville all are taking their own samples and submitting them to different labs, with similar results being reported.
Commercial Package Insurance Policy Renewal
Mr. Douglas, seconded by Mr. Driscoll, made a motion to approve the recommendation to renew the current commercial liability and property insurance program with the insurance carrier Arch through broker HUB, International for one year at a 5% reduction in premium with no change in the basis and no change in coverage predicated on:
· The program being tailored for water districts
· The favorable experience with Arch
· The price being competitive with the market conditions
· The avoided costs of soliciting proposals
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Receive Leak Detection Proposals and Award Contract
Mr. Douglas, seconded by Mr. Driscoll, made a motion to approve the recommendation to waive the completion date of October 1, 2008, as a requirement for award of the 2008 Leak Detection contract, predicated on the District’s best financial interests and the negligible impact on district operations,
Award the contract for leak detection to Heath Consultants at the proposed survey rate of $107.00 per mile for an approximate total cost of $13,482.00 with the award being predicated on the quality of their proposal, the company’s and technician's experience, the company’s previous successful performance for the District and the favorable price
Mr. McGlinn noted that there was a typo in his memo to the Board. The completion date should be September 30, 2008.
Mr. Driscoll, seconded by Mr. Crockett, made a motion to approve the recommendation to:
· Waive as an informality Heath Consultants’ non-compliance of their proposal with the required start and completion for the work.
· Accept Heath Consultants’ post-proposal offer of a survey schedule of August 20, 2008 through September 30, 2008.
· Award the contract for leak detection to Heath Consultants at the proposed survey rate of $107.00 per mile for an approximate total cost of $13,482.00 with the award being predicated on the quality of their proposal, the company’s and technician's experience, the company’s previous successful performance for the District and the favorable price.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Lead Soil Remediation
Mr. McGlinn stated that C&E Engineering has reviewed the bids, performed reference and financial checks and noted that there are two quality contractors for the two separate contracts.
Mr. Nott, seconded by Mr. Driscoll, made a motion to award the Contract and allow the District’s Moderator, Ronald Molleur to sign the contract, for Lead Soil Remediation Butts Hill Small Water Tank Site, Butts Street, Portsmouth, RI, to the low bidder, Clean Venture, Inc of Framingham, MA, for the bid price of $121,150.11 (as adjusted higher by $0.50 to correct a math error in the total of bid items), predicated on the findings in a letter dated August 15, 2008, from the District’s engineering consultant, C & E Engineering Partner’s, Inc, that said company is the “lowest responsible bidder” premised on:
· their submitted base bid proposal
· meeting the contractual bidding requirements
· submitting required documentation
· experience
· documented evidence of past satisfactory project performance
· expertise related to similar projects
· financial stability and
· qualified staffing
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Mr. Crockett, seconded by Mr. Driscoll, made a motion to;
· Reject the bid from Dowling Corporation of Wrentham, MA, as it was received after the specified time for receipt of bids.
· Award the Contract and allow the District’s Moderator, Ronald Molleur to sign the contract for Lead Soil Remediation Quaker Hill Tank Site, East Main Road, Portsmouth, RI, to the low bidder, TMC Services, Inc. of Bellingham, MA , for the bid price of $85,754.00, predicated on the findings in a letter dated August 15, 2008, from the District’s engineering consultant, C & E Engineering Partner’s, Inc, that said company is the “lowest responsible bidder” premised on:
o their submitted base bid proposal
o meeting the contractual bidding requirements
o submitting required documentation
o experience
o documented evidence of past satisfactory project performance
o expertise related to similar projects
o financial stability and
o qualified staffing
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Mr. Driscoll asked if there would be a District employee supervising the work.
Mr. McGlinn explained that C&E Engineering’s contract with the District includes their;
· on-site inspection
· monitoring the remediation and directing the limits based on the plans
· supervising the removal of contaminated material and field testing
Mr. Fox expressed to the Board that the District has a very good reputation for fairness in the way the bid process is conducted. Extreme care must continue to be followed when receiving and opening bids submitted. Bids that are received late, no matter how late should not be opened.
It was noted that Mr. Wilkinson had explained to the Board that if discovered, opening a bid that was submitted late would be a reportable disclosure in the District’s annual financial report and it could cause future bid responders to become concerned about the District’s bid procedures.
Mr. McGlinn referred to the funding to pay for the remediation project, and he does not feel special funding is needed; rather the expense can be covered by using cash reserves that have been set aside for emergency purposes.
Mr. Douglas referred to the Butts Hill site and asked if the Board would be amenable to offer assistance to the historical project being conducted.
Mr. McGlinn stated that he will contact the group conducting the project.
Mr. Douglas, seconded by Mr. Driscoll, made a motion to have the General Manager follow the study group that’s looking into remediating the Ft Butts Historical Site to the extent that the District can be a good neighbor and help that process along, and report back to the Board.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Update of Sakonnet River Bridge Project – Corridor for Future Pipeline and Reimbursement Request
Mr. McGlinn referred to his correspondence to the Water Resources Board, requesting reimbursement for half of the District’s cost to date for the pipeline on the Sakonnet River Bridge, which is $6,391.
The District is eligible for 50% funding because this is a project that will service two communities. Estimates are pending from the Department of Transportation on the future cost for the construction on the bridge to accommodate the future pipeline.
It is estimated that the future construction cost will be $150,000, meaning the District will be responsible for approximately $75,000.
Update on Water Storage Tank Water Quality and Security Improvements Project
Mr. McGlinn noted that the large Butts Hill Tank is back online. The contractor had a problem getting the VOC test to pass. Although the results were a fraction of the safe drinking water act, the health department wants to have no VOCs detected when the tank is full. The tank was drained for them to put ventilators inside the tank for a week to help dry the paint with hopes of eliminating the volatiles when the tank was refilled.
It was noted that the District was responsible for one tank fill-up, with the contractor being responsible for any subsequent refills needed.
Request Authorization to Advertise for Replacement for Water Distribution System Manager
Mr. Driscoll, seconded by Mr. Nott, made a motion to authorize advertising for Replacement for Water Distribution System Manager.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Recommend Moving Next Board Meeting from September 16th to September 23
Mr. Magliocco explained that Mr. McGlinn will be at a conference on September 16, 2008, and has requested to move the meeting date to September 23, 2008 so that he can be present.
Mr. Driscoll, seconded by Mr. Nott, made a motion to move the next Board meeting form September 16, 2008 to September 23, 2008.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Portsmouth Heights Subdivision (Wicks Farm), Map 63, Lots 12 and 15
Mr. McGlinn explained that there was originally a proposal to subdivide and build 54 single family homes on the Wicks Farm property. It is now being proposed to build 108 homes that will qualify for LMI – Low to Middle Income Housing.
Although there is enough reason for the Town to deny the 108 building request, they have requested information from experts on the effects of the water systems, both the District and Newport.
Mr. Douglas asked what the point is of having a water shed district if building is allowed.
Mr. McGlinn explained that the Town can’t completely disallow building, but they can control how construction is done; such as no underground storage tanks and controls on drainage and how to treat it before it reaches the water shed.
The District will recommend to the Portsmouth Planning Board to reject the request to allow the LMI Subdivision based on the Town’s Rules and Regulations and the District’s concern about water quality.
Mr. Douglas, seconded by Mr. Driscoll, made a motion to submit a letter to the Town of Portsmouth Planning Board, signed by the District’s Chairman.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
Mr. Driscoll asked that in the event the project is allowed to proceed, will there be double-backs required.
Mr. McGlinn confirmed and added that there will be no dead-ends allowed. A review will also be done to study the feasibility of tying in to Jepson Lane.
REPORT FROM LEGAL COUNSEL
Mr. Fox noted that the Navy Contract Negotiations scheduled for Executive Session are not ready for discussion at this time.
ADJOURNMENT
Mr. Driscoll, seconded by Mr. Nott made a motion to adjourn.
A vote was taken and the motion passed with Gaetano Polselli, Michael Nott, Philip Driscoll, Joseph Magliocco, George Crockett, William Douglas and Ronald Molleur voting in the affirmative.
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Philip T. Driscoll, Clerk