Phelps County PWDS #4
Board Meeting Minutes
September 13, 2010
Call to Order
Board members in attendance were John Staples, Ken Matthew, Jack Lansberry and Bob Laney. Also present were Jodie Branson from MRPC and Dusty Densmore of Triple D Construction. Community members present were Juanita & Rodney Blaser, Tom & Cathy Zadrozny, Eddie & Louis House, Phil Davidson, Gary Hitch, Robert & Alberta Bullock, William Stotler, Mark Jones, Jeff Jones, David Bartle, Jim Holt, Dan Hawley, Curt Voss, Chris & Candace Woodward, Betty & John Scheller, Rick & Judy Homeyer and Russ Falkenrath. The President of the Board, John Staples, called the meeting to order at 6:04.
Recognition of Visitors
Bob Laney opened the meeting to comments. Jim Holt asked why the district needed a rate increase and Bob Laney responded that the district is running out of money. Jim Holt wanted to know if there were people getting a “free ride”. John Staples responded that there are people with large balances who are still connected and a lien has been placed on their property. Jim Holt stated that if a person doesn’t intend to sell, a lien is ineffective. Bob Laney stated that the district is prepared to disconnect for non pay. The district did not disconnect in the past because the attorney advised the board would be liable for damages when the sewer backed up into the home. The attorney has recently advised the board to follow a disconnect procedure and there would not be a liability issue. The board was asked if they had tried using a collection agent and they responded that the board had decided not to use a collection agent because they felt that it would be ineffective. Bob Laney stated that the goal is to get everyone in the district paying for the service, and to that end, the district is negotiating with past due accounts to collect the past due sewer fees and negotiate the amount of the past due penalties. Bob Laney also stated that disconnecting non payers will not lower the monthly fee for district users.
When asked why the monthly fee was high in comparison to the City of St. James. The board responded the district can not be compared to the City because there are a larger number of connections and the houses are closer together. Bob Laney explained that the original plan was for sewer and water. When that could not be done, it was determined that sewer was more important to the public. Phil Davidson stated that public sewer is an asset to home values, but, the high monthly rate is a negative when trying to sell a home.
When asked under what authority the district operates, Bob Laney explained that the district sets the ordinances for the district under guidelines established by Missouri State Statute and the District is a political subdivision in the State of Missouri.
Chris Woodward asked if he has to pay sewer fees on vacant land he owns. Bob Laney stated that if he were to build on the land he would have to pay the monthly fee. Phil Davidson corrected the statement, saying that he signed a paper that said he had to inform the buyer, should he ever sell his vacant lot, that a connection fee of $3,000 to $5,000 would be assessed. Bob Laney stated that customers who wished to stop paying on vacant lots were giving up their connection and would be assessed a connection fee should a dwelling be built on the land.
Phil Davidson asked why the district is broke. He questioned why the administration expense had doubled from January to August 2010. Bob Laney explained that the district had to pay MRPC for meeting space, billing and other services; that MRPC was deferring payment on this account to assist the district; and, that the invoices go back to September of 2009. Jack Lansberry compared raising the sewer rate to the 13% increase in Intercounty Electric rates this past year. The district is operating under budget constraints, like everyone else, and is going broke.
When asked what options had been researched, Jack Lansberry responded that USDA can not defer payments on the loan or reduce the interest rate. Bob Laney stated that there is the option to let the district go into default, and turn the district over to the county and the county will make the users pay $70-$100 per month.
John Sheller asked why the repairs were done by a company out of Illinois. Jack Lansberry stated that the pumps were purchased from a company in Illinois and that company was responsible for warranty work. The pump warranties have expired and repairs will be an added expense. The district will continue to be responsible for the pumps; it will not become the homeowner’s responsibility.
When asked how many people are not paying, Jodie Branson said there were approximately 20 delinquent accounts that will be subject to disconnect. Bob Laney responded that delinquencies have been greatly reduced by MRPC. No one has been disconnected, yet. The district has put into place procedures to disconnect that have been approved by the attorney. Initial notification of the policy change was distributed the 1 st of September. Past due accounts will receive a notice at the end of the month and disconnections will begin October 30 th. Juanita Blaser wanted to know the amount of actual monthly fees included in the accounts receivable report. Bob Laney stated that we could provide that number at a later date.
John Scheller stated that he would like the sewer district to come and take the pump out and reconnect his septic. He stated that his basement floods every time it rains because “they” went through the drain tile with an auger. Bob Laney agreed that his private system worked perfectly, also. But, with the public sewer, there isn’t raw sewage running out in ditches or leaching into wells.
Chris Woodward wanted to know the number of residents in the district. MRPC will determine that number and provide it at the next meeting. Phil Davidson wanted to know if the subdivision on County Road 1022 is connected. Jodie Branson stated that the one lot that has been developed is connected. Bob Laney stated that a connection fees will be assessed when the lots sell.
Phil Davidson wanted to know about the delinquencies. MRPC stated that of the 224 connections, approximately 20 accounts are delinquent. Mr. Davidson questioned 20 accounts adding up to $201,000 uncollectable on the cash flow statement. Bob Laney stated that “the number is totally fictitious”. He went on to explain that we would never collect the late charges accrued under the old policy.
Juanita Blaser wanted to know what the original loan amount was compared to the current balance. Bob Laney stated that we had retired approximately $20,000 and MRPC would provide exact amounts at the next meeting.
Chris Woodward stated that everyone is being penalized for those that are late. Jack Lansberry stated costs go up every year for any business. Phil Davidson stated that in this case, the cost of the product has exceeded market value. Jack Lansberry stated that he believes the rates are comparable. Dusty Densmore stated that an engineered sewer system would cost the homeowner $14,000. Phil Davidson stated that a $50 per month sewer bill is a negative to a potential buyer when selling property. Jack Lansberry stated that the alternative to a rate increase was the district going bankrupt and whoever managed the district for the bankruptcy would be able to charge the participants whatever it takes to run the district.
Chris Woodard stated that at a meeting prior to the public sewer being built, they were told that water would be available in 5 years and every household would pay a flat fee of $25. The board responded that the State wouldn’t allow installation of sewer and water at the same time. Bob Laney stated there was a greater need for public sewer, so that was the choice. Originally sewer connection was choice and 4-5 years after the feasibility study, and after construction began, USDA required mandatory connection. Chris Woodward wanted to know why “it” keeps changing. Jodie Branson explained that each funding agency has requirements and at the time Archer began the project, all the funding was not in place.
Phil Davidson asked for the attorney to be present for the next meeting to answer questions and was told that it will cost $1,300 for the attorney to be present. Jim Holt stated that there may be an option for the City of St James to take over the district. The City already treats the sewage from the district and they have the other needed services in place. Bob Laney pointed out that the City would be hesitant to take over the system liabilities such as the replacement of grinder pumps that are out of warranty. Chris asked how many grinder pumps were purchased; and how many are not in the ground. Dusty Densmore responded that there were 120-125 pumps purchased and there are currently 3 spares.
Betty Scheller asked why the district was paying for administration and no one would call her back. Mrs. Scheller asked how she can pay for something that she doesn’t have enough money for; and why it keeps raising. Jodie Branson stated that she had sent letters and called Mrs. Scheller. Mrs. Scheller said she did not receive any call backs and didn’t believe that any attempt had been made to call her.
Phil Davidson wanted to know if the district had a CPA audit the books and wasn’t it required by law. Jodie Branson said that the district is not in violation by not having an audit. The audit has been bid and needs to be scheduled. Bob Laney stated that an audit cost money. Chris Woodward said that an audit would tell the district where it was at. Bob Laney stated that an audit is going to establish whether or not MRPC is doing a good job. Any one in this room can seek funds for the district and the board would be indebted to them for the effort. The customers have a vested interest in the district. Curt Voss volunteered to make calls to search for funding and was provided with some ideas and contact numbers.
Chris asked if the original proposal anticipated repairs and delinquencies. John Staples responded that Archer did not anticipate hitting rock; or parts of the system not working as designed; or the first contractor defaulting on the contract requiring a new contractor be assigned to complete the project.
Dan Hawley asked what the rate would be to cover the operating expenses and retire the debts. Bob Laney stated the current rate would cash flow the expenses. There hasn’t been any discussion to retiring the MRPC account. Jodie Branson stated that a rate in the $60 range would retire the MRPC account, but unanticipated expenses such as the $5,000 to repair the lift station this month could change the outlook. The $5,000 repair was half of the revenue for the month. USDA provided the district with a chart that used a 3% per year inflation factor and raised the rate every year. The rate would be $50 this year.
When asked about the life of the components, Dusty responded that if the pumps are abused it decreases the life of the pump. There is no way to anticipate the life of a pump to certainty. Dusty stated that they have identified several design flaws; and his focus is on making the system work. Curt Voss stated that if the customer caused a breakdown they should pay. John Staples stated we have a procedure in place to bill the customer, but it is a matter of customer service and proof.
John Scheller stated that the contractor building the system went through the drain tile on his house and now his basement floods every time it rains. The contractor dug up the yard three times and it wasn’t necessary. The contractor didn’t know what they were doing. They put the grinder pump in the wrong place. They disregarded what he told them and put it where they wanted it. Mr. Scheller stated that the whole foundation of his house needed to be dug up to fix the drain tile. It’s going to cost $30,000 to fix the drain tile; and he has to pay $50 every month. Mr. Scheller demanded that we take our system out and re-connect his septic. Mr. Scheller went on to say that he would sue the district in federal court because “you don’t know what you’re doing”. John Staples responded that there is an opening on the board if Mr. Scheller would like to get involved.
Phil Davidson asked about the closed session on the agenda and wanted to know if there were any pending litigations. Bob Laney reported that we have never gone into closed session and that we did not have any pending litigation “before tonight”. Phil Davidson asked if there was going to be action tonight on the rate increase. John Staples responded yes. Phil Davidson said the rate increase should be put off until after an audit. Chris Woodard stated that he preferred not having an increase now and another one after the audit. He understands that an audit costs, but, feels that it is necessary before the rate is increased. Bob Laney said that the design of the audit wouldn’t necessarily be to make a recommendation about a rate. Phil Davidson wanted an audit to verify the district financials. Jodie Branson said the financial are accurate. The late fee revenue on the financials was accrued per the ordinance in affect. The late fees are probably not collectible based on the history of the board negotiating with the customers. And, the policy has been changed to reflect what the board feels are more reasonable late charges. Intercounty Electric couldn’t produce a balance sheet, revenue and expense reports or a budget as required by the loan. That is why there has never been an audit.
Phil Davidson expressed a concern with a $3 increase being implemented when an $8 increase is necessary. Jack Lansberry stated that whatever model you go with, there are unplanned expenditures. Chris Woodward stated that he plans for his car to break down. Jodie Branson reported that the district places $368 a month for repairs in a replacement reserve account.
Tom Zadrozny said that he believed that a member of the board and Jim Holt should meet with Mayor Wilson and see if the City taking over the system is workable. He is concerned that the cost will continue to rise and there will be people who can’t afford it.
Chris Woodward expressed concern that the sewer bill would continue to go up and Dusty reminded him that your electric is going up; your gas goes up; your food goes up. Everything goes up. There is inflation on everything. Chris compared district rates to what City resident pay. Bob Laney said that the cost is spread over more people; and, he said the city admits that their rates are artificially low and they make it up in other fees. It’s unfair to compare district rates to the City.
Juanita Blaser said that there was raw sewage on the ground prior to the public sewer. Mrs. Blaser is concerned that homes that are disconnected be monitored for re-routing of sewer to the ground. Jack Lansberry stated that the district would monitor and report spills to proper authorities; and non compliance could result in a house being condemned.
Rodney Blaser questioned MRPC receiving $4,000 per month which is a third of the district’s income. He doesn’t believe that the district can ever pay the “loan” off. Juanita Blaser wanted to know what MRPC’s fee was based on. Bob Laney explained that it was the facility, answering the phones, billing and overall administration of the district. Rodney Blaser suggested that the district needed to cut their overhead and that MRPC’s services were too expensive. Jodie Branson suggested MRPC was willing to end the contract at any time. Bob Laney stated that if the district had a full time staff and maintained a building to perform the district administration, it would be more expensive. Juanita Blaser stated that she strongly disagreed with Bob Laney’s statement because she knew what it cost and there are many people who can do this out of their homes. She acknowledged some negativity and stated she didn’t want the job. Mrs. Blaser stated there has to be an avenue that doesn’t cost $4,000 a month. Jodie Branson stated that the job was advertised for bid and MRPC was the best choice from the responses. Mrs. Blaser said that in the months that MRPC has been working with the district, the time spent should be going down. Jodie Branson agreed, but more time is required because the policies and procedures keep changing.
Mr. Blaser wanted to know how many people are charging time to this project. The bulk of the work is being performed by Jodie Branson. But, because of separation of duties, one person received the payments and another applies the payments; and another pays the bills. Mrs. Blaser said the district doesn’t require those layers. Mrs. Blaser stated that she has done more than all these duties and has never gotten paid that much. Ms. Blaser asked the rate the district is paying MRPC and stated that the board should know. Bob Laney stated that the rates are revisited regularly. Jodie Branson explained the rate includes the overhead, not just wages. Mr. Blaser addressed the attendees, “How many of you make $40 an hour?” Jodie Branson stated that she surely doesn’t make $40 an hour. MRPC’s board had been approached to reduce the rate for the sewer district because of their financial situation. MRPC’s board declined doing so.
Bob Laney suggested that the district would be in chaos without MRPC and advised never getting involved with a new board that doesn’t have the rules in place. He stated that the district could hire an accounting firm and contract with a manager or the district could hire staff. But it would be more costly than what is in place. If the city has the capacity to handle the district administration it would be an option. We don’t know if the City would be interested. Jim Holt stated that it would be a “hard sell” to get the city interested.
Alberta Bullock stated that we are in a hard place because we are going to have equipment break downs. John Staples said that even after the loan is paid, he doesn’t foresee the rate decreasing. Bob Laney stated if the district defaults on the loan, and the county takes over, it will be worse.
Jim Holt questioned if there was agreement to approach the City. He stated that the district would not get the same rates as city residents. The city is facing necessary upgrades to the older part of their system. If they can’t come up with the funds, the “fed” will probably step in and require the City charge an additional 2% of the middle income and their rates are going up. John Staples stated the city will probably want to annex the district if they operate the sewer.
Mr. Blaser wanted to know where the maintenance was reflected in the financials. Bob Laney stated that Triple D was the other best thing they ever did, because, Triple D is going above and beyond to assist the board in running the district. Maintenance activities are being performed regularly and they have saved the district money. Jim Holt requested that Triple D not close the manhole at his property due to the smell. Dusty Densmore said that if the board approves it, he will leave it alone. Triple D was concerned that debris could enter the system at the open manhole and possibly cause damage to the lift station.
Candace Woodward asked if there was a legal stand point to go back on the engineer. John responded that there is probably a statute of limitations; and legal action would cost. Bob Laney said we would probably lose. Dusty pointed out that the engineer would pass the blame, such as the contractor didn’t build to the drawings. Dusty stated that the engineer has been unable to provide as built drawings; only aerials with lines drawn in. Curt Voss compared the situation to a home inspector who is not liable for errors.
John Staples stated that he was appreciative of the ideas expressed this evening and he encouraged the public to get involved. The visitors left the meeting. Jeff Jones stayed.
Financial StatementsMaintenance and Operations Report
Dusty Densmore presented the maintenance activities report for the month of August:
Jack Lansberry asked if we have a spare flow monitor on hand. Triple D is working on getting the old one repaired, but is having a problem with Dwyer returning his call. Triple D will continue to contact Dwyer.
Doug Counts mentioned an alternative float system to Triple D. Dusty Densmore is familiar with the alternative because he uses the same in conventional systems. The alternative to the electronic pressure gauge we are using is a 3-stage float tree. The bottom is a low level alarm; the middle is a flow regulator which runs the pump until the low level alarm shuts the pump off; the top is a high level alarm as a safety if the middle alarm is by-passed. Doug Counts said that we could outfit all three lift stations with the float tree for what it cost to replace one flow monitor. Dusty Densmore pointed out that a new control panel would be required. Dusty Densmore stated that there could be a cost savings in parts and labor after the initial cost of changing the panels.
Triple D provided an inventory list of items on hand.
Bob Laney made a motion to approve $665 payment to Triple D for service calls in August. Ken Matthews seconded the motion. The motion carried unanimously.
The board received a copy of the Operations & Maintenance Agreement renewal in the meeting packet for their review. The Operation & Maintenance contract will be open for bidding in 2012 unless there are substantial changes. Jack Lansberry made a motion to accept the annual renewal. Bob Laney seconded the motion. The motion carried unanimously. Triple D will provide the required e-verify documentation at a later date.
Orschlens does not have the tank we need. Dusty Densmore will continue to search. Dusty Densmore has not heard from Tom Caraker regarding training. Dusty Densmore will follow up with Flo-Systems regarding part needed to repair duplex pump at Rita Waters/Annette Fenley location on County Road 2310. John Staples asked Triple D to check on the house at the corner of Hwy V (Pam Nugent). The light was on, but not the alarm. Dusty Densmore has checked with E-One and they only sell to authorized dealers. Flo-Systems and a company in Springfield, Missouri are the closest authorized dealers. Dusty Densmore can be trained to repair the pumps, but the parts will be ordered through Flo-Systems.
Jack Lansberry asked if the pump at Usery’s had been pulled. Dusty is waiting for the board to make a determination. Board requested the pump at Usery’s second connection be removed.
Old Business
The board received a copy of the changes to User Charge Ordinance Article V Sections 2 & 3 in the packet for their review. Section 2 is the assessment of late charges. Section 3 is the disconnect policy. The disconnect policy states that the disconnection and reconnection charge will be “not less than $600”. This can be re-visited at a later date when the true cost is known. Dusty Densmore stated that a regular valve can be used on the gravity lines, but he hasn’t found a method that doesn’t require digging to shut off and turn on. John suggested a cap for the line. Bob Laney made a motion to approve the policy change to the User Charge Ordinance Article V Sections 2 & 3 as presented. Ken Matthews seconded the motion and the motion passed.
The board received a copy of the amendment to the User Charge Ordinance Article IV Section 2 and Appendix A in the packet for their review. Section 2 is the monthly charge. The board discussed USDA’s recommendation and options listed in Appendix A. Jeff Jones wanted to make it clear that everyone in the district owns the system; prior to the public sewer, other peoples’ sewage drained onto his property. He wouldn’t let the kids play in the yard or drink the water; and it smelled. Bob Laney made a motion for the rate to be $51.50 effective 9/30/10, target cutting expenses $3,900 and visit the rate again in 6 months. Ken Matthews seconded the motion and the motion passed.
John Staples will contact Chris Mueller with CenturyTel regarding the auto dialers. John will contact John Scheller and discuss the issues.
Jeff Jones would like to be considered for a position on the board. The board will take action at the next meeting. Ken Matthews submitted his resignation from the board effective September 14, 2020.
New Business
The board discussed the disconnect procedures. Customers on gravity lines need to be aware that the disconnect cost could exceed $1,000; the potential cost should be listed in the 30 day letter. Disconnections should be scheduled for a Monday when possible. Disconnections should be staggered to allow Dusty adequate time to respond. And accounts with the highest balances should be targeted first.
Next Meeting
Monday, October 4, 2010.
Adjournment
Jack Lansberry made a motion to adjourn the meeting at 8:58. Bob Laney seconded the motion. The motion passed unanimously.
I, John Staples, the duly elected President of Public Water Supply District #4 of Phelps County, do herby certify that the foregoing is a true and correct copy of the minutes of the regular board meeting of the Board of Directors held at Meramec Regional Planning Commission in St. James, Missouri on September 13, 2010.
_______________________________
President: John Staples