* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. SECRETARY. IT'S A [00:00:01] SPIRIT. IT'LL BE RECTIFIED IN THE FUTURE. THANK YOU. ALRIGHT, I CALL THE MEETING TO ORDER AT 4 34. WE ARE NOW HERE TO THE POINT WHERE, UM, IT IS, UH, THE CITIZEN'S COMMENT SECTION. DO WE HAVE ANYBODY THAT HAS SIGNED UP? DO I NEED TO READ THIS? NO. OKAY. THERE IS NOBODY [a. Consider approving the minutes of the Baytown Area Water Authority Regular Meeting held on September 18, 2024. ] HAS SIGNED UP. SO WE'LL MOVE ON TO THE AGENDA. WE ARE NOW GOING TO CONSIDER APPROVING THE MINUTES OF THE BAYTOWN AREA WATER AUTHORITY REGULAR MEETING HELD ON SEPTEMBER 18TH, 2024. MOVE TO APPROVE. I SECOND. SECOND. ANY DISCUSSION? ALL IN FAVOR SAY AYE. A AYE. ALL OPPOSED, THE AYES HAVE IT. NEXT WE'RE GONNA [b. Consider approving the minutes of the Baytown Area Water Authority Regular Meeting held on November 20, 2024. ] CONSIDER APPROVING THE MINUTES OF THE BAYTOWN AREA WATER AUTHORITY REGULAR MEETING HELD ON NOVEMBER 20TH, 2024. DO I HAVE A MOTION? A MOTION TO APPROVE? SECOND. WE HAVE A SECOND. ANY DISCUSSION? ALL IN FAVOR SAY AYE. AYE. ALL OPPOSED, NAY. THE AYES HAVE IT. [a. Consider a resolution authorizing payment to Cummins Inc., for generator repair service at the Baytown Area Water Authority Fritz Lanham Water Treatment Plant.] NOW WE'RE GOING TO THE PROPOSED RESOLUTIONS AND WE'RE GONNA CONSIDER RES A RESOLUTION AUTHORIZING PAYMENT TO CUMMINS INC. FOR A GENERATOR REPAIR SERVICE AT THE BAYTOWN AREA WATER AUTHORITY. FRITZ LAYMAN WATER TREATMENT PLANT. HELLO EVERYONE. GREETINGS TO OUR PRESIDENT, ACTING PRESIDENT. UM, SO IN DECEMBER OF 2025, UH, EXCUSE ME, DECEMBER OF 2024, UH, BA MAIN EXPERIENCED AN INTERRUPTION TO GENERATOR SERVICE FOR GENERATOR NUMBER THREE. UM, I PREVIOUSLY BROUGHT BEFORE YOU GENERATOR NUMBER TWO. WELL, THIS IS GENERATOR NUMBER THREE. UM, THERE WAS A AFTER COOLER LEAK ON THE GENERATOR. THIS WAS DUE TO NORMAL WEAR AND TEAR. THE RADIATOR FROM NORMAL USAGE HAD A LEAK IN IT AND WAS LEAKING FLUID. SO IT NEEDS TO BE REPAIRED. THE REPAIR COST IS $157,601 AND 5 CENTS. AND THIS WOULD BE WITH CUMMINS THROUGH OUR SOURCE. WELL, CONTRACT STAFF RECOMMENDS APPROVAL. I MOVED, GO AHEAD. GO AHEAD. I MOVED TO APPROVE. I SECOND. ALRIGHT. DISCUSSION. ANY DISCUSSION QUESTIONS? I HAVE A QUESTION. SO THERE WAS A RADIATOR LEAK AND DID THE RADIATOR DRAIN OUT AND THE, AND THE GENERATOR BURNED UP? THE GENERATOR DID NOT BURN UP. IT DIDN'T CAUSE ANY ISSUE TO THE ENGINE. THIS WAS SIMPLY A RADIATOR LEAK. THERE WAS AN ONGOING LEAK AND IN ORDER TO REPAIR THAT LEAK, THEY HAD TO BASICALLY REPAIR THE RADIATOR ITSELF. AND THAT WAS $157,000? YES, SIR. YES SIR. AND THAT WAS FOR A REPLACEMENT TO REPAIR IT? IT WAS RIGHT AT 130, 140,000. SO IT WAS ALMOST THE SAME COST. SO WE WENT AHEAD AND REPLACED IT. HOW MANY, HOW MANY OF THESE GENERATORS DO WE HAVE OUTTA CURIOSITY? WE HAVE FOUR GENERATORS, INCLUDING, INCLUDING THE BAA EAST PLANT. WE HAVE THREE GENERATORS AT BAA MAINE AND WE HAVE ONE GENERATOR AT BAWA EAST. OKAY. ANY OTHER DISCUSSION OR QUESTIONS ONE MORE TIME? YOU SAID YOU HAD THREE. WHERE? WE HAVE THREE GENERATORS AT BWA, MAINE. OKAY. AND WE HAVE ONE GENERATOR AT BWA EAST. OKAY. SO HOW OFTEN, UH, ARE THESE RADIATORS USUALLY HAVE TO BE REBUILT? WE'RE JUST EXPERIENCING THESE ISSUES AS OF THE LAST YEAR. SO OVER THE COURSE OF THE LAST YEAR, WE'RE STARTING TO SEE THESE REPAIRS HAPPEN. SO THIS IS THE FIRST TIME, UH, THEY WERE INSTALLED IN 2016. SO WE'RE GETTING A GOOD, UH, EIGHT YEAR RUN. RIGHT. SO THEY'VE BEEN IN USAGE FOR ABOUT EIGHT YEARS. AND NOW THIS IS THE FIRST TIME THAT WE'RE SEEING THESE REPAIRS. BUT IF WE HAD A SIMILAR ISSUE EAST, WE'D BE SHUT DOWN OUT THERE. WE WOULD WITH ONE GENERATOR, WE WOULD, BUT THE GREAT THING ABOUT IT IS THE PLANT CAME ONLINE IN 2021. SO THAT GENERATOR HAS ONLY BEEN IN USAGE FOR ABOUT THREE YEARS. SO WITH THE PROJECTION OF EIGHT YEARS, WE STILL HAVE ABOUT FIVE MORE YEARS TO GO BEFORE WE MAY SEE ANY PROBLEMS. BUT LIKE YOU'RE SAYING, IF THERE WAS AN EMERGENT SITUATION THAT HAPPENED, THEN YES, WE WOULDN'T ABLE TO BE, WE WOULDN'T, WOULDN'T BE ABLE TO USE A GENERATOR IF IT DID GO DOWN. 'CAUSE THERE IS ONLY ONE GENERATOR EXPANSION. YEAH. THAT'S GREAT. SO ONE, ONE THING STERLING JUST MENTIONED IS WITH THE EXPANSION, WE ARE ADDING A SECOND GENERATOR, SO THAT IS COMING. YEAH, THAT WAS MY NEXT QUESTION. YEAH, , HE HE ANTICIPATED THAT. YEAH, HE DID. SO, SO ON THESE GENERATORS, UH, SPEAKING OF THE OLDER ONES, AND I GUESS THE, I GUESS THE ONE AT THE EAST PLANT ALSO, UH, YOUR, WHAT KINDA INSPECTION PROGRAM, I GUESS DO YOU HAVE, UM, TO, TO MAYBE SPOT SOMETHING LIKE THAT? WE DO, WE SERVICE OUR GENERATORS SEMI-ANNUALLY AND WE SERVICE OUR GENERATORS THROUGH CUMMINS. CUMMINS [00:05:01] IS THE GENERATOR PRODUCT. OKAY. THAT IS THE MANUFACTURER OF THE GENERATOR. SO WE UTILIZE THE SAME SERVICE PROVIDER. SO WE DO SERVICE THOSE SEMI-ANNUALLY THROUGH CUMMINS, BUT WE ALSO DO PREVENTATIVE MAINTENANCE WITH OUR BYLAW STAFF AS WELL. SURE. OKAY. AND, AND THE ONLY PURPOSE OF THESE GENERATORS IS TO COVER ELECTRICITY WHEN WE LOSE IT FROM THE GRID, IS THAT CORRECT? YES, SIR. THERE'S, WE DON'T NEED IT. NORMALLY IT'S, IT'S, THEY'RE JUST FOR AN EMERGENCY. YES, SIR. OKAY. BUT THEY DO RUN Y THEY DO RUN PERIODICALLY, RIGHT? YES, SIR. WE, WE TEST OUR GENERATORS YEAH. UM, ON A MONTHLY BASIS TO MAKE SURE THAT THEY'RE RUNNING AT BOTH OF OUR FACILITIES AND WE KEEP TRACK OF ALL THOSE RECORDS AS WELL. YEAH. OKAY. SO ANY OTHER DISCUSSION? ALRIGHT. ALL RIGHT. ALL IN FAVOR SAY AYE. AYE. AYE. OPPOSED? NAY. THE AYES HAVE IT. THANK YOU. [b. Consider a resolution authorizing an Engineering Services Agreement with Binkley & Barfield, Inc., for the Baytown Area Water Authority Backwash and Decant Pump Replacement Project, in the amount of $360,314.00.] THE NEXT WE'RE GONNA CONSIDER RESOLUTION AUTHORIZING AN ENGINEERING SERVICES AGREEMENT WITH BINKLEY AND BARFIELD INC. FOR THE BAYTOWN AIR WATER AUTHORITY BACKWASH AND DECANT PUMP REPLACEMENT PROJECT IN THE AMOUNT OF $360,314. THAT IS CORRECT. GOOD AFTERNOON TO ALL. UM, THE ITEM BEFORE YOU IS FOR THE ENGINEERING SERVICES RELATED TO BINKLEY AND BARFIELD, WHO IS, HAS BEEN SELECTED TO PERFORM THE DESIGN WORK ASSOCIATED WITH THE BACKWASH AND DECAMP PUMP, UM, REPLACEMENT. SO WITH THE BACKWASH, THOSE WILL BE, THE PLAN IS TO BE REPLACED IN KIND AND FOR THE DECAMP PUMP THAT WILL, UM, WILL BUILD A NEW PUMP STATION, WHICH WILL, UH, INCREASE THE WET WELL SIZE AND CHANGE OUT THE PUMPS. CURRENTLY THERE ARE VERTICAL TURBINE PUMPS. THOSE WILL BE SWITCHED OVER TO SUBMERSIBLE PUMPS. AND THAT'S THE, THE WORK SCOPE FOR THIS SET OF PROJECT. AND WITH THAT BEING SAID, STAFF RECOMMENDS APPROVAL. THANK YOU. DO I HAVE A MOTION? MOVE TO APPROVE. SECOND. I SECOND DISCUSSION. AND WHAT, WHAT PLANT IS THIS AT? THIS IS AT THE FRITZ LANUM PLANT. OLD PLANT. YES, SIR. ALRIGHT, IF THERE'S NOT ANY MORE DISCUSSION, DO UH, ALL IN FAVOR SAY AYE. A THE OPPOSED SAY NAY. AND THE AYES HAVE IT. [a. Receive a report on the status of the Baytown Area Water Authority East Expansion Project.] OKAY. NOW WE'RE GONNA RECEIVE A REPORT ON THE STATUS OF THE BAYTOWN AREA WATER AUTHORITY EAST EXPANSION PROJECT. UH, GOOD EVENING. UH, JUST A MOMENT. I'LL PULL UP A BRIEF PRESENTATION WE HAVE FOR YOU THIS EVENING. UH, LET ME GET IT INTO THE CORRECT MODE. THERE COMES, THERE WE GO. UH, I'M FILLING IN FOR LINDSEY KOVAR, UH, FROM BGE. SHE'S OUR OWNER'S REP, BUT SHE WAS UNABLE TO MAKE IT THIS EVENING. I'M MICHAEL LEACH. I'M THE ASSISTANT DIRECTOR OF THE PUBLIC WORKS DEPARTMENT, BUT I'M OVER THE CAPITAL IMPROVEMENT PROGRAM, STERLING'S OVER UTILITY OPERATIONS AS AN ASSISTANT DIRECTOR. UH, AND I'M OVER THE CIP GENERAL GENERALLY. SO YOU'VE SEEN THIS TABLE BEFORE, UH, IN YOUR PAST PRESENTATION. WE WERE AT THE LEVEL BETWEEN ALTERNATIVE ANALYSIS WORKSHOPS IN THE PERMITTING PLAN. WE'VE, WE'VE SINCE MOVED ON. UH, WE'RE IN THE PERMITTING, UH, PLAN STAGE AS WELL AS PERFORMING FIELD INVESTIGATION. SO ESSENTIALLY WHAT THE PERMITTING PLAN IS, IT'S, IT IS PRETTY GENERAL. IT'S ESSENTIALLY INVOLVES COORDINATION WITH CHAMBERS COUNTY, THE FACILITIES LOCATED IN CHAMBERS. SO, UH, WE HAD A MEETING WITH THEM ACTUALLY EARLIER TODAY. UH, IN GENERAL, THE WORK ASSOCIATED WITH, IT'LL BE COMPARABLE TO WHAT YOU'D FIND AT A A COMMERCIAL FACILITY. SO THEY'RE GONNA BE FOCUSING ON THINGS LIKE THE NEW, THE NEW WAREHOUSE FACILITY THAT'S OUT THERE, MAKING SURE IT'S SPRINKLED THE NEW OFFICE OR WELL, YOU KNOW, THE INFRASTRUCTURE, MAKING SURE WE HAVE FIRE HYDRANTS SPACED APPROPRIATELY. IT WON'T HAVE MUCH TO DO WITH THE SCIENTIFIC PROCESSES ASSOCIATED WITH THE PURIFICATION OF WATER, WHICH IS REALLY THE NAME OF THE GAME OUT, OUT AT THE FACILITY, OF COURSE. SO, UH, WE FEEL LIKE WE HAVE A GOOD HANDLE ON THAT. UH, HERE'S A GRAPHIC FOR YOU THAT'S INTENDED TO SHOW, UM, SOME OF THE NEW INFRASTRUCTURE, UH, AS IT'S PLAYED INTO THE SITE, ADJACENT TO THE EXISTING INFRASTRUCTURE. SO YOU'LL SEE, UH, THE BROWN, UH, RECTANGULAR SHAPE UP HERE IS, UH, THE PROPOSED LOCATION FOR THE NEW LAGOON. UH, THE PURPLE DISC IS THE NEW TWO AND A HALF MILLION DOLLAR MILLION GALLON, PARDON ME, UH, GROUND STORAGE TANK, GST. UH, THIS IS THE WAREHOUSE SHOP FACILITY. UH, THIS IS THE NEW GENERATOR LOCATION THAT WAS MENTIONED EARLIER IN THE PRIOR, UH, DISCUSSION. UH, HERE IS THE EXISTING FACILITY FOR THE PROCESS. THIS IS WHERE THE, UH, FILTRATION THROUGH THE MEDIA HAPPENS. UH, AND IT'S GOING TO BE ADJACENT TO THE NEW ONE, SO IT'S RIGHT IN HERE. SO, UH, HERE'S, AND THERE'S SOME, UH, LITTLE HEADWORKS AND PIPING AND THINGS LIKE THAT HERE. OH, PARDON ME. UH, HERE'S AN ALTERNATE VIEW OF THE SAME, UH, IMPROVEMENTS. SO YOU CAN THERE. OKAY. SO WE HAVE A, A COUPLE OF UPDATES ON FUNDING. UH, THIS IS A BIG PART OF IT. UH, THE TEXAS WATER DEVELOPMENT BOARD, UH, SWIFT FUND. UH, WE [00:10:01] HAVE AN APPLICATION DUE TO THEM, UH, EARLY IN FEBRUARY. AND SO WHAT THIS AND WE'RE, WE'RE PREPARED, THE TEAM IS WORKING HARD TO BE PREPARED FOR THIS SUBMITTAL. NOW, YOU'LL RECALL FROM THE LAST DISCUSSION IN NOVEMBER THAT THERE'RE GONNA BE SORT OF TWO FUNDING COMPONENTS TO THIS, RIGHT? WE HAVE THE MAIN, UH, WORK AT THE PLANT ITSELF, AND THEN WE HAVE THE PFAS WORK. IT WAS DECIDED THAT IT MADE SENSE TO SEPARATE THE PFAS WORK BECAUSE, UH, OF JUST THE FUNDING MECHANISM. IT MADE SEPARATE, IT MADE SENSE TO DO THEM AS TWO SEPARATE PROJECTS SO THEY DON'T OVERLAP AND THERE'S NO CONFUSION. SO, UH, THE FIRST ONE IS THE SWIFT FUNDING, AND THAT IS FOR THE FACILITY ITSELF. WE'LL BE MAKING THAT APPLICATION, UH, EARLY PART OF FEBRUARY. UH, THE NEXT THING THAT'LL BE COMING UP IS THE PRELIMINARY DESIGN, UH, 30% THAT DEADLINE'S IN MARCH. UH, AND THEN THE NEXT FUNDING SOURCE FOR PFAS. IT'S THE, UM, TEXAS WATER DEVELOPMENT BOARD, UH, STATE REVOLVING FUND. AND IT'S, UH, SET UP FOR PFAS HERE. SO, UH, THAT APPLICATION WILL BE DUE IN BEGINNING OF APRIL. SO AGAIN, THE TEAM IS PREPARED, UH, TO MOVE FORWARD WITH THAT. UH, THE NEXT SORT OF MAJOR MILESTONE AFTER THEREAFTER WILL BE THE DESIGN PACKAGE WILL GO UP TO 60%, AND THEN WE'LL HAVE THE PROPOSAL FROM THE DESIGN BUILDER, UH, FOR THE MAXIMUM PRICE IN THE SEPTEMBER TIMEFRAME. SO, PROJECTS TRACKING GENERALLY, UH, ON SCHEDULE, UH, PRETTY COMFORTABLE WITH WHERE IT'S AT AT THIS POINT. UH, LET'S SEE. HERE'S MORE INFORMATION ABOUT THE SWIFT FUNDING. UM, YOU KNOW, THE, THE, THERE ARE TWO, TWO PHASES. THERE'S A BUNCH GONNA BE A BUNCH OF STUFF THAT'S DUE, BUT THESE INITIAL APPLICATIONS ARE DUE IN FEBRUARY, LIKE I MENTIONED. AND THEN FOR THE PFAS STUFF THAT'S GOING TO BE DUE IN APRIL. SO AGAIN, WITH THE TWO SEPARATE FUNDING SOURCES, SORRY TO BE A LITTLE REDUNDANT THERE. AND THEN YOU'VE SEEN THIS TABLE BEFORE. UH, LINDSAY WENT OVER THIS WITH YOU, I THINK AT THE NOVEMBER MEETING. UH, THIS TALKS ABOUT A LOT OF THE KEY DECISIONS THAT HAVE BEEN MADE, UH, AS WELL AS SOME ITEMS THAT ARE SORT OF STILL UP IN THE AIR AND STILL BEING DEBATED AND FIGURED. RIGHT? SO PRELIMINARY, THE LOT, THE, UH, XS THAT ARE IN THE, UH, COLUMN IS TITLED PRELIMINARY DECISIONS. UH, THOSE ARE ONES THAT ARE PRETTY WELL SET. THAT'S THE DIRECTION THAT THINGS ARE GOING TO HEAD. BUT THERE ARE A COUPLE OF ITEMS THAT REQUIRE ADDITIONAL RESEARCH AND, UH, COUPLE THAT ARE GOING TO, WELL, JUST THE ONE THAT'S THE PFAS THAT WE'VE TALKED ABOUT, THAT'LL BE A FUTURE PROJECT. SO WHAT WE HAVE, UH, PENDING ADDITIONAL RESEARCH ARE SOME OF THE ELECTRICAL AND CONTROL SYSTEMS TRYING TO SORT THROUGH EXACTLY WHAT THAT'S ABOUT. AND THE, THE TEAM IS HERE, THERE ARE A LOT OF REPRESENTATIVES OF THE TEAM AND THEY CAN GO INTO THE TECHNICAL DETAILS OF WHAT ALL'S IN INVOLVED WITH THAT, IF YOU CARE TO GO INTO THAT LEVEL. AS WELL AS, UH, DETAIL ABOUT THE CHEMICAL STORAGES, THAT'S CHEMICAL STORAGE THAT NEEDS TO BE WORKED OUT. SO, UH, THAT'S REALLY THE SUM OF MY PRESENTATION. I TRIED TO KEEP IT HIGH LEVEL, BUT I DO HAVE THE TEAM HERE, OF COURSE TO ANSWER ANY DETAILED QUESTIONS YOU HAVE ABOUT THE, UH, PROJECT. SO ONE, ONE THING, THERE WAS ONE APPLICATION THAT'S DUE EARLY FEBRUARY, THAT'S MONDAY. SO I'M ASSUMING THAT MIGHT HAVE ALREADY BEEN SUBMITTED OR IS GOING TO BE SUBMITTED BY MONDAY. YEAH, SO THAT APPLICATION IS COMPLETE. IT'S JUST IN THE REVIEW PROCESS, LETTING ALL EYES REVIEW BEFORE SUBMISSION. OKAY. AND THEN, UM, SORRY, I JUST, IT STUCK IN MY HEAD THAT THAT IS MONDAY AND SO IT FELT LIKE CLOSER THAN, YOU KNOW, BEGINNING OF FEBRUARY WE'RE RIGHT THERE. YEAH. UM, AND THEN THE OTHER QUESTION I HAD, SO THE, THE PFAS FUTURE PROJECT, HOW FAR IN THE FUTURE IS THAT? WHEN WILL WE BE LOOKING INTO THAT? SO WE'RE DOING PRELIMINARY TESTING THIS YEAR, UM, JUST TO GATHER SOME BASELINE DATA. UM, THE TIMELINE FOR WHEN THE PROJECT WOULD, WOULD GO WOULD BE DEPENDENT ON HOW LARGE SCALE THE PROJECT WILL WILL BE. SO ONCE WE ARE ABLE TO OBTAIN THAT ADDITIONAL INFORMATION, YOU KNOW, CONSULTANT IS SELECTED, SCOPE IS DESIGNED OR DEVELOPED AND ALL THAT, THEN WE'LL HAVE A BETTER, UM, CASE TO BE ABLE TO ANSWER THAT. OKAY. RIGHT NOW EVERYTHING'S KIND OF PRELIMINARY. DO THEY, DO THEY EVEN HAVE A WAY TO FILTER THIS STUFF OUT YET? HAVE THEY EVEN FIGURED THAT OUT? THERE ARE A FEW TECHNOLOGIES THAT ARE DEVELOPED. UM, THEY ARE VERY EXPENSIVE, UM, EITHER ON THE CAPITAL SIDE OR THE OPERATIONAL SIDE. UM, SO IF IT'S GOT LOWER, UH, CAPITAL COSTS, IT'S GOT HIGH OPERATIONAL COST OR VICE VERSA. UM, SO IT'S REALLY ONLY KIND OF THREE, UM, SYSTEMS THAT ARE WIDELY TALKED ABOUT CURRENTLY. UM, AND SO, YOU KNOW, THROUGH THAT VETTING PROCESS, YOU KNOW, WE WILL KIND OF DETERMINE WHAT'S THE, THE BEST WAY TO GO. UM, SO YOUR, YOUR TESTING IS FINDING OUT HOW MUCH OF A PROBLEM WE HAVE, IS THAT CORRECT? AND THEN, AND THEN THAT'LL HELP YOU GUIDE YOU TO THE NEXT SOLUTION? IS THAT, IS THAT HOW YOU'RE GONNA APPROACH IT? YEAH. YEAH. HOW, HOW FAR OUT WE ARE, YOU KNOW, CONSISTENTLY WITH THE RESULTS, UM, TO, YOU KNOW, DETERMINE HOW MUCH IS NEEDED. LIKE HOW MUCH DO WE NEED TO REMOVE, YOU KNOW, HOW EXTENSIVE DOES THIS PROCESS NEED TO BE AND, AND WHAT ARE WE USING TO DETERMINE THAT? ARE WE JUST GOING OFF OF WHAT, LIKE THE EPA IS RECOMMENDED OR ARE WE [00:15:01] LOOKING AT IT AS I DON'T, DO WE HAVE A DIFFERENT STANDARD, A HIGHER STANDARD? OR ARE WE JUST USING EPA STANDARD? THE IMMEDIATE CONCERN IS TO GET IN COMPLIANCE. OKAY. SO, YOU KNOW, BASED UPON THAT, THAT WOULD BE KIND OF LIKE THE, THE INITIAL TARGET. NOW FROM THAT, YOU KNOW, UH, IF WE'RE TRYING TO, YOU KNOW, REACH A, A DIFFERENT GOAL, IT'LL BE ONE OF THOSE THINGS WHERE WE'RE MEASURING THE COST VERSUS THE REWARD OF SUCH. SO, UH, AGAIN, ALL OF IT WILL BE DETERMINED LATER, BUT YOU KNOW, THE INITIAL CONCERN WILL BE JUST GETTING UNDER THE COMPLIANCE CRITERIA. ANY OTHER QUESTIONS? ALRIGHT, THANK YOU [b. Receive the Baytown Area Water Authority's Annual Financial Report for the fiscal year ended September 30, 2024.] SIR. OKAY. SO NOW WE'LL RECEIVE THE UH, BAYTOWN AIR WATER AUTHOR'S ANNUAL FINANCIAL REPORT FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 20, 24. OKAY. GOOD EVENING BOARD. UM, I'M HAPPY TO ANNOUNCE WE ARE HERE TO PRESENT OUR FY 24 ANNUAL AUDIT REPORT. UM, STEVEN SMITH WITH OUR NEW AUDITOR, WEAVER AND TIDWELL WILL BE PRESENTING. THANK YOU. THERESA. HELLO? YES, UH, MY NAME IS STEVEN SMITH. I'M A AUDIT MANAGER HERE AT, UH, WEAVER. WE WERE ENGAGED, AS THERESA SAID, TO AUDIT THE FINANCIAL STATEMENTS FOR THE AUTHORITY FOR THE FISCAL YEAR ENDED SEPTEMBER 30TH, 2024. UH, IN FRONT OF YOU ARE TWO MATERIALS. UH, YOU SHOULD HAVE RECEIVED A LETTER, UH, ADDRESSED TO GOVERNANCE AS WELL AS THE AUDIT FINANCIAL STATEMENTS. THE LETTER ADDRESSED TO GOVERNANCE INCLUDES, UH, THE AUDITOR'S RESPONSIBILITIES AS WELL AS MANAGEMENT'S RESPONSIBILITIES AS IT PERTAINS TO THE AUDIT, AS WELL AS SIGNIFICANT RISKS AND ESTIMATES THAT WERE CONSIDERED WHEN DESIGNING AND PERFORMING OUR PROCEDURES. THE AUDITED FINANCIAL STATEMENTS INCLUDES TWO AUDITOR REPORTS IN THEM AS WELL. UH, ONE IS AN ON PAGE THREE, THERE IS AN, UH, WE EXPRESSED THAT THERE WAS AN UNMODIFIED OR CLEAN OPINION FOR OUR AUDIT OF THE FINANCIAL STATEMENTS ON PAGE SEVEN AS OUR REPORT ON INTERNAL CONTROL, UH, OVER FINANCIAL REPORTING FOR THE AUTHORITY. WHERE WE EXPRESSED, I THOUGHT, I DIDN'T REALIZE I WAS MOVING A DIFFERENT SLIDE SHOW HERE, UH, WHERE WE EXPRESSED THAT WE DID NOT IDENTIFY ANY SIGNIFICANT DEFICIENCIES OR MATERIAL WEAKNESSES IN INTERNAL CONTROL FOR THE AUTHORITY ON PAGES 16 AND 17. UH, IS THE BALANCE SHEET AND THE INCOME STATEMENT FOR THE, THE YEAR FOUR, THE RESULTS, IF YOU WANTED TO TURN TO SEE SOME OF THE HIGHLIGHTS FOR THE YEAR THERE, YOU'LL SEE THAT UNDER THE AUTHORITIES' ASSETS. SOME KEY CHANGES THAT YOU'LL YOU'LL NOTICE IS, IS THAT THE RESTRICTED ASSETS FOR CASH HAD INCREASED BY ABOUT 24 MILLION YEAR OVER YEAR, LARGELY DUE TO THE ISSUANCE OF THE 2024 SERIES BONDS. UH, OTHER CHANGES IN THE AUTHORITIES ASSETS WAS THAT, UH, CONSTRUCTION AND PROGRESS HAD DECREASED BY ABOUT $5 MILLION YEAR OVER YEAR DUE TO THE PREVIOUS CONSTRUCTION PROJECTS BEING PLACED INTO SERVICE DURING THE YEAR AND ADDED INTO PLANT EQUIPMENT UNDER LIABILITIES. UH, THE SIGNIFICANT CHANGE THERE THAT YOU'LL NOTICE IS, IS THAT THE BONDS PAYABLE NOW, I'M SORRY. OH, GO AHEAD. WHAT, WHAT PAGE ARE YOU WORKING OFF OF RIGHT NOW? UH, PAGE 16. PAGE 16? YES. OF, OF THIS GUY HERE. OKAY, THAT'S FINE. THANK YOU. MM-HMM . UH, SO, UH, YEAH, IN THE LIABILITY SECTION YOU'LL SEE THAT THE, THE BIG CHANGE THERE, UH, TOWARDS THE BOTTOM FOR NON-CURRENT LIABILITIES, THERE'S A BONDS PAYABLE ROW. IT SHOWS FROM 39 MILLION TO 59 MILLION AS, AND THAT'S MOSTLY DUE TO THE NEW BONDS THAT WERE ISSUED. UH, AND THEN ON PAGE 17 FOR SOME OTHER HIGHLIGHTS TO POINT OUT, UH, FOR TOTAL OPERATING REVENUES THAT HAD INCREASED FROM 18 TO 20 MILLION, ABOUT $2 MILLION INCREASE THERE FOR OPERATING EXPENSES, IT DID INCREASE BY ABOUT $3.9 MILLION. AND, UH, THAT WAS LARGELY DUE TO CITY OF HOUSTON BILLING ERROR THAT WAS DISCOVERED, UH, IN 24. THAT IN 23 IT WAS APPLYING THE INCORRECT RATES. BUT THAT, THAT'S WHY YOU SEE SUCH A SIGNIFICANT INCREASE COMPARED TO, UH, THE OPERATING REVENUES AND FOR A TOTAL CHANGE IN NET POSITION FOR THE YEAR OF ABOUT 4 MILLION FOR ENDING THAT POSITION TO BE AT 76 MILLION. UH, OTHER THAN THAT, UH, THERE'S ANYTHING IN THE FOOTNOTES OR ANY QUESTIONS ABOUT SOME OF THE RESULTS, UH, RELATED TO THE REPORT [00:20:01] THAT I MIGHT BE ABLE TO ASSIST WITH. YOU SAID THAT THE RAW WATER COST IS UP BECAUSE OF A BILLING ERROR ON THE CITY OF HOUSTON'S PART. MM-HMM . UH, NOT DETECTED UNTIL 2024. WHY WAS THAT NOT A PRIOR PERIOD ADJUSTMENT? SO THAT WE DID CONSIDER THAT AS FAR AS WHEN WE WERE REVIEWING IT, AND THAT WOULD'VE BEEN SOMETHING THAT, UH, WOULD NOT BEEN MEASURABLE AS OF LAST YEAR AS FAR AS KNOWING, UH, I MEAN WE'RE WE'RE ALSO THE, THE NEW AUDITORS ON THE SCENE. SO WE, WE COULDN'T HAVE SEEN WHY, WHAT INVOICES Y'ALL WERE SEEING IN LAST YEAR. BUT AS FAR AS EVALUATING WHETHER OR NOT IT SHOULD HAVE BEEN AN EV A PRIOR PERIOD ADJUSTMENT FOR THIS YEAR, UH, THAT WOULDN'T HAVE BEEN SOMETHING MEASURABLE AT THAT TIME FROM THE CITY SIDE. . OH, YOU, YOU, OKAY. UM, SO WITH THAT PARTICULAR, UH, BILLING ERROR, IT IS NOT THAT IT WASN'T IDENTIFIED PRIOR TO, IT WASN'T ADDRESSED PRIOR TO VIA THE CITY OF HOUSTON. SO WE HAD, IT WENT BACK ACTUALLY A COUPLE YEARS WHERE THEY HAD A PERIOD OF TIME WHERE THEY WERE UNDER BILLING US A PERIOD OF TIME WHERE THEY WERE OVERBILLING US. AND THE TO PRESENT DAY, THE ISSUE IS STILL ACTUALLY NOT CORRECTED. IT'S JUST THAT WE DIRECTED THEM TO UTILIZE A NUMBER THAT'S MORE CLOSELY RESEMBLES WHERE WHAT WE USE. SO ESSENTIALLY THEY, THERE'S FOUR PUMPS. THEY'RE PULLING READINGS OFF OF THE FOUR PUMPS. THEY LOST COMMUNICATION. SO THEY'RE NOT ABLE TO SEE THAT. SO THAT THEY WERE ESTIMATING A NUMBER THAT WHAT THEY ASSUMED WOULD BE GOING THROUGH THOSE PUMPS, THOSE NUMBERS WERE INCORRECT. AND SO WE HAVE AMOUNT THAT WE ARE PULLING FROM THE FOUR BAY, UM, WHICH IS WHERE THOSE PUMPS FEED TO, UM, THAT WE HAVE THEM ESTIMATING OFF OF RIGHT NOW TO BILL US MORE APPROPRIATELY WHAT THE ACTUAL AMOUNT USED IS. SO THAT'S KIND OF THE, THE SHORT AND ALONG ANSWER OF THAT, UH, THE PERMANENT SOLUTION THAT WE AS THE, AS THE BALL STAFF HAS ELECTED TO PURSUE IS WE'RE PUTTING OUR OWN METERS ON THOSE PUMPS VIA THE CURRENT CONSTRUCTION PROJECT THAT YOU GUYS AWARDED BACK, I DON'T KNOW, A FEW MONTHS BACK. UH, WITH LIMB CONSTRUCTION, WITH THE RAW WATER REHAB PROJECT, WITH THAT PARTICULAR PROJECT, THERE WILL BE METERS PLACED ON THOSE PUMPS AND SO THAT IT WILL BE THE CORRECT FLOW THAT THE AUTHORITY IS USING. AND THAT'S THE NUMBER THAT THEY'LL HAVE TO USE MOVING FORWARD. AND THEY'VE AGREED TO USE THAT. YEAH. YEAH. SO, SO REALLY THE, THE RESPONSIBILITY FOR THEM TO FIX THEIRS, BUT SINCE THEY'RE, THEY HAVEN'T FIXED THEIRS, THEN THEY'LL BE ABLE TO U UTILIZE OURS. AND SO WE'RE, WE'RE PUTTING, WE'RE PUTTING NEW METERS ON THEIR PUMPS ON THEIR, OR WE'RE, WELL, THERE ARE PUMPS, BUT OKAY. BUT THEY'RE RESPONSIBLE FOR, FOR METERING, YOU KNOW, THE FLOW, IT WAS THEIR METERS ON OUR PUMPS. CORRECT. THAT LOST COMMUNICATIONS. RIGHT. CORRECT. THAT WAS THEIRS THAT THEY KEPT UP WITH AND, AND ALL THAT. OKAY. RIGHT. YEAH. SO ARE WE PRESENTLY BEING BUILT ON AN ESTIMATE AS WELL? CORRECT. IT IS BUILT ON THE ESTIMATE, BUT IT IS THE ACTUAL USAGE THAT THE, THE AUTHORITY IS USING FROM THE FOUR BAY. SO BASICALLY WHEN THAT, THOSE PUMPS FROM THE CANAL, WHICH ARE THE CITY OF HOUSTON, WHERE THE METERS ARE, ARE PUMPING FROM THE FOUR BAY, FROM THE FOUR BAY, ONCE WE PUMP IT INTO THE PROCESS, WE HAVE FLOW FROM THAT AND THEY'RE UTILIZING THE INFORMATION FROM THAT, FROM THE FOUR BAY. SO IS THERE GOING TO BE SOME OTHER FUTURE SETTLE UP? UH, DON'T BELIEVE THAT THERE'LL BE A FUTURE SETTLE UP. UM, THIS, UH, NUMBER THAT WE PROVIDED THEM, WE WENT, WENT BACK AND LOOKED AT HISTORICALLY HOW CLOSE, AND IT'S, IT'S VERY CLOSE. IT'S WITHIN 5% OF WHAT THE, THE FLOW SHOULD BE. SO WHAT WE HAD ASKED THEM IS THAT THEY COULD, THEY, UM, UH, DECREASE THE AMOUNT THAT WE SHOW BY A, A CERTAIN PERCENTAGE, WE NEGOTIATE A PERCENTAGE WITH THEM, UM, IN ORDER TO ACCOMPLISH THAT SO THAT THERE WOULDN'T BE A, A CREDIT GOING BACK AND, YOU KNOW, WE COULD FEEL COMFORTABLE THAT WE'RE BEING BILLED APPROPRIATELY. SO I I WHAT I THINK YOU'RE TELLING ME IS IF WE USE, OR IF WE THINK WE'VE USED A MILLION GALLONS OF WATER, WE GET BILLED FOR SOMETHING LESS THAN A MILLION GALLONS. WELL IF, IF THE FLOW SHOWS THAT IT WAS A MILLION, THEN YEAH, THEY WOULD CHARGE US 97,000. OKAY. IS, IS THERE A DIFFERENCE IN THE TWO PUMPS? UM, WHAT THINGS, UH, EVAPORATION FROM THE CANAL TO THE FOUR BAY EVAPORATION DOES PLAY A ROLE, BUT THE BIGGEST ISSUE IS THAT OUR DECAMP PUMPS, THEY PUMP BACK INTO THE FOUR BAY. SO THE WATER THAT IS PULLING FROM THE FOUR BAY IS A MIXTURE OF WHAT IS RECYCLED THROUGH THE PROCESS. OH, SO I SEE WHAT YOU'RE SAYING ALONG WITH WHAT IS COMING FROM THE CAN, IT'S NOT JUST, IT'S NOT JUST PURELY THE WATER FROM THE CANAL. GOTCHA. CORRECT. CORRECT. AND TO YOUR POINT EARLIER, [00:25:01] AS FAR AS IF IT SHOULD HAVE BEEN A PRIOR PERIOD ADJUSTMENT, SINCE THERE WASN'T THAT SETTLE UP PERIOD THAT AT THE BEGINNING OF THE YEAR THAT Y'ALL OWED A LIABILITY FOR ANYTHING THAT MAY HAVE NOT BEEN BILLED UP TO THAT POINT, THERE WASN'T A PRIOR PERIOD TO ADJUSTMENT TO CONSIDER, SINCE Y'ALL WEREN'T BEHIND ON PAYMENTS OR ANYTHING LIKE THAT. I, I WON'T ARGUE THAT WITH YOU, OTHER THAN WE WERE BEHIND ON LIABILITY. BUT, UM, DO WE HAVE ANY IDEA WHAT THE ACTUAL COST OF THE WATER THAT WE SOLD SHOULD HAVE BEEN? THE COST OF WATER SOLD IS, IS ACCURATE. THE NUMBER THAT IS BEING DISPUTED IS WHAT WE PURCHASED. I, I'M SORRY, I I DIDN'T HAVE A PROBLEM WITH THE REVENUE. MY QUESTION IS THIS $7.8 MILLION AS FAR AS WHAT WE ACTUALLY RECEIVED IN 24, THAT $7.8 MILLION IS OVERSTATED AS TO WHAT WE ACTUALLY SHOULD HAVE BEEN BILLED, CORRECT? YEAH. THE 7.8 IS MORE CLOSELY ALIGNED WITH WHAT WE SHOULD HAVE BEEN BILLED. SO LAST YEAR WHEN WE WERE BILLED 3.9, WE WERE UNDERBILLED BY $3 MILLION OR SOMETHING. CORRECT? YEAH. THERE, THERE WAS A BIG UNDER BILLING, WHICH IS WHY I THINK THAT THEY CAUGHT THAT, THAT'S WHY THEY PUT THAT ESTIMATE ON THERE. UM, IT'S JUST THE PROBLEM WITH THE ESTIMATE IS THAT IT WAS DOUBLING UP IN ANOTHER AREA. SO YOU KNOW HOW THE, HOW WE WORK IS THERE'LL ONLY BE TWO PUMPS GOING ON AT ONCE. AND SO IF THEY GO BACK AND THEN TRY TO ESTIMATE, YOU KNOW, EACH PUMP HOW MUCH IS, AND THEN THEY APPLY THAT ON THERE, THEN THEY'RE DOUBLE CHARGING US ESSENTIALLY. 'CAUSE THEY'RE, THEY'RE PUTTING FLOW ON PUMPS THAT, YOU KNOW, IN A MONTH WE MAY NOT RUN. OKAY. I, I'M, I'M STILL TRYING TO GET A, AN UNDERSTANDING OF WHAT OUR, WHAT OUR TRUE, IF YOU WILL, OPERATING INCOME IS IF I TAKE 24 AND 23 AND ADD THEM TOGETHER, IF I DO THAT AND DIVIDE IT BY TWO, IS THAT ABOUT WHAT EACH YEAR SHOULD HAVE BEEN? NO. 20 20 23 IS AN ANOMALY. IF YOU USE THAT, IT WON'T GIVE YOU A, A ACCURATE REPRESENTATION OF WHAT IT SHOULD BE. SO WHEN, WHEN DID, SO, SO IN OTHER WORDS, YOU'RE TELLING ME THAT OUR $6.9 MILLION IN 23 WAS OVERSTATED BY SOME AMOUNT, MAYBE A MILLION DOLLARS, MAYBE $2 MILLION. IS THAT CORRECT? YES, SIR. THAT IS THAT, THAT'S CORRECT. THAT'S CORRECT. AND TO YOUR POINT OF WHY IT WAS ENCAPTURED, BUT IT GOES BACK TO WEAVER BEING IN THE NEW AUDITOR NOW. YES, SIR. BUT YOU ARE CORRECT. IT, IT'S OVERSTATED ON WHAT OUR OPERATING INCOME IS BECAUSE WHAT, SO, SO 24 IS, IS REPRESENTATIVE OF WHAT WE SHOULD SEE GOING FORWARD? YES, SIR. OKAY. THAT'S ALL I'M TRYING TO GET AT. OKAY. OKAY. SO WE'RE HAPPY WITH OUR NEW AUDITORS TO, WE'VE ASKED THEM TO DO DEEPER DIVES AND ALL OF OUR STUFF, AND THIS IS THE FIRST PRESENTATION THEY'RE DOING. UM, AND, UM, WE EXPECT TO CONTINUE TO FIND STUFF LIKE THIS AS THEY'RE WORKING WITH THIS. I'M FAMILIAR, I KNOW THEY'RE GOOD FARM. WHAT, WHAT IS THE PROCESS TO CHANGE OUT AUDITORS? OR IS THERE A SCHEDULE OR ARE YOU ON A THREE YEAR RETAINER? HOW DOES THAT WORK? WE HAD THE SAME AUDITOR FOR QUITE SOME TIME AND, UH, UM, I BELIEVE IT WAS A, ON A, A THREE YEAR SCHEDULE, BUT I'LL LET THERESA SPEAK TO THAT. THREE YEARS. THREE YEARS. IT WAS A THREE YEAR SCHEDULE. AND THE SAME AUDITOR, THE SAME AUDITOR WAS, UH, REAPPOINTED EACH TIME, WHICH IS NOT A GREAT PRACTICE TO HAVE THE SAME AUDITOR. I THINK THEY WERE 15 TO 20 YEARS OR SOMETHING LIKE THAT, INSTEAD OF SWITCHING TO A NEW AUDITOR TO DOUBLE CHECK THE AUDITOR. RIGHT. AND SO THAT'S, WEAVER HAS STEPPED IN AND THEY'VE, UH, TAKEN ON A, A BIG TASK AT THIS POINT. AND THEY ARE, UM, IDENTIFYING THINGS THAT HAVE BEEN HELPFUL AS WE GO THROUGH THE PROCESS. AND THAT'S WHAT WE WANTED SO THAT WE CAN CORRECT ANY MISTAKES THAT WE HAVE. I, I KNOW IN THE UK THEY HAVE A LOT OF PUBLIC COMPANIES. YOU HAVE LAWS WHERE YOU HAVE TO CHANGE AUDITORS AFTER SO MANY YEARS, AND THEY DON'T HAVE THAT IN THE UNITED STATES, BUT VERY GOOD. AND EVEN IN, IN OUR FIRM, IF, IF FOR WHATEVER REASON THAT Y'ALL WANTED TO ROTATE PARTNERS, IF Y'ALL DIDN'T, YOU KNOW, Y'ALL FELT LIKE IT HAD BEEN TOO LONG. NOT TO SAY THAT THE PARTNER ON THE ENGAGEMENT, UH, IS, IS, YOU KNOW, BUT, UH, IF Y'ALL FELT WANTED TO ROTATE OR HAVE SOME FRESH EYES ON IT, EVEN WITHIN OUR OWN FIRM, WE COULD, UH, ROTATE STAFF AT, AT WHEREVER INTERVAL THAT Y'ALL FELT COMFORTABLE WITH. AND STERLING, OUT OF CURIOSITY, WHEN DID Y'ALL, UM, MAKE THAT ADJUSTMENT OR THAT CHANGE WITH THE CITY TO DO? 97% OF WHAT'S IN OUR, UM, ON THE, I GUESS THE DOWNSTREAM SIDE OF THE PUMPS? I, I CAN'T REMEMBER OFF, OFF MY TOP OF MY HEAD. UM, IT WAS SEVERAL MONTHS BACK, UH, SEPTEMBER. SEPTEMBER. OKAY. SO, SO MAYBE 75% OF THE YEAR WAS NOT USING THE CURRENT METHOD THAT WE USE NOW. [00:30:01] YEAH. I HAVE A QUESTION FOR ANY BIG SURPRISES. UH, ANYTHING WE SHOULD KNOW ABOUT? NO, UH, OUR, OUR REPORT SAID EVERYTHING, UH, AS FAR AS FROM WHAT WE LOOKED AT, UH, YOU KNOW, WE EXPRESSED A MOD, UNMODIFIED CLEAN OPINION, DIDN'T FIND ANYTHING BIG. AND, UH, ALSO THE LETTER, JUST THE GOVERNMENT'S THING INCLUDES A, AN OUTLINE SCOPE OF WHAT WE CONSIDERED AND WHAT WE HAD LOOKED INTO OR WHEN DESIGNING OUR PROCEDURES AND, UH, UH, EVERYTHING FOR THIS, I GUESS IT WAS BIGGER IN 23 AS FAR AS, UH, SOME QUESTION MARKS, BUT 24 LOOKED, UH, YOU KNOW, I GUESS BUSINESS AS WHAT SHOULD BE BUSINESS AS USUAL. BUT WOULD LIKE TO, TO THANK YOU GUYS FOR HAVING ME HERE AS WELL AS, UH, THE HARD WORK FROM MANAGEMENT TO BE ABLE TO GET US TO THIS POINT. THANK YOU. [a. The next Baytown Area Water Authority meeting is scheduled for Wednesday, February 19, 2025, at 4:30 p.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas 77520. ] MANAGER'S REPORT. UH, NEXT MEETING IS, UM, WILL BE ON MY CALENDAR FEBRUARY 19TH AT FOUR 30. AND ONCE AGAIN, I DO APOLOGIZE FOR BEING LATE Y'ALL. THANKS FOR YOUR PATIENCE. THANK YOU. ALL RIGHT. SO IT IS NOW TIME TO ADJOURN. DO I HAVE A MOTION? A MOTION TO ADJOURN? SECOND. I'LL OPPOSE. AYE. AYES HAVE IT ADJOURNED. , NONE OPPOSED, YOU JUST MADE SURE WE. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.