Benton Utilities Meeting Monday Night – Service Territories, Sewage Backup, more

The Benton Public Utilities Commission will meet at 6 p.m. Monday, January 6th at the Electric Utility Building, 1827 Dale Avenue. The agenda follows, as well as minutes from the previous meeting.

AGENDA:

1. Call to Order

2. Prayer

3. Pledge of Allegiance

4. Roll Call

5. Approval of Minutes from the Regular Meeting of December 9, 2019.

6. Old Business

A. Service Territories

7. Departmental Reports

A. Finance – Karen Scott

1. Budget

B. Wastewater Collection – Nathan Schultz

1. Sewage Backup into home at 1201 Doyle Drive

C. Wastewater Treatment – Gregory Becker

1. Ordinance to Waive Competitive Bidding

8. New Business

9. Announcements

A. Benton City Council – Community Services/Animal Control Committee, Thu. 01/16/20.

B. Next Commission meeting date: Monday, January 20, 2020 is Martin Luther King Day.

10. Executive Session

A. Personnel Matters

MINUTES:

The City of Benton Utility Commissioners met in regular session Monday, December 9, 2019 at the Electric Utility Building, 1827 Dale Avenue.

In Attendance:

Gary Ferrell, Chairman
Charlie Best, Member
Jim Martin, Member
Doug Stracener, Member
Phil Miller, Member
David Vondran, General Manager

Vice Chairman Stracener called the meeting to order with all members in attendance with the exception of Chairman Ferrell. Member Martin gave the invocation and Member Miller led the Pledge of Allegiance.

The first item of business was approval of the minutes from the regular meeting of November 4 and November 18, 2019. Member Miller made a motion to approve the minutes as presented and Member Martin seconded. A vote was taken and approval was given.

DEPARTMENTAL REPORTS

Finance-Karen Scott
November Financials

Mrs. Scott said for the November Financial Reports, on Page 1 she added to the bottom the note the 2019 YTD Revenues include Contributed Capital Received from the Highway Department. The month expenditures were $234,000 less than last year, and one big purchase that was made last year was the vac truck that was purchased for the Wastewater Collections Department. Also, she will highlight in all of the departmental expenditures that we had 3 payrolls in November instead of just 2, so the payroll was higher. We have for 2 months out of the year that have 3 payrolls. On page 2, you will see that we did have a loss in November of $80,196, but our YTD actual ROE is 6.235 million. On page 7, the Bad Debt Analysis, we wrote off $13,085, but collected $17,080.22. This is the time of the year when we are starting to write off some of those high bills, and this is what we talked about last time, that some of this is a little cyclical. Still, for the YTD .29%, most places would love a bad debt ratio like that. On page 13, which is Revenue VS Expenditures, the Electric receipts were down 30%, but October was very hot. Expenditures were down, but then again, there was an additional payroll in November. In Wastewater, expenditures were up, in addition to the additional payroll we had a few invoices for equipment that we had waited several months for. We bought a Ditch Witch, plus there was a pump and hoist rigging, so those expenditures for WW were a little out of whack, but we did have a correction to revenues in WW. When going through her reports she found that the revenue we were receiving from Southwest every month was all getting credited to Water, but there is a share of it that is for WW from Exit 114, so that was properly adjusted in November, so revenues were up slightly due to that. Member Martin said so, Wastewater was in the red YTD by $778,000 on page 13. He asked if that is correct and Mrs. Scott said that was correct. Member Martin asked if the lion share of that was on equipment and major purchases. Mrs. Scott said in this month it was. $185,000 was lost. The equipment, pump, hoist and rigging were around $100,000, but in his defense, we have been waiting on one of these invoices since February. She doesn’t know how a business goes 7 months without $50,000. Member Martin made a motion to approve the financial report as presented and file for future reference. Member Best seconded the motion. A vote was taken and approval given.

Selection of Financial Advisor

Mrs. Scott said we released a request for qualifications for a Financial Advisor/Broker Services, and as discussed in the work session, it was her recommendation that we utilize state law that allows us to invest our funds in accounts that would drive more interest earnings than our local DDA accounts or even CD’s. She did this at NLR and she patterned this just like she had done at NLR. We received 3 responses from Arvest Wealth Management, Crews and Associates and Raymond James. She actually worked with all 3 of these firms in NLR, and in fact, these specific people. All of them have to abide by the same rules. There are limited instruments they can invest in (government backed securities). Initially, NLR was buying Fanny Mae and Federal Home Loan Bank, but the Treasury is out performing those bonds now, so in the end NLR was just dealing with Treasury. What happens is that whoever you decide to go with will give her a list of potential investments and they will talk about maturities and when we think we are going to need cash and so forth. No bond funds can be invested in these funds according to state law. We have about 9.5 million in restricted funds right now. She and Mr. Vondran haven’t really settled on an exact amount yet, but she did tell them all that we are going to invest about 6 million. You don’t have any penalties for withdrawal should our cash needs become such that we didn’t initially plan for; you just lose potential interest earnings. You never lose principal in these investments. Arvest Wealth Management (Daniel Robinson), Crews and Associates (Andy Edwards) and Raymond James (Gary Aday) are all with respectable firms. They all met the qualifications that we specified. We actually had a lot of interest from out of state firms, but the law says they have to have a state office presence. These guys are all very familiar with the law and recording requirements. Vice Chairman Stracener asked Mrs. Scott since she had a history with all three of those firms, which would be her recommendation. Mrs. Scott said she certainly thinks that Andy Edwards with Crews & Associates was certainly very diligent. He called on her when she first came here. She knows he understands our philosophy and goals, and again, any of them would be fine. Vice Chairman Stracener said we can always change later. Member Martin asked what kind of contract we would be under with this type of arrangement. He asked if once we deposit in the account with funds if we get a monthly or quarterly report. Mrs. Scott said Monthly. Member Martin asked if we want to get out in 6 months from now and go somewhere else if there would be penalties and Mrs. Scott said correct. But say we invest in a 12-month maturity and we took it back at 6 months, we would just be sacrificing the other 6 months of interest earnings. We would never lose principal. Member Martin asked what fees Crews charges and Mrs. Scott said they all work on kind of a net basis. Say they sell us the investments at say 99.75 and the .25 is what they get, but it fluctuates. They all are pretty much operating the same way. One difference is that Crews has their own desk. Arvest does not. Crews has a little bit more ability to reach out and grab securities. We would also have them custody the assets so there would be no additional fees for that. Andy is basically a salesperson, so he is going to make his commission on the difference. There are tools she used in NLR to look at what we should be paying for securities and keep them honest basically. Member Miller made a motion to go with Crews and Associates and Member Martin seconded the motion. A vote was taken and approval given.

Water Distribution-Dewayne Hood
Payment of Labor & Material to Replace Water Heater

Mr. Hood said this is a water heater that was damaged in Wellington Pointe where they were working. She contacted Jennings Sewell because he was on vacation. We were working over there the day before, and once we were done her water heater was damaged. It started leaking. She did have a plumber come in and the water heater had a life-time warranty on it, so he was able to replace it. The bill she had was for $590.72, which was the labor portion of the installation and removal of the hot water tanks. He doesn’t know what the extent of the damage was to the water heater, other than her saying it was ruptured and leaking. It was the first house downstream of the valve we opened, but we did everything as we normally would. It is a dead-end line, but there is a blow off open down there. He can’t argue a whole lot other way. There was a possibility that there was enough air in the line to cause some damage and make the water tank leak. He really can’t defend that they didn’t do something to cause the water heater to leak. He can’t say that they did and he can’t say that they didn’t, but there again, she is the first house past the where they opened up the valve. There could have been something to it. Member Best asked if we have ever paid in the past for a hot water heater and Mr. Hood said we have under similar conditions, and there again the hot water tank was under warranty. She wasn’t asking for the cost of that. It was just for reimbursement of the labor portion. Member Martin asked if it blew off the popoff valve or if it ruptured the tank and Mr. Hood said the damage was in the tank itself. Member Best said which means it was a pretty good shock and Mr. Hood said it may very well have been. Mr. Vondran said he believed that the residents had a regulator. Mr. Hood said he disputed it a little bit when Jennings called him, because he wouldn’t have thought she was tied onto that line, but we went back, chased it down and she was. Member Martin said we looked for a leak in that area for about 5 years and thought it was rainwater, but found that one line leaking water out of it. Mr. Hood said we spent a lot of time over there. A lot more time than he would have liked to spend over there. Member Martin asked if we are liable and Mr. Hood said he honestly thinks so. She was nice but persistent about it. Member Martin made a motion to approve payment based on the staff’s recommendation. Member Best seconded the motion. A vote was taken and approval given.

Payment for Busted Water Lines due to Water Meter Leaking After Shut Off.

Mr. Hood said he wants to ask Mrs. Cindy Hawkins, Comptroller as to what the dollar amount is that he is asking for. Mrs. Hawkins said he brought this information to her about a month ago. The labor is $165, which is labor for himself at $15 an hour. The materials were $165.68. The total is $320.68. Mr. Hood said what this one was, back in November we had a pretty good little cold snap where the temperatures got below freezing for a couple of days. We got a call for a mobile home out on Silica Heights that had some ruptured pipes. They wanted the water turned off. When they got out there, the meter was actually turned off and locked off, so they really didn’t know what was going on. He had told Andy who was handling the service tickets that the mobile home was vacant, but the pipes had burst and he needed to figure out what was going on. So Andy did pull the meter, but even though the shut off mechanism was turned and locked off due to non-pay or something on Cindy’s side of the fence, there was a little water going through that so it didn’t completely shut off. What he is saying is that, it is a faulty ball valve that created his problem and caused the freezing and rupturing his pipes. We pulled the meter out and he fixed his stuff. The next day we dropped the meter back in after he called to say it was fixed. That ball valve is there for us to be able to control the flow of water to maintain the meter. It is not for the customer’s benefit, even though it is used for that; it is for us to be able to change out that meter. During that time period we only had 2 other calls that pertained to anything that was frozen and had issues with something rupturing, and both of those were meters in houses that were under construction and where they didn’t cover anything up. They were just sitting out in the open and the meters ruptured, and we did bill those builders for that. So, we went back and looked and the mobile home was vacant. It didn’t have any underpinning or anything under it. He doesn’t know if he had the heat turned on in it, but had he left the faucets open even though there was just a small amount of water going through there, the chances of it freezing… it probably wouldn’t have. Surely, if he had underpinned it or opened up a drain to winterize it, then it wouldn’t have frozen ruptured. He doesn’t feel like it was their responsibility since the vacant mobile home wasn’t winterized or underpinned. He winterizes his barn, RV and winterize things at the shop. There again, we didn’t have hardly any other customers with this issue due to the cold weather, so in his opinion, he should have taken better care of his vacant property. That is just his personal opinion. Vice Chairman Stracener Member asked Mrs. Hawkins is she has any documents on that. Mrs. Hawkins said she just has his receipts and comments he wrote down. Mrs. Madeline Wilson said she tried to find his phone number because the number he gave her was disconnected. She thinks he is the maintenance person. This is owned by a company out of Conway. Mrs. Hawkins said it is AFB Mobile Home Park. His name is Lewis Beecham. Mrs. Wilson said she thinks it is owned by someone else. Member Best asked if he is a plumber and Mrs. Wilson said she thinks he is the maintenance man. Mr. Hood said all that we maintain in there are the meters. The stop that is there to shut that off is for us to be able to pull the meter out, replace that meter or do maintenance on our side. It is not technically there for a plumbing code or for the customer to have access to. Member Best made a motion that unless further evidence appears or there is something else that we don’t know, that they decline payment. Member Miller seconded the motion. A vote was taken and approval given.

Wastewater Collections-Nathan Schultz
Sewer Connection Fees for New CTE Building

Mr. Schultz said we got the plans for the CTE Building. When we do a school, the top taper is the ordinance and we charge $15 a student for the occupancy of the building, and that is how we charge the school for tie ons. The school just pays like $10,000 each time going by the occupancy. The CTE Center occupancy is 2,718 times $15 would be $40,770. There are about 5 different connections with grease traps and a certain number of manholes, but that is how the ordinance reads on educational institutes. Vice Chairman Stracener asked if this is for connections only and Mr. Schultz said only for sewer connections. It would cover all of the buildings. He got the occupancy for all of the buildings from the engineer. Mr. Schultz said his count was 2,500, but the engineer’s count was 2,718. Member Martin asked if we are being asked to waive that fee and Mr. Vondran said not yet. Member Best said he thinks they need to move on like the ordinance says and Mr. Vondran said it was just for information purposes only at this time, because the bill is not due and it is not time to invoice them. Vice Chairman Stracener said that still requires City Council approval. We just make a recommendation to waive.

Old Business

Service Territories-Jason Carter

Mr. Carter reminded them that they are in a conflict with Entergy over the Exit 114 parcels. We have received another offer from them for iteration 7 now. We negotiated back and forth, and have some new facts in. He thinks it is a worthwhile point in time to have a discussion over where we are at. Just walking you through pretty quickly over our points of negotiation, we got to a point where we could say we will agree to negotiate to maybe a wholesale power kind of thing if it is to the advantage of both of us; that would be great. We are not talking about a full requirements contract, but just some piece or block that would kind of represent the territory that is being acquired. We agreed that in order to achieve a settlement, it would have to result in Benton Utilities serving that property. There is not going to be a settlement without Benton Utilities serving the property. We also had agreed that it is primarily a City issue, but to work through revising the franchise agreement. There were kind of 3 points of agreement. The points of contention between us has been a notion of a royalty on the property that is being taken over, and some additional protected service territory. Where we started back in the day was with Entergy’s royalty level basically at about a 5% mark up on all revenue and perpetuity, and they wanted 1,000 acres of protected territory with double acquisition cost basically doubling that acquisition cost if you tried to buy in to that territory. We responded with a royalty of 1.5% for 5 years and no protected territory at all. That was the position we responded with and they came back with a 3% royalty for 10 years, with 500 acres of protected territory. We responded with 1.5% for 10 years; we expanded a little bit, and then started arguing that the 500 acres are okay if it’s South of Hwy 70 and South of I-30 in an area where it is not going to encroach on where we think we are going to actually grow in the next 10 years. That was the concept behind that kind of proposal. The response we got back on that was a royalty down to 2% for 10 years. We started at 1.5 for 5 and went to 1.5 for 10. They went down to 2% for 10 years and then said 250 acres North of Hwy 70- and 250-acres South of Hwy 70 and I30, right above south in that direction. Our response back to them on this, and these are all pretty abbreviated, there are a lot more terms there, we started at flushing out what a wholesale power negation looks like. We said we would like to see what the price point would be for 4MW delivered to the door step. Obviously, we can’t violate an existing contract, but we would like to see what that is. Our proposal was that these additional terms or royalty fees and costs would terminate with the entry of a wholesale power agreement. As far as the percentage points, we still stuck with our 1.5% number, and said if you want to go to 2% that is fine, but it is just on electric sales and not on service revenues or demand charges. As far as the protected acquisition territory, we said they were at 250 North and 250 South, but we said 150 North and 150 South. We have gotten a response to those, and this is starting to get more flesh on the bones as far as a settlement agreement would go. They are requesting as part of the wholesale power negotiations that bidding would be waived, so we wouldn’t go through a formal bidding process. That one doesn’t offend him as much from the standpoint that we kind of know what power goes for these days. Power costs are not exceedingly volatile. We ought to be able to recognize a good deal when we see it, so we will know whether it is in our best interest or not in our best interest to enter into that agreement. They have not agreed to the idea that if we enter a wholesale power agreement, that it would terminate the other provisions that we are requesting. He thinks we just have to negotiate that in as part of the wholesale contract, in other words, price point X equals. We buy the power and it would end the settlement agreement as well. We would have to negotiate that as part of that separate negotiation. As to where they are at percentage wise; they are at 1.75 for 10 years, so we are apart by a quarter of a point basically. As far as their 2 protected areas, we are kind of at 150 North and 150 South. They are at 200 North and 300 South, but honestly that was not the big focal point that we were concerned about form a negotiating standpoint anyway. David can throw a rock at him if he misstates that. Those were the things we were primarily concerned about. He thinks the additional fact that may move us along is when we talked about franchise fees. Entergy right now pays the City a franchise fee of 4.25%. First Electric pay 5.22%. BU pays 5.48%. So, assuming it would agreeable to the City, he thinks the proposal back to Entergy is, and he would urge them to consider that the numbers we are looking at may be okay as far as terms to get us there, but they are going to have to agree to match First Electric’s franchise fee. They have got to go up to 5.22%. That is something they can agree to under Statute 1420010, and by doing so, he suggests approaching the City for Entergy going up to 5.22%, that if we approve the settlement agreement, all amounts to be paid to Entergy would be subtracted from the franchise fees that you would otherwise pay the City so that BU would be made whole. The City would not lose money. Of course, franchise fees are pass-through from a factual perspective. Citizens who live in Benton who are served by Entergy would see a 1% increase basically in their electric bill. His argument regarding that would be yes, but that is fair. If First Electric’s customers are paying 5.22% then Entergy customers should pay it as well. That is fair. Mr. Vondran said one point of clarification he would like to make with Mr. Carter is that our franchise fee is embedded into our rate. So it will require a rate adjustment to be approved by the Council. Mr. Carter said so it is not an adder and Mr. Vondran said it is not. Mr. Carter said so somehow you calculate that and Mr. Vondran said correct. Mr. Carter said so, what he is saying is from that calculated amount, that is where the payment would be tendered, so money that would otherwise go to the City would be the money that would be used to pay Entergy as the proceedings move forward. Settling an argument is not always about winning, but choosing the most desirable outcome of the least desirable alternatives that are available. That is part of the decision-making process and the good thing about settling a conflict is that you control the process, you control the price and you control the outcome. When we don’t settle a conflict, you entrust that task to others, and hope, pray and believe they will make the right decision, but at the end of the day, they make the decision and we don’t. From that standpoint, there is value in settling an agreement. Obviously, the City would have to be a part of this, but we wanted to bring to you where Entergy was and get his marching orders from there. Member Martin said they threw in a 5^th item in withdrawing the election ordinances and he asked if there was any discussion in regards to a signed and sealed agreement prior to the 16^th of December when the 2^nd and 3^rd reading of the ordinance will be before the City Council. Mr. Carter said we haven’t had that discussion yet. As of right now, you are seeing the proposal that they made to us. He and Mr. Vondran have had a chance to read it, look over it and kind of congeal our thoughts and bring it back to get your guidance, but we have not responded to them. Member Martin said he thinks if we withdraw and don’t have a signed agreement. Vice Chairman Stracener said we can re-do an ordinance at any time. We may have some costs, but that doesn’t in any way affect Entergy at all. Mr. Carter said he thinks the primary costs you are looking at is once the Election Commission starts printing ballots and start hiring people and all of that. Then you start inheriting a cost share. Vice Chairman Stracener said it will be minimal compared to the alternative. Member Best asked if this includes Hurricane Creek east and north and Mr. Carter said right now this does not. He thinks there are other strategies we have to address, but this one does not. Member Best asked if that was just dropped out and Mr. Carter said from a negotiating standpoint, their standpoint is that we are injecting new material to the conflict. This was not a part of the conflict. It is not about what we are trying to get settled. He thinks it is hard to keep that from growing a little bit, and honestly, in his communications with Mr. Vondran, Hurricane Lakes is a serious issue. The folks who live up there on the north side are served by a radial. There are very few customers there and they are kind of out there by their lonesome separated from the Entergy footprint. If they have an outage, he thinks they will be way down on the priority list trying to get their power back on. Member Best asked if that is still included in the ordinance for the elections and Mr. Carter said it is right now. Member Best said that is the important thing and Mr. Carter said it’s still on there right now, and we can tell them (and have told them), we understand that even if we are not negotiating that as part of the settlement conflict that is in front of us right now, it is still an issue and we are not going to let go of it. Vice Chairman Stracener asked what Mr. Carter needed from them. Mr. Carter said he feels like from a negotiating standpoint, that we have gotten close. We are close enough now that the City is going to play a very important role, and if the City is not willing to agree with the settlement, then there won’t be a settlement and we are just going to have to move forward. He would think they are not going to agree to a settlement unless you are willing to. He guesses the Commission is going to ask themselves if these are generally acceptable terms, particularly with the 1.75%, or whatever would be paid to Entergy, would be deducted from the franchise payments that would otherwise be paid to the City. Member Martin asked if there is a time element on the 1.75% as he reads this in the proposal and Mr. Carter said there is, and it is for 10 years. The 10-year period would run both to the acquisition of territory and on the royalty or fee. Member Martin said there would effectively be a period of construction time of building out and so forth, and the royalty total would be very small for 5 to 7 ½ years. Mr. Carter said he wouldn’t want to move off of the position we have discussed with them before. Member Martin asked if we have locked in 10 years and Mr. Carter said we have approached the point of 1.5% for 10 years, but in all fairness, when we discussed that it was with the assumption that we would approach the City about cost sharing at least some portion of it, if not the entire thing. Member Best said if other than the ordinance, he has any different feelings about the election as to how well it might or might not go. Mr. Carter said he is pretty confident in the election. He is a little concerned as far as what Entergy expressed at the City Council that they are gearing to bring an injunction to try to shut the election down. They may try that maneuver. Member Best asked on what basis and Mr. Carter said he doesn’t know yet as to what their basis would be. He could tell them when they file a complaint. That is the way they are posturing themselves; is as if the ordinance gets passed, they will file a lawsuit to try to stop the election from occurring. Member Best said his question in all of that is that they want to bid to become our supplier, yet they are going to court to shut us down. That doesn’t make since. Mr. Carter said it would make it hard to be business partners. Vice Chairman Stracener said he thinks we are at the point now where Mr. Vondran and Mr. Carter could meet with the Mayor to explain the cautionary side of it, because if he doesn’t buy into it then it is not going to matter. He asked them to meet with the Mayor in the near future to get his ideas on it and let him know what is going on. He may say no, let’s go with the people and Mr. Vondran agreed. Mr. Carter said his only concern about the follow-up to the election is that honestly, nobody has done this in decades. It has been a long time since anybody has executed this statutory process. He is not saying it can’t be done, it just hasn’t been done in a while. We would just blow the dust off of the books and have an election. Member Martin said if they even should pursue an injunction, the publicity will be in our favor, in his opinion. It would market our position more so than us getting entities out there to support the power to vote this. Mr. Carter said he thinks everything Benton Utilities has done throughout this entire process has been forthright, with open hands and an honest heart to try to manage the conflict as best as possible. Member Martin said its David and Goliath. He asked Mr. Carter to help him understand they negotiate 4 Mw and their proposal is to waive competitive bidding or going out on the market for that 4 Mw. He said there is no negotiation if we settle on the 4 Mw. It is at any price they want to charge us. He knows he mentioned a while ago that we know what the market is pretty much, but if they have a lock on 4 Mw then we have no control over what they are going to charge us on that 4 Mw. They could double it to 10¢. Mr. Carter said we are not guarantying them that we will enter into a contract with them at all. All we are saying is we will negotiate, and waiving the competitive bid process is kind of common these days. There was a time when everybody got pretty nervous about that, and by competitive bidding he means putting ads in the newspaper, receive sealed bids and open them up like we are buying a track hoe or something. A lot of times now, with acquisition power they waive the competitive bidding process in favor of a negotiated process or some other way to arrive at price, but you would not be locking yourself in to buying any amount of power. Member Best said they will give you a price. Mr. Carter said right, and all you are saying is we will negotiate with you and see what you come across the table with. If it works out for us it does and if it doesn’t it doesn’t.

New Business

Election of Officers for 2020

Mr. Vondran said this is just a parliamentary procedure for proceeding with this calendar year. The Commission needs to elect a Chairman and Co-chairman for 2020. Member Martin made a motion to nominate Vice Chairman Stracener as Chairman since he has done such a fine job for the past two years as Vice Chairman. Member Miller seconded the motion and Member Best moved the nominations cease and he be elected by acclimation. A vote was taken and approval given.

Member Martin made a motion to nominate Member Best as Vice Chairman and Member Miller seconded the motion. Member Martin moved the nominations cease and he be elected by acclimation. A vote was taken and approval given.

Approving New Share Board Member-Cindy Hawkins

Mrs. Hawkins said you have a letter before you from Galan Hughes. He is requesting to join the Share Board. He currently works at 1^st Baptist Church. He is the one who grants their funds for those who come in seeking help with utility bills. He has sat in on a couple of meetings. It is wonderful to have someone who wants to help out. We do have an ad running because we still need 2 others. We have several others who are going off of the board and not being able to sign up again. Member Miller made a motion to accept Mr. Hughes to be a member of the Share Board and Member Best seconded the motion. A vote was taken and approval given.

Bauxite Water Agreement-David Vondran

Mr. Vondran said before them is a copy of the Agreement for Wholesale Water service to the town of Bauxite. It expires on December 31, 2019. Within that Wholesale Water Agreement, you will see that there was originally a price set of 1.925 per 1,000 gallons. Further down in that agreement it allows a 1% increase effective annually on January 1. With that 1% increase there was a year or 2 that that was not implemented, but it has been recently caught up to represent 1% for each of those 5 years. They currently pay 2.003 per thousand gallons. You also have a copy of Salem and Southwest’s contract which allows us to charge them based on our Cost of Service Study, and that price is 2.416 per thousand gallons. That is roughly a 21% increase that the Cost of Service Study yielded, and that 2 of our 3 wholesale water customers are paying. Bauxite is not. We haven’t visited with the Town of Bauxite yet and we know that their budget for next year is already complete, so we would be looking at any option you wish as far as phasing in or working with the town of Bauxite to see what they are or are not capable of over any given time period. Vice Chairman Stracener asked if they were current on the billing at this time and Mr. Vondran said yes sir they are. Member Best asked if their contract is up in August and Mr. Vondran said their contract is up on December 31^st of this month. Member Best asked if Mr. Vondran had talked to them at all and Mr. Vondran said no sir. When we implemented the 21% increase, the Salem and Southwest Water Users were able to absorb it without raising their rates. We know that the town of Bauxite won’t be able to do that. Member Best asked if he is talking about going from 1.925 to 2.00 and Mr. Vondran said they have already gone to 2.003 and would be going to 2.416. Vice Chairman Stracener said that is about a 21% increase as well. Member Best asked what the average bill is out there and Mrs. Scott said about $4,000 a month. Member Best asked what the average customer bill is and Mrs. Cindy Hawkins said we have several people that work for us who live out there and their bill is outrageous! Mrs. Wilson said they are paying for the infrastructure. Vice Chairman Stracener said he thinks that since we are at such a late hour on this that if we increase any then it needs to be a small amount, and then increment that until we get to the cost of service point. Mr. Vondran said we could continue to proceed under this contract with a 1% increase for calendar year 2020 with the understanding that we need to renegotiate the contract during the calendar year of 2020. Member Best said he thinks it needs to be in writing and Mr. Vondran agreed. Member Martin made a motion to continue the current contract and negotiate a new wholesale agreement with Bauxite in the calendar year 2020 for a 1% increase and giving them until July 1, 2020 to come to an agreement and bring back to the Commission. Member Best seconded the motion. A vote was taken and approval given.

Announcements

Next Commission meeting date: Monday, January 6, 2019
In order of occurrence, there will be a pre-bid meeting tomorrow from 1:00 to 4:00 for the Saline River electric crossing and the I-30 electric crossing. Fisher and Arnold will be here to conduct that pre-bid meeting. It is his understanding we have 10 to 15 contract submittals. The bid due date is still 2 weeks off, but it is a recommended pre-bid meeting tomorrow so that we can go over the specifications and drawings and go out and make a site visit.
Vondran said he wanted to remind the Commission that the December City Council meeting will be a week from tonight. He and Mr. Carter will visit with the Mayor prior to then. He is not sure if the Community Service Committee meets possibly this week, but he hopes to get in front of that Community Service Committee meeting, just to stay in touch with the Council Members.
Vondran said the Christmas party is December 18^th at 11:00.
Wright said Mr. Jonathan Buff’s last day is December 20^th. He is retiring as Wastewater Manager.
Karen Scott said it does not look like we are going to market with our bond deal. The 10-year treasury was 1.8146 this afternoon. We need to be about 50 bases lower than that to get any money, so unless something crazy happens… and from Christmas on nothing will really happen. We probably will not make it happen before Monday night’s City Council meeting.

Member Martin asked for the status on the Human Resource Officer and Mr. Vondran said that will be discussed in the Executive Session.

Mr. Vondran said the budget will be finished tomorrow and we will disburse that to you.

Executive Session

Personnel Matters

Member Miller made a motion to adjourn into executive session at 7: 05 p.m. and Member Martin seconded the motion. A vote was taken and approval given.

The meeting reconvened at 7:30 PM. Member Martin made a motion to adjourn at 7:31 PM with no action taken. Member Miller seconded the motion. A vote was taken and approval given.

_________________ _________________________

Gary Ferrell, Chairman Madeline Wilson, Recording Secretary