The Benton Public Utilities Commission will meet at 6 p.m. Monday, July 6th at the Electric Utility Building, 1827 Dale Avenue. The agenda follows, as well as minutes from the previous meeting.
1. Call to Order
3. Pledge of Allegiance
4. Roll Call
5. Approval of Minutes from the Regular Meeting of June 15th, 2020.
6. Departmental Reports
7. Old Business
8. New Business
A. Herman Reeves Dirt Work Change Order # 2 – David Vondran
A. Next Commission meeting date: Monday, July 20, 2020.
The City of Benton Utility Commissioners met in regular session Monday, June
15, 2020 at the Electric Utility Building, 1827 Dale Avenue.
Doug Stracener, Chairman
Charlie Best, Member
Jim Martin, Member
Gary Ferrell, Member
Phil Miller, Member
Chairman Stracener called the meeting to order with all members in attendance.
Member Martin gave the invocation and Member Miller led the Pledge of
The first item of business was approval of the minutes from the regular meeting of
May 18, 2020. Member Martin made a motion to approve the minutes as
presented and Member Miller seconded the motion. A vote was taken and
Finance-May Financials Karen Scott
Mrs. Scott said on the first page, behind the cover page, she would like to call their attention to May of 2020’s ROE of $165,794, bringing our RTD total to a little over 2.1 million. The columns to the right show you the differences between 2020 and 2019. As you can see, we are slightly better for the month as well as YTD.
On page 4, 5 and 6, and we normally don’t look at this but she wanted to point out that she left May 2019 in the far left column, May 2020 is the 2 nd to the right column as a comparison so that you could see how COVID-19 may be affecting us. There’s some of that in there and as we know, the weather was a little different this May.
Revenues in Electric were down verses May 2019, but the ROE we up, due in large part by the cost of wholesale power. The next 2 pages are Water and Wastewater and include the same columns so you can see that in May we actually had higher revenues in Water than we did in 2019, however, we did have more expenditures due to the purchase of a dump truck and a truck for Water Distribution.
In Wastewater we had slightly higher in 2020 than 2019, but we had expenditures that were also higher due mostly to some work on lift stations and some work out at the treatment plant. On page 7, you will see on the Bad Debt Analysis we wrote off $9,857.23 and collected $3,200, but YTD verses last year were very similar. On
page 9, the Condensed Financials, she wants to reiterate, as she talked about last month, that the Condensed Financials includes the contributed capital whereas the Concise Financials do not, so that is the difference in your numbers. Member Ferrell asked if the power plant went down for maintenance and Mrs. Scott said
she thinks it went down for a routine maintenance. Member Ferrell said they were supposed to do some extra things and Mrs. Scott said she is not aware, but will find out. Member Ferrell said if they did, we wouldn’t have to go to Constellation to buy. Right now, it would probably help them.
When we visited out there, they had a pretty extensive list of things to do. Member Miller asked where we are
YTD on our Band Debt Analysis and Mrs. Scott said YTD we have written off $55,983.14 and collected $30,637.88 between the 3 services; similar to 2019. Member Ferrell said that doesn’t include the people in arrears and Mrs. Scott said correct. Chairman Stracener asked if there is a ballpark figure on that and Mrs. Scott said she actually has an exact figure. The total passed due right now is $167,000, however, $98,000 of that is in the 1 to 30 day and that is the cycle of bills due last Friday. Mrs. Cindy Hawkins, Comptroller is aware of several customers who have CADC pledges. The amount of 98,300 for 1-30 days, $40,000 in 31-60 days, $23,000 for 61-90 days and 6,500 for 90 days plus. Out of all of that bad debt, $56,650.57 is due to 112 accounts that have made absolutely no payments at all since March. Out of the 1,200 or so that are delinquent, most have made an attempt to pay.
Customer Service has been reaching out to our customers urging them to make some sort of payment, communicate with us about their situation and needs they may have. There are 3 in that 112 that are businesses on that list…the list is a little surprising; Tuesday Morning, Applebee’s and Jay’s Collision. Member Ferrell said Tuesday Morning might close. Mrs. Scott said she saw something where they might file bankruptcy and they owe $560.00. It is a
little surprising to her that they have made absolutely no payments since March 23 rd . Member Martin asked if there had been a spike on the requests for the Share Program and Mrs. Scott said she is not aware of one. We usually get a little bit of a spike at this time of the year since the bills are higher, but customers are only
eligible for the Share Program if the participated in it. Normally, if we get a request, the discussion is that we are sorry, but you haven’t participated in it. If fact, the check we wrote this month was about average; $4,300 she thinks. Member Martin asked if we are current with the City on our franchise and Mrs. Scott said absolutely, in fact, that check got cut on Friday, June 5 th . Member Martin move that they accept the Financials as written. Member Best 2 nded the motion, a vote was taken and unanimous approval was given.
Water System Improvements Bid Approval Jacob Gillip
Mr. Gillip said he did 2 on-call contracts for the Water Department. The longer one is a unit price list of different things that can come up in water projects. The purpose of this contract was to have a contractor approve, so that if Mr. Dewayne Hood, Water Department Manager wants to replace the water line on a couple of streets or define a certain scope mostly for system replacement type of projects, so he would have someone ready to go with that. The results of the bid opening were a little disappointing. We had a lot of contractors who expressed interest and bought plans, but as the bid day came, they started saying they weren’t going to bid.
The day of the bid opening, he expected it to be down to 2 contractors on each job, but only 1 contractor showed up for both bids. He has done a cost analysis on Coakley’s prices, which he passed out to them. Member Ferrell asked if there were any comments as to why they didn’t bid and Mr. Gillip said a lot of people were busy and didn’t want to commit to something for 5 years. We expected to see a bid from Diamond and JR, but both felt they were just too busy to commit to something right now. Member Ferrell said it takes a lot of time to put these together, and in fact, he doesn’t like to do them either. Mr. Gillip said it does have a lot of moving parts and is time consuming to sit down, call them and there is some analysis that goes into these prices.
We went through some historic costs on other jobs, and obviously we don’t have a comparison for some of these, but some of the more common items we did. It looks like their prices are pretty decent. Number 6 and 7 were a little bit high, but not just terrible. We broke out the anchor-t and swivel-t as separate items because depending on the main size, there can be a variation in price for that fitting. There’s about a $500 difference between a 6” and a 12”, which is pretty typical. Most of these prices look pretty good. Mr. Coakley didn’t know he would be the only bidder, so he thinks Mr. Coakley was trying to get it. Mr. Coakley does on-call work for the City of Hot Springs, and he likes that kind of a contract. He is familiar with that kind of work, and most of us are familiar with the name.
Coakley does good water and sewer work and are good contractors. He has never had a bad experience with them or heard of one. Member Martin asked if this is for emergency purposes or for circumstances our existing staff can’t get around to. Mr. Gillip said his understanding from Mr. Hood is it is more for projects to replace the waterlines where maybe they have old A/C lines and want to do improvements in that area, then he will put together something based on these prices and Mr. Gillip will authorize that contractor to get started. Member Martin asked what the response time would be if you have a project like that and Mr. Gillip said this would be more for planned projects. If they had an emergency come up, they might reach out to this contractor if they are available to do that, but Mr. Hood was looking for something for planned projects as opposed to surprise or emergency projects. The concrete contract is separate there. Member Martin asked if they are needing approval for these fixed costs and Mr. Gillip said yes. Member Martin asked how long these estimated unit costs are good for and Mr. Gillip said they will be good for the rest of the year with a provision in the contract to extend it each year if it is mutually beneficial.
If Mr. Hood is happy with the work they are doing and Coakley wants to continue working with the City, then it can be extended. If there is valid justification due to a cost increase; there is a provision to negotiate that. If the price of a product goes up 25%, then they could negotiate a new price that is reasonable. Member Ferrell made a motion to accept the sole bidder as written for both the Water and concrete. Member Best seconded the motion, and a vote was taken with unanimous approval given. Mr. Gillip said you have the bid tab on the concrete
Concrete Repairs Annual Contract Bid Approval Jacob Gillip
Chairman Stracener said we just covered this one. Mr. Gillip said there is a bid tab on the concrete and those prices are about what the City has been paying. Northshore Estates Jonathan Hope/Carey Smith Cary Smith, Hope Engineers, said he had met most of the people in the room when he worked at Stephen’s for 13 years; either from the City Council or the PUC. We have talked about many projects. He left Stephen’s at the end of 2012. What he is doing now is working on 2 City projects. The first one is within the city limits. It is Eden Estates Phase 2 and 3, which is over off of Edison. There are about 80 lots that they are about to develop. The first phase will be about 40 lots. Those homes will be in the 1,200 to 1,400 sq. ft. range, which is similar to Phase 1. We did not develop Phase 1; another party did. We are developing Phase 2 and 3. Back in October or November, 48 acres on Northshore became available, and we had Jonathan Hope look at it.
Johnathan is the engineer on the Eden Estates project as well as this Northshore Estates project. We had him look at it and thought it made a lot of since to buy, so we bought it knowing that it was not in the City limits. They did some preliminary homework with Jonathan and talked to the Utility, and it didn’t seem to be an issue to provide both water and sewer to it. At one time, they were given no notification that there would be any issue at all. We didn’t understand that there would be an issue, so they purchased the property.
A few months ago, the Utility did an analysis to determine if we would have the appropriate capacity there. If he is out of his league, you can help him here. It was determined that the capacity wasn’t there, so the lines have got to be enlarged from 8” to 12”, which is a couple hundred thousand dollars. They came back to them and said we have your project and a project down the street that is 60 some odd lots. If you split all of that on a pro rata basis, it will be close to $1,000 a lot to upgrade the system to handle the new capacity. At that point, we were already in the process of annexing into the City, and again, we had no idea there would be a capacity issue. He thinks it was just a timing issue for the City to do its work, and once they realized that, they were quick to let Jonathan know that there would be a capacity issue. From that point, we were already lined up to annex it into the City but we stopped. That is a lot per lot. We are working on very thin margins. The proposed was about 172 lots on that 48 acres.
This is going to be a slow-moving project, where realistically, we build about 15 to 20 houses a year, and with 172 lots that is over several years that this project is going to take place. It also depends upon market conditions. If the market turns cold we are not going to keep building, so it depends on what the market tells us. We decided to stop and not annex yet, because we could leave it in the County and do acre lots and not worry about the sewer given the cost of that. We set up a meeting which occurred about 2 weeks ago with the Mayor, Brad Jordan, Mr. Vondran and Nathan Schultz. We had a good conversation where both ends learned a lot. He learned from the Utility perspective of what it is trying to accomplish. He thinks the Utility and the City learned what they are trying to accomplish. The reason we are here tonight is to have a conversation and continue the conversation to tell you what we would like to see, and see if there is a way to make this project work. It will be a nice project with nice houses of 1,600 to 2,200 square feet. They have redesigned some of the front lots and the lots closest to Northshore are going to be larger, which could carry larger houses. The ones on the back will be your standard sized lot.
We tried to show the real benefits in the last meeting, of having this in the City limits. Please note that our goal is to have this in the City limits. Probably 20 years ago, John Walden would call us at the office and he would have a project like this or a commercial or industrial project. He would ask what is this going to do, how do we fund this or how do we issue bonds for this. We and the engineers would do an analysis for him to work it through. We would tell him you need to increase rates here or do this or that to help him analyze it. This was before the Utilities had its own finance person. He would like to do something similar with the City and Utility as he did with John. John would work with you and worked with several mayors. He needed something to show the benefit to the City and Utilities for
doing this project verses not doing this project. He then passed out a 2-page summary of the benefits of a 48-acre project that is outside the City limits, that you could annex into the City limits and how it would impact the Utility and City from the perspective of upfront revenues and ongoing revenues. As he explained the other day, when he helped the Utility when Terry McKinney was here, they looked a wanting to grow revenue, but at the same time you have to watch you expenses too.
If you have good revenues, control you expenses and if your rate structure is right, then you are probably going to have an okay utility system. Knowing that for years, and he thinks the case is still the same today, your electric subsidizes your water and sewer. It always has in the 13 to 14 years he worked, but there are potential changes that are being contemplated and discussed according to Mr. Vondran. In the first box on page 1, it speaks of the revenue you and the City would generate with this project as a 1-time revenue as it is being constructed, and knowing that not all 172 lots are going to be developed at one time. The City Column is in yellow. When he met with the Mayor, the mayor explained that the City and Utility are separate, and that he wanted them broken out separately to know how it would impact the City, and how it would impact the Utility, so that is what he did here.
You can see all of the permit and revenues that the City would generate, it is about $123,000. The Utilities would be about $292,000 for a total of about $416,000. He has some assumptions there at the bottom that were based on information received from the City and the Utility. Again, that is a 1-time revenue during construction. Page 2 tells you what this is going to look like once it is constructed. It explains how much revenue the City and the Utility will generate ongoing, on an annual basis and monthly basis. There are 3 boxes. The first box says Estimated Ongoing Storm Drainage Fee and Utility Revenue to be received by the City and Utilities upon project completion. The Storm Drainage Fee For the City is not a lot for a year. It is about $10,000 a year. The Utility will receive a pretty decent amount per year and most of it comes from electric.
The assumption there is based upon what the Utility gave us, and is $125, but if you have 172 of them, it is about $258,000 a year, the water revenue is $51,000 and Wastewater is $72,000, so the total annual revenue is about $381,000 to the Utility. Steve Lee, Alderman & Liaison for the City said from the City side, he is looking at that $123,000, 172 lots that you said you would complete about 15 houses a year… it is going to take 12 years to get that, so he is looking at actually getting $10,000 for the year, and Mr. Smith agreed. Mr. Lee said $10,000 is not a lot, but the $123,000 looks pretty impressive if you don’t do the math. He hates to say that at least half of them on the Council is not going to do that. Mr. Smith said it is not a lot of revenue to the City. The Mayor had him break it out to show the income, and he made the same point that it is not going on line at the same time, true, but eventually it will all be online.
Box 2 is the estimated ongoing property tax revenue to be received by the City, and the Utility won’t care much about this, but the Mayor did. Annually, if you look at the types of taxes the City collects 2.8 regular City mills and Fire Department and Street Department of 1.5 mill, so once all 172 lots are built out it is about $41,000 yearly in property tax revenue. Again, not a lot of revenue to the City. The bottom box is simply a summary that shows the annual revenue to be received by the City and Utility in blue, for a total of $433,000. If John Walden had asked him about this, he would have thought that once this thing gets built out 8-10 years down the road and there is no guarantee it all gets built because something could happen to the developer… actually they will guarantee. As soon as it is built out it will eventually have revenues that look like this.
From the meeting a few weeks ago, Mr. Vondran made some very valid points. He said if you are going to put up over $200,000, that there is really no cost recovery method to get that back. We proposed working together as a partnership to find a way that we are not charged the $969 per lot. We are looking at it from this perspective: if you look at the other Northshore projects, there’s one that Rausch Coleman just started. They are using that same capacity and they are not having to pay that fee. The project up the road is 60 lots and we are having to pay that fee. There are several other projects in that area such as Razorback Road and all in that area who hooked on to the City sewer at some point and didn’t have to pay that fee.
We are proposing to be treated the same way that they were treated, and don’t make us pay that fee. If you provided capacity to those projects, and just because our projects happen to be last in line… there are 5 projects. The first 3 made it through the gate and didn’t have to pay. The last 2 were slower to the gate and now they have to pay. Our point is if you provided capacity to them, then let’s find a way to provide capacity to this project, and treat every developer fair and equitable. He asked if there is a way, we can make that work. At the first meeting with the Mayor, you asked us to pay $200,000. What if we paid that upfront to the Utility as a loan more or less, say we give you $170,000 and you give us a credit toward that $1,000 sewer fee until we recoup that money. Therefore, we are paying for the development and ya’ll are, more or less, giving us a credit on the backend.
In essence, the Utility would still be paying for that, he would just be fronting the money. It could be all up front or in phases to let you get it done. Obviously, he wants to pay the $1,000 that everybody else has to pay, and he would be doing that this way. He would give them the money upfront, and then as those lots come online, rather than you charging him $1,000; you don’t charge him that $1,000 until he gets the payback. Chairman Stracener asked what the difference is between the $969 and $1,000 connection fee. Mr. Nathan Schultz, Wastewater Manager said the $1,000 connection fee is for any residence that comes in to the City of Benton. Chairman Stracener said that is in addition to that and Mr. Schultz said yes. On an area such as Vivian Heights and the subdivisions he is talking about, they go a totally different direction. They are not going in the direction that he and Vernon are going. They are going down south and that is where the capacity issues are. Vivian Heights and the other subdivisions go through Heritage Farms and down a different way.
Centennial Valley and Heritage Heights paid the thousand dollars, plus the developer pays $230 something a lot on top of that, and that check has to come before anything and before the as-builts are approved. In the Thomas Pasture area, there was a $500 per lot upgrade fee, plus the $1,000. It depends on the basin. Mr. Smith said as an example, in Eden Estates we are paying a little over $100 per lot that was grandfathered in before we even bought that project last year, but we are having to pay $173 per lot and that was already a done deal. This is unique in that it is not in the City limits and we are trying to find a way to save.
We only have 2 options; one is bringing it into the City limits (which is what we want to do) or leave it outside the City limits. If we leave it outside the City limits, then we will probably do 40 to 45 residential lots, and Entergy services that. BU could work out an agreement to provide water… he just thinks for long term the City can benefit and we can benefit with this thing being in the City limits. Let’s talk about the math right quick. You have 172 lots, and under a normal situation if he didn’t have to pay that $969, then he would pay $172,000 in connection fees.
He is proposing giving the Utilities that up front, and BU use that to make the improvements, then he will have to pay the other $1,000 per lot. Mr. Lee said all you will lose with that math is the interest on that money because you are going to get it back. Those other lots that you say hooked on for nothing… they paid a hook-on fee per lot to User. If they did, that is an expense they paid that you won’t have to. You are going to break out even and your only loss will be the interest lost for the duration of when you put the money up front, because you will get it all back. In those other subdivisions, the contractor was out paying and you are not. You want to be zero. Mr. Smith said he thought about that too, because it appears… Mr. Lee said if he was him and had thought about it, then he wouldn’t have said what he just said. Mr. Smith said he is not doing a good job explaining and will try to explain it better.
Here is the situation; he is going to write a check for $172,000, but the Utility wants him to write a check for twice that. Mr. Schultz said the developer doesn’t pay that. Whoever buys that lot and the plumber pays that. Mr. Smith said it still comes out in the overall cost of the lot regardless of who pays it. Mr. Schultz said he just wants to make that clear that 9 time out of 10 that the person that buys that lot or the plumber pays that $1,000. Mr. Smith said it still adds to the overall cost of the lot, and in this case, we are going to be building on the lots. Again, you really have to think through it. He is going to pay $172,000 and he is hoping to get sewer for that $172,000. If he didn’t have that $969 fee, he would have to pay twice that. He would have to pay the $1,000 connect fee and the $969 per lot, so it is $2,000 a lot. He wants to pay just the one set of $1,000… just the $172,000 up front and not have to pay anything else, which is the same thing it would have been in the first place. Had you started out and said “Mr. Smith, you can go and develop this project and all we are going to charge you is $1,000 per lot to connect to sewer, so that is $172,000. He is still paying that. He is willing to pay it up front. He is just not willing to pay twice that. Mr. Lee said so you will be out $172,000 and that is it and Mr. Smith said correct. Mr. Lee said and all of the lots will hook on for free and Mr. Smith said well, it cost me $172,000 to hook on and not pay the extra $969 per lot. Member Ferrell said he thinks they may not vote tonight because they need more information. He wants to make sure the 12” we are putting in will cover anything else that could be connected to it, and if it does, he asked if he is paying for that too. Mr. Schultz and no, there is a percentage that we came up with. Member Ferrell said it is at capacity and Mr. Schultz said yes. Member Ferrell said to Mr. Smith that we have gone to a capacity method, and you made comment that if you are outside of the City… we have come to the decision that if we don’t serve electric, water and sewer, then we won’t serve one or the other. Mr. Smith said so you couldn’t just serve water and Member Ferrell said outside of the City without serving the other Chairman Stracener said by ordinance, we can’t serve water outside of the City.
We can serve sewer by ordinance but we can’t serve water by itself. Member Martin asked who serves electric out there and Mr. Smith said presently, Entergy. Member Martin said so we don’t get the electricity and Chairman Stracener said if we annex them, we can. Mr. Smith said if you annex it you certainly would. Member Martin asked if this is going to be an Improvement District and Mr. Smith said no, it is not going to be an Improvement District; not at all. Member Best said if it is Entergy and there are meters out there, we will have to buy them. Mr. Smith said there is only 1 meter on his property. Member Ferrell said we may have to go back to the agreement we just made, which is some number in the air. Chairman Stracener said it is 2 ½ times he thinks. Member Ferrell said you have to go back to the case we just settled, and it is different because we never finalized that and there’s not a ruling. We are back to square one. Mr. Smith said Mr. Vondran said you are working on different rates so each department can support itself so that Electric doesn’t have to subsidize Water and Sewer. He can understand that and it makes since. It has been a long time coming and was a conversation 9 or 10 years ago when he was working with the Utilities. He told Mr. Vondran that they had put this project on hold until a resolution could be found that is workable for both parties. He was saying that might occur starting in the fall. We have no problem waiting until that time. Mr. Vondran seemed very open. Mr. Schultz said you might have talked to him after the Vernon deal, because it changes everything. Vernon wants to develop that and do the line, so if Vernon puts in his, and we have to put money in there up front, there will still be an extra charge because Sewer had to pay it upfront. He can’t say that because if this developer in the City of Benton backs off, he can’t tell Vernon he has to pay the whole thing. It is still going to be a percentage. He still has to use his budget money for pipe bursting. Anybody that ties on in that basin will have a percentage charge. In Centennial there is a $200 something charge, or a $500 charge over in this area. This wasn’t said, so he thought you were talking about after that meeting. He doesn’t want him to wait thinking he’s not going to have to pay anything. Mr. Smith said so the overall charge in that basin is $231,000, and that gives Vernon 60 lots along with our 172 lots. He would like to ask the Utility to consider, and Mr. Vondran seemed open to this, is him waiting and coming back after running an analysis. Mr. Vondran told him his rates are good.
If he can show that his payback is reasonable and he has to front that money, he would normally get that back in the form of serving wastewater out there, Mr. Vondran said he would certainly look at that, but he has to get the rates right first so he can calculate the reasonable payback on that investment. He told Mr. Vondran he is fine with that. Mr. Vondran emailed him and asked if he wanted to talk to the Commission to let them know what the discussion is and he agreed to come. That is why he is here tonight. He is not necessarily here for a vote tonight, but to begin the conversation, and find a way that maybe Vernon lots and our lots do not have to pay. Think about it… if we are willing to pay that cost up front, and the City gets that infrastructure improved, then we go broke and don’t build the lots, then the City has just got that development for free and you are out nothing. Mr. Lee said you are not giving it to the Mayor. You are giving it to the Utilities. Mr. Smith asked if they see what he is saying. If we are willing to do that; that is a good faith gesture to say you are trying to find a way to make this work. At the same time, he doesn’t think it is fair for him or Vernon to have to pay an extra $1,000 per lot to hook the sewer up. He just wants to pay the same $1,000 a lot that every other developer pays. Member Martin said he thinks he has already made that point. Mr. Schultz said the developers like in Hurricane Lake are paying that $500 a lot upgrade fee, but it is still us being the bank and getting into debt. There are other developers doing this. Chairman Stracener asked where his development is on the map and Mr. Smith pointed it out. Member Martin asked what his projected sales for each of the lots. Mr. Schultz said the developers, in his opinion need to pay something. He is faulting that $1,000, and asked what number he would be comfortable with. He asked if he is willing to pay anything.
Mr. Smith said he is certainly willing to work with them to make this project work where it can be in the City limits and be good for all parties involved. He doesn’t have a certain dollar amount, but he can get back to him with that. The way he continues to look at it is that other cities charge an impact fee across the board regardless of where it is located. They are not penalized for where they build. Treat everybody fairly and equally. You shouldn’t say you have to pay more because it is costing us money. Member Martin asked him to summarize in writing where these other lots have been treated differently from what we are proposing and have treated you. Mr. Smith said it is everything on Northshore, Beverly Heights has 7 or 8 houses and didn’t have to pay the extra $1,000. Treat everybody the same. Member Ferrell asked if he has developed in Little Rock at all and Mr. Smith said no. Mr. Schultz said he has been in classes with a lot of people in Fayetteville, and their sewer actually funds their water department. Before the developers there even put a shovel in the ground, they have to put up $30,000 to even be in the city. Right now, the developers here for so many years haven’t paid a dime. The Utilities are hurting right now and sewer has a lot of problems. Chairman Stracener said you are going to own all 172 lots until the houses are complete and Mr. Smith said we are not doing all 172 at the same time. It will be over about 10 years. We do not plan to sell them to other developers or builders, now could that change? Yes, it all depends on the market. Chairman Stracener said when he built in Long Hills, it was an Improvement District and he still had to pay the $1,000. He is trying to see where the difference is and if you sell out, how does this carry on for 5 years? If you decide you are not going to carry those houses and half way through you decide to sell the individual lots, then those people have to pay the $1,000 connection fee, because when they go to Community Development, they will say that will be $1,000. Mr. Smith said true, and in that case, they would pay that. If he had agreed to pay that up front then you are guaranteed that he is paying the bulk of that up front. Think of it like that. We just want to be treated like everybody else.
Member Martin asked how many lots he can put on there if he has sewer and Mr. Smith said about 40. Member Martin said without sewer your investment is and Mr. Smith said he thought if he went that route, then the goal was to be done with that project in 18 to 24 months, and move on to the next one. He wanted to simplify it and be done with it. Member Martin said the sewer is what gives you the extra revenue on 32 lots, so you are profiting by the very fact that the sewer is being made available to it, and Mr. Smith said yes sir, but that is over the course of 8-10 years. Member Martin said very much so, and that is where the philosophy has been with the prorated share of any upgrading in order to make a development work if it is in the City limits. We tried to be able to fund those projects without the other rate payers subsidizing that particular development. It is to your advantage to have that sewer there no matter what the cost. It doesn’t matter what you call it, whether it is $1,000 a lot or $2,000 a lot or an impact fee. He likes the idea of impact fees. Mr. Smith said he is fine with paying whatever anybody else had to pay. Member Martin said that is what is troubling him is the rational that we have been treating people differently. That bothers him and we need to do more on the investigating end of it. Chairman Stracener said Mr. Vondran said we are. At Hurricane it was $500 and over here it is $200. Mr. Schultz said the different basins are different. When we were forced to take over Centennial in 2011 is when that started over there. Member Martin said then, there is a rational for it. Mr. Smith said if you put a $5,000 fee on everybody then he is fine with that and will pay it. Just treat us the same. Mr. Schultz said this over here is going to need more than this up here, so it can’t be the same. Mr. Smith said look at Exit 114. It needed a lot of utility money to run sewer over there.
Did someone pay an extra $1,000 per whatever or did the Utility pay all of that to get it over there? Member Ferrell said we are serving all 3. We had talked about a different rate for the 114 properties. It is not built yet and we haven’t really sat down with them yet. We are considering an upcharge there. We will have to go to City Hall for that first. Mr. Smith said we would like Vernon’s project to be treated the same as ours. It wouldn’t be fair for him to have to pay the $1,000 when we are not. From what Mr. Vondran was saying, if your rate structure changes where you can calculate a decent payback for the $230,000 investment, Mr. Vondran seemed open to that. Member Martin said Mr. Vondran doesn’t make the decisions and Mr. Smith said good point, and that is why he is here talking to the Commission. Chairman Stracener asked where he stands on petition and Mr. Smith said we totally stopped it. We had the petition to the County Judge, and pulled that petition back in February until we could sort through this. Member Miller asked what school district this will be in and Mr. Smith said Bryant, but he can’t do anything about that. Member Martin said we appreciate your proposal, but we need to study it a little bit. Mr. Hope said we do deal with a lot of cities and everybody is a little different, but it is unusual to have different areas have different fees from what he has seen. He doesn’t work with every city in the state, but it is a little different.
There are some unknowns going in, and like you said, it was kind of a timing thing of closing on the land, and he is not sure what the final cost was. There are some definite risks there and unknowns. It wasn’t always this way. He thinks the line we are talking about on this went through St. Andrew’s and the subdivision to the south, and when we did all of that in house and the subdivision to the west if it. There wasn’t an additional fee back then on that line and capacity. He just appreciates the Commission for hearing them out. Member Martin said you can understand because of your project on the other side. He asked for the status of his development on the north side of Hurricane Lakes that we talked about 2 weeks ago. Mr. Hope said he thinks the ball is still in Mr. Vondran’s court to discuss with Water Users. Mr. Smith thanked the Commission for their patience and working with them in the coming months to find a resolution.
Chairman Stracener said he would like to start the dialog on shutoffs. The bad debt sounded pretty good. He guesses that is rolling in to these numbers. Mrs. Scott said frankly, Mrs. Hawkins said a lot of these 112 customers who haven’t paid are frequent fliers. There are customers who don’t do a good job of paying anyway. Chairman Stracener said it was a great opportunity. Member Martin said they are habitual late-payers or non-payers and Mrs. Scott agreed. Member Martin asked if the collection agency is lined up to go after them or if we are still playing the
pandemic. Mrs. Scott said we are currently still in a suspension of disconnects, but late fees are accruing. Mr. Lee said we all received the $1,200 and Chairman Stracener said actually, a lot of them paid it when the money first came in. Mr. Lee said it would be the right thing to do.
Mrs. Scott said there are a lot of customers who made attempts to pay. They reached out to charitable organizations
for help. CADC got additional money from the Cares Act. Right now that additional $600 a week is set to expire on July 31 st . She guesses Congress thought things would be back to normal by then. Member Ferrell suggested sending a letter out to everybody who is late, and not just the 112, and ask them to contact the Utility Department to discuss how to make payments to catch up. If they do not, then they are heading to shutoff. Chairman Stracener said he would tell them they have 10 days to make contact with us, and then set a date to reinstate the shut offs.
Member Ferrell said what we really want is for people to communicate with us and say they want to pay it, it is my debt, I want to do what is right and this is what I can and can’t do. We just want to hear something. If they don’t want to call and talk to you then… Mr. Lee said they’ve got to pay you something. He can tell you that he wants to pay until the cows come home, but I don’t reach for my billfold unless I have to. They will BS you to death. Member Ferrell said that is a different deal. The first thing is to get them to acknowledge that they owe the debt, because
we have had calls saying we should not charge them. Mrs. Scott said yes, completely. Chairman Stracener asked if the Commission wanted to put their heads together and draft something by email and Member Ferrell said he thinks that is the first step. Mrs. Scott asked if they are thinking about August 1 st or 15 th or another date in mind. Member Ferrell said the only problem he foresees is what the Covid is going to do in phase 2, and if we will twirl backwards which will all be for not.
He thinks we need to formulate a letter and have it ready. He doesn’t think we should pencil in dates right now. He thinks we really need to see what is going to happen. Member Best said right now he thinks it should just say in the future, because we are just trying to open up a conversation. Member Ferrell said he thinks maybe there should be a date for a return phone call. Chairman Stracener said if we give them a 10-day return call, and they don’t, what do we do then? Member Best said the Governor may not let us shut them off. Mrs. Scott said she thinks some utilities are considering levels of harshness. For the customers who have made attempts, and have reached out; they will work with them. The 112 who have done nothing will not get much concession. Member Ferrell said he agrees with that. Chairman Stracener said he thinks the 3 businesses should be notified right up. Member Ferrell said Tuesday Morning has filed. Mr. Lee said the customers and businesses that are working with you then you work with them, but for the ones that are not paying, he has zero sympathy. Mrs. Scott said as we have talked about before, the people that are on unemployment and get the extra $600 are making more money than they made when they worked. Mr. Lee said they are not going back to work until after July 31 st . He wouldn’t. Shoot, he can make more money watching TV and make more than he was working. Mrs. Scott said employers are supposed to report them if they won’t go back to work.
Member Miller said the governor said today that the employers will not be liable if they make their employees come back to work or lose their job, in which case, if they don’t go back to work they will lose their unemployment and if they come back to work they will lose their unemployment, but if they get sick their boss is not liable. It is forcing them to go back to work. Mrs. Scott said as long as the employer has followed the proper protocol and done what they were supposed to, to prevent their employees from getting the virus. Member Ferrell said he agrees with the levels of intensity communication to those that have tried. Member Martin said he sees it as a 2 stage where they communicate and get in touch with us. If you don’t get in touch with us within 30-days we will cut the electricity off. Mrs. Scott said some of the people that have reached out were self-employed and it took them 2 months to get unemployment. That is a little different situation than the person who worked at the steakhouse who had a job on Tuesday and didn’t have a job on Wednesday. They were in the pipeline to get that unemployment, and many got
their checks quickly. The self-employed people were in a very different situation, but again, out of all of our customers there were 112 who did nothing. Member Best asked if the 112 are over 90 days now. Mrs. Scott counted the dates and said yes, many of them are over 90 days. Member Best said we have been very lenient
and he thinks she should send the letter to the ones who are over 90 days. Mrs. Scott said the one from February 7 th is probably one who wasn’t a good customer anyway and then this happened in March and they said, “Whew, okay”.
Member Martin said when this started, it was on the basis that we were compassionate and if you work with us, we will work with you. If you are not going to work with us, then we will put you on notice. Member Miller said he wonders if state ordinance under the Covid-19 virus that says we can’t shut them off and Mrs. Scott said not that she knows of. Member Best said probably not, but it wouldn’t be good publicity. Mrs. Scott said the problem too, as you all know, is we are getting into these hot months, where we already get bad press for cutoffs. She didn’t ask Mrs.
Hawkins if any of these are on our medical list. You would think that someone who has a c-pap or oxygen would have already reached out to us, but in her experience, that isn’t always the case until they don’t have electricity, and then they are calling everyone; 7 on Your Side and everybody else. She asked if the Commission wants her to draft a letter to the 117 saying that we realize we are in trying times but our records indicate you have made no payments since this date and you have got to contact us within the next 10 days to make some discussion with us, or we will initiate disconnect. Chairman Stracener asked Mrs. Scott to draft something up and send it to the Commissioners or we are going to hear about it too, and Mrs. Scott said okay.
Next Commission meeting date; Monday, July 6, 2020.
Meeting adjourned at 7:18 p.m.
Doug Stracener, Chairman Madeline Wilson, Recording Secretary