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Commission Minutes
GREENWOOD
METROPOLITAN DISTRICT
MINUTES OF THE
August 8, 2007
Regular meeting
The regular meeting of the
Greenwood Metropolitan District Commission was held
Wednesday, August 8, 2007 at 3:00 p.m., in the Training Room
of Greenwood Metropolitan District Technical Service
Facility, 110 Metro Drive.
In attendance:
Commissioner Bob Haynie,
Chairman
Richard Coleman Paige Holley
Commissioner Byron Smith,
Vice Chairman George Martin Bibbi Lee
Commissioner Gene Hancock,
Secretary Marion Boone Marsha Meyer
Commissioner Michael G.
Monaghan
Daniel Clark Jamie Peeler
Commissioner Henry
Watts Wayne Daniel
Steve Pohlman
Commissioner Tim
Burke Roy
Hemphill Brian Waldrep
I.
Chairman Haynie called the meeting to order.
II.
Chairman Haynie gave the statement of compliance with
the notification provision of the Freedom of Information
Act.
III.
Commissioner Monaghan made a motion that the minutes
from the July 11, 2007 Regular Meeting be approved as
amended and Commissioner Hancock seconded. The motion was
unanimously approved.
IV.
Commissioner Monaghan made a motion that the minutes
from the May 23, 2007 Public Hearing be approved as mailed
and Commissioner Hancock seconded. The motion was
unanimously approved.
V.
Service Reports
a.
Collection System
Commissioner Monaghan noted
the collections amount on the low pressure systems are
almost equal to the expenses. He asked if Metro had any
expenses for the month of February. Mr. Martin responded if
Metro had expenses it was recorded. Mr. Daniel responded
Metro did not go to Stoney Point at all during the month of
February. Commissioner Monaghan noted from January to June
it looks like the monthly fee is going to cover the
expenses. Mr. Daniel stated he looked at July and the
expenses are less than the revenue. Commissioner Monaghan
stated Metro could disallow the rest of the expenses as
start up fee.
b.
Engineering
Commissioner Monaghan asked
if Greenwood Fabricating and Plating (GFP) was having more
problems. Mr. Waldrep responded they are being sampled
often and had one violation during the last thirty days.
Commissioner Monaghan inquired if Metro thinks GFP is
improving. Mr. Waldrep responded GFP has improved from
where they were. It does not seem to be affecting the
treatment plant. Commissioner Monaghan noted Metro did fine
GFP $4,000. Mr. Waldrep stated that is the way the fine
schedule is set up. Until GFP has three to four consecutive
months without a violation, they will be fined.
Commissioner Monaghan noted in the report it said the fined
was for penalties and sampling. Mr. Waldrep stated GFP
reimbursed Metro for the sampling. Commissioner Monaghan
asked if the penalty fine was included in the $4,000 fine or
was the fine all for sampling expenses. Mr. Waldrep
responded for this particular month that is correct. He
normally lists separately the amount for sampling and the
fine amount for the penalty. The penalty for a daily or
monthly violation is around $1,500. Chairman Haynie
commented he was under the impression that GFP was changing
their pretreatment lines to help eliminate the problem. Mr.
Waldrep responded GFP has again been supplied with
replacements. Commissioner Monaghan asked where is the
sampling point. Mr. Waldrep responded the sampling point is
at the discharge of the pretreatment equipment. Metro will
occasionally sample the manhole in front of the business.
Commissioner Monaghan asked if there is phosphorus included
in the laundry detergent that is used by the Self Regional
Laundry Facility. Mr. Waldrep responded very little is
included in the detergent. Commissioner Monaghan thought it
was illegal for detergent to contain phosphorus. Manager
Coleman said in some states it is against the law, but not
in South Carolina. Household detergent does not include
phosphorus. Some cleaning agents are in commercial grade
laundry detergents.
c.
I/I Abatement
No questions were asked by
the Commissioners regarding this department.
d.
Maintenance
Chairman Haynie inquired
about Omni-Site. Mr. Clark responded it is used to help
monitor the pump stations. Omni-Site currently uses analog
services. In April, 2008 analog services will not be
available and Metro will have to switch to a digital
service.
e.
West Alexander
Chairman Haynie inquired when
will Metro hear back regarding the temperature issue. Mr.
Peeler responded the information will be presented on
Wednesday, August 15th regarding the temperature
along with toxicity information. Comments made by the lab
doing the study showed only 1 degree difference in the
temperature. Manager Coleman reminded the Board that the
issue was Metro could not change the temperature upstream or
downstream by more than 4 degrees.
f.
Wilson Creek
Chairman Haynie inquired on
the status of the clarifier. Mr. Pohlman responded it is
still working.
VI.
Action Items
a.
Ratify Taggart Street Repairs
Commissioner Monaghan made a
motion to ratify the selection of Chandler Construction
Services, Inc. ($42,840) to repair Taggart Street;
Commissioner Burke seconded, and the motion was unanimously
approved.
Mr. Daniel shared with the
Board that Chandler will start the job on Monday August 13,
2007.
b.
Elections of Officers for FY 07/08
Commissioner Monaghan made a
motion to re-elect the officers already in place (Bob
Haynie, Chairman; Byron Smith, Vice-Chairman; and Gene
Hancock, Secretary); Commissioner Hancock seconded, and the
motion was unanimously approved.
Commissioner Monaghan
reiterated he believes Metro should have an election at the
end of each fiscal year. Chairman Haynie stated Mr. Martin
looked back through previous minutes and the last election
was September 13, 2006.
VII.
Miscellaneous Administrative Matters
a.
Discussion of Long Range Financial Plan
Manager Coleman said he did
not ask Mr. Parker to be here because he first needed input
from the Board. The projection for this coming year is an
8% increase starting January 1st. The difference between
the two scenarios given June, 2007 is what happens between
the second and fifth year. The income for fiscal year 06/07
were under an estimated 2.6%. Commissioner Monaghan said he
was concerned. Metro has two major industries (Fuji and
Solutia) that make up over 30% of the revenue. Manager
Coleman replied he did not think it was that much now, since
Solutia has gone down. Commissioner Monaghan responded that
is the thing. He noted that Solutia went bankrupt once and
it caught CPW with about $900,000 worth of bills.
Commissioner Monaghan does not want to draw down the
reserves so far that if one of the two biggest industries
was to file bankruptcy Metro would not have enough revenue
to offset their expenses. He thinks Metro should keep a
certain amount in reserves rather than drawing it down, but
he is not sure of the dollar amount. Chairman Haynie said
there are certain reserve amounts required by the bond.
Commissioner Monaghan noted that amount is 1.25 and the
Commission policy is 1.5. Manager Coleman said that is the
coverage issued on the bond payments. The more debt Metro
issues the more coverage Metro needs. The two scenarios are
the high and low suggestions. The Board can also choose
anything in between. The higher Metro keeps the reserves
the more money Metro has to borrow therefore, the higher the
rates will be. Commissioner Monaghan stated he does not
agree with that statement. He would like the relationship
between the rates and the reserves explained. Commissioner
Monaghan asked if the reserves are neutral why would Metro
need to raise the rates to keep the reserves at the same
level. He said the way Metro builds the reserves is they
have a net gain and that amount is put into the reserves.
Commissioner Burke noted Manager Coleman stated that the
revenue was off. Manager Coleman said the revenue is off
2.6%. If the Board looks from this point forward, Metro has
a certain amount of reserves. Under one scenario, Metro
draws down the reserves to the Cost Recovery Policy (adopted
2003) limit. The other scenario was to keep the reserves at
their current level and borrow all of the money that is
needed. Metro would be borrowing more money. The amount of
reserves that Metro has will bring in some interest income.
The interest income from the reserves is not enough to cover
the additional debt. Metro would have to raise the rates.
Commissioner Monaghan asked why not (the interest income).
Chairman Haynie said that typically it costs more to borrow
money. Commissioner Monaghan said he has never seen that
detailed. He would like for Mr. Parker to explain the
variance between interest earned and interest expense and
how that expands over time. Commissioner Hancock said it
has been about even. He said Metro’s borrowing cost will
come down based on the amount of reserves. It makes the
bonds cheaper. Manager Coleman said the amount of money and
the amount of outstanding debt is about $20 million each.
The interest earned is about equal to the interest paid.
Commissioner Monaghan asked why would the Board want to
change that. Manager Coleman replied if Metro is going to
keep the reserves the same then they are going to pay for
the capital program; they will need to borrow $20 million in
2008. This means Metro will have $40 million in debt and
the interest on $40 million is twice the amount of interest
on $20 million. The interest on the $20 million in reserves
will stay the same. Metro will have twice as much interest
to pay as they have earned. Chairman Haynie commented he
thought Metro was looking at a program where they were going
to maintain the reserves, borrow money on the front end and
then later start spending the reserves. Commissioner
Monaghan noted the advisors said the interest rates were in
the declining mode. Commissioner Burke asked what is the
speculation on the revenue interest rates as interest paid
on the reserves. Commissioner Monaghan said maybe Metro
needs to look at the level for the reserves. Manager
Coleman referred to tab 6 page 12 of the packet; under
scenario 1 the projected reserves are on top and the amount
borrowed on the bottom. Page 14 shows under scenario 2 the
same numbers. Commissioner Monaghan commented this is not a
budget analysis. Manager Coleman said in scenario 1 Metro
does not pull down the reserves all at once; they are pulled
down over a 5 year period and then Metro starts to build the
reserves back up in 2013. In scenario 2 the reserves stay
constant. Commissioner Monaghan noted in scenario 1 Metro
is pulling the reserves down to $4 million dollars; maybe
Metro does not want to pull the reserves down that much.
Manager Coleman said Metro can pull down the reserves to the
amount directed by the Board. Commissioner Monaghan said
that Metro may need a more blended scenario. He hates to
see Metro go down to $4 million worth of reserves and not be
able to get a bond. Commissioner Burke inquired on how that
would correlate with the capital projects. He thinks there
is more information that needs to go into the scenarios.
Chairman Haynie said he thought all of the project
information was charted. Commissioner Monaghan said it is
an either or scenario. Manager Coleman noted the $4 million
was adopted by the Board in 2003. Commissioner Monaghan
said he thought that was presented to the Board, but he was
not sure it was adopted. Chairman Haynie noted the Board
can change the amount. Manager Coleman said he is asking
from the Board what input do they want different from the
two scenarios and how do they want to proceed. Manager
Coleman said he could have Mr. Parker here to meet with the
Board. Chairman Haynie said he thought that is what the
Board had planned. Manager Coleman replied he was looking
for the Commissioner’s input so Mr. Parker would have
something prepared based on the wanted scenarios by the
Commissioners. The Board directed staff to look at keeping
the reserves the same versus the current policy.
Commissioner Monaghan stated he would like to understand the
relationship with interest earned and interest expense and
how that varies over time. He would like to put that
information against the capital improvement plan so he could
compare the information. Commissioner Monaghan said if one
of Metro’s big customers takes a dive between now and 2012;
Metro will need to have some healthy reserves. The scenario
should tell Metro how healthy the reserves will need to be.
Metro will have certain bond revenues that are going to run
out and Metro will need to have more. Commissioner Watts
stated the reserves should be able to support Metro for 3 to
6 months. Chairman Haynie said Metro may need the amount in
reserves to support the principle and interest payments for
one year. Manager Coleman said there is about $10 million
in the budget so $4 million would be about 40% of the year.
Commissioner Monaghan stated Metro will need to be able to
pay off the capital projects and Mr. Parker is going to say
at some point Metro will need to issue a bond. Commissioner
Monaghan thinks that Metro will need to have enough money in
the reserves to pay for capital projects in case the bond is
not issued. Chairman Haynie said he thought the Board had
settled on a blended approach being reasonably conservative
with reserves and borrowing and taking into account the
capital needs over the next ten years and that was going to
drive rates to an 8% or 9% increase each year. Manager
Coleman said that is scenario 1. Commissioner Monaghan said
the reserves are drawn down to $4 million in that scenario
and he does not like it. Commissioner Hancock replied if
Metro does not drawn it down some the rate users will not
have an 8% to 9% increase but instead they will have an 11%
to 12% increase. Chairman Haynie said it will come down to
a function of kind of rate increase Metro wants.
Commissioner Monaghan said he would like to understand the
relationship of the rate percentage to that. He said the
rates are based on capital expenses and also based on
depreciation. Manager Coleman replied depreciation is taken
out, but the replacement cost is added back. Commissioner
Monaghan said that is what you should do. Manager Coleman
said that is the way the study was done. Chairman Haynie
inquired on the availability of Mr. Parker. Manager Coleman
responded the next Board Meeting is Wednesday, August 22nd
and Mr. Parker has a meeting scheduled in Greenville at 4:00
pm. Manager Coleman said Mr. Parker may come that morning
or the next day, but he would need to check with Mr.
Parker. Commissioner Monaghan said the Board will need to
have a meeting before Mr. Parker comes in order for them to
understand what they need to ask Mr. Parker. He would like
to see a scheme that shows how the interest earned versus
the interest cost expands to such a point where Metro has to
increase rates. Commissioner Burke said that will still be
a guess. Commissioner Monaghan replied that he wanted to
see the rationality. Commissioner Monaghan asked if there
would be time to have a meeting before the next Board
Meeting. He noted the rates would not increase until next
year. Manager Coleman said Metro is talking about taking
bids on Wilson Creek Phase 2 in October. Commissioner
Monaghan replied the Board will not stop that. Manager
Coleman said when that phase starts a bond will need to be
issued to start paying for Phase 2. It may take two or
three months to have the bond issued and receive the money.
Commissioner Monaghan said Metro can still do that. Manager
Coleman stated if Metro issues bonds without changing the
rates, they do not have the coverage. Not having the
coverage is when Metro would not get a good bond rating.
Commissioner Monaghan said he does not understand it.
Chairman Haynie asked if Manager Coleman means prior to the
bonds. Metro knows they are going to change rates; it is
just a question of how much. Manager Coleman said when you
go into the bond rating Metro will show the bond rating
agency what the projected plan is; not just for this bond
issue but for future issues. Commissioner Monaghan
commented Metro needs an optimal level to shoot for
regarding the reserves. Manager Coleman said the Board can
control how much money they spend on capital and how much
the rates are changed. Commissioner Monaghan said he does
not understand what the reserve level should be kept at. He
would like to understand how the interest earned versus
interest expenses works. Commissioner Burke asked if Metro
needs to first figure out the comfort level on reserves
before Metro can extend out the correlation between the
revenue and expenditures. Commissioner Monaghan said Metro
will need to take the current capital improvement program
and see how much money Metro currently has and how much
money they will need. Chairman Haynie asked how will Metro
determine the comfort level. He asked if Metro should look
at the principle and interest due for a three year period
and reserve that amount of money. He noted if Solutia and
Fuji both closed it would take a long time for Metro to
recover. Manager Coleman responded Fuji has about seven
different products they manufacture in Greenwood.
Commissioner Monaghan said if Metro’s biggest customer is
for example 30% of the billing then that amount should be
the amount needed in the reserves. Chairman Haynie said
Metro may need to look at the top five users. Chairman
Haynie asked if the Board wants to have Mr. Parker here on
Wednesday, August 22nd at 1:00 pm. Commissioner
Monaghan replied that is too quick. Manager Coleman said
Mr. Parker has a model set up and he can change it depending
on the question to see how it affects the bottom line.
Commissioner Monaghan stated there is a certain tolerable
level of rates. Manager Coleman said he would need to check
with Mr. Parker. Manager Coleman will see when Mr. Parker
will be able to meet with Metro. Commissioner Watts asked
if the Board wants to meet before they meet with Mr.
Parker. Commissioner Monaghan asked for Manager Coleman to
provide the Board with new rate information based on what
was discussed during this meeting. The information will
need to be given to the Commissioners at the next Board
Meeting. Chairman Haynie stated Metro is trying to find the
lowest most consistent method.
b.
Partnership
The new director has
started. Commissioner Monaghan noted Techwood is back on
the table.
c.
Mr. Hemphill stated he was talking to the CPW
attorney today and as he understands it CPW will be in a
position to close on the Metro portion of the building by
the first of September. Commissioner Hancock stated CPW
signed for the money today. Chairman Haynie inquired on the
status of the plans. Mr. Martin responded Davis and Floyd
will have something to give Metro in a month or so.
d.
Mr. Martin asked if Thursday, August 23rd
at 1:00 pm at Technical Service Facility (TSF) will suit the
Commissioners to meet with the design manual consultant.
Lunch will be provided. Mr. Martin is to email/mail a
confirmation to the Commissioners.
e.
The Safety Luncheon will be held on Thursday, August
30, 2007 at 12:00 pm at TSF.
VIII.
With no further business, the meeting was adjourned.
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