Water Utilities Community Facilities District - Regular Meeting

I'd like to call Apache Junction Water District meeting of 05/20/2025 to order and request that all cell phones be put on silent mode. Roll call, please.

Chairperson Wilson.

Here.

Vice Chairperson Schroeder. Present. Board member Cross.

Here.

Board member Heck.

Here.

Board member Johnson.

Here.

Board member Nesser. Present. Board member Saller. Here. You have a quorum, your honor.

Thank you. Presentation and discussion and consideration of resolution number 2025Dash002. Mike.

Chairman Wilson, members of the board, a quick presentation tonight on classification compensation. We're looking to do the same as the city of Apache Junction, with a one step increase for all employees is about 2.5%, and then a 4.5% increase on our average health insurance premiums. And the premium costs will shared between the district and the employees, similar to what the city is doing. So tonight, we're looking at Resolution twenty twenty five-two. Consider adopting these classification plan, compensation plan, and flat hourly schedule for fiscal year 'twenty four and 'twenty five or 'twenty five and six, sorry. That's the end of this part of my presentation.

Okay.

Any questions or anything? Okay. Do I have a motion on resolution number 2025Dash002?

Your honor or chair?

GREGORY Yes.

GREGORY I move that resolution number twenty twenty five-two declaring as a public record and adopting certain documents filed with the district clerk entitled Apache Junction Water Utilities Community Facilities District Classification and Compensation Plan for fiscal year 2025 through 2026 be approved. Second.

Moved and seconded. Roll call.

Board Member Nesser? Yes. Board Member Johnson?

Yes.

Board Member Cross?

Yes.

Board Member Heck?

Yes.

Board Member Solar? Yes. Vice Chairperson Schroeder?

Yes.

Chairperson Wilson? Yes. Unanimous.

Thank you. Public hearings. Presentation, discussion of public hearing, and consideration of resolution number 2020Five-three. Mike.

Chairman Wilson, a little overview for tonight. I'm going to give you guys the proposed twenty twenty five-twenty twenty six budget, also proposed rates, fees, and charges that we're looking to change, and then also our budget schedule for review. You guys have some questions on our last presentation of where our budget was. I'm going to step back for one second here and bring it up. Let's pull this up so you guys can see it.

And the question was really here Board Member Heck, I think you brought it up here on our operating revenue. It went from our budget of 5.9 to projected at 2.9, then back up to 5.8 in 'twenty five, 'twenty six. We went back and reviewed that. What happened was, unfortunately, when we do our budgeting, our salaries are not included as part of that. So that was not included as part of that.

So we went back and we updated those numbers for review here. Sorry. But instead of that 5.9, our projected for this year is going to be 5.2, we added those salaries in so we can make sure that we accounted for those. We did move a couple other things around. As you can see here, we had a negative number in here for our projected not using any reserves, And we moved actually, because that's a funding source, that we pulled it out of our savings account and moved it over here so it actually funded something.

So we made that a positive number here. And that's why this went up to $12,000,000 rather than the $9,000,000 we had before. The other thing you can see here is we had a projected in our budget last year of $5,000,000 in grants. We only received $1,000,000 in grants, so we had to reduce that number and take out of our reserves to fund those projects and still maintain under our existing budget without getting some of those grants. So we had to use some of that money from our reserves.

So to kind of give you a heads up, that's kind of where we're headed. Again, we're back on track this year. We're going be taking money out of reserves to fund some of our projects we've been saving up for some ones we talked about and we'll talk about here in a little bit, of the major capital improvements we have. And then these are all, again, revenue services that we have. So this is our operating revenue coming in from rates, really, and help funding a lot of that.

We also are looking at applying for grants again for several of our projects. And then we have some investments we earn on. And then we have some miscellaneous revenue with broken meters and replacement meters where somebody has ruined something and then they have to pay to replace it through their insurance or paying in their own cash to refund us for damages that had been caused. And then this is our operating what we're using it on, roughly a $5,800,000 budget for operating expenses. We have money for our debt services for when we built our plant.

We're still planning on. We still have a few years left on that. Capital outlay of roughly $8,600,000 And then we always have contingency in our budget just in case a well goes down, a pipeline failure, or something that we're not projecting that we'd have. So we always use emergency funds in there. Again, we're using some of our water resource acquisition fees.

So these are what we're estimating, what funds will come in. We estimated system connection fees of $1,000,000 last year, projected to be at 1.65 Again, with development to the south and some infill projects, we're looking at $1,000,000 next year. Our water resource acquisition fee, we thought was going to be around $10,000,000 It actually came in at 5,000,000 We do have some subdivisions coming in here in the next month, so this may go up to about 7,000,000 or $8,000,000 that would be collected on water resource acquisition fees. So we're predicting, again, next year about $7,000,000 as these developments move forward down south and new development comes in, continually gaining dollars in those areas. As you can see, here's our current balance of our 'sixty two fund, which is system connection fees, which roughly, at the end of our last audit, was around $5,500,000 And then our water resource acquisition fee, we roughly have about $11,000,000 in the bank currently.

And again, this will help fund our Verde River, stuff we're working on, and some other projects that we have out there. Any questions on this budget now?

So the $8,600,000 that includes the $2,000,000 something for the new building. Is that correct?

That is correct, yes.

And the 5,800,000.0 in operating, that is taken into consideration the wage hikes that we have?

That is correct. That's

already included? Yes. Okay, thank you. Mike,

why the big reduction in grants and contributions?

MICHAEL went on to some water conservation grant. It was a large one last year of roughly $3,000,000 The funding project with WIFA is now unfunded this year so far, and we're not sure if WIFA is going get funded for additional water conservation projects at this point in time due to the changes in the government, so we didn't plan on going after any of those additional funds because we're not sure if they're going be out there at this point in time. As it comes back, I would surely apply for more in the future, but not next year because we don't know truly what's going to be out there. And it wouldn't stop us from applying to them. I'd come back to you guys. You could adjust that later, but this is what we're just budgeting for at this point in time.

Do you have to ask us for permission to pursue a grant?

At certain dollar amounts, we will come to you and ask for permission. You have to sign off on us pursuing those.

Okay. It's like, you know, have at it. Get as many as you can.

I would hope you don't turn it down, but yes, we do come for permission sometimes.

And I think knowing that is half the battle, knowing that we can. It's just we'll go do.

Anyone else?

Okay. Some of these large investments that we have going on is purchasing two new three quarter ton service trucks, roughly $130,000 purchased two new midsized trucks at roughly $95,000 in total and then purchased one track owned trailer at roughly $215,000 As you asked earlier, this is part of our design and construction of our new office. We budgeted $2,750,000 also to install a 12 inches waterline under U. Highway 60 and Goldfield, roughly $600,000 and then also to replace existing 12 inches and install a new 12 inches under Highway 60 at Idaho at roughly $800,000 Purchase a 2,000,000 gallon per day treatment train. Currently, we're at 4,000,000 gallons per day at our plant.

Developers paying to expand it another four MGD, or 4,000,000 gallons, we would pay for the final 2,000,000 gallons to do final build out of our plant of 10,000,000 gallons per day. We're also looking at constructing and adding on to our booster pump station at Booster 2 to replace that, drilling a well that we did not get to in this fiscal year, moving it to next fiscal year of roughly $2,000,000 and then finish our advanced water purification trailer that we started this year. We do have some also general expenditure increases with Salt River Project, working on our birdie sedimentation mitigation project we've been working on for the last four years. We have additional funding that they had some change orders, so we'll have two more years of funding on that. So this will be year five next fiscal year the following year one more time at 180,000 per year.

We also purchased our Central Arizona project water that funded eight seventeen acre feet of noninear agricultural water. We financed it over five years, and this will be our final payment of $334,000 for that last capital fee that we'd be paying for that water. We also, for purchasing all of our water through the Central Arizona Project, capital and maintenance fees is roughly $1,400,000 that we'd spend to get that water delivered to us and have it. And then our Central Arizona project capital fee is almost $400,000 per year and slightly increasing. As you can see here, it's been going up over the last few years.

It continues to go up. We are working on some agreements of wheeling additional water supplies through there that would hopefully maintain these levels or bring those costs down on the CAP as we move forward. Any questions on those so far? Okay, so we're trying to balance our revenues and expenditures. As you can see, we're doing a balancing budget using some from our reserves, some on our capital to build things up and save money as we move forward so that we can spend it on larger projects, either be it water resources or additional boosters that development has paid for or maintaining our existing facilities that are out there.

Here's a quick base rate comparison. Currently, our base rate is at $31.53 We're proposing an increase of 5% to our base rate, which would bring it up to $33.11 We compared against 15 other cities, taking off the highest and lowest, and giving you some ideas where other comparable cities of our size or neighboring cities and what water costs in the Phoenix Metro Area. As you can see, we're not the highest, but we're right at that level of just above a few other cities and slightly above El Mirage, Fountain Hills, and Gila Bend. And a lot of it depends on what type of water that you're delivering to your customers. Queen Creek is all groundwater.

They have no surface water, no renewable resources. It's kind of hidden in their fees here is you pay for water up front here. We're a designated assured water supply that we have here. So if we use more surface water, renewable resource than we have, we have to replenish it. Well, currently, we're not doing that, so we don't have to replenish it. Queen Creek is all groundwater, so any drop of water they use, they have to replenish. So instead of it being on their bill, they tax you on the back end as part of the CAGRD, which is the groundwater conservation district. So they have to tax you. So you're actually paying more a different way, not on your actual water bill. It's being taxed on the back end.

So it's slightly different. We do not tax you on the back end because we pay for it as the water district, as a designated provider, not a nondesignated provider. So there's little unique instances here.

Mr. Chair, can I clarify something? So you say they tax you meaning on your property DAY: tax statement. Is that correct?

That is correct, yes.

So that's Okay. And there's an item shows up for K Grid on your property tax.

That is correct. Yes. JAMES Okay.

Thank you. Mike, how is that number generated? Is it based on each resident's usage? Or is it a flat tax that everybody pays roughly the same?

No, it's based on your usage. So if you're a nondesignated provider, you have to provide to the state as part of your annual report to DWR on how much you use, and then they start taxing you of your overall usage for the annual use per month for that next year. So they can replenish that water for that water company or district or whatever your service is. Again, customers within the city were proposing a base rate increase of 5%. No changes to our consumption rate, which we have three tiers, and then no changes to our tier rates, which are currently zero to 4,000, 4,000 to 10, and then 10,000 and above.

If you live in the county, we're proposing a base rate increase of 5%, consumption rate increase of 5%, and no change to those tiers. What does this look like to an average customer here in the district? If you use 7,500 gallons per month, your water bill roughly goes from $73.25 to $75 a total increase of about $1.75 If you live in a county, your current bill is about $86.19 New bill would be $90.49 an increase of $4.3 roughly about 4.8% increase on your water bill. If you live in the county versus city, these would be your different rates. In the city, you'd pay $75 In the county, you'd be paying $90.49 for that 7,500 gallons per month that you'd be using on average.

Any questions on some of the rate increases that we're looking at?

Mr. Chairman?

Yes. My quick question. So this has the average consumption for a small household. It's 7,500 gallons a month. If you have a regular household, like four people in the household, what would be the average water use in the average?

It depends upon your family. It could be if you have irrigation. Mr. Powell would probably be a better answer.

Yeah, daughters take a lot of water available. They'll eat up the water.

Probably about 20,000 gallons. So you're probably looking at more, probably $130 bill, dollars 140 bill at that point.

I

guess our big thing here is we're doing a 2% increase to people who live in the city. This is not what we want to see. This is the town of Gilbert. In 2024, their city council approved a 48% increase. And they had gymnasiums full of people showing up saying, Hey, why aren't our bills going up? What's going on? Why are you raising our rates? You know, we're looking at a one point five zero dollars two dollars increase, and that year, there was a $17 increase. This year, it's going be a $13 increase, and they're looking at another $16 increase in next year. We'd prefer not to hit headlines like this, where they didn't change their rates, now, all of a sudden, we have these big rate jumps.

And people that are on limited incomes or, you know, their social security doesn't go up, they can't hit these dollar amounts as they go up that. So I'd rather just slowly ramp up our rates as we move through this. Again, same to in Queen Creek this last year. In August year, they went up 15%. Again, we don't want to be going up 15%, and this is what our rate case study that we did and recommended said we'd go up between 25% a year, so we don't have these huge rate spikes in a year that, over time, we don't do them, we don't do them, and now, all of sudden, we're behind, And now it's a 1520% increase. So we're trying to stay ahead of these so that we don't have these papers and we're not the headlines of anything really out there. So that's why we stay with these low increases over time.

I remember when we had that one time and all the objections that came forward on it. That was several years ago now.

That is correct. And since then, we've viewed the policy of the board to try to stay ahead of that by doing the policy we have now. That changes, we just need to know. But that's, I think, why you see what's happening in Queen Creek and Gilbert right now. They did rate passes, rate pass, rate pass. And I think we had done ten years of that. Correct. We had a room full of people here really upset. And I think it was like 12% or something like that.

Yes, it was.

Moving on to our system connection fees, we're looking at an increase of 1.8%, our CPI, going from $7,760 per single family resident to $7,900 We were asked a couple of questions, and I'm going to get to that, so I'm going to answer your questions on where we're at locally on some of these fees. For our residential system connection fee for Radiance and Blossom Rocks, since they're building the infrastructure and paying for our plants, they only have to pay for a certain portion of that, which is funding space for our CSRs, our vehicles, our equipment. So their fees are much lower. We're looking to increase them, again, by 1.8%. So we're going from $560 to $570 And then our water resource acquisition fee, going from $3,660 to $3,840 One of the questions last week is, if I was a customer and came in and I had a vacant parcel or I wanted to put a mobile home on a piece of property, how much would it cost me to establish water service at that location and get a meter set?

So here's the total fees that we would be asking the customer to pay. So the cost for a meter and radio is $460 The service installation fee of that copper, the box, and the tap into our main is $790 And then we have these system connection fees currently of $7,760 and $3,660 totaling about 12,000 to $13,000 that it would cost you to develop that lot as a developer. Okay? So if you're trying to build a modular home or add additional service to you, it's going to cost you $13,000 The other option that everybody has out there on acre and a quarter properties is to drill a well. You can install your own septic tank.

How much is it to drill a well? I don't know if any of the board members have any idea. I know you guys live on some acre and a quarter properties. Do you guys know what the cost would be to drill a well on a piece of property?

Gestimation, probably 40,000.

Okay, dollars 40,000. And then you have to put your septic system in.

But it's a one time fee once These that buy

are all one time fees, too. This is nonrecurring.

But no, there's a monthly bill. I would agree, but

you still have a monthly bill for your well by that electric. It doesn't come out the ground for free.

Right.

It's not treated. And it doesn't meet a drinking water standard that may or may not. Nobody tests it. And you're assured one hundred year water supply if you sign up with the water district. So there's different things, benefits you get from either one, but it's $40,000 up front rather than $13,000 So they have to balance that on how they want to manage their development.

I'm going to say is my neighbor put one in two years ago.

How much?

And it cost them $55,000 So,

expensive. Any kind of development is expensive. So we wanted to go out and see what other impact fees were across the valley. So I went Phoenix in the Northwest, which is development concurrently out there by the Taiwan chip company. Total fees between their water resources and wastewater is $25,000 for their impact fee.

Gilbert, that you said all their increases, is roughly $18,600 And as you can see, we're slowly getting on the list here as our current fees are roughly total with the sewer district this is including them is $15,770 We're proposing a $16,090 So we're not at the top. We're down in the middle here. Yes, there are some other communities that are lower and there are some communities that are higher, but here's a general where development impact fees are going for water resources for water, water resources, and wastewater. Any questions on that?

Yeah. More of a statement, I suppose.

Sure.

I'd really like to see if there's

a way we can get that reduced for next year somehow. I mean, I know inflation and everything else, but we're not at the high end as far as income in this city. And so proportionately, it'd be better if it

was a little lower. Specifically

in the impact fee?

Yeah.

Okay. I realize the acquisition fees and stuff like that. Then we turn around, we're putting multifamily housing in left and right that doesn't require one hundred year assured water supply.

They still have to pay these fees.

True.

So

But, you know, it's just

we

look at

It's a hard it's that's a big number. That's all I'm saying. And

It's an absolutely big number.

It was a little lower.

There's a lot of calculations going on this number. This number was put in roughly about three years ago, where we jumped it up. It's based off a study through tissue advice. We look at the cost of construction for how much does it produce that gallon of water for those houses, how much does it take in equipment, how much facilities does it take. They add all this up and divide it on how much water on average a person would use, and this is how we come up with these fees. So we can definitely take a look at that to see if we can go down. As you said, inflation's here. You know, we don't want to raise prices, but we don't want our existing rate payers to pay these prices either. As we mentioned before and as the Board has directed us is we want development to pay for itself, and we really don't want our rate payers to be paying the cost for new construction. And that's the biggest thing out there.

We can look at it though, but for sure, but I just kind of

We'll look at it. And I think we can ask our consultant about geographically add it to. Thank you.

Anyone else? Okay.

Any other questions on that? So last part of tonight is just consideration for adopting the proposed budget, proposed rates, fees, deposit, water resource acquisition fees, and charges for fiscal year twenty twenty five, and then the upcoming schedule. And then we'll have a resolution here in a minute. Any other questions on our presentation tonight?

I don't see any. Okay. I will now open this to the public hearing. There's a five minute time limit with one minute warning that you will hear. Please state your name and address for the record. And I don't see any movement. Mike, you're still holding the ground board, right? Yes. I will close the public hearing and ask for a motion for resolution number 2025Dash003.

Mr. Chair. Yes. Go ahead, Peter.

I move the resolution number 2020Five-three, the resolution of the Board of Directors of the Water Utilities Community Facilities District, City Of Apache Junction, Arizona, pursuant to ARS 40 eight-seven 16 adopting a proposed budget for the fiscal year beginning 07/01/2025 and ending on 06/30/2026 adopting proposed rates, fees, deposits, water resource acquisition fees and charges applicable for the fiscal year beginning 07/01/2025 and ending on 06/30/2026, establishing a public hearing on the proposed budget, and directing district staff to solicit comments from the city of Apache Junction on the proposed annual budget be approved. And I further move the public hearings for final budget adoption be held on 06/17/2025 at 6PM in the Apache Junction City Council Chambers 300 East Supercision Boulevard, Apache Junction, Arizona.

Second.

Moved and seconded. Roll call.

Board Member Cross?

Yes.

Board Member Nesser? Yes. Board Member Scholar?

Yes.

Board Member Johnson?

Yes.

Vice chairperson Schroeder?

Yes.

Board member Haack?

Yes.

Chairperson Wilson? Yes. Unanimous, your honor.

District manager's report? No report, your honor. District director's report?

Chairman Wilson, one update. We'll be sending out a public notice this week in our bills for the next couple weeks. We had an exceedance in our disinfection byproducts. What does that mean? There's no emergency, there's no boil water, anything like that. But we need to notify our customers. For exceeding that over a long period of time, there are some health issues that could be concerned about, so we're notifying all of our customers. What happened was this is based on a running annual average. Roughly four quarters ago, we had a high level of roughly 100 parts. The annual average has stayed below 80.

It's been below 80 the entire time until we hit this last quarter here, and we went up to 80.2 in one location and 84 in another location. So we have to notify the public of this. Our next quarter will drop that high level off, that hunter that we had before, and we'll be back in compliance. But we do have to send a notification out to the public. I just want to keep you guys aware of that if you get any questions. There's no immediate health urgencies or anything that needs to happen. There's no boil water or anything like that. But just keep you in loop just in case somebody asks a question. All of our customers will be notified of that in their next bill.

Okay.

And that's it.

Anything else? Nope? Questions? No. Okay. District treasurer's report.

No report.

Okay. Thank you. I'll adjourn this meeting.