Saratoga Cou nty Water Authority Annual Report

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1 Saratoga Cou nty Water Authority 2007 Annual Report

2 Table of Contents Operations and Accomplishments 2 Service Agreement with Saratoga County 3 Description of the Water System 4 Existing Purchase Water Agreements 4 Capital Improvement Program 6 Project Funding 7 List of Real Property 8 Real Property Transactions 8 Personal Property Transactions 8 Governance Information 9 Independent Auditors Report Appendix A - 1 -

3 Operations and Accomplishments The Saratoga County Water Authority The Authority is a corporate governmental agency as defined by the Saratoga County Water Authority Act (Act), Title 8-F of Article 5 of the New York State Public Authorities Law. The Authority is charged with providing water services for the public benefit. The Authority is empowered to borrow money and issue notes, bonds or obligations in order to pay the costs of water projects or projects for corporate purposes. Bonds issued by the Authority are not considered debt of the State of New York (the State ) or any municipality thereof. However, the State pledges not to alter or limit the rights of the Authority involving any projects that are being funded through bonds that the Authority had issued. The Authority is empowered to fix rates and collect charges for use of the facilities and services rendered in order to provide revenues for paying the principal and interest of bonds, notes and/or other obligations and for regular operation and maintenance ( O&M ) expenses. No public service commission or entity of like character has jurisdiction over the Authority in management and control of operations or in regulation of rates fixed and charges collected. The Act also states that powers of the Authority are vested in and exercised by a governing board of seven members. The members are appointed by the chairperson of the Board of Supervisors of Saratoga County ( County ). The officers of the Authority (other than the secretary) are required to be members of the Board. In addition to a secretary, officers include a chairperson, vice chairperson, and treasurer. The officers are elected by the Board. The chairperson of the Authority is John E. Lawler. Mr. Lawler has served as Supervisor of the Town of Waterford since 1994, and was elected to his 8th term in Previous to that he served as a Waterford Town Councilman and Town of Waterford Planning Board Chairman. He served as Chairman of the Saratoga County Board of Supervisors in 2000 and has chaired and or served on a number of county committees, i.e., Law and Finance, Public Safety, PCB Dredging, Insurance and Risk, Social Programs, Legislative and Research, Economic Development, Buildings and Grounds, Equalization and Assessment, Social Programs, Veterans and Racing Committee. Mr. Lawler is a Senior Vice President with SEFCU, a $l.4 billion federal credit union that primarily serves the Capital District area. In addition, he is also the President of SEFCU Asset Management Services, LLC, a wholly owned SEFCU subsidiary that provides various types of insurance services to the consumer and business markets. Mr. Lawler holds his series 6 NASD license as well as his New York State insurance licenses for property casualty and life insurance sales. He holds a Master of Business Administration Degree from Rensselaer Polytechnic Institute. The Vice Chairperson of the Authority is Anita Daly. Ms. Daly is a Clifton Park County Supervisor, and has held this position for seven terms. Prior to joining the Authority, she served on the Southern Saratoga County Chamber of Commerce, Clifton Park Industrial Development Agency, YMCA Board of Managers, and the Capital District Regional Planning Commission. Ms. Daly has over 20 years of experience in management with her family business and presently with a federal consulting firm. She received a - 2 -

4 Bachelor of Science Degree in Health Education from SUNY Plattsburg and a Master of Science Degree in Education from Sage Graduate School. The Treasurer of the Authority is Kevin T. King, CPA. Mr. King is a certified public accountant, has served as the Town of Malta Comptroller since Prior to being appointed Town of Malta Comptroller, Mr. King was employed by Urbach, Kahn, and Werlin from 1987 to He is a recipient of the Franklin C. Moore Award for Public Service, and a graduate of Siena College. The board includes Arthur J. Johnson Supervisor of the Town of Wilton, Charles Wait President of The Adirondack Trust Company, J. Gregory Connors Supervisor for the Town of Stillwater, and Raymond Callanan Supervisor of the Town of Ballston. Service Agreement with Saratoga County The Authority has a Service Agreement with the County whereby the Authority agrees to operate and maintain the Water System, defined herein, in accordance with good engineering and business practices for an essential public utility and in any event will (i) keep the Water System in good safe condition, repair and working order; (ii) promptly make all necessary repairs, replacements and renewals to the Water System; (iii) maintain the Water System in a neat and orderly condition and in a condition which permits compliance with all applicable Governmental Requirements; (iv) protect the Water System against deterioration, other than that attributable to ordinary wear and tear; (v) cause the Water System to continue to have the capacity and functional ability to perform the functions for which it was specifically designed; (vi) perform periodic maintenance inspections as required to enforce warranty and similar claims against contractors and any standards imposed by any insurance policies in effect at any time with respect to the Water System or any part thereof; (vii) provide all necessary labor, materials and equipment for the proper operation and maintenance of the Water System; (viii) cause the Water System at all times to be operated and maintained as a public water system; and (ix) maintain the safety of the Water System at a level consistent with applicable law and the sound operation of a water system. Under the Service Agreement, the County is obligated to pay a Service Fee to the Authority on a quarterly basis so long as any Bonds remain outstanding and the Authority is meeting its performance obligations under the Service Agreement to build and operate the Water System. The amount of the Service Fee will be equal to the amount budgeted by the Authority to be due for operating costs and debt service in the period commencing on the day following that Service Fee payment date and concluding on the next ensuing Service Fee payment date, less the amount of cash held by the Authority or Trustee as of the 35 th day before the Service Fee payment date in the Revenue Fund, Operating Fund, and the Bond Redemption and Accumulated Surplus Fund that is expected to be available during the covered period for the payment of debt service and operating costs. The Authority is obligated to repay the County for any and all amounts paid by the County as a Service Fee, with interest at the rate of 4 percent per annum compounded annually, but only to the extent that the annual revenues of the Authority from the operation of the System for any fiscal year exceed the total of operating costs, debt service, required deposits and amounts the Authority reasonably considers will be needed to pay for maintenance and repairs in the next fiscal year. The County is required to pay the Authority the Service - 3 -

5 Fee commencing on the date of issuance of the Series 2008 Bonds and on each quarterly Service Fee Payment Date thereafter. Description of the Water System The Water System consists of a regional water system that will make finished water available to municipalities within Saratoga County. The source of supply for the Water System is the upper Hudson River between the villages of Corinth and South Glens Falls. A raw water intake structure, pumping station and raw water transmission main will be constructed to convey the source water to the water treatment plant ( WTP ) site for treatment. The intake, raw water pump station, and WTP will be located in the Town of Moreau, Saratoga County, New York. The WTP will provide the capability of producing 14 million gallons per day ( mgd ) of potable water, and will be expandable to 26 mgd to meet potential additional future demands. The WTP will utilize chemical coagulation, membrane filtration, ph adjustment, and disinfection. Treated water will be conveyed to a baffled clear well, and a pump station will convey the finished water to wholesale water customers along the finished water transmission main. The route of the transmission main will make water available to the Towns of Ballston, Clifton Park, Greenfield, Malta, Milton, Moreau, Stillwater, and Wilton, as well as the City of Saratoga Springs and the Luther Forest Technology Campus ( LFTC ) all of which are located in Saratoga County. The service area generally consists of local municipal governments and private water companies within Saratoga County. Existing Purchase Water Agreements The Saratoga Economic Development Corporation ( SEDC ) has developed the LFTC, a major technology planned development district. AMD has tentatively agreed to site a chip fabrication plant at LFTC, and the potential exists for multiple chip fabrication plants at this location. The projected average daily demand for the LFTC, at present, is approximately 3.1 mgd, but may be as high as 9.3 mgd if multiple chip fabrication plants locate at the LFTC. The Luther Forest Technology Campus Economic Development Corporation ( LFTCEDC ) has entered into a water sales agreement to purchase from the Authority a minimum of 2.45 mgd of potable water for a period of 10 years commencing from the date that the Authority possesses the operational capacity and ability to deliver water to the LFTCEDC. In accordance with the agreement, the Authority will bill the LFTCEDC quarterly and charge a maximum price of no more than $2.05 per 1,000 gallons from the initial date of water delivery through December 31st of the following year. For the remaining years of the contract, the Authority will charge no more than an established maximum price which is defined as the maximum price charged in the previous year plus one and one half percent (1.5 percent) of the previous year s maximum price. Town of Ballston - In 2007, the Town entered into a water sales agreement with the Authority to purchase a minimum of 375,000 gallons of potable water per day for a period of 10 years to serve its existing and future water demands. In accordance with the agreement, the Authority will bill the Town quarterly and charge a maximum price of no more than $2.05 per 1,000 gallons from the initial date of water delivery through December 31 st of the following year. For the remaining years of the contract, the Authority will charge no more than an established - 4 -

6 maximum price, which is defined as the maximum price charged in the previous year plus one and one half percent (1.5 percent) of the previous year s maximum price. Town of Wilton - The Town of Wilton is currently served by the Town of Wilton Water and Sewer Authority ( WWSA ). The WWSA has entered into a water sales agreement to purchase a minimum of 300,000 gallons of potable water per day from the Authority under an agreement that is nearly identical to the agreements with the Town of Ballston and LFTC, except for the minimum purchase amounts

7 Capital Improvement Program The Authority s Water System capital improvement program ( CIP ) consists of the planned construction of the Water System described above in this Report. The opinion of Probable Construction Cost for the project including engineering, legal and administration as well as easement costs is summarized in the table below. Water System Project Costs Cost Item Estimated Cost Source Contract #1 Membrane Procurement Pall Corporation Contract #2 Raw Water Pump Station, Raw Water Transmission Main, Water Treatment Plant Site General, Plumbing, HVAC, and Electrical Contracts 2G Kubricky Construction Corporation 2E Gross Electric 2H Family Danz 2P E.W. Tompkins Contract #3 Finished Water Transmission Main 1000 Oaks Contract #4 Finished Water Transmission Main Trinity Contract #5 Finished Water Transmission Main Delaney Contract #6 Finished Water Transmission Main W.M. Schultz Contract #7 Finished Water Transmission Main Delaney Subtotal 1 $56,242,860 $ 3,429,710 Under Contract 25,767,624 Under Contract 7,337,747 Under Contract 5,267,523 Under Contract 5,635,741 Under Contract 4,079,537 Under Contract 4,724,978 Under Contract Contingency (5%) 2,812,143 Engineering Estimate Engineering/Permitting/Legal/Financial Malcolm Prinie, Inc. Dreyer Boyajian, LLP Miller, Mannix, Schachner, &Hafner, LLC Environmental Capital 7,000,000 Engineering Estimate Easements 750,000 Engineering Estimate TOTAL PROJECT COST $66,805,

8 Saratoga County entered into Contracts 1 with The Pall Corporation in 2005 and contracts 2-7 in June of Under the Memorandum of Understanding dated July 27, 2007 the County transferred its interest in the County Water System, including its design and the facilities and lands and easements acquired or to be acquired by the County as set forth herein, and the funding mechanisms and business plan established to date, to the Authority for the purpose of the Authority to assume the construction, ownership and operation of the County Water System, as authorized by the said Statute; and the Authority accepted and assumed the responsibility of the construction, ownership and operation of the County Water System as designed and permitted. Saratoga County Board of Supervisors Resolution authorized an advance of $250,000 to The Saratoga County Water Authority for start up costs. Saratoga County Board of Supervisors Resolution authorized and advance of $6,000,000 to The Saratoga County Water Authority until permanent financing is in place. The Saratoga County Water Authority intends to issue bonds in 2008 for the remainder of the project costs. As of December 31, 2007, $20.1 million had been expended on construction in progress. Based on an estimated total project cost of $67 million, the project was 30% complete at December 31, Project Funding The Water System will be funded with a mix of state grants, loans, and SCWA issued bonds. Sources of Funds Construction Funds from SCWA Bond Issuance $34,000,000 Environmental Facilities Corporation FAB Grant $10,000,000 EFC Pipeline for Jobs Program Grant $11,250,000 NYS TAD Grant $10,000,000 Empire State Development Grant $1,750,000 $67,000,

9 List of Real Property Water Treatment Plant Description: Membrane filtration plant on acres, having an estimated fair market value of $382,600.00, located at 260 Butler Road in the Town of Moreau (tax map # ). Easements The Saratoga County Water Authority owns a large number of easements for the placement of water main, pressure-reducing vaults, meter pits, ingress/egress to pump stations, and other water supply and distribution equipment. Real Property Transactions The Saratoga County Water Authority did not dispose of any real property in Personal Property Transactions The Saratoga County Water Authority did not dispose of any personal property in

10 Governance Information The Saratoga County Water Authority Board is working on the following; establishing a governance committee establishing an audit committee a statement of Board duties and responsibilities adopting bylaws adopting a code of ethics policies for salary and compensation, time and attendance, whistleblower protection, and defense and indemnification of Board Members a policy prohibiting the extension of credit to Board members and staff submitting financial disclosure forms in accordance with section 2825 of the Public Authorities Law - 9 -

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