December 20, 2022 Minutes

Pursuant to C.R.S., §32-1-903, notice is hereby given to the members of the Upper Thompson Sanitation District Board of Directors and to the general public that the Board will hold its regular meeting, which is open to the public, at 4:00 p.m. on Tuesday, December 20, 2022, at the Upper Thompson Sanitation District Administrative Office, 2196 Mall Road, Estes Park, CO, 80517. Individuals who wish to address the Board via public participation may do so “in-person”, via telephone, or virtually through online participation, facilitated by the Microsoft Teams platform. Members of the public wishing to join the meeting via online or telephone participation, please email a request for the meeting link or telephone number to Ms. Gina Moore, Secretary to the Board, at gina@utsd.org by 2:00p.m. on December 20, 2022.

Agenda

1. Call to Order.
2. Pledge of Allegiance.
3. Roll Call, Absences Excused.
4. Next Meeting Date: Regular Board Meeting, Tuesday, January 17, 2023
5. Agenda: Correction and Approval.
6. Disclosure of Potential Conflicts of Interest.
7. Public Forum: An opportunity for presentation by the public to provide information to the Board of Directors on any non-agenda item. Note: The Board cannot take any action on non-agenda items but may direct staff to include the item on a future agenda. Public Comment on Agenda Items: Public comments will be heard by the Board at the conclusion of the presentation of the agenda item. Persons addressing the Board shall first be recognized by the District Manager or Board Chairman and may speak only one time per agenda item. Speakers shall state their name and address for the official minutes, address comments to the Board as a Body, and shall be allotted three (3) minutes for public comment.
8. Minutes: Correction and Approval: Special Board Meeting, November 3, 2022
   Regular Board Meeting, November 15, 2022
9. New Business and Special Orders:
   1. Financial Credit Rating Presentation in Support of Financing the WRF and Lift Station Improvements Project – presented by Mr. Jason Simmons, Senior Managing Director, Hilltop Securities, Inc.
   2. Update: Phase II - Design of the WRF and Lift Station Improvements Project – presented by Mr. Ravel, P.E., Water/Wastewater Project Manager, Merrick & Company.
   3. Consideration for Adoption: Resolution No. 2022-12-01 – A Resolution Calling for The 2023 Regular District Election and Appointing a Designated Election Official – presented by Mr. Bieker.
   4. Consideration for Adoption: Resolution No. 2022-12-02 – A Resolution Authorizing the District Manager to Sign Documents and Make Project Management Decisions Related to the WRF and Lift Station Improvements Project – presented by Mr. Bieker.
   5. Consideration for Adoption: Resolution No. 2022-12-03 – A Resolution to Adopt 2023 Budget – presented by Mr. Bieker and Ms. Moore.
   6. Consideration for Adoption: Resolution No. 2022-12-04 – A Resolution Voiding Handwritten Notes in Old Tap Agreements and Ratifying Prior Board Action– presented by Ms. Jurgens.
   7. Request for Approval: Proposed Changes to Employee Benefits, Effective January 1, 2023 – presented by Ms. Jurgens.
10. Reports of Officers, Committees, and Staff: Questions, Comments, Correction and Approval:
    1. Treasurer’s Report.
    2. Plant Report.
    3. System Development Fee Allocation and Connection Report.
    4. Collection System Report.
    5. Operations Manager’s Report.
    6. Assistant District Manager’s Report.
    7. District Manager’s Report.
11. Executive Session: §24-6-402(4)(e), C.R.S., Determining positions relative to matters that may be subject to negotiations, developing strategy for negotiations, and instructing negotiators related to the site location of the Fish Creek Lift Station.
12. Adjournment.

Upper Thompson Sanitation District (District) prohibits discrimination against its customers, employees, and applicants for employment on the basis of disability, race, creed, color, religion, sex, sexual orientation, gender identity, gender expression, marital status, familial status, national origin, or ancestry, and in employment or in any program or activity conducted by the District. The District will make reasonable accommodation for qualified individuals with known disabilities. If any person has a disability and requires a reasonable accommodation to fully participate in this event, please contact District Manager, Mr. Chris Bieker, three days before the event via email at chris@utsd.org, or telephone at 970.586.4544, or dial 711 to connect with Relay Colorado.

Record of Proceedings

Call to Order

A regular meeting of the Board of Directors of the Upper Thompson Sanitation District, Estes Park, Colorado, was called to order at 4:01 p.m. and held as shown above and in accordance with the applicable statutes of the State of Colorado with the following Directors present and acting:

Pledge of Allegiance

The Pledge of Allegiance was recited.

Attendance

Board of Directors:
Jack Reed, Chairman
Susan Doylen, Vice-Chairman/Secretary
Kent Bosch, Assistant Secretary/Treasurer
Christopher Eshelman, Director

Absent:
It was moved by Ms. Doylen and seconded by Mr. Eshelman to excuse the absence of Director Duell. Motion carried unanimously.

Staff:
Chris Bieker, District Manager
Suzanne Jurgens, Assistant District Manager
Gina Moore, Financial Officer
Matt Allen, Operations Manager
Nathanael Romig, Collection Superintendent
Herny Newhouse, Plant Superintendent

Sheryl Panzer, Customer Accounts Manager Gained the meeting at 4:48 p.m.)
Naomi McCracken, Secretary Gained the meeting virtually at 4 p.m. and "in person" at 5:43 p.m.)

Invited Guests:
Steve Ravel, P.E., Water/Wastewater Project Manager, Merrick & Company John Kuosman, Water/Wastewater Division Leader, Merrick & Company Jason Simmons, Senior Managing Director, Hilltop Securities, Inc.

Joined via web conference call

Next Meeting Date

The next regular meeting of the Board of Directors will be held on January 17, 2023.

Approval of Agenda

The Board considered the Agenda.

It was moved by Ms. Doylen and seconded by Mr. Bosch to approve the Agenda as presented. Motion carried unanimously.

Disclosure of Potential Conflicts of Interest

Disclosure of potential conflicts of interest is a topic of discussion at every Board meeting to address potential conflicts of interest that may arise as new agenda items are introduced. District Directors who have disclosed potential conflicts of interest can vote as issues arise.

Public Forum

Mr. Reed opened the meeting for public comment.

Mr. Reed explained the Public Forum is an opportunity for presentation by the public to provide information to the Board of Directors on any non-agenda item. He further explained the Board cannot take action on non-agenda items but may direct staff to include the item on a future agenda.

Regarding public comment on Agenda Items, Mr. Reed provided the following statement:

Public comments will be heard by the Board at the conclusion of the presentation of the agenda item. Persons addressing the Board shall first be recognized by the District Manager or Board Chairman and may speak only one time per agenda item. Speakers shall state their name and address for the official minutes, address comments to the Board as a Body, and shall be allotted three (3) minutes for public comment.

One member of the public joined the meeting, via web conference call.

In attendance was Mr. Stewart Squires, of 618 Park River Place, Estes Park.

Mr. Bieker read aloud the following comments from Mr. Squires provided in an email before the Board meeting:

1. "Since 2020 when the Board last considered adding a Short-Term Rental (STR) classification for increased system impact and demand on unmetered residential treatment, services fees for 2023 will have increased by 50%. When compared to 2015, treatment fees are up 90%. Sewage costs have even replaced Front Range wildfire and hail inflated insurance costs for 2023 as the highest single budget item on my association's budget (21 %)".
2. "Since the Estes Valley Planning Commission was dissolved in 2021, the Town of Estes Park has embedded STR licensing into the Town's municipal code under the Business License section. In September of 2021, the Town passed Ordinance 13-21 grandfathering Transfer of License on Sale to all STR license holders (like any other on-going business concern), essentially permanently establishing these commercial entities in specific locations within residential neighborhoods. That permanence was highlighted when the Town Board established a moratorium on the submittal of any new STR license applications with the passage of Ordinance 16-21 in October of2021."
3. "In April of 2022, the Town passed Ordinance 2-22 which recognized the STR license holder's commercial impact to the reduction of workforce rental housing by adding a $1,390 annual impact fee to license renewals (~$700,000 for 2023) that would be used by the Town Board to help mitigate workforce housing affordability and shortages."
4. "Transfer of STR License on Sale within the Town of Estes Park and County of Larimer, and the cap on STRs in Residential neighborhoods within Estes Valley have caused homes with transferable STR licenses to sell for a premium (up to $150,000 in my experience, likely more in some places in the Estes Valley). This has been recognized by Town Board members and Larimer County and is causing the Larimer County Assessor's Office to consider STR license holders as a separate class of property for valuations in 2023. Larimer County Commissioners are also proposing new STR regulations specific to the Estes Valley addressing many of the same commercial issues dealt with by the Town of Estes Park Board."
5. "Voters passed legislation in November of 2022 increasing the Estes Park Local Marketing District Lodging Tax by 3.5%, again born by STR license guests, to further mitigate STR effects on workforce housing."

Mr. Bieker then read aloud the following summary provided by Mr. Squires: "In summary it is clear that UTSD needs to expand its revenue base to mitigate rising rates and to have any chance of meeting a reduction to forecasted 3 % rate increases in 2024 and later in this inflationary environment. It is also clear that STR licensed residences in general add significantly to sewage treatment costs and peak demand system requirements within the Estes Valley as they are lodging businesses where maximum occupancy is the expectation."

Also included in Mr. Squires email was the following recommendation that Mr. Bieker read aloud to the Board: "I recommend that the UTSD Board have Staff revisit and update the work done in 2020 by Mr. Ravel and Staff and move to incorporate an STR classification to the capital improvement cost and treatment rate structure that captures the financial impact of these STR businesses on plant operation and maintenance costs."

The Board thanked Mr. Squires for his comments and stated they will continue to evaluate the impact STR's have on the District's wastewater treatment system as the Project progresses and will address this matter at a future Board meeting.

Approve Minutes from Prior Meetings

The Board reviewed and discussed the Minutes of the November 3, 2022, Special Board Meeting and the November 15, 2022, Regular Board Meeting.

It was moved by Mr. Bosch and seconded by Ms. Doylen to approve the Minutes of the November 3, 2022, Special Board Meeting as presented. Motion carried unanimously.

It was moved by Mr. Bosch and seconded by Mr. Eshelman to approve the Minutes of the November 15, 2022, Regular Board Meeting as presented. Motion carried unanimously.

New Business and Special Orders

Financial Credit Rating Presentation in Support of Financing the WRF and Lift Station Improvements Project - presented by Mr. Jason Simmons, Senior Managing Director, Hilltop Securities: The Board welcomed Mr. Jason Simmons, Senior Managing Director of Hilltop Securities, to the meeting. Mr. Simmons distributed hard copies of his prepared PowerPoint Presentation titled "Upper Thompson Sanitation District Financing Options & Rating Discussion".

Mr. Simmons began his presentation by describing four financing options the District may consider for funding the Water Reclamation Facility and Lift Station Improvements Project (Project). These four loan options include: Colorado Water Resources and Power Development Authority (CWRPDA), United States Department of Agriculture (USDA), Water Infrastructure Finance and Innovation Act (WIFIA), and Publicly Offered Bonds. Mr. Simmons reviewed with the Board various criteria for each type of funding, specifically the rating requirements, estimated interest rates and estimated costs. Mr. Simmons noted the CWRPDA finance option has a current capacity limited to loans of $18 million per public entity.

Mr. Simmons highlighted the WIFIA option for the District indicating this loan option does require an investment grade rating requirement; however, the Program offers significant repayment flexibility including deferring loan payments for five years after Project completion and offering a loan te1m of 35 years from substantial completion, including an interest only period.

Mr. Simmons then defined a credit rating as a forward-looking third-party opinion based on the creditwo1ihiness of an issue or an issuer. Mr. Simmons explained credit ratings help investors make informed decisions about the risk and quality of a particular investment. Mr. Simmons noted that ratings are primarily determined based on the economic profile, financial performance and flexibility, debt burden and ability to repay debt. Mr. Simmons stated the rating agencies typically used in Colorado are Standard & Poor's (S&P) and Fitch. Mr. Simmons noted the rating agency that typically works with utilities, including sewer districts, is S&P.

Mr. Simmons then presented different types of credit ratings including the credit assessment/indicative rating, private rating, or public rating, that can be assigned depending on the needs of the issuer. Mr. Simmons recommends the credit assessment/indicative rating for the District with S&P. Mr. Simmons explained to the Board that each rating agency has its own methodology, scorecard, and model to analyze a specific obligation. Mr. Simmons continued that revenue obligations issued by the District would be analyzed under a water and sewer or utility revenue criteria. The key rating factors for a utility credit can be separated into two factors: Enterprise/operational risk and financial risk. Mr. Simmons emphasized enterprise factors are typically out of an issuer's control, so Hilltop Securities focuses on the financial risk categories of "all-in" coverage ( coverage of all financial obligations), liquidity and reserves ( available cash and reserves), and debt & liabilities ( current indebtedness and anticipated borrowing) and financial management assessment.

Mr. Simmons stated for "all-in" coverage, the District's cmTent net revenues are not sufficient to cover the anticipated debt service. For liquidity and reserves, the District has sizeable reserves which results in a moderate amount of actual cash compared to larger utilities. Mr. Simmons said given the anticipated borrowing amount, the debt and liability factor will likely score very weak for the District and be highly leveraged for the foreseeable future given potential repayment structures. Mr. Simmons commented that it is challenging to determine an actual rating outcome for the District; however, based on an initial evaluation of the District, it is anticipated the rating to be on the lower medium border of an investment grade.

Mr. Simmons then explained the steps required for the S&P Rating Assessment Service Process. These steps first involve contacting S&P to begin the process of applying for the Rating Evaluation Service. The fee for this service is estimated between the minimum fee of $27,500 to $35,000. The second step is to schedule a call with the S&P analyst to review the rating process. The third step is for Hilltop Securities and the District to work together to prepare a rating presentation covering main rating factors. The fourth step is for the rating analyst to present the Districts status to the rating committee and then a rating is assigned. The final steps involve sharing the rating with a lender for the application process and obtaining the final rating assignment prior to closing the loan.

In conclusion of his presentation, Mr. Simmons provided a "Repayment Comparison by Financing Type" and "Sample Repayment Schedule" for a sample financing of a $40 Million Project Fund and 30-year Level Debt Service. Mr. Simmons compared the assumed rating, borrowing details, term, interest rate, and estimated payment information for a CWRPDA loan, WIFIA loan, and publicly offered bonds.

The Board asked questions of Mr. Simmons regarding the long-term costs of publicly offered revenue bonds, possible grants from CWRPDA, and the option of combining federal loan programs.

Mr. Simmons emphasized the WIFIA loan is the recommended financing alternative for the District because of the reasonable interest rates and repayment flexibility; however, a credit rating assessment is required to proceed with this loan option.

The Board discussed pursuing the WIFIA loan option and the need to obtain the required credit rating assessment to achieve an investment grade rating.

The Board thanked Mr. Simmons for his presentation.

Update: Phase II - Design of the Water Reclamation Facility and Lift Station Improvements Project - presented by Mr. Ravel, PE, Water/Wastewater Project Manager, Merrick & Company:

Regarding the design of the Water Reclamation Facility and Lift Station Improvements Project (Project), Mr. Ravel noted the following updates which occurred after the November 15, 2022, Regular Board Meeting:

• Overall Project:
  • The design drawings have been updated including process, structural, electrical, mechanical, and site civil.
  • The 60% documents ( drawings, specifications, and decision log) were submitted to the District on November 23, 2022.
  • Meetings were conducted with Garney Construction (Garney) to review the 60% design submittal scope of work for Garney's preparation of the 45% to 60% cost opinion. Garney's cost opinion will be submitted following further review of the scope items.
  • Design review meetings will be scheduled for late December /early January. Value engineering (VE) concepts identified by Garney and Merrick & Company will be incorporated into the design review meetings.
• Fish Creek Lift Station (FCLS):
  • The site location application process design report (PDR) is under review by the Colorado Department of Public Health and Environment (CDPHE).
  • Additional site investigations were completed for the site.
• Wapiti Lift Station (WLS), WLS Interceptor, and WLS Force Main:
  • The site location application PDR is under review by the CDPHE.
• Water Reclamation Facility (WRF):
  • The site location application is under review by the CDPHE.
  • A response was submitted to the CDPHE on December 2, 2022, regarding a second Request for Information (RFI).
• United States Bureau of Reclamation (USER): A monthly meeting was held with the USBR.
• Western Area Power Authority (WAP A) A quarterly meeting was held with WAPA.
• Town of Estes Park:
  • Coordination continued with the Town regarding the water main extension along Highway 34 and the potable water and fire water supply to the WRF, WLS, and FCLS.
  • Coordination continued with the Town regarding the electrical line relocation at the existing WRF site and proposed primary power feed to the proposed WRF.
• Fire District:
  • Coordination continued with the Fire District regarding the fire hydrant locations and fire lane access to the WRF.
• Larimer County:
  • A Larimer County Location and Extents (L&E) Public Hearing is scheduled for December 21, 2022.
  • Coordination is underway with Larimer County to confirm Planning Department submittal requirements for the FCLS, WLS, and WRF.
• Financial Planning:
  • The tentative schedule for a State Revolving Fund (SRF) loan application is due January 15, 2023. Alternatively, an SRF loan application will be delayed to June 2023 based on CDPHEs approval of the site location application.
  • WIFIA provided additional comments regarding the application for funding submitted on September 6, 2022. The WIFIA application remains open pending response to the remaining comments.
  • A meeting was conducted with the District's financial consultant (Hilltop Securities) to discuss the updated financial model and alternative funding for project delivery.

Mr. Ravel answered questions from the Board regarding the fire hydrant locations and fire code requirements for the WRF.

Mr. Kuosman then presented to the Board an update on the Construction Manager At Risk (CMAR) process as applicable to the Project cost estimates. Mr. Kuosman informed the Board that the District's selected CMAR Contractor, Garney, has submitted updated Project costs to Merrick & Company (Merrick), based on the 60% drawing and specification documents. Mr. Kuosman explained Merrick's design team has met with the estimating team from Garney to compare scope and develop a rough draft of Project pricing.

Mr. Kuosman then detailed the next steps including obtaining a third-party valuation of unit costs for labor and equipment rates, duration times to complete Project activities, and other unit pricing. Mr. Kuosman stated Merrick contracted with Glacier Construction to prepare this independent cost estimate to validate unit costs Garney has submitted. The valuation from Glacier is anticipated to be received January 6, 2023. Once received and reviewed, a Garney and Merrick team intends to present the Project cost estimates to the District in the third week of January 2023.

Mr. Kuosman answered questions of the Board regarding the valuation process.

The Board thanked Mr. Ravel and Mr. Kuosman for their Project update.

In reference to the Project, Mr. Bieker read aloud to the Board the following email, in regard to the Fish Creek Lift Station (FCLS) site location, he received from Mr. Mark Stelter, owner of Estes Lake Lodge in Estes Park, dated December 19, 2022:

"When I made the presentation to the Board expressing my interest in selling a piece of land that I own further down Fish Creek so as to minimize the impact the lift station will have on Lake Estes and the town in general, there were some concerns raised about the extra cost this might entail. At that time, I replied that we need to consider the long-term costs of the project, including any aesthetic or historical costs, associated with the project, so that a slightly more expensive option might be the most cost effective taking all things into consideration, especially since our area derives most of its revenue from tourism and the natural beauty of the area. Since that time, I read an article in the Trail Gazette that the total cost of the project, including the new buildings off Mall Road, would be in the range of $50,000,000. If that is the case, then the additional $100,000 to $300,000 that it might cost to move the location further down Fish Creek and away from Lake Estes makes even more sense. I am not minimizing the extra expenses, and I agree it is good practice to reduce costs, but if the location on my property further down Fish Creek makes more sense than placing it directly in view of Highway 36, Lake Estes, the dog park, etc. and the entire project is approximately $50,000,000, then it seems to me that it even makes more sense to spend this small amount if it would protect the former site of Joel Estes' cabin and protect the beauty of the views from Lake Estes, the Stanley Fair Ground, the dog park, and the drive along Highway 36, especially exiting town. Because the additional $100,000 would be approximately 115th of 1% of the total project cost. Even if the additional cost were $300,000, that is still less just slightly more than 1/2 of 1 % of the project cost. Just thought this was something to consider as we sometimes don't see the forest for the trees or, to use a different metaphor, can be penny wise and pound foolish."

The Board thanked Mr. Stelter for his comment provided in an email to Mr. Bieker.

At 5:40 p.m., Mr. Squires excused himself from the remainder of the meeting.

Consideration for Adoption: Resolution No. 2022-12-01 - A Resolution Calling for the 2023 Regular District Election and Appointing a Designated Election Official - presented by Mr. Bieker:

Mr. Bieker outlined for the Board the declarations included in Resolution No. 2022-12-01 Calling for the 2023 Regular District Election and Appointing a Designated Election Official. These declarations include:

• The terms of office for three Directors, Ms. Susan Doylen, Mr. Christopher Eshelman, and Mr. Ronald Duell, expiring in May 2023.
• Conducting an election for three Directors to serve a term of four years.
• The public interest to collect, retain, and spend all revenues generated from any source to carry out the objectives and purposes of the District.
• The necessity to submit to the eligible electors of the District the question of receiving and spending all revenues received by the District from any source, including state and local grants for Capital and other District purposes.
• Calling for the May 2, 2023, election to be conducted as a mail ballot election, to elect three new Directors and pose a question in the form of a ballot title to be approved by separate resolution in 2023.
• There shall be no election precinct or polling place.
• Designating Assistant District Manager, Suzanne Jurgens, as the District's Designated Election Official (DEO) for conducting the election.
• Providing authority for the DEO to proceed with any action necessary or appropriate to effectuate the provisions of the Resolution and of the Election Laws, or other applicable laws.
• Stating that the Self-Nomination and Acceptance Forms may be filed with the DEO no earlier than January 1, 2023, nor later than the close of business on Friday, February 24, 2023.

Mr. Bieker stated that the ballot question will ask the District's eligible electors to consider "Debrucing" the District - which, in effect, is the act of eliminating the revenue cap at a government level to allow the District to retain and spend all of the revenue it collects.

Mr. Bieker explained that the revenue cap is part of the Taxpayer Bill of Rights (Called TABOR/Authored by Douglas Bruce/1992 Inception) and works with other provisions to reduce the District's ability to raise revenue and invest in critical and necessary infrastructure projects. The revenue cap means no matter how much revenue comes into the District from state and local grants, or other revenue sources, the District will have a limit on how much of that revenue is available to invest in infrastructure which facilitates vital water reclamation services and protects our pristine environment.

Mr. Bieker further explained that in addition to sourcing traditional financing options, the District intends to seek all state and local grants as funding sources for the Water Reclamation Facility and Infrastructure Improvements Project (Project).

Mr. Bieker emphasized that the District has never posed the "Debrucing" question to eligible electors subsequent to the enactment of the TABOR law in 1992. Therefore, the District is subject to a revenue cap imposed by the Taxpayer Bill of Rights and might be limited to accept all revenues the Project is eligible to receive.

Mr. Bieker stated as the Project is evolving, and the District is investigating financing opportunities, District staff feel it is important to ensure the District is eligible to accept all funding without limitation imposed by TABOR. Hence, the staffs initiative to pose the ballot question to District customers in the May 2023 election. Passing the ballot question is integral to the District's retention of all revenue generated to pay for the Water Reclamation Facility and Lift Station Improvements.

Mr. Bieker noted that the cost of a mail ballot question has been budgeted for 2023.

Mr. Bieker highlighted that following the Fair Campaign Practices Act (FCP A), the District will utilize the communication services of GBSM to assist in educating District customers about this important initiative. The Board discussed the 2023 election and considered the two components of the Resolution - the election of three Directors and the ballot question which will exempt the District from TABOR laws. It was moved by Ms. Doylen and seconded by Mr. Eshelman to adopt Resolution No. 2022-12-01 Calling for the 2023 Regular District Election and Appointing Ms. Jurgens as the Designated Election Official. Motion carried unanimously.

Consideration for Adoption: Resolution No. 2022-12-02 - A Resolution Authorizing the District Manager to Sign Documents and Make Project Management Decisions Related to the WRF and Lift Station Improvements Project - presented by Mr. Bieker:

Mr. Bieker presented the details of Resolution No. 2022-12-02, Authorizing the District Manager to sign documents and make project management decisions related to the WRF and Lift Station Improvements Project, for consideration by the Board of Directors. Mr. Bieker noted Resolution No. 2022-12-02 states:

• Previously the Board of Directors deemed it necessary and appropriate to delegate authority to the District Manager to incur ce1iain financial obligations related to the day-to-day functioning of the District.
• The Board of Directors has approved the design and construction of the Water Reclamation Facility and Lift Station Improvements Project (Project), and the day-to-day oversight and management of the Project to the District Manager.
• Efficient and expedient construction of the Project is in the best interest of the public health, safety, and welfare.
• In the interest of avoiding delays or impediments to the efficient and expedient completion of the Project, the District Manager may be presented with changed conditions requiring a change order for the design and/or material procurements.
• Regarding the Project, time is of the essence for completion, and supply chain disruptions and procurement demands due to the COVID 19 pandemic, along with opportunity costs associated with any delay in completion including personnel and remobilization costs, require a decision on any requested change order(s) be made on an ongoing "real time" basis.
• The Board desires to provide for an expedient and efficient means and method for the District Manager to sign any necessary documents including change orders, and to make executive decisions related to the management of the Project, with a net value of no greater than $100,000.
• The Project is a significant and necessary public facility improvement.
• The District manager should be provided with broad authority to manage the construction of the Project, including signing documents and making procurements based on a net value of any change order of up to$100,000.
• The District Manager is expressly given such authority.
• Any project management decisions related to the Project that are within the authority granted by this Resolution shall be itemized and reported to the Board at the next public meeting following such decision, to be reviewed and ratified for approval by the Board.

Mr. Bieker reminded the Board that in September 2013, the Board granted, by resolution, similar management authority to the District Manager to facilitate the District's expedient response to flood recovery.

Mr. Bieker continued that in January 2015, the Board ratified a comparable Resolution granting the District Manager unlimited signatory authority for the purpose of management and document administration of the 2013 flood recove1y grant funding.

Mr. Bieker stated effective project management will require Project documents to be executed by a District official in an expedient time frame.

Mr. Bieker said he will serve as the District's executive Project manager and will have full understanding of the needs of the Project and will be the appropriate District official to determine the necessity to execute a document and make decisions that affect the Project costs.

Mr. Bieker commented as has always been the practice for large District construction projects, in future monthly Board meetings, he will apprise the Board of Project changes within the $100,000 limit and seek ratification by the Board of those decisions.

Mr. Bieker concluded by stating the Project is evolving, and comprehensive oversight of design, construction, administrative and financial matters will arise. Thereby timely decisions and document administration will be required to promote overall efficient and effective use of all resources - which, in turn, affects Project costs.

The Board discussed the Resolution and the authority it delineates to the District Manager for the Project.

It was moved by Mr. Bosch and seconded by Mr. Eshelman to adopt Resolution No. 2022-12-02: A Resolution Authorizing the District Manager to Sign Documents and Make Project Management Decisions Related to the Water Reclamation Facility and Lift Station Improvements Project of up to $100,000 without Prior Board Approval and Further Requiring Board Action to Ratify and Approve Expenditures. Motion carried unanimously.

Consideration for Adoption: Resolution No. 2022-12-03 - A Resolution to Adopt 2023 Budget - presented by Mr. Bieker and Ms. Moore.

Mr. Bieker stated he is pleased to present the final version of the 2023 Budget to the Board for consideration and approval at this meeting.

Mr. Bieker noted the final budget document has been revised since it was presented to the Board at the public hearing during the November 15, 2022, Regular Board Meeting.

Mr. Bieker commented on the budget message and spreadsheets reflect updated information and data through November 30, 2022.

Mr. Bieker reminded the Board the budget is in compliance with legal requirements showing estimated beginning and ending fund balances, previous year audited figures, year-end estimated figures for 2022, and figures for the year in which the budget will be adopted.

Ms. Moore then reported revisions to the following accounts in the budget since the November 15, 2022, Board meeting:

• Account 5150/300 (Budget Page 35) - Building Maintenance/Repair - Increased from $5,000 to $6,000 for sealcoating the Collection building parking lot, per vendor quote received.
• Account 5251/200 (Budget Page 36) - Workman's Compensation Insurance - Increased from $30,000 to $40,000. The invoice for the 2023 premium was received in the amount of $29,791.00. The additional $10,000 budgeted allows for claim deductibles, payroll changes, and the final audit reconciliation.
• Account 5260/200, (Budget Page 36) - Election Expense, increased by$10,000 due to the anticipated mail ballot election.
• Account 5775/200, (Budget Page 38)- Professional Services:
  • Created a new sub account, 5775.08, for Investment Rating Fee for Project Financing with a budget amount of $70,000.
  • Created a new sub account, 5775.09, for Consulting services for Developing a communication plan and Project platform with a budget amount of $150,000.
• Account 6020/400 (Budget Page 39)- Plant Repairs & Maintenance:
  • Added $35,000 for the Caterpillar Backhoe Rehabilitation.
  • Removed $7,000 Backhoe Hydraulic Repair from the budget, as this is included in the $35,000 added for the backhoe rehabilitation.
  • Increased sealcoating the Plant building parking lot per vendor quote received, from $5,000 to $8,500.
• Account 6320/300 (Budget Page 40) -Vehicle Maintenance and Repairs Increased by $10,000 (from $15,000 to $25,000) for extensive Collection Department vehicle repairs.
• Account 7020/500 (Budget Page 41) - Office Equipment - Added$7,200 for two statewide communication compatible 800 MHZ radios and batteries for the Administration Department.
• Account 7030/500 (Budget Page 41) -Computer Software/Hardware Added $27,000 for CCTV Software, per quote received.
• Account 7055/500 (Budget Page 41)-Plant Equipment:
  • Moved $50,000 from the 2022 budget to the 2023 budget for the Filter PLC Cabinet Hardware.
  • Added $7,200 for two statewide communication compatible 800 MHZ radios and batteries for the Plant Department.
• Account 7085/500 (Budget Page 41) -Collection System Equipment:
  • Added $60,000 for a hydraulic pump and power pack for cleaning aeration basins.
  • Increased the budgeted amount for the snowplow attachment for the 262D Caterpillar Skid Steer by $500 (from $6,500 to $7,000), per quote received.
  • Moved the safety tripod that was originally budgeted in 2022 account 6800/300 (safety expense) to account 7085 because the price increased from $4,700 to $6,000.

Ms. Moore then stated the 2022 forecast spreadsheet has been updated to reflect actual year to date revenues and expenses through November 2022.

Additionally, Ms. Moore stated the 2022 estimated revenues and expenses have been revised based on year-to-date figures and staff input and reflect a best eff01i to predict final totals.

Mr. Bieker then stated that since the November 15, 2022, board meeting he has not received comments or questions from customers of the District or other members of the community.

Mr. Bieker reported after final revisions to the 2023 budget, the General Fund Budget Summary indicates operational revenues to be $5,593,735, and capital revenues to be $235,500.

Mr. Bieker said that the 2023 total revenue is budgeted conservatively at $5,829,235. Budgeted overhead expenditures for the year 2023 total $4,820,247, and budgeted operation expenditures total $1,174,025.

Mr. Bieker continued noting that budgeted operation and overhead expenditures total $5,994,272 and capital expenditures in 2023 are budgeted at $4,550,400.

Mr. Bieker summarized the 2023 budget highlighting that all expenditures for the year, including overhead, operation, and capital, equal $10,544,672. The 2023 budget indicates a net operating/capital deficit of $4,715,437 which will be funded with reserve funds. The 2023 deficit is resultant of planned capital expenses for the year. The anticipated 2023 beginning fund balance 1s $13,241,336 and the anticipated 2023 ending fund balance is $8,525,898.

The Board considered the 2023 Budget and thanked Mr. Bieker and Ms. Moore for their presentation.

It was moved by Mr. Bosch and seconded by Mr. Eshelman to adopt Resolution No. 2022-12-03, Adopting the 2023 Budget and Appropriating Funds for the 2023 Budget Year. Motion carried unanimously.

Consideration for Adoption: Resolution No. 2022-12-04 - A Resolution Voiding Handwritten Notes in Old Tap Agreements and Ratifying Prior Board Action - presented by Ms. Jurgens.

Ms. Jurgens reported in June of this year that Ms. Ponzer reported a local realtor stopped in the office and presented a Tap Agreement dated November 13, 1973, and inquired about the validity of the document, stating that he was "working on the property".

Ms. Jurgens said Ms. Ponzer made a copy of the Tap Agreement and told the realtor she would look at the document, investigate its validity, and contact him with the District's response.

Ms. Jurgens explained that the Tap Agreement presented by the realtor issues to the tap holder one 4" tap for a fee of $600 and was signed by a District official and the property owner. Additionally, the document has a handwritten clause in the document which states "District shall sell tap holder as many taps for future subdivision of described property at price agreed here in as may be needed."

Ms. Jurgens stated that District staff assumed the realtor was inquiring about the handwritten clause in the document which indicates the owner of the property would be able to purchase an unlimited number of sewer taps at the historic (1973) rate of $600 each.

Ms. Jurgens noted that Ms. Ponzer's investigation of the document led her to discover District board meeting minutes of May and June 2001 which record the Board of Directors' consideration of handwritten notes on old tap agreements, that the Board sought and obtained a legal opinion, and ultimately approved a policy prohibiting handwritten notes of promises contained in old tap agreements for future tap purchases. Upon resurrection of those board meeting minutes, in July 2022, staff asked Ms. Shellie Tressell to investigate the District's historical records and Laserfiche repository to gather all documentation related information regarding handwritten notes in historical Tap Agreements. Ms. Tressell was able to find information related to this issue and created a written chronological timeline of the District's staff and board actions and provided copies of supp01iing documents for review and consideration.

Ms. Jurgens rep01ied that District staff contacted District legal counsel, Ms. Linda Glesne, of the legal firm Cockrel, Ela, Glesne, Greher and Ruhland (CEGR Law) to discuss the issue, share documentation, and seek her opinion of the matter.

Ms. Jurgens continued that through this time, the realtor did contact Ms. Ponzer a few times asking if the District had a response as to the validity of the document. Ms. Ponzer told him the District was still researching the matter. Ms. Jurgens informed the Board that CEGR Law has prepared the Memorandum, dated December 15, 2022, included in the board packet for this meeting, which provides a summary background, identifies two issues regarding the old Tap Agreements, and case law analysis of the matter. The two issues of consideration are:

1. Whether a governmental entity can have a perpetual contract that obligates it to certain conditions (in this instance, to sell taps into the future at an old rate not supported by the current Rules and Regulations of the District)? Answer: It is not necessarily against public policy in Colorado for a governmental entity to be party to a contract with a perpetual obligation, especially for water. So, absent action to void the terms of the old agreements, including by action of the Board or by updating the Rules and Regulations, it is possible a court would find them enforceable.
2. Can a district's Board of Directors void a prior contractual commitment by regulation? Answer: Yes. In certain situations, a district's Board of Directors can permissibly void a contractual commitment by regulation. While CEGR believes that the prior Board action can be interpreted to void the prior contractual commitment, we do have a recommendation to formalize the policy for ease of future application and reference.

Ms. Jurgens explained the memorandum indicates the District's policy of not honoring handwritten notes in old Tap Agreements would not raise a contractual or constitutional issue if a current holder of an old tap agreement tried to enforce the handwritten notes in court.

Ms. Jurgens noted the Memorandum recommends the District further memorialize prior Board action in a Board meeting by resolution and within the Rules and Regulations to clarify the District's purposes and assist in any potential legal action that could be brought by a current holder of an old Tap Agreement.

Ms. Jurgens informed the Board that included in the board packet, following the CEGR Memorandum, is Resolution No. 2022-12-04 - A Resolution Voiding Handwritten Notes in Old Tap Agreements and Ratifying Prior Board Action. The resolution provides a historical background of prior Board action in 2001 which approves a policy, by motion and affirmative vote, prohibiting any handwritten notes or promises contained in old Tap Agreements purporting to fix or set a "grandfathered" historic rate for future tap purchases contrary to the Rules and Regulations.

Ms. Jurgens detailed how the resolution also calls for further Board action in 2005 and 2009 to reconcile outstanding or pending Tap Agreements resulting in the District writing off $15,375 of inactive customer deposits in 2010.

Ms. Jurgens stated the resolution codifies the Board's previous actions into one resolution and provides an amendment to Rule 2.6 - entitled "Modification, Waiver, and Suspension of Rules," in the Rules and Regulations.

The modification states:
No handwritten notation or promise to modify the District's duly authorized rates fees and charges will be given force or effect, except as expressly authorized by the District, in a writing signed by District officials, and as provided in these Rules and Regulations. Ms. Jurgens said since this summer's last inquiry by the realtor about the status of the District's research on the matter, Ms. Ponzer has not heard from him. Ms. Jurgens commented that subsequent to the Board's action at this meeting regarding the proposed resolution, the District will compose a letter to known customers who hold historic Tap Agreements with handwritten clauses informing those customers of the District's policy on those clauses and highlighting the Rules and Regulations pertaining to the matter.

Ms. Jurgens invited general questions about the matter and proposed the Board adopt the Resolution to further memorialize the District's policy regarding handwritten notes on historic Tap Agreements.

The Board asked questions of Ms. Jurgens about the number of District customers who hold historic tap agreements with handwritten notes. Ms. Jurgens responded she is aware of two customers.

It was moved by Mr. Eshelman and seconded by Ms. Doylen to adopt Resolution No. 2022-12-04, A Resolution Voiding Handwritten Notes in Old Tap Agreements and Ratifying Prior Board Action. Motion carried unanimously.

Request for Approval: Proposed Changes to Employee Benefits, Effective January 1, 2023- presented by Ms. Jurgens.

Ms. Jurgens reported to the Board that in May of this year District Manager, Chris Bieker, presented to the staff a survey inquiring about what matters most as an employee of the District. The intent of the survey was to learn what employees value as contributors to job satisfaction.

Ms. Jurgens stated that the responses to the survey indicated that the first item of importance is compensation and employee benefits rank second on the list. Falling under the benefit umbrella, responses to the survey list paid time off and year-round on-call pay for plant operators within the top 10 items that matter to Upper Thompson Sanitation District employees.

Ms. Jurgens asked for the Board's consideration of approval, adding year-round on-call pay for plant operators and adding two paid holidays to the current list of seven paid holidays for full-time employees.

Ms. Jurgens explained the employee benefits are called out in the District's Personnel Manual and, if approved by the Board, these new benefits would begin effective January 1, 2023, and be included in the next revision of the Personnel Manual.

Ms. Jurgens detailed for the Board year-round on-call pay stating that Treatment Plant Operators are required to be on-call year-round on a rotating schedule. On-call duty requires remote checks of the treatment facility after normal work hours. The on-call operator is paid for one hour of service at a rate of one and one-half (1 ½) times their regular rate of pay, regardless of actual hours worked within the work week. Historically, for District plant operators, on-call pay has been offered between the months of May and October. Outside of those months, the treatment plant operator who is on call has been performing remote checks of the treatment facility after normal work hours without pay.

Ms. Jurgens said offering on-call pay year-round to operators incentivizes and rewards the Districts certified water professionals for their diligent oversite of the treatment facility 24 hours a day. Paying operators for their oversite of the treatment facility after normal work hours is common practice throughout the industry.

Ms. Jurgens then stated District leadership proposes adding two paid holidays to the existing seven paid holidays for full-time employees.

Ms. Jurgens explained after the Employer Council compensation analysis in 2017, she and Mr. Bieker became aware that the number of nine paid holidays offered by the District is less than what is offered by other Colorado employers whether public/government or private.

Ms. Jurgens commented that she and Mr. Bieker considered all the traditional U.S. holidays and propose offering Good Friday and the day after Christmas as added paid holidays.

Ms. Jurgens said that if the Board approves these additional benefits, the total compensation and benefit offerings to employees in 2023 definitively demonstrate the Board's ongoing commitment to taking care of the District's number one asset, District employees.

Ms. Jurgens then invited questions from the Board about the proposed added employee benefits.

The Board asked questions of Ms. Jurgens and Mr. Newhouse regarding year­round on-call pay and considered the additional paid holidays.

It was moved by Mr. Bosch and seconded by Ms. Doylen to approve the proposed changes to employee benefits - paying on-call pay to treatment plant operators on a year-round basis and adding two paid holidays - Good Friday and the day after Christmas - effective January 1, 2023. Motion ca1Tied unanimously.

At 6:33 p.m., Mr. Kuosman and Mr. Simmons excused themselves from the remainder of the meeting.

At 6:33 p.m., the Board took a 34-minute recess.

Reports of Officers, Committees, Professional Consultants, & Staff

The Board considered the Reports of Officers, Committees, Professional Consultants, and District Staff.

Adding to the Treasurer's Report, Ms. Moore asked the Board for approval to remit payment to Garney Construction for invoice number 6450-002 in the amount of $70,742 for preconstruction services performed on the Water Reclamation Facility and Lift Station Improvements Project from October 31, 2022, through December 2, 2022.

It was moved by Ms. Doylen and seconded by Mr. Eshelman to approve payment to Garney Construction for Invoice Number 6450-002 in the amount of $70,742. Motion carried unanimously.

Ms. Moore then asked the Board for approval to remit payment to Merrick & Company for two invoices received by the District: Invoice Number 219212 in the amount of $254,269.30 and Invoice Number 220165 in the amount of $308,867.43. Invoice Number 219212 is for work performed on the Water Reclamation Facility and Lift Station Improvements Project from October 1, 2022, through October 28, 2022. Invoice Number 220165 is for work performed on the Project from October 29, 2022, through November 25, 2022.

It was moved by Ms. Doylen and seconded by Mr. Eshelman to approve payment to Merrick & Company for Invoice Number 219212 in the amount of $254,269.30. Motion carried unanimously.

It was moved by Ms. Doylen and seconded by Mr. Eshelman to approve payment to Merrick & Company for Invoice Number 220165 in the amount of $308,867.43. Motion carried unanimously.

In addition to the Plant Report, Mr. Newhouse congratulated Mr. David Darmafall, Plant Operator, for achieving the Wastewater Treatment Level C Certification.

Adding to the Operation Manager's Report, Mr. Allen commended Mr. Garrett Johnson, Flex Operator, for obtaining his Collection System Level 1 Certification.

Adding to the Assistant District Manager's Report, Ms. Jurgens reminded the Board to check their UTSD emails on a regular basis with specific consideration of the upcoming election. This ensures prompt communication and allows for addressing inquiries from District customers.

Adding to the District Manager's Report, Mr. Bieker informed the Board that District staff had a celebration to honor employee's milestone years of service. Mr. Bieker thanked Ms. Jurgens for her presentation of these service awards.

Ms. Jurgens commended Ms. Moore for her 6 1/2 years of service, Mr. Romig for his 7 years of service, Mr. Allen for his 10 years of service and Mr. Bieker for his 35 years of service.

The Board asked questions of the staff regarding the departmental reports.

The Board did not have corrections to the departmental reports.

The Board thanked District staff for preparing the reports.

It was moved by Ms. Doylen seconded by Mr. Bosch to accept the Treasurer's Rep01t, Plant Report, System Development Fee Allocation and Connection Report, Collection System Rep01t, Operations Manager's Rep01t, Assistant District Manager's Report and District Manager's Report. Motion carried unanimously.

At 7:32p.m., Ms. Panzer, Ms. McCracken, Mr. Romig, and Mr. Newhouse were excused from the remainder of the meeting.

Executive Session

At 7:32 p.m., it was moved by Ms. Doylen and seconded by Mr. Eshelman to go into Executive Session pursuant to §24-6-402( 4)( e ), C.R.S. "Determining positions relative to matters that may be subject to negotiations, developing strategy for negotiations, and instructing negotiators related to the site location of the Fish Creek Lift Station." Motion carried unanimously.

The Executive Session was attended by Directors Reed, Doylen, Bosch, and Eshelman; Mr. Bieker; Ms. Jurgens; Ms. Moore; Mr. Allen; and Mr. Ravel.

The Board did not engage in substantial discussion of any matter not enumerated in §24-6-402(4)(e) C.R.S., nor did it adopt any proposed legislative policy, position, resolution, rule, regulation, or formal action.

The Executive Session was adjourned at 7:50 p.m.

Return to Regular Session

At 7:50 p.m., the Board returned to regular session.

The Board continued discussion of pursuing the WIFIA loan option and the need to obtain the required credit rating assessment to achieve an investment grade rating. The Board agreed to proceed with the credit rating process.

It was moved by Mr. Eshelman and seconded by Mr. Bosch to move forward with the investment credit rating process. Motion carried unanimously.

Adjournment

Having no further business, at 8:04 p.m. it was moved by Ms. Doylen and seconded by Mr. Eshelman to adjourn the meeting. Motion carried unanimously.