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 a special meeting/study session, which is open to the public, at 8:30 a.m. to 3:00 p.m. on Tuesday, June 27, 2023, at the Quality Inn Conference Room, 2nd Floor/East Side of Main Building, 1450 Big Thompson Avenue, Estes Park, CO, 80517. Individuals who wish to address the Board via public participation may do so “in-person” at the meeting. Members of the public wishing to join the meeting, please notify Ms. Gina Moore, Secretary to the Board, at gina@utsd.org by 2:00 p.m. on June 26, 2023.
Agenda
- Call to Order.
- Pledge of Allegiance.
- Roll Call, Absences Excused.
- Next Meeting Date: Regular Board Meeting, Tuesday, August 15, 2023.
- Agenda: Correction and Approval.
- Disclosure of Potential Conflicts of Interest.
- 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. - Minutes: Correction and Approval: Regular Board Meeting, June 20, 2023.
Special Board Meeting, June 27, 2023. - New Business and Special Orders:
- Cybersecurity Review – presented by Mr. Tom Miller, President, Istonish.
- 2022 Audit – presented by Anderson & Whitney.
- Update: Phase II - Design of the Water Reclamation Facility and Lift Station Improvements Project –presented by Mr. Ravel, P.E., Water/Wastewater Project Manager, Merrick & Company.
- Request for Approval: WRF and Lift Station Improvements Project, Garney Construction, CMAR Invoice 6450-003, Dated January 19, 2023 – presented by Ms. Moore.
- Board Discussion: S&P Global Rating Results and Future Debt Obligations.
- Reports of Officers, Committees, and Staff: Questions, Comments, Correction and Approval:
- Treasurer’s Report.
- Plant Report.
- System Development Fee Allocation and Connection Report.
- Collection System Report.
- Operations Manager’s Report.
- Assistant District Manager’s Report.
- District Manager’s Report.
- 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
Minutes of a Regular Meeting of the Board of Directors of
Upper Thompson Sanitation District
Held: June 27, 2023, at 8:30 a.m., at the Quality Inn Conference Room, 1450 Big Thompson Avenue, Estes Park, Colorado
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:
Attendance
Board of Directors:
Jack Reed, Chairman
Susan Doylen, Vice-Chairman/Secretary
Ronald I. Duell, Treasurer/Assistant Secretary
Kent Bosch, Assistant Secretary/Treasurer
Christopher Eshelman, Assistant Secretary/Treasurer
Staff:
Chris Bieker, District Manager
Suzanne Jurgens, Assistant District Manager
Gina Moore, Financial Officer
Matt Allen, Operations Manager
Henry Newhouse, Plant Superintendent
Sheryl Panzer, Customer Accounts Manager
*Naomi McCracken, Secretary Joined the meeting virtually at 4:01 p.m. and "in person" at 4:58 p.m.)
Guest:
Steve Ravel, P.E., Water/Wastewater Project Manager, Merrick & Company * John Kuosman, Water/Wastewater Division Leader, Merrick & Company
* Tom Miller, President, lstonish
* Alan Holmberg, CPA, Anderson & Whitney, PC
* Joined via web conference call
Pledge of Allegiance
The Pledge of Allegiance was recited.
Next Meeting Date
The next regular meeting of the Board of Directors will be held on August 15, 2023, at 4:00 p.m.
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.
Two members of the public joined the meeting, via web conference call. One member of the public joined the meeting in person.
In attendance via web conference call, was Mr. Stewart Squires, of 618 Park River Place, Estes Park, and Mr. Jeff Hanrahan, Reporter for the Estes Park Trail-Gazette. Mr. Squires and Mr. Hanrahan did not offer comment on a non-agenda item. In attendance was Ms. Rebecca Urquhart, of 1955 Homestead Lane, Estes Park. Ms. Urquhart indicated she was observing the meeting on behalf of the League of Women Voters.
Approve Minutes from Prior Meetings
The Board reviewed and discussed the Minutes of the June 20, 2023, Regular Board Meeting and the June 27, 2023, Special Board Meeting.
It was moved by Mr. Eshelman and seconded by Ms. Doylen to approve the Minutes of the June 20, 2023; Regular Board Meeting as presented. Motion carried unanimously.
It was moved by Mr. Eshelman and seconded by Ms. Doylen to approve the Minutes of the June 27, 2023; Special Board Meeting as presented. Motion carried unanimously.
New Business and Special Orders
Cybersecurity Review - presented by Mr. Tom Miller, President, lstonish:
Mr. Tom Miller, President of lstonish (the District's new information technology (IT) Managed Service Provider), presented a cybersecurity review to the Board including cyber hygiene assessment and actions, exposure to personally identifiable information (PII), planned upgrades and next steps.
Mr. Miller defined cybersecurity as a combined and equal effort of technology, people, and processes. Mr. Miller detailed for the Board the cyber hygiene assessment findings from lstonish's review of the District's cybersecurity, including low, medium, and high/critical vulnerabilities. Mr. Miller highlighted the District is in an outstanding position, based on lstonish's initial review. The District's current exposure to PII has zero low and zero high vulnerabilities; however, three identified medium vulnerabilities were identified. These three medium vulnerabilities include the SSL (Secure Sockets Layer) Certificate not being trusted or signed and the TLS (Transport Layer Security) Version 1.1 Protocol is deprecated for the Microsoft 365 service. Mr. Miller explained actions taken by lstonish to address these vulnerabilities were to disable the TLS Version 1.1 Protocol. Additionally, Mr. Miller explained the SSL Certificate is not necessary to the District's cybersecurity needs. Mr. Miller assured the Board that lstonish is protecting the District's PII, business records, and infrastructure.
Mr. Miller detailed the following upgrades to cybersecurity for the District administered by lstonish:
- 24x7 Security Operations Center monitoring of infrastructure devices
- Remote monitoring and management of endpoint devices
- Monthly end-user security training
- Secure email gateway & encryption
- Web/DNS filtering
- Multi-Factor Authentication for all users
- Regular vulnerability scanning and testing
Concluding his presentation, Mr. Miller identified next steps to be taken by lstonish regarding the District's cybersecurity practices. These next steps include:
- Quarterly vulnerability scans - both internal and external
- Regular reviews with District leadership to prioritize and address findings
- Stay current with industry standards and hold regular planning sessions to keep the District abreast of any relevant changes
- Plan for the future and regularly revisit and update the plan
Mr. Miller answered questions of the Board regarding the background and experience of lstonish.
The Board thanked Mr. Miller for his presentation.
Mr. Miller excused himself from the remainder of the meeting at 4:18 p.m.
2022 Audit
Presented by Mr. Alan Holmberg, CPA, Anderson & Whitney:
Mr. Alan Holmberg, CPA, of Anderson & Whitney, presented the District's 2022 Audit comprising the following contents: Independent Auditors' Report, Management Discussion and Analysis, Statement of Net Position, Statement of Revenue, Expenses and Changes in Net Position, Statement of Cash Flows, Notes to Financial Statements, Required Supplementary Information, and Supplementary Information.
Mr. Holmberg reviewed the Independent Auditor's Report. He stated Anderson & Whitney reviewed and evaluated the District's financial processes, records, and internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement. He reported that, in Anderson & Whitney's opinion, the financial statements referred to in the audit present fairly, in all material respects, the financial position of the District as of December 31, 2022. He also stated the changes in the District's financial position and cash flows for the year 2022 concluded in conformity with accounting principles generally accepted in the United States.
Mr. Holmberg highlighted the responsibilities of District Management pertaining to the Audit including financial statement preparation and implementation of internal controls.
Mr. Holmberg reviewed financial highlights presented in the Management Discussion and Analysis, including the amounts held in net position and capital assets.
Mr. Holmberg reported that as of December 31, 2022, approximately $37 million was held in net position, which is a $1.56 million or 4.43% increase from 2021. Mr. Holmberg explained this increase is primarily from increased service charges.
Mr. Holmberg stated that in 2022, operating revenue increased approximately 15% from 2021.
Mr. Holmberg noted the District treated 277 million gallons of wastewater in 2022 and the cost of treatment was $.0118 per gallon, which is a $.003 increase from 2021.
Mr. Holmberg then detailed the Statement of Net Position and Changes in Net Position and emphasized the District's investments increased in 2022 in comparison to 2021.
Regarding the Statement of Net Position, Mr. Holmberg noted there was no progress from the Federal Emergency Management Agency (FEMA) in the year 2022 for net allowance of grant receivables and the closeout of Project Worksheet 861 is also not anticipated in year 2023.
Mr. Holmberg then stated the recording of the net pension liability is a requirement of PERA and the 2022 Audit details the basis of accounting for the District's pension fund with PERA.
Mr. Holmberg provided a summary of the Schedule of Revenue and Expenditures - Actual (Budgetary Basis) Compared to Budget report in the audit document. Mr. Holmberg reported general expenditures did not exceed appropriated 2022 budgeted amounts and the District was in compliance with Colorado budget law.
Mr. Holmberg concluded his report stating that District staff was cooperative and there were no instances of non-compliance or delays throughout the audit process.
The Board did not have questions for Mr. Holmberg and thanked him for presenting the 2022 Audit.
It was moved by Mr. Bosch and seconded by Mr. Duell to accept the 2022 Audit as presented. Motion carried unanimously.
Mr. Holmberg excused himself from the remainder of the meeting at 4:41 p.m.
Mr. Squires excused himself from the remainder of the meeting at 4:41 p.m.
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 June 20, 2023, Regular Board Meeting:
- Overall Project:
- Meetings were conducted with the District and Garney Construction, Inc. (Garney) to review the Project.
- Meetings were conducted with the District to review project financing and funding opportunities.
- The Federal Emergency Management Agency (FEMA) approved the Conditional Letter of Map Revision (CLOMR) for the WRF site on June 7, 2023.
- A conference call was conducted with representatives of WIFIA (Water Infrastructure Finance and Innovation Act) to discuss the credit rating on July 3, 2023. WIFIA requested that the District submit an updated letter of interest (LOI). WIFIA indicated that their review may be up to eight (8) weeks from submittal of the updated LOI. The updated LOI is planned for submittal on July 18, 2023, with WIFIA review anticipated by mid-September 2023.
- An updated project schedule including permitting, financing, and design considerations will be further developed for completion of the project following response from WIFIA.
- Wapiti Lift Station (WLS), WLS Interceptor, and WLS Force Main:
- The site location application Process Design Report (PDR) is under review by the Colorado Department of Public Health and Environment (CDPHE).
- Water Reclamation Facility (WRF):
- The site location application is under review by the CDPHE. The CDPHE has not committed to a completion date.
- Larimer County:
- The WRF site plan submittal is under review by Larimer County.
- The WRF site Re-Zoning Application was approved as a consent agenda item at the June 21, 2023, Planning Commission meeting.
- The WRF site Re-Zoning Application will be reviewed by the Estes Valley Planning Advisory Committee (EVPAC) on July 20, 2023.
- The WRF site Re-Zoning Application final review by Larimer County will be conducted at the Larimer County Land Use Hearing on July 31, 2023.
Mr. Ravel highlighted that the supplemental application requested by WIFIA was submitted on July 18, 2023.
Mr. Ravel stated that the CLOMR has been officially submitted and approved by Larimer County, allowing work on the Project to proceed in the flood plain.
Mr. Ravel explained that preceding the July 31, 2023, Larimer County Board of County Commissioners Land Use Hearing, Larimer County requested the District's virtual attendance at the Estes Valley Planning Advisory Committee meeting on July 20, 2023. Mr. Ravel said the purpose of this request is to be available for any questions the committee may have regarding the re-zoning of the District's 9.01- acre parcel from Estes Valley Rural Estate to Estes Valley Outlying Commercial.
Mr. Ravel added he, Mr. Bieker, and Ms. Jurgens attended a virtual meeting on July 17, 2023, with Ms. Nicole Rowan, Director of CDPHE's Water Quality Control Division, and Mr. Ron Falco, CDPHE's Safe Drinking Water Program Manager. As a result of this meeting, Mr. Ravel informed the Board that Ms. Rowan and Mr. Falco have verbally committed to delivering modified Preliminary Effluent Limits (PELs) for the WRF to the District by August 7, 2023. Following review of these limits, the District anticipates receiving approval of the site location application from CDPHE by the end of August to beginning of September 2023.
Mr. Ravel then highlighted that the updated environmental assessment was submitted to the Bureau of Reclamation (BOR), and BOR agrees with the recommendations included in the assessment. On July 19, 2023, a virtual meeting is scheduled to discuss the environmental assessment and the BOR's schedule for the approval of the Project to be constructed on BOR Lands.
Mr. Ravel answered questions of the Board regarding Project next steps and upcoming deadlines.
The Board thanked Mr. Ravel for the Project update.
Request for Approval: WRF and Lift Station Improvements Project, Garney Construction, CMAR Invoice 6450-003, Dated June 19, 2023 - presented by Ms. Moore:
Ms. Moore asked the Board for approval to remit payment to Garney Construction for CMAR Invoice 6450-003, dated January 19, 2023, in the amount of $51,701. Ms. Moore explained this invoice is for preconstruction services for the Water Reclamation Facility and Lift Station Improvements Project from December 2, 2022, through January 8, 2023. The District received the invoice on June 28, 2023, due to changes in Project management. Ms. Moore stated she has prepared a check to remit payment and it is ready for signature at this meeting. The Board discussed pre-construction services provided by Garney.
It was moved by Mr. Eshelman and seconded by Mr. Bosch to approve payment to Garney Construction for Invoice Number 6450-003 in the amount of $51,701. Motion carried unanimously.
Board Discussion: S&P Global Rating Results and Future Debt Obligations:
Ms. Jurgens stated the S&P Global Rating Results and Future Debt Obligations agenda item is to facilitate discussion amongst the Board of the potential effects the planned WRF and Lift Station Improvements Project may have on the District's financial position for many years.
Ms. Jurgens referred to the documents distributed to the Board, including a Letter of Interest to WIFIA for consideration of eligibility to apply for a long term, low-cost loan from the federal credit assistance program. Ms. Jurgens reminded the Board that the District will also seek Project funding through the State Revolving Fund Loan program facilitated through the Department of Local Affairs and the Colorado Water Resources and Power Development Authority. Ms. Jurgens noted the S&P Global letter shared with the Board by District staff is confidential. The letter provides a summary analysis reflecting the rating committee's response and indicative credit rating determined after S&P Global considered the proposed scenario the District provided if the Project were constructed as planned. The S&P letter incorporates required securities, general assumptions of the District, analytical judgments of the District and an outlook including an upside and downside scenario. Ms. Jurgens explained a final investment grade rating will be sought by the District as the Project cost and finance package is determined.
Ms. Jurgens stated two additional documents were provided to the Board to assist in the Board's discussion pertaining to future debt obligations including: Opinion of Probable Total Project Cost, prepared by Merrick & Company, dated July 12, 2023, and the financial Pro-Forma prepared by Hilltop Securities. The cost opinion has been determined after value engineering the 60% design plans. This cost opinion was submitted with the Letter of Interest to WIFIA. The financial Pro-Forma outlines a financial scenario the District may experience given certain assumptions for debt encumbrance to construct a water reclamation facility project with a total cost of $80 million. Ms. Jurgens noted the financial Pro-Forma was also submitted with the District's Letter of Interest to WIFIA.
Ms. Jurgens highlighted that the 2022 Financial Audit also addresses the impact the planned capital improvements will have on the District's long term financial position.
Ms. Jurgens informed the Board that the District has engaged Willdan Financial Services to perform a rate study which will consider all the information distributed to the Board, along with additional financial and statistical data. The rate study is expected to be finalized for consideration by the Board by the end of September or first of October 2023.
Ms. Jurgens concluded as the District endeavors to move forward with the Project, she invited the Board to discuss the Project, potential future long-term debt obligations, and implications of the Project and related debt to the District's customers.
The Board discussed various options to meet debt obligations, including generating revenue from a mill levy instead of service fee rates, and continuing to pursue grant options. Ms. Doylen calculated the number of mills it would take for the District's future debt coverage and concluded operating on a mill levy is not feasible for the District and its customers. The Board discussed and agreed that continuing to generate revenue from user fees is a better option than taxing District customers.
The Board emphasized the implications of the Project and significant impact on the District's finances, specifically the principal and interest payments that will result from debt incurred to construct the Project, in conjunction with the need to maintain District overhead and operation expenditures, such as employee labor and benefits, insurance, professional services, etc. The Board discussed the consequent necessity to raise rates.
The Board acknowledged the impact of increased rates to the District customers, specifically those on a fixed income. The Board suggested District staff investigate changing from quarterly billing to monthly billing. The Board discussed how this option allows for customers to better manage their personal budgets; however, the cost of postage and billing supplies would be more costly for the District on a monthly basis compared to quarterly. Ms. Panzer explained to the Board that the new billing software, CUSI, will offer District customers the customization option to receive and pay their bills monthly. The Board commented that after the implementation of the new billing software, they would like to revisit the discussion of monthly versus quarterly billings.
Mr. Bieker noted the importance of communicating the value of sewer service to District customers at such events as the Farmers Market and Open House, in local newspapers, and visits to organizations such as Estes Park Rotary and the League of Women Voters.
The Board summarized their commitment to moving forward with the Project, continuing educating and communicating with District customers, and being fiscally responsible.
Reports of Officers, Committees, Professional Consultants, & Staff
Adding to the Plant Report, Mr. Newhouse answered questions of the Board regarding upcoming and necessary Plant repairs and maintenance including changing pump seals, replacing water lines in the lift stations, repairing valves, filters, and maintenance of the centrifuge.
At 5:54 p.m., Mr. Kuosman excused himself from the remainder of the meeting.
In addition to the Assistant District Manager's Report, Ms. Jurgens referred to the Board an email she distributed before the meeting from Ms. Natalie Miklas, Grants and Projects Supervisor, with FEMA's Office of Grants Management. Ms. Jurgens explained she followed up with the Board's request from the June 20, 2023, Regular Board Meeting to inquire on the closeout status of the District's Project Worksheet (PW) 861 grant receivable. Ms. Jurgens reported, per the email, the closeout process has not yet started, nor been assigned to a member of FEMA's closeout team.
Ms. Jurgens announced and congratulated Ms. Sandy Mourning for her new role with the District as Water Quality Laboratory Analyst. Ms. Jurgens noted the job was posted internally.
Ms. Jurgens then asked each Board Director to visit the Bank of Colorado and meet with Ms. Ann Marie Judson to sign updated signatory authorization forms. Ms. Jurgens mentioned this is required to allow her signing authority as approved via Resolution No. 2023-06-01 at the June 20, 2023, Regular Board Meeting.
Ms. Jurgens invited the Board to the District Open House on Thursday, August 3rd from 4 to 7 p.m. and to the summer picnic on Thursday, August 10th from 4 to 7 p.m. at Ride-A-Kart.
Ms. Jurgens thanked GBSM for their strategic partnership and communication to the public on behalf of the District.
Mr. Bieker then commended Mr. Ravel for all his help with drafting letters and being a liaison between the District and federal/state agencies. The Board stated Mr. Ravel is highly valued by the District.
The Board considered the Reports of Officers, Committees, Professional Consultants, and District Staff.
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 and seconded by Mr. Eshelman to accept the Treasurer's Report, Plant Report, System Development Fee Allocation and Connection Report, Collection System Report, Operations Manager's Report, Assistant District Manager's Report and District Manager's Report. Motion carried unanimously.
Adjournment
Having no further business, at 6:14 p.m. it was moved by Ms. Doylen and seconded by Mr. Bosch to adjourn the meeting. Motion carried unanimously.